Key's New Zealand Election Win Fulfills Child's Dream

By Tracy Withers

Nov. 10 (Bloomberg) -- John Key fulfilled a childhood dream by becoming New Zealand's prime minister two days ago. With the economy in recession, the former Merrill Lynch & Co. trader must act quickly to ensure it doesn't turn into a nightmare.

``We have to re-instill confidence in our economy,'' Key, 47, told TV3 News yesterday after leading the National Party to the country's biggest election victory since 1996. ``We have to get New Zealand going.''

Key plans to cut income taxes and redirect government spending to roads and a high-speed Internet network to help create jobs after the global financial crisis helped push the unemployment rate to a five-year high. Any increased spending will be made harder by projections the national budget will slip into deficit by June, snapping eight years of surpluses under Helen Clark, the Labour Party leader he ousted.

``The government has a big balance sheet, and we shouldn't be afraid to use it,'' said Cameron Bagrie, chief economist at ANZ National Bank Ltd. in Wellington. ``He has been given a mandate to act quickly in response to what's happening in the world.''

New Zealand stocks rose and the currency gained after the result amid relief that the new government has a clear majority and can assume power quickly. The currency gained 1.4 percent to 59.80 U.S. cents at 2:25 p.m. in Wellington. The Top 50 stock index increased 1.9 percent.

Big Mandate

``It's extremely comforting that we've had a resounding result,'' said Brendan O'Donovan, chief economist at Westpac Banking Corp. in Wellington. ``The last thing we need at this time is a lame-duck government.''

Key comes to power in a year when New Zealand business confidence plunged the most in two decades, housing prices slumped, the nation's currency lost a quarter of its value and the benchmark stock index tumbled 33 percent. The $130 billion economy contracted in the first two quarters, the deepest recession in a decade, prompting the central bank to cut its benchmark interest rate 1.75 percentage points since July.

``We don't know whether there's going to be another few quarters of recession and then the economy picks up, or whether we could be facing the whole of 2009 with the economy still contracting,'' Bill English, who will be the new finance minister, said on Radio New Zealand.

Apec Meeting

The National Party won 59 seats and 45.5 percent of the vote in the Nov. 8 election, the biggest percentage for a single party in a dozen years, according to the Chief Electoral Office Web site. With support from allies ACT New Zealand and United Future, the governing bloc will control 65 seats in the 122- member parliament.

Key, who campaigned under the slogan ``Choosing a Brighter Future,'' is the 51st leader of New Zealand, a nation of 4.2 million people. The father of two is bidding to be sworn in as prime minister within an unprecedented 10 days, allowing him to represent the nation at the annual Asia Pacific Economic Cooperation forum in Lima, Peru, starting Nov. 22

Apec leaders will discuss the global financial outlook and ``it will be in the best interest of New Zealand if the new government was able to attend,'' Key told reporters. ``We are working through the issues to see if that is possible.''

Normally, a new leader isn't sworn in until after absentee votes are counted, which is set to be by Nov. 22.

Shared Ambitions

Key says he is prepared to put the country into debt to fund spending needed to foster growth, pledging financial assistance to people who recently lost jobs.

His party plans to call in the heads of government departments and ``instruct them to undertake a line-by-line review of their spending'' in order to identify savings, Key said earlier this month. The party has said its proposed tax cuts are worth NZ$47 ($27.71) a week to the average wage earner.

Becoming prime minister was one of two ambitions Key shared as an 8-year-old with neighbor Gwendoline Howard in the Christchurch housing development where he grew up. The other, Howard said in an interview last month, was to earn a million dollars, which he achieved while working as a currency trader.

After graduating from the University of Canterbury in 1982 with a degree in commerce, Key worked as an auditor before joining Canterbury Clothing New Zealand, a jersey maker for the nation's beloved All Blacks rugby team.

A television documentary named ``A Day in The Life of a Trader'' prompted a change in career and jobs as a currency trader for Elderbank and Bankers Trust Corp.

His career with Merrill began in Singapore in 1995, culminating with a transfer to London and promotion to head of foreign exchange.

Political Career

Key returned to New Zealand in 2001 and entered parliament a year later. Then-National leader Don Brash, a former central bank governor, appointed him finance spokesman in 2004. Key became leader when Brash quit politics two years later.

Key's victory ended Clark's 15 years as leader of the social democratic Labour Party. She announced after the results that she would quit as party leader but remain in parliament. Labour's support fell 7 percentage points to 33.8 percent as voters in New Zealand's provincial seats and in much of Auckland, the nation's most populous city, swung behind Key.

Clark, 58, was seeking to become the first Labour Party leader to win four elections after gaining power in 1999.

Political Partners

One of Key's potential partners will be ACT New Zealand, which won 3.7 percent of the vote to have five members in parliament, including Roger Douglas, who was Finance Minister in the 1984-1990 Labour government.

Labour will have 43 seats, forming a 52-seat opposition with the Green Party and the Progressives. The non-aligned Maori Party won five seats.

In 2005, Labour won 49 seats to National's 48 and Clark was able to form a government by relying on support from four smaller parties.

One of those, New Zealand First, didn't make it back to the new parliament and leader Winston Peters, 63, a foreign affairs minister in the previous government, will leave politics after 27 years.

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

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China Producer-Price Inflation Slows on Commodities

By Nipa Piboontanasawat

Nov. 10 (Bloomberg) -- Producer-price inflation in China cooled to the slowest pace in eight months on falling energy and commodity costs, making the central bank more likely to keep cutting interest rates.

Factory-gate prices rose 6.6 percent in October from a year earlier, the statistics bureau said today, after gaining 9.1 percent in September. That was less than the 8 percent median estimate of 15 economists surveyed by Bloomberg News.

Easing inflation pressures give the central bank room to keep reducing rates after the government pledged a $590 billion stimulus package to spur the world's fourth-biggest economy. Monetary policy ``doesn't need to be so restrictive,'' central bank Governor Zhou Xiaochuan said in Sao Paulo yesterday.

``Inflation should continue to ease as food and commodity prices will likely remain soft over the coming months,'' said Jing Ulrich, chairwoman of China equities at JPMorgan Chase & Co. in Hong Kong. ``The definite shift in inflation gives the government leeway to take more aggressive monetary and fiscal action to stimulate the economy.''

Consumer prices probably rose 4.2 percent in October from a year earlier, a Bloomberg News survey showed. That would be the slowest pace in more than a year. The figure is due at 10 a.m. tomorrow.

Policy makers seek to prevent an economic slump after growth cooled to 9 percent in the third quarter, the slowest pace since 2003, and as a world recession looms.

Manufacturing, Exports

China cut rates for the first time in six years in September and followed up with two more reductions, leaving the key one-year lending rate at 6.66 percent.

