Yen, Dollar Slide on Optimism Obama Plan to Aid Risk Appetite

By Yasuhiko Seki and Ron Harui

March 23 (Bloomberg) -- The yen and the dollar fell, with Japan’s currency touching a five-month low against the euro, on speculation new U.S. government steps to help banks deal with toxic assets will boost demand for higher-yielding currencies.

The dollar extended last week’s biggest decline since the 1985 Plaza Accord on speculation U.S. yields will drop following the Federal Reserve’s plan to buy Treasuries. South Korea’s won and Australia’s dollar surged against the yen as a government survey showed confidence among Japanese manufacturers fell the most on record this quarter, diminishing the currency’s allure as a shelter from the financial crisis.

“The so-called bad bank plan, aimed at removing bad loans from private banks, may improve prospects for riskier assets, including stocks and higher-yielding currencies,” said Yasuhide Yajima, senior economist at NLI Research Institute Ltd., a unit of Japan’s second-largest life insurer. The improved outlook for riskier assets “should reduce demand for safe-haven currencies,” he said.

The yen dropped to 131.30 per euro as of 11 a.m. in Tokyo from 130.29 on March 20. It touched 131.36, the lowest since Oct. 22. Japan’s currency eased to 96.22 per dollar from 95.94.

The dollar weakened to $1.3649 per euro from $1.3582 late in New York on March 20. The U.S. currency reached $1.3738 on March 19, the lowest level since Jan. 9.

The Obama administration outlines today regulatory changes aimed at avoiding a repeat of the financial crisis that’s crippled the U.S. banking system.

U.S. Treasury Secretary Timothy Geithner intends to expand the Federal Reserve’s $1 trillion Term Asset-Backed Securities Loan Facility to buy frozen assets, according to unidentified people familiar with the proposal.

Political Turmoil

Japan’s currency fell against the euro for a second day after the Asahi newspaper reported today that prosecutors will tomorrow indict an aide to Ichiro Ozawa, leader of the opposition Democratic Party of Japan, signaling further turmoil.

The yen dropped against all of the 16 most-traded after a survey by the Cabinet Office and Finance Ministry showed today that sentiment among large manufacturers was minus 66.0 points this quarter compared with minus 44.5 points three months earlier. A negative number means pessimists outnumber optimists. The government began compiling the report in 2004.

“Japan’s fundamentals including its economy are still deteriorating, casting doubt over the appeal of its currency,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The trend for the yen is to weaken” to 131.05 per euro and 96.25 against the dollar today, he said.

Takanori Okubo, arrested March 3 on suspicion of falsely reporting donations, will be indicted by prosecutors for campaign funding violations, Asahi reported, without saying where it obtained the information.

Dollar Index

The ICE’s trade-weighted Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, fell 0.4 percent to 83.5. It dropped 4.1 percent last week, the biggest decrease since September 1985, when the U.S., U.K., France, Japan and West Germany agreed at New York’s Plaza Hotel to coordinate the devaluation of the dollar against the yen and the deutsche mark.

The Fed unexpectedly announced on March 18 that it will buy as much as $300 billion of Treasuries and increase purchases of agency mortgage-backed securities, to lower consumer borrowing costs, sparking speculation that dollar-denominated assets will lose yield advantage.

Yields Dropping

The yield on the benchmark 10-year Treasury note dropped 0.26 percentage point last week in its biggest decrease since December. The difference in yield between 10-year debt in the U.S. and Japan narrowed to 122 basis points on March 18, the least in almost two months, down from 173 basis points on Feb. 27. It widened to 136.4 basis points today.

Foreigners hold about half of marketable Treasury debt outstanding. China, the biggest foreign holder, with $740 billion, is “worried” about its investment in Treasuries and wants assurances its money is safe, Premier Wen Jiabao said at a press briefing in Beijing two weeks ago.

Demand for the euro also increased after European Central Bank President Jean-Claude Trichet said in an interview with the Wall Street Journal that zero interest rates have “drawbacks” and would not be “appropriate.”

“The ECB is most reluctant to lowering interest rates,” said Yuji Saito,” Tokyo-based head of the foreign-exchange group at Societe Generale SA, France’s third-largest bank. This, combined by an additional support measure for eastern Europe, “should support the euro,” he said.

ECB council member Axel Weber also dismissed speculation the crisis might prompt a euro-region government to default.

Asian Currencies

“All this talk of euro-area sovereigns being in a long- term problem with fiscal budgets is just a lot of nonsense,” Weber told a German Marshall Fund conference in Brussels yesterday. “There is no sustainability problem whatsoever, it’s a pricing issue.”

South Korea’s won was the strongest among the 16 most-traded currencies against the U.S. dollar. The won gained 1.3 percent to 1,394.50 per dollar, according to Seoul Money Brokerage Services Ltd. It reached 1,373.50 on March 19, the highest since Feb. 9. Korea’s currency advanced 1.3 percent to 14.535 against the yen.

The currency strengthened 10 percent this month against the greenback, the best performance among Asia’s 10 most-traded currencies outside Japan, on speculation a widening current- account surplus will ease a shortage of dollars needed to pay overseas debt.

Goldman Sachs Group Inc. today revised up its forecast for Korea’s current-account surplus in the first half of 2009 to $11 billion, from $7 billion, and reiterated its forecast that the won will gain 7.3 percent to 1,300 versus the U.S. currency within 12 months.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

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Euro Currency of Choice as Fed Easing Devalues Dollar

By Oliver Biggadike

March 23 (Bloomberg) -- Less than a month after lambasting European Central Bank President Jean-Claude Trichet for failing to keep up with Ben S. Bernanke’s efforts to stem the recession, foreign-exchange traders are glad he’s behind the curve.

The 16-nation currency strengthened 7.5 percent versus the dollar since February, after tumbling 9.3 percent in the first two months of the year. JPMorgan Chase & Co., Morgan Stanley and Citigroup Inc. are advising investors to buy euros.

Traders are looking past forecasts from Germany’s Kiel- based IfW institute for the European Union economy to shrink 3.3 percent this year, and snapping up currencies where central bankers are resisting calls to purchase debt securities as a way of lowering interest rates and pump cash into their financial systems. Those options are becoming scarce after Federal Reserve Chairman Bernanke joined the Bank of England, Bank of Japan and Swiss National Bank in so-called quantitative easing.

“The dollar is a sell near term versus those currencies where quantitative easing is off the table,” said John Normand, head of currency strategy at JPMorgan in London. “The top on euro-dollar will come when the ECB looks likely to join the quantitative easing crowd. For now, it’s content to stay on the sidelines.”

The euro will probably rise 2.8 percent to $1.40 in a month after soaring 5.1 percent last week as long as the ECB refrains from purchasing assets, Normand predicted. The Euro Index, which tracks the currency against the dollar, pound, yen, Swiss franc and Swedish krona, climbed 2.6 percent to 118.03. The euro gained 0.4 percent today to $1.3630 as of 9:41 a.m. in Tokyo.

Fed Spending

The Fed said March 18 that it plans to expand its balance sheet by as much as $1.15 trillion as it buys up to $300 billion of U.S. government bonds and steps up purchases of mortgage securities. Bernanke’s goal is to reduce consumer borrowing rates such as those for mortgages and encourage banks to lend in an effort to boost the economy.

