2008.08.28 10:00 - Blommberg TOP 40 selected by professor 1x2

"European Stocks Fall, Led by Ahold, Daimler; U.S. Futures Drop "

By Adam Haigh

"Aug. 28 (Bloomberg) -- European stocks declined, led by retailers and carmakers, after Royal Ahold NV reported earnings that missed analysts' estimates, Toyota Motor Corp. cut its sales forecast and oil rose for a fourth day. U.S. index futures fell, while Asian shares advanced."

"Ahold, the Dutch owner of Stop & Shop supermarkets in the U.S., dropped 4.4 percent. Daimler AG, the world's second- biggest luxury carmaker, slipped 2 percent and Renault SA lost 2.3 percent after Toyota cut its sales estimate for Europe as higher gasoline price damped demand. Natixis SA, the French bank seeking 3.7 billion euros ($5.5 billion) in new capital, sank 5.1 percent after reporting a wider-than-forecast loss."

"Europe's Dow Jones Stoxx 600 Index declined 0.7 percent to 281.37 at 9:29 a.m. in London. The index has lost 23 percent this year as rising oil prices and more than $500 billion in credit- related losses by the world's largest banks threatened global economic growth, prompting analysts to cut profit estimates."

"``It's still too early to be too confident on the earnings picture,'' said Peter Jarvis, a London-based director of European equities at F&C Asset Management, which has about $200 billion. ``We want to see a more benign inflationary backdrop and commodity prices not to rise any more. The most important drivers are still going to be the macro headwinds.''"

Futures on the Standard & Poor's 500 Index fell 0.5 percent. Gains by commodity producers helped lift the MSCI Asia Pacific Index 0.2 percent.

"Profit among companies in the Stoxx 600 will decline 2 percent on average in 2008, according to data compiled by Bloomberg. That's down from 11 percent growth forecast at the start of 2008, the data show."

House Prices Tumble

"The prospect of a recession and tighter mortgage lending discouraged home buyers in the U.K., sending house prices to the biggest annual decline in almost two decades in August, according to Nationwide Building Society, Britain's fourth- biggest mortgage lender."

National benchmark indexes fell in all 17 western European markets that were open except Luxembourg. Germany's DAX sank 0.8 percent. France's CAC 40 slipped 0.4 percent as did the U.K.'s FTSE 100.

"Ahold slid 4.2 percent to 8.32 euros after reporting second-quarter net income of 336 million euros, less than the 260 million-euro estimate of eight analysts in a Bloomberg survey."

"Daimler, the world's second-largest luxury carmaker, lost 2 percent to 39.32 in Germany. Renault, France's second-largest automaker, slipped 2.3 percent to 55.78 euros."

"General Motors Corp., the world's largest truckmaker, fell 6 cents to $10.14 in Germany."

Cutting Forecast

"Toyota, the world's second-largest automaker, cut its 2009 sales forecast 6.7 percent as gasoline prices near $4 a gallon damp demand for trucks in the U.S., its biggest market."

"Crude rose in New York on speculation Tropical Storm Gustav will be the most damaging since Hurricane Katrina as it moves toward production platforms in the Gulf of Mexico. Oil for October delivery was at $118.78 a barrel, up 63 cents."

"Natixis slid 5.1 percent to 5.40 euros as the bank reported a net loss of 1.02 billion euros in the second quarter, wider the 669 million-euro median loss estimate of nine analysts surveyed by Bloomberg."

"Swiss Life Holding tumbled 9.4 percent to 203 francs. Switzerland's biggest life insurer reported first-half profit that climbed to 1.64 billion Swiss francs ($1.5 billion), missing the 1.84 billion-franc median estimate of six analysts surveyed by Bloomberg News."

Fannie Mae

Fannie Mae Chief Executive Officer Daniel Mudd replaced three top deputies in an effort to restore investor confidence after record losses and a 90 percent drop in the shares. The shares fell 12 cents to $6.36 in German trading.

Essilor International SA climbed 4.4 percent to 34.67 euros. The world's largest maker of eyeglass lenses reported net income rose 9 percent to 198.3 million euros ($293 million) as it sold more of its products in emerging markets such as Brazil and Argentina. That beat the 192.2 million-euro median estimate of 14 analysts in a Bloomberg News survey. Essilor had reported profit of 181.7 million euros in the year-earlier period.

"BT Group Plc climbed 2.5 percent to 169.4 pence. Goldman Sachs Group Inc. raised its recommendation on the stock to ``buy'' from ``neutral,'' saying risks to the share price are now discounted into the price."

"Credit Agricole SA added 4.3 percent to 13.78 euros after France's third-biggest bank by market value said its Tier 1 capital ratio, a key measure of financial strength, held steady."

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

"Last Updated: August 28, 2008 04:41 EDT"





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"French Stocks: Accor, Credit Agricole, Essilor, Natixis, SEB "

By Adria Cimino

"Aug. 28 (Bloomberg) -- France's CAC 40 Index slid 11.65, or 0.3 percent, to 4,361.43 at 9:22 a.m. in Paris, falling for a second time this week. The SBF 120 Index slipped 0.3 percent."

The following shares rose or fell in Paris. Stock symbols are in parentheses.

"Accor SA (AC FP) sank 1.09 euros, or 2.4 percent, to 43.90, falling a second day. The company said first-half profit dropped 48 percent to 310 million euros ($459 million), missing analysts' estimates."

"Bureau Veritas SA (BVI FP) added 55 cents, or 1.4 percent, to 39.05 euros, rising for a fourth day. The world's second- largest goods-inspection company said first-half profit rose 28 percent to 106.5 million euros, helped by acquisitions."

"Credit Agricole SA (ACA FP) slipped 21 cents, or 1.6 percent, to 13 euros, dropping for a second day. France's third-largest bank by market value said second-quarter profit dropped 94 percent to 76 million euros, missing analysts' estimates, on writedowns tied to U.S. bond insurers."

"Essilor International SA (EF FP) jumped 1.39 euros, or 4.2 percent, to 34.59, rising the most in nearly three weeks. The world's largest maker of eyeglass lenses said first-half profit rose 9 percent to 198.3 million euros, surpassing analysts' estimates, as it sold more of its products in emerging markets such as Brazil and Argentina."

"High Co. (HCO FP) jumped 57 cents, or 7.8 percent, to 7.87 euros, the biggest gain since January. The marketing and communications consulting company said first-half profit excluding gains from asset sales last year, rose 13 percent to 6.72 million euros. The company raised its full-year sales growth target to 6 percent from 5 percent."

"Ipsos SA (IPS FP) added 63 cents, or 2.9 percent, to 22.49 euros, the biggest gain in six weeks. The French market researcher that conducts polls for the Associated Press in the U.S. said first-half profit climbed 12 percent on acquisitions. Net income rose to 21.7 million euros from 19.4 million euros a year earlier, the Paris-based company said."

"Manitou SA (MTU FP) tumbled 1.34 euros, or 6.6 percent, to 18.85, falling the most since April. The French maker of forklift trucks said first-half net fell 12 percent 48.5 million euros. The company sees full-year net falling 10 percent to 15 percent."

"Natixis SA (KN FP) retreated 31 cents, or 5.5 percent, to 5.38 euros, the biggest drop in about two weeks. The French bank seeking 3.7 billion euros in new capital reported a second-quarter loss of 1.02 billion euros on writedowns tied to U.S. bond insurers. The loss was bigger than analysts' estimate."

"Provimi SA (VIM FP) soared 1.49 euros, or 9.6 percent, to 17 for the biggest gain since May. The maker of animal nutrition products said first-half net income increased nearly threefold to 50 million euros."

"Groupe SEB SA (SK FP) surged 1.97 euros, or 5.7 percent, to 36.69, the biggest gain in a week. The world's largest maker of countertop kitchen appliances said operating profit rose 81 percent to 94 million euros, or 1.08 euros a share."

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

"Last Updated: August 28, 2008 03:29 EDT"





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Lithuanian GDP Expands at Slowest Pace in Six Years (Update1)

By Milda Seputyte

Aug. 28 (Bloomberg) -- Lithuania's economy expanded in the second quarter at the slowest pace in more than six years after domestic demand weakened.

"Gross domestic product grew a revised 5.3 percent, the lowest rate since the first quarter of 2002, compared with a preliminary 5.5 percent and following a 7 percent rate in the first three- month period, the Vilnius-based statistics office said today. The median estimate of three economists in a Bloomberg survey was for a 5.7 percent rate."

"The economy is faltering four years after entry into the European Union sparked growth in lending, property prices and domestic demand. Now, accelerating inflation, at 12.2 percent in July, is curbing consumer spending and banks are tightening lending requirements, squeezing growth."

"``The pace of consumer spending in the April-June period was slower than in the first half as rising inflation curbed spending,'' the statistics office said in the statement. Slowing construction output also weakened growth, it said."

"Consumer confidence fell in August for a sixth consecutive month as pessimism grew over the Baltic nation's economic outlook, the office also reported today."

"The index, a measure of current and future economic expectations, fell to minus 27 from minus 24 in August. The confidence rate was a positive 5 in August last year."

Baltic Comparison

"Still, growth continues to be faster than in neighboring Latvia, where GDP growth slowed to 0.2 percent in the second quarter, and Estonia, where the economy contracted 1.4 percent in the same period."

"Retail sales rose an annual 4.4 percent in July, after dropping 0.5 percent in the previous month, the office also reported today. In the month, sales rose 6.3 percent, compared with a decline of 4.6 percent in June."

"The economy will probably avoid a recession this year and in 2009 as net exports are supporting growth, Standard & Poor's rating agency said on Aug. 20."

"``Although we expect the Lithuanian economy to slow in the next two years, growth should remain positive during the readjustment period,'' S&P said. The rating company estimates economic growth may slow to 4 percent this year and to 2.3 percent in 2009."

"Lithuania's central bank on July 25 lowered its growth forecast to 6 percent for this year, adding that weaker demand in the country's key export markets such as Latvia may hurt foreign sales growth."

To contact the reporter on this story: Milda Seputyte in Vilnius at mseputyte@bloomberg.net

"Last Updated: August 28, 2008 04:12 EDT"





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"U.S. Stocks Gain on Durable Goods; Fannie Mae, Freddie Mac Rise "

By Eric Martin

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Aug. 27 (Bloomberg) -- U.S. stocks rose for a second day after orders for durable goods unexpectedly advanced in July and analysts said new investments by Fannie Mae and Freddie Mac will boost their earnings.

Bank of America Corp. and American Express Co. each climbed more than 2 percent after the Commerce Department report bolstered expectations that the economy is recovering. Fannie Mae and Freddie Mac rallied more than 15 percent each after the largest U.S. mortgage finance companies also sold $3 billion in debt at yields which suggest they won't need a government bailout. Oil's advance of more than $2 a barrel pushed up 38 of 39 energy producers in the Standard & Poor's 500 Index.

"The S&P 500 added 10.15 points, or 0.8 percent, to 1,281.66, with 9 of its 10 main industry groups gaining. The Dow Jones Industrial Average climbed 89.64, or 0.8 percent, to 11,502.51. The Nasdaq Composite Index increased 20.49 to 2,382.46. Four stocks advanced for each that fell on the New York Stock Exchange."

"``As long as businesses are optimistic, we have a good chance of pulling out of this weak period in the economy in fairly short order,'' said Peter Jankovskis, who helps manage $1.5 billion at OakBrook Investments in Lisle, Illinois. The durable goods data ``was a very strong report, and the market has acted appropriately.''"

Durable Goods Growth

"The 1.3 percent gain in durable goods orders defied economist forecasts for an unchanged reading in July. Stock futures fell before the Commerce Department report as a third day of gains in oil spurred concern that crude's rebound from a more than 20 percent tumble since July will threaten profits at consumer, transportation and technology companies."

"Trading on the NYSE was the slowest for a full session since December 2006, with about 820 million shares changing hands. Volume since the start of last week has been more than one-third lower than the year-to-date average."

"Fannie Mae added 86 cents to $6.48, while Freddie Mac gained 78 cents, or 20 percent, to $4.75. The mortgage-finance companies may get the biggest profits on new investments since at least 1998. The current-coupon mortgage bonds Fannie and Freddie buy yield about 40 basis points, or 0.40 percentage point, more than what they pay to borrow by selling benchmark bonds, Citigroup Inc. said in a report. The difference exceeded 20 basis points only twice in the 10 years through 2007 -- in 1998 and 2003."

"The two companies today sold short-term debt at yields relative to benchmark rates that were higher than in sales earlier this month, yet below levels seen a year ago, data compiled by Bloomberg show. Investors have been watching the debt sales for any ``tell-tale'' signs that the companies can't fund themselves, UBS AG analysts in New York wrote in a report."

"Fannie, which tumbled 37 percent last week on concern a government bailout will wipe out shareholders, has risen for five straight days for its longest streak of gains in a year."

`Great Confidence'

"Merrill Lynch & Co. gained $1.17, or 4.9 percent, to $25.27. Temasek Holdings Pte, Singapore's $130 billion sovereign wealth fund, said it has ``great confidence'' in Merrill's Chief Executive Officer John Thain and plans to raise its stake."

"Temasek, the U.S. bank's biggest shareholder, received U.S. antitrust approval yesterday to raise its stake to between 13 percent and 14 percent."

`Still Opportunities'

"``Once we get through this credit crisis and rebuild confidence, things should get better,'' Kelli Hill, a portfolio manager at Ashfield Capital Partners in San Francisco, which manages $4 billion, said in an interview with Bloomberg Television. ``There are still opportunities within the market.''"

"Goldman Sachs Group Inc. dropped 43 cents to $155.48. Morgan Stanley analyst Patrick Pinschmidt cut his estimate for Goldman's third-quarter earnings to $1.65 a share from his earlier $3 estimate. The New York-based bank may mark down so-called principal investments by $525 million, he said in a note to clients."

"Exxon Mobil Corp. rose 52 cents to $80.47, while Chevron Corp. climbed 83 cents to $86.62. Crude oil, natural gas and gasoline rose on speculation Tropical Storm Gustav will become the most damaging hurricane since Katrina as it moves toward production platforms in the Gulf of Mexico."

"Valero Energy Corp., Tesoro Corp. and Sunoco Inc., the biggest U.S. petroleum refiners, rose more than 4 percent and made up the three top advances in the S&P 500 Energy Index. The gains came as profit margins on processing oil into gasoline and heating oil, the so-called crack spread, advanced 6.8 percent, sending the measure to its biggest two-day increase since March."

Refiners Rally

Valero increased $1.42 to $35.02. Tesoro climbed $1.84 to $18.41. Sunoco jumped $1.97 to $42.23.

"Amylin Pharmaceuticals Inc. plunged $6.76, or 25 percent, to $20.48 after four more patients taking the diabetes drug Byetta died from pancreatitis. Byetta, available in the U.S. since June 2005, is Amylin's leading product, with global sales that rose 25 percent in the second quarter to $194.7 million from a year earlier."

"No definite relationship between Byetta and the additional deaths has been proved, and the Food and Drug Administration was aware of them when it made its announcement last week, Amylin Chief Executive Officer Dan Bradbury said by telephone yesterday."

"Health-care companies had the only decline among 10 S&P 500 industries, falling 0.1 percent. Pfizer and Bristol-Myers Squibb Co. dropped after saying their experimental blood thinner apixaban worked no better than an older pill in a study, causing them to delay seeking U.S. regulatory approval. Bristol-Myers dropped 46 cents, or 2.1 percent, to $21.52 and Pfizer declined 20 cents, or 1 percent, to $19.08."

