N.Z. Annual Trade Deficit Narrows to NZ$5.16 Billion

By Tracy Withers

Jan. 7 (Bloomberg) -- New Zealand’s annual trade deficit unexpectedly narrowed in November as a domestic recession curbed demand for imports.

The gap narrowed to NZ$5.16 billion ($3.1 billion) in the 12 months ended Nov. 30 from NZ$5.27 billion in the year through October, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of five analysts was for a NZ$5.49 billion shortfall.

New Zealand’s economy was in a recession last year as a housing slump and the global financial crisis curbed spending on imported cars and computers. Consumer spending on debit and credit cards fell by the most in almost three years in November, according to a government report this week.

“Demand for imports will remain subdued as domestic demand flags amid deteriorating housing and labor-market conditions,” said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney.

New Zealand’s dollar bought 59.72 U.S. cents at 4:05 p.m. in Wellington from 59.77 cents immediately before the report.

Smiths City Group, a Christchurch-based furniture and appliance retailer, last month said sales fell in November amid a slump in consumer confidence.

Imports rose 5.2 percent in November from a year earlier to NZ$4.21 billion, the slowest annual gain since January, the statistics agency said.

Cars, Petroleum

Car imports plunged 52 percent from a year earlier, the agency said. Petroleum and jet fuel imports also declined.

The figures aren’t adjusted for inflation and reflect falling prices for imports as well as actual shipments.

Crude oil imports increased because of higher volumes. The price paid by oil importers fell 29 percent from October after global crude prices dropped to less than $50 barrel for the first time since May 2005 on Nov. 20.

Imports of fertilizer and other chemicals rose amid an increase in prices, the agency said.

Exports gained 9.4 percent in November from a year earlier to NZ$3.69 billion.

Sales of milk powder, butter and cheese, which make up almost one-fifth of overseas shipments, rose 10 percent in November from a year earlier.

Oil Exports

The value of crude oil sales fell 60 percent and aluminum exports also declined.

“Weak global demand and falling commodity prices will mean that export growth will moderate,” said Kevans.

The U.S., Japanese, U.K. and euro-area economies will all shrink in 2009, the Organization for Economic Cooperation and Development said last month.

Prices of butter, meat and other commodities dropped 7.4 percent in December from November, extending their decline last year to 25 percent, according to an index published today by ANZ National Bank Ltd.

Economists monitor the rolling, 12-month trade balance because of volatility in the month-on-month figures, which aren’t seasonally adjusted.

In November, there was a NZ$520 million trade deficit compared with a NZ$628 million gap a year earlier. Economists expected a NZ$775 million monthly deficit.

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

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N.Z. Workers Less Optimistic About Job Prospects

By Tracy Withers

Jan. 7 (Bloomberg) -- New Zealander workers are less optimistic about the outlook for employment and earnings, according to an index compiled by Westpac Banking Corp. and McDermott Miller Ltd.

The fourth-quarter employment confidence index slumped to a record-low 104 from 121.2 in the third quarter, according to a report released in Wellington today. A reading above 100 indicates most people are optimistic about employment prospects.

Confidence collapsed after New Zealand’s economy slumped into a recession last year and the jobless rate rose to a five- year high. Unemployment will probably keep rising in 2009 as the world’s largest economies contract, crimping exports and company profits.

“Employees have finally succumbed to the negativity that has pervaded the economy over the past year,” said Donna Purdue, senior economist at Westpac in Wellington. “Demand for workers has been satisfied and redundant workers will find it increasingly difficult to obtain work.”

Companies expect to fire more workers while profit and investment intentions are near record lows, according to an ANZ National Bank Ltd. survey published last month.

Westpac expects the jobless rate will rise to about 6 percent later this year from 4.2 percent in the third quarter of 2008.

Job Security

A net 26 percent of employees say jobs are hard to get compared with 25 percent who said jobs were plentiful in the third quarter, Westpac said today. The net number subtracts pessimists from optimists.

More New Zealanders expect jobs will be harder to get in a year, while job security has slumped to 1.8 percent from 12.2 percent in the third quarter.

Fewer of the 1,056 employees questioned expect wages will be higher in a year. The survey was conducted between Dec. 1 and Dec. 14 and has a margin of error of 2.5 percent.

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

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Asia to Have 'V-shaped' Recovery in 2010, BNP Paribas Says

By Jason Clenfield

Jan. 7 (Bloomberg) -- Asian economic growth, after slowing this year, will probably rebound in 2010 as government spending and interest rate cuts spur demand, BNP Paribas SA said.

Asia, excluding Japan and China, will grow 4.3 percent next year after a 1.4 percent expansion in 2009, Richard Iley, a New York-based economist at the bank, wrote in a report. Public spending in China, Taiwan and South Korea, combined with increasingly loose monetary policy, should help to drive a “reasonably vibrant” recovery, he said.

Asian governments are planning more measures to boost growth as a slump in global demand hurts exports, deepening the region's economic slowdown. South Korea has pledged about $30 billion in extra spending and tax cuts since September. China may follow a 4 trillion yuan ($585 billion) spending package announced November with a second plan as early as this month.

“The scale of the global policy response -- monetary and fiscal -- should ensure the recovery is more V than U-shaped,” Iley said. “In many instances, economies will experience a 6 to 7 percentage point swing in growth rates.”

Iley said economic growth will worsen this year before the 2010 improvement, in a report titled ``Asia: Apocalypse Now.''

``Global industrial production appears to have collapsed at a 30-40 percent annualized rate since September,'' he said, referring to the ``biggest demand shock since the 1930s.''

Forecast Cut

As a result of the drop in output, BNP Paribas cut its 2008 forecast for Asian economic growth to 1.4 percent from a November prediction of 3.9 percent. BNP Paribas' definition of the region includes Hong Kong, India, Indonesia, Malaysia, Philippines, Singapore, South Korea, Taiwan and Thailand.

Iley said China will grow about 7.7 percent in 2009, helped by the November fiscal package ``worth an eye-popping'' 14 percent of gross domestic product over two years. The economy probably expanded 9.3 percent in 2008, slowing from 11.9 percent the year before. He predicted 8.1 percent growth in 2010.

Hong Kong will grow 3.5 percent in 2010 after shrinking 3.4 percent this year, the bank predicted. Taiwan will expand 3.9 percent after contracting 3.3 percent; Singapore will grow 4.4 percent after declining 2.8 percent this year. South Korea will expand 3.2 percent, rebounding from a 2.4 percent contraction.

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

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Zero Growth in China Is 2009 Black Swan Event: William Pesek

Commentary by William Pesek

Jan. 7 (Bloomberg) -- Anyone who said a year ago that China’s economy was crisis-bound was dismissed out of hand. Today, skeptics have lots of company.

“This year is going to be characterized by much, much weaker growth in China than I think people are anticipating,” says Jim Walker, chief economist at Asianomics Ltd. in Hong Kong.

That may be news to the World Bank, which forecasts China will expand 7.5 percent in 2009. The government is targeting 8 percent growth, believing the 4 trillion yuan ($586 billion) stimulus package it announced in November will boost the world’s fourth-biggest economy.

Citigroup Inc. agrees. “The most important reason supporting our confidence about 8 percent growth is the government’s will and ability,” says Huang Yiping, the bank’s chief Asia-Pacific economist in Hong Kong.

