"European Stocks Decline, Led by Banks; UBS, Royal Bank Fall "
By Adam Haigh
"July 15 (Bloomberg) -- European stocks tumbled, sending the Dow Jones Stoxx 600 Index to a three-year low, as investors speculated credit-market losses will widen and German investor confidence fell to a level not seen in 16 years."
"UBS AG, the European bank hardest hit by the U.S. subprime contagion, and Royal Bank of Scotland Group Plc, dropped to the lowest since at least 1998. Fortis slipped 11 percent after regulators said they may investigate whether its management misled shareholders, and a brokerage said the financial-services company may need more capital. Ciba Holding AG sank the most in a month after Merrill Lynch & Co. slashed earnings estimates for the chemical maker on concern higher raw-material costs will hurt profit."
"The Stoxx 600 lost 2.2 percent to 266.51, extending its slump to 33 percent from a peak in June 2007. Sixteen of the 18 industry groups declined today. The index earlier dropped as much as 3.3 percent."
"``People are very fearful,'' said Colin McLean, a fund manager in Edinburgh at SVM Asset Management, which has about $1 billion in assets. ``The market is now expecting a lot worse'' for some financial companies, he said."
"Stocks pared declines after oil prices dropped more than $9 a barrel. Earlier, Federal Reserve Chairman Ben S. Bernanke said risks to U.S. economic growth and inflation had increased, sending shares lower."
"The U.K.'s FTSE 100, the Standard & Poor's 500 Index, the benchmark for American equities, and the MSCI World Index last week all slumped into bear markets. Among the 23 industrialized nations in the MSCI World, only Canada has averted such a sell- off. A 20 percent drop defines a so-called bear market."
$13 Trillion Lost
"More than $13 trillion has been wiped off the value of global equities since Oct. 31, when the MSCI World Index closed at a record high. Accelerating inflation, record oil prices, and $416 billion in credit-related losses has damped prospects for economic and profit growth."
"Banks, which have led the retreat, have been forced to raise almost $326 billion in capital to shore up balance sheets."
"Investor confidence in Germany, Europe's largest economy, dropped to the lowest since the data was first compiled in December 1991, while inflation in the U.K. accelerated to the fastest pace in at least 11 years in June, reports showed today."
"Analysts estimate that earnings for companies in the Stoxx 600 will decline by 2.3 percent this year, according to data compiled by Bloomberg. That's down from 11 percent growth predicted at the start of 2008."
"National indexes declined in all 18 western European markets. The FTSE 100 retreated 2.4 percent, while Germany's DAX lost 1.9 percent. France's CAC 40 slipped 2 percent."
"UBS, Royal Bank"
"UBS slipped 6.3 percent to 18.30 francs, while Royal Bank, the U.K.'s second-biggest bank, sank 7.1 percent to 167.3 pence."
"Fortis tumbled 11 percent to 8.46 euros. Dutch regulators said they may investigate whether Fortis management misled shareholders, and a brokerage wrote in a note to clients that Belgium's biggest financial-services company has a ``capital deficiency.''"
"Fortis may need to raise as much as an additional 4 billion euros ($6.4 billion), Farquhar Murray, a London-based analyst at Fox-Pitt Kelton Ltd., wrote in a note dated yesterday."
"Fortis said as of July 11 it didn't envisage a further capital increase, according to a statement today."
"The Stoxx 600 Banks Index dropped 3.8 percent, the second- worst performance among the 18 groups in the broader index."
Financial firms tumbled yesterday in the U.S. after last week's collapse of IndyMac Bancorp Inc. spurred speculation that regional banks are short of capital. The U.S. Treasury Department announced a plan on July 13 to rescue Fannie Mae and Freddie Mac to stem a collapse of confidence in the two companies that own or guarantee about half of the $12 trillion in home loans in the world's largest economy.
"Allied Irish Banks Plc, the country's largest bank by market value, dropped 6.6 percent to 7.10 euros. Credit Suisse Group AG cut its price estimate on the stock 37 percent to 9.5 euros."
"House prices in Ireland are ``likely to fall further due to tightened credit availability,'' Abigail Webb wrote in a note to investors today. ``The housing market will remain the most important driver of both the economy and bank share prices.''"
"Ciba slumped 6.7 percent to 25.44 francs. Merrill cut its earnings-per-share estimate for this year by 10 percent and for 2009 by 32 percent, citing increasing raw-material prices."
"``Continued increases in raw materials is likely to significantly impact the group's performance in the near term,'' London-based analyst Andrew Stott wrote in a note to clients."
"Kesko Oyj, Finland's largest publicly traded retailer, dropped 7.9 percent to 17.53 euros. UBS initiated coverage of the retailer with a ``sell'' recommendation and a price estimate of 14.20 euros on the shares."
"``With the economy in general and the housing market in particular deteriorating rapidly, we believe Kesko's operating margin will decline quickly by 2010,'' Amsterdam-based analyst Mark Van Der Geest wrote in a note to clients today."
"BT Group Plc fell 4.8 percent to 192.3 pence after the U.K.'s biggest phone company said it will suspend a share buyback program from July 31, while saying it remains committed to its dividend."
"Parmalat SpA, Italy's biggest dairy company, fell 7.8 percent to 1.50 euros after cutting its profit forecast for 2008 because of weak economic growth in some of its main markets."
"Continental AG rallied 12 percent to 73.42 euros. Schaeffler Group, a German family-owned maker of ball bearings, said it has secured the rights to about 36 percent of the shares of Europe's second-largest tiremaker and offered 69.37 euros a share for the remainder."
The transaction would rank as the largest in the auto- component industry since Continental's 11.4 billion-euro purchase of Siemens AG's VDO car-components unit in 2007.
To contact the reporter on this story: Adam Haigh in London at firstname.lastname@example.org
"Last Updated: July 15, 2008 12:53 EDT"
Brazil Studies Measures to Avoid Trade Deficit (Update1)
By Andre Soliani and Carla Simoes
"July 14 (Bloomberg) -- Brazil's government is studying additional measures to boost exports on concern a growing economy and an appreciating currency may turn the current trade surplus into a deficit, Brazilian Foreign Trade Secretary Welber Barral said."
"``We don't want a deficit,'' Barral said today in an interview in Brasilia. ``At the current pace, who knows, we could have a deficit by 2010.''"
"Brazil's imports jumped almost 50 percent in the first half of the year, while higher commodity prices helped increase exports by 23 percent. Brazil's trade surplus narrowed to $30.8 billion in the 12 months through June from $47.5 billion a year earlier. The trade surplus has been dwindling since May 2007, when it reached a record $47.8 billion."
"The government is considering incentives for exporters to add more value to their products and to increase shipments to Asia, Africa and Eastern Europe, Barral said. He declined to elaborate."
"``Currently what we are discussing are tools to encourage exporters to add value,'' Barral said. He also spoke in Bloomberg Television interview today."
The new measures to boost exports would follow 21.4 billion reais ($13.4 billion) in tax cuts announced by President Luiz Inacio Lula da Silva May 12 for 25 favored industries.
"Brazil's currency has gained 17 percent against the U.S. dollar in the past 12 months, the second best performer after the Swiss franc among the 16 most traded currencies tracked by Bloomberg."
"Latin America's biggest economy is concerned about sustaining its trade surplus because it helps finance its balance of payments, Barral said. Brazil posted its first current account deficit in almost five years in the 12 months ended in January as the trade surplus narrowed and companies stepped up profit remittances abroad."
"Brazil may post its first trade deficit since 2000 as early as next year, said Jose Augusto de Castro, vice president of the Brazilian Foreign Trade Association, based in Rio de Janeiro."
"``It would take miracle to avoid a deficit given the currency rate,'' Castro said. ``Brazil has been able to sustain a surplus only thanks to record high commodity prices.''"
Castro said 65 percent of the country's exports are commodities.
"The country's 12-month current account deficit, the broadest measure of trade in goods and services, widened to $15.2 billion in May, compared with a $1.46 billion surplus in December."
To contact the reporter on this story: Andre Soliani in Brasilia at at email@example.com; Carla Simoes in Brasilia at at firstname.lastname@example.org.
"Last Updated: July 14, 2008 16:27 EDT"
Japan's Crude Imports Rise on Demand From Utilities (Update1)
By [bn:PRSN=1] Shigeru Sato  and [bn:PRSN=1] Yuji Okada 
Aug. 21 (Bloomberg) -- Japan's crude oil imports increased in July as regional power utilities burned more fossil fuels to make up for reduced nuclear generation in the world's third- largest energy-consuming nation.
"Japan purchased 20.3 million kiloliters, or about 4.12 million barrels a day, of oil last month, up 2.8 percent from a year earlier, according to a finance ministry report released in Tokyo today. The oil import bill rose 69 percent to 1.79 trillion yen ($16.3 billion) as crude oil prices remained above $110 a barrel."
"The indefinite closure of Tokyo Electric Power Co.'s Kashiwazaki-Kariwa nuclear plant, which was shut after an earthquake on July 16, 2007, prompted the utility to switch to oil and gas-fired generation."
"Japan's fuel oil use at thermal power plants increased by 7.6 percent in June from a year earlier, in contrast to the decline in consumption of other refined products such as gasoline."
"Liquefied natural gas imports rose 7.6 percent last month to 6.06 million metric tons, according to the trade report. Coal imports gained 5.4 percent to 17.5 million tons."
"Benchmark crude oil prices in New York climbed 67 percent in the past 12 months, sending local retail gasoline, kerosene and gasoil prices to record levels. Oil traded at $115.87 a barrel in after-hours trading at 9:03 a.m. Tokyo time."
To contact the reporters on this story: Shigeru Sato in Tokyo at email@example.com; Yuji Okada in Tokyo at firstname.lastname@example.org.
"Last Updated: August 20, 2008 20:26 EDT"
Japan's Bonds Rise After Report Shows Narrowing Trade Surplus
By Theresa Barraclough
Aug. 21 (Bloomberg) -- Japanese government bonds rose for a second day after a Finance Ministry report showed record-high oil prices and falling exports to the U.S. caused the trade surplus in July to narrow for a fourth month.
"Ten-year yields fell to a four-month low as exporters led losses in the benchmark stock index, boosting the attraction of debt. Shipments to the U.S. dropped for an 11th month and imports climbed at the fastest pace in two years, shrinking Japan's trade surplus 87 percent to 91.1 billion yen ($837 million), the ministry said today in Tokyo."
"``The higher import costs because of higher oil may push the trade balance into a deficit, which is negative for the economy and positive for bonds,'' said Susumu Kato, chief economist in Tokyo at Calyon Securities, one of the 26 primary dealers required to bid at government debt sales. ``The bond market expects a deficit in August or September.''"
"The yield on the 1.5 percent bond due June 2018 fell 3 basis points to 1.41 percent at 4:18 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.260 yen to 100.776 yen. The yield is at the lowest since April 21. A basis point is 0.01 percentage point."
Ten-year bond futures for September delivery advanced 0.25 to 138.03 as of the afternoon close at the Tokyo Stock Exchange. The Nikkei 225 Stock Average declined 0.8 percent and the broader Topix index fell 0.7 percent.
"Benchmark bonds handed investors a return of about 0.7 percent this month through yesterday, compared with a 1.3 percent gain for holders of U.S. Treasuries, according to indexes compiled by Merrill Lynch & Co. The Nikkei 225 lost about 4 percent in the same period."
"Government bonds in the U.S. and Europe rose yesterday amid concern that financial firms face widening losses from credit markets and a global economic slowdown. Lehman Brothers Holdings Inc. may post $4 billion in writedowns when it reports fiscal third-quarter earnings, JPMorgan Chase analysts said."
"``The current bond market is focused on the financial uncertainty,'' said Koji Shimamoto, chief strategist at BNP Paribas Securities Japan Ltd. in Tokyo and the top-rated debt analyst in Japan according to the Nikkei Veritas newspaper. ``The firm Treasury market is positive for the JGB market and the firm tone will continue for the time being.''"
"The difference in yields between 10-year Japanese and U.S. debt shrank to about 2.32 percentage points today, the narrowest in five weeks, according to data compiled by Bloomberg."
"The world's biggest banks and securities firms have reported more than $500 billion in writedowns and credit losses since the U.S. housing market slump started last year, according to data compiled by Bloomberg."
"Gains in Japan's bonds were limited by speculation two-year yields near the lowest in four months are unattractive given that the Bank of Japan is likely to hold off cutting interest rates, according to UBS Securities Japan Ltd."
"``Short-term notes cannot be bought without assuming a Bank of Japan interest-rate cut, so it is easy for investors to profit-take,'' said Eiji Dohke, chief strategist at UBS Securities in Tokyo."
"Two-year yields fell 1 basis point to 0.675 percent today, narrowing the yield advantage over the overnight lending rate to 17.5 basis points, Bloomberg data show. The gap is likely to widen to 29 basis points by the end of September, according to a Bloomberg News survey. The estimate puts a heavier weighting on more recent forecasts."
"There is a 9 percent chance the BOJ will cut its target rate to 0.25 percent from 0.5 percent by Dec. 31, according to calculations by JPMorgan Chase using overnight interest-rate swaps. The odds were 15 percent two days ago."
Investors may buy debt to match a change in a benchmark index they use to gauge performance. Nomura Securities Co. next week will announce the increase in the average duration of its Bond Performance Index in September.
"``Toward the end of the month there will be an extension of the index into next month, and usually in September it is longer than usual,'' Calyon's Kato said."
"Money managers such as Japan's Government Pension Investment Fund, which runs the world's largest pool of retirement wealth, use the index to decide on their holdings. Duration is a gauge of how much a change in yields affects the price of a bond or debt portfolio."
To contact the reporter on this story: Theresa Barraclough in Tokyo at email@example.com.
"Last Updated: August 21, 2008 03:53 EDT"
"Canada Stocks Rise, Led By Barrick, Suncor; Maple Leaf Falls "
By John Kipphoff
"Aug. 21 (Bloomberg) -- Canadian stocks rose, pushing the main equity index to its biggest two-day gain in almost five months, as rallies in oil, gold and grain lifted commodity producers such as Barrick Gold Corp. and Suncor Energy Inc."
"Maple Leaf Foods Inc. declined after recalling some meat products because of an outbreak of listeria. Other companies that rely on consumer spending slid after Canada's annual inflation rate rose to a five-year high, on a surge in gasoline prices."
"``We're going into the last leg of a massive bull market in commodities,'' said Marty Hibbs, associate futures portfolio manager and commodity broker with Union Securities Ltd. in Kitchener, Ontario. ``Inflation will be rampant. Canada is well- placed with its commodity-driven economy. Stocks based on commodities will mostly do very well.''"
"The Standard & Poor's/TSX Composite Index added 1.5 percent to 13,552.34 at 3:32 p.m. in Toronto, for a two-day advance of 3.7 percent, the biggest since March 25."
"Canada's main equity index has still fallen 10 percent from its June 18 record as energy, metals and grain prices fell from peaks on concern credit losses will slow global growth and demand for resources, which make up about half of the nation's exports."
"Oil futures in New York rose more than $5 a barrel today, as yesterday's missile-shield agreement between the U.S. and Poland fanned concern that Russia may disrupt the flow of oil."
"Gold surged the most in two months as a weaker U.S. dollar increased the appeal of commodities. Copper, corn and soybeans rallied. The Reuters/Jefferies CRB Index of 19 commodities soared, heading for its biggest weekly gain in 33 years, after falling 15 percent from a July 3 record."
"Barrick Gold, the largest bullion mining company, climbed 5.2 percent to C$37.55. Rival Goldcorp Inc. rose 6 percent to C$36.40. Teck Cominco, Canada's biggest diversified mining company, advanced 3 percent to C$43.93. Potash Corp. of Saskatchewan Inc., the largest maker of crop nutrients by market value, increased 3.3 percent to C$193.44."
"Suncor Energy, the second-biggest oil-sands mining company in the world, jumped 3.7 percent to C$62.11. EnCana Corp., the nation's largest energy company by market value, advanced 1.8 percent to C$77.50. Canadian Natural Resources Ltd. added 1.2 percent to C$89.50."