`Significant Risks'

U.S. airlines retreated after Citigroup Inc. said demand may weaken and ``significant risks remain'' for the industry as crude oil rebounds.

"``U.S. airlines have yet to see a severe consumer downturn despite gloomy economic data,'' analyst Andrew Light wrote in a note."

"Investors should sell shares of AMR Corp., parent of American Airlines, the world's largest carrier, because they have more than doubled since falling to a five-year low last month, Light said. AMR declined 2.7 percent to $9.35. UAL Corp., the Chicago-based parent of United Airlines, dropped $1.27, or 11 percent, to $9.88."

The S&P 500 is up 1.1 percent in August after falling in June and July. The benchmark index for U.S. equities has posted only two monthly gains since reaching a record in October and is down almost 13 percent this year.

For Related News:

To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.

"Last Updated: August 27, 2008 16:39 EDT"





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"U.K. Stocks Fall, Led By Kazakhmys; Water Utilities Retreat "

By Sarah Jones

"Aug. 28 (Bloomberg) -- U.K. stocks declined, led by copper producers after Kazakhmys Plc reported earnings that missed analysts' estimates. Antofagasta Plc retreated."

Severn Trent Plc and United Utilities Group Plc fell after Goldman Sachs Group Inc. recommended investors sell the shares.

"The FTSE 100 dropped 23.7, or 0.4 percent, to 5,504.4 at 9:06 a.m. in London. The FTSE All-Share Index lost 0.4 percent and Ireland's ISEQ Index also decreased 0.4 percent."

"Kazakhmys dropped 3.6 percent to 1,291 pence after Kazakhstan's biggest copper producer posted a 23 percent drop in first-half profit to $608.4 million, missing analyst estimates, after cold weather and repairs cut output at two smelters."

"Antofagasta, owner of copper mines in Chile, slipped 1.3 percent to 584.5 pence. Vedanta Resources Inc., India's largest zinc and copper producer, lost 1.7 percent to 1,821 pence."

"Severn Trent, the U.K.'s second-biggest water company, declined 2 percent to 1,377 pence and United Utilities, the U.K.'s largest publicly traded water company, lost 1.5 percent to 710.5 pence."

"Goldman Sachs downgraded the water companies to ``sell'' from ``neutral,'' saying both look ``overpriced'' relative to the utilities sector."

"BT Group Plc, the U.K.'s largest phone company, increased 2.5 percent to 169.4 pence."

"Goldman Sachs raised its recommendation for the shares to ``buy'' from ``neutral,'' saying the company will likely deliver on its interim dividend commitment when it reports second-quarter results on Nov. 13."

To contact the reporter on this story: Sarah Jones in London at sjones35@bloomberg.net.

"Last Updated: August 28, 2008 04:10 EDT"





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Japan's Net Sales of Foreign Debt Reach Record High (Update1)

Aug. 28 (Bloomberg) -- Japanese investors made the biggest weekly net sales of overseas bonds since at least 2001 on currency swings and concern the U.S. housing slump will worsen.

"Sales of overseas securities exceeded purchases by 1.42 trillion yen ($13 billion) in the week ended Aug. 23, according to figures based on reports from designated major investors released by the Ministry of Finance in Tokyo. JPMorgan Asset Management Japan Ltd. said last week it was reducing its holdings of debt issued by Fannie Mae and Freddie Mac."

"``Japanese investors have been constant sellers of agency debt,'' said Hideo Shimomura, who oversees the equivalent of $4 billion as a chief fund manager at Mitsubishi UFJ Asset Management Co. ``Major Japanese institutional investors are likely to have sold agency bonds'' in the week ended Aug. 23"

"In addition to being net sellers of foreign bonds and notes, Japanese investors also sold a net 82.8 billion yen in overseas stocks and bought 154.1 billion yen in short-term overseas securities, Finance Ministry data showed. That resulted in total net sales of 1.34 trillion yen."

"``Although Fannie and Freddie are being aided by the government, there still is no guarantee on their debt, so it is difficult to hold it,'' said Daisuke Uno, chief bond and currency strategist at Sumitomo Mitsui Banking Corp. in Tokyo. ``Without a guarantee, nobody will do anything as it's too risky, so they sold the bonds.''"

Rising Volatility

"Local investors may also have sold overseas bonds due to increased volatility in major currencies, said Tsutomu Komiya, an investment manager in Tokyo at Daiwa Asset Management Co."

"``The forex market volatility has been so high that some investors are reluctant to hold foreign bond assets,'' said Komiya at the unit of Japan's second-largest brokerage, overseeing the equivalent of $88.7 billion."

"Volatility implied by options for major exchange rates has risen nearly 2 percentage points from a year ago, according to data compiled by JPMorgan Chase & Co. The bank's index that tracks implied volatility on three-month options for the major currencies was 10.27 percent today, from 8.03 percent at the end of August 2007."

"Overseas investors made net purchases of 557.9 billion yen of Japanese bonds in the week ended Aug. 23, sold 214.5 billion yen in stocks and cut holdings of short-term securities by 156.4 billion yen, the Ministry of Finance said. That resulted in total net purchases of 187 billion yen."

"----With reporting by Shizuka Muragishi and Stanley White in Tokyo and Wes Goodman and Ron Harui in Singapore. Editor: Nicholas Reynolds, Nate Hosoda"

To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.





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Cnooc Shares Rise on Record Profit; PetroChina Drops (Update3)

By Winnie Zhu and Wang Ying

"Aug. 28 (Bloomberg) -- Cnooc Ltd., China's third-largest oil company, rose to the highest in more than a month in Hong Kong trading after first-half profit climbed to a record, beating estimates, because of higher output and oil prices."

"The oil producer's shares advanced as much as 6.4 percent to HK$12.36, the highest since July 15, and closed at HK$11.96. PetroChina Co., the nation's biggest oil company, fell 3.3 percent to close at HK$9.96 after posting its steepest semi- annual profit decline in more than six years on refining losses."

"Cnooc, which doesn't run refineries, said yesterday profit surged 89 percent to 27.54 billion yuan ($4 billion), more than triple the earnings growth of Exxon Mobil Corp. and Royal Dutch Shell Plc. PetroChina, overtaken by Exxon as the world's most valuable company during the half, said net income fell 35 percent after government fuel-price caps undermined crude gains."

"``Cnooc earnings are much higher than the street consensus on strong second-quarter production growth, good cost control and pricings,'' Graham Cunningham, a Hong Kong-based oil analyst at Citigroup Inc., said in a research report today. ``The second-quarter production surged 11.8 percent, the strongest growth since 2005, which alleviates market concern over its full-year target.''"

Record Crude

Crude prices reached a record $147.27 a barrel on July 11. Prices have dropped 18 percent since then and are still 66 percent higher than a year ago.

"Total oil and gas production climbed 8 percent to the equivalent of 92 million barrels of oil, Cnooc said yesterday. It said on Jan. 29 it plans to increase crude oil and natural gas output by as much as 18 percent to between 195 million and 199 million barrels of oil equivalent this year."

"PetroChina's refining business posted a loss of 59 billion yuan between January and June this year, compared with a year- earlier profit of 3.9 billion yuan, the company said yesterday."

"``We don't expect enough of a turnaround though to turn positive on PetroChina, and maintain our view that earnings will continue to be relatively weak,'' JPMorgan Chase & Co. analyst Brynjar Eirik Bustnes said in a research note today. ``Cash flow could become a problem and require raising cash.''"

"PetroChina's first-half net income dropped to 53.6 billion yuan, the company said yesterday."

"Exxon's earnings climbed 16 percent in the first six months while Shell's profit rose 29 percent, according to data compiled by Bloomberg. The companies struggled to boost output as countries from Kazakhstan to Venezuela cut access to oil."

To contact the reporters on this story: Winnie Zhu in Hong Kong at wzhu4@bloomberg.netWang Ying in Hong Kong at wang30@bloomberg.net;

"Last Updated: August 28, 2008 04:42 EDT"





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"German Stocks Fall as Oil Extends Gains; BMW, Daimler Decline "

By Stefanie Haxel

"Aug. 28 (Bloomberg) -- German stocks declined, led by automakers, as oil gained for a fourth day and Toyota Motor Corp. cut its 2009 sales forecast for Europe on lower demand."

"Bayerische Motoren Werke AG and Daimler AG, the world's largest makers of luxury cars, paced the retreat. Meteorologists forecast Tropical Storm Gustav will be the most damaging since Hurricane Katrina as it moves toward oil production platforms in the Gulf of Mexico. MAN AG, Europe's third-biggest truckmaker, fell for a second day."

"The DAX Index lost 47.41, or 0.8 percent, to 6,273.62 as of 10:24 a.m. in Frankfurt. DAX futures expiring in September slipped 0.8 percent. The HDAX Index of the country's 110 biggest companies sank 0.7 percent."

"``Though everyone expected oil to rise, it's now weighing on the sentiment and that Toyota, the industry's top dog, is facing problems shows that the financial crisis has reached the real economy,'' said Robert Halver, head of research at Baader Bank in Frankfurt."

"The benchmark index for German equities is down 22 percent this year on concern higher oil prices, accelerating inflation and more than $500 billion in credit-related losses will curb consumer spending and slow global economic growth."

"German unemployment dropped more than economists expected in August, pushing the jobless rate to the lowest level in 16 years, the Federal Labor Agency said today. The number of people out of work, adjusted for seasonal swings, dropped 40,000 to 3.2 million. Economist expected a decline of 10,000, the median of 31 forecasts in a Bloomberg News survey showed."

Crude Oil

"Crude oil for October delivery traded near $119 a barrel in New York. Gustav will probably reach the coast of Louisiana, where U.S. oil and gas offshore platforms and pipelines are most concentrated, by 8 p.m. on Sept. 1, the National Hurricane Center forecast."

"BMW, the world's biggest luxury carmaker, fell for a fourth day, losing 49 cents, or 1.8 percent, to 27.165 euros. Daimler, the second-largest maker of luxury vehicles, lost 72 cents, or 1.8 percent, to 39.39 euros, the lowest in more than three weeks."

"Toyota, the second-biggest automaker, cut estimates for worldwide demand next year by 6.7 percent. The company reduced its forecast for vehicles it aims to sell in Europe 10 percent to 1.3 million units as demand in the region is sagging."

"MAN slipped 85 cents, or 1.3 percent, to 64.64 euros."

"Deutsche Lufthansa AG sank 23 cents, or 1.6 percent, to 14.17 euros. The region's second-largest airline is in talks with TUI Travel Plc and Thomas Cook Group Plc about a possible merger of their charter and low-cost airlines, Crawley, U.K.-based TUI Travel said today."

The following stocks also rose or fell in German markets. Symbols are in parentheses.

"Air Berlin Plc (AB1 GY) added 14 cents, or 3.6 percent, to 4.03 euros, the highest in more than a week. Europe's third- biggest discount airline said second-quarter profit gained 38 percent to 8.3 million euros ($12.3 million) as sales growth offset higher fuel costs."

"SAF-Holland SA (SFQ GY) gained 18 cents, or 2.1 percent, to 8.90 euros, snapping a three-day drop. The supplier of parts for heavy-truck trailers that sold shares in July 2007 said first- half profit rose fivefold and that it bought a wheel unit from Georg Fischer AG of Switzerland."

To contact the reporters on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

"Last Updated: August 28, 2008 04:27 EDT"





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"Agrenco, Eletropaulo, GCC, Tegma, YPF: Latin Equity Preview "

By [bn:PRSN=1] William Freebairn [] and Paulo Winterstein

"Aug. 28 (Bloomberg) -- The following companies may have unusual price changes today 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 2.7 percent yesterday to 3,979.79."

Argentina

"YPF SA (YPFD AF): Repsol YPF SA, parent company of energy company YPF, will begin the first Argentine offshore exploration for oil and natural gas in 30 years, Planning Minister Julio de Vido said on a government Web site yesterday. YPF was unchanged at 147 pesos."

Brazil

Agrenco Ltd. (AGEN11 BS): The agriculture and biofuels company filed for bankruptcy protection for its Brazilian subsidiaries. Sao Paulo-based Agrenco said in a regulatory filing yesterday that the protection is a condition imposed by lenders for the company to receive new loans. Agrenco said it will give details of the plan to restructure its finances within the next 60 days. Agrenco was unchanged at 44 centavos.

"Banco Nossa Caixa SA (BNCA3 BS): Banco do Brasil SA, Latin America's largest bank by assets, hasn't yet offered a price to buy Nossa Caixa SA, Milton de Melo Santos, Nossa Caixa's chief executive officer, said yesterday. Banco do Brasil, which is based in Brasilia, is holding talks for the acquisition of four state-controlled banks including Sao Paulo-based Nossa Caixa. The bank said earlier this month it expects to agree on a price soon and aims to wrap up the deal by the end of November. Nossa Caixa rose 1.2 percent to 37.85 reais."

"Eletropaulo Metropolitana SA (ELPL6 BS): The Brazilian utility controlled by AES Corp. will go ahead with its payment of a 360 million reais ($223 million) dividend. The Sao Paulo- based company won a court decision reversing an earlier cancellation of the dividend, Eletropaulo said in a regulatory filing yesterday. The utility fell 2.2 percent to 29.84 reais."

"Tegma Gestao Logistica SA (TGMA3 BS): The logistics company that specializes in transporting cars may buy back 1.72 million voting shares, or as much as 7 percent of outstanding shares, during the next 90 days. The company didn't say in yesterday's filing how many shares were repurchased during the previous program, announced in May, to buy back up to 7 percent of shares. Tegma added 0.4 percent to 13.05 reais."

Mexico

"Grupo Cementos de Chihuahua SAB (GCC* MM): The Mexican cement company got a $140 million bank loan that will be used to refinance lending used to buy some U.S. facilities. The loan was made by Banco Bilbao Vizcaya Argentaria SA, ABN Amro Bank NV, Barclays Bank Plc, Export Development Canada, JPMorgan Chase Bank and Wells Fargo Bank, Cementos de Chihuahua said in a statement to Mexico's stock exchange yesterday. GCC, as the company is known, fell 0.7 percent to 44.69 pesos."

To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net; Paulo Winterstein in Sao Paulo at pwinterstein@bloomberg.net.

"Last Updated: August 28, 2008 00:00 EDT"





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Credit Agricole Quarterly Net Drops 94% on Writedowns (Update3)

By Fabio Benedetti-Valentini

"Aug. 28 (Bloomberg) -- Credit Agricole SA, France's third- largest bank by market value, said second-quarter profit dropped 94 percent on writedowns tied to U.S. bond insurers."

"Net income fell to 76 million euros ($112 million) from 1.29 billion euros a year earlier, the Paris-based bank said in a statement today. The shares rose as much as 5.5 percent after the company said its Tier 1 capital ratio, a key measure of financial strength, held steady."

"``Investors are hanging onto the news about solvency, that's the good news of the report,'' said Amandine Gerard, a fund manager at Richelieu Finance, which oversees $6.2 billion in Paris."

"Credit Agricole, the hardest hit in France by the global credit collapse, has announced 6.5 billion euros of writedowns tied to the U.S. subprime mortgage crisis and in May replaced the head of its securities division. Calyon, the investment- banking division, posted a third straight quarterly loss."

`Under Pressure'

"Excluding the loss at Calyon, the French company's profit fell 19 percent, while earnings at the retail banking unit advanced 3.2 percent in the quarter."

