Satyam Sued by Investors in Three U.S. Lawsuits Over Fraud

By Thom Weidlich

Jan. 10 (Bloomberg) -- Satyam Computer Services Ltd. was sued by investors in at least three class-action lawsuits in federal court in the U.S. after its shares in Mumbai plunged to record lows when its chairman said he falsified accounts.

Hossein Momenzadeh, who bought 75 shares of the Indian software company’s American depositary receipts in July 2007 at $26.50 each, sued Jan. 8 on behalf of all purchasers of the ADRs from January 2004 to January 2009. Aekta Ben Patel, who bought 100 shares in July 2007 at $27 each, sued Jan. 7, the day Satyam Chairman Ramalinga Raju revealed the fraud.

“When the truth was revealed,” the ADRs “lost nearly their entire value,” Momenzadeh’s lawyers wrote in his complaint.

In a letter to directors, Raju said he falsified the accounts “for several years” and quit. The scandal has eroded $2.2 billion in shareholder wealth. Raju and his brother Rama were arrested yesterday and the remaining directors of the software exporter were fired, as India started investigating an alleged $1 billion fraud.

Melissa Baratta, a spokeswoman for Hyderabad-based Satyam in New York, declined to comment. “At this point we really can’t speak to anything beyond what the company has already made public,” she said.

The ADRs, each of which represents two ordinary Satyam shares, fell $8.42, or 90 percent, to 93 cents before the opening of the New York Stock Exchange on Jan. 7, when trading was halted.

PricewaterhouseCoopers

An additional investor class action, or group lawsuit, was filed yesterday in federal court in San Jose, California, naming Satyam as well as auditor PricewaterhouseCoopers. David Nestor, a spokesman for the accounting firm, said he hadn’t seen the lawsuit and couldn’t comment on it.

Kenneth Vianale, one of Patel’s lawyers, said his firm was already investigating Satyam.

“We were gearing up to sue them before this news hit,” he said yesterday in a phone interview. “There was other stuff that caught our notice. They had a big stock-price drop in December.”

On Dec. 16, the ADRs fell a record 55 percent to $5.70 after shareholder objections led the company to scrap a plan to spend $1.6 billion buying two companies owned by Raju’s family.

The shareholders face difficulty recouping their investments, said Shaalu Mehra, the Menlo Park, California-based chairman of the law firm Perkins Coie’s outsourcing and India practices.

‘Kill Any Viability’

“The indications are that Satyam isn’t going to have sufficient cash reserves to make it to the end of the month,” Mehra said in a phone interview. “The mass departure of their customers is going to kill any viability that they had.”

Robert Harwood, one of Momenzadeh’s lawyers, said he’s been contacted by “a number of other people with some significant shareholdings” in Satyam. “They’re quite unhappy,” said Harwood, of Harwood Feffer in New York.

The New York cases are Patel v. Satyam Computer Services Ltd., 09-cv-93, and Momenzadeh v. Satyam Computer Services Ltd., 09-cv-161, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Thom Weidlich in New York at tweidlich@bloomberg.net.

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Lloyds TSB to Pay $350 Million to Settle Prove of Transfers

By Karen Freifeld

Jan. 10 (Bloomberg) -- Lloyds TSB Bank Plc, accused of allowing Iran and Sudan illegal access to the U.S. financial system, will pay $350 million to settle an investigation by Manhattan District Attorney Robert Morgenthau.

Lloyds admitted it altered wire transfer information to hide the identity of its clients, Morgenthau said. The bank must provide financial information on the transactions, according to a deferred prosecution agreement. Charges can still be pursued if the bank knowingly transmitted funds to or from terrorists.

“This is the largest penalty by far for a violation of U.S. sanctions,” Morgenthau told reporters in his offices yesterday.

U.S. banks have software filters that look for entities barred from doing business in the states, prosecutors said. Lloyds stripped out identifying features on the wires so the filters wouldn’t catch them. The transactions appear to be from Lloyds rather than, for example, Iranian Bank Melli and its customers.

He said $350 million in the funds sent by Lloyds terminated in the U.S. and “several billion” dollars went through U.S. banks in violation of U.S. law.

“Why would Lloyds do this?” he asked. “I think the answer is banks want deposits.”

Morgenthau said nine other major foreign banks have been using the same technique to disguise illegal money transfers. He declined to name the banks. The investigation is continuing.

Lloyds cooperated with Morgenthau’s office and the U.S. Justice Department, which joined in the probe, according to a Lloyds statement. Lloyds is in talks with the U.S. Office of Foreign Assets Control about the matter and doesn’t expect it will have to make any additional payments, according to the statement.

Compliance Programs

“We are committed to running our business with the highest levels of integrity and regulatory compliance across all of our operations and have undertaken a range of significant steps to further enhance our compliance programs,” Lloyds said in the statement.

The prosecution of the bank will end if Lloyds fulfills all requirements of the agreement, as well as a separate one with the federal government, over the next two years.

In the New York agreement, Lloyds admitted that from 2001 to 2004 it allowed Iranian banks and their customers to move more than $300 million by stripping information. The Iranian banks included Bank Melli, Bank Saderat and Sepah Bank, according to a statement by Morgenthau.

Sudanese Clients

Lloyds later allowed Sudanese clients to illegally transfer more than $20 million dollars, ending in 2007, according to Morgenthau.

In addition to the Sudanese and Iranian transactions, Lloyds between 2002 and 2004 processed $20 million for a Libyan customer, according to the agreement.

In one internal document, Lloyds said transactions from the London branches of Iranian banks should be processed in “the normal way,” which meant removing information that would tie them to Iran, according to the agreement. Lloyds eventually dedicated specific employees to scrubbing the Iranian transactions, the agreement said.

Over 12 years, “about $350 million was allowed to move through the U.S. financial system that at a minimum should have been scrutinized,” Matthew Friedrich, acting assistant attorney general of the Justice Department’s Criminal Division, told reporters yesterday in Washington.

Nine Months

Over the next nine months, Lloyds has agreed to provide financial information on the transactions, Friedrich said. The vast majority of information already has been turned over, the Justice Department said.

“We can look at where did this money go, where was it sent from and we can do the scrutiny that should have been performed in the first place,” he said.

One of the main questions U.S. authorities will focus on is whether any of the money funded terrorism, Friedrich said.

Most of the money was sent from accounts from a blacklisted country to a U.S. account, he said.

This is the first criminal action the Department of Justice has taken to address “stripping,” DOJ spokeswoman Laura Sweeney said in an e-mail, though she said in 2005 Dutch bank ABN Amro was fined by the U.S. Department of Treasury for similar conduct.

According to the agreement, Lloyds falsified or deleted information on outgoing U.S. dollar messages that involved sanctioned countries from the mid 1990s through January 2007.

Heightened Efforts

In 2002, bank officials became concerned with these practices because of heightened U.S. efforts to enforce financial sanctions and ended them with regard to Iranian banks in 2004.

Lloyds had relationships with the biggest Iranian banks and their UK units, including Bank Melli, Bank Sepah, Bank Tejerat, Bank Mellat, Bank Saderat and the Iranian Overseas Investment Bank.

U.S. laws bar the transfer of funds from Iran and other sanctioned countries without authorization by the U.S. Treasury Department. Assistant District Attorney Adam Kaufman said the bank’s conduct didn’t necessarily violate laws in the U.K., where Lloyds is based.

Last month, federal prosecutors in the U.S. sued to gain control of a 36-story Manhattan office tower they claim belongs to the Iranian government’s Bank Melli. Farhsid Jahedi, President of the Alavi Foundation that owns a 60 percent stake in the tower, also was arrested for destroying documents.

To contact the reporter on this story: Karen Freifeld in New York at kfreifeld@bloomberg.net.

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Rand Posts Biggest 5-Day Drop Since October on Growth Concern

By Garth Theunissen

Jan. 10 (Bloomberg) -- South Africa’s rand posted its biggest weekly drop in 2 1/2 months after manufacturing sank the most in nine years and house prices grew the least in 12 years, more signs the continent’s largest economy is slowing.

