Gold Futures Rebound on Interest-Rate Outlook; Silver Advances

By Pham-Duy Nguyen

Jan. 15 (Bloomberg) -- Gold prices rose in New York for the first time this week on speculation worldwide interest rates will remain low, boosting the appeal of the precious metal as an alternative to currencies. Silver also gained.

The European Central Bank today reduced its benchmark rate to 2 percent from 2.5 percent. The Bank of England and the U.S. Federal Reserve had slashed borrowing costs to stimulate growth as the global recession deepens. In 2008, gold rose 5.5 percent, the eighth straight annual gain.

“Gold is moving up against all the currencies,” said Marty McNeill, a trader at R.F. Lafferty Inc. in New York. “All interest rates are falling, and that’s a factor that will help gold work its way higher.”

Gold futures for February delivery rose $4.30, or 0.5 percent, to $813.10 an ounce at 9:26 a.m. on the Comex division of the New York Mercantile Exchange. The price declined 5.4 percent in the previous three sessions.

Silver futures for March delivery gained 5.5 cents, or 0.5 percent, to $10.53 an ounce. The metal slumped 24 percent in 2008.

To contact the reporter on this story: Pham-Duy Nguyen in Seattle at pnguyen@bloomberg.net.

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Oil Drops in New York After OPEC Cuts 2009 Demand Forecast

By Grant Smith and Alexander Kwiatkowski

Jan. 15 (Bloomberg) -- Oil fell in New York after OPEC said demand for its crude will fall 4.2 percent this year as the deepening recession reduces spending on fuels.

Global consumption of OPEC’s crude will shrink 1.4 million barrels a day to 29.5 million barrels a day, according to a monthly report released today. U.S. fuel demand fell the most in five years as crumbling economic confidence reined in consumer spending.

“The economic news which is predominating the market is invariably bad,” said Gareth Lewis-Davies, an analyst at Dresdner Kleinwort Group Ltd. in London. “We’re at the point where the night is darkest just before the dawn.”

Crude oil for February slid 2 percent to $36.53 a barrel on the New York Mercantile Exchange as of 1:20 p.m. London time. It earlier fell as much as 3.1 percent to $36.13. Yesterday, futures dropped 1.3 percent to $37.28 a barrel in New York, the lowest settlement since Dec. 24. Oil has declined 60 percent in the past year.

Brent crude oil for February settlement advanced $1.64, or 3.6 percent, to $46.72 a barrel on London’s ICE Futures Europe exchange. The contract, which expires today, is more than $9 higher than crude traded in New York because of excessive U.S. supplies. The more-active March Brent contract gained $1.01 to $48.63 a barrel.

There will be a “major contraction” in demand among members of the Organization for Economic Cooperation and Development, with the United States being the “main contributor,” to this reduction, the OPEC report said.

U.S. inventories of crude soared to a 16-month high as fuel demand tumbled 6 percent, the Energy Department said yesterday. European equity markets fell for a seventh day after the Standard & Poor’s 500 Index slid the most in six weeks yesterday on concern that company profits are deteriorating.

Inventories Grow

U.S. crude stockpiles increased 1.14 million barrels to 326.6 million last week, the highest since Aug. 31, 2007. Gasoline and distillate fuel supplies also rose. Fuel demand fell 6 percent, the largest one-week decline in almost five years, as the Federal Reserve reported the U.S. economy weakened further in the past month.

“The concern now is that falls in demand are greater than the reduction in supply,” Lewis-Davies said.

Saudi Arabia said this week it may cut output more than was announced at OPEC’s last meeting in December. Venezuelan President Hugo Chavez said yesterday the Organization of Petroleum Exporting Countries is “willing to cut 2 million more, 4 million more barrels to preserve the price of oil.”

Inventories at Cushing, Oklahoma, where oil traded on Nymex is stored, climbed 2.5 percent to 33 million barrels last week, the highest since at least April 2004, when the department began keeping records for the location.

‘Killer’

The price of oil for delivery in February 2010 is 58 percent more than for the front-month contract, allowing traders to profit if they can store crude. February 2009 crude is trading at a $7.14 discount to March, from $3.88 on Jan. 5.

“High stocks in Cushing were the killer for the oil price,” said Dresdner’s Lewis-Davies.

Gasoline stockpiles rose 2.07 million barrels to 213.5 million barrels, higher than the 1.85 million-barrel increase forecast in the survey. Supplies of distillate fuel, a category that includes heating oil and diesel, surged 6.35 million barrels to 144.2 million barrels, the biggest gain since January 2004.

“Signs of a collapse in diesel demand, mirroring the plunge in international trade, container traffic at U.S. port, U.S. trucking demand and industrial activity, is undermining heating oil prices despite frigid winter temperatures on the East Coast,” said Antoine Halff, head of energy research at Newedge USA LLC in a report yesterday.

Sales at U.S. retailers fell more than twice as much as forecast in December as job losses and the choking-off of credit led Americans to cut back on everything from eating out to car purchases. The 2.7 percent decrease, the sixth consecutive drop, extended the longest series of declines in records going back to 1992, the Commerce Department said yesterday in Washington.

The U.S. economy weakened across almost all regions, hurt by a lack of credit and declines in retail sales, the Federal Reserve said yesterday in its regional business survey.

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.netGrant Smith in London at gsmith52@bloomberg.net

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Copper, Aluminum Extend Falls After Japan’s Record Orders Drop

By Claudia Carpenter

Jan. 15 (Bloomberg) -- Copper dropped for a second day and aluminum extended its decline to four sessions after a record drop in machinery orders in Japan added to signs that demand is worsening for industrial metals.

Japan’s machinery orders fell 16 percent in November, twice the estimate of economists in a Bloomberg survey, figures from the Cabinet Office in Tokyo showed. Japan was the fourth-largest copper buyer last year, according to the International Copper Study Group. The MSCI World Index of equities fell for a seventh day, led by the materials group that includes BHP Billiton Ltd.

“Certainly for copper, prices can fall further,” said Neil Buxton, managing director of GFMS Metals Consulting Ltd. in London. “Given the data out there, there’s little reason for any optimism at all.”

Copper for delivery in three months on the London Metal Exchange dropped $71, or 2.2 percent, to $3,215 a metric ton as of 9:55 a.m. local time, eroding this year’s gain to 4.7 percent. Aluminum declined $31, or 2.1 percent, to $1,464 a ton, extending this year’s drop to 4.9 percent.

BHP slid 6.6 percent in Sydney trading.

Copper fell 54 percent last year, the most since at least 1987, and aluminum declined 36 percent as recessions in the U.S, Germany and Japan curbed demand for metals used in cars, homes and machinery.

Manufacturing in the Philadelphia area is projected to show a reading of minus 35 in January, according to a separate Bloomberg survey. Figures less than zero signal manufacturing is contracting. The Federal Reserve Bank of Philadelphia report is due at 3 p.m. London time.

Imports, Stockpiles

Demand for copper and aluminum in China, the world’s largest buyer, is also falling and pressuring prices. Imports dropped 1.3 percent last year for copper and alloys and 10 percent for aluminum products, the Beijing-based customs office said.

