China May Raise Retail Electricity Prices by 5%, CLSA Says

By Bloomberg News

Nov. 6 (Bloomberg) -- China, the world’s second-biggest energy user, may raise retail electricity prices by 5 percent this month to help power distributors cover losses, CLSA Asia- Pacific Markets said.

A possible increase is 0.025 yuan (0.4 cents) per kilowatt- hour, said Dave Dai, a utilities analyst, said in an e-mailed note today. The government may raise residential tariffs more than commercial and industrial charges to avoid overly increasing operating costs that will put pressure on the economic recovery, Dai said.

The Chinese government controls power costs to curb their impact on inflation and it last raised retail tariffs in July 2008. China’s two electricity distributors, State Grid Corp. of China and China Southern Power Grid Co., incurred a net loss of 4.39 billion yuan in the first eight months as the government kept power prices unchanged because of the economic slowdown.

This is in line with “our view that China may eventually subsidize grid companies via increase in retail tariff,” Dai said. The increase “can be negative to downstream end users including aluminum, steel, chemical and cement industries.”

Wang Yonggan, secretary-general at the China Electricity Council, said he hasn’t seen any official government notice of the potential power price adjustment. Li Pumin, a spokesman for the National Development and Reform Commission, didn’t answer calls made to his office.

On-Grid Charges

The Shanghai Securities News reported today that the government may also adjust wholesale electricity charges, or the on-grid cost of power paid by distributors to producers. China last raised on-grid power prices in August last year.

Wholesale prices may drop in eastern China and rise in the west as power plants’ costs vary in different regions, the newspaper reported, without saying where it got the information. Prices of electricity generated by coal-fired power stations may fall 0.007 yuan a kilowatt-hour in Guangdong while those in Shanxi may increase by 0.012 yuan a kilowatt-hour, it reported.

“The key reason for this up and down adjustments is related to different paces of profit recovery in 2009” between power producers in in-land regions and in coastal areas, Dai wrote in the note.

The country’s “top government officials” want to adjust prices this month or “no later than” coal producers and power utilities meet to discuss coal supply contracts for 2010, the report said, without giving details.

To contact the Bloomberg News staff on this story: Ying Wang in Beijing at ywang30@bloomberg.net

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Crude Oil Rises, Poised for Weekly Gain, on Signs of Recovery

By Yee Kai Pin and Ben Sharples

Nov. 6 (Bloomberg) -- Crude oil rose in New York, poised for a weekly gain, on optimism fuel demand will increase amid improved prospects for an economic recovery in the U.S., the world’s biggest energy consumer.

Oil rebounded from last week’s 4.4 percent decline after U.S. crude oil stockpiles unexpectedly fell, an Energy Department report showed this week. Futures also rose as Asian stocks followed U.S. equities higher and the dollar traded near a one-week low against the euro.

“Yesterday’s big gain in the stock market was a very good signal,” said Ken Hasegawa, a commodity derivatives sales manager at brokers Newedge in Tokyo. “Everyone understands commodities shouldn’t be different from stocks” as an indicator of the economy and demand, he said.

Crude oil for December delivery rose as much as 55 cents, or 0.7 percent, to $80.17 a barrel in electronic trading on the New York Mercantile Exchange. It was at $79.95 a barrel at 3:45 p.m. Singapore time. Yesterday, the contract slipped 78 cents to settle at $79.62 a barrel. Futures, up 80 percent in 2009, have gained 4 percent this week.

The Standard & Poor’s 500 Index added 1.9 percent in New York yesterday. The Dow Jones Industrial Average increased 2.1 percent to close above 10,000 for the first time since Oct. 22. Asian shares also rose, with the MSCI Asia Pacific Index up 1.1 percent at 4:46 p.m. in Tokyo, trimming its loss for the week.

“If you look at the trend over the past eight months, we’re certainly in a recovery phase,” said Toby Hassall, a research analyst at CWA Global Markets Pty in Sydney. “There are forecasts out there for $85 to $90 by year’s end, which I would say aren’t too far off the mark.”

Unemployment Rate

Oil declined 1 percent yesterday on concern that the Labor Department will say the U.S. unemployment rate rose to a 26-year high in October. An additional 175,000 jobs were probably lost in October, pushing unemployment to 9.9 percent, economists forecast before the Labor Department payrolls report due at 8:30 a.m. today in Washington.

“There has been some concern over the labor market and what that means for the consumer sector,” Hassall said. “The market is still looking for indications that the economy as a whole is improving.”

The dollar was little changed against the euro at $1.4877 at 7:50 a.m. in London. Yesterday it touched $1.4917, the weakest level since Oct. 27. The dollar’s decline bolsters the appeal of commodities as an alternative investment.

U.S. crude oil stockpiles fell 3.94 million barrels last week, more than reversing inventory gains made over the previous three weeks, the Energy Department said Nov. 4. An increase of 1.5 million barrels was forecast, according to the median estimate in a Bloomberg News survey of analysts.

Price Survey

Oil analysts and traders were split over whether crude oil prices will rise or fall next week, as investors focus on a weak dollar and ample product stockpiles.

Fourteen of 35 respondents polled by Bloomberg News, or 40 percent, said futures will drop through Nov. 13. Fourteen more predicted that oil will rise, while seven said prices may be little changed. Last week, 44 percent of survey respondents said the market would fall.

Brent crude oil for December settlement rose as much as 69 cents, or 0.9 percent, to $78.68 a barrel on the London-based ICE Futures Europe exchange. The contract was at $78.60 a barrel at 3:51 p.m. in Singapore.

To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

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Euro Gaining Trend Revives, Citigroup Says: Technical Analysis

By Candice Zachariahs

Nov. 6 (Bloomberg) -- The euro may climb as much as 3 percent against the dollar after finding support at its 55-day moving average, Citigroup Inc. said, citing trading patterns.

Recent declines in Europe’s single currency stalled Nov. 3 at the 76.4 percent Fibonacci retracement of the rally from the euro’s Oct. 2 low of $1.4481 to its Oct. 26 high of $1.5063, Citigroup said. The euro may now gain to $1.5064 with a “firm” break of that level opening up a move to $1.5285, analysts Tom Fitzpatrick and Aron Gera in New York and London-based Shyam Devani wrote in a note to clients yesterday.

“At this stage it appears as though the correction down is over and the general uptrend is back in play,” according to the Citigroup team, led by chief technical analyst Fitzpatrick. “The recent highs at $1.50-plus will be tested again.”

The euro traded at $1.4870 as of 8:29 a.m. in Tokyo and has a 55-day moving average of $1.4661.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Fibonacci charts are based on the theory that securities tend to rise or fall by specific percentages after reaching a new high or low.

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

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Dollar Poised for Weekly Drop as U.S. Job Losses Seen Slowing

By Anchalee Worrachate and Yoshiaki Nohara

Nov. 6 (Bloomberg) -- The dollar fell, heading for a weekly loss against the euro, before a government report today forecast to show U.S. employers cut fewer jobs last month, boosting demand for higher-yielding assets.