Chinese manufacturing contracted last month by the most on record as export orders fell, according to two purchasing managers' indexes. Construction activity fell in September at the fastest pace since the 1990s, according to Macquarie Securities Ltd.

``Producer-price inflation will continue on a down trend as production costs, especially global energy and commodity prices, cool,'' said Michael Dai, senior economist at Bank of China (Hong Kong) Ltd. ``The central bank has started reversing the direction of monetary policy to boost economic growth and there will be more interest-rate cuts coming.''

Purchasing prices climbed 11 percent in October from a year earlier.

For the first 10 months, producer prices increased 8.2 percent from a year earlier and purchasing prices climbed 12.2 percent, the National Bureau of Statistics said.

To contact the reporter on this story: Nipa Piboontanasawat in Hong Kong at npiboontanas@bloomberg.net

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Brown Seeks `Global Consensus' on Tax, Spending at G-20 Summit

By Mark Deen

Nov. 10 (Bloomberg) -- U.K. Prime Minister Gordon Brown will call on governments around the world to coordinate tax and spending policies to shore up a slowing world economy.

``We must use the power of multilateralism to establish a global consensus on a new, decisive and systemic approach to strengthening the global economy,'' Brown will say today, according to a text released by his office. After committing more than $3 trillion to bail out the banking system, governments must now turn to ``international co-ordination of fiscal and monetary policy,'' he will say.

Brown's comments, to be made in a speech to London's banking community, set out the U.K.'s position going into a meeting of world leaders in Washington Nov. 15. A coordinated program to trim taxes and boost spending would give Brown political cover to allow Britain's budget deficit to swell when the Treasury announces its plans in coming weeks.

There are already signs that other countries are ready to heed Brown's call. China, the world's fourth-largest economy, announced a 4 trillion yuan ($586 billion) stimulus plan yesterday, saying the funds will be used by the end of 2010 as part of a ``proactive fiscal policy.''

A similar message came yesterday from Sao Paulo, where finance ministers from the Group of 20 nations met over the weekend to lay the groundwork for the heads-of-state summit in Washington. Ministers agreed to act ``urgently'' to bolster growth as the world's leading industrialized economies battle recession, according to the G-20 statement.

Warding Off Recession

The push comes as Brown and Chancellor of the Exchequer Alistair Darling prepare to update the government's tax and spending plans this month or next. Brown has said he's ready to increase borrowing to ward off recession after the U.K. economy contracted in the third quarter.

Spending is already increasing as the inflow of tax receipts slows. Britain had its biggest budget deficit since 1946 in the six months through September and economists say the shortfall may reach 7 percent of gross domestic product over the next two years, more than double the 3 percent limit set down by the European Union.

Since March, Brown's government delivered tax cuts and spending increases worth 4.8 billion pounds ($7.6 billion) to give relief to low-income earners, delay an increase in fuel duties and to help homeowners with mortgages and stamp-duty taxes on property purchases.

`Emergency Tax Cuts'

``A package of emergency tax cuts'' would be the most effective way of ``increasing demand in the economy,'' Frank Field, a lawmaker with the ruling Labour Party, wrote in the Sunday Telegraph newspaper yesterday. ``Steering these cuts towards the poorest'' would ensure that most of the cash would be spent immediately, he said.

Field is a former welfare minister who earlier this year forced Brown to water-down plans to scrap the U.K.'s lowest band of income tax. In his newspaper article, he said that further tax cuts would also offer Brown a boost in popularity, perhaps enough to call and win an election in the first half of 2009.

An ICM Ltd. poll for the Sunday Telegraph showed Labour still trails the Conservatives, with 30 percent support compared with 43 percent for the Conservatives. At the same time, 40 percent of the 1,005 voters interviewed said that Brown is best placed to handle an economic crisis, compared with 38 percent for Conservative leader David Cameron. ICM conducted the poll Nov. 5 and 6. No margin of error was given.

To contact the reporters on this story: Mark Deen in London at markdeen@bloomberg.net.

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Australian Central Bank Signals More Key Rate Cuts

By Jacob Greber

Nov. 10 (Bloomberg) -- Australia's central bank signaled it's prepared to add to the most aggressive interest-rate cuts in 17 years as it tries to ensure the economy sidesteps a looming global recession.

The bank today cut its 2008 economic expansion forecast to 1.5 percent from 2 percent and said it had been forced to make ``unusually large'' reductions in the overnight cash rate target in October and November because renewed global turmoil raised the risk growth will stall.

Governor Glenn Stevens has slashed the benchmark lending rate since early September by 200 basis points to 5.25 percent in the biggest round of cuts since a recession in 1991. Australia's weakening economy also means underlying inflation is now reaching a peak and will begin to slow in coming months, the bank said in its quarterly policy statement released in Sydney.

``There is still considerable scope for monetary policy to help the economy over the next 12 to 18 months,'' said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney. ``They are saying the economy will keep expanding, but it will be seriously affected by the global slowdown.''

Reserve Bank policy makers will cut the benchmark rate by another half point to 4.75 percent on Dec. 2, according to 12 of 19 economists surveyed by Bloomberg News last week. Five expect a quarter-point reduction, one tipped a three-quarter-point cut and one forecasts a 1 percentage point decline.

`Appropriate Balance'

``The board will be seeking to strike the appropriate balance between avoiding an unduly sharp weakening in demand and the need for inflation to fall back'' within its target range of 2 percent to 3 percent ``over a reasonable period,'' today's statement said.

The Australian dollar traded at 69.05 U.S. cents at 12:02 p.m. in Sydney from 68.95 cents just before the statement was released. The two-year government bond yield rose 2 basis points to 3.87 percent. A basis point is 0.01 percentage point.

The bank said falling global demand for commodities, with base metals prices down by an average of more than 30 percent this year, means ``it's clear that Australia's terms of trade have now peaked.''

Income from foreign sales is ``likely to subtract noticeably from national income growth over the year ahead,'' it said.

Growth Forecast

Gross domestic product will rise 1.75 percent in 2009, less than the 2.5 percent expansion forecast by the bank in its August statement. The bank also said GDP will gain 2.5 percent in 2010, compared with its previous prediction of 2.75 percent.

``A more rapid unwinding of the resources boom than has been assumed would have significant negative effects throughout the economy, resulting in softer growth in domestic incomes and spending,'' today's statement said.

``A number of resource companies are reconsidering their capital expenditure intentions for 2009, and smaller mining firms in particular are likely to cut back their investment,'' the bank said. That will ``flow through into slower activity in other sectors of the economy.''

Australian companies, including builders, are finding it harder to borrow money, the central bank said.

The International Monetary Fund is forecasting that the U.K., Japan, the euro region and the U.K. economies will all contract next year in their first simultaneous recession since the World War II.

