Builders Probably Broke Ground on Most U.S. Houses in 11 Months

By Shobhana Chandra

Nov. 18 (Bloomberg) -- Builders in October probably broke ground on U.S. houses at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said reports today may show.

Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

Government tax credits and lower prices and borrowing costs may spur residential sales and construction in coming months, indicating housing will help the economy recover. A lack of inflation has made it possible for policy makers to pledge to hold interest rates down for an “extended period” in a bid to sustain the expansion and bring down joblessness.

“Housing is starting to turn,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “One problem is the still-soft job market, which may hold back the recovery. We’re not going to return to the peak for quite some time to come.”

The Commerce Department’s housing report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from 570,000 to 630,000, after 590,000 in September.

Also at 8:30 a.m., the Labor Department will release the consumer price gauge. Compared with the same time last year, prices were probably down for the eighth consecutive month.

Excluding Food, Fuel

Excluding food and energy costs, the so-called core index rose 0.1 percent after climbing 0.2 percent in September, according to the Bloomberg survey median. The gauge was probably up 1.6 percent in the 12 months to October, according to the survey median.

Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.7 percent to 2 percent. It was up 1.3 percent in the 12 months to September.

The housing report may also show building permits, a sign of future construction, increased 0.9 percent to a 580,000 annual pace, according to the survey.

Construction may further improve after President Barack Obama and Congress extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Tax Credit

Concern over the looming expiration of the credit earlier this month weighed on builder sentiment. The National Association of Home Builders/Wells Fargo’s confidence index held at 17 in November for a second month, the group said yesterday.

Some companies are already seeing a turn. Toll Brothers Inc., the largest U.S. luxury homebuilder, last week said orders surged 42 percent in the quarter ended Oct. 31. The Horsham, Pennsylvania-based company also said cancellations slowed and revenue beat analysts’ estimates.

Gains in consumer confidence, more stable home prices and fewer unsold houses “suggest that the new home market should be improving,” Chief Executive Officer Robert Toll said in a statement. “We sense that it is, though slowly and through choppy waters.”

The Standard & Poor’s Homebuilder supercomposite index is up 72 percent since March 9, outpacing gains in the broader S&P 500 gauge that’s increased 64 percent from the 12-year low reached that day.

A sustained rebound still requires an improvement in the job market. The median estimate of economists surveyed this month anticipated unemployment, which reached a 26-year high of 10.2 percent last month, will top 10 percent through the first half of 2010.

Foreclosure filings exceeded 300,000 for an eighth straight month in October as rising joblessness made it tougher for homeowners to pay their bills, RealtyTrac Inc. said last week.

                        Bloomberg Survey

===============================================================
                              CPI     Core  Housing Building
                                       CPI   Starts  Permits
                             MOM%     MOM%   ,000’s   ,000’s
===============================================================
Date of Release              11/18    11/18    11/18    11/18
Observation Period            Oct.     Oct.     Oct.     Oct.
---------------------------------------------------------------
Median                        0.2%     0.1%      600      580
Average                       0.2%     0.1%      598      581
High Forecast                 0.5%     0.2%      630      620
Low Forecast                 -0.2%    -0.2%      570      552
Number of Participants          78       77       77       50
Previous                      0.2%     0.2%      590      575
---------------------------------------------------------------
4CAST Ltd.                    0.2%     0.1%      570      560
Action Economics              0.3%     0.1%      600      585
Aletti Gestielle SGR          0.2%     0.1%      600      590
Ameriprise Financial Inc      0.2%     0.1%      595      580
Banesto                       ---      ---       590      580
Bank of Tokyo- Mitsubishi     0.3%     0.2%      592      552
Barclays Capital              0.2%     0.1%      605     ---
Bayerische Landesbank         0.2%     0.1%     ---      ---
BBVA                          0.2%     0.1%      598      581
BMO Capital Markets           0.1%     0.1%      600     ---
BNP Paribas                   0.2%     0.1%      600     ---
BofA Merrill Lynch Resear     0.3%     0.1%      625      620
Briefing.com                  0.2%     0.0%      585      585
C I T I C Securities          0.2%     0.2%     ---      ---
Calyon                        0.2%     0.1%      603      586
Capital Economics             0.0%     0.1%      600     ---
CIBC World Markets            0.3%     0.1%      620     ---
Citi                          0.3%     0.1%      600      590
ClearView Economics           0.3%     0.1%      620      590
Commerzbank AG                0.3%     0.1%      600      580
Credit Suisse                 0.1%     0.1%      580     ---
Daiwa Securities America      0.3%     0.1%      600     ---
Danske Bank                   0.5%     0.1%     ---      ---
DekaBank                      0.2%     0.1%      580      570
Desjardins Group              0.2%     0.0%      605      610
Deutsche Bank Securities      0.2%     0.2%      590      580
Deutsche Postbank AG          0.2%     0.1%      600     ---
DZ Bank                       0.2%     0.1%      580      565
Exane                         0.1%     0.0%      600     ---
First Trust Advisors          0.2%     0.1%      630     ---
Fortis                        0.1%     0.2%      590     ---
FTN Financial                 0.2%     0.1%      600     ---
Goldman, Sachs & Co.          0.2%     0.1%      602     ---
Helaba                        0.2%     0.1%      610      570
Herrmann Forecasting          0.2%     0.1%      595      562
High Frequency Economics      0.3%     0.1%      600      575
HSBC Markets                  0.2%     0.1%      610      590
IDEAglobal                    0.2%     0.1%      600      580
IHS Global Insight            0.2%     0.1%      584      576
Informa Global Markets        0.2%     0.1%      585      580
ING Financial Markets         0.2%     0.1%      590      575
Insight Economics             0.2%     0.1%      600     ---
Intesa-SanPaulo               0.2%     0.1%      590      580
J.P. Morgan Chase             0.2%     0.1%      605      575
Janney Montgomery Scott L     0.2%     0.1%      601      580
Jefferies & Co.               ---      ---       592      575
Johnson Illington Advisor     0.3%     0.2%      615     ---
Landesbank Berlin            -0.2%    -0.1%      585      580
Landesbank BW                 0.2%     0.1%      600      580
Maria Fiorini Ramirez Inc     0.3%     0.1%      595     ---
MF Global                     0.3%     0.1%      590      580
MFC Global Investment Man     0.2%     0.1%      595      590
Mizuho Securities             0.2%     0.1%      587     ---
Moody’s Economy.com           0.1%     0.1%      605      585
Morgan Keegan & Co.           0.4%     0.2%      601      578
Morgan Stanley & Co.          0.2%     0.1%      620     ---
National Bank Financial       0.2%     0.1%      590     ---
Natixis                       0.2%     0.1%      595     ---
Nomura Securities Intl.       0.2%     0.1%      615      590
PineBridge Investments        0.2%     0.1%      615     ---
PNC Bank                      0.2%     0.1%      600     ---
Raymond James                 0.2%     0.1%      600      580
RBC Capital Markets           0.2%     0.1%      596     ---
RBS Securities Inc.           0.2%     0.1%      590     ---
Ried, Thunberg & Co.          0.3%     0.1%      580      570
Schneider Foreign Exchang     0.2%     0.1%      577      587
Scotia Capital                0.3%     0.1%      600      590
Societe Generale              0.1%     0.0%      615     ---
Stone & McCarthy Research     0.2%     0.1%      595      585
TD Securities                 0.3%    -0.2%      620      610
Thomson Reuters/IFR           0.3%     0.1%      590      565
UBS                           0.3%     0.1%      575     ---
UniCredit Research            0.2%     0.0%      595      575
Union Investment              0.2%     ---       598      570
University of Maryland        0.3%     0.2%      600      590
Wells Fargo & Co.             0.0%     0.1%      610     ---
WestLB AG                     0.3%     0.1%      600      585
Westpac Banking Co.           0.3%     0.1%      605      580
Woodley Park Research         0.4%     0.2%      608      584
Wrightson Associates          0.3%     0.1%      580      570
===============================================================

