Corn, Soybeans Fall as Lehman Bankruptcy May Signal Slowdown

By Jeff Wilson

Sept. 15 (Bloomberg) -- Corn and soybeans may fall in Chicago as the bankruptcy filing by Lehman Brothers Holdings Inc., the biggest in history, increased speculation that a global economic slowdown will reduce demand for food, feed and fuel.

U.S. equity-index futures and stocks in Asia and Europe fell after Lehman's filing and Bank of America Corp. agreed to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for $50 billion in an emergency deal. Corn futures have fallen 31 percent from a record in June and soybeans are down 29 percent since rising to an all-time high in July.

``You have a liquidity crisis and people are getting out of positions,'' said Roy Huckabay, an executive vice president of the Linn Group in Chicago. ``This crisis is spreading overseas, and people are getting very concerned about foreign demand'' for food, livestock feed and alternative fuels made from corn and soybeans, the two biggest U.S. crops, Huckabay said.

Corn futures for December delivery fell 12.75 cents, or 2.3 percent, to $5.505 a bushel overnight on the Chicago Board of Trade. A close at that price would be the biggest drop since Sept. 5. Corn jumped the CBOT's 30-cent daily limit on Sept. 12, when the government cut its forecast for this year's U.S. crop. The most-active futures rose to a record $7.9925 on June 27.

Soybean futures for November delivery fell 34.75 cents, or 2.9 percent, to $11.6725 a bushel overnight in Chicago. A close at that price would be the biggest drop since Sept. 5. The most- active futures touched a record $16.3675 on July 3.

Crude oil in New York tumbled 7 percent to a seven-month low earlier today, after refineries along the Gulf of Mexico escaped damage from Hurricane Ike over the weekend. Commodities, as measured by the Standard & Poor's GSCI Index of 24 raw- material futures, fell as much as 5.3 percent to the lowest since Feb. 8. The index is down 31 percent from a record in July.

Corn is the biggest U.S. crop, valued at a record $52.1 billion in 2007, with soybeans in second place at $26.8 billion, government figures show. Wheat is the fourth-biggest crop, behind hay, with a value of $13.7 billion.

To contact the reporter on this story: Jeff Wilson in Chicago at jwilson29@bloomberg.net



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Gold Jumps in London as Investors Seek Haven From Weaker Stocks

By Marianne Stigset

Sept. 15 (Bloomberg) -- Gold jumped as much as 2.6 percent in London as Lehman Brothers Holding Inc.'s bankruptcy filing, the biggest in history, pushed stocks lower, sending investors scrambling for a safe haven.

U.S. equity-index futures and stocks in Asia and Europe fell after Lehman's filing and Bank of America Corp. agreed to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for $50 billion in an emergency deal. American International Group Inc., the largest U.S. insurer by assets, fell by almost half in early trading as the company failed to present a plan to raise capital and stave off credit downgrades.

``People are talking about the greatest, most radical reshaping in Wall Street history,'' said Mark O'Byrne, managing director of brokerage Gold and Silver Investments Ltd. in Dublin. ``There was hope the worst was over, but it's spreading from the financial sector to the rest of the economy. We're extremely bullish on gold.''

Gold for immediate delivery climbed as much as $20.20 to $785.70 an ounce and was at $774.55 an ounce as of 2:06 p.m. in London.

``The decline in the oil price and the recovery of the dollar has capped gold's gains,'' O'Byrne added. ``We expect prices may go up 4 to 5 percent over the week.''

Crude oil fell below $95 a barrel to the lowest in six months as refineries along the Gulf of Mexico coast escaped major damage from Hurricane Ike. Lower energy costs diminish investor demand for gold as a hedge against inflation.

The dollar dropped the most in a decade against the yen and fell versus the euro, pound and Swiss franc, before recovering.

`Need for Cash'

Gold futures for December climbed as much as $25, or 3.3 percent, to $789.50 an ounce in electronic trading on the Comex division of the New York Mercantile Exchange, and last traded at $776.30 an ounce. The metal declined 4.8 percent last week, the second straight weekly decline.

``Overall the sentiment has been quite bearish'' for gold, James Moore, an analyst at TheBullionDesk.com, said by telephone from London. Investors have been liquidating positions as ``the need for cash is still quite present. This might help stabilize gold.''

Gold rose to $779.25 an ounce in the morning ``fixing'' in London, used by some mining companies to sell production, from $757.50 at the previous afternoon fixing.

The London Bullion Market Association said it expects no impact from the bankruptcy of Lehman or the sale of Merrill Lynch, both of which are members, the LBMA's Chief Executive Officer Stewart Murray said. The LBMA, representing the wholesale gold and silver market in London, has 57 ordinary members this year, up from 55 last year and 52 in 2006.

Market Impact

``They're ordinary members, they're not market makers, they're not clearers,'' Murray said by phone from London today. The two banks' weight within the London bullion market is ``quite small given the many number of ordinary members.''

The London Metal Exchange, the world's largest copper bourse, the Liffe commodities exchange, and Intercontinental Exchange Inc.'s ICE Futures Europe all suspended Lehman from trading today. LCH.Clearnet Group Ltd., which clears trades, declared Lehman's European subsidiary a defaulter.

Fifteen of 28 traders, investors and analysts surveyed by Bloomberg from Mumbai to Chicago on Sept. 11 and Sept. 12 advised buying gold. Nine said to sell, and four were neutral.

``The next few days are going to be very much dollar bearish and bullish precious metals,'' Narayan Gopalakrishnan, a Geneva-based trader at MKS Finance, said by telephone. ``We can expect a rally. We could easily hit $800 an ounce.''

Long Positions

Hedge-fund managers and other large speculators decreased their net-long position in New York gold futures in the week ended Sep. 9, according to U.S. Commodity Futures Trading Commission data.

Speculative long positions, or bets prices will rise, outnumbered short positions by 82,655 contracts on the Comex division of the New York Mercantile Exchange, the Washington- based commission said in its Commitments of Traders report from Sept. 12.

``In the short-term, I see gold trading well below $800 an ounce,'' Bayram Dincer, a commodity research analyst at Dresdner Bank AG in Zurich, said by phone.

Inflation is perceived as diminishing, investors are getting increasingly averse even toward bullion and the global economic slowdown will reduce physical demand for gold, he said. Dincer added he's considering revising his forecast for gold to average $700 an ounce next year, down from $800.

Among other metals for immediate delivery, silver dropped 8.5 cents, or 0.8 percent, to $10.795 an ounce and palladium fell $11.75, or 4.8 percent, to $234.75 an ounce.

Platinum for immediate delivery slipped $3.25, or 2.8 percent, to $1,176.75 an ounce.

Platinum rose to $1,200 an ounce in the morning ''fixing'' in London from $1,187 at the previous afternoon fixing. Palladium gained to $244.00 an ounce, from $241.00.

To contact the reporter on this story: Marianne Stigset in Oslo at mstigset@bloomberg.net



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Taiwan Financial Shares Fall on Lehman Concerns; Builders Drop

By Tim Culpan

Sept. 15 (Bloomberg) -- Taiwan shares fell to their lowest in almost three years, led by financial stocks, as Lehman Brothers Holdings Inc. prepares to declare bankruptcy. Construction companies retreated on concern a global economic slowdown will hurt Taiwan real-estate sales

Cathay Financial Holdings Co., Taiwan's largest financial- services company, dropped 6.9 percent and Farglory Land Development Co., the largest developer, fell by 7 percent. Both shares declined to their daily limits.

``Everyone is worried about Lehman Brothers, the sentiment is very bad for financial stocks,'' said Steven Chao, who helps manage about $30 million at National Investment Trust Co. in Taipei. ``Construction stocks in Taiwan are falling because the confidence is gone. We'll have a major correction in housing.''

Taiwan's Taiex Index fell 258.23 points, or 4.1 percent, to 6,052.45 at the close of trade in Taipei, the lowest since November 2005. The benchmark has lost 29 percent this year, compared with a 26 percent decline in the MSCI Asia-Pacific Index.

Cathay lost NT$4.10, or 6.9 percent, to NT$55.10, leading a 6 percent decline in the 35-member Taiex Financial and Insurance Index. Chinatrust Financial Holding Co., the fourth-largest financial company, fell NT$1.25, or its 6.8 percent limit, to NT$17.05.

Lehman Brothers, once the fourth-largest U.S. investment bank, said it will file for bankruptcy after potential buyers abandoned talks and the U.S. government declined to bail out the company. American International Group Inc., the largest U.S. insurer by assets, asked the U.S. Federal Reserve for a bridge loan to help forestall credit downgrades, the New York Times reported, citing an unnamed person.

`Banking Crisis'

``We're in the middle of a severe financial and banking crisis and it's going to get worse,'' Nouriel Roubini, Chairman of Roubini Global Economics and Professor of Economics at New York University's Stern School of Business said in a Bloomberg Television interview today.

