By Rachel Graham
Aug. 21 (Bloomberg) -- Gold rose to a one-week high in London as the dollar fell against the euro, buoying demand for the metal as an alternative investment. Platinum also advanced.
The relationship between gold and the euro-dollar exchange rate is strengthening, with a correlation of 0.7 so far this year, compared with 0.58 last year. A figure of 1 would mean the two moved in lockstep.
``The major effect on gold is coming from the weakening dollar,'' Liran Kapeluto, a senior dealer at trading-system operator Finotec Trading U.K. Ltd., said by phone from London. ``It is pushing commodities up.''
Gold for immediate delivery advanced $11.72, or 1.4 percent, to $825.40 an ounce as of 12:15 p.m. in London. The metal earlier reached $827.47, the highest since Aug. 14.
Gold futures for December climbed $14, or 1.7 percent, to $830.30 an ounce in after-hours electronic trading on the Comex division of the New York Mercantile Exchange.
Platinum, used in car exhaust systems, advanced for a second day, gaining as much as $28.50, or 2.1 percent, to $1,408 an ounce. It last traded at $1,407 an ounce, 39 percent below its March 4 record of $2,301.50.
Industrial demand for the metal is ``at best stable if not declining slightly,'' Wolfgang Wrzesniok-Rossbach, head of marketing and sales at Heraeus Metallhandels GmbH, said by phone from Hanau, Germany. Heraeus owns five precious metal refineries.
Demand for platinum will advance in the second week of September, when German car companies resume normal operations after summer vacations, Wrzesniok-Rossbach said.
Platinum has mostly dropped as investors withdrew money from exchanged-traded funds, he said.
ETF Securities Ltd., a provider of contracts tracking commodities, has said its physical platinum fund lost more investment last week than any other fund. ETFS Physical Platinum lost $72.5 million in the week to Aug. 15.
Among other metals for immediate delivery, silver rose 35 cents, or 2.6 percent, to $13.585 an ounce and palladium gained $4.50, or 1.6 percent, to $290 an ounce.
To contact the reporter on this story: Rachel Graham in London at rgraham13@bloomberg.net
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Thursday, August 21, 2008
French Stocks: Business & Decision, Gemalto, Lafarge, Stedim
By Adria Cimino
Aug. 21 (Bloomberg) -- France's CAC 40 Index lost 51.46, or 1.2 percent, to 4,314.41 at 12:36 p.m. in Paris, retreating for a third time this week. The SBF 120 Index slipped 1.1 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
Business & Decision Group (BND FP) plunged 2.45 euros, or 31 percent, to 5.52, a record decline. The consulting group said operating profit is below analyst forecasts, at between 2 percent and 2.5 percent of revenue for the first half.
Gemalto NV (GTO FP) jumped 2.51 euros, or 10 percent, to 27.30, the most since July 2006. The world's largest smartcard maker said first-half earnings more than doubled on cost cuts, higher sales of mobile-phone cards and as the banking-card business returned to profit. Adjusted profit rose to 63.3 million euros ($93.6 million) from 24.5 million euros a year earlier.
The company raised its target for full-year operating income to around 160 million euros.
Lafarge SA (LG FP), the world's biggest cement producer, tumbled 2.26 euros, or 2.8 percent, to 78.09, dropping for a fourth day. Cie. de Saint-Gobain SA (SGO FP), Europe's biggest supplier of building materials, sank 76 cents, or 1.9 percent, to 39.41, slipping for a fourth day. Holcim Ltd., the second- largest cement maker, lowered its full-year earnings target after second-quarter profit dropped on slowing U.S. construction and rising raw-material costs.
Sartorius Stedim Biotech SA (DIM FP) increased 2.79 euros, or 12 percent, to 25.29, for the biggest gain since October 2002. Societe Generale raised its recommendation on shares of the plastic bag maker owned by Sartorius AG to ``buy'' from ``hold,'' citing valuation and earnings prospects.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Aug. 21 (Bloomberg) -- France's CAC 40 Index lost 51.46, or 1.2 percent, to 4,314.41 at 12:36 p.m. in Paris, retreating for a third time this week. The SBF 120 Index slipped 1.1 percent.
The following shares rose or fell in Paris. Stock symbols are in parentheses.
Business & Decision Group (BND FP) plunged 2.45 euros, or 31 percent, to 5.52, a record decline. The consulting group said operating profit is below analyst forecasts, at between 2 percent and 2.5 percent of revenue for the first half.
Gemalto NV (GTO FP) jumped 2.51 euros, or 10 percent, to 27.30, the most since July 2006. The world's largest smartcard maker said first-half earnings more than doubled on cost cuts, higher sales of mobile-phone cards and as the banking-card business returned to profit. Adjusted profit rose to 63.3 million euros ($93.6 million) from 24.5 million euros a year earlier.
The company raised its target for full-year operating income to around 160 million euros.
Lafarge SA (LG FP), the world's biggest cement producer, tumbled 2.26 euros, or 2.8 percent, to 78.09, dropping for a fourth day. Cie. de Saint-Gobain SA (SGO FP), Europe's biggest supplier of building materials, sank 76 cents, or 1.9 percent, to 39.41, slipping for a fourth day. Holcim Ltd., the second- largest cement maker, lowered its full-year earnings target after second-quarter profit dropped on slowing U.S. construction and rising raw-material costs.
Sartorius Stedim Biotech SA (DIM FP) increased 2.79 euros, or 12 percent, to 25.29, for the biggest gain since October 2002. Societe Generale raised its recommendation on shares of the plastic bag maker owned by Sartorius AG to ``buy'' from ``hold,'' citing valuation and earnings prospects.
To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.
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Oil Gains a Third Day on U.S.-Russia Tensions, Dollar Weakness
By Grant Smith and Christian Schmollinger
Aug. 21 (Bloomberg) -- Oil rose on speculation that Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities.
U.S. plans for a missile shield in Poland will ``spur an arms race'' in Europe, Russia's Foreign Ministry said in a statement. About 1.1 million barrels of Caspian Sea crude remains shuttered following a pipeline fire in Turkey on Aug. 5. Russia's invasion of Georgia closed some export routes that could have been used to re-direct Caspian supplies to Europe.
``Geopolitical risk in oil-producing regions, as we're seeing with the tensions between the U.S. and Russia when the spare capacity buffer is low, is making prices volatile,'' said Thina Saltvedt, a Nordea Bank AB analyst in Oslo. ``Historically the correlation between oil and the dollar is high.''
Crude oil for October delivery rose as much as $2.69, or 2.3 percent, to $118.25 a barrel on the New York Mercantile Exchange and was trading at $117.94 at 12:54 p.m. in London. Futures are down 21 percent from a July 11 record of $147.27. Prices are 68 percent higher than a year ago.
The September contract expired yesterday after increasing 45 cents, or 0.4 percent, to settle at $114.98 a barrel.
``Supply constraints are still with us and even more evident when you look at events that are unfolding in Georgia, affecting countries such as Azerbaijan,'' Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London, said in an Bloomberg radio interview. ``The trend for demand is to remain strong in emerging markets over the next five years.''
Weaker Dollar
The U.S. currency fell against the euro, driving investors to dollar-priced assets like gold and crude. The dollar slipped to a one-week low of $1.4832 against the euro, and fell 1.3 percent to 108.61 yen, the biggest decline since July 15. Gold for immediate delivery gained as much as $3.93, or 0.5 percent, to $817.61 an ounce.
U.S. gasoline supplies fell 6.2 million barrels last week, the U.S. Energy Department said yesterday, more than double analysts' predictions. Analysts had predicted a 3 million-barrel decline, according to a Bloomberg survey.
Motor fuel demand was down 1.6 percent from last year's levels. Oil stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain since March 2001.
Brent crude oil for October settlement rose as much as $2.39, or 2.1 percent, to $116.75 a barrel on London's ICE Futures Europe exchange. It was at $116.60 a barrel at 12:53 p.m. London time. It rose $1.11, or 1 percent, to $114.36 a barrel yesterday.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
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Aug. 21 (Bloomberg) -- Oil rose on speculation that Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities.
U.S. plans for a missile shield in Poland will ``spur an arms race'' in Europe, Russia's Foreign Ministry said in a statement. About 1.1 million barrels of Caspian Sea crude remains shuttered following a pipeline fire in Turkey on Aug. 5. Russia's invasion of Georgia closed some export routes that could have been used to re-direct Caspian supplies to Europe.
``Geopolitical risk in oil-producing regions, as we're seeing with the tensions between the U.S. and Russia when the spare capacity buffer is low, is making prices volatile,'' said Thina Saltvedt, a Nordea Bank AB analyst in Oslo. ``Historically the correlation between oil and the dollar is high.''
Crude oil for October delivery rose as much as $2.69, or 2.3 percent, to $118.25 a barrel on the New York Mercantile Exchange and was trading at $117.94 at 12:54 p.m. in London. Futures are down 21 percent from a July 11 record of $147.27. Prices are 68 percent higher than a year ago.
The September contract expired yesterday after increasing 45 cents, or 0.4 percent, to settle at $114.98 a barrel.
``Supply constraints are still with us and even more evident when you look at events that are unfolding in Georgia, affecting countries such as Azerbaijan,'' Harry Tchilinguirian, senior oil analyst at BNP Paribas SA in London, said in an Bloomberg radio interview. ``The trend for demand is to remain strong in emerging markets over the next five years.''
Weaker Dollar
The U.S. currency fell against the euro, driving investors to dollar-priced assets like gold and crude. The dollar slipped to a one-week low of $1.4832 against the euro, and fell 1.3 percent to 108.61 yen, the biggest decline since July 15. Gold for immediate delivery gained as much as $3.93, or 0.5 percent, to $817.61 an ounce.
U.S. gasoline supplies fell 6.2 million barrels last week, the U.S. Energy Department said yesterday, more than double analysts' predictions. Analysts had predicted a 3 million-barrel decline, according to a Bloomberg survey.
Motor fuel demand was down 1.6 percent from last year's levels. Oil stockpiles rose 9.39 million barrels to 305.9 million barrels, the biggest gain since March 2001.
Brent crude oil for October settlement rose as much as $2.39, or 2.1 percent, to $116.75 a barrel on London's ICE Futures Europe exchange. It was at $116.60 a barrel at 12:53 p.m. London time. It rose $1.11, or 1 percent, to $114.36 a barrel yesterday.
To contact the reporter on this story: Christian Schmollinger in Singapore at christian.s@bloomberg.net; Grant Smith in London at gsmith52@bloomberg.net
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Indian Stocks Decline, Led by Banks, on Oil, Inflation Concern
By Pooja Thakur
Aug. 21 (Bloomberg) -- Indian stocks fell, with the Sensitive Index posting its biggest drop in more than three weeks, amid concern rising oil prices will boost inflation and crimp consumer spending.
State Bank of India, the country's largest lender by assets, fell the most in three weeks and ICICI Bank Ltd., the second- biggest, sank 5.2 percent after oil rose for a third day. A government report today may show that inflation quickened to the fastest pace in 16 years, as fuel costs rose.
``Inflation concerns continue to dog the market,'' said Ajay Bodke, who helps manage the equivalent of $872 million of stocks at IDFC Mutual fund in Mumbai. ``Inflation remaining high is a worry.''
The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 434.50, or 3 percent, to 14,243.73, the most since July 29. All but one stock in the Sensex declined. The S&P CNX Nifty Index on the National Stock Exchange slid 131.90, or 3 percent, to 4,283.85.
Oil for October delivery rose as much as 2.1 percent to $117.35 a barrel on the New York Mercantile Exchange and last traded at $117.29. India is Asia's third-largest oil user.
Faster inflation, coupled with a global economic slowdown, may weaken expansion in India's $912 billion economy, Asia's third largest. JPMorgan Chase & Co. cut India's growth forecast to 7.5 percent in the year ending March 2010 from an estimated 8 percent, the brokerage said in a report today.
State Bank of India declined 7 percent to 1,343.10 rupees, its lowest since July 29. ICICI fell to 643.70 rupees, its worst close since Aug. 4. HDFC Bank Ltd., the third-largest, dropped 5.8 percent to 1,166.35 rupees, the most since July 29.
Overseas investors sold a net 11.4 billion rupees ($281.6 million) of Indian stocks on August 19, increasing their net outflow this year from equities to $6.9 billion, according to the nation's stock market regulator.
To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net
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Aug. 21 (Bloomberg) -- Indian stocks fell, with the Sensitive Index posting its biggest drop in more than three weeks, amid concern rising oil prices will boost inflation and crimp consumer spending.
State Bank of India, the country's largest lender by assets, fell the most in three weeks and ICICI Bank Ltd., the second- biggest, sank 5.2 percent after oil rose for a third day. A government report today may show that inflation quickened to the fastest pace in 16 years, as fuel costs rose.
``Inflation concerns continue to dog the market,'' said Ajay Bodke, who helps manage the equivalent of $872 million of stocks at IDFC Mutual fund in Mumbai. ``Inflation remaining high is a worry.''
The Bombay Stock Exchange's Sensitive Index, or Sensex, fell 434.50, or 3 percent, to 14,243.73, the most since July 29. All but one stock in the Sensex declined. The S&P CNX Nifty Index on the National Stock Exchange slid 131.90, or 3 percent, to 4,283.85.
Oil for October delivery rose as much as 2.1 percent to $117.35 a barrel on the New York Mercantile Exchange and last traded at $117.29. India is Asia's third-largest oil user.
Faster inflation, coupled with a global economic slowdown, may weaken expansion in India's $912 billion economy, Asia's third largest. JPMorgan Chase & Co. cut India's growth forecast to 7.5 percent in the year ending March 2010 from an estimated 8 percent, the brokerage said in a report today.
State Bank of India declined 7 percent to 1,343.10 rupees, its lowest since July 29. ICICI fell to 643.70 rupees, its worst close since Aug. 4. HDFC Bank Ltd., the third-largest, dropped 5.8 percent to 1,166.35 rupees, the most since July 29.
Overseas investors sold a net 11.4 billion rupees ($281.6 million) of Indian stocks on August 19, increasing their net outflow this year from equities to $6.9 billion, according to the nation's stock market regulator.
To contact the reporter on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net
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U.K. Stocks Pare Losses; ENRC, Commodity Producers Advance
By Sarah Jones
Aug. 21 (Bloomberg) -- U.K. stocks pared losses, led by mining companies after Eurasian Natural Resources Corp. forecast a `strong' second half and base metals advanced.
Kazakhmys Plc and Antofagasta rose. Tullow Oil Plc led a rally in oil companies as the price of crude advanced.