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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BOE Policy Makers Split Three Ways on Bond Program

By Brian Swint

Nov. 18 (Bloomberg) -- Bank of England policy makers split three ways in a vote to extend the bond-purchase program to 200 billion pounds ($336 billion), and discussed lowering the deposit rate on bank reserves to encourage lending.

While the majority of the nine-member Monetary Policy Committee wanted a 25 billion-pound increase, Chief Economist Spencer Dale favored no change and David Miles sought a 40 billion-pound expansion, minutes of the Nov. 5 meeting published in London today showed. They unanimously kept the benchmark interest rate at 0.5 percent.

“A reduction in the rate of remuneration relative to bank rate on a proportion of commercial bank reserves would bear down on short-term market rates and could ease monetary conditions further,” the minutes said. The committee “agreed that it might be a useful policy tool in some circumstances, and therefore should be available in future.”

The decision is the first three-way split since August 2008, before the collapse of Lehman Brothers Holdings Inc. exacerbated the financial crisis. A change in the deposit rate would expand the toolkit available to policy makers as they try to pull the U.K. out of its longest recession on record.

“It’s very much a case of keeping their options open,” said Alan Clarke, an economist at BNP Paribas SA in London. “These minutes are saying there’s arguments in both directions, and it’s going to be very data-dependent in the next three months.”

The pound rose 0.3 percent against the dollar today, trading at $1.6837 as of 10:02 a.m. in London. The yield on the 2-year U.K. government bond fell 2 basis points to 1.25 percent.

‘Costly to Rectify’

Dale said that an increase in the bond plan posed a risk to inflation, and “might result in unwarranted increases in some asset prices that could prove costly to rectify.”

Miles’s argument for expansion was that it would “provide greater insurance against the downside risks to growth and inflation arising from constrained credit supply.”

While policy makers increased their forecasts for inflation and economic growth this month, Bank of England Governor Mervyn King said last week that he has an “open mind” about expanding the purchases further. The bank’s projections for the next two years show inflation approaching the 2 percent target even if the bank starts to increase interest rates next year and the total asset purchases stay at 200 billion pounds.

“Some members thought that that downside risks to activity in the near term were somewhat greater than implied by the inflation report projections,” the minutes said. “A number of committee members noted that one consequence of additional asset purchases would be to bring forward the point at which the extraordinary degree of stimulus could begin to be withdrawn.”

To contact the reporter on this story: Brian Swint in London at bswint@bloomberg.net.

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Rand Gains as Gold Surges to Record; Retail Sales Slump Eases

By Garth Theunissen

Nov. 18 (Bloomberg) -- The rand strengthened as the price of gold surged to a record and a government report showed the contraction in retail sales slowed as South Africa’s first recession in 17 years eased.

The currency of Africa’s biggest economy gained as much as 0.7 percent to 7.4201 per dollar and traded 0.5 percent stronger at 7.4392 by 11:53 a.m. in Johannesburg, from a close of 7.4738 yesterday.

Gold, which rivals platinum as South Africa’s biggest export, rallied for a fourth straight day, rising as much as 0.9 percent to an all-time high of $1,147.72 an ounce. A report showed retail sales shrank an annual 5.1 percent in September, compared with a revised 6.5 percent contraction the previous month, the Pretoria-based statistics office said.

“Gold and commodity prices in general are benefiting from a weaker dollar and that’s positive for the rand, which is still seen as a major commodity play,” said Natheem Alexander, a bond and currency trader in Cape Town at Peregrine Quant. “The fact that the slowing trend in retail sales is easing up a bit is definitely a positive signal.”

Bullion, which along with platinum accounts for about 22 percent of South Africa’s export earnings, has surged more than 30 percent this year as central banks, pension funds and individual buyers seek to protect their wealth against a weaker dollar and inflation. The Dollar Index, which tracks the U.S. currency against six major counterparts, has lost 7.5 percent this year, boosting commodities that are priced in dollars.

Government bonds fell in South Africa, with the price of the benchmark 13.5 percent security due September 2015 losing 6 cents to 123.20 rand. The drop pushed up the yield by less than half a basis point to 8.37 percent.

South Africa’s currency also strengthened versus half of its 16 most actively traded counterparts, appreciating most against the Taiwanese dollar. Against the euro it lost 0.2 percent to 11.1138, from yesterday’s close of 11.0956.

To contact the reporter on this story: Garth Theunissen in Johannesburg gtheunissen@bloomberg.net

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HSBC Brazil Fund Outperforms Rivals on Economic Outlook, Real

By Makiko Asai and Anna Kitanaka

Nov. 18 (Bloomberg) -- HSBC Global Asset Management’s Japan-based mutual fund investing in Brazilian stocks has beaten its biggest peers this year in the Asia-Pacific region as the stronger real boosted returns from bets on JBS SA and Duratex SA.

The 224.36 billion-yen ($2.5 billion) HSBC Brazil Open (Japan) fund has risen 170 percent in 2009, the steepest gain among 2,361 funds tracked by Bloomberg and based in the Asia- Pacific region with assets of at least $100 million.

Brazil’s Bovespa stock index has surged 80 percent this year, buoyed by the outlook for economic growth and by winning bids to host the 2014 World Cup soccer matches and 2016 Olympics. Further boosting returns at HSBC’s yen-denominated fund is the real’s 33 percent appreciation against the Japanese currency. Adjusted into yen, the Bovespa has soared 139 percent this year, the most of 89 benchmarks worldwide tracked by Bloomberg.

“Brazil’s economy is showing a strong recovery, led by domestic demand,” Pedro A B Bastos, chief executive officer of HSBC Global Asset Management in Brazil, said by e-mail. “With the 2014 World Cup and 2016 Olympic Games in Rio de Janeiro, interest in investment into Brazil has grown significantly.”

The country’s economy will expand 3.5 percent next year after a 0.7 percent contraction this year, according to forecasts published Oct. 1 by the International Monetary Fund. The real has strengthened against most currencies this year on the prospects for growth, increased commodity prices, rising stocks and an improved credit outlook.