The trade-weighted Dollar Index, measured against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, posted its biggest one-day drop since 1971, tumbling 2.69 percent, and fell 4.1 percent for the week to 83.841.

“This is a historic moment -- the start of debasement of the world’s reserve currency,” wrote Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. “It feels to many participants that in the grand sweep of history we are witnessing the end of ‘Rome’ on the Potomac.”

Shrinking Economy

U.S. gross domestic product shrank 6.2 percent last quarter, the most since 1982. The Congressional Budget Office said March 20 that President Barack Obama’s administration will generate a budget deficit of $1.85 trillion this year, and expenses will exceed revenue by a total $9.27 trillion between 2010 and 2019. That’s about $2.3 trillion more than the administration forecast. At 8.1 percent, the unemployment rate is the highest in more than a quarter century.

The flood of dollars also increases the chances for quicker inflation in the global economy, spurring demand for commodities and currencies of raw materials producers. The Standard & Poor’s GSCI Index of commodities is up 21 percent since Feb. 18 to 372.1680, and last week posted its biggest gain in two months, rising 8.6 percent.

“Quantitative easing across the board will diminish the fiat currencies as a store of value,” said Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “Investors may then seek refuge in harder currencies such as commodities.”

BHP’s Gain

Hardman recommends Norway’s krone, the Australian dollar and New Zealand dollar. Demand for Australian coal, iron ore and wool drove 17 consecutive years of economic expansion. Norway is the world’s fifth-largest oil producer and New Zealand relies on sales of milk powder, butter, cheese and aluminum.

Australia’s dollar climbed 4.4 percent last week to 68.69 U.S. cents, while the krone rallied 6.5 percent to 6.3773, the biggest gain since 1973 and the most among the 16 most-traded currencies. New Zealand’s dollar appreciated 6.4 percent to 55.87 U.S. cents. Melbourne-based BHP Billiton Ltd., the world’s largest mining company, climbed 1.6 percent to A$32.18 on the Australian stock exchange.

Trichet, 66, took over the ECB from the Netherlands’ Wim Duisenberg in November 2003. Under his watch, the euro appreciated to a peak of $1.6038 in July 2008 from about $1.15.

The currency began to slide as the ECB waited until October 2008 to cut interest rates as the global economy slowed, more than a year after Bernanke began slashing borrowing costs. The ECB’s main rate is 1.5 percent, compared with a target range of zero to 0.25 percent for the Fed.

‘Behind the Curve’

A drop in two-year German bund yields in February to the lowest relative to longer-maturity debt since 1997 was a sign that the ECB needs “to wake up to reality,” Komal Sri-Kumar, chief global strategist at Los Angeles-based TCW Asset Management, which oversees about $118 billion, said last month.

“European policy makers are behind the curve,” said Neil Mackinnon, chief economist and partner at ECU Group, a London- based hedge fund with about $1 billion in assets. “The European economy will sink deeper into depression.”

While the ECB has refrained from quantitative easing, the European Union has taken other steps to bolster the economy. EU leaders said March 20 that they will double to 50 billion euros ($68 billion) a credit line for countries in financial distress.

Even Mackinnon says the euro rally may be short-lived as the ECB cuts its main refinancing rate close to zero. He expects the currency to depreciate to $1.245. None of the 53 analysts surveyed by Bloomberg forecast the currency will return to its previous high of $1.6038.

Sufficient Strategy

“All major central banks will have to follow the Fed and adopt quantitative easing,” said Mackinnon, a former economist for the U.K. Treasury. “If the European policy makers are hoping they will get a free ride on the U.S. stimulus, hoping they will look more prudent, they are deluding themselves.”

Trichet said March 17 in a speech to business leaders in Paris that his policy of loaning banks unlimited funds is sufficient for now.

“In the context of the euro area, guaranteeing firms and households a steady access to credit largely means ensuring the banking system has appropriate liquidity,” Trichet said. “In the euro area, it is natural for ‘credit easing’ to be implemented primarily through the participation of banks.”

In a March 19 report titled ‘Sprint to Print,’ Morgan Stanley recommended selling the dollar against the euro, forecasting it will depreciate to $1.45 in a year.

‘Turning Point’

“This move may mark the turning point for the dollar,” wrote Morgan Stanley currency analysts led by Sophia Drossos and Ron Leven in New York. “The Fed’s action exposes the dollar to its vulnerabilities, but this leaves the euro and the yen facing appreciation.”

Citigroup’s London-based global head of currencies, Jim McCormick, said in a research report to clients last week that the euro may rise to $1.40. “We’ve been selling dollars and we’re now adding to that short,” he wrote in the report.

Samarjit Shankar, a director of strategy for the global markets group in Boston at Bank of New York Mellon, which administers more than $23 trillion, also predicts $1.40.

“You have Bernanke taking a page from Greenspan’s book and reflating assets,” said Shankar. Former Fed Chairman Alan Greenspan cut interest rates to 1 percent in 2003, the lowest level since World War II, to boost growth after the 2001 recession. The ECB takes “a very orthodox, almost straitjacketed approach,” he said.

Buying Euro Calls

Werner Eppacher, head of foreign exchange at Deutsche Bank AG´s DWS Investment unit in Frankfurt, said he bought call options on the euro versus the dollar and used forwards to bet on the common currency gaining versus the greenback.

Calls give the buyer the right to purchase an asset at a predetermined price, and forwards are agreements to trade a currency pair in the future.

“The U.S. is facing more structural problems than other regions,” Eppacher said. “As soon as we have some moderation in financial markets, the conversation will go back to U.S. households deleveraging and external deficits, fiscal deficits, money printing.”

He predicts the euro will rise to $1.40 in six months, and the Australian dollar will appreciate to 75 U.S. cents.

“The euro is not rising on its own merits,” said Hans- Guenter Redeker, the London-based global head of currency strategy at BNP Paribas SA, France’s biggest bank. “The U.S. is exporting its expansionary monetary conditions abroad, which ultimately is very positive for equity markers and is going to be very positive for risk takers.”

To contact the reporter on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net.

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BHP, Macarthur, Qantas Airways, Rio: Australia Equity Preview

By Shani Raja

March 23 (Bloomberg) -- The following is a list of companies whose shares may rise or fall in Australia. This preview includes news announced after markets closed on Friday. Prices are from Friday’s close unless otherwise stated.

The S&P/ASX 200 Index futures contract due in March dropped 0.6 percent to 3,467 at 6:59 a.m. in Sydney. The Bank of New York Australia ADR Index lost 0.9 percent. The S&P/ASX 200 Index slipped 0.4 percent to 3,465.80.

Mining shares: BHP Billiton Ltd. (BHP AU), the world’s largest mining company, advanced 3 percent to A$32.18. The company’s U.S.-traded receipts declined 1.3 percent in New York trading to the equivalent of A$32.23.

Aluminum Corp. of China, known as Chinalco, will get two seats on the board of Rio Tinto Group (RIO AU), according to Rio spokesman Nick Cobban. The world’s third-biggest mining company rose 3 percent to A$46.85.

