Canada Stocks Fall as Commodities Retreat; CI Financial Jumps
By John Kipphoff
"Aug. 22 (Bloomberg) -- Canadian stocks fell for the first time in three days, paring the main index's weekly gain, as lower commodity prices dragged down energy and raw-material producers."
EnCana Corp. declined as crude futures tumbled the most since 2004. Barrick Gold Corp. and Goldcorp Inc. led mining shares lower on a slide in metals prices. Financial companies advanced after CI Financial Income Fund said it held talks about a merger or acquisition with ``a number of parties.'
"The Standard & Poor's/TSX Composite Index dropped 0.7 percent to 13,447.29 in Toronto. Canada's benchmark still had its second weekly advance this month, gaining 2.7 percent, as commodity prices rallied through yesterday."
"``People are trying to get the right valuations on these commodity stocks,'' said Greg Eckel, who helps manage about $1.15 billion at Morgan Meighen & Associates in Toronto. ``Clearly they went to extremes, both on the upside and the downside.''"
"The S&P/TSX dropped 11 percent from its June 18 record after commodity prices slumped on concern financial companies' credit losses will slow global growth and demand for resources, which make up about half of Canada's exports. Measures of energy and raw-materials shares account for 49 percent of the S&P/TSX's value and fell 2.1 percent and 2.3 percent, respectively, today."
"EnCana, the nation's largest energy company by market value, declined 2.4 percent to C$75.72. Suncor Energy Inc., the world's second-biggest oil-sands mining company, retreated 2.3 percent to C$60.36 after climbing 16 percent in the previous three sessions."
"Canadian Natural Resources Ltd. fell 3.2 percent to C$86.57. Husky Energy Inc., controlled by Hong Kong billionaire Li Ka- shing, slid 3.7 percent to C$46.67."
"Crude tumbled as the U.S. dollar strengthened, reducing the investment appeal of commodities, and BP Plc restored shipments on a Caspian Sea pipeline through Turkey. Oil for October delivery declined $6.59 a barrel to $114.59 in New York."
"Copper and gold also slid, and corn snapped a four-day rally in Chicago as U.S. exports fell and investors bet gains this week were excessive."
"Barrick Gold, the world's largest bullion producer, decreased 3.2 percent to C$36.31. Goldcorp, which rallied 17 percent over the past four days, lost 3.9 percent to C$35.08. Yamana Gold Inc. tumbled 5.3 percent to C$11.37."
"Potash Corp. of Saskatchewan Inc., the biggest maker of crop nutrients, dropped 2 percent to C$188.78. First Quantum Minerals Ltd., a copper mining company, fell 4.5 percent to C$70.43."
"CI Financial, the nation's second-biggest mutual-fund manager, gained 5.4 percent to C$22.11, the most in five weeks. The company said it held talks about a merger or acquisition with ``a number of parties,'' however, there's no guarantee any transaction will be completed."
"Bank of Nova Scotia, Canada's third-largest lender, may exchange its mutual-fund arm for a stake in CI Financial, the National Post reported, citing unidentified sources. Scotiabank added 1.7 percent to C$48.60. Sun Life Financial Inc., the insurer that owns 37 percent of CI Financial, added 2.1 percent."
CI Financial Chief Executive Officer Bill Holland and Scotiabank spokesman Frank Switzer declined to comment on the Post's report.
"Other mutual-fund management companies advanced. IGM Financial Inc., the country's biggest, gained 2.5 percent to C$42.18. Dundee Corp., the owner with Scotiabank of mutual-fund company DundeeWealth Inc., rose 4.7 percent to C$13.39. DundeeWealth last year turned down an approach from CI Financial."
A group of financial shares in the S&P/TSX rose 1.4 percent.
"``People are speculating'' about deals, said Eckel. ``CI's always looking for acquisitions. That's what he does, Bill Holland.''"
To contact the reporter on this story: John Kipphoff in Toronto at firstname.lastname@example.org.
"Last Updated: August 22, 2008 17:07 EDT"
East European Currencies: Polish Zloty Declines Against Euro
By Ewa Krukowska
"Aug. 22 (Bloomberg) -- Poland's zloty declined against the euro on concern Europe's economic slowdown will deepen, curbing investor appetite for the region's currencies. The Czech koruna fell."
"The zloty pared its weekly advance versus Europe's single currency to 0.9 percent, making it the third-best performer among emerging-market currencies. Industrial orders in the euro area fell the most in more than six years in June, the European Union's statistics office in Luxembourg said today. The data pushed the euro lower against the dollar."
"``The fall of the euro and concerns that Europe's growth prospects may worsen caused a decline in the zloty, prompting investors to take profit on earlier gains,'' said Grzegorz Maliszewski, economist at Bank Millennium in Warsaw."
"The Polish zloty traded at 3.3044 per euro at 4:55 p.m. in Warsaw, compared with 3.2950 late yesterday and 3.3339 a week ago. It may ``strengthen toward 3.20 at the end of this year,'' Maliszewski said."
"Poland's Monetary Policy Council rejected a quarter-point increase in the benchmark interest rate last month because a majority of rate setters said a strong zloty and an expected economic slowdown should help curb inflation, according to the minutes of the meeting released yesterday."
"Policy makers will probably leave the main rate unchanged at 6 percent on Aug. 27, according to a Bloomberg survey of 15 economists."
"The Czech koruna traded at 24.410 per euro, compared with 24.325 late yesterday and 24.536 on Aug. 15. The Romanian leu dropped 0.1 percent to 3.5286 against the euro, paring its weekly gain to 0.6 percent."
"The Hungarian forint posted the biggest weekly advance in two months, strengthening 2.3 percent to 233.88 per euro."
"The forint is supported by bets that its interest-rate advantage over the euro area will continue to attract carry trades, where investors borrow cheaply in currencies with lower rates and invest in higher-yielding assets elsewhere."
"It may advance to 225 per euro by the end of the year because the central bank will probably keep rates unchanged at 8.5 percent as the European Central Bank signals lower borrowing costs to stimulate growth, said Ulrich Leuchtmann, an analyst at Commerzbank AG in Frankfurt."
"The Turkish lira posted a second weekly gain, strengthening to 1.1864 per dollar, from 1.1873 on Aug 15."
"The lira is the best emerging-market performer this quarter as policy makers raised the key interest rate to 16.75 percent, the highest among major developing economies."
The Slovak koruna was little changed at 30.317 versus the euro.
To contact the reporter on this story: Ewa Krukowska in Warsaw at email@example.com;
"Last Updated: August 22, 2008 11:07 EDT"
Cocoa Declines Most in a Week in New York as Dollar Strengthens
By Yi Tian
"Aug. 22 (Bloomberg) -- Cocoa fell the most in a week in New York as the dollar strengthened, making the beans more expensive for overseas buyers."
"The dollar rose the most in two weeks against a basket of the euro, yen and four other major currencies. Yesterday, the dollar's 1 percent drop sent the cocoa price up the most in more than three years."
"``We've got the dollar back up today,'' pushing cocoa down, said David Hightower, the president of the Hightower Report in Chicago. ``The market got a little carried away with the run-up yesterday.''"
"Cocoa futures for December deliver fell $29, or 1 percent, to $2,812 a metric ton on ICE Futures U.S., the former New York Board of Trade. The percentage drop was the biggest for a most- active contract since Aug. 15."
"The price still jumped 8.7 percent this week, the most since April 11. The International Cocoa Organization said yesterday that a global production shortfall will be twice as large as forecast in May."
"Cocoa has surged 38 percent this year, partly on diminishing bean quality in Ivory Coast, the world's biggest producer, and Ghana, the second-largest."
To contact the reporter on this story: Yi Tian in New York at firstname.lastname@example.org.
"Last Updated: August 22, 2008 17:49 EDT"
South Africa's Rand Posts Weekly Advance as Commodities Rally
By Garth Theunissen
Aug. 22 (Bloomberg) -- South Africa's rand snapped two weeks of losses against the dollar as gains in gold and platinum boosted revenue prospects for the world's biggest producer of precious metals.
The rand was the best performer of the 16 major currencies monitored by Bloomberg in the past five days as gold headed for its biggest weekly rally in more than two years and platinum ended a five-week losing run. The metals rose with other commodities as a weaker dollar and higher oil prices spurred demand for alternative investments and hedges against inflation.
"``Commodities are a strong theme for the rand at the moment,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Strong gains in oil and a weaker dollar are fueling gold and platinum, which is positive for the rand.''"
"The rand climbed 2.6 percent in the week to 7.6692 per dollar by 3:36 p.m. in Johannesburg, from 7.8707 on Aug. 15. It advanced 1.7 percent from Aug. 15 to 11.3752 per euro."
"``Positive momentum has returned to commodities, which along with a dollar correction, is keeping the rand buoyant,'' said Tolga Ediz an emerging-markets currency strategist in London at Lehman Brothers Holdings Inc. ``There's still enough risk appetite to help high-yielding currencies.''"
Commodities are poised to advance in the week as the dollar traded near the lowest level in more than two weeks against the yen and was set to drop in the week versus the euro.
"Gold climbed 5 percent to $826.60 an ounce, the biggest weekly advance since July 2006. Platinum rose 2.5 percent from Aug. 15 to $1,417.70 an ounce. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold, typically causing the rand to move in tandem with the metals' prices."
"Crude oil rose 5.3 percent this week to $119.80 a barrel, set for its biggest weekly increase in almost three months."
"Government bonds fell this week, with the yield on South Africa's benchmark 13.5 percent security due September 2015 adding 13 basis points to 9.27 percent. Yields move inversely to bond prices."
To contact the reporter on this story: Garth Theunissen in Johannesburg email@example.com
"Last Updated: August 22, 2008 09:52 EDT"
South Africa's Rand Posts Weekly Advance as Commodities Rally
By Garth Theunissen
Aug. 23 (Bloomberg) -- South Africa's rand snapped two weeks of losses against the dollar as gains in gold and platinum boosted revenue prospects for the world's biggest producer of precious metals.
The rand climbed to the highest level in 14 days versus the U.S. currency yesterday as gold rallied in the week and platinum ended a five-week losing run. The metals rose with other commodities as a weaker dollar and higher oil prices spurred demand for alternative investments and hedges against inflation.
"``Commodities are a strong theme for the rand at the moment,'' said Kay Muller, a currency researcher at Rand Merchant Bank in Johannesburg. ``Strong gains in oil and a weaker dollar are fueling gold and platinum, which is positive for the rand.''"
"The rand climbed 2.5 percent in the week to 7.6776 per dollar by 6 p.m. in Johannesburg yesterday, from 7.8707 on Aug. 15. It advanced 1.8 percent from Aug. 15 to 11.3573 per euro."
"``Positive momentum has returned to commodities, which along with a dollar correction, is keeping the rand buoyant,'' said Tolga Ediz, an emerging-markets currency strategist in London at Lehman Brothers Holdings Inc. ``There's still enough risk appetite to help high-yielding currencies.''"
Commodities are poised to advance in the week as the dollar traded near the lowest level in more than two weeks against the yen and dropped in the week versus the euro.
"Gold climbed 5.7 percent to $828.32 an ounce and platinum rose 3.9 percent from Aug. 15 to $1,437 an ounce. South Africa produces almost 80 percent of the world's platinum and about 10 percent of its gold, typically causing the rand to move in tandem with the metals' prices."
Crude oil rose this week to $114.59 a barrel.
"Government bonds fell this week, with the yield on South Africa's benchmark 13.5 percent security due September 2015 adding 13 basis points to 9.27 percent. Yields move inversely to bond prices."
To contact the reporter on this story: Garth Theunissen in Johannesburg firstname.lastname@example.org
"Last Updated: August 23, 2008 03:10 EDT"
"3M, Deere Lead $2.82 Billion of Corporate Bond Sales (Update1) "
By Gabrielle Coppola
Aug. 22 (Bloomberg) -- U.S. corporate bond sales slowed to the lowest level in seven weeks as the extra yield investors demand to own investment-grade bonds rather than government debt reached record highs.
"Borrowers raised $2.82 billion, compared with $16 billion last week and $28 billion in the same time last year. 3M Co., the maker of 50,000 products from Scotch-brand tape to rubber squeegees, sold $850 million of notes after boosting its sale. Moline, Illinois-based tractor maker Deere & Co. sold $350 million of floating-rate notes through a finance unit."
"Sales dropped amid concern that Fannie Mae and Freddie Mac, the two largest U.S. mortgage-finance companies, may need a government bailout, causing banks to rein in lending and boosting costs for corporate borrowers. The average spread on investment- grade debt rose this week to 312 basis points, surpassing the record set three days after the Federal Reserve backed a rescue of Bear Stearns Cos. by JPMorgan Chase & Co. in March."
"``Fannie and Freddie are a bigger problem than Bear Stearns,'' said Matthew Eagan, a vice president at Loomis Sayles & Co. in Boston, which oversees $8 billion of high-yield debt. ``We need to get beyond this to have any order return to the marketplace, and to have a tightening of investment-grade spreads.''"
"Treasury Secretary Henry Paulson last month was granted the authority he sought to take equity stakes in Washington-based Fannie and Freddie of McLean, Virginia, and extend them more credit should their financial conditions deteriorate and their ability to raise capital falter. Freddie paid its highest yields over Treasuries on record in a debt sale Aug. 19 on concern that credit losses are depleting the companies' capital."
"A bailout of the government-sponsored enterprises may cause spreads to tighten initially, though further deterioration of the housing market would push yields over Treasuries wider, analysts led by Jeff Meli at Barclays Capital in New York wrote in a report yesterday."
"``Real estate disappointments will likely fuel concerns about a fresh round of writedowns,'' the analysts said. ``We remain fundamentally negative on the IG market, and believe that spreads will widen after Labor Day.''"
"Corporate bond sales were the lowest since borrowers raised $2.49 billion during the holiday week ended July 4, the slowest period of the year."