The U.S. currency declined most compared with the South Korean won and the New Zealand dollar, sending the Dollar Index 0.1 percent lower. The euro was poised for a weekly gain versus the yen before data economists expect to show German factory orders rose for a seventh month. The Australian dollar climbed against all but two of its 16 major counterparts after the central bank said the nation’s economy will expand at more than three times the pace it forecast in August.

“The dollar should retain its weakening bias into the jobs data,” said Geoffrey Yu, a currency strategist in London at UBS AG. “Sentiment on the economic outlook seems to be stabilizing. People are expecting a slowdown in job losses, and you will need a really bad number to surprise the market.”

The dollar dropped to 90.45 yen as of 8:33 a.m. in London, from 90.71 yen in New York yesterday, paring its weekly gain to 0.4 percent. It was at $1.4877 per euro from $1.4871 yesterday, when it touched $1.4917 in New York, the weakest level since Oct. 27. The yen was at 134.57 per euro from 134.92.

The dollar has dropped 1.1 percent this week against the euro. The Labor Department may say today U.S. employers eliminated 175,000 jobs in October after a reduction of 263,000 in the previous month, according to the median estimate of 84 economists in a Bloomberg News survey. The report is scheduled for release at 8:30 a.m. in Washington.

‘Re-focus on $1.50’

“Good data is more likely to put pressure on the dollar as foreign-exchange markets are still being guided by global risk aversion,” Antje Praefcke, a currency strategist at Commerzbank AG in Frankfurt, wrote today in a report. “If the labor-market report does not bring any negative surprises, the improved sentiment on the financial markets is likely to support euro- dollar. In that case attention could soon re-focus on the $1.50 mark.”

The U.S. currency may also extend losses as Group of 20 finance chiefs push for Asian nations to allow their currencies to appreciate when they meet in Scotland this weekend, according to UBS, the world’s second-largest foreign-exchange trader.

While exchange rates won’t be on the agenda, “many nations will seek to bring it up,” Yu wrote in a research report today.

Euro-Yen

The euro headed for a weekly gain versus the yen. Germany’s Economy Ministry may say factory orders rose 1 percent in September after gaining 1.4 percent in August, according to the median estimate of economists in a Bloomberg News survey. The data are due for release at noon in Berlin.

European Central Bank President Jean-Claude Trichet yesterday indicated unlimited 12-month loans to commercial banks, one of the ECB’s main policies this year to support Europe’s economic recovery, won’t be extended after next month’s operation. The ECB kept its benchmark rate at 1 percent.

“Although his remarks were not particularly hawkish, this presented a positive surprise for the markets, which did not have strong prior expectations that the ECB President would in fact explicitly discuss prospects for an exit strategy and aided sentiment toward the euro,” Emmanuel Ng, an economist in Singapore at Oversea-Chinese Banking Corp., wrote today.

The world’s biggest central banks are starting to unwind emergency measures introduced earlier this year to stave off a second Great Depression. The Bank of England yesterday slowed the pace of bond purchases. A day earlier, the Federal Reserve outlined the circumstances in which it would be prepared to raise interest rates.

Aussie Gains

The Australian dollar climbed after the Reserve Bank of Australia today said the nation’s gross domestic product will expand 1.75 percent this year. In August, the bank forecast a 0.5 percent increase.

“Growth in business investment and exports is expected to be strong, underpinned by the ongoing expansion of the resources sector,” the central bank said. “The outlook for Australia’s terms of trade has also improved, with some increase now expected over the next year or two.”

The Australian dollar rose to 91.72 U.S. cents from 91.02 cents. It advanced to 83.02 yen from 82.57 yen.

Benchmark interest rates are 3.5 percent in Australia, compared with as low as zero in the U.S. and 0.1 percent in Japan, making the nation’s assets attractive to investors seeking higher returns.

Pound’s Weekly Gain

The pound headed for a second weekly advance against the dollar on speculation a U.K. report will show producer prices rose for a fourth month in October.

The central bank yesterday left its key rate at 0.5 percent and raised the amount of bonds it will buy as part of its quantitative-easing program to 200 billion pounds ($332 billion), less than the 225 billion pounds forecast in a Bloomberg News survey of economists.

There are “a number of indicators of spending and confidence” that “suggest that a pickup in economic activity may soon be evident,” the BOE Monetary Policy Committee said in a statement. “The committee believes that the prospect is for a slow recovery in the level of economic activity.”

The price of goods at U.K. factory gates rose 0.2 percent in October after a 0.5 percent increase in September, a separate Bloomberg survey showed before the Office for National Statistics releases the data at in London today.

“The BOE is sounding a little more upbeat on economic prospects and has increased its quantitative easing program by less than expected,” said Mike Jones, a currency strategist at Bank of New Zealand Ltd. in Wellington. “As a result, the pound is finding strength.”

The pound traded at $1.6618 from $1.6583 in New York yesterday, when it climbed to $1.6636, the highest level since Oct. 23. It gained 1 percent on the week.

To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Yoshiaki Nohara in Tokyo at ynohara1@bloomberg.net

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Thai Rice Production May Beat Forecast, Official Says

By Supunnabul Suwannakij and Luzi Ann Javier

Nov. 6 (Bloomberg) -- Rice production in Thailand, the world’s biggest exporter, may beat a previous projection in the current crop year as increasing prices drive farmers to plant more, an official said.

Output in the crop year that began Oct. 1 may rise to as much as 35 million metric tons, Chairit Damrongkiat, deputy director general of rice department, said in an interview in Bangkok yesterday. The department’s previous projection for the 2009-2010 crop was 32 million tons.

“We see lower global production,” Chairit said. “This provides us with an opportunity to increase output.”

Higher output from Thailand may slow a decline in global production and boost exports available to buyers including the Philippines, preventing prices from returning to 2008’s record levels. The global rice crop is forecast to drop 2.7 percent to 433.7 million metric tons in the 2009-2010 marketing year, the U.S. Department of Agriculture estimated on Oct. 9.

Rice traded in Chicago jumped 15 percent in the past month on concern that crop losses from storms in the Philippines and drought in India would curb supply and boost demand for imports.

The contract for January delivery last traded at $15.12 per 100 pounds as of 10 a.m. in Singapore. Futures climbed to a record $25.07 in April 2008 as surging food prices sparked protests around the globe.

Production from Thailand’s main crop, harvested from October, is estimated to be about 23 million tons. The output increase is likely to come from the second crop, which is harvested from March, Chairit said.

Supply Response

“You would expect that with these kinds of market price signals that there is certainly potential to see more acreage, particularly in irrigated rice areas,” Eric Wailes, an agricultural economics professor at the University of Arkansas, said Nov. 2. “There will be a supply response into the next spring of 2010.”