"Credit Agricole rose as much as 73 cents to 13.94 euros and was trading at 13.79 euros at 10:02 a.m. local time. The stock has fallen 35 percent this year, trailing the 34 percent drop of the 70-member Bloomberg Europe Banks & Financial Services Index."

"``We're starting toward the end of the writedown exercise,'' said Pierre Chedeville, a Paris-based analyst at CM- CIC Securities who has a ``reduce'' rating on the stock. ``There might be a short-term rebound in the stock, but the banking industry remains under pressure.''"

"Chief Executive Officer Georges Pauget, 61, is reorganizing Calyon after the bank raised 5.9 billion euros last month and lifted the Tier 1 capital ratio to 8.9 percent as of June 30. It remained at that level at the end of the second quarter, the company said today."

"The subprime crisis cost Societe Generale SA, France's second-largest bank, 4.9 billion euros of revenue writedowns since the beginning of 2007. BNP Paribas SA, France's biggest lender bank, had 2.6 billion euros of markdowns and provisions tied to the U.S. mortgage crisis so far."

"BNP Paribas earlier this month reported second-quarter profit fell 34 percent to 1.51 billion euros, matching analysts' estimates. Societe Generale had its biggest gain in four months after the bank reported net income fell 63 percent, less than expected."

"Credit Agricole's risky-loan provisions in the second quarter jumped to 365 million euros from 211 million euros a year earlier, beating analysts' estimate of 402 million euros."

"Fitch Ratings on Aug. 8 cut Credit Agricole's long-term issuer default rating by one grade to AA- from AA, saying that the strategy change at the investment-banking unit Calyon weighs on Credit Agricole's profitability outlook."

Calyon Overhaul

Calyon on July 17 named new heads and a more detailed supervisory structure for its four main business units. Credit Agricole is set to provide more details on Calyon's reorganization on Sept. 10. The bank has pledged to trim the division's costs by at least 150 million euros this year and ``refocus'' the business on broking activities and fixed income.

Credit Agricole in May also said it plans to sell 5 billion euros of assets in the next 18 to 24 months.

The bank's board backed Pauget with ``full confidence'' last month after speculation he would resign after Calyon's losses.

"Credit Agricole named Patrick Valroff to head Calyon on May 15, replacing Marc Litzler, who had been appointed a year earlier. The lender hired Litzler from rival Societe Generale in 2004 to expand businesses such as equity derivatives and to turn around the unit after defections following the 16 billion-euro purchase of France's Credit Lyonnais in 2003."

To contact the reporter on this story: Fabio Benedetti-Valentini in Paris at fbenedettiva@bloomberg.net.

"Last Updated: August 28, 2008 04:08 EDT"





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Spain May Suffer From ECB Lending Curbs as Expansion Falters

By Ben Sills and Esteban Duarte

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"Aug. 28 (Bloomberg) -- Spain's economy, brought to the brink of a recession by surging global credit costs, may find money even harder to come by when the European Central Bank tightens its lending practices."

"Spain's banks have stored up 89 billion euros of their own asset-backed securities, more than any euro-region country, because the ECB accepts them as collateral in auctions, according to UniCredit SpA. Now the central bank wants to change the rules, ECB council member Yves Mersch said in an interview on Aug. 23, a move that may leave Spain holding the bag."

"``This may affect negatively the profitability of Spanish banks and their ability to lend,'' said Willem Buiter, a professor at London School of Economics and a former Bank of England policy maker. ``It could lead to slower growth.''"

"Spain's banks have relied on cheap money from the ECB to help provide credit to consumers and companies even as the economy is buffeted by a real-estate downturn. Without the ECB, the country would be more dependent on foreign investors, who are demanding higher returns before committing funds."

"ECB officials have agreed to adjust collateral rules in response to some banks' attempts at ``gaming the system,'' Mersch told Bloomberg News at the Federal Reserve's annual retreat in Jackson Hole, Wyoming. Axel Weber, another council member, said in an interview published yesterday in Frankfurt that the ECB must ensure its rules are ``not abused.''"

Fitch Warning

"The share of asset-backed bonds in the collateral deposited with the ECB jumped by a third last year. What's more, the quality of the assets underlying those bonds has deteriorated, Fitch Ratings said in a report in May. Spanish banks are pooling ``higher risk'' mortgages and consumer loans to back the bonds, Fitch said."

"``We see bonds being issued just to forward them directly to the ECB,'' said Kornelius Purps, a fixed-income strategist in Munich at UniCredit, Europe's fourth-largest bank."

"Holders of asset-backed securities can get money 39 percent cheaper at central-bank auctions than through investors. A Spanish mortgage-backed bond rated at the highest credit rating trades with a spread of about 2.8 percentage points to the euro interbank offered rate, or Euribor. The resulting rate of 7.76 percent compares with an average rate of 4.74 percent at yesterday's ECB auction for three-month money."

"Since the credit squeeze began a year ago, Spanish institutions raised their monthly borrowing from the ECB by 31 billion euros to a record 49.4 billion euros, according to data compiled by Bloomberg based on central-bank figures. The increase is three times the size of Prime Minister Jose Luis Rodriguez Zapatero's fiscal stimulus package aimed at averting a recession."

`Delicate Situation'

"``The economy is in a very delicate situation,'' said Jose Luis Martinez, a strategist at Citigroup Inc. in Madrid, who predicts a recession in Spain in the second half of the year. ``One reason for that is the tighter credit conditions and anything which exacerbates that is bad news.''"

"Spain's economy grew 0.1 percent in the second quarter, the slowest in 15 years. The euro region's gross domestic product shrank for the first time since the introduction of the single currency in 1999."

"One option for ECB policy makers is to reduce the amount of money that can be borrowed for every euro of asset-backed collateral, Natacha Valla, chief economist of Goldman Sachs Group Inc. in Paris, said in a report after Mersch's comments."

Spanish Debt

"Buiter said the ECB may make it harder for banks to use as collateral bonds backed by loans they themselves granted. Banco Popular Espanol SA, Spain's no. 3 lender, tripled its holdings of assets eligible in ECB auctions to 15.2 billion euros since December 2006. The bank faces 7 billion euros of debt maturities over the next 18 months."

"Spain's economy doubled in size over the past decade as the decline in borrowing costs brought by euro membership spurred construction and consumer spending. That spree saw Spain run up the world's second-biggest current-account deficit after the U.S., leaving businesses and consumers reliant on foreign lenders."

"With household debt reaching 130 percent of incomes, consumption was already slowing when the global credit crunch began. The turbulence triggered a collapse in the housing market as investors became more reluctant to provide financing to Spanish lenders. Home sales fell by a third in May from a year earlier."

"``If the ECB restricts the possibilities for using asset- backed bonds in refinancing operations, the market spread will widen again,'' said Sylvain Broyer, an economist at Natixis in Frankfurt. ``Such a tightening will hurt the part of the euro-zone economy which is weakest right now.''"

To contact the reporters on this story: Ben Sills in Madrid at bsills@bloomberg.netEsteban Duarte in Madrid at eduarterubia@bloomberg.net;

"Last Updated: August 27, 2008 18:01 EDT"





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Estonian Wage Growth Slows to Weakest in 2 Years on Recession

By Ott Ummelas

Aug. 28 (Bloomberg) -- Estonian wages grew at the slowest pace in two years in the second quarter after the Baltic nation entered its third recession since regaining independence in 1991.

"The average monthly gross pay rose 15.2 percent from a year earlier to 13,306 krooni ($1,257), compared with an increase of 19.5 percent in the first quarter, the statistics office in Tallinn said on its Web site today."

"``There are clear signs of slowing wage growth based on tax accrual,'' Deputy central bank Governor Marten Ross said yesterday."

"Estonia became the second European Union economy after Denmark in the second quarter to enter a recession since the start of the global credit crunch. Slowing wage growth is crucial to ensure exports remain competitive at a time when domestic demand continues to weaken, the central bank says."

To contact the reporters on this story: Ott Ummelas in Tallinn at oummelas@bloomberg.net

"Last Updated: August 28, 2008 02:11 EDT"





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"Hong Kong Stocks Drop Most in Week; Esprit, China Mobile Fall "

By Hanny Wan

"Aug. 28 (Bloomberg) -- Hong Kong stocks fell the most in a week, led by phone companies and clothing retailers, on concern increased competition will erode earnings at China Mobile Ltd. and after Esprit Holdings Ltd. reported slowing profit growth."

"China Mobile, the world's biggest phone company by market value, tumbled 6.3 percent after JPMorgan Chase & Co. cut its recommendation on the stock. China Unicom Ltd., the nation's No. 2 wireless operator, slumped 7.3 percent. Retailer Esprit plunged 18 percent, the most in a decade, as at least three brokerages lowered their ratings on the shares after net income grew the slowest in six years. PetroChina Co. fell 3.3 percent after refining losses and taxes dented profit."

"``Downside risks remain in place as the bottom line of manufacturers is weak,'' said Renault Kam, a senior portfolio manager at Atlantis Investment Management in Hong Kong, which oversees $5 billion. ``The pressure on retail is big.''"

"The Hang Seng Index lost 492.43, or 2.3 percent, to close at 20,972.29, its biggest drop since Aug. 21. The Hang Seng China Enterprises Index, which tracks so-called H shares of Chinese companies, retreated 2.4 percent to 11,497.68."

To contact the reporter on this story: Hanny Wan in Hong Kong at hwan3@bloomberg.net.

"Last Updated: August 28, 2008 04:38 EDT"





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"Asian Mining Stocks Advance, Led by BHP; China Mobile Declines "

By Chen Shiyin and Ian C. Sayson

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"Aug. 28 (Bloomberg) -- Asian commodity stocks advanced as concern eased that an economic slump will curb raw-material demand, countering losses in phone and technology shares after analysts downgraded China Mobile Ltd. and Samsung Electronics Co."

"BHP Billiton Ltd. added 2.1 percent after an unexpected rise in U.S. durable goods orders spurred gains in prices of copper and other metals. Cnooc Ltd. rose 2.9 percent after its earnings beat estimates. China Mobile, the world's No. 1 phone company by market value, dropped 6.3 percent after JPMorgan Chase & Co. said rising competition will curb growth. Samsung, Asia's biggest maker of chips and flat panels, lost 1.7 percent after Morgan Stanley said demand isn't improving."

"``Resources have shown solid results, unwinding fears of a sharp slowdown in China,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``Investors were previously concerned about a sharp weakness in China and the global economy.''"

"The MSCI Asia Pacific Index was little changed at 122.75 as of 5:59 p.m. in Tokyo, following yesterday's 0.4 percent advance. A measure tracking mining companies was the biggest contributor to gains among the gauge's 10 industry groups."

The regional index has dropped 22 percent this year as soaring inflation assailed global economies and the world's largest financial companies posted writedowns and credit losses of more than $500 billion.

"Japan's Nikkei 225 Stock Average added 0.1 percent to 12,768.25, ending a two-day, 1 percent retreat. Canon Inc. fell after rival Ricoh Co. announced its largest acquisition, increasing concern that competition in the U.S. will intensify. The Karachi Stock Exchange 100 Index rose 0.6 percent as Pakistan set minimum stock prices to halt a six-day, 16 percent slump."

U.S. Rallies

U.S. stocks advanced yesterday after the Commerce Department said orders for goods meant to last several years rose 1.3 percent in July. Fannie Mae and Freddie Mac posted the biggest gains on the Standard & Poor's 500 Index after they sold $3 billion in debt at yields that suggest the U.S. mortgage- finance companies won't need a government bailout. S&P 500 Index futures fell 0.4 percent today.

"BHP rose 86 cents to A$41.75, its highest close since July 2. Copper, which is used in air conditioners, cars, electronics and other durable items, climbed 0.8 percent yesterday in New York, while prices of platinum and palladium also increased."

"Orders of primary metals gained 2.2 percent last month, the Commerce Department report showed."

"``Demand seems to be still there and today there's no indication that it's weakening or slowing down,'' said Tim Barker, who helps manage more than $54 billion of assets at BT Financial Group in Sydney."

Rio Tinto

"Rio Tinto Group, the world's third-largest mining company, added 1.2 percent to A$126.50. Nippon Mining Holdings Inc., Japan's biggest copper producer, gained 2.1 percent to 595 yen."

Cnooc rose 34 cents to HK$11.95 in Hong Kong after the oil explorer said first-half profit jumped 89 percent to a record 27.54 billion yuan ($4 billion). That topped the median profit estimate of 22.1 billion yuan in a Bloomberg survey of analysts.

"Woodside Petroleum Ltd., Australia's second-largest oil and gas explorer, rallied 4.7 percent to A$61.17, its highest close since July 15. Crude oil for October delivery added 1.6 percent to $118.15 yesterday in New York."

"China Mobile tumbled HK$6.10 to HK$90.45 in Hong Kong after JPMorgan cut its rating to ``underweight'' from ``overweight,'' saying that competitors are expanding their networks and introducing plans for third-generation mobile-phone services."

`Hard Landing'

"Morgan Stanley cut its rating on Samsung to ``equal- weight'' from ``overweight,'' saying that it expects a ``hard landing'' for liquid-crystal displays and that the dynamic random access memory industry isn't improving."

"Samsung lost 9,000 won to 521,000. Elpida Memory Inc., Japan's No. 1 maker of computer memory chips, declined 4.4 percent to 2,385 yen."

"Hon Hai Precision Industry Co., the world's largest contract manufacturer of handsets, plunged 5 percent to NT$162.50 in Taipei. Its 72 percent-owned mobile phone unit Foxconn International Holdings Ltd. post a 56 percent drop in first-half profit yesterday."

"In Tokyo, Canon dropped 5.2 percent to 4,790, its largest retreat since March 3. The world's largest office-equipment maker has lost about 50 percent of its U.S. sales network as the distributors have been bought by printer makers."

"Ricoh advanced 2.9 percent to 1,777 yen on speculation the purchase of Ikon Office Solutions Inc. will help the company grab U.S. market share from Canon. Its $1.62 billion cash offer for the Malvern, Pennsylvania-based company will be the largest acquisition for Ricoh."

Esprit Plunges

"Esprit Holdings Ltd. plunged 18 percent to HK$66 in Hong Kong, the biggest drop on MSCI's Asian index, after saying net income grew 13 percent in the second half, the weakest expansion since the clothing retailer joined Hong Kong's benchmark Hang Seng Index in 2002."

"Acom Co., Japan's biggest consumer lender by market value, was the biggest gainer on the regional stock index, surging 8.8 percent to 3,090 yen. Mitsubishi UFJ Financial Group Inc., the nation's largest bank by market value, will spend 140 billion yen ($1.28 billion) to boost its stake in Acom to 40 percent from 15 percent, the Mainichi newspaper reported, without saying where it obtained the information."

The companies said in separate statements today that no decision has been made.

To contact the reporter for this story: Chen Shiyin in Singapore at schen37@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg.net

"Last Updated: August 28, 2008 05:11 EDT"





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Venezuela Inflation to Slow by Yearend After Tax Cut (Update1)

By Jose Enrique Arrioja and Jose Orozco

"Aug. 27 (Bloomberg) -- Venezuelan inflation will slow in the second half of 2008 after the government eliminated a tax on financial transactions and shortages of basic foods were alleviated, central bank director Armando Leon said."

"The central bank and government have also restrained liquidity growth through bond sales, which will help slow price gains during the rest of the year, Leon said today during an interview with Bloomberg Television at his office in Caracas."

