Yen Falls as Gain in Stocks Adds Demand For Higher-Yield Assets

By Oliver Biggadike and Ye Xie

April 9 (Bloomberg) -- The yen weakened against most of the world’s most actively traded currencies as the five-week rally in stocks signals renewed demand for higher-yielding assets.

The dollar rose against the euro this week by the most in three months on speculation investors are shifting funds to U.S. assets. The British pound depreciated against the Australian dollar, South African rand and U.S. dollar after the Bank of England said it will keep pumping money into the economy by purchasing government bonds. Norway’s krone gained by the most this week versus Japan’s currency.

“There was panic in the market and now there’s clearly a lot of cash on the sidelines which is still not invested,” said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. “Those who can afford it have started to do so.”

The yen declined 07 percent to 100.46 per dollar at 12:11 p.m. in New York, from 99.76 yesterday. Japan’s currency weakened 1.6 percent to 71.96 to the Australian dollar and by 0.5 percent to 15.04 versus the Norwegian krone.

The dollar gained 1 percent to $1.3147 against the euro from $1.3486 on April 3. The yen depreciated as the Standard & Poor’s 500 Index headed for its fifth weekly gain, the longest rally since October 2007. The MSCI World Index of global shares advanced 2.5 percent today.

Risk Appetite

“High-yield corporate bonds have priced in a very high default rate that is not realistic,” said Pu Yonghao, head of Asia-Pacific research at UBS, in a Bloomberg Television interview from Hong Kong. “Over the longer term equity does look attractive in terms of valuation even if in the short term we see potential volatility and potential corrections.”

Credit-default swaps on high-risk, high-yield debt sold by Asian companies and governments fell yesterday for the fifth time in six days to the lowest level in more than a month, according to data compiled by Bloomberg. The contracts decline as perceptions of default risk improve.

Predictions for swings in the yen against the dollar slid to the lowest since Lehman Brothers Holdings Inc. failed in September, as a perceived easing of the global financial crisis reduced the lure of Japan’s currency, according to Daiwa Securities Group Inc.

Volatility on one-month yen-dollar options fell to as low as 15.25 percent this week, the least since Sept. 15, when Lehman failed, data compiled by Bloomberg show.

Policy ‘Safety Net’

“Expectations that policy actions around the world will provide a safety net have reduced the risk of yen appreciation and pushed down volatility,” said Takahide Nagasaki, senior currency strategist at Daiwa Securities SMBC Co. in Tokyo.

European Central Bank council member Ewald Nowotny said cutting the benchmark rate below 1 percent is still open for debate and it would be “sensible” for the bank to buy corporate debt as it fights for an economic recovery.

“It’s my personal opinion that the benchmark rate should not go below 1 percent, but this is a point that’s open for discussion,” Nowotny, who heads Austria’s central bank, said in a telephone interview from Vienna late yesterday. The purchase of commercial paper and corporate bonds is “a sensible and efficient measure” that would take time to prepare, he said.

The Deutsche Bank trade-weighted euro index, measured against the dollar, the yen, the Swiss franc, the pound and the Swedish krona, rose to 136.65 from 136.42 yesterday.

The euro will rise to $1.40 in three months and $1.45 in six and 12 months, according to Goldman Sachs Group Inc.

The Dollar Index, which the ICE uses to track the greenback versus the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, fell 0.2 percent to 85.156 from 85.361.

Deeper German Recession

Gains in the euro may be tempered after a German government report today showed industrial production fell for a sixth month, adding to concern the nation’s recession is deepening.

“We would argue there’s more weakness coming in the euro,” said Robert Doll, who oversees $280 billion as chief investment officer for global equities at BlackRock Inc., speaking in a Bloomberg Television interview. “The euro zone’s been slow to recognize the problem, slow to reduce interest rates. Therefore it’s going to be much slower to recover.”

Output fell a seasonally adjusted 2.9 percent from January, when it slumped 6.1 percent, the most since data for a reunified Germany began in 1991, the Economy Ministry in Berlin said. Inflation slowed to the least in almost 10 years last month as consumer demand eased, a separate report showed today.

The dollar extended its gains against the euro after a government report showed U.S. trade deficit unexpectedly narrowed in February to the lowest level in nine years.

Imports of Asian cars, toys and electronics collapsed, narrowing the difference between goods brought in from overseas and exports by 28 percent to $26 billion.

“It’s a big deal,” said Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Greenwich, Connecticut. “It suggests that global rebalancing has taken another big step forward, which is very good for the dollar.”

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

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U.S. Wheat Supplies to Fall as Use Rises, USDA Says

By Tony C. Dreibus

April 9 (Bloomberg) -- U.S. wheat inventories at the end of the current marketing year will be 2.2 percent smaller than estimated last month because of increased domestic demand for use of the grain as livestock feed, the government said.

About 696 million bushels will be in storage on May 31, down from 712 million estimated in March, the U.S. Department of Agriculture said today in a report. Inventories of hard winter wheat were projected at 278 million bushels, down 0.7 from the month-ago forecast. Hard spring supplies will total 173 million bushels, down 4.9 percent from the March estimate, USDA said.

“We really picked up some usage,” said Dennis DeLaughter, the owner of Progressive Farm Marketing Inc. in Edna, Texas. “They lowered stocks of hard winter and hard spring so that should get a firm reaction.”

Wheat futures for May delivery rose 5 cents, or 0.9 percent, to $5.37 a bushel at 6 a.m. on the Chicago Board of Trade. The price still is down 12 percent this year, partly on increased global production.

Livestock producers will use 250 million bushels of the grain to feed animals in the year ending May 31, up 8.7 percent from last month’s estimate, the USDA report said. About 79 million bushels will be used as seed, up from 78 million projected last month, the department said.

Domestic use will total 1.254 billion bushels, up 1.7 percent from the March estimate, the USDA said. There were 306 million bushels of unsold wheat on hand on May 31, 2008.

Imports of the grain may total 125 million bushels, up 4.2 percent from the March projection, the government said.

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, government data show.

To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net.

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Cotton Climbs to 2-Month High as Rising U.S. Exports Cut Supply

By Shruti Date Singh

April 9 (Bloomberg) -- Cotton prices jumped to the highest in almost two months on a forecast for tighter supplies as exports rise from the U.S., the world’s largest exporter.

The U.S. will ship 12.5 million bales in the year ending July 31, up from 12 million forecast last month, the Department of Agriculture said today in a report. U.S. cotton output will fall to 12.83 million bales, down from 13.04 million forecast in March, USDA said. U.S. inventories will be 6.7 million bales on July 31, down from USDA’s March estimate of 7.3 million.

“We’ve seen the exports, which were good, and the world supply and demand report came out quite bullish for U.S. fundamentals,” said Andy Ryan, an FCStone Group Inc. risk- management consultant in Nashville, Tennessee.

Cotton futures for July delivery rose 0.41 cent, or 0.8 percent, to 49.8 cents a pound at 10:07 a.m. on ICE Futures U.S. in New York. The price earlier reached 50.02 cents, the highest for a most-active contract since Feb. 10.

A weaker dollar and higher soybean and grain prices helped cotton rise, Ryan said.

The U.S. Dollar Index, which measures the greenback against six major currencies including the euro and yen, fell as much as 0.5 percent, making commodities traded in New York cheaper for overseas buyers.

