"European Stocks Rise on Earnings; Carrefour, PPR, Dexia Advance "
By Adam Haigh
Aug. 29 (Bloomberg) -- European stocks rose for a fourth day as better-than-estimated earnings from Carrefour SA and PPR SA and Dexia SA's signal it won't need more capital overcame concern that a slump in consumer spending on technology is spreading.
"Carrefour, the world's second-biggest retailer, jumped 6.7 percent as demand in emerging markets boosted first-half profit. PPR climbed 4.9 percent after earnings more than doubled, helped by higher revenue at the Gucci luxury-goods brand. Dexia, the world's biggest lender to local governments, jumped 3.4 percent after saying its solvency is ``extremely high.''"
"Europe's Dow Jones Stoxx 600 Index added 0.6 percent to 289.06 at 2:51 p.m. The index has climbed 1.9 percent in August, heading for its first advance in four months."
"``The market is definitely performing better after the earnings reports,'' said Philippe Gijsels, Brussels-based senior equity strategist at Fortis Global Markets with $62 billion under management. ``Outside the financials, they continue to be fairly good which lends some support to the market.''"
"Stocks extended gains after a measure of U.S. business activity unexpectedly showed expansion in August. The National Association of Purchasing Management-Chicago said its business index increased to 57.9 this month, after economists had projected it would fall to 50. A figure above 50 signals growth."
The Stoxx 600 yesterday erased this month's losses after a U.S. economic report signaled companies are weathering higher inflation and $512 billion in credit-related losses. U.S. stocks climbed the most in three weeks yesterday following the data.
ASML Holding NV led declines by semiconductor-related shares after Dell Inc. said the U.S. slide in technology spending is moving to Europe and parts of Asia.
"National benchmark indexes rose in 13 of the 18 western European markets. The U.K.'s FTSE 100 gained 0.4 percent, and France's CAC 40 climbed 0.5 percent. Germany's DAX Index was little changed."
"Carrefour jumped 6.7 percent to 35.95 euros. First-half net income from recurring operations totaled 750 million euros ($1.1 billion), beating the 743 million-euro median of seven analysts in a Bloomberg survey."
"PPR climbed 4.9 percent to 80.14 euros after saying first- half profit more than doubled on demand for luxury goods and a gain from selling YSL Beaute. Net income climbed to 779 million euros ($1.15 billion), beating the 327 million-euro median estimate of six analysts surveyed by Bloomberg."
Dexia climbed 3.4 percent to 9.73 euros after its Chief Executive Officer Axel Miller damped speculation the company would need more capital.
"``Dexia's solvency has remained extremely high,'' Miller said."
"Technology stocks were the worst performing industry group on the Stoxx 600 after Dell, the world's second-biggest maker of personal computers, said that ``continued conservatism'' from some customers in the U.S. is spreading to western Europe and some Asian countries."
"ASML, Europe's largest manufacturer of semiconductor equipment, fell 2.1 percent to 16.28 euros. Nokia Oyj, the world's biggest maker of mobile phones, slipped 2.9 percent to 16.95 euros."
"Concern rising oil prices and credit losses will stifle economic growth has led analysts to cut earnings estimates this year. Profit among companies in the Stoxx 600 will decline 2.1 percent on average in 2008, according to data compiled by Bloomberg, down from 11 percent at the start of 2008."
"Analysts expect retailers to buck the trend, with earnings forecast to rise 4.8 percent this year, the data show. That compares with a 26 percent slump for financial firms, the worst outlook among groups in the benchmark Stoxx 600 index."
"Daimler AG, the world's second-largest luxury carmaker, lost 1.2 percent to 39.95 euros. PSA Peugeot Citroen, Europe's second-biggest carmaker, sank 0.8 percent to 33.05 euros"
"Merrill Lynch & Co. downgraded Peugeot to ``underweight'' from ``neutral,'' saying the company may have to reduce its 2008 operating profit targets as growth slows."
"Crude oil is headed for its biggest weekly gain in almost two months as producers evacuated rigs ahead of Gustav, forecast to become the worst Gulf of Mexico hurricane since Katrina. Crude today climbed as much as $1.80, or 1.6 percent, to $117.39 in New York."
L'Oreal fell 3.7 percent to 67.26 euros. Sales at the world's largest cosmetics maker disappointed some analysts and the company reported the slowest profit growth in three years.
To contact the reporter on this story: Adam Haigh in London at email@example.com
"Last Updated: August 29, 2008 10:05 EDT"
Agency Mortgage-Bond Yield Spreads Narrow to Lowest in a Month
By Jody Shenn
Aug. 29 (Bloomberg) -- Yields on agency mortgage securities relative to U.S. Treasuries fell to the lowest in a month as investors took advantage of some of the highest spreads since 1986.
"The difference between yields on Washington-based Fannie Mae's current-coupon 30-year fixed-rate bonds and 10-year government notes narrowed 1 basis point today to 196 basis points, the lowest since July 30, according to data compiled by Bloomberg, reducing the cost of new home loans."
"The spread fell from 215 basis points on Aug. 18, the widest since March, when the gap set a 22-year high of 238 basis points. A new round of widening had accelerated in July and early August amid concern that financial companies led by Fannie and Freddie Mac may cut holdings as capital-depleting losses continue. Asian investors reduced purchases as Fannie and Freddie's slumping shares raised questions about whether the U.S. government will need to step in to ensure the quality of the securities."
"``Mortgages had gotten extremely cheap, so even if Fannie and Freddie are capital-constrained and might not be as aggressive, other leveraged accounts can put on the same trade that they might have,'' said Gary Cloud, who oversees $500 million in fixed-income securities as at Financial Counselors Inc. in Kansas City, Missouri."
"Agency mortgage bonds, a $4.5 trillion market, are guaranteed by federal agency Ginnie Mae or Fannie and Freddie. Last month, U.S. Treasury Secretary Henry Paulson forged a rescue package for the government-chartered companies, which reported $14.9 billion in net losses in the past four quarters as loan delinquencies rose."
"Fannie declined 64 cents, or 8 percent, to $7.31 in New York Stock Exchange composite trading as of 9:37 a.m., after rising six consecutive days. Freddie fell 42 cents to $4.86, following a four-day increase. The rallies had reduced concern that Fannie and Freddie would need a federal bailout."
"Fixed-rate agency mortgage bond returns compared with Treasuries with maturities similar to their expected lives yesterday turned positive for August, at 14 basis points, Lehman Brother Holdings Inc. index data show. The debt underperformed government notes by 111 basis points in June and July. A basis point is 0.01 percentage point."
"Spreads may also be rallying as slowing growth in outstanding securities helps offset any drop in demand, said Cloud, who helps manage the AFBA 5 Star Balanced Fund. The Federal Reserve's holdings for foreign official and international accounts of agency mortgage bonds and agency debt, such as Fannie and Freddie's corporate bonds, fell to $970.5 billion in the week ended Aug. 27, down 1.3 percent a record high on July 23."
"Bloomberg current-coupon indexes represent the average of yields for the two groups of mortgage bonds with prices just above and below face value, the ones lenders typically package new loans into. The spread helps determine the rates offered to homeowners on new prime mortgages of $417,000 or less in most areas, and up to $729,500 in high-cost counties."
"On an option-adjusted spread basis against interest-rate swaps, another common benchmark, with maturities similar to their expected lives, Fannie's securities have fallen 26 basis points from an Aug. 15 level that was near the highest on record to 57 basis points, according to data complied by Bloomberg. The spread against Treasuries yesterday was near the lowest since July 30 at 145 basis points, according to Lehman data."
An option-adjusted spread takes into account the inability to predict when the underlying mortgages will be refinanced or otherwise paid off. Simple yield spreads against benchmarks of a single maturity also fail to take into account that borrowers' principal is paid down both sooner and later than the average lives of the debt. A swap rate is the fixed yield paid in return for floating payments linked to short-term bank borrowing costs.
"Congress created Fannie and McLean, Virginia-based Freddie to increase home financing. The companies now buy or guarantee more than 70 percent of new mortgages, according to Morgan Stanley. Ginnie guarantees securities composed of government- backed loans, which are responsible for most of the rest of homeowner funding following the collapse of the ``non-agency'' market."
To contact the reporter on this story: Jody Shenn in New York at firstname.lastname@example.org
"Last Updated: August 29, 2008 09:43 EDT"
"Corporate Bond Risk Falls in Europe, Credit-Default Swaps Show "
By Abigail Moses
"Aug. 29 (Bloomberg) -- The cost of protecting European corporate bonds from default fell, according to traders of credit-default swaps."
"Contracts on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings decreased 6 basis points to 544, the lowest in three weeks, according to JPMorgan Chase & Co. prices at 11:20 a.m. in London. The index is a benchmark for the cost of protecting bonds against default and a rise indicates a deterioration in the perception of credit quality; a decline signals the opposite."
"The Markit iTraxx Europe index of 125 companies with investment-grade ratings fell 1.25 basis points to 98.75, JPMorgan prices show."
"A basis point on a credit-default swap contract protecting 10 million euros ($14.7 million) of debt from default for five years is equivalent to 1,000 euros a year."
"Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a company fail to adhere to its debt agreements."
"Credit-default swaps on the Markit CDX North America Investment Grade index, a benchmark gauge of credit risk linked to the bonds of 125 companies in the U.S. and Canada, dropped 2.75 basis points to 142, according to CMA Datavision."
To contact the reporter on this story: Abigail Moses in London Amoses5@bloomberg.net
"Last Updated: August 29, 2008 06:25 EDT"
Yuan Completes First Monthly Loss Against Dollar Since May 2006
By Judy Chen and Jiang Jianguo
Aug. 29 (Bloomberg) -- China's yuan had its first monthly loss against the dollar since May 2006 on speculation weaker global demand will prompt the government to limit currency gains to protect exporters. Government bonds rose.
"Slower growth worldwide will weigh on China's exports in the second half of 2008, Vice Commerce Minister Gao Hucheng said yesterday. The yuan's 6.6 percent gain in the first half, which almost matched the advance for the whole of 2007, crimped profits at exporters and cooled sales abroad."
"``It's obvious that the government is adjusting the pace of yuan appreciation against the dollar to make sure it won't do more harm to exports,'' said Liu Dongliang, a foreign-exchange analyst in Shenzhen at China Merchants Bank Co., the country's sixth largest lender. ``Most foreign trade transactions are settled in dollars.''"
"The yuan fell 0.05 percent this month to 6.8350 a dollar as of 5:30 p.m. in Shanghai, according to the China Foreign Exchange Trade System. It weakened 0.11 percent today, halting three days of gains."
"China's exports may increase in the second half at the same pace as in the first six months of the year, Gao said at a press conference in Beijing yesterday. Overseas shipments rose 21.8 percent in the first half of 2008, slower than the 27.6 percent growth a year earlier."
"The yuan is allowed to trade by up to 0.5 percent against the dollar either side of a daily reference rate, which was set at 6.8345 per dollar today."
"China will start annual checks on how well domestic and foreign banks implement rules on foreign-currency controls, the State Administration of Foreign Exchange, the country's top currency regulator, said in a statement on its Web site today."
The government approved new foreign-currency controls on Aug. 6 to tighten monitoring of cross-border capital payments and deter ``illegal'' inflows that seek to profit from the yuan's one-way appreciation.
"The yuan will have a ``minor'' depreciation against the dollar for the rest of this year, and about 4 percent appreciation in 2009, Tao Dong, chief Asia economist at Credit Suisse Group AG in Hong Kong, wrote in an Aug. 26 report."
"Government bonds rose, pushing 10-year yields to a two- month low, on concern slowing exports will stall economic growth."
"The yield on the 4.41 percent note due June 2018 fell 7 basis points to 4.18 percent, the lowest since July 1, according to the China Interbank Bond Market. The yield dropped 42 basis points this month. The price rose 0.56 per 100 yuan face amount to 101.83. A basis point is 0.01 percentage point."
"``Growth will probably decline, easing pressure for the central bank to raise interest rates,'' said Jiang Chao, a fixed-income analyst at Guotai Junan Securities Co. in Shanghai. ``Yields may keep going down.''"
"China's economy grew 10.1 percent in the second quarter, the fourth successive slowdown. Electricity output rose 12 percent in the first seven months, compared with a 17 percent a year earlier, according to China Electricity Council."
To contact the reporters on this story: Judy Chen in Shanghai at email@example.com; Jiang Jianguo in Shanghai at firstname.lastname@example.org.
"Last Updated: August 29, 2008 06:48 EDT"
Canada Economy Grew at 0.3% Pace in Second Quarter (Update1)
By Greg Quinn
"Aug. 29 (Bloomberg) -- Canada's economy grew less than economists predicted in the second quarter and shrank more in the first three months of the year than initially estimated, possibly giving the Bank of Canada more reason to cut interest rates this year."
"Gross domestic product expanded at a 0.3 percent annualized rate to C$1.33 trillion ($1.26 trillion) after a revised 0.8 percent drop in the first quarter, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg said growth would be 0.6 percent, after an initially reported 0.3 percent contraction in the January-through-March period."
"The report may lead Bank of Canada Governor Mark Carney to alter his position that economic risks are ``balanced'' between slow growth and high energy costs ahead of next week's rate decision. Before today, most economists surveyed by Bloomberg forecast the bank would leave borrowing costs unchanged on Sept. 3 and lower them in the first three months of next year."
"``You still have on average an economy in the first half of the year that went nowhere,'' Derek Holt, an economist at Scotia Capital Inc. in Toronto, said before the report. As a result, he said, central bankers will probably signal next week that they're prepared to consider a rate reduction."
"The currency weakened 0.3 percent to C$1.0544 per U.S. dollar at 8:59 a.m. in Toronto, from yesterday's C$1.0510."
"Deputy Governor David Longworth said Aug. 26 that economic growth and inflation would be slower than policy makers predicted in July, without saying that the balance of inflation risks had changed or that a rate cut may be needed."
The rebound in growth may help Prime Minister Stephen Harper decide whether to call an election this year and argue that tax cuts last year helped the economy avoid a recession. Harper has also said the opposition Liberal Party's plan to tax pollution would worsen consumer confidence already shaken by record energy costs.
Harper may call an election in the next few weeks because he says Parliament's ability to function is being obstructed by opposition parties. Liberal Party leader Stephane Dion says Harper wants to avoid waiting until a mandated October 2009 election on concern that the economy will worsen by then.
"The economy was split in the second quarter between gains in domestic spending and profits for energy producers, and losses for manufacturing production and exports."
"Government spending increased 1.3 percent in the second quarter from 0.6 percent in the previous three months. Household expenditures growth slowed for a third straight quarter to 0.6 percent, on reduced automobile purchases, Statistics Canada said."
"Exports fell 1.5 percent in the second quarter, the fourth straight decline, as weak U.S. demand pared shipments of lumber, automobiles and factory goods. Imports advanced 0.6 percent. Company profits surged 8.3 percent, the fastest since the first quarter of 2004, on high prices for crude oil, natural gas and coal."
"On a monthly basis, the economy grew 0.1 percent in June, matching economist predictions, after shrinking 0.1 percent in May. The economy rebounded in June as construction advanced 0.4 percent and wholesaling gained 0.5 percent."
"Separately, Statistics Canada today said manufacturing product prices raw-material costs rose in more slowly in July than in June, as energy price gains ebbed."