Stockpiles of copper in warehouses monitored by London Metal Exchange increased 5,175 tons, or 1.4 percent, to 387,325 tons, bringing this year’s increase to 14 percent. Copper futures for March delivery fell 4.5 cents, or 3 percent, to $1.4425 a pound ($3,180 a ton) on the Comex division of the New York Mercantile Exchange.

Aluminum stockpiles in Japan climbed 17 percent in December to 316,300 tons, the highest since January 2006, trading company Marubeni Corp. said.

Nickel fell $100, or 0.9 percent, to $10,750 a ton, lead dropped $15, or 1.3 percent, to $1,116 a ton and tin declined $50, or 0.5 percent, to $11,150 a ton. Zinc increased $20, or 1.6 percent, to $1,283 a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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India’s Sensex Falls to One-Month Low; Infosys Leads Declines

By Pooja Thakur

Jan. 15 (Bloomberg) -- India’s benchmark stock index fell to the lowest in more than a month. Tata Consultancy Services Ltd. and Infosys Technologies Ltd. led declines after a Canadian customer for their software services collapsed.

Tata Consultancy sank 5.3 percent, the most in a month, and Infosys slid 4 percent after mounting losses prompted phone equipment maker Nortel Networks Corp. to seek court protection from creditors. ICICI Bank Ltd., India’s second-largest lender, retreated 7.4 percent as a drop in U.S. retail sales fanned concern that the global recession will deepen.

“Markets are reacting to the dismal news on U.S. retail sales and the bankruptcy filing of Nortel,” said Ajay Bodke, who helps look after about $1 billion in equities at IDFC Assets Management Co. in Mumbai.

The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 3.5 percent to 9,046.74, its lowest since Dec. 5. All but one stock in the Sensex fell. The S&P CNX Nifty Index on the National Stock Exchange slid 3.5 percent to 2,736.70. The BSE 200 Index declined 3.2 percent to 1,079.71. Nifty futures for January delivery fell 3.1 percent to 2,726.10.

U.S. retail sales dropped for a sixth month, shrinking 2.7 percent in December, the longest stretch of declines since tallies began in 1992, the Commerce Department said yesterday. The retreat was more than twice the pace economists estimated.

Deepening Recession

Nortel made the bankruptcy filing a day before a $107 million interest payment was due and was granted protection in Ontario Superior Court yesterday. Nortel’s U.S. subsidiary made a Chapter 11 filing in Wilmington, Delaware, after financing dried up amid a deepening recession.

Tata Consultancy, India’s largest software developer, fell 5.3 percent to 510.45 rupees, the most since Dec. 11. Infosys, the No. 2 developer, dropped 4 percent to 1,251.70 rupees. Wipro Ltd., the No. 3, slid 3.5 percent to 235.25 rupees.

Sasken Communication Technologies Ltd. slumped 18 percent to 43.80 rupees, its lowest since 2005. JPMorgan Chase & Co. said the Indian telecommunications supplier that counts Nortel amongst its top three clients may lose orders because of the bankruptcy filing. Sasken earns about 10 percent of its revenue from Nortel, P. Jaykumar, Sasken’s head of investor relations, said from Bangalore.

ICICI Bank fell 7.4 percent to 408.65 rupees, its lowest in a month. Reliance Industries Ltd., India’s most valuable company, declined 3.2 percent to 1,142.35 rupees. The two account for about 21 percent of the Sensex’s weighting.

Overseas funds sold a net 3.34 billion rupees ($68 million) of Indian stocks on Jan. 13, according to the nation’s stock market regulator.

The following were among the most active shares traded on the Bombay and National stock exchanges. Stock symbols are in parentheses after company names:

Bharti Airtel Ltd. (BHARTI IN) dropped 19.1 rupees, or 3.1 percent, to 603.65, its lowest since Nov. 20. India’s largest mobile-phone operator’s stock rating was cut to “neutral” from “overweight” at JPMorgan. Idea Cellular Ltd. (IDEA IN) fell 2.55 rupees, or 5.6 percent, to 42.90, its lowest since Nov. 20, after its stock rating was reduced to “underweight” from “overweight.”

Infotech Enterprises Ltd. (INFTC IN) dropped 17.85 rupees, or 18 percent, to 82.55, the most since 2002. The Indian software service company focused on computer-aided designing said profit in the three months ended Dec. 31 fell 32 percent to 144.70 million rupees. The company reported currency losses of 224.6 million rupees in the quarter ended December.

Maytas Infra Ltd. (MAY IN) dropped 6.45 rupees, or 5 percent, to 122.90, extending a five-day 23 percent decline. The real estate company controlled by the family of Ramalinga Raju, the former chairman of Satyam Computer Services Ltd. (SCS IN), is in talks with two companies to sell stakes in projects it can’t afford to complete, the Economic Times reported, citing an unidentified executive at one of the companies approached by Maytas.

Satyam Computer Services Ltd. (SCS IN) dropped 9.55 rupees, or 32 percent, to 20.30, its lowest since July 1998. India is unlikely to bail out Satyam as it will set a bad precedent, the Economic Times reported, citing a person in the Prime Minister’s office it didn’t identify.

Supreme Industries Ltd. (SI IN) declined 2.75 rupees, or 2.4 percent, to 110. The Indian maker of plastic products posted a second-quarter loss of 14.9 million rupees, compared with a profit of 130.7 million rupees a year earlier, the Mumbai-based company said.

Unitech Ltd. (UT IN) dropped 3.25 rupees, or 9.3 percent, to 31.70, its lowest since Dec. 5. India’s second biggest developer fell after its credit rating was cut to non-investment grade by Fitch Ratings on uncertainty over its ability to repay debt.

To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net

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Asian Stocks Slump to 5-Week Low on Machinery, U.S. Sales Slump

By Patrick Rial

Jan. 15 (Bloomberg) -- Asian stocks fell, dragging the regional benchmark index to a five-week low, after Japanese machinery orders and U.S. retail sales dropped at more than double the pace economists had estimated.

Advantest Corp., the world’s No. 1 maker of memory-chip testing equipment, lost 9.8 percent after machine orders sank by a record 16.2 percent. Samsung Electronics Co., the largest television maker globally, fell 6.1 percent after U.S. retail sales declined for a sixth month. Woori Financial Holdings Co. led South Korean banks lower as the won weakened and a government official said the nation’s growth would fall short of estimates. BHP Billiton Ltd. lost 6.6 percent after metals prices slumped.

The MSCI Asia Pacific Index declined 3.8 percent to 83.58 as of 7:20 p.m. in Tokyo, set for the lowest close since Dec. 8. All 10 industry groups on the gauge lost ground. The cost of protecting Asia-Pacific bonds from default rose, while the region’s currencies fell as investors fled equities.

“The market looks like it’s pointing down for now as investors are afraid of what could happen next,” said Hiroshi Chano, who helps manage the equivalent of $7.3 billion at Yasuda Asset Management Co. in Tokyo. “The market is really not very cheap when examined from an earnings standpoint.”

Japan’s Nikkei 225 Stock Average tumbled 4.9 percent to close at 8,023.31, the sharpest decline since Dec. 12. Banks and automakers dragged down South Korea’s Kospi index 6 percent, the biggest sell-off since Nov. 20. It led declines by major markets today. The Bombay Stock Exchange’s Sensitive Index, or Sensex, fell 3.5 percent to the lowest since Dec. 5.