Soybeans rose as much as 2 percent in overnight trading on the Chicago Board of Trade while corn gained 1 percent, increasing the incentive for farmers to plant less cotton. U.S. farmers may sow cotton on about 8.8 million acres this year, down from 9.47 million in 2008, to grow more soybeans and grains, the USDA said on March 31.

To contact the reporter on this story: Shruti Date Singh in Chicago at ssingh28@bloomberg.net.

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Palm Oil Advances to Six-Month High on Crude, Lower Stockpiles

By Claire Leow

April 9 (Bloomberg) -- Palm oil rose to a six-month high as commodities including crude oil rallied and stockpiles of the vegetable oil declined in Malaysia, the second-largest producer.

Crude oil, leads palm oil as the tropical commodity is often used in biofuels, rose as much as 4.2 percent. Malaysian palm oil stockpiles fell for a fourth month in March to about 1.5 million tons, Minister of Plantation Industries and Commodities Peter Chin said on April 7.

“The crude palm oil pricing up-cycle would sustain,” said an AMResearch Bhd. report today that raised its average forecast for this year and 2010. “There is a possibility that palm oil inventory could touch a low of 1.3 million tons by the year- end,” from a record 2.27 million tons in November.

June-delivery palm oil on the Malaysia Derivatives Exchange rose 104 ringgit, or 4.8 percent, to 2,269 ringgit ($628) a ton in Kuala Lumpur, the highest since Sept. 26. Futures have gained for seven weeks.

AMResearch, which also said a weak U.S. dollar would support higher palm oil prices, raised its average forecast by 25 percent to 2,500 ringgit a ton this year, and 17 percent to 2,700 ringgit for 2010. Palm oil has averaged 1,928 ringgit a ton this year.

Chin’s comment “is adding to the buoyancy,” Ben Santoso, an analyst at DBSVickers Securities, said. Malaysia’s palm oil board may announce monthly data tomorrow or on April 13.

Indonesia and Malaysia account for about 90 percent of the world’s palm oil, also used in foods. While Indonesia doesn’t announce monthly stockpile data, Sahat Sinaga, executive director at the Indonesian Confederation of Vegetable Oil Industries, said in March that stockpiles held by producers and at ports probably declined to 1.3 million tons from 1.5 million tons in February.

China Tariffs

Still, China, the biggest user of vegetable oils, indicated today it may raise a tariff on shipments of soybeans, crushed to produce an oil that competes with palm oil.

China’s dependence on imported oilseeds is “too high,” increasing the risks to the nation’s food security, He Yanli, deputy director of industries at the National Development and Reform Commission, said in Beijing.

The nation is buying oilseeds “from their own farmers to keep them quiet and build reserves,” Santoso said. “Demand from China will be muted,” potentially reducing global prices for palm oil and soybeans, he said.

Soybeans may fall to $7.40 a bushel, Santoso forecast, which may drag down palm oil prices. Soybeans futures for May delivery in Chicago were at $10.23 at 6:06 p.m. in Singapore.

“Palm oil cannot trade at a premium to soybean oil,” he said. “The outlook for the next six months is bearish.”

Soybean oil for May delivery was at 35.44 cents a pound at 6:06 p.m. in Singapore, 24 percent premium to palm oil, according to data on the Bloomberg.

To contact the reporter for this story: Claire Leow in Singapore at cleow@bloomberg.net

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Wheat Futures Fall After USDA Increases Global Supply Estimate

By Tony C. Dreibus

April 9 (Bloomberg) -- Wheat fell for the fourth straight day, erasing earlier gains, after the U.S. Department of Agriculture said global stockpiles will be 2.3 percent higher than forecast last month.

About 158.1 million metric tons of wheat will be in storage at the end of the marketing year on May 31, the USDA said today in a report. That’s up from a March projection of 155.9 million tons. Argentina’s estimated supplies at the beginning of the marketing year were raised to 1.6 million tons from 300,000 tons a month ago.

“When you look at the world ending stocks you did see a little bit of an increase,” said Dewey Strickler, president of Ag Watch Market Advisers in Nashville, Tennessee. “Wheat has been the weakest market of all the grains.”

Wheat futures for May delivery fell 7.25 cents, or 1.4 percent, to $5.2475 a bushel at 11:35 a.m. on the Chicago Board of Trade. The price is down 14 percent this year, partly on increased global production and declining demand for U.S. grain.

Futures earlier gained as much as 2.2 percent after the USDA projected U.S. stockpiles would decline from last month’s projection. Domestic inventories will total 696 million bushels (18.9 million tons), down from a March estimate of 712 million bushels.

Wheat is the fourth-biggest U.S. crop, valued at $16.6 billion in 2008, behind corn, soybeans and hay, government data show.

To contact the reporter on this story: Tony C. Dreibus in Chicago at Tdreibus@bloomberg.net.

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Oil Rises More Than $2 as Equity Gains Signal Demand May Climb

By Mark Shenk

April 9 (Bloomberg) -- Crude oil rose more than $2 a barrel as equities gained, signaling that some investors expect economies to stabilize, bolstering energy demand.

Oil rose as much as 6 percent after stocks increased on better-than-estimated earnings at Wells Fargo & Co. and speculation banks will pass government stress tests. Prices were also higher because a government report showed a smaller gain in U.S. supplies than the industry indicated a day earlier.

“When equities bounce, you see oil, industrial metals and grains lift as well,” said Bill O’Grady, chief markets strategist at Confluence Investment Management in St. Louis. “The commodity markets are awaiting the return of global growth, and the stock market is an early signal that the economy is recovering.”

Crude oil for May delivery rose $2.19, or 4.4 percent, to $51.57 a barrel at 10:36 a.m. on the New York Mercantile Exchange. Prices are up 16 percent this year.

The Standard & Poor’s 500 Index added 3 percent to 849.45. The Dow Jones Industrial Average rose 2.6 percent to 8,044.16.

“Oil prices are likely to hover around $50 a barrel for now,” said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. “The proximity of this psychologically important level, rising equity markets and a smaller-than-feared increase in U.S. oil inventories have given the price a boost.”

Two Reports

U.S. crude oil supplies increased 1.65 million barrels to 361.1 million last week, the highest since July 1993, the report yesterday from the U.S. Energy Department showed. The industry- funded American Petroleum Institute said April 7 that stockpiles jumped by 6.94 million barrels to the highest since 1990.

“People were a little bit shocked yesterday that the crude number was so different than the API number,” said Ray Carbone, president of Paramount Options Inc. in New York and a trader at the New York Mercantile Exchange. “We’re just in a range between $47.25 and $53 and nothing has broken us out of that range.”

Global oil demand falls to an annual low during the second quarter as refineries close to perform maintenance after winter in the Northern Hemisphere.

“If prices stay where they are, at about $50, or even drop a little, it will be a good thing because we should not forget that the global economy is shrinking,” Algerian Oil Minister Chakib Khelil told the state-run Algerie Presse Service yesterday.

The market continues to be oversupplied, and the Organization of Petroleum Exporting Countries will decide at its May 28 meeting whether to cut production, depending on the state of the global economy, he said.

“OPEC is generally OK with oil at this level,” O’Grady said. “It’s too low to spur a lot of exploration but high enough for most members to meet their budgets.”

Fuel Supplies

Gasoline stockpiles rose 656,000 barrels to 217.4 million in the week ended April 3. Total daily fuel demand averaged over the past four weeks was 18.9 million barrels, down 4.4 percent from a year earlier, the Energy Department said. It was the lowest consumption for a four-week period since October.

