TOP 50

U.K. Price Expectations Highest Since at Least 1999 (Update1)

By Mark Deen

"Sept. 11 (Bloomberg) -- U.K. consumers' predictions for inflation in the next year reached the highest since at least 1999 in a survey for the Bank of England, making it harder to cut interest rates as the threat of a recession looms."

"The median forecast on increases in consumer prices for the coming 12 months rose to 4.4 percent, the central bank said today in London. That's the highest since the quarterly survey began nine years ago and compares with 4.3 percent in May. GfK NOP interviewed 2,115 people from Aug. 14 to Aug. 19."

"Inflation will accelerate further after reaching 4.4 percent in July and policy makers need to guard against consumers getting a ``5 percent mindset'' about cost increases, Bank of England Deputy Governor John Gieve said this week. The rate has exceeded the bank's 2 percent goal for 10 months, adding to the risk that higher prices will get entrenched."

"``If employees try to get bigger wage rises that could trigger a wage-price spiral and that's what the bank is trying to prevent,'' said Hann-Ju Ho, an economist at Lloyds TSB Group Plc in London. ``We think the bank will keep interest rates on hold at 5 percent for the rest of this year.''"

The pound was little changed after the report and traded at $1.7501 at 9:38 a.m. in London.

"The central bank's forecasts released last month show inflation, which has already reached the fastest pace in at least 11 years, will accelerate to about 5 percent after annual increases in food and energy prices."

Gieve's View

"``We've got to ensure that we don't create a 'five per cent mindset' where people think 'oh well, inflation's at five percent, I'd better put my prices up by more than I'd otherwise do,''' Gieve told the Irish News during a visit to Northern Ireland, in an interview published yesterday."

"The median response in the survey on the current rate of inflation was 5.4 percent, the highest since at least 1999. That compares with 4.9 percent in May, the Bank of England said."

"``Inflation is clearly going to rise above 5 percent and even if it tails off it'll still be more than double the bank's 2 percent target,'' said Lloyds TSB's Hann-Ju Ho. ``The risk is that what should be a temporary rise in inflation gets entrenched if inflation expectations go out of control.''"

"Wages have so far shown little sign of responding to the jump in the inflation rate. Average earnings, excluding bonuses, increased 3.7 percent in the second quarter, the slowest pace since the three months through January."

Inflation may slow after economic growth stalled in the second quarter. Banks including UBS AG predict the U.K. will enter a recession in the second half of the year.

The central bank has cut the benchmark interest rate three times since last December to cushion the economy from the credit squeeze. Policy makers kept the rate unchanged at 5 percent for a fifth month on Sept. 4.

"When asked how to assess the bank's performance in ``doing its job to set interest rates to control inflation,'' the net percentage of people satisfied was at 18 percent, the lowest since the survey began, the report showed. The highest-ever reading was 54 percent in November 2001."

To contact the reporter on this story: Mark Deen in London at markdeen@bloomberg.net

"Last Updated: September 11, 2008 04:41 EDT"





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Australian Employment Rises Three Times Forecast Pace (Update2)

By Jacob Greber

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"Sept. 11 (Bloomberg) -- Australian employers hired almost three times as many workers in August as economists forecast, adding to evidence a mining boom is helping offset weaker domestic demand."

"The number of people employed rose 14,600 last month, the statistics bureau said in Sydney today. The median estimate of 25 economists surveyed by Bloomberg News was for a 5,000 gain. The jobless rate fell to 4.1 percent from 4.3 percent."

Australia's currency rose on speculation the lowest unemployment rate in five months reduces the central bank's scope to cut borrowing costs again this year. Governor Glenn Stevens reduced the benchmark last week for the first time in sevens years and said policy makers were now questioning whether to cut again or hold.

"``This reinforces the idea that while the Reserve Bank is looking to make policy less restrictive, they're not about to race to an expansionary footing,'' said Andrew Hanlan, a senior economist at Westpac Banking Corp. in Sydney."

"The Australian dollar rose to 80.05 U.S. cents at 12:35 p.m. in Sydney from 79.61 cents before the report was released. The two-year government bond yield climbed 7 basis points, or 0.07 percentage point, to 5.60 percent."

"The S&P/ASX 200 Index of stocks narrowed its losses. It was down 1.1 percent to 4,850.10 at 12:36 a.m. in Sydney, up from a low of 4,834.2 before the report."

Full-Time Jobs

"The number of full-time positions rose 7,500 in August and part-time jobs increased 7,200. About half of the nation's 21 million people are employed. The August employment gain followed a revised increase of 18,700 jobs in July."

"Demand for skilled labor at companies including BHP Billiton Ltd., which is expanding mines to meet Chinese orders for iron ore, is helping generate new jobs in the states of Western Australia and Queensland, where unemployment fell in August to 2.8 percent and 3.3 percent respectively."

"By contrast, Australia's most populous state, New South Wales, saw an increase in its jobless rate to 4.9 percent from 4.7 percent. The rate was 4.3 percent in Victoria, 4.4 percent in South Australia and 4 percent in Tasmania."

Concern that demand for skilled labor would stoke wage increases and inflation was a key reason central bank policy makers increased borrowing costs twice this year to a 12-year high. They reduced the benchmark rate by a quarter point to 7 percent on Sept. 2.

Rate Outlook

"``In the near term, the question will be do we hold here or go down a bit more'' on interest rates, Stevens told parliament's economics committee in Melbourne this week."

"Investors reduced bets that Stevens will cut the benchmark again on Oct. 7, according to a Credit Suisse Group index based on trading in interest-rate swaps. They forecast an 80 percent chance of a reduction, the index showed at 12:15 p.m. in Sydney, down from 90 percent before the report was released."

"There are signs that businesses reliant on household spending are starting to review hiring plans. Fairfax Media Ltd., Boeing Co., Ford Motor Co., Starbucks Corp. and Australia & New Zealand Banking Group Ltd., all announced job cuts in Australia last month. Qantas Airways Ltd., the nation's biggest airline, will fire 1,500 workers."

"``Don't get too excited -- the unemployment rate has fallen because the participation rate dropped slightly,'' said Katie Dean, a senior economist at Australia & New Zealand Banking Group Ltd. in Melbourne. ``Moreover, the leading indicators of employment suggest that the jobless rate will rise gradually.''"

Business Confidence

"Job-vacancy advertisements fell 4.9 percent in August, the biggest drop in more than seven years, according to an ANZ Bank report released on Sept. 8. Businesses confidence is also close to the lowest level since the 2001 terrorist attacks in the U.S."

"The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.2 percent in August from 65.3 percent in July, today's figures showed."

"Gross domestic product rose 0.3 percent in the three months through June 30, the smallest gain since the fourth quarter of 2004, as consumers cut spending by 0.1 percent, a report showed last week."

"The jobless rate will rise ``a bit'' over the next year to 18 months, Governor Stevens said this week. ``The rate of employment growth will slow. It is starting to do that already,'' he said."

"Today's unemployment report was compiled by the statistics bureau using a sample of businesses that has been cut by 24 percent. The bureau, which reduced the survey because of budget cuts, has said it will increase the volatility of the figures."

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

"Last Updated: September 10, 2008 23:00 EDT"





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"Canada Stocks Rally Most in 7 Months; EnCana, Barrick, RIM Gain "

By John Kipphoff

Sept. 10 (Bloomberg) -- Canadian stocks rose the most in seven months as Research In Motion Ltd. gained after introducing a new phone and commodity shares advanced on speculation shares are cheap relative to earnings following this month's selloff.

Research In Motion rebounded from a five-month low on a plan to market a flip-cover version of its BlackBerry Pearl that may help it dent Nokia Oyj's dominance of the market for e-mail phones. EnCana Corp. paced the biggest gain in three weeks by energy companies. Barrick Gold Corp. helped lift raw-materials stocks from an 18-month low.

"The Standard & Poor's/TSX Composite Index rose 2.9 percent to 12,497.15 in Toronto, the most since Jan. 22, and the best gain among global stock indexes today. Canada's main stock benchmark ended a slump in which it fell 12 percent this month through today and lost $142.1 billion in value. The S&P/TSX traded at 15.3 times earnings yesterday compared with 17.5 at the end of August and an average of 18.2 times the past year."

"``We're getting a bounce in resource stocks after a pretty ugly time,'' said Paul Hand, managing director of equity trading at RBC Capital Markets in Toronto. ``People are going back to fundamentals and realizing that at some point they have to pick away at things.''"

"Research In Motion rose 6 percent to C$121.36, the most in a month, to end an eight-day slide. The new phone will be available later this year, Co-Chief Executive Officer Jim Balsillie said yesterday. The announcement will be viewed as positive for the stock, Citigroup Inc. analyst Jim Suva wrote in a note today."

Market Share

"Research In Motion's share of the U.S. smartphone market rose to 53.6 percent during the second quarter from 44.5 percent in the first three months of the year, the Sydney Morning Herald reported on its Web site, citing technology research firm IDC."

"Measures of raw-materials and energy stocks added 3.9 percent and 3.5 percent, respectively, as all 10 industry groups advanced."

"The S&P/TSX, whose 103 percent gain since 2002 is more than twice that of the Standard & Poor's 500 Index, rose more than four times as fast today, in part because of its larger concentration of commodity shares. Energy and mining companies make up about 46 percent of the Canadian benchmark, compared with about 16.4 percent of the S&P 500."

"``We're part of the global themes,'' said Paul Hand, managing director of equity trading at RBC Capital Markets in Toronto. ``We're very attractive when people are on the commodity trade, and when they get off, we suffer.''"

Energy Companies

"EnCana, Canada's biggest energy company by market value, added 3.1 percent to C$69.18. Smaller rival Canadian Natural Resources Ltd. rose 5.9 percent to C$79."

"Suncor Energy Inc., advanced 2.3 percent to C$46.74. The world's second-biggest oil-sands producer had fallen 37 percent from its May 20 record before today. Rival Canadian Oil Sands Trust rose 3.7 percent to C$41.46 after falling 11 percent yesterday. Husky Energy Inc., the oil company controlled by Hong Kong billionaire Li Ka-shing, added 7.7 percent to C$42.45."

Crude-oil fell to a five-month low in New York following a U.S. government report that showed supplies increased along the Gulf Coast as Hurricane Gustav cut refinery output. Prices are down about 30 percent from a July 11 record of $147.27.

"Barrick Gold increased 5.3 percent to C$29.50, the most since Aug. 13, even as the price of the precious metal declined. The biggest gold mining company slid 9.8 percent yesterday."

Fertilizer Maker

"Potash Corp. of Saskatchewan Inc., the largest maker of fertilizer by market value, added 1.9 percent to C$153.11."

"The energy index fell to 14.9 times earnings yesterday, compared with the average of 18.6 for the past year, while the materials group slipped to a 16.8 multiple, from an average of 27.33."

"Canadian National Railway Co. and Manulife Financial Corp. paced gains in industrial and financial companies. Canadian National, the country's biggest railroad, added 3 percent to C$55.04. Manulife Financial, the nation's largest insurance company, rose 3.2 percent to C$38.09."

Royal Bank of Canada added 3.4 percent to C$49.52.

"Canadian banks are ``looking like a good place to hide with commodities tanking'' John Aiken, an analyst with Dundee Securities Corp. in Toronto, wrote in a report."

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

"Last Updated: September 10, 2008 17:44 EDT"





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Yuan Drops Most in Week as Inflation Dips; Bonds Little Changed

By Judy Chen and Belinda Cao

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Sept. 11 (Bloomberg) -- China's yuan declined by the most in almost a week against the dollar on concern that the central bank will slow the currency's gains as inflation pressures ease. Bonds were little changed.

"A government report showed yesterday that consumer prices climbed 4.9 percent in August from a year earlier, the slowest pace in 14 months, edging closer to the government's 4.8 percent target for 2008. The central bank set the reference rate for yuan trading at 6.8457 against the dollar today, the lowest in three weeks."

"``Slowing inflation reduces the possibility of accelerated yuan appreciation,'' said Huang Yi, a foreign exchange trader at Guangdong Development Bank Co. in Guangzhou. ``The yuan will stay stable against the dollar for the rest of this year before the country's exports recover.''"

"The yuan dropped 0.08 percent to 6.8443 a dollar as of 12:57 p.m. in Shanghai, from 6.8385 yesterday, according to the China Foreign Exchange Trade System."

"Exports grew 21.1 percent in August, down from July's 26.9 percent gain, the customs bureau said yesterday. China has halted the yuan's appreciation against the dollar since the end of July as policy makers seek to maintain economic expansion and shore up exports."

U.S. Labor Secretary Elaine Chao said on Aug. 26 that the Bush administration will keep pressing China to let the yuan strengthen at a faster pace to help close a trade deficit with the Asian nation that ballooned to a record $256 billion in 2007.

Hard to Break

"``It will be hard for the yuan to break through the key level of 6.8 by the end of this year,'' said Ken Peng, an economist at Citigroup Inc. in Shanghai. ``But the government won't allow a depreciation which would hurt its relationship with the U.S.''"

"Shenzhen, an export hub for goods including textiles, toys and shoes, is facing an economic situation ``even tougher and more severe'' than the 1997 Asian financial crisis, the South China Morning Post said today, citing an interview the city's mayor Xu Zongheng gave to a radio program."

"The city's economy expanded 10.5 percent in the first half, the slowest pace since it became a special economic zone in 1979, the Hong Kong-based newspaper said."

Government bonds were little changed after the yield on the 30-year debt dropped the most in more than seven months yesterday as investors shifted their focus to slowing economic growth after government data showed inflation is cooling.

"The yield on the 30-year bond declined 6 basis points, the most since Feb. 1, to 4.62 percent yesterday, according to rates compiled by the nation's biggest debt clearing house. A basis point is 0.01 percentage point."

Focus on Growth

"``Yields tended to go down as concerns shifted to growth rather than inflation, which slowed faster than expected,'' said Yang Hui, a fixed-income analyst with Citic Securities Co. in Beijing."

China's economic growth declined for four straight quarters to 10.1 percent by June amid a global slowdown.

"The rally in bonds yesterday was also driven by China Development Bank's 10-year bond sale yesterday, Yang said. The debt yielded 4.28 percent at the auction, about 20 basis points lower than traders had estimated."

"The yield on the 4.16 percent bond due February 2023 was little changed at 4.34 percent in Shanghai, according to the China Interbank Bond Market. The price of the security held at 98.13 per 100 yuan face amount."

To contact the reporters on this story: Judy Chen in Shanghai at xchen45@bloomberg.net; Belinda Cao in Beijing at lcao4@bloomberg.net.

"Last Updated: September 11, 2008 01:29 EDT"





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"Asia Pacific Stocks `Very Close' to Trough, Morgan Stanley Says "

By Chua Kong Ho

"Sept. 11 (Bloomberg) -- Stocks in the Asia Pacific region excluding Japan appear to be ``very close to a trough'' when compared to previous market cycles, according to Morgan Stanley."