"Spreads on investment-grade bonds reached record highs on four straight days this week, jumping 7 basis points from last week and 64 basis points since May 31, according to Merrill Lynch & Co.'s U.S. Corporate Master index. A basis point is 0.01 percentage point."
"St. Paul, Minnesota-based 3M, which last month posted quarterly earnings that beat analysts' estimates, sold five-year, 4.375 percent notes priced to yield 135 basis points more than Treasuries of similar maturity, according to data compiled by Bloomberg."
"That's the lowest spread a U.S. company has paid to issue five-year dollar-denominated debt since May 7, Bloomberg data show. 3M earlier had marketed $500 million of the notes. The debt is rated Aa1, the second-highest level of investment grade, by Moody's Investors Service, and one step lower at AA by Standard & Poor's."
"Deere, the world's largest maker of farm equipment, sold $350 million of two-year floating-rate notes that pay 50 basis points more than the three-month London interbank offered rate. Libor, a borrowing benchmark, is currently set at 2.81 percent. John Deere Capital Corp., a unit of John Deere, issued the debt, which is rated A2 by Moody's, the sixth level of investment grade, and an equivalent A by S&P."
`Crashed Through It'
"The eclipse of the March record in investment-grade spreads is making some corporate bonds more attractive to investors, said Brian Gevry, the chief executive officer of Boyd Watterson Asset Management in Cleveland, which oversees $3 billion of fixed- income assets."
"``We didn't just break it, we crashed through it,'' Gevry said. ``I think it's a great opportunity, not an opportunity to barrel in like an elephant, but an opportunity to selectively identify bonds that you like.''"
"There were no sales of high-yield, high-risk bonds as the average spread on junk-rated debt climbed 18 basis points to 830 basis points, the highest level since March 20, before dropping 1 basis point yesterday, according to Merrill's U.S. High Yield Master II index. High-yield, or junk, bonds are rated below Baa3 by Moody's and BBB- by S&P."
`Little Bit Shaky'
"High-yield issuance ``has dropped off tremendously,'' Martin Fridson, chief executive officer of New York-based research and investment firm Fridson Investment Advisors, said today in an interview on Bloomberg Television. ``There is just not the comfort with the credit. Demand for high-yield is a little bit shaky right now.''"
"Mississippi Power Co., a subsidiary of Southern Co., the biggest U.S. electricity generator, and Chet Morrison Contractors Inc., an oilfield services provider, are among companies seeking to raise at least $20 billion of bonds in the U.S., Bloomberg data show."
To contact the reporter on this story: Gabrielle Coppola in New York at email@example.com
"Last Updated: August 22, 2008 10:44 EDT"
Indonesia's Listrik Negara Loss Widens on Fuel Costs (Update1)
By Berni Moestafa
"Aug. 23 (Bloomberg) -- PT Perusahaan Listrik Negara, Indonesia's state-owned power producer, said its first-half net loss widened to 1 trillion rupiah ($109 million) from 944 billion rupiah as a doubling of oil prices raised fuel expenses."
"First-half revenue increased to 79 trillion rupiah from 52 trillion rupiah a year earlier, the power company said in a statement published in the Bisnis Indonesia newspaper today."
"Fuel and lubricant costs jumped to 53 trillion rupiah from 29 trillion rupiah, Listrik Negara said. Surging oil prices eroded the company's margins as crude oil futures jumped 97 percent in the 12 months through June 30."
To contact the reporter on this story: Berni Moestafa in Jakarta at firstname.lastname@example.org
"Last Updated: August 22, 2008 23:20 EDT"
"Canada Says Budget Surplus Fell, Cuts Growth Forecast (Update1) "
By Greg Quinn and Kevin Bell
Aug. 22 (Bloomberg) -- Canada's budget surplus narrowed in June as spending rose faster than revenue. The Finance Department also cut its forecast for economic growth this year.
"The surplus of C$1.74 billion ($1.66 billion) was smaller than the C$2.82 billion cushion recorded in June 2007, the Finance Department said today from Ottawa. Revenue increased 2.4 percent, trailing an 11 percent gain in program spending."
"The report comes the same week Conservative Party Prime Minister Stephen Harper said he may call an election this year. The economy, set to be a dominant campaign issue, will grow 1.1 percent after adjusting for inflation instead of the 1.7 percent predicted in Minister Jim Flaherty's February budget, the report said, citing a survey of economists."
"``Slower growth does have the potential to weigh on tax receipts and the budget surplus,'' Charmaine Buskas, senior economics strategist at TD Securities in Toronto, said by telephone."
"Between April and June, the budget surplus narrowed to C$1.22 billion from C$5.6 billion in the same time last year, the Finance Department's report said."
"Still, the government said Canada's finances up to this point of the fiscal year are skewed because the pace of spending is expected to slow in the coming months. Canada will bring in a surplus of C$2.3 billion this fiscal year as projected in February, the report said."
"The economists in the survey also predicted faster inflation, meaning unadjusted growth -- which Flaherty says is the best measure of government revenue and spending -- is ``largely unchanged'' from February's 3.5 percent forecast, according to the report."
"``We will continue to watch things closely,'' Flaherty told reporters today in Toronto, ``because there is continuing weakness in the U.S. economy, which has a slow-growth effect'' on Canada."
"Canada's economy, the eighth-largest in the world, shrank between January and March, the first quarterly drop in almost five years. Economists surveyed by Bloomberg say Statistics Canada next week will report an expansion of 0.5 percent for the April-through-June period."
"Bank of Canada Governor Mark Carney said last month that sluggish exports will limit economic growth to 1 percent this year, the slowest since 1992. The central bank already has cut its key interest rate to 3 percent, the lowest since December 2005. The bank's next rate decision is Sept. 3."
Flaherty announced C$60 billion of tax cuts last year and has said that's enough to keep the economy afloat.
Harper says the opposition Liberals would hurt the economy with their plan to tax pollution and cut other levies by the same amount. Liberals counter that Harper hasn't done enough to mitigate factory layoffs in Ontario and Quebec.
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com; Kevin Bell in Toronto at firstname.lastname@example.org.
"Last Updated: August 22, 2008 14:02 EDT"
"Oil May Fall to $80, Hedge-Fund Manager Haugerud Says (Update1) "
By Stewart Bailey and Saijel Kishan
"Aug. 22 (Bloomberg) -- Crude oil may tumble to $80 a barrel within 12 months as supplies of alternative energy increase, while grain prices may climb on emerging-market demand, said Renee Haugerud, whose hedge fund gained 18 percent this year."
"The surge in oil has been ``overdone'' by investors seeking holdings in raw materials through the Standard & Poor's GSCI Index, a commodity gauge weighted toward energy, she said. Industrial metals also rose too high, she said."
"``They were the sexy commodities,'' Haugerud, founder of the $2.5 billion commodities hedge-fund firm Galtere Ltd., said in an Aug. 19 interview in her New York office. ``Everyone wanted to get long an asset class via the GSCI, and let's face it, the GSCI is crude.''"
"Grains including corn and wheat may double as wealthier populations in nations such as Brazil and Russia eat more meat, boosting demand for livestock feed, Haugerud said. New energy sources such as solar power and ethanol will stall a recovery in oil prices, she said."
Haugerud's flagship fund has surged almost fivefold since starting in 1999. The long-term performance and this year's return were outlined in a letter sent to an investor. She declined to comment on her fund's returns.
Oil has slumped 22 percent from a record $147.27 on July 11. Futures for October delivery tumbled $6.59 to $114.59 today on the New York Mercantile Exchange. The 5.9 percent drop was the most since December 2004.
"Energy prices account for 74 percent of the S&P GSCI Index, with crude oil making up 38 percent of the gauge."
"Price swings, or volatility, in commodities will continue as investors increase demand for ``hard assets'' as a store of value amid slumping financial markets and negative real-interest rates, Haugerud said."
"``Commodities as an asset class are like an emerging market that comes in and out of favor,'' she said. ``It's exciting.''"
"Haugerud began her career in 1981 trading commodities at Cargill Inc., the largest U.S. agriculture company, and later worked at NatWest Markets, a unit of U.K.-based National Westminster Bank."
"Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets, bet on falling as well as rising asset prices and participate substantially in profits from money invested."
"They have dropped an average of 3.5 percent this year, according to Chicago-based Hedge Fund Research Inc.'s Global Hedge Fund Index."
"The U.S. economy, wallowing in the worst housing crisis since the Great Depression, may have entered a recession, she said. Growth in other countries will probably slow, she said."
`Epicenter of Disaster'
"``We might be in a recession here and go into slower global growth in the rest of the world,'' Haugerud said. ``The U.S. financial system is the epicenter of disaster. It's heinous.''"
"North American banks, including Citigroup Inc. and Merrill Lynch & Co., lead overseas rivals with $252.9 billion in writedowns related to the subprime mortgage market, more than half the global total. The International Monetary Fund has forecast that global losses will total $1 trillion."
"Gold may rise to $1,000 an ounce on investor demand for a haven should equity prices tumble, Haugerud said. The precious metal fell $5.50 to $833.50 today in New York and has dropped 19 percent from a record $1,033.90 on March 17."
"The commodity surge that started in 2001 and sent prices of copper, corn, soybeans, wheat and gasoline to all-time highs this year may be only a third or halfway through, Haugerud said."
"``There's too much money in the world, and there are not enough commodities,'' she said."
The Reuters/Jefferies CRB Index of 19 raw materials has dropped 17 percent from the record on July 3 after posting the best first half in 35 years.
"Copper may fall ``to the mid $2-a-pound range in the short term in a worst-case scenario,'' should the U.S. housing slump plunge the world's largest economy still deeper into recession, Haugerud said. The metal may be on an ``uptrend'' over the next decade, she said."
"Copper futures for December delivery dropped 7.9 cents, or 2.2 percent, to $3.4595 on the Comex division of the Nymex. The price last touched $2.50 in February 2007."
"U.S. natural gas is ``a buying opportunity'' at a range of $6 to $8 per million British thermal units, she said. Futures fell to $7.843 today, tumbling 43 percent from $13.694 on July 2. That had marked the highest since December 2005."
To contact the reporter on this story: Stewart Bailey in New York at email@example.com; Saijel Kishan in New York at firstname.lastname@example.org.
"Last Updated: August 22, 2008 15:39 EDT"
"Natural Gas Declines on Outlook Economy to Weaken, Crude Slumps "
By Reg Curren
Aug. 22 (Bloomberg) -- Natural gas in New York fell to the lowest in more than six months amid speculation demand will decline as the U.S. economy slows and as crude oil slumped.
"Turmoil in world credit markets will continue to hamper the global economy and there's little central banks can do to correct it, analysts said. Crude slipped as the U.S. dollar strengthened and the flow of oil was restored through a Caspian Sea pipeline in Turkey. A rising dollar prompts investors using commodities as an inflation hedge to exit the market."
"Gas is ``taking a cue from crude,'' said Tom Orr, director of research at Weeden & Co. in Greenwich, Connecticut. ``There's nothing'' to lift gas today."
"Natural gas for September delivery fell 40.9 cents, or 5 percent, to settle at $7.843 per million British thermal units at 3:19 p.m. on the New York Mercantile Exchange, the lowest close since $7.74 on Feb. 1. Futures have tumbled 42 percent since closing at $13.577 on July 3, a 30-month high. Gas is selling below its 200-day moving average of $9.591."
"Gas in a range of $6 to $8 is ``a buying opportunity,'' said Renee Haugerud, managing principal of hedge fund Galtere Ltd. In New York. ``There's too much money in the world, and there are not enough commodities.''"
"In cash markets, gas at the Henry Hub in Erath, Louisiana, fell 5.5 cents, or 0.7 percent, to settle at $7.9815 per million Btu. The hub is the benchmark U.S. pricing and delivery point for Nymex futures."
"Crude oil for October delivery fell $6.59, or 5.4 percent, the biggest drop since December 2004, to settle at $114.59 a barrel in New York. Futures reached a record $147.27 on July 11."
"``A lot of traders are watching, taking cues from where crude is going. We haven't gotten away from that,'' said Brad Florer, a trader at Kottke Associates Inc. in Louisville, Kentucky."
"On a technical basis, $8 per million Btu has been a significant area of support. Should that price hold today, it may prompt ``more buyers to come into this market,'' said Florer."
"Technical traders watch for patterns on daily charts for clues to price direction, and will sell or buy commodities or equities based on those indicators."
"``People are trying to decide if what happened yesterday is the start of a turn up or was it a nice selling opportunity in this bear market,'' said Florer."
"Gas yesterday gained 2.2 percent to an intraday high of $8.388 per million Btu. Crude soared more than 5 percent, settling at $121.18 a barrel, the biggest increase since June 6."
"In the U.S., borrowing premiums for banks and corporations are at their highest in months, prolonging the drag on growth."
Reports in the last week showing a surge in inflation reinforce expectations that Federal Reserve Chairman Ben S. Bernanke will have to keep U.S. interest rates on hold.
The dollar traded at $1.4771 at 3:26 p.m. in New York from $1.4899 yesterday. The U.S. currency has climbed versus the euro since touching an all-time low of $1.6038 on July 15.
"As the dollar gains ``commodities are getting crushed,'' said Phil Flynn, senior trader at Alaron Trading Corp. in Chicago. ``It seems everybody who ran to commodities as a hedge is getting out.''"
"Mild weather and higher gas inventory growth are also weighing on gas, Orr said. Moderate weather limits the demand for gas-fired power generation to run air conditioners."
"The U.S. Energy Department yesterday said supplies increased for the week ended Aug. 15. Inventories rose 88 billion cubic feet to 2.655 trillion. Stockpiles are 1 percent above the five- year average of 2.629 trillion, according to department data."
Analysts expected supplies to gain 84 billion cubic feet. The average change for this time of year over the past five is an increase of 56 billion.
"``We're expecting sizable storage injections for the next couple of weeks, which will put downward pressure'' on gas prices, said Gene McGillian, an analyst at TFS Energy LLC in Stamford, Connecticut."