"Gauges of materials and energy stocks accounting for almost half the S&P/TSX's value advanced 4.1 percent and 2.4 percent, respectively. The energy measure is poised for its biggest three-day gain in more than eight years."
"Maple Leaf Foods dropped 2.8 percent to C$10.29. Canada's largest food processor closed a plant in Toronto that may be the source of an outbreak of listeria linked to 17 cases across Canada, including one death in Ontario."
"Consumer prices rose 3.4 percent from July 2007, Statistics Canada said today in Ottawa, in line with economists' median forecast in a Bloomberg survey. Prices for gasoline were up 29 percent between July 2007 and July 2008."
"Falling prices for automobiles helped keep annual inflation from accelerating further, Statistics Canada also said. Magna International Inc., the nation's largest car-parts maker, dropped 2.2 percent to C$61.55."
"Gildan Activewear Inc., North America's biggest T-shirt maker, had extended its losing streak to the longest in more than four years, dropping 3.3 percent to C$23.45. Cotton prices rose to the highest in a week after textile mills increased purchases following a price slump and Tropical Storm Fay posed a potential threat to the crop in Georgia, the second-biggest U.S. grower."
To contact the reporter on this story: John Kipphoff in Toronto at firstname.lastname@example.org.
"Last Updated: August 21, 2008 15:54 EDT"
U.K. Gilts Gain as Stock Losses Boost Demand for Safest Assets
July 15 (Bloomberg) -- U.K. government bonds advanced as stocks declined and concern the British housing slump will push the economy into a recession fueled demand for the safest assets.
"The gains pushed the yield on the two-year note down from the highest level in a week as traders bet the Bank of England will be forced to cut interest rates to boost the economy. U.K. house prices fell in June, the Royal Institution of Chartered Surveyors started measuring the property market in 1978."
"``The economic downturn in the U.K. will become so intense that the next policy move will be a cut,'' said Nick Stamenkovic, a fixed-income strategist at RIA Capital Markets Ltd. in Edinburgh. ``I'm bullish on gilts.''"
"The yield on the two-year note fell 2 basis points to 4.88 percent by 8:55 a.m. in London. The price of the 4.75 percent security due June 2010 gained 0.03, or 30 pence per 1,000-pound ($1,999) face amount, to 99.77."
The yield on the 10-year gilt declined 1 basis point to 4.87 percent. Yields move inversely to bond prices.
"Equity markets dropped in Europe and Asia, and U.S. stock- index futures fell."
"The pound climbed above $2 for the first time since July 1, and was last at $2.0039, from $1.9951 yesterday."
Gains for gilts may be limited before a government report that will probably show inflation accelerated in June after quickening at the fastest pace in a decade a month earlier. Price-growth erodes the value of bonds' fixed payments.
"Consumer prices rose 3.6 percent in the year, compared with a 3.3 percent gain in May, according to the median estimate of 36 economists surveyed by Bloomberg News. The data are due at 9:30 a.m. in London."
To contact the reporter on this story: Anchalee Worrachate in London at email@example.com
"Asia Bank Stocks Fall on Freddie Mac, Fannie Mae Debt (Update1) "
By Finbarr Flynn and Tim Culpan
"July 15 (Bloomberg) -- Financial stocks fell in Japan and Taiwan, led by Cathay Financial Holding Co. and Mitsubishi UFJ Financial Group Inc., on concern about holdings of debt issued by Freddie Mac and Fannie Mae, the embattled U.S. mortgage lenders."
"Taiwan's bank index slumped 5.8 percent to the lowest in more than two years. Taiwanese banks and insurers hold a combined $20 billion of Freddie Mac and Fannie Mae debt, the island's financial regulator said today. Mitsubishi UFJ fell the most in four months after Nikkei English News said Japan's largest bank holds debt in the two companies."
"The declines came even after the U.S. Treasury pledged to support Fannie Mae and Freddie Mac, which own or guarantee about half of the $12 trillion in U.S. home loans outstanding. A slump in U.S. bank stocks yesterday also helped undermine confidence that the worst of the financial crisis is over."
"``The banks' holdings of Fannie and Freddie debt are a concern,'' Mamoru Shimode, Tokyo-based chief equity strategist at Deutsche Bank AG, said in an interview with Bloomberg Television. ``Even with the U.S. government working to resolve the problems among financial companies, we are not going to see any quick resolution.''"
"Bank stocks also fell in markets including Australia, Hong Kong, China and South Korea, helping drive the MSCI Asia Pacific Financials index to the lowest since December 2005. The measure of 233 companies fell 3.9 percent as of 2:53 p.m. in Hong Kong, the steepest decline since March 17."
Too Big to Fail
"Cathay Financial, the island's biggest publicly traded financial services company, dropped by the 7 percent daily limit in Taipei, as did Shin Kong Financial Holding Co. Fubon Financial Holding Co. lost 6.9 percent."
"Cathay Financial owns NT$200 billion ($6.6 billion) of securities tied to Freddie Mac and Fannie Mae, according to a company filing today. Fubon Financial holds $676 million of their debt, the company said in a filing."
"Taiwanese companies expect ``limited losses'' from their investments, the financial regulator said in Taipei today."
"Fannie Mae and Freddie Mac are ``way too big a part of the mortgage system'' to be allowed to fail, said hedge fund manager Barton Biggs in an interview yesterday."
"``If Fannie Mae and Freddie Mac are going to default on their obligations, then the world economy is going to collapse,'' said Victor Kung, president of Taipei-based Fubon, in an interview. ``You think Fannie Mae and Freddie Mac are going to default? I don't think so.''"
"Even so, Japan's financial regulator said today it needs to step up scrutiny of banks' holdings of debt issued by U.S. government-supported companies."
"Mitsubishi UFJ dropped 5.3 percent to 926 yen at the market close in Tokyo. Mizuho Financial Group Inc., the second-biggest Japanese bank by revenue, fell 5 percent and Sumitomo Mitsui Financial Group Inc. slumped 6.1 percent."
"Mitsubishi UFJ had 3.3 trillion yen in bonds issued by U.S. government-backed companies including Fannie Mae and Freddie Mac as of March 31, spokesman Takashi Takeuchi said by phone today. Sumitomo Mitsui had 219.8 billion yen in such bonds, spokeswoman Chika Togawa said."
"Mizuho had 1.2 trillion yen worth of the securities, most of it in Ginnie Mae, spokeswoman Masako Shiono said. Ginnie Mae's debt is fully backed by the U.S. federal government."
"``With U.S. government support being assumed, Japan's banks shouldn't face a big impact'' from holdings of Fannie Mae and Freddie Mac bonds, said Keisuke Moriyama, a Tokyo-based analyst at Nomura Holdings Inc. ``Bank shares are falling as investors assess business problems at Freddie Mac and Fannie Mae and earnings at U.S. financial institutions this week.''"
To contact the reporter on this story: Terje Langeland in Tokyo at firstname.lastname@example.org
"Last Updated: July 15, 2008 03:03 EDT"
"Petrobras Rises to 3-Week High on Oil, UBS Outlook (Update1) "
By Paulo Winterstein
"Aug. 21 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, rose to the highest this month in Sao Paulo trading after oil prices rallied and UBS AG played down concern that Brazil will increase taxes on oil concessions."
"Petrobras, as the Rio de Janeiro-based company is known, and OGX Petroleo e Gas Participacoes SA, the oil and gas exploration company controlled by Brazilian billionaire Eike Batista, will benefit as concern eases that new legislation on the country's so-called pre-salt oil reserves will lead to lower profit."
"``Our bullish view on these stocks is more of a call on oil,'' analyst Gustavo Gattass wrote in a note to investors. ``More likely than not that we are going to see no change for existing concessions'' and ``Brazil is unlikely to announce policies that are negative for the market.''"
"Brazil's government is considering new taxes and rules to manage oil discoveries in the offshore ``pre-salt'' region that may contain as many as 50 billion barrels of oil, according to Peter Wells, a director at U.K. research company Neftex Petroleum Consultants Ltd. The area is home to Tupi, the largest oil discovery in the Americas since 1976."
"Petrobras has a ``home-court advantage'' in new rules relating to the pre-salt area, Nomura Securities Plc analyst Xavier Grunauer wrote in a note. He raised Petrobras to ``buy'' from ``neutral,'' saying that the stock was ``oversold.''"
"The company's ``above average'' production growth and increasing demand from its refineries also will benefit the stock, Grunauer wrote."
"Oil gained more than $6 a barrel today on speculation rising tensions between the U.S. and Russia may disrupt the flow of oil, and as a weaker dollar bolstered the appeal of commodities."
Petrobras rose 3.6 percent to 35.45 reais at 1:16 p.m. New York time. Rio de Janeiro-based OGX fell 2.8 percent to 627 reais.
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at email@example.com.
"Last Updated: August 21, 2008 13:51 EDT"
Brazil Unemployment Rises First Time in Five Months (Update2)
By Andre Soliani and Joshua Goodman
"Aug. 21 (Bloomberg) -- Brazil's unemployment rate rose for the first time in five months in July, signaling central bank interest rate increases and faster inflation are slowing the economy."
"Unemployment in Brazil's six largest metropolitan areas rose to 8.1 percent in July, up from 7.8 percent in June. The jobless rate was higher than the median forecast of 7.7 percent in a Bloomberg survey of 23 analysts."
"``We're seeing numerous signs that economic growth has peaked and will settle down in the second half,'' Jankiel Santos, chief economist at Banco Espirito Santo de Investimento SA, said. ``Still, the central bank will wait for unequivocal signs of slowing growth before ending the tightening cycle.''"
The central bank has raised its benchmark lending rate from a record low 11.25 percent to 13 percent since April and economists covering Latin America's biggest economy expect policy makers to push the rate up to 14.75 percent by year-end.
"The increase in joblessness ``reflects not only the monetary policy of higher interest rates, but also the effect of faster inflation eating up income,'' Marcelo Voss, chief economist at Liquidez Corretora, said in an interview with Bloomberg Television."
Voss and Santos expect the central bank will increase the overnight rate to 13.75 percent from 13 percent at its Sept. 9- 10 meeting.
"Central bankers at their July 22-23 meeting said that ``robust'' domestic demand posed an increasing risk that inflation could overshoot their annual target of 4.5 percent, plus or minus 2 percentage points, according to the minutes of the meeting published July 31."
"The bank said it would act vigorously to bring inflation back to the 4.5 percent target in 2009. Annual inflation quickened to a three-year high of 6.37 percent last month, twice the rate of May 2007."
"To be sure, monthly inflation is slowing as food prices ease. Consumer prices, as measured by the mid-month IPCA-15 index, will probably ease for a second straight month to 0.39 percent in August from 0.63 percent in July, according to the median forecast in a Bloomberg survey of 35 analysts."
"Brazil's annual current account deficit widened to a six- year high as companies step up profit remittances and imports, a central bank report distributed today showed."
"The deficit widened to $19.5 billion in the 12 months through July, compared with an $18.1 billion deficit in June. Latin America's biggest economy posted a $2.1 billion deficit last month."
"The inflows of foreign direct investment and investments in fixed income have been ``more than enough to compensate'' for July's current account deficit, Diego Donadio, economist at BNP Paribas in Brazil, said in an e-mailed note to clients."
"The real rose 0.3 percent to 1.6130 per dollar at 10:39 a.m. New York time from 1.6185 yesterday. The real has declined 3 percent this month, paring its advance this year to 10.40 percent."
To contact the reporter on this story: Andre Soliani in Brasilia at at firstname.lastname@example.org; Joshua Goodman in Rio de Janeiro at Jgoodman19@bloomberg.net
"Last Updated: August 21, 2008 11:52 EDT"
"German Stocks Fall on Crude Oil, Bank Concerns; Lufthansa Drops "
By Stefanie Haxel
"Aug. 21 (Bloomberg) -- German stocks fell to a five-week low as oil gained more than $7 a barrel, damping the earnings outlook for airlines and carmakers, and concern mounted that financial firms may post more credit-related losses."
"Deutsche Lufthansa AG, Europe's second-largest airline, and Bayerische Motoren Werke AG led a retreat among companies sensitive to fuel costs as crude traded above $118 a barrel. Deutsche Bank AG, Germany's biggest financial company, and Hypo Real Estate Holding AG dropped for a fourth day as Babcock & Brown Ltd. of Australia posted its first-ever profit decline and Citigroup Inc predicted three U.S. banks will write down a combined $6.4 this quarter."
"The benchmark DAX Index lost 80.84, or 1.3 percent, to 6,236.96, the lowest since July 16. DAX futures expiring in September sank 1.1 percent as of 5:46 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies fell 1.2 percent."
"``It looks as if the bear-market rally has been shelved,'' Richard Zellmann, director of sales and research at First Private Investment in Frankfurt, said in a Bloomberg Television interview. ``News are still downright negative and the trend is clearly bearish.''"
"Crude oil for October delivery rallied as much as $7.06, or 6.1 percent, to $122.04 a barrel in New York after the signing yesterday of a missile-shield agreement between the U.S. and Poland bolstered concern that Russia may disrupt oil flows."
"Lufthansa sank 36.5 cents, or 2.5 percent, to 14.02 euros. Jet-fuel prices in northwest Europe have risen 32 percent so far this year, Bloomberg data show."
"BMW, the world's biggest luxury carmaker, lost 97 cents, or 3.4 percent, to 27.73 euros."
"Henkel AG & Co. KGaA dropped 86 cents, or 3.2 percent, to 26.10 euros, the lowest in more than two weeks. The maker of Loctite glue and Persil detergent on Aug. 6 cut its earnings forecast because of surging costs for oil-based chemicals."
"Praktiker AG, Germany's second-biggest home-improvement retailer, sank 35 cents, or 3.6 percent, to 9.38 euros, the lowest since selling shares in 2005. Arcandor AG, the country's largest department-store operator, slumped 58 cents, or 9.7 percent, to 5.41 euros, the lowest since 1992."
"Deutsche Bank declined 1.09 euros, or 1.9 percent, to 55.96 euros. Commerzbank AG, the nation's second-biggest bank, lost 53.5 cents, or 2.7 percent, to 19.615 euros. Hypo Real Estate, the country's second-largest commercial-property lender, retreated 46 cents, or 2.8 percent, to 15.94 euros."
"Babcock & Brown, Australia's second-biggest manager of listed funds, plunged to a record low in Sydney trading. First- half net income dropped 24 percent as its listed funds slumped amid the global financial crisis."
"Citigroup analyst Prashant Bhatia lowered his third-quarter earnings estimates for Lehman Brothers Holdings Inc, Goldman Sachs Group Inc. and Morgan Stanley, estimating the three banks will write down a combined $6.4 billion for the period."
The following stocks also rose or fell in German markets. Symbols are in parentheses.
"Arques Industries AG (AQU GY) tumbled 46 cents, or 5.6 percent, to 7.73 euros, the steepest decline since July 4. The investment company reported a second-quarter loss and said ``difficult'' market conditions prompted it to lower its profit forecast for 2008."
"IKB Deutsche Industriebank AG (IKB GY) rallied 21 cents, or 7.8 percent, to 2.89 euros, the highest in six weeks. Lone Star Funds, the Dallas-based private equity firm, agreed to buy Germany's first casualty of the subprime mortgage crisis."
"Kloeckner & Co. SE (KCO GY) retreated for the fourth time in five days, losing 1.10 euros, or 3.9 percent, to 27 euros. HSBC Holdings Plc downgraded the steel trader to ``neutral'' from ``overweight.''"
"MTU Aero Engines Holding AG (MTX GY) fell 1.50 euros, or 6.6 percent, to 21.30, the steepest increase in four weeks. The largest independent provider of jet-engine maintenance dropped on concern a weaker dollar may curb earnings. MTU generated about 54 percent of its sales in North America last year, according to Bloomberg data."
"Nordex AG (NDX1 GY) rose 1.07 euros, or 4.9 percent, to 22.86, the steepest advance in three weeks. The windmill maker reiterated the full-year outlook it was forced to cut last month as personnel costs in the U.K. and China spiralled."