"The MSCI Asia Pacific excluding Japan Index is trading at 11 times forward price-earnings, just 5 percent above trough levels in prior market downturns, said Morgan Stanley analysts led by Malcolm Wood in a note today. When compared to reported earnings, current valuations are 14 percent below the average trough level of 14.9 times, the note said."

"Other signs that point to a market bottom include a slowing decline in U.S. home prices and depressed sentiment in Asia, according to the note."

"The MSCI Asia Pacific excluding Japan Index has declined 33 percent this year and is valued at 11.9 times reported earnings, according to data compiled by Bloomberg."

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net

"Last Updated: September 10, 2008 22:04 EDT"





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"Asian Currencies Fall, Led by Korean Won, Rupiah on Stock Sales "

By Aaron Pan and Kim Kyoungwha

Sept. 11 (Bloomberg) -- South Korea's won and Indonesia's rupiah led losses in Asian currencies on speculation purchases of dollars will increase as overseas investors add to sales of regional stocks.

"All 10 of the most-traded currencies in Asia outside of Japan fell as funds abroad sold more shares than they bought in Korea, Taiwan, the Philippines and Thailand. The won remained lower after the Bank of Korea kept interest rates unchanged at an eight-year high of 5.25 percent. Asian currencies also declined as the dollar rose to the highest in almost a year against the euro."

"``Capital is moving back to the U.S.,'' said Marcelo Ayes, senior vice president for treasury at Rizal Commercial Banking Corp. in Manila. ``Banks, funds and companies are selling their investments in Asia and the rest of the world to fund recapitalization of U.S. companies.''"

"The won declined 1.3 percent to 1,109.5 against the dollar as of the 3 p.m. close in Seoul, compared with 1,095.50 yesterday, according to Seoul Money Brokerage Services Ltd. The rupiah fell 0.8 percent to 9,428 per dollar, the lowest since Jan. 23, and dropped as much as 1 percent to 9,455, according to data compiled by Bloomberg."

Korea's won slumped 15 percent this year as global funds dumped Korean shares on concern that the country may be headed for a repeat of the 1997 financial crisis. Vice Finance Minister Bae Kook Hwan said officials will take action when the currency market is ``volatile.''

`Continued Intervention'

"``Continued intervention will do more harm than good given the global trend of a stronger dollar,'' said Oh Suk Tae, an economist with Citigroup Inc. in Seoul. ``Behind the won's weakness is a perception forming that the central bank will find it increasingly difficult to raise interest rates as growth slows.''"

"International investors have sold more Korean shares than they bought every day except five in the 29 trading days since Aug. 1, according to Korea Exchange data. Central banks intervene in the currency market by selling or buying foreign exchange."

"The Indonesian central bank will stay in the market to curb rupiah volatility, Deputy Governor Hartadi A. Sarwono said yesterday."

"Oversea investors sold more Indonesian stocks than they bought on five of the past eight trading days, helping sending the benchmark share index to a 17-month low."

`Panic in the Market'

"``There's panic in the market because of losses on the stock exchange,'' said Lindawati Susanto, head of currency trading at Bank Resona Perdania Pt in Jakarta. ``The rupiah is trying to break 9,500.'' The central bank will limit losses in the rupiah, Susanto said."

The Philippine peso fell to the lowest in a year as Lehman Brothers Holdings Inc. reported a record loss and said it will sell a stake in its asset-management unit and spin off real- estate holdings.

"The currency declined as much as 1.9 percent to 47.80 per dollar, according to Tullett Prebon Plc, the lowest since May 2007, and last traded at 47.088."

Taiwan's dollar fell to an almost seven-month low on speculation a global economic slowdown will crimp demand for the island's exports.

"``When the market sees the major economies in the world slowing, there will be weakness in the Taiwan dollar,'' said Philip Wee, a currency strategist at DBS Bank Ltd. in Singapore."

"The island's currency fell as much as 0.7 percent to NT$32.080 against the U.S. dollar, the weakest since Feb. 12, according to Taipei Forex Inc. It last traded at NT$32.04."

"Overseas investors were net sellers of Taiwan stocks for eight of the last 10 trading days, during which time the Taiex index fell 8.8 percent."

Malaysian Ringgit

Malaysia's ringgit traded close to a one-year low on speculation falling commodity prices such as palm oil will erode export receipts and curb growth in Southeast Asia's third-largest economy.

"A government report today showed industrial production grew at the slowest pace in 11 months in July. Industrial production rose 1.8 percent from a year earlier, according to the Statistics Department. That was below the median forecast in a Bloomberg News survey of 16 economists for a 2.1 percent gain. It expanded 2 percent in June, the slowest since August 2007."

"``The weakness is tied to the outlook for slower growth and outflows of capital from the local markets,'' said Wan Suhaimi Saidi, an economist at Kenanga Investment Bank Bhd. in Kuala Lumpur. ``The ringgit is not getting much support'' from the government or central bank, he said."

"The ringgit was little changed at 3.4685 per dollar, according to data compiled by Bloomberg. The currency earlier reached 3.4743, the lowest since Sept. 19, 2007."

"The ringgit's recent decline is not a problem for the country, state news agency Bernama reported yesterday, citing Deputy Finance Minister Ahmad Husni Hanadzlah."

"Elsewhere, the Singapore dollar lost 0.6 percent to S$1.4437, Thailand's baht declined 0.5 percent to 34.75 and Vietnam's dong added 0.1 percent to 16,580."

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

"Last Updated: September 11, 2008 04:34 EDT"





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Petrobras Oil Reserves Likely to Swell on Iara Field Estimate

By Jeb Blount

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"Sept. 11 (Bloomberg) -- Petroleo Brasileiro SA, Brazil's state-controlled oil company, said its Iara offshore field contains 3 billion to 4 billion barrels of oil, its second giant find in a year and enough to supply the country for five years."

"The assessment released yesterday is the first estimate of recoverable oil from the discovery announced Aug. 11. Petrobras, as the Rio de Janeiro-based company is known, said in January its Jupiter field in the same region contained gas quantities similar to its Tupi area, the largest oil find in the Americas since 1976."

"Iara is in the Santos Basin to the north of Tupi, a 5 billion- to 8 billion-barrel field announced in November. If confirmed, Iara and Tupi, which sit in non-adjacent parts of the same exploration block, could almost double Brazil's 12.6 billion barrels of proven oil reserves, according to BP Plc."

"``It's still a huge field and bigger than almost anything around,'' Ted Harper, senior research analyst with Frost Investment Advisors in Houston, said by telephone. The company manages the equivalent of $2 billion of stocks and bonds, including Petrobras, Harper said."

"Iara is operated and 65 percent owned by Petrobras. The U.K.'s BG Group Plc holds a 25 percent stake and Portugal's Galp Energia SGPS SA the rest. Brazil consumed an average 2.19 million barrels a day of oil in 2007, according to BP."

"The area contains natural gas and a lighter grade of crude than is common in South America, Petrobras said. It measures 26 to 30 degrees on the American Petroleum Institute scale of viscosity, at the top end of the medium range. Lighter grades are easier to refine and therefore command a higher price."

"``This will be highly beneficial to Petrobras and its partners in a world where there seems to be a general lack of large, light, sweet crude discoveries,'' Harper said."

August Discovery

"The Iara estimate is based on a well drilled in 2,230 meters (7,315 feet) of water. The final well depth is 6,080 meters. When the discovery was announced last month, the well was still being drilled, Petrobras said."

"The find is 227 kilometers (141 miles) east-southeast of the city of Rio de Janeiro and lies in a new petroleum province known as the pre-salt. The area, which runs 800 kilometers along Brazil's coast from Espirito Santo to Santa Catarina states, has oil deposits beneath a layer of salt resting as much as 3,000 meters beneath the ocean surface and another 3,000 to 5,000 meters below the seabed."

"The most promising areas so far have been near Tupi, Guilherme Estrella, head of exploration and production, said Sept. 1. Petrobras has not said whether Iara is an extension of Tupi. Unleased and unexplored areas sit between the two fields. The block, named BM-S-11, is in two, non-contiguous parts. The Iara portion is less than a quarter the size of the Tupi portion, according to a map supplied by Petrobras."

More to Come

"``The volume is impressive because of the relatively small area of Iara when compared with Tupi,'' said Breno Guerbatin, an energy analyst at BNY Mellon Arx, which manages $5 billion worth of assets in Rio de Janeiro. ``But it's more than volume. This announcement is important because nobody was expecting Petrobras to announce new volume estimates before mid-2009.''"

"The area around Tupi and Iara may contain as much as 70 billion barrels, according to Julio Bueno, economic policy secretary for the government of Rio de Janeiro state, Brazil's main oil-producing region. It will take an estimated $600 billion to develop the fields and surrounding discoveries, according to UBS AG, a Swiss bank."

"The discovery may help Petrobras stock, BNY Mellon's Guerbatin said. Petrobras's preferred shares, its most-traded class of stock, have fallen 45 percent since reaching a high of 52.51 reais on May 21 when the company became the world's fifth- largest by market value. At yesterday's close it ranked 21st."

Rapid Slide

"Petrobras' decline is more than double the 21 percent slide in the benchmark Bovespa index in the same period as Brazil's government launched a discussion of how to manage the new fields in the pre-salt area and as oil prices fell from record highs, Guerbatin said."

"Preferred shares rose 33 centavos, or 1.2 percent, to 28.68 reais in Sao Paulo before the Iara announcement."

"For Lisbon-based Galp, which has the potential for more oil in the Tupi field than it has ever had in its history, Brazil will have a ``transformational impact,'' said Jason Kenney, an analyst with ING Bank NV, in a research note last month."

"Galp wants to expand exploration in countries including Brazil and Angola to increase access to crude supplies and rely less on refining and selling fuel at home and in Spain, which still account for half its operating profit. Galp ended 2007 with proven and probable reserves of 31 million barrels, or about 1/40th of its potential stake in Tupi and Iara."

To contact the reporter on this story: Jeb Blount in Rio de Janeiro at jblount@bloomberg.net and;

"Last Updated: September 11, 2008 01:02 EDT"





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Asian Stocks Decline to Lowest Since November 2005; Banks Fall

By Kyung Bok Cho

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"Sept. 11 (Bloomberg) -- Asian stocks tumbled, driving the benchmark index to its lowest level since November 2005, on concern credit-market losses will increase and slowing growth will damp demand for the region's exports."

"Mitsubishi UFJ Financial Group Inc. and Australia & New Zealand Banking Group Ltd. fell more than 3 percent after Lehman Brothers Holdings Inc. posted a wider loss than analysts estimated. Mazda Motor Corp., which gets more than half of its operating profit in Europe, plunged the most in seven years after the European Commission cut the euro area's growth outlook. Sumitomo Heavy Industries Ltd. retreated 5.3 percent after Japan's machinery orders declined."

"The MSCI Asia Pacific Index sank 2.6 percent to 114.71 as of 5:16 p.m. in Tokyo, set for its biggest loss since July 25. The measure has given up gains made in a Sept. 8 rally sparked by the U.S. government's takeover of Fannie Mae and Freddie Mac."

"``The rescue of Fannie and Freddie wasn't enough to erase the symptoms of economic slowdown,'' said Lim Chang Gue, who oversees the equivalent of $1.8 billion as head of global investment at Samsung Investment Trust Management Co. in Seoul. ``Some industries would normally see a seasonal bump in demand about now, but this year there just isn't any.''"

"All 10 industry groups fell today, led by financial stocks."

"Japan's Nikkei 225 Stock Average lost 1.9 percent to 12,116.93, led by Mitsubishi UFJ. Taiwan's Taiex Index slumped 3.2 percent on speculation government measures to revive the economy will be insufficient. New Zealand's NZX 50 Index fell the least in the region after the central bank cut its benchmark interest rate by more-than-expected 50 basis points."

Record Loss

"Standard & Poor's 500 Index futures were down 0.5 percent recently. U.S. stocks rose yesterday, with the S&P 500 advancing 0.6 percent to 1,232.04, as investors bought energy shares trading at their cheapest level in 18 months."

"Mitsubishi UFJ, Japan's biggest bank, fell 5.1 percent to 823 yen. ANZ, Australia's fourth-largest by market value, slid 3.9 percent to A$16.92."

"Lehman said yesterday it posted a $3.9 billion third-quarter loss on $5.6 billion of writedowns, worse than the $2.2 billion loss analysts had predicted. Chief Executive Officer Richard Fuld is striving to convince investors that the No. 4 U.S. securities firm will stem losses as housing prices fall."

"Mizuho Financial Group Inc., Japan's second-biggest bank by assets, retreated 5.3 percent to 445,000 yen. Babcock & Brown Ltd., an Australian infrastructure-asset manager that has lost 93 percent this year, fell 16 percent to A$1.98, a record low."

European Slowdown

"Lehman's loss pushed global writedowns and credit losses caused by the collapse in the U.S. mortgage market to $511 billion, according to figures compiled by Bloomberg News."

"``Global securities firms and investment banks can no longer count on the securitization deals that have kept them profitable in recent years,'' said Yuuki Sakurai, a Tokyo-based general manager at Fukoku Mutual Life Insurance Co., which manages about $54 billion."

"Mazda, Japan's fourth-largest automaker, slumped 10 percent to 463 yen in Tokyo, the most since September 2001. Nikko Citigroup today cut its rating on Mazda to ``sell'' from ``hold.''"

"The European Commission lowered its full-year growth forecast for the 15-nation euro region's economy to 1.3 percent, from 1.7 percent earlier, and signaled the 2009 outlook may also be cut. The euro dropped to the lowest in 13 months against the yen. A weaker euro hurts Japanese exporters by reducing the value of repatriated sales."

"Nintendo Co., which got 37 percent of last year's sales from Europe, fell 3.4 percent to 48,150 yen in Osaka."

"TPV, Motech"

"TPV Technology Ltd., the world's biggest contract maker of computer monitors that gets a quarter of its sales from Europe, tumbled a record 13 percent to HK$2.73 in Hong Kong. The company cut its forecast for shipments this year. Motech Industries Inc., Taiwan's biggest solar-cell maker that got 39 percent of last year's sales from Europe, fell 4.8 percent to NT$160."

Stocks in Taiwan also fell as investors bet a NT$180.9 billion ($5.6 billion) package of spending and tax cuts won't boost the market.

"The measures ``will not succeed since they are not altering corporate or economic fundamentals in a meaningful way,'' said Howard Wang, who oversees $10 billion at JF Asset Management Ltd. in Hong Kong."

"Sumitomo Heavy, Japan's largest maker of plastic injection- molding gear, dropped 5.3 percent to 469 yen. Fanuc Ltd., the world's biggest industrial-robot maker, lost 2 percent to 7,540 yen in Tokyo."

Capital Spending

"Japan's machinery orders declined 3.9 percent in July from the previous month, the Cabinet Office said today. Economists had estimated orders, an indicator of capital spending in the next three to six months, would fall 3.6 percent."