"The industrial product price index rose 0.4 percent in June, while raw-material costs for factories 1.4 percent. Economists expected product prices to gain 0.7 percent, and input costs to increase by 0.2 percent, according to the median estimates in Bloomberg surveys."
To contact the reporter on this story: Greg Quinn in Ottawa at email@example.com.
"Last Updated: August 29, 2008 09:03 EDT"
"German Stocks Are Little Changed; Adidas Gains, Infineon Falls "
By Stefanie Haxel
Aug. 29 (Bloomberg) -- German stocks were little changed as better-than-estimated earnings from European consumer companies offset Dell Inc.'s negative earnings outlook for the region. [bn:WBTKR=ADS:GY]
"Adidas AG , the second-largest sporting goods maker, and Hugo Boss AG rose to the highest in more than a week after Carrefour SA and Gucci-owner PPR SA reported profit that beat analysts' projections. Infineon Technologies AG, Europe's second-largest maker of semiconductors, fell after Dell Inc. said the U.S. slump in technology spending has spread abroad."
"The DAX Index gained 1.92, or less than 0.1 percent, to 6,422.46 as of 12:51 p.m. in Frankfurt. DAX futures expiring in September were little changed. The HDAX Index of the country's 110 biggest companies increased 0.1 percent."
"The benchmark index for German equities is on course for a 0.8 percent decline in August, bringing this year's loss to 20 percent, on concern higher oil prices, accelerating inflation and more than $500 billion in credit-related losses will curb consumer spending and slow global economic growth."
"``We basically moved sideways for quite a while,'' said Matthias Joerss, an analyst at Sal. Oppenheim Jr. & Cie. in Frankfurt. ``We expect the sideways movement will continue. However, risks outweigh opportunities. We may see some bad labor market numbers from the U.S. in one of the next reports which should lead then to losses in equity markets.''"
"Adidas climbed 73 cents, or 1.9 percent, to 40.12 euros. Puma AG, Europe's second-biggest sporting-goods maker, advanced for a second day, gaining 3.70 euros, or 1.8 percent, to 215.14."
"Carrefour SA, the world's second-largest retailer, said first-half net income climbed to 750 million euros ($1.1 billion) on stronger grocery demand in emerging markets. Analysts estimated profit of 743 million euros in a Bloomberg survey. PPR SA said income from continuing operations in the period gained 17 percent to 344 million euros, exceeding the 327 million-euro median estimate."
"Hugo Boss, Germany's largest clothing maker, climbed for a fourth day, adding 57 cents, or 2.5 percent, to 24.4 euros."
"Infineon dropped for a second time this week, falling 11.5 cents, or 1.9 percent, to 5.835 euros. Dell, the world's second- biggest personal-computer maker, said growth in western Europe slowed last quarter and profit missed analysts' estimates after the company reduced prices, particularly in Europe, cutting into profit margins."
The following stocks also rose or fell in German markets. Symbols are in parentheses.
"Indus Holding AG (INH GY) advanced 71 cents, or 4 percent, to 18.64 euros, the steepest gain in almost four months. The company that owns businesses including steel and information technology said second-quarter profit rose 44 percent to 18.8 million euros as cost cuts offset higher charges for raw-material and energy."
"Krones AG (KRN GY) rose for a second day, adding 81 cents, or 1.6 percent, to 50.38 euros. Goldman Sachs Group Inc. raised its share-price estimate for the maker of bottling and packaging equipment 6.4 percent to 58.50 euros."
"Norddeutsche Affinerie AG (NDA GY) dropped for a third time this week, falling 38 cents, or 1.1 percent, to 31.57 euros. Europe's largest copper refiner reported fiscal third-quarter net income of 48 million euros, missing the 54.6 million-euro median estimate of six analysts in a Bloomberg News survey."
"Stada Arzneimittel AG (SAZ GY) increased 66 cents, or 1.8 percent, to 37.06 euros, the highest in a month. Equinet AG raised its recommendation for Germany's third-largest generic- drug maker to ``accumulate'' from ``hold.''"
"Stratec Biomedical Systems AG (SBS GY) rallied 83 cents, or 4.6 percent, to 19.08 euros, the highest since Jan. 10. Goldman Sachs lifted its price projection for the maker of laboratory equipment for diagnostics companies 2.1 percent to 19.7 euros."
To contact the reporters on this story: Stefanie Haxel in Frankfurt at firstname.lastname@example.org
"Last Updated: August 29, 2008 07:13 EDT"
Hungarian Domestic Producer Prices Rise the Most Since 2008
By Zoltan Simon
"Aug. 29 (Bloomberg) -- Hungarian prices of goods leaving factories and mines and sold within the country rose the most in 7 1/2 years, a sign of prevailing inflation pressure."
"Domestic producer prices, a key indicator of inflation, rose 13.3 percent in July, the highest rate since December 2000, the Budapest-based statistics office said in an e-mail today. The indicator rose from 12.1 percent in June and more than doubled from 6.2 percent a year earlier."
"Inflation, driven by food and oil price increases, has been above the central bank's 3 percent target for two years, leading the benchmark interest rate rising 1 percentage point to 8.5 percent, the highest in three years. Borrowing costs are unlikely to fall this year, economists said."
"``The acceleration in domestic sales prices came as a negative surprise,'' Eszter Gargyan, a Budapest-based economist at Citigroup Inc., said in a note to clients. ``This reinforces our view that the central bank will keep rates unchanged this year.''"
"The forint traded at 238 per euro at 1:09 p.m. in Budapest, from 238.74 yesterday. The yield on the benchmark three-year bond fell to 8.69 percent from 8.72 percent."
"The inflation rate in July was 6.7 percent, unchanged from the previous month. The central bank estimates that this year's rate will be 6.3 percent and its 2009 forecast is 4.1 percent."
"Overall producer prices, which include domestic and export costs, rose at the slowest pace in seven months as a strengthening forint and weaker demand in the European Union cut export costs. The annual rate was 3.7 percent, after a 4.6 percent increase in the previous month. Export costs fell 3.4 percent, the biggest annual decline since November."
"Domestic producer prices probably slowed this month because of falling oil prices, analysts including Orsolya Nyeste of Erste Bank AG in Budapest, said. The price of crude for October delivery has fallen 21 percent since reaching a record of $147.27 on July 11."
To contact the reporter on this story: Zoltan Simon in Budapest at email@example.com
"Last Updated: August 29, 2008 07:11 EDT"
"Vietnam's Stocks Round Out Monthly Gain, World's Best Performer "
By Nguyen Kieu Giang and Van Nguyen
Aug. 29 (Bloomberg) -- Vietnam's benchmark stock index rounded out the largest monthly gain of global markets on speculation the fastest inflation in Asia may be under control.
"The VN Index gained 19.4 percent this month, the biggest monthly gain since January 2007, according to Bloomberg data. Improved liquidity following a range of government market- boosting measures and signs inflation may peak in September has helped the index this month."
"``Three key areas of inflation, the trade deficit, and foreign currency that have all been stabilized and improved have added a lot to positive sentiment,'' said Don Lam, chief executive officer of Vinacapital Investment Management Ltd. in Ho Chi Minh City."
"The measure today fell 8.59, or 1.6 percent, to close at 539.10, after the central bank kept interest rates unchanged. Some investors had speculated the bank would cut rates. Among the 156 index members, 60 rose, while 83 declined."
"The central bank today said it would maintain the key rate at 14 percent, the highest in Asia. The bank was under pressure from companies to lower rates, making it cheaper to borrow money."
"Consumer prices this month rose 1.6 percent, slower than the 2 percent to 3 percent expected by analysts, according to Bui Duc Thinh, Hanoi-based head of the research department at Royal International Securities."
"The trade deficit also widened at a slower pace through August, allaying fears Vietnam may be facing a currency crisis, Standard Chartered Plc said earlier this month."
"Gasoline, Trading Limits"
"Saigon Thuong Tin Commercial Joint-Stock Bank, known as Sacombank and the only lender on the Ho Chi Minh City Stock Exchange, dropped 1,600 dong, or almost 5 percent, to 30,900, the lowest since Aug. 22."
"Vietnam Dairy Products Joint-Stock Co., known as Vinamilk and the second-biggest company on the bourse, lost 5,000 dong, or 4.5 percent, to 106,000. Sacombank and Vinamilk posted the biggest declines today."
"Refrigeration Electrical Engineering Joint-Stock Co., a maker of air conditioners and electrical appliances, advanced 2,200 dong, or 5 percent, to close at 46,500, extending a winning streak of 16 days after reporting pretax profit of 28 billion dong ($1.7 million) in July."
"Vietnam lowered gasoline prices on Aug. 27 for a second time this month after crude oil declined. The benchmark index has gained 13 percent since the first reduction in fuel prices on Aug. 14, Bloomberg data shows."
"The government also allowed Vietnam's two exchanges to widen their daily trading limits from Aug. 18. Gains or losses on the main Ho Chi Minh City Stock Exchange were raised to 5 percent from 3 percent, while the cap on the smaller Hanoi Securities Trading Center was lifted to 7 percent from 4 percent."
"This increase helped ``push up liquidity,'' contributing to ``boosting trading volume'' in the market, said Thinh at RIS."
"Increased liquidity helped the stock market rally this month after retail investors, the main drivers of Vietnam's stock market, pulled money from their investments in gold and U.S. dollars, according to Vinacapital's Lam."
To contact the reporter on this story: Nguyen Kieu Giang in Hanoi at firstname.lastname@example.orgVan Nguyen in Ho Chi Minh City at email@example.com
"Last Updated: August 29, 2008 06:42 EDT"
"Canadian Natural, Potash May Rise; Research In Motion May Drop "
By John Kipphoff
"Aug. 29 (Bloomberg) -- Canadian Natural Resources Ltd. may rise, based on bids on the Toronto Stock Exchange, as crude-oil and natural-gas prices advance."
"Potash Corp. of Saskatchewan Inc. may climb, on speculation potash prices will gain because of a supply shortage, as a strike at three of its mines may leave it unable to fulfill contracts. Research In Motion Ltd. may drop after one of its phone-chip suppliers, Marvell Technology Group Ltd., reported lower-than-estimated profit and forecast slowing sales growth."
"The Standard & Poor's/TSX Composite Index added 1.6 percent to 13,750.48 yesterday in Toronto and is poised for a monthly gain, the first since May."
"Crude oil rose more than $2.80 a barrel in electronic trading in New York, heading for its biggest weekly gain in almost two months, and natural gas rose, as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina in 2005."
"Canadian Natural, the nation's fourth-largest energy company by market value, may gain 88 cents to C$90.88, bids already submitted in Toronto showed. Suncor Energy Inc., the world's second-biggest producer of crude from oil sands, may climb 54 cents to C$60.40, bids indicated."
"Potash Corp. may rise C42.18 to C$199.59. The world's largest producer of the crop nutrient may have to declare force majeure if a strike at three Canadian mines continues, David Silver, an analyst at JPMorgan Chase & Co. said in a note to clients today"
"Research In Motion may fall C$1.96 to C$131.50, based on bids. Marvell Technology, a maker of chips for the BlackBerry e- mail phone, reported second-quarter profit that trailed the average of analysts' estimates in a Bloomberg survey by 30 percent. The company predicted sales in the current quarter of $860 million to $880 million, missing the $889.2 million predicted by analysts in a Bloomberg survey."
U.S. stock futures fell as personal incomes decreased three times faster than economists forecast and Dell Inc.'s lower-than-estimated earnings spurred concern that a slump in technology spending is spreading overseas.
To contact the reporter on this story: John Kipphoff in Montreal at firstname.lastname@example.org.
"Last Updated: August 29, 2008 09:30 EDT"
"Gold Falls, Erasing Earlier Gain; Platinum Extends Monthly Drop "
By Claudia Carpenter
Aug. 29 (Bloomberg) -- Gold erased gains in London as platinum headed for its biggest monthly drop since at least 1987.
"Gold for immediate delivery fell 92 cents to $833.13 an ounce as of 1:51 p.m. in London, after earlier rising $4.73."
"Platinum dropped $7.95 to $1,469.55 an ounce, extending the drop in August to 17 percent. Use of the metal in jewelry, auto catalysts and other industrial applications will decline this year, shrinking the global supply deficit, Johannesburg-based Impala Platinum Holdings Ltd., the world's second-biggest producer of the metal, forecast yesterday."
"Supplies will fall short of demand by 90,000 ounces, down from a deficit of 405,000 ounces last year, the company said."
"General Motors Corp., Ford Motor Co. and Toyota Motor Corp.'s U.S. sales declined last month, crimping demand for the metal used in auto catalysts to reduce vehicle emissions. The metal soared to a record $2,301.50 in March after mining disruptions in South Africa, the world's largest producer, crimped supplies."
"Silver for immediate delivery rose 3.12 cents to $13.7199 an ounce, and palladium increased $5 to $298.75."
"Demand for gold as a hedge against inflation may accelerate as Gustav, forecast to become the worst Gulf of Mexico hurricane since Katrina, heads for Louisiana next week, threatening to disrupt a quarter of U.S. petroleum production. Gold has climbed for seven years as the dollar dropped 39 percent against the euro and oil jumped to records."
"``Given the storm situation and fears of a spike in oil, people may be taking positions in gold,'' said James Moore, an analyst at TheBullionDesk.com in London."
To contact the reporter on this story: Claudia Carpenter in London at email@example.com
"Last Updated: August 29, 2008 09:00 EDT"
"Italian Stocks Update: ERG Renew, Immsi, Intesa, Isagro Shares "
By Francesca Cinelli
"Aug. 29 (Bloomberg) -- Italy's S&P/MIB Index rose 119, or 0.4 percent, to 28,744. Futures expiring in September increased 66, or 0.2 percent, to 28,810."
The following were among the most active stocks on the Italian market today. Share symbols are in parentheses.
"Azimut Holding SpA (AZM IM) advanced 0.4 percent to 5.99 euros, extending gains of 6.4 percent yesterday. ``We remain positive on the core fundamentals of the business and the group's ability to continue to attract incremental assets,'' Luca Della Santa and Kemide Sanbanjo, analysts at Goldman Sachs, wrote in a report. Euromobiliare Sim increased its price estimate to 8.5 euros from 8 euros."
"Banca Monte dei Paschi di Siena SpA (BMPS IM), Italy's third-biggest bank, increased 2 cents, or 1.1 percent, to 1.81 euros. Second-quarter profit increased 28 percent on higher income from lending and a gain from an asset sale."
"``Standalone results are well ahead of consensus,'' Citigroup analysts Jeremy Sigee and Azzurra Guelfi, who have a ``hold'' on the stock, wrote in a research report."
"Banca Popolare di Milano Scrl (BPM IM), an Italian regional bank that's been looking for a partner for more than a year, gained 1.9 percent to 6.77 euros. ``Balance sheet structures will remain in the spotlight and we therefore expect share price dispersion to increase,'' Merrill Lynch analyst Stuart Graham wrote in a report on the European banking industry. Pop. Milano and Intesa Sanpaolo SpA (ISP IM), Italy's second-biggest bank are listed as ``key buys'' at Merrill."
"Intesa Sanpaolo shares added 8.5 cents, or 2.3 percent, to 3.73 euros. Credit Suisse upgraded the stock to ``outperform'' from ``neutral,'' while lowering its price estimate to 4.8 euros from 5 euros. Lehman Brothers, Merrill Lynch, Natixis Securities, and Keefe, Bruyette & Woods Ltd. cut price estimates on the stock."