The rand had its steepest five-day drop since Oct. 24 after U.S. jobless reports showed the world’s biggest economy shed the most jobs since the end of World War II, highlighting the severity of the country’s recession.

“The declining global growth story and the negative impact it’s having on the domestic economy is what’s driving rand negativity,” said Natheem Alexander, a bond and currency trader at Peregrine Quant, a hedge fund in Cape Town. “Poor growth tends to translate into currency weakness.”

The rand traded at 9.7378 per dollar as of 5 p.m. in Johannesburg Jan. 9, from 9.3147 on Jan. 2, taking its weekly decline to 4.5 percent. It also slipped versus all 16 most- actively traded currencies monitored by Bloomberg this past week, depreciating 1.5 percent against the euro to 13.1637.

Factory output, which accounts for 16 percent of South Africa’s $278 billion economy, contracted for a second straight month in November, slumping 4.4 percent, Pretoria-based Statistics South Africa said this week. Manufacturers including ArcelorMittal South Africa Ltd., the country’s biggest steel producer, are scaling back output on lower demand.

South African house-price growth slid to 3.8 percent in 2008, the slowest in 12 years, as interest rates at a five-year high hurt consumers, mortgage lender Absa Group Ltd. said. Growth in nominal house prices eased from 14.5 percent in 2007, Absa said.

‘Big Influence’

In the U.S., the decline in payrolls was in line with forecasts, bringing job losses for 2008 to 2.589 million, the most since 1945, according to a Labor Department report in Washington. The jobless rate rose more than forecast to 7.2 percent, a 15-year high, from 6.8 percent.

A separate report showed the total number of Americans receiving unemployment benefits advanced to 4.6 million, the most since 1982,

“The world’s biggest economy is in trouble and that’s going to have a big impact on the outlook for emerging-market growth prospects,” Alexander said.

The currency will extend last year’s 28 percent slump in 2009, declining to 10.50 per dollar by year-end as the global financial crisis restricts South Africa’s ability to lure foreign capital and a drop in commodity prices cuts export revenue, Rand Merchant Bank predicted in a client note.

Platinum, which competes with gold as the country’s biggest export earner, has slumped almost 60 percent from its March high.

South African government bonds fell this week, with the yield on the 13.5 percent security due September 2015 gaining 26 basis points from Jan. 2 to 7.48 percent. Yields move inversely to bond prices.

To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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Saudi Supertanker Freed by Somali Pirates, Owner Says

By Glen Carey

Jan. 10 (Bloomberg) -- The Saudi Arabian oil supertanker Sirius Star, which was hijacked by Somali pirates in November in the Indian Ocean, has been released, its owner said.

All crewmembers are safe and in good health, state-owned Vela International Ltd. said today in an e-mailed statement. The Sirius Star contains 2 million barrels of crude oil.

The tanker, which was hijacked Nov. 15 about 420 nautical miles (780 kilometers) off Somalia, was the largest ship and the farthest from shore of the 43 vessels that Somali pirates seized last year. Concerns that piracy could endanger energy supplies has been cited by governments such as France as a reason for sending warships to the waters off Somalia.

The pirates who commandeered the oil tanker appear to have received payment to release the ship, the U.S. Navy said yesterday. Press photographs showed an object being parachuted onto the vessel.

A Vela spokesman declined to comment on whether a ransom was paid to free the ship when contacted by telephone today. It is company policy not to identify the spokesman.

Five of the pirates drowned with their share of a reported $3 million ransom after their small boat capsized, the Associated Press reported. Pirate Daud Nure said a boat with eight people on board overturned in a storm after dozens of pirates left the Sirius Star, according to the news agency.

Weapons Destroyed

The Sirius Star is now leaving Somalia’s territorial waters, the Saudi Press Agency reported today, citing Oil Minister Ali Naimi.

Pirates attacked 165 ships off the coast of Somalia last year, up from 58 attacks in 2007, the French military says.

In response, the European Union in December launched its first naval mission to Somalia. The EU fleet, named Atalanta, saw its first action Dec. 27 when a helicopter from German frigate FDS Karlsruhe chased off pirates attacking an Egyptian bulk carrier and then destroyed their weapons.

Task Force 150, a Bahrain-based 20-country multinational fleet that’s supporting U.S.-led operations in Afghanistan, said Jan. 8 it’s spinning off some of its warships to create Task Force 151, which will concentrate on suppressing piracy.

The United Nations Security Council voted 15-0 last month to allow naval forces in the area to “take all necessary measures” to fight pirates.

The Gulf of Aden, where most of the attacks take place, is transited by 50 ships a day on their way to or from the Suez Canal. About 30 percent of Europe’s oil supply, or 3.5 million barrels a day, passes through the canal.

Other countries, including China, India, Malaysia and Russia, have sent warships to protect their merchant vessels.

U.S. and Russian warships continue to track a Ukrainian boat containing T-72 battle tanks that pirates hijacked Sept. 25.

To contact the reporter on this story: Glen Carey in Dubai at gcarey8@bloomberg.net

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South Africa’s ANC Pledges Spending Boost, More Jobs

By Mike Cohen

Jan. 10 (Bloomberg) -- South Africa’s ruling African National Congress hit the campaign trial today, pledging to lower the country’s 23 percent unemployment rate and raise spending on health, education and grants for poor children.

ANC supporters from Eastern Cape Province were bused into the southeastern city of East London for the presentation of an election manifesto, filling the 30,000-seat Absa rugby stadium. The event, which coincided with 97th anniversary celebrations of Africa’s oldest political movement, was also beamed onto a giant screen in a nearby cricket stadium and broadcast on national television.

“The developmental state will play a central and strategic role in the economy,” the ANC said in the document. “Fiscal and monetary policy mandates, including management of interest rates and exchange rates, need to actively promote creation of decent employment, economic growth, broad-based industrialization, reduced income inequality and other developmental imperatives.”

The ANC, which led the fight against apartheid and took power under Nelson Mandela in 1994, won almost 70 percent of the vote in the last elections five years ago. Rivals this year include the Congress of the People, led by former Defense Minister Mosiuoa Lekota and several other veterans of the fight against racial segregation.

Zuma Leadership

The ANC split after Jacob Zuma, 66, ousted Thabo Mbeki as party leader in December 2007. The ANC forced Mbeki to step down as the nation’s president in September, and temporarily replaced him with its deputy leader Kgalema Motlanthe until Zuma is eligible to take over after the poll.

“We can now say with confidence that much has been done in addressing the legacy of apartheid over the last 15 years, that much more remains to be done and that working together, we can do more,” Zuma said. “We will retain those strategies and practices that have been successful, but will change or improve those that have not delivered optimal results.”

Labor unionists and communists, who form part of South Africa’s ruling alliance and backed Zuma’s rise to power, have been pushing for lower interest rates. They also want the central bank, whose sole mandate is to control inflation and protect the value of the currency, to consider how interest rate changes will affect growth and unemployment.

The ANC doesn’t intend to scrap inflation targeting or change the central bank’s mandate, party spokeswoman Jessie Duarte said. “Those policies will stay.”

Labor Desires

The ANC “has to intensify the process of change so that it benefits the masses of our people,” Zwelinzima Vavi, secretary- general of the Congress of South African Trade Unions, the country’s largest labor federation, said at the rally. The government should not “continue with failed economic and discredited policies. The elected leadership should also not forget that they serve at the behest of the people and shall be removed if they stray from the mandate.”

The ANC’s other election promises include bolstering development in rural areas and increasing the size of the police force to combat crime in a country where on average more than 50 murders are committed each day. The party also intends to extend support grants to children who are 15 to 18 years old. About 8 million young people already receive the grants.

Land redistribution programs will be stepped up “to ensure more land is in the hands of the rural poor,” the manifesto says. “The government will work toward free and compulsory education for all children. As an immediate step it will ensure at least 60 percent of schools are no-fee schools.”