Farglory Land lost NT$3.2 percent, or 7 percent, to NT$42.80, pushing its decline to 46 percent this year and leading the 35-member Taiex Construction Index 6.8 percent lower. Cathay Real Estate Development Co., the second-largest developer, dropped 80 cents, its 7 percent limit, to NT$10.70.

``We believe the near-term outlook of Taiwan's property market will be dictated by the global macroeconomic environment and the TAIEX's performance,'' Yuanta Financial Holding Co. analyst Jiwei Tang wrote in a report Sept. 12. Yuanta downgraded the construction sector and lowered its 2009 earnings forecasts by an average 38 percent.

``I don't like real-estate stocks right now,'' National Investment's Chao said. He holds no construction stocks and plans to buy financial shares once they've fallen a little further, he said.

The following shares rose or fell in Taiwan's stock market. Stock symbols follow company names.

Compal Electronics Inc. (2324 TT) dropped NT$1, or 4.3 percent, to NT$22.20 after Credit Suisse Group AG, downgraded the company, the world's second-largest maker of notebook computers, to ``underperform'' from ``neutral.''

HTC Corp. (2498 TT) added NT$8, or 1.5 percent, to NT$531 after Taiwan's largest cellphone vendor said sales this year will be at the ``upper end'' of its earlier forecast for 20 percent to 30 percent growth.

Industrial Bank of Taiwan (2897 TT) added 23 cents, or 3.4 percent, to NT$7.03 after the Taiwan bank said it plans to invest $17.5 million to take a 23.68 percent stake in a Vietnam venture with an unnamed U.S. bank.

Tung Ho Steel Enterprise Corp. (2006 TT) added 50 cents, or 1.4 percent, to NT$35.20, after climbing the daily limit in the previous session. Taiwan's third-largest steelmaker said it will buy back up to 20 million of its shares at NT$30 to NT$45 each for a total of up to NT$10.8 billion ($337 million).

To contact the reporter on this story: Tim Culpan in Taipei at tculpan1@bloomberg.net.



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U.K. Stocks Slump Most in 8 Months; Barclays, HBOS, RBS Plunge

By Adam Haigh

Sept. 15 (Bloomberg) -- U.K. stocks tumbled the most in eight months, led by financial companies, after Lehman Brothers Holdings Inc. filed for bankruptcy.

Barclays Plc, which pulled out of talks to buy Lehman yesterday, slid 13 percent, the steepest retreat since at least 1988. HBOS Plc, the biggest mortgage lender in Britain, slumped a record 27 percent and Royal Bank of Scotland Group Plc dropped 13 percent.

``The problem when you have a crisis is the notion of fear and that is what you have,'' Piers Hillier, the London-based head of European equities at WestLB Mellon Asset Management who oversees the equivalent of $8.8 billion, said in a Bloomberg Television interview. ``The fact that Lehman has gone to the wall does raises a lot of questions. The concern is that we haven't been able to address the problem,'' he added.

The FTSE 100 index tumbled 245.6, or 4.5 percent, to 5,171.1 at 1:57 p.m. in London, the steepest slump since January, for a decline of 20 percent so far this year. The FTSE All-Share Index lost 4.4 percent today, and Ireland's ISEQ Index slid 5.4 percent.

The cost to protect corporate bonds from default surged as Lehman's bankruptcy, the biggest in U.S. history, and the emergency sale of Merrill Lynch & Co. to Bank of America Corp. heightened concern the subprime crisis will cause more bank failures and add to $514 billion of credit losses and asset writedowns worldwide.

Barclays lost 13 percent to 303.75 pence. HBOS dropped 27 percent to 207 pence and Royal Bank, the second-largest U.K. bank, slid 13 percent to 203.75 pence.

``It seems like everyone is trying to get out of their positions on this news,'' said Joshua Raymond, market strategist at City Index Ltd. in London. ``It's taken a turn for the worst and we are continuing now on a downward trend.''

BHP Billiton Ltd., the world's largest mining company, slid 5.3 percent to 1,429 pence and Anglo American Plc, the world's fourth biggest diversified mining company, dropped 5.9 percent to 2,355 pence. Copper for three-month delivery sank 3.1 percent on the London Metal Exchange.

The following stocks also rose or fell in the U.K. markets. Stock symbols are in parentheses.

Heritage Oil Ltd. (HOIL LN), a U.K.-based explorer with interests in Africa, rose 13.5 pence, or 6.5 percent, to 222.75 after winning government approval to take a working interest in Dominion Petroleum Ltd. licenses in Tanzania.

J Sainsbury Plc (SBRY LN), the third-largest U.K. supermarket chain, fell 14 pence, or 3.8 percent, to 351 pence after Chief Executive Officer Justin King told the Financial Times that consumer sentiment is ``worse than it has ever been.''

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



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Canada Stocks Fall on Lehman Failure; Energy Shares, Banks Drop

By John Kipphoff

Sept. 15 (Bloomberg) -- Canadian stocks fell after the bankruptcy of Lehman Brothers Holdings Inc. spurred concern that the fallout of the U.S. housing and mortgage crisis will spread further.

Suncor Energy Inc. led commodity producers lower as prices for oil, copper and corn tumbled. Royal Bank of Canada paced declines among financial companies.

The Standard & Poor's/TSX Composite Index dropped 394.50, or 3.1 percent, to 12,375.08 at 9:36 a.m. in Toronto as 22 stocks fell for every one that rose.

Suncor Energy, the world's second-largest oil-sands producer, declined 6.2 percent to C$47.07. Royal Bank, the nation's largest lender by assets, fell 3.7 percent to C$47.40.

To contact the reporter on this story: John Kipphoff in Toronto at jkipphoff@bloomberg.net.



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India Stocks Slump on Lehman Bankruptcy; Reliance Leads Drop

By Pooja Thakur

Sept. 15 (Bloomberg) -- Indian stocks plunged, with the Sensitive index falling to its lowest in a month, after Lehman Brothers Holdings Inc. filed for bankruptcy, deepening a global financial crisis.

Reliance Industries Ltd., India's most valuable company, dropped 2.4 percent to its lowest in two weeks. ICICI Bank Ltd., the country's second-largest lender, fell 3.9 percent, to its lowest since July 29.

``The pain is unfolding at a huge cost because of the erosion in value'' of U.S. investment banks, said A. Balasubramaniam, who oversees $8.7 billion in assets as chief investment officer at Birla Sun Life Asset Management Co. ``It's difficult to say how deep the problem is going to be.''

The Bombay Stock Exchange's Sensitive Index, or Sensex, declined 469.54, or 3.4 percent, to 13,531.27, its lowest since July 17, recouping 380.46 points from the day's low.

Stocks recouped some of their losses after China cut interest rates for the first time in six years and reduced the amount of cash that some banks are required to set aside.

The S&P CNX Nifty Index on the National Stock Exchange retreated 3.7 percent to 4,072.90, the biggest decline since July 15.

Stocks sank in Australia, Taiwan and Southeast Asia after Lehman Brothers, the fourth-largest U.S. investment bank, succumbed to the subprime mortgage crisis with the biggest bankruptcy filing in history. Also, American International Group Inc., the largest U.S. insurer by assets, was working on plans late yesterday to raise capital and sell units to forestall credit downgrades that may hobble it.

Sensex, MSCI

India's Sensex outperformed its Asian peers over the past two months, climbing 5.2 percent from its July 16 low while the MSCI Asia Pacific Index fell 4.6 percent.

Bank of America Corp. separately agreed to buy Merrill Lynch & Co. for about $44 billion, a person with knowledge of the deal said, after shares of the third-biggest U.S. securities firm fell by more than 35 percent last week. That agreement came after Bank of America and Barclays Plc abandoned talks to buy Lehman.

Stocks also fell after bomb blasts in the capital, New Delhi, killed 21 people on Sept. 13, the worst terrorist attack in the country since 50 people died in the western city of Ahmedabad in July.

``The news of Lehman Brothers filing for bankruptcy and the Merrill Lynch takeover has shaken investor confidence,'' said Viswanathan Vasudevan, who manages about $400 million at Aquarius Investment Advisors Pte. from Singapore. ``Also, the blasts in New Delhi have added to the woes.''

Rupee Drops

Reliance fell 2.4 percent to 1,886.95 rupees, its lowest since Aug. 28. ICICI dropped 3.9 percent to 627.50 rupees, its lowest since July 29. The two account for about 22 percent of the Sensex's weight.

India's rupee slumped to a two-year low on concern investors will dump riskier assets, including emerging-market securities. The rupee fell 0.5 percent to 45.9375 per dollar as of 3:55 p.m. in Mumbai, adding to last week's 2.3 percent loss, according to data compiled by Bloomberg.