"Without the threat of production disruptions from tropical storms in the Gulf of Mexico, gas isn't likely to ``trade too far away from $8,'' he said."
"Gulf storms can pare output from oil and gas platforms and rigs. The hurricane season runs through November. Hurricane Katrina formed over the Bahamas on Aug. 23, 2005, making landfall in southeast Louisiana on Aug. 29."
"Hurricane Rita, the most intense tropical cyclone ever observed in the Gulf, made landfall Sept. 24, 2005, at Sabine Pass near the border of Texas and Louisiana."
"The storms curtailed Gulf gas flow, prompting the fuel to touch $15.78 per million Btu on Dec. 13, 2005, the highest since gas began Nymex trading."
"Tropical Storm Fay, an active storm on the edge of the Gulf over Florida, is weakening and is expected to move inland over southern Alabama by Aug. 24, according to forecasters at the National Hurricane Center in Miami."
"The storm crisscrossed Florida for the past three days, dumping as much as 30 inches (76 centimeters) of rain over parts of the state, flooding roads and homes and causing millions of dollars of damage to crops and infrastructure."
"Fay's maximum sustained winds fell to about 45 miles (72 kilometers) per hour today from 60 mph yesterday, and the storm was 40 northeast of Cedar Key as of 11 a.m., the center said in an advisory."
"Storage is ``being refilled at a good clip,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``Nobody is worried'' about supplies as they were in May, he said."
To contact the reporters on this story: Reg Curren in Calgary at email@example.com.
"Last Updated: August 22, 2008 15:35 EDT"
"Natural Gas May Rise Next Week on Storm Threat, Survey Shows "
By Reg Curren
Aug. 22 (Bloomberg) -- Natural gas may rise next week amid speculation possible storms in the Gulf of Mexico would disrupt the flow of the heating and furnace fuel from rigs and platforms.
"Fifteen of 17 analysts surveyed by Bloomberg News, or 88 percent, said prices would rise through Aug. 29. Two, or 12 percent, said futures would be little changed. None said prices would decline. Last week, 50 percent of participants said prices would rise."
"``Weather will continue to play an important factor,'' said Guy Gleichmann, president of United Strategic Investors Group in Hollywood, Florida. ``Any major storms entering the Gulf could temporarily disrupt production at the critical'' time for building supplies before winter heating demand."
"A weather system about 400 miles (600 kilometers) east of the Windward Islands and moving west may encounter favorable conditions ``for slow development over the next couple of days,'' the National Hurricane Center in Miami said in forecast."
"Hurricane Katrina formed over the Bahamas on Aug. 23, 2005, making landfall in southeast Louisiana on August 29. Hurricane Rita made landfall Sept. 24, 2005, at Sabine Pass near the border of Texas and Louisiana."
"The storms limited Gulf gas output, prompting the fuel to touch $15.78 per million British thermal units on Dec. 13, 2005, the highest since futures began trading on the New York Mercantile Exchange."
"Natural gas for September delivery tumbled 3.1 percent this week to settle at $7.843 per million Btu in New York. Futures have plunged 42 percent since closing at $13.577 on July 3, a 30- month high."
The natural gas survey has correctly forecast the direction of prices 50 percent of the time since its June 2004 introduction.
Bloomberg's survey of natural-gas analysts and
"traders, conducted on Fridays, asks for an assessment of"
"whether Nymex natural-gas futures will probably rise, fall"
or remain neutral in the coming week. This week's results
RISE FALL NEUTRAL
15 0 2
To contact the reporter on this story: Reg Curren in Calgary at firstname.lastname@example.org
"Last Updated: August 22, 2008 16:11 EDT"
"Nordic Commodity, ECM Post Top Power Hedge-Fund Gains (Update2) "
By Lars Paulsson
"Aug. 22 (Bloomberg) -- Energy Capital Management and Nordic Commodity Funds AB's hedge funds are outperforming the competition in European energy markets, where power prices fell as much as 17 percent last month from a record."
"Energy Capital's MMT fund returned 19.2 percent this year through July, according to a letter to investors, the best result in a Bloomberg survey of 11 funds in Europe's electricity, coal, natural-gas and emissions markets. Alfakraft AB's Alfa Energy Fund posted the biggest drop, at 17.9 percent, according to its Web site."
"The plunge in power prices and related commodities since early July ended a four-year surge in electricity costs that enabled funds to provide better returns than stocks and bonds. Coal costs, which affect European power markets, more than doubled in the first half, before sliding 13 percent in July."
"``It was difficult to predict the market, with big swings in coal prices and weather patterns,'' said Fredrik Bodecker, managing director of Nordic Commodity Funds in Stockholm, whose Nordic Power Fund rose 16.6 percent through the first seven months of 2008."
"German power for delivery in 2009, the benchmark contract, had its biggest price fluctuations in two years in July and was down 7.8 percent today from its record. On July 23, 10-day volatility was as high as 42.8 percent, according to data compiled by Bloomberg. Volatility is a gauge of price swings during a specific period, expressed as an annual percentage."
"In the Nordic market, the most actively traded quarterly power contract slid 8.1 percent on July 2, its biggest one-day decline. The price reached a record a day earlier."
"Alfakraft, Nordic Commodity Funds and Norden Absolute Energy Management ASA all target annual returns of 15 percent to 25 percent, while Shepherd Energy aims for 15 percent to 20 percent, according to the funds."
"The MMT Energy Fund ``is capable of 30 percent plus returns in a good year,'' according to Energy Capital Management's Web site. Chief Executive Officer Marcel Melis declined to comment."
"``It's possible if you've had a lucky streak, but funds with returns of 15 to 20 percent this year will be few and far between,'' said Gary Vasey, general manager for Europe at Utilipoint International Inc., an energy market consultant. Vasey is also founder of New York-based Energy Hedge Fund Center LLC."
Power Funds Beat Others
"Gardner Finance AG's PowerMacroIndex, which pools the performance of eight electricity hedge funds, was up 6.55 percent through June, compared with 21.2 percent for all of 2007. Data for the year through July wasn't available."
"Power funds are beating the average hedge fund. The typical global hedge fund dropped 3.5 percent this year through July, according to Chicago-based Hedge Fund Research Inc. Last year they gained 10.2 percent. An investment tracking the Standard & Poor's 500 Index declined 12.2 percent this year."
"Power and utility funds are part of the $70 billion managed by commodity hedge funds, according to Cole Partners Asset Management LLC in Chicago, an investor in the industry."
"Hedge funds are private, largely unregulated pools of capital whose managers can buy or sell any assets and participate substantially in profits from money invested."
"Nordic Commodity's Bodecker plans to increase the Nordic Power Fund at least 10-fold to 200 million to 300 million euros ($446 million) by the end of next year. He may start a second fund for German power, gas, coal and emissions this year, targeting 25 million euros to 30 million euros."
The Nordic Power Fund posted its biggest gains of 10.38 percent in February and 6.28 percent in June.
"``We increased the risks when we started to make money,'' Bodecker, 40, said."
"Climbing coal costs caused by rising demand in Asia and production bottlenecks in Australia were among the main drivers of European power prices this spring, fund managers said."
"``The market has generally been very choppy and difficult,'' Peter Brewer, chief investment officer at PCI Investors Ltd. in London, said in an interview. The company's Cumulus Weather Fund lost 8.8 percent in the six months through June, according to a letter to investors. Brewer declined to comment on the performance."
Coal prices in northwest Europe have tumbled 12 percent since a July 1 record and are up about 80 percent this year.
"``They've added a new dimension to the Nordic power market that traders need to take into account,'' said Bengt Lindblad, managing director at Alfakraft in Stockholm. ``Coal and oil prices will continue to be volatile.''"
"Oil prices influence power because of their link to natural gas, the fuel used to generate 20 percent of the European Union's electricity. Crude oil futures on the New York Mercantile Exchange have declined about 19 percent since trading at a record $147.27 a barrel on July 11."
"``We expect continued high volatility in the power markets due to the instability of oil,'' Energy Capital Management said in an investor letter detailing July's return of 5.9 percent, its 12th consecutive monthly gain."
Fund Name Net Return Through July
MMT Energy Fund 19.18%
Nordic Power Fund 16.6%
Plenum Power Fund 13.36%
Shepherd Energy Fund 6.34%
Norden Absolute Energy Fund 5.93%
Electris Energy Fund 1.76% THROUGH JUNE
Interkraft Energy Fund 2.24%
Valartis European Energy Fund 0.66%
Markedskraft Elexir 0.04%
Cumulus Weather Fund -8.8% THROUGH JUNE
Alfa Energy Fund -17.9%
To contact the reporter on this story: Lars Paulsson in London at email@example.com
"Last Updated: August 22, 2008 10:44 EDT"
"U.K. Stocks Advance, Led by HBOS, Banks; Collins Stewart Gains "
By Sarah Jones
"Aug. 22 (Bloomberg) -- U.K. stocks rallied the most in two weeks, led by financial companies on speculation takeovers will increase after Korea Development Bank said it is considering an investment in Lehman Brothers Holding Inc."
"HBOS Plc, Britain's largest mortgage lender, and Lloyds TSB Group Plc gained. Collins Stewart Plc rose on talk the stockbroker may receive a takeover offer from Japan's Nomura Holdings Inc. Liberty International Plc advanced after Simon Property Group Inc. disclosed a stake."
"The FTSE 100 Index gained 135.4, or 2.5 percent, to 5,505.6 in London. The benchmark index has advanced 0.9 percent this week. The FTSE All-Share Index added 2.5 percent today, while Ireland's ISEQ Index increased 3.6 percent."
"``Takeover speculation in the banking sector suggests the markets are once again ripe for activity,'' said Tim Hughes, head of sales trading at IG Index in London. Lehman speculation helped the market ``finish with a very welcome flourish.''"
Goldman Sachs Group Inc. said in report today that European takeovers have drawn a ``line in the sand'' for asset valuations and represent a turning point for the market.
"HBOS gained 6.3 percent to 289 pence. Lloyds TSB, the U.K.'s largest provider of checking accounts, added 7 percent to 299.5 pence. Barclays Plc, the U.K.'s third-biggest bank, advanced 5.1 percent to 326.75 pence."
Collins Stewart Climbs
"Korean Development Bank is considering options including Lehman, a KDB spokesman said today, declining to elaborate. A Reuters report earlier today cited a spokesman saying that KDB is open to possibilities, including a purchase of Lehman."
"Collins Stewart, the U.K. stockbroker that's considering a takeover approach, jumped 5.4 percent to 92.5 pence on speculation Noumra will make an offer."
"``Nomura seems to be popular consensus in terms of the rumored bidder for Collins Stewart, but I'm not so sure,'' said Jeremy Grime, a London-based analyst at Arden Partners Ltd."
"Charlotte Kirkham, a London-based spokeswoman for Collins Stewart, declined to comment. Paul Abrahams, a spokesman for Nomura, wasn't immediately available to comment."
"Liberty International, the largest owner of shopping centers in the U.K., jumped 8 percent to 945 pence. The shares rose as much as 11 percent, the most since 1992, after Simon Property, the biggest U.S. real estate investment trust by market value, disclosed a stake of more than 3 percent."
"Benfield Group Ltd. surged 27 percent to 345.6 pence after Aon Corp., the world's largest insurance broker, agreed to buy the U.K. reinsurer for 844 million pounds ($1.6 billion)."
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
"FirstGroup Plc (FGP LN), Britain's biggest train operator, jumped 18.5 pence, or 3.3 percent, to 581 after rival train operator Arriva Plc said first-half profit jumped 32 percent as the company added buses, won a rail-route franchise and attracted travelers switching to public transit as gasoline prices rose. Arriva gained 30.5 pence, or 4.3 percent to 743.5."
"Rentokil Initial Plc (RTO LN) dropped 4.5 pence, or 6.1 percent, to 69.25 after the world's largest pest-control provider said second-quarter pretax profit dropped 68 percent to 13.3 million pounds and said it may take five years to turn around sliding earnings."
"WPP Group Plc (WPP LN) rallied 16 pence, or 3.4 percent, to 491.5 after the world's second-biggest advertising company said first-half profit rose 14 percent to 208.2 million pounds as sales in Asia and Latin America made up for slower growth in Europe and the U.S."
"Earnings before interest and tax advanced 15 percent to 389.1 million pounds, beating the 366.8 million-pound median estimate of five analysts surveyed by Bloomberg News."
"Kingspan Group Plc (KSP ID) jumped 61 cents, or 9.2 percent, to 7.25 euros. Europe's largest maker of flooring and insulation panels bought the U.S. operations of Metecno Group for $86 million to gain the country's second-largest maker of composite sandwich panels used in construction."
To contact the reporter on this story: Sarah Jones in London at firstname.lastname@example.org.
"Last Updated: August 22, 2008 11:56 EDT"
Analysts' Accuracy on U.S. Profits Worst in 16 Years (Update2)
By Lynn Thomasson
"Aug. 22 (Bloomberg) -- Analysts' accuracy in predicting U.S. profits dropped to the lowest level in at least 16 years last quarter, adding to a worsening track record since regulators forced companies to stop leaking information to Wall Street."
"Earnings estimates from analysts matched results for 6.7 percent of companies in the Standard & Poor's 500 Index that reported second-quarter profit, the fewest since Bloomberg began compiling the data in 1992. Accuracy peaked at 30 percent in the fourth quarter of 2000, the year Regulation Fair Disclosure, known as Reg FD, was adopted, and has fallen for six of the seven years since."
"``They're winging it,'' said John Kornitzer, who oversees $5 billion as chief investment officer of Kornitzer Capital Management in Shawnee Mission, Kansas. ``They can't find out the stuff they want to find out, and they've got so much to do because there have been so many cuts.''"
The Securities and Exchange Commission's law stripped analysts of their edge in forecasting earnings by making companies release information that affects profits to the public. More than $500 billion of bank losses from the collapse of the subprime mortgage market has made predicting company results even harder.