Brazilian Stock Market

The Bovespa’s percentage gain in yen terms this year compares with increases of 25 percent for the MSCI World Index, 83 percent for the Sensitive Index in India, 78 percent for the Shanghai Composite Index in China and 130 percent for Russia’s dollar-denominated RTS Index.

JBS SA, the world’s largest beef producer and the HSBC fund’s largest holding, has climbed 95 percent this year.

“As emerging economies grow, diets change and more people eat meat, so demand is growing outside of Brazil too,” said Kenji Yamamoto, corporate director at HSBC Global Asset in Tokyo.

Duratex SA, a maker of bathroom fittings and wood panels that has gained 273 percent this year, and BR Malls Participacoes SA, Brazil’s biggest owner of shopping malls, with a 154 percent increase this year, are also among the HSBC fund’s top holdings, Bastos said.

To contact the reporter on this story: Makiko Asai in Tokyo masai@bloomberg.net; Anna Kitanaka at akitanaka@bloomberg.net.

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Builders Probably Broke Ground on Most U.S. Houses in 11 Months

By Shobhana Chandra

Nov. 18 (Bloomberg) -- Builders in October probably broke ground on U.S. houses at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said reports today may show.

Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

Government tax credits and lower prices and borrowing costs may spur residential sales and construction in coming months, indicating housing will help the economy recover. A lack of inflation has made it possible for policy makers to pledge to hold interest rates down for an “extended period” in a bid to sustain the expansion and bring down joblessness.

“Housing is starting to turn,” said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. “One problem is the still-soft job market, which may hold back the recovery. We’re not going to return to the peak for quite some time to come.”

The Commerce Department’s housing report is due at 8:30 a.m. in Washington. Estimates in the survey ranged from 570,000 to 630,000, after 590,000 in September.

Also at 8:30 a.m., the Labor Department will release the consumer price gauge. Compared with the same time last year, prices were probably down for the eighth consecutive month.

Excluding Food, Fuel

Excluding food and energy costs, the so-called core index rose 0.1 percent after climbing 0.2 percent in September, according to the Bloomberg survey median. The gauge was probably up 1.6 percent in the 12 months to October, according to the survey median.

Fed policy makers’ long-term forecast for their preferred measure of inflation, the Commerce Department index tied to consumer spending and excluding food and fuel, calls for gains in a range of 1.7 percent to 2 percent. It was up 1.3 percent in the 12 months to September.

The housing report may also show building permits, a sign of future construction, increased 0.9 percent to a 580,000 annual pace, according to the survey.

Construction may further improve after President Barack Obama and Congress extended a tax credit of as much as $8,000 for first-time homebuyers until April 30, from Nov. 30. They also expanded it to include some current owners.

Tax Credit

Concern over the looming expiration of the credit earlier this month weighed on builder sentiment. The National Association of Home Builders/Wells Fargo’s confidence index held at 17 in November for a second month, the group said yesterday.

Some companies are already seeing a turn. Toll Brothers Inc., the largest U.S. luxury homebuilder, last week said orders surged 42 percent in the quarter ended Oct. 31. The Horsham, Pennsylvania-based company also said cancellations slowed and revenue beat analysts’ estimates.

Gains in consumer confidence, more stable home prices and fewer unsold houses “suggest that the new home market should be improving,” Chief Executive Officer Robert Toll said in a statement. “We sense that it is, though slowly and through choppy waters.”

The Standard & Poor’s Homebuilder supercomposite index is up 72 percent since March 9, outpacing gains in the broader S&P 500 gauge that’s increased 64 percent from the 12-year low reached that day.

A sustained rebound still requires an improvement in the job market. The median estimate of economists surveyed this month anticipated unemployment, which reached a 26-year high of 10.2 percent last month, will top 10 percent through the first half of 2010.

Foreclosure filings exceeded 300,000 for an eighth straight month in October as rising joblessness made it tougher for homeowners to pay their bills, RealtyTrac Inc. said last week.

                        Bloomberg Survey

===============================================================
                              CPI     Core  Housing Building
                                       CPI   Starts  Permits
                             MOM%     MOM%   ,000’s   ,000’s
===============================================================
Date of Release              11/18    11/18    11/18    11/18
Observation Period            Oct.     Oct.     Oct.     Oct.
---------------------------------------------------------------
Median                        0.2%     0.1%      600      580
Average                       0.2%     0.1%      598      581
High Forecast                 0.5%     0.2%      630      620
Low Forecast                 -0.2%    -0.2%      570      552
Number of Participants          78       77       77       50
Previous                      0.2%     0.2%      590      575
---------------------------------------------------------------
4CAST Ltd.                    0.2%     0.1%      570      560
Action Economics              0.3%     0.1%      600      585
Aletti Gestielle SGR          0.2%     0.1%      600      590
Ameriprise Financial Inc      0.2%     0.1%      595      580
Banesto                       ---      ---       590      580
Bank of Tokyo- Mitsubishi     0.3%     0.2%      592      552
Barclays Capital              0.2%     0.1%      605     ---
Bayerische Landesbank         0.2%     0.1%     ---      ---
BBVA                          0.2%     0.1%      598      581
BMO Capital Markets           0.1%     0.1%      600     ---
BNP Paribas                   0.2%     0.1%      600     ---
BofA Merrill Lynch Resear     0.3%     0.1%      625      620
Briefing.com                  0.2%     0.0%      585      585
C I T I C Securities          0.2%     0.2%     ---      ---
Calyon                        0.2%     0.1%      603      586
Capital Economics             0.0%     0.1%      600     ---
CIBC World Markets            0.3%     0.1%      620     ---
Citi                          0.3%     0.1%      600      590
ClearView Economics           0.3%     0.1%      620      590
Commerzbank AG                0.3%     0.1%      600      580
Credit Suisse                 0.1%     0.1%      580     ---
Daiwa Securities America      0.3%     0.1%      600     ---
Danske Bank                   0.5%     0.1%     ---      ---
DekaBank                      0.2%     0.1%      580      570
Desjardins Group              0.2%     0.0%      605      610
Deutsche Bank Securities      0.2%     0.2%      590      580
Deutsche Postbank AG          0.2%     0.1%      600     ---
DZ Bank                       0.2%     0.1%      580      565
Exane                         0.1%     0.0%      600     ---
First Trust Advisors          0.2%     0.1%      630     ---
Fortis                        0.1%     0.2%      590     ---
FTN Financial                 0.2%     0.1%      600     ---
Goldman, Sachs & Co.          0.2%     0.1%      602     ---
Helaba                        0.2%     0.1%      610      570
Herrmann Forecasting          0.2%     0.1%      595      562
High Frequency Economics      0.3%     0.1%      600      575
HSBC Markets                  0.2%     0.1%      610      590
IDEAglobal                    0.2%     0.1%      600      580
IHS Global Insight            0.2%     0.1%      584      576
Informa Global Markets        0.2%     0.1%      585      580
ING Financial Markets         0.2%     0.1%      590      575
Insight Economics             0.2%     0.1%      600     ---
Intesa-SanPaulo               0.2%     0.1%      590      580
J.P. Morgan Chase             0.2%     0.1%      605      575
Janney Montgomery Scott L     0.2%     0.1%      601      580
Jefferies & Co.               ---      ---       592      575
Johnson Illington Advisor     0.3%     0.2%      615     ---
Landesbank Berlin            -0.2%    -0.1%      585      580
Landesbank BW                 0.2%     0.1%      600      580
Maria Fiorini Ramirez Inc     0.3%     0.1%      595     ---
MF Global                     0.3%     0.1%      590      580
MFC Global Investment Man     0.2%     0.1%      595      590
Mizuho Securities             0.2%     0.1%      587     ---
Moody’s Economy.com           0.1%     0.1%      605      585
Morgan Keegan & Co.           0.4%     0.2%      601      578
Morgan Stanley & Co.          0.2%     0.1%      620     ---
National Bank Financial       0.2%     0.1%      590     ---
Natixis                       0.2%     0.1%      595     ---
Nomura Securities Intl.       0.2%     0.1%      615      590
PineBridge Investments        0.2%     0.1%      615     ---
PNC Bank                      0.2%     0.1%      600     ---
Raymond James                 0.2%     0.1%      600      580
RBC Capital Markets           0.2%     0.1%      596     ---
RBS Securities Inc.           0.2%     0.1%      590     ---
Ried, Thunberg & Co.          0.3%     0.1%      580      570
Schneider Foreign Exchang     0.2%     0.1%      577      587
Scotia Capital                0.3%     0.1%      600      590
Societe Generale              0.1%     0.0%      615     ---
Stone & McCarthy Research     0.2%     0.1%      595      585
TD Securities                 0.3%    -0.2%      620      610
Thomson Reuters/IFR           0.3%     0.1%      590      565
UBS                           0.3%     0.1%      575     ---
UniCredit Research            0.2%     0.0%      595      575
Union Investment              0.2%     ---       598      570
University of Maryland        0.3%     0.2%      600      590
Wells Fargo & Co.             0.0%     0.1%      610     ---
WestLB AG                     0.3%     0.1%      600      585
Westpac Banking Co.           0.3%     0.1%      605      580
Woodley Park Research         0.4%     0.2%      608      584
Wrightson Associates          0.3%     0.1%      580      570
===============================================================