The FTSE 100 Index gained 2.6, or less than 0.1 percent, to 5,374.4 in London at 12:47 p.m., having earlier dropped as much as 1.1 percent. The FTSE All-Share Index was little changed, while Ireland's ISEQ Index declined 1.6 percent.
ENRC rallied 2.6 percent to 1,054 pence after the world's third-largest ferrochrome producer said first-half profit more than tripled, beating analysts' estimates, as prices for the steelmaking raw material increased to a record.
The company added the second half will be ``very strong'' and doubled spending on an expansion to $6.9 billion.
Kazakhmys, Kazakhstan's largest copper producer, rose 4.3 percent to 1,314 pence. Antofagasta, owner of copper mines in Chile, added 1.4 percent to 566.5 pence.
Base metals including copper, nickel and tin rallied on the London Metal Exchange.
Tullow Oil, the U.K. explorer with the most exploration licenses in Africa, increased 3.9 percent to 770.5 pence.
Crude oil rallied above $117.35 a barrel on speculation Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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Aug. 21 (Bloomberg) -- U.K. stocks pared losses, led by mining companies after Eurasian Natural Resources Corp. forecast a `strong' second half and base metals advanced.
Kazakhmys Plc and Antofagasta rose. Tullow Oil Plc led a rally in oil companies as the price of crude advanced.
The FTSE 100 Index gained 2.6, or less than 0.1 percent, to 5,374.4 in London at 12:47 p.m., having earlier dropped as much as 1.1 percent. The FTSE All-Share Index was little changed, while Ireland's ISEQ Index declined 1.6 percent.
ENRC rallied 2.6 percent to 1,054 pence after the world's third-largest ferrochrome producer said first-half profit more than tripled, beating analysts' estimates, as prices for the steelmaking raw material increased to a record.
The company added the second half will be ``very strong'' and doubled spending on an expansion to $6.9 billion.
Kazakhmys, Kazakhstan's largest copper producer, rose 4.3 percent to 1,314 pence. Antofagasta, owner of copper mines in Chile, added 1.4 percent to 566.5 pence.
Base metals including copper, nickel and tin rallied on the London Metal Exchange.
Tullow Oil, the U.K. explorer with the most exploration licenses in Africa, increased 3.9 percent to 770.5 pence.
Crude oil rallied above $117.35 a barrel on speculation Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities.
To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.
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German Stocks Fall on Crude Oil, Bank Concerns; Lufthansa Drops
By Stefanie Haxel
Aug. 21 (Bloomberg) -- German stocks fell to a five-week low as higher oil prices damped the earnings outlook for airlines and carmakers and concern mounted that financial firms may post more credit-related losses.
Deutsche Lufthansa AG, Europe's second-largest airline, and Bayerische Motoren Werke AG led a retreat among companies sensitive to fuel costs as crude traded above $118 a barrel. Deutsche Bank AG, Germany's biggest, and Hypo Real Estate Holding AG dropped for a fourth day as Babcock & Brown Ltd. of Australia posted its first-ever profit decline and Citigroup Inc predicted three U.S. banks will write down a combined $6.4 this quarter.
The benchmark DAX Index lost 72.66, or 1.2 percent, to 6,254.14 as of 2:46 p.m. in Frankfurt, the lowest since July 16. DAX futures expiring in September sank 1.2 percent. The HDAX Index of the country's 110 biggest companies fell 1 percent.
``It looks as if the bear-market rally has been shelved,'' Richard Zellmann, director of sales and research at First Private Investment in Frankfurt, said in a Bloomberg Television interview. ``News are still downright negative and the trend is clearly bearish.''
Crude oil for October delivery rallied as much as 3.1 percent to $118.49 a barrel in New York on concern that Russian crude may be disrupted after the U.S. agreed to build a missile- defense system in Poland and the conflict in Georgia has halted supplies from the Caspian Sea.
Lufthansa sank 21 cents, or 1.5 percent, to 14.175 euros. Jet-fuel prices in northwest Europe have risen 29 percent so far this year, Bloomberg data show.
BMW, the world's biggest luxury carmaker, lost 69 cents, or 2.4 percent, to 28.01 euros.
Consumer Shares
Henkel AG & Co. KGaA dropped 78 cents, or 2.9 percent, to 26.18 euros, the lowest in two weeks. The maker of Loctite glue and Persil detergent on Aug. 6 cut its earnings forecast because of surging costs for oil-based chemicals.
Praktiker AG, Germany's second-biggest home-improvement retailer, sank 39 cents, or 4 percent, to 9.34 euros, the lowest since selling shares in 2005. Arcandor AG, the country's largest department-store operator, slumped 43 cents, or 7.2 percent, to 5.56 euros, the lowest since 1992.
Deutsche Bank declined 83 cents, or 1.5 percent, to 56.22 euros. Commerzbank AG, the nation's second-biggest bank, lost 43 cents, or 2.1 percent, to 19.72 euros. Hypo Real Estate, the country's second-largest commercial-property lender, retreated 27 cents, or 1.7 percent, to 16.13 euros.
Record Low
Babcock & Brown, Australia's second-biggest manager of listed funds, plunged to a record low in Sydney trading. First- half net income dropped 24 percent as its listed funds slumped amid the global financial crisis.
Citigroup analyst Prashant Bhatia lowered his third-quarter earnings estimates for Lehman Brothers Holdings Inc, Goldman Sachs Group Inc. and Morgan Stanley, estimating the three banks will write down a combined $6.4 billion for the period.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Arques Industries AG (AQU GY) tumbled 84 cents, or 10 percent, to 7.35 euros, the steepest decline since April. The investment company reported a second-quarter loss and said ``difficult'' market conditions prompted it to lower its profit forecast for 2008.
IKB Deutsche Industriebank AG (IKB GY) rallied 23 cents, or 8.6 percent, to 2.91 euros, the highest in six weeks. Lone Star Funds, the Dallas-based private equity firm, agreed to buy Germany's first casualty of the subprime mortgage crisis.
Kloeckner & Co. SE (KCO GY) retreated for the fourth time in five days, losing 98 cents, or 3.5 percent, to 27.12. HSBC Holdings Plc downgraded the steel trader to ``neutral'' from ``overweight.''
Merck KGaA (MRK GY) gained for a fourth day, adding 1.79 euros, or 2.4 percent, to 76.71. UBS AG rated the maker of the Erbitux cancer drug ``buy'' in new coverage.
To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.
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Aug. 21 (Bloomberg) -- German stocks fell to a five-week low as higher oil prices damped the earnings outlook for airlines and carmakers and concern mounted that financial firms may post more credit-related losses.
Deutsche Lufthansa AG, Europe's second-largest airline, and Bayerische Motoren Werke AG led a retreat among companies sensitive to fuel costs as crude traded above $118 a barrel. Deutsche Bank AG, Germany's biggest, and Hypo Real Estate Holding AG dropped for a fourth day as Babcock & Brown Ltd. of Australia posted its first-ever profit decline and Citigroup Inc predicted three U.S. banks will write down a combined $6.4 this quarter.
The benchmark DAX Index lost 72.66, or 1.2 percent, to 6,254.14 as of 2:46 p.m. in Frankfurt, the lowest since July 16. DAX futures expiring in September sank 1.2 percent. The HDAX Index of the country's 110 biggest companies fell 1 percent.
``It looks as if the bear-market rally has been shelved,'' Richard Zellmann, director of sales and research at First Private Investment in Frankfurt, said in a Bloomberg Television interview. ``News are still downright negative and the trend is clearly bearish.''
Crude oil for October delivery rallied as much as 3.1 percent to $118.49 a barrel in New York on concern that Russian crude may be disrupted after the U.S. agreed to build a missile- defense system in Poland and the conflict in Georgia has halted supplies from the Caspian Sea.
Lufthansa sank 21 cents, or 1.5 percent, to 14.175 euros. Jet-fuel prices in northwest Europe have risen 29 percent so far this year, Bloomberg data show.
BMW, the world's biggest luxury carmaker, lost 69 cents, or 2.4 percent, to 28.01 euros.
Consumer Shares
Henkel AG & Co. KGaA dropped 78 cents, or 2.9 percent, to 26.18 euros, the lowest in two weeks. The maker of Loctite glue and Persil detergent on Aug. 6 cut its earnings forecast because of surging costs for oil-based chemicals.
Praktiker AG, Germany's second-biggest home-improvement retailer, sank 39 cents, or 4 percent, to 9.34 euros, the lowest since selling shares in 2005. Arcandor AG, the country's largest department-store operator, slumped 43 cents, or 7.2 percent, to 5.56 euros, the lowest since 1992.
Deutsche Bank declined 83 cents, or 1.5 percent, to 56.22 euros. Commerzbank AG, the nation's second-biggest bank, lost 43 cents, or 2.1 percent, to 19.72 euros. Hypo Real Estate, the country's second-largest commercial-property lender, retreated 27 cents, or 1.7 percent, to 16.13 euros.
Record Low
Babcock & Brown, Australia's second-biggest manager of listed funds, plunged to a record low in Sydney trading. First- half net income dropped 24 percent as its listed funds slumped amid the global financial crisis.
Citigroup analyst Prashant Bhatia lowered his third-quarter earnings estimates for Lehman Brothers Holdings Inc, Goldman Sachs Group Inc. and Morgan Stanley, estimating the three banks will write down a combined $6.4 billion for the period.
The following stocks also rose or fell in German markets. Symbols are in parentheses.
Arques Industries AG (AQU GY) tumbled 84 cents, or 10 percent, to 7.35 euros, the steepest decline since April. The investment company reported a second-quarter loss and said ``difficult'' market conditions prompted it to lower its profit forecast for 2008.
IKB Deutsche Industriebank AG (IKB GY) rallied 23 cents, or 8.6 percent, to 2.91 euros, the highest in six weeks. Lone Star Funds, the Dallas-based private equity firm, agreed to buy Germany's first casualty of the subprime mortgage crisis.
Kloeckner & Co. SE (KCO GY) retreated for the fourth time in five days, losing 98 cents, or 3.5 percent, to 27.12. HSBC Holdings Plc downgraded the steel trader to ``neutral'' from ``overweight.''
Merck KGaA (MRK GY) gained for a fourth day, adding 1.79 euros, or 2.4 percent, to 76.71. UBS AG rated the maker of the Erbitux cancer drug ``buy'' in new coverage.
To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.
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Stocks in Europe, Asia Decline; U.S. Index Futures Retreat
By Sarah Thompson
Aug. 21 (Bloomberg) -- Stocks in Europe and Asia fell as concern deepened banks will report more writedowns, while Holcim Ltd.'s profit forecast pushed building-materials shares lower. U.S. index futures declined.
HSBC Holdings Plc and BNP Paribas SA both lost 2.6 percent in Europe after Citigroup Inc. analysts predicted three U.S. banks will write down a combined $6.4 billion this quarter. Babcock & Brown Ltd., Asia's worst-performing stock this year, plunged a record 36 percent after earnings dropped and its chief executive officer quit. Holcim sank 1.9 percent as the world's second-biggest cement maker said profit won't meet its target.
Europe's Dow Jones Stoxx 600 Index lost 0.9 percent to 278.21 at 1:54 p.m. in London, extending this year's decline to 24 percent. Financial firms have led stocks lower worldwide in 2008 on concern accelerating inflation and more than $500 billion in credit-related losses will stifle profit growth.
``There is little that can comfort you that we are at the bottom'' for financial shares, said Gary Dugan, London-based chief investment officer for Europe at Merrill Lynch Global Wealth Management. ``We are not going to see the bottom for at least another six months. In terms of this drip feed of bad news, this will continue with banks.'' He spoke in a Bloomberg Television interview. Merrill manages $1.5 trillion worldwide.
Futures on the Standard & Poor's 500 Index decreased 0.7 percent, while the MSCI Asia Pacific Index slipped 0.5 percent.
Abandoned Talks
Lehman Brothers Holdings Inc. fell in German trading after the Financial Times said Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake in the U.S. bank this month. Air France-KLM Group slipped as crude rose for a third day, climbing above $118 a barrel.
European Central Bank Governing Council member Nout Wellink said higher prices are feeding into wages, Het Financieele Dagblad reported, citing an interview.
``There are still effects in the pipeline that push up prices and we see second-round effects appear,'' Wellink, who also heads the Dutch central bank, told the newspaper Het. ``The higher prices feed into wages. We are monitoring all developments.''
Rising commodity prices have kept central banks from cutting interest rates even as the economy slows.
Crude rose for a third day in New York on concerns that Russian and Caspian Sea supplies may be disrupted after the U.S. agreed yesterday to construct a missile-defense system in Poland over Russian objections.
HBOS, Credit Suisse
HSBC, Europe's largest bank, slipped 2.6 percent to 802.5 pence. BNP Pariba, France's biggest bank, sank 2.6 percent to 56.86 euros.
Citigroup analyst Prashant Bhatia cut his third-quarter earnings estimates for Lehman, Goldman Sachs Group Inc. and Morgan Stanley, and estimated the three banks will write down a combined $6.4 billion for the period.
Goldman slipped $1.20 to $157.05 in Germany, while Morgan Stanley didn't trade in Europe.
Lehman lost 48 cents to $13.25 in Germany. The two Asian investors held talks in the first week of this month about buying a stake of as much as 50 percent in the New York-based firm, the Financial Times reported today, citing unidentified people familiar with the matter. The pair walked away after deciding Lehman was asking too high a price, the newspaper said.
Matthew Russell, a spokesman for Lehman in Hong Kong, declined to comment on the report, as did Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank. Raymond Tang, a spokesman for Citic in Beijing, said he hadn't heard about the discussions.
Five-Week High
The cost of protecting bank debt from default rose to a five-week high in Europe.
Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers jumped 2.5 basis points to 90, the highest since July 16, according to JPMorgan Chase & Co. prices at 10 a.m. in London.
Babcock & Brown, a Sydney-based manager of infrastructure assets, slumped A$1.23 to A$2.22. The company posted a 24 percent decline in net income and said Phil Green will resign as CEO. Jim Babcock, who founded the company in 1977, stepped down as executive chairman.
Holcim declined 1.9 percent to 75.6 francs. Second-quarter profit dropped after U.S. construction slowed and transport and raw-material costs increased.
Missing Target
Operating profit for 2008 will match last year's results on a comparable basis, the Zurich-based company said today in a statement. That compares with a long-term target of 5 percent annual growth.
Net income fell to 696 million Swiss francs ($634 million) in the quarter from 2.07 billion francs a year earlier, when the Zurich, Switzerland-based company booked a 1.1 billion-franc disposal gain. Earnings before interest and tax decreased to 1.23 billion francs. Analysts estimated 1.31 billion francs.