"Second-quarter earnings declined 22 percent for the 459 companies in the S&P 500 that released results so far, according to data compiled by Bloomberg. That's twice the drop analysts projected in the first week of July, before the reports began."
Missing the Mark
"Analysts are increasingly likely to miss the mark because companies are more cautious with information following the SEC's rule, said John Wilson, co-director of equity strategy and chief market technician for Morgan Keegan, which manages $120 billion in Memphis, Tennessee."
"``You no longer have that favored guy who gets the wink and the nod before everyone else,'' Wilson said. ``Unless you've got an analyst with a really good handle on an industry, it just gets tougher and tougher in an environment like this.''"
"Gap Inc., the largest U.S. clothes retailer, climbed 4.6 percent to $19.88 in New York trading today after reporting second-quarter profit of 32 cents a share, topping the 30-cent average forecast of analysts surveyed by Bloomberg."
"Not all research has gotten worse, said Jerome Dodson, a fund manager who oversees $1.7 billion at San Francisco-based Parnassus Investments."
"``Often an individual analyst knows the company better than we do because they follow it on a daily basis,'' said Dodson. ``Good analysts will bring a company to our attention that's not getting a lot of attention on Wall Street.''"
"Citigroup, Bear Stearns"
"Meredith Whitney, the bank analyst at Oppenheimer & Co., predicted Citigroup Inc. would cut its dividend two months before it did. Wachovia Corp.'s Douglas Sipkin lowered his recommendation on Bear Stearns Cos. in May 2007, when it was trading at $150. JPMorgan Chase & Co. later bought the company $9.43 a share, the deal's value when it closed in May."
"Job cuts and a decline in analysts' pay after government efforts to prevent research operations from mingling with investment banking may have exacerbated the drop in the quality of research, according to Morgan Asset Management's Walter ``Bucky'' Hellwig. The SEC requires banks to separate research and investment banking divisions to prevent the leaking of nonpublic information about corporate transactions."
"Bank of America Corp., the second-biggest U.S. bank, fired about a quarter of the stock analysts in its New York-based securities unit in January. Newark, New Jersey-based Prudential Financial Inc., the second-largest U.S. life insurer, shut its 420-person stock research and trading unit last year because it wasn't making money."
"``It's not the high-profit, high-dollar profession that it used to be,'' said Hellwig, who helps oversee $30 billion in Birmingham, Alabama. ``In the wake of all the regulation to separate investment banking from analysis, the job of the analyst became just that, often just watching the stocks and checking the estimates.''"
"Accuracy in the second quarter worsened as complex, illiquid securities caused unexpected losses, said Sean Ryan, a New York- based analyst with Sterne, Agee & Leach Inc."
"American International Group Inc.'s report was among the biggest misses of all companies in the S&P 500 after the world's largest insurer wrote down more than $11 billion of holdings. The adjusted loss was 51 cents a share, compared with analysts' estimate for a 77-cent profit. New York-based AIG's shares plunged 18 percent Aug. 7, the day after the report, for the steepest drop since the company went public in 1969."
"National City Corp., the Cleveland-based bank whose market fell by 70 percent this year, reported a loss that was more than twice what analysts estimated, as did Seattle-based Washington Mutual, the biggest U.S. savings and loan, and New York-based Merrill Lynch & Co., the largest U.S. stock brokerage."
"Morgan Keegan's Wilson, who uses technical and quantitative analysis to make investment decisions, says investors can't rely only on analyst reports because ``nobody knows right now how bad it could be'' as the U.S. economy slows and banks' credit losses continue to climb."
"``You've got to do lots of other things beside read an analyst report and take an earnings estimate at face value,'' he said. ``Schmoozing the company doesn't help anymore.''"
To contact the reporter on this story: Lynn Thomasson in New York at email@example.com.
"Last Updated: August 22, 2008 16:47 EDT"
"French Stocks: Air France, Alcatel, EADS, Kaufman and Scor "
By Adria Cimino
"Aug. 22 (Bloomberg) -- France's CAC 40 Index added 95.84, or 2.2 percent, to 4,400.45 in Paris, paring this week's decline to 1.2 percent. The SBF 120 Index gained 2.2 percent."
"Air France-KLM Group and Alcatel-Lucent SA, among this week's 10 worst performing stocks in the CAC 40, rebounded today. Air France, Europe's largest airline, added 82 cents, or 5.3 percent, to 16.43 euros. It's down 5.6 percent this week. Alcatel, the world's largest supplier of fixed-line telecommunications networks, increased 18 cents, or 4.8 percent to 3.96 euros, cutting its weekly decline to 5.6 percent."
"``This is a technical rebound after a difficult week,'' said Clemence Bounaix, an analyst at Richelieu Finance in Paris, which oversees $6.2 billion. ``There are still worries about the oil price.''"
The following shares rose or fell in Paris. Stock symbols are in parentheses.
"European Aeronautic Defence & Space Co. (EAD FP), which owns planemaker Airbus SAS, increased 79 cents, or 5.6 percent, to 14.97 euros, gaining for the first day this week. Boeing Co., seeking to win the reopened $35 billion U.S. Air Force tanker competition, said it may consider dropping out of the race unless the Pentagon allows the company up to six months to prepare its proposal."
"In the last round of competition that began in January 2007, Northrop Grumman Corp. and its partner EADS won the 179- plane contract."
"Kaufman & Broad SA (KOF FP), a home builder, surged 3.20 euros, or 10 percent, to 33.70 euros, the most since June 2000, on speculation that its controlling shareholder PAI Partners will buy the rest of the company."
"``The rumors have been around for a while and they are pushing up the stock today,'' said Samuel Henry-Diesbach, an analyst at Landsbanki Kepler in Paris who has a ``reduce'' recommendation on the stock."
"Sandrine Gallien, an outside spokeswoman for PAI Partners at Hudson Sandler in London, wasn't immediately available for comment. Nobody was immediately available for comment at Kaufman & Broad either."
"Scor SE (SCR FP) climbed 59 cents, or 4 percent, to 15.33 euros, rising the most in more than two weeks. France's biggest reinsurer had its financial strength and issuer default ratings raised one level to ``A'' by Fitch Ratings, citing its successful integration of Swiss rival Converium Holding AG last year."
To contact the reporter on this story: Adria Cimino in Paris at firstname.lastname@example.org.
"Last Updated: August 22, 2008 13:13 EDT"
PIK Sinks to Record on Russian Slowdown Concern (Update1)
By William Mauldin
"Aug. 22 (Bloomberg) -- PIK Group, Europe's second-largest real-estate company by market value, sank to a record low in London trading on concern that Russia's economic growth may slow and hurt the ability of Moscow residents to pay for housing."
AFI Development Plc also slid to the lowest since the company listed in London last year.
"PIK's global depositary receipts declined $1.71, or 8.5 percent, to $18.43 at 3:23 p.m. in London, heading for their biggest one-day drop ever. The stock of the Russian apartment builder has fallen 40 percent this year on concern Russia's economy may slow, making property less affordable."
"``Real-estate prices continue going up, but at the same time, growth in real disposable income is going down,'' said Elena Jouronova, a real estate equity analyst at JPMorgan Chase & Co. in Moscow. ``This hurts the affordability of housing.''"
"Moscow residential real estate has climbed 36 percent this year to $5,877 a square meter. Growth in real disposable income in Russia decelerated to 5.2 percent in May, the slowest rate in four years. The annual rate was 7 percent in June, according to data compiled by Bloomberg."
"The International Monetary Fund estimates the country's economic growth will slow to 6.8 percent this year from 8.1 percent in 2007. The Washington-based fund expects a 6.3 percent expansion in 2009, which would be the weakest since 2002."
"JPMorgan cut its price estimate for PIK's global depositary receipts 13 percent to $35.80 on Aug. 14, citing ``signs of a slowdown in economic activity and income growth.'' Since then the shares have lost 19 percent."
PIK Group and its owners last year raised $1.85 billion in the biggest initial public offering by a developer in Europe.
"AFI Development, the real estate company controlled by Israeli billionaire Lev Leviev, sank 22 cents, or 4.2 percent, to $4.98 in London today."
"Russian real-estate stocks have suffered as borrowing costs increase following turmoil in the market for U.S. subprime mortgage loans. AFI's one-year, $62 million loan from VTB Group paid an interest rate of 12.4 percent earlier this month, the company said on August 5."
"``Russian development companies are suffering from lower access to funding, but most of them are still in good shape since the demand for real estate in Russia is still very strong,'' said Mikhail Galkin, a fixed income analyst at MDM Bank in Moscow."
"Goldman Sachs Group Inc. cut its recommendation on AFI to ``neutral'' from ``buy'' on Aug. 18, citing higher financing costs."
To contact the reporter on this story: William Mauldin in Moscow at email@example.com.
"Last Updated: August 22, 2008 10:30 EDT"
Sulzer First-Half Profit Rises 20% on Oil Pipelines (Update3)
By Diana ben-Aaron
"Aug. 22 (Bloomberg) -- Sulzer AG, the world's second- biggest maker of pumps, said first-half profit climbed 20 percent as oil and gas companies extended their pipelines."
"Net income increased to 158.2 million francs ($144.2 million), or 4.70 francs a share, from 131.8 million francs, or 3.85 francs, a year earlier, Wintherthur, Switzerland-based Sulzer said today in a statement. Analysts surveyed by Bloomberg predicted 145 million francs."
"Sulzer relies on the expansion of the fuel and power industries for growth, winning orders from South African coal and Chinese nuclear plants in the quarter. The company raised its target for return on sales to ``above 12 percent'' from ``above 11 percent,'' based on gains at the pumps and chemical mixing divisions. Full-year sales and operating income will increase, it said."
"``The operating margin was higher than I anticipated, and it's positive that they're increasing their margin target,'' said Maria Ivek, a Zurich-based Credit Suisse analyst with an ``underperform'' rating on Sulzer. ``Pump sales were below my expectations but I don't necessarily view that as negative since they mentioned long order times and I expect to see those revenues come in later in the year.''"
"Sulzer rose 3 francs, or 2.4 percent, to 127 francs, lifting its market value to 4.35 billion francs."
Sales advanced 6.3 percent to 1.76 billion francs. Analysts predicted 1.79 billion francs.
"``Growth is supported in the oil and gas market by the high oil price,'' Sulzer said in the statement. ``Due to the long lead times of many large projects, sales will continue to grow in a stable manner but will trail order intake.''"
"Crude oil prices, up more than 50 percent this year, have lifted profit for producers and spurred investment in exploration and drilling. The oil-and-gas industry accounts for about half of revenue at Sulzer, which makes multiphase pumps built to withstand a broad range of pressures and temperatures caused by oil wells."
"Pump sales gained 5.3 percent in absolute terms and 15.4 percent adjusted for currency effects as the franc strengthened against the U.S. dollar, euro and pound. Demand is expected to remain ``good'' in all areas except the pulp and paper industry, Sulzer said. It expects fewer large orders for pumps in the second half."
"The company gets about a fifth of sales from chemical mixers used to make foods and plastics, and another fifth from coatings used to strengthen metals, which it sells to Volkswagen AG and other carmakers to protect engines. Its division that maintains jet engines and other turbines had the biggest sales increase in the quarter."
"The Swiss company, founded in 1834, tried six times to take over Bodycote Plc to expand the metals coatings business. Flowserve Corp., based in Irving, Texas, is the world's biggest manufacturer of pumps."
"Its largest shareholder is Vienna-based Everest Beteiligungs GmbH, controlled by Russian billionaire Viktor Vekselberg, with a stake of about 26 percent."
To contact the reporter on this story: Diana ben-Aaron in Helsinki at firstname.lastname@example.org
"Last Updated: August 22, 2008 12:40 EDT"
FDIC's IndyMac Borrower Aid Is `Dangerous' for Bonds (Update2)
By Jody Shenn
"Aug. 22 (Bloomberg) -- The Federal Deposit Insurance Corp.'s plan to have IndyMac Federal Bank FSB rework mortgages for troubled homeowners is ``dangerous'' for bondholders, according to Barclays Capital."
"Investors in mortgage-backed securities may be worse off if enough loans default after they're modified because recoveries may be lower as home prices decline, analyst Sharon Greenberg wrote yesterday in a report. Loan changes also cost bondholders by reducing borrower payments, their collateral or both."
"``We think IndyMac, under FDIC's watchful eye, will interpret the MBS agreements more loosely and err on the side of modifications over other solutions, including foreclosure,'' wrote Greenberg, who is based in New York. ``This can be dangerous.''"
"FDIC Chairman Sheila Bair, who has led regulators in pressing mortgage-servicing companies to rework loans amid surging foreclosures, two days ago announced plans to have the failed lender modify more loans to keep ``tens of thousands'' of borrowers in their homes and avoid the effects of foreclosures on the economy. The FDIC took over Pasadena, California-based IndyMac Bancorp Inc. on July 11, making it the third-largest federally insured bank to be seized by federal regulators."
Harm Other Banks
"The FDIC said that IndyMac would only modify loans underlying mortgage-backed securities or owned by other investors if doing so improves their value and meets contract guidelines. About 30 percent of IndyMac modifications last year failed, with a third of those representing borrowers missing their first revised payments, Greenberg wrote."
"``The reason it is beneficial for bondholders is we're talking about delinquent loans, loans where the borrower's not paying, and we're creating an obligation that now will continue to pay for the long-term,'' Michael Krimminger, special adviser for policy to the FDIC chairman, said in a telephone interview. Any analysis on whether to foreclose or allow a sale for less than the homeowner's debt will require assumptions on the directions of the housing market and broader economy, he said."
"IndyMac mortgage modifications may harm other banks under the FDIC's watch because they own some of the securities, Julian Mann, a mortgage- and asset-backed bond manager at First Pacific Advisors LLC in Los Angeles, which oversees $11 billion, said earlier this week."
"``It hurts the bondholders that are off any shelf of any bank that is perceived as weak and potentially seizure bait, because the collateral is now in question,'' Mann said."