"``The factors that contributed to the high inflation at the end of last year and early this year are gone,'' he said."

"Venezuela, the fourth-biggest supplier of foreign crude oil to the U.S., is working to contain the region's highest inflation rate and maintain economic growth, which has averaged 11.24 percent a year since the end of 2003. The economy expanded 7.1 percent in the second quarter."

"Leon said the economy will probably expand 6 percent to 7 percent both this year and in 2009, driven by consumer demand and construction, petrochemicals and infrastructure."

"The central bank is seeking to keep inflation below 27 percent this year, a forecast made last week by Finance Minister Ali Rodriguez, Leon said. Even so, the central bank doesn't have any plans to raise interest rates, and it won't take steps to cause a ``violent'' drop in consumption, he said."

"Leon said inflation this month may be slower than in July. Monthly price increases may stay below 2 percent for the rest of the year, he said."

Inflation Rate

"Venezuelan consumer prices rose 22.5 percent in 2007. Annual inflation accelerated to 33.7 percent in July, according to the central bank."

"Economists forecast annual inflation will remain above the central bank's target this year and next as a fixed exchange rate and price caps on some foods cause demand to exceed supply. In a Bloomberg survey this month, the median forecast from four economists was for consumer prices to rise 28.7 percent this year and 27.8 percent next year."

"``As long as price and currency controls are maintained, there will be a gap in supply and demand and inflation will be a problem,'' said Miguel Carpio, an economist at Banco Federal CA in Caracas."

"Bank lending, car sales and industrial production growth have all slowed this year, even as oil prices surged to a record."

"A drop in investment in the first quarter, which led to a slowdown in growth, was caused by expectations that consumption in 2008 would be softer than last year, Leon said."

"``No one thought consumer demand would be maintained,'' Leon said. ``There will be no contraction in consumer demand.''"

"Investment has since recovered in agriculture, textiles, transportation and infrastructure, Leon said."

"Flush with foreign reserves, there are ``good conditions'' for a debt buyback, should the government decide to pursue one, Leon said. He didn't have any information on when or if the government would follow through with a plan to buy back some of its foreign debt this year."

To contact the reporter on this story: Jose Enrique Arrioja in New York at jarrioja@bloomberg.net; Jose Orozco in Caracas at jorozco8@bloomberg.net

"Last Updated: August 27, 2008 17:28 EDT"





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Lula to Raise Brazil Government Spending 13% in 2009 (Update2)

By Andre Soliani and Joshua Goodman

"Aug. 27 (Bloomberg) -- Brazil's President Luiz Inacio Lula da Silva plans to boost spending excluding interest payments by 13 percent in 2009, the government's budget proposal for next year shows."

"The federal government plans to spend 607.8 billion reais ($375 billion) in 2009, compared with 539.1 billion reais authorized for this year, the Budget Ministry said today in a statement distributed in Brasilia."

"The budget estimates economic growth next year will slow to 4.5 percent, compared with 5 percent this year and 5.4 percent in 2007. Inflation in 2009 will slow to 4.5 percent from 6.4 percent this year."

"``Growth is going to slow because the government took measures such as increasing interest rates and containing the credit expansion to fight inflation,'' Budget Minister Paulo Bernardo told reporters."

The country's target for the surplus before interest payments was kept at 3.8 percent of gross domestic product. The budget also seeks permission from lawmakers to increase that target by 0.5 percentage point to contribute to a proposed sovereign wealth fund still under consideration by congress.

Spending on personnel will increase 16.5 percent to 155.3 billion as the government hires more workers and increases salaries.

"Revenue, excluding transfers to state and municipalities, is expected to increase 12.5 percent to 662.3 billion reais."

To contact the reporters on this story: Andre Soliani in Brasilia at at asoliani@bloomberg.net; Joshua Goodman in Rio de Janeiro jgoodman19@bloomberg.net

"Last Updated: August 27, 2008 17:01 EDT"





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Argentine Dollar Bonds Gain on Government's Debt Buyback Plan

By Lester Pimentel

"Aug. 27 (Bloomberg) -- Argentine bonds gained, pushing yields relative to Treasuries to their narrowest in a week, as the government said it plans to buy back debt."

"The extra yield investors demand to own the country's debt rather than Treasuries shrank 10 basis points, or 0.1 percentage point, to 6.7 percentage points at 4:55 p.m. in New York, according to JPMorgan Chase & Co. The so-called spread is the smallest since Aug. 15."

"Argentina will repurchase $50 million of bonds this week as part of buyback program it began earlier this month, the Economy Ministry said in a statement. The government has bought back $380 million of debt in the last two weeks. Argentine bonds also gained after La Nacion reported, without saying how it obtained the information, that the government is considering reopening its 2005 restructuring of $95 billion in defaulted debt to holdouts."

"The buyback and speculation on reopening the debt exchange ``created a better tone for Argentine assets,'' said Dario Pedrajo, who as a senior portfolio manager oversees $100 million of emerging-market debt for Miami-based Kapax Investment Advisors."

"Cabinet Chief Sergio Massa denied the La Nacion report, telling reporters in Buenos Aires today that the government has no plans to make a new offer."

"The risk of owning Argentina's bonds declined for a second day. Five-year credit-default swaps based on the country's debt fell 6 basis points to 7.98 percentage points, according to Bloomberg data. That means it costs $798,000 to protect $10 million of the country's debt from default."

Default Risk

"Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent."

"``It would be great if they did'' reopen the settlement, said Cathy Elmore, who manages $700 million of emerging-market debt at WestLB Mellon Asset in London. ``I'm pretty skeptical. They have held out for so long.''"

"The yield on Argentina's 8.28 percent bonds maturing in 2033 fell 9 basis points to 11.23 percent, according to Bloomberg data. The bond's price rose 0.65 cent on the dollar to 74.15 cents, the highest since Aug. 15."

Merrill Lynch & Co. analyst Pablo Goldberg said in a research note that it was ``premature'' to think the government is considering reopening the exchange.

"``A reopening is one of the least costly changes the government can do, as we do not believe it will hurt its popularity at all if well dressed,'' Goldberg wrote. ``However, it would require a significant change in the way the Kirchners have been operating.''"

"The Kirchners are Argentine President Cristina Fernandez de Kirchner, and her husband and predecessor, Nestor Kirchner."

The average spread on emerging-market debt was unchanged at 3.09 percentage points.

To contact the reporter on this story: Lester Pimentel in New York at lpimentel1@bloomberg.net

"Last Updated: August 27, 2008 17:08 EDT"





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"Brazil Stocks Rise on Easing Inflation, Banks; Bolsa Gains "

By Alexander Ragir and Paulo Winterstein

Aug. 27 (Bloomberg) -- Brazilian stocks gained the most in a week as drop in wholesale prices in two years boosted retailers and banks while rising commodity prices sent energy and steel producers higher.

"Lojas Americanas SA and Banco do Brasil SA paced advances for retail and bank stocks after Brazil's broadest inflation index dropped in August more than economists expected. Petroleo Brasileiro SA and Gerdau SA gained as oil and metal prices jumped and Citigroup Inc. recommended investors buy commodity producers, banks and consumer companies as economic growth quickens."

"``We're reaching a point where people are re-evaluating whether the scenario out there is so bad,'' said Jose Oliveira, who oversees the equivalent of $49 billion as chief executive of BNY Mellon Arx in Rio de Janeiro. ``Investors are looking at the domestic market still doing well, with lower inflation.''"

"The Bovespa index rose 1,160.54, or 2.1 percent, to 55,519.24, the biggest gain since Aug. 20. The MSCI Latin America index gained 2.8 percent. Mexico's Bolsa climbed 0.2 percent. Chile's Ipsa advanced 0.4 percent."

"Investors should buy financial and consumer stocks in Brazil because the economy is growing and inflation expectations ``have peaked,'' Citigroup Inc. strategists said."

"``It is time to turn aggressive on domestic sector strategy in Brazil,'' wrote Latin American Strategist Geoffrey Dennis in a note to clients. ``The domestic economy is strong.''"

"Consumer, construction and wholesale prices, as measured by the IGP-M price index, decreased 0.32 percent, more than all estimates, and the 0.20 percent median forecast in a Bloomberg survey of 28 analysts, the Rio de Janeiro-based Getulio Vargas Foundation said today."

Banks Upgraded

"Banco do Brasil, Latin America's biggest bank, gained 5.4 percent to 23.40 reais. Lojas Americanas, the largest discount retailer, rose 2.1 percent to 10.20 reais. Citigroup's Dennis raised his rating on Brazilian banks to ``overweight' from ``underweight' and upgraded consumer companies reliant on discretionary spending to ``neutral'' from ``underweight.''"

"Lojas Renner SA, Brazil's biggest publicly traded clothing retailer, rose 2.5 percent to 30.02 reais."

Citigroup also reiterated its ``overweight'' rating on raw material producers.

"Gerdau, Latin America's largest steelmaker, climbed 2.3 percent to 29.68 reais. BNY's Oliveira said he favors steelmakers because supply constraints and strong demand will keep prices high."

Lead rose 11 percent on the London Metal Exchange as industry and investors took advantage of recent declines to buy at cheaper prices. Nickel gained 4.8 percent in London.

"Cia. Vale do Rio Doce, the world's biggest iron ore and nickel miner, gained 4 percent to 38.50 reais."

Oil Jumps

"Petrobras jumped 3 percent to 35.20 reais. Crude oil for October delivery increased $1.88, or 1.6 percent, to settle at $118.15 a barrel at 2:58 p.m. on the New York Mercantile Exchange."

"Net Servicos de Comunicacao SA, Brazil's biggest cable-TV company, gained 2.4 percent to 18.30 reais on speculation it may be able to continue charging for extra customer connections."

"The antitrust agency of Brazil's Finance Ministry defended companies' right to charge extra fees for additional connections to cable networks, Raymond James & Associates Inc. analyst Alexandre Garcia wrote in a note."

"In Mexico, the Bolsa index rose for the first time in three days, led by America Movil SAB, Latin America's largest mobile phone company."

"The company may be interested in buying an Indian wireless company, which ``could be a positive,'' JPMorgan Chase & Co. wrote in a research note. The Times of India said America Movil has approached Datacom, which has a mobile-phone license there, about buying a stake."

America Movil rose 2.2 percent to 26.06 pesos.

"Elsewhere in Latin America, Argentina's Merval index rose 1.1 percent, Colombia's IGBC dropped 0.7 percent and Peru's Lima General Index fell 3.6 percent."

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

"Last Updated: August 27, 2008 16:26 EDT"





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European Two-Year Notes Pare Gains on Money-Supply Growth Data

Aug. 28 (Bloomberg) -- European two-year notes pared gains after reports showed European money-supply growth slowed less than economists forecast in July and Germany's jobless rate dropped to the lowest level in 16 years.

"The yield on the two-year notes was little changed at 4.08 percent by 9:24 a.m. in London, after falling to as low as 4.04 percent earlier. The price of the 4.75 percent note held at 101.10."

The yield on the 10-year note dropped 3 basis points to 4.14 percent. Yields move inversely to bond prices.

To contact the reporter on this story: Agnes Lovasz in London at alovasz@bloomberg.net





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Brazil's Real Rises as Commodity Prices Boost Export Inflows

By Adriana Brasileiro and Carolina Matos

Aug. 27 (Bloomberg) -- Brazil's real rose for a second day as rising commodity prices increased foreign currency flows from exports.

"The real climbed 0.4 percent to 1.623 per U.S. dollar at 10:11 a.m. New York time compared with 1.6288 yesterday. Brazil's real has advanced 9.7 percent this year, the biggest gainer among the 16 most-actively traded currencies tracked by Bloomberg."

"``The real is moving on commodities and on the U.S. dollar performance against other currencies,'' said Rodrigo Boulos, head of proprietary trading in Sao Paulo at Banif Investment Bank."

"Crude oil rose for a third day on forecasts that Tropical Storm Gustav will strengthen as it enters the Gulf of Mexico, home to 26 percent of U.S. production. Crude oil is among Brazil's biggest export products along with iron ore and soybeans."

Metals also rose as a weakening dollar boosted the appeal of commodities as a hedging instrument. The dollar fell against 15 of the 16 most-actively traded currencies today.

"The yield on Brazil's zero-coupon bonds due in January 2010 rose 2 basis points, or 0.02 percentage point, to 14.78 percent, according to Banco Votorantim."

To contact the reporters on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net; Carolina Matos in Sao Paulo at cmatos1@bloomberg.net

"Last Updated: August 27, 2008 10:12 EDT"





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U.S. Economy Probably Expanded at Faster Pace on Export Gains

By Courtney Schlisserman

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"Aug. 28 (Bloomberg) -- The U.S. economy probably grew in the second quarter at a faster pace than previously projected, led by a jump in exports, economists said ahead of a government report today."

"Growth accelerated to a 2.7 percent annual rate from April through June, up from an advance estimate of 1.9 percent issued last month, according to the median of 78 economists surveyed by Bloomberg News. Gross domestic product rose at a 0.9 percent rate in the first three months of the year."

"Record exports and the temporary stimulus from the tax rebates prevented the economy from shrinking as housing slumped and companies slashed inventories and bought less equipment. Consumer spending is now waning and slower growth abroad dims the outlook for foreign sales, signaling last quarter will be the year's highpoint."

"``The second quarter GDP numbers will mark the economy's last hurrah,'' said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. ``Exports will continue to expand, but at a much slower pace.''"

The Commerce Department's report is due at 8:30 a.m. in Washington. Survey estimates ranged from 2.2 percent to 3.1 percent.

"Separately, initial jobless claims will remain near a six- year high, indicating the job market has weakened, economists forecast a Labor Department report at the same time will show. Applications fell to 425,000, from 432,000 a week earlier, according to the survey median. Claims totaled 457,000 in the week ended Aug. 1, the most since March 2002."

Fed Forecast

"Private economists aren't the only ones taking a dimmer view. Federal Reserve staff also ``marked down'' the central bank's forecast for growth in the second half of 2008, according to minutes of the Federal Open Market Committee's Aug. 5 meeting released earlier this week."

"A weakening labor market is one reason consumer spending is likely to slow after the government sent out about $92 billion in tax rebate checks. The U.S. has lost 463,000 jobs so far this year and wages haven't kept up with inflation, according to Labor Department data."

"The longest expansion in consumer spending on record will probably end this year, according to economists surveyed by Bloomberg earlier this month. Retail sales fell in July for the first time in five months, led by a slump in auto purchases, according to Commerce data."

"``With the rebate payouts completed for all practical purposes, we expect the boost to go away and consumption to decline over the next several months, reflecting still-high gasoline prices, the credit crunch, and slowing employment,'' Goldman Sachs economist Seamus Smyth said in a note to clients."

Less Profit

"Pacific Sunwear of California Inc., the owner of the PacSun clothing chain, said Aug. 21 that it may earn less in the third quarter than analysts had forecast. The company cited a ``difficult environment and challenging retail conditions in some of the company's key markets.''"

"The shrinking trade gap has contributed to economic growth for more than a year, culminating in a 2.4 percentage-point boost last quarter that was the biggest since 1980. The economy would have contracted at a 0.5 percent pace without the help."

"The biggest jump in exports in more than fours years caused the trade deficit to unexpectedly narrow in June, Commerce reported earlier this month. Adjusted for inflation, the gap was the smallest since December 2001. Those figures were not available when the government's advance GDP estimate was issued on July 31."