"Bulgari SpA (BUL IM), the world's third-largest jeweler, surged 9.2 cents, or 1.3 percent, to 7.01 euros. PPR SA, the French retailer that owns Gucci, said first-half profit more than doubled on higher luxury goods sales and a gain from selling YSL Beaute."
"ERG Renew SpA (EGR IM), an Italian holding controlling companies operating in production of electricity from renewable sources and water service, climbed 19.8 euros, or 10 percent, to 2.18 euros. Goldman Sachs initiated coverage with a ``buy'' and a price estimate of 3 euros, citing ``an enviable portfolio of operating/pipeline assets in the Italian wind market, currently the most valuable market in the world.''"
"Immsi SpA (IMS IM), the Italian holding that controls scooter-maker Piaggio SpA (PIA IM), rose to the highest in more than three months, adding 6.61 cents, or 7.8 percent, to 91.45 cents. Euromobiliare Sim reiterated its ``buy.'' The company yesterday confirmed that it will participate in the bailout of state-controlled airline Alitalia SpA (AZA IM), with an investment of ``not more than 150 million euros.''"
"Isagro SpA (ISG IM), Italy's biggest maker of agricultural chemicals, climbed 30.5 cents, or 6.6 percent, to 4.96 euros. The company said profit rose to 1.1 million euros in the first half compared with 0.2 million euros a year earlier."
"Landi Renzo SpA (LR IM), the Italian maker of injection systems for alternative fuels, fell for the first time in three days, losing 10.7 cents, or 2.2 percent, to 4.78 euros. Mediobanca Securities downgraded the stock to ``neutral'' from ``outperform'' while increasing its price estimate to 5.3 euros from 4.9 euros. Citigroup increased its price estimate to 5.2 euros from 4.2 euros."
"Parmalat SpA (PLT IM), Italy's largest dairy company, dropped 0.6 percent to 1.86 euros. The company said first-half profit rose 83 percent after legal settlements won from banks offset surging costs and said slowing global economic growth was weighing on earnings. ``We expect that management will be quizzed on their intentions in Australia now that Dairy Farmers is to be acquired by the market leader, National Foods,'' Rob Mann, an analyst at Collins Stewart, wrote in a report."
"Poltrona Frau SpA (PFG IM), the maker of Cappellini and Cassina furniture, gained 2.47 percent to 1.16 euros. Revenue was encouraging and margin was weak as expected, Euromobiliare analysts wrote in a report. They maintained their ``buy''. Cheuvreux cut its price estimate to 1.15 euros from 1.3 euros."
"``Low visibility on 2008 results might cap near-term share price performance, while upside on a medium-term horizon remains considerable,'' Davide Vimercati, an analyst at UniCredit Markets & Investment Banking, wrote in a research report."
"Telecom Italia Media SpA (TME IM), the television unit of Italy's biggest phone company, added 1.1 percent to 12.8 cents. The company signed a deal with the Italian soccer association for exclusive rights to broadcast the Serie B championship."
"Tecnologia Avanzata dei Sistemi SpA (TAS IM), an Italian software company, jumped 4.3 euros, or 22 percent, to 23.9 euros. The company said in a monthly update to market regulator Consob it's implementing its business plan in line with expectations."
"Tod's SpA (TOD IM), the Italian luxury-goods maker known for its rubber-studded Driving Shoe, gained 1.15 euros, or 2.9 percent, to 41.49 euros. Citigroup increased its price estimate on the stock to 42.5 euros from 38 euros. Deutsche Bank AG and Merrill Lynch increased their price projections to 45 euros from 42 euros and to 34 euros from 31.5 euros respectively."
"Unione di Banche Italiane SCPA (UBI IM) Italy's fourth- biggest bank by branches, fell 17.2 cents, or 1.1 percent, to 15.33 euros. ING Wholesale Banking downgraded the stock to ``hold'' from ``buy'' after second-quarter results disappointed ``due to growth in fixed costs, an early rebound of loan provisions and unexciting revenue mix,'' analyst Roberto Marchesi wrote."
To contact the reporter on this story: Francesca Cinelli in Milan at firstname.lastname@example.org
"Last Updated: August 29, 2008 06:38 EDT"
"U.S. Consumer Spending Slows, Inflation Accelerates (Update3) "
By Shobhana Chandra
Aug. 29 (Bloomberg) -- Spending by U.S. consumers slowed in July as the impact of the tax rebates faded and a pickup in inflation eroded Americans' buying power.
"The 0.2 percent rise in purchases matched forecasts and followed a 0.6 percent increase in June, the Commerce Department said today in Washington. Prices rose by the most in 17 years."
"Today's figures underscore economists' projections for U.S. economic growth to slow from the 3.3 percent annual pace in the second quarter that the government reported yesterday. Americans, faced with rising unemployment, soaring food and fuel costs and falling home values, are cutting back on big-ticket items like automobiles and furniture."
"``We are looking for a clear slowdown in the economy,'' said Nigel Gault, chief U.S. economist at Global Insight Inc. in Lexington, Massachusetts, who accurately forecast the gain in spending. ``Inflation has been eating into spending power.''"
"Treasuries fell, with yields on benchmark 10-year notes at 3.82 percent at 9:48 a.m. in New York, compared with yesterday's close of 3.78 percent. The Standard & Poor's 500 Stock Index dropped 0.3 percent at 1,297.03."
"A measure of business activity unexpectedly rose in August, separate figures showed today. The National Association of Purchasing Management-Chicago said its business index increased to 57.9 from 50.8. Fifty is the dividing line between expansion and contraction."
"Economists had forecast spending would rise 0.2 percent, according to the median of 75 estimates in a Bloomberg News survey. Projections ranged from gains of 0.8 percent to a drop of 0.1 percent."
"Incomes dropped 0.7 percent, the first decrease since August 2005, reflecting the end of the rebates. That was after a 0.1 percent gain the prior month, today's report showed. The median forecast was a decline of 0.2 percent."
"The report's price gauge tied to spending patterns jumped 4.5 percent from July 2007, the biggest 12-month gain since 1991."
"The Federal Reserve's preferred gauge of prices, which excludes food and fuel, climbed 0.3 percent for a second month. The so-called core price measure was up 2.4 percent from a year before, the most since February 2007."
"Adjusted for inflation, spending plunged 0.4 percent, the biggest drop in four years. Price-adjusted purchases of durable goods, such as autos, furniture, and other long-lasting items, dropped 1.6 percent. Spending on non-durable goods decreased 0.9 percent, and services, which account for almost 60 percent of all outlays, were unchanged."
Concern over both slower growth and rising prices led Fed policy makers to hold the benchmark interest rate at 2 percent this month.
"Rising unemployment, falling stock and house prices and stricter lending rules ``were viewed as pointing towards weak growth in personal consumption expenditures during the second half of 2008,'' minutes of the Fed's Aug. 5 meeting released this week showed."
The drop in incomes pushed the savings rate down to 1.2 percent from 2.5 percent the prior month.
"Disposable income, or the money left over after taxes, decreased 1.1 percent. Adjusted for inflation, it fell 1.7 percent after declining 2.6 percent in June."
"Other reports indicate purchases of big-ticket items are weakening. Sales of autos and light trucks plunged in July to a 12.5 million annual pace, the lowest since 1993, according to Bloomberg calculations based on industry data."
"The real-estate slump in also hurting purchases of household goods. Williams-Sonoma Inc., the biggest U.S. gourmet- cookware chain, said yesterday that second-quarter earnings dropped 29 percent and reduced its annual sales forecast."
"Weakening trends continued through August and are worst in cities most affected by the housing slump, Chief Executive Officer Howard Lester said on a conference call. At Pottery Barn and West Elm, for example, purchases have suffered in Southern California, Nevada and south Florida, he said."
"``It is extremely difficult to know how the consumer will respond in the back half of the year,'' Lester said in a statement. ``We are also looking forward to 2009 with a very cautious outlook.''"
"The longest expansion in consumer spending on record will probably end this year, according to economists surveyed by Bloomberg earlier this month. Retail sales fell in July for the first time in five months, led by a slump in auto purchases, according to Commerce data."
To contact the reporter on this story: Shobhana Chandra in Washington at email@example.com
"Last Updated: August 29, 2008 09:54 EDT"
"Oil May Drop to $90 Before Rebounding Late in Year, Nordea Says "
By Jakob Lindstroem
"Aug. 29 (Bloomberg) -- Oil prices may fall to $90 a barrel in the fourth quarter before rallying to reach $105 next year, Nordea Bank AB executives said at a presentation in Stockholm."
"``Higher fuel prices and the weaker U.S. economy will hamper demand for oil and drive prices lower before remaining high in the coming two years,'' said Thina Margrethe Saltvedt, Oslo-based global head of commodities research at Nordea."
"``Long-term, oil is fundamentally determined by supply and demand, and prices will remain high as we expect Saudi Arabia will not be able to increase production as much as they have indicated,'' Saltvedt said today at the bank's headquarters."
"Crude headed for its biggest weekly gain in almost two months as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina. Oil traded at $117.22 a barrel at 8:29 a.m. in New York. Crude futures reached a record $147.27 in July."
To contact the reporter on this story: Jakob Lindstroem in Stockholm at firstname.lastname@example.org.
"Last Updated: August 29, 2008 08:37 EDT"
"U.S. Stocks Retreat on Income, Spending Data, Dell's Earnings "
By Lynn Thomasson
"Aug. 29 (Bloomberg) -- U.S. stocks fell, paring the best monthly gain since April, as personal incomes dropped three times faster than estimated and lower earnings at Dell Inc. spurred concern a slump in technology spending is spreading overseas."
"Bank of America Corp. and Intel Corp. lost more than 1 percent each and led the Dow Jones Industrial Average to its first drop in four days on a government report that growth in consumer spending slowed to 0.2 percent in July as incomes declined 0.7 percent. Dell, the second-biggest personal-computer maker, tumbled 12 percent on profit that missed analyst estimates. United Airlines' parent UAL Corp. slid more than 6 percent as energy prices rose on concern Tropical Storm Gustav will damage oil and gas rigs."
"``We still have a lot of rough water ahead of us,'' Andrew Seibert, a senior portfolio manager at Nextier Wealth Management in Pittsburgh, said in an interview on Bloomberg Radio. ``Consumers have somewhat tightened their belts. They've had to because of gasoline prices.''"
"The Standard & Poor's 500 Index slipped 7.6 points, or 0.6 percent, to 1,293.08 as of 9:37 a.m. in New York. The Dow lost 58.62, or 0.5 percent, to 11,656.56. The Nasdaq Composite Index retreated 25.82 to 2,385.82. Three stocks fell for each that rose on the New York Stock Exchange."
"The S&P 500 has gained 2.1 percent in August, snapping a two-month retreat that sent the measure to an almost three-year low on July 15. The rally was fueled by the 22 percent drop in oil from a record, a jump in the dollar and growing speculation that the worst of banks' mortgage losses are over."
Dell sank $2.93 to $22.28. The company said ``continued conservatism'' from some customers in the U.S. is spreading to western Europe and some Asian countries. Sales growth in those areas slowed last quarter and profit missed analysts' projections after Dell reduced prices.
"Hewlett-Packard Co., the biggest PC maker, lost 1.3 percent to $46.72. Microsoft retreated 21 cents $27.73, while Intel Corp., the largest chipmaker, slumped 31 cents to $23.28."
"UAL retreated 70 cents to $10.30, while Delta Air Lines Inc., JetBlue Airways Corp. and Northwest Airlines Corp. each lost more than 3 percent."
Crude oil for October delivery rose as much as 1.6 percent to $117.39 a barrel today and futures for gasoline and natural gas climbed as producers evacuated rigs on forecasts that Gustav will be the worst Gulf of Mexico hurricane since Katrina. Oil is headed for its biggest weekly gain in two months as the storm approaches.
"Marvell Technology Group fell 46 cents to $14.30 after the maker of chips for Apple Inc.'s iPhone predicted sales in the current quarter of $860 million to $880 million, missing the $889.2 million estimated by analysts in a Bloomberg survey."
"PetSmart Inc. increased 7.7 percent to $26.31. The largest U.S. pet-store chain said second-quarter profit fell less than analysts estimated, helped by increased boarding and grooming sales for dogs and cats."
The S&P 500 has gained 0.3 percent this week and the Dow average has increased 0.8 percent. The Nasdaq Composite Index has slipped 1 percent.
"At 10 a.m., a report from Reuters/University of Michigan may show the consumer sentiment index climbed to 62 in August, compared with 61.2 last month, according to the survey median."
The S&P 500 is poised to complete only its third monthly advance since reaching a record in October. It is still down 11 percent this year.
"The S&P 500's August gain has been led by so-called consumer discretionary companies, which include retailers and hotel and restaurant chains. The S&P 500 Consumer Discretionary Index rallied 8.1 percent this month for the best gain among 10 industries through yesterday"
"An index of technology shares in the S&P 500 has had the second-best return in August with a 4.6 percent rally, led by a 48 percent jump in Advanced Micro Devices Inc."
U.S. markets will be closed on Sept. 1 for the Labor Day holiday.
To contact the reporters on this story: Lynn Thomasson in New York at email@example.com.
"Last Updated: August 29, 2008 09:39 EDT"
"Rate Decisions, U.S. ISM Indexes, Vivendi: European Week Ahead "
By Daniela Silberstein
Aug. 29 (Bloomberg) -- Interest rate decisions from the European Central Bank and the Bank of England and reports on U.S. manufacturing and services may move stock markets next week.
"Earnings from Vivendi SA, France's largest entertainment company, will also be watched. Spanish builder Grupo Ferrovial SA is also scheduled to report results."
"The Dow Jones Stoxx 600 Index advanced 1.6 percent to 288.31 this week as of 1:28 p.m. in London. The Stoxx 50 increased 1.8 percent, while the Euro Stoxx 50, a benchmark for nations sharing the euro, added 1.5 percent."
"``Everything will revolve around the wording at the ECB's press conference,'' Michael Schubert, an economist at Commerzbank AG in Frankfurt, wrote in a report to investors today. ``The ECB should continue to keep all option open although it will reduce its growth projections significantly.''"
"The European Central Bank will hold its meeting Sep. 4 in Frankfurt. The governing council will probably keep its key rate at a seven-year high of 4.25 percent to fight inflation, according to the median estimate of 28 economists surveyed by Bloomberg."
"The Bank of England on the same day may leave its main rate at 5 percent for a fifth month, according to the median of 50 economists' estimates."
"European producer price inflation may have accelerated to 1.2 percent in July, according to Bloomberg estimates. The European Union statistics office in Luxembourg will publish the report Sep. 2."
The European Commission is due to report gross domestic product figures for the euro zone Sep. 3. Economic growth probably contracted in the second quarter as faltering sales undermined investment by companies and soaring costs hit consumer spending.
"The Institute of Supply Management's index of manufacturing, due Sep. 2, may show manufacturing in the U.S. shrank to 49.5 in August from 50 a month earlier, according to Bloomberg estimates. Fifty is the dividing line between contraction and expansion."
"The ISM's index of non-manufacturing businesses probably fell to 49.5 from 49.5 the prior month, Bloomberg data shows. Service industries make up almost 90 percent of the U.S. economy. The report is due Sep. 4."
"Vivendi reports results Sep. 1. The media company may say second-quarter profit dropped 3.6 percent to 728 million euros ($1.08 billion), according to the median estimate of seven analysts surveyed by Bloomberg, as expenses related to the acquisition of Neuf Cegetel SA more than wiped out higher earnings at pay-TV operator Canal Plus."