To contact the reporter on this story: Shobhana Chandra in Washington schandra1@bloomberg.net

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Pound Falls Versus Euro as Bank of England Minutes Show Split

By Paul Dobson

Nov. 18 (Bloomberg) -- The pound fell against the euro after minutes from this month’s Bank of England meeting showed policy makers split three ways on whether to extend their debt- buying plan and discussed cutting the deposit rate on reserves.

Sterling snapped a four-day gain versus the 16-nation currency and was little changed versus the dollar. A majority of policy makers voted on Nov. 5 to boost the asset-purchase plan by a less-than-forecast 25 billion pounds ($42 billion), minutes published today showed. One member of the Monetary Policy Committee favored no change and one voted for an expansion.

“It’s very inconclusive,” said Peter Frank, a currency strategist in London at Societe Generale SA. “The two camps don’t seem to be agreeing. We’re coming to the end of the quantitative-easing process and people are worrying over how the inflation risk plays out ahead.”

The pound fell 0.4 percent to 88.87 pence per euro as of 10:30 a.m. in London, and traded at $1.6810, from $1.6812 yesterday.

U.K. government bonds were little changed, with the yield on the 10-year gilt rising 2 basis points to 3.69 percent. The two-year note yield slipped 1 basis point to 1.27 percent.

To contact the reporter on this story: Paul Dobson in London at pdobson2@bloomberg.net

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Dollar, Yen Fall Against Euro as Stocks Rise, Before House Data

By Bo Nielsen

Nov. 18 (Bloomberg) -- The dollar and the yen fell against the euro as stock markets in Europe climbed and before a report that may show U.S. housing starts in October surged to the highest in almost a year.

The U.S. currency also declined against the Australian and New Zealand dollars. The Dow Jones Stoxx 600 Index climbed 0.3 percent and oil rose for a third day. The pound fell against the euro and the dollar after minutes of this month’s Bank of England policy-maker meeting showed the committee split three ways in a vote to extend its bond-buying program.

“It’s a relatively good day for oil and stocks are up,” said John Hydeskov, a senior analyst in Copenhagen at Danske Bank A/S, Denmark’s biggest lender. “When equities are up, the euro-dollar tends to tick upwards. That’s a favorable environment.”

The dollar fell 0.4 percent to $1.4936 per euro, 0.2 percent to 93.28 U.S. cents per Australian dollar and 0.4 percent to 74.8 U.S. cents per New Zealand dollar as of 9:32 a.m. in London. The yen also slid 0.4 percent, to 133.12 per euro. The pound dropped 0.2 percent to $1.6782 and 0.6 percent to 89.02 pence per euro.

A U.S. report today will show housing starts rose 1.7 percent in October from September to an 11-month high, according to a Bloomberg survey.

To contact the reporters on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

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Sugar Rises to Four-Week High as Rains May Disrupt Brazil Crop

By Claudia Carpenter

Nov. 18 (Bloomberg) -- Sugar rose to a four-week high in London on speculation more rain in Brazil’s Center South, the world’s largest producing region for sugar cane, will disrupt harvesting.

The Center South will have wetter-than-normal weather in the next 10 to 15 days, AccuWeather.com said yesterday. The International Sugar Organization last week reduced its crop estimate for Brazil by 3.3 percent after rains in September.

“Fundamentals are still very constructive,” said Nick Hungate, a trader at Rabobank Ltd. in London.

White, or refined, sugar futures for March delivery climbed as much as $11.20, or 1.8 percent, to $622.50 a metric ton, the highest since Oct. 19 and were at $621.30 a ton at 10:17 a.m. on the Liffe exchange. Raw sugar futures for March delivery jumped 2.1 percent to 23.59 cents a pound on ICE Futures U.S. in New York. Prices for raw sugar climbed to a 28-year high of 25.43 cents a pound on Sept. 30.

Among other agriculture markets on Liffe, robusta coffee for January delivery climbed 1.1 percent to $1,342 a ton and cocoa for December delivery gained 0.5 percent to 2,023 pounds ($3,407) a ton.

To contact the reporter on this story: Claudia Carpenter in London at ccarpenter2@bloomberg.net

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Oil Rises a Third Day as Industry Report Shows Stockpile Drop

By Christian Schmollinger and Ayesha Daya

Nov. 18 (Bloomberg) -- Oil advanced for a third day in New York, rising above $80 a barrel after an industry report showed crude stockpiles declined in the U.S., the largest energy consumer.

The American Petroleum Institute said yesterday crude inventories fell by 4.37 million barrels last week to 333.1 million barrels. The U.S. Energy Department releases its weekly supply report today in Washington. Analysts expect it to say overall fuel supplies fell. Imports and output were disrupted last week as Hurricane Ida passed through the Gulf of Mexico.