Macarthur Coal Ltd. (MCC AU): Nathan Tinkler, the Australian investor who sold his 10 percent stake in Macarthur Coal Ltd. in May, said the stock represents “value for money” and won’t rule out a takeover bid, the Australian Financial Review said, citing an interview with Tinkler.

Macarthur Coal jumped 12 percent to A$3.50.

Qantas Airways Ltd. (QAN AU): Australia’s largest airline is set to cut as many as 100 senior executive jobs in a reorganization to cope with a slump in global air travel, the Australian Financial Review said, citing people it didn’t identify. Qantas fell 3.1 percent to A$1.69.

To contact the reporter on this story: Shani Raja in Sydney at sraja4@bloomberg.net.

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Australian Resource Shares Rise; Japan Futures Fall on Earnings

By Masaki Kondo

March 23 (Bloomberg) -- Australian resource shares advanced as higher oil and metal prices lifted producers’ earnings prospects. Japan’s stock futures fell on concern earnings will deteriorate further.

BHP Billiton Ltd., the world’s biggest mining company, climbed 0.8 percent in Sydney after prices for crude and copper rose. U.S.-traded receipts of Mitsubishi UFJ Financial Group Inc. and Mizuho Financial Group Inc., Japan’s biggest banks, lost at least 3.3 percent from the closing price in Tokyo, after Credit Suisse Group AG said rising bad loans may cause the lenders to post annual losses. Sony Corp. slumped 3.4 percent after its mobile-phone affiliate predicted a first-quarter loss.

“Earnings for fiscal 2008 will undoubtedly turn out bad,” said Yoku Ihara, head of equity research at Retela Crea Securities Co. “Rising bankruptcies are putting pressures on banks, and nobody knows when demand for electronics and cars will recover.”

Australia’s S&P/ASX 200 Index swung between gains and losses, and was up 0.3 percent to 3,477.30 as of 10:23 a.m. in Sydney. New Zealand’s NZX 50 Index was little changed at 2,599.40 in Wellington. In New York, the Standard & Poor’s 500 Index slid 2 percent on March 20.

Futures on Japan’s Nikkei 225 Stock Average expiring in March closed at 7,825 in Chicago, 0.4 percent lower than 7,860 in Osaka on March 19. Japan’s market was closed on March 20 for a national holiday.

Last week, the MSCI Asia Pacific Index gained 6.4 percent, the biggest weekly rally since August 2007, on optimism central banks and governments will step up efforts to avert a deepening of the global recession. Japanese Finance Minister Kaoru Yosano said yesterday that a new stimulus package would require trillions of yen and that a figure of 20 trillion yen ($209 billion) is “not out of line.”

Sony Ericsson

Crude oil for May delivery added as much as 1.6 percent to $52.90 a barrel today in after-hours electronic trading on the New York Mercantile Exchange. Copper rose as much as 0.7 percent.

Mitsubishi UFJ may post a net loss of 430.9 billion yen and Mizuho may lose 436.6 billion yen as the value of shareholdings fall and bad-loan costs swell, Shinichi Ina, a Tokyo-based analyst for Credit Suisse, wrote in a report on March 19. He cut Mizuho to “neutral” from “outperform.”

Sony Ericsson, 50 percent owned by Tokyo-based Sony, said on March 20 that a pretax loss will reach as much as 390 million euros ($530 million) in the first three months of this year as demand wanes. Sony, the world’s second-biggest maker of consumer electronics, expects a record $2.7 billion operating loss for the year to March 31.

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

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Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Mar 20 09 06:00 GMT |

Investors Shift Out of Financials and into Materials amid USD Weakness as Backlash on Bank Bonuses Reaches Fever Pitch; Asian Bourses Retreat from Highs, while S&P Futures Sink in Extended Correction; EUR, GBP Consolidate Gains The day after the Fed announced a shift in policy to expand its balance sheet, extended pronounced greenback sparked investor flight from the recently outperforming financials to flock to the materials/commodity pastures. During the US session, XLF broke a string of consecutive rallies with an 8% fall, while IYM - the Basic Materials ETF residence of the likes of Newmont and Freeport-McMoRan - jumped 3.6%. A similar dynamic unfolded in Asia, where traders took profits on the gains in financials in favor of the depressed commodity names. In Sydney, BHP and Rio Tinto traded up as much as 5% and Woodside Petroleum was higher by 2.7%, while banking sectors' NAB and MacQuarrie, were lower by 2.4% and 8% respectively. Likewise, Korea's Woori Finance traded down 2.5% and HSBC in Hong Kong pared its initial 3% rally to trade around unchanged levels, whereas Korea's steelmaker Posco outperformed. Broader indices in Asia were weaker across the board from the initial strong open, with S&P/ASX falling 0.4%, Hang Seng down 1.6%, and Kospi trading off session highs at +0.8%. Japan's indices were closed due to a national holiday. Front-month S&P futures approached the last trading session of the week on the down side, falling by nearly a full percentage point. Economic data was light over the Asian hours, however a spattering of statements from European officials crossed the wires earlier. EU's Barroso noted the EU had sufficient resources to help struggling economies, calling for G20 round to oppose protectionism. In the UK, BOE Chief Economist Dale expressed optimism by noting that the UK is a long way through the recession, with much of contraction to have taken place by the end of the first half of 2009. In currencies, European majors extended their gains against the greenback earlier in US hours, but mainly flatlined through the Asian session amid TOkyo holiday-thinned markets. EUR/USD was contained by 1.3680, while GBP/USD staged an over-150pip correction from intra-day high around 1.46. The Swissy has remained firm across the board, but struggled with the 1.12 USD/CHF support for much of the session after a brief test earlier. Commodity currencies - infused with dollar weakness-driven strength in the commodity sector - outperformed notably. AUD/USD and NZD/USD are targeting 0.69 and 0.56, while CAD is lagging in the commodity FX sector ahead of tomorrow's retail sales data as USD/CAD broke back above 1.24 handle. Japanese Yen received a boost on the broad dollar weakness, with USD/JPY contained below 95.00 and EUR/JPY unable to retest 130 level. Crude oil prices are lower, after rising by more than 7% in NY trading. During the NY session, the NYMEX front-month crude contract rose above $50/bbl for the first time since Jan 6, as the Fed's decision to buy bonds has been supportive for commodities prices at the expense of the dollar. In terms of oil supplies, Tanker Tracker disclosed that in the 4 weeks to April 4, OPEC's exports are seen at -770K bpd vs. the prior survey of -350K bpd. Overall, oil prices are on track to rise for the 5th consecutive week, as the April NYMEX crude contract expires on Friday's session. Spot Gold is lower, after gaining sharply during the NY session. Gold, like oil, has benefited from the recent measures announced by the Fed. The SPDR Gold Trust ETF once again increased its holdings of gold to a new record of 1,103 tons by buying approximately 19 tons on March 19. This is the 4 time during the week that the ETF has increased its holdings of gold. Gold is currently set to close the week higher, for the first time in 1 month. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by ecPulse.com | Mar 20 09 06:56 GMT |