``Foreign institutional investor flows coming into India have been affected, and hence the stock market is showing some impact,'' Naina Lal Kidwai, chief executive officer of the India unit of HSBC Holdings Plc said from New Delhi today.

Overseas investors sold a net 14.1 billion rupees ($307 million) of Indian stocks on Sept. 11, increasing their net outflow this year from equities to $7.8 billion, the nation's market regulator said.

Satyam Drops

Satyam Computer Services Ltd., India's fourth-largest software services provider, had its biggest drop in more than five years after a report that the company may fire about 9 percent of its employees.

Satyam dropped 9.5 percent to 368.50 rupees, the most since April 10, 2003. Satyam may cut as many as 4,500 jobs, the Economic Times reported today, citing unidentified people.

As part of its appraisal process, Satyam said it identified ``around 5 percent'' of its employees for ``performance improvement.'' About half of them will leave ``voluntarily or involuntarily,'' Satyam said.

Satyam led other software developers lower. Tata Consultancy Services Ltd. and Infosys Technologies Ltd., India's largest, fell 5.9 percent to 762.80 rupees and 4 percent to 1,578.15 rupees respectively.

To contact the reporters on this story: Pooja Thakur in Mumbai at pthakur@bloomberg.net;

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Europe Options Index Has Steepest Rise in 8 Months on Lehman

By Adam Haigh

Sept. 15 (Bloomberg) -- The benchmark index for European options rallied the most since January as investors bought insurance against equity declines after Lehman Brothers Holdings Inc. filed for bankruptcy.

The VStoxx, which measures the cost of using options as insurance against losses in the Dow Jones Euro Stoxx 50 Index, surged 26 percent to 34.14 at 1:21 p.m. in London, the biggest one-day jump since Jan. 21 and the highest since March.

``There has been a massive spike up,'' said Ben King, a trader at derivatives broker ETX Capital in London. ``The volatility is going through the roof.''

Lehman, once the fourth-largest U.S. investment bank, filed for bankruptcy after Barclays Plc and Bank of America Corp. abandoned talks to buy the crippled firm. Bank of America agreed to acquire Merrill Lynch & Co., the world's biggest brokerage firm, for about $50 billion.

Put options with a strike price of 200 pence expiring this month on Royal Bank of Scotland Group Plc, the most traded contract today among options on London's Liffe exchange monitored by Bloomberg, rallied 1,400 percent to 7.5 pence. Royal Bank shares slid 12 percent to 206.5 pence. The options contract is 3.1 percent away from the strike price.

``There is a lot of pain out there,'' said Ian Thurgood, an equities and derivatives broker at ODL Securities in London. ``With such a violent move it forces people to do something. Due to the expiry this week people are buying back near month puts and rolling them on to October, November and December,'' he added.

Allianz Puts

Puts on Allianz SE, Europe's largest insurer, for expiry in December with a strike price of 92 euros surged 110 percent to 3.93 euros, the most active of options contracts on the Eurex exchange, according to Bloomberg data.

Calls for Deutsche Bank AG with a strike price of 58 euros that expire this month slumped 81 percent to 28 cents, as the stock of Germany's biggest bank lost 9.4 percent to 52.49 euros in Frankfurt.

More than two puts were traded for each call that exchanged hands on the VStoxx.

European-style calls give the right to buy a security for a certain amount, the strike price, on a given date. Puts convey the right to sell. Investors use options to guard against fluctuations in the price of securities they already own, make leveraged bets on shares or wager that volatility, or stock-price swings, will increase or decrease.

In France, puts of Axa SA expiring this month with a strike price of 20.5 euros soared 685 percent, the steepest gain today among all the options contracts on the index, Bloomberg data show.

For Related News:

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



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Emerging-Market `Panic' May End With 20% Stock Rally

By Michael Tsang and Eric Martin

Sept. 15 (Bloomberg) -- Emerging-market companies, earning more for shareholders than ever before, are getting no respect just as their stocks drop to levels that preceded rallies.

More than $500 billion in credit-market losses and falling prices of oil, nickel and soybeans pushed the MSCI Emerging Markets Index down more than a third since October, leaving it 24.7 percent below its 200-day moving average. In the past two decades, the difference grew that wide only in the aftermath of Sept. 11, the 1998 Russian debt default and Mexico's 1994 peso devaluation, data compiled by Bloomberg show. In every case, the index gained 20 percent or more in the next three months.

This time, prospects for a rebound are even greater as developing-nation economies grow twice as fast as a decade ago, says Uri Landesman, head of global growth and international equities at ING Groep NV's asset management unit in New York. Return on equity, or a company's profit made with money invested by shareholders, rose to 16.8 percent this quarter, the highest for emerging markets since Bloomberg began tracking MSCI Inc. data in 2003 and a level Morgan Stanley says may be a record.

``You're more than getting paid for your risk,'' said Landesman, who oversees $5 billion. ``When you have a panic like this, the baby gets thrown out with the bathwater.''

Equity prices in the MSCI index average 9.8 times forecast earnings over the next 12 months, the cheapest in a decade versus reported profits. Valuations have fallen even as developing economies are projected to expand 6.7 percent next year, double the average rate during the 1990s, with one-tenth the inflation, according to the Washington-based International Monetary Fund.

Equity Return

The MSCI Emerging Markets Index lost 2 percent at 12:01 p.m. London time as stocks tumbled worldwide on the bankruptcy of Lehman Brothers Holdings Inc., the fourth-largest U.S. investment bank.

While return on equity for industrialized-nation stocks fell almost 10 percent from an all-time high in October as global economic growth slowed, developing-nation companies increased profitability, data compiled by Bloomberg show.

Return on equity at China Mobile Ltd., the world's largest wireless carrier by users, climbed to 27.76 percent in the first half, the most on record dating back to 2003. China Mobile said last month that second-quarter profit jumped 51 percent, beating analysts' estimates.

Even so, the Beijing-based company, which lost 45 percent of its value this year in the biggest decline since 2001, is trading at 10.1 times estimated 2009 profit. That's the lowest valuation compared with reported earnings in more than five years.

No Respect

CEZ AS, the Czech Republic's biggest utility, reported a return on equity of 27.6 percent in the second quarter, the highest since at least 2002, data compiled by Bloomberg show.

The company, located in Prague, raised its full-year profit forecast after saying last month second-quarter earnings rose 68 percent on cost cuts and higher electricity prices. Still, CEZ plummeted 21 percent this year and traded at a record low 9.7 times next year's forecast earnings last week.

``Emerging-market equities should get respect,'' said Brett Hammond, New York-based chief investment strategist at TIAA-CREF, which oversees $420 billion and is buying shares in developing nations. ``The fundamentals are what's driving earnings. They're still robust compared to anything in the developed world.''

After emerging-market stocks surged more than fourfold in the past five years, investors grew skeptical of growth prospects as commodity prices fell by the most in almost three decades and the biggest U.S. housing bust since the Great Depression caused $514 billion in asset writedowns and credit losses for banks.

Pulling Out

``The air is coming out of those emerging-market stocks,'' said Jeffrey Kleintop, chief market strategist at LPL Financial in Boston, which oversees $273 billion. ``What we're seeing is a really nasty bear market and it can stay oversold for as long as it stayed overbought in the bull market run-up.''

Kleintop said LPL started trimming its emerging-market holdings in the first quarter and sold out completely in July.

Investors have pulled almost $29 billion from emerging- market equity funds this year, the most ever on a net basis, data compiled by EPFR Global, a Cambridge, Massachusetts-based fund research firm, and New York-based Merrill Lynch & Co. show.

The 14-week stretch of redemptions also matches the longest streak since EPFR started tracking the data in 2000.

Traders in currency markets are also betting on further declines as the economic slowdowns in the U.S., Europe and Japan make investors less willing to take on risk. Volatility on options for currencies from the Brazilian real to South Korean won versus the dollar is rising at a faster pace than those to buy or sell the euro and yen, according to JPMorgan Chase & Co.

Commodities Slump

The MSCI Emerging Markets Index plummeted 31 percent this year, the biggest year-to-date drop in a decade.

Raw-materials producers, which make up about a third of the index, accelerated the decline as 19 commodities such as crude oil, metals and farm products averaged the biggest monthly loss since 1980. The index fell 2.1 percent to 855.47 last week, and slumped 24.7 percent below its average price in the past 200 trading days. The gap, which tracks the depth and speed of a sell- off and gauges investor pessimism, signaled similar bearishness only three times in the MSCI gauge's 20-year history.

In the wake of the Asian financial crisis and Russia's default on $40 billion of ruble-denominated debt, the index plunged 37 percent below its 200-day moving average in September 1998. During the so-called Tequila Crisis that began when Mexico devalued its currency in December 1994, emerging markets hit bottom after tumbling 22.7 percent below the average.