“Oil prices are moving on surprisingly bullish data showing a higher-than-expected draw on crude stocks, indicating that demand is improving,” said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. “It’s probably explained by Ida, which caused refineries and transportation to be shut down.”

Crude oil for December delivery rose as much as 89 cents, or 1.1 percent, to $80.03 a barrel in electronic trading on the New York Mercantile Exchange and traded at $79.97 at 10:11 a.m. London time. Yesterday, the contract rose 24 cents to settle at $79.14. Futures have gained 79 percent this year.

Prices have gained this week after a more-than-forecast jump in U.S. retail sales increased optimism that prospects for the global economy were improving. U.S. stock markets gained for a third day yesterday. Asian equity climbed as well.

“We’re seeing the rally in crude, the rally in equities and the rally in gold all highly correlated over the past six months,” said Alan Plaugmann, head of futures at Saxo Bank in a Bloomberg Television interview.

Ida’s Impact

Energy producers in the U.S. idled about 43 percent of oil output in the Gulf of Mexico on Nov. 10 as Ida made landfall, the Interior Department’s Minerals Management Service said.

The Louisiana Offshore Oil Port, used by tankers too large to dock at U.S. harbors, was closed for 3 1/2 days because of rough seas and high winds, Barb Hestermann, a spokeswoman for the oil terminal said yesterday.

The Energy Department report will probably show stockpiles of crude oil climbed 300,000 barrels, according to the 17 analysts who provided crude estimates. Those looking for an inventory decline focused on disruptions caused by Ida.

Supplies of distillates, a category that includes heating oil and diesel, fell 850,000 barrels from 167.4 million the prior week, according to the survey.

Gasoline consumption in the U.S. rose for the first time in three weeks, increasing by 1.4 percent, according to a report by MasterCard Inc. Motorists bought an average 9.22 million barrels a day in the week ended Nov. 13, MasterCard, the second-biggest credit-card company, said in its SpendingPulse report yesterday. It was the first gain since Oct. 23.

OPEC Meeting

The government requires that reports be filed with the Energy Department for its weekly survey. The industry-funded API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines.

“We should be careful not to give the data too much importance,” Saltvedt at Nordea Bank said. “OPEC members have said the group won’t officially boost output at the next meeting because demand is still too weak.”

The Organization of Petroleum Exporting Countries will keep production levels “as is” when it meets next month in Luanda, Angola, Kuwaiti Oil Minister Sheikh Ahmed Al-Sabah said yesterday. The group is unlikely to “tamper too much” with the oil market, Nigerian Minister Rilwanu Lukman said. There is “some oversupply” in the market, according to OPEC President Jose Maria Botelho de Vasconcelos.

Brent crude oil for January settlement rose as much as 97 cents, or 1.2 percent, to $79.94 a barrel on the London-based ICE Futures Europe exchange. It was at $79.90 a barrel at 10:11 a.m. local time. The contract climbed 21 cents, or 0.3 percent, to $78.97 a barrel yesterday.

To contact the reporters on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Ayesha Daya at adaya1@bloomberg.net

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Vietnam Rice Exports May Top Record by 20% This Year

By Jason Folkmanis and Van Nguyen

Nov. 18 (Bloomberg) -- Rice exports from Vietnam, the world’s second-biggest shipper, may exceed the previous record by 20 percent this year, even as the total value of exports is forecast to drop.

Shipments are expected to be 6 million to 6.2 million metric tons, Minister of Industry and Trade Vu Huy Hoang told the National Assembly in Hanoi today. That compares with the previous record of 5.17 million tons in 2005, according to figures from the U.S. Foreign Agricultural Service, which last month forecast total exports of 5.7 million tons.

By Jason Folkmanis and Van Nguyen

Nov. 18 (Bloomberg) -- Rice exports from Vietnam, the world’s second-biggest shipper, may exceed the previous record by 20 percent this year, even as the total value of exports is forecast to drop.

Shipments are expected to be 6 million to 6.2 million metric tons, Minister of Industry and Trade Vu Huy Hoang told the National Assembly in Hanoi today. That compares with the previous record of 5.17 million tons in 2005, according to figures from the U.S. Foreign Agricultural Service, which last month forecast total exports of 5.7 million tons.

Global demand for imports is expected to grow this year after storms destroyed 1.3 million tons of rice in the Philippines, the world’s biggest buyer, and drought slashed India’s crop by as much as 18 percent, according to the country’s Farm Ministry.

“This will be a record year for our rice exports, but because the price has fluctuated so much, we expect the total value of shipments to fall compared with 2008,” Hoang said.

Rice futures in Chicago have jumped 36 percent since slumping to a low of $11.195 per 100 pounds in March, and traded at $15.205 at 12:39 p.m. in Singapore. The price reached a record $25.07 in April 2008 as concerns over shortages prompted countries like Vietnam and India to curb exports.

The Philippines will hold two record tenders of 600,000 tons each on Dec. 1 and Dec. 8, as the country advances imports for 2010 to secure supplies amid rising prices. The Southeast Asian nation bought 260,000 tons in September, including 15,000 tons from Vietnam Southern Food Corp.

‘Huge Supplies’

India is in talks with Thailand and Vietnam to buy rice under government-to-government contracts, the country’s Trade Minister Anand Sharma said yesterday. Thailand is the world’s biggest rice exporter.

Vietnam has “huge exportable supplies,” the Foreign Agricultural Service said in a monthly report on global grain markets in October.

“Vietnam’s price quotes are around $60 per ton below Thailand’s price quotes, down from an almost $100 difference in early October, but still enough of a difference to make Vietnam a very competitive seller,” the U.S. Agriculture Department said in a report last week.

Stronger-than-expected rice shipments may boost Vietnam’s overall export receipts and help ease a widening trade deficit that has damaged confidence in the Vietnamese dong.

The value of Vietnamese rice exports declined 8 percent in the 10 months through October to $2.38 billion, even as shipments increased 33 percent by volume to 5.34 million tons, according to preliminary estimates from the General Statistics Office in Hanoi.

Rice was Vietnam’s sixth-biggest export by value in the first 10 months of the year.

To contact the reporters on this story: Jason Folkmanis in Hanoi at folkmanis@bloomberg.net; Van Nguyen in Hanoi at vnguyen23@bloomberg.net

Global demand for imports is expected to grow this year after storms destroyed 1.3 million tons of rice in the Philippines, the world’s biggest buyer, and drought slashed India’s crop by as much as 18 percent, according to the country’s Farm Ministry.

“This will be a record year for our rice exports, but because the price has fluctuated so much, we expect the total value of shipments to fall compared with 2008,” Hoang said.

Rice futures in Chicago have jumped 36 percent since slumping to a low of $11.195 per 100 pounds in March, and traded at $15.205 at 12:39 p.m. in Singapore. The price reached a record $25.07 in April 2008 as concerns over shortages prompted countries like Vietnam and India to curb exports.

The Philippines will hold two record tenders of 600,000 tons each on Dec. 1 and Dec. 8, as the country advances imports for 2010 to secure supplies amid rising prices. The Southeast Asian nation bought 260,000 tons in September, including 15,000 tons from Vietnam Southern Food Corp.