The boost from trade may wane the rest of the year as growth among some of the U.S.'s biggest trading partners slows. Europe and Japan both shrank last quarter.


Bloomberg Survey

================================================================
GDP Personal Initial
Annual Consump. Claims
" QOQ% QOQ% ,000's"
================================================================

Date of Release 08/28 08/28 08/28
Observation Period 3Q P 3Q P Aug. 23
----------------------------------------------------------------
Median 2.7% 1.6% 425
Average 2.7% 1.6% 427
High Forecast 3.1% 1.9% 450
Low Forecast 2.2% 1.5% 410
Number of Participants 78 7 40
Previous 1.9% 1.5% 432
----------------------------------------------------------------
4CAST Ltd. 2.8% --- 420
Action Economics 2.8% --- 410
AIG Investments 2.8% --- ---
Aletti Gestielle SGR 2.9% 1.6% 430
Allianz Dresdner Economic 2.7% --- ---
Argus Research Corp. 2.6% --- ---
Banc of America Securitie 2.6% --- ---
Bank of Tokyo- Mitsubishi 2.8% --- 427
Barclays Capital 2.7% --- 430
BBVA 3.0% --- ---
BMO Capital Markets 2.7% --- 425
BNP Paribas 2.8% --- 420
Briefing.com 2.8% --- ---
Calyon 2.7% --- ---
CFC Group 2.5% 1.6% 435
CIBC World Markets 2.8% --- ---
Citi 2.8% --- 430
ClearView Economics 2.4% --- ---
Commerzbank AG 2.5% --- 450
Credit Suisse 2.8% --- 410
Daiwa Securities America 2.6% --- ---
Danske Bank 2.5% --- ---
DekaBank 2.8% --- ---
Desjardins Group 2.3% --- 425
Deutsche Bank Securities 2.9% --- ---
Deutsche Postbank AG 2.3% --- ---
Dresdner Kleinwort 2.9% --- ---
DZ Bank 2.5% --- ---
First Trust Advisors 2.8% --- 429
Fortis 2.6% --- ---
FTN Financial 2.2% --- ---
Global Insight Inc. 2.7% --- ---
"Goldman, Sachs & Co. 2.5% --- ---"
H&R Block Financial Advis 2.8% 1.5% 415
HBOS Treasury Services 2.8% --- 450
Helaba 2.5% --- ---
High Frequency Economics 2.4% --- ---
Horizon Investments 2.3% --- ---
HSBC Markets 2.8% --- 420
IDEAglobal 2.8% 1.9% 445
Informa Global Markets 2.9% --- 440
ING Financial Markets 2.4% --- 430
Insight Economics 3.0% --- 425
Intesa-SanPaulo 2.5% --- ---
J.P. Morgan Chase 2.7% --- 420
Janney Montgomery Scott L 2.6% 1.5% ---
Landesbank Berlin 2.5% --- 425
Landesbank BW 3.1% --- ---
Lehman Brothers 2.9% --- 420
Lloyds TSB 2.8% --- 415
Maria Fiorini Ramirez Inc 2.7% --- 430
Merk Investments 2.7% --- ---
Merrill Lynch 2.3% --- 430
Moody's Economy.com 2.7% --- 420
Morgan Stanley & Co. 2.5% --- ---
National City Corporation 2.7% --- ---
Natixis 2.5% --- ---
Newedge 2.6% 1.6% ---
Nomura Securities Intl. 2.6% --- ---
Nord/LB 2.5% --- 425
PNC Bank 2.8% --- ---
RBS Greenwich Capital 2.7% --- ---
"Ried, Thunberg & Co. 2.6% --- 425"
Schneider Trading Associa 2.6% 1.7% 425
Scotia Capital 2.7% --- 445
Societe Generale 2.5% --- ---
Stone & McCarthy Research 2.9% --- 425
TD Securities 2.7% --- 420
Thomson Financial/IFR 2.5% --- 430
Tullett Prebon 2.8% --- 435
UBS Securities LLC 2.8% --- 425
Unicredit MIB 2.8% --- 430
University of Maryland 2.6% --- ---
Wachovia Corp. 2.9% --- ---
Wells Fargo & Co. 2.8% --- 410
WestLB AG 2.5% --- ---
Westpac Banking Co. 3.0% --- 425
Wrightson Associates 2.6% --- 425
================================================================


To contact the report on this story: Courtney Schlisserman in Washington Cschlisserma@bloomberg.net

"Last Updated: August 28, 2008 00:01 EDT"





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"Argentina, Brazil, Chile: Latin America Bond, Currency Preview "

By Valerie Rota

Aug. 28 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from the previous session.

Argentina: An offer to buy back as much as 150 million pesos ($50 million) of bonds closes today at 1 p.m. New York time. The repurchase is part of a buyback program the government began earlier this month. Argentina bought back $380 million of dollar- and peso-denominated bonds in the previous two weeks.

The peso was little changed at 3.0263 per dollar.

"The yield on the country's inflation-linked peso bonds due in December 2033 rose 7 basis points, or 0.07 percentage point, to 10 percent, according to Citigroup Inc.'s unit in Argentina."

"Brazil: President Luiz Inacio Lula da Silva plans to boost spending excluding interest payments by 13 percent in 2009, the government's budget proposal for next year showed yesterday."

"The federal government plans to spend 607.8 billion reais ($375 billion) in 2009, compared with 539.1 billion reais authorized for this year. The budget estimates economic growth next year will slow to 4.5 percent, compared with 5 percent this year and 5.4 percent in 2007. Inflation in 2009 will slow to 4.5 percent from 6.4 percent this year."

The real rose 0.4 percent to 1.6219 per dollar.

"The yield on the country's zero-coupon bonds due January 2010 rose less than 1 basis point to 14.8 percent, according to Banco Votorantim SA."

"Chile: Industrial production increased 4.3 percent in July from a year earlier after falling 0.9 percent the previous month, according to the median forecast of 12 analysts in a Bloomberg News survey. Unemployment was 8.4 percent last month, matching the jobless rate in June, the median forecast of 13 economists surveyed by Bloomberg shows. The national statistics agency is scheduled to publish the reports at 9 a.m. New York time."

The peso rose 0.6 percent to 519.82 per dollar.

"The yield for a basket of five-year peso bonds in inflation-linked currency units rose 1 basis point to 2.88 percent, according to Bloomberg composite prices."

To contact the reporter on this story: Valerie Rota in Mexico City at vrota1@bloomberg.net.

"Last Updated: August 28, 2008 00:01 EDT"





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Pound Drops Versus Euro as House Prices Fall for Ninth Month

By Lukanyo Mnyanda and Andrew MacAskill

Aug. 28 (Bloomberg) -- The U.K. pound fell to the lowest level in four months against the euro after a private report showed house prices fell a ninth month.

"The pound fell for a second day after the survey from Nationwide Building Society, the nation's fourth-biggest mortgage lender, showed the average value of a home dropped 1.9 percent in August, exceeding economists estimates for a decline of 1.5 percent. Loans approved for house purchases slumped 65 percent last month, the British Bankers' Association said yesterday."

"The U.K. currency fell to as low as 80.61 pence per euro by 7:10 a.m. in London, the lowest since April 17, from 80.23 yesterday. The pound was little changed at $1.8348, showing a decline this month of 7.5 percent. It's headed for the biggest monthly loss since October 1992, when it sank 12 percent."

"U.K. government bonds dropped with Treasuries and European bonds yesterday, reversing an earlier gain that pushed the yield on the 10-year bond to the lowest level since April 16."

"``We know that the economy is very weak and the numbers, if anything, are deteriorating further,'' said Sean Maloney, a fixed-income strategist at Nomura International Plc in London. ``The market is now waiting for the Bank of England to get the impetus to come in and support things and then gilts will really get moving.''"

"The yield on the 10-year gilt rose 1 basis point to 4.50 yesterday. The 5 percent security due March 2018 fell 0.08, or 80 pence per 1,000-pound ($1,8373) face amount, to 103.82."

"The yield on the two-year gilt, which is more sensitive to interest-rate expectations, increased 2 basis points to 4.41 percent. Bond yields move inversely to prices."

To contact the reporters on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net

"Last Updated: August 28, 2008 02:13 EDT"





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Germany Aug. Seasonally Adjusted Unemployment: Summary (Table)

By Kristian Siedenburg

Aug. 28 (Bloomberg) -- Following is a summary of Germany's August seasonally adjusted unemployment figures from the German Federal Labor Office in Nuremberg:


================================================================================
Aug. July June May April March Feb.
2008 2008 2008 2008 2008 2008 2008
================================================================================
Unemployment rate 7.6% 7.7% 7.8% 7.9% 7.9% 8.0% 8.1%
--------------------------------------------------------------------------------
"Unemployed chg -40,000 -20,000 -43,000 -14,000 -17,000 -52,000 -60,000"
"Vacancies -2,000 -8,000 6,000 -6,000 -10,000 -5,000 -4,000"
"Employed n/a 37,000 16,000 15,000 33,000 32,000 34,000"
================================================================================
NOTE: Levels represent the change from the previous month.

SOURCE: Bundesagentur fur Arbeit (Federal Labor Office)


To contact the reporter on this story: Kristian Siedenburg in Budapest at ksiedenburg@bloomberg.net

"Last Updated: August 28, 2008 04:06 EDT"





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U.K. Government Bonds Rise as House Prices Drop Most Since 1990

"Aug. 28 (Bloomberg) -- U.K. government bonds rose after a report showed house prices posted their biggest annual drop in almost two decades in August, reinforcing speculation the economy may slow enough for the central bank to cut interest rates."

"Nationwide Building Society, the nation's fourth-biggest mortgage lender, said the average value of a home slipped 10.5 percent, the steepest drop since the final quarter of 1990 and more than the 9.6 percent forecast by economists in a Bloomberg survey. Two-year yields have fallen 35 basis points this month as investors reduced bets the Bank of England will lift rates."

"``We know the economy is very weak and the numbers, if anything, are deteriorating further,'' said Sean Maloney, a fixed-income strategist at Nomura International Plc in London. ``The market is waiting for the Bank of England to get the impetus to come in and support things and then gilts will really get moving.''"

"The yield on the two-year gilt, which is more sensitive to interest-rate expectations, dropped 6 basis points to 4.45 percent by 8:22 a.m. in London. The 4.75 percent security due June 2010 rose 0.10, or 1 pound per 1,000-pound ($1,837) face amount, to 100.51."

The yield on the 10-year gilt dropped 5 basis points to 4.45 percent. Yields move inversely to bond prices.

"This month's annual decline in property prices was the first double-digit percentage drop since 1990. Two-year gilts also rose this week as an industry report showed mortgage approvals held near the weakest level in a decade. The number of mortgages approved last month slumped 65 percent in the year and their value fell to the least since 1998, the British Bankers' Association said."

To contact the reporter on this story: Lukanyo Mnyanda in London at lmnyanda@bloomberg.net; Andrew MacAskill in London at amacaskill@bloomberg.net





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India's Rupee May Advance on Speculation Central Bank Will Buy

By Anoop Agrawal

Aug. 28 (Bloomberg) -- India's rupee may gain for a second day on speculation the central bank will seek to bolster the currency to curb inflation.

The Reserve Bank of India may purchase the rupee as its decline this week to the lowest level since March 2007 threatened to boost the cost of imported commodities including crude oil. A government report today may show inflation accelerated to the fastest pace since June 1992.

"``There was discomfort after the rupee fell past 44 per dollar, which gave rise to speculation the central bank will intervene,'' said Parthasarthi Mukherjee, treasurer of Axis Bank Ltd. in Mumbai. ``I think the rupee will not weaken now.''"

"The rupee was little changed at 43.745 per dollar as of 9:43 a.m. in Mumbai, versus 43.7535 yesterday, according to data compiled by Bloomberg."

"Central banks intervene in currency markets by arranging purchases or sales of foreign exchange. The Reserve Bank of India doesn't comment on daily rupee movements and its foreign- exchange operations, according to Mumbai-based spokeswoman Alpana Killawala."

"India's foreign-exchange reserves fell for a fifth week through Aug. 15, the longest stretch of declines since November 2000, indicating the central bank sold dollars to support the rupee."

"India's foreign-currency reserves dropped to $286 billion in the week ended Aug. 15, from a record $306.2 billion in May, according to data provided by the central bank."

"Wholesale prices jumped 12.78 percent in the week ended Aug. 16 from a year earlier, the biggest gain since June 1992, according to the median estimate in a Bloomberg survey of 22 economists. The Ministry of Commerce and Industry will report the data at about 6 p.m. in New Delhi."

To contact the reporter on this story: Anoop Agrawal in Mumbai at aagrawal8@bloomberg.net.

"Last Updated: August 28, 2008 00:23 EDT"





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Euro Rises for Second Day on Speculation ECB Won't Lower Rates

By Gavin Finch and Stanley White

Aug. 28 (Bloomberg) -- The euro rose against the dollar for a second day on speculation the region's interest-rate advantage over the U.S. will draw investors after a European Central Bank official signaled a cut in borrowing costs is unlikely.

"The euro is at a four month-high against the British pound after ECB policy makers Axel Weber and Lucas Papademos said yesterday that rates may have to rise as the economy recovers. The U.S. dollar fell for a second day against the yen as oil climbed, threatening growth in the largest energy consumer. The Australian dollar gained after a government report showed second- quarter business investment increased by almost three times as much as forecast."

"``There seems to be a concerted ECB drive to correct market perceptions that policy makers are even considering a rate cut and that's supporting the euro in the short term,'' said Kamal Sharma, a currency strategist in London at JPMorgan Chase & Co. ``Given the outlook for U.S. financial institutions there's also reasons to suggest that the dollar looks vulnerable at these levels.''"

"The euro rose to $1.4778 at 9:17 a.m. in London, from $1.4727 yesterday in New York. The currency traded at 160.90 yen from 161.27. Against the pound, it appreciated 0.2 percent to 80.43 pence, near a record high of 80.99 pence on April 16. The dollar fell to 108.88 yen, from 109.49 yen."

"The euro stayed higher after a report showed unemployment fell in Germany in August by an adjusted 40,000, outpacing economists expectations of a 10,000 decline."

Aussie Dollar

"The Australian dollar advanced to 86.72 U.S. cents, a second day of gains, from 85.88 cents yesterday after the Bureau of Statistics said capital spending rose 5.7 percent from the first quarter, when it increased a revised 1 percent."

"ECB policy makers may need to raise borrowing costs once the economic outlook ``brightens'' toward the end of the year and in 2009, Weber, 51, who heads Germany's Bundesbank, said in an interview in Frankfurt. Papademos, the ECB's vice president, said in a speech in Buenos Aires there's a risk of a wage-price spiral which, if it happens, would ``require a stronger degree of monetary tightening.''"

Annual increases in consumer prices of 4 percent for the 15 nations that share the euro are twice the ECB's target of just below 2 percent. The yield spread on two-year German government debt over similar maturity Treasuries widened to 1.73 percentage points from a two-month low of 1.54 percentage points on Aug. 13.

Traders reduced bets that the central bank will cut its 4.25 percent main refinancing rate next year. The implied yield on the Euribor futures contract expiring in September 2009 has risen 9 basis points this week to 4.47 percent. The yield averaged 18 basis points above the ECB's benchmark from 1999 to August 2007.