EURO The pair continued to incline yesterday to breach the 1.3700 level neglecting technical indicators suggesting the downside movement and is now trading near the last correction at 1.3850 (61.8%) for the decline that started from 1.4720 which will determine the next short term direction. On the intraday basis, we expect a slight downside correction to reach 1.3450 after breaching the minor support at 1.3580 and in attempt to trade within a new ascending channel The trading range for today is among the key support at 1.2980 and the key resistance at 1.3850 The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2220 and 1.2120 Support: 1.3580, 1.3530, 1.3480, 1.3450, 1.3400 Resistance: 1.3690, 1.3750, 1.3805, 1.3845, 1.3905 Recommendation: According to our analysis, we see that its bes to sell the pair below 1.2895 with targets at 1.2745 and stop loss with a four hour close aboe 1.2960 GBP After confirming the breach of the resistance for the minor channel, the pair continued to incline in an attempt to reach the targets of the bullish technical pattern as it neared the initial target at 1.4600 before correcting to the downside. We expected the pair to decline towards 1.4380 which is the intersection of the resistance for the breached upside channel and the 50% correction before rebounding back to the upside heading towards 1.4680 and 1.4800 as far as 1.4380 remains intact The trading range for today is among the key support at 1.3885 and the key resistance at 1.4800 The general trend is to the downside as far as 1.5270 remains intact with targets at 1.3440 and 1.2960 Support: 1.4380, 1.4345, 1.4300, 1.4255, 1.4190 Resistance: 1.4495, 1.4575, 1.4600, 1.4635, 1.4680 Recommendation: According to our analysis, we believe its best to buy the pair above 1.4380 with targets at 1.4545 and stop loss with a four hour close below 1.4300 JPY The pair declined as expected to reach the support level at 93.55 and rebound to the upside which may take the pair to 95.90 before continuing the decline we still support which may reach 92.95 and 90.00 respectively. The trading range for today is among the key support at 90.00 and the key resistance at 99.70 The general trend is to the downside as far as 102.10 remains intact with targets at 84.95 and 82.60 Support: 94.30, 93.70, 92.95, 92.75, 92.50 Resistance: 94.75, 95.25, 95.90, 96.15, 96.90 Recommendation: According to our analysis, we believe its best to buy the pair above 94.75 with targets at 95.90 and stop loss with a four hour close below 93.70 CHF Yesterday's decline took the pair to the initial target at 1.1165 before rebounding to the upside in correctional movements to reach 1.1355. Our outlook to reach 1.1355 remains valid before reversing back to the downside an breach 1.1165 to reach 1.0975 The trading range for today is among the key support at 1.0975 and the key resistance at 1.1585 The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2055 and 1.2160 Support: 1.1205, 1.1165, 1.1100, 1.1055, 1.0975 Resistance: 1.1315, 1.1355, 1.1405, 1.1455, 1.1495 Recommendation: According to our analysis, we believe that its best to sell the pair below 1.1355 with targets at 1.1250 and stop loss with a four hour close above 1.1450 CAD The downside movements took the pair towards 1.2140 yet couldn't extend past 1.2190 as it rebounded back to the upside to currently trade near the 38.2%. We expect the pair to reach the 61.8% correction at 1.2535 before gathering enough bearish momentum to reverse and reach 1.2140 and 1.1955 respectively. 1.2535 must remain intact for the decline to continue The trading range for today is among the key support at 1.1955 and the key resistance at 1.2755 The general trend is to the upside as far as 1.1780 remains intact with targets at 1.3400 Support: 1.2345, 1.2315, 1.2275, 1.2235, 1.2185 Resistance: 1.2485, 1.2535, 1.2570, 1.2620, 1.2670 Recommendation: According to our analysis, we beleive its best to sell the pair below 1.2535 with targets at 1.2400 and stop loss with a four hour close above 1.2620 Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | Mar 20 09 06:16 GMT |

EUR/JPY Despite the sideways actions confirmed clearly on the Gator indicator as shown on the above chart but approaching the full correction level of the whole medium term decline started at 131.02 is still pressuring the pair in addition to the decreasing bulls appearing on the indicator .Hence we expect a downside wave today as far as 131.00 remains unbroken. A clear break below 128.60 (SMA 20) will accelerate the action and will force the pair to enter the broken channel again to retest 76.4% Fibonacci level at 126.50 before defining the next step. Trading range for today is among key support at 123.85 and key resistance now at 132.50. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support: 128.60, 128.00, 127.30, 126.50, 126.00 Resistance: 129.65, 130.20, 130.75, 131.50, 132.50 Recommendation: According to our analysis, we believe that it is good to sell the pair at 129.20 with targets at 127.50 and stop loss at 130.60. GBP/JPY Three previous candles of 4h time frame before the current candle closed below 137.40 (very critical point) confirming our expected bearish scenario of our yesterday's mid-day report pressured by the middle line of the Bollinger band and trading below TEMA 20 indicator. Therefore we expect more declines on the intraday basis as far as 138.20 remains intact .This drop will be accelerated if the pair succeeded to breach and close below 76.4% Fibonacci again. Carefully note that Stockstick's negative overlapping supports this bearish scenario. Trading range for today is among key support at 132.50 and key resistance at 141.50. The general trend is to the downside as far as 148.20 remains intact with target at 116.00 Support: 136.50, 135.90, 135.00, 134.25, 133.20 Resistance: 137.30, 138.00, 138.60, 139.40, 140.00 Recommendation: According to our analysis, we believe that it is good to sell the pair at 136.75 with targets at 135.00 and stop loss at 138.20 EUR/GBP The royal pair collected the power it needs around 0.9390 (initial support areas) exactly as we expected followed by an obvious candle formation confirming our yesterday's bullish scenario towards the full correction areas at 0.9525 areas supported by a positive Stockstick overlapping .We note that the value of SMA 20 is increasing gradually as it started to breach the previous consolidation areas around 0.9350 zones now and more expected positive actions are highly anticipated as far as 0.9350 remains unbroken . Trading range is among the key support 0.9240 and key resistance now at 0.9650. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support: 0.9400, 0.9350, 0.9300, 0.9260, 0.9200 Resistance: 0.9480, 0.9520, 0.9575, 0.9600, 0.9665 Recommendation: According to our analysis, we believe that it is good to buy the pair at 0.9430 with targets at 0.9520 and stop loss at 0.9350. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Oil Set for Fifth Week of Gains on U.S. Growth Plan, Dollar

By Angela Macdonald-Smith and Mark Shenk

March 20 (Bloomberg) -- Crude oil is poised to gain for a fifth week, the longest winning streak in 11 months, after rising above $50 a barrel on the Federal Reserve’s plans to spur growth by spending $1 trillion buying back debt.

Oil climbed 7.2 percent yesterday to close at a three-month high after the Fed said it was seeking to purchase U.S. Treasuries, mortgage-backed bonds and other debt, raising expectations that efforts to end the global recession will boost fuel demand. Commodities surged the most this year as the dollar weakened against the euro.

“The dollar and equities markets certainly seem to be flowing positively into oil,” said Mark Pervan, senior commodity strategist at Australia & New Zealand Banking Group Ltd. in Melbourne. “There’s a lot of sidelined interest in commodities markets as people try to pick the bottom so it’s no surprise we’ve seen quote a strong response in some of the commodities.”