Worst Ever

The benchmark index slid 24.3 percent below the 200-day mean in September 2001 after terrorists crashed commercial jetliners into New York's World Trade Center and the Pentagon.

This year's plunge is one of the worst in history, with less than a 0.3 percent chance of occurring at any given time, based on volatility-adjusted probabilities compiled by Bloomberg.

History shows that each of the three prior troughs heralded the start of a bull market for emerging-market equities. Developing-nation stocks climbed an average 24 percent in the next three months and 36 percent over a 12-month span.

The steepest drop preceded the biggest rally, with the MSCI index jumping 27 percent between September and December 1998.

``It's been an incredibly quick and deep sell-off, and very little has been spared,'' said Greg Lesko, who oversees $900 million at Deltec Asset Management Corp., a New York-based hedge fund. ``We're seeing real value out there, and when we see real value we like to be buying it.''

To contact the reporters on this story: Michael Tsang in New York at mtsang1@bloomberg.net; Eric Martin in New York at emartin21@bloomberg.net.



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Brazil's Bovespa Falls Most in 8 Months; Petrobras, Vale Drop

By Alexander Ragir

Sept. 15 (Bloomberg) -- Brazilian stocks tumbled the most in eight months, led by commodity producers, as the bankruptcy of Lehman Brothers Holding Inc. led investors to flee from riskier, emerging-market assets.

Banco do Brasil SA led declines for banks as the bankruptcy of Lehman, once the fourth-largest U.S. investment bank, fueled speculation that turmoil in the credit markets will deepen. Petroleo Brasileiro SA, Brazil's state-controlled oil company, slid the most since March as the price of crude dropped as much as $7 a barrel. Cia. Vale do Rio Doce paced a drop for raw- material producers as industrial metals plunged.

``It's clearly very negative what's happening in the U.S.,'' said Roberto Lampl, who helps manage $4 billion in emerging- market stocks at ING Investment Management in the Hague. ``At the moment you're seeing a lot of risk aversion and fund flow being negative for emerging markets.''

Brazil's Bovespa index slid 5.3 percent to 49,618.81 at 9:12 a.m. New York time, the biggest drop since Jan. 21. U.S. stock- index futures also tumbled, pointing to the steepest retreat by the Standard & Poor's 500 index since September 2002. The MSCI Emerging Markets Index dropped 2.1 percent.

Banco do Brasil slumped 3.3 percent to 21.70 reais.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America abandoned takeover talks yesterday and the company lost 94 percent of its market value this year.

Global Market

``There's no direct effect at all in Latin America with Lehman,'' said Urban Larson, Latin America portfolio manager at F&C Management Ltd. in London, which oversees about $2.5 billion in stocks. ``But indirectly, it has a huge effect on global market conditions.''

Petrobras fell 7.6 percent to 30.50 reais as crude oil traded at a seven-month low.

Vale dropped 7.1 percent to to 34.67 reais. The S&P GSCI Index of 24 commodities fell 5 percent, extending its slide from July's record to 31 percent.

Brazil's Bovespa index has dropped 33 percent from its May 20 high as rising interest rates and falling commodity prices raised concern about economic growth.

To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net.

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U.S. Stocks Decline as Lehman Bankruptcy Deepens Market Turmoil

By Lynn Thomasson

Sept. 15 (Bloomberg) -- U.S. stocks tumbled, erasing almost $400 billion in market value, as Lehman Brothers Holdings Inc.'s bankruptcy fueled speculation credit-market turmoil will deepen.

Lehman plunged 93 percent after the 158-year-old investment bank's subprime mortgage losses pushed it into the biggest Chapter 11 filing in history. American International Group Inc. retreated 39 percent as the biggest U.S. insurer sought capital, while Bank of America Corp. slumped 12 percent after agreeing to buy Merrill Lynch & Co. for $50 billion. Exxon Mobil Corp. and Valero Energy Corp. sent energy shares in the Standard & Poor's 500 Index to a 4.5 percent retreat as oil plunged 5.3 percent. Stocks fell across Europe and Asia, the dollar lost the most against the yen in a decade and Treasuries surged.

``Until you get some panic out of those equities, it's going to be hard to get any sustainable rallies,'' said Bruce McCain, the Cleveland-based chief investment strategist at Key Private Bank, which oversees about $30 billion. ``We need to get to the bottom of the credit crisis before financials are the sort of place that we want to put a lot of money.''

The S&P 500 declined 29.86 points, or 2.4 percent, to 1,221.84 at 10:06 a.m. in New York. December futures on the benchmark index had fallen as much as 4.4 percent. The Dow Jones Industrial Average sank 325.35 to 11,096.64. The Nasdaq Composite Index decreased 44.47 to 2,216.80. Almost 16 stocks slipped for each the rose on the New York Stock Exchange. Europe's Dow Jones Stoxx 600 Index lost 4.4 percent, the most since March 17.

The S&P 500 has decreased more than 20 percent since an October record as worldwide bank losses from the first nationwide decline in U.S. home values since the Great Depression reached $513.6 billion. Financial shares led the retreat, losing 41 percent through last week. Plunging profit at banks and brokers drove the price-to-earnings ratio of the S&P 500 to an almost five-year high of 26 last month.

Rate-Cut Odds

Yields on two-year Treasury notes fell below 2 percent for the first time since April, as traders in futures contracts gave 64 percent odds the Federal Reserve will cut its benchmark interest rate to 1.75 percent from 2 percent by tomorrow. The yen gained as much as 3.4 percent to 104.54 per dollar.

Lehman was forced into bankruptcy after Barclays Plc and Bank of America abandoned takeover talks yesterday and the company lost 94 percent of its market value this year.

``It's all basically going down the drain,'' said Franz Wenzel, who helps oversee about $830 billion as deputy director for investment strategy at Axa Investment Managers in Paris. ``The rhythm of the shoes that drop has accelerated. That's what we follow with caution.''

Lehman sank $3.39 to 26 cents. JPMorgan Chase & Co., whose March takeover prevented Lehman rival Bear Stearns Cos.'s bankruptcy, fell 2.2 percent to $40.26. Citigroup Inc., the largest U.S. bank by assets, declined 5.1 percent to $17.05.

`Quite Favorable'

Lehman's bankruptcy is ``quite favorable,'' said Gloom, Boom & Doom Report publisher Marc Faber.

``The air will be clean within the next one month and we can get a fairly good rebound starting from the middle of October until the spring of next year,'' he said in a Bloomberg Television interview from Thailand.

AIG shares lost $4.68 to $7.46. The insurer was working on plans late yesterday to raise capital and sell units to forestall credit downgrades from hobbling the company. Billionaire investor Warren Buffett's Berkshire Hathaway Inc. ``is thought to be in talks'' with AIG about a possible investment, the Insurance Insider reported, citing unidentified sources.

Goldman Sachs Group Inc. and JPMorgan were downgraded by Merrill Lynch analysts. Goldman Sachs, which lost 5.2 percent to $146.24, was lowered to ``neutral'' on the likelihood Lehman's bankruptcy will reduce profitability for the biggest U.S. securities firm. The analysts cut their JPMorgan recommendation to ``underperform'' and predicted the lender will report a third- quarter loss.

`Once in a Century Event'

Former Federal Reserve Chairman Alan Greenspan said the financial crisis that began with the collapse of the subprime- mortgage market last year ``is probably a once in a century event'' that will lead to the failure of more firms.

``There's no question that this is in the process of outstripping anything I've seen, and it is still not resolved,'' Greenspan said in an interview today on ABC's ``This Week with George Stephanopoulos.'' Greenspan, 82, retired from the Fed in January 2006 after serving for 18 years as chairman.

Merrill climbed 31 percent to $22.34. Bank of America, the biggest U.S. consumer bank, will pay $29 a share to buy the company as the credit crisis claimed another of America's oldest financial institutions. Bank of America shares fell $3.91 to $29.83.

Washington Mutual retreated 14 percent to $2.35. The company may cost taxpayers as much as $24 billion in the event of a U.S. government bailout, said Richard Bove, an analyst at Ladenburg Thalmann & Co. The federal government may have to provide that much in mortgage guarantees in order to attract a buyer for the Seattle-based bank, Bove said.

``You may get an assisted merger with a limit on how much the private buyer would pay for the bank with the government giving a guarantee for the rest,'' Bove said in an interview with Bloomberg Radio.

The S&P 500 Energy Index lost 4.5 percent. Exxon fell 2.5 percent to $75.54, and Valero declined 9.9 percent to $32.31.

Crude oil plunged $5.44 to a seven-month low of $95.74 a barrel in New York as refineries along the Gulf of Mexico escaped major damage from Hurricane Ike.

To contact the reporter on this story: Lynn Thomasson in New York at lthomasson@bloomberg.net.