‘Huge Supplies’

India is in talks with Thailand and Vietnam to buy rice under government-to-government contracts, the country’s Trade Minister Anand Sharma said yesterday. Thailand is the world’s biggest rice exporter.

Vietnam has “huge exportable supplies,” the Foreign Agricultural Service said in a monthly report on global grain markets in October.

“Vietnam’s price quotes are around $60 per ton below Thailand’s price quotes, down from an almost $100 difference in early October, but still enough of a difference to make Vietnam a very competitive seller,” the U.S. Agriculture Department said in a report last week.

Stronger-than-expected rice shipments may boost Vietnam’s overall export receipts and help ease a widening trade deficit that has damaged confidence in the Vietnamese dong.

The value of Vietnamese rice exports declined 8 percent in the 10 months through October to $2.38 billion, even as shipments increased 33 percent by volume to 5.34 million tons, according to preliminary estimates from the General Statistics Office in Hanoi.

Rice was Vietnam’s sixth-biggest export by value in the first 10 months of the year.

To contact the reporters on this story: Jason Folkmanis in Hanoi at folkmanis@bloomberg.net; Van Nguyen in Hanoi at vnguyen23@bloomberg.net

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U.K. Stocks Advance; BP, Xstrata, Diageo Shares Lead the Gains

By Adam Haigh

Nov. 18 (Bloomberg) -- U.K. stocks advanced as a three-day rally in crude oil and rising metals prices buoyed commodities producers and Societe Generale recommended buying Diageo Plc.

BP Plc and Royal Dutch Shell Plc, Europe’s largest energy producers, climbed as oil advanced to $79.85 a barrel. Xstrata Plc led a rally in mining companies. Diageo, the world’s biggest liquor maker, added 1.7 percent after Societe Generale raised its recommendation to “buy” on a rebound in volumes in the U.S. market.

The benchmark FTSE 100 Index gained 10.98, or 0.2 percent, to 5,356.91 as of 10:02 a.m. in London. The gauge has rebounded 53 percent from this year’s low on March 3 amid signs government stimulus policies and record-low interest rates are helping to drag the global economy out of recession. The FTSE All-Share Index added 0.2 percent today and Ireland’s ISEQ Index lost 0.1 percent.

“The rally seems to be holding up though clients are getting a little wary at the moment as we approach 5,400 on the FTSE 100,” said Paul Chesterton, a senior sales trader at CMC Markets Plc in London. “Clients are sticking with positions but are a bit reluctant to keep buying at ever higher levels.”

Bank of England policy makers were split three ways in a vote to extend the bond-purchase program to 200 billion pounds ($336 billion), and discussed lowering the deposit rate on bank reserves to encourage lending.

While the majority of the nine-member Monetary Policy Committee wanted a 25 billion-pound increase, Chief Economist Spencer Dale favored no change and David Miles sought a 40 billion-pound expansion, minutes of the Nov. 5 meeting published in London today showed. They unanimously kept the benchmark interest rate at 0.5 percent.

Oil Advances

BP gained 0.7 percent to 591.6 pence. Shell added 0.7 percent to 1,884.5 pence. The companies account for about 16 percent of the benchmark index by market weighting.

Oil advanced for a third day in New York after an industry report showed a decline in crude stockpiles in the U.S., the largest energy consumer.

Xstrata, the world’s largest exporter of coal used by power stations, climbed 3 percent to 1,107 pence. BHP Billiton Ltd., the biggest mining company, rose 2 percent to 1,885 pence. Copper, lead, nickel and tin climbed on the London Metal Exchange.

Diageo added 1.7 percent to 1,050 pence. Societe Generale raised its recommendation to “buy” from “hold.”

Cadbury Plc increased 1.2 percent to 797.5 pence. Hershey Co. has been in talks with Ferrero SpA for weeks about making a joint bid for Cadbury, the Wall Street Journal reported yesterday, citing unidentified people familiar with the discussions.

Ladbrokes Advances

Ferrero may be divided about making a bid for Cadbury or a tie-up with the U.K. confectioner, the London-based Times reported, without attribution.

Ladbrokes Plc rose 3.3 percent to 131.2 pence. The owner of more than 2,300 U.K. and Irish betting shops was upgraded to “buy” from “underperform” at BofA Merrill Lynch Global Research, with a new price estimate of 160 pence.

Wolseley Plc dropped 2.3 percent to 1,341 pence. The world’s largest supplier of heating and plumbing gear said profit before exceptional items slumped 45 percent and sales from continued operations fell 13 percent in the three months ended Oct. 31.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net.

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Most Asian Stocks Fall on Share-Sale Concern; Banks Decline

By Shani Raja

Nov. 18 (Bloomberg) -- Most Asian stocks fell as capital and share-sale concerns dragged banks and property companies lower, overshadowing advances among telecommunications companies.

HSBC Holdings Plc lost 0.9 percent, the biggest drag on Hong Kong’s Hang Seng Index, after its chairman said new capital rules may reduce credit in the economy. Developer Tokyo Tatemono Co. sank 17 percent in Tokyo on plans to sell 45.6 billion yen in shares. China Mobile Ltd. added 2.5 percent after saying its high-speed wireless service will have 3 million subscribers by the end of the year.

Five stocks declined for every four that advanced on the MSCI Asia Pacific Index, which was little changed at 118.65 as of 6:08 p.m. in Tokyo. The gauge has climbed 68 percent from a more than five-year low on March 9 as stimulus measures around the world helped revive the global economy.

“The economic data is saying we’re past the worst,” said Stephen Halmarick, Sydney-based head of investment-markets research at Colonial First State, which holds about $135 billion. “But the recovery process is still going to be painful and grinding.”

Japan’s Topix Index lost 0.8 percent, while the Nikkei 225 Stock Average fell 0.6 percent. Japan Airlines Corp., which is seeking a state bailout, fell 3.9 percent after Reuters reported the country’s transport minister as saying he wouldn’t rule out a bankruptcy of the airline.

Hong Kong’s Hang Seng Index declined 0.3 percent, as Hang Lung Properties Ltd., which gets 40 percent of its revenue in China, sank 3 percent after a Chinese central bank adviser said Shenzhen city will introduce a property tax.

Takeover Speculation

Australia’s S&P/ASX 200 Index rose 0.2 percent. Insurance Australia Group Ltd. added 2.3 percent amid takeover speculation. South Korea’s Kospi Index climbed 1.1 percent.

Futures on the Standard & Poor’s 500 Index were little changed. The gauge rose 0.1 percent yesterday, buoyed by commodity companies as oil and copper prices advanced.

The MSCI Asia Pacific Index has climbed 33 percent this year, on course for its steepest annual increase since 2003. It has outpaced gains of 23 percent by the S&P 500 and 26 percent for Europe’s Dow Jones Stoxx 600 Index. Stocks in the Asian index are valued at 22 times estimated earnings, compared with 18 times for the S&P and 16 times for the Stoxx 600.