India’s wet season harvest, which accounts for 80 percent of the country’s total output, may slump to 65 million tons, from 85 million tons a year ago, said Samarendu Mohanty, a senior economist at the Manila-based International Rice Research Institute.

The weakest monsoon in India since 1972 may help pull stockpiles in the world’s five biggest rice-exporting nations down by a third to 20 million tons in the 2009-2010 marketing year, Concepcion Calpe, senior economist at the U.N. Food and Agriculture Organization, said last month.

Tender Increased

The Philippines, which lost about 1 million tons of rice to Tropical Storm Ketsana and Typhoon Parma, may buy as much as 312,500 tons of rice, 25 percent more than sought in its first tender for 2010 supplies. The Nov. 4 tender took place a month earlier than usual on concern that a supply shortage may cause prices to surge.

The State Trading Corp. of India Ltd. is seeking bids from overseas suppliers for about 10,000 metric tons of 25 percent broken rice for delivery by December at a tender on Nov. 9, according to a notice sent to traders on Oct. 30.

India may import as much as 3 million tons next year, Mohanty said, turning the country into a net importer for the first time in more than two decades.

To contact the reporters on this story: Supunnabul Suwannakij in Bangkok at ssuwannakij@bloomberg.net Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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Copper to Outperform in 2010 on Stimulus Effect, Tong Yang Says

By Sungwoo Park

Nov. 6 (Bloomberg) -- Copper, which has more than doubled in price this year, may outperform other metals in 2010 as government infrastructure spending boosts demand for the metal used in electrical wires, Tong Yang Securities Inc. said.

“Prices of industrial metals will advance next year,” Yi Seong Je, a commodities analyst at Tong Yang Securities in Seoul, said by phone yesterday. “Copper will outperform since stimulus spending is focused mostly on infrastructure, which primarily needs the metal.”

Copper gained to a one-year high last month on demand from China, the world’s biggest metals user, and as the dollar slumped against major currencies. China’s government is spending $586 billion to spur the local economy, helping to drive imports to record levels in the first half of 2009.

Yi forecast copper for delivery in three months on the London Metal Exchange may average around $6,500 a ton next year, and top $7,000 a ton by the end of 2010.

Copper on the LME has averaged $4,907 a ton this year, according to Bloomberg data. The metal gained 0.5 percent to $6,562 a ton at 10:06 a.m. Seoul time.

“What I am closely looking at now is demand-related indicators because current price levels fueled by increased liquidity cannot be sustainable without support from actual demand,” Yi said. “The key is by how much demand in major consuming nations apart from China will recover.”

Aluminum in London has gained 26 percent this year, while zinc has jumped 85 percent and lead has more than doubled.

Base-metal prices may decline toward the end of this year because “fundamentals are too weak” to justify current levels and a rebound in the dollar cannot be ruled out, he said.

To contact the reporter on this story: Sungwoo Park in Seoul at spark47@bloomberg.net.

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Soybeans Rise as Investors Judge Recent Declines as Excessive

By Luzi Ann Javier

Nov. 6 (Bloomberg) -- Soybeans rose as investors judged the drop in the past two days as excessive and higher crude oil prices boosted prospects for crops used in biofuels.

Soybean futures fell 3.8 percent in the past two days and corn futures lost 3.5 percent on speculation warmer, drier weather in the U.S. Midwest will help accelerate harvesting in the largest exporter of both crops. Crude oil traded near $80 a barrel in New York on optimism demand will rise amid improved prospects for an economic recovery in the U.S.

“There’s been heavy selling in the market” Tetsu Emori, a commodity fund manager at Astmax Co., said by phone from Tokyo today, referring to soybeans, corn and wheat. Some investors are covering their short positions, or bets prices will fall, helping support prices, he said.

Soybeans for January delivery rallied as much as 1.1 percent to $9.825 a bushel in after-hours electronic trading on the Chicago Board of Trade before trading at $9.805 at 2:06 p.m. Singapore time. Soybeans yesterday had the biggest drop for the most-active contract in almost five weeks.

Corn for December delivery was little changed at $3.7675 a bushel, after gaining as much as 0.5 percent earlier. The most- active contract, which closed 2 percent lower yesterday, is headed for a 2.9 percent gain this week.

Wheat Declines

December-delivery wheat fell 0.2 percent to $5.115 a bushel, trimming the weekly gain to 3.5 percent.

Higher crude oil boosted demand prospects for corn, processed into ethanol to stretch gasoline supplies, and soybean oil, used to make biodiesel, Emori said.

Denatured ethanol for December delivery added 0.1 percent to close at $1.867 a gallon on the Chicago Board of Trade yesterday, as its discount to gasoline encouraged refiners and blenders to boost usage.

Still, drier, warmer weather in the Midwest, the largest U.S. growing region, may accelerate harvesting, lowering the risk of frost damage and damping prices, Emori said.

“Good production in the U.S. would ease the supply tightness in the oilseed and grain market,” he said.

Global stockpiles of all major oilseeds including soybeans were estimated to drop 12 percent to 55 million tons before the start of the 2009-2010 marketing year, from a year earlier, as production lags behind demand, according to a U.S. Department of Agriculture forecast on Oct. 9.

The USDA forecast in October that the nation’s soybean output will rise to a record 3.25 billion bushels from 3.245 billion bushels it estimated a month earlier.

It also increased in October its U.S. corn output estimate to 13.018 billion bushels, the second-largest on record, from 12.955 billion bushels a month earlier.

To contact the reporter on this story: Luzi Ann Javier in Singapore at ljavier@bloomberg.net

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Most Japanese Stocks Fall; Financial Shares Decline, Sony Rises

By Kana Nishizawa and Satoshi Kawano

Nov. 6 (Bloomberg) -- Most Japanese stocks fell, led by financial companies on concern stricter rules will force them to raise funds, diluting the value of current shareholdings, and after companies cut their profit forecasts.

T&D Holdings Inc., Japan’s biggest listed life insurer, tumbled 11 percent after it registered to sell 120 billion yen ($1.3 billion) in new shares. NTT Urban Development Corp. tumbled 7 percent after reducing its full-year net income forecast by more than half. Sony Corp., the nation’s biggest television exporter, added 1.6 percent after the U.S. reported lower-than-expected jobless claims and higher productivity.

“Regulations are expected to be tightened, so financial companies have to raise capital to maintain their size,” said Kiyoshi Ishigane, strategist at Mitsubishi UFJ Asset Management Co., which oversees the equivalent of $56 billion in Tokyo. “An excess supply of their shares will lead to sell-offs.”

Japan’s Topix index lost 0.1 percent to 874.01 at the close in Tokyo, with more than two shares falling for each that rose. The Nikkei 225 Stock Average climbed 0.7 percent to 9,789.35. The Topix lost 2.3 percent for the week, while the Nikkei declined 2.5 percent. Stocks in the Topix are valued at 36 times estimated earnings, compared with 20 at the start of 2009.