"In Hong Kong, China Mobile Ltd., the world's biggest wireless carrier by users, fell 5.3 percent to HK$77, the lowest since June 15, 2007. Chinese regulators plan to let some China Mobile users keep their phone numbers when they switch to rivals, the Nanfang Daily newspaper reported today."

"Affiliates of South Korea's Kumho Asiana Group gained after the group said it may sell all or part of its life-insurance unit to raise cash. Daewoo Engineering & Construction Co., South Korea's biggest builder, climbed 2.7 percent to 13,250 won. Asiana Airlines Inc., the nation's second-largest carrier, advanced 4.9 percent to 4,610 won."

"Daito Trust Construction Co., a Japanese rental property developer, added 11 percent to 5,000 yen, the biggest gain since December. Unison Capital Inc., a Japanese private equity firm, will lead a group in bidding for Daito in a deal worth as much as $9 billion, the Wall Street Journal reported."

To contact the reporter for this story: Kyung Bok Cho in Seoul at kcho7@bloomberg.net.

"Last Updated: September 11, 2008 04:31 EDT"





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Hungarian Inflation Slowed in August on Food and Oil (Update1)

By Zoltan Simon

"Sept. 11 (Bloomberg) -- Hungarian inflation slowed in August as oil and food costs, which have buoyed consumer-price growth over the past year, eased and a strong forint capped imports."

"The annual rate fell to 6.5 percent from 6.7 percent in July, the Budapest-based statistics office said today. The median estimate of 20 economists in a Bloomberg survey was 6.6 percent. On the month, consumer prices fell 0.3 percent."

Decreasing global energy and food prices have raised expectations that the inflation rate will fall back toward the central bank's 3 percent target and allow policy makers to lower interest rates after boosting the key rate to a three-year high.

"``The data is reassuring,'' analysts at Intesa Sanpaolo SpA's unit in Budapest, including Mariann Trippon, said in a note to clients. ``The numbers reinforce our expectation that the central bank's next move will be a cut, but the timing is uncertain.''"

"The forint weakened to 240.2 per euro at 10:03 a.m., from 239.57 late yesterday."

"Food prices, which jumped 2.2 percent on a monthly basis last September as inflation began to quicken globally, fell by the most in three years in August, statistics office analyst Borbala Minary said. They were down 1.5 percent, dropping for a third month."

"A 9.9 percent increase in household natural gas prices on July 1 added 0.3 percent to the August figure and prevented inflation from slowing further last month, Minary said."

"Oil prices, which have fallen 28 percent since mid-July, point in a ``favorable direction'' for a drop in the inflation rate, central bank policy maker Gabor Oblath said."

`Slowly But Surely'

"The strengthening of the forint, which gained 11 percent against the euro in the past six months and helped lower durable goods prices, also slowed inflation. The price of durable goods fell for a fifth month in August."

"``Disinflation will allow us to slowly but surely approach the target'' of 3 percent, Oblath said in an interview on Sept. 9. The central bank expects to meet its inflation target in 2010, according to its most recent forecast issued in August."

"Still, Hungary needs ``unequivocal'' evidence that inflation is slowing before lowering the European Union's second-highest interest rate, Oblath said."

"The bank has kept the two-week deposit rate at 8.5 percent for three months, double the rate in the euro region, after increasing it 1 percentage point to curb inflation."

"``In the upcoming months the central bank could stick to its wait-and-see approach, but if the inflation data does not disappoint during the autumn months and markets remain stable, the first cut could come as early as November,'' Trippon said."

To contact the reporter on this story: Zoltan Simon in Budapest at zsimon@bloomberg.net.

"Last Updated: September 11, 2008 04:37 EDT"





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"Japan Machine Orders Fall 3.9%, Second Monthly Drop (Update2) "

By Jason Clenfield

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"Sept. 11 (Bloomberg) -- Japanese machinery orders fell for a second month in July, signaling manufacturers expect the global slowdown to crimp demand into next year."

"Orders, an indicator of capital spending in the next three to six months, declined 3.9 percent from June, when they slid 2.6 percent, the Cabinet Office said today in Tokyo."

"Japan's economy probably shrank last quarter more than initially estimated as business spending fell, the government is expected to report tomorrow. Slowdowns in the U.S. and Europe have taken a toll on Japanese exports, the engine that drove growth over the past six years, while stagnating wages and the worst inflation in a decade have subdued consumer spending."

"``Business investment is likely to stay on a downward trend at least through the end of the year,'' said Tomoko Fujii, head of Japan economics and strategy at Bank of America Corp. in Tokyo. ``We need to see an improvement in the U.S. for this to change.''"

"The yield on Japan's 10-year bond fell 2 basis points to 1.485 percent at 11:36 a.m. in Tokyo. The Topix stock index slid 1.5 percent, and a subindex of machinery makers lost 2 percent."

The median estimate of 35 economists surveyed by Bloomberg News was for a 3.6 percent drop in machinery orders.

"From a year earlier, orders decreased 4.7 percent, the first decline in four months, the Cabinet Office said. The value of orders placed from abroad, a figure excluded from the headline number, declined to the lowest level in two years."

Impact of Slowdown

"That ``suggests that the slowdown in the global economy is starting to have a material impact on the machinery sector,'' said Hiroshi Shiraishi, an economist at Lehman Brothers Holdings Inc. in Tokyo."

"Kubota Corp., the world's biggest maker of mini excavators, said last month it will cut production because of slowing demand from the U.S. and Europe. Tokyo Electron Ltd., Japan's largest maker of semiconductor equipment, lowered its full-year profit forecast by 40 percent last month after weakening demand for personal computers prompted chipmakers to postpone spending plans."

"``Companies are very cautious in a recessionary environment and I don't think they're bold enough to anticipate a quick profit recovery,'' said Fujii at Bank of America."

"Spending, Profits"

"Businesses reduced spending on factories and equipment for a fifth quarter in the three months ended June 30, the Finance Ministry said last week. Record costs for oil and raw materials caused profits to decline for the fourth consecutive quarter."

"The government will use the capital spending figures to revise second-quarter gross domestic product tomorrow. The economy contracted an annualized 3.1 percent, more than the 2.4 percent reported last month, according to economists surveyed."

"Still, economists say the current slowdown is unlikely to be as severe as the last recession, which lasted from December 2000 to January 2002. The economy is more resilient because companies have shed the excess workers, factory lines and debt that contributed to a decade of stagnation in the 1990s."

"``In the old days external shocks tended to get amplified,'' said Seiji Shiraishi, chief Japan economist at HSBC Securities Ltd. in Tokyo. ``But this time around, without the three excesses, the downside risks are limited.''"

Japan Is Unique

"The world's second-largest economy may also benefit more than others from declining oil prices, according to Julian Jessop, who says Japan is unique in having escaped the credit crunch and the housing collapse that's hit the U.S. and Europe. Crude has eased 29 percent since reaching a record in July."

"``That's going to relieve a lot of cost pressures,'' said Jessop, chief international economist at Capital Economics Ltd. in London. ``I'm convinced the Japanese economy will be one of the first to recover as the global inflation shock fades.''"

"Other economists say oil's decline reflects weakening demand and slower growth in the emerging markets that have helped Japanese companies weather the U.S. slowdown. In China, which in July passed the U.S. as Japan's biggest export customer, economic expansion has cooled for four quarters."

"``You can't rescue the world economy just with lower oil prices,'' said Martin Schulz, senior economist at a research arm of Fujitsu Ltd., Japan's biggest computer services company. ``Asia has to correct quite a bit and that's an important market for Japan.''"

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

"Last Updated: September 10, 2008 22:45 EDT"





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Copper Gains From Seven-Month Low on China Import Speculation

By Li Xiaowei

"Sept. 11 (Bloomberg) -- Copper rebounded from its lowest in more than seven months in London on speculation imports from China, the largest consumer, will gain on stronger local prices."

"The price plunge in London has led to a large premium for metal in Shanghai since the end of August, which ``will encourage Chinese copper imports to recover substantially in the fourth quarter,'' Macquarie Group Ltd. said in a report today."

"``The consensus that Chinese imports will gain is supporting the market,'' Chen Yonglin, an analyst at Citic Futures Co., said from Shanghai. Refined metal purchases are ``very likely to return to normal levels of 100,000 tons'' in September, he said."

"Copper for three-month delivery advanced as much as 1.5 percent to $6,940 a ton on the London Metal Exchange and traded at $6,920.25 at 3:10 p.m. in Shanghai. Metal for December delivery closed up 0.5 percent at 54,550 yuan ($7,970) a ton on the Shanghai Futures Exchange."

"Freeport McMoRan Copper & Gold Inc., the second-largest copper producer, said supply globally may be constrained because of a lack of new discoveries and falling output at ageing mines."

"``We feel very optimistic about the markets,'' Chief Executive Officer Richard Adkerson said in an interview in Denver. ``We see current output from mines being consistently lower than expected, not for one reason but for a variety of issues.''"

"Freeport, based in Phoenix, this week lowered the production forecast from its Grasberg mine in Indonesia after a pit wall collapsed, while BHP Billiton Ltd. said its Escondida copper mine, the world's largest, will yield 15 percent less metal as ore quality declines."

China Premium

"Chinese copper for immediate delivery trades at a premium of $360 a ton above LME cash copper, compared with an $800 discount in May, Macquarie analysts led by Bonnie Liu said in the report."

"Copper has fallen 23 percent from the July peak of $8,940 a ton in London, as increasing stockpiles signaled weaker demand and a rebound in the U.S. currency reduced dollar-priced investments. Shanghai prices have declined 14 percent."

"Imports of copper and copper products by China fell 4 percent to 178,047 tons last month from July, preliminary data from the country's customs office showed yesterday."

"Aluminum fell 0.2 percent to $2,620 a ton at 3:14 p.m. in Shanghai. The metal has tumbled 22 percent from a July record of $3,380.15 a ton."

Price Support

"Aluminum may find support at current levels as producers in China, the world's largest, delay starting new plants as prices have fallen below output costs, Macquarie said in a report today."

"Producers will cut the fee they charge buyers in Japan, Asia's biggest importer, by as much as 14 percent, the biggest drop in five years, as a slump in home and car sales slows demand, according to four executives involved in the talks. They declined to be identified as the negotiations were private."

"Among LME-traded metals, lead was up 0.1 percent to $1,800 a ton, nickel was down 0.3 percent to $18,450, zinc was unchanged at $1,750 a ton and tin rose 1.5 percent to $18,605."

To contact the reporter for this story: Li Xiaowei in Shanghai at Xli12@bloomberg.net

"Last Updated: September 11, 2008 04:14 EDT"





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"Galp, BG Rise on Petrobras Assessment of Iara Field (Update1) "

By Joao Lima

"Sept. 11 (Bloomberg) -- Galp Energia SGPS SA and BG Group Plc, who both hold stakes in Brazil's Iara field, jumped after Petroleo Brasileiro SA estimated reserves from the discovery at between 3 billion and 4 billion barrels of oil."

"Galp, Portugal's biggest oil company, advanced as much as 12 percent to 12.74 euros, and traded at 12.08 euros as of 9:55 a.m. in Lisbon. BG, the U.K.'s third-largest oil and natural-gas producer, increased 4.3 percent and last traded at 1,099 pence. Petrobras, as Brazil's state-controlled oil company is known, gained 7.2 percent to 11.90 euros in Frankfurt."

"Iara is in the Santos Basin to the north of Tupi, a 5 billion- to 8 billion-barrel field announced in November and the biggest discovery in the Americas since 1976. If confirmed, Iara and Tupi, which sit in non-adjacent parts of the same exploration block, could almost double Brazil's 12.6 billion barrels of proven oil reserves, according to BP Plc."

"``The oil and gas reserves are of better quality than the expected quality of Tupi and the other blocks in the Santos basin,'' Bruno Almeida da Silva, an analyst at Banco BPI SA who has a ``buy'' rating on Galp, said today in a research note. That ``implies a better realization oil price and to a lesser degree, lower production costs.''"

"Petrobras is the operator and owns 65 percent of the block where both the Iara and Tupi wells were drilled. Reading, England-based BG owns 25 percent and Lisbon-based Galp owns 10 percent."

First Estimate

The assessment of Iara released yesterday is the first estimate of recoverable oil from the discovery announced last month.

"The area contains natural gas and a lighter grade of crude than is common in South America, Petrobras said. It measures 26 to 30 degrees on the American Petroleum Institute scale of viscosity, at the top end of the medium range. Lighter grades are easier to refine and therefore command a higher price."

"``This will be highly beneficial to Petrobras and its partners in a world where there seems to be a general lack of large, light, sweet crude discoveries,'' said Ted Harper, senior research analyst with Frost Investment Advisors in Houston. The company manages the equivalent of $2 billion of stocks and bonds, including Petrobras, Harper said."

Pre-Salt

"The find is 227 kilometers (141 miles) east-southeast of the city of Rio de Janeiro and lies in a new petroleum province known as the pre-salt. The area, which runs 800 kilometers along Brazil's coast from Espirito Santo to Santa Catarina states, has oil deposits beneath a layer of salt resting as much as 3,000 meters beneath the ocean surface and another 3,000 to 5,000 meters below the seabed."

"The area around Tupi and Iara may contain as much as 70 billion barrels, according to Julio Bueno, economic policy secretary for the government of Rio de Janeiro state, Brazil's main oil-producing region. It will take an estimated $600 billion to develop the fields and surrounding discoveries, according to UBS AG, a Swiss bank."

"Tupi is the largest oil discovery in the Americas since Mexico's Cantarell field was found in 1976, and compares with the 12 billion barrels held at Kazakhstan's Kashagan field, the largest oil find in the last three decades. Petrobras has not said whether Iara is an extension of Tupi."

`Transformational Impact'

"For Lisbon-based Galp, Brazil will have a ``transformational impact,'' Jason Kenney, an analyst with ING Bank NV, said in a research note last month."

Galp wants to expand exploration in countries including Brazil and Angola to increase access to crude supplies and rely less on refining and selling fuel at home and in Spain. Refining and marketing still account for more than half of Galp's operating profit.

"First-half adjusted net income at Galp fell 25 percent to 214 million euros as crude prices rose, squeezing refining margins 46 percent, the company said Aug. 6. Galp, which owns holdings in four exploration blocks in the Santos Basin, ended 2007 with proven and probable reserves of 31 million barrels."

"Petrobras in January said that a gas and oil discovery known as Jupiter, in the Santos Basin's BM-S-24 block, could be as big as Tupi. Petrobras owns 80 percent of Jupiter and operates the well, while Galp has a 20 percent stake."

"The Tupi discovery helped Galp's stock more than double in 2007 to become the best performer in the Dow Jones Europe Stoxx Oil & Gas Index. Eni SpA, Italy's biggest oil company, and Portuguese holding company Amorim Energia BV, each control a third of Galp."

To contact the reporter on this story: Joao Lima in Lisbon at jlima1@bloomberg.net

"Last Updated: September 11, 2008 05:08 EDT"





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"Junk Bond Distress Levels Surge, Signaling Defaults (Update1) "

By John Glover

"Sept. 11 (Bloomberg) -- More than 30 percent of European high-risk, high-yield bonds are trading at distressed levels, the most in five years, stoking speculation defaults will rise."