In Hong Kong, HSBC, Europe’s largest lender, lost 0.9 percent to HK$96.50 as Chairman Stephen Green warned of the “unintended effects” from new rules to increase banks’ capital.

Capital Ratios

“Cumulative enhancement of capital ratios at the wrong stage of the economic cycle could easily withdraw credit from the economy and cause a new credit crunch,” Green said at a conference in London yesterday.

Governments around the world are seeking to strengthen lenders following the worst financial crisis since the Great Depression. Writedowns and losses from the credit crisis have risen to almost $1.7 trillion, according to data compiled by Bloomberg.

Mitsubishi UFJ Financial Group Inc., which reports earnings today, sank 0.6 percent to 484 yen in Tokyo after the Wall Street Journal reported that the bank is considering raising up to 1 trillion yen ($11.2 billion) from selling stock to bolster capital ratios. The paper cited a person familiar with the situation.

Tokyo Tatemono tumbled 17 percent to 323 yen, the biggest drop on the MSCI Asia Pacific Index today. The developer is planning to sell new shares to fund investments in rental property and to repay debt. Tokyu Land Corp. declined 11 percent to 292 yen.

“Concerns about capital increases spread through the real- estate industry after Tokyo Tatemono’s plan to raise capital,” said Koichi Kurose, chief strategist in Tokyo at Resona Bank Ltd.

Property Tax

Hang Lung Properties lost 3 percent to HK$30.95, while China Overseas Land & Investment Ltd. fell 2.1 percent to HK$17.10. Sun Hung Kai Properties Ltd., the world’s largest developer by market value, slid 0.8 percent to HK$116.80.

The southern Chinese city of Shenzhen will introduce a property tax, central bank adviser Fan Gang said, adding that the move represented a “very important step” in balancing investment and consumption demand.

Japan Airlines slumped 3.9 percent to 98 yen after Reuters reported the comments from Transport Minister Seiji Maehara. Japan Air is seeking loans of 125 billion yen to maintain operations after posting a net loss of 131.2 billion yen for the six months ended Sept. 30.

In Sydney, Macarthur Coal Ltd., the world’s biggest exporter of pulverized coal, slumped 4.7 percent to A$9.70 after forecasting first-half profit may drop as much as 72 percent.

China Mobile

Insurance Australia gained 2.3 percent to A$4.01 after the Australian Financial Review reported QBE Insurance Group Ltd. is considering a takeover offer. QBE rose 2.5 percent to A$23.01 as spokeswomen for both companies declined to comment.

China Mobile, the world’s biggest phone company by market value, added 2.5 percent to HK$76.15. Chairman Wang Jianzhou said in Hong Kong today that its third-generation service will have 3 million subscribers by the end of the year. The company had 1.66 million users at the end of September.

STX Pan Ocean Co. climbed 1.9 percent to S$14.72 in Singapore after the Baltic Dry Index, a measure of shipping rates for commodities, advanced for a 14th day to the highest since September 2008.

Pacific Basin Shipping Ltd., Hong Kong’s largest operator of dry-bulk vessels, climbed 5.4 percent to HK$6.61. China Shipping Development Co., the dry-bulk arm of the nation’s second-biggest shipping group, advanced 5.6 percent to HK$12.40.

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

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German Stocks Rise Before U.S. Housing Report; Daimler Climbs

By Julie Cruz

Nov. 18 (Bloomberg) -- German stocks climbed for a second day this week before a report that may show U.S. housing starts in October rose at the fastest pace in 11 months.

The benchmark DAX Index added 0.4 percent to 5,801.42 as of 9:26 a.m. in Frankfurt, recouping most of yesterday’s drop. The measure has rallied more than 50 percent since March 6 as companies posted better-than-estimated earnings and investors speculated the global recession is easing. The broader HDAX Index also gained 0.4 percent today.

Housing starts increased 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

ThyssenKrupp AG, Germany’s largest steelmaker, gained 1.5 percent to 25.16 euros as metal prices rose in London. Smaller competitor Salzgitter AG added 0.9 percent to 65.11 euros.

Bayerische Motoren Werke AG and Daimler AG, the world’s biggest makers of luxury cars, climbed 1.1 percent to 34.26 euros and 1.3 percent to 35.85 euros, respectively. A measure of European automobile and parts companies advanced as much as 1.3 percent today, the best performance among 19 industry groups in Dow Jones Stoxx 600 Index.

Bayer AG declined 2.1 percent to 52.20 euros, ending its longest winning streak since 1999, after International Petroleum Investment Co. denied a report the German drugs and chemicals maker is an acquisition target. IPIC said late yesterday it’s discussing a venture with companies including Bayer to establish a petrochemical plant in Abu Dhabi.

‘Misinterpreted’

IPIC Chairman Khadem Abdulla Al-Qubaisi said he was “misinterpreted” in a report by ICIS news that said IPIC was in talks with five companies including Bayer’s MaterialScience unit and expected to close a European acquisition by the first quarter of next year.

Air Berlin Plc jumped 4.6 percent to 3.66 euros, poised for the biggest advance in a month. The discount carrier said third- quarter net income more than doubled to 95.2 million euros ($141.3 million) and confirmed its forecast for a better operating profit this year than in 2008.

Villeroy & Boch AG rallied 3.5 percent to 5.95 euros after Deutsche Boerse AG said the stock will replace OVB Holding AG, whose free float has fallen below the minimum 10 percent level, in Germany’s SDAX Index of smaller companies. The unscheduled change will take effect Nov. 20, the bourse operator said today.

XING AG increased 3.5 percent to 32.60 euros as the German business networking Web site operator said Burda Digital GmbH has acquired a 25.1 percent stake in the company from Cinco Capital GmbH.

To contact the reporter on this story: Julie Cruz in Frankfurt at jcruz6@bloomberg.net.

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European Stocks Gain; Cadbury, Areva, Ladbrokes Lead Advance

By Adria Cimino

Nov. 18 (Bloomberg) -- European stocks rose amid speculation Cadbury Plc may receive a joint bid from Hershey Co. and Ferrero SpA and a government report may show U.S. housing starts increased.

Cadbury advanced after the Wall Street Journal said Hershey is in talks with Ferrero concerning a joint bid for the U.K. confectionary maker. Areva SA added 2 percent as Les Echos reported Electricite de France SA may seek to control its nuclear reactor unit. Ladbrokes Plc gained 3.2 percent after BofA Merrill Lynch Global Research recommended shares of the betting company.

Europe’s Dow Jones Stoxx 600 Index rose 0.2 percent to 250.9 at 9:20 a.m. in London. The measure has climbed 58 percent since March 9 amid signs government spending and record- low interest rates are helping to drag the economy out of recession. The eight-month rally has pushed valuations in the index to more than 55 times its companies reported earnings, near the most expensive level since 2003.

“If economic numbers beat estimates or are even in line, that will push the market higher,” said Kilian de Kertanguy, a fund manager at Cholet-Dupont Gestion SA in Paris, which oversees about $2.3 billion. “We’re looking to data for clues regarding the start of 2010. Mergers and acquisitions activity is effervescent and also will animate the market.”