Financial stocks dropped after T&D, Japan’s biggest listed life insurer, announced it may sell stock to repay debt. T&D shares plunged 11 percent to 2,115 yen. Sompo Japan Insurance Inc., a casualty insurer, retreated 2 percent to 544 yen. Resona Holdings Inc., Japan’s fourth-largest bank by market value, fell 1.7 percent to 1,037 yen.

Financial Companies

Leaders from the Group of 20 nations are expected to favor stricter capital requirements at a meeting today that will exclude preferred shareholdings from core capital, a move that may force Japanese banks to issue new shares, the Nikkei reported.

NTT Urban Development Corp. tumbled 7 percent to 66,600 yen. The property developer cut its full-year net income forecast by more than half, to 5 billion yen from 12 billion yen because of impairment losses on inventory assets.

Acom Co., Japan’s largest consumer-finance lender by market value, dropped 7.5 percent to 1,477 yen after forecasting a loss of 11.4 billion yen for the year ending March to pay for headcount reductions. It plans to close branches and eliminate 550 jobs.

Mitsumi Electric Co. slid 6.3 percent to 1,631 yen, after the electronic-component maker reduced its full-year net income outlook to 5.3 billion yen from 7 billion yen. The company had a 11.2 billion yen profit a year ago. Its first-half profit tumbled 63 percent to 3.51 billion.

Exporters Advance

Bridgestone Corp. fell 3.3 percent to 1,436 yen. The world’s largest tiremaker by sales expects an annual loss of 10 billion yen as a result of plant closures in Australia and New Zealand. The company had previously expected a profit of 6 billion yen for the year through Dec. 31.

In New York, the Dow Jones Industrial Average jumped 2.1 percent yesterday, the biggest gain since July. Worker productivity surged at a 9.5 percent annual rate in the third quarter, the fastest pace in six years, according to the Labor Department. Initial jobless claims dropped by 20,000 to 512,000 in the week ended Oct. 31, the fewest since January. Labor costs also fell, signaling companies may start hiring again.

“Unemployment is the biggest problem in the U.S. and we’re seeing positive signs there, which boosts exporters here,” said Mitsubishi UFJ’s Ishigane.

Sony gained 1.6 percent to 2,590 yen. Canon Inc., the world’s largest camera maker, rose 1.8 percent to 3,410 yen.

“Investors are likely to buy into exporter shares with the improvements in the U.S. economic data,” said Juichi Wako, a senior strategist at Tokyo-based Nomura Holdings Inc.

To contact the reporter for this story: Kana Nishizawa in Tokyo at knishizawa5@bloomberg.net; Satoshi Kawano in Tokyo skawano1@bloomberg.net.

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Asian Stocks Rise on Australian Growth Outlook, Data From U.S.

By Jonathan Burgos

Nov. 6 (Bloomberg) -- Asian stocks rose, paring a weekly loss, after Australia’s central bank more than tripled its economic-growth forecast and reports showed U.S. unemployment claims and worker productivity beat estimates.

Macquarie Group Ltd., Australia’s largest investment bank, and Westpac Banking Corp., the country’s second-largest bank, both gained more than 2.5 percent. James Hardie Industries NV, the top seller of home siding in the U.S., advanced 2.6 percent. Asahi Glass Co., Asia’s largest glassmaker, climbed 6.5 percent in Tokyo after forecasting a narrower loss. Pioneer Corp. surged 8.9 percent after the maker of car-navigation systems said it needs less funds than previously expected as earnings improve.

“Macro-economic numbers and earnings should continue to surprise on the upside,” said Manpreet Gill, Singapore-based strategist for Asia at Barclays Wealth, which has $223 billion in assets. “Equities are not expensive, and investors waiting for a big correction may miss the boat.”

The MSCI Asia Pacific Index gained 1 percent to 115.88 as of 4:15 p.m. in Tokyo, with twice as many stocks advancing as declining. The gauge has fallen 0.5 percent this week. It has climbed 29 percent this year, on course for its steepest annual increase since 2003, as governments around the world pumped money into the financial system to revive the global economy.

Japan’s Nikkei 225 Stock Average added 0.7 percent to 9,789.35. China’s Shanghai Composite Index rose 0.3 percent and Hong Kong’s Hang Seng Index gained 1.6 percent. Australia’s S&P/ASX 200 Index climbed 1.9 percent, the sharpest advance in the Asia-Pacific, and most of the region’s benchmark indexes gained.

U.S. Stocks Surge

In the U.S. yesterday, the Dow Jones Industrial Average surged 2.1 percent, the most since July. Data from the Labor Department showed initial joblessness claims dropped to 512,000 last week, the lowest level since January, and worker productivity climbed at a 9.5 percent annual rate in the third quarter, the fastest pace in six years. Labor costs also fell, signaling companies may start hiring again. Futures on the Standard & Poor’s 500 Index were little changed today.

“Unemployment is the biggest problem in the U.S. right now and we’re seeing some positive signs there,” Kiyoshi Ishigane, a strategist in Tokyo at Mitsubishi UFJ Asset Management Co., which oversees about $56 billion.

James Hardie gained 2.6 percent to A$7.18. Sony Corp., Japan’s biggest exporter of televisions, climbed 1.6 percent to 2,590 yen. Canon Inc., the world’s largest camera maker, advanced 1.8 percent to 3,410 yen. Li & Fung Ltd., the biggest supplier of clothes and toys to Wal-Mart Stores Inc. and Target Corp., added 0.8 percent to HK$32.85 in Hong Kong.

Macquarie Group climbed 4.1 percent to A$49.60. Westpac gained 2.6 percent to A$26.55 and Melbourne-based BHP Billiton Ltd., the world’s largest mining company, added 2.6 percent to A$37.40. BHP and Westpac were the biggest contributors to the MSCI index’s advance.

Australian GDP

Australia’s central bank said the economy will expand at more than three times the pace forecast in August, and signaled it will continue to lead the world in raising interest rates.

“A further gradual lessening of monetary stimulus is likely to be required over time,” the Reserve Bank said in Sydney today. Gross domestic product will rise 1.75 percent this year and 3.25 percent in 2010, the bank said. Three months ago, it forecast gains of 0.5 percent and 2.25 percent respectively.

Stocks in the MSCI Asia Pacific Index are valued at 22 times estimated earnings, compared with 17 times for the Standard & Poor’s 500 in the U.S. and 15 times for the Dow Jones Stoxx 600 Index in Europe.

Earnings, Financing

Asahi Glass jumped 6.5 percent to 815 yen. The company said it will book a net loss of 5 billion yen ($55 million) this year, narrower than its previous forecast of 34 billion yen.

DBS Group Holdings Ltd., Southeast Asia’s biggest lender, added 2.9 percent to S$13.36 and was the biggest contributor to gains in Singapore’s benchmark index. The company reported third-quarter net income of S$563 million ($403 million), compared with the S$438 million estimated on average by analysts surveyed by Bloomberg.