`Solid if Unspectacular'
"``We expect Vivendi's first-half 2008 results to be solid if unspectacular,'' Paul Reynolds, an analyst at Deutsche Bank AG in London, wrote in a preview released Aug. 21. ``We expect some guidance on Neuf Cegetel's contribution for full-year 2008 but more importantly, for full-year 2009.''"
"Grupo Ferrovial, the Spanish builder that spent $20 billion buying BAA Plc, may say on the same day first-half profit slumped after a disposal boosted earnings a year earlier, a survey of analysts by Bloomberg showed."
"Net income probably dropped to 12.7 million euros from 756 million euros a year earlier, according to the median of five estimates."
To contact the reporter on this story: Daniela Silberstein in Zurich at firstname.lastname@example.org.
"Last Updated: August 29, 2008 09:32 EDT"
"Indian Rupee Has Monthly Loss as Importers, Global Funds Sell "
By Anoop Agrawal
Aug. 29 (Bloomberg) -- India's rupee declined this month on speculation importers exchanged the currency for dollars to pay month-end bills.
The currency closed at the lowest level in more than 17 months on concern slowing growth and inflation near a 16-year high will prompt overseas investors to dump more local shares. The government today said Asia's third-biggest economy expanded in the second quarter at the slowest pace since December 2004.
"``Sentiment is not supportive of buying the local currency because of widespread dollar demand,'' said Shashi Ranjan Giri, a trader with state-owned Allahabad Bank in Mumbai. ``The equity market trend is suggesting we may see some more stock sales by overseas investors.''"
"The rupee weakened 3.1 percent this month to 43.935 against the dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. It fell 0.4 percent today."
"The economy expanded 7.9 percent in the quarter ended June 30, slower than the 8 percent median forecast of economists in a Bloomberg survey."
Finance Minister Palaniappan Chidambaram said the economy will meet the target of 8 percent growth this year.
"``Eight percent growth is not to be scoffed at, it is something you ought to be proud of,'' Chidambaram told reporters in Mumbai. ``There's a high degree of savings, a high degree of investment.''"
"The government yesterday said wholesale prices jumped 12.4 percent in the week ended Aug. 16 from a year earlier, after increasing 12.63 percent in the previous week, which was the biggest gain since June 1992."
"India's average oil import costs rose to $8 billion a month this year, from $5.5 billion in 2007, trade ministry data show."
Volatile Capital Flows
Overseas investors sold $7.2 billion more local shares than they bought this year as the benchmark stock index slumped 28 percent. They were net sellers of local stocks on all but six of the 17 trading days this month through Aug. 27. Net equity purchases reached a record $17.2 billion in 2007.
"``Capital flows have been volatile in this fiscal year up to August,'' the central bank said in a report today."
"The National Stock Exchange of India Ltd. today started trading in currency futures, the country's first, to help investors hedge their foreign-exchange risk. The total traded volume on the first day was $65.8 million, the bourse said."
"Futures contracts are agreements to buy or sell a currency, commodity or other financial product at a later specific price and date. Futures differ from forwards, assets bought and sold at current prices for later delivery, in that they are usually traded on an exchange. Options give the bearer the right to buy or sell a security at a specified date and price."
"Daily turnover in the local foreign-exchange market rose 87 percent to $48.1 billion in the fiscal year ended March 31, the central bank report said."
To contact the reporter on this story: Anoop Agrawal in Mumbai at email@example.com.
"Last Updated: August 29, 2008 08:35 EDT"
East European Currencies: Zloty Rises as Growth Beats Forecasts
By Ewa Krukowska
Aug. 29 (Bloomberg) -- Poland's zloty rose against the euro after a government report showed economic expansion in the second quarter exceeded forecasts. The Hungarian forint gained.
"The zloty snapped a five-day loss after Poland's statistical office said the economy grew 5.8 percent, compared with 6.1 percent in the first quarter. That was above the 5.6 percent median forecast in a Bloomberg News survey. The zloty is set for its first monthly drop since January on concern a global economic slowdown will spread to eastern European economies this year."
"``Leading indicators suggest the second half of 2009 will be more challenging, but the Polish economy proved it remains resilient to the global slowdown,'' said Bartosz Pawlowski, a strategist at TD Securities in London. ``The zloty should find support on the better-than-expected net exports performance, and the bond market is likely to reconsider its quite aggressive rate-cut expectations.''"
"The zloty climbed to 3.3500 per euro by 12:38 p.m. in Warsaw, from 3.3542 yesterday, paring its decline this past month to 4.5 percent. It is the worst emerging-markets currency in August as traders scaled back bets for an increase in interest rates from 6 percent."
Central banker Halina Wasilewska-Trenkner said the second- quarter growth figures were better than expected and provide ``ammunition'' for raising interest rates. Policy maker Dariusz Filar reiterated one or two increases in borrowing costs were needed to curb inflation.
The yield on the zero-coupon two-year government note due July 2010 fell 2 basis points to 6.36 percent. Bond yields move inversely to prices.
"In other trading, the Hungarian forint rose 0.2 percent to 238.26 against the euro, paring its weekly loss to 1.9 percent."
The forint is set to slip in August after Prime Minister Ferenc Gyurcsany told state radio on Aug. 27 he would resign if lawmakers don't approve his budget proposals for next year.
The government wants to cut taxes by as much as 1.2 trillion forint ($100 million) in the next four years to spur the weakest economic growth since 1993 last year.
"The Romanian leu was at 3.5382 per euro, from 3.5284 a week ago, while the Turkish lira was poised for a weekly advance, trading at 1.1820 against the dollar."
"The Czech koruna advanced 0.2 percent to 24.677 against the euro today, paring its weekly decline to 1.2 percent. It has lost 3 percent this month, leaving it 7 percent higher this year."
"Czech central bank Governor Zdenek Tuma said the koruna's strength will ``take its toll'' in the next six to 12 months in the shape of a deteriorating trade balance and slackening economic growth, Hospodarske Noviny reported today."
"The Slovak koruna was little changed in the week, trading at 30.324 against the euro. Slovakia will join the euro area at the start of next year."
To contact the reporter on this story: Ewa Krukowska at firstname.lastname@example.org
"Last Updated: August 29, 2008 07:30 EDT"
Japan Mitigates Wheat Price Gain to Curb Inflation (Update2)
By Aya Takada
"Aug. 29 (Bloomberg) -- Japan, Asia's biggest wheat importer, will increase prices of the grain sold to domestic flour millers by 10 percent in October, lagging behind gains in import costs as the government attempts to curb inflation."
"The increase, following a 30 percent gain in April, is below the 23 percent rise in purchase costs in the eight months ended July 31, the Ministry of Agriculture, Forestry and Fisheries said in a statement today."
"Ruling party politicians pressed to minimize the gain as growth slows in the world's second-largest economy and inflation gains before a general election expected next year. The increase will add to costs for companies such as Nisshin Seifun Group Inc., Japan's biggest flour miller, and Yamazaki Baking Co. and may spur them to raise product prices."
"``We took an exceptional step to alleviate the pain of consumers,'' Tatsuya Kajishima, director at the grain trade division of the ministry, told reporters in Tokyo."
Wheat in Chicago climbed to a record at $13.495 a bushel on Feb. 27 after adverse weather curbed global production. December- delivery wheat traded at $8.085 a bushel at 5:05 p.m. in Tokyo.
"Japan imports almost 90 percent of its wheat. Overseas purchases and domestic sales are controlled by the Ministry of Agriculture, Forestry and Fisheries, which reviews the selling price to millers every six months."
"The wheat selling prices will rise to an average 76,030 yen ($700) a metric ton in October from 69,120 yen currently. The 30 percent gain in April was the biggest increase since December 1973, when the ministry boosted selling prices by 35 percent."
"The ministry increased prices by 10 percent last October, after raising them in April for the first time since 1983."
Japan may cut domestic wheat prices next April as Chicago futures have lost 40 percent from the peak on forecasts for global production to rise to a record this year.
"The ministry has bought a total of 2.04 million metric tons of milling wheat through regular tenders for the fiscal year to March 31, 2009. It bought 5.13 million tons of milling wheat through the tenders in the previous fiscal year."
"Japan's inflation rate exceeded 2 percent in July for the first time in a decade as companies passed higher costs onto households, deterring spending. The economy contracted at an annual 2.4 percent pace in the second quarter."
"Rising prices of foreign wheat had spurred consumers to eat more rice as prices of the Japanese staple were stable, Kajishima of the agriculture ministry said. Japanese demand for domestic rice rose by 160,000 tons to 8.53 million tons in the year ended June 30 from a year earlier, he added."
To contact the reporter on this story: Aya Takada in Tokyo email@example.com
"Last Updated: August 29, 2008 05:31 EDT"
"Asian Stocks Rise on U.S. Growth Outlook; Toyota, Nintendo Gain "
By Chen Shiyin and Shani Raja
"Aug. 29 (Bloomberg) -- Asian stocks gained the most in four months, led by automakers and technology companies, after the U.S. economy grew faster than estimated, bolstering optimism that exporters' earnings will improve."
"Toyota Motor Corp., which gets more than a third of its sales from North America, added 3.4 percent. Nintendo Co. soared 8.4 percent after the maker of the Wii video-game console raised its profit forecast. Baoshan Iron & Steel Co. and Bank of China Ltd. both advanced more than 2 percent after the companies posted net income that topped analyst estimates."
"``The U.S. economy just refuses to roll over, despite the most dire predictions,'' said Prasad Patkar, who helps manage the equivalent of about $1.8 billion at Platypus Asset Management in Sydney. ``Such a strong performance from the world's largest economy is a big positive. It helps repair the fragile sentiment and, more fundamentally, supports the global economy.''"
"The MSCI Asia Pacific Index climbed 2.2 percent to 125.22 as of 7:31 p.m. in Tokyo, paring its August decline to 5.4 percent and completing for its biggest one-day rally since April 21. The benchmark index gained 3 percent for the week."
"The regional measure has dropped 21 percent this year as the world's largest financial companies posted writedowns and credit losses of more than $500 billion, and inflation soared."
"Japan's Nikkei 225 Stock Average added 2.4 percent to 13,072.87. JFE Holdings Inc., Japan's No. 2 steelmaker, jumped after the nation's trade ministry said industrial production unexpectedly rebounded. India's Sensitive Index rallied 3.7 percent, paced by ICICI Bank Ltd., after inflation eased. Stock indexes advanced in most regional markets open for trading."
"Advances were capped after Fujifilm Holdings Corp. cut its full-year forecast, sending the shares to their largest drop in 27 years."
U.S. stocks climbed the most in three weeks after the Commerce Department said gross domestic product grew at a 3.3 percent annual rate. Standard & Poor's 500 Index futures fell 0.2 percent today on concern a report today will show consumer spending slowed in July.
"Toyota, Japan's largest automaker that yesterday cut its forecast for 2009 vehicle sales growth, rose 160 yen to 4,930. Canon Inc., the world's biggest maker of digital cameras, added 3.3 percent to 4,950 yen. Westfield Group, the owner of 55 U.S. shopping malls, advanced 1.7 percent to A$17.29."
The U.S. government's initial estimate of economic growth was 1.9 percent last month and economists in a Bloomberg survey on average projected 2.7 percent. The data follows an unexpected advance in durable goods orders that helped boost U.S. stocks this week.
Reversing the Headwinds
"``If you believe GDP's not going to worsen from this point onwards, the implication is that the U.S. will avoid going into a deep recession,'' said Jason Teh, who helps manage the equivalent of $5.7 billion at Investors Mutual Ltd. in Sydney. ``The hope is that the headwinds the global economy has been facing will be reversed when the U.S. pulls the whole world out from its demise.''"
"Nintendo jumped 4,000 yen to 51,800 in Osaka, extending advances after the company raised its full-year net income estimate by 26 percent, citing a weaker yen and sales of its DS and Wii players."
"Japan's factory output increased 0.9 percent in July from the previous month, when it fell 2.2 percent, the government said today. The median estimate of 37 economists surveyed by Bloomberg News was for a 0.3 percent decline."
"JFE surged 4.7 percent to 4,660 yen, its largest gain since July 14. Nippon Steel Corp., the world's second-largest steelmaker, gained 5.4 percent to 523 yen. Komatsu Ltd., the world's second-largest maker of earthmovers, rose 3.8 percent to 2,315 yen, halting a three-day, 6.3 percent decline."
"Nisshinbo Industries Inc. soared 10 percent to 1,213 yen, the largest rally in a year, after the maker of textiles, chemicals and machine tools said it will retire part of its shares. The company also said it plans to strengthen its solar and battery-related operations in Japan to meet growing demand."
"Baoshan Iron & Steel added 0.24 yuan, or 3.8 percent, to 6.52 after saying second-quarter profit rose 20 percent to record 5.39 billion yuan ($789 million), helped by higher prices and demand for automobile sheets and ship plates. Analysts surveyed by Bloomberg had a median estimate of 4.9 billion yuan."
"Bank of China rose 7 cents, or 2.1 percent, to HK$3.39 in Hong Kong, after saying yesterday net income increased 43 percent in the first half to 42.2 billion yuan, beating the 41.2 billion yuan average estimate of analysts compiled by Bloomberg."
"The bank's 66 percent-owned unit, BOC Hong Kong (Holdings) Ltd., slumped 3.3 percent to HK$17.50 after its earnings fell 5 percent yesterday to HK$7.09 billion ($908 million) and Credit Suisse Group cut its share price target by 12 percent to HK$22."
"ICICI, India's second-biggest bank by assets, advanced 6.2 percent to 671.9 rupees. HDFC Bank Ltd., the third-largest, gained 5.2 percent to 1,276.7 rupees."
"India's inflation rose 12.4 percent in the week to Aug. 16, the government said yesterday after the market closed. Economists were expecting a 12.78 percent gain. Easing consumer price growth may decrease the likelihood the central bank will raise interest rates for the fourth time since June."
"Fujifilm Holdings, the world's biggest maker of liquid- crystal display film, slumped 12 percent to 3,030 yen, its largest decline since September 1981. The company said yesterday net income for the year ending March 31 will be 80 billion yen ($734 million), down from a previous estimate of 110 billion yen."
"Doosan Infracore Co. plunged 15 percent to 21,250 won, the biggest retreat on MSCI's Asian index. The company said yesterday that it and an affiliate will inject a total of $1 billion into its Bobcat unit."
"Merrill Lynch & Co. cut its rating on Doosan Infracore to ``underperform'' from ``buy,'' saying the ``sudden'' decision raises concerns about the management's credibility."
To contact the reporter for this story: Chen Shiyin in Singapore at firstname.lastname@example.org; Shani Raja in Sydney at email@example.com.
"Last Updated: August 29, 2008 06:37 EDT"
High-Grade Bond Sales May Reach $275 Billion Through Year-end
By Bryan Keogh
Aug. 29 (Bloomberg) -- U.S. investment-grade bond sales may reach $275 billion through year-end as banks refinance record amounts of debt and falling interest costs attract borrowers back to the market after the slowest North American summer in a decade.
"Hewlett-Packard Co., the world's largest personal-computer maker, and securities firm Merrill Lynch & Co. are among borrowers that may tap the market in September through December, according to Barclays Capital. Companies sold $316 billion of debt in the same period in 2007. September sales may reach $100 billion, Barclays said."