"``The only reason the shares are rising is that they kept their forecast,'' said Alexander Stiehler, a UniCredit Markets & Investment Banking analyst in Munich, who rates Nordex ``sell.'' ``Operatively they presented some pretty weak results.''"
"Solarworld AG (SWV GY) rallied 1.89 euros, or 5.9 percent, to 34.08, the highest in more than two months. Germany's third- largest solar company advanced on renewed speculation General Electric Co. may make an offer."
To contact the reporters on this story: Stefanie Haxel in Frankfurt at email@example.com.
"Last Updated: August 21, 2008 12:10 EDT"
"Corn, Soybeans Rally on Concern Midwest Flooding May Cut Yields "
By Jae Hur
"July 15 (Bloomberg) -- Corn rose after touching a one-month low and soybeans gained after a U.S. government report showed planting delays and Midwest floods in June slowed pollination and blooming, potentially reducing yields for the crops."
"About 13 percent of the corn crop was pollinating as of July 13, down from 50 percent a year earlier and below the five-year average of 36 percent, the U.S. Department of Agriculture said yesterday. An estimated 26 percent of the soybeans were making flower blooms that will develop pods, down from 54 percent a year earlier and below the five-year average of 45 percent, it said."
"``There's growing concern that yields of the two crops may decline further following the significantly lower ratings of corn pollination and soybean blooming,'' said Takaki Shigemoto, an analyst at Tokyo-based broker Okachi & Co."
"Corn for December delivery rose 7.5 cents, or 1.1 percent, to $6.8975 a bushel as of midday in London after falling to $6.7825 a bushel, the lowest since June 11, in after-hours trading on the Chicago Board of Trade. The contract lost 3.8 percent yesterday as a favorable mix of sunshine and rain may boost crop conditions in the U.S. Midwest."
"The most-active futures still have gained 98 percent in a year, reaching a record $7.9925 on June 27."
"About 64 percent of the corn was in good or excellent condition as of July 13, compared with 62 percent a week ago and 64 percent a year earlier, the USDA said yesterday in a report. Some 59 percent of the soybeans got the top ratings, unchanged from a week ago and down from 62 percent a year earlier, it said."
"The corn crop will be 11.715 billion bushels, down 0.2 percent from last month's estimate of 11.735 billion and down 10 percent from a record 13.074 billion harvested last year, the USDA said July 11. The agency cut its forecast for this year's yield to 148.4 bushels an acre from 148.9 bushels a month ago."
"This year's soybean crop will total 3 billion bushels, down 3.4 percent from 3.105 billion forecast in June, the USDA said. Yields are projected to fall to 41.6 bushels an acre from 42.1 bushels estimated in June. Inventories before next year's harvest will total 140 million bushels, down 20 percent from the June forecast."
"Soybeans for November delivery rose 14 cents, or 0.9 percent, to $15.73 a bushel as of midday in London. The contract fell 2.3 percent yesterday. The most-active futures have risen 80 percent in the past year, reaching a record $16.3675 on July 3."
"``Although soybeans prices have been pressured lower by the improvement in Midwest weather, we believe there is less downside risk to soybean prices given the underlying supply-demand fundamentals,'' Toby Hassall, an analyst at Commodity Warrants Australia in Sydney, said in an e-mail."
"Wheat for September delivery rose 8 cents, or 1 percent, to $8.26 a bushel as of midday in London after declining 1.5 percent yesterday. Prices have slumped from a record $13.495 set on Feb. 27 as higher prices spurred farmers to boost planting."
"Some 61 percent of the U.S. spring-wheat crop was rated good or excellent as of July 13, down from 69 percent a week earlier, the USDA said. Temperatures were as much as 4 degrees Fahrenheit warmer than normal in parts of North Dakota and Minnesota, hurting plants that were sown late because of wet weather."
"In the export market, Egypt plans to buy at least 80,000 metric tons of the grain at a tender today. Japan is seeking to buy 76,000 tons of milling wheat at a tender on July 17."
To contact the reporter on this story: Jae Hur in Singapore at firstname.lastname@example.org
"Last Updated: July 15, 2008 07:13 EDT"
"Mitsubishi UFJ May Miss Its Profit Target by 43%, HSBC Says "
By Finbarr Flynn
"Aug. 21 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc., Japan's largest bank by market value, may miss its profit target by 43 percent as mounting corporate bankruptcies hurt lenders' earnings, according to HSBC Holdings Plc."
"Mitsubishi UFJ's net income may fall to 365 billion yen ($3.3 billion) for the year ending March 31, compared with the bank's forecast of 640 billion yen, HSBC analyst Brett Hemsley said in a report dated yesterday. Sumitomo Mitsui Financial Group Inc., Japan's second-largest bank, may post a 253 billion yen profit, 47 percent below its 480 billion yen target, he said."
"``As the banks review their borrowers' creditworthiness over the next few quarters, we foresee substantial earnings downgrades,'' Hemsley said in the report. Mitsubishi UFJ and Sumitomo Mitsui ``in particular are vulnerable,'' he wrote."
"Hemsley cut his rating on Sumitomo Mitsui to ``underweight'' from ``overweight.'' He kept his ``underweight'' rating on Mitsubishi UFJ, while lowering his price target to 700 yen from 900 yen."
"Mitsubishi UFJ fell 0.6 percent to 812 yen, the lowest in five months, as of 10:33 a.m. on the Tokyo Stock Exchange. Sumitomo Mitsui fell 0.9 percent."
"Both of the banks said profit declined by more than half in the first quarter ended June 30 as bad loans swelled in a slowing economy. Urban Corp., a Japanese property developer, filed for bankruptcy on Aug. 13, becoming the country's largest corporate collapse this year with 255.8 billion yen of debt, forcing at least nine smaller Japanese banks to say they may not be able to recover loans."
To contact the reporter on this story: Finbarr Flynn in Tokyo at email@example.com
"Last Updated: August 20, 2008 21:43 EDT"
"Euro May Rise as Recent Losses Deemed Excessive, JPMorgan Says "
By Kosuke Goto
"Aug. 21 (Bloomberg) -- The euro will rebound against the dollar as recent losses are excessive, said Tohru Sasaki, chief currency strategist at JPMorgan Chase & Co."
"The euro's 14-day relative strength index was 25.5 versus the dollar today. A level below 30 signals the currency's losses may reverse. Futures traders raised their bets on a euro fall to the highest amount since May, positions that are often used as a contrary indicator."
"``The euro's decline against the dollar was a bit too fast,'' said Tokyo-based Sasaki at the third-largest U.S. bank. ``Investors have also piled up huge short-euro positions against the dollar. The markets are likely to correct those excessive positions.'' A short position is one that bets on a currency falling."
"Europe's single currency was at $1.4776 as of 11:55 a.m. in Tokyo from $1.4747 in New York yesterday. It fell to $1.4631 on Aug. 19, the lowest level since Feb. 20."
"The difference in the number of wagers by hedge funds and other large speculators on a drop in the euro compared with those on a gain -- so-called net shorts -- rose to 19,427 on Aug. 12, the highest since May, figures from the Washington-based Commodity Futures Trading Commission showed on Aug. 15."
"The euro's 14-day stochastic oscillator versus the dollar was 14.4 today, according to Bloomberg data. A level below 20 suggests the currency has fallen too fast."
"In technical analysis, investors and analysts study charts of trading patterns and prices to forecast price changes in a security, commodity, currency or index."
To contact the reporter on this story: Kosuke Goto in Tokyo at firstname.lastname@example.org
"Last Updated: August 20, 2008 23:02 EDT"
Asian Currencies Rise; U.S. Slowdown May Lure Funds to Region
By Aaron Pan and Shanthy Nambiar
"July 15 (Bloomberg) -- Asian currencies rose against the dollar on speculation U.S. credit-market losses will worsen, spurring investors to increase investments in the region."
"The Thai baht strengthened the most in eight weeks before a policy meeting tomorrow at which economists say the central bank will increase interest rates. The Singapore dollar climbed to a record high and the Malaysian ringgit touched the strongest in six weeks. Seven of the 10 most-traded Asian currencies outside of Japan strengthened, according to data compiled by Bloomberg."
"The baht ``is taking its cues from the dollar, and there is a bit of consolidating,'' said Carl Rajoo, a regional Asian economist at Forecast Singapore Pte. ``The Bank of Thailand is hawkish on inflation. If the rate hike is in line with expectations, the baht will continue to consolidate.''"
"The Thai currency advanced 0.5 percent to 33.49 per dollar as of 4:12 p.m. in Bangkok, according to data compiled by Bloomberg. The gain was the biggest since May 20."
"The Bank of Thailand will increase the one-day bond repurchase rate for the first time in two years tomorrow, according to a Bloomberg News survey. Policy makers will raise the rate by a quarter-percentage point to 3.5 percent, according to 16 of 19 economists in the survey. The remaining three predict a half-point increase. Policy makers last boosted the benchmark in June 2006."
"The Singapore dollar climbed 0.7 percent to S$1.3463, after touching an all-time high of S$1.3454."
"``The Singapore dollar has strengthened a lot today because the U.S. dollar has weakened so much in the currency basket,'' said Thomas Harr, a currency strategist at Standard Chartered Plc in Singapore. ``The Singapore dollar has to strengthen in line with the other currencies.''"
"Malaysia's ringgit gained for a third day on speculation investors will steer more funds into Asian assets as U.S. credit-market losses swell. U.S. stocks slumped yesterday, led by financial shares, on concern the nation's regional banks are short of capital."
"``What's happening in the U.S. could sway more funds into the Asian markets and that's good for regional currencies,'' said Awaluddin Shariff, a foreign-exchange trader at EON Bank Bhd. in Kuala Lumpur. ``There are concerns about U.S. banks and stock market.''"
"The ringgit traded at 3.2165 per dollar versus 3.2300 late yesterday, according to data compiled by Bloomberg. The currency reached 3.2130, the highest level since June 2."
"Expectations of higher interest rates also helped support Indonesia's rupiah, which reached 9,099 per dollar, the strongest level since March 10. The currency gained 0.2 percent to 9,140 per dollar, according to data compiled by Bloomberg."
"``We could see the currency continuing to strengthen gradually,'' said Christy Tan, a senior currency strategist at Bank of America Corp. in Singapore. ``The central bank's monetary tightening efforts started ahead of the others and there's prospects of them staying on this path longer than others in the region.''"
"Bank Indonesia raised its benchmark interest rate for the third straight month on July 3 to slow inflation, which is at a 21-month high of 11 percent. The central bank said last week it will use ``all instruments'' to slow price gains. The rupiah also gained today as Bisnis Indonesia newspaper reported foreign direct investment in the six months to June more than doubled from the same period last year."
"Elsewhere, South Korea's won fell 0.4 percent to 1,008.20. Vietnam's dong was little changed at 16,834.50 per dollar, from 16,834.50 yesterday, and Taiwan's dollar traded at NT$30.390, compared with NT$30.404 yesterday."
To contact the reporters on this story: Aaron Pan in Hong Kong at email@example.com; Shanthy Nambiar in Bangkok at firstname.lastname@example.org.
"Last Updated: July 15, 2008 06:00 EDT"
"Asian Stocks Drop, Led by Banks, as Credit Concerns Increase "
By Chen Shiyin and Chua Kong Ho
"July 15 (Bloomberg) -- Asian stocks fell, dragging the region's benchmark index to the lowest since November 2006, on concern widening credit-market losses will hurt bank earnings and slow economic growth."
"Mitsubishi UFJ Financial Group Inc. and Cathay Financial Holding Co., among the region's holders of more than $50 billion of U.S. agency debt, dropped on concern about swelling losses at Fannie Mae and Freddie Mac, which the Treasury Department has pledged to support. Matsushita Electric Industrial Co. fell after Nikko Citigroup Ltd. said the company's earnings may decline. GS Engineering & Construction Corp. led South Korean builders lower on speculation higher interest rates will dent housing demand."
"The MSCI Asia-Pacific Index lost 2.1 percent to 129.61 at 7:20 p.m. Tokyo time, the lowest since Nov. 20, 2006. All 10 of its industry groups fell, with financial stocks accounting for 45 percent of the drop. Seventeen stocks declined for each one that rose on the benchmark gauge."
"``Freddie and Fannie are basically quasi-sovereigns and many Asian governments and banks hold their debt,'' said Leslie Phang, the Singapore-based head of investments at the private-clients unit of Schroders Plc, which oversees about $260 billion globally. ``Nobody expected them to blow up and it's shaken the foundations.''"
"The U.S. Treasury and Federal Reserve were forced to assemble a rescue plan for Fannie and Freddie on July 13 to stem a collapse of confidence in the two companies, which own or guarantee about half of the $12 trillion in U.S. home loans during the country's worst housing recession in 25 years."
"Taiwan's Taiex Index slumped 4.5 percent, the biggest drop in the region. Japan's Nikkei 225 Stock Average declined 2 percent to 12,754.56, its lowest close since April 1. Benchmark indexes fell in the region's biggest markets."
Financial Stocks Slump
"U.S. stocks dropped yesterday, sending the Standard & Poor's 500 Index 0.9 percent lower. Financial shares slumped after last week's collapse of IndyMac Bancorp Inc. spurred speculation regional banks are short of capital. S&P 500 index futures lost 0.5 percent today."
"MSCI's Asian index has dropped 18 percent this year, led by financials, as the world's largest banks and securities firms reported more than $414 billion of writedowns and credit losses."
"Mitsubishi UFJ, Japan's largest bank by market value, slumped 5.3 percent to 926 yen, its largest drop since March 13. Sumitomo Mitsui Financial Group Inc., the second-biggest, lost 6.1 percent to 784,000 yen, while smaller rival Mizuho Financial fell 5 percent to 511,000 yen."
"The three Japanese banks held a total of 4.7 trillion yen ($44 billion) in debt securities issued by U.S. government-backed mortgage finance companies including Fannie Mae and Freddie Mac, and by U.S. federal agency Ginnie Mae, the companies said."
`Taking A Hit'
"Yoshimi Watanabe, the head of Japan's financial regulator, today urged caution about holding Fannie Mae and Freddie Mac debt. Investor Jim Rogers said in an interview yesterday that the U.S. Treasury Department's plan to shore up the two companies is an ``unmitigated disaster.''"
"U.S. Treasury Secretary Henry Paulson proposed two days ago legislation giving the Treasury the power to make unlimited purchases of equity in Fannie Mae and Freddie Mac, and to increase their credit lines. The Fed separately agreed to let the companies borrow directly from the central bank."
"Cathay Financial, Taiwan's biggest listed financial services company, dropped 7 percent to NT$58.70, its lowest close since April 2006. The company said it hasn't incurred any losses from its NT$200 billion ($6.6 billion) of securities tied to Fannie Mae and Freddie Mac."
Technology Stocks Fall
"Fubon Financial Holding Co., which said it holds $676 million of the U.S. mortgage-finance companies' debt, lost 6.9 percent to NT$25."
"Commonwealth Bank of Australia, the country's biggest mortgage provider, dropped 3.5 percent to A$38.75, its largest retreat since June 10. JPMorgan Chase & Co. lowered its rating to ``neutral'' from ``overweight,'' because of a ``cautionary'' outlook for the company's 2008 earnings."
"``Investor confidence is taking a hit from the state of the U.S. financial system,'' said John Padilla, who helps manage the equivalent of about $3.4 billion Metropolitan Bank & Trust Co. in Manila. ``Banks will stay out of favor as long as investors don't see an end to credit-market losses in the U.S.''"
"Matsushita, the world's biggest consumer-electronics maker, lost 2.2 percent to 2,225 yen. The stock's rating was cut to ``hold'' from ``buy'' at Nikko Citigroup."
Higher Interest Rates?
"The brokerage also lowered its recommendation on Sharp Corp., Japan's biggest maker of liquid-crystal displays, to ``sell'' from ``hold.'' The shares retreated 3.4 percent to 1,557 yen."
"LG Electronics Inc., the world's fourth-largest maker of mobile phones, dropped 6.2 percent to 105,500 won in Seoul. CJ Investment & Securities Co. lowered its share-price estimate by 13 percent, citing lower earnings prospects in the third quarter."