Pioneer advanced 8.9 percent to 246 yen. The company said it needs to raise only half of the 40 billion yen it had targeted by March 2012.

NEC Corp., Japan’s largest maker of personal computers, surged 10 percent to 273 yen. The company plans to raise as much as 134 billion yen ($1.5 billion) by selling stock to help fund new businesses and pay off debt. NEC had the steepest gain in the MSCI index.

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

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Deutsche Boerse Follows NYSE With Third-Quarter Earnings Drop

By Nandini Sukumar and Whitney Kisling

Nov. 6 (Bloomberg) -- Deutsche Boerse AG joined NYSE Euronext in reporting a decline in third-quarter profit as trading slowed and the largest exchanges in Europe and the U.S. lost business to smaller competitors.

Deutsche Boerse’s net income fell 38 percent to 158.3 million euros ($235.4 million) from 257.3 million euros a year earlier on fewer transactions and lower fees, the Frankfurt- based exchange said yesterday. NYSE Euronext reported a 28 percent decline in third-quarter profit last week as equity trading revenue fell and European competitors took market share.

Business at NYSE Euronext, London Stock Exchange Group Plc and Deutsche Boerse has slowed following the worst financial crisis since the Great Depression. At the same time, competition from so-called multilateral trading facilities, such as Chi-X Europe Ltd., Turquoise and Bats Global Markets, has wrested more than 25 percent of trading from traditional exchanges in the last two years.

“The competition has stiffened up, and the overall market volume is down a bit from last year,” said Sang Lee, a market analyst at Aite Group LLC, a Boston-based financial-services consultant. The biggest exchanges “see their revenue coming from the trading side declining, driven by the competition from some of their smaller, more nimble competitors that are out there,” he said.

Biggest Stock Retreat

Deutsche Boerse’s profit of 85 euro cents a share missed the average adjusted estimate of analysts surveyed by Bloomberg by 4.4 percent. While NYSE’s profit beat analysts’ estimates, it still spurred a 6.3 percent retreat in the stock on Oct. 30, its steepest sell-off in four months.

Nasdaq OMX Group Inc., owner of the second-largest U.S. stock exchange, said yesterday that profit rose 3.4 percent after it cut expenses and recovered market share in the nation’s equity trading with lower fees. Third-quarter net income climbed to $60 million, or 28 cents a share, from $58 million, or 27 cents, a year earlier. Excluding some items, profit was 42 cents a share, matching the average estimate of 18 analysts surveyed by Bloomberg.

NYSE’s net income fell to $125 million, or 48 cents a share, in the third quarter from $174 million, or 66 cents, a year earlier, the New York-based company said on Oct. 30. Excluding some costs, profit was 53 cents a share, beating the 46 cent average of 17 analysts surveyed by Bloomberg.

Market Share Drops

NYSE’s share of U.S. equity trading in September fell to 28 percent from 34.3 percent a year earlier. Its share of France’s CAC 40 Index volume dropped to 46 percent in September from 55 percent a year earlier, according to data compiled by Thomson Reuters. NYSE boosted rebates for its biggest customers and cut fees at two options exchanges in the past year to stem losses in market share in Europe and the U.S. to newer competitors such as Chi-X and Direct Edge Holdings LLC.

Nasdaq and NYSE battled only each other for U.S. equity trading for about three decades, with the New York Stock Exchange claiming most of the market, until Bats and Direct Edge started about four years ago, now accounting for about 20 percent combined.

Deutsche Boerse’s costs fell 1 percent to 306.7 million euros in the third quarter, and revenue dropped 19 percent to 500.9 million euros.

“The decline is largely due to price changes in trading of U.S. options and in the settlement of German securities as well as effects caused by the weaker U.S. dollar,” the exchange said in the statement yesterday. Costs in 2010 won’t exceed the 1.28 billion euros it’s targeting for 2009, a forecast that the exchange reiterated yesterday.

Sales Decline

Deutsche Boerse is part-owner of Eurex, Europe’s largest futures market. It bought New York-based International Securities Exchange Holdings Inc. in 2007 and also owns Clearstream, the region’s No. 2 securities-settlement company.

Sales from the company’s Xetra stock trading unit dropped 37 percent to 63.1 million euros. Revenue from Eurex slid 26 percent to 191.5 million euros. Sales at Clearstream declined 7 percent to 176.6 million euros. Revenue from Market Data & Analytics fell 2 percent to 45.4 million euros.

“Competition in Europe has given a big headache to incumbent exchanges,” Mamoun Tazi, an exchange analyst at MF Global Ltd. in Geneva who rates Deutsche Boerse “neutral,” said in an interview yesterday.

To contact the reporters on this story: Nandini Sukumar in London at nsukumar@bloomberg.net; Whitney Kisling in New York at wkisling@bloomberg.net.

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Global Stocks May Fall as U.S. Yields Rise: Technical Analysis

By Patrick Rial

Nov. 6 (Bloomberg) -- Global stocks may be headed for a “correction” as an increase in U.S. 10-year yields prompts a reduction of carry trades, according to Citigroup Inc.

The yield on 10-year government bonds climbed 37 basis points from a July 31 low to Aug. 8. Using that range, the resistance level stands at 3.55 percent from a low of 3.18 percent on Oct. 1, said Yutaka Yoshino, chief technical analyst at Citigroup in Tokyo, who uses the Japanese technical analysis method of “ichimoku kinko,” which looks at wave patterns and repeating trends. Yields move inversely to bond prices and 1 basis point is equal to 0.01 percentage point.

“If we pass that 3.55 level on the yield, we stop being in a rebound phase and enter into a rising trend,” said Yoshino. “Inflation concerns are starting to creep in and the Federal Reserve has no control over long-term interest rates.”

The yield on the 10-year note finished at 3.53 percent yesterday and will keep rising should it break above the resistance level, Yoshino said. Rising U.S. interest rates mean investors can’t borrow as cheaply in dollars to fund purchases of higher-yielding assets including stocks, a strategy known as a carry trade, he said.

The Dow Jones Industrial Average could decline 14 percent to as low as 8,600 and the Nikkei 225 Stock Average may slide 13 percent to 8,450, he said.

Fed officials said on Nov. 4 they’re more optimistic about the economic outlook and maintained a commitment to keeping interest rates near zero for an “extended period.” The central bank specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline.

Ichimoku kinko, a strategy developed by a Japanese journalist prior to World War II, translates as “one glance equilibrium chart” because of the cloud-like patterns formed by trend lines that make it easy to understand at a glance. The style of analysis is similar to the Elliott Wave theory developed by accountant Ralph Nelson and popularized by Robert Prechter.

Technical analysts make predictions based on patterns in price charts and market data.