Crude oil for April delivery fell 61 cents to $51.00 a barrel on the New York Mercantile Exchange in after-hours electronic trading at 12:24 p.m. in Sydney. Oil is up 10 percent this week, set for its longest series of weekly gains since April 2008.

Yesterday, futures rose $3.47 to $51.61 a barrel, the highest settlement since Nov. 28. The April contract expires at the close today. The more-active May contract slipped 45 cents to $51.59 a barrel in after-hours trading after jumping 6.4 percent yesterday.

Brent crude oil for May settlement was at $50.33 a barrel, down 34 cents, or 0.7 percent, at 12:36 p.m. Sydney time. Yesterday the contract jumped 6.3 percent, to $50.67 on London’s ICE Futures Europe exchange, the highest close since Nov. 28.

OPEC, Dollar

Oil has risen about 50 percent in the past three months from the Dec. 19 close of $33.87 a barrel. Crude has gained 14 percent so far this year as record production cuts by the Organization of Petroleum Exporting Countries started to reduce a supply glut caused by the worst economic crisis since World War II. Prices are down 65 percent from July’s record of $147.27 a barrel.

OPEC will cut crude oil shipments 3.3 percent in the four weeks ending April 4 as producers seek to adhere to quotas, tanker-tracker Oil Movements said yesterday. The group decided at a March 15 meeting to hold output targets steady, pledging to tighten compliance with quotas.

OPEC members “have been rewarded now with a higher price,” Daniel Yergin, chairman of Cambridge Energy Research Associates, said in a Bloomberg Radio interview.

Dollar Slide

The trade-weighted Dollar Index, which tracks the currency’s performance against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, slid yesterday for an eighth day, the longest stretch in a year.

The dollar was down 1.4 percent to $1.3667 per euro from $1.3474 March 18.

The decline in the value of the U.S. currency, which helped push oil to the July record, is “not yet” on the agenda of OPEC’s next meeting on May 28, the group’s president, Jose Maria Botelho de Vasconcelos, said yesterday.

Gold yesterday jumped the most since September and copper surged to the highest since November on the Fed announcement. The Reuters/Jefferies CRB Index of 19 prices rose 11.36, or 5.3 percent, to 225.30, the highest since Jan. 26.

To contact the reporters on this story: Angela Macdonald-Smith in Sydney at amacdonaldsm@bloomberg.net; Mark Shenk in New York at mshenk1@bloomberg.net

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Dollar Heads for Record Weekly Loss Versus Euro as Supply Rises

By Ron Harui

March 20 (Bloomberg) -- The dollar headed for a record weekly drop against the euro after the Federal Reserve unexpectedly said it will start buying Treasuries, ramping up supply of the currency.

The greenback traded near a two-month low versus the European currency and headed for a second weekly decline versus the yen as the Fed will boost its balance sheet by as much as $1.15 trillion through buying up to $300 billion of U.S. government debt and purchasing more mortgage bonds. The Australian and New Zealand dollars gained, heading for a third weekly advance, as prices of commodities the South Pacific nations export surged.

“The Fed is massively expanding the supply of dollars by buying government debt,” said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp., Australia’s biggest lender by market value. “They’re effectively printing money; we regard this as profoundly bearish for the dollar.”

The dollar traded at $1.3643 per euro as of 10:20 a.m. in Singapore from $1.3665 yesterday, when it touched $1.3738, the weakest level since Jan. 9. The U.S. currency has lost 5.2 percent this week, the most since the euro’s debut in 1999. The dollar was at 94.74 yen from 94.51 yesterday, set for a 3.3 percent loss this week. The euro was at 129.25 yen from 129.17 yesterday, after gaining 2 percent this week.

The Australian dollar rose to 68.64 U.S. cents from 68.51 cents yesterday, and headed for a 4.3 percent weekly advance. The New Zealand dollar climbed to 55.61 U.S. cents from 55.35 cents, and was set for a 6.1 percent gain this week. Trading in currencies may be more subdued than usual because of a national holiday in Japan today, Callow said.

Commodity Producers

Currencies of commodity producers such as the New Zealand dollar are leading the rally against the greenback, which has declined against all of the 16 most traded currencies over the past five days.

Silver jumped 13 percent yesterday, the most since 1979. gold had the biggest increase since September, and crude oil topped $52 a barrel as the Fed’s steps to revive the U.S. economy prompted speculation that demand for raw materials will increase as investors seek hedges against inflation.

“You saw a rally in the euro as well as commodity currencies,” said Thomas Harr, a senior currency strategist at Standard Chartered Bank in Singapore. “It’s related to the rebound in commodity prices over the last couple of weeks.”

Dollar Index

The trade-weighted Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, headed for its biggest decline since 1985 this week, as the Fed said on March 18 it would purchase Treasuries and an additional $750 billion of agency mortgage-backed securities.

“As the money-printing machine kicks into high gear, dollar devaluation should accelerate with a ballooning money supply,” Yilin Nie, New York-based currency strategist at Morgan Stanley, wrote in a research note yesterday. The Fed’s move “is a key negative for the dollar.”

The dollar index traded at 83.223 today from 83.129 yesterday, when it touched 82.631, the lowest since Jan. 9. It is poised for a 4.9 percent loss this week.

The dollar fell by the most in nine years versus the euro on March 18. Yields on 10-year Treasuries slid the most since 1962 the same day after the Fed said it would concentrate purchases in notes due from two to 10 years. The central bank is expanding its so-called quantitative easing policy to more than $1.85 trillion in securities. Fed Chairman Ben S. Bernanke will speak on “The Financial Crisis and Community Banking” at 9 a.m. in Phoenix, Arizona today.

‘Dollar Devaluation’

Morgan Stanley recommended investors buy the euro against the dollar at $1.3704, with a target of $1.45 and a stop-loss order at $1.30. A stop-loss order is an automatic instruction to sell or buy a currency should it reach a particular level.

The premium traders pay to buy call options on the euro versus the dollar over puts increased to a level indicating traders are more bullish on the European currency. A call option gives an investor the right to buy, while a put provides the right to sell.

The euro’s one-month 25-delta risk-reversal rate against the dollar rose to 1.0925 percent today from 1.0675 yesterday. The index had a negative reading as recently as March 10. Delta is the change in the value of an option for each dollar change in the market price of the underlying asset.

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

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Korean Won Set for Best Week in 3 Months as Stocks Extend Rally

By Kim Kyoungwha

March 20 (Bloomberg) -- South Korea’s won strengthened, set to complete its biggest weekly advance in three months, as economic stimulus and stock gains helped draw funds to the nation’s assets.

The currency traded near a five-week high after Finance Minister Yoon Jeung Hyun said yesterday the government is planning an extra spending package of as much as 29 trillion won ($21 billion) to aid the economy. The Kospi stock index rose 0.7 percent, poised for a second weekly advance.

“The market is still in recovery mode,” said Ko Yun Jin, a currency dealer with Kookmin Bank in Seoul. “But the won also faces modest downward pressure after recent bull runs as there’s demand for dollars as overseas investors repatriate dividends and importers pay bills.”

The won gained 0.4 percent to 1,391.50 per dollar as of 9:48 a.m. in Seoul, according to Seoul Money Brokerage Services Ltd. The currency rose 6.2 percent this week, paring this year’s loss to 9.5 percent, still Asia’s worst performance.