Dollar Rally

"The dollar's rally against the euro over the past month is ``overdone'' and doesn't reflect the outlook for interest rates and economic growth in the U.S. and Europe, according to Bank of Tokyo-Mitsubishi UFJ Ltd."

"The correlation between the euro-dollar exchange rate and the implied yield differential on the 90-day Eurodollar futures contract for March 2009 delivery and the corresponding Euribor contract has been weakening. They have had a correlation of 0.97 in the past two years, according to Derek Halpenny, London-based head of currency research at the firm. A reading of 1 would mean they moved in lockstep."

"``The very substantial dollar gains of the past month are not justified by the outlook for the U.S. economy,'' said Halpenny. ``The fallout from the collapse of the housing market is in its early stages and will undermine economic growth for some time. Meanwhile, the outlook for the euro region is not as bleak as some are forecasting.''"

Oil Rises

"Crude oil rose for a fourth day, to $118.70 a barrel, on forecasts Tropical Storm Gustav will strengthen as it enters the Gulf of Mexico, home to 26 percent of U.S. production."

"Declines in the dollar may be limited before revisions to the second-quarter gross domestic product report from the Commerce Department today. The U.S. economy expanded an annualized 2.7 percent, faster than preliminary data showing 1.9 percent growth, according to a Bloomberg survey of 78 economists."

"``The dollar has gained valuable support,'' said Kengo Suzuki, currency strategist in Tokyo at Shinko Securities Co. ``The U.S. economy looks to be in a better position than other countries as the global economic slowdown spreads.'' The U.S. currency may rise to 110 yen next week, he said."

Losses in the yen may be limited by speculation Japanese investors are repatriating earnings amid concern the U.S. housing slump will worsen.

Repatriating Earnings

"Japanese investors' disposals of overseas bonds exceeded purchases by 1.42 trillion yen ($13 billion) in the week ended Aug. 23, the biggest net sales since at least 2001, the Finance Ministry said today in Tokyo. JPMorgan Asset Management Japan Ltd. said last week it was reducing holdings of debt of Fannie Mae and Freddie Mac, the two largest U.S. mortgage financers."

"``The global economy is sluggish and Japanese investors can't take on risk and so we've seen them reducing exposure of foreign assets,'' said Yasutoshi Nagai, chief economist in Tokyo at Daiwa Securities SMBC Co., part of Japan's second-largest brokerage. ``I'd expect the yen to continue appreciating for the rest of this year'' to around 105 versus the dollar, he said."

"The U.S. Dollar Index's six-week advance may stall at 77.85, based on charts that predict price movements, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London."

"The rally in the Dollar Index from the middle of July has lost its ``bullish'' short-term momentum and trend strength before reaching its December high of 77.85, Edgeley wrote in a research note yesterday."

"The Dollar Index traded on ICE Futures in New York declined 0.4 percent to 76.77, from 77.051 yesterday. It reached an eight- month high of 77.619 on Aug. 26."

"The Dollar Index's support levels are at the Aug. 21 low of 76.02 and June 13 high of 74.31, according to the report."

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net; Stanley White in Tokyo at swhite28@bloomberg.net

"Last Updated: August 28, 2008 04:22 EDT"





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"Asian Currencies: Won Gains on Intervention, Peso Unchanged "

By Aaron Pan and Kim Kyoungwha

"Aug. 28 (Bloomberg) -- South Korea's won strengthened, leading gains amongst Asian currencies, on speculation the central bank will intervene to curb losses. The Philippine peso was little changed before a monthly interest-rate decision."

"Korea's won rose for a second day after Vice Finance Minister Kim Dong Soo said the central bank will take action to prevent drastic moves in the currency when necessary. Seven of the 10 most-active Asian currencies outside of Japan rose today, with the rest little changed."

"``Market participants are unwilling to push the dollar higher given that ministry officials' rhetoric raised the possibility of intervention,'' said Jay Won, a currency dealer with Korea Exchange Bank in Seoul. ``Offshore players are selling the dollar, which is also adding to the won's advance.''"

"The currency rose 0.2 percent to 1,081.95 against the dollar as of 1:01 p.m. in Seoul, according to Seoul Money Brokerage Services Ltd. It has fallen 13.6 percent this year, the worst performer in the region."

"Central banks intervene in the currency market by selling or buying foreign exchange. The Korean currency will trade between 1,075 and 1,087 today, Won forecast."

"Fund managers outside the nation sold more Korean shares than they bought for an eighth day, stock exchange data showed."

The Philippine peso was little changed against the dollar on speculation the central bank today will raise its key interest rate for the third time this year.

`Tightening Mode'

"Bangko Sentral ng Pilipinas is ``still on a tightening mode'' as inflation probably held near the fastest pace in more than 16 years this month, Deputy Governor Diwa Guinigundo said yesterday. All 15 economists in a Bloomberg News survey forecast the central bank will raise rates by at least 25 basis points, or a quarter-percentage point, to 6 percent."

"The peso ``will be range trading because we're awaiting the decision of the BSP,'' said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp. in Manila. ``If the central bank increases its rate by 50 basis points, then it will help the peso.''"

"The local currency traded at 45.760 per dollar, compared with 45.725 late yesterday, according to Tullett Prebon Plc. The peso may trade between 45.60 and 46 today, Ayes said."

Malaysia's ringgit traded near a nine-month low on speculation the central bank will tolerate a weaker currency to help revive exports amid signs economic growth is slowing.

Malaysian GDP

"The currency was little changed as economists in a Bloomberg News survey predicted gross domestic product expanded at the slowest in a year in the second quarter. Bank Negara Malaysia release the report tomorrow, the same day Prime Minister Abdullah Ahmad Badawi present the 2009 Budget in parliament."

"``Growth could have slowed given that the external sector has cooled and domestic demand was affected after the March general elections,'' said Irvin Seah, an economist at DBS Bank Ltd. in Singapore. ``It's not looking good for the ringgit and the central bank may want a weaker currency to help boost exports.''"

"The ringgit traded at 3.3765 per dollar, versus 3.3790 yesterday, according to data compiled by Bloomberg."

"Taiwan's dollar was little changed near a six-month low, stabilizing on speculation a recession will be averted in the U.S., the world's biggest economy."

"A U.S. government report yesterday showed durable goods orders unexpectedly increased in July. A stronger U.S. economy may help sustain Taiwan's exports, which account for about half of the island's gross domestic product."

`Facing Problems'

"``These numbers suggest the U.S. economy may not be as bad, but I wouldn't be too quick to say all is well,'' said Thio Chin Loo, a currency strategist at BNP Paribas SA in Singapore. ``Taiwan's trade balance shifted to a deficit in July and it's still facing problems with the economy. We wouldn't be surprised to see the Taiwan dollar hit NT$32 by the end of the year.''"

"The island's currency was little changed at NT$31.470 against the U.S. dollar, compared with yesterday's close of NT$31.481, according to Taipei Forex Inc. It touched NT$31.571 on Aug. 25, the weakest level since Feb. 21."

"Elsewhere, the Singapore dollar added 0.2 percent to S$1.4139, Indonesia's rupiah gained 0.1 percent to 9,156 and Thailand's baht rose 0.1 percent to 34.05. Vietnam's dong advanced 0.4 percent to 16,560."

To contact the reporters on this story: Aaron Pan in Hong Kong at apan8@bloomberg.net; Kim Kyoungwha in Beijing at kkim19@bloomberg.net.

"Last Updated: August 28, 2008 00:22 EDT"





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"National Bank, Royal Bank, TD Bank: Canada Equity Preview "

By John Kipphoff

"Aug. 27 (Bloomberg) -- The following companies may have unusual price changes in Canadian trading tomorrow. Stock symbols are in parentheses, and share prices are from the previous close."

"The Standard & Poor's/TSX Composite Index added 1.7 percent to 13,530.65."

"National Bank of Canada (NA CN): The nation's sixth-biggest lender by assets is scheduled to report fiscal third-quarter results. The bank may report profit of C$1.40 a share excluding one-time gains and losses, the median of 13 analysts' estimates in a Bloomberg survey. The shares gained 3.5 percent to C$48.50."

"Royal Bank of Canada (RY CN): The country's largest bank may say that it earned C$1.07 a share before one-time items in the third quarter, the median estimate of 10 analysts polled by Bloomberg News. The shares rose 2.5 percent to C$45.30."

"Toronto-Dominion Bank (TD CN): Canada's second-biggest bank may report third-quarter profit of C$1.45 a share excluding one- time items, the mean estimate of 12 analysts surveyed by Bloomberg News. The shares rose 1.8 percent to C$59.34."

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

"Last Updated: August 27, 2008 18:39 EDT"





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Australian Dollar Gains as Spending Surges; N.Z. Dollar Rises

By Ron Harui and Tracy Withers

Aug. 28 (Bloomberg) -- The Australian dollar rose after a government report showed business investment increased almost three times as much as economists estimated in the second quarter. The New Zealand dollar gained.

"Australia's dollar advanced for a second day on speculation the economy will be resilient enough to warrant fewer central bank interest-rate reductions than earlier forecast. New Zealand's dollar climbed for a second day on optimism the economy is recovering from a first-half recession, prompting traders to pare bets on lower borrowing costs."

"``The report will encourage the Reserve Bank of Australia to be measured in its easing cycle,'' said Adam Carr, Sydney-based senior economist at ICAP Australia Ltd., part of the world's largest inter-bank broker. ``It's very modestly bullish for the Aussie dollar,'' he said, referring to the currency by its nickname."

"The Australian dollar climbed 0.7 percent to 86.76 U.S. cents at 4:48 p.m. in Sydney, from 86.05 cents before the report and 86.18 cents late in Asia yesterday. It reached 84.94 cents on Aug. 26, the lowest since Sept. 20. The currency strengthened 0.7 percent to 94.48 yen from 93.78 yen."

"The New Zealand dollar advanced 0.6 percent to 70.62 U.S. cents from 70.17 cents in Asia yesterday. It touched 68.26 cents on Aug. 13, the lowest since August 2007. The currency, known as the kiwi, rose 0.8 percent to 76.93 yen from 76.36 yen."

Capital Spending

"Australia's currency trimmed this week's loss against the U.S. dollar to 0.2 percent after the Bureau of Statistics said in Sydney that capital spending rose 5.7 percent from the previous three months, when it gained a revised 1 percent. The median estimate of economists surveyed by Bloomberg News was for a 2 percent gain."

"Traders are betting the RBA will cut its 7.25 percent benchmark interest rate by 1.09 percentage points within the next year, down from a forecast of 1.14 percentage points yesterday, according to a Credit Suisse Group index based on interest-rate swaps."

"Benchmark rates in Australia and those of 8 percent in New Zealand compare with 2 percent in the U.S. and 0.5 percent in Japan, making the two South-Pacific nations popular destinations for international investors seeking higher returns."

New Zealand's dollar was the third-best performer among the 16 most-active currencies versus the U.S. dollar today after a survey yesterday showed business confidence improved in August for the first time in six months.

`More Positive'

"``The business confidence data revealed a more positive outlook,'' said Philip Borkin, an economist at ANZ National Bank Ltd. in Wellington. ``U.S. dollar fortunes may wane'' against the New Zealand dollar, he said."

"Companies were positive about sales and profits over the next 12 months, according to an ANZ National Bank Ltd. survey. A second measure of economic confidence improved to minus 21 from minus 43, and firms were less pessimistic about profits, hiring and investment plans."

"New Zealand's $105 billion economy was probably in a recession in the six months through June, the Treasury Department said Aug. 4."

"A separate Credit Suisse Group index shows the Reserve Bank of New Zealand may lower its official cash rate by 1.41 percentage points over the next 12 months, down from 1.45 points yesterday."

"Australian 10-year government bonds fell, snapping a two-day winning streak, with the yield rising 5 basis points, or 0.05 percentage point, to 5.77 percent. The price of the 5.25 percent security due March 2019 declined 0.366, or A$3.66 per A$1,000 face amount, to 95.973."

"New Zealand 10-year government debt gained for a fourth day, with the yield falling 3 basis points to 6.01 percent. The price of the 6 percent note maturing in December 2017 rose 0.184, or NZ$1.84 per NZ$1,000 face amount, to 99.924. Yields move inversely to prices."

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Tracy Withers in Wellington at twithers@bloomberg.net

"Last Updated: August 28, 2008 02:52 EDT"





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Japan's Government Bonds Gain as Demand Increases at Debt Sale

"Aug. 28 (Bloomberg) -- Japan's government bonds rose, pushing 10-year yields to near the lowest in four months, after demand increased at an auction of two-year notes."

"The sale of the securities drew bids for 3.85 times the amount on offer, compared with a so-called bid-to-cover ratio 3.30 at the previous sale of the debt last month. Government reports tomorrow may show industrial output fell in July for a second month and unemployment held at the highest in almost two years, according to Bloomberg News surveys."

"``The market is bullish,'' said Takashi Nishimura, an analyst in Tokyo at Mitsubishi UFJ Securities Co., a unit of Japan's largest bank by assets. ``Given there is no sign of a recovery in the data, the bullish mood will continue. Stocks are really, really risky and investors are in a dilemma because they know bonds are very expensive, but they have no alternatives.''"

"The yield on the 1.5 percent bond due June 2018 fell 1 basis point to 1.42 percent as of 5:04 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.087 yen to 100.688 yen. A basis point is 0.01 percentage point."

"Ten-year bond futures for September delivery climbed 0.17 to 138.25 as of the 3 p.m. close at the Tokyo Stock Exchange. Japan's Nikkei 225 Stock Average has lost 4.5 percent in August, set for a third monthly loss."

The lowest price at the 1.7 trillion yen ($15.6 billion) sale of 0.7 percent notes was 0.05 yen higher than the 99.925 median forecast in a Bloomberg survey of economists.

Factory Output

"Industrial production declined 0.3 percent from June, when it fell 2.2 percent, according to the median estimate of economists surveyed by Bloomberg before tomorrow's report. The unemployment rate may have held at 4.1 percent, the highest since September 2006, a separate Bloomberg survey showed."

"The data may add to evidence the world's second-largest economy is slipping into a recession. Gross domestic product shrank an annualized 2.4 percent in the quarter ended June 30, the government said this month."

"The gain in bonds was limited on speculation yields are too low given the Bank of Japan is likely to keep its overnight lending rate unchanged, according to Calyon Securities, one of the 26 primary dealers required to bid at government debt sales."

"Five-year yields, among the most sensitive to changes in monetary policy, fell half a basis point to 0.99 percent, extending their decline from an 11-month high of 1.555 percent reached on June 13."

"``Yields have been too low lately and investors should be cautious as the BOJ cannot cut rates,'' said Susumu Kato, chief economist at Calyon in Tokyo."

Bets Pared

"Traders pared bets the central bank will reduce borrowing costs by year-end. There is a 1 percent chance of a cut to 0.25 percent from 0.5 percent by the end of December, according to calculations by JPMorgan Chase & Co. using overnight interest- rate swaps. The odds declined from 15 percent on Aug. 19, when the central bank kept its target rate unchanged."

"Bank of Japan board member Miyako Suda said containing inflation is ``key'' to sustaining the economy's expansion, suggesting she is more concerned about rising prices than her colleagues. A government report tomorrow is estimated by economists to show the inflation rate exceeded 2 percent in July for the first time in a decade."

"``While the Japanese economy is in a sluggish state, containing inflation is key to sustaining economic growth,'' Suda told business executives today in Kanazawa, central Japan. ``Given that global monetary conditions have been accommodative, inflation is rising around the world, and that's clearly causing inflationary expectations of people and companies to rise.''"