"Investors demand an extra yield over government debt of more than 10 percentage points to hold 53 of the 169 bonds in Merrill Lynch & Co.'s Euro High Yield Constrained Index. That's the biggest proportion of distressed debt since March 2003, in the aftermath of the Sept. 11 terror attacks and the dot-com crisis."

"``Typically, those levels of distress would indicate that defaults are going to rise,'' said Karl Bergqwist, who manages the equivalent of about $500 million in high-yield debt at Gartmore Investment Management in London. ``We think there's much worse to come. Spreads could go a lot wider and defaults are undoubtedly going to go up.''"

"Defaults on European speculative-grade corporate bonds will climb to 2.3 percent in a year, from 0.7 percent now, near a record low, Moody's Investors Service said in a Sept. 8 report. Worldwide defaults will surge to 7.4 percent, from 2.7 percent."

"Spreads on high-yield debt have widened as investors, fleeing the fallout from the collapse of the U.S. subprime- mortgage market, shun all but the safest bonds and as banks tighten lending standards. The average yield in the Merrill High Yield index, an indication of the absolute cost of debt to companies, is now 12.3 percent, twice the level of last March."

Market Closed

"Europe's primary high-yield bond market has been effectively closed since July 2007, data compiled by Bloomberg show. Last year, companies borrowed the equivalent of $32.1 billion using such securities, with all but $5 billion in the first half. Now, amid spiraling money-market rates, investors are wary of speculative borrowers. High-yield, or junk, bonds are those rated below Baa3 by Moody's or BBB- by Standard & Poor's."

"``If companies find it difficult to raise money in the bond market at the same time as banks are tightening lending, then the probability of default increases,'' said Guy Stear, a strategist at Societe Generale SA in Paris. ``That's the case even if the fundamental business is sound.''"

"The New York-based ratings firm expects makers of durable consumer goods such as furniture, floor coverings and fridges to show the highest default rate in Europe. The companies with the largest share of bonds in euros at distressed levels are General Motors Corp. and its finance unit, General Motors Acceptance Corp., according to Bloomberg data."

"In Europe, six bonds sold by chemicals companies and nine issues from financial firms have spreads above 1,000 basis points more than government debt, Bloomberg data show."

Pre-Crunch Rush

Some bonds sold in the rush of the first half of 2007 are now distressed.

"The 500 million euros ($704 million) of 7 percent notes due 2017 sold by Norske Skogindustrier ASA, the second-biggest newsprint maker, are at a spread of 1,016 basis points more than government debt, according to Royal Bank of Scotland Group Plc. The 125 million euros of 8.125 percent bonds due 2014 sold by Paris-based car rental company Europcar Group SA are at 1,441 basis points, RBS prices show."

"Whistlejacket Capital Ltd., the structured investment vehicle managed by Standard Chartered Plc, defaulted on 45 million pounds ($79 million) of senior notes sold in June 2007."

"Levels of distress are ``a leading indicator of future speculative-grade defaults with a lead time of roughly nine months,'' S&P analysts including Diane Vazza wrote in a research report published last month. ``A rising distress ratio is indicative of a stressful credit environment.''"

"The absolute number of bonds in the Merrill index quoted at distressed levels is the highest since November 2002 after banks reported losses and writedowns of more than $500 billion worldwide, almost half of them in Europe."

"In November 2002, investors were willing to pay an average price of 74 cents on the euro for the bonds in the Merrill High Yield index. The securities carried an average Moody's rating of B1, four levels below investment grade. The average price of the current index is 80.7 cents and the rating is unchanged."

To contact the reporter on this story: John Glover in London at johnglover@bloomberg.net

"Last Updated: September 11, 2008 04:26 EDT"





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"Fannie, Freddie Takeover Jolts Preferred Stock Market (Update2) "

By Caroline Salas

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Sept. 10 (Bloomberg) -- Treasury Secretary Henry Paulson's takeover of Fannie Mae and Freddie Mac is roiling the market for preferred securities.

"Prices of fixed-rate preferred stock fell an average of 11 cents to 69.8 cents on the dollar this week, including the biggest one-day drop in a decade on Sept. 8, according to Merrill Lynch & Co. index data. The 13 percent decline compares with a 0.8 percent drop in the Standard & Poor's 500 index in the same time."

"In putting Fannie and Freddie in conservatorship, Paulson scrapped dividends on the mortgage-finance companies' equity securities and said the U.S. would buy as much as $200 billion of preferred stock ranking ahead of existing issues. Investors are more hesitant to invest in similar securities of other financial institutions on concern that Paulson set a precedent for issuers. Unlike common stock, preferreds typically carry fixed dividends."

"Paulson's ``actions have damaged the preferred market,'' said Thomas Hayden, the investment strategist for Liberty Bankers Life Insurance in Dallas. ``Somebody is going to be looking at an issue of Fannie or Freddie preferred shares that were rated AA up until a few months ago. If that's not money good then what about the small regional bank in some part of the country?''"

"Hayden, whose $1.5 billion fixed-income portfolio contains preferred shares of Fannie and Freddie, said he's ``not interested'' in buying any more preferred securities."

Rising Costs

The market's tumble is making it more expensive for banks and brokers trying to raise fresh capital after taking $506 billion of writedowns and losses on the collapse of the subprime-mortgage market.

"Sales of preferred securities in the U.S. have risen 48 percent this year to about $44 billion from more than $30 billion in the same period of 2007, according to data compiled by Bloomberg. The average yield as measured by the Merrill index has risen to 10.4 percent from 8.8 percent on Sept. 5 and 7.9 percent at the end of last year."

"The takeover was ``unambiguously bad'' for preferred investors and ``likely set a precedent for any future rescue transactions,'' Kathleen Shanley, an analyst at bond research firm Gimme Credit LLC in Chicago, wrote in a Sept. 7 report."

"Preferred shares of Washington-based Fannie and Freddie of McLean, Virginia were cut to the second-lowest rating by Standard & Poor's and Moody's Investors Service on Sept. 7. The grades were slashed 11 levels by S&P to C and 10 rankings to Ca by Moody's. Moody's rated their preferred stock Aa3, the fourth- highest grade, until July."

Biggest Losers

"Freddie preferred shares have lost 83 percent the past two days, while Fannie's have declined 80 percent, the biggest losers in the Merrill index. The two companies account for about $24 billion of the $190 billion par amount in the index. Forty of the top 50 issuers have declined in the last two days."

The declines are particularly stinging for Fannie and Freddie investors because the companies have sold $20.4 billion of securities since November. Fannie Mae said today it will pay its third quarter dividends.

"Citigroup Inc., the fourth-biggest U.S. bank by market value, lost $450 million this quarter on investments in Fannie and Freddie, including writedowns on preferred securities, the New-York based bank said in a filing today. E*Trade Financial Corp. will have a pretax loss of $150 million this quarter from selling its shares, the New York-based company said in a filing."

Paulson tried to calm preferred stock investors when he announced the rescue of the government-sponsored enterprises and said the takeover shouldn't have negative implications for the wider market.

"Lehman, Merrill"

"``Preferred stock investors should recognize that the GSEs are unlike any other financial institutions and consequently GSE preferred stocks are not a good proxy for financial institution preferred stock more broadly,'' Paulson said in a Sept. 7 statement. ``The broader market for preferred stock issuance should continue to remain available for well-capitalized institutions.''"

"Lehman Brothers Holdings Inc. is down 42 percent, while Merrill has tumbled 16 percent."

"``In the primary market it's going to be much more difficult for financials across the board,'' Hayden said. ``If Lehman Brothers thought they needed to go to the market and had any chance at all of issuing preferred stock to raise capital, it is now three times more difficult than it was last Friday.''"

`Gun-Shy'

"Mark Lane, a spokesman for Lehman, and Danielle Robinson, a spokeswoman for Merrill, declined to comment. Lehman and Merrill are both based in New York."

"Investors will be ``gun-shy'' about buying preferred shares, said Thomas Houghton, who manages $2 billion of corporate bonds at Advantus Capital Management in St. Paul, Minnesota."

"``There are a number of financial institutions that are experiencing distress right now, so the dividend on the common and the preferred share are going to be the first to go,'' he said."

To contact the reporter on this story: Caroline Salas in New York at csalas1@bloomberg.net

"Last Updated: September 10, 2008 17:38 EDT"





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"Euro May Fall to 149.28 Yen, Bank of Tokyo-Mitsubishi UFJ Says "

By Ron Harui

"Sept. 11 (Bloomberg) -- The euro may extend losses to 149.28 yen after it fell today to the lowest in almost a year, said Masashi Hashimoto, a currency analyst at Bank of Tokyo- Mitsubishi UFJ Ltd. in Tokyo, citing technical charts."

"So-called support at 149.28 yen is the low on Aug. 17, 2007, according to Hashimoto. The currency is likely to keep weakening as momentum indicators such as the moving average convergence- divergence chart are still signaling to sell the euro, he said. Support is a level where buy orders may be clustered."

"``The currency may fall to 149.28 yen in coming days, given the present pace of declines,'' Hashimoto said. ``There's a good chance that it'll drop below there, bringing 145.60 yen into focus.'' The 145.60 yen level is a 61.8 percent Fibonacci retracement of the euro's climb from the June 2005 low of 130.62 yen to the July high of 169.96 yen, he said."

"The euro declined to 149.91 yen as of 1:45 p.m. in Tokyo from 150.75 yen late in New York yesterday. It reached 149.63 yen, the weakest since Aug. 17, 2007. The currency has fallen 11.8 percent since reaching its record high."

"MACD charts can indicate whether a price shift is a change in trend or a short-term deviation by comparing moving averages based on nine-, 12- and 26-day periods."

Fibonacci analysis is a mathematical formula based on the theory that prices rise or fall by certain percentages after reaching a high or low. A break of one indicates a currency may move to the next. A failure suggests a trend may stall. Other Fibonacci points include 76.4 percent.

"In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Resistance is where sell orders may be clustered, while support is where there may be buy orders."

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net

"Last Updated: September 11, 2008 01:02 EDT"





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"Brazil's Telemar Delays $1.5 Billion Bond Sale, Citing Markets "

By Patricia Kuo

"Sept. 11 (Bloomberg) -- Telemar Participacoes SA, owner of Brazil's largest telephone company, delayed indefinitely a plan to sell about $1.5 billion of bonds intended to help finance its acquisition of rival Brasil Telecom Participacoes SA."

"The Rio de Janeiro-based company's Telemar Norte Leste SA unit ``decided to postpone its benchmark primary offering due to adverse market conditions,'' according to an e-mail to investors seen by Bloomberg News today."

"Telemar aimed to price five-year notes to yield about 7.75 percent and 10-year securities to yield 8.5 percent, according to a separate offer document seen by Bloomberg."

Telemar in July said it needed to raise 3 billion reais ($1.7 billion) more to pay for pay for Brasil Telecom after agreeing to buy a controlling stake in the company in May for 5.86 billion reais. The acquisition would give Telemar control of almost two-thirds of Brazil's land lines and 19 percent of domestic mobile-phone subscribers.

Six bank failures in the U.S. in the past two months and growing concern about capital levels at Lehman Brothers Holdings Inc. pushed lenders' borrowing costs to near a four-month high yesterday. The U.S. government's takeover of Fannie Mae and Freddie Mac this week gave the markets a brief lift.

More Expensive

Falling equity and credit asset prices are making it more expensive for banks and brokers to raise fresh capital after taking $510.6 billion of writedowns and losses on the collapse of the subprime-mortgage market.

"Traders in the forward markets, where financial instruments are sold for future delivery, are pricing three-month cash from December to March at 90 basis points over expectations for the federal funds rate. That's up from 85 basis points at the start of the week and an average of 7 basis points average in 2006. A basis point is 0.01 percentage point."

"Citigroup Inc., Banco Itau Holding Financeira SA, and Banco Santander SA are managing the debt offering with the investment banking units of Banco Bradesco SA and Banco do Brasil SA., according to the offer document."

"Moody's Investors Service on Sept. 2 said it rated the proposed bonds Baa3, the lowest-investment grade. Fitch Ratings gave the securities a comparable BBB- ranking."

"Telemar Norte Leste is Brazil's largest local exchange carrier, with 13.9 million subscribers as of June 30, according to Moody's. The company also has about 20.3 million wireless and 1.8 million broadband customers, the rating assessor said."

Telemar's investor relations department didn't reply to an e-mail from Bloomberg News seeking comment today outside office hours in Brazil.

To contact the reporter for this story: Patricia Kuo in Hong Kong at pkuo2@bloomberg.net

"Last Updated: September 11, 2008 03:41 EDT"





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"Japan, Australia Bond Risk Rises for Third Day on Lehman Loss "

By Laura Cochrane and Oliver Biggadike

Sept. 11 (Bloomberg) -- The cost of protecting investors in Australian and Japanese corporate bonds from default rose for a third day on speculation Lehman Brothers Holdings Inc. may incur further losses and be unable to trade.

"Credit-default swaps on U.S. banks and securities firms rose to a six-month high yesterday after Lehman posted the biggest quarterly loss in its 158-year history, adding to $510 billion of global writedowns and credit market losses triggered by the collapse of the subprime mortgage market. New York-based Lehman reported a $3.9 billion third-quarter loss and plans to sell about 55 percent of its asset management group."

"``We are weaker on the Lehman action,'' said Scott Rundell, head of credit research at ING Investment Management in Sydney. ``Lehman is on everyone's mind at the moment, and if they are unable to execute what they announced it will dent market confidence even further.''"

"The Markit iTraxx Australia index rose 5 basis points to 159 as of 6:22 p.m. in Sydney, BNP Paribas SA's prices show. The benchmark, which rises as perceptions of credit quality deteriorate, is tied to the debt of 25 companies including Qantas Airways Ltd. and BHP Billiton Ltd."

"The Australian benchmark may rise as high as 165 basis points today, Rundell said."

Real-Estate Spinoff

"Lehman plans to spin off real-estate holdings and cut its dividend to 5 cents per common share from 68 cents, the company said in a statement yesterday. Five-year credit-default swaps on Lehman soared to a record 610 basis points yesterday, or $610,000 annually to protect a $10 million investment in the company's debt, according to broker Phoenix Partners Group."

"Some Japanese investors are shunning the credit-default swap market on concern a bankruptcy by Lehman would disrupt the swaps they are involved in, said Mana Nakazora, chief credit analyst for Japan at JPMorgan Chase & Co. in Tokyo. Lehman has been among the top 10 counterparties to credit-default swaps trades, according to Fitch Ratings."

"``If Lehman goes bankrupt, what happens in the CDS market?'' Nakazora said. ``Not so many Japanese investors want to trade CDS because they are afraid of what happens from here.''"

"Japan's iTraxx index rose 2.5 basis points to 137.5, Credit Suisse Group prices show. The benchmark is tied to 50 investment- grade Japanese companies, including All Nippon Airways Co. and Japan Tobacco Inc."