G20 Action

The Group of 20 nations said in a statement yesterday following a meeting in Sao Paulo that it's prepared to act ``urgently'' to bolster growth and called on governments to cut interest rates and raise spending as the world's leading industrialized economies battle the threat of a recession.

Ongoing stress in financial markets means it is ``possible that the deterioration in the external environment could continue,'' the Reserve Bank said. ``Even if this did not occur, the effects on domestic activity of the deterioration that has already occurred could be deeper or more persistent than expected in this outlook.''

Australia's economy grew 0.3 percent in the second quarter, the slowest pace in more than three years, as households cut spending for the first time since 1993.

Recent reports showed house prices fell 1.8 percent in the third quarter, the biggest drop since 1978, retail sales tumbled in September by the most in three years and job advertisements slid for a sixth month.

Home-loan approvals fell 2.7 percent in September, the eighth month of declines, a separate report showed today.

Core inflation is likely to remain ``around 4.5 percent'' during the year through December 2008 and then ``decline gradually'' to 3.25 percent by mid-2010 and 2.5 percent by mid 2011, the bank said.

Three months ago, it forecast inflation to slow to 3 percent by the middle of 2010.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Japanese Machinery Orders Slide 10.4%, Matching Record Decline

By Jason Clenfield

Nov. 10 (Bloomberg) -- Japanese machinery orders tumbled 10.4 percent last quarter, matching the biggest drop on record, as manufacturers cut investment plans in anticipation the global slowdown will stifle overseas demand.

The decline in orders, an indicator of capital spending in the next three to six months, matched a record drop set 10 years ago, the Cabinet Office said today in Tokyo.

Falling profit for Japan's exporters has driven the Nikkei 225 Stock Average down 44 percent this year and forced some of the country's biggest companies to cut costs. Toyota Motor Corp. last week forecast earnings will drop by almost 70 percent this fiscal year and said it plans to lay off workers and scale back investment.

``The deterioration in demand has become clearer and that's eroding companies' willingness to invest,'' said Yoshimasa Maruyama, a senior economist at BNP Paribas Securities Japan Ltd. in Tokyo. ``We're going to see companies make deeper cuts.''

The yen traded at 99.21 per dollar at 9:57 a.m. in Tokyo, from 98.95 before the report was published.

On a monthly basis, orders for Japanese machinery rose 5.5 percent in September, an increase the government described as a ``weak rebound.'' The gains ended a three-month losing streak that was the worst since the country's 2001 recession.

Economists predicted a 5.2 percent rebound they said provided little relief amid an overall slowdown in corporate investment.

26-Year Low

The Bank of Japan, which last month cut its key interest rate to 0.3 percent after stocks fell to a 26-year low, forecasts that business spending will remain sluggish for the next several quarters. The slowdown in Japan's export markets and the 8 perent appreciation of the yen since October will create a ``severe'' earnings environment, the bank said.

The International Monetary Fund expects the economies of the U.S., Japan, and euro zone to shrink next year.

Governments and central banks are taking steps to spur demand. The U.S., Europe, South Korea and India have lowered borrowing costs in the past two weeks and China last night unveiled a $586 billion stimulus plan to prop up growth.

Toyota expects its earnings this fiscal year will be the lowest since 1999. President Katsuaki Watanabe, who started his career at the carmaker by cutting costs at the company cafeteria, said last week he'll head an emergency committee to trim spending and review the timing and scale of new projects. The company will also layoff 3,000 contract workers by the end of March.

Global Slowdown

Today's report is another sign the global slowdown has pulled the world's second-largest economy into a recession. Manufacturers said last month they plan to cut production in November. Economists say conditions may deteriorate in coming months after the U.S. economy suffered its biggest decline since 2001 in the third quarter.

``U.S. economic activity slowed significantly in September and October, which may affect Japan's exports,'' said Chotaro Morita, head of fixed-income strategy research at Barclays Capital in Tokyo. ``We will probably see the impact materializing from the November data.''

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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China Export Growth May Cool on Global Economic Slump

By Li Yanping

Nov. 10 (Bloomberg) -- China's exports probably grew at the slowest pace since March 2007 as demand slumped because of the global financial crisis and shippers struggled to get letters of credit.

Shipments climbed 18.1 percent in October from a year earlier after gaining 21.5 percent in September, according to the median estimate of 17 economists surveyed by Bloomberg News. The data may be released as early as today.

The world's fourth-biggest economy risks expanding at the weakest pace in 18 years in 2009 as exports cool and the property market slumps, economists say. The government pledged yesterday a 4 trillion yuan ($586 billion) stimulus plan to prop up growth through 2010.

``Exports are deteriorating fast and orders may continue to shrink on faltering overseas demand,'' said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. ``Soon that will translate into the loss of jobs, an issue that would worry the government more,'' Xing said.

The trade surplus may have swelled to a record $30 billion on weaker imports. Inflation probably slowed for the sixth straight month to 4.1 percent, the survey showed.

The global economic slowdown and frozen credit markets have made it more difficult for shippers to secure letters of credit, which transfer payments internationally from buyer to seller once shipments have been deliver.

No Money to Pay

``We dare not sign any big orders nowadays, for fear that buyers may not have the money to pay in the end,'' Wu Yipeng, vice manger of Shantou Defeng Trading Co., a toy exporter in southern Guangdong province, said by telephone. ``Things could get worse next year.''

China's economy grew 9 percent in the third quarter, the slowest pace in five years. Next year's expansion may be 7.5 percent or less, the weakest since 1990, according to Credit Suisse AG and UBS AG.

The State Council, China's cabinet, said the stimulus package will include low-rent housing, infrastructure in rural areas, roads, railways and airports. The government will also allow tax deductions for purchases of fixed assets such as machinery to stimulate investment.

To help exporters through the slowdown, the government raised tax rebates on 3,486 items, including toys and textiles, from Nov. 1. It has also stalled the yuan's gains against the dollar and eliminated quotas that restricted lending by banks.

Export Orders

An export-order index compiled by CLSA Asia Pacific Markets dropped last month to the lowest since it began in 2004. The number of buyers from the U.S. at China's largest trade fair, in the southern city of Guangzhou during October and November, fell 20 percent from a year earlier. Orders at the fair dropped 16 percent.

Export rebates for some labor-intensive industries may be increased again, the China Securities Journal reported on Nov. 6, citing an official from the Ministry of Industry and Information Technology.

``Policy changes can't fight cyclical downturns and global demand is beyond the government's control,'' CICC's Xing said.

The central bank has cut interest rates three times in two months, reducing the key one-year lending rate to 6.66 percent.

``Inflation remains a medium and long-term worry but it's not the issue at the moment,'' said Huang Yiping, chief Asia economist at Citigroup Inc. in Hong Kong.

Premier Wen Jiabao says sustaining growth is his government's ``top priority.''