"Borrowers sold $115 billion of investment-grade debt in June through August, the least since at least 1999, as demand slumped and investors sought the biggest yield over benchmark Treasury debt on record. Merrill, the third-biggest U.S. securities firm and banks including Citigroup Inc. and Wachovia Corp. need to refinance $260 billion of debt by the end of the year, according to JPMorgan Chase & Co. data. Merrill has $26.5 billion of bonds maturing this year."
"``The banks are certainly dying to tap the markets, as well as the brokers,'' said Vincent Murray, managing director and head of U.S. fixed-income syndicate in New York at Mizuho Financial Group Inc., who expects September sales to reach $75 billion to $100 billion if financial companies return to the market."
"The highest yields in more than six years, bank writedowns and signs of a deepening credit crisis kept borrowers away during the past three months. Yields relative to benchmark rates rose to a record as second-quarter corporate profit fell the most since the 2001 recession."
"September borrowing may prove relatively attractive for companies because U.S. Treasury yields have fallen, reducing borrowing costs, said Jeff Ebert, a fixed-income portfolio manager who helps oversee $17 billion in assets for FAF Advisors in Minneapolis. Yields on benchmark 10-year Treasuries are about the lowest since April."
"``In order for issuance to come you're going to need a few relative days of stability in the market,'' said Tom Farina, a director at Deutsche Bank AG's insurance asset management unit in New York, which oversees $150 billion of fixed-income assets. ``It's going to be a little challenging to hit those figures.''"
"Companies have sold $612 billion of bonds this year, 13 percent less than last year's record pace, Bloomberg data show. Sales of the debt in June through August of 2007 were $238 billion, Bloomberg data show. Investment-grade bonds are rated at least Baa3 by Moody's Investors Service and BBB- by Standard & Poor's."
`You Never Know'
"Earnings adjusted for the value of inventories and depreciation of capital expenditures, known as profits from current production, decreased 2.4 percent to an annual rate of $1.56 trillion, according to the Commerce Department. Earnings were down 7 percent from the same time last year, the biggest decrease since the 2001 recession."
"``The difference is that the flexibility you need to have today when going to the market is much different than it was 18 months ago,'' said Paul Beard, treasurer and senior vice president of finance at Sparks, Maryland-based McCormick & Co., one of three companies to issue U.S. corporate bonds this week. ``You never know what tomorrow's going to bring.''"
"McCormick, the world's biggest maker of spices, sold $250 million of five-year, 5.25 percent notes at a spread of 223 basis points over Treasuries of similar maturity to repay short-term debt used to help finance its purchase last month of Lawry's seasonings. Sierra Pacific Resources, Nevada's largest utility and Toyota Motor Corp.'s U.S. finance unit also sold corporate bonds this week."
Banks and Brokers
"Issuance by banks and brokers fell to $24.5 billion in June through August, or 21 percent, compared with 51 percent a year ago, Bloomberg data show. The world's biggest financial companies have posted $513 billion of credit losses and writedowns since the beginning of last year amid the biggest housing downturn since the Great Depression. More than one in four financial companies is poised for a ratings cut as writedowns and the slumping housing market weigh on the industry, according to S&P."
"``They're going to have to pay some pretty generous spreads in order to raise a decent amount of cash,'' Murray said."
"The extra yield investors demand to own investment-grade bonds rather than Treasuries has widened 68 basis points since May 31 to 316 basis points, the highest since at least December 1996, according to Merrill's U.S. Corporate Master index. Overall yields have dropped 20 basis points to 6.54 percent from a more than six-year high on July 23."
New Issue Premium
"The typical new-issue premium, the extra yield borrowers must pay relative to where their debt is trading, has increased to the highest in Farina's 10 years in the business, he said. The premium ranges from as little as about 10 basis points for some utilities to about 75 basis points for Citigroup Inc. earlier this month, Farina said."
"Utilities and financial companies will ``make up the bulk'' of issuance for the rest of the year, Barclays analyst Melody Vogelmann said in an Aug. 21 report. Financial companies must repay about $500 billion in fixed- and floating-rate issuance coming due between now and the end of 2009, according to the report."
To contact the reporter on this story: Bryan Keogh in New York at firstname.lastname@example.org
"Last Updated: August 29, 2008 08:39 EDT"
"India's Economy Grows 7.9%, Slowest Pace Since 2004 (Update3) "
By Cherian Thomas
Aug. 29 (Bloomberg) -- India's economy grew at the slowest pace since 2004 last quarter as the fastest inflation in a decade and increased borrowing costs damped consumer spending.
"Asia's third-largest economy expanded 7.9 percent in the three months to June 30 from a year earlier, following an 8.8 percent gain in the previous quarter, the Central Statistical Organisation said in a statement in New Delhi today. Analysts expected gross domestic product to increase 8 percent."
"Inflation has almost tripled this year to 12.4 percent amid higher fuel and food prices, forcing the central bank to raise interest rates three times since June. While growth is almost double the average pace since India's independence in 1947, it is slowing along with the other so-called BRIC economies of Russia, Brazil and China."
"``We don't expect India's slowdown to be too dramatic,'' said Philip Wyatt, a senior economist at UBS AG in Hong Kong. ``There will be a gradual slowdown in GDP growth throughout this year - the industrial side of GDP is already slowing.''"
"India's benchmark Sensitive index, which has declined by a third this year, rose 3.7 percent to 14564.53 at the 3:30 p.m. close on the Bombay Stock Exchange, while the yield on the key 10-year bond fell 7 basis points to 8.70 percent. The rupee gained 0.4 percent to 43.935 against the U.S. dollar."
"Finance Minister Palaniappan Chidambaram said today that growth for the year to March 31 will be close to 8 percent. India risks being overtaken by Russia as the world's fastest expanding major economy after China this year. Russia's economy may grow 7.1 percent in 2008, surpassing India's 7 percent expansion this year, according to World Bank estimates."
"The World Bank expects the U.S. economy to expand 1.1 percent this year, half of 2007's pace. The U.S. economy grew at a faster-than-expected 3.3 percent annual rate in the second quarter, helped by a surge in exports that will probably wane as Europe and Japan head toward recessions."
"India's expansion slowed in the second quarter as construction growth weakened to 11.4 percent from 12.6 percent in the previous three months and manufacturing gained 5.6 percent compared with 5.8 percent in the first quarter, today's report said."
"ACC Ltd., India's biggest cement-maker, reported a worse- than-estimated 27 percent drop in second-quarter profit on fuel costs and government-enforced price curbs to check inflation."
"Passenger car sales were almost stagnant in July. Maruti Suzuki India Ltd., maker of half the cars in the South Asian country, posted a 1.5 percent gain in sales while Hyundai Motor Co.'s India unit, the nation's second-largest carmaker, boosted sales by 0.5 percent."
"Reserve Bank of India Governor Yaga Venugopal Reddy, due to retire Sept. 5, raised the key repurchase rate to a seven-year high of 9 percent last month and said controlling inflation will be the central bank's ``overriding priority.''"
"``As inflation rates have hardened beyond tolerable levels, monetary policy would continue to address aggregate demand pressures which appears to be strongly in evidence,'' the central bank said today in its report for the year ending June."
"The repurchase rate may climb to between 9.25 percent and 9.5 percent by the end of October, according to eight of 12 economists surveyed by Bloomberg after the last policy statement on July 29."
"``High inflation and interest rates are issues that are bothering the industry as they have an impact on consumer demand and hurt corporate profitability,'' said Kundapur Vaman Kamath, chief executive officer at ICICI Bank Ltd., India's second- largest lender. ``Until we see inflation easing, it would be unrealistic to expect an easing of monetary policy.''"
"Services including banking, transportation and hotels grew 10 percent in the second quarter from a year earlier, slowing from an 11.2 percent gain in the previous three months, according to today's report. Agriculture increased 3 percent from an earlier advance of 2.9 percent."
"Inflation can win or lose elections in India, where about 456 million people live below the World Bank's poverty line of $1.25 a day. Prime Minister Manmohan Singh's Congress Party lost ground in nine of 11 state elections since January 2007 because of rising prices. General elections are scheduled to be held before May."
"Singh said this month he doesn't want growth to suffer in the battle against inflation, adding faster economic expansion is vital to eradicating poverty."
"In February, Singh wrote off $17 billion of farm loans and this month increased salaries of about 5 million government employees by 21 percent to spur consumer demand."
The central bank's forecast of 8 percent economic growth in the year to March 31 will be weakest expansion since 2003 and comes after Singh presided over record average annual growth of 8.9 percent since 2004.
"The June-September monsoon, which accounts for four-fifths of the nation's annual rainfall, was 39 percent below average in the week ended Aug. 27, according to the weather office. A normal monsoon will help the country's 234 million farmers harvest a bigger crop and boost rural incomes."
"``Going forward, agriculture will hold the key for both industry and overall growth,'' said Tushar Poddar, a Mumbai- based economist at Goldman Sachs. ``The monsoon will be critical in that regard.''"
To contact the reporter on this story: Cherian Thomas in New Delhi at email@example.com
"Last Updated: August 29, 2008 07:50 EDT"
Chile Bank Voted Unanimously to Raise Rate to 7.75% (Update1)
By Sebastian Boyd
Aug. 29 (Bloomberg) -- Chile's central bank policy makers voted unanimously to increase interest rates at their last meeting by half a percentage point for the third straight month.
The central bank lifted borrowing costs to 7.75 percent to help stem the fastest inflation in 13 years. The bank published minutes from the Aug. 14 meeting on its Web site today.
"The bank's board considered a half- or three-quarter point increase, with a half-point rise implying future interest-rate rises, according to the minutes. The policy makers felt that the ``inflationary scenario'' was deteriorating and that the annual pace of price increases would remain near its current level in coming months, according to the minutes."
"``With regards to the future evolution of the monetary policy rate, all the councilors agreed that further increases would be necessary,'' to slow inflation toward the bank's 3 percent target, the minutes said."
To contact the reporter on this story: Sebastian Boyd in Santiago at firstname.lastname@example.org
"Last Updated: August 29, 2008 08:56 EDT"
"French Stocks: Carrefour, Suez Environnement, PPR, Transgene "
By Adria Cimino
"Aug. 29 (Bloomberg) -- France's CAC 40 Index advanced 21.68, or 0.5 percent, to 4,483.17 at 12:44 p.m. in Paris, heading for a 1.9 percent increase this week. The index is up 2.1 percent this month. The SBF 120 Index gained 0.5 percent today."
The following shares rose or fell in Paris. Stock symbols are in parentheses.
"Artprice.com (PRC FP) soared 78 cents, or 8.7 percent, to 9.70, the biggest gain since April. The company, which gathers art auction results, said first-half net income surged 93 percent to 330,000 euros."
"Carbone Lorraine SA (CRL FP) increased 84 cents, or 2.2 percent, to 38.84 euros, gaining for a second day. The maker of electric motor parts reported a 73 percent rise in first-half net income to 33.6 million euros and forecast ``brisk'' sales growth for the second half."
"Carrefour SA (CA FP) jumped 2.21 euros, or 6.6 percent, to 35.91, the biggest gain since March. Europe's biggest retailer said first-half profit rose 1.2 percent after stronger growth in emerging markets from Brazil to China stoked demand for groceries. So-called net income from recurring operations climbed to 750 million euros, surpassing analysts' estimates."
"Hi-Media SA (HIM FP) sank 32 cents, or 7.8 percent, to 3.79 euros, the biggest decline since 2006. Europe's third- biggest online advertising broker said first-half net income fell 83 percent to 1 million euros. Gilbert Dupont cut its recommendation on the stock to ``add'' from ``buy.''"
"Ipsen SA (IPN FP) jumped 1.70 euros, or 4.8, to 37.20 euros, for the biggest gain in three months. The family- controlled drugmaker said first-half profit climbed 42 percent on lower taxes and demand for the Dysport treatment for movement disorders and muscle spasms."
"Itesoft (ITE FP) soared 13 cents, or 6.2 percent, to 2.24 euros, the biggest gain in two weeks. The software developer reported first-half net income of 400,000 euros compared with a loss of 1.7 million euros a year earlier."
"Jet Multimedia (JET FP) advanced 62 cents, or 11 percent, to 6.11 euros, its biggest increase in two months. The provider of data-base collecting services said first- half net income more than doubled to 3.6 million euros."
"L'Oreal SA (OR FP) slipped 2.61 euros, or 3.7 percent, to 67.20, falling for a third time this week. The world's largest cosmetics maker declined after its sales forecast disappointed some analysts and the company reported the slowest profit growth in three years."
"NRJ Group SA (NRG FP) tumbled 25 cents, or 3.3 percent, to 7.35 euros, declining for a third day. The operator of French commercial radio station NRJ said first- half profit fell to 2.6 million euros from 49.5 million euros a year earlier, hurt by higher costs and operating losses at its television unit. The company will exit the SBF 120 Index and the change will take effect Sept. 22, NYSE Euronext said."
"Outremer Telecom (OMT FP) surged 76 cents, or 12 percent, to 6.89 euros for the biggest gain since March. The telephone company operating in French oversees territories reported first-half net income of 1.7 million euros compared with a loss of 2.6 million euros a year earlier."
"Pernod Ricard SA (RI FP) advanced 1.63 euros, or 2.6 percent, to 63.72, gaining for a third time this week. The world's second-largest liquor maker brought an early end to its Absolut vodka distribution agreement in the U.S. with distiller Fortune Brands Inc."
"Fortune also agreed to buy the French company's Cruzan rum brand for $100 million, according to a statement yesterday after stock markets closed."
"PPR SA (PP FP) climbed 3.65 euros, or 4.8 percent, to 80.08, the biggest increase in more than three weeks. The retailer that owns the Gucci brand said first-half profit more than doubled to 779 million euros on higher luxury goods sales and a gain from selling YSL Beaute. Income from continuing operations gained 17 percent to 344 million euros, beating the 327 million-euro median estimate of six analysts surveyed by Bloomberg."
"Suez Environnement SA (SEV FP) added 76 cents, or 4 percent, to 19.71 euros, gaining for a sixth day. Europe's second-biggest water company will join the CAC 40 on Sept. 22, NYSE Euronext said."
"Transgene SA (TNG FP) retreated 1.58 euros, or 12 percent, to 11.42, the most since January. The drug researcher and partner Roche Holding AG said they will initiate a new and larger phase II trial for TG4001/R3484, their treatment for high-grade cervical dysplasia. The decision will result in a delay in the product's eventual commercialization, Transgene said."
To contact the reporter on this story: Adria Cimino in Paris at email@example.com.
"Last Updated: August 29, 2008 06:50 EDT"
"U.K. Shares Rise, Led by BP; FTSE 100 Heads for Monthly Gain "
By Alexis Xydias
"Aug. 29 (Bloomberg) -- U.K. stocks advanced for a third day, helping the benchmark FTSE 100 Index extend its first monthly gain since April. Energy companies BP Plc and Cairn Energy Plc climbed as crude oil rose."
"The FTSE 100 added 22.20, or 0.4 percent, to 5,623.4 at 11:57 a.m. in London. The index has risen 2.1 percent this week and is poised for a monthly gain of 3.9 percent, the best- performing equity market among the world's largest 20."
The benchmark dropped more than 11 percent in the previous three months as concern over a stagnant economy and a slump in commodity prices weighed on share prices.