That’s the problem. Chinese officials have done a masterful job generating growth, creating jobs and reducing poverty. They have done so with impressive regularity and earned the trust of many economists and investors. It’s important to remember, though, that external trends made China’s success possible.

The global boom of the 1990s floated most boats, including China’s. Even during Asia’s crisis in the late 1990s, rapid U.S. demand supported the most populous nation. The real acceleration in growth that caught investors’ attention came after China’s accession to the World Trade Organization in 2001.

Zero Growth?

There’s no doubt that China’s leaders have the will to support growth. The question is their ability to do so while all of the world’s economic engines sputter. Yes, all.

That issue featured prominently in the annual “10 Outrageous Claims” release of Saxo Bank. Each year, analysts at the Danish Internet trading bank come up with a list of “Black Swan” events, or unexpected ones with great impact. This year’s candidates include the odds of revolution in Iran, crude oil falling to $25 a barrel, the Standard & Poor’s 500 Index sliding to 500 and Italy scrapping the euro.

A Saxo Bank team led by London-based Chief Investment Officer Steen Jakobsen also pondered this question: Will we see a China crisis with gross domestic product at 0 percent?

Their rationale is that the export-driven industries of China’s economy will be hurt by the freefall in U.S. growth. Many commodity-related investments in recent years will sour with global demand. And since China has been running an overly expansionary monetary policy for many years, the gamut of speculative bubbles will be revealed.

Tough Year

Clearly, zero growth isn’t the most likely outcome. Walker, for example, expects 0 percent to 4 percent this year, with a 30 percent probability of a contraction.

For a developing and highly populated nation like China, 5 percent growth is as good as zero. For Japan, such output would be a dream; for China it would be a nightmare.

A year ago, officials in Beijing struggled to keep their $3.3 trillion economy from overheating. That task will prove easy compared with juggling plunging exports, shuttered factories, tumbling property prices, surging unemployment, dwindling demand and growing worker unrest.

The ruling Communist Party faces its toughest challenge since 1989, the year of the Tiananmen Square protests.

Economists have long agreed that China needs growth in the vicinity of 10 percent to placate the masses. The social contract is this: We will make you richer, you won’t question the government. If growth slows to 5 percent, never mind zero, Chinese officials will be in a very bad way.

Losing End

China’s $1.9 trillion of currency reserves are a plus. So is the government’s success in letting the yuan rise a bit, but not enough to devastate exporters. And as we saw from recent stimulus efforts, China is willing to do what it takes. That may not be enough, though.

Plunging home prices around the world are just part of it. This month, Americans, Europeans and Japanese will be reviewing their 2008 investment and retirement-fund statements. When it dawns on average households in Cleveland, Manchester or Nagoya that they lost 40 percent or more of their net worth, they might put off that holiday. They might scrap plans to buy that new car, flat-screen television, stereo unit, mobile phone, iPod, business suit, sofa or toy.

China will be on the losing end of many of these decisions. The era of excess discretionary spending that served Asia so well these past 10 years is over. That leaves China with two options: boost public spending and encourage consumers to save less.

The trouble is, China must turn its economic model upside down, relying on growth from within rather than from abroad. Spooked by a 66 percent decline in China’s benchmark stock index last year and growing economic gloom, consumers are more likely to increase saving than spending.

The stability of a top-down, command economy now rests on the shoulders of the masses far below. In 2009, China may learn the limits of conjuring growth from on high.

(William Pesek is a Bloomberg News columnist. The opinions expressed are his own.)

To contact the writer of this column: William Pesek in Tokyo at wpesek@bloomberg.net

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Vietnam May Raise Electricity Prices This Year, Tuoi Tre Says

By Ta Bao Long

Jan. 7 (Bloomberg) -- Vietnam may increase electricity prices by as much as 9.5 percent this year, Tuoi Tre newspaper reported, citing Deputy Trade Minister Bui Xuan Khu.

The ministry has submitted the proposal to the government for approval, the report said.

The price increase is inevitable as the country may face electricity shortages in the future, Khu was quoted as saying. The average electricity price is 860 dong (5 cents) per kilowatt-hour, according to the newspaper.

To contact the reporter on this story: Ta Bao Long in Hanoi at longta@bloomberg.net

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PetroChina's Biggest Plant Processes 7% More Crude

By Winnie Zhu

Jan. 7 (Bloomberg) -- PetroChina Co. increased crude-oil processing at its biggest refinery by 7 percent to a record last year after new units started operations.

Refining volume at the plant in the northern city of Dalian rose to 14.3 million metric tons, or 286,000 barrels a day, parent China National Petroleum Corp., the country's largest oil company, said in a statement on its Web site today. Sales increased to 61.5 billion yuan ($9 billion), it said.

Seven units started operating in August, in time to meet additional fuel demand during the Beijing Olympics. The plant's annual capacity has almost doubled to 20.5 million tons from a year earlier, China National said Aug. 8.

The plant sources a third of the crude it processes from Daqing, China's largest oilfield, and the rest comes from countries including Kuwait, Saudi Arabia and Sudan, Zhu Aihua, a spokesman at the refinery, said on July 28.

To contact the reporter on this story: Winnie Zhu in Shanghai at wzhu4@bloomberg.net

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Taiwan's November Coal Imports Fall 10% on Slowdown

By Yu-huay Sun

Jan. 7 (Bloomberg) -- Taiwan, which imports all of its coal, reduced purchases by 10 percent from a year earlier in November as demand from steelmakers and electricity producers dropped.

Shipments fell to 5.35 million metric tons, the Bureau of Energy said in an e-mailed report today. Consumption declined 12 percent to 4.58 million tons, the bureau said.

Coal accounts for about a third of Taiwan's energy supplies. It's also used in steelmaking. Consumption by steel companies dropped because of the global market slowdown, the bureau said.

To contact the reporter on the story: Yu-huay Sun in Taipei ysun7@bloomberg.net

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Nippon Oil, Nippon Mining to Cut Refining Capacity at Mizushima

By Megumi Yamanaka

Jan. 7 (Bloomberg) -- Nippon Oil Corp. and Nippon Mining Holdings Inc., which last month agreed to merge and form Japan's largest refining company, plan to reduce processing capacity at two of their refineries to cope with falling demand.

Combined capacity at the plants at Mizushima in central Japan will be cut to between 300,000 and 350,000 barrels a day from 455,200 barrels, said two officials at the companies, who declined to be named because the details are confidential. Units for producing petrochemicals such as paraxylene, used to make polyester fiber, may be added, they said.

Nippon Oil President Shinji Nishio last month pledged to cut the refining capacity of the merged company by 400,000 barrels a day, or 24 percent, within two years as an ageing population coupled with a switch to cleaner-burning fuels curbs Japanese demand. Petroleum consumption in the country has fallen each year since 2006, prompting some refiners including Nippon Mining to expand petrochemicals production to tap Chinese demand.

``It's a step forward but it's not enough,'' Hidetoshi Shioda, a senior analyst at Mizuho Securities Co., said by telephone from Tokyo. ``Demand is falling rapidly and Japan suffers from about 20 percent overcapacity. I expect more cuts.''

The capacity reduction at Mizushima will likely be undertaken at Nippon Oil's 250,000 barrel-a-day refinery, the two officials said. The two plants sit across the Mizushima bay and are connected by pipelines.