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

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China Unveils 4 Trillion Yuan Spending as World Faces Recession

By Li Yanping and Chia-Peck Wong

Nov. 10 (Bloomberg) -- China pledged a 4 trillion yuan ($586 billion) stimulus plan to prop up growth in the fourth-largest economy as the world heads toward a recession.

The funds, equivalent to almost a fifth of China's gross domestic product last year, will be used by the end of 2010, the Beijing-based State Council said yesterday on its Web site. Following a weekend meeting in Sao Paulo, finance ministers from the Group of 20 nations, of which China is a member, issued a joint statement saying they are ready to act ``urgently'' to tackle the economic slump.

``If the Chinese use this as a diplomatic initiative, it could be an important step toward a more coordinated response,'' Simon Johnson, a senior fellow at the Peterson Institute for International Economics and former chief economist of the International Monetary Fund, said in Boston.

China is taking steps to bolster its economy, the biggest contributor to global expansion, less than a week before President Hu Jintao goes to Washington for talks with world leaders on ways to revive growth. U.S. President-elect Barack Obama vowed last week to push a package through Congress ``immediately after'' taking office in January if lawmakers and the Bush administration can't agree on one before then.

China accounted for 27 percent of global economic growth last year, more than any other nation, according to IMF estimates. Central bank Governor Zhou Xiaochuan said Nov. 8 that boosting spending at home is the best way China can help avert a prolonged world recession.

`Intensifying' Crisis

Taiwan, which counts China as its largest trading partner, late yesterday cut interest rates for the fourth time in two months after exports dropped in October by the most in three years. The Federal Reserve, the European Central Bank and the Bank of Japan have all lowered their benchmark rates in the last two weeks, as has the People's Bank of China.

``Over the past two months, the global financial crisis has been intensifying daily,'' the State Council said in yesterday's statement. ``In expanding investment, we must be fast and heavy- handed,'' it said, adding that the central bank will pursue a ``moderately loose'' monetary policy.

The stimulus package, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports, it said.

The government will allow tax deductions for purchases of fixed assets such as machinery to stimulate investment, a move that will reduce companies' costs by an estimated 120 billion yuan.

Grain Subsidies

In addition, grain purchase prices and subsidies for farmers will be raised, as will allowances for low-income urban households. The government also scrapped loan quotas to help boost lending to small businesses.

``We view this as a positive step,'' the U.S. Treasury's Undersecretary for International Affairs David McCormick told Bloomberg in televised interview in Sao Paulo ``This stimulus should help encourage domestic consumption'' in China, he said.

The stimulus plan should give a lift to China's shares, said Ben Simpfendorfer, an economist at Royal Bank of Scotland Group Plc in Hong Kong. The CSI 300 Index has tumbled 69 percent this year, the biggest drop among stock benchmarks in the Asia-Pacific region.

``The package will be positive for the stock market, but again, we need to see results,'' Simpfendorfer said.

``China is well positioned during the recession to boost infrastructure, modernize aging industrial assets and also invest in raw materials production abroad, including energy,'' said Ariel Cohen, a senior fellow at the Heritage Foundation in Washington.

May Boost Growth

The extra spending may boost the nation's economic growth by 2 percentage points next year, said Xing Ziqiang, an economist at China International Capital Corp. in Beijing. UBS AG and Credit Suisse AG, before yesterday's announcement, forecast GDP would rise no more than 7.5 percent next year, which would be the smallest increase in nearly two decades.

China is trying to stop an economic slowdown from deepening as exports wane, manufacturing cools and a property slump undermines domestic demand. The central bank has already cut interest rates three times in two months, reducing the one-year lending rate to 6.66 percent.

Manufacturing contracted by the most since at least 2004 in October and export orders dropped to their lowest, according to CLSA Asia Pacific Markets. Home sales have plunged in major cities including Beijing and the stockpile of unsold new vehicles was at a four-year high in September.

``The golden years have shuddered to a dramatic halt,'' said Stephen Green, head of China research at Standard Chartered Bank Plc in Shanghai.

To contact the reporters on this story: Li Yanping in Beijing at yli16@bloomberg.netChia-Peck Wong in Hong Kong at cpwong@bloomberg.net

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Malaysia's Ringgit Climbs on Optimism Spending Will Spur Growth

By David Yong

Nov. 10 (Bloomberg) -- Malaysia's ringgit rose, snapping two days of losses, on speculation spending programs by governments in the region will help revive economic growth.

The currency headed for the biggest gain in a week as Asian stocks snapped a two-day slide after China unveiled a $586 billion stimulus plan to bolster the world's fourth-largest economy. Malaysia may top up its 7 billion ringgit ($1.98 billion) fiscal stimulus plan announced on Nov. 4, the Star newspaper reported today.

``The market is reacting to China's plan because it's a crucial factor in cushioning the region from a major slowdown,'' said Suresh Kumar Ramanathan, a rates and currency strategist at CIMB Investment Bank Bhd. in Kuala Lumpur. ``The local factors are less encouraging.''

The ringgit advanced 0.6 percent to 3.5305 versus the dollar as of 8:55 a.m. in Kuala Lumpur, according to data compiled by Bloomberg.

Fitch Ratings today cut the outlook on Malaysia's credit rating to ``stable'' from ``positive,'' citing a slowdown in electronics exports and lower commodity prices on its balance of payments. China is Malaysia's fourth-largest export market.

Traders bet the ringgit will weaken to 3.5365 per dollar in three months, according to non-deliverable forwards contract. Forwards are agreements in which assets are bought and sold at current prices for delivery at a specified future date. They are settled in dollars.

To contact the reporter on this story: David Yong in Singapore at dyong@bloomberg.net.

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Australia, New Zealand Dollars Advance on Chinese Stimulus Plan

By Candice Zachariahs

Nov. 10 (Bloomberg) -- The Australian and New Zealand dollars advanced after China pledged a $586 billion stimulus plan to prop up growth, prompting investors to buy currencies linked to emerging economies.

The currencies rose as China, the biggest contributor to global expansion, said it would use the funds by the end of 2010. Demand from emerging economies for commodities boosts the Australian and New Zealand dollars as raw material exports make up more than half of the nations' overseas shipments.

China's ``spending package has really given high-yielding, growth-sensitive currencies like the kiwi and the Aussie a boost,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington, referring to the currencies by their nicknames. ``I think currency markets will still watch equities to see where they go.''

Australia's currency rose 1.6 percent to 68.48 U.S. cents as of 8:14 a.m. in Sydney from 67.41 cents late in New York on Nov. 7. The currency advanced 2.5 percent to 67.85 yen.

New Zealand's dollar gained 1.2 percent to 59.83 U.S. cents from 59.12 in New York last week. It bought 59.21 yen from 58.08.