Stockpiles at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude oil is delivered, fell 878,000 barrels to 29.98 million last week, the lowest since the week ended Dec. 26. Supplies in the week ended Feb. 6 were the highest since at least April 2004, when the Energy Department began keeping records for the location.

Cushing supplies are still above their average of 20.5 million barrels over the past five years. The excess in inventories has weighed on the May Nymex oil contract, which trades at a discount to June futures, a situation known as contango. The difference between the two is now at $2.34 a barrel, up from 69 cents a barrel a month ago.

Texas Discount

Brent crude oil for May settlement rose $1.74, or 3.4 percent, to $53.33 a barrel on London’s ICE Futures Europe exchange.

Brent is trading at a premium of $1.76 a barrel to the West Texas Intermediate contract in New York, swinging from a discount of 43 cents on March 31.

“The WTI-Brent differential does appear to us to be justified by the extreme imbalance” in inventories, Paul Horsnell, head of commodities research at Barclays Capital in London, said in a report today.

Still, Barclays is “not overly concerned about the absolute size of the crude inventory overhang,” saying cuts by the Organization of Petroleum Exporting Countries will siphon off the excess.

To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net

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Emerging-Market Stocks Extend Biggest Rally in Year; Bonds Gain

By Laura Cochrane and Michael Patterson

April 9 (Bloomberg) -- Emerging-market stocks rose and headed for their longest stretch of weekly gains in a year as energy companies climbed on higher oil prices and speculation mounted government aid will revive economic growth.

Russian, Taiwanese and Hungarian equities helped drive the MSCI Emerging Markets Index up 3.7 percent to 632.47 at 11:24 a.m. in New York. The gauge rose 3.1 percent this week and was poised for the highest close in almost six months. Bonds rallied from Turkey to Brazil and Indonesia while the South Korean won led advances in developing-nation currencies against the dollar.

“There has been more risk-taking appetite generally and people have become more comfortable with the stock market gains off the recent lows,” said Dmitry Gourov, an economist at UniCredit SpA in Vienna.

Emerging-market stocks have surged 33 percent from this year’s low on March 2, paring losses in the past 12 months to 45 percent, as oil climbed and Group of 20 leaders pledged to triple the lending stockpile of the International Monetary Fund to $750 billion. The lender has already allocated more than $70 billion to help emerging economies including Hungary, Pakistan and Romania to avoid default.

“This package has been a definite confidence-building measure,” Gourov said today in a phone interview.

This week’s gains would extend a five-week rally for the MSCI developing-nation index, the longest rise since the six- week period ended May 2. Markets from Warsaw to Johannesburg and Mumbai will be closed tomorrow for holidays.

‘Bear Market Rally’

The surge in stocks since March is a “bear market rally” and equities may retreat as a global recession persists, Aberdeen Asset Management Plc’s Hugh Young and BlackRock Inc.’s Dan Chamby said this week. The number of Americans filing first- time claims for unemployment insurance exceeded 600,000 for a 10th straight week, a sign the labor market remains weak, the Labor Department said today. Industrial production in Germany dropped for a sixth month in February, the Economy Ministry said.

The MSCI index, up 11 percent this year, extended gains after Wells Fargo & Co., the second-biggest U.S. home lender, said its first-quarter earnings will top analysts’ estimates. The Micex Index in Russia, the world’s biggest energy-exporting economy, advanced 10 percent as state-owned oil pipeline OAO Transneft jumped 21 percent. Brazil’s Bovespa index added 2.9 percent as Petroleo Brasileiro SA gained 3.4 percent.

Oil advanced as much as 6 percent to $52.35 a barrel, and higher copper, aluminum and zinc prices improved outlooks for emerging markets relying on exports.

Japan Stimulus

Asian stocks gained on speculation Japan will unveil a $154 billion stimulus package to help revive the economy, according to a document obtained by Bloomberg News, adding to optimism efforts by governments around the world will pull the global economy out of its worst recession since World War II. Taiwan’s benchmark Taiex index surged 3.5 percent to the highest in six months.

Emerging-market equities may climb as much as 15 percent in the “next few weeks,” tracking a pattern seen during the stocks’ initial rebound from the bear market that ended in 2001 Jonathan Garner, Morgan Stanley’s London-based chief Asian and emerging-market strategist, wrote in a research note.

An increase in bonds reduced yields by 15 basis points to 5.58 percentage points over U.S. Treasuries, according to JPMorgan Chase & Co.’s EMBI+ Index. Both gauges are set for their fifth week of gains. A basis point is equal to 0.01 percentage point.

Turkey, Brazil Bonds

The spread between yields on Turkey’s bonds and Treasuries narrowed 27 basis points to a more than six-month low of 4.33 percentage points, according to JPMorgan indexes, on speculation the government is near an agreement with the IMF on a loan and the country’s central bank will cut interest rates more than forecast.

The yield spread on Brazil’s bonds fell 10 basis points today to 3.66 percentage points, while the nation’s currency, the real, appreciated 1 percent to 2.1808 per dollar.

The Czech koruna climbed as much has 0.16 percent against the euro. The koruna will be the “clear outperformer” among eastern European currencies for the next 12 months as the region starts to recover from the global credit crisis, Goldman Sachs Group Inc. analysts said.

“Though we see some further currency weakness in the next three months, relative to the spot levels, we have moved our forecasts stronger across the board,” Rory MacFarquhar, a Goldman Sachs economist in Moscow, wrote in a note to clients today.

To contact the reporter on this story: Laura Cochrane in London at lcochrane3@bloomberg.net

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S&P 500 May Drop 7% After Rally, JPMorgan Strategist Lee Says

By Alexis Xydias

April 9 (Bloomberg) -- The Standard & Poor’s 500 Index will likely fall to about 780 from last week’s 842.50 close, said JPMorgan Chase & Co.’s top strategist, who cited historical market “corrections” since 1900.

Since the start of the last century, every 20 percent-plus increase within a two-month period in the Dow Jones Industrial Average, another U.S. equities benchmark, was followed by an average decline of 7 percent from the peak, New York-based strategist Thomas Lee wrote in a report dated yesterday.

The S&P 500 has climbed 22 percent from a 12-year low March 9 on speculation the worst of the economic slump is over. The peak of this rebound was reached on April 3, with the measure dropping 2.1 percent this week. The strategist reiterated his forecast that the index may reach its bottom at 750-775 in “coming months.”

To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.

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Clearwater, FuelCell, Moog, Nordstrom, Wynn: U.S. Equity Movers

By Lu Wang

April 9 (Bloomberg) -- Shares of the following companies are having unusual moves in U.S. trading. Stock symbols are in parentheses, and prices are as of 11:45 a.m. in New York.

Banks climbed after Wells Fargo & Co., the second-biggest U.S. home lender, said first-quarter net income was about $3 billion and that results at Wachovia Corp., acquired about three months ago, were exceeding expectations.

Wells Fargo (WFC US) climbed 19 percent to $17.75. Bank of America Corp. (BAC US) gained 19 percent to $8.41. JPMorgan Chase & Co. (JPM US) rose 14 percent to $31.31. Citigroup Inc. (C US) advanced 9.3 percent to $2.95.

SunTrust Banks Inc. (STI US) gained 19 percent to $12.88. Fifth Third Bancorp (FITB US) jumped 20 percent to $3.17. U.S. Bancorp (USB US) increased 9.3 percent to $15.69.