"GS Engineering, South Korea's No. 3 builder, slumped 12 percent to 89,800 won, the second-biggest tumble on MSCI's Asian index. Hyundai Engineering & Construction Co., the country's biggest builder by market value, fell 6.9 percent to 58,100 won."
"South Korea's government has said it aims to limit lending to curb inflation, which last month accelerated at the fastest pace in almost 10 years."
"``Investors are losing confidence'' in a property recovery, said Cho Yoon Ho, an analyst at Daishin Securities Co. in Seoul."
To contact the reporter for this story: Chen Shiyin in Singapore at email@example.com; Chua Kong Ho in Shanghai at Kchua6@bloomberg.net.
"Last Updated: July 15, 2008 06:22 EDT"
"Italian Stocks Update: Fiat, Intesa, Saipem, Telecom Italia "
By Francesca Cinelli
"Aug. 21 (Bloomberg) -- Italy's S&P/MIB Index fell to the lowest in more than a month, losing 390, or 1.4 percent, to 27,758. Futures expiring in September slid 398, or 1.4 percent, to 27,845."
The following were among the most active stocks on the Italian market today. Share symbols are in parentheses.
"Assicurazioni Generali SpA (G IM), Italy's biggest insurer, declined 39 cents, or 1.7 percent, to 22.1 euros. Goldman Sachs cut its price estimate on a three-month horizon to 23.7 euros from 24.5 euros and kept the stock on its Conviction Sell List."
"Separately, the company won a license to sell non-life policies in Belarus, as it expands in central and eastern Europe."
"Banca Italease SpA (BIL IM), an unprofitable Italian leasing company, fell 10.2 cents, or 2 percent, to 5.16 euros. Mediobanca Securities lowered its price projection on the stock to 5.8 euros from 7.4 euros."
"Banca Popolare di Milano Scrl (BPM IM), an Italian regional lender, shed 9.2 cents, or 1.4 percent, to 6.39 euros. Merrill Lynch cut its price estimate on the stock to 8 euros from 8.9 euros because of higher taxes and impairments. The brokerage maintained its ``buy'' recommendation. Dresdner Kleinwort lowered its price projection on the stock to 8 euros from 8.7 euros because of the outlook for revenue and tax."
"Banco Popolare SC (BP IM), the bank created by Popolare di Verona's purchase of Banca Popolare Italiana, increased 11.4 cents, or 0.9 percent, to 12.64 euros. After the lender yesterday denied a newspaper report that it's planning to merge with rival Unione di Banche Italiane SCPA (UBI IM), ``the market seems to be somehow still playing such a scenario even if volatility remains high,'' said Patrizio Pazzaglia, a money manager at Bank Insinger de Beaufort NV in Rome. Popolare is due to report earnings on Aug. 28. ``The market has been anticipating good results,'' Keefe, Bruyette & Woods Ltd. analysts wrote in a report published Aug. 12."
"Erg SpA (ERG IM), Italy's biggest crude-oil refiner by sales, rose 44.8 cents, or 3.5 percent, to 13.4 euros. Banca Imi upgraded the stock to ``add'' from ``hold,'' while lowering its price estimate to 15.6 euros from 16.9 euros."
"Fiat SpA (F IM), Italy's biggest manufacturer, dropped to the lowest in more than a month, losing 48.5 cents, or 4.6 percent, to 10.15 euros. ``It seems like the optimism that had been surrounding Fiat has been replaced by excessive pessimism notwithstanding an adverse economic scenario for the industry as a whole,'' Fabrizio Spagna, managing director of Axia Financial Research in Padua, Italy, told Bloomberg Television."
"Gemina SpA (GEM IM), which owns the manager of Rome's airports, increased 1.32 cents, or 1.7 percent, to 79.54 cents. BAA Ltd., the owner of Heathrow, may be ordered by antitrust regulators to sell two London airports and one in Scotland, forcing a breakup of the 42-year-old former government agency. ``We don't see Gemina being involved in the process,'' Euromobiliare analysts wrote in a note. ``However, it will be interesting to verify the interest and prices for this type of asset during this phase of the market.''"
"Intesa Sanpaolo SpA (ISP IM), Italy's second-biggest bank, declined 13.3 cents, or 3.7 percent, to 3.42 euros. ``With a fast- worsening macro scenario, we expect consensus to be cut for 2008 and most importantly for 2009,'' Keefe, Bruyette & Woods Ltd. analysts Marcello Zanardo and Aldo Comi wrote in a research report ahead of second-quarter results."
"Mediolanum SpA (MED IM), the Italian financial-services company partly owned by Prime Minister Silvio Berlusconi, dropped 9.3 cents, or 3.3 percent, to 2.74 euros. Banking and insurance stocks were the worst and third-worst performers among the 18 industry groups in Europe's Dow Jones Stoxx 60 Index today."
"Pirelli & C SpA (PC IM), Europe's third-largest tiremaker, dropped for the third consecutive session, losing 2.7 percent to 43.35 cents. The shares sank together with France's Michelin & Cie. on higher crude prices and ``persisting difficulties for the automobile industry,'' said Filippo Cavadini, a fund manager at RMJ Sgr in Milan."
"Saipem SpA (SPM IM), Europe's largest oil-field-services contractor by market value, climbed to the highest in almost 1 1/2 months, adding 1.06 euros, or 4.2 percent, to 26.13 euros. Oil stocks were the second-best performers among the 18 industry groups in Europe's Dow Jones Stoxx 60 Index today."
"Tenaris SA (TEN IM), the world's biggest maker of seamless steel tubes for pipelines, surged 46.7 cents, or 2.6 percent, to 18.4 euros."
"STMicroelectronics NV (STM IM), Europe's largest semiconductor maker, rose 6.8 cents, or 0.8 percent, to 8.39 euros. Euromobiliare Sim lifted its price estimate on the stock 8 percent to 8.4 euros."
"Telecom Italia SpA (TIT IM), Italy's biggest phone company, fell to the lowest in 10 1/2 years, losing 3.5 percent to 1.07 euros. JPMorgan Chase & Co. cut its price estimate on common stock to 1.26 euros from 1.57 euros and lowered its price target on savings shares to 1.07 euros from 1.34 euros. The savings shares declined 2.9 percent to 83.9 cents."
"Telecom Italia Media SpA (TME IM), the television unit of Italy's biggest phone company, climbed 3.8 percent to 12.4 cents. ``Some renewed speculation about a potential sale propped the shares up,'' Bank Insinger de Beaufort's Pazzaglia said."
"Unione di Banche Italiane SCPA (UBI IM), Italy's fourth- biggest bank by branches, declined 32 cents, or 2.1 percent, to 15.16 euros. Dresdner Kleinwort cut its price estimate to 19 euros from 21.3 euros, reiterating its ``buy'' recommendation."
To contact the reporters on this story: Francesca Cinelli in Milan at firstname.lastname@example.org
"Last Updated: August 21, 2008 12:06 EDT"
Canada Inflation Accelerates to Fastest Since 2003 (Update2)
By Theophilos Argitis
Aug. 21 (Bloomberg) -- Canada's annual inflation rate rose to the highest since 2003 in July because of a surge in gasoline prices for the country's drivers.
"Consumer prices rose 3.4 percent from July 2007, Statistics Canada said today in Ottawa, in line with economists' median forecast in a Bloomberg survey. Prices rose 0.3 percent from June, less than economists' 0.4 percent forecast."
"With most of July's gain tied to energy prices, which have dropped in the past month, the report may not affect the Bank of Canada's ability to cut interest rates to kick start growth. Policy makers signaled in mid-July that borrowing costs would stay put for the foreseeable future, citing slow growth and projecting inflation to peak at 4.3 percent next year, more than double their target."
"``We see this report as a sign the Bank of Canada has room to cut rates,'' Karen Cordes, an economist at Scotia Capital Inc. in Toronto, said by telephone, adding cuts may come later this year."
"Gasoline pump prices rose 5.1 percent to a monthly record of C$1.39 per liter in June, according to data compiled by Bloomberg, and have since dipped to C$1.29 as of last week."
Canada's dollar strengthened 0.7 percent to C$1.0527 per U.S. dollar at 8:54 a.m. in Toronto from C$1.0599 yesterday. One Canadian dollar buys 94.99 U.S. cents.
"Labor and housing markets in Canada have softened in recent months, reviving expectations that the Bank of Canada's next move will be a rate reduction."
"Recent gains in bond prices indicate investors are anticipating rate cuts by the end of this year, Avery Shenfeld of CIBC World Markets Inc. said in a note to investors."
"``Markets will dismiss the high headline rate, taking comfort in the drop in oil and gasoline prices since these July readings,'' Shenfeld said."
"Excluding gasoline and seven other volatile items, inflation rose 1.5 percent in July from a year earlier and 0.1 percent from June. Economists predicted the so-called core rate would gain 1.6 percent from a year earlier and 0.2 percent on a monthly basis."
Bank of Canada Governor Mark Carney said June 20 that he may rely less on core inflation as a guide to future trends during what he referred to as a ``super cycle'' of rising commodity prices.
"Policy makers set interest rates to keep inflation between 1 percent and 3 percent, with an optimal target of 2 percent. The central bank cut interest rates four times between December and April to fend off an export slump before pausing in June and holding again on July 15."
"After the July decision, the central bank said the economy will grow just 1 percent this year, the slowest since 1992 when Canada had its last recession."
"Prices for gasoline were up 29 percent between July 2007 and July 2008, while natural gas costs for consumers rose 25 percent over that period, the agency said."
"Food prices in stores were up 4.3 percent, led by bakery products such as bread. The price index for shelter gained 5.4 percent over the 12-month period, the agency said."
"Falling prices for automobiles helped keep annual inflation from accelerating further, the statistics agency said."
To contact the reporter on this story: Theophilos Argitis in Ottawa at email@example.com.
"Last Updated: August 21, 2008 08:57 EDT"
German Investor Confidence Probably Decreased in July (Update1)
By Christian Vits
"July 15 (Bloomberg) -- German investor confidence probably dropped to the lowest level in almost 16 years in July as faster inflation and higher interest rates dimmed the outlook for growth in Europe's largest economy, a survey of economists shows."
"The ZEW Center for European Economic Research will say its index of investor and analyst expectations fell to minus 55 from minus 52.4 in June, according to the median of 37 forecasts in a Bloomberg News survey. That would be the lowest reading since December 1992. ZEW issues the report at 11 a.m. in Mannheim today."
"Record oil and food prices prompted the European Central Bank to raise its key rate by a quarter point to 4.25 percent this month, further squeezing purchasing power. With a stronger euro weighing on exports and the deepening U.S. housing slump damping confidence worldwide, Germany's benchmark DAX share index has dropped 7 percent in the past month and 23 percent this year."
"``Higher inflation, the slump in equity markets and the ECB's interest-rate hike are all weighing on sentiment,'' said Juergen Michels, an economist at Citigroup Inc. in London. ``Freddie Mac and Fannie Mae may add to this trend.''"
"Treasury Secretary Henry Paulson has asked Congress for authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, which buy or finance almost half the $12 trillion of U.S. mortgages. The companies' shares lost about half their value last week on concern they will run short of capital."
"About 50 percent of the responses to the ZEW survey came in after July 9, when news broke that Freddie Mac and Fannie Mae may be in trouble, said Sandra Schmidt, an economist at the institute."
`Any Kind of Crisis'
"``The markets are currently focusing on any kind of crisis,'' said Gertrud Traud, chief economist at Landesbank Hessen- Thueringen in Frankfurt. ``However, we should be quite close to the low point, as everything negative is priced in already.''"
"Germany's economy probably shrank in the three months through June, Deputy Economy Minister Walther Otremba said last month."
"Economic growth may slow to 1 percent in 2009 from 2.4 percent this year, the Munich-based Ifo institute said June 24, a day after reporting its gauge of business confidence dropped to a two-year low."
"``The cooling of world economic activity will damp foreign sales and the stronger euro is an additional restricting factor,'' Ifo said."
"Europe's single currency has gained 15 percent against the dollar over the past year, while the collapse of the U.S. subprime mortgage market has roiled financial markets and damped the outlook for global growth."
The world's biggest financial companies have posted more than $400 billion in writedowns and credit losses since the start of last year.
"ECB policy makers say Europe's economic fundamentals are sound and they're more concerned about inflation, which accelerated to 4 percent last month, the fastest in more than 16 years."
"Oil prices have almost doubled in the past year and reached a record $147.27 a barrel last week. Maize prices have almost tripled since the beginning of 2006 and wheat prices have risen by more than 80 percent, the ECB said in its June monthly report."
"The gloomy growth outlook may prevent the central bank from raising interest rates further. Eonia forward contracts show investors have scaled back bets on higher rates. The March contract was at 4.38 percent yesterday, down from 4.74 percent a month ago."
"Still, Germany's gross domestic product, which accounts for about a third of the euro-region economy, rose 1.5 percent in the first quarter from the previous three-month period as companies stepped up spending on machinery and construction."
"Economic growth is likely to be ``more subdued'' in the second and third quarters before picking up again at the end of the year, Germany's Bundesbank said last month."
To contact the reporter on this story: Christian Vits in Frankfurt firstname.lastname@example.org.
"Last Updated: July 15, 2008 02:39 EDT"
"Commodities Stocks Are a `Sell', Merrill and Morgan Stanley Say "
By Fabio Alves
"July 15 (Bloomberg) -- Investors should sell commodities stocks because a slowing global economy will cut demand for raw materials such as copper, nickel and corn, according to strategists at Merrill Lynch & Co. and Morgan Stanley."
"``Given forecasts of slowing global growth and terrible stock market performance from the emerging markets, we believe we may have witnessed the peak in this commodity cycle,'' Merrill U.S. sector strategist Brian Belski wrote in a note to clients dated yesterday. ``A combination of deteriorating pricing power, a U.S. dollar that has found its footing against major currencies and rising interest rates for risky borrowers is providing significant macroeconomic headwind for materials.''"
"Belski, based in New York, reiterated his ``underweight'' rating on the materials industry."
"The 19 commodities in the Reuters/Jefferies CRB Index gained 29 percent in the first half of the year, the most since 1973, according to Bloomberg data. The index has fallen 2.8 percent since reaching a high for the year on July 2. Copper prices have lost 8.3 percent from their peak this year, while zinc has tumbled 30 percent."
"The decline in commodities prices isn't enough of a reason to buy raw material stocks, Morgan Stanley chief U.S. equity strategist Abhijit Chakrabortti wrote in a note to clients, keeping his ``underweight'' recommendation on the industry. He maintained gold as ``overweight,'' saying the bullion is a best option as a ``crisis hedge'' than oil."
"``The materials sector has gone from pricing in an outlook of persistently strong growth and tight inventory/supply conditions to one that now recognizes the risk of sizeable demand destruction,'' New York-based Chakrabortti wrote."
To contact the reporter on this story: Fabio Alves in New York at email@example.com
"Last Updated: July 15, 2008 10:19 EDT"
"Dollar Falls Most Against Euro in Month on Bank Writedowns, Oil "
By Ye Xie and Cordell Eddings
Aug. 21 (Bloomberg) -- The dollar fell the most against the euro in more than a month on speculation further writedowns at financial firms and an increase in crude oil prices will prolong the U.S. economic slowdown.
"The yen rose versus the dollar, euro and Australian dollar after the Financial Times reported Lehman Brothers Holdings Inc. failed to sell a 50 percent stake, prompting investors to reduce holdings of higher-yielding assets funded in Japan. The Canadian dollar and the South African rand rallied against the dollar as oil and gold surged."
"``When we look at risks going forward, ultimately the U.S. will be hit the hardest by the financial crisis, which originated in the U.S.,'' said Todd Elmer, currency strategist at Citigroup Global Markets Inc. in New York. ``We are on the cusp of another leg down in the dollar.''"
"The dollar decreased 0.9 percent to $1.4882 per euro at 3:16 p.m. in New York, from $1.4747 yesterday. It touched $1.4896, the weakest level since Aug. 14. The yen advanced 0.3 percent to 161.59 per euro, from 162.03, and touched 160.20, the strongest level since May 13. Japan's currency rose 1.2 percent to 108.59 per dollar, from 109.86."