Separately, the Group of 20 nations called for interest-rate cuts and increased spending to support growth as the world's industrialized nations slump into recession.

The South Pacific nations' currencies gained after a statement from the G-20 yesterday indicating governments would act ``urgently'' to stabilize financial markets. Brazil, Russia, India and China, the so-called BRIC nations, plan coordinated measures to increase trade and capital flows among their economies, Russian Finance Minister Alexei Kudrin said in an interview.

Crisis Intensifying

``Over the past two months, the global financial crisis has been intensifying daily,'' the Beijing-based State Council said Nov. 9 on its Web site announcing the stimulus package. ``In expanding investment, we must be fast and heavy-handed,'' it said. The central bank will pursue a ``moderately loose'' monetary policy, according to the statement.

Finance ministers and central bankers from the G-20 met this weekend in Sao Paulo to lay the groundwork for a Nov. 15 heads- of-state summit in Washington.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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Canadian Dollar to Fall 10% in 3 Months, Barclays Capital Says

By Candice Zachariahs

Nov. 10 (Bloomberg) -- The Canadian dollar will plunge 10 percent over the next three months because of falling commodity prices and dwindling capital inflows from emerging economies as global growth slows, according to Barclays Capital.

Barclays forecasts Canada's currency, or loonie, will fall to C$1.24 versus the U.S. dollar in one month and C$1.31 and C$1.30 over the next three and six months. It will trade at C$1.28 in 12 months, New York-based currency strategist Steven Englander at the unit of the U.K.'s second-largest bank wrote in a report dated Nov. 7. Capital inflows will diminish as demand for the nation's assets falls, said Barclays.

The Canadian dollar dropped to a four-year low of C$1.3017 to the U.S. currency on Oct. 28 as oil prices tumbled. The cost of a barrel of oil was $63.82 compared with a record high of $147.27 in July. Crude oil accounted for 10 percent of Canada's export revenue in 2007.

Canada's dollar ``is out of line with commodity prices and other commodity currencies,'' Englander at the third-biggest foreign-exchange company wrote. It will ``weaken significantly as the Canadian economy responds to the plunge in global commodity prices and the drop in global activity.''

The Canadian dollar traded at C$1.1794 per U.S. dollar as of 10:53 a.m. in Tokyo, from C$1.1893 on Nov. 7. It has declined 9.6 percent over the past three months while currencies of other commodity-exporting nations like Australia and Brazil plunged 23 percent and 25 percent.

Canada's trade surplus may get ``close to zero'' in the coming months as commodity prices fall, said Barclays.

``Exacerbating the potential outflow is that much of the recent investment in Canadian long-term assets has come from emerging-market investors, who may be relatively quick to repatriate as their own currency comes under pressure,'' Englander wrote.

To contact the reporter on this story: Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

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Yen Falls on Speculation China Stimulus to Boost High-Yielders

By Ron Harui and Stanley White

Nov. 10 (Bloomberg) -- The yen declined for a second day against the euro and the dollar on speculation China's $586 billion stimulus package will give investors confidence to buy higher-yielding assets using money borrowed in Japan.

The yen fell the most against the South African rand and Australia's dollar on speculation support for China's economy, the world's fourth largest, may help avert a global recession and improve traders' appetite for risk. The Group of 20 nations is ready to act ``urgently'' and urged governments to lower interest rates and raise spending at a meeting yesterday in Sao Paulo.

``China and the tone of the G-20 meeting are clearly going to provide some support to the economic outlook,'' said Tony Morriss, a currency strategist at Australia & New Zealand Banking Group Ltd. in Sydney. ``This would reduce risk aversion. The yen looks weak overall.''

The yen fell to 127.52 per euro at 10:15 a.m. in Tokyo from 124.90 late in New York on Nov. 7. Against the dollar, it declined to 99.10 from 98.24. The euro rose to $1.2867 from $1.2718. The pound advanced to $1.5864 from $1.5643. The yen may decline to 130 versus the euro this week, Morriss said.

Against the South African rand, the yen declined 3.8 percent to 10.0350 from 9.6559. It also fell 3 percent versus the Australian dollar to 68.29 and 2.3 percent against the New Zealand dollar to 59.44.

In carry trades, purchases of higher-yielding assets are funded in nations with lower interest rates, earning the spread between the two. The risk is that currency market moves erase those profits. Japan's benchmark rate of 0.3 percent compares with 3 percent in the U.K., 12 percent in South Africa, 5.25 percent in Australia and 6.5 percent in New Zealand.

China Stimulus

The yen also weakened as volatility implied by one-month dollar-yen options fell to 23.75 percent from 24.27 percent on Nov. 7, signaling a reduced risk of exchange-rate fluctuations that make carry trades unprofitable. Volatility reached 41.79 percent on Oct. 24, the highest since Bloomberg began compiling the data in December 1995.

China's stimulus plan, equivalent to almost a fifth of last year's gross domestic product, will go toward low-rent housing and infrastructure, the Beijing-based State Council said yesterday on its Web site. The government will also grant tax breaks to boost corporate spending.

World leaders will meet in Washington on Nov. 15 to discuss their response to a global economic crisis sparked by losses on mortgage derivatives and a seizure in credit markets.

``There's a chance emerging-market economies like China, India and Brazil could take the lead in responding to the financial crisis,'' Masafumi Yamamoto, head of foreign exchange strategy for Japan at Royal Bank of Scotland Group Plc in Tokyo and a former Bank of Japan currency trader, wrote in a research note today. ``There's a risk that stocks gain and the yen weakens should these steps improve market sentiment.''

ECB's Trichet

The yen dropped versus all of the 16 most-active currencies as the MSCI Asia-Pacific Index of regional shares climbed 2.3 percent and the Nikkei 225 Stock Average rose 4.9 percent.

Gains in the euro may be limited after European Central Bank President Jean Claude-Trichet said in an interview with Brazilian broadcaster Globo TV that he can't rule out a further reduction in interest rates next month.

Central banks around the world are lowering borrowing costs to stave off the worst of the banking crisis. The ECB cut its main refinancing rate by a half-percentage point on Nov. 6 to 3.25 percent. Policy makers in the U.K., Switzerland, and the Czech Republic trimmed their benchmark rates on the same day.

``There's talk of more ECB rate cuts, given the pessimistic outlook on Europe's economies,'' said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. ``The medium- to long-term downtrend for the euro is likely to persist.''

ECB Rate Bets

Traders increased bets the ECB will reduce rates in the first quarter of next year. The implied yield on Euribor interest-rate futures contracts expiring in March fell to 2.995 percent, from 3.005 percent on Nov. 7.