A-Power Energy Generation Systems Ltd. (APWR US) rallied 29 percent to $5.75 and earlier jumped 39 percent, the most intraday since Oct. 13. The Chinese wind turbine manufacturer said fourth-quarter profit tripled to $10 million.

Apple Inc. (AAPL US) climbed 2.5 percent to $119.27 and earlier rose to $119.88, the highest intraday price since Sept. 26. Credit Suisse Group AG raised its fiscal second quarter earnings estimate for the company by 12 percent to $1.09 per share, citing better-than-expected demand for both Macintosh computers and iPhones. The firm also raised its price target for the stock by 11 percent to $133

Autoliv Inc. (ALV US) rose 10 percent to $24.09 and earlier jumped to $25.25, the highest intraday price since Oct. 15. The world’s largest maker of vehicle air bags was upgraded to “buy” from “hold” at Societe Generale SA.

Cash America International Inc. (CSH US) gained 18 percent to $20.31 and earlier rallied 21 percent, the most intraday since September 1999. The world’s largest pawn shop operator said first-quarter profit was at least 76 cents a share, topping its earlier forecast. The result also exceeded the average estimate of 66 cents in a Bloomberg survey of analysts.

Charlotte Russe Holding Inc. (CHIC US) gained 14 percent to $10.45 and earlier climbed to $10.72, the highest intraday price since Sept. 30. The retailer of clothing for young women said it probably had a fiscal second-quarter per-share profit of 2 cents to 5 cents excluding costs to pay severance and conduct a strategic review. The company had previously said it would have a loss of at least 10 cents on that basis.

Clearwater Paper Corp. (CLW US) rose 16 percent to $9.20 and earlier climbed 16 percent, the most intraday since March 19. The maker of pulp and paperboard was raised to “buy” from “neutral” by D.A. Davidson & Co.

Costco Wholesale Corp. (COST US) fell 3.1 percent to $46.22 and earlier lost 4.5 percent, the most intraday since Feb. 4. The largest U.S. warehouse club reported its weakest monthly sales performance since November as gasoline prices declined and a stronger U.S. dollar ate into international revenue. Sales at stores open at least a year fell 5 percent in the five weeks ended April 5.

Excel Maritime Carriers Ltd. (EXM US) surged 12 percent to $6.66 and earlier climbed to $7.10, the highest intraday price since Feb. 13. Profit from operations excluding some charges and one-time items was $1.71 per share, beating the $1.66 per share estimate of Cantor Fitzgerald LP analyst Natasha Boyden.

FuelCell Energy Inc. (FCEL US) rose 12 percent to $2.94 and earlier rallied 13 percent, the most intraday since March 11. The maker of pollution-free power plants said it won final approval by Connecticut utility authorities to install 27.3 megawatts of the plants around the state.

General Motors Corp. (GM US) rose 3.6 percent to $2. The biggest foreign automaker in China said it expects to double its annual sales in the country to over 2 million vehicles over the next five years.

Gymboree Corp. (GYMB US) jumped 21 percent to $26.47 and earlier advanced 24 percent, the most intraday since Nov. 20. The children’s clothing retailer boosted its first-quarter earnings forecast to at least 50 cents a share from an earlier projection of 25 cents at most.

Hospitality Properties Trust (HPT US) fell the most in the Russell 1000 Index, sliding 21 percent to $10.78. The real estate investment trust with interest in hotels suspended its dividend, citing market conditions.

Moog Inc. (MOG/A US) slid 9.9 percent to $22.91 and earlier slumped 15 percent, the most intraday since at least February 1988. The maker of flight-control systems reduced its earnings forecast for 2009, saying it expects profit excluding a change to be around $2.20 a share. The company previously projected $2.80.

Movado Group Inc. (MOV US) fell 9.8 percent to $7.50 and earlier lost 14 percent, the most intraday since March 5. The watchmaker said it isn’t in compliance with one of the financial covenants in its credit agreements.

Nordstrom Inc. (JWN US) rose 14 percent to $21.21 and earlier advanced to $21.66, the highest intraday price since Oct. 8. The luxury department-store chain said March sales at stores open at least one year dropped 13.5 percent. Analysts surveyed by Retail Metrics Inc. expected a decline of 14 percent.

Shaw Group Inc. (SGR US) dropped 5.2 percent to $27.57 and earlier lost 8.3 percent, the most intraday since March 2. The builder of power plants said 2009 per-share profit will be $2.10 to $2.30, excluding Westinghouse results. The Baton Rouge, Louisiana-based company had previously forecast a profit of $2.50 to $2.70 a share.

Textron Inc. (TXT US) surged 52 percent to $13.86 for the biggest jump in the Standard & Poor’s 500 Index. Kuwait’s Al- Watan newspaper reported a United Arab Emirates consortium is preparing to buy the maker of Cessna aircraft and Bell helicopters for $21 a share. Textron spokeswoman Karen Gordon Quintal declined to comment.

Wal-Mart Stores Inc. (WMT US) dropped 4.3 percent to $50.35 for the biggest decline in the Dow Jones Industrial Average. The world’s largest retailer reported comparable-store sales in March that rose less than some analysts estimated. Revenue from U.S. stores open at least a year advanced 1.4 percent in the five weeks ended April 3, missing the 3.2 percent average estimate compiled by Retail Metrics Inc.

Other retailers that reported worse-than-expected sales also declined. Abercrombie & Fitch Co. (ANF US) lost 10 percent to $23.04. BJ’s Wholesale Club Inc. (BJ US) slid 5 percent to $32.37.

Wynn Resorts Ltd. (WYNN US) rose 9.9 percent to $30.42. The casino company had its share-price estimate increased to $30 from $27 by Sanford C. Bernstein & Co., which said Wynn will be able to meet its debt covenants.

To contact the reporter on this story: Lu Wang in New York at lwang8@bloomberg.net

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Canadian Currency Strengthens for Third Day Against U.S. Dollar

By Chris Fournier

April 9 (Bloomberg) -- Canada’s dollar rose for a third day against its U.S. counterpart on signs deterioration in the world’s eighth-largest economy may be losing momentum and improved prospects for commodity currencies.

The Canadian currency, known as the loonie, climbed after the nation unexpectedly posted a trade surplus of C$126 million ($102 million)in February on shipments of cars and airplanes. Economists forecast a deficit of C$1.2 billion, according to the median estimate in a Bloomberg News survey. Commodities, which accounted for 56 percent of Canada’s export revenue last year, advanced.

“As we get through 2009, the market is going to continue to like commodity-linked currencies,” said Stephen Gallo, head of market analysis at Schneider Foreign Exchange in London. He predicts the loonie will appreciate to C$1.18 by year-end.

The Canadian dollar rose 0.8 percent to C$1.2266 per U.S. dollar at 10:51 a.m. in Toronto, from C$1.2364 yesterday. One Canadian dollar buys 81.53 U.S. cents. The Canadian dollar tends to track fluctuations in stocks and commodity prices.

The Standard & Poor’s 500 Index rose 2.6 percent after Wells Fargo & Co. said first-quarter earnings would be better than expected.

Crude oil for May delivery rose 4.7 percent to $51.68 a barrel. Copper futures for May delivery gained 3.1 percent in New York to $2.061 a pound, heading for the fourth consecutive weekly increase.

Risk Appetite

“Generally the fall in commodity prices seems to have stopped,” said Aaron Fennell, a Toronto-based futures and currency broker at MF Global Canada Co., a unit of MF Global Ltd. “In terms of risk appetite, traders seem to be more willing to look for the bottom in the various commodity markets. Many traders are planning their strategies for how they want to be positioned as we come out of the recession.”