Cie. de Saint-Gobain SA, Europe's biggest supplier of building materials, fell 1.8 percent to 39.45 euros. Lafarge SA, the world's No. 1 cement company, sank 3 percent to 77.97 euros.
Air France, Europe's biggest airline, sank 1.2 percent to 16.03 euros. Ryanair Holdings Plc, the region's largest discount carrier, slipped 2.2 percent to 2.56 euros. BMW, the world's largest luxury-car maker, lost 2.7 percent to 28.91 euros.
Crude oil for October delivery rose as much as $2.93, or 2.5 percent, to $118.49 a barrel on the New York Mercantile Exchange.
Frontline fell 5.6 percent to 296 kroner. The world's largest owner of supertankers said second-quarter net income rose to $318.4 million, or $4.25 a share, from $187.9 million, or $2.51, a year earlier. The shipping line was expected to make $339 million, or $4.53, according to the median estimate of nine analysts surveyed by Bloomberg News.
Eurasian Natural Resources Corp. advanced 3.2 percent to 1,060 pence. The world's third-biggest ferrochrome producer said first-half profit more than tripled after prices for the steelmaking raw material increased to a record.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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Aug. 21 (Bloomberg) -- Stocks in Europe and Asia fell as concern deepened banks will report more writedowns, while Holcim Ltd.'s profit forecast pushed building-materials shares lower. U.S. index futures declined.
HSBC Holdings Plc and BNP Paribas SA both lost 2.6 percent in Europe after Citigroup Inc. analysts predicted three U.S. banks will write down a combined $6.4 billion this quarter. Babcock & Brown Ltd., Asia's worst-performing stock this year, plunged a record 36 percent after earnings dropped and its chief executive officer quit. Holcim sank 1.9 percent as the world's second-biggest cement maker said profit won't meet its target.
Europe's Dow Jones Stoxx 600 Index lost 0.9 percent to 278.21 at 1:54 p.m. in London, extending this year's decline to 24 percent. Financial firms have led stocks lower worldwide in 2008 on concern accelerating inflation and more than $500 billion in credit-related losses will stifle profit growth.
``There is little that can comfort you that we are at the bottom'' for financial shares, said Gary Dugan, London-based chief investment officer for Europe at Merrill Lynch Global Wealth Management. ``We are not going to see the bottom for at least another six months. In terms of this drip feed of bad news, this will continue with banks.'' He spoke in a Bloomberg Television interview. Merrill manages $1.5 trillion worldwide.
Futures on the Standard & Poor's 500 Index decreased 0.7 percent, while the MSCI Asia Pacific Index slipped 0.5 percent.
Abandoned Talks
Lehman Brothers Holdings Inc. fell in German trading after the Financial Times said Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake in the U.S. bank this month. Air France-KLM Group slipped as crude rose for a third day, climbing above $118 a barrel.
European Central Bank Governing Council member Nout Wellink said higher prices are feeding into wages, Het Financieele Dagblad reported, citing an interview.
``There are still effects in the pipeline that push up prices and we see second-round effects appear,'' Wellink, who also heads the Dutch central bank, told the newspaper Het. ``The higher prices feed into wages. We are monitoring all developments.''
Rising commodity prices have kept central banks from cutting interest rates even as the economy slows.
Crude rose for a third day in New York on concerns that Russian and Caspian Sea supplies may be disrupted after the U.S. agreed yesterday to construct a missile-defense system in Poland over Russian objections.
HBOS, Credit Suisse
HSBC, Europe's largest bank, slipped 2.6 percent to 802.5 pence. BNP Pariba, France's biggest bank, sank 2.6 percent to 56.86 euros.
Citigroup analyst Prashant Bhatia cut his third-quarter earnings estimates for Lehman, Goldman Sachs Group Inc. and Morgan Stanley, and estimated the three banks will write down a combined $6.4 billion for the period.
Goldman slipped $1.20 to $157.05 in Germany, while Morgan Stanley didn't trade in Europe.
Lehman lost 48 cents to $13.25 in Germany. The two Asian investors held talks in the first week of this month about buying a stake of as much as 50 percent in the New York-based firm, the Financial Times reported today, citing unidentified people familiar with the matter. The pair walked away after deciding Lehman was asking too high a price, the newspaper said.
Matthew Russell, a spokesman for Lehman in Hong Kong, declined to comment on the report, as did Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank. Raymond Tang, a spokesman for Citic in Beijing, said he hadn't heard about the discussions.
Five-Week High
The cost of protecting bank debt from default rose to a five-week high in Europe.
Credit-default swaps on the Markit iTraxx Financial index of 25 European banks and insurers jumped 2.5 basis points to 90, the highest since July 16, according to JPMorgan Chase & Co. prices at 10 a.m. in London.
Babcock & Brown, a Sydney-based manager of infrastructure assets, slumped A$1.23 to A$2.22. The company posted a 24 percent decline in net income and said Phil Green will resign as CEO. Jim Babcock, who founded the company in 1977, stepped down as executive chairman.
Holcim declined 1.9 percent to 75.6 francs. Second-quarter profit dropped after U.S. construction slowed and transport and raw-material costs increased.
Missing Target
Operating profit for 2008 will match last year's results on a comparable basis, the Zurich-based company said today in a statement. That compares with a long-term target of 5 percent annual growth.
Net income fell to 696 million Swiss francs ($634 million) in the quarter from 2.07 billion francs a year earlier, when the Zurich, Switzerland-based company booked a 1.1 billion-franc disposal gain. Earnings before interest and tax decreased to 1.23 billion francs. Analysts estimated 1.31 billion francs.
Cie. de Saint-Gobain SA, Europe's biggest supplier of building materials, fell 1.8 percent to 39.45 euros. Lafarge SA, the world's No. 1 cement company, sank 3 percent to 77.97 euros.
Air France, Europe's biggest airline, sank 1.2 percent to 16.03 euros. Ryanair Holdings Plc, the region's largest discount carrier, slipped 2.2 percent to 2.56 euros. BMW, the world's largest luxury-car maker, lost 2.7 percent to 28.91 euros.
Crude oil for October delivery rose as much as $2.93, or 2.5 percent, to $118.49 a barrel on the New York Mercantile Exchange.
Frontline fell 5.6 percent to 296 kroner. The world's largest owner of supertankers said second-quarter net income rose to $318.4 million, or $4.25 a share, from $187.9 million, or $2.51, a year earlier. The shipping line was expected to make $339 million, or $4.53, according to the median estimate of nine analysts surveyed by Bloomberg News.
Eurasian Natural Resources Corp. advanced 3.2 percent to 1,060 pence. The world's third-biggest ferrochrome producer said first-half profit more than tripled after prices for the steelmaking raw material increased to a record.
To contact the reporter on this story: Sarah Thompson in London at sthompson17@bloomberg.net
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Limited Brands, Massey, Southern Copper: U.S. Equity Preview
By Jeff Kearns
Aug. 21 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets. Stock symbols are in parentheses after company names, and prices are as of 8 a.m. in New York, unless stated otherwise.
Bally Technologies Inc. (BYI US) climbed 6.9 percent to $33.50. The second-largest U.S. maker of slot machines said fourth-quarter profit rose 69 percent as it won market share from rivals and lowered costs. The company reiterated its full-year forecast.
Citi Trends Inc. (CTRN US): The clothing retailer reported second-quarter profit of 20 cents a share, exceeding the average analyst estimate by 16 percent, according to Bloomberg data. The shares rose 5.1 percent to $19.39 in extended trading yesterday.
Limited Brands Inc. (LTD US) climbed 5.7 percent to $19. The owner of the Victoria's Secret chain reported second-quarter profit above the average analyst estimate and raised its earnings forecast for the year.
Massey Energy Co. (MEE US) rose 2.8 percent to $66.70. The largest U.S. producer of coal from the Appalachian region was raised to ``buy'' from ``neutral'' at UBS AG.
JDS Uniphase Corp. (JDSU US) slumped 12 percent to $10.52. The maker of phone equipment for AT&T Inc. posted a wider net loss after sales of testing equipment dropped. Excluding some items, profit was 7 cents a share, compared with the 11-cent estimate of analysts in a Bloomberg survey.
Phillips-Van Heusen Corp. (PVH US): The seller of Calvin Klein and Izod clothing said third-quarter profit may be as low as $1.07 a share, compared with the average analyst estimate of $1.21 a share. The shares slipped 3 percent to $34.96 in extended trading.
Salesforce.com Inc. (CRM US) dropped 10 percent to $58.60. The seller of Internet-based customer-management software said sales growth slowed and an acquisition reduced earnings projections for the year.
Southern Copper Corp. (PCU US) rose 3.9 percent to $25.50. The world's fifth-largest copper producer was raised to ``neutral'' from ``underperform'' at Merrill Lynch & Co.
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
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Aug. 21 (Bloomberg) -- The following companies may have unusual price changes in U.S. markets. Stock symbols are in parentheses after company names, and prices are as of 8 a.m. in New York, unless stated otherwise.
Bally Technologies Inc. (BYI US) climbed 6.9 percent to $33.50. The second-largest U.S. maker of slot machines said fourth-quarter profit rose 69 percent as it won market share from rivals and lowered costs. The company reiterated its full-year forecast.
Citi Trends Inc. (CTRN US): The clothing retailer reported second-quarter profit of 20 cents a share, exceeding the average analyst estimate by 16 percent, according to Bloomberg data. The shares rose 5.1 percent to $19.39 in extended trading yesterday.
Limited Brands Inc. (LTD US) climbed 5.7 percent to $19. The owner of the Victoria's Secret chain reported second-quarter profit above the average analyst estimate and raised its earnings forecast for the year.
Massey Energy Co. (MEE US) rose 2.8 percent to $66.70. The largest U.S. producer of coal from the Appalachian region was raised to ``buy'' from ``neutral'' at UBS AG.
JDS Uniphase Corp. (JDSU US) slumped 12 percent to $10.52. The maker of phone equipment for AT&T Inc. posted a wider net loss after sales of testing equipment dropped. Excluding some items, profit was 7 cents a share, compared with the 11-cent estimate of analysts in a Bloomberg survey.
Phillips-Van Heusen Corp. (PVH US): The seller of Calvin Klein and Izod clothing said third-quarter profit may be as low as $1.07 a share, compared with the average analyst estimate of $1.21 a share. The shares slipped 3 percent to $34.96 in extended trading.
Salesforce.com Inc. (CRM US) dropped 10 percent to $58.60. The seller of Internet-based customer-management software said sales growth slowed and an acquisition reduced earnings projections for the year.
Southern Copper Corp. (PCU US) rose 3.9 percent to $25.50. The world's fifth-largest copper producer was raised to ``neutral'' from ``underperform'' at Merrill Lynch & Co.
To contact the reporter on this story: Jeff Kearns in New York at jkearns3@bloomberg.net.
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U.S. Stock-Index Futures Retreat; Lehman, GM, UAL Shares Drop
By Adam Haigh and Eric Martin
Aug. 21 (Bloomberg) -- U.S. stock-index futures dropped as investors speculated that writedowns at financial companies will increase and a climb in oil damped the earnings prospects for retailers and airlines.
Lehman Brothers Holdings Inc. slid 4.1 percent as Citigroup Inc. reduced its earnings estimates for the fourth-largest U.S. securities firm and the Financial Times said Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake. General Motors Corp. and UAL Corp. fell as oil posted the first three-day advance in more than five weeks. Investors will also focus on reports that may show the U.S. economic outlook dimmed for a third straight month and manufacturing in Philadelphia contracted.
``Smart investors are treading carefully,'' said Chirin Gill, a London-based fund manager at Daiwa SB Investments, which oversees about $60 billion. ``Investors are confused about the outlook for the economy over the next few months.''
Standard & Poor's 500 Index futures expiring in September retreated 6.80, or 0.5 percent, to 1,267 at 8:39 a.m. in New York. Dow Jones Industrial Average futures lost 59 to 11,347. Nasdaq-100 Index futures declined 10.25 to 1,905.75.
The S&P 500 has dropped 13 percent this year as the worst U.S. housing slump since the Great Depression slowed consumer spending and spurred turmoil in mortgage markets that saddled banks with more than $500 billion of losses. Earnings at financial companies in the S&P 500 declined 91 percent last quarter, according to Bloomberg data.
`The Gradual Decline'
``One characteristic of the third quarter is going to be the gradual decline in estimates for corporate earnings,'' said Bob Parker, London-based vice chairman of Credit Suisse Asset Management, which has $600 billion. He spoke in a Bloomberg Television interview.
Lehman fell 56 cents to $13.17. The company may post a third-quarter per-share loss of $3.25, wider than the 41-cent loss Citigroup analyst Prashant Bhatia had previously predicted. He also cut earnings forecasts for Morgan Stanley and Goldman Sachs Group Inc.
Korea Development Bank and Citic held talks in the first week of this month about buying a stake of as much as 50 percent in Lehman, the Financial Times reported, citing unidentified people familiar with the matter. The pair walked away after deciding Lehman was asking too high a price, the newspaper said.
Matthew Russell, a spokesman for Lehman in Hong Kong, declined to comment on the report, as did Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank. Raymond Tang, a spokesman for Citic in Beijing, said he hadn't heard about the discussions.
Earnings Estimates
Separately, Lehman cut its third-quarter earnings estimates for Morgan Stanley and Goldman, and the cost of protecting bank debt from default rose to a five-week high. Goldman lost $1.55 to $156.70, Morgan Stanley retreated 50 cents to $36.90.
An advance in financial shares yesterday helped snap a two- day, 2.4 percent slide in the S&P 500, its worst retreat in a month. Concern funding shortages at Fannie Mae and Freddie Mac will add to banks' $500 billion in credit losses sent financial shares down 6.3 percent during the week's first two days.
Fannie Mae today fell 43 cents to $3.97, while Freddie Mac lost 40 cents to $2.58. They have both plunged more than 88 percent in 2008.
GM, the largest U.S. automaker, dropped 17 cents to $9.99. United Airlines parent UAL slid 85 cents to $11.55.
Supply Disruption
Oil rose on speculation that Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities. Crude added 2.3 percent to $118.19 a barrel.
The Conference Board's index of leading indicators, a measure of the economy's direction over the next three to six months, fell 0.2 percent, according to the median forecast in a Bloomberg News survey. The Philadelphia Federal Reserve's gauge of manufacturing was probably less than zero for a ninth month, signaling a contraction in the economy. The two reports will be released at 10 a.m. New York time.
Salesforce.com Inc. dropped $6.60 to $58.70 after revenue growth slowed and the company said acquisition costs will trim profit.
JDS Uniphase Corp. slumped $1.30 to $10.60. The maker of phone equipment for AT&T Inc. posted an unexpected net loss after sales of products that test networks declined.