"The ICE futures exchange's Dollar Index, tracking the greenback against the currencies of six U.S. trading partners, fell 1 percent to 76.160, the biggest decline since March 26. It touched 77.413 on Aug. 19, the highest since this year."
"Canada's dollar was the biggest gainer versus its U.S. counterpart among major currencies. It increased 1.5 percent to C$1.0444, the biggest gain since April 16, as crude oil for October delivery climbed 5.3 percent to $121.05 a barrel."
"South Africa's rand rose 1.4 percent to 7.6537 per dollar as gold and silver futures for December delivery gained 3.1 percent to $841.50 an ounce and 5.4 percent to $13.86 an ounce, respectively. Oil and gold account for half of Canada's exports, while gold and silver are South Africa's largest exports."
"Norway's krone rose 1.1 percent to 5.3344 per dollar, the biggest gain since June 6. Norway is the world's fifth-largest oil supplier."
"The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations based on their value changes. A reading of 1 would mean they move in lockstep."
"``Commodities are taking off,'' said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products in Wilton, Connecticut. ``Rising commodities reinforced the momentum of dollar selling.''"
"Japan's currency climbed 0.9 percent to 95.13 per Australian dollar and the Swiss franc increased 0.6 percent to 1.4829 Brazilian reais on reduced demand for carry trades, in which investors get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's target lending rate of 0.5 percent and Switzerland's 2.75 percent benchmark compare with 7.25 percent in Australia and 13 percent in Brazil."
The franc advanced 1.2 percent to 1.0857 versus the dollar and 0.3 percent to 1.6154 against the euro.
"Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake in Lehman this month, the Financial Times reported. Spokesmen for Lehman and Seoul-based Korea Development Bank declined to comment, while a Citic spokesman in Beijing said he hadn't heard about the discussions."
The dollar has gained almost 8 percent versus the euro since touching the all-time low of $1.6038 on July 15 and appreciated 0.4 percent against the yen this month as reports showed the European and Japanese economies shrank in the second quarter and crude oil fell 18 percent from a record of $147.27 a barrel reached July 11.
"``We are in a state of consolidation,'' said Samarjit Shankar, director of strategy for the global markets group in Boston at Bank of New York Mellon, the world's largest custodial bank, with more than $23 trillion in assets. ``Our own flow data shows an element of dollar bullishness is still in place.''"
"The yield on two-year U.S. Treasury notes was 1.75 percentage points less than that of comparable-maturity German bunds, compared 1.74 yesterday. The spread was the widest since Aug. 1, making U.S. securities less attractive to investors."
"``Rate expectations have consolidated some, and oil has rebounded,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``There's not as much oxygen for the dollar as there once was.'' He still favors the dollar on evidence growth in Europe is slowing."
Contraction in Europe
"Europe's gross domestic product fell 0.2 percent in the second quarter, the first contraction since the 15-nation common currency was introduced in 1999, the European Union statistics office said last week."
"Hedge funds and other large speculators raised their bets last week that the dollar will appreciate further. The difference in the number of wagers on a gain in the dollar versus the euro compared with those on a decline, known as net longs, increased to 19,427 on Aug. 12, the largest since May, figures from the Washington-based Commodity Futures Trading Commission showed."
"``There are signs that this positioning change has run its course,'' said Citigroup's Elmer. ``Interest-rate spreads are not going to narrow further. That'll help put the recent dollar rally at rest.''"
To contact the reporters on this story: Ye Xie in New York at firstname.lastname@example.org; Cordell Eddings in New York at email@example.com;
"Last Updated: August 21, 2008 15:17 EDT"
Dollar Falls to Record Versus Euro; Credit Woes May Damp Growth
By Agnes Lovasz and Kosuke Goto
July 15 (Bloomberg) -- The dollar declined to a record low against the euro on speculation Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will say credit- market losses are hurting U.S. economic growth.
The currency also weakened to the lowest level in more than a month against the Japanese yen and to a 25-year low versus the Australian dollar on concern confidence in the debt of Fannie Mae and Freddie Mac will diminish even after the U.S. government pledged support for the two-largest buyers of home loans. The pound surpassed $2 for the first time since July 1 after U.K. inflation quickened to the fastest pace in at least 11 years.
"``The markets are reacting negatively to the renewed credit crisis in the U.S. and that's hurting the dollar across the board,'' said Roberto Mialich, a Milan-based currency strategist at Unicredit Markets & Investment Banking, a unit of Italy's largest lender. ``The market is speculating that Bernanke will offer a gloomy outlook for the U.S. economy.''"
"The dollar fell to $1.6038 per euro, the lowest since the euro's inception in 1999, and was at $1.6006 as of 7:22 a.m. in New York, from $1.5908 yesterday. The U.S. currency also dropped to 104.61 yen, the lowest level since June 9, from 106.14 yen yesterday. The yen traded at 167.69 per euro, from 168.89 yesterday, when it weakened to 169.75, the lowest since the single currency's debut."
"The dollar may fall to between $1.62 and $1.63 in the coming month, Mialich said."
Given Up Gains
"The U.S. currency has given up all the gains made versus the euro since July 3, when European Central Bank President Jean-Claude Trichet said he has ``no bias'' on future interest- rate moves."
"The dollar rose as much as 1.7 percent to $1.5611 per euro that week. It has since slumped as much as 2.7 percent as concern increased that Fannie Mae and Freddie Mac, which buy or finance almost half the $12 trillion of U.S. mortgages, would need to be rescued by the U.S. government."
"The Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners, fell for a fifth day on the ICE market to 71.334, the lowest since April 23, from 71.915."
"Bernanke will give his semiannual testimony on monetary policy and the economy before the Senate Banking Committee at 10 a.m. Washington time. A separate hearing at the committee with Paulson, and Securities and Exchange Commission Chairman Christopher Cox on financial markets, is scheduled for about 11:30 a.m."
"``The reality is the U.S. housing market and credit squeeze haven't hit bottom yet,'' said Takuma Kurosawa, global markets treasurer in Tokyo at HSBC Bank, a unit of Europe's biggest lender. ``That's discouraging investors from holding dollar assets.''"
Losses and Writedowns
Global banks and securities firms have reported losses and writedowns of more than $400 billion as the subprime-mortgage market collapsed.
The British pound was bolstered by expectations accelerating inflation will keep the Bank of England from lowering interest rates to avert a recession.
"Consumer prices climbed 3.8 percent from a year earlier, exceeding the government's 3 percent upper limit for a second month and the highest level since records began in 1997, the Office for National Statistics said today in London. Economists forecast 3.6 percent, according to the median of 36 estimates in a Bloomberg News survey. The pound was at $2.0107, from $1.9951 yesterday."
The Swiss franc rose to within half a cent of parity with the U.S. dollar and the Japanese yen strengthened as investors reversed purchases of higher-yielding assets financed with loans in Switzerland and Japan.
"Against the dollar, the franc rose as much as 1.4 percent to 1.0021 before trading at 1.0044, from 1.0161 yesterday."
"The yen stayed higher after the Bank of Japan kept interest rates at 0.5 percent today, the lowest among major economies, as expected by all 39 economists surveyed by Bloomberg News."
"The world's second-largest economy will grow 1.2 percent in the year ending March 31, slower than the 1.5 percent forecast on April 30, the central bank said in a statement in Tokyo. Consumer prices excluding fresh food will climb 1.8 percent, more than the 1.1 percent projected three months ago, it said."
Dollar at 100 Yen?
"The yen may rise as high as 100 per dollar this year as the Bank of Japan is more likely to raise interest rates than the Federal Reserve, said Toyoo Gyohten, former currency-policy chief at Japan's Ministry of Finance."
"Japan's central bank may increase borrowing costs should inflation accelerate and the economy sustain growth of at least 1 percent, Gyohten said."
"``The Fed is most likely to maintain its current level of interest rates,'' Gyohten, president for the Institute of International Monetary Affairs in Tokyo, said in an interview yesterday. ``The BOJ is more likely to raise rates. The medium- term trend is for a weaker dollar and a stronger yen.''"
"U.S. stocks fell yesterday, led by financial shares, after the government's seizure of Pasadena, California-based IndyMac Bancorp Inc. and predictions of wider credit losses overshadowed Paulson's pledge to shore up Fannie and Freddie. The Standard & Poor's 500 Index declined 0.9 percent."
"The dollar may extend declines on concern Fannie Mae and Freddie Mac will get the majority of funds they need by borrowing from the Fed rather than an investment from the government, increasing supply of the U.S. currency, said Ashley [=^]Davies[^=], a currency strategist in Singapore at UBS AG, the world's second-biggest currency trader."
"``Any whiff that the authorities will adopt steps to monetize the problems facing the U.S. housing market would be the trigger to drive the euro-dollar'' higher, [=^]Davies[^=] wrote in a report today."
"Against Australia's currency, the dollar weakened to 98.39 cents, the lowest level since 1983, from 97.18 cents yesterday."
"Gains in the euro were limited after a report showed investor confidence in Germany, Europe's largest economy, fell to a record low in July, weakening the case for higher rates."
"The ZEW Center for European Economic Research in Mannheim said its index of investor and analyst expectations fell to minus 63.9 in July from minus 52.4 the previous month. Economists expected a decline to minus 55, according to the median of 37 forecasts in a Bloomberg News survey."
"``For the dollar to drop abruptly from here is unwarranted,'' said Robert Minikin, a senior currency strategist at Standard Chartered Plc. ``We don't think the U.S. economy, or the financial system, is uniquely vulnerable. We see a lot of negative news on the U.K. and the euro zone economies. The balance of risks is tilted towards a recovery.''"
"The dollar may rise to $1.5750 in coming weeks and strengthen to $1.56 by the end of this quarter, Minikin said."
"Losses in the dollar may be limited by speculation reports will show inflation accelerated, spurring traders to add to bets the Fed will raise its benchmark interest rate from 2 percent."
"U.S. producer prices increased 8.7 percent from a year earlier in June, the most since 1981, according to a Bloomberg News survey of economists before a Labor Department report today. A report tomorrow will show consumer prices rose 4.5 percent in June, the most since September 2005, according to a separate Bloomberg survey."
To contact the reporters on this story: Agnes Lovasz in London at firstname.lastname@example.org; Kosuke Goto in Tokyo at email@example.com
"Last Updated: July 15, 2008 07:50 EDT"
Rupee Snaps 7-Day Loss on Speculation Exporters Bought Currency
By Anoop Agrawal
"Aug. 21 (Bloomberg) -- India's rupee rose, snapping seven days of losses, on speculation exporters converted overseas earnings after the currency's drop to the lowest in 17 months."
"The rupee ended its worst run since November as crude oil's slump from a record eased concern that import costs will increase and inflation will accelerate in Asia's third-biggest economy. Earnings rise in local currency terms for companies such as Tata Consultancy Services Ltd., the country's biggest software exporter, when the rupee weakens."
"``Exporters are capitalizing on a long-waited opportunity,'' said Paresh Nayar, head of foreign-exchange and debt trading at Development Credit Bank Ltd. in Mumbai. ``The recent fall in the rupee was quick and included an element of speculation. So it will correct accordingly now.''"
"The rupee gained 0.4 percent to 43.525 per dollar at the 5 p.m. close of trading in Mumbai, according to data compiled by Bloomberg. It slumped to 43.87 yesterday, the lowest level since March 2007."
India's currency declined earlier today on speculation falling stocks would damp demand for the currency.
"Global funds sold $7 billion more Indian shares than they bought this year after making a record $17.2 billion in net purchases in 2007, according to stock exchange data."
"``The underlying sentiment is against the rupee,'' said V. Rajagopal, chief currency trader at Kotak Mahindra Bank Ltd. in Mumbai. ``Global investors' confidence in the equity markets is dwindling, which may result in more capital outflows.''"
"India's benchmark stock index, the Bombay Stock Exchange Sensitive Index, dropped 3 percent today, the most this month."
To contact the reporter on this story: Anoop Agrawal in Mumbai at firstname.lastname@example.org.
"Last Updated: August 21, 2008 07:40 EDT"
European Bonds Decline as Manufacturing Index Exceeds Forecast
By Agnes Lovasz
Aug. 21 (Bloomberg) -- European government bonds declined the most in almost a month after an index of manufacturing in the 15-nation euro-region economy unexpectedly increased in August.
"The drop pushed the yield on the benchmark 10-year German bund up from the lowest level in more than three months as futures traders scaled back expectations the European Central Bank will reduce interest rates. Royal Bank of Scotland Group Plc's composite index was at 48, from 47.8 in July, as the manufacturing component climbed, Reuters Plc reported. Economists in a Bloomberg News survey forecast a decline to 47.7."
"``Expectations the ECB will hurry with rate cuts is damped by this stabilization of PMI, which is negative for the market,'' said Peter Mueller, a fixed-income strategist in Frankfurt at Commerzbank AG, Germany's second-largest lender. ``Also, the market is very expensive at these levels.''"
"The yield on the German bund, Europe's benchmark government security, rose 5 basis points to 4.17 percent by 4:41 p.m. in London, after falling to as low as 4.10 percent before the data. The 4.25 percent bond due July 2018 fell 0.42, or 4.2 euros per 1,000-euro ($1,487) face amount, to 100.58."
The two-year yield increased 9 basis points to 4.08 percent. Yields move inversely to bond prices.
"Two-year yields will rise to 4.10 percent and 10-year yields to 4.20 percent in coming weeks as investors bet the ECB will delay a rate reduction, Mueller predicted."
"Royal Bank of Scotland's indexes are based on a survey of purchasing managers by Markit Economics in London and a reading below 50 indicates contraction. The manufacturing index rose to 47.5, from 47.4 in July, while the services index declined to 48.2 from 48.3."
"European notes were buoyed yesterday after Germany's Economy Ministry said the outlook for Europe's largest economy has ``darkened,'' with expansion remaining moderate, and the country's BDB banking association said it will change its growth forecast for this year of between 2.25 percent and 2.5 percent."
"Traders have reduced bets the ECB will lower interest rates this year on mounting evidence the slowdown sparked by the collapse of the U.S. housing market is spreading to the region. The implied yield on the December Euribor futures contract rose 1 basis point to 5.04 percent. It has declined 19 basis points in the past month. The March contract jumped 5 basis points, to 4.75 percent today."
The European Union said Aug. 14 gross domestic product fell 0.2 percent in the second quarter. Separate data last week showed the German and French economies shrank.
The central bank left its main interest rate at 4.25 percent on Aug. 7 while ECB President Jean-Claude Trichet said growth will be ``particularly weak'' through the second and third quarters.
To contact the reporter on this story: Agnes Lovasz in London at email@example.com
"Last Updated: August 21, 2008 11:44 EDT"
Treasuries Rise as Bernanke Cites `Significant' Risks to Growth
By Daniel Kruger and Dakin Campbell
"July 15 (Bloomberg) -- Treasuries rose, with yields on two- year notes dropping to the lowest since May, after Federal Reserve Chairman Ben S. Bernanke said there are ``significant downside risks'' to economic growth."
Futures traders reduced bets policy makers will raise borrowing costs by January after Bernanke abandoned the central bank's June assessment that downside risks to growth had ``diminished somewhat'' and told the Senate Banking Committee growth and inflation risks are both increasing. His shift reflects renewed turmoil in markets that forced the Treasury and Fed to mount a rescue of Fannie Mae and Freddie Mac this week.
"``We are back to the Fed being on hold for the balance of the year,'' said David Ader, head of U.S. government bond strategy at RBS Greenwich Capital in Greenwich, Connecticut, one of the 19 primary dealers that trade with the central bank. Bernanke's appearance and recognition that risks to growth are increasing was ``icing on the cake.''"
"The yield on the two-year note fell 7 basis points, or 0.07 percentage point, to 2.38 percent at 4:19 p.m. in New York, according to BGCantor Market Data. It touched 2.26 percent, the lowest since May 12. The 2.875 percent security due in June 2010 advanced 1/8, or $1.25 per $1,000 face amount, to 100 30/32."