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AIG, Lehman, Merrill, Napster, Take-Two: U.S. Equity Preview

By Lu Wang

Sept. 15 (Bloomberg) -- The following companies may have unusual price changes in U.S. trading. Stock symbols are in parentheses, and share prices are as of 8:30 a.m. in New York unless stated otherwise.

American International Group Inc. (AIG US) plunged 36 percent to $7.83. The largest U.S. insurer failed to present a plan to raise capital and stave off credit downgrades.

Amylin Pharmaceuticals Inc. (AMLN US): Billionaire investor Carl Icahn raised his stake in the maker of the Byetta diabetes drug to 7.33 percent, according to a filing with the U.S. Securities and Exchange Commission. The stock rose 3.6 percent to $20.18 in regular trading Sept. 12.

Caterpillar Inc. (CAT US): The world's largest maker of construction equipment said it won a ruling that may help it block rivals from shipping hydraulic excavators to the U.S. The stock gained 1 percent to $65.46 in regular trading Sept. 12.

Cephalon Inc. (CEPH US) The drugmaker failed to win U.S. approval to expand marketing of its painkiller Fentora to patients who don't have cancer because of concerns that the drug may be misused. The shares fell 0.6 percent to $77.03 Sept. 12.

Lehman Brothers Holdings Inc. (LEH US) plunged 91 percent to 33 cents. The fourth-largest U.S. investment bank succumbed to the subprime mortgage crisis it helped create in the biggest bankruptcy filing in history.

Longs Drug Stores Corp. (LDG US) climbed 3.3 percent to $74. The California retailer that received a $75-a-share offer from Walgreen Co. (WAG US) said it recommends shareholders accept CVS Caremark Corp.'s (CVS US) month-old, $71.50-a-share bid.

Magellan Midstream Partners LP (MMP US): The U.S. oil products distributor said two of its pipelines are shut because of Hurricane Ike. Magellan Midstream rose 3.3 percent to $35.46 in regular trading Sept. 12.

Merrill Lynch & Co. (MER US) surged 29 percent to $22.03. Bank of America Corp. (BAC US), the biggest U.S. consumer bank, agreed to buy Merrill Lynch for about $50 billion as the credit crisis claimed another of America's oldest financial companies. Bank of America will pay $29 a share, or 70 percent more than Merrill's closing price on Sept. 12. Bank of America retreated 14 percent to $28.85.

M&T Bank Corp. (MTB US): The lender said it would take a third-quarter charge on holdings of Fannie Mae (FNM US) and Freddie Mac (FRE US), the mortgage buyers taken over by the government. The stock gained 4.1 percent to $78.17 in regular trading Sept. 12.

McAfee Inc. (MFE US): The security-software developer may gain 30 percent during the next year to $48 as the company posts better-than-estimated earnings and offers protection for corporate networks, Barron's reported, citing Jefferies & Co. analyst Katherine Egbert. The stock fell 3.5 percent to $36.22 in regular trading Sept. 12.

Middleby Corp. (MIDD US): The maker of Toastmaster ovens and Pitco fryers may rise to $95 amid a slowing U.S. economy that curbs Americans' dining-out habits, Barron's reported, citing Roth Capital Partners analyst Anton Brenner. Middleby rose 0.7 percent to $55.89 in regular trading Sept. 12.

Napster Inc. (NAPS US) surged 89 percent to $2.57. The pioneer of digital downloading of music agreed to be acquired by Best Buy Co. (BBY US) for $2.65 a share, or $121 million. Best Buy, the largest U.S. electronics chain, lost 3.3 percent to $43.

Take-Two Interactive Inc. (TTWO US) fell 30 percent to $15.40. Electronic Arts Inc. (ERTS US), the second-largest video- game publisher, said it ended discussions with Take-Two Interactive and won't make a proposal to buy the company. Electronic Arts lost 1.3 percent to $44.99 in regular trading Sept. 12.

Textron Inc. (TXT US): The largest maker of business jets through its Cessna brand won a $250.1 million contract to provide armored security vehicles to the U.S. Army, the Department of Defense said on its Web site. The stock rose 0.4 percent to $38.92 in regular trading Sept. 12.

Washington Mutual Inc. (WM US) retreated 16 percent to $2.30. Its 75 percent slide in market value to $4.7 billion since March leaves the struggling lender valued at just above what JPMorgan Chase & Co. (JPM US) was willing to pay at the time to buy the firm.

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



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Devon Returns Workers to Two Deepwater Gulf Rigs, Platforms

By Andres R. Martinez

Sept. 15 (Bloomberg) -- Devon Energy Corp., the biggest U.S. independent oil and natural-gas producer, returned some workers to two deepwater rigs in the Gulf of Mexico and platforms off the coast of Louisiana after Hurricane Ike.

Workers are beginning to return to the Ocean Endeavor and Baroness rigs, and the company is assessing when production in the Gulf might resume, Devon spokesman Chip Minty said in a telephone interview

``A lot of the questions about production are going to rely on the status of third-party infrastructure,'' he said.

Oklahoma City-based Devon is the largest of U.S. oil and natural-gas producers that don't also operate refineries or produce chemicals.

To contact the reporter on this story: Andres R. Martinez in Mexico City at amartinez28@bloomberg.net



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U.K. Recession is Likely, Says Confederation of British Industry

Daily Forex Fundamentals |  Written by DailyFX |  Sep 15 08 11:49 GMT | 

Fundamental Headlines

• Crisis on Wall Street as Lehman Totters, Merrill Is Sold, AIG Seeks to Raise Cash - Wall Street Journal
• The Japan Lesson: U.S. Must Own Up To Its Bank Crisis - Wall Street Journal
• ECB and Bank of England inject funds - Financial Times
• China Reduces Interest Rates for First Time in Six Years as Economy Cools - Bloomberg
• Oil Falls Below $97 as Ike Spares Refineries, Lehman Collapses - Bloomberg

EURUSD - ECB Vice President Lucas Papademos said that the central bank expects 'sluggish rate of growth in the third quarter,' but went on to say 'that the recovery will start at a faster pace in the fourth quarter.' He also noted that 'we may witness another rise in the price of oil and commodities, which may have adverse implications for prices developments.' The mixed comments suggests that the ECB will not look to cut rates anytime in the near future, and may hold a neutral policy stance until 2009.

GBPUSD - The Confederation of British Industry (CBI) said that the U.K. economy was likely to have entered a rescission, and lowered their growth estimates to 1.1% from 1.7% for the rest of the year. The focus group expects economic growth to fall 0.2% in the third quarter, and 0.1% in the fourth quarter, and also lowered their 2009 forecast to 0.3% from 1.3%. The downward revision falls in line with a recent poll by Reuters, which showed that economists estimate a 55% chance that Great Britain will fall into a recession over the next 12 months.

USDCHF - Swiss retail spending surged to 6.2% from 0.7% in June as resilient labor demands helped to boost personal spending. The increase was much stronger than the 2.3% rise expected by economists, and has certainly helped to improve the growth outlook for Switzerland. The breakdown of the report showed that discretionary spending for electronics picked up the biggest gain as its rose 14% from last year, while automotive sales increase 4.8%. Meanwhile, producer and import inflation pulled back from a 19 year high as oil prices retreated from a record high in July. The index slipped to 4.0% from 4.9% in July, which crossed the wires lower than the 4.3% increase forecasted by economist.

DailyFX

Disclaimer

Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Euro, Pound Give Back Gains, Yen Rallies Over 300 Points On Lehman, Merrill Lynch News