Nomura Index

Bonds also gained on speculation some investors purchased the securities match a month-end change in a benchmark index they use to gauge performance.

"Nomura Securities Co. will increase the average duration of its Bond Performance Index by 0.16 year to 6.25 years in September, according to the company's Web site."

"``Demand for bonds may rise as month-end index buying comes in,'' said Daisuke Uno, chief bond and currency strategist at Sumitomo Mitsui Banking Corp. in Tokyo."

"Money managers such as Japan's Government Pension Investment Fund, which runs the world's largest pool of retirement wealth, use Nomura's index to help decide their holdings. Duration is a gauge of how much a change in yields affects the price of a bond or debt portfolio."

To contact the reporter on this story: Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net.





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"Fannie, Freddie Attract Buyers to Short-Term Debt (Update2) "

By Jody Shenn

Aug. 27 (Bloomberg) -- Fannie Mae and Freddie Mac sold $3 billion of short-term notes at yields that suggest the largest U.S. mortgage-finance companies are still capable of financing their businesses without government assistance.

"The yields on the debt relative to benchmark rates, while higher than in sales earlier this month, remain lower than a year ago, data compiled by Bloomberg show."

"Investors have been watching the debt sales for any ``tell- tale'' signs that Washington-based Fannie and Freddie of McLean, Virginia, can't fund themselves, UBS AG analysts in New York including William O'Donnell wrote in a report. Today's spreads were wide enough to attract demand, yet narrow enough to dim speculation the government-sponsored companies will be forced to turn soon to Treasury Secretary Henry Paulson for support."

"``The rising spreads clearly show some buyers are backing away from the market, but in general I think money funds continue to buy and hold Fannie and Freddie debt,'' said Peter Crane, president of Crane Data LLC, a firm in Westborough, Massachusetts, that tracks money-market funds. ``They assume the short-term money-market debt will be safe and covered.''"

Rescue Plan

"In Fannie's sale, the company paid the most relative to bank borrowing in a weekly auction since July 23, when lawmakers passed Paulson's emergency rescue plan. Freddie paid the most relative to the London interbank offered rate in a monthly auction since July 2007. Higher debt costs may lessen the companies' ability to use revenue from their $1.6 trillion portfolios to offset rising foreclosure-related expenses."

"Fannie sold $1 billion of three-month notes at a yield of 2.58 percent, the company said. That's about 89 basis points more than U.S. Treasuries and 23 basis points less than three-month Libor, compared with 76 basis points and 31 basis points in a sale last week."

"Freddie raised $1 billion of one-month debt at a yield of 2.28 percent, or 66 basis points more than Treasuries and 18 basis points less than one-month Libor. A month ago, the company sold similar debt at yields 55 basis points above Treasuries and 22 basis points below Libor."

"Merrill Lynch & Co. analysts Kenneth Bruce and Cyrus Lowe today said a bailout of Fannie and Freddie is ``premature'' because losses won't cause capital to deplete for several quarters. Paulson, who was granted the power last month to offer capital and loans to Fannie and Freddie, hasn't detailed plans for any support, leaving some bond buyers wary."

Expand Homeownership

"Fannie rose for a fifth straight day, climbing 86 cents, or 15 percent, to $6.48 in New York Stock Exchange composite trading. Freddie increased for a third day, advancing 78 cents, or 19 percent, to $4.75. The companies have each lost more than 83 percent of their market values this year."

"U.S. House Financial Services Committee Chairman Barney Frank said yesterday in an interview with Bloomberg Television that he doesn't know if a government bailout is ``inevitable,'' adding that the two companies are performing better than many banks, mortgage lenders and securities firms."

"Congress created Fannie and Freddie to expand homeownership and provide market stability. They make money by buying mortgage and related bonds, funding their purchases with lower-cost debt, and by guaranteeing home-loan securities. The companies have about $200 billion of debt maturing through Sept. 30."

Overseas

"The Treasury is paying more attention to the yields paid by Fannie and Freddie in sales of long-term debt than their short- term borrowing, said Paul Colonna, the chief investment officer for fixed income at GE Asset Management in Stamford, Connecticut."

"``That's where all the large institutional players overseas are playing,'' he said today. ``We're comfortable with the credit risk profile of both the short term and long term senior debt.''"

"Fannie also sold $1 billion of six-month debt today at a yield of 2.87 percent, about 93 basis points above Treasury bills and 28 basis points below six-month Libor, compared with 88 basis points and 31 basis points last week. A basis point is 0.01 percentage point. Three-month Libor is currently set at 2.81 percent, while six-month Libor is at 3.12 percent."

"Yield spreads on short-term agency debt, the term for notes sold by Fannie, Freddie and the government-chartered Federal Home Loan Banks, have been mostly below historical averages this year, according to data complied by Bloomberg."

"In the five years ended June 30, 2007, yields on 90-day agency debt averaged with 18 basis points below three-month Libor, a measure of the average rate banks at which banks can borrow. So far this year, they've averaged 50 basis points. Since mid-2007, the spread reached as high as 95 basis points on Sept. 13, and as low as 15 basis points on July 23."

No Place to Go

"``There's no other place to go, now that money funds are out of SIVs,'' Crane said. ``A lot of people are looking at the rise in spreads as a godsend.''"

"Sales of commercial paper by SIVs, or structured investment vehicles, once an almost $400 billion market, halted in mid-2007 after buyers became concerned that some of the funds invested in bonds tied to subprime mortgages."

"Fannie and Freddie's rising relative borrowing costs have come with spreads on the mortgage-backed securities they invest in also climbing. The option-adjusted spread on fixed-rate home- loan bonds guaranteed by the companies or U.S. agency Ginnie Mae rose to 151 basis points yesterday, from 108 basis points on June 2, according to Lehman Brothers Holdings Inc. data."

"If their borrowing costs climb to ``some kind of distressed level, outside of corporate AAAs,'' Fannie and Freddie might be forced into sales of mortgage bonds, hurting prices and forcing up loan rates, FTN Financial Capital Markets mortgage-bond strategist Walt Schmidt said in an interview yesterday."

"The debt of top-rated U.S. corporate borrowers yields about 175 basis points more than U.S. Treasuries, compared with the about 82 basis point spread on the long-term debt of Fannie and Freddie, according to Merrill index data."

To contact the reporter on this story: Jody Shenn in New York at jshenn@bloomberg.net.

"Last Updated: August 27, 2008 17:00 EDT"





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U.K. Nationwide House Prices Drop Most Since 1990 (Update1)

By Svenja O'Donnell

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"Aug. 28 (Bloomberg) -- U.K. house prices declined at the fastest annual pace in almost two decades in August after lower mortgage lending and the prospect of a recession discouraged home buyers, Nationwide Building Society said."

"The average value of a home plunged 10.5 percent to 164,654 pounds ($301,500), the biggest drop since the final quarter of 1990, Britain's fourth-biggest mortgage lender said today. Prices fell 1.9 percent from July, the 10th monthly decline."

"The fastest inflation in more than a decade, a stagnant economy and the rationing of mortgages by banks have sparked the worst property slump since the last recession in the early 1990s. That's prompting economists at banks including Societe Generale SA and Bank of America Corp. to forecast policy makers will be forced to set aside inflation concerns and cut interest rates this year."

"``Confidence in the housing market has been evaporating,'' said Fionnuala Earley, chief economist at Nationwide, in a television interview. ``You'd expect that given the amount of economic gloom we're seeing.''"

"U.K. government bonds rose. The yield on the two-year gilt, which is more sensitive to rate expectations, dropped 5 basis points to 4.44 percent at 9:07 a.m. in London."

"This month's annual price decline was also the first double- digit percentage drop since 1990. The U.K.'s economy ground to a halt in the second quarter, ending the nation's longest stretch of growth in a century after tighter credit deterred spending and investment."

Losing Value

"``If prices continue to fall at the pace they have done over the past three months, then they will end the year down 15 percent,'' said George Buckley, an economist at Deutsche Bank AG in London, in an e-mailed note. ``With inflation running at 5 percent, this means that residential real estate will have lost around a fifth of its value in real terms during 2008.''"

"Today's report echoes others showing the housing market is worsening. Mortgage lender HBOS Plc said Aug. 7 that residential prices fell an annual 10.9 percent in July, the biggest decline reported so far in the current downturn. Taylor Wimpey Plc, the country's largest homebuilder, yesterday reported a first-half loss of 1.42 billion pounds after writing down the value of land and expects no improvement in the market ``in the short term.''"

Bank of England Governor Mervyn King said this month that home values face ``a significant adjustment'' after a decade-long boom.

"British banks have curtailed lending after the U.S. subprime mortgage collapse ricocheted through the global economy, sparking more than $500 billion in writedowns and credit losses. Home-loan approvals held close to the lowest in at least 11 years in July, the British Bankers' Association said Aug. 26. Banks granted 22,448 mortgages last month, down 65 percent from a year earlier."

Rate Cuts

Policy makers are so far showing little inclination to help the housing market with rate cuts. The Bank of England has kept its benchmark at 5 percent since April as officials weigh the risks of faster inflation with those of economic contraction.

"The Bank of England forecasts that inflation, which accelerated to 4.4 percent in July, will peak at 5 percent. That's more than double its 2 percent target."

"Still, the pound has declined as prospects for the U.K. economy worsen and investors speculate the Bank of England wil be forced to cut rates. Economists at Societe Generale, Tullett Prebon and Bank of America see the benchmark rate dropping to 3.5 percent next year."

"The pound, which touched a record $2.1162 in November, has dropped 7 percent against the dollar this month and traded $1.8377 today."

To contact the reporter on this story: Svenja O'Donnell in London at sodonnell@bloomberg.net.

"Last Updated: August 28, 2008 04:09 EDT"





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Gold Rises as Dollar's Drop Spurs Demand; Platinum Extends Gain

By Claudia Carpenter

Aug. 28 (Bloomberg) -- Gold rose in London as the dollar's decline may increase demand for the precious metal as an alternative investment. Platinum climbed for a second day.

"Gold may climb to $900 in three months, about 8 percent higher than today's price, as the dollar ``appears to have topped out for now,'' UBS AG said in a report today. European customers of Hanau, Germany-based Heraeus Holding GmbH are waiting as long as two weeks for deliveries of small bars."

"``People are searching for an investment that is a long-term store of value,'' said Ben Davies, who helps manage the Hinde Gold Fund in London. Gold ``supply is not readily available at these prices.''"

"Gold for immediate delivery rose $7.90, or 1 percent, to $834.80 an ounce as of 8:38 a.m. in London. Prices have climbed 1.6 percent in three days."

"Silver for immediate delivery increased 24.5 cents, or 1.8 percent, to $13.74 an ounce and platinum gained $3 to $1,446.50 an ounce. Palladium fell 75 cents to $291.25."

"The dollar fell as much as 0.5 percent against the euro today on speculation higher interest rates in Europe will draw investment from the U.S. currency. Last week, the dollar fell 0.7 percent against the euro, the first weekly decline in six weeks. Gold rose 4.5 percent last week, the most in six months."

"Demand was ``unprecedented'' by jewelers and other so-called physical buyers of the actual metal in the past three weeks, in areas including Europe and Asia, including India, UBS said. India is the world's largest buyer of gold."

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

"Last Updated: August 28, 2008 03:54 EDT"





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"Treasuries Fall Before $22 Billion Five-Year Sale, GDP Report "

By Wes Goodman

Aug. 28 (Bloomberg) -- Treasuries fell for the first time this week before a $22 billion debt sale and a report that economists estimate will show U.S. gross domestic product grew faster than the government first estimated.

"The five-year notes being auctioned yield 3.03 percent, or 1.03 percentage points more than the Federal Reserve's target for overnight bank loans, close to the narrowest spread since May. Japanese investors sold a net 1.42 trillion yen ($13 billion) of overseas bonds and notes, a record, during the week ended Aug. 23, according to the Ministry of Finance in Tokyo."

"``Talking to investors, there's not much interest,'' said Kazuaki Oh'e, a debt salesman in Tokyo at CIBC World Markets Japan. ``The current bond market is too expensive.''"

"The yield on the benchmark 10-year note rose 1 basis point to 3.78 percent as of 8:57 a.m. in London, according to bond broker BGCantor Market Data. The 4 percent security due August 2018 fell 1/8, or $1.25 per $1,000 face amount, to 101 26/32."

"The yield on the securities will climb to 3.98 percent by year-end, according to a Bloomberg News survey of banks and securities companies, with the most recent forecasts given the heaviest weightings."

"Today's five-year auction will be the biggest since February 2003. At the sale on July 24, investors bid for 2.46 times the amount of debt for sale. The average for the past 10 auctions is 2.21. The government sold a record $32 billion of two-year debt yesterday, drawing bids for 2.18 times the amount on offer."

Debt Demand

"The Fed will probably raise its 2 percent target rate in the first quarter of next year, futures contracts on the Chicago Board of Trade indicate."

"U.S. economic growth accelerated to a 2.7 percent annual rate from April through June, up from an advance estimate of 1.9 percent issued last month, according to the median forecast of 78 economists surveyed by Bloomberg before the Commerce Department reports the figure today."

"A separate report will show initial jobless claims are near a six-year high, according to a Bloomberg survey."

"Demand for Treasuries may last through the end of August because money managers need bonds to match changes in the benchmark indexes they use to gauge performance, said Tsutomu Komiya, an investor in Tokyo at Daiwa Asset Management Co., a unit of Japan's second-largest brokerage."

"At the end of each month, new securities sold are added to bond market indexes, and the Treasury issued both 10- and 30-year debt in August."

"``Demand from investors will increase'' as August comes to a close, said Komiya, who helps oversee the equivalent of $88.7 billion. Prices may decline in September, he said."

Japanese Sales

"Japanese sales of overseas debt climbed to the most since the finance ministry began publishing the figures in 2001. The sales come as speculation grows that the U.S. will have to take over Fannie Mae and Freddie Mac, the two largest mortgage-finance companies, so-called government sponsored agencies."

"``Japanese investors have been constant sellers of agency debt,'' said Hideo Shimomura, who oversees the equivalent of $4 billion as a chief fund manager at Mitsubishi UFJ Asset Management Co."

"Fannie Mae Chief Executive Daniel Mudd replaced three top deputies to restore investor confidence after record losses and a 90 percent drop in the shares, the Washington-based company said in a statement yesterday."

To contact the reporter on this story: Wes Goodman in Singapore at wgoodman@bloomberg.net.

"Last Updated: August 28, 2008 04:01 EDT"





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Germany's Jobless Rate Declines to Lowest in 16 Years (Update2)

By Brian Parkin

"Aug. 28 (Bloomberg) -- German unemployment fell more than economists expected in August, pushing the jobless rate to the lowest level in 16 years."

"The number of people out of work, adjusted for seasonal swings, dropped 40,000 to 3.2 million after falling 20,000 in July, the Federal Labor Agency in Nuremberg said today. The rate fell to 7.6 percent, the lowest since May 1992. Economists expected a decline of 10,000 and an unchanged rate of 7.8 percent, the median of 31 forecasts in a Bloomberg survey showed."

"The German economy, Europe's largest, shrank in the second quarter as companies cut back on investment, suggesting that payrolls may follow. German business confidence fell to a 36-month low in August. Still, the job market may not deteriorate as fast."

"``Unemployment will continue to decline, if at a weaker pace,'' said Gregor Eder, an economist at Dresdner Bank AG in Frankfurt. ``The development of the labor market is still very healthy with companies creating jobs. That's positive.''"