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

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Zhongjin Gold, Yunnan Copper Jump on Surge in Commodity Prices

By Xiao Yu and Shidong Zhang

March 20 (Bloomberg) -- Zhongjin Gold Co. and Yunnan Copper Industry Co. led gains by Chinese commodities producers as investors bought more metals on concern U.S. government efforts to revive the economy will drive inflation.

Zhongjin Gold rose 8 percent to 56.20 yuan in Shanghai at 10:44 a.m. local time, after earlier surging as much as 10 percent. Yunnan Copper, the nation’s third-biggest producer of the metal, advanced 8 percent to 18.06 yuan in Shenzhen trading.

The Reuters/Jefferies CRB Index, which tracks 19 commodities, yesterday jumped the most this year as investors bought raw material contracts as a hedge against inflation. The Federal Reserve this week said it may buy more than $1 trillion in government and mortgage debt to help end the recession and credit crisis.

“Commodities prices jumped on the U.S. government’s plan to stimulate the economy,” Le Yukun, an analyst at BOC International Ltd., said from Shanghai. “Commodity stocks are a haven as investors worry about inflation and the declining U.S. dollar.”

Zijin Mining Group Co., the country’s largest bullion producer, jumped as much as 9.3 percent in Shanghai. Jiangxi Copper Co. climbed 5.3 percent in Shanghai trading. Aluminum Corp. of China rose as much as 8 percent in Hong Kong trading.

Every commodity in the Reuters/Jefferies CRB Index climbed yesterday while the dollar fell. Gold for immediate delivery yesterday gained 1.9 percent to $959.85 an ounce, the highest close in almost a month.

Copper futures jumped 3.6 percent to $3,985 a metric ton yesterday, the highest since Nov. 5. The metal rose to $4,000 a ton today.

To contact the reporters on this story: Shidong Zhang in Shanghai at szhang5@bloomberg.net; Xiao Yu in Beijing at yxiao@bloomberg.net

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Gold, Platinum Head for First Weekly Gain in Four on Inflation

By Glenys Sim

March 20 (Bloomberg) -- Gold and platinum dropped in Asia, paring the week’s gains, as some investors sold the metals to lock in profits following the recent rally on a weaker dollar and increased inflation concerns.

Both metals are set for their first weekly gain in a month on investors’ demand for a hedge against accelerating consumer prices after the Federal Reserve said it will buy as much as $1.15 trillion in bonds to cut borrowing costs. Gold is up 2.4 percent this week as the Dollar Index, which tracks the currency against those of six major U.S. trade partners, lost 4.9 percent.

“Gold has once again established its inverse relationship with the dollar, and will continue to extend gains as long as the dollar remains in its downtrend,” Steven Lv, trader at Shanghai Tonglian Futures Co., said from Shanghai.

Gold for immediate delivery fell 0.8 percent to $952.45 an ounce at 9 a.m. in Singapore after touching $961.51 yesterday, the highest since Feb. 27. Silver fell 0.5 percent to $13.525.

Assets in the SPDR Gold Trust, the biggest such fund backed by bullion, expanded to a record 1,103.29 metric tons yesterday, according to figures on the company’s Web site.

“We will continue to see people taking profit when there’s a big increase in prices, and then other people buying when they deem prices are low enough,” said Lv. Still, “it will take a lot more bad news, like consumer price indexes rising or equities tanking or the collapse of some major organization, for gold to break out of the $900 to $1,000 range.”

Debt Purchase

The Fed pledged March 18 to buy as much as $300 billion of Treasuries, up to $750 billion of bonds backed by government- controlled mortgage companies and $100 billion in debt from other state agencies to loosen credit and bolster the housing market. The dollar touched $1.3738 per euro yesterday, the lowest level since Jan. 9 and was at $1.3633 at 9:46 a.m.

Platinum lost 0.8 percent to $1,117 an ounce at 9:13 a.m., up 6.1 percent this week, as inflation concerns spurred demand for precious metals as a store of value. The metal rose as much as 6.7 percent to $1,130.50 yesterday, the highest since Sept. 26. Palladium added 0.6 percent to $207.50 an ounce. Both metals are used mainly in catalytic converters.

U.S. auto suppliers will get as much as $5 billion in U.S. Treasury aid to avoid a collapse that would cripple the domestic industry, including federally funded General Motors Corp. and Chrysler LLC. Suppliers will get a guarantee that money owed them for products will be paid, regardless of what happens to car companies, the Treasury Department said yesterday.

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

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Murchison, Mitsubishi Sign A$4 Billion Port Accord

By Jason Scott and Jesse Riseborough

March 20 (Bloomberg) -- Murchison Metals Ltd. and Mitsubishi Corp. today signed a A$4 billion ($2.7 billion) agreement with the Western Australian government to build an iron ore port and rail project in the state’s mid-west.

The deep-water port, 450 kilometers (280 miles) north of Perth, may make its first shipments from 2013 with construction scheduled to start from 2010, Premier Colin Barnett said today in an e-mailed statement.

“Oakajee is the single most important project for Western Australia’s economic development over the next 50 years,” Barnett said in the statement. Oakajee Port & Rail Pty, a joint venture between Murchison and Mitsubishi, will spend A$160 million on completing a financing study by March 2010, he said.

The port, with a capacity to ship 35 million metric tons of the steelmaking raw material annually, will boost exports with potential users including Mount Gibson Iron Ltd., Atlas Iron Ltd., Gindalbie Metals Ltd., Golden West Resources Ltd. and Asia Iron Holdings Ltd.

Perth-based Murchison rose 1.4 percent to 71.5 cents at 1:42 p.m. in Sydney. The company, part-owned by China’s Sinosteel Corp., has gained 13 percent this year and has a market value of A$293 million.

Project Funding

Murchison and Mitsubishi will need to raise about A$3 billion in the next 12 months to fund construction, Oakajee Port & Rail Chief Executive Officer Christopher Eves told reporters at a briefing in Perth.

“We’re confident we’ll raise the funds,” Eves said. “The financing market we’ll go to in 12 months time will likely be different to the one now.”

The project, which will create 2,000 jobs during construction and employ 400 workers on completion, is dependent on an initial financing study scheduled to be completed by March 31 next year, Barnett said. He didn’t rule out the possibility of the port being used to ship out uranium exports.

Government funding will total A$678 million, to be used to develop a heavy industrial estate, with Barnett saying he’s confident the federal government will contribute half of that.

Thiess Ltd., controlled by Leighton Holdings Ltd., was named the project’s contractor, with Australian Rail Network Ltd. and P&O Automotive and General Stevedoring to operate the rail and port networks.

To contact the reporter on this story: Jason Scott in Perth at Jscott14@bloomberg.net; Jesse Riseborough in Melbourne at jriseborough@bloomberg.net

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India's Plan to Extend Trading Hours Will Drive Up Costs, Birla Says

By Pooja Thakur

March 20 (Bloomberg) -- India’s proposal to narrow the gap between local and overseas securities trading hours may be spurned by investors on concern it will boost costs, Birla Sun Life Asset Management Co. said.

Trading hours for stocks and derivatives may be increased, the Securities and Exchange Board of India said yesterday, seeking market feedback over the next three weeks.