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

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Bebe, Hansen, Nvidia, Sotheby’s, Starbucks: U.S. Equity Preview

By Rita Nazareth

Nov. 6 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Bebe Stores Inc. (BEBE US): The clothing retailer reported first-quarter adjusted loss of 4 cents a share, wider than the average analyst estimate of a loss of 2 cents.

Crocs Inc. (CROX US): The maker of colorful clogs with holes forecast fourth-quarter adjusted loss of as much as 20 cents a share, wider than the average analyst estimate of a loss of 16 cents.

Hansen Natural Corp. (HANS US): The beverage maker reported third-quarter profit excluding some items of 60 cents a share, missing the average analyst estimate by 5.4 percent.

Nvidia Corp. (NVDA US): The maker of graphics chips reported third-quarter profit excluding some items of 19 cents a share, beating the 10-cent average of analyst estimates compiled by Bloomberg.

Sotheby’s (BID US): The auction house reported third- quarter adjusted loss of 84 cents a share as art sales contracted with the global economy. On average, the three analysts surveyed by Bloomberg forecast a loss of 29 cents a share.

Starbucks Corp. (SBUX US): The world’s largest coffee-shop operator reported fourth-quarter profit excluding some items of 24 cents a share as cost cuts expanded margins. The earnings beat the average analyst estimate by 15 percent.

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

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Hyatt Hotels Shares Advance After Offering Boosts IPO Market

By Nadja Brandt and Michael Tsang

Nov. 5 (Bloomberg) -- Hyatt Hotels Corp., the chain controlled by Chicago’s Pritzker family, climbed in its first day of trading after raising $950 million in the third-largest U.S. initial public offering this year.

Hyatt added $1.89, or 7.6 percent, to $26.89 as of 10:03 a.m. on the New York Stock Exchange. The Pritzker family sold 38 million Class A shares at $25 each and will receive all the proceeds from the sale. The total doesn’t include the 5.7 million additional shares the underwriters may purchase, which would push the value to $1.09 billion.

Hyatt was priced near the high end of the forecast range of $23 to $26 after U.S. hotel operators outperformed the Standard & Poor’s 500 Index as the economy recovered from the deepest recession since the Great Depression. The offering came after bankers pulled IPOs of PlainsCapital Corp., Aviv REIT Inc. and AEI in the past week after failing to find enough buyers.

“Investors are being very selective when it comes to IPOs,” said Walter Todd, who oversees $750 million as co-chief investment officer at Greenwood Capital Associates LLC in Greenwood, South Carolina. “Many people have their arms around Hyatt because it’s a well-established company. People don’t want to take the risk with companies they don’t understand.”

Hotel Valuations

Hyatt runs 413 hotels around the world under its namesake brand and will be the third-largest publicly traded U.S. hotel chain based on 2008 sales, data compiled by Bloomberg show.

The mid-point of Hyatt’s offering price range values the company’ stock- and bond-market capitalization at 13 times its estimated 2010 earnings before interest, taxes, depreciation and amortization, based on data from Research Edge LLC.

Marriott International Inc., the biggest U.S. hotel chain, has a ratio of 13.5 on the same basis, Research Edge estimates show. The company’s shares have surged 31 percent this year, beating the 16 percent rise in the Standard & Poor’s 500 Index. Starwood Hotels & Resorts Worldwide Inc., which has jumped 66 percent in 2009, has the same valuation as Hyatt.

Hyatt had a net loss of $31 million in the nine months ended Sept. 30, as revenue fell 17 percent to $2.4 billion, according to a regulatory filing.

Marriott had a loss of $452 million from revenue of $7.53 billion in the same period. Starwood, the second-largest U.S. hotel chain, earned $268 million on sales of $3.56 billion.

Long-Term Debt

Hyatt had $845 million in long-term debt versus $1.3 billion in cash at the end of the third quarter, according to its regulatory filing. At Marriott, long-term debt totaled $2.52 billion, while the Bethesda, Maryland-based company had $130 million in reserves, data compiled by Bloomberg show. White Plains, New York-based Starwood’s long-term borrowings equaled $3.36 billion and it had $113 million in cash.

William Crow, a St. Petersburg, Florida-based analyst at Raymond James & Associates Inc., said demand for Hyatt’s IPO may indicate that investors are growing more optimistic that the global economy is recovering from the first contraction since World War II.

France, Germany and Hong Kong have exited recessions, while the U.S. Commerce Department said last month that the world’s largest economy expanded at a 3.5 percent pace last quarter.

“The pricing toward the upper end is a positive takeaway,” Crow said. “This is an opportunity for investors to make sizeable bets on an economic recovery not just in the U.S. but globally given Hyatt’s global reach.”

50 Percent Rally

More U.S. companies have been offering their shares in the past two months than at any time in almost two years, data compiled by Bloomberg show. IPOs have increased as sellers took advantage of the more than 50 percent rally in the S&P 500 from its March low to unload their stakes.

The revival hasn’t coincided with bigger returns.

The offerings of American companies in September and October outperformed the S&P 500 by 0.5 percentage point on average in the first month of trading through yesterday, the worst performance in Bloomberg data going back 14 years. IPOs by U.S. companies have beaten the S&P 500 by an average 21.3 percentage points since 1995, the data show.

PlainsCapital, a bank-holding company based in Dallas, postponed its IPO yesterday, citing “recent volatility in the financial markets.” The company planned to raise $240 million in its offering.

Aviv REIT, the Chicago-based real-estate investment trust that operates nursing homes in 21 U.S. states, shelved its IPO on Nov. 3. The postponement came just five days after bankers were forced to pull an $800 million offering by George Town, Cayman Islands-based AEI after they couldn’t find enough buyers for the former overseas unit of Enron Corp.

Underwriters

Goldman Sachs Group Inc., the lead underwriter for Hyatt’s IPO, also managed the AEI offering.

JPMorgan Chase & Co. in New York was the sole underwriter for PlainsCapital, while New York-based Morgan Stanley and Citigroup Inc. and Charlotte, North Carolina-based Bank of America Corp. were the underwriters for Aviv’s IPO. JPMorgan, Citigroup and Zurich-based Credit Suisse Group AG, ran the AEI sale along with Goldman Sachs in New York.

Hyatt’s IPO was originally scheduled for today. After the pricing of Hyatt was announced, Ancestry.com Inc., the Provo, Utah-based online provider of family histories, sold 7.41 million shares in an IPO at $13.50 each, the midpoint of its forecast range.

Voting Power

Hyatt set up two classes of shares that give the Pritzker family more voting power than other shareholders.

The family will own about 80.7 percent of the company’s Class B common stock, representing about 62.4 percent of shares outstanding and 78.4 percent of total voting power. Each Class B share is entitled to 10 votes compared with one vote per Class A share, according to company filings.

Penny Pritzker, who served as President Barack Obama’s campaign finance chairwoman and is the first cousin of Hyatt Executive Chairman Thomas J. Pritzker, serves on the board of the company as an independent director.