Spokesmen for Nippon Oil and for Japan Energy Corp., the refining unit of Nippon Mining, said the companies are still in negotiations and have yet to decide on capacity reduction.

Falling Demand

Consumption of oil-based fuels in Japan fell 4 percent in 2007 as factories and power producers shifted to natural gas, while gasoline sales dropped 1.7 percent. The trade ministry is yet to release data for 2008.

Falling demand has forced Japanese refiners to idle capacity. They processed 4.01 million barrels a day of crude in the year ended March 2008, compared with a capacity of 4.89 million barrels a day. The trade ministry expects consumption to drop 2.9 percent annually through March 2013.

Nippon Mining President Mitsunori Takahagi said in 2007 the company is studying the possibility adding a paraxylene unit capable of producing at least 500,000 metric tons annually, as part of its plan to tap demand from China.

Nippon Oil and Nippon Mining will sign a contract in March and combine under a holding company in October 2009, Nishio and Takahagi said Dec. 4. The merged company will have a refining capacity of 1.85 million barrels a day.

To contact the reporters on this story: Megumi Yamanaka in Tokyo at myamanaka@bloomberg.net.

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Gazprom Threatens to Cut Gas Through Ukraine as Dispute Worsens

By Lyubov Pronina and Daryna Krasnolutska

Jan. 7 (Bloomberg) -- OAO Gazprom, Russia’s gas-export monopoly, threatened to cut gas deliveries through Ukraine if it holds up fuel meant for customers in central and western Europe.

“If Ukraine fully stops delivery of gas to the west, for consumers in central and western Europe, we do not see sense in supplying gas to the border with Ukraine,” Gazprom Chief Executive Officer Alexei Miller said at Prime Minister Vladimir Putin’s Novo-Ogarevo residence near the Russian capital.

Russia and Ukraine blamed each other yesterday for cuts as supplies from Gazprom through Ukraine plummeted, deliveries to the Balkans halted and Slovakia declared an emergency. The spat, which shut off fuel shipments to Europe for the first time in three years, caused U.K. gas to jump as much as 27 percent and came amid freezing temperatures across Europe.

“Gazprom risks increasing negative publicity,” said Igor Kurinnyy, an oil and gas analyst with ING Groep NA. “What matters is that European customers are facing disruption.”

Since a similar dispute in January 2006, European nations have diversified their sources of fuel and improved inventories. They are also using more gas, the source of 24 percent of the world’s energy consumption last year, to reduce emissions linked to global warming.

NAK Naftogaz Ukrainy Chief Executive Officer Oleh Dubina said he would return to Moscow tomorrow to resume talks. In 2006, Russia turned off all Ukrainian gas exports for three days, causing volumes to fall in the European Union, and also cut shipments by 50 percent last March during related debt claims.

Arctic Air

Gazprom Deputy Chief Executive Officer Alexander Medvedev told Bloomberg Television yesterday that Ukraine shut three export pipelines and said “unilateral action of the Ukrainians” caused the shortfall. Naftogaz spokesman Valentyn Zemlyanskyi said Gazprom, Russia’s state-run gas exporter, cut shipments to Europe through Ukraine to 74 million cubic meters a day, compared with about 300 million normally.

Miller said Gazprom would hold talks with European partners in Brussels tomorrow.

As the dispute intensified, Arctic air from Siberia pushed into Central Europe, northern France, Italy and parts of the U.K., bringing snow and temperatures as low as minus 25 degrees Celsius (minus 13 degrees Fahrenheit) in parts of Germany.

Russia, which supplies a quarter of Europe’s gas, cut shipments intended for Ukraine’s domestic market on Jan. 1, and accused Ukraine of siphoning off gas destined for other buyers. Gazprom has warned that Ukraine risks amassing a debt of “billions of dollars” if the conflict continues.

Russian Energy

Gas flows to Bulgaria, Turkey, Greece and Macedonia were halted early yesterday morning at the Ukrainian-Romanian border, Bulgaria’s Energy and Economy Ministry said. Russian gas is sent through Ukraine and then Romania to the southern Balkan states. Supplies were cut to Romania and Croatia too.

“The former Soviet bloc countries are between the devil and the deep blue sea,” James Nixey, manager of the Russia and Eurasia Program at London-based foreign policy research institute Chatham House, said by phone. “They are reliant on Russian energy more than Western countries and that’s a big problem because they are desperately trying to break free, but then the reality is that they just can’t.”

Further west, Russian gas supplies to Germany’s Waidhaus transit point, near the Czech border, stopped completely at times yesterday, according to Kai Krischnak, a spokesman for the Ruhrgas unit of E.ON AG, Germany’s biggest utility.

Lower Supplies

Gas for next-day delivery at Germany’s EGT trading hub rallied 17 percent yesterday to 26.65 euros ($35.93) a megawatt- hour, according to broker ICAP Plc.

In the U.K., Europe’s biggest market for the fuel, gas for immediate delivery rose as much as 27 percent yesterday to 75 pence a therm, ending trading at a two-month high of 67 pence.

Other utilities across Europe experienced lower gas supplies, including Austria’s OMV AG, which operates Baumgarten gas hub, near Vienna, and Poland’s Polskie Gornictwo Naftowe I Gazownictwo SA. In Slovakia, emergency measures were declared as the country’s dominant gas company, Slovensky Plynarensky Priemysel AS, restricted deliveries to some customers.

Czech Prime Minister Mirek Topolanek, whose country holds the revolving presidency of the EU, said the dispute between Russia and Ukraine on gas prices is becoming “more serious” and the effects are spreading across Europe.

Alternative Sources

Other countries can’t be “held hostage” by Russia over gas supplies, Topolanek told reporters in Prague yesterday. Ukraine may have to compromise on gas fees in the disagreement, he added.

Italy, Poland and other nations said they were using stockpiled gas, and alternative delivery routes from Russia where possible, to help satisfy demand. Restrictions on which customers receive gas may prove necessary in some countries, should the stoppage prove prolonged.

Turkey may also draw on more natural gas from a pipeline from Iran, Energy Minister Hilmi Guler said.

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

IMF Bailout

Ukraine’s political leaders, President Viktor Yushchenko and Prime Minister Yulia Timoshenko, are grappling with a financial crisis that has forced it to seek a $16.4 billion International Monetary Fund bailout.

Gazprom’s Medvedev said yesterday in London that the company is working to diversify its export routes to Europe, including two planned pipeline projects that bypass Ukraine.

The Nord Stream link, in which Gazprom owns 51 percent, is planned to run from Russia via the Baltic Sea to Germany. South Stream, where Eni is a partner, will run from the Black Sea to Bulgaria, where it will split into a southern route to Italy and a northern route to Austria.

To contact the reporters on this story: Lyubov Pronina in Moscow on lpronina@bloomberg.net; Daryna Krasnolutska in Kiev on dkrasnolutsk@bloomberg.net

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Apache, Santos Seek to Revive Australian Gas Project

By Angela Macdonald-Smith

Jan. 7 (Bloomberg) -- Apache Corp. and Santos Ltd. are seeking to revive a A$900 million ($651 million) natural gas project in Australia after signing an accord to sell the fuel to an iron ore venture proposed by Citic Pacific Ltd.

The restart of work to develop the Reindeer project depends on signing construction contracts by mid-March, Houston-based Apache said in a statement. Contracts worth A$390 million with Clough Ltd., an engineering company, were scrapped last month after the project was halted because of a failure to complete the agreement with Citic Pacific.