``In December, at our next meeting'' the ECB will have new projections on economic growth and inflation and ``we do not exclude to decrease rates,'' Trichet said, Brazilian broadcaster Globo TV reported yesterday, citing an interview.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomerg.net; Stanley White in Tokyo at swhite28@bloomberg.net

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Copper Surges in Asia on Speculation China Plan to Spur Demand

By Glenys Sim

Nov. 10 (Bloomberg) -- Copper surged in Asia as China, the world's largest user of the metal, unveiled a 4 trillion yuan ($586 billion) stimulus plan to prop up growth.

Prices in London jumped as much as 7.3 percent, leading industrial metals higher, after China said yesterday it will increase spending on infrastructure. The funds, equivalent to almost a fifth of the country's gross domestic product last year, will be used through 2010.

``The plan is certainly bullish for metals and we can expect some knee-jerk reaction from the markets, especially since it's been pretty gloomy the past few weeks,'' Cai Luoyi, chief analyst at China International Futures (Shanghai) Co., said.

Copper for delivery in three months on the London Metal Exchange climbed for the first day in four to $4,030 a metric ton, and stood at $4,019.75 a ton at 9:43 a.m. Singapore time.

The metal on the Comex division of the New York Mercantile Exchange rose as much as 7.7 percent to $1.8275 a pound in after-hours electronic trading, before trading at $1.8150.

Copper for January delivery on the Shanghai Futures Exchange gained as much as 3.9 percent to 30,950 yuan ($4,535) a ton, and stood at 30,740 yuan at 9:44 a.m. local time.

``However the plan is a long-term one, with spending to be spread over two years so we're not likely to see any immediate impact on demand, which will keep prices muted in the near-to- medium term,'' Cai said.

Stimulus Plan

China announced the package after finance ministers from the Group of 20 nations, of which China is a member, issued a joint statement saying they are ready to act ``urgently'' to tackle the economic slump.

The stimulus plan, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports, China's State Council said.

``As proactive and aggressive as the package is, the unfortunate reality is that no fiscal package can change the economy's cyclicality,'' Jerry Lou, an analyst at Morgan Stanley wrote in a note to clients today. ``We think Beijing can, at best, buy out the economy's hard-landing scenario and that is not enough to reaccelerate the economy in 2009.

Among other LME-traded metals, aluminum was up 3 percent at $2,018 a ton, zinc gained 5.4 percent to $1,150, lead added 5.1 percent to $1,431, and nickel jumped 8.4 percent to $11,900 as of 9:45 a.m. in Singapore.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net

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Oil Rises More Than 4% as China Unveils Growth Support Package

By Gavin Evans

Nov. 10 (Bloomberg) -- Crude oil advanced more than 4 percent on speculation stimulus plans by China and other major economies may help sustain growth and demand for fuel.

China, the world's second-largest oil consumer, yesterday said it will spend 4 trillion yuan ($586 billion) through 2010 to prop up the biggest contributor to global economic growth. Copper futures gained as much as 4.9 percent and gold also rose after China said it will increase spending on infrastructure and encourage investment in machinery.

``It's a pretty big spending package they've announced,'' said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. It will ``definitely give the commodity markets a bit of a boost.''

Crude oil for December delivery rose as much as $2.96, or 4.9 percent, to $64 a barrel in after-hours electronic trading on the New York Mercantile Exchange. It was at $63.69 at 8:24 a.m. in Singapore.

On Nov. 7, the contract rose 27 cents, or 0.4 percent, to $61.04 on, having earlier fallen to $59.97, the lowest intraday price since March 22, 2007. Prices fell 10 percent last week as equities dropped, U.S. fuel stockpiles rose more than expected and the nation's unemployment rate climbed to a 14-year high.

The International Monetary Fund is forecasting that the economies of the U.S., Japan, Europe and the U.K. will all contract next year in their first simultaneous recession since the Second World War.

G-20 Ministers

Governments worldwide must do all they can to lower interest rates and raise spending to support sustainable economic growth, finance ministers and central bankers from the Group of 20 industrial nations said in a statement after a meeting in Sao Paulo yesterday.

Brent crude oil for December settlement gained $2.28, or 4 percent, to $59.63 a barrel on London's ICE Futures Europe exchange. The contract fell 8 cents to $57.35 on Nov. 7.

Shipments from Russia, the biggest producer after Saudi Arabia, have fallen 25 percent below normal levels this month after export duties fell less than oil companies had wanted, Interfax reported Nov. 9.

Producers have contracts to meet and the reduction in deliveries will be temporary, the news service said, citing Nikolai Tokarev, chief executive officer of government-owned pipeline operator OAO Transneft.

To contact the reporter on this story: Gavin Evans in Wellington at gavinevans@bloomberg.net

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Australia Stocks Update: S&P/ASX 200 Rises 28.90 to 4,080.20

By Darren Boey

Nov. 10 (Bloomberg) -- Australia's benchmark stock index, the S&P/ASX 200 Index, rose 0.71 percent at 10:05 a.m.

The index of 200 companies traded on the Australian Stock Exchange rose 28.90 to 4,080.20. Among the stocks in the index, 110 rose, 15 fell and 75 were unchanged.

Gains in the S&P/ASX 200 Index were led by Bhp Billiton Ltd, Macquarie Group Ltd and Csl Ltd/australia. About 38.54 million shares changed hands on the Australian Stock Exchange.

Bhp Billiton Ltd, which rose 94 cents to A$28.87, was the most active stock by value in Australia.

The next most-active issues were Australia & New Zealand Banking Group Ltd, which fell 6 cents to A$16.23, and Commonwealth Bank Of Australia, which fell 37 cents to A$39.70.

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Japan Stocks Rise on Global Stimulus Plans; Nippon Yusen Gains

By Masaki Kondo

Nov. 10 (Bloomberg) -- Japan shares rose for the first time in three days, led by shipping and resource companies, after China announced a fiscal stimulus plan, joining global efforts to revive economic growth.

Nippon Yusen K.K., Japan's largest shipping line, jumped 8.8 percent after China pledged a 4 trillion-yuan ($586 billion) spending package. Nippon Steel Corp., the world's second-biggest maker of the alloy, leapt 6.3 percent after the Group of 20 nations called for interest-rate cuts and higher government spending. Sony Corp. rose 9.2 percent after the yen weakened.

The Nikkei 225 Stock Average climbed 460.91, or 5.4 percent, to 9,043.91 as of 9:53 a.m. in Tokyo. The broader Topix index rose 38.69, or 4.4 percent, to 917.69. All 33 industry groups on the Topix advanced.

``Governments and businesses are working on solutions to the slowdown plaguing economies and earnings, which may bring us some positive surprises,'' Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. ``Given demand is waning, government spending will be a welcome boost to economies.''

The Group of 20 nations said yesterday after a meeting in Sao Paulo that it's ready to act ``urgently'' to bolster economic growth, and that governments should use all measures at their disposal, including monetary and fiscal policy steps, in this effort. The same day, China's State Council announced an economic plan ranging from tax deductions for equipment purchases to infrastructure investments.