"The 10-year note yield declined 3 basis points to 3.83 percent. The difference in yields, or spread, between two- and 10-year notes widened to 145 basis points, from 141 yesterday."
Treasuries have rallied this week as traders bet widening credit-market losses will prevent policy makers from increasing interest rates. Last month investors bet borrowing costs would rise as soon as September to quell accelerating inflation.
"``Events of the past few days have reiterated the concerns over the financial sector,'' said Kurush Mistry, an interest- rate strategist in New York at Lehman Brothers Holdings Inc., another primary dealer. ``Bernanke mentioned as much in his testimony. Given that, the market is'' correctly pricing in ``that the Fed will not raise rates anytime soon.''"
"Futures contracts on the Chicago Board of Trade showed a 69 percent chance the Fed will raise its 2 percent target rate for overnight lending between banks by at least a quarter-percentage point by its January meeting. The likelihood yesterday was 80 percent. The futures showed 7 percent odds it will raise the rate at its Aug. 5 meeting, down from 77 percent a month ago."
"Government notes gained even after the Treasury and Fed put a plan before Congress on July 13 to provide financing to Fannie and Freddie in an effort to prevent a collapse of confidence in the firms, which guarantee or own almost half the $12 trillion in U.S. home loans outstanding."
"The Fed ``is in the uncomfortable position of having to deal with higher inflation and higher unemployment,'' said Kevin Logan, senior market economist at Dresdner Kleinwort in New York. ``The question is how do they balance these two things.''"
"Concern that bank losses will widen reignited before second-quarter earnings reports this week from companies that include Citigroup Inc., JPMorgan and Merrill Lynch & Co."
"The cost of protecting against losses on Treasuries soared to a record, credit-default swaps show. Contracts on U.S. government debt increased 2 basis points to 22 basis points, according to CMA Datavision at 4:50 p.m. in London, after trading as high as 24 earlier today. The 10-year contracts exceeded a previous record of 20 basis points yesterday."
"Yields on three-month Treasury bills fell for a fifth day, dropping 12 basis points to 1.33 percent. They touched 1.28 percent, the lowest since April 25, when bets increased the Fed was near the end of its series of rate cuts that began in September."
"Banks became less confident about lending over the past week, money market rates indicated. The difference between three-month Treasury-bill yields and the three-month London interbank offered rate, the so-called TED spread, widened to 146 basis points, the broadest since April 30, from 94 basis points on July 8."
"The Fed's offering of $75 billion in cash loans through the Term Auction Facility yesterday drew $93.3 billion in bids, the central bank announced today. It was the most in six weeks and a sign of continued stress on the banking sector."
"Foreign governments and international organizations owned $1 trillion of U.S. federal agency debt in the first quarter, Commerce Department data show."
"``Foreigners are not reassured by what they see in the U.S.,'' said David Kotok, chairman and chief investment officer of Cumberland Advisors Inc., a Vineland, New Jersey firm that manages $1 billion. ``The Fed cannot raise rates while financial markets are dysfunctional. It must fix that first before it can deal with monetary policy issues.''"
The Fed chief spoke less than two hours after government figures showed that the economic boost from U.S. tax rebates began to fade in June and inflation pressures increased.
"Producer prices climbed by 1.8 percent in June, the Labor Department said, the biggest gain since November. A Bloomberg survey forecast a 1.4 percent rise. U.S. retail sales increased 0.1 percent last month, the Commerce Department said in Washington, the smallest since February."
"The difference between yields on 10-year Treasury Inflation Protected Securities, or TIPS, and conventional notes was little changed at 2.45 percentage points today. The figure reflects the inflation rate traders expect for the next decade."
To contact the reporters on this story: Daniel Kruger in New York at firstname.lastname@example.org; Dakin Campbell in New York at email@example.com
"Last Updated: July 15, 2008 16:24 EDT"
India's Rupee Set for Biggest Gain in Six Weeks as Oil Slumps
By Anil Varma
July 17 (Bloomberg) -- India's rupee headed for the biggest gain in almost six weeks as demand for foreign currencies from the nation's refiners may slow after crude oil had the biggest two-day decline since January 2007.
"The currency climbed for a second day after oil prices in New York dropped more than 8 percent from a record high of $147.27 per barrel reached on July 11. The rupee also gained as risk aversion among global investors may wane, boosting demand for emerging-market assets, after U.S. Federal Reserve Chairman Ben Bernanke said yesterday the world's largest economy will ``return to good growth''."
"``There are a couple of positive factors for the rupee today,'' said Vikas Babu, a currency trader at state-owned Andhra Bank in Mumbai. ``The decline in crude oil is reassuring and may ease dollar demand. Bernanke's comments too are encouraging for financial markets.''"
"The rupee gained 0.6 percent to 42.8525 per dollar as of 1:56 p.m. in Mumbai, according to data compiled by Bloomberg. That is the biggest gain since June 6. The currency may rise as high as 42.70 in the coming days, Babu said."
"``The range for the day could be between 42.80 and 43.05,'' he said."
"The rupee has lost 8.1 percent this year as crude oil advanced 40 percent, boosting the cost of India's energy imports. The South Asian nation's imports of the commodity averaged $7.8 billion a month this year, compared with $5.5 billion in 2007, government data show."
"India's benchmark share index rose for the first time in six days, spurring speculation global investors will reduce sales of local assets. The Bombay Stock Exchange's Sensitive Index, or Sensex, gained as much as 4.2 percent. The MSCI Asia- Pacific Index added 1.4 percent."
"Funds based abroad sold $7.07 billion more Indian shares than they bought this year, following a record $17.2 billion in net purchases in 2007, according to the Securities & Exchange Board of India."
To contact the reporters on this story: Anil Varma in Mumbai at firstname.lastname@example.org.
"Last Updated: July 17, 2008 04:50 EDT"
"Brazil Stocks Fall, Led by Airlines, Commodities; Bolsa Drops "
By Alexander Ragir
"July 15 (Bloomberg) -- Brazilian stocks fell the most in almost two weeks, led by airlines and commodity shares, after U.S. brokerages recommended investors sell raw-material producers and high oil prices spurred profit concerns."
"Tam SA and Braskem SA led a plunge in companies whose costs rise with oil prices. Gerdau SA, Latin America's biggest steelmaker, paced a decline in raw material producers on concern that banking and credit problems in the U.S. and Europe will curb demand for commodities."
"For airlines, ``the price of oil combined with the industry's own problems, makes better margins almost impossible,'' said Saulo Sabba, who helps manage the equivalent of $245 million as investment director at Maxima Asset Management in Rio de Janeiro. ``The credit crisis in the U.S. and slowing economy will have to affect global growth. All the uncertainty is causing people to wait for a better time to buy.''"
"The Bovespa index of most-traded shares on the Sao Paulo exchange slid 1,586.03, or 2.6 percent, to 59,134.87 at 10:16 a.m. New York time. Mexico's Bolsa retreated 2 percent. Chile's Ipsa dropped 1.2 percent."
"Tam led airlines lower, falling 2.2 percent to 26.79 reais. Oil hovered near a record as the dollar fell to a new low against the euro, boosting the appeal of crude as a currency hedge. Fuel prices account for 40 percent of TAM's costs."
"Gol Linhas Aereas Inteligentes SA, Brazil's second-biggest airline, dropped 4.3 percent to 12.41 reais."
Braskem fell 1.7 percent to 12.50 reais.
`Underweight' Raw Materials
"Investors should sell commodities stocks as a slowing global economy will cut demand for raw materials such as copper, nickel and corn, according to strategists at Merrill Lynch & Co and Morgan Stanley."
"``Given forecasts of slowing global growth and terrible stock market performance from the emerging markets, we believe we may have witnessed the peak in this commodity cycle,'' Merrill Lynch strategists, including Brian Belski, wrote in a note to clients, reiterating their ``underweight'' rating."
Gerdau declined 2.6 percent to 34.82 reais.
"Fannie Mae and Freddie Mac, the two largest U.S. mortgage- finance companies, tumbled, extending losses for firms to more than 80 percent in 2008. A report today showed German investor confidence dropped to a record low as quickening inflation and rising interest rates lowered the outlook for Europe's largest economy."
"``Consumer confidence in the U.S. and Europe is really low,'' said Sabba. ``The numbers just keep getting worse.''"
To contact the reporter on this story: Alexander Ragir in Rio de Janeiro at email@example.com.
"Last Updated: July 15, 2008 10:24 EDT"
European Bonds Gain as Concern About Bank Losses Hurts Equities
By Kim-Mai Cutler and Lukanyo Mnyanda
July 15 (Bloomberg) -- European government bonds rose for a second day as concern credit-market losses at banks will widen sent stocks lower and before a report that will probably show German investor confidence slid to near a 16-year low.
"The gains pushed the yield on the 10-year German bund to within 1 basis point of its lowest level in more than a month. The Dow Jones Stoxx 600 Index lost 1.4 percent and the MSCI Asia- Pacific Index dropped 2.3 percent. The ZEW Center for European Economic Research may say investor confidence in Europe's biggest economy registered the weakest reading since December 1992, according to the median of 37 forecasts in a Bloomberg survey."
"``Credit market worries are still driving the market,'' said Karsten Linowsky, a fixed-income strategist in Zurich at Credit Suisse Group, Switzerland's second-biggest bank. ``A strong Treasury market performance has fed into support for the European bond market this morning. We are bullish on bonds in the very short term, yields could go lower.''"
"The yield on the 10-year German bund, Europe's benchmark government security, declined 1 basis point to 4.38 percent as of 8:04 a.m. in London. The price of the 4.25 percent bond due July 2018 gained 0.06, or 60 euro cents per 1,000-euro ($1,594) face amount, to 98.93. The yield earlier climbed to 4.39 percent."
The yield on the two-year note dropped 2 basis points to 4.36 percent. Bond Yields move inversely to prices.
"Ten-year German bunds yielded 54 basis points more than similar maturity Treasuries today, from 47 basis points at the end of last week. The gap widened as declines in financial stocks highlighted rising concern that problems for the U.S. banking system may be worsening."
"ZEW is due to publish its investor confidence report at 11 a.m. in Mannheim, Germany."
To contact the reporters on this story: Kim-Mai Cutler in London at firstname.lastname@example.org; Lukanyo Mnyanda in London at email@example.com
"Last Updated: July 15, 2008 03:15 EDT"
"Gold Trades Little Changed on Weak Dollar, Near Record Oil "
By Iris Leung and Feiwen Rong
"July 15 (Bloomberg) -- Gold was little changed after reaching its highest in almost four months, on near record oil prices and as deepening losses at U.S. financial institutions caused the dollar to weaken against the yen."
"Gold climbed to as high as $975.32 an ounce yesterday, the highest since March 19, on concerns that Israel may be preparing to attack Iran. Crude oil was steady as employees of Petroleo Brasileiro SA, Brazil's state oil company, began a strike in an area, home to more than 80 percent of the country's output."
"``Gold prices are still much supported by three factors: the weak dollar, regional instability in the Middle East and the high oil prices,'' said Ellison Chu, manager of precious metals at Standard Bank Asia Ltd. ``It will be testing $995 an ounce in the short term.''"
Bullion for immediate delivery traded 0.2 percent lower at $970.25 an ounce at 10:40 a.m. in Hong Kong. Silver lost 0.1 percent to $19.07 an ounce.
The dollar also traded near a two-week low against the yen on speculation losses at Fannie Mae and Freddie Mac will deepen. The currency fell to a 25-year low versus the Australian dollar.
"New York crude oil futures traded at $144.78 a barrel in Hong Kong at 10:41 a.m., just below the record $147.27 reached on July 11. The dollar traded at 105.90 yen, down from 106.14 yesterday."
"``Gold's drivers remain: falling mine production, competitive currency devaluations, wealth creation in India and China, and petrodollars,'' John Hill, analyst at Citigroup Global Markets Inc., said yesterday in a report. ``Gold has reasserted safe-haven status above $950 an ounce as the dollar dithers and oil retakes records near $150.''"
"Gold for August delivery lost 0.3 percent to $970.90 an ounce in after-hours electronic trading on Comex at 10:45 a.m. in Hong Kong. Gold for December delivery traded in Shanghai advanced for a fourth day, gaining 0.3 percent to 212.93 yuan a gram ($966 an ounce) at the same time."
"Gold for June 2009 delivery rose 0.6 percent to 3,335 yen a gram ($979 an ounce) on the Tokyo Commodity Exchange."
To contact the reporters for this story: Iris Leung in Hong Kong at firstname.lastname@example.org; Feiwen Rong in Singapore at email@example.com
"Last Updated: July 14, 2008 23:15 EDT"
"Canadian Dollar Jumps Most Since April as Crude Oil, Gold Surge "
By Chris Fournier
Aug. 21 (Bloomberg) -- Canada's dollar gained the most in four months as commodities including crude oil and gold surged and the U.S. dollar weakened against most major currencies.
The Canadian currency was the biggest gainer versus the greenback among the major currencies as crude oil for October delivery leaped more than $5 a barrel and gold climbed the most in almost two months. The appeal of oil and other commodities as a hedge against inflation grew as the U.S. dollar fell against the euro. Commodities make up about half of Canada's exports.
"``It's this huge move we've had in crude today'' that's driving up the Canadian dollar, said Doug Porter, deputy chief economist at BMO Capital Markets in Toronto. ``Resources generally have flared higher.'' He predicts the Canadian dollar will trade at C$1.05 by year end."
"Canada's dollar increased 1.3 percent to C$1.0459 per U.S. dollar at 1:42 p.m. in Toronto, the third consecutive increase and the largest since April 16, from C$1.0599 yesterday. One Canadian dollar buys 95.63 U.S. cents."
The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials climbed for a fourth straight day. The U.S. dollar fell against all 16 of the most-traded currencies except Taiwan's dollar and the South Korean won.
"Crude oil for October delivery rose for a third day, increasing 5.3 percent to $121.04 a barrel, on bets Russian supplies may be disrupted because of rising tension with the U.S. Gold futures for December delivery advanced 3.1 percent to $841.50 an ounce."
"``The oil price has come back,'' said David Watt, a senior currency strategist in Toronto at RBC Capital Markets Inc., a unit of Canada's biggest bank by assets. ``That's an environment that's good for the Canadian dollar.''"
Loonie and Oil
"Canada's dollar, dubbed the loonie because of the aquatic bird on the one-dollar coin, surged 17 percent in 2007 as commodity prices soared. It stalled this year as the economy of the U.S., the nation's largest trading partner, cooled and as oil fell from the record high of $147.27 a barrel set July 11. The Canadian currency touched C$1.0728 on Aug. 12, the weakest level since August 2007."
"``We thought the recent sell-off had been a little too violent,'' said Watt. So far this year, the loonie has dropped against all but four of the 16 most-active currencies."
"Watt predicts Canada's dollar will trade at C$1.06 by year end. The currency will slide to C$1.10 by the end of 2009, according to the median forecast of 30 economists surveyed by Bloomberg News."
"Consumer prices rose 3.4 percent from July 2007, Statistics Canada said today in Ottawa, in line with economists' median forecast in a Bloomberg survey. Prices increased 0.3 percent from June, less than economists' 0.4 percent forecast."
Bank of Canada
"``The data is unlikely to influence the Bank of Canada's monetary policy,'' said Jack Spitz, managing director of foreign-exchange trading at National Bank of Canada in Toronto. U.S. dollar flows and commodity prices will determine the direction of the Canadian currency, he said."
Canada's central bank held the overnight lending rate at 3 percent for a second consecutive meeting on July 15. The bank's target for annual inflation is 2 percent.
The U.S. dollar has risen against all of the other major currencies this month on speculation the U.S. economic slowdown is spreading to other industrialized countries.
"The yield on the two-year Canadian government bond added 4 basis points, or 0.04 percentage point, to 2.83 percent. The price of the 2.75 percent security due in December 2010 decreased 5 cents to C$99.82. The 10-year bond's yield increased 1 basis point to 3.59 percent."