Gas from Reindeer will be used to power the A$5.2 billion Sino Iron project in Western Australia, where prices of the fuel have jumped on a lack of new supply and a shortage since a June blast at an offshore Apache plant. The possible revival of the plan comes after the government's commodities forecaster said the value of Australian mining and energy projects fell 4 percent in November from April as the economic outlook worsened.

``It's an encouraging development at a time when lots of projects are being scrapped or deferred,'' said Graeme Bethune, chief executive officer of EnergyQuest, an Adelaide-based consultant. ``Reindeer and Devil Creek will form a third production hub for Western Australian gas, so that diversifies the state's gas supplies.''

The seven-year contract to buy gas from the project, comprising the offshore Reindeer field and Devil Creek onshore processing plant, which will start in the second half of 2011, is worth about $1.3 billion at $50-a-barrel crude-oil prices, Citic Pacific said yesterday in a statement. The fuel will feed a power station at the mine site at Cape Preston, it said.

Doubling Gas Prices

The new start-up date for Reindeer is about a year later than the original plan. The project includes the construction of the Devil Creek gas processing plant southwest of Dampier and a 105-kilometer (65-mile) offshore pipeline.

Adelaide-based Santos, which owns 45 percent of Reindeer, said its share of revenue from the contract will be about $585 million for the supply of 75 petajoules (71 billion cubic feet) of gas. That's equivalent to an average of $7.80 a gigajoule, or double the average A$4.90 ($3.53) a gigajoule that Santos got for its gas in the three months ended Sept. 30.

``There's been a lot of volatility and uncertainty in the markets and now we're glad that we have a buyer who's ready to go forward with a major project,'' Bill Mintz, a spokesman for Apache, said in an interview from Houston.

Shares Rise

Santos gained as much as 35 cents, or 2.3 percent, to A$15.49 in Sydney trading and was at A$15.39 at 1:25 p.m. local time. Clough, which said in a statement it's ``ideally placed'' to resume work on the Reindeer project, surged as much as 60 percent to 40 cents, while Citic Pacific climbed 8.5 percent to HK$11.80 in Hong Kong.

The gas contract price is fixed for the first three years, with adjustments for the inflation rate, then indexed to international oil prices starting in the fourth year, Santos, Australia's third-biggest oil and gas producer, said today in a separate statement to the Australian stock exchange.

The Reindeer project will have the capacity to produce 215 terajoules a day of gas and will be a third source of supply for Western Australia after the North West Shelf venture's Karratha plant and Apache's Varanus Island facility. It would supply the equivalent of a fifth of the state's existing gas market.

``The Reindeer field and Devil Creek facility represent important steps in bringing a significant new source of gas supply into the rapidly growing Western Australian market,'' David Knox, chief executive officer of Santos, said in the statement.

Alcoa Inc., the largest U.S. aluminum producer, suspended a proposed expansion of the Wagerup refinery in Western Australia as the global credit crisis curbs demand. Minara Resources Ltd., the Australian nickel producer controlled by Glencore International AG, in August deferred a A$300 million expansion.

To contact the reporter on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net

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Australian Dollar Climbs to 3-Month High; N.Z. Currency Gains

By Ron Harui

Jan. 7 (Bloomberg) -- Australia’s dollar rose to a three- month high and New Zealand’s dollar climbed to its strongest in almost three weeks versus the greenback as gains in equities and commodities revived appetite for higher-yielding assets.

The currencies also advanced to the highest since November against the yen on optimism U.S. President-elect Barack Obama’s $775 billion fiscal stimulus will help the world’s largest economy recover from recession. The Australian and New Zealand dollars gained for a third day versus the U.S. currency as the Bloomberg UBS Constant Maturity Commodity Index of 26 raw materials climbed to its highest in almost two months.

“People who pulled money out from abroad last year are now re-investing their funds, as risk-taking sentiment seems to be improving,” said Kenichiro Ikezawa, who oversees about $3 billion as a fund manager at Daiwa SB Investments Ltd. in Tokyo. “Higher-yielding assets in Australia and New Zealand are attractive for U.S. and Japanese investors.”

Australia’s dollar rose to 72.18 U.S. cents at 2:20 p.m. in Sydney, from 71.22 cents in late Asian trading yesterday. It touched 72.67 cents, the strongest since Oct. 8, and has rebounded 20 percent from the five-year low of 60.10 cents reached on Oct. 28. The currency rose to 67.72 yen from 66.92 and earlier touched an eight-week high of 68.26 yen.

New Zealand’s dollar gained to 59.74 U.S. cents from 58.72 cents in Asia yesterday. It reached 59.93 cents, the strongest since Dec. 19, after the country’s annual trade deficit unexpectedly narrowed in November. The currency touched a seven- week high of 56.33 yen, before trading at 56.03 yen from 55.17 yen yesterday.

Commodities

The Bloomberg UBS Constant Maturity Commodity Index yesterday reached 952.42, the highest since Nov. 10. Crude oil touched a five-week high of $50.47 a barrel on speculation fighting in the Gaza Strip will disrupt Middle East oil supplies.

The MSCI Asia-Pacific Index of regional shares rose 2.1 percent today, following a 0.8 percent advance in the Standard & Poor’s 500 Index of U.S. equities.

New Zealand’s trade deficit narrowed to NZ$5.16 billion ($3.1 billion) in the 12 months ended Nov. 30 from NZ$5.27 billion in the year through October, Statistics New Zealand said in Wellington today. The median estimate in a Bloomberg survey of five analysts was for a NZ$5.49 billion shortfall.

The Australian and New Zealand dollars gained for a fifth day versus the yen after General Motors Corp. said rescue loans already pledged by the U.S. government should ensure the automaker’s survival.

The U.S. Treasury has pledged as much as $13.4 billion in aid to help GM pay its bills and $6 billion to prop up lender GMAC LLC, which GM relies on for auto loans and dealer support.

Potential Upside

Japan’s yen has weakened against 14 of the 16 most-active currencies in 2009, after climbing last year by at least 10 percent against each of the more than 170 global currencies tracked by Bloomberg. Bank of Japan Governor Masaaki Shirakawa said Jan. 4 the central bank may use measures including monetary policy to counter the strengthening yen as the economy faces severe conditions this year.

“Near 20 percent overvaluation in the yen and rising currency rhetoric from Japanese officials and signals of a return toward foreign-exchange risk-taking implies further upside potential for a long Aussie-yen position,” wrote Dwyfor Evans, a strategist in Hong Kong at State Street Global Markets, in a research note yesterday.

Benchmark interest rates are 5 percent in New Zealand and 4.25 percent in Australia, compared with 0.1 percent in Japan and as low as zero in the U.S., attracting investors through so- called carry trades.

In a carry trade, investors get funds in a country with low borrowing costs and invest in one with higher interest rates, earning the spread between the two. The risk is that currency market moves erase those profits.

‘Positive Development’

Australia’s dollar held gains after the Bureau of Statistics said today that the nation’s retail sales rose 0.1 percent in November, matching economists’ expectations. Retail sales gained 0.2 percent in October.

“Today’s retail sales report is a positive development,” Ashley Davies, a currency strategist at UBS AG in Singapore, wrote in a research note today. “On balance, we remain of the view that the Australian dollar should have another period of weakness as risk aversion deteriorates once more.”