"The Markit iTraxx Asia index of 20 high-risk, high-yield borrowers outside Japan, including the Philippine government and India's Tata Motors Ltd., rose 30 basis points to 609.5 in Hong Kong, according to ABN Holding NV's prices."

Investment-Grade Rises

"The Markit iTraxx Asia index of 50 investment-grade borrowers outside Japan, including the Thai government and Hong Kong-based Hutchison Whampoa Ltd., increased 10 basis points to 171.5, ABN Amro's prices show."

"The indexes are benchmarks for protecting bonds against default and traders use them to speculate on changes in credit quality. A basis point, or 0.01 percentage point, is worth $1,000 on a swap that protects $10 million of debt from default."

Credit-default swaps are used to protect against or speculate on default. They pay the buyer face value in exchange for the underlying securities if a borrower fails to adhere to its debt agreements.

To contact the reporters on this story: Oliver Biggadike in Sydney at obiggadike@bloomberg.net; Laura Cochrane in Melbourne at lcochrane3bloomberg.net

"Last Updated: September 11, 2008 04:57 EDT"





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French Payrolls Fall More Than Twice Initial Forecast (Update2)

By Helene Fouquet and Gregory Viscusi

Sept. 11 (Bloomberg) -- France lost more than twice as many jobs as initially reported in the second quarter as economic growth contracted for the first time in more than five years.

"Payrolls, excluding government employees, farm workers and the self-employed, fell for the first time in more than four years, declining by 28,800, or 0.2 percent, to 16.04 million from the first quarter, statistics office Insee said today in Paris. Insee on Aug. 14 released an initial estimate of 12,200 jobs lost in the quarter."

"``The economic slowdown has hit employment faster than usual,'' said Dominique Barbet, an economist at BNP Paribas SA in Paris. ``Employment declines will weigh on income and confidence and prevent a significant economic recovery.''"

"Europe's third-biggest economy is feeling the pinch from the global economic slowdown and contracted 0.3 percent in the second quarter. French Finance Minister Christine Lagarde said today on radio France Inter that economic growth will slow to ``around'' 1 percent this year. That's half the pace of a year ago, she said."

"The European Commission yesterday predicted that the French economy will stagnate in the third quarter and expand 1 percent this year, the slowest pace in six years."

Unemployment Rate

"The economy also created fewer jobs than initially reported in the first quarter, Insee said. France added 47,800 jobs in the three months through March, an increase of 0.3 percent. That's less than the 57,400 jobs and 0.4 percent rise initially estimated on Aug. 14. The jobless rate stayed at the 25-year low of 7.6 percent in April-June period, Insee said."

"Credit Agricole SA, France's third-largest bank, will eliminate about 500 jobs at its Calyon corporate and investment banking unit to rein in costs, following three consecutive quarterly losses. Societe Generale, France's second-largest bank, said Aug. 26 it plans to hire 8 percent fewer employees than in 2007 in France."

"European Aeronautic, Defence & Space Co. said it will shift work to non-European countries including Tunisia as it seeks 1 billion euros ($1.4 billion) in cost-savings. Automaker Renault outlined plans Sept.9 for the elimination of 4,000 jobs in France by April 2009."

"Today's report also provides a first estimate for job creation in the not-for-profit field, which include positions subsidized by the government. The number of those posts climbed by 9,700, or 2.2 percent from a year ago, to 2.1 million."

"Merging both categories, total private-sector employment, excluding the self-employed, fell 0.1 percent from the previous quarter to 18.14 million."

To contact the reporters on this story: Helene Fouquet in Paris at hfouquet1@bloomberg.net. Gregory Viscusi in Paris at gviscusi@bloomberg.net.

"Last Updated: September 11, 2008 05:22 EDT"





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Indonesian Bonds Slump as Rupiah Drops: World's Biggest Mover

"Sept. 11 (Bloomberg) -- Indonesia's seven-year bonds fell the most since August 2007, the biggest fluctuation of any government debt market today, on concern a slide in the currency will erode fixed-income payments."

"The yield jumped 60 basis points as the rupiah declined, taking the currency's loss to 3 percent so far in September, the second-worst performer in Asia. The interest rate banks charge each other for loans rose to the highest since 2006."

"``The moves in the rupiah in the last couple of days remind investors that the currency is vulnerable,'' said Jens Lauschke, a Singapore-based fixed-income strategist at DBS Group Holdings Ltd., Southeast Asia's largest bank. ``Bond yields are rising in response to that and higher money market rates.''"

"The yield on the 9.5 percent note maturing in June 2015 climbed to 12.872 percent, the highest since July 7, according to midday prices by the Inter Dealer Market Association in Jakarta. The price dropped 2.4052, or 24,052 rupiah per 1 million rupiah face amount, to 85.055. A basis point is 0.01 percentage point."

The world's biggest movers are based on changes in price or yield and are screened for the size of the market and the amount of daily trading.

"Oversea investors sold more Indonesian stocks than they bought on five of the past eight trading days, helping sending the benchmark share index to a 17-month low. The three-month Jakarta interbank offered rate, or Jibor, climbed to 10.4975 percent, the highest since November 2006, and was last at 10.486 percent."

"Stock Losses, Rupiah"

The rupiah was the third-worst performer today among the 10 most-active Asian currencies outside Japan as falling commodity prices sparked concern that the economy will slow. Indonesia is the world's biggest producer of palm oil and the largest thermal coal exporter.

"Indonesia's economic growth will slow to 5.82 percent in the fourth quarter compared with 6.32 percent in the first three months of the year, according to a Bloomberg News survey of economists. Palm oil prices have slumped 47 percent from a record reached in March."

"The rupiah fell as much as 1 percent to 9,455, the lowest since Jan. 23, and traded at 9,430 per dollar as of 2:41 p.m. in Jakarta, compared with 9,358 late yesterday, according to data compiled by Bloomberg."

"The central bank will limit losses in the rupiah, said Lindawati Susanto, head of currency trading at Bank Resona Perdania Pt in Jakarta."

"``There's panic in the market because of losses on the stock exchange,'' said Susanto. The rupiah may break 9,500."

"The slide in the rupiah today is in line with that of its regional peers, and the central bank will stay in the market to guard the movement of the local currency, Bank Indonesia Deputy Governor Budi Mulya said."

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.





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Fed May Expand Funding Aid to Banks in a `Mother of Year-Ends'

By Craig Torres and Liz Capo McCormick

Enlarge Image/Details

"Sept. 11 (Bloomberg) -- The Federal Reserve may have to increase the cash it provides to banks and brokers, already a record, to help them balance their books at the end of the year."

Six bank failures in the past two months and rising concern about Lehman Brothers Holdings Inc.'s capital levels pushed lenders' borrowing costs to near a four-month high yesterday. They may climb further as companies rush for cash to settle trades and buttress their balance sheets at year-end.

"``This could be the mother of year-ends,'' said Brian Sack, vice president of Macroeconomic Advisers LLC in Washington, who used to serve as head of monetary and financial market analysis at the Fed. ``The markets will need extraordinary actions to get through it.''"

"One option is for banks and brokers to increase the loans they take out directly with the Fed; the central bank reports on the figures today. Officials could also offer options on its biweekly loan auctions or introduce special repurchase agreements to straddle the end of the year, economists said."

"When policy makers sought to head off a potential funding crunch with the year 2000 changeover, they auctioned liquidity options to the primary dealers of U.S. Treasuries."

"The central bank's latest weekly report on direct loans is scheduled for release at 4:30 p.m. New York time. Lending to commercial banks from the so-called discount window averaged $19 billion in the week through Sept. 3, the fifth record in seven weeks."

Funding Costs

"Traders in the forward markets, where financial instruments are sold for future delivery, are pricing three-month cash from December to March at 90 basis points over expectations for the federal funds rate. That's up from 85 basis points at the start of the week and an average of 7 basis points average in 2006."

"``If banks are unwilling to lend to other banks, then they are unwilling to lend to you and me,'' says Stan Jonas, chief executive officer at Axiom Management Partners LLC, a New York investment firm. ``The market anticipates that we will be in a heightened state of credit risk.''"

"As the credit crunch erupted a year ago, Fed officials introduced new tools to stem a jump in borrowing costs. In December, they created the Term Auction Facility to inject cash to commercial banks."

"The Term Securities Lending Facility was unveiled in March as a resource for primary dealers of Treasuries, and offers a loan of U.S. government bonds in exchange for collateral including asset-backed debt. After Bear Stearns Cos.'s collapse, the Fed the same month gave dealers access to direct loans."

January Extension

"Acknowledging persistent funding strains, policy makers in July extended the programs through January. They also introduced sales of options on the TSLF to help brokers get through quarter-ends."

"``We will continue to review all of our liquidity facilities to determine if they are having their intended effects or require modification,'' Fed Chairman Ben S. Bernanke said Aug. 22."

"Even if the Fed succeeds in easing the liquidity squeeze, it can do little to alleviate the underlying problem about the solvency of companies that invested in securities whose values are sliding. Worldwide, financial firms have posted $510 billion of writedowns and losses in the crisis, and raised just $359 billion of capital."

"``Liquidity tools by definition can only have so much impact,'' said Dino Kos, former head of financial markets at the New York Fed and now a managing director at Portales Partners LLC, a New York research firm."

`Solvency Problem'

"The Fed ``can alleviate the problem by helping institutions finance these bad assets,'' Kos said. ``But by itself, that doesn't lift the price of these assets. You still have an underlying solvency problem.''"

The need for cash is exacerbated by rising credit losses and difficulty in obtaining capital to offset them.

"The government seizure of Fannie Mae and Freddie Mac this week may have heightened perceptions of risk in investing in U.S. financial firms. The two companies failed to raise capital even after the Treasury won unlimited powers to inject funds as a backstop in July. After the Sept. 7 takeover, shareholders were nearly wiped out."

"``Why would anyone inject equity capital into a financial institution if a few weeks later the government comes in and renders it worthless?'' said Axel Merk, president of Merk Investments, a Palo Alto, California-based fund manager. ``The slope of bailouts is slippery and expensive.''"

Falling Stocks

"Prices of fixed-rate preferred stock, a security typically used by banks to raise new capital, fell an average of 11 cents to 69.8 cents on the dollar this week, with the biggest drop in a decade Sept. 8, according to Merrill Lynch & Co. index data."

"Lehman lost more than half its value this week, closing at $7.25 yesterday. The New York-based investment bank yesterday reported a $3.9 billion third-quarter loss, the biggest in its 158-year history."

"Lehman hasn't tapped the Fed for cash since April, a person briefed on the matter said yesterday. Any such loans would appear on the Fed's Primary Dealer Credit Facility figures to be released today; there was no outstanding balance last week."

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net.; Liz Capo McCormick in New York at +1- Emccormick7@bloomberg.net

"Last Updated: September 11, 2008 00:01 EDT"





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U.S. Stocks Rise as Energy Shares Rally; FedEx Climbs on Profit

By Elizabeth Stanton

"Sept. 10 (Bloomberg) -- U.S. stocks rose as investors snapped up energy shares trading at their cheapest level in 18 months, while better-than-forecast earnings at FedEx Corp. buoyed industrial companies."

"Exxon Mobil Corp. and ConocoPhillips led oil stocks to their biggest gain in six weeks and helped the Standard & Poor's 500 Index rebound from its steepest drop since February 2007. FedEx Corp. rallied 3.7 percent as lower fuel costs helped boost profit at the largest air-cargo carrier. Lehman Brothers Holdings Inc. slid 6.9 percent, adding to yesterday's record 45 percent tumble and sending financial stocks to a second-straight decline, after the securities firm posted a wider loss than analysts estimated."

"The S&P 500 advanced 7.53 points, or 0.6 percent, to 1,232.04. The Dow Jones Industrial Average added 38.19, or 0.3 percent, to 11,268.92, and the Nasdaq Composite Index climbed 18.89, or 0.9 percent, to 2,228.7. More than two stocks rose for each that dropped on the New York Stock Exchange."

"``The valuations of some of these energy companies are at levels that warrant addressing by a lot of value investors,'' said Robert Lutts, president and chief investment officer of Cabot Money Management in Boston, which oversees $500 million. ``If you were waiting for bargains in the energy sector, you've got some today.''"

Energy Valuation

"The valuation of companies in the S&P 500 Energy Index sank to an average 9.9 times trailing earnings yesterday, the cheapest since March 2007, as oil slid to a five-month low on speculation OPEC won't cut output. The gauge of 39 energy producers has tumbled 26 percent from its May record as oil retreated 30 percent from a peak of $147.27 a barrel in July on signs global economic growth is slowing."

"Crude oil futures today fell 68 cents to $102.58 a barrel, the eighth drop in nine days and the lowest price since April. Natural gas futures fell almost 2 percent. Energy shares still rose the most among the S&P 500's 10 main industry groups, with 38 of 39 companies in the group advancing."

"The gains pared the S&P 500's decline this year to 16 percent. The main benchmark for U.S. equities is poised for its first annual drop since 2002, led by financial companies, as more than $500 billion in bank credit losses and asset writedowns linked to falling home prices damp the outlook for earnings."

Profit Watch

"Analysts expect profits at companies in the index to fall 1.7 percent on average in the third quarter and slip 2.1 percent in 2008, according to estimates compiled by Bloomberg."

Stocks tumbled yesterday as concern about Lehman Brothers Holdings Inc.'s ability to raise capital rattled the banking industry and a drop in oil prices pushed energy companies down by the most since August 2002.

"Exxon, the biggest oil company, increased $1.99 to $75.25, driving the S&P 500 Energy Index to a 3.6 percent advance. Chevron Corp., the second-biggest U.S. oil company, added 3 percent to $81.16 and ConocoPhillips, the No. 3. U.S. energy company, jumped 5.2 percent to $71.87."

"FedEx climbed $3.11 to $87.86. Earnings were $1.23 a share for the period ended Aug. 31, eclipsing the outlook of 80 cents to $1, FedEx said yesterday after exchanges closed. Analysts expected 95 cents, according to the average of 12 estimates compiled by Bloomberg. Rival UPS Inc. added 2.4 percent to $66.69."

FedEx helped lead the S&P 500 Industrials Index to a 0.6 percent advance.

`Priced In'

"``With a lot of these stocks, slower growth has already been priced in, but the benefit of lower fuel prices has not been priced in yet,'' said Greg Woodard, strategist at Manning & Napier in Fairport, New York, which manages $18 billion, including FedEx shares. ``That's where you could see upward reactions in the stocks.''"

"Texas Instruments Inc. rose 14 cents to $21.85. Third- quarter revenue will be between $3.33 billion and $3.47 billion, the Dallas-based company said yesterday. The midpoint, $3.4 billion, matched a previous forecast and the average estimate of analysts in a Bloomberg survey."

Texas Instruments fell 3 percent yesterday after Raymond James Associates Inc. downgraded it to ``outperform'' from ``strong buy'' and Stifel Nicolaus predicted it would lower its revenue forecast.