"The Labor Agency's IAB institute recorded 1.13 million job openings in the second quarter, 15,000 fewer than in the previous three-month period. Situations vacant will decline ``over the medium term,'' the IAB said on Aug. 11."

`Trailing Indicator'

"``The labor market is a trailing indicator,'' said Hans-Peter Kloes, a labor-market analyst at the IW Cologne economic institute. ``It lags about six months behind other economic indicators such as industrial production.''"

"Labor Agency Vice President Heinrich Alt sees a chance ``a bit above 50 percent'' of unemployment falling below 3 million in November, he said at a press conference in Nuremberg."

"Some companies will continue to expand their workforce this year and next. Germany's small and medium-sized companies will hire 400,000 more people over the next 12 months to meet export demand, Dresdner Bank AG economists said in an e-mailed note to clients on Aug. 19."

"Plasma television maker Loewe AG is hiring even as growth slows. ``You don't hire and fire in this environment, you wait to see when you can hire more,'' the Kronach-based company's Chief Executive Officer Frieder Loehrer said today. ``The economy's dipped somewhat, but it will pull up again and companies have to be prepared.''"

Solar Boom

"Jobs in Germany's solar industry, helped by subsidized domestic demand and export orders, are ``booming,'' said Thomas Krupke, chief executive of Berlin-based Solon AG, a maker of photovoltaic equipment. ``It's non-stop hiring.''"

"Solon will add another 60 staff to its 900 workers this year to help meet orders, 75 percent of which are from abroad."

"Still, evidence is mounting that Germany may face a recession. Germany's economy contracted for the first time in almost four years in three months through June and the economy of the euro region, destination for most of Germany's exports, shrank for the first time since the euro was introduced a decade ago."

"Rising oil and food prices that helped push inflation to 12- year high of 3.5 percent in July are sapping private consumption, creating an ``Achilles Heel'' for the economy, said Economy Minister Michael Glos said on Aug. 26."

"German consumer confidence is at a five-year low and retail sales dropped more than twice as much as economists expected. At the same time, the euro's 9 percent gain in the past year is taking its toll on foreign demand. Factory orders unexpectedly fell for a seventh month in June."

ECB Limit

Borrowing costs at a seven-year high may weigh on companies in the euro region as long as inflation remains at almost twice the European Central Bank's limit. ECB council member Axel Weber said this week there's no scope for interest-rate cuts and policy makers may need to raise borrowing costs once the economy emerges from its slump.

The ECB raised its benchmark interest rate last month by a quarter point to 4.25 percent after inflation accelerated to twice the central bank's 2 percent ceiling.

"According to the latest comparable data of the Organization of Economic Cooperation and Development, Germany's jobless rate was 7.3 percent in June. France, Germany's main trading partner, reported 7.5 percent unemployment compared with 4.1 percent in Japan and 5.5 percent in the U.S. The OECD average that month was 5.8 percent."

"``At the large industrial companies we see a trend of ongoing job cuts,'' the Labor Agency's Alt said. ``But we see continued stable employment at medium sized companies.''"

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

"Last Updated: August 28, 2008 04:53 EDT"





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"Corn, Soybeans Decline as Price Gains Slow U.S. Export Sales "

By Jae Hur

Aug. 28 (Bloomberg) -- Corn and soybeans declined in Chicago as recent gains reduced demand for U.S. supplies and prompted some investors to unwind their bets ahead of a three-day weekend.

"Corn rose 15 percent from Aug. 8 to yesterday's close and soybeans gained 14 percent. Inspections of U.S. corn for export for the week ending Aug. 21 fell 17 percent from a year earlier and soybean inspections dropped 43 percent, the U.S. Department of Agriculture said Aug. 25."

"``We are seeing position-squaring ahead of the long U.S. weekend,'' said Daisuke Yamaguchi, an analyst at futures broker Yutaka Shoji Co. ``It's also a technical adjustment after the rallies in the past several weeks from their recent dips and amid a lack of fresh fundamental developments.''"

"Corn for December delivery was down 2 cents, or 0.3 percent, at $5.94 a bushel in after-hours electronic trading on the Chicago Board of Trade at 4:04 p.m. Singapore time. The price fell 26 percent from a record $7.9925 on June 27. The Chicago market will be closed on Sept. 1 for the Labor Day holiday."

"The dollar fell as much as 0.5 percent, extending its drop for a second day after reaching a six-month high against the euro. Crude oil rose for a fourth day on speculation Tropical Storm Gustav will be the most damaging since Hurricane Katrina as it moves toward production platforms in the Gulf of Mexico."

"``With the dollar appearing fairly range-bound in the near term, corn is under mixed influences from outside markets with recent weakness in wheat prices weighing on prices, while strength in crude is price-supportive,'' Toby Hassall, an analyst with Commodity Warrants Australia, said in an e-mailed note today."

Soybeans Drop

Soybeans for November delivery lost 0.75 cent to $13.4725 a bushel at 4:07 p.m. Singapore time after trading between $13.395 and $13.49. Futures declined 18 percent from a record $16.3675 on July 3.

"``The action in soybeans is closely mirroring that in the corn market,'' Hassall said. ``Moving forward, the reaction of oil prices to the threat of Tropical Storm/Hurricane Gustav will likely have flow-on effects for the grains markets.''"

"Argentina will continue to restrict agricultural exports to protect domestic food supplies and keep prices in check, said Ricardo Echegaray, head of the government unit that regulates the sale of grains and livestock."

"Policies to limit grain and beef exports were designed to ensure a ``responsible flow'' of farm products to export markets while making sure enough food is available for Argentines, Echegaray said yesterday. Argentina was the world's second- largest corn exporter and the third-largest in soybeans last year, according to USDA data."

Wheat for December delivery added 1.25 cents to $8.27 a bushel at 4:09 p.m. Singapore time after dipping to $8.20. The contract has plunged 39 percent from a record $13.495 on Feb. 27.

"Taiwan plans to buy 40,000 metric tons of U.S. milling wheat tomorrow and Bangladesh has been seeking 100,000 tons of wheat for October delivery."

To contact the reporter on this story: Jae Hur in Singapore at jhur1@bloomberg.net

"Last Updated: August 28, 2008 04:28 EDT"





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"European Retail Sales Contract for a Third Month, PMI Shows "

By Jennifer Ryan

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"Aug. 28 (Bloomberg) -- European retail sales declined for a third month in August after the fastest inflation in 16 years and the prospect of a recession dented consumer confidence, the Bloomberg purchasing managers' index showed."

"While a measure of sales activity in the euro region increased to 47.7 from 46 in July, it's still the third month that the reading held below 50, the dividing line between growth and contraction. The survey of around 1,200 executives compiled for Bloomberg LP by Markit Economics showed retailers cut jobs for a fifth month."

"Europe's economy contracted in the second quarter and recent reports suggest it's struggling to resume growth as rising prices erode household spending power. With inflation at double the European Central Bank's 2 percent ceiling, council member Axel Weber said Aug. 26 that the ECB has no scope to encourage a recovery by cutting interest rates."

"``Inflation is squeezing disposable incomes and the outlook for consumer spending and for retailers is gloomy,'' said Ken Wattret, an economist at BNP Paribas SA in London. ``The ECB recognizes the downward risks to growth but it's not giving any indication it will respond while inflation is above the desired level.''"

"The German retail sales index dropped to 44.1 in August from 46.4 in the previous month, Markit said. The Italian gauge increased to 44.8 from 38.2 and the French measure rose to 53.7 from 51.3."

Recession Risk

"Today's report adds to evidence Europe is edging towards a recession, typically defined as two quarters of contraction. German business confidence fell to a three-year low last month while consumer sentiment slumped to the weakest since 2003. In France, the stock of new, unsold homes reached a record in the three months through June."

"``The latest contraction was largely attributed to continued caution amongst consumers with regard to discretionary spending, given the uncertain economic outlook,'' the Markit report said."

"Retailers are cutting workers as sales decline. Metro AG, Germany's largest retailer, said July 31 it had a second-quarter loss after shutting Real superstores, which missed profit goals as consumers shifted to discount grocers. Markit's index of employment was at 48.7 compared with 48.6 in the previous month."

Stubborn Inflation

Faster inflation is making it harder for policy makers to help consumers and companies. Oil rose above $147 for the first time in July while corn prices climbed to a record the previous month. Weber said inflation is the ``No. 1 worry for central bankers in the euro region.'' Vice President Lucas Papademos said yesterday the pace of price increases is ``stubbornly high.''

"Some companies are nevertheless benefiting from consumers' drive to cut costs. Casino Guichard-Perrachon SA, the biggest supermarket owner in Paris, said July 11 second-quarter sales rose as French shoppers went to its discount stores."

"Inflation pressures may also ease now that oil prices have fallen about 20 percent from their peak last month. Markit's measure of prices paid for goods for resale fell to 62.7 from 67.3, the biggest decrease since data begin in 2004."

"For the Bloomberg retail indicator, Markit Economics recruited a panel of companies in Germany, France and Italy, which together make up around 80 percent of total euro-area retail sales by value. The panel includes large chain retailers as well as smaller stores."

To contact the reporter on this story: Jennifer Ryan in London at Jryan13@bloomberg.net

"Last Updated: August 28, 2008 04:00 EDT"





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Australian Company Investment Rose More Than Forecast (Update2)

By Jacob Greber

Aug. 28 (Bloomberg) -- Australian business investment rose more than twice as much as economists forecast in the second quarter as mining companies spent extra on machinery and equipment to meet demand from China.

"Capital spending rose 5.7 percent from the previous three months, when it gained a revised 1 percent, the Bureau of Statistics said in Sydney today. The median estimate of 23 economists surveyed by Bloomberg News was for a 2 percent gain."

"Increased investment is helping offset weaker consumer spending that will probably prompt the central bank to cut borrowing costs next week for the first time in seven years. Spending may cool after business confidence in July held at the lowest level since 2001, stock markets tumbled and sales growth slowed at retailers such as Harvey Norman Holdings Ltd."

"``The message is that business is still investing and we are yet to see any fallout from the subprime crisis and fall in sentiment'' among consumers, said Shane Oliver, senior economist at AMP Capital Investors in Sydney."

The Australian dollar climbed to 86.62 U.S. cents at 12:10 p.m. in Sydney from 86.05 cents before the report was released. The two-year bond yield rose 4 basis points to 5.73 percent. A basis point is 0.01 percentage point.

"Investment by mining companies such as Rio Tinto Group surged 8.1 percent in the quarter, while manufacturers cut spending by 3.9 percent, today's report showed."

"Buildings, Equipment"

Spending on buildings and structures fell 0.5 percent and company investment in the new plant and equipment advanced 8 percent in the second quarter.

"Companies forecast investment of A$99.8 billion ($86 billion) in the year ending June 30, 2009, which is 14.5 percent more than the estimated three months earlier and 26 percent greater than the corresponding predicted last year."

The central bank forecasts export income will rise by 20 percent this year after mining companies including Rio Tinto negotiated a price increase of as much as 97 percent for iron ore destined for China.

"``Investment might remain surprisingly resilient given that much of it is concentrated in the resources sector, which is still performing strongly,'' said Brian Redican, a senior economist at Macquarie Group Ltd. in Sydney."

Interest Rates

"Still, ``there are many more potential obstacles down the track to be overcome, and if we do see more aggressive cutbacks in these investment budgets, then it's likely to be accompanied by more aggressive monetary policy easing by the Reserve Bank.''"

"The Reserve Bank of Australia may soon cut interest rates to avoid a ``deeper and more persistent'' economic slowdown, policy makers said in the minutes of their Aug. 5 meeting, released last week."

"Australia's $1 trillion economy expanded at the weakest pace in almost two years in the three months through March and growth will remain ``low'' in the second and third quarters, the central bank said last week. Figures for economic growth in the second quarter will be released on Sept. 3."

"The economy is slowing as consumers cut spending to offset the highest borrowing costs in 12 years and a surge in gasoline prices, forcing companies including Qantas Airways Ltd. and Ford Motor Co. to fire workers."

Stocks Tumble

The nation's All Ordinaries Index of stocks has tumbled 20 percent this year.

"A survey of more than 400 companies by National Australia Bank Ltd., published on Aug. 12, showed business confidence in July held at the lowest level since the 2001 terrorist attacks in the U.S."

"Investors forecast a 100 percent chance central bank Governor Glenn Stevens will cut the benchmark lending rate to 7 percent from 7.25 percent on Sept. 2, according to a Credit Suisse Group index based on trading in interest-rate swaps."

"Policy makers last raised interest rates in March, adding to increases in February, November and last August."

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

"Last Updated: August 27, 2008 22:24 EDT"





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Yuan Jumps Most in Month as China to Curb Inflation; Bonds Rise

By Aaron Pan and Jiang Jianguo

Aug. 28 (Bloomberg) -- The yuan rose the most in a month on speculation China is seeking to temper inflation through currency gains and as the dollar declined in Asia.

"China's currency advanced for a third day after Xinhua news agency reported curbing inflation is a priority for the government for the rest of the year, citing National Development and Reform Commission Vice Chairman Zhu Zhixin. Seven of Asia's 10 most-active currencies outside Japan strengthened against the dollar as the currency dropped versus the euro."

"``There's been an appreciation in the yuan on the back of the dollar weakening,'' said Steven Chang, vice president for global markets at State Street Bank & Trust Co. in Hong Kong. ``China policy makers haven't changed their stance on maintaining yuan strength.''"

"The yuan rose 0.17 percent to 6.8262 per dollar as of 12:03 p.m. in Shanghai from 6.8380 yesterday, according to the China Foreign Exchange Trade System. That's the steepest gain since July 29."

The central bank set a stronger reference rate for today's trading of 6.8326. The yuan is allowed to trade by as much as 0.5 percent against the dollar either side of the reference rate.

"The central bank manages the exchange rate against a basket of currencies, including the yen and the euro, after scrapping a peg to the dollar in 2005."

Post-Olympics Slowdown?

The yuan has been little changed in recent weeks on speculation China will pursue a more moderate pace of appreciation to safeguard against a post-Olympics slowdown in the economy. The People's Bank of China said Aug. 15 it will ``fine-tune'' policies to strike a balance between maintaining growth and curbing inflation.

"Government bonds rose, pushing seven-year yields to the lowest in more than two months, on speculation inflation eased in August from a year earlier."

"The yield on the 4.01 percent note due May 2015 fell 7 basis points to 4.05 percent, the lowest since June 25, according to the China Interbank Bond Market. The price rose 0.38 per 100 yuan face amount to 99.73. A basis point is 0.01 percentage point."

"``The August inflation rate may have slowed to about 5 percent because of declining food prices, so this is good news for the bond market,'' said Nie Shuguang, a fixed-income analyst at Industrial bank Co. in Shanghai. Inflation erodes the fixed payments on debt."

"Average vegetable prices were 7.9 percent lower than a year earlier last week and grain prices were little changed, the Ministry of Commerce said Aug. 26 on its Web site. Food costs account for about a third of China's consumer price index."

"China's annual inflation was 6.3 percent in July, the slowest pace in 10 months. The government is due to report August inflation on Sept. 11."

To contact the reporters on this story: Aaron Pan in Hong Kong at Apan8@bloomberg.net; Jiang Jianguo in Shanghai at jjiang@bloomberg.net.

"Last Updated: August 28, 2008 00:23 EDT"





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