To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.
Last Updated: August 21, 2008 08:40 EDT
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Aug. 21 (Bloomberg) -- U.S. stock-index futures dropped as investors speculated that writedowns at financial companies will increase and a climb in oil damped the earnings prospects for retailers and airlines.
Lehman Brothers Holdings Inc. slid 4.1 percent as Citigroup Inc. reduced its earnings estimates for the fourth-largest U.S. securities firm and the Financial Times said Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake. General Motors Corp. and UAL Corp. fell as oil posted the first three-day advance in more than five weeks. Investors will also focus on reports that may show the U.S. economic outlook dimmed for a third straight month and manufacturing in Philadelphia contracted.
``Smart investors are treading carefully,'' said Chirin Gill, a London-based fund manager at Daiwa SB Investments, which oversees about $60 billion. ``Investors are confused about the outlook for the economy over the next few months.''
Standard & Poor's 500 Index futures expiring in September retreated 6.80, or 0.5 percent, to 1,267 at 8:39 a.m. in New York. Dow Jones Industrial Average futures lost 59 to 11,347. Nasdaq-100 Index futures declined 10.25 to 1,905.75.
The S&P 500 has dropped 13 percent this year as the worst U.S. housing slump since the Great Depression slowed consumer spending and spurred turmoil in mortgage markets that saddled banks with more than $500 billion of losses. Earnings at financial companies in the S&P 500 declined 91 percent last quarter, according to Bloomberg data.
`The Gradual Decline'
``One characteristic of the third quarter is going to be the gradual decline in estimates for corporate earnings,'' said Bob Parker, London-based vice chairman of Credit Suisse Asset Management, which has $600 billion. He spoke in a Bloomberg Television interview.
Lehman fell 56 cents to $13.17. The company may post a third-quarter per-share loss of $3.25, wider than the 41-cent loss Citigroup analyst Prashant Bhatia had previously predicted. He also cut earnings forecasts for Morgan Stanley and Goldman Sachs Group Inc.
Korea Development Bank and Citic held talks in the first week of this month about buying a stake of as much as 50 percent in Lehman, the Financial Times reported, citing unidentified people familiar with the matter. The pair walked away after deciding Lehman was asking too high a price, the newspaper said.
Matthew Russell, a spokesman for Lehman in Hong Kong, declined to comment on the report, as did Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank. Raymond Tang, a spokesman for Citic in Beijing, said he hadn't heard about the discussions.
Earnings Estimates
Separately, Lehman cut its third-quarter earnings estimates for Morgan Stanley and Goldman, and the cost of protecting bank debt from default rose to a five-week high. Goldman lost $1.55 to $156.70, Morgan Stanley retreated 50 cents to $36.90.
An advance in financial shares yesterday helped snap a two- day, 2.4 percent slide in the S&P 500, its worst retreat in a month. Concern funding shortages at Fannie Mae and Freddie Mac will add to banks' $500 billion in credit losses sent financial shares down 6.3 percent during the week's first two days.
Fannie Mae today fell 43 cents to $3.97, while Freddie Mac lost 40 cents to $2.58. They have both plunged more than 88 percent in 2008.
GM, the largest U.S. automaker, dropped 17 cents to $9.99. United Airlines parent UAL slid 85 cents to $11.55.
Supply Disruption
Oil rose on speculation that Russian crude may be disrupted because of rising tensions with the U.S., and as the weaker dollar bolstered the hedging appeal of commodities. Crude added 2.3 percent to $118.19 a barrel.
The Conference Board's index of leading indicators, a measure of the economy's direction over the next three to six months, fell 0.2 percent, according to the median forecast in a Bloomberg News survey. The Philadelphia Federal Reserve's gauge of manufacturing was probably less than zero for a ninth month, signaling a contraction in the economy. The two reports will be released at 10 a.m. New York time.
Salesforce.com Inc. dropped $6.60 to $58.70 after revenue growth slowed and the company said acquisition costs will trim profit.
JDS Uniphase Corp. slumped $1.30 to $10.60. The maker of phone equipment for AT&T Inc. posted an unexpected net loss after sales of products that test networks declined.
To contact the reporters on this story: Adam Haigh in London at ahaigh1@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.
Last Updated: August 21, 2008 08:40 EDT
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America Movil, Banco Bradesco, Klabin: Latin Equity Preview
By Alexander Ragir and [bn:PRSN=1] William Freebairn []
Aug. 21 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index rose 3.9 percent to 3,976.18.
Argentina
Banco Macro SA (BMA AF): Argentina's fourth-largest private lender has the best risk-return mix of the country's five listed banks, partly because of its low government bond holdings and a share-buyback program, Grupo SBS analyst Paula Kritz wrote in a research note yesterday. Macro bought 854,267 of its own shares yesterday for an average of 5.98 pesos each, it wrote in a regulatory filing. The shares fell 0.3 percent to 5.96 pesos.
Brazil
Banco do Brasil SA (BBAS3 BS): Deutsche Bank AG analysts cut their 2008 earnings forecast for Banco do Brasil, citing ``weaker-than-expected'' second-quarter profit for Latin America's largest bank by assets, and also lowered their estimate for Banco Bradesco SA (BBDC4 BS). Banco do Brasil rose 2 percent to 22.65 reais. Bradesco rose 2.7 percent to 29.95 reais.
Klabin SA (KLBN4 BS): Brazil's fourth-largest pulp and paper maker had the outlook for its debt rating reduced to ``stable'' from ``positive'' by Standard & Poor's Rating Services on concern that the cash generation needed for a higher rating will take ``longer than anticipated.'' Analyst Marcelo Costa yesterday also affirmed Klabin's BB credit rating, two levels below investment grade. Klabin rose 0.6 percent to 4.94 reais.
Vivo Participacoes SA (VIVO4 BS) and Tim Participacoes SA (TCSL4 BS): Brazilian mobile-phone companies added 2.16 million new subscribers in July, an increase of 16 percent from the year- ago period, Brazil's telecommunications regulator said yesterday. Vivo, Brazil's biggest mobile-phone company, accounted for 30.25 percent of those additions, down from 30.36 percent in June, while second-biggest Tim accounted for 25.26 percent, down from 25.4 percent in the previous month. Vivo gained 1 percent to 8.03 reais. Tim rose 0.6 percent to 3.65 reais.
Colombia
Bancolombia SA (PFBCOLO CB): Foreign investors may shift their focus away from Bancolombia, which has the country's only easy-to-trade American depositary receipts, and toward other local stocks, if authorities remove capital controls, Greg Lesko, who helps manage about $600 million in emerging market equities at Deltec Asset Management Corp. in New York, said by phone yesterday. The government is studying a regulation that would remove restrictions on stock investments, Portafolio newspaper reported Aug. 19, citing President Alvaro Uribe. Bancolombia's preferred shares rose 3.4 percent to 15,200 pesos.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile- phone company gained market share in Brazil in July, that country's telecommunications regulator Anatel said on its Web site yesterday. The company's share of new subscribers declined from June, Pali Research said in a research note. America Movil fell 1.7 percent to 26.01 pesos.
Cemex SAB (CEMEXCP MM): The nationalization by Venezuela's government of the local unit of North America's largest cement producer will reduce earnings before interest, taxes, depreciation and amortization by about 3.7 percent, IXE Grupo Financiero said in a research note yesterday. The company is likely to use any proceeds it receives to reduce debt, IXE analysts Rodrigo Heredia and Patricio Rivera wrote in the note, where they kept their ``buy'' rating on the company. Cemex was unchanged at 20.92 pesos.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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Aug. 21 (Bloomberg) -- The following companies may have unusual price changes in Latin America trading. Stock symbols are in parentheses, and share prices are from the previous close. Preferred shares are usually the most-traded class of stock in Brazil.
The MSCI Latin America Index rose 3.9 percent to 3,976.18.
Argentina
Banco Macro SA (BMA AF): Argentina's fourth-largest private lender has the best risk-return mix of the country's five listed banks, partly because of its low government bond holdings and a share-buyback program, Grupo SBS analyst Paula Kritz wrote in a research note yesterday. Macro bought 854,267 of its own shares yesterday for an average of 5.98 pesos each, it wrote in a regulatory filing. The shares fell 0.3 percent to 5.96 pesos.
Brazil
Banco do Brasil SA (BBAS3 BS): Deutsche Bank AG analysts cut their 2008 earnings forecast for Banco do Brasil, citing ``weaker-than-expected'' second-quarter profit for Latin America's largest bank by assets, and also lowered their estimate for Banco Bradesco SA (BBDC4 BS). Banco do Brasil rose 2 percent to 22.65 reais. Bradesco rose 2.7 percent to 29.95 reais.
Klabin SA (KLBN4 BS): Brazil's fourth-largest pulp and paper maker had the outlook for its debt rating reduced to ``stable'' from ``positive'' by Standard & Poor's Rating Services on concern that the cash generation needed for a higher rating will take ``longer than anticipated.'' Analyst Marcelo Costa yesterday also affirmed Klabin's BB credit rating, two levels below investment grade. Klabin rose 0.6 percent to 4.94 reais.
Vivo Participacoes SA (VIVO4 BS) and Tim Participacoes SA (TCSL4 BS): Brazilian mobile-phone companies added 2.16 million new subscribers in July, an increase of 16 percent from the year- ago period, Brazil's telecommunications regulator said yesterday. Vivo, Brazil's biggest mobile-phone company, accounted for 30.25 percent of those additions, down from 30.36 percent in June, while second-biggest Tim accounted for 25.26 percent, down from 25.4 percent in the previous month. Vivo gained 1 percent to 8.03 reais. Tim rose 0.6 percent to 3.65 reais.
Colombia
Bancolombia SA (PFBCOLO CB): Foreign investors may shift their focus away from Bancolombia, which has the country's only easy-to-trade American depositary receipts, and toward other local stocks, if authorities remove capital controls, Greg Lesko, who helps manage about $600 million in emerging market equities at Deltec Asset Management Corp. in New York, said by phone yesterday. The government is studying a regulation that would remove restrictions on stock investments, Portafolio newspaper reported Aug. 19, citing President Alvaro Uribe. Bancolombia's preferred shares rose 3.4 percent to 15,200 pesos.
Mexico
America Movil SAB (AMXL MM): Latin America's largest mobile- phone company gained market share in Brazil in July, that country's telecommunications regulator Anatel said on its Web site yesterday. The company's share of new subscribers declined from June, Pali Research said in a research note. America Movil fell 1.7 percent to 26.01 pesos.
Cemex SAB (CEMEXCP MM): The nationalization by Venezuela's government of the local unit of North America's largest cement producer will reduce earnings before interest, taxes, depreciation and amortization by about 3.7 percent, IXE Grupo Financiero said in a research note yesterday. The company is likely to use any proceeds it receives to reduce debt, IXE analysts Rodrigo Heredia and Patricio Rivera wrote in the note, where they kept their ``buy'' rating on the company. Cemex was unchanged at 20.92 pesos.
To contact the reporters on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;
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JPMorgan Says Mexico Index May Beat Brazil in Rebound
By Alexis Xydias
Aug. 21 (Bloomberg) -- Investors in Latin American equities should buy Mexican shares now and expect further declines in Brazil, if history is any guide, JPMorgan Chase & Co. said.
The MSCI Latin America Index has fallen more than 10 percent over two months in eight occasions since 1994, including the current 23 percent slide that started in May, Ben Laidler and a team of strategists at the U.S. brokerage wrote in a report dated yesterday. The sell-offs lasted an average of 15 weeks and dragged the benchmark down by 23 percent from this year's high.
Brazil's Bovespa Index has fallen 24 percent from its 2008 high, in U.S. dollars, on May 30. Investors who ``bought'' the index after an 11-week drop lost 10 percent in the following six months on average, JPMorgan said. The average six-month return after the Brazilian benchmark reached a trough is 24 percent.
Mexico's Bolsa Index, which also touched this year's high on May 30 when measured in dollars, may fare better in the short term, according to the strategists. Historically, an investment in the index returned at least 1 percent in the six months after an 11-week decline, and yielded 23 percent in the six months following a bottom, they said. The measure has fallen 14 percent since May 30.
Investing in the MSCI Latin America after an 11-week drop resulted in losses of 6 percent on average during the past sell- offs, while the six-month average return after troughs was 16 percent, JPMorgan calculated.
The brokerage reiterated its ``overweight'' position in Mexican shares and a ``neutral'' stance for Brazil.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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Aug. 21 (Bloomberg) -- Investors in Latin American equities should buy Mexican shares now and expect further declines in Brazil, if history is any guide, JPMorgan Chase & Co. said.
The MSCI Latin America Index has fallen more than 10 percent over two months in eight occasions since 1994, including the current 23 percent slide that started in May, Ben Laidler and a team of strategists at the U.S. brokerage wrote in a report dated yesterday. The sell-offs lasted an average of 15 weeks and dragged the benchmark down by 23 percent from this year's high.
Brazil's Bovespa Index has fallen 24 percent from its 2008 high, in U.S. dollars, on May 30. Investors who ``bought'' the index after an 11-week drop lost 10 percent in the following six months on average, JPMorgan said. The average six-month return after the Brazilian benchmark reached a trough is 24 percent.
Mexico's Bolsa Index, which also touched this year's high on May 30 when measured in dollars, may fare better in the short term, according to the strategists. Historically, an investment in the index returned at least 1 percent in the six months after an 11-week decline, and yielded 23 percent in the six months following a bottom, they said. The measure has fallen 14 percent since May 30.
Investing in the MSCI Latin America after an 11-week drop resulted in losses of 6 percent on average during the past sell- offs, while the six-month average return after troughs was 16 percent, JPMorgan calculated.
The brokerage reiterated its ``overweight'' position in Mexican shares and a ``neutral'' stance for Brazil.
To contact the reporter on this story: Alexis Xydias in London at axydias@bloomberg.net.
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Canada's Inflation Rate - Up Again in July
Daily Forex Fundamentals | Written by RBC Financial Group | Aug 21 08 12:50 GMT |
Canada's all-items inflation rate was 3.4% in July, in line with market forecasts and the fastest pace of increase since March 2003. The inflation rate was 3.1% in June. The Bank of Canada's core inflation rate, CPIX, held steady at 1.5%, slightly lower than the expected 1.6%. The increase in the all-items inflation rate largely reflected a 28.6% rise in gasoline prices over the past twelve months. Excluding gasoline, consumer prices were 2.1% higher than a year earlier, up from June's 1.8%.
On the month, the all-items index rose 0.3% in July relative to June, slightly slower than market forecasts for a 0.4% increase while the CPIX rose 0.1% on the month, slower than forecasts for a 0.2% increase. The seasonally-adjusted all-items index also rose 0.3% in July.