After reaching a four-year low of C$1.3064 on March 9, the loonie appreciated as investors ventured out of haven currencies such as the U.S. dollar and the Japanese yen. They purchased riskier assets such as stocks and commodity-linked currencies.

Canadian employers pared a net 61,300 jobs, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg predicted employment would fall by 50,000.

The loonie will weaken to C$1.26 against the greenback by the end of this quarter, according to the median forecast in a Bloomberg survey of 37 economists.

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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Global Stocks, Oil Gain as Treasuries, VIX Fall; Banks Advance

By Rita Nazareth

April 9 (Bloomberg) -- Stocks rallied around the world, driving the benchmark index of investor anxiety to a six-month low, as better-than-estimated earnings at Wells Fargo & Co. and speculation American banks will pass government stress tests boosted confidence in the financial system. Oil gained, Treasuries fell and the dollar rose against the euro and yen.

Wells Fargo, the second-largest U.S. lender, jumped 20 percent. Bank of America Corp. and JPMorgan Chase & Co. climbed at least 12 percent on a report that all 19 banks examined by the government will pass the review meant to determine their viability should the recession deepen. Barclays Plc surged 12 percent in London after agreeing to sell its iShares unit. The VIX, as Wall Street’s stock market “fear gauge” is known, fell to 37.62, the best level since September.

The Standard & Poor’s 500 Index added 2.5 percent to 845.99 at 12:14 p.m. in New York, poised to advance for a fifth straight week, the longest stretch since the bear market started in October 2007. The Dow Jones Industrial Average rose 173.55, or 2.2 percent, to 8,010.66. Benchmark stock gauges in Germany and Hong Kong added 3 percent as the MSCI World Index of 23 developed nations increased 2.2 percent, the most in a week.

“The worst is behind us,” said Alan Gayle, a Richmond, Virginia-based senior investment strategist at RidgeWorth Capital Management, which oversees $60 billion. “We’re working our way through the credit crisis and that’s why the market is cheering.”

VIX Under 40

Stocks also rallied after the government reported that initial jobless claims in the U.S. dropped more than economists estimated last week and the trade deficit unexpectedly shrank 28 percent, the most since 1996, as imports decreased.

The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell to the lowest since Sept. 26, dropping 3.2 percent to 37.62. The index measures the cost of using options as insurance against declines in the S&P 500.

Before Lehman Brothers Holdings Inc. filed the largest bankruptcy in U.S. history in September, the VIX surpassed 40 during four prior periods in its 19-year history and never stayed above that level for more than 10 days. It’s closed below 40 only eight times since Sept. 29.

The S&P 500 has climbed 25 percent since reaching the lowest level in a dozen years on March 9 as banks from Citigroup Inc. to JPMorgan said they made money in the first two months of the year and Treasury Secretary Timothy Geithner unveiled plans to rid financial firms of toxic assets. The index is still down 6.4 percent in 2009 after tumbling 38 percent last year, its worst annual return since the Great Depression.

Wachovia Beats

Wells Fargo jumped $2.95 to $17.84. The second-biggest U.S. home lender reported a record first-quarter profit that beat the most optimistic Wall Street estimates, sparking speculation that the industry’s slump has ended.

Net income rose about 50 percent from $2 billion a year earlier. Per-share profit equaled about 55 cents, more than double the average estimate of analysts surveyed by Bloomberg. The acquisition of Wachovia Corp., whose overdue home loans helped cut Wells Fargo’s stock price in half this year, is exceeding expectations, the statement said.

“Earnings expectations are so low, there’s wide open potential for pleasant surprises,” said Bruce Bittles, the Nashville-based chief investment strategist at Robert W. Baird & Co., which oversees $16 billion. “We see stocks moving higher into late summer.”

Bank of America gained 19 percent to $8.41 and Citigroup climbed 8.5 percent to $2.93. JP Morgan added 12 percent to $30.77. Fifth Third Bancorp surged 21 percent to $3.20.

The S&P 500 Financials Index, a gauge of 80 banks, insurers and investment firms, climbed 7.8 percent to its highest level in two months.

More Capital?

Some of the largest lenders may still need additional capital infusions from investors or taxpayers, the New York Times said, citing unidentified officials involved in the research. Regulators may use the findings of the examinations, likely to be completed this month, to push some companies to sell distressed assets, according to the report.

Federal Reserve officials are conducting an internal review of bank supervision aimed at improving regulators’ response to stress in the financial system, according to people familiar with the process. The evaluation focuses on speeding information flows and clearing up lines of communication for bank examiners who now report to both regional Fed bank officers and the Board of Governors in Washington.

Europe’s Dow Jones Stoxx 600 Index increased 2.2 percent as the Bank of England left its key interest rate at a record low of 0.5 percent. The MSCI Asia Pacific Index rallied 3.2 percent.

Treasuries, Oil, Copper

Treasury 10-year notes declined for the first time in three days, sending yields up 0.04 percentage point to 2.89 percent. Crude oil rallied 3.7 percent to $51.19 a barrel as copper and aluminum also gained.

Barclays shares jumped 12 percent to 177.5 pence after agreeing to sell iShares, its exchange-traded funds unit, to CVC Capital Partners Ltd. for 3 billion pounds ($4.4 billion).

Textron Inc. soared the most in 28 years on takeover speculation, jumping 52 percent to $13.87. Kuwait’s Al-Watan newspaper reported a United Arab Emirates consortium is preparing to buy the maker of Cessna aircraft and Bell helicopters for $21 a share.

General Motors Corp. rose 3.6 percent to $2. The biggest foreign automaker in China said it expects to double annual sales in the country to over 2 million vehicles over the next five years. China’s passenger car sales rose 10 percent in March from a year earlier after tax cuts and government subsidies boosted demand, according to the China Association of Automobile Manufacturers.

Macs, iPhones

Apple Inc. rose 2.5 percent to $119.21 after Credit Suisse Group AG raised its fiscal second-quarter earnings estimate, citing higher-than-projected demand for both Macintosh computers and iPhones.

Robert Doll, global chief investment officer at BlackRock Inc., told financial news network CNBC that he is advising investors to shift money from safer assets such as U.S. Treasuries into equities. He recommended energy, technology and health-care companies.

“The worst of the recession is in the rear-view mirror,” Doll said.

Profits at S&P 500 companies probably fell 38 percent on average in the first quarter, according to analysts’ estimates compiled by Bloomberg. The stretch of seven straight declines in quarterly earnings is the longest since at least the Great Depression, data compiled by S&P and Bloomberg show.

Oil, Wal-Mart

Exxon Mobil Corp. added 1.3 percent to $69.87, while ConocoPhillips increased 1.2 percent to $40.03. Crude oil rose for a second day after a government report showed a smaller gain in U.S. inventories than the industry indicated a day earlier.

Wal-Mart Stores Inc. fell 4.1 percent and Costco Wholesale Corp. lost 2.1 percent, leading consumer staples stocks to the biggest decline in the S&P 500 among 10 industries.

Wal-Mart, the world’s largest retailer, reported comparable-store sales in March that rose less than some analysts estimated. Costco, the largest U.S. warehouse club, reported its weakest monthly sales performance since November.