Taxes Versus Debt

While the ANC manifesto contains scant detail on how the party will fund its promises, policy chief Jeff Radebe has said taxes won’t be increased, raising the prospect of increased government borrowing.

“Although many of these initiatives will be phased in, with some further allocations likely in the Feb. 11 budget statement, the rising social welfare payments will still raise concerns over the fiscal implications,” said Mike Davies, an analyst an Eurasia Group in London.

The ANC’s track record in government indicates it’s unlikely to implement the election promises, said Helen Zille, leader of the Democratic Alliance, the main opposition party.

“Manifestos are not always the best guide to a party’s philosophy or policies because there is often a vast difference between what they say and what they do,” she said in a Jan. 9 statement.

Mbeki, 66, did not attend today’s rally.

While Mandela, who turned 90 last year, has pledged support for the ANC in the election, he has declined to campaign actively or seek to reunite the party.

“I have chosen, and made that publicly known, not to become involved in those or other political matters,” Mandela said in a statement read by his daughter Zindzi. “It is the task of a new generation to lead and take responsibility.”

To contact the reporters on this story: Mike Cohen in Cape Town at mcohen21@bloomberg.net;

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Russian Gas Flows Still Halted Amid Monitoring Delays

By Maria Ermakova and Kateryna Choursina

Jan. 10 (Bloomberg) -- Russian natural-gas shipments through Ukraine to Europe were suspended for a fourth day amid delays in signing an agreement to deploy international monitors.

Czech Prime Minister Mirek Topolanek, who holds the European Union’s presidency, will visit Moscow today to persuade Russia to resume gas shipments. OAO Gazprom Chief Executive Officer Alexei Miller said supplies won’t be restored until a document has been signed and monitors are in place.

Natural-gas prices in the U.K., Europe’s largest market, initially fell on speculation gas could soon be flowing again through Ukraine after EU officials brokered a deal on Jan. 8 between both sides. Gazprom halted transit flows on Jan. 7 after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country.

“Europe has seen its dependence on Russia,” said Stephan Thomas, a fund manager at Frankfurt Trust Investment GmbH. “It highlights our need of a pipeline through the Baltic Sea to diversify our supplies.”

The first three EU monitors of a group of 22 arrived in Ukraine’s capital just before 5 p.m. local time, David Stulik, a spokesman for the European Commission delegation in Kiev, said by telephone. There’s no definite schedule for the visit yet and its duration is unknown, he added.

The monitoring team will consist of 18 experts from Europe’s main gas companies and four “high-ranking” European Commission officials, according to Stulik.

‘Imperative’

Russia, Ukraine and the EU struck a deal Jan. 8 on monitoring gas flows, paving the way for the resumption of deliveries to the 27-nation bloc. The EU said it’s “imperative” that shipments resume “without any further delay” after the three parties agreed on the details of the mission, though it hasn’t been signed by all parties yet.

“As soon as the document is signed and the commission’s representatives begin work at Ukrainian and Russian gas measuring stations, transit will become possible,” Miller told reporters in Sochi, Russia yesterday.

Once Russia restarts shipments, it will take up to three days for Russian gas to reach European consumers, the EU said. Russia halted shipments intended for Ukraine’s domestic market Jan. 1.

Supply Shortfalls

Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. The Russian exporter, which provides a quarter of Europe’s gas, said its overall deliveries to Europe were cut by about 60 percent on Jan. 7.

The gas crisis is “unprecedented” in European history, the EU said yesterday.

Bulgaria, Hungary and Slovakia were among eastern European countries that maintained curbs on gas use yesterday. Most countries in western Europe have suffered less from the cutoff, tapping stockpiles and sourcing alternative supplies to satisfy demand.

E.ON AG, Germany’s biggest utility, is in charge of the technical side of the monitoring, Kai Krischnak, a spokesman for the company’s Essen-based gas unit, said yesterday by phone. Germany is Russia’s biggest foreign gas customer.

RWE Transgas, the Czech Republic’s biggest gas trader, said it has sent an observer to join the monitoring team while OMV AG, Austria’s largest oil and gas company, is sending two.

GDF Suez SA said it will send four technicians while Italian Industry Minister Claudio Scajola said representatives of Eni SpA will also join the group.

No Progress

Gazprom spokesman Sergei Kupriyanov said the agreement governing the monitoring group has not yet been signed. “Until the protocol is signed by all sides, these specialists do not have the status of observers,” he said.

Miller said yesterday that no progress has been made in talks with Ukraine over gas prices and fees, at the center of the disagreement that has hit supplies to at least 20 nations.

“Talks have resumed but there is an impression that the Ukrainian participants don’t have any mandate, any authority” to discuss price levels for 2009 or volumes of gas purchases, he told Russian President Dmitry Medvedev yesterday. “We don’t see any readiness of Ukrainian participants in talks for signing the contract.”

Ukrainian President Viktor Yushchenko told reporters in Kiev yesterday Ukraine favors applying market prices for Russian gas. “The earlier we switch to market prices for gas, for transit and for storage, the better it is for Russia and Ukraine,” he said at a briefing after a meeting with Topolanek.

IMF Bailout

The standoff comes as Ukraine’s leaders, Yushchenko and Prime Minister Yulia Timoshenko, are facing a financial crisis that has forced them to seek a $16.4 billion International Monetary Fund bailout.

Neil Shearing, an emerging-markets economist at Capital Economics Ltd., said higher gas prices could deepen the country’s recession. “Given that gross domestic product is already set to contract by more than 5 percent this year, the implications for the real economy would be catastrophic,” Shearing said in an e-mailed note.

Russian Prime Minister Vladimir Putin said on Jan. 8 Russia would be prepared to double the fee it pays to send gas through Ukraine, if its neighbor paid market prices for supplies. Russia would be ready to pay $3.40 per 1,000 cubic meters of gas over 100 kilometers (62 miles), up from $1.70, Putin told reporters at his residence near Moscow, without specifying a timetable.

Gazprom had raised its demands on Jan. 4 as Miller cited a possible price of $450 per 1,000 cubic meters for deliveries to Ukraine, reflecting the average price in countries bordering Russia’s neighbor. Ukraine, which paid $179.50 for Russian gas last year, rejected a Gazprom offer last week of $250 for 2009 and said then $201 would be fair.

Gas Market

Gazprom says it is still owed $615 million by Ukraine. Yushchenko said yesterday Ukraine has paid for all the gas it received in 2008.

U.K. natural-gas for the week ahead declined after the deal on monitors was reached. Week-ahead gas fell as much as 1.75 pence, or 2.9 percent, to 58.50 pence a therm, according to broker ICAP Plc.

In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the EU, and also cut shipments by 50 percent last March during a debt spat.

To contact the reporters on this story: Maria Ermakova in Moscow at mermakova@bloomberg.net. Kateryna Choursina in Kiev at kchoursina@bloomberg.net

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Asian Currencies: Ringgit, Singapore Dollar Decline During Week

By Lilian Karunungan and David Yong

Jan. 10 (Bloomberg) -- Most Asian currencies dropped this week, led by the Malaysian ringgit and the Singapore dollar, on concern investors will exit emerging markets amid signs a global recession is deepening.

The ringgit had its biggest weekly loss against the U.S. currency since June 2007 after reports showed industrial output fell the most since 2004 and exports had their biggest slide in almost seven years. Singapore’s dollar completed its worst week since October after the government said the economy may shrink more than previously forecast.

“We haven’t seen the trough yet in terms of the declining economic trends,” said Zulkifli Hamzah, head of research at MIDF Amanah Investment Bank Bhd. in Kuala Lumpur. “The ringgit may be susceptible to short-term fund outflows.”

The ringgit traded at 3.5445 per dollar as of 4:11 p.m. yesterday in Kuala Lumpur, down 2.2 percent from 3.4662 at the end of last week, according to data compiled by Bloomberg. The Singapore dollar slid 1.7 percent to S$1.4782. The South Korean won, which lost 26 percent last year, Asia’s worst performance, slid 1.6 percent this week to 1,343.