"A 7.4 percent drop in technology shares this month may overestimate the earnings impact of slower global growth, said Walter Todd, money manager at Greenwood Capital in Greenwood, South Carolina, which oversees $750 million."

`Valid Concern'

"``There are valid concerns about a slowdown in worldwide growth, but a lot of that's in the names at this point,'' Todd said."

"Washington Mutual Inc. tumbled the most in the S&P 500, losing 30 percent to $2.32, the lowest price since November 1990. At least three potential acquirers ended negotiations to buy either Seattle-based WaMu or Cleveland's National City Corp., bankers involved in the talks said. One sticking point, they say, is an accounting rule change that will force acquirers to compute a target's assets at market prices instead of deriving values from measures including the purchase price."

"WaMu also slid as S&P lowered its credit rating outlook for the largest U.S. savings and loan, citing potential credit losses."

"Lehman Brothers fell 6.9 percent to $7.25, the lowest since Oct. 7, 1998. Most of today's decline occurred in the last hour of trading after Moody's Investors Service placed Lehman's credit ratings under review."

"Before the market opened today, the fourth-largest U.S. securities firm said it will shore up capital by selling assets, including a majority stake in its asset-management unit, following a $3.9 billion third-quarter loss."

`Survival Mode'

"``The market's concern is that they haven't taken aggressive enough steps early on in this process,'' Liam Dalton, New York- based chief executive officer of Axiom Capital Management, which oversees $1.3 billion, told Bloomberg Television. ``They're obviously in survival mode and desperately trying to take tactical steps to reassure Wall Street.''"

"Merrill Lynch & Co., the third-biggest U.S. securities firm, fell 5.9 percent to $23.30, the lowest since October 1998. Financial shares in the S&P 500 dropped 0.7 percent as a group after losing 6.6 percent yesterday."

"The S&P 500 Regional Banks Index fell 3.2 percent after Keefe Bruyette & Woods downgraded nine institutions. The industry faces a ``challenging'' operating environment ``amid slowing economic growth, contraction of credit and constrained capital,'' analyst Jefferson Harralson wrote in a report."

Bank Downgrades

"Synovus Financial Corp., downgraded to ``underperform,'' slumped 2.5 percent to $9.77 after the owner of 35 banks in the southeastern U.S. also cut its dividend by 65 percent and eliminated 650 jobs, about 9 percent of its staff."

"Fifth Third Bancorp and Valley National Bancorp retreated more than 5 percent. SunTrust Banks Inc., Marshall & Ilsley Corp., Huntington Bancshares Inc., BB&T Corp. and Comerica Inc. fell by between about 1 percent and 5 percent. South Financial Group Inc. rose despite being downgraded."

"Salesforce.com Inc., the biggest seller of Internet-based customer management software, climbed 7.7 percent to $56.09, while Fastenal Co., the largest U.S. retailer of nuts and bolts, added 0.8 percent to $52.58. The two were picked to replace Fannie Mae and Freddie Mac in the S&P 500 after the federal government nationalized the two mortgage finance companies this week."

"International Rectifier Corp., the maker of semiconductors that help machines use less power, rose 7 percent to $22.57. Vishay Intertechnology Inc. raised its bid to buy the company to $23 a share from $21.22 and plans to begin a tender offer to shareholders."

"Boeing Co. fell 3.6 percent to $61.71 and contributed the most to the Dow average's drop. The world's second-largest commercial aircraft maker said it expects a work stoppage by its machinists, its largest union, to last at least a month."

To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net.

"Last Updated: September 10, 2008 16:34 EDT"





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"Australia May Harvest Less Wheat, ProFarmer Says (Update2) "

By Madelene Pearson

"Sept. 11 (Bloomberg) -- Australia, the world's sixth-largest wheat exporter, may harvest less of the grain than previously forecast because of dry weather in some states, ProFarmer Australia said."

"Production may be 22.7 million metric tons, down from an August estimate of 24.5 million tons, the Perth-based forecaster said today in a report on its Web site. That compares with last year's drought-reduced crop of about 13 million tons."

ProFarmer's latest forecast comes after JPMorgan Chase & Co. last week lowered its crop estimate and Rabobank Group said yesterday below-average rain in recent months is threatening the nation's wheat output. Australian farmers need rain ahead of the harvest starting in about November to meet yield potential.

"``It just hasn't rained enough in August, September to be confident about yield prospects in most states,'' ProFarmer wrote in the report. The lower forecast is ``owing to a sharp decline in West Australian production prospects and reduced potential in South Australia and Victoria,'' it said."

Wheat for December delivery fell 0.2 percent to $7.24 a bushel in after-hours electronic trading on the Chicago Board of Trade at 4 p.m. Sydney time. Prices are down 46 percent from a record $13.495 a bushel on Feb. 27.

"Production in South Australia and Victoria states may be 10 percent and 13 percent lower respectively than forecast in August, ProFarmer said. Western Australia, the nation's biggest wheat growing state, may gather 7.84 million tons this harvest, 15 percent less than previously forecast, it said."

`Finishing Rain'

"Output in Western Australia ``could fall further unless crops in the south get a finishing rain over the next couple of weeks,'' the forecaster said. ``Central and southern New South Wales, Victoria and South Australia crops are on a similar trajectory.''"

"Recent rain in parts of Queensland and in northern New South Wales states has improved yields in those regions, it said. Forecast output was raised 5.3 percent in Queensland and 4.6 percent in New South Wales."

"A predicted rebound in output after drought is forecast to make Australia the third-largest wheat exporter in the year that began June 1, according to the U.S. Department of Agriculture. The U.S. is forecast to be the largest, followed by Canada."

To contact the reporter on this story: Madelene Pearson in Melbourne on mpearson1@bloomberg.net

"Last Updated: September 11, 2008 03:22 EDT"





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Brazil's Real Weakens to Seven-Month Low on Commodity Decline

By Adriana Brasileiro

"Sept. 10 (Bloomberg) -- Brazil's real fell to a seven-month low as commodity prices declined for a ninth straight day, curbing dollar inflows from the country's exports of such products as soybeans, coffee and crude oil."

"``Falling commodity prices not only affect our trade data, but it's also fueling the dollar's rally and that's a strong factor for the performance of the real,'' said Vanderlei Arruda, who manages the foreign-exchange trading desk at Sao Paulo-based Corretora Souza Barros. ``We are also in an environment of heightened aversion to risk, which is drying up liquidity and flows to emerging markets.''"

"The real fell 0.5 percent to 1.7864 per dollar at 4:24 p.m. New York time, from 1.7770 yesterday. The currency earlier touched 1.7950, the weakest since Jan. 28. It has slid 12.4 percent since the end of July."

"The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials dropped 0.7 percent today, extending its decline from a record high on July 2 to 22 percent."

"The real's losses were tempered by stronger-than-expected economic growth in the second-quarter, which added to speculation the central bank will raise the benchmark lending rate by 0.75 percentage point today."

"The 6.1 percent growth rate in the April-to-June quarter, the second-highest since 2004, was more than the 5.5 percent median forecast in a Bloomberg survey of 36 analysts and more than the revised 5.9 percent growth rate in the first quarter. Brazil's economy grew 1.6 percent in the second quarter from the first, the government said."

Monetary Policy Meeting

"Brazil's central bank will raise its benchmark overnight rate to a two-year high of 13.75 percent from 13 percent, according to the median forecast in a Bloomberg News survey of 41 economists, luring investors to the country's fixed-income market. The bank has raised the rate 1.75 percentage points this year in a bid to cool growth and curb a pickup in inflation. The bank's monetary policy committee is scheduled to announce its decision after 5 p.m. New York time."

"The yield on Brazil's zero-coupon bonds due in January 2010 fell 8 basis points to 14.80 percent, according to Banco Votorantim. The yield on the overnight futures contract for January delivery rose 1 basis point to 13.96 percent."

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

"Last Updated: September 10, 2008 16:30 EDT"





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Sweden's Krona Unchanged After Unemployment Unexpectedly Drops

By Bo Nielsen

Sept. 11 (Bloomberg) -- Sweden's krona was little changed against the euro after a report showed the August unemployment rate unexpectedly fell to the lowest level since at least 2005.

"The unadjusted jobless rate declined to 5.2 percent, from 5.8 percent in July, Stockholm-based Statistics Sweden said today. The median forecast of 16 economists surveyed by Bloomberg was for unemployment of 5.8 percent. The krona slipped for an 11th day versus the dollar, the longest run of declines in 33 years, on bets economic growth in Europe, Sweden's biggest export market, will slow faster than in the U.S."

"The krona was at 9.5030 per euro by 10:21 a.m. in Stockholm, from 9.5058 yesterday. The krona fell 0.4 percent to 6.8203 per dollar, making it the longest sequence of declines since the 11 days ended July 24, 1975."

The dollar rose to a one-year high against the euro after the European Commission yesterday changed its growth estimate for the 15-nation economy this year to 1.3 percent from an April forecast of 1.7 percent and said the weakening global economy ``seems to suggest a significant downward revision for 2009.''

"The U.S. and Swedish economies will both expand 1.7 percent this year, according to Bloomberg surveys. Expansion in Sweden reached 2.9 percent last year."

"In other trading, Iceland's krona fell 0.3 percent to 90.44 per dollar before a meeting of policy makers today who will probably keep their benchmark interest rate at a record 15.5 percent, according to all six economists surveyed by Bloomberg. The central bank, or Sedlabanki, will announce its decision at 9 a.m. in Reykjavik."

Inflation Pressures

"Norway's krone also fell for an 11th day versus the dollar, falling 0.8 percent to 5.8044. It was at 8.0877 per euro, from 8.0651 yesterday, when a government report showed underlying inflation held near a 7 1/2-year high in August. The rate, excluding energy costs and taxes, slipped to 2.8 percent, from 2.9 percent in July, Statistics Norway said."

"Norges Bank, which raised its key interest rate twice this year, to 5.75 percent, a 5 1/2-year high, indicated in June it may deliver one more increase by December to curb inflation. The next policy meeting is on Sept. 24."

"Nordic government bonds fell, with the yield on Sweden's 5.25 percent note due March 2011 rising 2 basis points to 4.22 percent. The yield on Norway's 6 percent bond maturing May 2011 rose 1 basis point to 5.04 percent, according to Danske Bank prices. Yields move inversely to bond prices."

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

"Last Updated: September 11, 2008 04:54 EDT"





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Dollar Rises to One-Year High Against Euro on Growth Outlook

By Agnes Lovasz and Ron Harui

"Sept. 11 (Bloomberg) -- The dollar rose to the highest in a year against the euro on speculation that economic growth in Europe will be slower than in the U.S., prompting the region's central bank to lower interest rates."

"The U.S. currency climbed for a second day as traders raised bets that the European Central Bank will cut borrowing costs before a government report tomorrow likely to show industrial production in the euro area shrank. New Zealand's dollar dropped to its lowest level since October 2006 after Alan Bollard, governor of the nation's central bank, reduced interest rates by more than economists expected."

"``We've got this dollar strength for several weeks now that is driving currency markets and the fundamental picture is underpinning this,'' said Lutz Karpowitz, a currency strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. ``The euro-zone economy is going into recession. This is a growth-differential story.''"

"The U.S. currency climbed to $1.3933 per euro, the strongest since Sept. 18, 2007, before trading at $1.3943 as of 8:35 a.m. in London from $1.3998 yesterday in New York. The Japanese yen advanced to 149.27 per euro, the highest since Nov. 2, 2006, and was last at 149.52, from 150.75. It also gained to 107.27 per dollar from 107.70."

"The dollar will rise in coming days to $1.3830 against the euro, a so-called resistance level that may trigger orders to sell the U.S. currency, Karpowitz said."

"The New Zealand dollar declined to as low as 64.62 U.S. cents before trading at 64.75 cents, down 2.2 percent from yesterday. The Reserve Bank of New Zealand cut its benchmark interest rate by half a percentage point to 7.5 percent, saying the economy is in a recession."

Risk Aversion

"The ICE's Dollar Index touched 80.25 today, the highest since September 2007, when the U.S. central bank began cutting the target rate for overnight lending between banks from 5.25 percent to 2 percent to avoid a recession. The index, a gauge measuring the dollar against the currencies of six U.S. trading partners, reached a low of 70.698 on March 17."

"The European Commission said yesterday the euro region's economy will probably stagnate this quarter after shrinking the previous three months for the first time since the currency's debut in 1999. It cut its 2008 growth forecast to 1.3 percent, from 1.7 percent. By contrast, the median in a Bloomberg News survey of 84 economists was for U.S. growth of 1.7 percent."

Volatility Rises

"The yen rose against all 16 of the most-active currencies on speculation that widening subprime-mortgage losses will hurt earnings of U.S. companies, reducing demand for so-called carry trades."

"In carry trades, investors get funds in a country with low borrowing costs and buy assets where returns are higher. Japan's target lending rate is 0.5 percent, compared with 7 percent in Australia. The risk is that currency swings erase profits."

"``Investors in Japan are in risk-aversion mode, so they're buying the yen,'' said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG. ``The economy also is doing poorly'' so the yen may appreciate to 107.00 against the dollar today."

"The currency gained for a fourth day against the euro after implied volatility on one-month euro options versus the yen rose to 16.94 percent yesterday, the highest since March 18. It was at 16.61 percent today."

"The yen stayed higher after a government report showed Japanese machinery orders fell for a second month in July, signaling manufacturers expect the global slowdown to crimp demand into next year."

"The European Union's statistics office in Luxembourg will probably say tomorrow that industrial output in the 15 nations fell 0.2 percent in July after a revised 0.2 percent decline in June, according to a Bloomberg News survey of economists."

Growth Outlook

"``The euro is likely to extend its adjustment lower,'' said Saburo Matsumoto, senior manager of foreign-exchange sales in Tokyo at Sumitomo Trust & Banking Co., Japan's fifth-largest publicly traded bank by market value. ``The euro-zone economy is facing a recession, so a weaker currency could provide some relief to exports.''"

"Europe's single currency may weaken to 147.50 yen in the next few days, Matsumoto forecast."

"Traders are betting that the ECB will cut its 4.25 percent benchmark interest rate by 42 basis points over the next 12 months, up from 30 basis points a week earlier, according to a Credit Suisse Group index based on overnight swaps."

"Implied volatility on the dollar versus the most actively traded currencies was at 11.55 percent after touching 12 percent, the highest since April, according to the JPMorgan Volatility index. The gauge of perceived price fluctuation in the dollar reached 9.27 percent on Aug. 4, the lowest this year."

To contact the reporters on this story: Agnes Lovasz in London at alovasz@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net

"Last Updated: September 11, 2008 04:22 EDT"





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U.S. Trade Gap in July Probably Widened on Rise in Imported Oil

By Timothy R. Homan

Enlarge Image/Details

"Sept. 11 (Bloomberg) -- The U.S. trade deficit probably widened in July for the first time in three months, reflecting record-high oil prices, economists said ahead of a government report today."

"The gap increased to $58 billion from $56.8 billion in June, according to the median forecast of 75 economists surveyed by Bloomberg News."