"IndyMac Federal has about 740,000 mortgages that it owns or services for other companies, according to the FDIC, which earlier suspended foreclosures on the bank's $15 billion in loans. On March 31, the company was the eighth-largest home-loan servicer, overseeing $200 billion of mortgages, according to newsletter National Mortgage News. The company services loans in mortgage securities other than ones it issued, Barclays said."
"Modifications may also hurt investors in ``senior,'' or more highly rated, mortgage bonds by reducing their interest payments, Greenberg wrote. That's partly because trustees may fail to use ``common sense'' to reduce payouts to junior bonds after principal forgiveness for homeowners, she said, citing the experience of investors when West Palm Beach, Florida-based Ocwen Financial Corp. stepped up balance reductions earlier this year."
"``We've talked to MBS investors, we've talked to trustees on deals and they want to monitor how we perform as I would expect them to,'' Krimminger said."
"Preventing foreclosures may be bad for some borrowers because they would be better off in more affordable rental housing, according to Joshua Rosner, the managing director at New York-based research firm Graham Fisher & Co. Delaying inevitable defaults also may hide problem loans at banks and prevent prices from tumbling quickly to levels that would make homes cheap enough to allow for a housing recovery, he has said."
To contact the reporter on this story: Jody Shenn in New York at email@example.com.
"Last Updated: August 22, 2008 18:16 EDT"
Thornburg Seeks New Business Model After Home Crisis (Update2)
By Ari Levy
"Aug. 22 (Bloomberg) -- Thornburg Mortgage Inc. co-founder Larry Goldstone, who spent more than four months securing enough shareholder support to keep his company alive, now has to find a new business model."
"Goldstone's Santa Fe, New Mexico-based company, which specializes in ``jumbo'' loans for expensive homes, won approval this month for a bailout that resulted in losses of up to 80 percent for preferred investors. In rebuilding the business, he needs to develop a way to finance the company that doesn't rely so much on private lenders after margin calls ate through cash and left the firm on the brink of bankruptcy."
"``Maybe the only place for mortgage lending to be done is under the protection of the U.S. government,'' said Goldstone, 53, in an interview on July 3. ``I think that's a crying shame.''"
"Thornburg, which may report second-quarter results as early as today, thrived for 14 years by providing mortgages of more than $417,000 to borrowers with high credit scores and investing in top-rated mortgage-backed securities. From 2000 through 2006, profit rose 10-fold and the stock tripled, compared with the 54 percent gain for the Standard & Poor's 500 Financials Index."
"Unlike Countrywide Financial Corp. and Washington Mutual Inc., Thornburg never made a subprime loan. As of March less than 0.7 percent of its mortgages were delinquent."
"Still, the business collapsed in the first quarter as the credit markets seized up and lenders cut off funding, forcing Thornburg to accept a rescue package from buyout firm MatlinPatterson Global Advisers LLC."
"The March 31 deal gives Thornburg $1.35 billion in loans. Investors get $5 in cash and 3.5 common shares for each preferred share, once valued at $25. Those holders sold more than 80 percent of their stakes as of Aug. 19, Thornburg said, exceeding the required 66.7 percent. The deadline is Sept. 2."
"Under the plan, new investors will control about 90 percent of Thornburg with preferred and common holders owning about 5 percent each. Had investors not tendered, MatlinPatterson would have recouped its money, leaving existing investors with nothing, Goldstone said."
"``It's a cold, hard world, but that's it,'' said Goldstone. ``There's nothing else we can do for them.''"
Thornburg's Series C preferred shares fell 5 cents to $5.80 at 4:10 p.m. New York time today. The common shares gained 1 cent to 33 cents. They have tumbled 97 percent in the past year.
"``It's the biggest decline that I've suffered in a stock and I had a lot of clients in it,'' said Donald Hodges, chairman of Hodges Capital Management in Dallas, who has managed money for 48 years and oversees more than $1 billion."
"Thornburg has until March to obtain about $5 billion of financing to repay lenders. Beyond that, Goldstone aims to end reliance on so-called reverse repurchase agreements, which let creditors demand cash on a daily basis when assets decline in value."
Goldstone outlined four options: obtaining secured financing from banks; selling its portfolio of assets as a security; gaining government protection by starting or buying a bank; or adjusting its reverse-repurchase model.
"``I wouldn't know how to handicap any one of the four,'' Goldstone said in an Aug. 6 interview. ``They all have pros and cons.''"
"For Jeffrey Tudas, who owned 15,000 preferred shares at Summit Wealth Advisors in Overland Park, Kansas, becoming a bank is ideal because access to the Federal Reserve discount window provides protection from future credit crises."
Government Safety Net
"``If you're a for-profit enterprise outside of a bank, you don't get afforded the same opportunities,'' said Tudas, whose firm manages more than $100 million."
"Prior to co-founding Thornburg in 1993, Goldstone was an executive at Downey Savings & Loan and Great American Bank, both in California. Still, gaining approval will be difficult amid bank failures, said John Douglas, former general counsel at the Federal Deposit Insurance Corp."
"``I'd be a little surprised if there was much appetite for that,'' said Douglas, now with law firm Paul, Hastings, Janofsky & Walker LLP in Atlanta. ``A well thought-out plan with good capital and good management is certainly not out of the realm of possibility.''"
"Thornburg's troubles started last August, as investors fled mortgage-related securities, and then peaked in the first quarter. Thornburg, which typically received up to $50 million a week in margin calls, was hit with $200 million in calls from Feb. 14 to 20, Goldstone said. In the first three days after its Feb. 28 annual report, $770 million in calls arrived."
"Before the rescue plan, Thornburg struck an agreement with its lenders to suspend margin calls until March 2009. That deal hinged on raising capital, which required that preferred shareholders tender. While the bailout means losses for investors, the company had no choice, said John Wagner of Camden Asset Management LP in Los Angeles, which owned Thornburg preferred shares while selling the stock short."
"``When your house is on fire and someone shows up at your front door with a fire engine, you don't negotiate a price,'' he said."
To contact the reporter on this story: Ari Levy in San Francisco at firstname.lastname@example.org
"Last Updated: August 22, 2008 16:12 EDT"
EU Emission Permits Hold Steady Near 1-Month High as Gas Rises
By Mathew Carr
"Aug. 22 (Bloomberg) -- European Union emission permits were little changed near a one-month high as some U.K. natural gas futures advanced, potentially making the clean-burning fuel less profitable for power utilities."
EU carbon dioxide allowances for December fell 14 cents to close at 24.58 euros ($36.48) a metric ton on London's European Climate Exchange. United Nations certified emission reduction credits for December lost 0.5 percent to 20.34 euros a ton.
"U.K. gas for delivery next month rose 3.3 percent to 58.76 pence a therm on London's ICE Futures exchange. That's equal to $10.92 a million British thermal units. A therm is 100,000 Btus. Gas for the six months through September next year fell 1.1 percent to 84.01 pence."
EU permits have risen 10 percent this year. European power utilities need double the number of allowances to burn coal instead of gas. The EU carbon-trading program is the world's biggest greenhouse-gas market.
To contact the reporter on this story: Mathew Carr in London at email@example.com
"Last Updated: August 22, 2008 12:50 EDT"
"Dragon Oil Gains as Net Profit, Turkmen Output Rises (Update1) "
By Maren Naess Olsen
"Aug. 22 (Bloomberg) -- Dragon Oil Plc, an oil and gas producer in Turkmenistan, jumped in London trading after first- half profit gained on higher crude prices."
"Net income advanced 34 percent to $167 million, or 32.3 cents a share, from $124 million, or 24.3 cents, a year earlier, Dubai-based Dragon said today in a statement. Sales rose 63 percent to $373.5 million."
"Dragon plans to boost output by about 25 percent next year, taking advantage of rising prices after oil climbed above $140 a barrel for the first time in June. It is also seeking to buy another producing asset."
"``We've got a very, very good asset, we can't go wrong,'' Chairman Hussain M. Sultan said in an interview in London. He said production will continue to grow. ``We hope to achieve an average of 50,000'' barrels of oil per day next year."
"Dragon Oil increased 15.5 pence, or 5 percent, to 327.5 pence in London, giving the company a market value of 1.67 billion pounds ($3.1 billion)."
"The company plans to produce about 40,000 barrels a day in Turkmenistan by the end of this year after production peaked at 43,227 barrels a day in June. Most of its oil is exported via Iran, and some via Azerbaijan and Georgia."
"Military conflict between Russia and Georgia ``could potentially impact the group's exports,'' the Dragon statement said. ``Should the current arrangements experience interruption, the group will seek alternative arrangements.''"
"Dragon also aims to bring natural gas to market within ``three years' time,'' when a gas processing plant has been built, Sultan said. The company is currently flaring gas from its Turkmen operations."
"Average gross production in the quarter advanced 36 percent from a year earlier, to 38,482 barrels of oil a day. Dragon booked a one-time expense of $91 million on a hedge, which capped its oil sale price at $102 a barrel. Profit missed analyst estimates of $182 million at Goodbody Stockbrokers and beat estimates of $165 million at Renaissance Capital."
"Dragon Oil is actively pursuing new assets, ideally in the Middle East, North Africa or the Caspian, Sultan said. ``What we are looking for is a producing asset that we can invest in, develop fast and reap the benefits at an early date,'' he said. ``It's a dangerous thing to be a single-asset company.''"
"The company is developing the Cheleken Contract Area in the Caspian Sea off Turkmenistan, a Central Asian nation that's gradually opening up to foreign investment. Dragon signed a production-sharing contract with the Turkmen government in 2000."
Dragon oil has tendered for four new rigs in the region.
"``For us to achieve continued increase in production we need more rigs,'' Sultan said. The lack of so-called jackup rigs is the main problem oil companies face in the Caspian region, he said. ``There are none available at the moment.''"
"At the end of December, Dragon bought stakes in several fields in Yemen from Virgin Resources Ltd. to expand its production base."
"Emirates National Oil Co., wholly owned by the government of Dubai, has a 52 percent stake in Dragon Oil."
To contact the reporter on this story: Maren Naess Olsen in London firstname.lastname@example.org
"Last Updated: August 22, 2008 11:58 EDT"
"Macquarie's Gammel Likes Exxon, Chesapeake Energy, XTO: Video "
"Aug. 22 (Bloomberg) -- Jason Gammel, an analyst at Macquarie Bank Ltd., talks with Bloomberg's Pimm Fox in New York about the outlook for energy prices, Gammel's investment strategy and stock recommendations including Exxon Mobil Corp., Chesapeake Energy Corp. and XTO Energy Inc. (Source: Bloomberg)"
"00:00 Gammel's picks: Exxon, Chesapeake, XTO"
Running time 10:14
"Last Updated: August 22, 2008 18:41 EDT"
Kaufman & Broad Has Steepest Gain Since 2000 on Bid Speculation
By Albertina Torsoli
"Aug. 22 (Bloomberg) -- Kaufman & Broad SA, a French home builder, posted the biggest gain in eight years in Paris trading on speculation among traders and investors that its controlling shareholder PAI Partners will buy the rest of the company."
"Kaufman & Broad jumped as much as 2.99 euros, or 9.8 percent, to 33.49 euros and traded at 33.45 euros as of 3:43 p.m., the steepest increase since June 2000. The builder is the biggest winner on France's SBF-250 Index today, giving the company a market value of 745.2 million euros ($1.1 billion)."
"``There are rumors saying PAI will make a bid on minority shareholders,'' said Samuel Henry-Diesbach, an analyst at Landsbanki Kepler in Paris who has a ``reduce'' recommendation on the stock. ``The rumors have been around for a while and they are pushing up the stock today.''"
Henry-Diesbach said a bid ``is likely'' to come in September.
"Kaufman & Broad is 80 percent controlled by PAI Partners, according to Bloomberg data."
"Sandrine Gallien, an outside spokeswoman for PAI Partners at Hudson Sandler in London, wasn't immediately available for comment when reached by Bloomberg today. Nobody was available for a comment at Kaufman & Broad either."
To contact the reporter on this story: Albertina Torsoli in Paris at email@example.com
"Last Updated: August 22, 2008 09:55 EDT"
Brazil's Tim Jumps as Banif Says Vivo May Buy Rival (Update2)
By Fabiola Moura
"Aug. 22 (Bloomberg) -- Tim Participacoes SA, Brazil's second-biggest mobile-phone company, gained the most in six weeks in Sao Paulo trading after Banif Investimentos said Vivo Participacoes SA may be interested in acquiring its rival."
"Tim's ordinary shares, which have voting rights, had the second-biggest advance on the Bovespa, rising 5.1 percent to 5.83 reais. Tim's preferred shares slipped 1.1 percent to 3.50 reais. Vivo rallied 3.6 percent to 8.08 reais."
"``We believe Vivo could purchase Tim Participacoes, which would be very positive for all of the Tim and Vivo shares,'' Banif analyst Alex Pardellas wrote in a report."
"Both Tim and Vivo reported losses in the second quarter, hurt by rising competition in Latin America's biggest economy. Yesterday, the Brazilian telecommunications agency reported Vivo and Tim's share of the mobile-phone market declined in July, while the number of subscribers increased."
"``Competition is very strong in the mobile phone market,'' Pardellas said in an interview. ``The Brazilian wireless sector will consolidate in the future.''"
"Rio de Janeiro-Based Tim reported a net loss of 34.1 million reais in the second quarter, compared with a 34 million reais profit a year earlier."
"``We maintain our cautious view on Brazilian mobile, despite strong subscriber growth prospects'' as interconnection cuts may prevent ``significant'' higher margins and competition will intensify, JPMorgan Chase & Co. analysts led by Andre Baggio wrote in a note yesterday."
"``The rumors circulating in the market lack any fundamentals,'' according to a Tim statement emailed to Bloomberg. Sao Paulo-based Vivo, the largest mobile-phone company, didn't return a call from Bloomberg News to its Sao Paulo press office seeking comment."