Japanese machinery orders rose 5.5 percent in September, the Cabinet Office said today, an increase the government described as a ``weak rebound.'' Economists predicted a 5.2 percent gain in September.

Chinese Infrastructure

Nippon Yusen jumped 8.8 percent to 495 yen, while closest rival Mitsui O.S.K. Lines Ltd. gained 9.2 percent to 510 yen. Komatsu Ltd., the world's second-biggest maker of earthmoving equipment, soared 9.6 percent to 1,228 yen.

Nippon Steel climbed 6.3 percent to 322 yen, and JFE Holdings Inc., Japan's No. 2 steelmaker, advanced 8.8 percent to 2,585 yen. Sumitomo Metal Industries Ltd. rose 6.6 percent to 258 yen. China's package, of which 100 billion yuan is earmarked for this quarter, will go toward low-rent housing, infrastructure in rural areas, as well as roads, railways and airports.

Concern lingers that the worldwide economy will fall into a recession after the collapse of the U.S. mortgage market triggered a credit crisis. The MSCI World Index has lost 41 percent of its value so far this year, and $29 trillion has been shed from global stock markets.

Oil, Currency

In the U.S., the jobless rate rose to 6.5 percent in October, the highest level since 1994, the Labor Department reported on Nov. 7. There is a 97 percent chance the Federal Reserve will cut its interbank lending rate at its Dec. 16 meeting, according to futures on the Chicago Board of Trade.

Inpex Corp., Japan's largest oil and gas explorer, rose 8.4 percent to 592,000 yen, while closest competitor Japan Petroleum Exploration Co. added 8.8 percent to 4,080 yen. Crude oil for December delivery rose as much as 4 percent today on speculation China's economic plan will help sustain demand for fuel.

Sony, a consumer-electronics maker that gets a quarter of its sales from the U.S., surged 9.2 percent to 2,380 yen, and bigger rival Panasonic Corp. gained 5.8 percent to 1,617 yen. Canon Inc., the world's biggest digital-camera maker, rose 4.9 percent to 3,430 yen.

The yen weakened against the dollar to as much as 99.37 today from 97.50 at the close of stock trading in Tokyo on Nov. 7, while depreciating against the euro to as much as 127.91 from 124.13.

Nikkei futures expiring in December added 4.5 percent to 9,050 in Osaka and gained 4.9 percent to 9,040 in Singapore.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Asian Stocks Climb as China Unveils $586 Billion Stimulus Plan

By Masaki Kondo and Patrick Rial

Nov. 10 (Bloomberg) -- Asian stocks rallied for the first time in three days after China announced a $586 billion economic stimulus package and Taiwan cut interest rates.

Rio Tinto Ltd., which gets about a fifth of its sales in China, added 7 percent after the country unveiled measures including infrastructure spending, tax deductions and farming subsidies. Macquarie Group Ltd., Australia’s biggest investment bank, jumped 4.2 percent after Group of 20 leaders called for interest-rate cuts and higher spending to bolster global growth. Toyota Motor Corp. added 1.7 percent after Japanese machinery orders rose more than forecast in September from a month earlier.

“Governments and businesses are working on solutions to the slowdown plaguing economies and earnings, which may bring us some positive surprises,” said Tomochika Kitaoka, a Tokyo-based strategist at Mizuho Securities Co., said in an interview with Bloomberg Television. “Given demand is waning, government spending will be a welcome boost to economies.”

The MSCI Asia Pacific Index gained 1.3 percent to 88.36 as of 9:11 a.m. in Tokyo. The gauge is still down 44 percent in 2008 as the credit crisis slows global growth, denting demand for Asian exports.

Japan’s Nikkei 225 Stock Average surged 4 percent to 8927.64. Australia’s S&P/ASX 200 Index gained 2.1 percent. New Zealand’s NZX 50 Index rose 1.4 percent following the election of John Key, a former trader at Merrill Lynch & Co., as prime minister.

Stimulus Package

Futures on the Standard & Poor’s 500 Index climbed 2 percent today. The gauge advanced 2.9 percent on Nov. 7, the first gain in three days, as traders bet the Federal Reserve will cut interest rates in the face of rising unemployment.

China plans to spend 4 trillion yuan ($586 billion) by 2010 to support growth in its domestic economy as the rest of the world slows, the Beijing-based State Council said yesterday on its Web site. The funds are equivalent to almost a fifth of the nation’s gross domestic product.

The Group of 20 nations said yesterday after a meeting in Sao Paulo that it’s ready to act “urgently” to bolster economic growth, and that governments must take all measures, which include monetary and fiscal policy. Taiwan’s central bank lowered its benchmark interest rate for the fourth time in two months, effective today.

Concerns linger that the worldwide economy will fall into a recession after the collapse of the U.S. mortgage market triggered a credit crisis. The MSCI World Index has lost 41 percent of its value so far this year, and $29 trillion has been wiped off from global stock markets.

In the U.S., the jobless rate rose to 6.5 percent in October, the highest level since 1994, the Labor Department reported on Nov. 7. There is a 97 percent chance the Fed will cut its interbank lending rate at its Dec. 16 meeting, according to futures on the Chicago Board of Trade.

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.

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Allianz, Belgacom, Precious Woods, UBS: European Equity Preview

By Nadja Brandt

Nov. 10 (Bloomberg) -- The following companies' shares may have unusual price changes in European trading. Stock symbols are in parentheses, and stock prices are from the previous close.

The Dow Jones Stoxx 600 climbed 1.9 percent to 219.60. The Dow Jones Stoxx 50 Index added 1.9 percent to 2,284.22. The Euro Stoxx 50 Index, a benchmark for the nations using the euro, increased 2.4 percent to 2,602.54.

Allianz SE (ALV GY): Europe's third-biggest insurer by market value had its first quarterly loss in more than five years after stock investments fell and the sale of Dresdner Bank declined in value. The shares increased 3.68 euros, or 6 percent, to 65.55 euros.

Bayerische Motoren Werke AG (BMW GY): BMW, Daimler AG and Volkswagen AG's banking units are considering tapping the German government's rescue package for the financial industry, Der Spiegel reported, without citing anyone. The carmakers' banks have agreed to request guarantees for several billion euros, the magazine said on its Web site.

BMW shares closed at 21.56 euros, up 50 cents or 2.4 percent.

Belgacom SA (BELG BB): Belgium's biggest phone company won antitrust approval to acquire Scarlet NV for 185 million euros ($235 million), as long as it sells Scarlet's fiber-optic network and caps prices for broadband Internet services. Belgacom said it expects to complete the purchase by the end of November. Belgacom shares rose 49.5 cents, or 1.8 percent, to 28.32 euros.