Malaysia’s industrial production dropped 7.7 percent from a year earlier in November after a revised 2.9 percent decline the previous month, the government reported yesterday. Exports fell 4.9 percent in November, data earlier in the week showed.

China, the world’s fourth-largest economy, will next week report a 5.3 percent slide in overseas sales for December, according to the median estimate of economists surveyed by Bloomberg News. That would be the largest decrease in more than a decade.

Deepening Recession

Singapore’s economy is forecast by the government to shrink as much as 2 percent this year, twice the pace of a November prediction. Growth was 1.5 percent in 2008, the slowest in seven years.

The U.S. dollar headed for its first weekly loss against the yen in three weeks as reports showed a shrinking labor market. The currency traded at 91.14 yen in Tokyo, versus 91.83 at the end of last week and 91.20 late in New York on Jan. 8.

South Korea’s won weakened to the lowest level in 2009 after the central bank cut interest rates to a record to revive growth in Asia’s fourth-largest economy.

Rate Cuts

The Korean currency fell for a third week as a retreat in local stocks prompted foreign investors to sell more shares than they bought for a second day, according to Korea Exchange. The Bank of Korea trimmed its seven-day repurchase rate by half a percentage point to 2.5 percent yesterday, the fifth reduction since the start of the last quarter. The Bank of Thailand will probably join Korea, Indonesia and Taiwan in lowering borrowing costs when policy makers meet on Jan. 14, according to a Bloomberg News survey of economists.

“Those who were betting on bigger rate cuts are disappointed,” said Oh Suk Tae, an economist with Citigroup Inc. in Seoul. “It’s premature to talk about a floor, or recovery for the markets and the economy.”

The Kospi index lost 2 percent, sliding for a second day. The economy is “deteriorating rapidly” as demand cools faster than expected at home and abroad, the central bank said in a statement yesterday. Exports declined for a second straight month in December.

Elsewhere, the Indonesian rupiah gained 1 percent this week to 11,020 per dollar, the Thai baht fell 0.1 percent to 34.83 and the Philippine peso advanced 0.8 percent to 47.14. The Taiwan dollar was at NT$33.155, weakening from NT$32.86 on Dec. 31, the island’s last trading day before this week. Vietnam’s dong was at 17,476 compared with 17,483 at the end of last week.

To contact the reporters on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net; David Yong in Singapore at dyong@bloomberg.net.

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Asian Stocks Fall as Recession Erodes Profits; Satyam Tumbles

By Chua Kong Ho

Jan. 10 (Bloomberg) -- Asian stocks fell in the first week of 2009, extending last year’s rout, as the global recession cut earnings while Satyam Computer Services Ltd.’s false accounting rocked confidence in India’s corporate governance.

Lenovo Group Ltd. slumped 21 percent in Hong Kong after the personal computer maker forecast its first loss in three years. Shanghai Electric Group Co., China’s largest maker of power equipment, fell 18 percent after warning that 2008’s profit may miss its forecast. Satyam, India’s fourth-largest software- services provider, plunged 87 percent after the chairman said he inflated assets by $1 billion. India’s Sensitive Index led regional gauges lower.

“As we enter the earnings season, no good news can be expected,” said Yoji Takeda, managing about $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “Actual numbers and forecasts are likely to be even worse than investors expect.”

The MSCI Asia Pacific Index slid 0.3 percent to 89.85. The index fell 43 percent last year, the biggest annual loss on record, as the global economy sank into recession, hurting demand and forcing companies to cut jobs as profits slump.

Japan’s Nikkei 225 Stock Average fell 0.3 percent, snapping a four-week rally. South Korea’s Kospi Index ended the week 2 percent higher after the central bank cut interest rates to a record low, saying the economy is deteriorating “rapidly.”

Lenovo, Asustek

Lenovo, which bought International Business Machines Corp.’s PC division in 2005, fell 21 percent to HK$1.73. The PC maker expects to post a “material loss” in the quarter ended Dec. 31, the company said in a Jan. 8 statement. Lenovo will eliminate about 2,500 jobs, or about 11 percent of its entire workforce, leading to savings of about $300 million in the year ending March 2010, according to the statement.

Asustek Computer Inc., the world’s largest supplier of boards that connect computer components, lost 9.2 percent to NT$33.4 after saying it expects to post a loss in its Asus brand unit on lower-than-expected demand, excess inventories and currency fluctuations. Macquarie Group Ltd. and Credit Suisse Group cut the company’s rating to “underperform” from “neutral.”

Shanghai Electric slipped 18 percent to HK$2.66 after saying profit may be as much as 13 percent less than the 2.97 billion yuan ($434 million) forecast in November because customers asked for a delay in deliveries.

Satyam, India

Satyam Computer tumbled 87 percent to 23.75 rupees, the steepest drop on MSCI’s regional index, after Chairman Ramalinga Raju said Jan. 7 that he had falsified accounts and quit. Interim Chief Executive Officer Ram Mynampati said he can’t be sure whether the company has enough cash for this month. The statement prompted concern that other companies may disclose one-off items when they announce earnings over coming weeks.

DLF Ltd., India’s biggest real-estate developer, declined 28 percent to 216 rupees. Reliance Communications Ltd., the country’s second-largest mobile-phone company, fell 26 percent to 186.85 rupees. Jaiprakash Associates Ltd., India’s biggest builder of dams, slumped 22 percent to 68.5 rupees.

“We believe the Satyam incident marks a turning point in investors’ attitude towards corporate governance,” UBS AG analyst Suresh Mahadevan wrote in a Jan. 9 note.

Bumi, Indonesia

In Indonesia, PT Bumi Resources fell 31 percent to 630 rupiahs. BNP Paribas SA and PT Samuel Sekuritas followed JPMorgan Chase & Co., CLSA Ltd. and CIMB-GK Securities Pte. in downgrading their ratings on the stock, saying Asia’s largest power-station coal exporter was overpaying for acquisitions. Bumi announced this week three acquisitions valued at $565 million in total, raising concern the company will have to increase its debt.

Among stocks that rose, Sharp Corp., the world’s second- largest solar-battery maker, leapt 30 percent to 827 yen after saying Jan. 7 it will start producing solar panels early next year at a plant now under construction to meet growing demand.

Woori Finance Holdings Co. gained 23 percent to 7,700 won in Seoul. Its unit Woori Bank plans to seek about 3 trillion yuan ($2.3 billion) from a government-initiated fund to boost capital, the Korea Economic Daily reported Jan. 6.

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

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Employment: Heavy Losses Continue in Changing Economy

Daily Forex Fundamentals | Written by Wachovia Corporation | Jan 09 09 14:57 GMT |

Nonfarm employment fell 524,000 with broad declines in manufacturing, construction, and services. Aggregate hours declined for the ninth month in a row, signaling a drop of six percent in fourth quarter GDP. Jobs, like credit and output, are adjusting to the expected slow-growing economy of 2009-2010. Consumers remain challenged. Employment Declines Signal Broad Consumer Weakness Job declines were widespread with losses in manufacturing and construction - the only bright spots remaining are health care & education, which reflects demographic trends. In contrast to the broad trend of declines in private sector, government employment continues to grow. What might this suggest about the changing composition of the economy? Unemployment Up, Output Down Rising unemployment rates have been driven by a loss of jobs and are consistent with weakness in consumer spending and the drop in consumer sentiment. Unemployment rates remain significantly different by education cohort. The employment and wages component of personal income continues to weaken and this puts pressure on the consumer. Wachovia Corporation http://www.wachovia.com Disclaimer: The information and opinions herein are for general information use only. Wachovia Corporation and its affiliates, including Wachovia Bank, N.A., do not guarantee their accuracy or completeness, nor does Wachovia Corporation or any of its affiliates, including Wachovia Bank, N.A., assume any liability for any loss that may result from the reliance by any person upon any such information or opinions. Such information and opinions are subject to change without notice, are for general information only and are not intended as an offer or solicitation with respect to the purchase or sales of any security or any foreign exchange transaction, or as personalized investment advice. Securities and foreign exchange transactions are not FDIC-insured, are not bank-guaranteed, and may lose value.