Hyatt’s IPO has conflicts that allow the founding Pritzker family to benefit ahead of shareholders, research firm Green Street Advisors said in a report last week.

“Simply put, Hyatt’s corporate governance is the worst in our entire coverage universe,” wrote analyst John Arabia at the Newport Beach, California-based firm. “The existing owners are sending a strong signal to outside public shareholders that the Pritzker family will firmly control Hyatt, even if the family’s economic ownership interest falls below 50 percent.”

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net; Michael Tsang in New York at mtsang1@bloomberg.net

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U.K. Stocks Pare Losses; Tesco, Next Advance, Mining Shares Drop

By Roger Neill

Nov. 5 (Bloomberg) -- U.K. stocks pared declines as a rally in retailers Tesco Plc and Next Plc countered a sell-off in mining companies.

The benchmark FTSE 100 Index retreated 0.48, or less than 0.1 percent, to 5,107.41 at 1:42 p.m. in London, having fallen as much as 1.4 percent earlier.

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U.S. Stocks Advance on Drop in Jobless Claims, Cisco Earnings

By Sapna Maheshwari

Nov. 5 (Bloomberg) -- U.S. stocks rose, sending the Standard & Poor’s 500 Index higher for a fourth day, as jobless claims and worker productivity beat forecasts and Cisco Systems Inc. said a global economic recovery spurred a rebound in sales.

Cisco, the biggest maker of networking equipment, gained 2.4 percent after earnings topped analysts’ estimates and the company expanded its stock buyback plan by $10 billion. Research In Motion Ltd. rose after saying it will repurchase as much as $1.2 billion in shares. All but one of the 30 stocks in the Dow Jones Industrial Average rose as government data showed initial claims for unemployment benefits dropped to 512,000 last week and worker productivity surged at the fastest pace in six years.

The S&P 500 added 0.7 percent to 1,053.47 at 9:36 a.m. in New York. The Dow increased 89.7 points, or 0.9 percent, to 9,891.84. About six stocks advanced for each that fell on the New York Stock Exchange.

“We’ve actually seen more good news than bad across a broad spectrum of economic data,” said Art Hogan, the chief market analyst at New York-based Jefferies & Co. “We look at the initial jobless claims as another piece of economic data we’re pretty happy with,” he said. “The most important thing is the non-farm productivity number."

Nine of 10 industry groups in the S&P 500 advanced as the decrease in unemployment claims signaled that job losses are slowing as the economy begins to recover. The Labor Department’s measure of worker output jumped at a 9.5 percent annual rate, topping the highest estimate of economists surveyed by Bloomberg, as labor costs fell 5.2 percent to cap the biggest 12-month decrease since records began in 1948.

Tomorrow’s Jobs Report

The jobless claims data helped ease concern that rising unemployment will stifle the economy’s rebound. The government is projected to report that payrolls fell by 175,000 workers last month, according to the median of estimates in a Bloomberg News survey before tomorrow’s Labor Department report. The jobless rate probably climbed to 9.9 percent, the highest since 1983, according to the survey.

The S&P 500 has surged 56 percent from a 12-year low in March after $11.6 trillion in government spending, lending and guarantees returned the economy to growth following four straight quarters of contraction. The index is trading at more than 21 times earnings, according to weekly data compiled by Bloomberg. That’s near the highest level since July 2002.

Cisco added 2.6 percent to $23.90. The company’s net income fell 19 percent to $1.79 billion, or 30 cents a share, in the first quarter, which ended Oct. 24. Excluding stock compensation and some other costs, profit was 36 cents, beating the 31-cent average estimate in a survey of analysts.

‘Very Optimistic’

Cisco Chairman and Chief Executive Officer John Chambers, one of the first technology leaders to herald the recession two years ago, said he now sees a global economic recovery, fueling a rebound in his company’s sales this quarter.

‘‘Cisco is talking about a recovery around the world, Chambers is being very optimistic and people listen to him,” said William Dwyer, chief investment officer at Baltimore-based MTB Investment Advisors, which oversees $13 billion. “People are a little cautious, they like what they’re seeing, but there’s an awful lot built into the market.”

Earnings have exceeded the average analyst estimate at 81 percent of S&P 500 companies that have reported third-quarter results so far, according to data compiled by Bloomberg. That would mark the highest full-quarter proportion in data going back to 1993.

Research In Motion, Whole Foods

Research In Motion, the maker of the BlackBerry phone, added 3.1 percent to $59.37.

Whole Foods Market Inc. slid 9.6 percent to $28.99. The natural-food grocer forecast full-year earnings of as little as $1.05 a share, trailing the average estimate of $1.11 from analysts in a Bloomberg survey.

U.S. stocks yesterday erased most of a 156-point rally in the Dow average after a House bill to curb credit-card rates spurred concern about bank earnings, outweighing the Federal Reserve’s plan to keep interest rates at a record low.

The Bank of England slowed the pace of bond purchases as signs of an economic recovery give policy makers scope to wind down their money-printing program next year. The European Central Bank may signal it’s moving closer to withdrawing emergency stimulus measures after leaving its benchmark interest rate at a record low today.

For Related News and Information:

To contact the reporter on this story: Sapna Maheshwari in New York at smaheshwar11@bloomberg.net.

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Asian Stocks Decline on Growth Concerns; Doosan Heavy Slumps

By Jonathan Burgos and Patrick Rial

Nov. 5 (Bloomberg) -- Asian stocks fell, dragging the MSCI Asia Pacific Index down for the third time in four days, as South Korea said it’s “unclear” whether the economic rebound will be sustained and New Zealand’s unemployment rate rose.

Samsung Electronics Co., Asia’s biggest maker of chips and mobile phones, lost 2.9 percent in Seoul as the country’s finance ministry said factory production probably slowed in October. Doosan Heavy Industries & Construction Co. sank 8.6 percent after brokerages cut their share-price targets. Telecom Corp. of New Zealand, the country’s largest phone company, dropped 2.4 percent as the nation’s unemployment rate rose to a nine-year high.

The MSCI Asia Pacific Index dropped 0.4 percent to 114.85 as of 7:28 p.m. in Tokyo. The gauge has slumped 5.2 percent from a 13-month high on Oct. 20 amid concerns the withdrawal of stimulus measures will cause the global recovery to falter. The index is still up 63 percent from a five-year low on March 9.

“The market is now reaching the point where monetary stimulus policies stop pushing up asset prices and earnings become the main focus,” said Koichi Kurose, who helps oversee $4.6 billion as chief strategist at Resona Bank Ltd.

Japan’s Nikkei 225 Stock Average declined 1.3 percent to 9,717.44 as the yen rose against all 16 major counterparts amid higher demand for the currency as a refuge.

South Korea’s Kospi Index dropped 1.8 percent and Hong Kong’s Hang Seng Index declined 0.6 percent. New Zealand’s NZX 50 Index fell 0.7 percent, while Australia’s S&P/ASX 200 Index lost 0.7 percent.