Bond Yield Outlook
"The two-year bond's yield will rise to 3.09 percent by the end of this year, while the 10-year bond's yield will increase to 3.82 percent, according to the median forecasts of economists surveyed by Bloomberg News."
"The yield advantage of the 10-year U.S. Treasury note compared with similar-maturity Canadian government bonds was 24 basis points, down from 36 basis points on Aug. 11. The Canadian 10-year bond yielded 36 basis points more than its U.S. counterpart on Jan. 22."
"Canadian government bonds have returned 4.6 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries have returned 4 percent this year."
To contact the reporter on this story: Chris Fournier in Montreal at firstname.lastname@example.org
"Last Updated: August 21, 2008 13:47 EDT"
Brazilian Real Strengthens as Commodity Gains Boost Inflows
By Adriana Brasileiro
Aug. 21 (Bloomberg) -- Brazil's real strengthened for a third day as gains in commodities increased the value of export flows from Latin America's biggest economy.
"The real rose 0.2 percent to 1.6153 per dollar at 9:39 a.m. New York time, from 1.6185 yesterday. The real has advanced 10 percent this year, the best performance among the 16 most actively-traded currencies."
"``Demand for commodities is strong and will support prices in the short to medium term,'' said Mario Cebrian, head of foreign exchange trading at Banco Standard de Investimento in Sao Paulo."
"Crude oil prices rose on speculation that Russian production may be disrupted because of rising tensions with the U.S., while a weaker dollar increased the appeal of commodities as a hedging instrument. Crude oil is among Brazil's top three export products."
"The yield on Brazil's zero-coupon bonds due in January 2010 rose 4 basis points, or 0.04 percentage point, to 14.74 percent, according to Banco Votorantim. The yield on the overnight interest futures contract for January delivery was little changed at 13.81 percent."
To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at email@example.com
"Last Updated: August 21, 2008 09:41 EDT"
Coffee Rises to 6-Week High in New York on Late Brazil Harvest
By Shruti Date Singh
"Aug. 21 (Bloomberg) -- Coffee rose to the highest in more than six weeks on concern delays in Brazil's harvest, the world's biggest, may reduce production."
"Brazil's arabica exports this month through yesterday fell 3.5 percent to 877,419 bags from 909,434 bags in the first 20 days of last month, a coffee shippers group reported. The country's 2008 harvest, including arabica and robusta beans, may reach 51.1 million bags, compared with 37.6 million last year, because trees are in the higher-producing half of a biennial crop cycle, the U.S. Department of Agriculture has forecast."
"``The move we've seen is about the delayed harvest and farmers are holding back,'' said Paul Caruso, research analyst for hedge fund Galtere Ltd. in New York."
"Coffee futures for December delivery rose 2.9 cents, or 2.1 percent, to $1.441 a pound at 11:35 a.m. on ICE Futures U.S., the former New York Board of Trade. The price earlier reached $1.4535, the highest for a most-active contract since July 7."
"The dollar's drop today also is ``supporting commodities in general,'' Caruso said."
"The U.S. Dollar Index, a gauge that includes the euro and yen among six currencies, fell as much as 1.2 percent, making commodities traded in New York cheaper for overseas buyers."
The Reuters/Jefferies CRB Index rose to the highest level since Aug. 4.
To contact the reporter on this story: Shruti Date Singh in Chicago at firstname.lastname@example.org.
"Last Updated: August 21, 2008 11:39 EDT"
"Brazil, Chile, Peru: Latin America Bond, Currency Preview "
By Jamie McGee
July 15 (Bloomberg) -- The following events and economic reports may influence trading in Latin American local bonds and currencies today. Bond yields and exchange rates are from a previous session.
"Brazil: Retail sales increased by 9.9 percent in May, compared to 8.7 percent growth in April, according to the median estimate of 25 economists in a Bloomberg survey."
The government is scheduled to release the data at 8 a.m. New York time.
The real rose 0.4 percent to 1.5948 per dollar.
"The yield on the country's zero-coupon bonds due January 2010 rose 3 basis points, or 0.03 percentage point, to 15.13 percent, according to Bloomberg pricing."
"Chile: The central bank can't afford to risk losing credibility by not acting against inflation, bank President Jose De Gregorio told lawmakers in Santiago."
"``The loss of credibility, which happens when the right decisions are not taken at the right time, only leads to higher costs for controlling inflation,'' De Gregorio said before the Chamber of Deputies economics committee in Santiago. ``Containing inflation isn't free, but postponing that containment is even more expensive.''"
The peso rose 1.07 percent to 496.71 per dollar.
"The yield for a basket of five year peso bonds in inflation-linked currency units, called the unidades de fomento, rose 5 basis points or 0.05 percentage point, to 2.95 according to the Bloomberg composite prices."
"Peru: The economy expanded by 8 percent for the year ending in May, compared to 13.3 percent growth in the 12 months through April, according to the median estimate of 9 economists in a Bloomberg survey. The central bank is slated to release the data at 11:30 a.m. New York time."
The sol rose 0.32 percent to 2.8235 per U.S. dollar.
The yield on the nation's 8.6 percent sol-denominated bonds due in August 2017 was unchanged at 7.63 percent according to Citigroup Inc.'s unit in Peru.
To contact the reporter on this story: Jamie McGee in New York at email@example.com
"Last Updated: July 15, 2008 00:00 EDT"
Asia-Pacific Bond Risk Rises on Concern Bank Earnings to Slow
"July 15 (Bloomberg) -- Asia-Pacific default protection costs rose, led by Australia, on concern U.S. banks will report slower second-quarter earnings growth as mortgage losses increase."
"Australia's benchmark credit-default swap index surged the most in almost four months, gaining 15.5 basis points to 159 at 3:41 p.m. in Sydney, Citigroup Inc. prices show. The increase is the most since March 20, the same week the Federal Reserve helped JPMorgan Chase & Co. rescue Bear Stearns Cos. Rising prices suggest deteriorating perceptions of credit quality."
"``A sustained improvement is something we're really not expecting to see until the U.S. housing market and corporate profits stabilize,'' said Michael Bush, head of fixed-income credit research at National Australia Bank Ltd. in Melbourne. ``People just aren't really seeing what they'd like to be seeing.''"
"M&T Bank Corp., the lender whose second-largest shareholder is Berkshire Hathaway Inc., slumped the most since 1980 in New York equity trading yesterday after second-quarter profit plunged 25 percent on losses tied to mortgages. U.S. sales of new homes fell in May to the second-lowest level since 1991, a June 25 Commerce Department report showed."
"The Markit iTraxx Japan index rose 14 basis points to 145, Morgan Stanley prices show. Asia's default-swap benchmark of 50 investment-grade borrowers outside Japan, including the Thai government and Hutchison Whampoa Ltd., a diversified Hong Kong- based company with investments from property to retailing, advanced 9 basis points to 158.5, according to ICAP Plc."
"Credit-default swaps on the subordinated debt of Australia's four largest banks climbed 11 basis points to 150, according to Citigroup. Contracts on Japan's banks including Bank of Tokyo- Mitsubishi UFJ Ltd. were little changed, Credit Suisse Group prices show."
"The indexes are benchmarks for protecting bonds against default, and traders use them to speculate on changes in credit quality. A basis point, or 0.01 percentage point, is worth $1,000 on a swap that protects $10 million of debt from default."
Credit-default swaps are used to protect against or speculate on default. They pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements.
To contact the reporters on this story: Oliver Biggadike in Tokyo at firstname.lastname@example.org; Laura Cochrane in Melbourne at email@example.com
"Australian, N.Z. Dollars Gain as U.S. Financial Markets Worsen "
By Ron Harui and Candice Zachariahs
July 15 (Bloomberg) -- The Australian dollar rose to a 25- year high and the New Zealand dollar advanced to the strongest in five weeks on speculation investors will be attracted to the nations' assets as losses at U.S. financial companies deepen.
"Australia's currency, known as the Aussie, climbed for a fourth day and New Zealand's gained for a fifth after a stock index of U.S. financial firms slumped on speculation regional banks are short of capital. The New Zealand dollar was supported after a government report showed consumer prices rose at the fastest pace in 18 years."
"``The Aussie is showing itself to be resilient in the face of financial turmoil in the U.S.,'' said Sean Callow, senior currency strategist in Sydney at Westpac Banking Corp., Australia's fourth-biggest bank. ``The grave concerns over the U.S. financial sector are playing out as a net negative for the dollar.''"
"Australia's dollar rose 0.9 percent to 97.72 U.S. cents as of 4:48 p.m. in Sydney, compared with 96.85 cents late in Asian trading yesterday. It earlier touched 97.77 cents, the strongest level since 1983. The currency bought 103.29 yen from 103.31."
"New Zealand's currency strengthened 0.8 percent, the most since June 16, to 76.78 U.S. cents. It touched 76.79 cents, the strongest level since June 9. The currency fetched 81.19 yen from 81.21 yen."
The Australian dollar maintained its gains after the central bank said in minutes of its July 1 meeting released today that ``there had been no material change in the inflation outlook'' and its 12-year-high benchmark interest rate is restraining the economy.
"The Australian dollar extended the past five days of gains to 2.6 percent, the best performance among the 16 most-active currencies, before Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson address U.S. lawmakers on their response to widening credit-market losses."
"Global banks and securities firms have reported losses of about $400 billion as the subprime-mortgage market collapsed. Australia's five largest lenders shunned investments linked to the subprime market, helping them avoid the losses reported by firms on Wall Street and in Europe."
Reserve Bank of Australia Governor Glenn Stevens said on July 9 that Australia's main institutions were ``well placed'' to withstand the current environment.
"The New Zealand dollar advanced after a government report showed inflation quickened at the fastest pace in 18 years last quarter, prompting traders to pare bets the central bank will lower interest rates."
"``The yield is still very attractive in New Zealand,'' said Boris Schlossberg, a senior currency strategist at currency trader DailyFX.com in New York. ``We're seeing a broad anti- dollar move and the kiwi is benefiting as being part of the group of high-yielders.''"
"New Zealand's benchmark interest rate of 8.25 percent is the highest of any AAA rated nation. Reserve Bank of New Zealand Governor Alan Bollard has left borrowing costs at a record high since July last year, betting the slowing economy will curb inflation."
"The consumer prices index rose 1.6 percent from the first quarter, Statistics New Zealand said in Wellington today. The median estimate of economists surveyed by Bloomberg was for inflation of 1.4 percent."
"Traders see a 50 percent chance the RBNZ will cut its benchmark rate by a quarter-percentage point at its next meeting on July 24, compared with 59 percent odds yesterday, according to a Credit Suisse Group index based on interest-rate swaps."
"Australian government bonds gained, pushing the yield on the 10-year security down 11 basis points to 6.31 percent. The price of the 5.25 percent bond due March 2019 rose 0.778, or A$7.78 per A$1,000 face amount, to 91.893."
"New Zealand's bonds also advanced, with the 10-year yield declining 6 basis points to 6.03 percent. A basis point is 0.01 percentage point."
To contact the reporter on this story: Ron Harui in Singapore at firstname.lastname@example.org; Candice Zachariahs in New York at email@example.com.
"Last Updated: July 15, 2008 03:08 EDT"
Brazilian Stocks Rise on Commodity Prices; Eletrobras Gains
By Alexander Ragir and Paulo Winterstein
"Aug. 21 (Bloomberg) -- Brazilian stocks rose for a third day, the longest winning streak in a month, as higher commodity prices and an improved earnings outlook boosted energy and raw material producers."
"Petroleo Brasileiro SA climbed as oil jumped and UBS AG recommended buying the stock. Cia. Vale do Rio Doce, the world's biggest iron ore miner, advanced for a third day as metals prices surged. Centrais Eletricas Brasileiras SA, Latin America's largest utility, gained the most in a month after it said it will pay 2.8 billion reais ($1.73 billion) in dividends owed to shareholders since the 1970s."
"``The dollar falling has propped up commodities and is really helping Petrobras and Vale after they fell a lot,'' said Luiz Sedrani, head of equity at Sao Paulo-based Banco Votorantim, the financial arm of the largest diversified industrial group."
"The Bovespa index gained 0.7 percent to 55,741.88 at 1:37 p.m. New York time, posting its longest winning streak since the three days ended July 16. Mexico's Bolsa slipped 0.7 percent, while Peru's IGBVL index jumped 2.9 percent. The MSCI Latin America index gained 1.1 percent."
"Brazilian companies, trading at a discount to other emerging markets, will likely continue to report ``strong'' earnings this year after second-quarter profit was above estimates, UBS AG said."
"Real estate companies and petrochemical companies beat estimates by more than 15 percent, while pulp and paper companies and mining company Cia. Vale do Rio Doce were ``the main disappointment.''"
"``We believe earnings momentum should remain strong, supporting further upward earnings revisions,'' strategist Pedro Batista wrote in a note to investors."
"Petrobras, as the state-controlled oil company is known, gained 3.4 percent to 35.37 reais. Crude oil advanced more than $6 on speculation that rising tensions between the U.S. and Russia may disrupt the flow of oil, and as a weaker dollar bolstered the appeal of commodities."
"UBS reiterated its ``buy'' rating on the stock, citing oil price prospects and easing concern that the government will raise taxes on the company. Nomura Holdings Inc. analyst Xavier Grunauer raised his rating on the stock to ``buy'' from ``neutral,'' writing in a note that shares had been ``oversold.''"
"The oil gain hurt companies whose costs rise with the price of crude. Braskem SA, Latin America's biggest petrochemical company whose main cost is petroleum products, dropped 2.9 percent to 12.02 reais. Brazil's biggest airline Tam SA fell 3.1 percent, while second-biggest Gol Linhas Aereas Inteligentes SA dropped 2.9 percent."
"Gerdau SA, Latin America's biggest steelmaker, rose 2.1 percent, leading gains in steelmakers on speculation demand for metals will stay strong as prices of copper, nickel, platinum and lead rose more than 4 percent. Cia. Siderurgica Nacional SA rose 2.1 percent. The dollar fell against the euro, buoying demand for metals as an alternative investment."
Vale jumped 2.5 percent to 38.85 reais. The UBS Bloomberg CMCI Industrial Metals Index rose 4.6 percent.
"Eletrobras common shares led gains among utilities, rising 3.9 percent to 29.65 reais. The company's preferred shares gained 1.4 percent to 24.80 reais."
The state-controlled utility confirmed a Valor Economico story that it will pay 2.8 billion reais ($1.73 billion) of dividends in cash and issue new shares for the remainder. The company owes a total of 8.5 billion reais in dividends. An Eletrobras spokeswoman said there is no date set for when the dividend plan will be completed.
"The dividend payments will be ``very positive'' for the common shares, UBS said. ``At market price, it would imply a dividend yield of about 35 percent'' for common shares, analyst Eduardo Haiama wrote in a note to clients today."
"The Bovespa's gains were limited, with two stocks falling for every one that rose, as banks slumped around the world on speculation credit writedowns at U.S. financial firms will increase. Banco Itau Holding Financeira SA, Brazil's second- biggest non-state banks, fell 1.9 percent to 30.91 reais."
"``The fear about the financial sector is back, causing the dollar to fall, which in the end helps commodities,'' Sedrani said. ``These worries end up affecting Brazilian banks even though they don't have the same problems as banks abroad.''"
"Mexico's Bolsa retreated for the third time in four days, as phone company Axtel SAB and cement maker Cemex SAB dropped."
"A potential agreement between Telefonos de Mexico SAB and cable and satellite television firms to offer pay-TV may be a ``missed opportunity'' for Axtel, the second-largest Mexican fixed-line telephone company, Banco Santander SA said. The shares lost 1.2 percent to 12.93 pesos."
"Cemex dropped 2 percent to 20.51 pesos, the lowest in two weeks, on concern the company's debt load and structure of derivatives arrangements may pull down the shares, and on concern that Venezuela's expropriation of the Cemex unit there will hurt the stock, the Wall Street Journal said in its ``Heard on the Street'' column."
"Peru's Lima General index rose the most in six months, led by copper and tin mining companies as metal prices surged."