Machinery Orders

Growth in the global economy will slow to 2.2 percent this year, a rate “equivalent to a global recession,” the International Monetary Fund said in November. Companies in the MSCI Asia benchmark reported an aggregate 32 percent drop in profit in the latest quarter, according to data compiled by Bloomberg. The gauge has given up more than a third of the gains it made since falling to a five-year low on Nov. 20.

U.S. stocks retreated the most in six weeks yesterday, with the Standard & Poor’s 500 Index losing 3.4 percent. Futures on the gauge fell 0.5 percent in trading today.

Advantest dropped 9.8 percent to 1,213 yen. Fanuc Ltd., the world’s No. 1 maker of industrial robots, lost 4.2 percent to 5,660 yen. Hitachi Construction Machinery Co., the largest maker of giant excavators, sank 9 percent to 1,006 yen.

Japan’s machine orders, an indicator of capital spending in the next three to six months, decreased 16.2 percent in November from the previous month, the Cabinet Office said today, the biggest decline since the current survey began in 1987. Economists had estimated an 8 percent slump.

Retail Sales

Samsung slid 6.1 percent to 459,500 won in Seoul, steepest drop since Oct. 24. Westfield Group, the world’s No. 1 shopping center owner by market value, slipped 2.5 percent to A$12.29 in Sydney.

U.S. retail sales dropped for a sixth month with a 2.7 percent slump in December, the longest stretch of declines since the tallies began in 1992, the Commerce Department said yesterday. That’s more than twice the drop economists had estimated.

“With demand dropping like an ebb tide, manufacturers have no choice but to cut investments,” said Hisakazu Amano, head of fund management at T&D Asset Management Co., which oversees about $39 billion. “U.S. retail sales will remain poor for quite some time; demand there will not recover easily.”

Konica Minolta Holdings Inc., a maker of printers and film for liquid-crystal displays, slumped 5.1 percent to 650 yen. The company’s film facilities aren’t running at full capacity as LCD makers reduce production during the slump, Ryohei Takahashi, an analyst at Merrill Lynch & Co. who lowered the stock to “neutral,” wrote in a report.

Deutsche Loss

Woori Financial, operator of South Korea’s second-largest bank, plunged 11 percent to 7,560 won. Mizuho Financial Group Inc., Japan’s third-biggest listed bank by assets, retreated 5.5 percent to 240 yen. Fubon Financial Holding Co., Taiwan’s second- largest listed financial services company by market value, declined 6.9 percent to NT$20.25.

Deutsche Bank AG, Germany’s biggest lender, yesterday reported a record loss in the fourth quarter, and the New York Times reported Citigroup Inc. may have trouble unloading some assets as it tries to streamline operations.

Mitsubishi UFJ Financial Group Inc. fell 1.5 percent to 516 yen. Japan’s biggest lender by value said after the close of trading it will record a 288 billion yen ($3.2 billion) charge for stock holdings that have dropped in value, which may force the bank to post its first loss since forming in 2005.

Bond Risk

South Korean financial shares were also hurt as the won weakened to the lowest in a month against the dollar, raising the cost of servicing foreign-currency debt. Vice Finance Minister Bae Kook Hwan said the country’s economic growth in 2009 is likely to fall short of central bank and IMF predictions.

Seven of Asia’s 10 most-active currencies, excluding the yen, declined versus the greenback, with the Malaysian ringgit and Taiwan dollar also reaching one-month lows.

The Markit iTraxx Australia index of credit-default swaps widened 15 basis points to 325 as of 3:09 p.m. in Sydney, Westpac Banking Corp. prices show, while the benchmark gauge for Japan rose 10.5 basis points to 305 at 1:05 p.m. in Tokyo, according to Credit Suisse Group AG. Nortel Networks Corp., the phone equipment maker that was once Canada’s largest company by market value, filed for bankruptcy yesterday, triggering about $1.5 billion of derivatives protecting against a default on the company’s bonds.

Hyundai, Kia

BHP, the world’s largest mining company, lost 6.6 percent to A$28.90 after agreeing to higher copper processing fees. Rio Tinto Group, the third largest, plunged 8.2 percent to A$37.30 after appointing steel executive Jim Leng to replace Chairman Paul Skinner and saying iron ore output declined 18 percent in the fourth quarter as steelmakers idled furnaces.

Australia’s Alumina Ltd., partner in the world’s biggest producer of the material used to make aluminum, lost 8.5 percent to A$1.29. Jiangxi Copper Co., China’s second-biggest smelter, fell 2.5 percent to HK$5.75.

A measure of six metals traded on the London Metal Exchange, declined 2.5 percent yesterday, as prices for nickel, copper and aluminum fell.

Hyundai Motor Co. slid 10 percent to 43,000 won, the steepest drop since Nov. 24, while Kia Motors Corp. lost 11 percent to 6,950 won. South Korea’s biggest carmakers had their debt ratings cut to junk levels by Fitch Ratings as the deepening global recession curbs auto sales.

Nine Dragons Paper (Holdings) Ltd., China’s biggest maker of containerboard paper for packaging, plunged 9.7 percent to HK$1.67 after saying it will post a “substantial reduction” in profit for the six months to Dec. 31 on higher raw-material costs and lower selling prices.

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net.

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German Stocks Fluctuate; Siemens, Adidas Gain as Postbank Falls

By Stefanie Haxel

Jan. 15 (Bloomberg) -- German stocks swung between gains and losses as a stronger dollar offset concern the European Central Bank’s interest-rate cut won’t be enough to revive the economy.

Siemens AG and Adidas AG, which get more than a fifth of sales in North America, rose at least 1 percent. Deutsche Postbank AG tumbled 16 percent as JPMorgan Chase & Co. cut its recommendation for Germany’s biggest consumer bank by clients, saying terms for the revised 4.9 billion-euro ($6.4 billion) deal with Deutsche Bank AG are “negative” for shareholders.

The benchmark DAX Index slipped 0.1 percent to 4,417.28 at 2:49 p.m. in Frankfurt. DAX futures expiring in March dropped 0.4 percent. The broader HDAX decreased 0.1 percent.

“Macro economic data comes in extremely weak and investors are dreading the impact on corporate earnings,” said Matthias Joerss, head of equity strategy at Sal. Oppenheim Jr. & Cie. in Frankfurt. “The market is very volatile as investors are playing single news stories.”

The euro declined against the dollar after the ECB cut its benchmark lending rate by 50 basis points to 2 percent, the lowest level in almost six years, to counter an economic slump.

Siemens, Europe’s biggest engineering company, advanced 3.9 percent to 43.97 euros. Adidas, the world’s second-largest sporting goods maker, gained 1.2 percent to 25.71 euros.

The DAX Index has tumbled 45 percent since the beginning of last year as credit losses and writedowns topped $1 trillion in the worst financial crisis since the Great Depression and the U.S., Japan and Europe fell into simultaneous recessions.

Economy Watch

Japanese machinery orders fell by a record 16.2 percent in November, twice as much as economists estimated, as businesses cut spending amid a deepening global recession. U.S. reports showed a bigger-than-estimated increase in initial jobless claims and a decline in manufacturing in New York.

Postbank lost 16 percent to 10 euros, extending yesterday’s 17 percent slump. JPMorgan cut its recommendation on the shares to “underweight” from “neutral.”