Australian government debt advanced. The yield on the 10- year bond fell four basis points, or 0.04 percentage point, to 4.25 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 rose 0.337, or A$3.37 per A$1,000 face amount, to 108.182.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was at 4.43 percent from 4.37 percent yesterday.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net

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Asia Currencies Gain, Led by Won, on Rate Cuts, U.S. Spending

By Lilian Karunungan and Kim Kyoungwha

Jan. 7 (Bloomberg) -- Asian currencies gained, led by the South Korean won and the Indonesian rupiah, on speculation interest-rate cuts in the region and U.S. stimulus spending will help revive economic growth.

The won strengthened for a third day as global funds bought more of the nation’s shares than they sold for a sixth day, the longest stretch since April 2007, according to Korea Exchange data. The MSCI Asia Pacific Index of equities jumped to the highest in two months and after President-elect Barack Obama said the U.S. will incur deficits for years to pull the economy out of recession.

“Sentiment for the won is heartened by foreign net buying of stocks,” said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul. “Any rapid gain in the currency may be limited as importers’ deals and offshore dollar buying are likely to emerge.”

The won climbed 2 percent to 1,286.95 per dollar as of 10:27 a.m. in Seoul and reached 1,284.35, according to Seoul Money Brokerage Services Ltd. The rupiah rose 1.3 percent to 10,900 per dollar, while the Malaysian ringgit advanced 0.3 percent to 3.5005. The Taiwan dollar gained 0.2 percent to NT$32.98 versus the U.S. currency and the Philippine peso strengthened 0.8 percent to 46.57 per dollar.

The country’s Kospi index of equities has advanced 7.8 percent this year following a 40 percent loss in 2008. The won, which declined 26 percent last year, the worst performer among the 10 most-traded regional currencies outside Japan, will weaken to 1,425 by the end of March, according to the median estimate in a Bloomberg survey of 23 strategists.

Obama Spending

The dollar rose for a sixth day against the yen after General Motors Corp. said it has enough government funding to cover the worst-case scenario and may not need additional loans to survive. The dollar rose to 94.07 yen at 10:21 a.m. in Tokyo from 93.65 yen late yesterday in New York. Against the euro, it was at $1.3446 from $1.3536.

“There’s high expectations about the impact of Obama’s economic policies, so people are taking a bit more risk,” said Lam Chee Mun, who helps manage about $200 million as an investor at TA Investment Management in Kuala Lumpur. “Economic data is still weak and you can’t be overly bullish on stocks or the ringgit.”

Indonesia’s central bank will probably reduce its benchmark interest rate for the second straight month. Policy makers may lower the borrowing cost to 9 percent today, according to 14 of 16 economists in a Bloomberg News survey.

“The expectations of a rate cut are probably going to help the local bond market, which in turn would encourage foreign investors to buy,” said Euben Paracuelles, an economist in Singapore at Royal Bank of Scotland Plc., 58 percent-owned by the U.K. government. “That’s got to be a support for the rupiah.”

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net. Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

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Dollar Rises After GM Says May Not Need More Government Funds

By Stanley White

Jan. 7 (Bloomberg) -- The dollar rose for a sixth day against the yen, the longest run of gains in two years, after General Motors Corp. said rescue loans already pledged by the government should ensure the biggest U.S. automaker’s survival.

The dollar also advanced for a fourth day versus the euro on speculation U.S. President-elect Barack Obama’s $775 billion package of tax cuts and government spending will help the economy recover from a recession. The 16-nation euro also fell against the yen as derivatives showed investors are betting the European Central Bank will lower its key interest rate by at least a quarter of a percentage point next week.

“The news about GM is a plus factor for the dollar,” said Akifumi Uchida, deputy general manager of the marketing unit at Sumitomo Trust & Banking Co. in Tokyo. “There are also rising expectations about how far Obama will go to revive the U.S. economy, making it difficult to bet on dollar declines.”

The dollar rose to 93.83 yen at 11:44 a.m. in Tokyo from 93.65 yen late yesterday in New York, when it touched a five- week high of 94.63 yen. Against the euro, it was at $1.3491 from $1.3536. The dollar appreciated to $1.3313 per euro yesterday, the strongest since Dec. 12. The euro slid to 126.55 yen from 126.75. The dollar may rise to 94.25 yen today, Uchida said.

The greenback rose to 1.1173 Swiss francs from 1.1145. It also appreciated to $1.4883 per British pound from $1.4917. The South Korean won strengthened to 1,289.85 per dollar from 1,312.70 as overseas investors added to their holdings of the nation’s stocks.

Auto Rescue

The U.S. Treasury has pledged as much as $13.4 billion in aid to help GM pay its bills and $6 billion to prop up lender GMAC LLC, which GM relies on for auto loans and dealer support.

GM received the first $4 billion on Dec. 31 from the Troubled Asset Relief Program administered by the Treasury. The company said it is spending that money to pay bills, mostly to its 3,000 suppliers.

Obama, who takes office on Jan. 20, is pushing for tax cuts worth $500 for individuals, according to a House Democratic aide, and his economic stimulus plan includes the largest infrastructure investment since the 1950s.

The euro traded at 90.59 British pence from 90.70. It has declined by 5.3 percent in the last two days, the biggest drop since the currency’s debut in 1999, on speculation slowing inflation will give the ECB room to cut interest rates to tackle a recession.

European producer prices probably fell 1 percent in November, according to the median forecast of economists surveyed by Bloomberg News before the data is released at 11 a.m. in Luxembourg today. October’s 0.8 percent decline was the biggest in 22 years.

ECB Rates

Consumer prices in the euro-zone rose 1.6 percent in December, the slowest pace of gains in two years, data yesterday showed. The ECB aims to keep inflation below 2 percent.

The central bank cut interest rates by 1.75 percentage points since early October to 2.5 percent as the region entered a recession. Policy makers will lower the main rate by at least a quarter of a percentage point at the next meeting on Jan. 15, according to a Credit Suisse Group AG gauge of probability, based on overnight index-swap rates.

“The euro looks heavy and is vulnerable to selling on rallies,” said Akio Shimizu, chief manager of foreign exchange trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest publicly listed bank. “The ECB will have to lower interest rates at some point to respond to the state of the economy.”

The euro may decline to $1.33 today, he said.

Jobs Market

Gains in the dollar may be limited by speculation the U.S. job market has deteriorated further. Companies in the U.S. eliminated 493,000 jobs in December after cutting payrolls by 472,000 the previous month, ADP Employer Services may say today, according to a Bloomberg News survey. The data are due at 8:15 a.m. New York time.

U.S. nonfarm payrolls fell 500,000 in December, bringing last year’s decline to 2.4 million, the most since 1945, according to a separate survey before Labor Department figures due Jan. 9. The unemployment rate likely jumped to 7 percent, the highest level since 1993.

“We may see the dollar decline on worse-than-expected employment data,” said Kimihiko Tomita, head of foreign exchange in Tokyo at State Street Bank & Trust Co., a unit of the world’s largest money manager for institutions. “There’s a risk that people are expecting too much from the U.S. economy.”

Minutes of the Federal Reserve’s meeting in December showed policy makers saw “substantial” risks to the slumping economy. The Fed reduced the target rate for overnight loans between banks to a range of zero to 0.25 percent and pledged to expand emergency loans if necessary.