The monthly increase in the all-items index reflected higher energy prices with gasoline costs rising 1.2% and natural gas prices up 8.8%. Electricity prices also firmed and were up 1.9%. Prices for food posted a 0.6% increase building on June's 1.1% rise and May's 1% gain. Prices for the purchase and lease of motor vehicles dipped by 2.2% in July building on June's 0.5% decline and had a moderating effect on the monthly change.
On a year-over-year basis, the biggest contributor to July's 3.4% rise was gasoline prices which stood 28.6% higher than in July 2007. Prices of other fuels also firmed, jumping 49.4% relative to a year earlier and natural gas prices were up 25%. Mortgage interest costs also contributed to July's annual rise and were up 8.5%. This was slightly slower than June's 9% increase as the pace of house price gains slowed. Mitigating some of the impact of the price increases were lower prices for the purchase and lease of passenger vehicles (-8.9%) as manufacturers continue to give incentives. Computer equipment prices posted a 12% decline, slightly less than June's 13.2% drop.
With Canada's headline inflation rate continuing to plod higher for the fourth month running, it's hard to get too excited about the prospect that the Bank of Canada will ease the policy rate anytime soon. To be sure, the core measure remains secured below the mid-point of the Bank's target band but with a 3.4% headline inflation rate policymakers will remain wary about a pickup in inflation expectations. Recent data reports suggest that the economy rallied back in June with real GDP growth forecast at 0.2% on the month and second quarter growth expected to come in at a 0.8% annualized rate - an improvement after the marginal annualized dip of 0.3% in Q1. In the near term, the Bank is likely to hold the policy rate steady at 3% weighing the prospect that the above-target headline inflation rate will filter into the broader economy against downside risks to the growth coming from the recent softening in the labour market and housing data and persistent worries about the outlook for the US economy.
RBC Financial Group
http://www.rbc.com
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
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Canada's all-items inflation rate was 3.4% in July, in line with market forecasts and the fastest pace of increase since March 2003. The inflation rate was 3.1% in June. The Bank of Canada's core inflation rate, CPIX, held steady at 1.5%, slightly lower than the expected 1.6%. The increase in the all-items inflation rate largely reflected a 28.6% rise in gasoline prices over the past twelve months. Excluding gasoline, consumer prices were 2.1% higher than a year earlier, up from June's 1.8%.
On the month, the all-items index rose 0.3% in July relative to June, slightly slower than market forecasts for a 0.4% increase while the CPIX rose 0.1% on the month, slower than forecasts for a 0.2% increase. The seasonally-adjusted all-items index also rose 0.3% in July.
The monthly increase in the all-items index reflected higher energy prices with gasoline costs rising 1.2% and natural gas prices up 8.8%. Electricity prices also firmed and were up 1.9%. Prices for food posted a 0.6% increase building on June's 1.1% rise and May's 1% gain. Prices for the purchase and lease of motor vehicles dipped by 2.2% in July building on June's 0.5% decline and had a moderating effect on the monthly change.
On a year-over-year basis, the biggest contributor to July's 3.4% rise was gasoline prices which stood 28.6% higher than in July 2007. Prices of other fuels also firmed, jumping 49.4% relative to a year earlier and natural gas prices were up 25%. Mortgage interest costs also contributed to July's annual rise and were up 8.5%. This was slightly slower than June's 9% increase as the pace of house price gains slowed. Mitigating some of the impact of the price increases were lower prices for the purchase and lease of passenger vehicles (-8.9%) as manufacturers continue to give incentives. Computer equipment prices posted a 12% decline, slightly less than June's 13.2% drop.
With Canada's headline inflation rate continuing to plod higher for the fourth month running, it's hard to get too excited about the prospect that the Bank of Canada will ease the policy rate anytime soon. To be sure, the core measure remains secured below the mid-point of the Bank's target band but with a 3.4% headline inflation rate policymakers will remain wary about a pickup in inflation expectations. Recent data reports suggest that the economy rallied back in June with real GDP growth forecast at 0.2% on the month and second quarter growth expected to come in at a 0.8% annualized rate - an improvement after the marginal annualized dip of 0.3% in Q1. In the near term, the Bank is likely to hold the policy rate steady at 3% weighing the prospect that the above-target headline inflation rate will filter into the broader economy against downside risks to the growth coming from the recent softening in the labour market and housing data and persistent worries about the outlook for the US economy.
RBC Financial Group
http://www.rbc.com
The statements and statistics contained herein have been prepared by the Economics Department of RBC Financial Group based on information from sources considered to be reliable. We make no representation or warranty, express or implied, as to its accuracy or completeness. This report is for the information of investors and business persons and does not constitute an offer to sell or a solicitation to buy securities.
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London Session Recap
Daily Forex Fundamentals | Written by Forex.com | Aug 21 08 12:07 GMT |
The buck traded sideways against most of the majors in the London session as the market awaits the results of US economic data out this morning. PMI manufacturing surveys out of the Euro-zone for August came in mixed overnight with France slipping to 45.1 from 47.1, Germany dipping to 49.9 from 50.9, and the Euro-zone composite increasing to 47.5 from 47.4 prior.
EUR/USD initially traded up in the session, towards a high near 1.4830. The uninspiring data, however, brought the pair back down towards a close near 1.4775 -- where it initially opened London trading. GBP/USD was a touch lower, closing near 1.8630 after opening the session around the 1.8650 mark. This was despite UK retail sales surprising to the upside with a 0.8% gain in July. The prior month was revised lower, however, and this took the annual rate to 2.1% from 2.2%.
Oil prices jumped nearly $1 towards $117.25/bbl at the London close. This helped USD/CAD trade about 10 pips lower after a 1.0585 open. The decline was contained as markets awaited the release of Canadian CPI at the start of the NY session. Though core CPI came in at a lower than expected 0.1% -- leaving the annual rate at 1.5% -- further gains in oil towards $118.25/bbl has USD/CAD trading near 1.0540 currently.
Upcoming Economic Data Releases (NY Session) Prior Estimate
* 8/21/2008 12:30 US Initial Jobless Claims 16-Aug 450K 440K
* 8/21/2008 12:30 US Continuing Claims 9-Aug 3417K 3405K
* 8/21/2008 14:00 US Philadelphia Fed. AUG -16.3 -12.6
* 8/21/2008 14:00 US Leading Indicators JUL -0.10% -0.20%
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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The buck traded sideways against most of the majors in the London session as the market awaits the results of US economic data out this morning. PMI manufacturing surveys out of the Euro-zone for August came in mixed overnight with France slipping to 45.1 from 47.1, Germany dipping to 49.9 from 50.9, and the Euro-zone composite increasing to 47.5 from 47.4 prior.
EUR/USD initially traded up in the session, towards a high near 1.4830. The uninspiring data, however, brought the pair back down towards a close near 1.4775 -- where it initially opened London trading. GBP/USD was a touch lower, closing near 1.8630 after opening the session around the 1.8650 mark. This was despite UK retail sales surprising to the upside with a 0.8% gain in July. The prior month was revised lower, however, and this took the annual rate to 2.1% from 2.2%.
Oil prices jumped nearly $1 towards $117.25/bbl at the London close. This helped USD/CAD trade about 10 pips lower after a 1.0585 open. The decline was contained as markets awaited the release of Canadian CPI at the start of the NY session. Though core CPI came in at a lower than expected 0.1% -- leaving the annual rate at 1.5% -- further gains in oil towards $118.25/bbl has USD/CAD trading near 1.0540 currently.
Upcoming Economic Data Releases (NY Session) Prior Estimate
* 8/21/2008 12:30 US Initial Jobless Claims 16-Aug 450K 440K
* 8/21/2008 12:30 US Continuing Claims 9-Aug 3417K 3405K
* 8/21/2008 14:00 US Philadelphia Fed. AUG -16.3 -12.6
* 8/21/2008 14:00 US Leading Indicators JUL -0.10% -0.20%
Forex.com
http://www.forex.com
DISCLAIMER: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase of sale of any currency. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
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Mid-Day Report: Yen and Oil Remain Dominant
Market Overview | Written by ActionForex.com | Aug 21 08 12:31 GMT |
Rebound in oil and risk aversion continues to be the main theme in the market into US session. Crude oil extends the rebound to above $118 level. The Japanese yen is sharply higher across the board. As a result, dollar yen dives through 108.36 support. While the greenback is weak, reaction in other dollar majors are relatively mild so far as Euro, Aussie and Sterling are all pressured in respectively yen crosses. Indeed, EUR/JPY and GBP/JPY both resume recent decline which AUD/JPY breaks through this week's low.
Canadian dollar continues to recover on the back of dollars weakness and rebound in oil prices. Canadian CPI rose 0.3% mom, 3.4% yoy in Jul, hitting a 5 year high, inline with expectation. Core CPI rose 0.1% mom, 1.5% yoy, slightly below consensus of 0.2% mom, 1.6% yoy. US jobless claimes improved to 432k. Leading indicators and Philly Fed index will be released later in US session.
Little reaction was paid to European data today. Manufacturing PMI and Services PMI both stayed below 50 in Aug, at 47.5 and 48.2 respectively. The bigger surprise today was indeed the sharp deterioration in Germany manufacturing to 49.9 and services PMI to 50.6. UK retail sales unexpectedly rebound by 0.8% mom in Jul with yoy rate dropped slightly to 2.1% yoy. Swiss ZEW index dropped from -76.90 to -79.6 in Aug. Swiss combined PPI jumped 0.5% mom, 4.9% yoy in Jul, above expectation. Japanese Jul trade balance released overnight showed 91.1b surplus, narrow than expected on strong rise of 18.2% in imports. Export rose 8.1%.
USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.0594; (P) 1.0598; (R1) 1.0601; More.
USD/CAD's correction from 1.0727 is still in progress and dives to as low as 1.0520. At this point, intraday bias remains on the downside for 38.2% retracement of 0.9974 to 1.0727 at 1.0439. But downside should be contained above 1.0273 support and bring rally resumption. On the upside, above 1.0653 minor resistance will suggest that retreat from 1.0727 has completed and recent rise from 0.9974 has possibly resumed for mentioned 1.0791/98 cluster resistance.
In the bigger picture, medium term rise from 0.9056 is still in progress towards mentioned cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.
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Rebound in oil and risk aversion continues to be the main theme in the market into US session. Crude oil extends the rebound to above $118 level. The Japanese yen is sharply higher across the board. As a result, dollar yen dives through 108.36 support. While the greenback is weak, reaction in other dollar majors are relatively mild so far as Euro, Aussie and Sterling are all pressured in respectively yen crosses. Indeed, EUR/JPY and GBP/JPY both resume recent decline which AUD/JPY breaks through this week's low.
Canadian dollar continues to recover on the back of dollars weakness and rebound in oil prices. Canadian CPI rose 0.3% mom, 3.4% yoy in Jul, hitting a 5 year high, inline with expectation. Core CPI rose 0.1% mom, 1.5% yoy, slightly below consensus of 0.2% mom, 1.6% yoy. US jobless claimes improved to 432k. Leading indicators and Philly Fed index will be released later in US session.
Little reaction was paid to European data today. Manufacturing PMI and Services PMI both stayed below 50 in Aug, at 47.5 and 48.2 respectively. The bigger surprise today was indeed the sharp deterioration in Germany manufacturing to 49.9 and services PMI to 50.6. UK retail sales unexpectedly rebound by 0.8% mom in Jul with yoy rate dropped slightly to 2.1% yoy. Swiss ZEW index dropped from -76.90 to -79.6 in Aug. Swiss combined PPI jumped 0.5% mom, 4.9% yoy in Jul, above expectation. Japanese Jul trade balance released overnight showed 91.1b surplus, narrow than expected on strong rise of 18.2% in imports. Export rose 8.1%.
USD/CAD Mid-Day Outlook
Daily Pivots: (S1) 1.0594; (P) 1.0598; (R1) 1.0601; More.
USD/CAD's correction from 1.0727 is still in progress and dives to as low as 1.0520. At this point, intraday bias remains on the downside for 38.2% retracement of 0.9974 to 1.0727 at 1.0439. But downside should be contained above 1.0273 support and bring rally resumption. On the upside, above 1.0653 minor resistance will suggest that retreat from 1.0727 has completed and recent rise from 0.9974 has possibly resumed for mentioned 1.0791/98 cluster resistance.
In the bigger picture, medium term rise from 0.9056 is still in progress towards mentioned cluster resistance at 1.0791/98 (61.8% retracement of 1.1874 to 0.9056 at 1.0798, 61.8% projection of 0.9056 to 1.0378 from 0.9974 at 1.0791) first. Sustained break of 1.0791/98 will argue that rise from 0.9056 is probably more than just a correction in the long term down trend and will set the stage to test key long term resistance at 1.1874. On the downside, a break below 0.9974 support is needed to confirm that rise from 0.9056 has completed. Otherwise, further rally is still expected even in case of a deep pull back.
Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
23:50 JPY Japan Import Y/Y Jul 18.20% 12.90% 16.20%
23:50 JPY Japan Export Y/Y Jul 8.10% 5.60% -1.70%
23:50 JPY Japan Trade balance (jpy) Jul 91.10B 252.5B 138.6B
06:15 CHF Swiss Trade balance (chf) Jul 2.37B 2.0B 2.41B 2.37B
07:15 CHF Swiss Combined PPI M/M Jul 0.50% 0.30% 0.60%
07:15 CHF Swiss Combined PPI Y/Y Jul 4.90% 4.60% 4.50%
07:30 EUR Germany Manufacturing PMI Aug 49.9 50.5 50.9
07:30 EUR Germany Services PMI Aug 50.6 52.1 53.1
08:00 EUR Eurozone Manufacturing PMI Aug 47.5 47 47.4
08:00 EUR Eurozone Services PMI Aug 48.2 48 48.3
08:30 GBP U.K. Retail sales M/M Jul 0.80% -0.40% -3.90% -4.30%
08:30 GBP U.K. Retail sales Y/Y Jul 2.10% 2.00% 2.20%
09:00 CHF Swiss ZEW index Aug -79.6 N/A -76.9
11:00 CAD Canada CPI M/M Jul 0.40% 0.40% 0.70%
11:00 CAD Canada CPI Y/Y Jul 3.40% 3.40% 3.10%
11:00 CAD Canada CPI core M/M Jul 0.10% 0.20% 0.10%
11:00 CAD Canada CPI core Y/Y Jul 1.50% 1.60% 1.50%
12:30 USD U.S. Jobless claims Aug 432K 450K 450K
14:00 USD U.S. Leading indicators Jul -0.20% -0.10%
14:00 USD U.S. Philadelphia Fed survey Aug -15 -16.3
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FX Thoughts for the Day
Daily Forex Technicals | Written by Kshitij Consultancy Services | Aug 21 08 12:05 GMT |
USD-CHF @ 1.0923/27.... Could dip further if 1.09 breaks.