Daily Forex Fundamentals | Written by DailyFX | Sep 15 08 11:45 GMT |

Talking Points Japanese Yen: Rallied As Risk Aversion Reins Pound: Back Below 1.800 As BoE Infuses Liquidity Euro: Falls Back Below 1.43 On ECB Actions US Dollar: Industrial Production on Tap Euro, Pound Give Back Gains, Yen Rallies Over 300 Points On Lehman, Merrill Lynch News The Yen continues to rally as risk aversion dominates the markets on the heels of the Lehman Brothers Bankruptcy and Merrill Lynch Purchase. A historic day in the financial markets that will change the landscape of the U.S. banking industry forever had sunk the dollar against most major currencies. However, the Euro and Pound have given back some of their earlier gains as the BoE and ECB have taken measures to infuse liquidity into their economies. The Euro has fallen back below 1.4280 after reaching as high as 1.4479. The news that two more broker dealers have fallen by the wayside sent the financial markets in turmoil and sent the USDJPY dropping over 300 points to below 104.60 as risk aversion reined. The failure of Lehman Brothers to find a buyer has left the beleaguered banker to file for bankruptcy ending nearly a century and a half of existence. In response the Fed has expanded the collateral it will accept for emergency loans to include equity as it attempts to minimize potential disruptions to the financial system. In response to the events in the U.S. the ECB and BoE took measures to add liquidity. The BoE is to offer GBP 5.0B in 3-day repo in order to provide short-term liquidity. The ECB added to what will most likely be a worldwide effort of central banks to bring stability to markets with their no intended volume 1-Day tender. These measures have weakened these currencies against the dollar as supply demand factors offset bearish dollar sentiment. The Pound has gained over 600 points against the dollar since testing the 1.7450 price level as oversold conditions and the U.S. banking events have led to the rebound. Yet, the U.K. economy is still believed to have entered a recession by CBI, which has reduces its growth outlook for the country to 1.1% in 2008 and 0.s% in 2009 from 1.7% and 1.3% respectively. Therefore, we could see the Sterling give back its gains after stability returns to the markets. The dollar was stung but has remained relatively strong given the nature of the events that have transpired, which could see the greenback look to erase some of its losses. However there still looms the issue of AIG, which has asked the Fed for a $40 billion bridge loan in an attempt to raise capital and prevent credit downgrades that would cripple the company. The overall impact of the events of Lehman Brothers and Merrill Lynch could lead to U.S. investors adding to the dollar weakness. An expected decline in Augusts’ industrial production of 0.3% will add to the dour economic picture for the U.S. following the unexpected drop in retail sales. Speculation has grown that that the Fed may cut rates by as much as 50 bps at tomorrow’s rate decision. Although we don’t expect the central bank to take the benchmark rate below %2.00, fed fund futures are pricing in a 12% chance of a 25bps cut and a 22.6% chance of a cut at their next meeting, which has increased from 0% just a week ago. If the outlook for a rate reduction continues we could see continued dollar weakness. DailyFX Disclaimer Investment in the currency exchange is highly speculative and should only be done with risk capital. Prices rise and fall and past performance is no assurance of future performance. This website is an information site only. Accordingly we make no warranties or guarantees in respect of the content. The publications herein do not take into account the investment objectives, financial situation or particular needs of any particular person. Investors should obtain individual financial advice based on their own particular circumstances before making an investment decision on the basis of the recommendations in this website. While we try to ensure that all of the information provided on this website is kept up-to-date and accurate we accept no responsibility for any use made of the information provided. All intellectual property rights are the property of Daily FX. Daily FX and its affiliates, will not be held responsible for the reliability or accuracy of the information available on this site. The content herein is provided in good faith and believed to be accurate, however, there are no explicit or implicit warranties of accuracy or timeliness made by Daily FX or its affiliates. The reader agrees not to hold Daily FX or any of its affiliates liable for decisions that are based on information from this website. Daily FX highly recommends that before making a decision, the reader collects several opinions related to the decision and verifies facts from at least several independent sources.

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Currency Pair Daily Forecasts

Daily Forex Technicals |  Written by Finotec Group |  Sep 15 08 11:06 GMT | 

EUR/USD Daily Technical Reports

EUR/USD-market strategy can be a buy from the level 1.4280$

Technical oscillators supporting the bullish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines in a bullish direction and crossing below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. Also, MA oscillators indicate a bullish cross on the short MA line. As seen on the chart there are two bottoms leading upwards to a buying trend.

USD/JPY Daily Technical Reports

USD/JPY-market strategy can be a sell form the level 106.10

Technical oscillators supporting the bearish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD in a bearish direction below the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction. Also, MA oscillators indicate a bearish cross on the short MA line.

GBP/USD Daily Technical Reports

GBP/USD-market strategy can be a buy from the level 1.7980$

Technical oscillators supporting the bullish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines are in a bullish direction. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bullish direction. Also, MA oscillators indicate a bullish cross on the short MA line. As seen on the chart there are two bottoms leading upwards to a buying trend.

USD/CHF Daily Technical Reports

USD/CHF-market strategy can be a sell from the level 1.1150

Technical oscillators supporting the bearish trend for the currency pair

To strengthen our analysis; we use many other indicators, starting with MACD (Moving Averages convergence divergence); we notice the MACD lines in a bearish direction above the zero line. In order to find the power of the market, we use RSI (Relative Strength Index).With RSI; we can determine that the market is in a bearish direction. Also, MA oscillators indicate a bearish cross on the short MA line.

Finotec Group Inc.
http://www.finotec.com/

Disclaimer: FINOTEC Tradings Market Commentaries are provided for informational purposes only. The information contained within these reports is gathered from reputable news sources and not intended as investment advice. FINOTEC Trading assumes no responsibility or liability from gains or losses incurred by the information herein.

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London Session Recap

Daily Forex Fundamentals | Written by Forex.com | Sep 15 08 11:53 GMT |


The investment community's flight to safety continued in the London session, with US stock futures slipping about -4% in broad terms while yields have now plunged 20-40 basis points. JPY crosses remained under pressure as the selloff in equities pares carry trades. USD/JPY remained heavy and remained down more than -250 pips near the 105.30/40 area at the London close. EUR/JPY was -470 pips lower on the day and remained near the intraday lows around the 148.60/70 area.

EUR/USD was sold in a big way in London as market participants come to the realization that the US subprime problem is also a big problem for European banks. Indeed, credit market write-downs have been just as severe across the pond as they have been here in the US, at well over $200 billion in losses for each. The pair plunged more than -200 pips towards a London close near the 1.4180 level. Oil came off sharply, taking out the psychologically significant $100 mark towards a low just below the $95 mark and helping the buck as well. The fact that US economic fundamentals remain relatively stronger than European ones should help keep the pressure on EUR/USD.

Economic data this morning is expected to be ignored as the market clearly has much bigger fish to fry. Talk about a Fed rate cut also remains prevalent. While this move is probably unlikely given the Fed's expansion of accepted collateral to now include stocks, it cannot be ruled out if things take a turn for the worse in the NY open. Much of the action will likely be concentrated around the JPY crosses as traders in these will be keenly following the goings on in stocks. Stay tuned!

Upcoming Economic Data Releases (NY Session) Prior Estimate

* 9/15/2008 12:30 US Empire Manufacturing SEP 1 2.8
* 9/15/2008 13:15 US Industrial Production AUG -0.30% 0.20%
* 9/15/2008 13:15 US Capacity Utilization AUG 79.60% 79.90%

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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Futures and FX Technical Analysis

Daily Forex Technicals | Written by Trade The News | Sep 15 08 11:35 GMT |

FX Market as of 9:00 GMT (5:00 AM EST)

USD/JPY (US Dollar vs Japanese Yen)

Japanese Yen bulls took over the price action and broke below the internal upward sloping trendline that dominated the price action since March with the latest price action seeing USD/JPY breaking below the psychologically important 105.00 handle, a level defended by the 38.2 Fib of the 95.76-110.67 US dollar rally. A further move to the downside will most likely see the pair head lower and test the bids around 104.00 figure, a level established by the Jul 16 low and a bullish hammer candlestick pattern. A further break to the downside will most likely see the yen bulls extend their gains and test the dollar bids around 103.00 figure, a level marked by the May consolidation lows and 50.0 Fib of the 95.76-110.67 US dollar rally. Further support is seen around 101.40, a level created by the 61.8 Fib of the 95.76-110.67 US dollar rally

GBP/JPY (British Pound vs Japanese Yen)

Sterling bulls where in full retreat as cross once again fell below psychologically important 190.00 handle and aimed at recent lows around 185.00 figure, a level defended by the Sep 11 spike low. A sustained break to the downside will most likely see the cross head lower and with sustained momentum to the downside targeting the bids around the psychologically important 180.00 handle, a level established by the 2002-2003 multiple lows.
Equities

S&P 500 September Emini Futures Contract (ES U8)

Emini continued to consolidate within a trading range that dominated the price action since July with the latest move to the downside once again seeing market tumble toward the recent lows around 1210 figure, a level defended by the Sep 11 spike low. A further move to the downside will most likely see the contract extend its decline toward the psychologically important 1200 handle, a level established by the July15 low and the end of the May-July equity selloff. A sustained breakout will most likely see Emini gain further downside momentum and target bids around 1185, a level defended by the 50.0 Fib of the 788-1587 equity rally.
Interest Rates

Eurodollar June 09 Futures Contract (GE M9)

Eurodollar futures managed to break above the 97.20 figure a level marked by the Sept 5 spike high and targeted offers around psychologically important 97.50 handle, a level defended by the 78.6 Fib of the Apr-Jun Eurodollar rally. A further move on the part of the Eurodollar bulls will most likely see the contract break higher and aim for 97.68, a level defended by Apr 1 high with sustained momentum to the upside seeing the contract extending its gains toward targeting psychologically important 98.00 handle, a level marked by the Mar 17 high.
NYMEX/COMEX Futures

Crude Oil October Futures Contract (CL V8)

Crude oil futures broke below the psychologically important 100.00 handle, thus breaking the number of key support zones, with most notable levels including 50.0 Fib of the 50.00-147.00 Crude oil rally, a Nov 2007-Feb 2008 consolidation high and March 20 swing low. A sustained momentum to the downside will most likely see oil futures head toward the 90 figure with further move to the downside testing the bids around 85-87 price zone, a level established by the combination of 2007-Feb 2008 consolidation lows, 61.8 Fib of the 50.53-147.72 Crude oil rally and 1.00 Fib extension of the July-Aug oil selloff.