"Southern Copper Corp., the country's largest producer of that metal, advanced to the highest this month after Merrill Lynch & Co. upgraded shares to ``neutral'' from ``underperform.''"
"Minsur SA, the world's third-largest tin producer, gained the most in 14 months as tin jumped after Indonesia announced output limits. Southern climbed 7.8 percent to $26.19. Minsur surged 7 percent to 6.10 soles."
To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at firstname.lastname@example.org; Paulo Winterstein in Sao Paulo at email@example.com.
"Last Updated: August 21, 2008 14:11 EDT"
"French Stocks: Business & Decision, Gemalto, Lafarge, Stedim "
By Adria Cimino
"Aug. 21 (Bloomberg) -- France's CAC 40 Index lost 61.26, or 1.4 percent, to 4,304.61 in Paris, retreating for a third time this week. The SBF 120 Index slipped 1.3 percent."
The following shares rose or fell in Paris. Stock symbols are in parentheses.
"Air France-KLM Group (AF FP), Europe's biggest airline, sank 61 cents, or 3.8 percent, to 15.61 euros. Michelin & Cie. (ML FP), the world's second-largest tiremaker, retreated 1.51 euros, or 3.4 percent, to 42.99."
Crude oil advanced more than $6 after the signing yesterday of a missile-shield agreement between the U.S. and Poland bolstered concern that Russia may disrupt the flow of oil. The contract for October delivery rose as much as 6.1 percent to $122.04 on the New York Mercantile Exchange.
"Business & Decision Group (BND FP) plunged 2.72 euros, or 34 percent, to 5.25, a record decline. The consulting group said operating profit is below analyst forecasts, at between 2 percent and 2.5 percent of revenue for the first half."
"Gemalto NV (GTO FP) jumped 2.96 euros, or 12 percent, to 27.75, the most since July 2006. The world's largest smartcard maker said first-half earnings more than doubled on cost cuts, higher sales of mobile-phone cards and as the banking-card business returned to profit. Adjusted profit rose to 63.3 million euros ($93.6 million) from 24.5 million euros a year earlier."
The company raised its target for full-year operating income to around 160 million euros.
"Lafarge SA (LG FP), the world's biggest cement producer, tumbled 2.37 euros, or 3 percent, to 77.98, dropping for a fourth day. Cie. de Saint-Gobain SA (SGO FP), Europe's biggest supplier of building materials, sank 1.02 euros, or 2.5 percent, to 39.15, also slipping for a fourth day. Holcim Ltd., the second-largest cement maker, lowered its full-year earnings target after second-quarter profit dropped on slowing U.S. construction and rising raw-material costs."
"Sartorius Stedim Biotech SA (DIM FP) increased 2.65 euros, or 12 percent, to 25.15, for the biggest gain since October 2002. Societe Generale raised its recommendation on shares of the plastic bag maker owned by Sartorius AG to ``buy'' from ``hold,'' citing valuation and earnings prospects."
To contact the reporter on this story: Adria Cimino in Paris at firstname.lastname@example.org.
"Last Updated: August 21, 2008 12:16 EDT"
Hungarian Industrial Production Growth Slows on Forint Strength
By Zoltan Simon
July 15 (Bloomberg) -- Hungarian industrial production grew at a slower annual pace in May as gains by the forint made exporters less competitive.
"Production rose 4.7 percent from a year earlier, compared with 6.5 percent in April, the Budapest-based statistics office said today, confirming its preliminary estimate. On the month, output fell 0.7 percent."
"Hungary relies on exports, mostly to the European Union, to drive growth. The country's economy expanded an annual 1.6 percent in the first three months, accelerating for the first time in five quarters."
"Industrial exports increased 5.1 percent in May, slowing from 12 percent in April. Imports increased 1.9 percent after rising 3.6 percent in the previous month."
"The forint was Europe's best-performing currency over the past month, gaining 7.3 percent against the euro."
To contact the reporter on this story: Zoltan Simon in Budapest at email@example.com.
"Last Updated: July 15, 2008 03:00 EDT"
"Mitsubishi UFJ, Japan Banks Fall on Credit Concern (Update3) "
By Finbarr Flynn and Takako Taniguchi
"July 15 (Bloomberg) -- Mitsubishi UFJ Financial Group Inc. fell the most in four months in Tokyo trading, leading Japanese banks lower after a U.S. government rescue plan for embattled Fannie Mae and Freddie Mac sparked concern the banks may face additional credit-related losses."
"Mitsubishi UFJ, the nation's largest bank by market value, fell 5.3 percent to close at 926 yen on the Tokyo Stock Exchange. It was the second-biggest decline among the 84 companies in the Topix banking index."
"Japan's three biggest lenders held a total of 4.7 trillion yen ($44 billion) in debt securities issued by U.S. government- backed mortgage financers including Fannie Mae and Freddie Mac, and by U.S. federal agency Ginnie Mae, as of March 31, according to the banks. U.S. financial stocks fell yesterday on concern a U.S. Treasury Department rescue plan won't stop shares in beleaguered Fannie Mae and Freddie Mac from dropping."
"``The fears are that the same problem which has forced Fannie Mae and Freddie Mac to require assistance are also going to weigh on a wide range of private-sector banks in the U.S.,'' said David Threadgold, an analyst at Fox-Pitt Kelton Asia Ltd. in Tokyo. ``You could certainly expect more to mark-to-market losses on international structured credit portfolios.''"
"Sumitomo Mitsui Financial Group Inc., Japan's second- biggest bank by market value, dropped 6.1 percent in Tokyo trading, while No. 3 Mizuho Financial Group Inc. fell 5 percent. The Topix banking index declined 4.2 percent, the third-largest drop among the 33 industry groups that make up the benchmark Topix index."
"Mitsubishi UFJ had 3.3 trillion yen in bonds issued by U.S. government-backed companies including Fannie Mae and Freddie Mac as of March 31, spokesman Takashi Takeuchi said by phone today. Sumitomo Mitsui had 219.8 billion yen in such bonds, spokeswoman Chika Togawa said."
"Mizuho had 1.2 trillion yen worth of the securities, although most of the amount was from Ginnie Mae, spokeswoman Masako Shiono said. Ginnie Mae's debt is fully backed by the U.S. federal government."
"The lenders declined even as U.S. Treasury Secretary Henry Paulson moved to back Fannie Mae and Freddie Mac. Paulson has asked Congress for authority to buy unlimited stakes in the two companies, which buy or finance about half the $12 trillion of U.S. mortgages, and provide loans to them."
"``With U.S. government support being assumed, Japan's banks shouldn't face a big impact'' from holdings of Fannie Mae and Freddie Mac bonds, said Keisuke Moriyama, a Tokyo-based analyst at Nomura Holdings Inc. ``Bank shares are falling as investors assess business problems at Freddie Mac and Fannie Mae and earnings at U.S. financial institutions this week.''"
"The turmoil in U.S. financial markets is making investors ``skittish,'' said Masaru Hamasaki, a senior strategist in Tokyo at Toyota Asset Management Co., which manages the equivalent of $3.3 billion."
"``Worsening sentiment is practically the only thing that's moving the market today,'' Hamasaki said."
"Even so, Japan's financial regulator said today it needs to step up scrutiny of banks' holdings of debt issued by U.S. government-supported companies."
"``We need to be more cautious in examining this matter,'' Yoshimi Watanabe, head of the Financial Services Agency, said at a regular press briefing in Tokyo."
"Five-year credit-default swaps on the dollar-denominated senior bonds of Bank of Tokyo-Mitsubishi UFJ Ltd. were little changed at 86 basis points, or $86,000 annually to protect $10 million in debt, according to data compiled by Bloomberg."
"The contracts, used to speculate on a borrower's ability repay debt, increase as perceptions of credit quality fall and decline as they rise."
To contact the reporters on this story: Finbarr Flynn in Tokyo at firstname.lastname@example.org; Takako Taniguchi in Tokyo at Ttaniguchi4@bloomberg.net
"Last Updated: July 15, 2008 03:19 EDT"
ABN Amro Cuts End-2008 Australian Dollar Forecast to 87 Cents
By Ron Harui
"Aug. 21 (Bloomberg) -- ABN Amro Holding NV cut its Australian dollar forecasts for this year, saying slower global economic growth, lower commodity prices and reductions in domestic interest rates will weigh on the currency."
"The Australian dollar, known as the Aussie, will trade at 83 U.S. cents at the end of September and 87 cents at year-end, weaker than a previous prediction of parity, the bank said in a research note. It's dropped 7.5 percent against the U.S. dollar this month, the biggest slide among the 16 most-active currencies, as traders bet the Reserve Bank of Australia will reduce borrowing costs to bolster the economy."
"``The greatest risk for the Aussie dollar is to the downside in the near term,'' Greg Gibbs, a currency strategist in Sydney at ABN Amro said in a Bloomberg News interview, confirming the note dated yesterday. ``The RBA is about to begin a rate-easing cycle. Sentiment has shifted for the U.S. dollar and the more rapid slowing in other major economies in recent months is likely to prevent a rebound in commodities.''"
"Australia's currency rose to 87.45 U.S. cents as of 4:55 p.m. in Sydney from 86.90 cents late in Asia yesterday. It reached a 25-year high of 98.49 cents on July 16 before sliding to 85.93 cents on Aug. 13, the weakest since Jan. 23."
"The Australian dollar has weakened in recent weeks as prices of commodities the nation exports fell and reports showed the European and Japanese economies shrank in the second quarter. The U.S. economy, the world's biggest, contracted in the final three months of 2007."
"``We might expect some further decline in commodity prices in coming months in light of the more rapid slowing we have seen in major economies in recent months,'' Gibbs wrote in the research note. ``This may prove to weigh on the Australian dollar in coming months.''"
"Gold, Australia's third-most valuable commodity export behind iron ore and coal, has dropped 10.8 percent and the UBS Bloomberg Constant Maturity Commodity Index has weakened 5.3 percent this month. U.S. builders broke ground on the fewest new homes in 17 years in July, a government report showed this week."
The World Bank said on June 10 that global economic growth will probably slow to 2.7 percent this year from 3.7 percent in 2007.
"Australia's dollar dropped to the lowest in more than six months against the U.S. currency last week as the central bank signaled it may lower borrowing costs. Members of the bank's board said in minutes of the Aug. 5 meeting, released on Aug. 19, that ``a case could be made for an early reduction.''"
"The Reserve Bank of Australia's benchmark interest rate is 7.25 percent and traders are betting it will be cut 1.06 percentage points in the next 12 months, a Credit Suisse Group index based on overnight swaps shows."
"The Aussie gained for a second year in 2007, rising 11 percent, as international investors favored currencies offering higher yields. Benchmark interest rates are 2 percent in the U.S. and 0.5 percent in Japan."
To contact the reporter on this story: Ron Harui in Singapore at email@example.com
"Last Updated: August 21, 2008 03:37 EDT"
"European Stocks Fall on Writedown Concern; HSBC, Airlines Drop "
By Sarah Thompson
Aug. 21 (Bloomberg) -- European stocks fell for the third time this week as concern deepened banks will report more writedowns and a rise in oil damped earnings prospects for airlines.
HSBC Holdings Plc and BNP Paribas SA lost 2.7 percent after Citigroup Inc. analysts predicted three U.S. banks will write down a combined $6.4 billion this quarter. Ryanair Holdings Plc slipped 3.1 percent as oil climbed more than $6 a barrel. Holcim Ltd. sank to the lowest in two weeks as the world's second- biggest cement maker said profit won't meet its target.
"Europe's Dow Jones Stoxx 600 Index lost 0.8 percent to 278.44, extending this year's decline to 24 percent. Financial firms have led stocks lower worldwide in 2008 on concern accelerating inflation and more than $500 billion in credit- related losses will stifle profit growth."
"``We are not going to see the bottom for at least another six months,'' said Gary Dugan, London-based chief investment officer for Europe at Merrill Lynch Global Wealth Management. ``In terms of this drip feed of bad news, this will continue with banks.'' He spoke in a Bloomberg Television interview. Merrill manages $1.5 trillion worldwide."
"National benchmark indexes declined in 16 of the 18 western European markets. Germany's DAX slipped 1.3 percent and France's CAC 40 fell 1.4 percent. The U.K.'s FTSE 100 was little changed, as gains by commodity producers offset declines at banks."
Rising commodity prices have kept central banks from cutting interest rates even as the economy slows.
"European Central Bank Governing Council member Nout Wellink said higher prices are feeding into wages, Het Financieele Dagblad reported, citing an interview."
"``There are still effects in the pipeline that push up prices and we see second-round effects appear,'' Wellink, who also heads the Dutch central bank, told the newspaper. ``The higher prices feed into wages. We are monitoring all developments.''"
"Oil rose today on speculation that rising tensions between the U.S. and Russia may disrupt the flow of oil, and as a weaker dollar bolstered the appeal of commodities."
"HSBC, Europe's largest bank, slipped 22 pence to 805.75. BNP Paribas, France's biggest bank, sank 1.59 euros to 56.81."
"Citigroup analyst Prashant Bhatia cut his third-quarter earnings estimates for Lehman Brothers Holdings Inc., Goldman Sachs Group Inc. and Morgan Stanley, and estimated the three banks will write down a combined $6.4 billion for the period."
"Separately, the Financial Times said Korea Development Bank and China's Citic Securities Co. abandoned talks to buy a stake in Lehman this month."
"Matthew Russell, a spokesman for Lehman in Hong Kong, declined to comment on the report, as did Sung Joo Yung, a spokesman at Seoul-based Korea Development Bank. Raymond Tang, a spokesman for Citic in Beijing, said he hadn't heard about the discussions."
The cost of protecting bank debt from default rose to a five-week high. A benchmark gauge of European bank risk rose to the highest since July 16.
"Ryanair, Europe's largest discount carrier, slipped 8.2 cents to 2.54 euros. Air France-KLM Group, the region's biggest airline, sank 3.8 percent to 15.61 euros. Bayerische Motoren Werke AG, the world's largest luxury-car maker, lost 3.4 percent to 27.73 euros."
"Crude oil for October delivery rose as much as $7.06, or 6 percent, to $122.04 a barrel on the New York Mercantile Exchange. Holcim declined 0.8 percent to 76.45 Swiss francs. Second-quarter profit dropped after U.S. construction slowed and transport and raw-material costs increased."
"Operating profit for 2008 will match last year's results on a comparable basis, the company said. That compares with a long- term target of 5 percent annual growth."
"Net income fell to 696 million Swiss francs ($634 million) in the quarter from 2.07 billion francs a year earlier, when the Zurich, Switzerland-based company booked a 1.1 billion-franc disposal gain. Earnings before interest and tax decreased to 1.23 billion francs. Analysts estimated 1.31 billion francs."
"Cie. de Saint-Gobain SA, Europe's biggest supplier of building materials, fell 2.5 percent to 39.15 euros. Lafarge SA, the world's No. 1 cement company, sank 3 percent to 77.98 euros."
"The gain in crude left the U.K.'s FTSE 100 little changed, pushing BP Plc, Europe's second-biggest oil company, 1.2 percent higher to 517 pence. Anglo American Plc, the world's fourth- largest diversified mining company, climbed 4.1 percent to 2,870 pence."
"Copper jumped the most in more than seven months in London as the dollar weakened, spurring demand for commodities as a hedge against inflation. Gold, platinum and silver also rose."
"Eurasian Natural Resources Corp. advanced 3.4 percent to 1,062 pence. The world's third-biggest ferrochrome producer said first-half profit more than tripled after prices for the steelmaking raw material increased to a record."
"Frontline Ltd. fell 5.9 percent to 295 kroner. The world's largest owner of supertankers said second-quarter net income rose to $318.4 million, or $4.25 a share, from $187.9 million, or $2.51, a year earlier. The shipping line was expected to make $339 million, or $4.53, according to the median estimate of nine analysts surveyed by Bloomberg News."
Persimmon Plc jumped 10 percent to 327 pence. The U.K.'s biggest homebuilder by market value booked lower-than-estimated land writedowns.
To contact the reporter on this story: Sarah Thompson in London at firstname.lastname@example.org
"Last Updated: August 21, 2008 12:38 EDT"
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