R: 1.1000-25 / 1.1040-50 / 1.1150-75
S: 1.0950 / 1.0900 / 1.0840-20 / 1.0800
The pair has once again gone into the tight trading range of 100 pips, this time between 1.09-1.10. Overall the pair has a decent Support at 1.09, and if it continues to hold a rise towards the Resistance zone near 1.1030-60.
If on the other hand the Support at 1.09 gives way this week, the week ahead could see some corrective dips.
GBP-USD @ 1.8655/59... Within 1.85-1.87
R: 1.8700-15 / 1.8760-80 / 1.8820
S: 1.8620 / 1.8560-50 / 1.8500
Cable rose in the day to face a stiff Ressitance at 1.87, a level it tested a couple of times over. However, Cable failed at the Resistance and has come off since then to trade at 1.8630. In the process, our TSL on the pair got triggered.
For now, 1.87 is an important Resistance, while 1.85 forms the base of the immediate trading range. A break of this trading range is goin to set the momentum of the pair going ahead from here.
AUD-USD @ 0.8697/701.... Support could spring a bounce
R: 0.8720 / 0.8750 / 0.8790-8806 / 0.8875
S: 0.8675-50 / 0.8640-30 / 0.8600
The Support at 0.8650 is strong and is expected to hold this week. Provided it does, a rise towards 0.8820 could be seen. However, note that the Max High for the day is at 0.8754 and a rise further beyond may not be seen in the day. The bias for now is sideways with the range being 0.86-0.8750. A break of this range would direct the market further from here in the direction of the break.
The overall there is a possibility of upside, however, a long consolidation here (0.8650-0.8750), if seen, could negate the possibility of the rise beyond the range.
Holding:
* Long AUD 10K at 0.8720, Exit at 0.8680 or 0.8730, whichever is seen earlier.
Kshitij Consultancy Service
http://www.fxthoughts.com
Legal disclaimer and risk disclosure
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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USD-CHF @ 1.0923/27.... Could dip further if 1.09 breaks.
R: 1.1000-25 / 1.1040-50 / 1.1150-75
S: 1.0950 / 1.0900 / 1.0840-20 / 1.0800
The pair has once again gone into the tight trading range of 100 pips, this time between 1.09-1.10. Overall the pair has a decent Support at 1.09, and if it continues to hold a rise towards the Resistance zone near 1.1030-60.
If on the other hand the Support at 1.09 gives way this week, the week ahead could see some corrective dips.
GBP-USD @ 1.8655/59... Within 1.85-1.87
R: 1.8700-15 / 1.8760-80 / 1.8820
S: 1.8620 / 1.8560-50 / 1.8500
Cable rose in the day to face a stiff Ressitance at 1.87, a level it tested a couple of times over. However, Cable failed at the Resistance and has come off since then to trade at 1.8630. In the process, our TSL on the pair got triggered.
For now, 1.87 is an important Resistance, while 1.85 forms the base of the immediate trading range. A break of this trading range is goin to set the momentum of the pair going ahead from here.
AUD-USD @ 0.8697/701.... Support could spring a bounce
R: 0.8720 / 0.8750 / 0.8790-8806 / 0.8875
S: 0.8675-50 / 0.8640-30 / 0.8600
The Support at 0.8650 is strong and is expected to hold this week. Provided it does, a rise towards 0.8820 could be seen. However, note that the Max High for the day is at 0.8754 and a rise further beyond may not be seen in the day. The bias for now is sideways with the range being 0.86-0.8750. A break of this range would direct the market further from here in the direction of the break.
The overall there is a possibility of upside, however, a long consolidation here (0.8650-0.8750), if seen, could negate the possibility of the rise beyond the range.
Holding:
* Long AUD 10K at 0.8720, Exit at 0.8680 or 0.8730, whichever is seen earlier.
Kshitij Consultancy Service
http://www.fxthoughts.com
Legal disclaimer and risk disclosure
These views/ forecasts/ suggestions, though proferred with the best of intentions, are based on our reading of the market at the time of writing. They are subject to change without notice.Though the information sources are believed to be reliable, the information is not guaranteed for accuracy. Those acting in the market on the basis of these are themselves responsibly for any profits or losses that might occur, without recourse to us. World financial markets, and especially the Foreign Exchange markets, are inherently risky and it is assumed that those who trade these markets are fully aware of the risk of real loss involved.
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U.S. crude rises above $116 on geopolitics
By Seng Li Peng
SINGAPORE (Reuters) - Oil raced above $116 a barrel on Thursday, a third straight day of gains, on supply concerns after Russia expressed its displeasure over a U.S.-Poland defense pact.
U.S. crude futures gained 80 cents to $116.36 a barrel by 0709 GMT, while London Brent crude climbed 65 cents to $115.01.
Oil prices are down more than 20 percent from peaks hit in mid-July on worries over slowing global demand, but they remain up about 15 percent this year in a multi-year rally driven by Asian economic growth.
"I am more bullish than bearish. I think the market has too quickly discounted geopolitical risks and was too concerned with demand destruction. We should be trending back towards $120-$125 a barrel," said Jonathan Barratt of Commodity Broking Services in Australia, referring to global security threats in Nigeria, Iran, Georgia, and now Russia and the United States.
The United States and Poland signed a deal on Wednesday to station parts of a U.S. missile defense shield in Poland, but Russia, the world's second-largest oil producer, views this as a threat to its own security.
Some Russian politicians and generals have even said Poland must be prepared for a preventive attack on the site in the future.
The pact comes at a time when relations between Russia and the United States have soured following Moscow's military intervention in Georgia.
International tensions took precedence over the biggest weekly increase in U.S. crude inventories, which reversed earlier crude losses during intraday trading on Wednesday.
Crude stockpiles rose 9.4 million barrels to 305.9 million barrels, far surpassing expectations of a 800,000-barrel build-up.
"We see the big picture of demand destruction in the U.S., but there is also a lot of bullish news that is driving the market," said Clarence Chu of Hudson Capital Energy.
He cited factors such as Iran's attempts to obtain nuclear arms under cover of a civilian program and the bad weather season in the United States.
"There are still tropical storms forming in the Atlantic and the hurricane season will last until November," Chu said.
(Editing by Ben Tan)
Read more...
SINGAPORE (Reuters) - Oil raced above $116 a barrel on Thursday, a third straight day of gains, on supply concerns after Russia expressed its displeasure over a U.S.-Poland defense pact.
U.S. crude futures gained 80 cents to $116.36 a barrel by 0709 GMT, while London Brent crude climbed 65 cents to $115.01.
Oil prices are down more than 20 percent from peaks hit in mid-July on worries over slowing global demand, but they remain up about 15 percent this year in a multi-year rally driven by Asian economic growth.
"I am more bullish than bearish. I think the market has too quickly discounted geopolitical risks and was too concerned with demand destruction. We should be trending back towards $120-$125 a barrel," said Jonathan Barratt of Commodity Broking Services in Australia, referring to global security threats in Nigeria, Iran, Georgia, and now Russia and the United States.
The United States and Poland signed a deal on Wednesday to station parts of a U.S. missile defense shield in Poland, but Russia, the world's second-largest oil producer, views this as a threat to its own security.
Some Russian politicians and generals have even said Poland must be prepared for a preventive attack on the site in the future.
The pact comes at a time when relations between Russia and the United States have soured following Moscow's military intervention in Georgia.
International tensions took precedence over the biggest weekly increase in U.S. crude inventories, which reversed earlier crude losses during intraday trading on Wednesday.
Crude stockpiles rose 9.4 million barrels to 305.9 million barrels, far surpassing expectations of a 800,000-barrel build-up.
"We see the big picture of demand destruction in the U.S., but there is also a lot of bullish news that is driving the market," said Clarence Chu of Hudson Capital Energy.
He cited factors such as Iran's attempts to obtain nuclear arms under cover of a civilian program and the bad weather season in the United States.
"There are still tropical storms forming in the Atlantic and the hurricane season will last until November," Chu said.
(Editing by Ben Tan)
Read more...
Asia stocks, U.S. dollar drop with oil above $116
By Kevin Plumberg
HONG KONG (Reuters) - Asian stocks fell on Thursday on investors worried about the ability of the region's exporters to weather a widespread economic slowdown, while the U.S. dollar slid as oil prices rose above $116, halting the currency's rally.
European stocks were expected to open as much as 0.7 percent lower as higher oil prices rekindled worries about inflation and consumer spending, according to financial bookrunners, with the euro pushing up toward $1.48.
The U.S. housing market, the source of a financial crisis that threatens to drag all Group of Seven rich nations into a recession, remained a chief concern, as shares of top mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) tumbled overnight to their lowest in nearly 20 years.
Instability in the financial sector continued to ripple through markets and breed nervousness. The Federal Reserve acted on rumors last month and called Credit Suisse Group (CSGN.VX: Quote, Profile, Research, Stock Buzz) to see if it had pulled a credit line from U.S. investment bank Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the Wall Street Journal said.
Crude prices rose for a third day after an agreement on a U.S.-Poland missile shield drew a cold response from Russia, the world's second-largest oil producer.
U.S. crude futures jumped by more than $1 to $116.84 a barrel, adding to cost headaches and profit pressures for corporate managers already frazzled by shrinking demand.
"Exporters don't have power to keep rising as the U.S. and European economies are getting worse and the demand volume is declining," said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.
Shares of high profile exporters such as Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz), Samsung Electronics Co Ltd (005930.KS: Quote, Profile, Research, Stock Buzz) and Taiwan Semiconductor (2330.TW: Quote, Profile, Research, Stock Buzz) were among the top drags on their respective indexes.
Japan's Nikkei share average .N225 finished down 0.8 percent, within striking distance of chart support around 12,670 points, below which would mark a 4-1/2-month low.
Outside Japan, Asia-Pacific shares fell 1.4 percent, approaching a 17-month low touched on Tuesday, according to an MSCI index .MIAPJ00000PUS.
Babcock & Brown Ltd stock (BNB.AX: Quote, Profile, Research, Stock Buzz) plunged 35 percent after the investment firm's chief executive and chairman stepped down, leading the decliners on Australia's S&P/ASX 200 index , which fell 1 percent.
Babcock's shares have lost nearly 90 percent in value this year as worries grow about the viability of its debt-funded investment model amid the global credit crunch.
Hong Kong's Hang Seng index .HSI dropped 1.8 percent after dipping to a 1-year low on Wednesday, with a fall in China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz) shares leading the way.
The Shanghai composite index declined 3.1 percent .SSEC, unable to sustain momentum after posting its biggest single-day rise in four months on Wednesday.
NO WORD FROM BEIJING
Hopes for a near-term fiscal stimulus package from Beijing faded amid doubts about the need for government support in what is still the world's fastest growing major economy.
Louis Wong, research director with Phillip Securities in Hong Kong, said markets were unlikely to get a helping hand from China's government any time soon, especially since the country's financial sector is in relatively good shape compared with Europe and the United States.
"There have been no bank failures in China and mainland banks are reporting high double digit earnings growth, so what is the logic for a stimulus package?" he said.
Unidentified officials with China's National Development and Reform Commission and the Ministry of Finance denied or said they were unaware of market talk that China was considering a 200-400 billion yuan stimulus plan, according to the International Finance News.
There were also signs that slack demand from developed economies for Asian exports is shifting the global trade dynamic. July figures from Japan showed exports to China topped exports to the United States for the first time since World War II.
Whether demand from China alone could support the entire global economy is another issue altogether. Expectations for the global economy have fallen to their lowest level in nearly 18 years, with the outlook in Western Europe and Asia deteriorating, the Ifo economic research institute said on Wednesday.
Oil price gains helped hold back the U.S. dollar, which has rallied more than 8 percent in the last month against the euro on increasing signs the European Central Bank will not raise interest rates this year to fight inflation as the economy shrinks.
The euro was up 0.35 percent at $1.4795, well above a six-month low of $1.4630 touched on Tuesday, but below a record high of $1.6040 in mid-July.
Against the yen, the dollar dropped 0.8 percent to 108.92 yen, almost 2 yen below a seven-month high of 110.67 yen hit last week.
Spot gold edged up 0.6 percent to around $817.40 an ounce as firmer oil prices encouraged safe-haven asset buying.
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HONG KONG (Reuters) - Asian stocks fell on Thursday on investors worried about the ability of the region's exporters to weather a widespread economic slowdown, while the U.S. dollar slid as oil prices rose above $116, halting the currency's rally.
European stocks were expected to open as much as 0.7 percent lower as higher oil prices rekindled worries about inflation and consumer spending, according to financial bookrunners, with the euro pushing up toward $1.48.
The U.S. housing market, the source of a financial crisis that threatens to drag all Group of Seven rich nations into a recession, remained a chief concern, as shares of top mortgage finance companies Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) tumbled overnight to their lowest in nearly 20 years.
Instability in the financial sector continued to ripple through markets and breed nervousness. The Federal Reserve acted on rumors last month and called Credit Suisse Group (CSGN.VX: Quote, Profile, Research, Stock Buzz) to see if it had pulled a credit line from U.S. investment bank Lehman Brothers Holdings Inc (LEH.N: Quote, Profile, Research, Stock Buzz), the Wall Street Journal said.
Crude prices rose for a third day after an agreement on a U.S.-Poland missile shield drew a cold response from Russia, the world's second-largest oil producer.
U.S. crude futures jumped by more than $1 to $116.84 a barrel, adding to cost headaches and profit pressures for corporate managers already frazzled by shrinking demand.
"Exporters don't have power to keep rising as the U.S. and European economies are getting worse and the demand volume is declining," said Takahiko Murai, general manager of equities at Nozomi Securities in Tokyo.
Shares of high profile exporters such as Honda Motor Co (7267.T: Quote, Profile, Research, Stock Buzz), Samsung Electronics Co Ltd (005930.KS: Quote, Profile, Research, Stock Buzz) and Taiwan Semiconductor (2330.TW: Quote, Profile, Research, Stock Buzz) were among the top drags on their respective indexes.
Japan's Nikkei share average .N225 finished down 0.8 percent, within striking distance of chart support around 12,670 points, below which would mark a 4-1/2-month low.
Outside Japan, Asia-Pacific shares fell 1.4 percent, approaching a 17-month low touched on Tuesday, according to an MSCI index .MIAPJ00000PUS.