"The spread between Tim's nonvoting and voting shares has widened the most since September 2007, indicating a possible change in control, Pardellas wrote."
"``As yet, we have not heard any rumor on a change in control.'' Sao Paulo-based Banif is a unit of Portugal's fourth- largest publicly traded bank."
"A merger may raise regulatory concerns as Tim and Vivo control 55.51 percent of the market, according to data released by the telecommunications regulator Anatel."
Tim and Vivo are among four companies being investigated by the Justice Ministry's antitrust unit for allegedly stifling industry competition.
To contact the reporter on this story: Fabiola Moura in New York at firstname.lastname@example.org
"Last Updated: August 22, 2008 17:35 EDT"
America Movil Gains as IPhone Sales May Boost Profit (Update1)
By William Freebairn
"Aug. 22 (Bloomberg) -- America Movil SAB, Latin America's largest mobile-phone company, climbed to the highest in a month in Mexico City trading on speculation the company's sale of the Apple Inc. iPhone across Latin America will boost profit."
"America Movil rose 2.4 percent to 26.45 pesos, the highest price since July 18. The shares have lost 21 percent this year, compared with a 9 percent drop in the benchmark Bolsa index."
"Mexico City-based America Movil began selling the iPhone 3G in Argentina, Chile, Colombia, Peru and six other countries today. The company has sold the phone in Mexico since July. There was a waiting list of 50,000 people who reserved the device from America Movil or rival Telefonica SA in Argentina, Efe reported."
"``If they can replicate the success they have had in Mexico, it will be positive news,'' said Martin Lara, a telecommunications analyst at Vector Casa de Bolsa in Mexico City. ``It's a very profitable product.''"
"America Movil may increase the amount of revenue from Internet use on the device, which incorporates some computer functions, Lara said."
America Movil didn't immediately respond to a request for comment.
"Apple increased production and may make as many as 45 million iPhone 3Gs in the next 12 months, BusinessWeek reported, citing a person familiar with the plan. The newest version of the phone, which sold 1 million units in the first three days of its release last month, is scheduled to be available in 42 countries as of today."
"America Movil also gained as U.S. investors bought Mexican shares on speculation the financial crisis there may be bottoming, boosting the outlook for global equities, Lara said."
To contact the reporter on this story: William Freebairn in Mexico City email@example.com.
"Last Updated: August 22, 2008 16:36 EDT"
"Japan's Regulator to Seek Tax Break for Elderly, Nikkei Reports "
By Oliver Biggadike
"Aug. 23 (Bloomberg) -- Japan's Financial Services Agency will propose as early as this month a tax exemption on investment income for the elderly, the Nikkei newspaper reported."
"The regulator aims to exempt from capital gains tax the first 5 million yen ($46,000) of profit from share price increases and 1 million yen from dividends, the report said, without stipulating an age threshold for exemptions or saying where the information was obtained. Other investors may also receive the tax bread on dividends, it said."
Financial Services Minister Toshimitsu Motegi is trying to boost Tokyo's competitiveness as a financial center to fulfill a mandate from Prime Minister Yasuo Fukuda to make the nation's markets comparable to those in New York and London. Motegi said on Aug. 6 he's considering lowering corporate taxes.
To contact the reporter on this story: Oliver Biggadike in Tokyo at firstname.lastname@example.org.
"Last Updated: August 23, 2008 00:10 EDT"
"Mexican Peso Posts Weekly Gain on Inflation, Rate Outlook "
By Andrea Jaramillo
Aug. 22 (Bloomberg) -- Mexico's peso posted a weekly gain on speculation higher-than-forecast inflation will prompt the central bank to raise interest rates further.
"The currency has risen 7.4 percent this year as three interest-rate increases by Banco de Mexico have widened the difference between the Mexican and U.S. target lending rates to 6.25 percentage points, the biggest since 2005, luring investment to Mexico's securities. The peso fell today as the U.S. dollar rallied against most major currencies."
"``The market is starting to price in a bigger hike,'' said Francisco Diez, director of emerging-market trading at RBC Capital Markets in Toronto. Investors are boosting bets Banco de Mexico will raise the target lending rate by 0.5 percentage point to 8.75 percent by year-end, he said."
"Mexico's peso dropped 0.5 percent to 10.145 per dollar at 5:30 p.m. in New York, from 10.0931 yesterday. Earlier the currency touched 10.0783, its strongest level since Aug. 8, and has risen 0.4 percent this week."
"Policy makers raised Mexico's target overnight rate to 8.25 percent on Aug. 15, the highest level since December 2005. They next meet Sept. 19. The U.S. fed funds target is 2 percent."
"Consumer prices rose 0.31 percent in the first two weeks of August after increasing 0.38 percent in the same period a month earlier, the central bank said today. The median forecast of 18 economists surveyed by Bloomberg was for a gain of 0.26 percent."
"Yields on Mexico's 10 percent bond due in December 2024, the country's most-traded security, were little changed at 8.56 percent. The bond's price rose 0.02 centavo to 112.57 centavos per peso, according to Banco Santander SA."
To contact the reporter on this story: Andrea Jaramillo in Bogota at email@example.com
"Last Updated: August 22, 2008 17:41 EDT"
Canada's Dollar Drops for First Time in Four Days as Oil Falls
By Chris Fournier
Aug. 22 (Bloomberg) -- Canada's dollar fell for the first time in four days as crude oil and other commodities retreated and the U.S. dollar rallied against most major currencies.
"The Canadian dollar weakened 0.4 percent to C$1.0468 per U.S. dollar at 8:12 a.m. in Toronto, from C$1.0430 yesterday. One Canadian dollar buys 95.53 U.S. cents."
"Crude oil for October delivery slipped 1.1 percent to $119.90 a barrel, after gaining 5 percent yesterday. Gold futures for December dropped 0.1 percent to $838.40 an ounce. Silver, copper and platinum also declined."
The U.S. currency rose against all but two of the 16 other most actively traded currencies. It increased versus the euro after the biggest daily loss since June as a drop in European industrial orders raised speculation that the U.S. economic slowdown is spreading.
"The loonie, named after the aquatic bird on the Canadian one-dollar coin, has risen 1.1 percent since Aug. 15 in its second straight weekly advance as oil prices increased. Commodities account for about half of Canada's export revenue."
To contact the reporter on this story: Chris Fournier in Montreal at firstname.lastname@example.org
"Last Updated: August 22, 2008 08:18 EDT"
Futures Traders Raise Bets on Canadian Dollar Drop Vs Dollar
By Dave Liedtka
"Aug. 22 (Bloomberg) -- Futures traders increased their bets that the Canadian dollar will decline against the U.S. dollar, figures from the Washington-based Commodity Futures Trading Commission show."
Futures are agreements to buy or sell assets at a set price and date. The figures reflect holdings in currency-futures contracts at the Chicago Mercantile Exchange as of Tuesday.
Each Friday the CFTC publishes aggregate numbers for long and short positions for speculators such as hedge funds and institutional investors that buy or sell futures to protect against price moves. Analysts and investors follow changes in speculators' positions because such transactions can reflect an expectation of a change in prices.
To contact the reporter responsible for this story: Dave Liedtka in New York email@example.com
"Last Updated: August 22, 2008 15:36 EDT"
"JPMorgan Recommends Global Banks, Consumer Stocks (Update2) "
By Fabio Alves
Aug. 22 (Bloomberg) -- JPMorgan Chase & Co. strategists recommended that investors increase their holdings of global financial stocks and U.S. companies that rely on discretionary spending by consumers and sell energy and raw material producers.
"We ``urge that investors continue to shift away from the consensus `inflation shock' trade,'' JPMorgan strategists led by Adrian Mowat wrote in a note to clients today."
"The percentage of U.S. companies reporting higher-than- estimated earnings in the second quarter exceeded previous quarters and that trend should continue as inflation slows and the dollar weakens, they said."
The strategists advised investors to ``overweight'' global banks and U.S. consumer discretionary stocks and ``underweight'' commodity shares.
"A group of bank and brokerage shares in the Standard & Poor's 500 index climbed 2.7 percent today, the most among the 10 industries. Lehman Brothers Holdings Inc., the brokerage that lost almost 80 percent of its value this year, surged 15 percent after Reuters reported Korea Development Bank said it's open to purchasing the firm."
"Mounting credit losses, forcing banks globally to write down more than $500 billion in the value of their assets, sent the S&P 500 Financials Index tumbling 31 percent this year through yesterday, compared with a 13 percent drop in the broader measure."
The dollar has gained almost 8 percent versus the euro since touching an all-time low of $1.6038 on July 15 amid concern credit-market losses and a surge in crude oil prices would prolong the U.S. economic slowdown.
"Among emerging stock markets, the strategists said they are bullish on China and ``less constructive'' on Latin America, eastern Europe and Africa, except Mexico and Turkey."
To contact the reporterS on this story: Fabio Alves in New York at firstname.lastname@example.org;
"Last Updated: August 22, 2008 14:32 EDT"
U.K. Pound Falls to One-Week Low Against Euro as Growth Stalls
By Lukanyo Mnyanda
"Aug. 23 (Bloomberg) -- The U.K. pound fell to a one-week low against the euro after a government report showed economic growth stagnated in the second-quarter, strengthening the case for lower interest rates."
"The pound declined for a fifth week against the dollar, the longest losing streak since February 2006, as the Office for National Statistics said yesterday U.K. gross domestic product was unchanged from the previous three months. Inflation risks ``have probably eased a little,'' the minutes of the Bank of England's August rate meeting showed this week."
"``This is a pretty toxic environment for the pound,'' said Lee Hardman, a currency strategist in London at the Bank of Tokyo-Mitsubishi Ltd. ``There's a risk of a rate cut in November if the data continue to deteriorate.''"
"The U.K. currency dropped as much as 0.7 percent to 79.89 pence per euro, the lowest level since Aug. 14, and was at 79.70 yesterday in London, from 79.32 on Aug. 21 and 78.70 a week ago. It was at $1.8589 from $1.8782 the day before. The pound may drop below $1.80 in 12 months, Hardman forecast. The pound has declined 6.8 percent this month, headed for the biggest monthly drop since October 1992, when it lost 12 percent."
"Gross domestic product was unchanged from the first quarter, the Office for National Statistics said, compared with a previous estimate for growth of 0.2 percent. Economists had expected a 0.1 percent expansion, according to the median estimate of 34 economists in a Bloomberg News survey. Growth was 1.4 percent from a year earlier, the weakest since 1992."
"The report adds to pressure on the Bank of England to set aside concerns about inflation and cut its benchmark interest rate, currently at 5 percent."
`Support the Market'
"Deutsche Bank AG changed its U.K. interest-rate forecast two days ago and said the central bank will lower borrowing costs by 1 percentage point next year. The benchmark rate will be cut to 4 percent in the first three quarters of 2009, George Buckley, the bank's chief U.K. economist, wrote in an e-mailed note."
"``The prime focus remains how soon does inflation come off,'' said Simon Derrick, a currency strategist in London at Bank of New York Mellon Corp. ``And how soon can the Bank of England move to get monetary policy down to a level that will help support the market.''"
"Gilts dropped, with the yield on the 10-year bond rising 6 basis points to 4.63 percent. The 5 percent security due March 2018 fell 0.46, or 4.6 pounds per 1,000-pound face amount, to 102.85. The yield on the two-year gilt, which is more sensitive to interest rate changes, rose 5 basis points to 4.62 percent. Bond yields move inversely to prices."
"The U.K. economy faltered after banks choked off credit following the collapse of the U.S. subprime-mortgage market. Still, an inflation rate at more than twice its 2 percent target has prevented the Bank of England's from lowering interest rates to revive the economy."
"``It's a disappointing outturn,'' Ross Walker, an economist at Royal Bank of Scotland Group Plc, the U.K.'s second largest lender, said in a Bloomberg Television interview. ``It raises the risk of an earlier cut in interest rates.''"
Morgan Stanley recommended on Aug. 21 that investors put on trades that benefit from a drop in the pound against the Australian dollar and Swiss franc on speculation the economic slowdown in the U.K. will deepen.
"Investors should enter the so-called short positions at 2.1360 Australian dollars per pound and target a decline in the British currency to 2.0400, Sophia Drossos, a New York-based strategist, wrote in a client note. They should also hold on to so-called short positions on the pound versus the franc, with a target of 1.95, she wrote. A short position is a bet the value of a currency or security will fall."
U.K. bonds have outperformed their European counterparts in the past three months as evidence the economic slowdown is deepening persuaded investors to remove wagers on rate increases. The implied yield on the March short-sterling futures contract was at 5.27 percent yesterday. It has declined from 5.44 percent at the end of July.
"The spread between U.K. government bonds and their German counterparts has narrowed. The 10-year gilt yielded 38 basis points more than the German bund, the smallest amount since July 22. It was at 69 basis points on Feb. 25, the widest this year."
"U.K. bonds have returned 4.3 percent in the past two months, compared with 2.9 percent for their European counterparts, according to Merrill Lynch & Co.'s EMU Direct Government and U.K. Gilts Master indexes."
To contact the reporters on this story: Lukanyo Mnyanda in London at email@example.com
"Last Updated: August 23, 2008 02:30 EDT"
"Fannie, Freddie Have `No Pressing Need' for Bailout, Citi Says "
By Shannon D. Harrington
"Aug. 22 (Bloomberg) -- Fannie Mae and Freddie Mac don't need to be nationalized and the U.S. should resist being ``stampeded'' into a bailout of the beleaguered mortgage-finance companies, Citigroup Inc. analysts said."
"``The U.S. government should not be goaded into `doing something,''' Citigroup interest-rate strategists led by Scott Peng in New York wrote in a note to clients. ``From a capital and financing perspective, there is no pressing need for such a drastic intervention.''"