Natural Gas October Futures Contract (NG V8)

Natural gas futures remained in a 7.000-7.700 consolidation range as both sides positioned themselves in the path of hurricane. In case bears manage to gain an upper hand and push the contract lower, a further move to the downside will most likely see the contract break below 7.500 figure and target recent lows around psychologically important 7.000 handle. A sustained break to the downside will most likely see the contract head lower and target the bids around 6.600, a level defended by the Oct 2007 consolidation lows, with further support seen below psychologically important 6.000 handle at 5.720, a Sep 2007 contract low.

Gold December Futures Contract (GC Z8)

Gold futures managed to hold the psychologically important 750 handle as metal bulls managed to reverse the downside momentum. As gold retraces recent weakness, a further move to the upside will most likely see the contract head higher and test the offers around 780 figure, a level defended by the Aug 15 spike low, A further move to the upside will most likely see the contract head higher and test defenses around the psychologically important 800 handle, a level established by the combination of the 23.6 Fib of the 1000-737 Gold selloff and upper boundary of the downward slopping channels.
CBOT Grain Futures

Corn December Futures contract (C Z8)

Corn futures staged a comeback rally with the day's candle forming a closing bozu candlestick, signaling a strong reversal from current levels. A further move to the upside will most likely see the contract extend its gains and head above 5.740 figure, a level established by the 23.6 Fib of the 7.992-5.044 Corn selloff. A sustained momentum to the upside will most likely see Corn bulls power though the psychologically important 6.000 handle and target the offers around 6.200 figure, a level established by the 38.2 Fib of the 7.992-5.044 of the Jun- Aug selloff and August retrace highs. In case the Corn bears manage to over again reestablish control of the price action and push Corn lower, a further move to the downside will most likely see the contract head lower and target the bids around 5.376, a level defended by the 61.8 Fib of the 3.754-7.992 Corn rally. A sustained momentum to the downside will most likely see the grain target bids around the psychologically important 5.000 handle, a level defended by the March 24 and Aug 12 lows

Wheat December Futures Contract (W Z8)

Wheat futures continued to consolidate recent decline around the 7.200 figure. As bears resume control of the price action and push the contact lower, a further move to the downside will most likely see the contract test the bids around 7.100, a level defended by the Oct-Dec of 2007 consolidation range high. A sustained momentum to the downside will most likely seeing the traders test defenses around the psychologically important 7.000 handle. A further move to the lower will most likely see the bears push the contract lower and target 6.500 figure, a level defended by the combination of the 78.6 Fib of the Apr 2007-Apr 2008 Wheat rally and Oct-Dec of 2007 consolidation range low.

Soybean November Futures Contract (S X8)

Soybean futures remained on pause as contract continued to consolidate above 11.700 figure, a level defended by the 78.6 Fib of the Apr-June Soybean rally. As bears resume their advance and push the contract toward 11.500 handle a level defended by the 50.0 Fib of the October 2006 - June2008 Soybean rally at 11.303, a sustained break to the downside will most likely see contract break the neck of the large Head and Shoulders pattern, which remains intact on both daily and weekly charts. A further momentum to the downside will most likely see the bears push the contract toward psychologically important 11.000 handle and with a break target bids around 10.500, a level marked by the Apr 1 spike low.

Trade The News Staff
Trade The News, Inc.

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GLOBAL MARKETS-Lehman storm hammers dlr, stocks in risk flight

* Investors run from risk after Lehman files for Chapter 11

* High-grade debt, gold, yen in demand on banking stress

* Fed, ECB, BoE turn on liquidity taps

* Focus turns to Fed policy decision on Tuesday (Changes dateline, byline, adds quotes update prices, PVS HONG KONG)

By Veronica Brown

LONDON, Sept 15 (Reuters) - Stocks and the U.S. dollar sank on Monday after Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) filed for bankruptcy protection, with a broad flight from risk igniting U.S. Treasury debt, gold and the low yielding Japanese yen.

Adding to the mix of ingredients feeding the latest financial storm, American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), one of the world's largest insurers, was reported to have asked the U.S. Federal Reserve for a $40 billion bridge loan, and the Fed expanded its liquidity provision facilities.

U.S. stock market futures SPc2 DJc2 NDc2 were down between 2 and 3.5 percent, pointing to a sharply lower open, while European stocks fell 3.6 percent in early trade. Amongst them, Lehman Brothers shares in Frankfurt tanked 83 percent (LHMH.F: Quote, Profile, Research, Stock Buzz).

Turmoil on Wall Street, just a week after the U.S. government bailed out troubled mortgage agencies Fannie Mae and Freddie Mac, sparked a violent wave of risk aversion through all asset classes.

The dollar tumbled 2.7 percent versus the yen, setting the Japanese currency on track for its biggest daily gain since early 2002.

Fed fund futures jumped to indicate a 86 percent probability of a U.S. interest rate cut to 1.75 percent on Tuesday from 2 percent currently [FEDWATCH].

Classic financial market safe-haven gold jumped more than 2 percent while U.S. Treasury yields, which move in the opposite direction to prices, fell to multi-month lows.

"What we're seeing is a rise in risk aversion because nobody really knows if there is a systemic problem in the U.S. financial system," said Lutz Karpowitz, forex strategist at Commerzbank.

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Credit Suisse hires from troubled Lehman, Merrill

LONDON, Sept 15 (Reuters) - Swiss bank Credit Suisse AG (CSGN.VX: Quote, Profile, Research, Stock Buzz) has poached senior investment bankers from Lehman Brothers and Merrill Lynch, taking advantage of the turmoil around two of the major U.S. investment banks.

According to a Credit Suisse memo sent to Reuters on Monday, Philippe Cerf will join the bank as a managing director in the European mergers and acquisitions group in December.

Cerf spent 14 years at Lehman (LEH.N: Quote, Profile, Research, Stock Buzz), which has filed for bankruptcy protection, becoming the largest and the highest-profile casualty of the credit crisis.

Jeffrey Culpepper also started at Credit Suisse in August as head of investment banking in the Middle East and Africa. He previously worked as the most senior investment banker in the Middle East for Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz), which has agreed to sell itself to Bank of America (BAC.N: Quote, Profile, Research, Stock Buzz).

Merrill is stuck with some of the same toxic debt -- much of it mortgage-related -- that torpedoed Lehman's balance sheet.

Credit Suisse has also recruited Ian Carnegie Brown from Citigroup (C.N: Quote, Profile, Research, Stock Buzz) as a managing director in the UK investment banking group and Anthony Laubi from Deutsche Bank (DBKGn.DE: Quote, Profile, Research, Stock Buzz) as a managing director and head of European paper and packaging investment banking. (Reporting by Olesya Dmitracova; Editing by David Holmes)

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FOREX-Dlr slumps, yen rallies on financial fears

 * Lehman files for bankruptcy protection

 * Risk aversion rises with financial sector fears

 * Yen set for biggest daily gain in more than 6 years

 * Dollar down 2.6 percent at 105.14 yen

(Updates prices, add comments, previous SINGAPORE)

 By Ian Chua

 LONDON, Sept 15 (Reuters) - The yen looked set on Monday for
its biggest daily gain since early 2002 while the dollar slumped
as concerns mounted over the stability of the U.S. financial
system after Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) filed for bankruptcy.

 Worries the U.S. banking problems will spread to Europe kept
the euro from making strong gains against the dollar.

 Bank of America has agreed to buy Merrill Lynch and the
Federal Reserve will accept stocks in exchange for cash loans
for the first time ever.

 "The fear of an absolute dollar collapse this morning has at
least been temporarily averted. For traders, it's a case of
keeping the tin hat on at least until the Fed (policy) meeting
tomorrow," said Jeremy Stretch, strategist at Rabobank.

 "The next question is: are we going to continue seeing a
U.S. centric financial sector meltdown or are we going to see
something broader ... Obviously that might act as a catalyst for
preventing further dollar falls."

 At 0800 GMT, the dollar was down 2.6 percent against the
Japanese currency at 105.14 yen  -- the biggest one-day
percentage fall since early 2002 -- while the euro 
dropped 2 percent to 151.32 yen. The euro  rose 0.5
percent to $1.4305, but was off an early high of $1.4479.

 Seen also as a safe haven, the Swiss franc powered higher
against the dollar, which fell 1.6 percent to 1.1126 francs
.

 "What we're seeing is a rise in risk aversion because nobody
really knows if there is a systemic problem in the U.S.
financial system," said Lutz Karpowitz, forex strategist at
Commerzbank.