Deutsche Post will get about 8 percent of Deutsche Bank as partial payment for a Postbank stake. Deutsche Bank will acquire 22.9 percent of Postbank for about 1.1 billion euros in stock in a first step and also buy 2.7 billion euros of bonds that will be converted into a 27.4 percent Postbank stake in three years.

The previous agreement, struck last September, would have given Deutsche Bank a bigger initial stake and would have required Germany’s largest bank to buy additional shares sooner.

Deutsche Post climbed 2.6 percent to 9.74 euros.

Infineon, Daimler

Infineon Technologies AG, Europe’s second-largest maker of semiconductors, slid 4.5 percent to 85.5 cents. ASML Holding NV, the region’s largest maker of semiconductor equipment, said revenue will be between 180 million euros and 200 million euros this quarter, compared with a previous forecast of as much as 250 million euros.

Daimler AG slipped 2.5 percent to 24.22 euros as Citigroup Inc. cut its recommendation for the world’s largest truckmaker to “hold” from “buy,” citing “worse truck data.”

The following stocks also rose or fell in German markets. Symbols are in parentheses.

Continental AG (CON GY) plunged 19 percent to 19.95 euros. Europe’s second-largest car-parts maker may raise 1 billion euros in a stock sale as it considers options for covering a possible impairment charge, Continental spokeswoman Antje Lewe said in a phone interview.

GEA Group AG (G1A GY) fell for a seventh day, losing 1.2 percent to 9.88 euros. Citigroup Inc. and DZ Bank AG were among brokerages that cut their share-price estimates after the engineer whose machines milk a third of the world’s daily cows said yesterday orders in 2008 dropped and sales growth may have missed a target.

Lanxess AG (LXS GY) plunged 8.9 percent to 12.64 euros. Germany’s largest publicly traded specialty chemicals maker is cutting production of synthetic rubber products in an effort to reduce costs and respond to a drop in demand.

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

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European Stocks Fluctuate; Infineon Declines, Nestle Advances

By Sarah Jones

Jan. 15 (Bloomberg) -- European stocks fluctuated and U.S. index futures slid amid speculation European Central Bank interest-rate reductions will be insufficient to stem the deterioration in profit growth.

Infineon Technologies AG dropped 6.2 percent after rival ASML Holding NV cut its first-quarter sales forecast amid an industry slump. Apple Inc. tumbled 7.6 percent in Germany after the maker of the iPod said Chief Executive Officer Steve Jobs will take a medical leave of absence until June. Europe’s Dow Jones Stoxx 600 Index drifted between gains and losses as Nestle SA led a rally in food and beverage companies.

“This market has the ability to leap all over the place. It’s going to be a very volatile time,” said Justin Urquhart Stewart, who manages about $4 billion as director of 7 Investment Management in London. The earnings season “is going to be awful, utterly dreadful,” he said in a Bloomberg Television interview.

Three stocks fell for every two that rose in the Stoxx 600, which slipped 0.1 percent to 192.76 at 1:37 p.m. in London.

Futures on the Standard & Poor’s 500 Index slid 0.8 percent as a report that showed the deteriorating economy pushed employers to cut more jobs overshadowed earnings from JPMorgan Chase & Co. that beat analysts’ estimates.

The MSCI World fell 0.7 percent. The gauge of 23 developed nations retreated 9.9 percent over the past seven days as companies from Deutsche Bank AG to Intel Corp. fuelled concern the global recession and financial crisis, which has seen banks and insurers rack up $1 trillion in credit losses and writedowns since the start of last year, are snuffing out profit growth.

Asia, Emerging Markets

The MSCI Asia Pacific Index dropped 3.8 percent to a five- week low, while the MSCI Emerging Markets Index slipped for a seventh day, the longest losing streak in more than two years.

“We will see further downside,” said Philipp Baertschi, a senior equity strategist at Bank Sarasin in Zurich. “The key reason being the earnings season has just started. We will see further downgrades on the earnings side.”

ECB policy makers lowered the benchmark lending rate by half a percentage point to 2 percent, matching the lowest rate since the ECB took charge of monetary policy in 1999.

The reduction, the fourth in as many months, was in line with the median forecast of 60 economists in a Bloomberg News survey. The rate was last at this level between 2003 and 2005. The Frankfurt-based central bank, which took charge of monetary policy in 1999, will reduce the benchmark to 1.5 percent in March, another survey of economists shows.

Infineon, Apple

Infineon Technologies, Europe’s second-largest chipmaker, declined 6.2 percent to 84 cents after ASML cut its first- quarter sales forecast after machine bookings fell amid an industry slump.

ASML, Europe’s largest maker of semiconductor equipment, said revenue will be between 180 million euros ($236.8 million) and 200 million euros this quarter. That’s down from a forecast on Dec. 18 when the company predicted sales would be as much as 250 million euros. ASML fell as much as 4.3 percent before rebounding to add 2.1 percent to 12.16 euros.

Apple lost 7.6 percent to $78.80 in Germany. Chief Operating Officer Tim Cook, who filled in during Jobs’s 2004 medical leave, has taken over Apple’s day-to-day operations, the company said in a statement. Jobs said he will remain involved in major strategic decisions.

Surgery that Jobs may be having to remove his pancreas could be the result of painful side effects from a cancer procedure, or the return of tumors he said were removed five years ago, doctors say.

17 Percent

Deutsche Postbank lost 17 percent to 9.84 euros, extending yesterday’s 17 percent slump. JPMorgan cut its recommendation on the shares to “underweight” from “neutral.”

Deutsche Post will get about 8 percent of Deutsche Bank AG as partial payment for a Postbank stake. Deutsche Bank will acquire 22.9 percent of Postbank for about 1.1 billion euros in stock in a first step and also buy 2.7 billion euros of bonds that will be converted into a 27.4 percent Postbank stake in three years.

The previous agreement, struck last September, would have given Deutsche Bank a bigger initial stake and would have required Germany’s largest bank to buy additional shares sooner.

Nestle Rally

Nestle paced advancing shares in Europe, climbing 2.4 percent to 40.26 francs. Goldman Sachs Group Inc. upgraded the world’s biggest food company to “buy” from “neutral” and added the shares to its “conviction buy” list, saying it was unlikely that the company would raise its stake in L’Oreal SA.

Separately, Royal Bank of Scotland Group Plc upgraded Nestle, Unilever Plc and Heineken NV to “buy” from “hold.”

Advantest Corp., the world’s largest maker of memory-chip testing equipment, dropped 9.8 percent to 1,213 yen. Fanuc Ltd., the world’s No. 1 maker of industrial robots, lost 4.2 percent to 5,660 yen. Hitachi Construction Machinery Co., the world’s largest maker of giant excavators, sank 9 percent to 1,006 yen.

Japan’s machine orders, an indicator of capital spending in the next three to six months, decreased 16.2 percent in November from the previous month, the Cabinet Office said today, the biggest decline since the current survey began in 1987. Economists had estimated an 8 percent slump.

Less Than Zero

The global economic recession may curb earnings growth for European companies through 2010, wiping out all of the profit gains from the second half of the decade, according to estimates from Goldman Sachs Group Inc.