Babcock & Brown Ltd stock (BNB.AX: Quote, Profile, Research, Stock Buzz) plunged 35 percent after the investment firm's chief executive and chairman stepped down, leading the decliners on Australia's S&P/ASX 200 index , which fell 1 percent.
Babcock's shares have lost nearly 90 percent in value this year as worries grow about the viability of its debt-funded investment model amid the global credit crunch.
Hong Kong's Hang Seng index .HSI dropped 1.8 percent after dipping to a 1-year low on Wednesday, with a fall in China Mobile (0941.HK: Quote, Profile, Research, Stock Buzz) shares leading the way.
The Shanghai composite index declined 3.1 percent .SSEC, unable to sustain momentum after posting its biggest single-day rise in four months on Wednesday.
NO WORD FROM BEIJING
Hopes for a near-term fiscal stimulus package from Beijing faded amid doubts about the need for government support in what is still the world's fastest growing major economy.
Louis Wong, research director with Phillip Securities in Hong Kong, said markets were unlikely to get a helping hand from China's government any time soon, especially since the country's financial sector is in relatively good shape compared with Europe and the United States.
"There have been no bank failures in China and mainland banks are reporting high double digit earnings growth, so what is the logic for a stimulus package?" he said.
Unidentified officials with China's National Development and Reform Commission and the Ministry of Finance denied or said they were unaware of market talk that China was considering a 200-400 billion yuan stimulus plan, according to the International Finance News.
There were also signs that slack demand from developed economies for Asian exports is shifting the global trade dynamic. July figures from Japan showed exports to China topped exports to the United States for the first time since World War II.
Whether demand from China alone could support the entire global economy is another issue altogether. Expectations for the global economy have fallen to their lowest level in nearly 18 years, with the outlook in Western Europe and Asia deteriorating, the Ifo economic research institute said on Wednesday.
Oil price gains helped hold back the U.S. dollar, which has rallied more than 8 percent in the last month against the euro on increasing signs the European Central Bank will not raise interest rates this year to fight inflation as the economy shrinks.
The euro was up 0.35 percent at $1.4795, well above a six-month low of $1.4630 touched on Tuesday, but below a record high of $1.6040 in mid-July.
Against the yen, the dollar dropped 0.8 percent to 108.92 yen, almost 2 yen below a seven-month high of 110.67 yen hit last week.
Spot gold edged up 0.6 percent to around $817.40 an ounce as firmer oil prices encouraged safe-haven asset buying.
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Temasek says assets up 13 pct, eyes Western banks
(Updates with Temasek comments, details)
By Kevin Lim and Saeed Azhar
SINGAPORE, Aug 21 (Reuters) - Singapore sovereign wealth fund Temasek Holdings said on Thursday its assets rose 13 percent in the year to March 2008 and it was prepared to invest more money in Western banks if the opportunity arose.
"Growing with our blue chip companies and our direct investment activities, Temasek now owns a net portfolio of about S$185 billion ($131 billion) at market value as at 31 March 2008," Chairman S Dhanabalan said in a speech to a group of Singapore entrepreneurs.
He added that the Singapore fund [TEM.UL], which already owns large stakes in lenders such as Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) and Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), would look at opportunities to buy more shares in Western banks.
Sovereign funds from Asia and the Middle East have pumped billions into Wall Street and European banks hit by losses from the U.S. mortage market, though banking stocks have slid this year amid writedowns on risky debt.
"Our total shareholder return measuring changes in shareholder funds, including dividends paid and excluding new capital, is a healthy 17 percent compounded annually since inception," Dhanabalan said.
Temasek said in its annual report for the financial year to March 2007 that its assets stood at S$164 billion. It will release its 2007/2008 annual report on Tuesday.
The Singapore government had injected a little under S$30 billion in assets and cash into Temasek since it was set up in 1974, Dhanabalan said.
Temasek, the smaller of Singapore's two wealth funds, has been seeking investments outside its core markets of Asia excluding Japan in search of higher returns and to diversify its portfolio.
In his address, Dhanabalan said Singapore and Asia account for nearly 75 percent of Temasek's investments, down from 78 percent reported a year earlier.
Dhanabalan said Temasek aims to have in the long run about one third of its assets in Singapore, another one third in emerging markets and the remainder in the developed markets.
It is recruiting staff for new offices in Mexico and Brazil that will be set up this year [ID:nSP85829].
Temasek is also looking at Africa and the Middle East, and has asked a small number of staff to spend part of their time looking at potential investments in the region, a source familiar with the firm said.
Dhanabalan, who has been chairman of Temasek since September 1996, is a former Cabinet minister who once helmed the city-state's trade & industry and national development ministries. (Editing by Neil Chatterjee)
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By Kevin Lim and Saeed Azhar
SINGAPORE, Aug 21 (Reuters) - Singapore sovereign wealth fund Temasek Holdings said on Thursday its assets rose 13 percent in the year to March 2008 and it was prepared to invest more money in Western banks if the opportunity arose.
"Growing with our blue chip companies and our direct investment activities, Temasek now owns a net portfolio of about S$185 billion ($131 billion) at market value as at 31 March 2008," Chairman S Dhanabalan said in a speech to a group of Singapore entrepreneurs.
He added that the Singapore fund [TEM.UL], which already owns large stakes in lenders such as Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) and Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), would look at opportunities to buy more shares in Western banks.
Sovereign funds from Asia and the Middle East have pumped billions into Wall Street and European banks hit by losses from the U.S. mortage market, though banking stocks have slid this year amid writedowns on risky debt.
"Our total shareholder return measuring changes in shareholder funds, including dividends paid and excluding new capital, is a healthy 17 percent compounded annually since inception," Dhanabalan said.
Temasek said in its annual report for the financial year to March 2007 that its assets stood at S$164 billion. It will release its 2007/2008 annual report on Tuesday.
The Singapore government had injected a little under S$30 billion in assets and cash into Temasek since it was set up in 1974, Dhanabalan said.
Temasek, the smaller of Singapore's two wealth funds, has been seeking investments outside its core markets of Asia excluding Japan in search of higher returns and to diversify its portfolio.
In his address, Dhanabalan said Singapore and Asia account for nearly 75 percent of Temasek's investments, down from 78 percent reported a year earlier.
Dhanabalan said Temasek aims to have in the long run about one third of its assets in Singapore, another one third in emerging markets and the remainder in the developed markets.
It is recruiting staff for new offices in Mexico and Brazil that will be set up this year [ID:nSP85829].
Temasek is also looking at Africa and the Middle East, and has asked a small number of staff to spend part of their time looking at potential investments in the region, a source familiar with the firm said.
Dhanabalan, who has been chairman of Temasek since September 1996, is a former Cabinet minister who once helmed the city-state's trade & industry and national development ministries. (Editing by Neil Chatterjee)
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Vector Capital offers $13/share for Aladdin Knowledge
Aug 21 (Reuters) - Software security company SafeNet Inc, controlled by investment firm Vector Capital, said it offered to acquire Israel-based rival Aladdin Knowledge Systems Ltd. for $13 a share.
The offer, announced early Thursday, is 14 percent more than Aladdin's closing share price on Tuesday.
It values the company at about $184.5 million, based on 14.2 million shares outstanding as on July 21.
The proposal comes after Vector Capital withdrew an offer to buy out consumer software developer Corel Corp , in which it holds a majority stake.
As a potential alternative to a full buyout, SafeNet also proposed an acquisition of Aladdin's digital rights management software business for $125 million to 135 million, with Aladdin repurchasing its shares held by Vector Capital.
Digital rights management software business accounts for more than half of Aladdin Knowledge's revenue.
SafeNet said it made the offer to Aladdin on Aug. 16. On Aug. 20, Aladdin said it had received the offer and was reviewing the proposal.
Apart from Corel and SafeNet, the technology-focused investment firm has acquired companies such as Register.com, WatchGuard Technologies and WinZip.
Aladdin's shares have lost more than a third of their value in the last three months, hurt by a drop in the company's second-quarter earnings and a weak profit outlook.
The shares closed at $12.69 Wednesday on Nasdaq. (Reporting by Saumyadeb Chakrabarty in Bangalore; Editing by Vinu Pilakkott)
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The offer, announced early Thursday, is 14 percent more than Aladdin's closing share price on Tuesday.
It values the company at about $184.5 million, based on 14.2 million shares outstanding as on July 21.
The proposal comes after Vector Capital withdrew an offer to buy out consumer software developer Corel Corp , in which it holds a majority stake.
As a potential alternative to a full buyout, SafeNet also proposed an acquisition of Aladdin's digital rights management software business for $125 million to 135 million, with Aladdin repurchasing its shares held by Vector Capital.
Digital rights management software business accounts for more than half of Aladdin Knowledge's revenue.
SafeNet said it made the offer to Aladdin on Aug. 16. On Aug. 20, Aladdin said it had received the offer and was reviewing the proposal.
Apart from Corel and SafeNet, the technology-focused investment firm has acquired companies such as Register.com, WatchGuard Technologies and WinZip.
Aladdin's shares have lost more than a third of their value in the last three months, hurt by a drop in the company's second-quarter earnings and a weak profit outlook.
The shares closed at $12.69 Wednesday on Nasdaq. (Reporting by Saumyadeb Chakrabarty in Bangalore; Editing by Vinu Pilakkott)
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D. Post defends U.S. restructuring in McCain letter
DUESSELDORF, Germany, Aug 21 (Reuters) - The chief executive of DHL parent Deutsche Post AG has defended the company's controversial U.S. restructuring measures in a letter to U.S. Senator John McCain.
There is no alternative to the plan, which could entail thousands of job cuts, Frank Appel wrote in the letter, a copy of which was obtained by Reuters on Thursday. The plan, which envisions using rival UPS for express air deliveries, will not curtail competition with UPS, he wrote.
In May, Deutsche Post announced plans for a partnership with rival UPS as part of a $2 billion restructuring of its DHL Express business in the United States. U.S. presidential candidates McCain and Barack Obama have expressed concerns about the agreement. (Reporting by Matthias Inverardi) (michael.shields@thomsonreuters.com, Reuters Messaging: michael.shields.reuters.com@reuters.net; +49 69 7565 1266))
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There is no alternative to the plan, which could entail thousands of job cuts, Frank Appel wrote in the letter, a copy of which was obtained by Reuters on Thursday. The plan, which envisions using rival UPS for express air deliveries, will not curtail competition with UPS, he wrote.
In May, Deutsche Post announced plans for a partnership with rival UPS as part of a $2 billion restructuring of its DHL Express business in the United States. U.S. presidential candidates McCain and Barack Obama have expressed concerns about the agreement. (Reporting by Matthias Inverardi) (michael.shields@thomsonreuters.com, Reuters Messaging: michael.shields.reuters.com@reuters.net; +49 69 7565 1266))
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Bank of Korea Sees No Problem With Fannie Investments
By William Sim
Aug. 21 (Bloomberg) -- The Bank of Korea sees no problem in recovering its principal investments in senior bonds issued by Fannie Mae and Freddie Mac.
There is ``no chance'' the U.S. government will buy back the bonds at a discount if it decides to bail out the mortgage- finance companies, the central bank said in a statement today.
U.S. Treasury Secretary Henry Paulson received authority from Congress last month to pump unlimited amounts of capital into Fannie and Freddie in an emergency after the debt yields rose and their shares tumbled 90 percent from a year earlier.
The yields on Fannie and Freddie's senior debt fell after their executives met with Treasury officials on Aug. 20, on expectations recovery of the principal will be ``more certain'' if the bailout plan takes shape, the Bank of Korea said.
Shares in Fannie and Freddie, government-chartered companies that together account for almost half the $12 trillion U.S. mortgage market, reached their lowest levels in two decades yesterday. Their preferred shares have lost about one-third of their value this week.
Central banks pared purchases of new Fannie and Freddie debt by more than a quarter in the past two weeks.
To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net.
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Aug. 21 (Bloomberg) -- The Bank of Korea sees no problem in recovering its principal investments in senior bonds issued by Fannie Mae and Freddie Mac.
There is ``no chance'' the U.S. government will buy back the bonds at a discount if it decides to bail out the mortgage- finance companies, the central bank said in a statement today.
U.S. Treasury Secretary Henry Paulson received authority from Congress last month to pump unlimited amounts of capital into Fannie and Freddie in an emergency after the debt yields rose and their shares tumbled 90 percent from a year earlier.
The yields on Fannie and Freddie's senior debt fell after their executives met with Treasury officials on Aug. 20, on expectations recovery of the principal will be ``more certain'' if the bailout plan takes shape, the Bank of Korea said.
Shares in Fannie and Freddie, government-chartered companies that together account for almost half the $12 trillion U.S. mortgage market, reached their lowest levels in two decades yesterday. Their preferred shares have lost about one-third of their value this week.
Central banks pared purchases of new Fannie and Freddie debt by more than a quarter in the past two weeks.
To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net.
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Relatives grieve as Spanair crash probe begins
By Martin Roberts
MADRID, Aug 21 (Reuters) - Grieving relatives and medical staff on Thursday tried to identify the badly-burned bodies of victims of the crash of a Spanish jet in which 153 people were killed as it took off on a holiday flight from Madrid airport.
The investigation into the crash, Spain's worst aviation disaster since 1983, also got underway on Thursday with officials seeking to find out why the Spanair MD-82 jet aborted an initial take-off attempt shortly before the accident.
"The causes will have to be provided not only by the company but also by the black boxes, which compile all the flight data," Development Minister Magdalena Alvarez said on Wednesday night.
Relatives gathered at an improvised morgue in a convention centre to identify the bodies, many of which were badly burned.
Only 19 people of the 166 passengers and nine crew aboard survived. Rescue officials said many passengers were children.
"I'd kill the bastard who did this," a driver shouted at Spanish state television cameras outside the convention centre.
Another passenger said: "Knowing the plane was bad, it took off with my seven-year-old niece."
The plane was 15-years-old and passed its annual inspection last year, Alvarez said.
Spanair Flight JK5022, bound for Las Palmas in the Canary Islands, was originally due to take off at 1 p.m. But after moving away from the terminal and approaching the runway it returned because of a mechanical problem, a source close to the situation told Reuters.
On its second take-off attempt, it shot off the runway, broke into piece and burst into flames. Survivors were flung from the plane by the force of the impact and landed in a stream, saving them from more severe burns, a rescue official said.
Alvarez said the cause of the accident seemed to be "an error in take-off". But Spanish media and a source close to the situation said the plane's left engine, made by Pratt & Whitney, had caught fire.
The flight was a code-sharing operation with Lufthansa serving the Canary Islands, a popular holiday destination for tourists from throughout Europe.