Difficult Outlook

The pound slipped versus the dollar after Chancellor of the Exchequer Alistair Darling said the outlook for the U.K. economy is difficult, according to an interview with the Financial Times. The Bank of England will lower its benchmark rate by half a percentage point to 1.5 percent when it announces a policy decision tomorrow, according to a Bloomberg survey.

“In the current climate, no responsible finance minister could say that’s the job done, far from it,” he said, according to the FT.

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net

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Gold Declines as Strengthening Dollar Reduces Investment Demand

By Jae Hur

Jan. 7 (Bloomberg) -- Gold dropped as the dollar strengthened to a three-week high against the euro, reducing the appeal of the precious metal as an alternative investment.

Bullion fell as the dollar gained for a fourth day before a European Union report forecast to show declining producer prices, boosting the case for the European Central Bank to cut interest rates. Gold has fallen 2.8 percent this month, while the dollar has risen 4 percent.

“The dollar’s strength put pressure on bullion and other commodities,” said Hiroaki Hama, an analyst at Mizuho Corporate Bank Ltd. in Tokyo.

Gold for immediate delivery fell 0.7 percent to $857.54 an ounce at 10:18 a.m. in Tokyo. Silver for immediate delivery declined 1.2 percent to $11.34 an ounce after gaining 2 percent yesterday.

Spot gold advanced 5.8 percent last year, a record eighth annual advance, while silver fell 23 percent, its worst performance since 1984, and platinum plunged 39 percent, the steepest drop since at least 1988.

February-delivery gold dropped 0.7 percent to $859.90 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.

The euro traded at $1.3501 at 8:42 a.m. in Tokyo from $1.3536 late yesterday in New York, when it touched $1.3313, the lowest level since Dec. 12.

December-delivery gold on the Tokyo Commodity Exchange gained 2 percent to 2,594 yen per gram ($861 an ounce). December-delivery platinum rose 3.4 percent to 2,922 yen a gram.

Immediate-delivery platinum added 0.3 percent to $970.50 an ounce, gaining for a fifth day. The metal is used in pollution- control devices in cars and trucks.

To contact the reporter on this story: Jae Hur in Tokyo at jhur1@bloomberg.net

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Shanghai Copper Futures Contracts Surge by Daily Trading Limit

By Glenys Sim

Jan. 7 (Bloomberg) -- Copper futures contracts in Shanghai jumped by the exchange-imposed daily limit, tracking moves in London, on speculation that government spending will help bolster economies and revive demand for industrial metals.

Copper for delivery in January, February, March to July, November and December on the Shanghai Futures Exchange climbed the day’s limit of 6 percent from the previous settlement price. The benchmark March-delivery contract is not trading today after hitting the daily limit for three straight days.

London Metal Exchange copper gained as much as 9.1 percent to $3,480 a ton yesterday, and traded up 2.8 percent at 3,485 a ton at 9:11 a.m. Singapore time. The metal is up 14 percent this year.

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

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Oil Trades Near $48 as U.S. Recession Deepens, Inventories Rise

By Christian Schmollinger

Jan. 7 (Bloomberg) -- Crude oil traded little changed after falling yesterday on signs the economy in the U.S., the world’s biggest energy consumer, contracted further in November and December, pushing oil inventories higher.

U.S. crude oil stockpiles probably rose for a second week in the week ended Jan. 2, according to a Bloomberg News survey before an Energy Department report today. Orders placed with U.S. factories in November fell twice as much as forecast, signaling businesses are cutting back on investments, according to data from the Commerce Department.

“We’ve seen over the last few months that the market has been really focused on demand,” said Gerard Burg, an energy economist at National Australia Bank Ltd. in Melbourne. “Anytime we get negative economic news out of the U.S. it puts a damper on the crude market.”

Oil for February delivery was at $48.50 a barrel, down 8 cents, in electronic trading on the New York Mercantile Exchange at 10:05 a.m. in Singapore. Yesterday, futures dropped 23 cents, or 0.5 percent, to $48.58 a barrel.

U.S. crude oil stockpiles probably increased 900,000 barrels in the week ended Jan. 2, from 318.7 million the week before, according to the median forecast of 10 analysts surveyed by Bloomberg News.

Gasoline inventories rose 1 million barrels from 208.1 million, according to the survey. It would be the fifth consecutive weekly gain. Gasoline supplies have risen in 12 out of the past 14 weeks.

Economic Slowdown

Supplies of distillate fuel, a category that includes heating oil and diesel, probably increased 1.1 million barrels from 136 million barrels. Refineries probably operated at 82.5 percent of capacity, unchanged from the week before, when they ran at the lowest since the period ended Oct. 10 because of damage caused by Hurricanes Gustav and Ike.

The Energy Department is scheduled to release its weekly report at 10:30 a.m. in Washington. The release time will change this week from 10:35 a.m. previously.

The U.S. Federal Reserve released minutes of a meeting of policy makers last month that showed they believed “risks to the economy would be substantial.”

U.S. factory orders fell 4.6 percent in November after a revised 6 percent decrease in October that was larger than previously estimated, the Commerce Department said in Washington. The back-to-back decline was the biggest since records began in 1992.

To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net.

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BHP’s Australian Iron Ore Exports Rise 5% From a 9-Month Low

By Jason Scott

Jan. 7 (Bloomberg) -- BHP Billiton Ltd., the world’s biggest mining company, shipped 5 percent more iron ore from Australia in December than in November, when exports hit a nine-month low on plunging demand from China.

The world’s third-biggest iron ore producer exported 10.6 million metric tons from Western Australia in November, according to the Port Hedland Port Authority Web site. That’s more than the 10.1 million tons shipped in November.

Steel, which has slumped by half since trading at a record in July, may be poised for a rebound as mills in China, the world’s largest producer of the metal, gain from infrastructure spending. China plans 4 trillion yuan ($585 billion) of spending on housing, roads, railways and airports.

Iron ore, a raw material used in steelmakers’ furnaces, has risen 24 percent since Oct. 31, when it reached the lowest in three years, according to data compiled by industry publication Metal Bulletin. Steel has dropped for five consecutive months, according to Steel Business Briefing.

BHP rose 3.7 percent to A$32.88 at 12:26 p.m. Sydney time on the Australian stock exchange.

To contact the reporter on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net

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Emerging-Market Funds Lose Record $48.3 Billion

By Chen Shiyin

Jan. 7 (Bloomberg) -- Emerging-market equity investors withdrew a record $48.3 billion from their funds in 2008 as the global financial crisis and economic recession hurt demand for riskier assets, according to data from EPFR Global.

Outflows last year were pared after a rebound in stock prices last month attracted $1.6 billion to emerging-market equity funds in December, according to Cambridge, Massachusetts- based EPFR.

The MSCI Emerging Markets Index, which tracks 746 companies in developing nations, climbed 7.6 percent in December, the first gain in seven months. The advance pared the measure’s loss in 2008 to 56 percent, compared with a 38 percent decline in the Standard & Poor’s 500 index.

“The question for 2009 is whether credit markets will continue to thaw and whether all of the fiscal stimulus to come and the expectation of a recovery in economic activity later this year will be enough to coax some of the cash back into equity and bond exposure,” Brad Durham, EPFR’s managing director, said in the statement.