Takeover Bids

Sanyo Electric Co. tumbled 20 percent as Panasonic Corp. started a bid for the company at a discount. Among stocks that gained, Acom Co., Japan’s largest consumer lender by value, rose 7.6 percent after Citigroup Inc. upgraded the stock. Transurban Group, owner of toll roads in Australia and Virginia, surged 19 percent on speculation it will receive a higher takeover bid.

Futures on the Standard & Poor’s 500 Index slipped 0.3 percent. The gauge rose 0.1 percent yesterday as the Federal Reserve said it will keep interest rates near zero for “an extended period” and specified for the first time that policy will stay unchanged as long as inflation expectations are stable and unemployment fails to decline.

The Fed is “quite concerned that a premature pullout of the low-interest environment and the withdrawal of stimulus spending will be detrimental to the U.S. economy and the rest of the world,” said Jofer Gaite, a fund manager at the Manila- based Government Service Insurance System, which has $10 billion in assets. “The ongoing recovery is still fragile and the Fed is resorting to all it can to avoid a prolonged recession.”

Balanced Growth

Policy makers around the world are trying to ensure growth doesn’t collapse following the withdrawal of policies introduced to drag the global economy out of its worst slowdown since World War II. Australia yesterday raised interest rates for the second time in four weeks, while the Bank of Japan decided on Oct. 30 to end corporate-debt buying programs.

Stocks in the MSCI Asia Pacific Index are valued at 22 times estimated earnings, compared with 17 times for the S&P 500 and 15 times for Europe’s Dow Jones Stoxx 600 Index.

Samsung Electronics declined 2.9 percent to 712,000 won. South Korea remains “too dependent” on external demand and the country needs to balance between export and local consumption, Finance Minister Yoon Jeung Hyun said.

The government will continue its “macroeconomic policies and try to create more jobs and boost investment and consumption,” the country’s Finance Ministry said in a monthly report today.

Reducing Debt

Doosan Heavy Industries slumped 8.6 percent to 59,700 won, set for its lowest closing level since July 15. Goldman Sachs Group Inc. and Credit Suisse Group AG cut their share-price targets after the company reported a third-quarter net loss.

Korean Air Lines Co., the nation’s biggest carrier, lost 1.8 percent to 43,500 won after the Maeil Business Newspaper reported that creditors had called on the company to increase capital in order to lower debt ratios.

In Wellington, Telecom New Zealand dropped 2.4 percent to NZ$2.48, while Fletcher Building Ltd., the world’s largest maker of laminated building board, lost 1.6 percent to NZ$7.86.

The nation’s unemployment rate rose to 6.5 percent in the third quarter from 6 percent in the previous three months, government statistics showed. Central bank Governor Alan Bollard said a strengthening currency will slow the nation’s recovery from a recession.

In Tokyo, Sanyo tumbled 20 percent to 172 yen after Panasonic offered to buy the company for a price of 131 yen a share. Sanyo stock closed yesterday at 216 yen.

Acom, Takefuji

Goldman Sachs and two other banks that in 2006 bailed out Sanyo, the world’s biggest maker of rechargeable batteries, have agreed to sell a combined 50 percent stake for 403 billion yen ($4.5 billion).

Among stocks that gained today, Acom rose 7.6 percent to 1,596 yen. Citigroup upgraded the shares to “hold” from “sell.” The brokerage raised its rating on Japan’s consumer lenders to “neutral” from “bearish,” saying the government may relax loan restrictions.

Promise Co. and Takefuji Corp. each had their ratings boosted as well. Promise advanced 15 percent to 786 yen and Takefuji climbed 19 percent to 488 yen.

In Sydney, Transurban Group surged 19 percent to A$5.24. The company rejected an unsolicited takeover offer from Canada Pension Plan Investment Board and Ontario Teachers’ Pension Plan. The two funds currently hold a combined 28 percent stake in Transurban, according to Bloomberg data.

To contact the reporters for this story: Jonathan Burgos in Singapore at jburgos4@bloomberg.net; Patrick Rial in Tokyo at prial@bloomberg.net.

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Brazil’s Bovespa Index Gains on Earnings, Led by Gerdau, Vivo

By Allen Wan

Nov. 5 (Bloomberg) -- Brazilian stocks rose for a third day after Vivo Participacoes SA and Gerdau SA reported profit that exceeded analyst estimates, signaling an earnings recovery in Latin America’s largest economy.

The Bovespa index rose 0.4 percent to 64,136.10 at 8:42 a.m. New York time. Gerdau climbed 2.6 percent to 28.21 reais. Vivo advanced 3.2 percent to 47.66 reais.

To contact the reporter on this story: Allen Wan in New York at awan3@bloomberg.net

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Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Nov 04 09 08:19 GMT |

Previous session overview The dollar edged down against the yen in Asia Wednesday as short-term players sold the U.S. unit ahead of a Federal Open Mark Committee meeting later in the global day. At 0450 GMT, the dollar traded at JPY90.22 compared with JPY90.37 late Tuesday in New York. It could fall to JPY89.80 if the FOMC does not lay the groundwork for eventual dollar-positive rate hikes, said dealers. The risk-sensitive euro and Australian dollar were also lower against the safe-haven Japanese unit after data showed Australian retail sales fell 0.2% in September, worse than expectations for a 0.4% rise, dealers said. The Dollar Index, which measures the currency's value against six major units including the euro, edged down to 76.253 from 76.320. Earlier, euro traded relatively quietly in Asia with Tokyo markets closed for a holiday, the pair then tumbled in Europe to as low as USD1.4626 partly due to the selloff in European stock markets. The Pound broke below USD1.6300 as the market continued to focus on the downside ahead of BOE and in the midst of banking concerns. A rebound in commodities and US stocks helped lift the pair from lows. The Australian dollar was slightly stronger late Wednesday despite a volatile session fueled by surprising weakness in retail sales in September. Market expectation EURJPY, EURUSD keep rising as players buy higher-yielding assets with risk appetite slightly higher on stronger Asian share markets, World Bank forecast for Chinese GDP to grow 8.7% in 2010, above its revised estimate for 8.4% growth in 2009, say analysts. Yet regardless of the results, volatilities are unlikely to decline much further for now, the dealers said, as players are still worried about a sudden sharp fall in the dollar due to lingering risk-aversion sentiment. They added players will avoid unloading a lot of hedges even after the FOMC meeting today, as other events, such as non-farm payrolls data due later this week, will come up. EURUSD traders have suggested that sell interest seen placed to USD1.4760, a break to open a move toward USD1.4775/80 ahead of USD1.4811 (Tuesday's Asian highs). Support USD1.4705/00, stronger toward USD1.4680. Markets expected to remain relatively subdued ahead of this evening's FOMC announcement. Traders said the next hurdle for the Australian dollar will be the outcome of the U.S. Federal Reserve two-day policy meeting Thursday. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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