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FX Thoughts for the Day

Daily Forex Technicals | Written by Kshitij Consultancy Services | Jan 09 09 12:29 GMT |

USD-CHF @ 1.0913/15...Support at 1.09 R: 1.0932-58 / 1.0980-1018 / 1.1034-50 S: 1.0814-06 / 1.0732 Swiss traded lower during the day pressured by the 8-SMA on the 4-hourly and it also spiked below the 8-day MA (1.0900) Support mentioned earlier to find SUpport at 200-day MA as it touched a low of 1.0885. However, it has been trading in a thin range over most part of the day between 1.0885-1.0950. If the Support region of 1.0885-1.0905 breaks, it could potentially slip towards 1.07 over the next few days; or if it rides on the Support of the 8-day MA, we could see it move towards 1.11 or even 1.12. To see the chart of Swiss, click on: http://www.kshitij.com/graphgallery/chfcandle.shtml#candle Cable GBP-USD @ 1.5291/94...Support at 55-day MA R: 1.5280-315 / 1.5473 / 1.5517 S: 1.5192 / 1.5160-34 / 1.5016 Cable has managed to honour the trendline Resistance when it rose towards 1.5280. The pair has Resistance in the region of 1.5280-1.5315 which contains the trendline Resistance as can be seen from the daily candle chart and the 21-MA Resistance on the 3-day candle chart. To see the candle chart and the Moving Average charts click on: http://www.kshitij.com/graphgallery/gbpcandle.shtml#candle http://www.kshitij.com/graphgallery/gbpma.shtml#ma respectively. On the downside, it has taken Support of the 55-day MA through the day and is likely to hold on to it as it continues to ride higher as seen from the longer term charts (weekly). Aussie AUD-USD @ 0.7089/92...Support at 0.70 held R: 0.7121 / 0.7205 S: 0.7003-6989 / 0.6935-24 / 0.6884 Aussie has honoured the trendline Support mentioned in the morning as it dipped to 0.7011 and has risen from there. It could potentially now move up towards the 100-day MA at 0.7170 during the US session, if it continues to honour the Support mentioned above. To see the chart of Aussie, click on: http://www.kshitij.com/graphgallery/audcandle.shtml#candle A dip from the abovementioned Support can be next Supported near 0.6944 (21-day MA). Kshitij Consultancy Service http://www.fxthoughts.com Legal disclaimer and risk disclosure These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.

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Daily Technical Strategist

Daily Forex Technicals | Written by FXTechstrategy | Jan 09 09 12:03 GMT |

Today's Focus: EURUSD & GBPUSD EURUSD: Nearer Term Recovery Sees Further Upside Gains. GBPUSD: GBP Maintains Recovery Momentum. EURUSD EUR's rise off the 1.3313 level, its Jan 06'09 low built more upside momentum Thursday maintaining a second day of higher gains to close at 1.3698.The pair's short term upside embarked upon from the 1.2330 has halted and as long as the 1.4363 level, its Dec 29'08 high remains resistance, we envisage further downside losses through the 1.3298 level, its Dec 11'08 high/former range top with the next support residing at its .618 Fib Ret (1.2330-1.4719 rally)support at 1.3244 and then its Nov 25'08 high at 1.3081.On the contrary, a break and hold above 1.4363 level must occur to reduce the current downside threat and bring further upside gains towards the 1.4719 level, its Dec 18'08 high. We retain our medium term bearish tone on the pair despite its recent upside incursions (ST) and see a return to the 1.2330 level and possibly beyond. On the whole, its decline off the 1.4719 level remains consistent with its MT downtrend now on hold. Support Comments 1.3531 Oct 20'08 high 1.3298 Dec 11'08 high/former range top 1.3244 .618 Fib Ret (1.2330-1.4719 rally) Resistance Comments 1.3785 Oct 09'08 high 1.3882/1.3900 Sept 11'08 high/.618 Ret. 1.4363 Dec 29'08 high. GBPUSD Since reversing off the 1.4378 low on Jan'02'09, GBP has steadily recovered higher pushing through the 1.5000 level on Thursday to close at 1.5225.This development has opened up upside risk towards its strong resistance at the 1.5724 level, marking its Dec 17'08 high but before there it has to overcome the 1.5250/65 zone and the 1.5534 level, its Nov 25'08 high first. The 1.5724 level is expected to limit upside gains and turn the pair lower again before resuming its overall medium to longer term downtrend. Supports are situated at the 1.4831 level, its Jan 01'08 ahead of the 1.4558 level, its Nov 13'08 low. The next lies at its Dec 04'08 low at 1.4470 and ultimately the 1.4352 level, its YTD low. All in all, the pair's current recovery remains corrective of its overall medium to longer term declines off the 2.1161 high. Support Comments 1.4831 Jan 01'09 high 1.4558 Nov 13'08 low 1.4470 YTD low Resistance Comments 1.5724 Dec 17'08 high 1.5250/65 Nov 19'08 high/Oct 24'08 low 1.5534 Nov 25'08 high Mohammed Isah Market Analyst www.fxtechstrategy.com This report is prepared solely for information and data purposes. Opinions, estimates and projections contained herein are the author's own as of the date hereof and are subject to change without notice. The information and opinions contained herein have been compiled or arrived at from sources believed to be reliable but no representation or warranty, express or implied, is made as to their accuracy or completeness and neither the information nor the forecast shall be taken as a representation for which the author incur any responsibility. The does not accept any liability whatsoever for any loss arising from any use of this report or its contents. This report is not construed as an offer to sell or solicitation of any offer to buy any of the currencies referred to in this report

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U.S. Payrolls Post Biggest Annual Drop Since 1945

By Shobhana Chandra

Jan. 9 (Bloomberg) -- The U.S. lost more jobs in 2008 than any year since 1945 as employers fired another 524,000 people in December, indicating a free-fall in the economy just days before President-elect Barack Obama takes office.

“Consumers are now going to get more and more scared at the prospect of losing their job,” said Nariman Behravesh, chief economist at IHS Global Insight in Lexington, Massachusetts. Obama’s proposed fiscal stimulus “needs to be big, needs to be bold, needs to be swift. If they can do something quickly we can limit the hemorrhage by mid-year.”

The Labor Department reported that the nation lost 2.589 million jobs in 2008, with the unemployment rate climbing more than economists forecast, to a 15-year high of 7.2 percent in December.

Today’s figures will intensify pressure on U.S. lawmakers to speed Obama’s recovery program, which may exceed $775 billion, through Congress in an effort to save or create 3 million jobs. They also underscore the urgency of the Federal Reserve’s $200 billion initiative to restart consumer financing markets that’s scheduled to begin next month.

The outlook for jobs this year is no brighter as retailers from Wal-Mart Stores Inc. to Macy’s Inc. slash profit forecasts and manufacturers including Alcoa Inc. cut output and staff.

Stocks, Treasuries

Stock-index futures rose and Treasuries fell amid relief among some investors that the drop in payrolls wasn’t even bigger. Futures on the Standard & Poor’s 500 Stock Index rose 0.4 percent to 910.70 at 9:10 a.m. in New York, and yields on benchmark 10-year notes were at 2.47 percent, from 2.44 percent late yesterday. The dollar gained 1 percent to $1.3568 per euro.

Payrolls were forecast to drop 525,000 after a previously reported 533,000 decline in November, according to the median estimate of 73 economists surveyed by Bloomberg News. Revisions subtracted 154,000 from payroll figures previously reported for November and October.

The jobless rate was projected to jump to 7 percent from a previously reported 6.7 percent in November.