Bilfinger Berger AG (GBF GY): Germany's second-largest builder is scheduled to report third-quarter results. The company may say profit gained 31 percent, according to a survey of analysts by Bloomberg News. The shares slipped 43 cents, or 1.2 percent, to 36.07 euros.

Cable & Wireless Plc (CW/ LN): The U.K.'s second-biggest phone company reports earnings. Cable & Wireless advanced 6.7 pence, or 5 percent, to 134.7 pence.

Daimler AG (DAI GY): The banking units of Daimler, Bayerische Motorenwerke AG and Volkswagen AG are considering tapping the German government's rescue package for the financial industry, Der Spiegel reported, without citing anyone. The carmakers' banks have agreed to request guarantees for several billion euros, the magazine said on its Web site.

The shares increased 57 cents, or 2.3 percent, to 25.50 euros.

Deutsche Post AG (DPW GY): Europe's biggest mail carrier plans to post third-quarter results. The shares climbed 51 cents, or 5.7 percent, to 9.36 euros.

Deutsche Postbank AG (DPB GY): Germany's biggest consumer bank by clients is scheduled to publish third-quarter results. The shares fell 19 cents, or 1.1 percent, to 16.70 euros.

Deutsche Telekom (DTE GY): Deutsche Telekom will concentrate on integrating recently bought units before it considers any new acquisitions, Chief Executive Officer Rene Obermann said in an interview published by Welt am Sonntag.

Telekom isn't prone to engage in ``adventures'' like buying one of its competitors on the U.S. mobile phone market, where the company's T-Mobile unit is the number four, said Obermann, the newspaper reported.

Fortis (FORB BB): Belgium would pull out of the rescue of Fortis if a court backs a complaint by minority shareholders, Prime Minister Yves Leterme told Het Laatste Nieuws.

Separately, Fortis said it will hold a shareholders meeting on Dec. 19 if meetings scheduled for Dec. 1 and Dec. 2 fail to produce a decision-making quorum. European Union regulators are also questioning whether the bailout involved unlawful state subsidies, De Standaard reported, citing an unpublished EU letter. The shares rose 0.5 cents, or 0.5 percent, to 1.04 euros.

Galp Energia SGPS SA (GALP PL): Galp and BG Group Plc are concerned the development of Tupi and other Brazilian offshore oil fields they are developing with Petroleo Brasileiro SA may be delayed, O Estado de S. Paulo newspaper reported, citing Afonso Henriques, president of BG's Brazilian unit. Shares climbed 15.5 cents, or 2 percent, to 7.835 euros.

GDF Suez (GSZ FP): A group led by the French utility will likely soon receive a license to begin construction on the Jurau hydroelectric dam on Brazil's Madeira River, the Estado de S. Paulo newspaper reported. The shares gained 1.42 euros or 4 percent to 35.65 euros.

HSBC Holdings Plc (HSBA LN): Europe's biggest bank is expected to announce it wrote down more than $3.5 billion against bad U.S. loans in the third quarter, the Observer newspaper reported, citing Ian Gordon, a BNP Paribas SA banking analyst in London. HSBC rose 3 pence, or 0.4 percent, to 746.5 pence.

Lloyds TSB Group Plc (LLOY LN): The U.K. bank that agreed to buy HBOS Plc in a government-backed rescue has given HBOS a loan facility of 10 billion pounds ($16 billion) to help it with wholesale-funding needs, the Sunday Times reported, without saying where it got the information. Lloyds rose 12.9 pence, or 7 percent, to 200.5 pence.

Rio Tinto Group (RIO LN): The world's second-biggest exporter of iron ore may establish joint ventures with companies backed by the Chinese government, the Guardian reported, citing Chief Executive Officer Tom Albanese. Rio advanced 112 pence, or 4 percent, to 2618 pence.

Precious Woods Holding AG (PRWN SW): The Swiss forestry company said nine-month profit dropped 83 percent because of ``unfavorable currency developments.'' The shares were unchanged at 48 Swiss francs.

Renault SA (RNO FP): The carmaker has told 1,000 workers in Argentina not to come to work for 10 days because of slowing sales, newspaper Clarin reported. Separately, unions in France asked a court to order the company to cancel 4,000 planned ``voluntary layoffs.'' The shares fell 91 cents or 4 percent to 21.61 euros.

Swiss Reinsurance Co. (RUKN VX): The world's second-biggest reinsurer has 85 percent of its structured product investments in either AAA-rated or government-guaranteed investments, Finanz und Wirtschaft said, citing Chairman Peter Forstmoser. The shares rose 92 centimes, or 2 percent, to 47.82 francs.

Total SA (FP FP): The French oil company and its partner Saudi Aramco may delay the 400,000 barrels-a-day Jubail refinery because of lower oil prices and demand, Al-Hayat reported. Separately, Chief Executive Officer Christophe de Margerie said oil prices close to $60 a barrel for a prolonged period would ``seriously affect'' global production capacity as companies cut investments. The shares rose 1.29 euros, or 3.3 percent, to 41.30 euros.

UBS AG (UBSN VX): Former Chief Executive Officer Peter Wuffli gave up 12 million Swiss francs ($10 million) of compensation he was entitled to, said bank spokeswoman Sabine Jaenecke. The shares fell 70 centimes, or 3.9 percent, to 17.30 francs.

Uralita SA (URA SM): Spain's biggest maker of building materials said in filing to regulators that nine-month profit fell 18 percent as a slowdown in residential construction crimped demand for its products. Shares were unchanged at 4.30 euros.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

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Top banker: Domestic growth key to market stability

Updated: 2008-11-09
(China Daily)

SAO PAULO - China's central bank will seek to help stabilize global financial markets by maintaining Chinese economic growth and spurring domestic demand, the bank's governor said on Saturday.

China's central bank governor Zhou Xiaochuan. [file photo]

Speaking to reporters at a G20 finance officials meeting in Brazil's business capital, Zhou Xiaochuan also said the People's Bank of China is monitoring the market situation to decide its next interest rate move.

"We are closely watching the developments of the financial crisis and the situation of global activity... On the other hand, we also pay attention to declining inflation. We put them together to decide what we should do," Zhou said when asked if China would keep following the global trend of lowering rates.

China has already reduced interest rates three times in the last month and a half.

Zhou added that China's central bank intends to "actively work" with the International Monetary Fund to hash out a plan to stabilize volatile financial markets.

He stressed that maintaining economic growth in China is crucial to helping restore a sense of normalcy to global markets.

"I think, China, as a large country, try to maintain our economic growth and domestic demand. If China could maintain internal demand, I think it will be good for global stabilization," he said.

Zhou said the bank forecasts the Chinese economy to expand between 8 and 9 percent in 2009.

Some economists have predicted that Chinese growth could slow to less than 8 percent next year.

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