The earnings rebound of 2010 will be “lackluster” following slumps of 19 percent last year and 16 percent in 2009, Goldman Sachs strategists led by Peter Oppenheimer wrote this week. Their estimate that profits will climb 8 percent next year would leave earnings growth at less than zero for European companies since the end of 2005, data compiled by Goldman Sachs and Bloomberg show.

In the U.S., earnings for all companies in the S&P 500 probably fell 20 percent in the fourth quarter of 2008, a sixth straight quarterly drop, according to analyst estimates compiled by Bloomberg. Profits are forecast to decrease in the first two quarters of 2009 before rebounding in the second half.

JPMorgan gained 4.8 percent to $27.15. The second-largest U.S. bank by assets said profit fell 76 percent to $702 million, or 7 cents a share, beating analysts’ estimates, as the company navigates the credit crisis with more success than most of its peers. Fourteen analysts surveyed by Bloomberg had an average earnings estimate of 1 cent a share.

The S&P 500 has wiped out more than half its gain since rallying from 11-year low in November, a sign the benchmark for U.S. equities may drop more.

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

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U.K. Shares Decline for Seventh Day; DSG, SABMiller, Shire Fall

By Adam Haigh

Jan. 15 (Bloomberg) -- U.K. stocks dropped for a seventh day, the FTSE 100 Index’s longest losing streak in more than four years, as concern mounted the slowdown in the global economy will continue to weigh on earnings.

DSG International Plc slumped 6.3 percent as Britain’s biggest consumer-electronics retailer said same-store sales retreated. SABMiller Plc fell after reporting an unexpected decline in third-quarter beer shipments as the global economic slump dented demand from Latin America to eastern Europe. Shire Plc lost 3.6 percent as Merrill Lynch & Co. advised clients to sell the shares as an upcoming launch of a generic version of its Adderall drug may weaken profits.

The benchmark FTSE 100 Index fell 31.6 points, or 0.8 percent, to 4,149.04 at 1:04 p.m. in London. The measure extended its 2009 retreat to 6.4 percent as investors shrugged off the European Central Bank’s decision to cut its benchmark interest rate by half a percentage point to 2 percent, joining efforts by global authorities from Washington to London to stem the economic crisis.

“There’s reignited concern about the length and depth of this global recession,” said Richard Hunter, London-based head of U.K. equities at Hargreaves Lansdown. “Despite the best efforts of governments and central banks to get lending going between institutions, it will take a long time to see this”

The FTSE All-Share Index dropped 0.9 percent and Ireland’s ISEQ Index lost 0.4 percent.

DSG tumbled 6.3 percent to 18.75 pence after saying same- store sales fell 10 percent in the 12 weeks ended Jan. 10 as customers waited for deeper discounts after the Christmas holiday period.

SABMiller Retreats

DSG expects “high single-digit negative” like-for-like sales this year as the U.K. recession bites, Chief Executive Officer John Browett said in a conference call.

SABMiller, the world’s second-largest brewer, declined 1.6 percent to 1,043 pence. The brewer of Peroni Nastro Azzuro saw a reduction in the quantity of lager sold, which missed analysts estimates.

Home Retail Group Plc slid 6.3 percent to 193. The owner of Argos and Homebase brands said same store sales at Argos fell by 7.5 percent in the 18 weeks to Jan. 3. Same store sales at its Homebase chain of stores declined by 10.2 percent in the period.

Shire retreated 3.6 percent to 993 pence. Merrill Lynch lowered its recommendation on the stock to “underperform” from “buy.”

The following stocks also rose or fell in the U.K. market. Stock symbols are in parentheses.

Associated British Foods Plc (ABF LN) added 9.5 pence, or 1.4 percent, to 684.5, snapping four days of losses. The owner of British sugar said revenue for the 16 weeks to Jan. 3 was 21 percent above the year-earlier period. Sales at its Primark discount clothes stores were up 18 percent.

William Hill Plc (WMH LN) added 21.25 pence, or 10 percent, to 228.5 after the U.K. bookmaker said it anticipates earnings before interest, tax and exceptional items to be about 275 million pounds ($401 million) for 2008, as the company “continued to show resilient trading.”

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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Bovespa Rebounds on Slowing Inflation, Prospect of Bank Merger

By Alexander Ragir

Jan. 15 (Bloomberg) -- Brazil’s Bovespa index rebounded from its lowest level this year after wholesale inflation fell more than economists estimated and banks rallied on a report Banco Bradesco SA is in talks to buy a smaller rival.

Rossi Residencial SA rose the most on the Bovespa index as slowing inflation may spur the central bank to make deeper interest-rate cuts to boost the economy. Lojas Renner SA led a rally in retailers. Bradesco and Banco Itau Holding Financeira SA surged more than 2 percent on speculation of more acquisitions within the industry after Brazilian news agency Broadcast said Bradesco is in talks to buy Banco Industrial e Comercial SA.

The Bovespa gained 1.1 percent to 38,382.57 at 9:06 a.m. New York time. Chile’s Ipsa rose 0.2 percent. The MSCI Emerging Markets index dropped 2.9 percent.

Rossi, Brazil’s third-biggest homebuilder, gained 4.9 percent to 4.30 reais.

Lojas Renner rose 1.1 percent to 15.16 reais.

Consumer, construction and wholesale prices, as measured by the IGP-10 price index, fell 0.85 percent the past month through Jan. 10, the Rio de Janeiro-based Getulio Vargas Foundation said today. The media forecast of 25 economists surveyed by Bloomberg News was for a 0.40 percent decline.

Bradesco gained 2.2 percent to 21.48 reais. Bic Banco jumped 15 percent to 4.58 reais. Bradesco and BicBanco have been in acquisition talks for a few months and the deal is pending agreement on the price, Brazilian news agency Broadcast reported, citing a person close to Bradesco that it didn’t name.

Itau, which is buying Uniao de Bancos Brasileiros SA to become Brazil’s biggest bank, gained 2.6 percent to 25 reais. Unibanco advanced 3.1 percent to 14 reais. Bradesco said in an e- mailed statement that it will not comment on market speculation.

The BM&FBovespa MidLarge Cap index rose 1.2 percent, while the BM&FBovespa Small Cap index advanced 0.9 percent.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net

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U.S. Stock Futures Fluctuate; JPMorgan Gains, Apple Retreats

By Eric Martin

Jan. 15 (Bloomberg) -- U.S. stock futures swung between gains and losses as better-than-estimated earnings at JPMorgan Chase & Co. offset reports showing declining prices and a bigger-than-forecast increase in initial jobless claims.

JPMorgan rallied 3 percent after reporting fourth-quarter net income of $702 million. General Motors Corp. and Intel Corp. led declines in Dow Jones Industrial Average stocks as producer prices capped the first annual decrease in seven years and first-time claims for unemployment benefits jumped by 54,000. Apple Inc. tumbled 5.7 percent after saying Chief Executive Officer Steve Jobs will take a medical leave of absence.

Standard & Poor’s 500 Index futures expiring in March retreated 0.2 percent to 838.3 as of 8:59 a.m. in New York. Dow Jones Industrial Average futures added less than 0.1 percent to 8,160 and Nasdaq-100 Index futures decreased 0.5 percent to 1,159.5.