Obama is pressing for a stimulus plan including tax cuts and spending on everything from roads and schools to the energy network. Yesterday he called for “dramatic action as soon as possible” to help pull the world’s largest economy out of a slump that’s in its second year. “If nothing is done, this recession could linger for years,” he said in Fairfax, Virginia.

Benchmark Revisions

With today’s report, Labor revised figures from its household survey, which includes the unemployment rate, going back five years. Benchmark revisions to the payroll figures will be announced in February.

Last month’s decline was the 12th consecutive drop in payrolls. The economy created 1.1 million jobs in 2007.

Today’s report showed factory payrolls shrank 149,000, the biggest drop since August 2001, after decreasing 104,000 in November. Economists had forecast a drop of 100,000.

The decrease included a loss of 21,400 jobs in auto and parts industries. Manufacturing, which makes up 12 percent of the economy, shrank in December at the fastest pace in 28 years, Institute for Supply Management figures showed.

Payrolls at builders dropped by 101,000 after decreasing 85,000. Financial firms reduced payrolls by 14,000, after a 28,000 loss the prior month.

Services Jobs

Service industries, which include banks, insurance companies, restaurants and retailers, subtracted 273,000 workers after a decline of 402,000. Retail payrolls dropped by 66,600 after a 100,000 decrease.

Government payrolls increased by 7,000 after falling 3,000 the prior month.

Fed staff last month cut projections for gross domestic product and the job market, stating the unemployment rate was “likely to rise significantly into 2010,” according to minutes of policy makers’ December meeting.

Analysts said the economy may be in danger of a reinforcing cycle of rising unemployment and declining household spending, what policy makers call a negative feedback loop, which is difficult to snap once it’s begun.

“This was the most rapid deterioration in the labor market over a six-month period since 1975,” said Michael Darda, chief economist at MKM Partners LP in Greenwich, Connecticut. “Policy makers will go full throttle” until “the labor market starts to turn,” he said.

Wal-Mart, the world’s biggest retail chain, yesterday said fourth-quarter profit will miss its earlier forecasts after sales rose less than analysts anticipated. Macy’s said December revenue slipped 4 percent and announced it would close 11 stores.

Retail Sales

Sales at stores open at least a year dropped 2.2 percent in the last two month months of 2008, the biggest holiday-season decline since the International Council of Shopping Centers started keeping records in 1970, the group said yesterday.

“These are extraordinary times, requiring speed and decisiveness to address the current economic downturn,” Klaus Kleinfeld, chief executive officer of Alcoa, said in a Jan. 6 statement announcing 13,500 job cuts worldwide. The world’s largest aluminum producer said it will trim an additional 1,700 contractor positions and froze hiring and salaries in some areas.

Some companies have taken other steps to lower costs. Caterpillar Inc., the world’s largest maker of construction equipment, will put 814 workers on an “indefinite” layoff, shipper FedEx Corp. cut the pay of Chief Executive Officer Fred Smith and other employees, and auto-parts supplier Visteon Corp. said it will trim the workweek and some salaries.

The average work week shrank to a record-low 33.3 hours from 33.5 hours, today’s figures showed. Average weekly hours worked by production workers dropped to 39.9 hours from 40.3 hours, while overtime decreased to 3 hours from 3.3 hours. That brought the average weekly earnings down by $2 to $611.39.

Workers’ average hourly wages rose 5 cents, or 0.3 percent, to $18.36 from the prior month. Hourly earnings were 3.7 percent higher than December 2007. Economists surveyed by Bloomberg had forecast a 0.2 percent increase from November and a 3.6 percent gain for the 12-month period.

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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Daily Market Commentary - Fundamental Outlook

Daily Forex Fundamentals | Written by GCI Financial | Jan 09 09 14:31 GMT |

€ The euro moved lower vis-à-vis the U.S. dollar today as the single currency tested bids around the US$ 1.3585 level and was capped around the $1.3750 level. Data released in the U.S. today saw December non-farm payrolls off 524,000, the worst print in more than fifteen years, while the unemployment rate moved higher-than-expected to 7.2%, the highest level since January 1993. Also, October's and November's prints were negatively revised a cumulative 154,000 jobs. Today's data mean 2.6 million jobs were shed in the U.S. economy in 2008 - the most since 1945 - with 1.9 million jobs lost in the four months alone. The “marginally attached” component of the jobs picture that measures underemployed and disenfranchised workers suggests the actual jobless rate in the U.S. could be above 12.5%. Also, December hourly earnings were up 3.7% y/y and average hours worked declined to 33.3, a new cyclical low. The average hours worked data are typically a leading economic indicator and these data suggest companies may be reducing employment rolls further in coming months. Boston Federal Reserve President Rosengren last night reported the U.S. recession is deeper and more severe than originally thought. Rosengren added “It appears the economy contracted quite significantly in the final quarter of 2008 and may continue contracting over at least the first half of 2009. We are seeing businesses retrenching and unemployment rising.” Kansas City Federal President Hoenig hawkishly said the Fed must have a plan to withdraw the hundreds of billions of dollars of monetary stimulus it has injected by expanding its balance sheet. The Fed's balance sheet has ballooned from about US$ 800 billion last year to $2.1 trillion at the present time. In eurozone news, German November industrial output was reported off 3.1% m/m and down 6.4% y/y. European Central Bank President Trichet reported the ECB is considering ways to enhance its supervisory role in the banking sector. Other data released today saw EMU-15 November retail sales climb 0.6% m/m and fall 1.5% y/y. Traders await December retail sales data to see if final private demand improved during the holiday shopping period. It was also reported that the eurozone future inflation gauge fell to a 3.5 year low. Euro bids are cited around the US$ 1.3055 level. ¥/ CNY The yen appreciated vis-à-vis the U.S. dollar today as the greenback tested bids around the ¥90.55 level and was capped around the ¥91.55 level. Japanese financial markets will be closed on Monday and less yen liquidity in the market could render it easier for dealers to push the yen higher or lower. Data released in Japan today saw the November coincident index off 2.8 index points m/m. Also, Japanese reported US$ 1.031 trillion of foreign reserves at the end of last month. The Nikkei 225 stock index lost 0.45% to close at ¥8,836.80. U.S. dollar offers are cited around the ¥104.15 level. The euro moved lower vis-à-vis the yen as the single currency tested bids around the ¥123.95 level and was capped around the ¥125.25 level. The British pound moved higher vis-à-vis the yen as sterling tested offers around the ¥139.30 level while the Swiss franc moved lower vis-à-vis the yen and tested bids around the ¥82.80 level. The Chinese yuan weakened vis-à-vis the U.S. dollar as the greenback closed at CNY 6.8360 in the over-the-counter market, up from CNY 6.8352. Data released in China overnight saw Q4 business confidence plunge to an eight-year low at 94.6. ₤ The British pound moved higher vis-à-vis the U.S. dollar today as cable tested offers around the US$ 1.5345 level and was supported around the US$ 1.5110 level. Traders are talking about media reports that a deal could be in the works between Bank of England and the U.K. Treasury to conduct quantitative easing. Chancellor Darling this week suggested quantitative easing is not yet in the works and any quantitative easing would require cooperation between the central bank and Treasury. It is likely that Darling's position will soften and the central bank will begin to monetize assets on its balance sheet. Data released in the U.K. today saw November factory output fall at its fastest annual pace since 1981, off 7.4% y/y. Production was off 2.9% in November, considerably worse than expectations. These data will likely have a negative impact on preliminary gross domestic product data for Q4 that are scheduled to be release on 23 January. Other data saw December producer price inflation unchanged m/m and up 4.7% y/y, the weakest level since December 2007. December input prices fell 2.0% and the annual rate fell to +4.3%, the weakest level since August 2007. Cable bids are cited around the US$ 1.3920 level. The euro moved lower vis-à-vis the British pound as the single currency tested bids around the ₤0.8920 level and was capped around the ₤0.9040 level. CHF The Swiss franc depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the CHF 1.1045 level and was supported around the CHF 1.0885 level. Swiss National Bank is expected to maintain an easy monetary policy for the next several months. U.S. dollar offers are cited around the CHF 1.1330 level. The euro moved higher vis-à-vis the Swiss franc as the single currency tested offers around the CHF 1.5020 level while the British pound gained ground vis-à-vis the Swiss franc as sterling tested offers around the CHF 1.6805 level. A$ The Australian dollar came off vis-à-vis the U.S. dollar today as the Aussie tested bids around the US$ 0.7010 level and was capped around the $0.7120 level. Economic data that were released in Australia this week were quite low and many traders believe Reserve Bank of Australia will continue to ease interest rates in Q1. Australian dollar bids are cited around the US$ 0.6600 figure. C$ The Canadian dollar depreciated vis-à-vis the U.S. dollar today as the greenback tested offers around the C$ 1.1930 level and was supported around the C$ 1.1790 level. Data released in Canada today saw December payrolls decline 34,400 with the unemployment rate rising to 6.6% from 6.3% in November. Average hourly wage growth fell to +4.5% y/y in December. Finance minister Flaherty reported Canada will run a “substantial” budget deficit in the fiscal year starting on 1 April. U.S. dollar offers are cited around the C$ 1.2210 level. GCI Financial http://www.gcitrading.com DISCLAIMER : GCI's Daily Market Commentary is provided for informational purposes only. The information contained in these reports is gathered from reputable news sources and is not intended to be used as investment advice. GCI assumes no responsibility or liability from gains or losses incurred by the information herein contained.