Abercrombie & Fitch Co. fell 9.9 percent to $23.13, the biggest decline in the S&P 500. The U.S. teen-apparel retailer reported a 34 percent drop in March same store sales.

The highest U.S. unemployment since 1983 has forced consumers to restrain spending. The number of Americans filing first-time claims for unemployment insurance exceeded 600,000 for a 10th straight week, although the tally of 654,000 was less 6,000 than economists’ average estimate, and the total collecting benefits increased to a record in a sign that the labor market remains weak.

To contact the reporter on this story: Rita Nazareth in New York at rnazareth@bloomberg.net.

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New Zealand Stocks: New Zealand Oil, Sky Network Television

By Shani Raja

April 9 (Bloomberg) -- New Zealand’s NZX 50 Index fell for a third day, slipping 0.2 percent to 2,562.97 at 10:35 a.m. in Wellington, poised for the lowest close since March 16. The following were among the most active shares in the New Zealand market. Stock symbols are in parentheses after company names.

New Zealand Oil & Gas Ltd. (NZO NZ), the country’s biggest publicly traded explorer, advanced 0.7 percent to NZ$1.38, erasing yesterday’s decline. Crude oil rose for the first time in four days yesterday after a U.S. government report showed a smaller inventory gain than that predicted in an industry report.

Sky Network Television Ltd. (SKT NZ), New Zealand’s largest pay-television operator, gained 1 percent to NZ$3.89, the benchmark index’s third-best performance.

Sky will be the host broadcaster of the 2011 Rugby World Cup, delivering all 48 matches live and providing a base for other licensed broadcasters, Rugby World Cup Ltd. said in a statement posted on its Web site.

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

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Roubini Says Bank Takeovers Deepened Financial Market Crisis

By Lynn Thomasson and Thomas R. Keene

April 8 (Bloomberg) -- Bank takeovers worsened the financial crisis by making firms that were already too big even bigger, said Nouriel Roubini, the New York University professor who predicted the financial crisis.

“The institutions are insolvent,” Roubini said in a Bloomberg Radio interview. “You have to take them over and you have to split them up into three or four national banks, rather than having a humongous monster that is too big to fail.”

JPMorgan Chase & Co. agreed to buy Bear Stearns Cos. in March 2008, with help from the Federal Reserve, while Bank of America Corp. purchased Merrill Lynch & Co. Wells Fargo & Co. took control of Wachovia Corp. and PNC Financial Services Group Inc. got National City Corp.

Banks around the world have reported $1.29 trillion in credit losses tied to the housing market collapse since 2007. The deficits, which spurred the first simultaneous recessions in the U.S., Europe and Japan since World War II, pushed the American government to pledge $12.8 trillion to stabilize the banking system and revive economic growth. That figure amounts to $42,105 for every man, woman and child in the country.

The Standard & Poor’s 500 Index, which tumbled 38 percent in 2008, has rallied 22 percent after sinking to a 12-year low on March 9. Roubini said in a Bloomberg interview that day that the S&P 500 is likely to drop to 600 or lower this year as the global recession intensifies.

To contact the reporters on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net; Thomas R. Keene in New York at tkeene@bloomberg.net.

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Arcandor, BMW, Comdirect, Henkel, TUI: German Equity

By Jann Bettinga

April 9 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close. The DAX Index rose 0.8 percent to 4,357.92 yesterday.

Arcandor AG (ARO GY): The retail company is considering taking state aid, the Financial Times Deutschland reported. Chief Executive Officer Karl-Gerhard Eick has discussed state guarantees in the “upper triple-digit” million-euro range with high-ranking members of Germany’s federal government, the newspaper said. The shares fell 15 percent to 1.64 euros.

Bayerische Motoren Werke AG (BMW GY): The world’s largest maker of luxury autos will remain an independent company and isn’t seeking a global alliance, the president of its U.S. unit said. The shares rose 6.2 percent to 25.385 euros.

Comdirect Bank AG (COM GY): The online broker agreed to buy European Bank for Fund Services, or Ebase, for 24.9 million euros ($33.1 million). The stock fell 1.2 percent to 5.71 euros.

Henkel AG & Co. (HEN3 GY): The maker of Persil detergent said first-quarter operating profit dropped 33 percent on declining demand for its adhesives business in the global recession. The stock advanced 0.7 percent to 21.82 euros.

Hochtief AG (HOT GY): The builder is withdrawing from a group to expand and operate the A5 highway in Germany, the Financial Times Deutschland newspaper reported. The shares rose 2.5 percent to 31.23 euros.

Deutsche Lufthansa AG (LHA GY): Europe’s second-biggest airline is scheduled to report March traffic figures. The shares climbed 2.7 percent to 9.195 euros.

TUI AG (TUI1 GY): Shareholder John Fredriksen proposed that supervisory board Chairman Juergen Krumnow be removed from the post at next month’s annual general meeting, a year after his first attempt failed. The shares rose 0.3 percent to 4.70 euros.

To contact the reporter on this story: Jann Bettinga in Frankfurt at jbettinga@bloomberg.net.

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Oil, Gas May ‘Slingshot’ Up After Credit Freezes Rigs

By David Wethe

April 8 (Bloomberg) -- The credit crunch will keep U.S. oil and gas producers from ramping up exploration they do through drillers such as Nabors Industries Ltd., setting the stage for shortages and surging prices when demand recovers.

Chesapeake Energy Corp. and Carrizo Oil & Gas Inc. are among producers spending no more than their cash flow after a collapse in credit markets drove up debt costs. That means they won’t hire the likes of Nabors and Rowan Cos. to drill more wells in anticipation of higher prices. Producers cut capital budgets 17 percent this year after demand slowed and prices plunged, according to Tristone Capital Inc.

“Quite frankly, they don’t have the credit, which exacerbates the problem that their revenue stream is far below the cost structure,” said Jud Bailey, an analyst at Jefferies & Co. in Houston. “They’re not jumping on lower service costs simply because they can’t. They’re literally stepping away from anything they’re not contractually obligated to.”

The result may be a “slingshot” effect as spending cuts leave a supply shortage once demand returns, Bailey said. The number of active drilling rigs worldwide has fallen 35 percent from the 23-year high reached in September, according to Baker Hughes Inc. The U.S. rig count has plunged by almost half.

Houston-based Rowan, a drilling contractor that also builds rigs, said clients are delaying or canceling projects as they wait for service costs to follow oil and natural-gas prices lower. “Our customers are being quite vocal about wanting to reset their costs of operations in this currently low commodity- price environment,” Chief Executive Officer Matt Ralls told investors on a Feb. 26 conference call.

Stocks Plunged

Rowan, which had lost 70 percent of its market value in the past year before today, rose 56 cents to $13.05 in New York Stock Exchange composite trading. Nabors, based in Bermuda and run from offices in Houston, climbed 37 cents to $11.62. It was down 68 percent in the past year.

Most of Rowan’s rigs drill on land or in waters less than 1,000 feet (305 meters) deep. Nabors, the world’s largest onshore oil and gas driller, expects “substantially lower” earnings from land-based rigs through the first half of this year, CEO Gene Isenberg said in a Feb. 25 statement.

Of the 273 onshore rigs Nabors had working in the U.S. in October, more than 150 are now sitting idle.

Drilling originally stalled after a collapse in oil and gas prices from last year’s historic highs, said Dennis Smith, corporate development director at Nabors. U.S. crude-oil futures are down almost $100 a barrel from the record set in July.