Asian stocks rose today, trailing gains in the U.S. yesterday, on speculation President-elect Barack Obama’s $775 billion package of tax cuts and government spending will revive the economy. Central banks from China to India have cut interest rates to boost economic growth after financial services companies incurred more than $1 trillion in credit losses and writedowns linked to the U.S. subprime market.

‘Decoupling Theme’

Asian stocks and exchange-traded funds posted $25.7 billion in outflows, making up more than half of the withdrawals from emerging-market equity portfolios last year, EPFR said. The region drew $20.4 billion in 2007 while funds investing in the U.S., Japan and Western Europe lost $101 billion.

“The decoupling theme that took hold in the last quarter of 2007, of investors moving money from developed market funds and putting it into emerging market funds, came to an abrupt halt in early in 2008,” Durham added. “As the fear and panic in global markets deepened, investors took from most equity and bond funds and stuck it in cash or cash equivalents.”

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net.

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Babcock, Fubon, DMCI, HTC, Lotte: Asia Ex-Japan Equity Preview

By Ian C. Sayson

Jan. 7 (Bloomberg) -- The following companies may have unusual price changes in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

China railway construction-related stocks: China will start 80 railway projects this year with total investment of 1.5 trillion yuan ($219 billion), the Ministry of Railways said yesterday. Fixed-asset investment in railway lines this year will be 701 billion yuan, it said.

China Railway Group Ltd. (601390 CH), Asia’s largest construction company, said its subsidiaries won 25 billion yuan of new projects. Its shares rose 0.06 yuan, or 1.1 percent, to 5.64. China Railway Construction Corp. (601186 CH), builder of more than half the nation’s rail links since 1949, added 0.05 yuan, or 0.5 percent, to 10.41.

Atlas Consolidated Mining & Development Corp. (AT PM): The second-largest Philippine metals producer by market value said its Carmen Copper Mine made its first shipment of concentrates and will complete a second delivery by end of the month. The stock gained 25 centavos, or 8.5 percent, to 3.20 pesos.

Babcock & Brown Ltd. (BNB AU): The Australian asset manager whose stock tumbled 99 percent last year said it submitted a proposal to its creditors to swap assets for debt and that it expects a response next week. The stock jumped 13.5 cents, or 54 percent, to 38.5 Australian cents.

Courage Marine Group Ltd. (CMG SP): The Hong Kong-based owner and operator of dry-bulk carriers said its wholly owned unit has sold a vessel for $7 million to Goldcapital Asia Management Ltd. on Jan. 3, providing it with funds for working capital or acquisitions. Courage Marine, whose shares are traded in Singapore, jumped 0.5 cents, or 3.7 percent, to 14 Singapore cents.

DMCI Holdings Inc. (DMC PM): The largest Philippine construction company said Maynilad Water Services Inc., a venture with Metro Pacific Investments Corp. (MPI PM), will spend 168.1 billion pesos ($3.58 billion) in 2008 through 2022 for fees and upgrades of its service area. DMCI said separately that it got the 4.9 billion contract to build a condominium and hotel project for Kingdom Hotel Investments in Manila.

DMCI gained 15 centavos, or 5.5 percent, to 2.90 pesos. Metro Pacific, which owns the longest Philippine tollroad, fell 10 centavos, or 3.7 percent, to 2.60 pesos.

Fubon Financial Holding Co. Ltd. (2881 TT): The bank’s Hong Kong unit said employees at its credit arm have been questioned by the city’s anti-graft agency in relation to an alleged loan racket. “We reported the case ourselves,” Betty Chan, a Hong Kong-based Fubon Bank spokeswoman, said in a phone interview. “It has no impact on our balance sheet and it has nothing to do with our clients’ money.”

Fubon, Taiwan’s second-biggest financial services company, fell 75 cents, or 3 percent, to NT$23.9. Fubon Bank (Hong Kong) Ltd. (636 HK), the company’s Hong Kong unit, fell 12 cents, or 4.7 percent, to HK$2.44.

HTC Corp. (2498 TT): The Taiwanese maker of Google Inc.’s G1 mobile phone said fourth-quarter profit declined 19 percent to NT$8.1 billion ($245 million), even as handset sales climbed, because a new accounting rule raised costs. The stock fell NT$2, or 0.6 percent, to NT$340.

Lotte Chilsung Beverage Co. (005300 KS): South Korea’s biggest beverage maker said it will pay 503 billion won ($383 million) for Doosan Corp.’s liquor business, enabling it to produce wine and soju, a distilled traditional liquor. Lotte climbed 19,000 won, or 2.2 percent, to 875,000 won. Doosan (000150 KS), the operator of Burger King restaurants and Ralph Lauren stores in South Korea, decreased 100 won, or 0.1 percent, to 91,400 won.

PetroEnergy Resources Corp. (PERC PM): The fourth-largest Philippine oil explorer by assets said total production at its Etame oil venture in Gabon is expected to increase 25 percent to 25,000 barrels a day with the additional output of three oil fields. The stock rose 50 centavos, or 11 percent, to 5 pesos.

Silitech Technology Corp. (3311 TT): The Taiwanese company that makes mobile phone keyboards for Nokia Oyj said December sales fell 47 percent to NT$210.2 million. The stock was unchanged at NT$40.2.

Sinopec Yizheng Chemical Fibre Co. (1033 HK): The unit of Asia’s biggest oil refiner said it expects a “significant loss” for 2008 because of a decline in demand for polyester products due to reduced consumption. The stock rose 1 cent, or 1.1 percent, to 92 Hong Kong cents. The company’s shares traded in mainland China (600871 CH) added 0.08 yuan, or 2.2 percent, to 3.67.

Top Glove Corp. (TOPG MK): The world’s largest rubber-glove maker said fiscal first-quarter profit rose to 34.5 million ringgit ($9.8 million) from 29.8 million ringgit a year earlier. The stock gained 22 sen, or 5.8 percent, to 4.02 ringgit.

WCT Bhd. (WCT MK): The Malaysian engineering company said its worst-case direct loss from a racecourse contract in Dubai that was canceled is about 300 million ringgit. WCT fell 54 sen, or 30 percent, to 1.29 ringgit, before it suspended its shares from trading in the afternoon yesterday and disclose the impact of the terminated contract.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

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Japan Stocks Rise on U.S. Stimulus Expectations; Mitsui Climbs

By Masaki Kondo

Jan. 7 (Bloomberg) -- Japan’s stocks rose after President- elect Barack Obama said the U.S. will run deficits for years to keep the economy afloat, lifting speculation government spending will boost demand for Japanese products.

Canon Inc., which gets a third of its sales from the Americas, jumped 11 percent on expectations Obama’s plan to cut taxes will boost spending in the world’s largest economy, and as the yen fell for the sixth day against the dollar. Fuji Heavy Industries Ltd., an automaker that makes 65 percent of its sales overseas, soared 19 percent. Mitsui & Co., which derives more than half its profit from commodities, leapt 6.4 percent as metal prices climbed to a one-month high in London.

The Nikkei 225 Stock Average added 182.31, or 2 percent, to 9,263.15 at the 11 a.m. break in Tokyo, rising for the seventh- straight day, and set for the longest winning streak since April 2006. The broader Topix index added 14.49, or 1.7 percent, to 890.69, with more than two stocks gaining for each that fell.

“One of the few investment themes we have in 2009 is public spending by governments globally,” said Yoshinori Nagano, a senior strategist at Tokyo-based Daiwa Asset Management Co., which manages about $96 billion. “The gains in stocks ease pessimism among investors and prompt them to buy.”