U.S. stocks yesterday slid the most in six weeks after retail sales decreased at more than twice the rate forecast by economists. The S&P 500 has dropped 6.7 percent in 2009 as companies from Alcoa Inc. to Intel Corp. spurred concern earnings will deteriorate amid the recession, while the unemployment rate in the U.S. climbed to the highest level in almost 16 years.

Apple lost $4.88 to $80.45. Chief Operating Officer Tim Cook, who filled in during Jobs’s 2004 medical leave, has taken over Apple’s day-to-day operations, the company said. Jobs said he will remain involved in major strategic decisions.

Bank of America

Bank of America Corp. dropped 5.7 percent to $9.62 on concern the biggest U.S. bank by assets may require more aid from the government following its acquisition of Merrill Lynch & Co.. Details of government aid are likely to be disclosed on Jan. 20, the people said. That’s when Bank of America may post its first quarterly loss in 17 years as it digests the purchases of Merrill Lynch and Countrywide Financial Corp. The combined company has already received $25 billion from the U.S.

U.S. foreclosure filings jumped 81 percent last year to more than 2.3 million as falling house prices, tighter mortgage lending and the longest recession in a quarter century battered property owners, RealtyTrac Inc. said.

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

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Major Market Mover: ECB Rate Decision

Daily Forex Fundamentals | Written by Crown Forex | Jan 15 09 08:15 GMT |

The world's largest economy lived through the worst holiday season ever with their Retail Sales sinking heavily as the economy is immersing in a deeper recession, resulting from the continuous job terminations which took place in the preceding year reaching to 2.59 million workers which reduced the total household incomes. Turbulence in the United States is not over yet, the materialization of the Credit Crisis on various sectors of the economy which are falling one after the other will continue to augment fears, threatening the world stability. Fears of fourth quarter earnings retrieved after retail sales reading fell to more than markets anticipated, the US indices closed in the red zone to widen the losses since the beginning of the year; the Dow Jones industrial average fell 2.94% or 248.42 points reaching 8200.14 levels reaching to a total loss of 6.57% since the beginning of the year, S&P 500 fell 3.35% or 29.17 points reaching 842.62 halting the index with 6.71% losses and NASDAQ fell 3.67% or 56.82 points reaching 1489.64 levels. Attention of markets is headed today toward the European Central Bank rate decision, because markets still question a rate cut according to the speeches released by banks Chairman Trichet in various occasions, that they need to see the effect of the past three rate cuts before deciding more rates cuts. But according to the data released in the past month a rate cut is needed, the Zone faced severe contraction in the Production levels as we saw yesterday a fall in industrial production in November, this is due to the contracted world global demand on the European goods which resulted in stalling the manufacturing sector for more than six consecutive months in a row. A total of 175 basis points the ECB reduced since the Credit Crisis intensified; the first rate cut took place in October which was collaboration with the joint committee created between six central banks. The second rate cut took place in November which was justified by the increasing downside risks to growth pushing the zone in the first recession since the Euro was established. The third rate cut took place in December taking interest rates to the current levels at 2.50% also in attempt to prop up growth just to snatch the economy out of the current recession, which might deepen because economies across the globe continue to tumble. So today markets project a 50 basis points reduction in the zone's benchmark taking it down to 2.0% the lowest since the zone was launched. The path is clearly open for Trichet and his committee to slash rates after the Zone's consumer prices plunged heavily to 2.1% in November with expectations that prices might continue its free fall in December to reach 1.6% falling 0.1% on the month. The falling crude prices from the unprecedented levels which were recorded at $147.28 per barrel in July to close at $41.61 per barrel in December along with the falling economic activity had contributed easing down the elevated consumer prices. But crude prices fall did not stop where yesterday's oil prices reached a low of $35.52 per barrel opening today at $37.37 per barrel continue falling to the current levels at $36.32 per barrel. Economies across the globe are fearing deflation as the crude prices and the economic demand weaken; the United States and the United Kingdom clearly said that they will be using methods just to fight any expectations of deflation, where both Central banks' Chairmen are adopting the method of reducing their rates down to Zero along with using some other unorthodox methods. But till now Trichet resist admitting that they will be heading to Zero interest rates saying in his last press conference after reducing rates in December that the zone is in a state of disinflation and the Central Bank is not worried about deflation because the fall in consumer price was due to the dramatic fall in crude prices. Moving across the oceans into the North American continent we have various data from the inflation and the job sectors; we will start with the Producer Prices, expectations clearly show that prices fell 2.0% on the month and 1.1% on the year, but the core producer prices inclined 0.1% and the yearly core prices rose to 4.1% from the previous 4.2%. Also our calendar contains the Empire manufacturing which is a gauge of assessing business conditions, expectations show that conditions improved slightly in January to -25.0 from the previous -25.76; also we've got the Philadelphia feds with projections that it would be falling to -35.0 in January from the previous -32.9 from the previous -36.1. Dear readers lets just wait to see what today's fundamentals reveal to us, what would Trichet comment on the current situations the zone is living through. Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

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All Eyes On ECB And Trichet Press Conference Today