 "So of course, there is a lot of pressure on the U.S. dollar
... it's bad news for the U.S. dollar so far. It's not really
clear what the Fed will do."

 The uncertainty was so high that major central banks around
the world including the European Central Bank, Bank of England
and Bank of Japan said they stood ready to help soothe markets.

 There is also speculation that the Fed, which holds its
regular policy meeting on Tuesday, may cut interest rates again.
Rate sensitive Fed funds futures are pricing in a 78 percent
chance of rates falling to 1.75 percent from 2.0 percent at the
September meeting. FEDWATCH

 European stocks tumbled in early trade while U.S. stock
index futures pointed to a sharply lower Wall Street open.

 Lehman Brothers Holdings filed for bankruptcy protection on
Monday after trying to finance too many risky assets with too
little capital, making it the largest and highest-profile
casualty of the global credit crisis. [ID:nN15469897]

 Underscoring the dire situation in the U.S. financial
sector, 10 of the world's biggest banks have committed to
establish a $70 billion borrowing facility to bolster worldwide
liquidity and reduce volatility in what they called an
"extraordinary market environment." [ID:nN14815043].

 Wall Street even arranged a rare emergency trading session
on Sunday to allow dealers in the $455 trillion derivatives
market to reduce their exposure to Lehman, though turnover was
said to have been light.

 Bill Gross, head of bond fund Pimco, told Reuters before
Lehman's announcement that a bankruptcy filing could set off a
wave of position unwinding around the globe.

 "It appears that Lehman will file for bankruptcy and the
risk of an immediate tsunami is related to the unwind of
derivative and swap-related positions worldwide in the dealer,
hedge-fund and buyside universe," Gross said.

 (Editing by Ruth Pitchford)

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Glaxo's pazopanib shows promise in ovarian cancer

By Ben Hirschler

LONDON, Sept 15 (Reuters) - GlaxoSmithKline's (GSK.L: Quote, Profile, Research, Stock Buzz) experimental drug pazopanib appears to be effective in fighting ovarian cancer, based on measurements of a biological marker used to predict tumour recurrence, researchers said on Monday.

Given the promising results, the world's second largest drugmaker said it planned to push ahead with a final-stage Phase III clinical trial of the once-daily pill in ovarian cancer.

Pazopanib, like Genentech (DNA.N: Quote, Profile, Research, Stock Buzz) and Roche's (ROG.VX: Quote, Profile, Research, Stock Buzz) blockbuster injection Avastin, works by inhibiting the formation of new blood vessels that feed tumours.

Results of a small Phase II study, involving 35 patients, showed that 31 percent of ovarian cancer patients had a greater than 50 percent decrease in blood levels of a protein called CA-125 when given the drug.

Because CA-125 levels rise when tumours are growing, the protein is used to predict the risk of tumours recurring and to test patients' response to chemotherapy.

The results were presented at the annual meeting of the European Society of Medical Oncology (ESMO) in Stockholm. "Many patients with ovarian cancer will have a recurrence of cancer following initial chemotherapy," said Michael Friedlander of the Prince of Wales Cancer Centre in Sydney.

"This study clearly demonstrates that pazopanib is an active, well-tolerated drug for women with recurrent ovarian cancer."

LUNG CANCER

A second Phase II study also suggested pazopanib may have a role to play in lung cancer, after 30 out of 35 patients treated with the drug before surgery saw their tumour size shrink by up to 85 percent.

However, Paolo Paoletti, Glaxo's senior vice president for oncology, told Reuters that further studies were needed before pazopanib was moved into Phase III testing in lung cancer.

Pazopanib is already in pivotal clinical tests as a treatment for breast cancer and has just completed a Phase III assessment in kidney cancer. It is also being assessed for other tumour types, including soft tissue sarcoma and cervical cancer.

Paoletti said the drug was most likely to win its first regulatory approval in kidney cancer, where it will compete with a number of other new products.

Pfizer (PFE.N: Quote, Profile, Research, Stock Buzz) and Bayer (BAYG.DE: Quote, Profile, Research, Stock Buzz) have recently introduced competing kidney cancer drugs called Sutent and Nexavar, while Novartis (NOVN.VX: Quote, Profile, Research, Stock Buzz) hopes to win a green light for its product Afinitor around the end of the year. (Editing by Simon Jessop)

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Popular says Colonial shareholders back refinancing

(Corrects to remove superfluous letter in sixth paragraph and "editing by" in signoff)

MADRID, Sept 15 (Reuters) - Spain's third largest bank Popular (POP.MC: Quote, Profile, Research, Stock Buzz) said on Monday that property company Colonial's (COL.MC: Quote, Profile, Research, Stock Buzz) core bank shareholders support its debt refinancing agreement.

The troubled property firm said on Monday it had reached an agreement with its creditor banks to finance a total of about 7 billion euros of debt.

In a statement, Popular said it and fellow banking core shareholder La Caixa no longer form part of the core shareholders consortium.

A Popular source said that as the original objectives of the core shareholders accord have been met, namely to refinance Colonial's debt pile, the bank is withdrawing from the consortium.

But it does not mean that Popular will sell its stake in Colonial, he said.

Popular owns about 9.15 percent of Colonial, which it acquired as part of an agreement to swap outstanding debts owed by the property company. (Reporting by Judy MacInnes)

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Stock futures sink on Lehman bankruptcy filing

(Reuters) - Stock index futures were down sharply early on Monday, pointing to a steep fall at the opening on Wall Street after Lehman Brothers (LEH.N: Quote, Profile, Research, Stock Buzz) filed for Chapter 11 bankruptcy protection, heightening fears over the embattled financial sector.

* By 4:22 a.m. EDT, S&P 500 futures, Dow Jones futures and Nasdaq 100 futures were down between 2.8 percent and 3.4 percent.

* Lehman filed for bankruptcy protection on Monday, making it the largest and highest-profile casualty of the global credit crisis.

The Chapter 11 filing did not include its broker-dealer operations and other units, such as asset management firm Neuberger Berman. Those businesses will continue to operate, although Lehman is expected to liquidate them. It said it is in advanced talks on selling its investment management division.

* Lehman shares traded in Frankfurt (LHMH.F: Quote, Profile, Research, Stock Buzz) were down 80 percent, while shares in Morgan Stanley (MS.N: Quote, Profile, Research, Stock Buzz) (MWD.F: Quote, Profile, Research, Stock Buzz), Goldman Sachs (GS.N: Quote, Profile, Research, Stock Buzz) (GS.F: Quote, Profile, Research, Stock Buzz) and Citigroup (C.N: Quote, Profile, Research, Stock Buzz) (TRV.F: Quote, Profile, Research, Stock Buzz) traded in Frankfurt were down between 7.4 and 15.2 percent.

* The U.S. dollar tumbled in Asian trade on the news that triggered talk of a possible Federal Reserve rate cut.

* The Federal Reserve launched a series of emergency measures on Sunday to calm financial markets and ease any trading disruptions that could arise from a collapse of Lehman.

One of the biggest changes the Fed made was to accept equities as collateral for cash loans at one of its special credit facilities, the first time that the Fed has done so in its nearly 95-year history.

* Adding to the gloom, the New York Times said insurer American International Group Inc (AIG.N: Quote, Profile, Research, Stock Buzz), working to stave off rating downgrades and shore up the capital of its holding company, has made an unprecedented approach to the Federal Reserve seeking $40 billion in short-term financing. AIG officials did not immediately respond to requests for comment. AIG shares traded in Frankfurt (AIG.F: Quote, Profile, Research, Stock Buzz) were down 33 percent.

* Also in the financial sector, Bank of America Corp (BAC.N: Quote, Profile, Research, Stock Buzz) agreed to buy Merrill Lynch (MER.N: Quote, Profile, Research, Stock Buzz) in an all-stock transaction worth $50 billion. Bank of America (BAC.F: Quote, Profile, Research, Stock Buzz) was down 12.5 percent in Frankfurt, while Merrill (MER.F: Quote, Profile, Research, Stock Buzz) was up nearly 40 percent.

* The news on Lehman knocked equity markets around the world, with the UK's FTSE 100 index .FTSE down 3.6 percent, Germany's DAX index .GDAXI down 3.4 percent, and France's CAC 40 .FCHI down 4.2 percent. A number of Asian markets, including Japan, Hong Kong, South Korea and China, were closed on Monday for a holiday.

* Companies releasing earnings on Monday include The Kroger Co (KR.N: Quote, Profile, Research, Stock Buzz) and Pall Corp (PLL.N: Quote, Profile, Research, Stock Buzz), while economic indicators include the New York Fed's manufacturing index for September, and the Fed's industrial output and capacity utilization data for August.

(Reporting by Blaise Robinson; Editing by Rory Channing)

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