Takeovers have increased as government stimulus measures help to ease credit markets. So far this month, $154 billion of acquisitions have been announced, compared with $67 billion in the whole of November 2008, according to Bloomberg data.

Housing Starts

Builders probably broke ground on U.S. houses in October at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said before reports today. Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. A report from the Labor Department may show the cost of living climbed 0.2 percent for a second month.

U.S. stocks rose yesterday, with benchmark indexes extending their 13-month highs, as a rebound in metal prices overshadowed a smaller-than-forecast increase in industrial production. Standard & Poor’s 500 Index futures were little changed today, as was the MSCI Asia Pacific Index.

Cadbury advanced 1.1 percent to 797 pence. The talks between Hershey and Ferrero have lasted for weeks and have not yet produced an offer, the Journal said.

Ferrero may be divided about making a bid for Cadbury or a tie-up with the U.K. confectioner, the London-based Times reported, without attribution.

Areva, Ladbrokes

Areva increased 2 percent to 369.95 euros. Henri Proglio, who takes over as EDF’s chief executive officer next week, told Les Echos that the nuclear reactor unit, formerly known as Framatome, should be supported by strong industrial actors. The creation of Areva in 2001 via the merger of Framatome with Cogema was “probably an error,” he told the newspaper, adding that France’s nuclear network needs to be redesigned. EDF added 0.9 percent to 38.70 euros.

Ladbrokes rose 3.2 percent to 131 pence. The owner of more than 2,300 U.K. and Irish betting shops was upgraded to “buy” from “underperform” at BofA Merrill, with a new price estimate of 160 pence.

Diageo Plc climbed 1.7 percent to 1,050 pence. The world’s largest liquor maker was raised to “buy” from “hold” at Societe Generale SA, which cited “a rebound in volumes in the U.S. market.”

A measure of basic-resources shares rose the most among the 19 industry groups in the Stoxx 600. Xstrata Plc, the world’s fourth-largest copper supplier, gained 2.6 percent to 1,103 pence. Fresnillo Plc, the world’s biggest primary silver producer, advanced 1.8 percent to 893 pence.

Copper futures rallied to the highest level in 14 months in London as the dollar’s decline boosted the appeal of raw materials as alternative investments. Silver, lead, nickel and tin also advanced.

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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Paulson Bets Bank of America Will Almost Double by End of 2011

By Saijel Kishan

Nov. 18 (Bloomberg) -- Paulson & Co., the hedge fund firm run by billionaire John Paulson, told investors Bank of America Corp.’s stock will almost double in the next two years as writedowns ease.

Bank of America, ranked first by assets and deposits in the U.S., may rise to $29.81 by December 2011, Paulson said in a quarterly letter to clients. A copy was obtained by Bloomberg News. Bank of America closed yesterday at $15.77 on the New York Stock Exchange.

“Banks will have passed the current writedown cycle and have visibility for growth in 2012,” the letter said. Bank of America dropped to $2.53 in February amid concern that the U.S. might seize banks that ran short on capital. While the bank “has risen from when we purchased the stock, we believe considerable upside remains,” the letter said.

Paulson reversed course this year by investing in Bank of America, ranked among the nation’s biggest home lenders. Last year, wagers by his New York-based firm against the U.S. housing market helped earn an estimated $2.5 billion. Charlotte, North Carolina-based Bank of America represents Paulson’s biggest holding among financial companies, the letter said. Earlier this month, he disclosed a stake in Citigroup Inc.

Paulson, who manages about $29 billion, started a hedge fund last year called Paulson Recovery to invest in financial companies hurt by mortgage writedowns. His firm held 160 million shares of Bank of America at the end of the third quarter valued at $2.7 billion, according to regulatory filings.

Armel Leslie, a spokesman for New York-based Paulson, declined to comment on the holdings.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net.

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U.S. Stock Futures Fluctuate; Salesforce.com Drops, Exxon Gains

By Daniela Silberstein

Nov. 18 (Bloomberg) -- U.S. stock-index futures drifted between gains and losses as forecasts from Salesforce.com Inc. and Autodesk Inc. missed analysts’ estimates, offsetting speculation a report may show U.S. housing starts rose.

Salesforce.com, the largest seller of Internet-based customer-management software, and Autodesk sank more than 5 percent in German trading. Exxon Mobil Corp., the biggest oil company, and Freeport-McMoRan Copper & Gold Inc. increased with crude and metals prices.

Futures on the Standard & Poor’s 500 Index expiring next month slipped less than 0.1 percent to 1,107.20 as of 9:44 a.m. in London, having earlier gained as much as 1 percent. Dow Jones Industrial Average futures added less than 0.1 percent to 10,401. Nasdaq-100 Index futures were unchanged at 1,808.75.

The S&P 500 has jumped 64 percent from a 12-year low in March as a four-quarter contraction in the world’s largest economy ended. The eight-month rally has pushed valuations to about 22.3 times its companies reported earnings, the highest level since 2002, weekly data compiled by Bloomberg show.

“It’s a tug of war between the ones forecasting a further rally and the ones expecting a correction,” said Rudolf Buxtorf, who manages about $114 million at RBS Coutts Bank in Zurich. “The debate is whether this upward movement is sustainable. The recovery since March has gone far beyond what was expected.”

U.S. stocks yesterday gained for a third day as a rebound in metal prices boosted commodity producers, overshadowing a smaller-than-forecast increase in industrial production.

Earnings Analysis

Per-share earnings topped estimates at 370 of the 446 S&P 500 companies that have released third-quarter earnings, a record in Bloomberg data going back to 1993, even as profits slumped for a record ninth straight quarter. BJ’s Wholesale Club Inc., Chico’s FAS Inc. and PetSmart Inc. are among companies scheduled to report earnings today.

Builders in October probably broke ground on U.S. houses at the fastest pace in 11 months, and consumer prices held below the Federal Reserve’s long-range goal, economists said reports today may show.

Housing starts rose 1.7 percent to an annual rate of 600,000, the most since November 2008, according to the median forecast of 77 economists in a Bloomberg News survey. The Commerce Department’s report is due at 8:30 a.m. in Washington. A report from the Labor Department at the same time may show the cost of living climbed 0.2 percent for a second month.

Salesforce.com

Salesforce.com sank 5.1 percent to $62.24. The company forecast fourth-quarter profit of 14 cents to 15 cents a share. Analysts, on average, expected the company to earn 15 cents, according to Bloomberg survey.

Autodesk dropped 8.3 percent to $24.77. The biggest maker of engineering-design software projected fourth-quarter profit excluding some items of 24 cents a share at most, trailing the average analyst estimate of 25 cents.

Exxon added 0.5 percent to $75.42. Crude advanced for a third day in New York after an industry report showed a decline in crude stockpiles in the U.S., the largest energy consumer.

Freeport-McMoRan, the world’s biggest publicly traded copper producer, rose 0.6 percent to $85.91. Copper futures in London, New York and Shanghai rallied to the highest level in 14 months as a decline in the dollar boosted the appeal of raw materials as alternative investments.

To contact the reporter on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net.

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