A passenger list published by Spanair, which is owned by Scandinavian Airlines Systems (SAS), showed mostly Spanish names but officials said there were also passengers from Sweden, Germany, the Netherlands and Chile.
Spanish Prime Minister Jose Luis Rodriguez Zapatero interrupted his holidays in southern Spain to fly to the scene.
The Spanish Olympic Committee said the Spanish flag would fly at half mast in the Olympic village in Beijing. Spain's national soccer team wore black armbands and stood for a minute's silence at a friendly match with Denmark on Wednesday night.
Spanair has been struggling with high fuel prices and tough competition. It announced it was laying off 1,062 staff and cutting routes after losing $81 million in the first half of the year.
Hours before the crash, Spanair's pilots threatened to strike. SAS has been trying to sell Spanair since last year.
The MD-82 is a medium-range single-aisle plane, popular with regional airlines. It is a member of the MD-80 family of planes made by U.S. manufacturer Boeing Co.
The crash appeared to be Spain's worst since 1983, when an Avianca Boeing 747 crashed approaching the same airport, killing 181. (Reporting by Martin Roberts; Editing by Angus MacSwan)
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MADRID, Aug 21 (Reuters) - Grieving relatives and medical staff on Thursday tried to identify the badly-burned bodies of victims of the crash of a Spanish jet in which 153 people were killed as it took off on a holiday flight from Madrid airport.
The investigation into the crash, Spain's worst aviation disaster since 1983, also got underway on Thursday with officials seeking to find out why the Spanair MD-82 jet aborted an initial take-off attempt shortly before the accident.
"The causes will have to be provided not only by the company but also by the black boxes, which compile all the flight data," Development Minister Magdalena Alvarez said on Wednesday night.
Relatives gathered at an improvised morgue in a convention centre to identify the bodies, many of which were badly burned.
Only 19 people of the 166 passengers and nine crew aboard survived. Rescue officials said many passengers were children.
"I'd kill the bastard who did this," a driver shouted at Spanish state television cameras outside the convention centre.
Another passenger said: "Knowing the plane was bad, it took off with my seven-year-old niece."
The plane was 15-years-old and passed its annual inspection last year, Alvarez said.
Spanair Flight JK5022, bound for Las Palmas in the Canary Islands, was originally due to take off at 1 p.m. But after moving away from the terminal and approaching the runway it returned because of a mechanical problem, a source close to the situation told Reuters.
On its second take-off attempt, it shot off the runway, broke into piece and burst into flames. Survivors were flung from the plane by the force of the impact and landed in a stream, saving them from more severe burns, a rescue official said.
Alvarez said the cause of the accident seemed to be "an error in take-off". But Spanish media and a source close to the situation said the plane's left engine, made by Pratt & Whitney, had caught fire.
The flight was a code-sharing operation with Lufthansa serving the Canary Islands, a popular holiday destination for tourists from throughout Europe.
A passenger list published by Spanair, which is owned by Scandinavian Airlines Systems (SAS), showed mostly Spanish names but officials said there were also passengers from Sweden, Germany, the Netherlands and Chile.
Spanish Prime Minister Jose Luis Rodriguez Zapatero interrupted his holidays in southern Spain to fly to the scene.
The Spanish Olympic Committee said the Spanish flag would fly at half mast in the Olympic village in Beijing. Spain's national soccer team wore black armbands and stood for a minute's silence at a friendly match with Denmark on Wednesday night.
Spanair has been struggling with high fuel prices and tough competition. It announced it was laying off 1,062 staff and cutting routes after losing $81 million in the first half of the year.
Hours before the crash, Spanair's pilots threatened to strike. SAS has been trying to sell Spanair since last year.
The MD-82 is a medium-range single-aisle plane, popular with regional airlines. It is a member of the MD-80 family of planes made by U.S. manufacturer Boeing Co.
The crash appeared to be Spain's worst since 1983, when an Avianca Boeing 747 crashed approaching the same airport, killing 181. (Reporting by Martin Roberts; Editing by Angus MacSwan)
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Japan's Mizuho to invest in U.S. Evercore Partners
TOKYO, Aug 21 (Reuters) - Mizuho Financial Group , Japan's second-largest bank by assets, said it would invest $120 million in U.S. boutique investment bank Evercore Partners , marking the latest push by a Japanese financial firm into the world's largest economy.
Mizuho said in a statement it had agreed to buy $120 million worth of convertible bonds in the U.S. bank.
If converted to common stock, the bonds would give the Japanese bank a 14.7 percent stake in Evercore in terms of voting rights, Mizuho said.
Mizuho Securities, the Japanese bank's brokerage arm, has had an alliance with Evercore since 2006, but the new agreement will extend cooperation to M&A advisory services, Mizuho said.
The two firms will "propose and advise on North America/Japan cross-border transactions", Mizuho said. (Reporting by David Dolan; Editing by Michael Watson)
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Mizuho said in a statement it had agreed to buy $120 million worth of convertible bonds in the U.S. bank.
If converted to common stock, the bonds would give the Japanese bank a 14.7 percent stake in Evercore in terms of voting rights, Mizuho said.
Mizuho Securities, the Japanese bank's brokerage arm, has had an alliance with Evercore since 2006, but the new agreement will extend cooperation to M&A advisory services, Mizuho said.
The two firms will "propose and advise on North America/Japan cross-border transactions", Mizuho said. (Reporting by David Dolan; Editing by Michael Watson)
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Japan's Crude Imports Rise on Demand From Utilities
By [bn:PRSN=1] Shigeru Sato [] and [bn:PRSN=1] Yuji Okada []
Aug. 21 (Bloomberg) -- Japan's crude oil imports increased in July as regional power utilities burned more fossil fuels to make up for reduced nuclear generation in the world's third- largest energy-consuming nation.
Japan purchased 20.3 million kiloliters, or about 4.12 million barrels a day, of oil last month, up 2.8 percent from a year earlier, according to a finance ministry report released in Tokyo today. The oil import bill rose 69 percent to 1.79 trillion yen ($16.3 billion) as crude oil prices remained above $110 a barrel.
The indefinite closure of Tokyo Electric Power Co.'s Kashiwazaki-Kariwa nuclear plant, which was shut after an earthquake on July 16, 2007, prompted the utility to switch to oil and gas-fired generation.
Japan's fuel oil use at thermal power plants increased by 7.6 percent in June from a year earlier, in contrast to the decline in consumption of other refined products such as gasoline.
Liquefied natural gas imports rose 7.6 percent last month to 6.06 million metric tons, according to the trade report. Coal imports gained 5.4 percent to 17.5 million tons.
Benchmark crude oil prices in New York climbed 67 percent in the past 12 months, sending local retail gasoline, kerosene and gasoil prices to record levels. Oil traded at $115.87 a barrel in after-hours trading at 9:03 a.m. Tokyo time.
To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.
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Aug. 21 (Bloomberg) -- Japan's crude oil imports increased in July as regional power utilities burned more fossil fuels to make up for reduced nuclear generation in the world's third- largest energy-consuming nation.
Japan purchased 20.3 million kiloliters, or about 4.12 million barrels a day, of oil last month, up 2.8 percent from a year earlier, according to a finance ministry report released in Tokyo today. The oil import bill rose 69 percent to 1.79 trillion yen ($16.3 billion) as crude oil prices remained above $110 a barrel.
The indefinite closure of Tokyo Electric Power Co.'s Kashiwazaki-Kariwa nuclear plant, which was shut after an earthquake on July 16, 2007, prompted the utility to switch to oil and gas-fired generation.
Japan's fuel oil use at thermal power plants increased by 7.6 percent in June from a year earlier, in contrast to the decline in consumption of other refined products such as gasoline.
Liquefied natural gas imports rose 7.6 percent last month to 6.06 million metric tons, according to the trade report. Coal imports gained 5.4 percent to 17.5 million tons.
Benchmark crude oil prices in New York climbed 67 percent in the past 12 months, sending local retail gasoline, kerosene and gasoil prices to record levels. Oil traded at $115.87 a barrel in after-hours trading at 9:03 a.m. Tokyo time.
To contact the reporters on this story: Shigeru Sato in Tokyo at ssato10@bloomberg.net; Yuji Okada in Tokyo at yokada6@bloomberg.net.
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New Zealand Economy May Rebound as Spending, Migration Gains
By Tracy Withers
Aug. 21 (Bloomberg) -- New Zealand's economy, which was probably in a recession in the first half of this year, may have passed the low-point in demand amid early signs of a pickup in immigration and spending, economists say.
Reports today showed annual immigration growth rose to a seven-month high in July, while spending on credit and debit cards rose for a second time in three months. Two surveys this week showed consumers are more confident about the economy and the housing market.
The $105 billion economy contracted in the first quarter and probably shrank in the three months ended June 30, putting it into the first recession since 1998, according to the Treasury Department. Consumer spending posted a record plunge in the second quarter as soaring fuel prices and credit costs crimped demand.
``Things are getting better, but if they weren't you would be getting worried,'' said Robin Clements, chief New Zealand economist at UBS Ag in Christchurch. ``The first part of a recovery is finding the bottom. Maybe there are some hints that is occurring.''
UBS expects the economy will probably shrink in the third quarter before expanding in the final three months of this year. The Treasury estimates annual growth in 2008 will be as low as 0.5 percent compared with 3.1 percent in 2007.
``The foundations are starting to fall into place,'' said Clements. ``We want to see confidence on the mend. It has been at perilously low levels and has to get better.''
More Migrants
The number of permanent migrant arrivals exceeded departures by 5,201 in the 12 months ended July 31, the most since December, Statistics New Zealand said in a report released today in Wellington.
Rising immigration buoys spending and demand for houses. The number of consumers saying it is a good time to buy a house rose last month to the highest since 2003, ASB Bank Ltd. said in a survey published on Aug. 20.
Consumers were less pessimistic about the outlook for the economy, according to a Roy Morgan poll conducted in the two weeks ended Aug. 10. Fifty percent of respondents said they would be better off in a year, the highest measure since March.
Spending on debit and credit cards rose 0.9 percent from June, according to a second report today from the statistics agency. The value of transactions excluding fuel, workshop and vehicle sales gained 1.2 percent.
Higher spending in July follows a report last week that retail sales increased 0.9 percent in June, which was more than economists forecast.
Fuel Prices
To be sure, monthly spending figures aren't adjusted for inflation and are being bolstered by higher fuel and food prices that leave consumers with less to spend on discretionary items. Excluding inflation, retail sales fell a record 1.5 percent in the second quarter, the biggest drop on record.
Economists say the latest indicators are a sign the economy isn't deteriorating rather than evidence of a dramatic turnaround.
``Things are not getting any worse,'' said Mark Walton, markets economist at Bank of New Zealand Ltd. in Wellington. ``We have seen some early signs of consolidation, but we think growth for the rest of this year will be pretty feeble.''
Bank of New Zealand also expects the economy will contract in the third quarter. Walton said lower interest rates, a fall in the currency and income tax cuts from Oct. 1 will combine to boost the economy in 2009.
Reserve Bank Governor Alan Bollard cut the benchmark interest rate a quarter point to 8 percent last month, the first reduction in five years, and said more declines are likely. The rate is likely to drop to 6.5 percent in the next year, according to a Credit Suisse index based on swaps trading.
New Zealand's dollar has slumped 11 percent against the U.S. currency the past six months, the worst performer of 16 major currencies tracked by Bloomberg.
The falling exchange rate and high global prices for butter, cheese and other commodities will bolster exports, which make up 30 percent of the economy.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.
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Aug. 21 (Bloomberg) -- New Zealand's economy, which was probably in a recession in the first half of this year, may have passed the low-point in demand amid early signs of a pickup in immigration and spending, economists say.
Reports today showed annual immigration growth rose to a seven-month high in July, while spending on credit and debit cards rose for a second time in three months. Two surveys this week showed consumers are more confident about the economy and the housing market.
The $105 billion economy contracted in the first quarter and probably shrank in the three months ended June 30, putting it into the first recession since 1998, according to the Treasury Department. Consumer spending posted a record plunge in the second quarter as soaring fuel prices and credit costs crimped demand.
``Things are getting better, but if they weren't you would be getting worried,'' said Robin Clements, chief New Zealand economist at UBS Ag in Christchurch. ``The first part of a recovery is finding the bottom. Maybe there are some hints that is occurring.''
UBS expects the economy will probably shrink in the third quarter before expanding in the final three months of this year. The Treasury estimates annual growth in 2008 will be as low as 0.5 percent compared with 3.1 percent in 2007.
``The foundations are starting to fall into place,'' said Clements. ``We want to see confidence on the mend. It has been at perilously low levels and has to get better.''
More Migrants
The number of permanent migrant arrivals exceeded departures by 5,201 in the 12 months ended July 31, the most since December, Statistics New Zealand said in a report released today in Wellington.
Rising immigration buoys spending and demand for houses. The number of consumers saying it is a good time to buy a house rose last month to the highest since 2003, ASB Bank Ltd. said in a survey published on Aug. 20.
Consumers were less pessimistic about the outlook for the economy, according to a Roy Morgan poll conducted in the two weeks ended Aug. 10. Fifty percent of respondents said they would be better off in a year, the highest measure since March.
Spending on debit and credit cards rose 0.9 percent from June, according to a second report today from the statistics agency. The value of transactions excluding fuel, workshop and vehicle sales gained 1.2 percent.
Higher spending in July follows a report last week that retail sales increased 0.9 percent in June, which was more than economists forecast.
Fuel Prices
To be sure, monthly spending figures aren't adjusted for inflation and are being bolstered by higher fuel and food prices that leave consumers with less to spend on discretionary items. Excluding inflation, retail sales fell a record 1.5 percent in the second quarter, the biggest drop on record.
Economists say the latest indicators are a sign the economy isn't deteriorating rather than evidence of a dramatic turnaround.
``Things are not getting any worse,'' said Mark Walton, markets economist at Bank of New Zealand Ltd. in Wellington. ``We have seen some early signs of consolidation, but we think growth for the rest of this year will be pretty feeble.''
Bank of New Zealand also expects the economy will contract in the third quarter. Walton said lower interest rates, a fall in the currency and income tax cuts from Oct. 1 will combine to boost the economy in 2009.
Reserve Bank Governor Alan Bollard cut the benchmark interest rate a quarter point to 8 percent last month, the first reduction in five years, and said more declines are likely. The rate is likely to drop to 6.5 percent in the next year, according to a Credit Suisse index based on swaps trading.
New Zealand's dollar has slumped 11 percent against the U.S. currency the past six months, the worst performer of 16 major currencies tracked by Bloomberg.
The falling exchange rate and high global prices for butter, cheese and other commodities will bolster exports, which make up 30 percent of the economy.
To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.
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