“It will make life miserable,” Birla Sun Life’s Chief Investment Officer A. Balasubramaniam said in an interview late yesterday. The nation’s third-largest money manager oversees $9.6 billion of assets. “We should trade fewer hours as it will improve productivity.”

The local market would have to open 3 1/2 hours earlier at 6:30 a.m. to match the start in Singapore, where trading volume of India’s Nifty stock futures has surged 10-fold since February 2007. Higher costs outweigh any benefits from eliminating the delay, said Samir Arora, who runs an India-focused fund at Helios Capital Management.

“There should absolutely be no change or increase in timing,” the Singapore-based hedge fund manager said. “Investors and fund managers would be better off spending more time in analysis and research, which is best done when the markets are closed.”

Daily trading of Nifty futures in Singapore rose as high as 23,404 contracts last month from a peak of 2,266 contracts in February 2007, data compiled by Bloomberg show.

Singapore License

The National Stock Exchange of India, which licensed its benchmark S&P CNX Nifty Index to the Singapore Exchange, proposed the change because investors don’t want the gap, the Indian exchange said in an e-mailed response to questions late yesterday. The proposal isn’t linked to the Singapore Exchange’s license, the Indian bourse said.

“The feedback from our members is that it is inevitable over a period of time trading hours are extended and are more in line with international benchmarks,” National Stock Exchange said. It will extend the hours “when there is broad consensus from market participants,” the bourse said.

The National Stock Exchange was ranked the second-largest derivative bourse globally in 2007 in terms of the number of contracts traded in single-stock futures.

Nifty futures start trading on the Singapore Exchange at 9 a.m. Singapore time, or 6:30 a.m. India time. Indian stock markets open at 9:55 a.m. local time and shut at 3:30 p.m., about the same time as the close of futures trading in the city- state.

‘Benefits Both’

“SGX believes that trading in its listed futures contracts benefits both the index futures as well as its component stocks in the home exchanges,” Singapore Exchange said in an e-mailed response to queries.

India’s 5 1/2-hour trading day is sufficient to keep the local stock market competitive, said Kenneth Andrade, head of investments at IDFC Asset Management Co.

“It’s anyway virtually the entire day,” said Andrade, whose company oversees assets worth $1.8 billion in Mumbai. “If you can’t finish trading, you have to be inefficient.”

The cost to brokerages will “shoot up” as they would require two shifts to match Singapore’s opening, said Arun Kejriwal, founder of Kejriwal Research & Investment Services in Mumbai.

“Which country in the world opens its markets even before the newspaper is out?” he said. “Logistically, it will be a nightmare.”

For Related News and Information: News about India’s markets regulator: SEBI IN CN Most-read stocks stories: MNI STK Sensex Member’s Ranked Returns: SENSEX MRR Graph Nifty Futures in Singapore: IHA GIP For top news on India: TOP IN Top financial services stories: FTOP Global stocks stories: TOP STK

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Indian Output May Signal Stockmarket’s ‘Bottom,’ JPMorgan Says

By Chen Shiyin

March 20 (Bloomberg) -- Indian stocks may “bottom” in the middle of the year after the slump in industrial production ends, JPMorgan Chase & Co. said.

Output typically troughs two to four months before India’s equity markets, JPMorgan analysts led by Bharat Iyer wrote in a report dated yesterday. Production may drop 3 percent over March and April before recovering, they said.

The Bombay Stock Exchange Sensitive Index has dropped 6.7 percent this year, adding to a 52 percent slump in 2008, as the global financial crisis and recession weighed on the corporate earnings outlook. In the last economic cycle, industrial production started recovering in May 2001 while equity markets reached a bottom in September that year, JPMorgan said.

“The above analysis would suggest that the equity markets could bottom out over June to July,” the analysts wrote. “This would also be a decisive phase for the equity markets as there should be clarity by then on the results of the national elections and the progress of the monsoon and its seasonal impact on the economy.”

Output at factories, utilities and mines dropped 0.5 percent in January from a year earlier, declining for the third time in four months, the Central Statistical Organization said on March 12. Economists had expected a 0.9 percent contraction.

Prime Minister Manmohan Singh has reduced taxes on consumer products and the central bank slashed interest rates to a record low to revive an economy that some analysts fear may slow further as elections in April and May stymie policymaking in the world’s biggest democracy.

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

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Australia Stocks: BHP Billiton, Lihir, Macquarie, Woodside

By Sam Waite

March 20 (Bloomberg) -- Australia’s S&P/ASX 200 Index fell 0.1 percent to 3,478.300 as of 10:48 a.m. in Sydney. The following are among the most active shares in the Australian market. Stock symbols are in parentheses after company names.

Banks fell after financial shares led a retreat in U.S. stocks on skepticism the Federal Reserve’s plan to buy bonds will revive the economy. Macquarie Group Ltd. (MQG AU), Australia’s largest investment bank, lost 5.1 percent to A$23.24. Commonwealth Bank of Australia (CBA AU), the nation’s biggest mortgage lender, dropped 2.4 percent to A$33.17.

Gold producers: Gold jumped the most in six months in New York after the Federal Reserve’s plan to buy debt weakened the dollar and revived concerns inflation will accelerate. Silver surged to the biggest gain in 29 years.

Newcrest Mining Ltd. (NCM AU), Australia’s biggest gold producer, rose 3.3 percent to A$34.17. Lihir Gold Ltd. (LGL AU) rose 3.1 percent to A$3.36 in Sydney trading.

Mining shares: The Reuters/Jefferies CRB index of 19 commodities rose 5.3 percent, to 225.3, the biggest gain since Dec. 31. BHP Billiton Ltd. (BHP AU), the world’s largest mining company, rose 4.1 percent to A$32.53.

Oil companies: Crude oil for April delivery rose $3.47 to $51.61 a barrel at 2:44 p.m. on the New York Mercantile Exchange, the highest settlement since Nov. 28. Woodside Petroleum Ltd. (WPL AU), Australia’s second-largest oil and gas producer behind BHP, gained 1.7 percent to A$37.61.

To contact the reporter for this story: Sam Waite in Tokyo at Swaite1@bloomberg.net

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Asian Resources Stocks Rise on Commodity Rally; Banks Fall

By Jonathan Burgos

March 20 (Bloomberg) -- Asian commodity stocks climbed on a rally in oil and metal prices, offsetting declines by banks amid skepticism U.S. and Japanese plans to purchase bonds will ease the financial crisis.

BHP Billiton Ltd., the world’s largest mining company, rose 4.3 percent in Sydney, while Posco, Asia’s third-largest steelmaker, gained 2.6 percent in Seoul. Commonwealth Bank of Australia, the nation’s largest mortgage lender, fell 2.9 percent, tracking declines by U.S. financial shares. Japan’s stock market is closed for a public holiday.

“Investors are switching out from banks and into the resources stocks because they’re waiting for signs of improvement in the credit markets,” said Rob Patterson, who manages about $2 billion at Argo Investments Ltd. in Adelaide, Australia.

The MSCI Asia Pacific excluding Japan Index was little changed at 236.31 as of 9:42 a.m. in Hong Kong, taking its advance this week to 6.3 percent. The gauge that includes Japan has climbed 7.8 percent in the past five days, the most since August 2007, as banks including Barclays Plc and Standard Chartered Plc reported “strong” starts to the year.