Daily Forex Fundamentals | Written by Saxo Bank | Jan 15 09 08:01 GMT |

Forex Market Update: Risk Aversion Continues To Boost USD And JPY As US Consumer Went On Strike In December. All Eyes On ECB And Trichet Press Conference Today Australia's employment report far worse than it appears on the surface. EURGBP - a follow up move lower in the cards? HEADLINES Japan Nov. Machine Orders out at -16.2% MoM and -27.7% YoY vs. -8.0% and -20.8% expected, respectively Japan Dec. Domestic CGPI out at -1.2% MoM vs. -1.5% expected Australia Dec. Unemployment rate rose to 4.5% as expected vs. 4.4% in Nov. Australia Dec. Employment change out at -1.2k vs. -20.0k expected New Zealand Dec. QV House Prices fell -7.4% YoY vs. -6.8% in Nov. THEMES TO WATCH - UPCOMING SESSION Norway Dec. Trade Balance (0900) EuroZone Dec. CPI (1000) EuroZone ECB to announce interest rates (1245) EuroZone ECB Press Conference (1330) US Dec. PPI (1330) US Weekly Initial Jobless Claims (1330) US Jan. Empire Manufacturing (1330) US Jan. Philadelphia Fed (1500) Switzerland SNB's Jordan to Speak (1600) US Fed's Lockhart, Evans to Speak (1840-55) US Fed's Yellen to Speak (2045) New Zealand Dec. Non-resident Bond Holdings (0200) Market Comments The US retail sales numbers for December were far worse than the consensus expectations, though perhaps not terribly surprising considering the ad hoc reports of sluggish activity and aggressive price slashing that were rolling in last month. Less autos, the retail numbers showed a seasonally adjusted -3.1% drop versus November data, which itself was revised down to -2.5% from -1.6%. The market action saw risk aversion in full bloom yesterday as this awful report conspired with the news of the Citigroup breakup and new worries at fresh needs for capital injection at Bank of America to punish equities through another layer of supports. The action overnight in Asia brought no relief. The risk aversion and lower commodity prices continue to support the greenback. Adding to the Euro's woes yesterday was an S&P cut to Greece's sovereign credit rating to A- from A. This move followed a spate of recent warnings from the ratings agency on Spain, Portugal and Ireland. All of this is a background drumbeat for one of the major themes we discussed before the turn of the year - that the EuroZone framework of individual nations, each with its own fiscal authority, within a single currency zone would be sorely tested in the New Year. This is now playing out in full force. Italy is likely to be the next major European country to come under review. As of yesterday, Greek 10-year bonds yielded almost 250 bps more than their German counterparts. The only thing in this world propping the EUR up at present is its deep liquidity. The fundamentals for the EuroZone are increasingly dire and it feels like something has to give soon. EURGBP may be one way to play for a weaker EUR besides EURUSD. See more on this in the charts section below. The ECB rate announcement and Trichet's press conference are on tap today. The baseline expectations are looking for a 50-bp cut to the 2.50% ECB rate to bring the rate to 2.00%. A small minority is looking for a hike beyond 50 basis points here, but considering Trichet amazing feats of gradualism, we think this is extremely unlikely. Another small minority is looking for only a 25 bp cut and until recently, a few were talking up the idea of no cut with the next ECB meeting only 3 weeks away. We strongly go with the consensus 50 bp cut and will look for Trichet's guidance at the press conference. The most recent round of rhetoric suggests that the ECB doesn't like the policy trajectory that the US Fed and the BOE have taken and that they don't want to cut rates 'too low'. Let's see if that rhetoric is renewed in any way today. There is absolutely nothing on the inflation front for Trichet and company to get all vigilant about at the present time. The German CPI data out today is looking for a 1.1% year-on-year inflation rate, which is edging down close the lowest levels for the last 10 years. It appears that deflation is, in fact, the greater threat in the near term. US headline CPI out this Friday is likely to turn negative for the first time in generations. The Australian employment report was actually far worse than it appeared at first blush. While the change in employment was negligible, the internals of the numbers showed a very large drop in full time employment (to the tune of almost -44k, which in population terms would be like US nonfarm dropping over 600k) vs. a surge in temporary employment. So this number is not to be taken as a sign of resilience in the Australian economy. The continued pressure on gold and other commodities besides the equity weakness are further reason to worry about the Aussie's fundamentals here. Chart: EURGBP EURGBP completed a well organized 5-wave sequence late last year to the spectacular 0.9800+ high and is now in a correction sequence. The rally we've seen this week may be a weak B-wave to be followed by a renewed C-wave to the downside. A trigger for that scenario could be a fall through the indicated rising trendline, currently coming in around 0.8925. The risk for bears, of course, is that the B-wave extends further first. The short term will be determined, of course, by today's ECB rate announcement and subsequent press conference. The pound is beginning to look resurgent against many of its G7 counterparts. Analysis Disclosure & Disclaimer SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by SaxBank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis dnot occur as anticipated. SaxBank utilizes financial information providers and information from such providers may form the basis for an analysis. SaxBank accepts nresponsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in SaxBanks analysis derive from objective fundamental macreconomical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations tbuy or sell a specific financial instrument, such recommendation should be seen as SaxBanks opinion that the specific instrument will respectively outperform the relevant market or underperform compared tthe market. SaxBanks recommendations should statistically correspond tan even distribution between buy and sell recommendations. The recommendations may expire promptly due tmarket volatility and in general, SaxBank does not anticipate its recommendations tbe valid more than one month. An analysis will be updated if and only if a market development or other issues relevant tthe analysis render a new analysis on the same topic relevant. SaxBanks analysis does not cover any specific financial product over time but only products which SaxBanks strategy team finds it important tcover at any given point in time. In order tprevent conflicts of interest, SaxBank has established appropriate business procedures, incl. procedures applicable tresearch and analysis tensure objective research reports. SaxBanks research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. SaxBank is under supervision by the Danish Financial Supervisory Authority. SaxBank does not engage in corporate finance activities and accordingly, SaxBanks employees, incl. the persons responsible for an analysis, dnot receive remuneration associated with investment banking transactions.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | Jan 15 09 08:11 GMT |

CHF The pre-planned buying positions from key supports were realized with attainment of basic assumed targets. OsMA trend indicator, having marked activity fall of both parties gives reasons for assumptions about further range rate movement without definiteness in the choice of planning priorities for today. Hence we assume the possibility of upper boundary of Ichimoku cloud test at 1.1100/20, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term buying positions on condition of formation of topping signals the targets will be 1.1170/90, 1.1230/50, 1.1300/20 and/or further breakout variant up to 1.1360/80, 1.1440/60, 1.1580/1.1600. An alternative for sells will be below 1.1040 with targets 1.0980/1.1000, 1.0920/40, 1.0860/80. GBP The pre-planned buying positions from key supports were realized with attainment of minimal assumed target. OsMA trend indicator, having marked advantage of bullish party development nevertheless generally preserves signs of possible range rate movement without definiteness in the choice of planning priorities for today. Hence and considering assumptions about bullish party development incompleteness we assume the possibility of another resistance range test at 1.4700/40, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.4620/40, 1.4560/80, 1.4460/1.4500 and/or further breakout variant up to 1.4380/1.4400, 1.4300/40. An alternative for buyers will be above 1.4840 with targets 1.4880/1.4900, 1.4960/80, 1.5020/40. JPY The pre-planned buying positions from key supports were realized but with damage to several points in attainment of minimal assumed target. OsMA trend indicator, having marked close activity parity of both parties gives reasons for assumptions about range rate movement without definiteness in the choice of planning priorities for today. Hence we assume the possibility of another resistance range test at 89.60/80, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 89.00/20, 88.40/60 and/or further breakout variant up to 87.80/88.00, 87.20/40, 86.80/87.00. An alternative for buyers will be above 90.60 with targets 91.20/40, 92.00/20, 92.60/80. EUR The pre-planned breakout variant for sells was realized with attainment of assumed targets. OsMA trend indicator, having marked general preservation of buying activity advantage in short-term outlook has signs of bearish development incompleteness. Hence at the moment considering bullish sign of indicator chart we assume the possibility of another resistance range test at 1.3220/40, where it is recommended to evaluate the activity development of both parties according to the charts of shorter time interval. For short-term sells on condition of formation of topping signals the targets will be 1.3160/80, 1.3100/20, 1.3040/60 and/or further breakout variant up to 1.2980/1.3000, 1.2920/40, 1.2820/40. An alternative for buyers will be above 1.3340 with targets 1.3380/1.3400, 1.3450/70, 1.3560/80. FOREX Ltd www.forexltd.co.uk

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Foreclosures in U.S. Rose 81%, Topping 2.3 Million Last Year

By Dan Levy

Jan. 15 (Bloomberg) -- U.S. foreclosure filings jumped 81 percent last year as falling house prices, tighter mortgage lending and the longest recession in a quarter century battered property owners, RealtyTrac Inc. said.

More than 2.3 million properties got a default or auction notice, or were seized by lenders, the Irvine, California-based seller of default data said today. That’s the most RealtyTrac has documented in four years of recordkeeping. Filings rose 41 percent in December from a year earlier to 303,410.

The nation lost more than 2.6 million jobs last year, the most since 1945, and U.S. stocks had their worst performance since the Great Depression. President-elect Barack Obama has said the country needs to prevent foreclosures to revive the housing market and economy.

“If we don’t adopt a comprehensive national policy, we’ll have 5 million to 8 million new foreclosures in the next three years,” Kenneth Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at the University of California, Berkeley, said in an interview. “The single most important thing is making credit available for the average person.”