"Patience is the ``right approach,'' the analysts said, citing data that shows Fannie Mae has $9.4 billion more in capital than the minimum required by its regulator and Freddie Mac has $2.7 billion over its requirements. Financing costs for the government-chartered companies, while rising, remain ``quite reasonable'' and are still at a historically low level when compared to the yields from the mortgage bonds they buy."
"``Any purchases they do make are providing historically high spreads relative to their funding,'' the analysts wrote."
"Treasury Secretary Henry Paulson last month won approval to pump unlimited amounts of capital into Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, which guarantee or own about $5 trillion of the $12 trillion in U.S. home loans."
"Bill Gross, who manages the world's biggest bond fund as co- chief investment officer at Pacific Investment Management Co., said earlier this month in a Bloomberg Television interview that the Treasury will likely be forced to buy as much as $30 billion of preferred shares in each company by the end of the quarter."
"Critics including former Federal Reserve Chairman Alan Greenspan and Richmond Federal Reserve Bank President Jeffrey Lacker have called for the companies to be nationalized. William Poole, the former head of the St. Louis Fed said last month Freddie Mac is technically insolvent and Fannie Mae's fair value may be negative next quarter. The two companies have posted $14.9 billion in combined net losses over the past four quarters."
Billionaire investor Warren Buffett said on CNBC today that ``the game is over'' for Fannie and Freddie as independent companies.
Fannie Mae's stock market value has dropped about 88 percent this year to about $5.3 billion and Freddie Mac has plunged 90 percent to about $2.1 billion amid concern that record home foreclosures will erode capital at the government-sponsored enterprises and a federal bailout will wipe out shareholders.
"``While the decline in the price of GSE equity may be uncomfortable to witness, it does not hinder the ability of the GSEs to continue operating as they always have,'' the Citigroup analysts wrote."
To contact the reporter on this story: Shannon D. Harrington in New York at firstname.lastname@example.org
"Last Updated: August 22, 2008 10:42 EDT"
"Asian Currencies: Korean Won, Philippine Peso Decline This Week "
By Lilian Karunungan and Judy Chen
Aug. 23 (Bloomberg) -- South Korea's won slumped to a four- year low on speculation intervention won't halt the currency's slide. The Philippine peso fell this week after the government lowered its economic growth forecast.
"The won dropped as much as 0.8 percent yesterday to 1,063 against the dollar, the weakest since December 2004, as refiners bought the U.S. currency to import oil and overseas investors sold local stocks. The won had rallied 0.6 percent before the slide on purchases by the central bank, according to Sam Hong, a Seoul-based currency trader at Shinhan Bank, a unit of South Korea's second-biggest financial group."
"``The government's action is not strong enough to stop the won's slide,'' said Lee Yoon Jin, a currency dealer at state-run Korea Development Bank in Seoul. ``There have been a lot of purchases of the dollar from the local energy companies.''"
"The won slid 0.7 percent to 1,062.5 per dollar yesterday in Seoul, after touching a high of 1,048, according to Seoul Money Brokerage Services Ltd. It's dropped 4.7 percent this month, the biggest decline among Asia's 10 most-active currencies excluding the yen. The peso fell 0.2 percent to 45.65 per dollar in Manila yesterday, according to Bankers Association of the Philippines, extending this week's losses to 0.3 percent."
"Korea's government continues to ``closely'' monitor the currency for ``drastic'' fluctuations, Vice Finance Minister Kim Dong Soo said on Aug. 20."
"The nation's foreign-currency reserves dropped $10.58 billion in July to $247.52 billion, a fourth straight monthly decline, as policy makers tried to halt a slide in the won. Central banks intervene in currency markets by selling or buying foreign exchange."
"The won slid 2.2 percent this week, declining for a fourth consecutive time, the longest stretch in a year. Demand for the currency slumped as overseas investors sold 1,226 billion won ($1.15 billion) more shares than they bought, trimming their holdings on all but one of the five trading days, according to stock exchange data."
"The Kospi index fell every day this week, sliding 4.8 percent to close at 1,496.91. That's the first time it's been below 1,500 since April 2007."
The peso fell for a fourth week and reached the lowest level in more than a month on concern that demand for the nation's exports from its biggest market in the U.S. will decrease.
"Slowing economies are ``a global concern of central banks,'' said Roland Avante, treasurer at Chinatrust (Philippines) Commercial Bank in Manila. ``There's a need for currencies to weaken against the dollar. We're still very much reliant on the U.S., they're still one of our major trading partners.''"
"Philippine central bank Governor Amando Tetangco said yesterday that foreign-exchange inflows will increase in the fourth quarter, boosting the peso. The currency is weaker because ``we are in import season,'' he said in an e-mail. ``There's demand for dollars.''"
"Economic Planning Undersecretary Augusto Santos this week said gross domestic product would expand 5.5 percent to 6.4 percent this year, instead of a previously forecast 5.7 percent to 6.6 percent. The U.S. accounts for 16 percent of overseas sales."
Six of the seven economists surveyed by Bloomberg News predict the Philippine central bank will increase borrowing costs next week by a quarter-percentage point to 6 percent. One economist forecast a half-percentage-point increase.
The Indonesian rupiah snapped a two-week decline on speculation overseas investors are buying the nation's assets as stocks rise and the government issues Islamic bonds.
The currency completed its best week in more than a month on speculation the central bank is seeking a stronger currency to help temper inflation. Foreign investors bought more Indonesian stocks than they sold in two of the three trading days until Aug. 21. The government closed this week an offering of 5 trillion rupiah ($546.4 million) of seven- and 10-year sukuk Islamic notes.
"``Funds overall are really positive on the rupiah,'' said Catherine Tan, head of foreign exchange at Thomson Financial Asia in Singapore. ``The central bank has been very pro-active in hiking interest rates to counter inflation. There's also been quite a lot of inflows into the sukuk.''"
"The currency rose 0.3 percent to 9,140 yesterday in Jakarta, according to data compiled by Bloomberg. The rupiah, which gained 0.5 percent this week, will strengthen to 9,000 by the end of the year, Tan forecast."
Singapore Dollar Strength
"The central bank raised its benchmark interest rate four times this year to 9 percent after inflation accelerated to 11.9 percent in July, the most in 22 months."
"Singapore's dollar had its best week in two months as the U.S. currency weakened against the euro and the yen, which are part of the trade-weighted basket managed by the Southeast Asian nation's central bank."
"The local dollar was the best performer yesterday among Asia's 10 most-traded currencies outside Japan, rising to a one- week high. The U.S. currency declined this week on concern that widening credit-market losses and a deepening housing recession will prevent the Federal Reserve from raising interest rates."
"``The Singapore dollar's strength is from a pullback in the broader U.S. dollar environment,'' said Han Sia Yeo, a currency strategist at Bank of America Corp. in Singapore."
"The Singapore dollar rose 0.6 percent this week, the most since the five days through June 20, to S$1.4081 against the U.S. dollar. It touched S$1.4028, the strongest level since Aug. 14."
"Elsewhere, the Malaysian ringgit advanced 0.2 percent to 3.3400 a dollar from 3.3480 last week. The Thai baht fell 0.3 percent to 33.93. Taiwan's dollar declined 0.1 percent to NT$31.370 and Vietnam's dong was at 16,595 per dollar."
To contact the reporters on this story: Lilian Karunungan in Singapore at at email@example.com; Judy Chen in Shanghai at firstname.lastname@example.org.
"Last Updated: August 22, 2008 18:19 EDT"
"German Stocks Gain, Led by Banks; Deutsche Post, Lufthansa Rise "
By Stefanie Haxel
"Aug. 22 (Bloomberg) -- German stocks advanced, rebounding from a five-week low, as concern eased that writedowns and credit-related losses in the financial industry will spread and crude oil fell for a first time in four days."
"Deutsche Postbank AG, the country's biggest consumer bank by clients, and Commerzbank AG led the gain. Deutsche Lufthansa AG, Europe's second-largest airline, snapped a four-day decline. Deutsche Post AG rallied the most in two weeks after Goldman Sachs Group Inc. recommended buying shares in Europe's largest mail carrier."
"The benchmark DAX Index advanced 105.46, or 1.7 percent, to 6,342.42, trimming this week's drop to 1.6 percent. DAX futures expiring in September advanced 1.5 percent as of 5:46 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies also rose 1.7 percent."
"``The situation of financial stocks in the U.S. is slightly calming down,'' Tilmann Galler, a client portfolio manager who helps oversee about $25 billion at JPMorgan Asset Management in Frankfurt, said in a Bloomberg Television interview. ``Although bank shares started very weak, we got first buy recommendations for Lehman Brothers Holdings Inc.''"
"Ladenburg Thalmann & Co. upgraded Lehman shares to ``buy'' from ``neutral'' yesterday and Citigroup Inc. confirmed a ``buy'' recommendation on Aug. 20. Lehman, the largest underwriter of mortgage bonds before the subprime market collapsed, may write down about $4 billion in credit-related investments in the third quarter, JPMorgan Chase & Co. said Aug. 19, triggering a slump in financial stocks."
"Deutsche Postbank surged 2.22 euros, or 5.5 percent, to 42.41. Commerzbank, Germany's second-biggest bank, rose 89.5 cents, or 4.6 percent, to 20.51 euros. Larger rival Deutsche Bank AG added 1.645 cents, or 2.9 percent, to 57.605 euros."
"Lehman, the fourth-largest U.S. securities firm, jumped 15 percent in New York trading today after a Reuters report that Korea Development Bank is ``open to'' an acquisition."
"Deutsche Post gained 53 cents, or 3.5 percent, to 15.57 euros, the steepest advance since Aug. 5. The carrier is among companies looking ``most attractive on both a qualitative and quantitative basis,'' analysts including Keith Hayes wrote in a report to clients today, lifting his recommendation to ``buy'' from ``neutral.''"
Crude for October delivery dropped as much as 3 percent to $117.54 a barrel in New York as the dollar strengthened and Turkey restored flows through a Caspian Sea pipeline closed by fire earlier this month.
"Lufthansa, Europe's second-largest airline, rallied 42 cents, or 3 percent, to 14.44 euros. BMW, the world's biggest luxury carmaker, advanced 90 cents, or 3.3 percent, to 28.63 euros. Daimler AG, the second-largest, increased 79.5 cents, or 2 percent, to 40.54."
The following stocks also rose or fell in German markets. Symbols are in parentheses.
"Heidelberger Druckmaschinen AG (HDD GY) gained 59 cents, or 4.4 percent, to 13.93 euros. The world's largest printing-press maker snapped a three-day decline as the dollar extended gains against the euro."
"``Investors may speculate the company's earnings will be burdened less than feared as the dollar stabilizes against the euro,'' said Eerik Budarz, an analyst at Bankhaus Metzler in Frankfurt who has a ``sell'' recommendation on the stock."
"Hochtief AG (HOT GY) surged 4.24 euros, or 8.5 percent, to 54.34, the steepest gain in almost seven months. Germany's biggest construction company may be broken up by its main shareholders, Spanish construction company ACS SA and Russian billionaire Oleg Deripaska, Manager Magazin reported, without saying where it got the information."
"``We don't have any indication that ACS has plans to break up Hochtief,'' Hochtief spokeswoman Jutta Hobbiebrunken said in a telephone interview with Bloomberg News. ``These rumors come up from time to time.''"
"Nordex AG (NDX1 GY) advanced for a second day, adding 56 cents, or 2.5 percent, to 23.42 euros. DZ Bank rated shares in the windmill maker ``buy'' in new coverage and set its price estimate at 28 euros."
To contact the reporters on this story: Stefanie Haxel in Frankfurt at email@example.com.
"Last Updated: August 22, 2008 11:52 EDT"
"Oil Futures May Rise as Dollar Weakens, Survey Shows (Update1) "
By Mark Shenk
"Aug. 22 (Bloomberg) -- Crude oil may rise next week because of a weakening dollar, tension between the U.S. and Russia and falling gasoline stockpiles."
"Sixteen of 29 analysts surveyed by Bloomberg News, or 55 percent, said prices will increase through Aug. 29. Seven of the respondents, or 24 percent, said oil will be little changed and six said there would be a drop in prices. Last week 63 percent expected prices to increase."
Energy and metals futures climbed yesterday as the U.S. currency fell the most against the euro in 11 weeks. A falling dollar prompts investors to by hard assets as an inflation hedge. Russia reacted angrily after Poland agreed to host a U.S. anti- missile base two weeks after Russia invaded Georgia.
"``The dollar is correcting, and there are tensions in various parts of the world,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``We fell more than $30 from last month's record so it's normal for prices to bounce back.''"
"U.S. gasoline supplies declined 6.2 million barrels to 196.6 million barrels last week, a U.S. Energy Department report on Aug. 20 showed. Inventories have dropped 9.4 percent in the past four weeks as refineries cut operating rates."
"Crude oil for October delivery rose 65 cents, or 0.6 percent, to $114.59 a barrel this week on the New York Mercantile Exchange. Futures have dropped 22 percent since touching $147.27 a barrel on July 11, the highest since trading began in 1983."
The oil survey has correctly predicted the direction of futures 49 percent of the time since its start in April 2004.
" Bloomberg's survey of oil analysts and traders, conducted"
"each Thursday, asks for an assessment of whether crude oil"
"futures are likely to rise, fall or remain neutral in the coming"
week. The results were:
RISE NEUTRAL FALL
16 7 6
To contact the reporter on this story: Mark Shenk in New York at firstname.lastname@example.org.
"Last Updated: August 22, 2008 16:56 EDT"
Copper Futures Drop Most in a Week in N.Y. on Demand Concern
By Millie Munshi
Aug. 22 (Bloomberg) -- Copper dropped the most in more than a week as rising stockpiles signaled demand may be waning for the metal used in pipes and wires.
"Inventories monitored by the London Metal Exchange jumped 4.6 percent to 163,800 metric tons, the biggest one-day gain since May 9 and the highest total since Feb. 11. Before today, copper had dropped 3.4 percent this month on concern slowing economic growth is reducing demand for metals."