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U.S. December Employment Situation: Statistical Summary (Table)

By Kristy Scheuble

Jan. 9 (Bloomberg) -- Following is a summary of the December employment situation from the Labor Department.

==============================================================================
                       Dec.    Nov.    Oct.    Sept.   Aug.    July   3-month
                       2008    2008    2008    2008    2008    2008   Average
==============================================================================
Unemployment rate         7.2%    6.8%    6.6%    6.2%    6.2%    5.8%    6.9%
Rate (3 decimals)      7.192%  6.775%  6.599%  6.204%  6.168%  5.767%  6.855%
Avg. hourly earnings      0.3%    0.4%    0.3%    0.2%    0.4%    0.3%    0.3%
Avg. weekly hours         33.3    33.5    33.5    33.6    33.7    33.7    33.4
------------------------------------------------------------------------------
Nonfarm employment        -524    -584    -423    -403    -127     -67    -510
Previous estimate        n/a     -533    -320    -403    -127     -67    n/a
Net Revision             -154
Manufacturing             -149    -104    -123     -69     -61     -40    -125
Previous estimate        n/a      -85    -104     -69     -61     -40    n/a
Household employment      -806    -513    -372    -244    -323    -142    -564
------------------------------------------------------------------------------
==============================================================================
                       Dec.    Nov.    Oct.    Sept.   Aug.    July   3-month
                       2008    2008    2008    2008    2008    2008   Average
==============================================================================
                        ------------Monthly Change in Employment------------
Nonfarm employment        -524    -584    -423    -403    -127     -67    -510
Total private             -531    -581    -438    -384    -139    -106    -517
Goods-producing          -251    -182    -201    -117     -70     -54    -211
Construction             -101     -85     -79     -55     -20     -23     -88
Manufacturing            -149    -104    -123     -69     -61     -40    -125
Service providing         -273    -402    -222    -286     -57     -13    -299
Trade, transport         -121    -164    -107    -121     -47     -38    -131
 Retail trade             -67    -100     -67     -76     -28     -22     -78
Information               -20     -19      -6      -6      -4      -9     -15
Financial                 -14     -28     -27     -23     -10      -7     -23
Business services        -113    -145     -81     -65     -50     -23    -113
 Temporary help           -81     -86     -54     -45     -38     -24     -73
Education, health          45      47      19      -4      62      44      37
Leisure, hospitality      -22     -67     -30     -52     -16     -24     -40
Government                  7      -3      15     -19      12      39       6
------------------------------------------------------------------------------
==============================================================================
                       Dec.    Nov.    Oct.    Sept.   Aug.    July   3-month
                       2008    2008    2008    2008    2008    2008   Average
==============================================================================
                       ----------------------Earnings-----------------------
Avg. hourly earnings    $18.36  $18.31  $18.23  $18.17  $18.14  $18.06  $18.30
MOM% change              0.3%    0.4%    0.3%    0.2%    0.4%    0.3%    0.3%
YOY% change              3.7%    3.8%    3.6%    3.4%    3.6%    3.4%    3.7%
Avg. weekly earnings   $611.39 $613.39 $610.71 $610.51 $611.32 $608.62 $611.83
MOM% change             -0.3%    0.4%    0.0%   -0.1%    0.4%    0.3%    0.0%
YOY% change              2.2%    2.9%    2.7%    2.8%    3.3%    3.1%    2.6%
                       --------------------Hours of Work--------------------
Total private             33.3    33.5    33.5    33.6    33.7    33.7    33.4
MOM% change             -0.6%    0.0%   -0.3%   -0.3%    0.0%    0.0%   -0.3%
Manufacturing             39.9    40.3    40.4    40.5    40.9    41.0    40.2
MOM% change             -1.0%   -0.2%   -0.2%   -1.0%   -0.2%    0.0%   -0.5%
 Overtime                 3.0     3.3     3.5     3.5     3.7     3.8     3.3
                       --------------------Aggregate Hours--------------------
Aggregate hours index    103.5   104.7   105.3   106.1   106.8   106.9   104.5
3-month annualized      -7.7%   -5.6%   -3.4%   -2.2%   -1.8%   -1.7%    n/a
MOM% change             -1.1%   -0.6%   -0.8%   -0.7%   -0.1%   -0.1%   -0.8%
==============================================================================
                       Dec.    Nov.    Oct.    Sept.   Aug.    July   3-month
                       2008    2008    2008    2008    2008    2008   Average
==============================================================================
                       -----------Labor Force Status (thousands)-------------
Pool available labor    16,596  15,869  15,286  14,732  14,386    n/a   15,917
Level change              727     583     554     346    n/a     n/a      621
Augmented Unemp. Rate    10.4%    9.9%    9.6%    9.2%    9.0%    n/a    10.0%
Civilian labor force   154,447 154,620 154,878 154,621 154,823 154,506 154,648
Level change             -173    -258     257    -202     317     106     -58
Participation rate      65.7%   65.8%   66.0%   66.0%   66.1%   66.1%   65.8%
Employment            143,338 144,144 144,657 145,029 145,273 145,596 144,046
 Level change            -806    -513    -372    -244    -323    -142    -564
Employment ratio        61.0%   61.4%   61.7%   61.9%   62.1%   62.3%   61.4%
Unemployment           11,108  10,476  10,221   9,592   9,550   8,910  10,602
 Level change             632     255     629      42     640     248     505
Avg. duration (wks)      19.7    18.9    19.8    18.7    17.6    n/a     19.5
Median duration          10.6    10.0    10.6    10.3     9.3    n/a     10.4
Not in labor force      80,588  80,208  79,734  79,739  79,284    n/a   80,177
Level change              380     474      -5     455    n/a     n/a      283
Job leavers               9.1%    8.9%    9.2%   10.1%   10.5%    n/a     9.1%
==============================================================================
                       Dec.    Nov.    Oct.    Sept.   Aug.    July   3-month
                       2008    2008    2008    2008    2008    2008   Average
==============================================================================
                       --------------------Diffusion Index--------------------
Private nonfarm          25.4    27.2    34.1    35.9    46.2    38.3     28.9
3-mo. average           28.9    32.4    38.7    40.1    42.3    42.3     n/a
Manufacturing            11.3    18.5    18.5    25.0    37.5    26.8     16.1
3-mo. average           16.1    20.7    27.0    29.8    31.6    33.9     n/a
==============================================================================
NOTE: All figures seasonally adjusted. Employment figures in thousands.
The augmented unemployment rate is the number of job wanters plus the number
unemployed divided by the labor force plus the number of job wanters.