"An increase in exports, propelled by a six-year slide in the dollar that made American goods affordable for overseas buyers, probably prevented the deficit from ballooning even more. The U.S. may not be able to count on similar gains in coming months as economies in Europe and Japan shrink and the dollar recovers."

"``Export growth will slow down, but it's still going to stay a bright spot in the economy,'' said Allen Sinai, chief global economist at Decision Economics Inc. in New York. ``It's going to get hurt by the slowing of growth in the world economy.''"

The Commerce Department is scheduled to release the trade report at 8:30 a.m. in Washington. Estimates of the deficit ranged from $54.6 billion to $62.5 billion.

"A Labor Department report on import prices, due at the same time, may show oil will be less of a threat to the trade gap in coming months. The cost of goods made overseas fell 1.8 percent in August from the previous month, the biggest decline in almost two years, according to the survey median."

"The drop was led by a slump in fuel expenses, economists said. Last month's report showed imported petroleum prices jumped 4 percent in July."

Jobless Claims

"Also at 8:30 a.m., the Labor Department is projected to report that initial jobless claims last week fell to 440,000 from 444,000 the previous week, according to the survey. Such a reading would signal the labor market is deteriorating."

"The smallest trade deficit in eight years was the biggest contributor to the 3.3 percent pace of economic expansion last quarter. The narrower gap added 3.1 percentage points to growth, the most since 1980."

"Exports have received a boost from the 7 percent decline in the dollar against a trade-weighted basket of currencies of major trading partners in the 12 months ended in July. The currency dropped 27 percent from February 2002 to April of this year, when it started to recover."

"Boeing Co., the world's second-biggest aircraft maker, has been one the beneficiaries of the more competitive dollar. Fifty of the Chicago-based company's 70 aircraft orders in July came from abroad. It delivered 25 planes to overseas buyers that month compared with 28 in June."

Boeing Strike

"A machinist's strike this month could prevent Boeing from boosting shipments in coming months, adding to concern U.S. exports will slow. In the past, work stoppages by members of the company's largest union, the International Association of Machinists and Aerospace Workers, have lasted four to 10 weeks."

"Another threat to exports is that economies overseas are weakening as the U.S. slows. The European Commission yesterday cut its growth outlook for the euro area for the rest of this year and predicted a recession for Germany, the region's largest economy. Japan's economy shrank at a 2.4 percent annual pace in the second quarter."

"The global slowdown is making it difficult for U.S. companies to offset weak domestic demand. Dell Inc., the world's second-biggest personal-computer maker said on Aug. 29 that the U.S. slump in technology spending had spread to Europe and Asia. Profit in the second quarter declined 17 percent."

"Sales to commercial clients in Asia advanced 16 percent, slower than the 19 percent growth in the first quarter, Dell said. Sales to corporate customers in Europe, the Middle East and Africa rose 11 percent, short of the 15 percent increase in the previous period."


Bloomberg Survey

================================================================
Trade Import Initial
Balance Prices Claims
" $ Blns MOM% ,000's"
================================================================

Date of Release 09/11 09/11 09/11
Observation Period July Aug.Aug. 30
----------------------------------------------------------------
Median -58.0 -1.8% 440
Average -58.2 -1.8% 440
High Forecast -54.6 0.5% 460
Low Forecast -62.5 -3.3% 400
Number of Participants 75 54 44
Previous -56.8 1.7% 444
----------------------------------------------------------------
4CAST Ltd. -58.5 -3.2% 430
Action Economics -62.5 -3.0% 435
AIG Investments -56.7 -2.6% ---
Aletti Gestielle SGR -54.6 --- 450
Argus Research Corp. -58.0 0.5% ---
Banc of America Securitie -59.8 --- ---
Bank of Tokyo- Mitsubishi -59.4 -0.7% 434
Bantleon Bank AG --- -1.6% ---
Barclays Capital -59.0 -1.5% 440
BBVA -58.3 -1.2% ---
BMO Capital Markets -58.0 -1.4% 440
BNP Paribas -59.1 -1.0% 454
Briefing.com -56.0 --- 430
Calyon -57.8 --- ---
CFC Group -58.0 --- ---
CIBC World Markets -58.0 --- ---
Citi -59.5 -1.0% 455
ClearView Economics -58.5 --- ---
Commerzbank AG -58.0 --- 435
Credit Suisse -57.5 -0.8% 440
Daiwa Securities America -61.0 --- ---
DekaBank -58.0 -2.8% ---
Desjardins Group -59.0 -1.0% 435
Deutsche Bank Securities -57.5 -2.0% 450
Deutsche Postbank AG -58.0 -1.3% ---
Dresdner Kleinwort -56.0 -3.3% ---
DZ Bank -58.0 -1.2% ---
First Trust Advisors -57.4 -0.8% 443
Fortis -60.0 -1.5% ---
Global Insight Inc. -61.5 --- ---
"Goldman, Sachs & Co. -59.0 --- ---"
H&R Block Financial Advis -56.0 -1.5% 440
Helaba -58.0 -1.5% ---
High Frequency Economics -60.0 -3.0% 430
Horizon Investments -57.5 -2.0% ---
HSBC Markets -58.5 -3.3% 430
IDEAglobal -58.5 -2.0% 435
Informa Global Markets -56.6 -1.0% 445
ING Financial Markets -57.7 -2.1% 435
Insight Economics -59.0 -2.0% 430
Intesa-SanPaulo -58.0 -2.0% ---
J.P. Morgan Chase -58.5 -2.0% 440
Janney Montgomery Scott L -57.0 --- ---
JPMorgan Private Client -56.5 --- 440
Landesbank Berlin -56.5 -2.5% 425
Landesbank BW -57.0 -2.3% ---
Lehman Brothers -57.0 -1.8% 435
Lloyds TSB -58.0 -1.0% 450
Maria Fiorini Ramirez Inc -58.0 -2.0% 450
Merk Investments -58.5 -0.7% 440
Merrill Lynch -58.6 -2.0% 450
MFC Global Investment Man -58.0 -1.8% 430
Moody's Economy.com -57.5 -1.8% 440
Morgan Stanley & Co. -60.0 --- ---
National Bank Financial -57.0 --- ---
National City Corporation -57.5 -0.8% ---
Natixis -59.3 -1.6% ---
Nomura Securities Intl. -57.9 --- ---
Nord/LB -57.5 --- 430
PNC Bank -55.5 --- ---
RBS Greenwich Capital -60.0 --- 455
"Ried, Thunberg & Co. -60.0 -3.0% 450"
Schneider Trading Associa -58.0 -1.5% 433
Scotia Capital -59.0 -1.8% 440
Societe Generale -57.0 --- 440
Stone & McCarthy Research -57.0 -1.5% 460
TD Securities -58.0 --- 450
Thomson Financial/IFR -57.3 -1.0% 445
UBS Securities LLC -60.0 -3.0% ---
Unicredit MIB -56.0 -0.8% 400
University of Maryland -58.3 -1.8% 435
Wachovia Corp. -58.7 --- ---
Wells Fargo & Co. -62.5 -3.0% ---
WestLB AG -58.0 -1.6% ---
Westpac Banking Co. -55.7 -2.0% 450
Wrightson Associates -60.0 -3.0% 450
================================================================


To contact the reporter on this story: Timothy R. Homan in Washington at thoman1@bloomberg.net

"Last Updated: September 11, 2008 00:01 EDT"





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Soybeans Advance Amid Speculation U.S. May Lower Crop Forecasts

By Jae Hur

Sept. 11 (Bloomberg) -- Soybeans advanced amid speculation U.S. farmers may harvest less than the government forecast last month after dry weather in August damaged crops already slowed by the worst flooding in 15 years. Corn was little changed.

"The U.S. Department of Agriculture on Sept. 12 will project a soybean crop of 2.955 billion bushels, according to the average estimate of 24 analysts surveyed. That's down 0.6 percent from the USDA's August estimate. A crop of that size would be 14 percent bigger than last year's 2.585 billion-bushel harvest after farmers planted 18 percent more acres with the oilseed."

"``Soybeans were supported by the survey result,'' Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd. in Tokyo, said today by phone. ``However, the dollar's strength against the euro put a cap on the price gain.''"

Soybeans for November delivery gained as much as 0.9 percent to $11.88 a bushel in after-hours trading on the Chicago Board of Trade and was at $11.815 by 3:05 p.m. Singapore time.

"Futures, which touched a five-month low of $11.57 on Sept. 9, have slid 28 percent from a record $16.3675 on July 3."

"Corn for December delivery was unchanged at $5.3675 a bushel as of 3:08 p.m. Singapore time after trading between $5.35 and $5.3875. The futures, which lost 1.4 percent yesterday, have fallen 33 percent from a record $7.9925 on June 27."

"The U.S. corn harvest will total 12.126 billion bushels, according to the survey, down 1.3 percent from the USDA's August estimate. Last year's harvest totaled 13.074 billion bushels after farmers increased planted acreage to a 63-year high."

Field Surveys

The government's crop estimates tomorrow will be the second this year based on actual field surveys and are backed up by interviews with farmers.

"The USDA raised its forecasts of the corn crop in September in the past two years. Last year, its final estimate in January was 1.8 percent lower than the September projection, and two years ago it was 5.5 percent lower."

"``Many traders will prefer to be on the sidelines'' ahead of Friday's USDA report, said Toby Hassall, an analyst at Commodity Warrants Australia in Sydney. ``While the upward momentum in the dollar appears very strong, I believe we may see some temporary support in crude prices at $100 a barrel which would likely ease the downward pressure on the grains.''"

"The dollar climbed to $1.3933 per euro, the strongest since Sept. 18, 2007, before trading at $1.3963. Crude oil for October delivery rose as much as 1.3 percent after declining as low as $101.36 yesterday, a five-month low."

"Wheat for December delivery was down 2 cents at $7.2375 a bushel as of 3:10 p.m. Singapore time after falling yesterday as low as $7.16, the lowest since Aug. 29, 2007. Futures have fallen 46 percent below the $13.495 record set in February as farmers boosted acreage to gain from the 77 percent rally in 2007."

"Australia, the world's sixth-largest wheat exporter, may harvest less of the grain than previously forecast because of dry weather in some states, ProFarmer Australia said."

"Production may be 22.7 million tons, down from an August estimate of 24.5 million tons, the Perth-based forecaster said today. That compares with last year's drought-reduced crop of about 13 million tons."

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

"Last Updated: September 11, 2008 03:29 EDT"





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Treasuries Little Changed; Yields May Damp Demand at Auction

By Anchalee Worrachate and Wes Goodman

Sept. 11 (Bloomberg) -- Treasuries were little changed as investors judged yields near the lowest level since April will curb demand for $12 billion of U.S. 10-year notes that go on sale today.

"Ten-year Treasuries yield 1.62 percentage points more than the Federal Reserve's 2 percent benchmark rate, compared with 2.05 percentage points at the previous auction on Aug. 6. A six- week rally paused as investors braced for an increase in borrowing as the U.S. takes over government-sponsored enterprises Fannie Mae and Freddie Mac."

"``Treasuries have gone up a long way because of concern about the financial sector,'' said Nick Stamenkovic, a fixed- income strategist at RIA Capital Markets in Edinburgh. ``They might struggle to rise much from here in the near term, or at least until the auction is out of the way.''"

"The yield on the 10-year note was at 3.63 percent as of 10:22 a.m. in London, according to BGCantor Market Data. The 4 percent security maturing in August 2018 rose 2/32, or 63 cents per $1,000 face amount, to 103 3/32."

"The yield was as low as 3.55 percent on Sept. 5, a level not seen since April 15. Two-year yields were little changed at 2.19 percent."

U.S. yields have declined more than half a percentage point in seven weeks as forecasts for slowing economic growth and credit-market losses fueled demand for the relative safety of government debt.

Jobless Claims

"The number of people receiving jobless benefits in the U.S. rose to 3.46 million, the most since 2003, according to the median estimate of 44 economists in a Bloomberg News survey. The Labor Department will release the figure at 8:30 a.m. in Washington."

"Economic growth will slow to 0.6 percent in the fourth quarter from 1.2 percent in the third and 3.3 percent in the second, according to a Bloomberg survey of banks and securities companies."

"``We're very bearish on the U.S. economy, and I don't think there is strong inflation pressure,'' said Satoshi Okumoto, a general manager in Tokyo at Fukoku Mutual Life Insurance Co., with $53 billion in assets. ``Risk aversion prevails. We'd like to add more'' Treasuries, he said."

"Traders are betting the Fed will keep its target rate for overnight lending between banks unchanged at 2 percent this year, futures contracts on the Chicago Board of Trade show. The odds on an unchanged rate are 85 percent, compared with 62 percent a month ago."

Treasuries Underperform

Treasuries have underperformed European bonds in the third quarter on speculation the economy in Europe will slow faster than in the U.S. The yield spread between 10-year Treasuries and German bunds narrowed to 45 basis points from 65 basis points at the end of June.

"More than 30 percent of European high-risk, high-yield bonds are trading at distressed levels, the most in five years, according to Merrill Lynch & Co's Euro High Yield Constrained Index, stoking speculation defaults will rise."

"The August 10-year note sale was for $17 billion, the most since 2003, as the Treasury increases it auction sizes. Two-year auctions have climbed to a record $32 billion. Investors bid for 2.61 times the amount of debt on offer at the last sale. The average for the past 10 auctions was 2.37."

"The government's rescue of Fannie and Freddie, the biggest mortgage-finance providers in the U.S., allows it to buy as much as $200 billion of stock in the companies."

Budget Deficit

"The U.S. budget deficit will climb to a record $565 billion in the fiscal year that starts Oct. 1, Goldman Sachs Group Inc. economists Ed McKelvey and Alec Phillips wrote to clients yesterday. The world's biggest securities company increased its estimate by more than $100 billion."

The Congressional Budget Office projects the figure will be $438 billion next year versus $407 billion in 2008.

"Interest-rate derivatives imply banks are becoming more hesitant to lend. The difference between the rate banks charge for three-month dollar loans relative to the overnight indexed swap rate, the so-called Libor-OIS spread, was 83 basis points, near the most since April 30."

"Global finance firms have reported $510 billion in credit- market losses and writedowns since the start of the housing slump at the beginning of last year. Lehman Brothers Holdings Inc. yesterday reported a $3.9 billion third-quarter loss on $5.6 billion of writedowns, worse than the $2.2 billion loss analysts had predicted."

"The difference between yields on 10-year Treasury Inflation Protected Securities, or TIPS, which reflects the outlook among traders for consumer prices, and conventional securities narrowed as oil prices declined from July's record high. The gap was 1.95 percentage points, near the lowest since 2003, and down from 2.60 percentage points on July 4."

"The price of oil was little changed at $102 a barrel, and has dropped 29 percent from a $147.27 on July 11."

"Import prices declined 1.8 percent in August from the previous month, the biggest drop in almost two years, according to a Bloomberg survey of economists before the Labor Department report today."