"``LME stocks were up sharply today and hurting sentiment,'' said Edward Meir, an analyst an MF Global in Darien, Connecticut. ``We should see a drift down'' in copper prices, he said."
"Copper futures for December delivery lost 5 cents, or 1.4 percent, to $3.4885 a pound at 9:17 a.m. on the Comex division of the New York Mercantile Exchange. A close at that price would mark the biggest drop for a most-active contract since Aug. 14."
"On the London Metal Exchange, copper for delivery in three months fell $134, or 1.7 percent, to $7,720 a metric ton ($3.50 a pound). Before today, the metal was up 13 percent in the last 12 months."
To contact the reporter on this story: Millie Munshi in New York at email@example.com
"Last Updated: August 22, 2008 09:18 EDT"
Japan Bonds Complete Fourth Weekly Gain on Stock Indexes Slump
By Theresa Barraclough
"Aug. 23 (Bloomberg) -- Japanese government bonds completed a fourth weekly gain as local stock indexes slumped, boosting the attraction of fixed income assets."
"Benchmark 10-year yields this week touched the lowest in four months after the Bank of Japan said it became more pessimistic about the outlook for the economy and kept interest rates at 0.5 percent. A government report on Aug. 21 showed Japan's trade surplus narrowed, as shipments to the U.S. dropped for an 11th month."
"``The data has been poor, all the numbers look poor, which is enough reason for bond prices to rally,'' said Stefan Liiceanu, a Tokyo-based senior fixed-income strategist with Barclays Capital Inc., the U.K.'s third-largest bank. There has been some ``asset reallocation'' from stocks to bonds, he said."
"The yield on the 1.5 percent bond due June 2018 fell 1 basis point this week to 1.445 percent, according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.085 yen to 100.472 yen. The yield fell to as low as 1.41 percent on Aug. 21, the lowest since April 21."
Ten-year bond futures for September delivery were unchanged at 137.69 on the Tokyo Stock Exchange. A basis point is 0.01 percentage point.
The Nikkei 225 Stock Average lost 2.7 percent this week and the broader Topix index dropped 2.5 percent.
"Japan's 10-year yields had a correlation of 0.68 with the Nikkei 225 in July, compared with 0.50 in June, according to Bloomberg data. A value of 1 means the two moved in lockstep."
"Benchmark bonds have handed investors a return of about 0.8 percent so far this month through Aug. 21, compared with a 1.1 percent return for holders of U.S. Treasuries, according to indexes compiled by Merrill Lynch & Co. The Nikkei 225 lost 4.7 percent in the same period."
The demand for bonds this week was limited on speculation yields that fell to the lowest since April deterred investors from buying the securities.
"Bonds are looking ``pretty expensive,'' said Tatsuo Ichikawa, a senior strategist in Tokyo at RBS Securities Japan Ltd., one of the 26 primary dealers required to bid at government auctions."
"Ten-year yields have fallen from an 11-month high of 1.895 percent reached on June 16 on mounting evidence Japan, the world's second-largest economy, is slowing. A government report on Aug. 13 showed gross domestic product shrank an annualized 2.4 percent in the three months ended June 30, bringing the nation to the brink of its first recession in six years."
"The demand for bond futures was also tempered as a technical chart that traders use to predict changes in prices, suggested it may decline, according to Daiwa Securities SMBC Co. The contracts approached 138.14, which is a 61.8 percent reversal of the drop from a high on March 19 of 141.91 to a June 13 low of 132.05, according to the Fibonacci series of numbers."
`Strong Resistance Level'
"``Many people are looking at the 138.14 level as it is a strong resistance level,'' said Keiko Onogi, a debt strategist at Daiwa Securities, another primary dealer. ``People are cautious of this level and we don't have enough factors to drive the market above it.''"
"Bank of Japan board members said there are few signs that rising commodity prices will prompt companies to increase wages and fan inflation, minutes of the July 14-15 meeting released yesterday showed. The minutes came two days after the central bank cut its economic assessment, saying growth in the world's second-largest economy is ``sluggish'' for the first time in 10 years."
"``Many members said that wages had not risen markedly in Japan and to date there had been no sign of second-round effects from the rise in prices of petroleum products and food,'' according to the minutes."
BOJ Rate Outlook
Economists say the benchmark interest rate is unlikely to increase from 0.5 percent until next year at the earliest. The rate was last raised in February 2007.
"``Still, market speculation of a BOJ rate cut probably will not vanish in coming months, leaving room for further modest JGB yields declines, as the economic slump likely continues,'' Tomoko Fujii, head of Japan economics and strategy at Bank of America Corp., wrote in a research note."
"There is a 7 percent chance the central bank will reduce interest rates to 0.25 percent by year-end, according to calculations by JPMorgan Chase & Co. using overnight interest- rate swaps."
"Japan's government isn't considering selling new bonds to fund an economic stimulus package that will be unveiled next week, Finance Minister Bunmei Ibuki said yesterday."
"``I'm not making the assumption that the government will issue bonds'' to finance the relief measures, Ibuki said at a press conference in Tokyo yesterday. He said the package may be funded by an extra budget for the current fiscal year as well as next year's regular budget."
To contact the reporter on this story: Theresa Barraclough in Tokyo at firstname.lastname@example.org.
"Last Updated: August 22, 2008 18:08 EDT"
Nissan Expects Auto Sales in Brazil to Triple by '09 (Update1)
By Heloiza Canassa
"Aug. 22 (Bloomberg) -- Nissan Motor Co., Japan's third- largest automaker, expects its annual sales in Brazil to more than triple in 2009 from last year."
"The carmaker forecasts sales of 18,000 cars and light commercial vehicles in the country this year and 40,000 in 2009, Chief Executive Officer Carlos Ghosn told reporters in Curitiba, Brazil, today. Nissan sold 11,900 vehicles in Brazil last year."
"``Brazil shows a large growth potential for us,'' Ghosn said while releasing the Livina, the first car Tokyo-based Nissan will make in the country. ``A faster economic growth and increasing bank loans create a positive scenario for sales.''"
"Nissan and France's Renault SA, also led by Ghosn, are adding models and boosting production in Brazil after weaker economic growth and higher oil prices curbed demand in the U.S., Europe and parts of Asia. U.S. auto sales dropped 11 percent in the first half, while the Brussels-based European Automobile Manufacturers' Association said European registrations fell 2 percent. Brazilian sales rose 30 percent during the same period."
"Ghosn also said sales growth in emerging markets for Renault, France's second-largest carmaker, may slow to an average of 10 percent next year, about half the expected rate for 2008."
"``There are signs emerging-market sales will keep growing, while at a lower pace,'' Ghosn said. ``Emerging markets made up for falling sales in mature countries last year, and this scenario is still the same today.''"
Investing in Brazil
"Brazil' fastest economic growth in four years and record bank loans are fueling demand for durable goods such as vehicles, computers and electronics."
"Anfavea, as the Brazilian automaker association is known, forecasts sales will rise to a record 3.06 million vehicles this year, a 24 percent increase from 2007. At the current pace of growth, ``a slowdown may only occur next year,'' Jackson Schneider, the association's head, said on Aug. 6."
"Renault, based in Boulogne-Billancourt, France, is investing 1 billion reais ($621 million) in Brazil between 2005 and 2009 to introduce new products and boost production capacity. The company expects sales to total 130,000 vehicles in 2008, above a previous estimate of 106,000 units."
"The carmaker, fifth-largest in Brazil, almost doubled sales in the country in the first seven months of the year. Registrations of Renault models totaled 65,200 units January through July, compared with about 33,100 units in the year- earlier period, according to Anfavea."
"Nissan fell 6 yen to 830 yen earlier today in Tokyo Stock Exchange composite trading. The shares have declined 33 percent this year. Renault rose 2.7 euros, or 4.7 percent, in Paris trading, and has fallen 39 percent this year."
To contact the reporter on this story: Heloiza Canassa in Sao Paulo at email@example.com.
"Last Updated: August 22, 2008 19:57 EDT"
"Italy Stocks Update: Fiat, Ifil, Italcementi, Mediolanum, Seat "
By Francesca Cinelli
"Aug. 22 (Bloomberg) -- Italy's S&P/MIB Index increased for the first time in four sessions, adding 332, or 1.2 percent, to 28,090. Futures expiring in September advanced 281, or 1 percent, to 28,125."
The following were among the most active stocks on the Italian market today. Share symbols are in parentheses.
"Banca Popolare di Milano Scrl (BPM IM), an Italian regional lender, increased 24 cents, or 3.8 percent, to 6.63 euros. Insurance and banking stocks were respectively the second- and fourth-best performers among the 18 industry groups in Europe's Dow Jones Stoxx 60 Index today as Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, jumped after Korea Development Bank said it's ``considering'' an investment in the company."
"Mediolanum SpA (MED IM), the Italian financial-services company partly owned by Prime Minister Silvio Berlusconi, surged 17.1 cents, or 6.3 percent, to 2.91 euros."
"Banco Popolare SC (BP IM), the bank created by Popolare di Verona's purchase of Banca Popolare Italiana, lost 12.3 cents, or 1 percent, to 12.51 euros. ``After the recent outperformance driven by speculation, we suggest switching to Unione di Banche Italiane SCPA (UBI IM),'' Carlo Tommaselli, an analyst at Cheuvreux who rates Banco Popolare an ``underperform,'' wrote in a note. UBI shares increased 36 cents, or 2.4 percent, to 15.52 euros."
"Italcementi SpA (IT IM) and Buzzi Unicem SpA (BZU IM), Italy's biggest cement makers, added 3.5 percent to 9.23 euros and 2.4 percent to 13.45 euros respectively. Construction stocks gained in Europe as oil prices retreated below $118 a barrel."
"Fiat SpA (F IM), Italy's biggest manufacturer, climbed 59.8 cents, or 5.9 percent, to 10.74 euros. ``European auto stocks are once again largely influenced by the twin themes of dollar and oil,'' Citigroup analysts John Lawson and Kristina Church wrote in a research report, adding that Fiat has ``the least exposure to forex issues among assemblers,'' while ``Fiat's impressive turnaround to date has set a new benchmark in the sector.''"
"Ifil SpA (IFL IM) and Istituto Finanziario Industriale SpA (IFP IM), the holding companies through which Italy's Agnelli family controls Fiat, climbed 30.7 cents, or 7.7 percent, to 4.3 euros and 1.14 euros, or 9.2 percent, to 13.51 euros respectively."
"Lottomatica SpA (LTO IM), the manager of Italy's national lottery, added 9 cents, or 0.4 percent, to 20.56 euros. Lottomatica and its partners are qualified to bid for a sports- betting concession in Turkey, an official for the Italian gaming company said, denying a newspaper report that Turkish authorities had blocked the bid."
"Pirelli & C SpA (PC IM) increased 2.9 percent to 44.6 cents. Pirelli Tyre SpA, the company's tire unit, announced the acquisition of stakes in two local subsidiaries in Turkey, Pirelli Turk Lastikleri and Celikord, for a total 43 million euros. The company bought a further 1 percent stake in Celikord from other shareholders. ``The operation should slightly reduce the weight of minority interests,'' Marco Cristofori, an analyst at Cheuvreux who rates the stock an ``underperform,'' wrote in a report. Euromobiliare Sim reiterated a ``buy'' rating on the stock."
"Prysmian SpA (PRY IM), an Italian cable maker, rose 2.2 percent to 15.87 euros. ``Prysmian has experienced excellent new business momentum in its high-margin businesses,'' Thomas Deitz, an analyst at Royal Bank Of Scotland, wrote in a report. He reiterated his ``buy'' while lowering his price estimate on the stock to 20.5 euros from 23.6 euros because of lower terminal value growth rate driven by a more cautious medium-term stance on the general economic outlook."
"Seat Pagine Gialle SpA (PG IM), Italy's largest publisher of phone directories, surged 0.6 cents, or 6.1 percent, to 10.37 cents. ``Reiterating full-year guidance has been a good signal'' to the market, Massimiliano Romano, head of research for Concentric Italy in Milan, told Bloomberg Television. ``We prefer a wait-and-see approach to verify Seat's capacity to deliver on targets.''"
To contact the reporter on this story: Francesca Cinelli in Milan at firstname.lastname@example.org
"Last Updated: August 22, 2008 11:59 EDT"
"Petrobras Favors Sale of Debt Over New Stock, Gabrielli Says "
By Jeb Blount and Laura Price
Aug. 22 (Bloomberg) -- Petroleo Brasileiro SA Chief Executive Officer Jose Sergio Gabrielli said the company prefers to increase debt instead of selling new stock to finance the development of new offshore oil fields.
"Brazilian politicians and union leaders have suggested Petrobras, as the state-controlled oil company is known, sell shares to the country's government, which has voting control and about 40 percent of its stock. This would allow the transfer of oil rights to the company for Brazil's development."
"``We have conducted studies but we have no immediate plans,'' Gabrielli told reporters in Rio de Janeiro today. ``We favor the sale of debt to finance new projects.''"
"Rio de Janeiro-based Petrobras plans to spend more than $113 billion by 2012 to expand oil output and refining capacity. The amount is likely to rise as the company seeks rigs, platforms and staff to develop new offshore so-called pre-salt fields, Chief Financial Officer Almir Barbassa has said."
"The pre-salt region may contain 50 billion barrels of oil, according to Peter Wells, a director at U.K. research company Neftex Petroleum Consultants Ltd. It is home to the Tupi Field, the largest oil discovery in the Americas since 1976."
"Before the November announcement of Tupi, Petrobras expected to double output to about 3.4 million barrels a day. Tupi may have enough oil to supply all U.S. needs for a year, according to 2007 figures from London-based BP Plc."
Petrobras plans to order 40 drilling ships and platforms worth about $30 billion for delivery by 2017.
To contact the reporters on this story: Jeb Blount in Rio de Janeiro at email@example.com; Laura Price in Sao Paulo at firstname.lastname@example.org
"Last Updated: August 22, 2008 11:42 EDT"
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