To contact the reporter on this story: Kristy Scheuble in Washington at kmckeaney@bloomberg.net

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Total’s Normandy Refinery Returns to Service After Power Loss

By Tara Patel and Nidaa Bakhsh

Jan. 9 (Bloomberg) -- Total SA said its largest refinery in France resumed normal operations following a brief loss of power and steam two days ago.

“All our units are running at 100 percent of capacity,” Michael Crochet-Vourey, a Total spokesman, said by phone today from Paris, where the company is based.

Power supply at the site in Normandy, northern France, was interrupted “momentarily” because of freezing temperatures, Crochet-Vourey said. Processing units were able to resume operations “very quickly,” he said.

The incident caused “smoke” to be released into the atmosphere, Crochet-Vourey said.

The Gonfreville refinery has the capacity to process 345,000 barrels of oil a day.

Freezing temperatures have led to record power and gas consumption in France.

To contact the reporter on this story: Tara Patel in Paris at tpatel2@bloomberg.netNidaa Bakhsh in London at nbakhsh@bloomberg.net

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Russian Gas Flows Still Halted Amid Delays in Monitoring Accord

By Nick Comfort and Kateryna Choursina

Jan. 9 (Bloomberg) -- Russian natural-gas shipments through Ukraine to Europe were suspended for a third day as a dispute over arrangements for independent observers prevented an early resolution.

OAO Gazprom said Ukraine agreed to allow Russian representatives to be part of a group that will monitor transit flows to the West after earlier objections. NAK Naftogaz Ukrainy had called on Russia to take a “constructive position.”

Natural-gas prices in the U.K., Europe’s largest market, initially fell on speculation supplies could soon be flowing again through Ukraine after EU officials yesterday brokered a deal between both sides. Gazprom halted transit flows on Jan. 7 after accusing Ukraine of diverting gas intended for other buyers for its own use, a charge denied by the country.

Shipments should still resume shortly as “it is in Russia’s interest to take in as much revenue as soon as possible, because the state’s income has fallen on lower oil and gas prices,” Klaus Breil, a fund manager at Cominvest Asset Management in Frankfurt, said today in a television interview.

Gazprom Chief Executive Officer Alexei Miller said Ukraine had accepted Russia’s proposal for monitoring shipments.

“As soon as the document is signed and the commission’s representatives begin work at Ukrainian and Russian gas measuring stations, transit will become possible,” Miller told reporters in Sochi, Russia.

EU monitors are scheduled to arrive in Ukraine at 5 p.m. local time today, Naftogaz Deputy Chief Executive Officer Volodymyr Trikolich told a press conference. The Ukrainian utility will also allow “authorized” Gazprom experts to access its pipelines, he said.

The EU said today it’s “imperative” that shipments resume “without any further delay.” The monitoring group will consist of 18 experts and four European Commission members, the EU said.

Gas Prices

Miller earlier said that no progress has been made in talks with Ukraine over gas prices and fees, at the center of the disagreement that has hit supplies to at least 20 nations.

“Talks have resumed but there is an impression that the Ukrainian participants don’t have any mandate, any authority” to discuss price levels for 2009 or volumes of gas purchases, he told Russian President Dmitry Medvedev today. “We don’t see any readiness of Ukrainian participants in talks for signing the contract.”

Russia’s ruble advanced against the euro after Russian Prime Minister Vladimir Putin reached an accord with his Czech counterpart Mirek Topolanek, who holds the EU’s presidency, late yesterday that could pave the way for the resumption of supplies.

Breakthrough

The breakthrough came after talks in Brussels yesterday involving Miller, his counterpart at NAK Naftogaz Ukrainy, Oleh Dubina, and EU Energy Commissioner Andris Piebalgs.

The agreement “should lead” to Russian gas supplies to the EU being restored, the Czech presidency said on its Web site.

Gazprom’s European customers receive 80 percent of supplies through pipelines that cross Ukraine. The Russian exporter, which provides a quarter of Europe’s gas, said its overall deliveries to Europe were cut by about 60 percent on Jan. 7.

The deal followed mounting political pressure from EU leaders for gas supplies to be restored.

Both French President Nicolas Sarkozy and Germany’s Merkel urged Russia to renew shipments of gas to Europe. Russia must “respect” its contractual commitments, Sarkozy told a joint press conference in Paris yesterday. “Russia has to hold to its obligations,” Merkel said.

Higher Fees

Yesterday, Putin said Russia was prepared to pay a higher transit fee to send gas through Ukraine should its neighbor pay European prices for its gas. Naftogaz said it was ready to “guarantee 100 percent” of Russian gas transit supplies to Europe.

Putin’s press service said Russia was insisting on having monitors on both its border into Ukraine and at exit borders.

Ukrainian President Viktor Yushchenko spoke with European Commission President Jose Barroso yesterday by telephone and confirmed Ukraine is prepared to immediately resume Russian gas transit, according to a statement from Yushchenko’s office.

U.K. natural-gas for the week-ahead declined after the deal was reached. Week-ahead gas fell as much as 1.75 pence, or 2.9 percent, to 58.50 pence a therm, according to broker ICAP Plc. That’s equal to $8.93 a million British thermal units. A therm is 100,000 Btus. Within-day gas prices surged 23 percent this week after the conflict between Russia and Ukraine intensified.

Supply Shortfalls

Ukraine, Romania, Bulgaria, Greece, Turkey, Macedonia, Serbia, Czech Republic, Slovakia, Bosnia-Herzegovina, Slovenia, Austria, Hungary, Italy, Croatia, Moldova, Turkey, Poland, Germany and France have all registered supply shortfalls this week since the cutoff.

RWE Transgas, the Czech Republic’s biggest gas trader, has already dispatched an observer to join the monitoring team, the company said in an e-mailed statement. Two representatives of OMV AG, Austria’s largest oil and gas company, will also join the group.

GDF Suez SA said it will send four Russian-speaking technicians as part of the European team, while Italian Industry Minister Claudio Scajola said representatives of Eni SpA will also join the monitoring group. E.ON AG, Germany’s biggest utility, said it will send pipeline experts to Ukraine.

Gazprom delivered about 170 million cubic meters of gas to Europe on Jan. 7, compared with 420 million to 450 million cubic meters a day normally, Deputy Chief Executive Officer Alexander Medvedev said on a conference call on Jan. 7. Gas is being supplied through Belarus and from underground storage.

Previous Spat

In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the EU, and also cut shipments by 50 percent last March during a debt spat.

Russia halted shipments intended for Ukraine’s domestic market Jan. 1. Gazprom has warned that Ukraine risks amassing a debt of “billions of dollars” if the conflict continues.

Gazprom raised its demands on Jan. 4 as Miller cited a possible price of $450 per 1,000 cubic meters for deliveries to Ukraine, reflecting the average price in countries bordering Russia’s neighbor. Ukraine, which paid $179.50 for Russian gas last year, rejected a Gazprom offer last week of $250 for 2009 and says $201 would be fair.

Putin said yesterday Russia would be prepared to double the fee it pays to send gas through Ukraine, if its neighbor paid market prices for supplies. Russia is ready to pay $3.40 per 1,000 cubic meters of gas over 100 kilometers (62 miles), up from $1.70, Putin told reporters at his residence near Moscow.

The company is still owed $615 million by Ukraine, Gazprom’s Medvedev said earlier this week in London. Ukraine disputes the debt.

Ukraine’s leaders, Yushchenko and Prime Minister Yulia Timoshenko, are facing a financial crisis that has forced them to seek a $16.4 billion International Monetary Fund bailout.

The ruble rose 4.2 percent to 39.9473 against the euro at 1:50 p.m. in Moscow, from 41.7027 yesterday.

To contact the reporters on this story: Nicholas Comfort in Frankfurt at ncomfort1@bloomberg.net

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