South Korea’s Kospi climbed 1.3 percent, while Australia’s S&P/ASX 200 Index lost 0.1 percent. Benchmark indexes in New Zealand, Singapore and Malaysia declined, while Taiwan’s rose.

Futures on the Standard & Poor’s 500 Index fell 0.5 percent. The gauge dropped 1.3 percent yesterday, led by financial shares, which had risen in seven of the previous eight days. The decline halted the S&P 500’s rebound from the 12-year low reached on March 9, paring the gain to 16 percent.

Commodities Rally

BHP gained 4.3 percent to A$32.60 as a measure of six metals jumped 5.6 percent yesterday in London. Rio Tinto Group, the world’s third-largest mining company, added 3.7 percent to A$47.18. Posco rose 2.6 percent to 356,500 won.

Other commodities followed gains in metals, with the Reuters/Jefferies CRB Index of 19 commodity prices climbing 5.3 percent, the biggest gain since Dec. 31.

Woodside Petroleum Ltd., Australia’s second-largest oil producer, added 1.7 percent to A$37.59 as crude oil futures surged 7.2 percent yesterday to $51.61 a barrel, the highest settlement since Nov. 28. Santos Ltd., the nation’s third- largest oil and gas producer, jumped 4.6 percent to A$16.05.

Newcrest Mining Ltd., Australia’s biggest gold producer, rose 2.7 percent to A$33.97. Lihir Gold Ltd. climbed 3.1 percent to A$3.36. Bullion jumped 7.8 percent in New York, the most in six months, as a Federal Reserve plan to buy debt weakened the dollar and revived concerns inflation will accelerate.

Commonwealth Bank of Australia fell 2.9 percent to A$33.03 in Sydney. Macquarie Group Ltd., Australia’s largest investment bank, dropped 3.6 percent to A$23.71.

A gauge of finance stocks on the MSCI Asia Pacific excluding Japan Index fell 1.1 percent, snapping a five-day, 15 percent rally. The comments this week from Barclays and Standard Chartered added to similar statements from Citigroup Inc. and Bank of America Corp., which fueled speculation the worst of the financial crisis is over.

To contact the reporter for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net.

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U.S. Stocks Decline Amid Skepticism About Fed Bond Purchases

By Cristina Alesci

March 19 (Bloomberg) -- U.S. stocks retreated, paring a global rally, as financial shares fell for the first time in three days on growing skepticism the Federal Reserve’s plan to buy bonds will revive the economy.

JPMorgan Chase & Co., Morgan Stanley and Goldman Sachs Group Inc. declined at least 5.7 percent. Prudential Financial Inc., the second-biggest U.S. life insurer, tumbled 25 percent after its senior debt rating was downgraded by Moody’s Investors Service because of investment losses. Oracle Corp. led an advance in technology shares after its earnings topped estimates and the company said it will start paying a dividend.

The Standard & Poor’s 500 Index dropped 1.3 percent to 784.04. The Dow Jones Industrial Average lost 85.78 points, or 1.2 percent, to 7,400.80. The Russell 2000 Index of small companies slumped 1.1 percent to 413.26. The MSCI World Index of 23 developed markets added 1.5 percent to 800.98, giving it an eight-day winning streak that’s the longest since 2006.

“With one hand the government is issuing debt, and with the other it’s repurchasing it using paper that it is printing,” said Lawrence Creatura, a Rochester, New York-based money manager at Federated Investors Inc., which oversees $407 billion. “This is a shell game that’s not going to be overlooked by global investors.”

A slump in financials overtook a rally in materials and energy producers that had helped drive a 1.1 percent gain in the S&P 500 one minute after trading started in New York. The decline halted the S&P 500’s rebound from the 12-year low reached on March 9, paring the gain to 16 percent.

54% Surge

Financial shares rose in seven of the previous eight days, advancing 54 percent from March 6 through yesterday. The gains came as Citigroup Inc., Bank of America Corp. and JPMorgan said they were profitable in January and February, spurring speculation the worst of the financial crisis is over.

The gain through yesterday pushed the S&P 500 Financials Index’s 14-day relative strength index, a measure of whether stocks have risen too far too fast, to its highest since October 2007.

“Everyone’s holding their breath and asking whether this rally has legs to it or not,” said Keith Wirtz, who helps oversee $20 billion as chief investment officer at Fifth Third Asset Management in Cincinnati. “A lot of money is still on the sidelines.”

JPMorgan, the biggest U.S. bank by market value, fell 8 percent to $24.95. Morgan Stanley declined 13 percent to $21.04 and Goldman Sachs slid 5.7 percent to $99.30.

Insurers Fall

Along with Prudential, insurer Lincoln National Corp. was among the top five decliners in the S&P 500. Lincoln National lost 15 percent to $8.04. Prudential retreated 25 percent to $18.76.

Technology shares in the S&P 500 added 0.4 percent. Oracle surged 9.7 percent to $17.37 after the world’s second-largest software maker reported third-quarter profit that topped estimates by 11 percent.

Airlines fell after the International Air Transport Association said losses this year may exceed the $2.5 billion projected in December as the global recession saps demand.

UAL Corp., parent of United Airlines, tumbled 14 percent to $5.19. AMR Corp., operator of American Airlines, dropped 10 percent to $3.08.

Companies in the S&P 500 Energy Index rose as investors rushed to commodities. Speculation that the Fed’s steps to revive the U.S. economy will spur demand for raw materials as a hedge against inflation pushed crude oil up over $52 a barrel to the highest price since Dec. 1.

Energy Shares

Chevron Corp. gained for a fourth day, adding 0.8 percent to $67.13. Hess Corp. advanced 7.6 percent to $64.92.

“If you look at energy stocks, they all bottomed in late October,” said Brian Barish, Denver-based president of Cambiar Investments LLC, which manages about $4 billion. “Oil is a good inflation hedge and they aren’t making any more of it.” Cambiar has 25 percent of its funds in energy companies.

Every commodity in the Reuters/Jefferies CRB Index of 19 prices climbed, while the dollar tumbled.

The Fed’s initiative, aimed at preventing the economy from sinking further, was followed by a report showing the number of Americans collecting jobless benefits swelled to a record 5.47 million, indicating that former employees are unable to find new work as companies continue to cut costs. Initial jobless applications last week topped 600,000 for a seventh straight time, the worst performance since 1982.

Philadelphia Manufacturing

Other data showed manufacturing in the Philadelphia region shrank in March for the 15th time in the last 16 months as orders and employment weakened.

Drug companies slid after retail sales of prescription medications rose at the slowest pace in 47 years as cost- conscious consumers favored cheaper generics, said IMS Health Inc., which compiled the data.

Pfizer Inc. fell 3.9 percent to $13.70 and Merck & Co. slumped 3.4 percent to $26.04. Health-care shares in the S&P 500 lost 2.5 percent, the second-steepest decline among 10 industries after financials. The group accounts for 15 percent of the S&P 500, the second-biggest weighting after technology shares.

To contact the reporter on this story: Cristina Alesci in New York at calesci2@bloomberg.net.

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