Credit Squeeze

“The credit crunch might exacerbate it to some extent, especially the smaller guys that have no access to capital now from the conventional debt markets,” Smith said. “Generally people that are investment grade are still able to borrow, but they’re just being very prudent because nobody knows for sure where their cash flow is going to be.”

Deepwater drillers such as Transocean Inc. and Noble Corp. have fared better as producers go forward with large projects under contracts committing them to pay rig rents of more than $500,000 a day in some cases.

The credit crunch sets the current drilling slump apart from the slowdowns of 1997-1998 and 2001-2002, said James Wicklund, chief investment officer at Carlson Capital LP in Dallas. Exploration and production companies have more to consider than waiting for costs to come down, he said.

“The problem is instead of just waiting them out, they don’t have the credit markets to rely on this time to re- accelerate their drilling,” Wicklund said. “Before it was like, ‘OK, I’m going to wait until you drop prices by 20 percent, then I’m going to swoop.’ This time, the E&P companies have to live within cash flow.”

Awaiting Lower Costs

Houston-based Noble Energy Inc. is one of those producers looking for service costs to drop before resuming some projects. Chief Executive Officer Charles Davidson said he also needs to avoid contributing to a U.S. gas glut.

“It’s probably not the best time to be accelerating gas production,” Davidson said in a March 23 interview.

Just about all producers will be affected by the lack of available credit, regardless of how much debt they hold, said Subash Chandra, an analyst at Jefferies & Co. in New York.

“You’ll find over the last several years, pretty much everyone has borrowed to grow,” Chandra said. “Our industry on average has spent 130 percent of cash flow for a couple years in a row now. It’s kind of standard procedure.”

Oil Seen Rising

Schlumberger Ltd., the world’s biggest oilfield contractor, said a more prolonged slowdown in exploration and production spending will mean sharper price gains when the slump ends.

“The longer the period of lower spending, the more dramatic the falloff in production capacity will be and the steeper the recovery in oil prices once demand recovers,” CEO Andrew Gould said March 23 at a conference in New Orleans.

Larry Dickerson, CEO at Houston-based Diamond Offshore Drilling Inc., said he thinks global economic growth will be “substantial” coming out of the financial crisis, partly because of the industrialization of China and India.

“I think all the factors are certainly there to look at higher demand, and that’s going to be reflected in the price of oil,” Dickerson said in an interview.

Jen Snyder, head of North American gas research at consulting firm Wood Mackenzie Ltd., said she expects gas demand to recover at a slower pace than the economy because of new coal-fueled power plants opening in 2010 and 2011.

Even as service costs come down, making more projects look profitable on paper, some producers are too starved for cash or credit to ramp up drilling, said Wicklund of Carlson Capital.

“This is like all of a sudden, the price of Porsches has come down, but you lost your job,” Wicklund said. “It’s like, ‘Oh, well that’s great that service or Porsche costs have come down, but I still can’t afford it.’”

To contact the reporter on this story: David Wethe in Houston at dwethe@bloomberg.net.

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Australian Dollar Slips Before Jobless Data; N.Z. Dollar Lower

By Candice Zachariahs

April 9 (Bloomberg) -- The Australian dollar declined for a fifth day, its longest losing streak since January, before a report forecast to show the nation’s unemployment rate rose to a five-year high. New Zealand’s currency also weakened.

The currencies also fell as Fitch Ratings lowered Ireland’s top AAA credit rating by one level and the U.K. economy shrank 1.5 percent in the first quarter, signaling Europe’s economic woes are deepening. Australia’s jobless rate climbed for a third month to 5.4 percent, the most since 2004, according to the median estimate of 22 economists surveyed by Bloomberg News.

“With the Australian dollar holding above 70 U.S. cents for the fifth consecutive trading session, today’s numbers could be a real test,” wrote Matthew Strauss, senior currency trader at RBC Capital Markets in Toronto, in a note to clients. “A break below this level could indicate a reversal in the month- long rally.”

Australia’s currency slipped 0.1 percent to 70.95 U.S. cents as of 8:03 a.m. in Sydney from 71.01 cents late in New York yesterday. The currency fell 0.1 percent to 70.78 yen. The Australian dollar will find buyers at 69.81 cents, Strauss said.

New Zealand’s dollar declined 0.2 percent to 57.89 U.S. cents from 57.97 in New York yesterday and bought 57.74 yen.

New Zealand’s currency declined after a report showed house prices fell 9.4 percent in March from a year earlier. The drop in average prices was the biggest since the series began in 2005, according to Quotable Value New Zealand Ltd., the Wellington- based government valuation agency. Prices have been dropping since July as the nation struggles to emerge from five quarters of contraction.

The South Pacific nations’ dollars both weakened after minutes of the Federal Reserve’s March meeting showed officials feared the U.S. economy, the world’s largest, might fall into a self-reinforcing cycle of rising unemployment and slumping business and consumer spending.

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

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Euro, Pound May Fall as Economic Reports Show Deeper Recession

By Oliver Biggadike and Ye Xie

April 9 (Bloomberg) -- The euro and pound may fall for a third day versus the yen after economic reports indicated the recession in Germany and the U.K. is deepening.

Mexico’s peso rose yesterday to a three-month high versus the greenback on the prospect of increased dollar inflows as the nation taps a credit line with the International Monetary Fund. Ireland’s top AAA credit rating was lowered one level by Fitch Ratings as economic turmoil fueled a surge in borrowing.

“Europe is lagging,” said Meg Browne, a currency strategist at Brown Brothers Harriman & Co. in New York. “We are telling investors to sell the euro rallies.”

The euro traded at 132.47 yen at 6:15 a.m. in Tokyo, after declining 0.6 percent yesterday. Sterling traded at 146.77 against Japan’s currency after falling 0.8 percent and fetched $1.4684 following a 0.3 percent decline. The dollar was at 99.75 yen, having lost 0.7 percent.

Some analysts said gains in the yen may be tempered before a Japanese report today forecast to show machinery orders, an indicator of capital investment, decreased for a fifth month. Orders dropped 6.9 percent in February from the previous month, according to a Bloomberg News survey before the report.

“Japan’s economy is in bad shape,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-largest lender. “There is no reason to buy the yen right now.”

Weaker Pound

The pound weakened versus the yen and dollar as the National Institute of Economic and Social Research said yesterday the U.K.’s economy contracted 1.5 percent in the first three months of the year following a decline in the fourth quarter. German exports dropped for a fifth month in February, falling 0.7 percent, the Federal Statistics Office said.

Ireland’s rating was dropped to AA+ with a “negative” outlook, indicating Fitch is more likely to lower the classification again than raise it or leave it unchanged. Ireland received the top rating in December 1998.

Standard & Poor’s lowered Ireland’s rating one step to AA+ on March 30. Moody’s Investors Service has placed Ireland’s rating up for review.

Mexico’s peso gained yesterday as much as 1.1 percent to 13.3212, the strongest level since January, after the central bank said last week it would seek a $47 billion credit line with the IMF.

Fed’s Minutes

The dollar remained lower versus the yen yesterday as minutes of the Federal Reserve’s March meeting showed policy makers feared the economy might fall into a self-reinforcing cycle of rising unemployment and slumping business and consumer spending.

That outlook prompted the Federal Open Market Committee in a unanimous vote to boost its open-market purchases of government and mortgage bonds by $1.15 trillion, continuing its unprecedented increase in money supplied to the economy.