"``Although a respite has been provided in the market, the economy itself is far from breathing a sigh of relief,'' said Omer Bhatti, head sales trader at WorldSpreads Group Plc in London. ``More pain will be felt before we begin to see sound fundamentals that the markets can begin to believe are a true bottom of the recent cycle.''"
"The FTSE All-Share climbed 0.6 percent today, while Ireland's ISEQ Index increased 0.9 percent."
"BP, Europe's second-largest oil company, rose 1.1 percent to 528 pence. Cairn Energy, the oil and gas explorer operating in India, added 2.3 percent to 2,923 pence. Crude oil headed for its biggest weekly gain in almost two months, rising 1.2 percent today, as producers evacuated rigs ahead of Gustav, forecast to become the worst Gulf of Mexico hurricane since Katrina."
Bloomsbury Publishing Plc added 3 percent to 170.75 pence. The U.K. publisher of the Harry Potter novels posted 42 percent higher first-half profit on sales in the U.K. and Germany and said it continues to seek acquisitions.
"Marshalls Plc, the U.K.'s largest maker of natural stone and concrete landscaping products, fell 4.8 percent to 167 pence. Net income in the first half of the year decreased to 16.4 million pounds ($30 million) from 19.7 million pounds, the company said, on slumping domestic demand and rising energy costs."
"New Star Asset Management Group Ltd. dropped 16 percent to 102.75 pence, the biggest retreat since January. The fund company set up by John Duffield said first-half profit slumped 70 percent as sales and assets under management slipped. The trading environment remains ``difficult,'' the company said."
The following stocks also rose or fell in London and Dublin. Stock symbols are in parentheses:
"Derwent London Plc (DLN LN) fell 6 pence, or 0.6 percent, to 1,083, a third decline in four sessions. The office property developer reported a loss in the first half as the estimated value of the company's properties slumped by 164 million pounds."
"Oxford BioMedica Plc (OXB LN) dropped 0.5 pence, or 4.3 percent, to 11.25 after the U.K. biotechnology company's Chief Executive Officer Mike McDonald left after less than two months in the job."
"Petrofac Ltd. (PFC LN) rose 31 pence, or 5 percent, to 652. The U.K. oil services provider with projects in the Middle East and North Sea bought Caltec Ltd. for 15 million pounds to boost output."
"Restaurant Group Plc (RTN LN) climbed 7.75 pence, or 5.9 percent, to 139.75. The U.K. owner of the Frankie and Benny's chain said first-half profit rose 25 percent on higher revenue."
"Grafton Group Plc (GN5 ID) tumbled 10 cents, or 2.5 percent, to 3.90 euros. Ireland's largest supplier of building materials said first-half profit fell by half on slowing construction demand in the U.K. and Ireland and predicted ``no immediate'' improvement."
To contact the reporter on this story: Alexis Xydias in London at firstname.lastname@example.org.
"Last Updated: August 29, 2008 07:03 EDT"
"India to Tackle `Beyond-Tolerable' Inflation, Central Bank Says "
By Kartik Goyal
"Aug. 29 (Bloomberg) -- India's central bank, having raised interest rates to the highest in seven years, will continue to take steps to curb inflation that's risen beyond ``tolerable levels,'' imperiling economic growth."
"``Inflation risks have increased sharply and appear to be persistent,'' the Reserve Bank of India said in its report for the year ending June. ``An overriding priority for monetary policy would be to eschew any further intensification of inflationary pressures.''"
"The Reserve Bank raised borrowing costs three times in as many months to curb inflation that's more than double its target. Rising fuel and food prices may further depress Asia's third-largest economy after growth slowed to the weakest since 2004, a report today showed."
"Rising global crude oil costs may force the government to increase its cap on retail prices as subsidies are straining state finances, the bank said. Coal and electricity prices may also add to inflation, the Reserve Bank said."
"India caps prices of gasoline, diesel and cooking gas to shield its 1.1 billion people from higher global oil prices."
"A government write-off of loans to poor farmers, announced in the budget this year, and higher state salaries are also a drag on the budget, it said. Prime Minister Manmohan Singh on Aug. 14 approved an average 21 percent pay rise for 5 million civil servants."
"``There is a need to ensure that effectiveness of monetary policy is not undermined by fiscal expansion,'' the central bank said in a press release."
The Reserve Bank of India last month raised its benchmark rate by a half point to a seven-year high of 9 percent. The reserve requirement for commercial lenders was also lifted to 9 percent from 8.75 percent.
Elevated inflation forced the central bank last month to raise its inflation forecast for the year to March 31 to 7 percent from a previous target of between 5 percent and 5.5 percent. The bank's next policy announcement is due Oct. 24.
"``As inflation rates have hardened beyond tolerable levels, monetary policy would continue to address aggregate demand pressures which appears to be strongly in evidence,'' the central bank said."
To contact the reporter on this story: Kartik Goyal in New Delhi at email@example.com
"Last Updated: August 29, 2008 07:31 EDT"
"Indian Stocks Climb Most in a Month; ICICI, HDFC Advance "
By Pooja Thakur
"Aug. 29 (Bloomberg) -- India's benchmark stock index rose the most in more than a month after the U.S. economy grew faster than estimated and India's inflation eased, lowering concern rising prices will crimp consumer spending."
"ICICI Bank Ltd., the nation's second-biggest bank by assets, added 6.2 percent. HDFC Bank Ltd., the third-largest, rose 5.2 percent. Both stocks rose the most in four weeks."
"``The GDP numbers from the U.S. and inflation coming in lower than expected has brought some relief to the market,'' said Jayesh Shroff, who helps manage about $3.5 billion at SBI Asset Management Co. in Mumbai."
"The Bombay Stock Exchange's Sensitive Index, or Sensex, rose 516.19, or 3.7 percent, to 14,564.53, the most since July 23. It was the biggest gainer among Asia's main bourses. The benchmark posted its first weekly gain in three climbing 1.1 percent. The S&P CNX Nifty Index on the National Stock Exchange added 146, or 3.5 percent, to 4,360."
U.S. stocks climbed the most in three weeks after the Commerce Department said gross domestic product grew at a 3.3 percent annual rate. The U.S. government's initial estimate of economic growth was 1.9 percent last month and economists in a Bloomberg survey on average projected 2.7 percent. The data follows an unexpected advance in durable goods orders that helped boost stocks yesterday.
"India's inflation rose 12.40 percent in the week to Aug. 16, the government said yesterday after the close of markets. Economists were expecting a 12.78 percent gain. Inflation easing may decrease the likelihood the central bank will raise interest rates for a fourth time since June."
"Today, the government said the economy expanded 7.9 percent in the three months to June 30 from a year earlier. Analysts expected gross domestic product to increase 8 percent."
"ICICI rose to 671.90 rupees. HDFC Bank climbed to 1,276.70 rupees. Both stocks gained the most since Aug. 5. State Bank of India, the nation's largest lender, advanced 7.2 percent to 1,403.85 rupees, the most since July 23. Housing Development Finance Corp., the biggest mortgage lender, added 4.3 percent to 2,343.50 rupees, the most since Aug. 1."
"Overseas investors sold a net 5.06 billion rupees ($125.4 million) of Indian stocks on Aug. 26, increasing their net outflow this year from equities to $7.17 billion, the nation's market regulator said."
The following are among the most active stocks traded on the Bombay and National Stock Exchanges. Stock symbols are in parentheses after company names:
"Bharat Heavy Electricals Ltd. (BHEL IN) added 78.30 rupees, or 4.8 percent, to 1,707.85, the most since July 23. India's biggest power-equipment maker, said it won an 11.55 billion rupee ($264 million) order from GVK Power & Infrastructure Ltd."
"Gammon Infrastructure Ltd. (GISP IN) rose 1.3 rupees, or 1.4 percent, to 95.25, the most since Aug. 11. The Indian maker of roads and dams climbed the most in more than seven weeks in Mumbai after winning an order to build and operate a bridge that may cost an estimated 8 billion rupees."
"Nectar Lifesciences Ltd. (NLSC IN) rose 12.9 rupees, or 3.7 percent, to 363.80. The Indian drugmaker approved selling warrants worth $2.5 million at a board meeting yesterday. Nectar will also split each share into 10, the company said."
"Tata Steel Ltd. (TATA IN) gained 28.75 rupees, or 5 percent, to 600.70, the most since July 30. India's largest steel producer reported a better-than-expected 60 percent gain in first-quarter profit on increased prices and output of high-grade products. Net income rose to 39 billion rupees in the quarter ended June 30 from 24.3 billion rupees a year earlier, the steelmaker said yesterday. Five analysts in a Bloomberg survey estimated a median profit of 19.7 billion rupees."
"Wipro Ltd. (WPRO IN) added 18.3 rupees, or 4.4 percent, to 432.40, its biggest gain since Aug. 1. India's third-largest computer-services provider may buy a German competitor that advises companies running business software made by SAP AG. The company will have sales of about $100 million to $200 million, Wipro Chairman Azim Premji said in a Bloomberg Television interview in London yesterday."
To contact the reporter on this story: Pooja Thakur in Mumbai at firstname.lastname@example.org
"Last Updated: August 29, 2008 07:23 EDT"
Oil Rises as Gustav Threatens U.S. Gulf of Mexico Platforms
By Mark Shenk
"Aug. 29 (Bloomberg) -- Crude oil headed for its biggest weekly gain in almost two months and natural gas rose as producers evacuated rigs before the arrival of Gustav, forecast to be the largest hurricane in the Gulf of Mexico since Katrina."
Royal Dutch Shell Plc and ConocoPhillips started pulling workers from Gulf of Mexico platforms in a region that pumps 26 percent of U.S. oil and 14 percent of the nation's gas. Louisiana officials said they will start evacuating residents today in two parishes around New Orleans that house refineries owned by Exxon Mobil Corp. and Valero Energy Corp.
"``Prices are higher on the prospect that Hurricane Gustav will strike the heart of the oil and natural gas production region in the Gulf of Mexico,'' said Addison Armstrong, director of market research at TFS Energy LLC in Stamford, Connecticut. ``If Gustav strikes near the Texas-Louisiana border, several refiners could be knocked out for a number of weeks.''"
"Crude oil for October delivery rose $2.53, or 2.2 percent, to $118.12 a barrel at 9:02 a.m. on the New York Mercantile Exchange. Futures are up 3.1 percent this week, the biggest gain since the week of July 4. Oil is up 61 percent from a year ago."
"Natural gas for October delivery rose 18.2 cents, or 2.3 percent, to $8.232 per million British thermal units in New York."
"Shell is evacuating workers from its Gulf of Mexico operations. The company pulled out 350 offshore workers yesterday and 400 the previous day, Shell said in a statement. The remaining workers will be withdrawn today and tomorrow."
"Gulf platforms produced 1.3 million barrels of oil and 7 billion cubic feet of gas a day in June, according to the Minerals Management Service. States along the Gulf, including Louisiana and Texas, contain 56 operable refineries that account for about 47 percent of U.S. refining capacity, according to the Energy Department."
"Katrina, which reached Category 5, the strongest type of hurricane, closed 95 percent of offshore output in the Gulf of Mexico. Almost 19 percent of U.S. refining capacity was idled because of damage and blackouts caused by hurricanes Katrina and Rita in 2005."
"Gasoline for September delivery climbed 5.33 cents, or 1.8 percent, to $3.0747 a gallon in New York."
"Pump prices rose for the first time since July 19, according to AAA, the nation's largest motorist organization. Regular gasoline, averaged nationwide, increased 0.9 cent to $3.669 a gallon, AAA said today on its Web site. Prices reached a record $4.114 a gallon on July 17."
"Gustav packed sustained winds of 65 miles (105 kilometers) an hour and was centered near the western tip of Jamaica, 100 miles west-northwest of the capital, Kingston, the U.S. National Hurricane Center said on its Web site at 8 a.m. Miami time."
"The forecast shows Gustav making landfall in central Louisiana as a hurricane on Sept. 2, then moving northwest into areas of Louisiana and Texas ravaged by Hurricane Rita three weeks after Katrina devastated New Orleans in 2005."
"Brent crude oil for October settlement rose $2.18, or 1.9 percent, to $116.35 a barrel on London's ICE Futures Europe exchange."
To contact the reporter on this story: Mark Shenk in New York at email@example.com.
"Last Updated: August 29, 2008 09:32 EDT"
"Cocoa Rises in London, Heads for Weekly Gain, on Higher Crude "
By Rachel Graham
"Aug. 29 (Bloomberg) -- Cocoa rose in London, heading for its second weekly gain, as higher crude-oil prices spurred demand for other commodities. Coffee rose and sugar fell."
"Crude oil rose as producers evacuated rigs before the arrival of Gustav, forecast to become the worst Gulf of Mexico hurricane since Katrina."
"``Oil is driving the direction for the agricultural commodities at the moment,'' Jonathan Parkman, farm commodities chief at Fortis, said by phone today in London."
"Cocoa for September delivery gained 33 pounds, or 2.1 percent, to $1,626 pounds ($2,983) a ton on London's Liffe exchange. A close at that level would mean a gain this week of 4.4 percent, and an increase for the month of 7.1 percent. The chocolate ingredient has climbed 56 percent this year."
"Higher prices may force food companies to switch to cheaper substitutes, according to the Hightower Report, a Chicago-based research company."
"``The most significant concern we have for prices is the move to substitute vegetable fats for more expensive cocoa butter in some chocolate products,'' it said in a note."
"White, or refined sugar, for October fell $3.70, or 0.9 percent, to $405.30 a ton in London. Raw sugar for October fell 0.07 cent, or 0.5 percent, to 13.16 cents a pound on ICE Futures U.S., the former New York Board of Trade."
"The October contract traded in New York may fall to $12.50 a pound as the market is oversupplied, David Sadler, head of sugar trading at Sucden (U.K.) Ltd., said by phone from London."
"``There are 200,000 tons of Argentine sugar available for delivery in October,'' he said. ``The Russians don't need anything until November. They are in the middle of their beet harvest.''"
"The International Sugar Organization said yesterday it expects a surplus in global production this year of 7.25 million tons, roughly 4 percent of total output. It forecasts a deficit of 3.9 million tons the following year ending Sept. 30, 2009."
"Among other agricultural commodities traded in London, robusta coffee for November delivery gained $25, or 1.1 percent, to $2,336 a ton."
To contact the reporter on this story: Rachel Graham in London firstname.lastname@example.org.
"Last Updated: August 29, 2008 08:35 EDT"
L'Oreal Declines in Paris Trading on Slowing Profit Growth
By Ladka Bauerova and Sarah Shannon
"Aug. 29 (Bloomberg) -- L'Oreal SA, the world's largest cosmetics maker, fell in Paris trading after the company reported the slowest profit growth in three years."
"First-half profit rose 6.8 percent, the slowest pace in three years, the Paris-based company said yesterday. Growth is getting harder to achieve as cash-strapped consumers in western Europe and the U.S. curb spending on makeup and fragrances."
"L'Oreal, the Paris-based maker of Maybelline makeup and Lancome perfumes, dropped as much as 2.80 euros, or 4 percent, to 67.01 euros and traded at 67.19 euros at 3:12 p.m. local time. The weaker dollar is reducing the value of U.S. sales and higher prices for raw materials are weighing on costs across the consumer-goods industry."
"``L'Oreal is spending a lot on launching new products, but those won't boost sales until the fourth quarter,'' said Marco Gulpers, an analyst at ING Wholesale Banking with a ``neutral'' rating on the stock. ``It's a bit of a gamble, and in these markets people are not willing to gamble.''"