The Nikkei tumbled a record 42 percent last year as the collapse of the American mortgage market dragged Japan, the U.S. and Europe into their first simultaneous recessions since World War II. Yesterday, stocks included in the benchmark traded at 17.1 times their estimated earnings for this fiscal year, almost doubling from a low of 9.5 times on Oct. 27, when the Nikkei plunged to a 26-year low.

Bank Capital

Consumers in the U.S., the single biggest market for Japanese exports, are increasingly reluctant to spend as the yearlong recession raises the likelihood of more job losses. Sony Corp. President Ryoji Chubachi yesterday said the company’s annual sales target for flat-display televisions will be “tough to reach.” Sony derives a quarter of its sales from the U.S.

Obama, who takes office on Jan. 20, yesterday said he expects to inherit a $1 trillion budget deficit and that similar shortfalls are in store “for years to come.” He’s pushing for tax cuts worth $500 for individuals, according to a House Democratic aide, and his economic stimulus plan includes spending on clean-energy development such as solar power and the largest infrastructure investment since the 1950s.

‘Few’ Investment Themes

Canon, the world’s biggest digital-camera maker, extended its gain to a fourth day, rising 11 percent to 3,300 yen. Fuji Heavy, the maker of Subaru cars, soared 19 percent to 292 yen, the sharpest advance since Oct. 14.

Sharp Corp., the world’s second-largest solar-battery maker, leapt 11 percent to 882 yen after the Asahi newspaper reported today the company will start producing solar panels at its Sakai factory in October, ahead of its originally planned 2010 date. Makers of electronics and cars contributed the most to the Topix’s gain.

The Japanese currency depreciated to as much as 94.63 yesterday, the weakest level since Dec. 1, from 93.15 at the close of Tokyo stock trading. It was the sixth day of declines. A 1 yen change against the dollar alters Canon’s annual operating profit by 2.6 billion yen ($28 million), the company said in October. A weaker yen increases the value of overseas sales when revenue is repatriated.

Mitsui, Japan’s second-biggest trading company by market value, climbed 6.4 percent to 1,032 yen, while market leader Mitsubishi Corp. added 4.3 percent to 1,394 yen. JFE Holdings Inc., the world’s third-largest steelmaker, rose 6.2 percent to 2,735 yen. Komatsu Ltd., the second-biggest maker of earthmoving equipment, jumped 3.9 percent to 1,300 yen.

A measure of six metals traded in London jumped 4.6 percent yesterday to the highest level since Dec. 1. Copper futures for March delivery jumped 8.5 percent in New York yesterday, the most since Dec. 8, amid speculation the U.S. spending package will lift demand for materials.

Nikkei futures expiring in March added 2.4 percent to 9,290 in Osaka and gained 2 percent to 9,285 in Singapore.

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

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Asia Stocks Rise on Expectation U.S. Spending Will Boost Growth

By Patrick Rial and Masaki Kondo

Jan. 7 (Bloomberg) -- Asian shares rose, driving the regional benchmark index to a two-month high, after President- elect Barack Obama said the U.S. will run deficits for years, lifting speculation government spending will restore growth.

Rio Tinto Group, the world’s No. 3 mining company, surged 8.1 percent after copper prices jumped the most in a month. Isuzu Motors Ltd., Japan’s third-biggest maker of commercial vehicles, soared 7.1 percent as the weakening yen lifted overseas sales prospects. Ricoh Co., Japan’s second-largest maker of office equipment, rallied 12 percent after Credit Suisse Group boosted its rating, citing copier demand in North America.

The MSCI Asia Pacific Index jumped 2.2 percent to 92.85 as of 9:58 a.m. in Tokyo, the highest since Nov. 5. About three shares climbed for each that retreated on the gauge, with consumer-related and materials companies accounting for 40 percent of the advance. The benchmark has gained 3.6 percent in 2009 after posting a record 43 percent decline last year.

“Hopes Obama will revive the U.S. economy continue to support the market,” Hiroichi Nishi, a Tokyo-based equities manager at Nikko Cordial Securities Inc., said in an interview with Bloomberg Television. “Though the yen may strengthen today, the current level is weak enough to ease deep-rooted concerns about Japanese corporate earnings.”

Japan’s Nikkei 225 Stock Average added 2.4 percent to 9,295.64, rising for a seventh-straight day. Benchmarks throughout the region advanced except in New Zealand. U.S. stocks climbed yesterday, with the Standard & Poor’s 500 Index gaining 0.8 percent. S&P futures rose 0.1 percent in trading today.

Tax Cuts

Obama, who takes office on Jan. 20, said he expects to inherit a $1 trillion budget deficit and that similar shortfalls are in store “for years to come.” He’s pushing for tax cuts worth $500 for individuals, according to a House Democratic aide, and his economic stimulus plan includes the largest infrastructure investment since the 1950s.

Rio jumped 8.1 percent to A$46.95. Mitsui & Co., Japan’s second-largest trading company, soared 8 percent to 1,048 yen. Fortescue Metals Group Ltd., Australia’s third-largest iron-ore producer, climbed 9.4 percent to A$2.34.

Copper futures for March delivery jumped 8.5 percent in New York, the most since Dec. 8, amid speculation the spending package will lift demand for materials. A measure of six metals traded in London jumped 4.6 percent.

“Right now, as of today, I would rather buy a basket of oversold industrial commodities” than gold, said Marc Faber, publisher of the Gloom, Boom & Doom Report. Faber, who successfully predicted the 1987 stock crash as well as the rally in the dollar in 2008, spoke in an interview with Bloomberg Television.

Hitachi Metals Ltd., a maker of specialty steel, soared 14 percent to 563 yen. Posco, Asia’s third-largest steelmaker, advanced 3.6 percent to 420,500 won in Seoul.

Exporting Companies

Iron ore, a raw material used in steelmakers’ furnaces, has risen 24 percent since Oct. 31, when it fell to the lowest in three years, according to data compiled by industry publication Metal Bulletin. That indicates steel is set for a “tentative recovery,” according to Michael Rawlinson, head of mining, resources and energy at London-based brokerage Liberum Capital Ltd.

The Japanese currency depreciated to as low as 94.63 in global trading yesterday, the weakest level since Dec. 1, from 93.15 at the close of Tokyo stock trading. A weaker yen boosts the value of overseas sales for Japanese exporters. The currency strengthened to 93.63 today.

Isuzu Motors added 13 percent to 142 yen. Nidec Corp., the world’s biggest maker of disk-drive motors, soared by its 500 yen daily limit, or 14 percent, to 4,200 yen. Daikin Industries Ltd., Japan’s biggest maker of air conditioners, rose 8.7 percent to 2,690 yen.

Ricoh Rating

Ricoh soared 12 percent to 1,352. Kunihiko Kanno, an analyst at Credit Suisse in Tokyo, lifted the stock to “outperform” from “neutral.”

The U.S. market “appears to be more stable than anticipated,” Kanno wrote in a report. “Compared with Europe, the US market focuses on higher-value-added products, and this could be a big advantage for Ricoh.”

Kawasaki Heavy Industries Ltd., a Japanese maker of trains, jumped 6.2 percent to 223 yen after the Nikkei newspaper reported it will build a factory to produce rechargeable storage batteries.

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

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