The yen increased 1.8 percent to 12.04 versus Sweden’s krona and 0.5 percent to 80.74 against the Canadian dollar on speculation Japanese investors will reduce purchases of higher- yielding assets overseas.

“The recovery that we’re seeing in equity markets and the improvement in risk appetite is maybe a little premature,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. “A consumer recovery would be necessary for an economic recovery to be sustained.”

Bed Bath & Beyond Inc. reported profit higher than some analysts estimated, pushing the shares up as much as 24 percent yesterday. The largest U.S. home-furnishings retailer said on April 7 that net income declined 18 percent in the three months ended Feb. 28.

Kazakhstan plans to tighten control over the country’s unofficial foreign-exchange market and the rates at which street traders buy and sell the tenge, the central bank told Bloomberg in an e-mail message. The former Soviet republic devalued its currency two months ago as economic growth slowed.

To contact the reporters on this story: Oliver Biggadike in New York at obiggadike@bloomberg.net; Ye Xie in New York at yxie6@bloomberg.net

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Oil Rises After Government Shows Smaller Supply Gain Than API

By Mark Shenk

April 9 (Bloomberg) -- Crude oil rose for a second day, extending yesterday’s gains that followed a U.S. government report showing a smaller inventory gain than industry figures.

Supplies increased 1.65 million barrels to 361.1 million last week, the highest since July 1993, the Energy Department said. Stockpiles were forecast to climb by 1.5 million barrels, according to a Bloomberg News survey. The industry- funded American Petroleum Institute said April 7 stockpiles jumped 6.94 million barrels to the highest since 1990.

The inventory build “wasn’t anywhere near as large as in the API report, which is giving the market support,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “It’s hard to be too bullish with inventories approaching a record.”

Crude oil for May delivery rose 69 cents, or 1.4 percent, to $50.07 a barrel on the New York Mercantile Exchange at 8:36 a.m. in Sydney. Yesterday, oil climbed 23 cents, or 0.5 percent, to $49.38 after touching $47.37, the lowest since April 1, before the Energy Department report was released at 10:30 a.m. in Washington. Prices are up 11 percent this year.

Oil supplies increased last week to 364.7 million barrels, according to API’s April 7 report. API and DOE inventory reports have moved in the same direction 75 percent of the time in the past four years.

Overreaction

“We overreact to the API, we sell down to $47.37 overnight, we get to the bottom of the trading range and there’s nothing to sustain the selling,” said Tom Knight, trading director at Truman Arnold Cos. in Texarkana, Texas. “But there’s not a fundamental reason for us to be trading at $51 in the first place.”

API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The Energy Department requires reports to be filed for its survey.

The API and DOE showed inventory gains for each of the past four weeks. The total increase over the period was 19.5 million barrels, according to the institute. The government report tallied a gain of 9.73 million barrels.

“This is very confusing for the market,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida. “We are looking at two agencies that should be able to provide this service. Something is wrong in the way at least one of them collects data.”

Stockpiles at Cushing, Oklahoma, where New York-traded West Texas Intermediate crude oil is delivered, fell 878,000 barrels to 29.98 million last week, the lowest since the week ended Dec. 26. Supplies in the week ended Feb. 6 were the highest since at least April 2004, when the Energy Department began keeping records for the location.

Fuel Stockpiles

Gasoline stockpiles rose 656,000 barrels to 217.4 million in the week ended April 3, according to the department. Distillate fuels, a category that includes heating oil and diesel, fell 3.35 million barrels to 140.8 million.

Gasoline futures for May delivery fell 2.08 cents, or 1.4 percent, to settle at $1.4396 a gallon in New York. Heating oil for May delivery increased 0.79 cent, or 0.6 percent, to end the session at $1.3982 a gallon.

Total daily fuel demand averaged over the past four weeks was 18.9 million barrels, down 4.4 percent from a year earlier, the report showed. It was the lowest consumption for a four-week period since October.

Global oil demand falls to an annual low during the second quarter as refineries shut to perform maintenance after the Northern Hemisphere winter.

“We are in an environment of surplus supply, but that will change during the second half of the year,” Francisco Blanch, head of global commodity research at Merrill Lynch & Co. in London, said in an interview. “This is the weakest seasonal demand period, so you have a lot of barrels searching for a home.”

Brent crude oil for May settlement increased 37 cents, or 0.7 percent, to end the session at $51.59 a barrel on London’s ICE Futures Europe exchange yesterday.

To contact the reporters on this story: Mark Shenk in New York at mshenk1@bloomberg.net

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Arcandor, BMW, Comdirect, Henkel, TUI: German Equity Preview

By Jann Bettinga

April 9 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Germany. Stock symbols are in parentheses, and share prices are from the previous close. The DAX Index rose 0.8 percent to 4,357.92 yesterday.

Arcandor AG (ARO GY): The retail company is considering taking state aid, the Financial Times Deutschland reported. Chief Executive Officer Karl-Gerhard Eick has discussed state guarantees in the “upper triple-digit” million-euro range with high-ranking members of Germany’s federal government, the newspaper said. The shares fell 15 percent to 1.64 euros.

Bayerische Motoren Werke AG (BMW GY): The world’s largest maker of luxury autos will remain an independent company and isn’t seeking a global alliance, the president of its U.S. unit said. The shares rose 6.2 percent to 25.385 euros.

Comdirect Bank AG (COM GY): The online broker agreed to buy European Bank for Fund Services, or Ebase, for 24.9 million euros ($33.1 million). The stock fell 1.2 percent to 5.71 euros.

Henkel AG & Co. (HEN3 GY): The maker of Persil detergent said first-quarter operating profit dropped 33 percent on declining demand for its adhesives business in the global recession. The stock advanced 0.7 percent to 21.82 euros.

Hochtief AG (HOT GY): The builder is withdrawing from a group to expand and operate the A5 highway in Germany, the Financial Times Deutschland newspaper reported. The shares rose 2.5 percent to 31.23 euros.

Deutsche Lufthansa AG (LHA GY): Europe’s second-biggest airline is scheduled to report March traffic figures. The shares climbed 2.7 percent to 9.195 euros.

TUI AG (TUI1 GY): Shareholder John Fredriksen proposed that supervisory board Chairman Juergen Krumnow be removed from the post at next month’s annual general meeting, a year after his first attempt failed. The shares rose 0.3 percent to 4.70 euros.

To contact the reporter on this story: Jann Bettinga in Frankfurt at jbettinga@bloomberg.net.

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New Zealand Stocks: New Zealand Oil, Sky Network Television

By Shani Raja

April 9 (Bloomberg) -- New Zealand’s NZX 50 Index fell for a third day, slipping 0.2 percent to 2,562.97 at 10:35 a.m. in Wellington, poised for the lowest close since March 16. The following were among the most active shares in the New Zealand market. Stock symbols are in parentheses after company names.

New Zealand Oil & Gas Ltd. (NZO NZ), the country’s biggest publicly traded explorer, advanced 0.7 percent to NZ$1.38, erasing yesterday’s decline. Crude oil rose for the first time in four days yesterday after a U.S. government report showed a smaller inventory gain than that predicted in an industry report.

Sky Network Television Ltd. (SKT NZ), New Zealand’s largest pay-television operator, gained 1 percent to NZ$3.89, the benchmark index’s third-best performance.

Sky will be the host broadcaster of the 2011 Rugby World Cup, delivering all 48 matches live and providing a base for other licensed broadcasters, Rugby World Cup Ltd. said in a statement posted on its Web site.

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

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