"Increased spending on development and marketing of new products is also likely to eat into profit margins in the second half, Gulpers said."
"``The results were lackluster and of low quality,'' Sanford C. Bernstein analyst Andrew Wood said in an e-mailed note yesterday after the company's earnings report. ``Rising commodities prices are taking their toll.''"
"Net income in the six months through June climbed to 1.26 billion euros ($1.9 billion), the Paris-based company said after markets closed yesterday. That was more than the median estimate of 1.21 billion euros in a Bloomberg survey of seven analysts, though the percentage increase was the smallest since 2005."
"The company also yesterday forecast that earnings per share will rise at least 10 percent this year on a basis excluding currency swings. Bernstein's Wood said this amounted to a forecast reduction, given that previous expectations communicated by the company made no mention of foreign-exchange rates. L'Oreal wouldn't immediately comment on Wood's note."
To contact the reporter on this story: Ladka Bauerova in Paris at email@example.com; Sarah Shannon in London at firstname.lastname@example.org.
"Last Updated: August 29, 2008 09:14 EDT"
"Transocean Evacuates 400 Workers From Gulf Rigs, More Planned "
By Aaron Clark
"Aug. 29 (Bloomberg) -- Transocean Inc., the largest offshore oil driller, evacuated about 400 workers from rigs in the Gulf of Mexico ahead of Tropical Storm Gustav."
"The Houston-based company plans to move more staff from three semi-submersible rigs today and tomorrow, according to an e-mail from spokesman Guy Cantwell."
The company will also move its eight semi-submersible drillships ``out of the path of the storm.''
"About 1,150 employees were aboard rigs in the Gulf this morning, Cantwell said."
To contact the reporter on this story: Aaron Clark in New York at email@example.com
"Last Updated: August 29, 2008 08:54 EDT"
"Petroperu May Sell Stock by Yearend, Exchange Says (Update1) "
By James Attwood
"Aug. 29 (Bloomberg) -- Petroleos del Peru SA probably will sell shares in Lima by yearend as state and private companies offer equity to tap rising wealth in South America's fastest growing economy, the stock exchange's chief executive said."
"Petroperu and other state companies such as Electricidad del Peru are planning initial public offerings after a government decree this year that requires public companies to sell at least 20 percent on the market, Federico Oviedo said in an interview."
"``There could be a couple of companies of interesting size; for example, Petroperu is in this process,'' he said at a conference in Panama yesterday. ``We are processing Petroperu's application. I'd like to think it will take a couple of months.''"
"The sale of minority stakes in Peru's remaining state companies, following a wave of large-scale privatizations last decade, may increase trading volume in Peru that is currently about one hundredth that of the Brazilian exchange. Colombia's state oil producer Ecopetrol SA accounts for about a third of that country's main index after selling a 10 percent stake to domestic investors for $2.7 billion a year ago."
"Lima's exchange trades $37.9 million a day compared with $3.5 billion in Brazil and $39.9 billion on the New York Stock Exchange, based on three-month averages compiled by Bloomberg."
"Peru's benchmark Lima General Index, which rose 15-fold from 2000 to 2007, slumped this year, and was the world's third- worst performer last month, as contagion from subprime mortgages drove investors away from emerging markets. The decline accelerated because most of the biggest companies are commodities producers and raw materials prices tumbled in July. The index was little changed at 9:40 p.m. New York time today."
"While international funds increased their holdings last quarter to $1.2 billion, the highest this decade, and Standard & Poor's raised Peru's credit rating to investment grade, Wall Street equity strategists say the market is too small to recommend to investors."
"That may change as new companies list and local investors' wealth and capital market expertise grow, Oviedo said."
"Lima's exchange is also in talks with private companies interested in initial public offerings, possibly this year, he said, declining to elaborate. That would add to 19 new secondary listings in 2008."
"``There is a large quantity of savings in Peru that we're not channeling because of the lack of stocks on offer,'' Oviedo said. ``As that advances I'm sure there is going to be a very good response from the Peruvian market.''"
"Peru's economy expanded 9.2 percent in the first quarter from a year earlier, matching its quickest rate in almost 13 years, according to Bloomberg data. Last year's figure was the fastest in South America, International Monetary Fund data show."
To contact the reporters for this story: James Attwood in Santiago at firstname.lastname@example.org.
"Last Updated: August 29, 2008 10:04 EDT"
Bradford & Bingley CEO Says Buy-to-Let Not a Threat (Update1)
By Poppy Trowbridge
Aug. 29 (Bloomberg) -- Bradford & Bingley Plc Chief Executive Officer Richard Pym said the slumping buy-to-let mortgage market won't threaten earnings after the biggest lender to U.K. landlords posted its first loss in four years.
"``Buy-to-let is not a problem,'' Pym, appointed CEO of the Bingley, England-based bank on Aug. 18, told journalists today. ``We've only ever had a problems where we've stretched the credit criteria, and we won't do that again.''"
"Pym takes over as the lender faces rising funding costs amid the worst British housing slump in 30 years. Buy-to-let loans, making up over half of Bradford & Bingley's book, are extended to customers who purchase houses and rent them out. The company made 1.6 billion pounds ($2.9 billion) in buy-to-let loans in the first half, bringing its share of the U.K. market to 19 percent."
"``U.K. property remains dramatically overvalued,'' James Hamilton, a London-based analyst at Numis Securities who has a ``reduce'' rating on Bradford & Bingley shares, wrote in a note to investors. ``Buy-to-let investors will eventually realize this and look to liquidate their portfolios impacting the group's interest income.''"
"Bradford & Bingley declined 4 percent to 48.25 pence at 12:22 p.m. in London trading, lowering its market value to 694 million pounds. The stock is down 82 percent this year, making it the worst performer in the eight-member FTSE All-Share Bank Index."
"The number of new buy-to-let loans in the U.K. slid 18 percent in the first half compared with the last six months of 2007, according to data published by the Council of Mortgage Lenders."
"Late payments climbed to 2.28 percent of Bradford & Bingley's total buy-to-let loans in June, from 1.85 percent in April, according to Alex Potter, a London-based analyst at Collins Stewart & Co. This compares with an arrears rate at HBOS Plc, Britain's biggest mortgage bank, of 1.73 percent, he wrote in a note to clients."
"``Results were little short of appalling,'' Potter said."
"The buy-to-let market will become more profitable over time, Bradford & Bingley Chairman Rod Kent said, citing the increasing rents being charged by landlords."
"``We continue to think buy-to-let is good lending,'' Kent told analysts. ``And when you compare it to other options in the mortgage market, we like it even more.''"
"Bad debts jumped to 74.6 million pounds, from 5.3 million pounds last year. The company also wrote down the value of its investments by 64.8 million pounds."
Pym's arrival comes after four turbulent months in which the bank's CEO departed due to ill health; the lender reversed assurances it didn't need fresh capital by selling discounted shares and private equity firm TPG Inc. withdrew an offer to buy a stake after Bradford & Bingley was downgraded by Moody's Ratings Service.
"This month, the company concluded a rights offering to raise 400 million pounds, the third attempt in as many months after late mortgage repayments surged. The share sale was spurned by 72 percent of the bank's investors, leaving underwriters Citigroup Inc. and UBS AG with 273 million pounds of stock."
"``After a torturous journey, we're happy to have completed the rights issue,'' Kent said."
"The bank's core Tier 1 capital ratio, a measure of financial strength, is 9.1 percent, in line with its target range of 8 percent to 10 percent, Bradford & Bingley said."
"The bank posted a first-half loss of 17.2 million pounds, or 2.8 pence a share, compared with a profit of 129 million pounds, or 20.4 pence, a year earlier. That exceeded the 9 million-pound net loss median estimate of five analysts surveyed by Bloomberg."
To contact the reporter on this story: Poppy Trowbridge in London at email@example.com
"Last Updated: August 29, 2008 08:04 EDT"
Canada's Dollar Falls as Economic Growth Is Less Than Forecast
By Chris Fournier
Aug. 29 (Bloomberg) -- Canada's dollar fell for a second day after a government report showed economic growth in the world's eighth-largest economy was less than forecast.
The Canadian currency has declined 0.7 percent this week as traders increased bets the Bank of Canada will cut borrowing costs. The central bank held its key rate unchanged at 3 percent on July 15. Policy makers reduced interest rates four times from December through April.
"Gross domestic product ``came in softer than expected, and that's negative for the Canadian dollar,'' said Matthew Strauss, a senior currency strategist at RBC Capital Markets Inc. in Toronto."
"Canada's dollar depreciated 0.4 percent to C$1.0552 per U.S. dollar at 9:29 a.m. in Toronto, from C$1.0510 yesterday. One Canadian dollar buys 94.76 U.S. cents. It has weakened 2.9 percent in August."
"Canada's currency will slip to C$1.10 against the U.S. dollar by the end of 2009, according to the median forecast of economists surveyed by Bloomberg News."
"Gross domestic product, the sum of all Canadian-produced goods and services, increased at an annualized pace of 0.3 percent from April to June, after a revised 0.8 percent drop in the first quarter, Statistics Canada said today in Ottawa. Economists surveyed by Bloomberg News had forecast 0.6 percent growth."
"Central bank policy makers are scheduled to meet on Sept. 3, when they will leave the key rate unchanged, according to all 16 economists polled by Bloomberg."
"Bankers' acceptances futures contracts for December fell 1 basis point, or 0.01 percentage point, to 2.88 percent. They declined from 3.07 percent on Aug. 22. The futures have settled at a three-month lending rate averaging 16 basis points above the central bank's target since Bloomberg started tracking the data."
The yield on Canada's 10-year government bond rose 3 basis points to 3.54 percent. The price of the 4.25 percent security maturing in June 2018 fell 25 cents to C$105.79. The yield on the two-year bond fell 3 basis points to 2.71 percent.
"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 3.86 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 26 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 4.9 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 29, 2008 09:30 EDT"
"JPMorgan Says Buy Mexico, Financials, Sell Petrobras, Materials "
By Paulo Winterstein
"Aug. 29 (Bloomberg) -- Mexican stocks should benefit from recovering growth, while Brazil is still at risk due to falling commodity prices and concern about higher interest rates, JPMorgan Chase & Co. strategists said."
"JPMorgan Chase & Co. remains ``overweight'' Mexico and ``neutral'' on Brazil, strategist Ben Laidler wrote in a note. Colombia ``merits closer attention'' on possible rate cuts and reduction in capital controls, he wrote."
"Investors should ``continue domestic rotation'' and buy Latin American financial stocks because they are cheaper than global rivals, Laidler wrote. JPMorgan is still ``overweight'' stocks that rely on discretionary spending from consumers."
"Laidler maintained his ``underweight'' rating on Brazil energy and material stocks, and recommended reducing holdings in state-controlled oil company Petroleo Brasileiro SA."
"Investors should add real estate company Desarrolladora Homex SAB and bank Grupo Financiero Banorte SAB to their Mexican holdings, he wrote."
To contact the reporter on this story: Paulo Winterstein in Sao Paulo at email@example.com.
"Last Updated: August 29, 2008 09:13 EDT"
European Bonds Head for Monthly Gain on Signs Growth Is Slowing
By Agnes Lovasz
"Aug. 29 (Bloomberg) -- European government bonds rose, headed for a second monthly advance, on bets slowing economic growth will curb the risk of inflation and allow the region's central bank to lower interest rates next year."
The gains pushed benchmark 10-year German bund yields down almost a quarter-point this month on concern the euro-region economy is entering a recession. Reports today showed economic sentiment in the 15-nation bloc region worsened and the inflation rate fell from a 16-year high by more than economists forecast.
"``The fundamental picture is bond-market friendly,'' said David Schnautz, a fixed-income strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. ``The economy in the euro zone is deteriorating and there are signs we have already passed the peak in inflation.''"
"The yield on the 10-year bund fell 4 basis points to 4.14 percent by 2 p.m. in London, leaving it 22 basis points lower this past month. The price of the 4.25 percent note rose 0.32, or 3.2 euros per 1,000-euro ($1,473) face amount, to 100.88."
"The yield on the two-year German note fell 6 basis points to 4.10 percent, down 16 basis points since the end of July. Yields move inversely to bond prices."
"Two-year yields will slip to 3.8 percent and 10-year yields to 4 percent by the end of September, Schnautz predicted."
"European bonds have returned 2.7 percent since June 27, compared with 3.9 percent for gilts and 1.9 percent on Treasuries, according to Merrill Lynch & Co.'s EMU Direct Government, U.K. Gilts and U.S. Treasury Master indexes."
"European consumers and executives became more pessimistic about the economic outlook, a confidence survey showed. An index measuring optimism in the euro region slipped to 88.8 from 89.5 in July, the European Commission in Brussels said."
"The inflation rate fell to 3.8 percent in August, from 4.1 percent a month ago, the European Union's statistics office said."
"Policy makers left their main interest rate at 4.25 percent on Aug. 7 after raising it by a quarter-percentage point in July, while ECB President Jean-Claude Trichet said growth will be ``particularly weak.''"
Traders reduced bets on lower interest rates after European Central Bank council members including Axel Weber signaled Aug. 27 that lower interest rates are unlikely. Weber said in an interview investors' expectations of lower rates were ``premature.''
"The implied yield on the March Euribor futures contract rose 4 basis points to 4.83 percent, paring its drop this month to 18 basis points."
ECB Executive Board member Lorenzo Bini Smaghi said in a Bloomberg Television interview broadcast today that inflation is ``too high'' and must be brought below the bank's ceiling. The ECB aims to keep inflation just below 2 percent. Fellow policy maker Klaus Liebscher said in Vienna today its ``paramount'' task is maintaining price stability.
"The difference between European two- and 10-year government bond yields narrowed this week as rate-sensitive short-dated bonds underperformed. The spread was 4 basis points, compared with 9 basis points at the end of last week."
"Confidence among euro-area manufacturers fell more than economists forecast to minus 10 this month from minus 8 in July, while sentiment among retailers also declined, according to today's report from the commission. Consumer confidence rose 1 point from July's minus 20, staying near a 5 1/2-year low."
To contact the reporter on this story: Agnes Lovasz in London at firstname.lastname@example.org
"Last Updated: August 29, 2008 09:02 EDT"
Dollar Declines Against Yen on Bets Consumer Spending Slowed
By Gavin Finch and Stanley White
"Aug. 29 (Bloomberg) -- The dollar fell against the yen, headed for its biggest weekly drop in almost four months, on speculation a U.S. government report will show growth in consumer spending slowed."
"The greenback also declined versus the euro, paring its biggest monthly gain since the debut of the European single currency in 1999, as oil prices climbed on signs a storm will disrupt production in the Gulf of Mexico. The U.K. pound slid to near a record low against the euro after a central bank policy maker said lower interest rates are needed to avoid a recession."
"``We've seen the dollar rally running out of steam this week as oil prices have started to firm up again, hurting the currency,'' said Ian Stannard, a London-based currency strategist for BNP Paribas SA. ``It's not surprising that the dollar has weakened given the extent of its recent gains. We see some upside potential for the euro.''"
"The U.S. currency declined 0.7 percent to 108.77 yen at 7:43 a.m. in New York, from 109.50 yesterday. The dollar fell 0.2 percent to $1.4732 per euro, from $1.4706. The euro dropped 0.5 percent to 160.26 yen, from 161.04. The dollar may weaken to $1.4850 per euro in the coming week, Stannard forecast."