Obama may use part of the remaining $350 billion in funds from the Troubled Asset Relief Program to help reduce mortgage payments for people facing foreclosure, Lawrence Summers, his top economic adviser, said this week in a letter to congressional leaders.

Barney Frank, a Massachusetts Democrat and chairman of the House Financial Services Committee, said up to $100 billion may be allocated to curb homeowner defaults.

Relief Efforts Fail

Foreclosure prevention programs offered by U.S. banks and state laws that temporarily delayed property seizures “have not had any real success in slowing down this foreclosure tsunami,” James Saccacio, RealtyTrac’s chief executive officer, said in a statement. One in 54 housing units, or 1.8 percent of homes, received at least one filing in 2008.

About 55 percent of loans modified in the first quarter of 2008 were 30 days or more delinquent six months later, the Office of the Comptroller of the Currency and the Office of Thrift Supervision said in a Dec. 22 report.

Proposed changes to bankruptcy laws that would allow judges to reduce the principal borrowers owe on their mortgages also may fail to stem foreclosures, according to Glenn Boyd, head of U.S. asset-backed securities strategy at Barclays Capital in New York.

Some borrowers will re-default while others whose income is too high to qualify for the plan will walk away from their obligations if neighbors get bailed out, he said.

Prices Plummet

Home prices in 20 major U.S. cities fell at the fastest rate on record in October and have dropped every month since January 2007, according to the S&P/Case-Shiller index. The gauge declined 18 percent after falling 17.4 percent in September.

“The biggest driver of the housing market has been the drop in home prices, but now it’s the economic risk of the job market collapsing and consumer sentiment,” said Sam Khater, a senior economist at the Santa Ana, California-based mortgage data firm First American CoreLogic.

December foreclosure filings rose 17 percent from November, RealtyTrac said. The total for the year reached 3.2 million, which includes multiple filings against some of the 2.3 million properties affected.

Nevada, Florida, Arizona

Nevada had the highest foreclosure rate in 2008, with 7.3 percent of housing units in some stage of default. A total of 77,693 properties received a filing, more than double the number in 2007 and a six-fold increase from 2006, according to RealtyTrac.

Florida had the second-highest rate with 4.5 percent of housing units in default. The state had 385,309 properties with filings against them, a 133 percent jump from a year earlier and up 412 percent from 2006.

Arizona had the third-highest rate at 4.49 percent. Properties with filings surged to 116,911, triple the number in 2007 and up 655 percent from 2006, said RealtyTrac, which collects data from more than 2,200 counties that are home to more than 90 percent of the U.S. population.

California, Colorado, Michigan, Ohio, Georgia, Illinois and New Jersey were also among the states with the 10 highest rates. New York ranked 35th with 50,032 properties receiving default notices.

California had the most properties with filings: 523,624, representing a 110 percent increase from a year earlier and a six-fold jump from 2006. Florida was second and Arizona third, followed by Ohio, Michigan, Illinois, Texas, Georgia, Nevada and New Jersey.

California also had the most cities among the top 10 metro areas with the highest foreclosure rates, led by Stockton, where 9.5 percent of housing units were in default, according to RealtyTrac. Riverside-San Bernardino ranked third, Bakersfield was fourth and Sacramento ninth.

Crisis May Deepen

Las Vegas had the second highest rate with 8.9 percent of housing units receiving a filing and Phoenix ranked fifth with 6 percent. Fort Lauderdale, Orlando and Miami, all in Florida, ranked sixth through eighth.

The foreclosure crisis will probably deepen this year as lenders put thousands of bank-owned properties on the market, said real estate broker Mike Novak-Smith in Moreno Valley, California, near Riverside. He said he expects one U.S. lender that he declined to identify to put 3,000 foreclosed homes on the market next month in Southern California.

“I think it will get substantially worse,” Novak-Smith, of the RE/MAX Results brokerage, said in an interview. “You’ve got people losing jobs right and left and the general business climate is bad. We’ve got an economy built on easy credit, and now it’s got to revert.”

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net

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Foreign Direct Investment in China Falls 5.7 Percent

By Li Yanping

Jan. 15 (Bloomberg) -- Foreign direct investment in China declined for a third month, adding to the toll that recessions in the U.S. and Europe are taking on the world’s third-biggest economy.

Investment fell 5.7 percent to $5.98 billion in December from a year earlier, the commerce ministry said at a briefing in Beijing today. November’s decline was 36.5 percent.

China’s deepening economic slowdown and a global squeeze on company credit and profits may continue to discourage investment. The CSI 300 stock index has tumbled 66 percent in the past year, house prices in the nation’s 70 major cities fell for the first time on record in December, and exports are waning because of recessions in the U.S. and Europe.

“Multinationals will become even more cautious in expanding,” said Ma Yu, a senior researcher at the Chinese Academy of International Trade and Economic Cooperation in Beijing. “A lot of the foreign investment that rushed to China over the past few years to gain from a stock and property boom is leaving.”

The yuan fell to 6.8369 against the dollar as of 12:50 p.m. in Shanghai after closing at 6.8352 yesterday.

A halt in the currency’s gains against the dollar since mid-July is also discouraging investors from putting money into China.

Outbound Investment

For 2008, investment rose 23.6 percent to a record $92.4 billion, commerce ministry spokesman Yao Jian said. Outbound investment jumped 63.6 percent to $40.7 billion, with mergers and acquisitions accounting for half of that. Those figures exclude financial-sector investment.

The number of new companies set up by U.S. investors in China fell 32 percent in the first 11 months of last year, according to government data. For European investors, the decline was 23 percent.

General Motors Corp., the largest overseas automaker in China, said sales in the nation grew last year at the weakest pace in at least six years on waning demand and a lack of new models.

China’s economy overtook Germany’s in 2007 to become the world’s third largest, according to revised figures released yesterday by China’s statistics bureau. Now, growth is sliding.

The economy expanded 9 percent in the three months through September last year. The fourth-quarter figure, to be announced next week, may be as low as 5.4 percent, according to Royal Bank of Scotland Plc. Exports fell in December by the most in almost a decade.

Economic Stimulus Plan

The government switched last year from trying to tame inflows of cash to cool inflation to announcing plans to pump 4 trillion yuan ($585 billion) into the economy to prop up growth amid the global recession.

China’s retail-sales growth in December may have matched the 21.9 percent pace of the first 11 months, the commerce ministry’s Yao said, adding that expanded subsidies for rural purchases of home appliances have had “very good results.”

The 2008 inflation rate may be about 6 percent, the official said. That compares with 6.3 percent for the first 11 months of last year, suggesting inflation slowed for an eighth month.

The median estimate in a Bloomberg News survey of 20 economists is for a 1.6 percent increase in consumer prices in December.

Talking about the outlook for exports in 2009, Yao said increasing trade frictions may pose a challenge, along with faltering demand.

The U.S. last month complained to the World Trade Organization that China was using prohibited subsidies to boost exports from apparel to high-tech electronics.

China’s shipments fell the most since 1999 in December as the deepening global recession cut demand for the nation’s toys, clothes and electronics. Falling commodity prices played a role by reducing the value of some exports, Yao said.

To contact the reporters on this story: Li Yanping in Beijing at yli16@bloomberg.net

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