"The dollar is set for a 5.9 percent gain against the euro this month, supported by a 5.7 percent decline in crude oil and a government report showing the U.S. economy grew faster than previously estimated in the second quarter."
"The euro is 4.8 percent lower against the yen this month, the largest drop since March 2004, as a slump in German business confidence added to concern European economies will fall into a recession."
"U.S. personal spending rose 0.2 percent last month after climbing 0.6 percent in June, according to the median forecast of 75 economists surveyed by Bloomberg News. Personal income decreased 0.2 percent following a 0.1 percent gain, a separate survey showed. The Commerce Department will release the data at 8:30 a.m. in Washington."
"Futures on the Chicago Board of Trade show a 19 percent chance that the Fed will increase its 2 percent target rate for overnight lending between banks by at least a quarter-percentage point by the Dec. 16 meeting, compared with 69 percent odds a month ago. Policy makers next meet Sept. 16."
"Crude oil for October delivery rose 1.1 percent to $116.82 a barrel on concern Tropical Storm Gustav, threatening U.S. oil rigs in the Gulf of Mexico, will strengthen into the worst hurricane since Katrina. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep."
"The ICE futures exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, fell 0.3 percent to 76.925, cutting its monthly advance to 5.1 percent. It reached 77.619 on Aug. 26, the highest level this year."
"The yen advanced against all 16 most-active currencies tracked by Bloomberg after the Japanese government said consumer-price growth exceeded 2 percent for the first time in a decade as food and oil prices surged. A separate report showed industrial production rose 0.9 percent last month, counter to economists' expectations for a decline."
"The pound headed for a 2.5 percent monthly decline versus the euro, the largest since March, after Bank of England policy maker David Blanchflower said yesterday in an interview with Reuters rates need to fall. It was at 80.60 pence per euro from 80.37. It reached a record low of 80.99 pence on April 16."
"The pound last stood at $1.8294, on course for a 7.9 percent decline this month, the most since October 1992. The average value of a home in the U.K. fell 10.5 percent in August from a year earlier, Nationwide Building Society said yesterday."
The implied yield on the March short-sterling futures contract fell 20 basis points this month to 5.22 percent. The BOE's benchmark rate is 5 percent.
"``The news for sterling has gone from bad to worse,'' analysts led by Hans-Guenter Redeker, the London-based global head of currency strategy at BNP Paribas SA, France's biggest bank, wrote in a research note yesterday. ``Moreover, BOE member Blanchflower delivered dovish comments.''"
"Traders have pared bets the European Central Bank will raise its 4.25 percent benchmark rate. The implied yield on the Euribor futures contract expiring September 2009 fell to 4.51 percent, from 4.63 percent on July 31."
"``The euro will continue to depreciate,'' said Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain's third-biggest lender. ``A slowdown in European economies is becoming quite evident. We expect the ECB to keep rates on hold until the second quarter of next year.''"
"The euro may decline to $1.45 within a month, he said."
To contact the reporters on this story: Gavin Finch in London at email@example.com; Stanley White in Tokyo at firstname.lastname@example.org
"Last Updated: August 29, 2008 07:48 EDT"
Pound Set for Monthly Loss as Confidence Holds Near Record Low
By Lukanyo Mnyanda and Andrew MacAskill
"Aug. 29 (Bloomberg) -- The pound fell to the lowest level in more than four months against the euro after a report showed consumer confidence held near a record low in August, strengthening the case for lower interest rates."
"The pound also headed for the biggest monthly drop in almost 16 years versus the dollar after London-based research group GfK NOP said a confidence index based on a survey of 2,001 people rose 3 points from July's minus 39, which was the weakest since the data began in 1974. Gilts pared earlier gains that pushed the yield on the 10-year bond to near the lowest level since April."
"``This is more bad news for sterling,'' said Lutz Karpowitz, a currency strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. ``It underlines the picture we have that the U.K. economy is heading for a recession.'' The pound may drop to 81 pence per euro by year-end, he forecast."
"The U.K. currency fell as much as 0.4 percent to 80.69 pence per euro, the weakest level since April 16, and was at 80.48 by 1:55 p.m. in London. It has dropped 2.4 percent in August, the steepest monthly loss since March. The pound was at $1.8296, headed for its biggest one-month drop since sinking 12 percent in October 1992."
"Gilts headed for a second monthly gain, with the 10-year note yield little changed at 4.47 percent, from 4.81 percent July 31. The 5 percent security due March 2018 was at 103.04."
"The yield on the two-year gilt, which is more sensitive to interest-rate expectations, fell 1 basis point, to 4.5 percent, taking its decline in the past month to 36 basis points. Yields move inversely to bond prices."
"The confidence data, together with a report showing luxury- home values registered their first annual fall in five years this month, reinforce speculation economic growth may slow enough for the Bank of England to cut its 5 percent benchmark interest rate."
"The average value of houses and apartments in London's nine most expensive neighborhoods dropped 1.6 percent from August 2007, broker Knight Frank LLP said today in a statement. Values fell 1.3 percent from July, a fourth monthly decline."
A report yesterday showed U.K. house prices had their biggest annual drop in almost two decades.
"``All the data points to a slowdown greater than previously anticipated,'' said Grant Lewis, the London-based head of fixed- income research at Daiwa Securities SMBC Europe Ltd. ``This is providing a lift to gilts.''"
"Investors have been paring bets on higher rates, with the implied yield on the March short-sterling futures contract dropping 34 basis points in the past month to 5.22 percent. That's helped gilts outperform Treasuries and European bonds in the past two months."
"Gilts have returned 3.9 percent since June 27, compared with 2.7 percent on European bonds and 1.9 percent on Treasuries, according to Merrill Lynch & Co.'s EMU Direct Government, U.K. Gilts and U.S. Treasury Master indexes."
"Ten-year gilts yielded 70 basis points more than Treasuries of a similar maturity today, compared with 117 basis points on Aug. 2, which was the most this year. The U.K. notes yielded 34 basis points more than the similar maturity German bund. That gap has narrowed from 69 basis points on Feb. 25."
To contact the reporter on this story: Lukanyo Mnyanda in London at email@example.com; Andrew MacAskill in London at firstname.lastname@example.org
"Last Updated: August 29, 2008 09:34 EDT"
U.S. Treasuries Decline as Business-Activity Gauge Shows Gains
By Dakin Campbell
Aug. 29 (Bloomberg) -- Treasuries fell as a measure of U.S. business activity showed expansion at the fastest pace since June 2007.
Yields on government securities rose as the National Association of Purchasing Management-Chicago said its business index increased to 57.9 this month from 50.8 in July. Fifty is the dividing line between growth and contraction. The government sold $54 billion in debt this week.
"The two-year note yield rose 4 basis points, or 0.04 percent, to 2.40 percent at 10:03 a.m. in New York, according to BGCantor Market Data. The 2.375 percent security due August 2010 fell 2/32, or 63 cents per $1,000 face amount, to 99 30/32. The 10-year note yield advanced 3 basis points to 3.82 percent."
"Another report, the Reuters University of Michigan index of consumer sentiment, showed confidence among U.S. consumers was little changed in August. That suggested falling gasoline prices may not be enough to put Americans at ease about the economy."
To contact the reporter on this story: Dakin Campbell in New York at email@example.com
"Last Updated: August 29, 2008 10:10 EDT"
Dollar Falls Against Yen as Personal Spending Slows in July
By Ye Xie and Gavin Finch
Aug. 29 (Bloomberg) -- The dollar declined against the yen as government reports showed consumer spending slowed and personal income dropped in July.
The greenback was headed for its biggest monthly advance against the euro since the European currency began trading in 1999. The pound slid to near a record low against the euro after a Bank of England policy maker said lower interest rates are needed to avoid a recession.
"``The dollar rally is too far too fast,'' said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York. ``All the indications point to weakness in consumer spending.''"
"The U.S. currency decreased 0.6 percent to 108.85 yen at 9:56 a.m. in New York, from 109.50 yesterday. Against the euro, the dollar traded at $1.4708, compared with $1.4706. The euro dropped 0.6 percent to 160.13 yen, from 161.04. The pound slid 0.3 percent to 80.60 pence per euro, after touching 80.69 pence, the weakest level since April 17. Sterling touched the record low of 80.99 pence on April 16."
"The greenback has risen versus all of the other major currencies this month on speculation the economic slowdown that began in the U.S. is spreading to the rest of the world. The dollar has gained 5.9 percent versus the euro, the best performance since the European currency's debut."
"``It's not surprising that the dollar has weakened given the extent of its recent gains,'' said Ian Stannard, a London- based currency strategist at BNP Paribas SA. ``We see some upside potential for the euro.''"
Pound Versus Euro
"The pound headed for a 2.3 percent monthly decline versus the euro, the largest since March, after Bank of England policy maker David Blanchflower said yesterday in an interview with Reuters that the central bank should cut the 5 percent target lending rate. The pound fell 0.2 percent to $1.8253 and fell 8 percent this month, the biggest decline since October 1992."
"The euro has dropped 4.9 percent against the yen in August, the largest monthly drop since March 2004, on a contraction in the European economy in the second quarter."
European Central Bank Executive Board member Lorenzo Bini Smaghi said in an interview on Bloomberg Television yesterday that inflation in the euro area is ``too high'' and must be brought below the bank's limit. The ECB's main refinancing rate is at a seven-year high of 4.25 percent.
"Annual inflation eased to 3.8 percent in August, from 4 percent the prior month, the European Commission in Brussels said today. ECB aims to keep inflation just below 2 percent."
Fed Rate Outlook
"Futures on the Chicago Board of Trade showed a 19 percent chance that the Federal Reserve will increase its 2 percent target rate for overnight lending between banks by at least a quarter-percentage point by the Dec. 16 meeting, compared with 69 percent odds a month ago. Policy makers next meet Sept. 16."
"U.S. personal spending increased 0.2 percent last month after a 0.6 percent advance in June, the Commerce Department said today in Washington. Personal income fell 0.7 percent in July after climbing 0.1 percent in the prior month. The median forecast of 73 economists surveyed by Bloomberg News was for a drop in personal income of 0.2 percent."
"``For the dollar's rally to sustain, you need either a rate hike from the Fed or a rate cut from the ECB,'' said Wells Fargo's Serebriakov. ``Neither of them will happen in the near future.''"
"Crude oil for October delivery rose 2.5 percent to $118.45 a barrel on concern a tropical storm threatening U.S. oil rigs in the Gulf of Mexico will strengthen into the worst hurricane since Katrina. The euro-dollar exchange rate and oil have had a correlation of 0.9 in the past year, according to Bloomberg calculations. A reading of 1 would mean they moved in lockstep."
`Sell the Dollar'
"``The recent rally in the dollar has likely come to an end,'' said Masahiro Sato, joint general manager of the treasury division at Mizuho Trust & Banking Co. in Tokyo. ``Traders are inclined to sell the dollar today as oil prices inch higher.''"
"The ICE futures Exchange's Dollar Index, which compares the greenback against the currencies of six U.S. trading partners, fell 0.3 percent to 76.938, cutting its monthly advance to 5.1 percent. It reached 77.619 on Aug. 26, the highest this year."
"The yen advanced against all of the other major currencies today after the Japanese government said inflation exceeded 2 percent for the first time in a decade as food and oil prices surged. A separate report showed industrial production rose 0.9 percent last month, counter to a forecast decline."
"Japanese Prime Minister Yasuo Fukuda, facing elections within a year, plans to spend about 2 trillion yen ($18 billion) to revive the world's second-largest economy, the government said in a statement today."
The yen rose 1.4 percent to 9.98 per South Korean won and 1.1 percent to 102.90 versus the Canadian dollar.
To contact the reporters on this story: Ye Xie in New York at firstname.lastname@example.org; Gavin Finch in London at email@example.com
"Last Updated: August 29, 2008 09:59 EDT"
"European Economic Confidence Drops, Inflation Eases (Update2) "
By Fergal O'Brien
Aug. 29 (Bloomberg) -- Europeans' confidence fell more than forecast this month as the economy teetered on the brink of a recession.
"An index of executive and consumer sentiment in the economic outlook dropped to 88.8 from 89.5 in July, the European Commission in Brussels said today. That is below the 89.3 median estimate of 26 economists surveyed by Bloomberg News. Inflation unexpectedly eased in August and a measure of consumer-price expectations declined."
"The reports signal the slump in economic growth is extending through the third quarter and a 20 percent drop in oil prices from a record $147.27 a barrel last month is easing inflation pressures. Consumer-price increases are still above the European Central Bank's limit, prompting policy makers including Axel Weber to indicate they are in no hurry to cut interest rates even as expansion slows."
"``The euro-zone economic situation is deteriorating markedly,'' said Carsten Brzeski, an economist at ING Group in Brussels. ``Therefore, it is somewhat striking that some central bankers still consider interest rates to be accommodative.''"
"Inflation eased to 3.8 percent from 4 percent, according to a separate report today. Economists had forecast that inflation would remain unchanged at a 16-year high. National data this week showed inflation in Germany, Europe's largest economy, Spain and Belgium eased this month."
"European companies and consumers see less chance of prices rising, the commission data indicate. A measure of companies' selling-price expectations fell to 17 in August from 20 in July. Consumers' outlook for prices dropped to 22 from 30, falling below its average reading for the past 18 years."
"The euro pared gains after the reports and was up 0.2 percent to $1.4737 against the dollar at 12:40 p.m. in London, having been as high as $1.4767 earlier. The yield on the German 1-year bund fell 4 basis points to 4.13 percent today. It's down 22 basis points since the start of the month."
"The ECB, which aims to keep inflation just below 2 percent, raised its key interest rate to 4.25 percent on July 3, a seven- year high. While the central bank left the rate on hold this month, ECB Executive Board member Lorenzo Bini Smaghi said in a Bloomberg Television interview broadcast today that inflation is ``too high'' and must be brought below the bank's ceiling."
The ECB's Weber this week said the central bank may need to raise borrowing costs once the economic outlook ``brightens'' toward the end of the year.
"``Inflation has started to slow, but remains too high for the ECB to soften its rhetoric,'' said Marco Valli, chief Italian economist at Unicredit MIB in Milan. He said the ECB may begin cutting rates from the middle of 2009."
"The 15-nation euro-area economy shrank in the second quarter while the region's manufacturing and service industries contracted in August. L'Oreal SA, the world's largest cosmetics maker, today reported the slowest profit growth in three years. Bertelsmann AG, Europe's largest media company, yesterday cut its 2008 profit forecast after advertisers slashed marketing budgets."
"Confidence among euro-area manufacturers fell more than economists forecast to minus 10 this month from minus 8 in July, while sentiment among retailers also declined, according to today's report from the commission. Consumer confidence rose 1 point from July's minus 20, staying close to a 5 1/2-year low. Spanish retail sales fell for an eighth month in July, while in the U.K., consumer confidence stayed near a record low in August, GfK NOP said today."
"In the euro area, unemployment remained at 7.3 percent in July, another report showed."
"Most investors have pared bets on the ECB raising rates again as the economic outlook worsens, Eonia forward contracts show. The May contract yielded 4.15 percent today, down from 4.44 percent a month ago."
To contact the reporter on this story: Fergal O'Brien in Dublin at firstname.lastname@example.org.
"Last Updated: August 29, 2008 07:46 EDT"
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