To contact the reporters on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net; Wes Goodman in Singapore at wgoodman@bloomberg.net

"Last Updated: September 11, 2008 05:33 EDT"





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Brazilian Stocks Rise on Faster Economic Growth; Ipsa Gains

By William Freebairn and Alexander Ragir

"Sept. 10 (Bloomberg) -- Brazilian stocks rebounded from a one-year low, led by retailers, after economic growth in the second quarter topped economists' estimates, boosting speculation consumer spending will rise."

"Lojas Americanas SA, the biggest discount store chain, paced gains for retailers after Brazil's gross domestic product had its second fastest expansion in four years. Miner Cia. Vale do Rio Doce rose the most in three weeks on speculation it will get higher prices from Asia customers next year. Meat producer JBS SA rose for the first time in nine days after the U.S. allowed the resumption of Brazilian exports."

"``You've had a sharp decline, while companies have been coming with good results, so you see valuations become very attractive,'' said Reginaldo Ferreira Alexandre, equity analyst for Proxycon Assessoria Financeira in Sao Paulo. ``The sell-off becomes a contradiction when you observe the GDP and the situation of the companies.''"

"The Bovespa index rose 1,197.86, or 2.5 percent, to 49,633.16. The MidLarge Cap index advanced 2.4 percent, while the Small Cap index gained 1.4 percent. Mexico's Bolsa was little changed. Chile's Ipsa index climbed 0.6 percent. The MSCI Latin America index rose 0.2 percent, its first advance in nine days."

GDP Beats

"Retailers advanced after the government said gross domestic product grew 6.1 percent in the April-through-June period, more than the median estimate of 5.5 percent in a Bloomberg survey of 36 economists. Lojas Americanas rose 3.7 percent to 9.59 reais. Lojas Renner SA, the country's largest publicly-traded clothing retailer, gained 1.9 percent to 27.30 reais. Cia. Brasileira de Distribuicao Grupo Pao de Acucar SA, the biggest food retailer, added 1.4 percent to 33.65 reais."

Brazil's central bank will probably raise its benchmark overnight rate by 0.75 percentage point to a two-year high of 13.75 percent later today.

"JBS, the world's largest beef producer, rose for the first time this month. The U.S. ended a five-week suspension of imports from Brazil following plant inspections to certify suppliers were complying with standards, the Agriculture Ministry said. JBS rose 9.6 percent to 5.73 reais, the biggest gain in six months."

"Vale gained for the first time in three days, adding 5.7 percent to 35.25 reais. The world's biggest iron-ore producer said yesterday it's in negotiations with Asian clients to boost prices for the second time this year."

"``Even if Vale's current attempts to secure an additional mid-year increase fail, we feel the process forms part of the posturing for 2009's annual contract price negotiations which begin in a couple of months,'' Nomura Holdings Inc. analyst Paul Cliff wrote in a note to clients today."

"Banco do Brasil SA, Latin America's biggest bank by assets, rose 3.5 percent to 22.24 reais after Deutsche Bank AG said it is among the top picks in the industry because of its valuation and earnings growth potential."

Televisa Gains

"Most stocks in Mexico's Bolsa index rose, with broadcaster Grupo Televisa SAB gaining and brewer Fomento Economico Mexicano SAB dropping."

"Televisa, Mexico's biggest broadcaster, may increase revenue by 15 percent in 2009 even as the U.S. and Mexican economies slow, Bank of Nova Scotia said. The stock added 0.9 percent to 50.01 pesos."

"Fomento Economico Mexicano, known as Femsa, fell the most in six months, losing 4.8 percent to 46.08 pesos. The announcement yesterday by Finance Minister Agustin Carstens that Mexico will increase the price of gasoline on a weekly basis until it reaches average international market rates in 2010 is raising concern that consumers will have less money to spend on discretionary goods, said Marisol Huerta, analyst at Actinver SA."

"In other Latin America markets, Argentina's Merval rose 0.6 percent, Peru's Lima General slid 0.5 percent and Colombia's IGBC added 0.4 percent."

To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.netAlexander Ragir in Rio de Janeiro at aragir@bloomberg.net;

"Last Updated: September 10, 2008 16:51 EDT"





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European Bonds Decline on Signs Inflation Is too High for ECB

"Sept. 11 (Bloomberg) -- European government bonds fell on speculation the region's central bank will highlight the risks of inflation in a report today, making it less likely it will cut interest rates to boost economic expansion."

"Ten-year German bunds slipped for a second day as a government report showed German wholesale prices rose more than 7 percent last month, giving policy makers more reason to keep borrowing costs on hold even as growth slows. The European Central Bank is scheduled to release its monthly report for September today. Bunds fell yesterday after Lehman Brothers Holdings Inc.'s announcement of plans to shore up its finances damped demand for the safest assets."

"``On the whole, the ECB will highlight that inflation risks are on the upside,'' said Charles Diebel, head of European rate strategy in London at Nomura International Plc. ``We had some fun and games on the credit side yesterday, and people are still nervously waiting for the next bit of bad news.''"

"The 10-year bund may yield 4 percent by year-end, Diebel predicted."

"The yield on the German bund, Europe's benchmark government security, rose 1 basis point to 4.08 percent by 9:40 a.m. in London. The 4.25 percent note due July 2018 fell 0.11, or 1.1 euros per 1,000-euro ($1,391) face amount, to 101.33. The yield on the two-year note was little changed at 4.02 percent. Yields move inversely to bond prices."

Price Pressures

"Wholesale prices in Germany, Europe's largest economy, rose an annual 7.4 percent, compared with 9.9 percent in July, the Federal Statistics Office in Wiesbaden said today. They were forecast to increase 8.6 percent, according to a survey of economists by Bloomberg News."

ECB President Jean-Claude Trichet said yesterday the current level of interest rates will help combat inflation in the ``medium term.'' Policy makers left their main refinancing rate at 4.25 percent on Sept. 4.

"``We considered that interest rates should be left at their current level, and that this level will allow us to provide the price stability that our fellow citizens demand,'' Trichet said in an interview with Portuguese television channel SIC Noticias. ``When European citizens are asked about what is their first worry, it is inflation.''"

"Among government bond auctions today, Italy plans to sell 2.5 billion euros of 4.25 percent notes due in 2013 and 2 billion euros of 5 percent notes due in 2039."

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





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Indian Bonds Gain a Third Day; Report May Show Inflation Slowed

By Anil Varma

Sept. 11 (Bloomberg) -- India's 10-year bond yields declined to the lowest in almost three months as a government report today may show inflation slowed for a third week.

"The Ministry of Commerce and Industry may say wholesale prices rose 12.01 percent in the week ended Aug. 30 from a year earlier, the smallest increase in more than a month, according to a Bloomberg News survey. The report is due at 6 p.m. in New Delhi. Bonds also rose on speculation banks are buying the securities to meet statutory requirements as deposits rise."

"``Bond-market sentiment is more upbeat now than a couple of weeks ago as inflation has come off its peak,'' said Paresh Nayar, head of currency and debt trading at Development Credit Bank Ltd. in Mumbai. ``Falling oil prices have also helped.''"

"The yield on the benchmark 8.24 percent note due April 2018 fell 1 basis point to 8.36 percent as of 11:57 a.m. in Mumbai, according to the central bank's trading system. The price rose 0.09, or 9 paise per 100-rupee face amount, to 99.23. A basis point is 0.01 percentage point."

The benchmark yield has dropped 1.2 percentage points from a seven-year high of 9.55 percent touched in July as the inflation rate declined from a 16-year high of 12.63 percent reached in the week ended Aug. 9. Crude oil prices have dropped almost 30 percent from a record high of $147.27 per barrel reached on July 11.

"Local lenders are required by law to invest at least 25 percent of their deposits in government debt or other low-risk securities approved by the central bank. Bank deposits in India increased 21.6 percent in the 12 months ended Aug. 15, central bank data show."

"The cost of benchmark interest-rate swaps, or derivative contracts used to guard against rate fluctuations, increased. The five-year swap rate, a fixed payment made to receive floating rates, climbed 6 basis points to 8.77 percent."

To contact the reporter on this story: Anil Varma in Mumbai at avarma3@bloomberg.net.

"Last Updated: September 11, 2008 03:02 EDT"





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Pound Advances Versus Euro Before King Testimony to Parliament

By Andrew MacAskill and Lukanyo Mnyanda

"Sept. 11 (Bloomberg) -- The British pound rose for a sixth day against the euro, the longest run of gains in 20 months, and was little changed versus the dollar before Bank of England Governor Mervyn King testifies to members of Parliament."

"The currency rose to its highest level in more than two weeks against the euro before King's discusses interest-rate policy with the Treasury select committee. Deputy Governor John Gieve said in an interview with the Irish News yesterday that inflation may accelerate, weakening the case for an interest-rate reduction."

"``My expectation is that King is going to disappoint anyone looking for an early sign of a rate cut,'' said Simon Derrick, chief currency strategist in London at Bank of New York Mellon Corp. ``This will give sterling a short-term boost.''"

"The pound increased to 79.54 pence per euro as of 9:13 a.m. in London, from 79.88 pence yesterday. It advanced 2.6 percent during the streak, the longest since the six days ended Jan. 15, 2007. Against the dollar, the U.K. currency was little changed at $1.7523, from $1.7530 yesterday."

Central bank policy makers kept interest rates at 5 percent for a fifth month on Sept. 4 as inflation risks prevented them from cutting borrowing costs to spur growth. The bank is due to release the minutes of the meeting Sept. 17.

"The pound's trade-weighted index, a gauge of the currency's performance against Britain's major trade partners, rose 0.3 percent to 86.19, paring its loss this year to 9 percent, according to Deutsche Bank AG. The measure has rebounded from the lowest level since at least 2000 last week."

"Government bonds were little changed. The 10-year yield added 1 basis point to 4.46 percent. The 5 percent security due March 2018 fell 0.07, or 70 pence per 1,000-pound ($1,752) face amount, to 104.11."

"The yield on the two-year note, which is more sensitive to interest-rate expectations, was little changed at 4.44 percent. Bond yields move inversely to prices."

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

"Last Updated: September 11, 2008 04:26 EDT"





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Lee Says South Korea Inflation Is Elevated; Leaves Rates Steady

By William Sim

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"Sept. 11 (Bloomberg) -- Bank of Korea Governor Lee Seong Tae said inflation will probably remain elevated for a significant period, an indication he may keep interest rates at an eight-year high this year."

"The central bank left the seven-day repurchase rate at 5.25 percent in Seoul earlier today, as forecast by all 23 economists surveyed by Bloomberg News. The bank raised borrowing costs in August for the first time in 12 months."

"Lee said today consumer prices may exceed the bank's 5.3 percent forecast in the second half, stoked by a weaker won and increases in power costs. South Korea's policy makers must balance the inflation threat against evidence of a deepening slowdown in the economy, which expanded at the weakest pace in more than a year last quarter as consumers cut spending."

"``The Bank of Korea maintains its tightening bias in light of inflation risks,'' said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong. ``We see rates on hold for the time being.''"

The government said yesterday it will raise electricity prices by 5 percent next month and gas prices in cities by 7.8 percent on Sept. 19 to help recoup higher production costs.

"Consumer prices increased 5.6 percent in August from a year earlier, moderating from July's 10-year high of 5.9 percent. It still marked the 10th consecutive breach of the central bank's 2.5 percent to 3.5 percent inflation target."

"``To say it simply, the inflation situation hasn't improved much,'' Governor Lee told reporters today."

Currency Decline

"The Kospi index of stocks fell 1.2 percent to 1,446.90 at 1 p.m. in Seoul, taking this year's drop to 23 percent. The won declined 1.1 percent to 1,107.90 against the dollar. The yield on the five-year government bond slipped 4 basis points to 5.73 percent."

"The won's 16 percent slump this year, Asia's worst performer, has fanned inflation pressures by driving up the cost of imported goods. The currency has declined as investors sold the nation's stocks and bonds because of the dimming outlook for economic growth and signs of increased overseas debt."

"Economists at Goldman Sachs Group Inc. and UBS AG predict the central bank will have to raise interest rates this year to stem the won's decline. Each 8 percent drop in the won adds 1.6 percentage points to the inflation rate, according to Goldman."

"``We expect the central bank to hike by 25 basis points as early as the next policy meeting,'' said Eva Yi, an economist at Goldman Sachs in Hong Kong. ``The sharp depreciation of the won has tilted the risks decisively towards inflation for the BOK, despite prospects of continued weakening in domestic demand.''"

Economic Slowdown

"In contrast, fifteen of 20 economists surveyed this week forecast rates will be kept unchanged for the rest of 2008 because higher borrowing costs would stifle an already-slowing economy as consumers, struggling with record debt levels, cut spending."

"``Another rate hike would do more harm than good by further damping domestic demand,'' said Chun Chong Woo, an economist at SC First Bank Korea Ltd. in Seoul. ``The won could weaken more if the economy cools faster than expected.''"

"The economy grew 4.8 percent in the second quarter from a year ago, the slowest pace in more than a year. Household spending fell for the first time in four years as rising living costs prompted consumers to cut discretionary purchases."

To contact the reporter on this story: William Sim in Seoul at wsim2@bloomberg.net.

"Last Updated: September 11, 2008 00:16 EDT"





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"India's Rupee Falls to Two-Year Low on Importers, Dollar Rally "

By Anoop Agrawal

Sept. 11 (Bloomberg) -- India's rupee fell to the lowest level in almost two years on speculation investors and importers stepped up purchases of the U.S. currency as the dollar rallied against the euro.

"The rupee dropped for a third day, sliding in tandem with eight other most-active Asian currencies outside Japan, on concern widening credit-market losses will slow economic growth. India's benchmark stock index has slumped 29 percent this year, heading for the first annual loss since 2001, as overseas funds dumped $7.4 billion more local equities than they bought."

"``Importers with short-term liabilities are covering aggressively at a time when dollar supply is very limited,'' said Parthasarathi Mukherjee, treasurer at Axis Bank Ltd. in Mumbai. ``The sentiment for the dollar is strengthening globally and that is adding to the momentum against the rupee.''"

"The rupee fell as much as 0.7 percent to 45.46 a dollar, the lowest level since Oct. 16, 2006, before trading at 45.4425 as of 12:07 p.m. in Mumbai, according to data compiled by Bloomberg. It may drop to 46 in the near term, Mukherjee said."

"India's economy, Asia's third-biggest, expanded 7.9 percent in the three months ended June, the slowest pace since the last quarter of 2004, a government report showed last month."

"The rupee has erased last year's 12.2 percent advance, which was the most in more than three decades. The currency touched almost a decade high of 39.185 a dollar on Nov. 7 as overseas investors bought a net $19.5 billion of Indian stocks and bonds, a record."

Dollar's Advance

"The U.S. dollar has advanced against all of the 16 major currencies tracked by Bloomberg in the past three months as commodities declined. The ICE's Dollar Index, measuring the greenback against the currencies of six U.S. trading partners, touched 80.25 today, the highest since September 2007."

Crude oil in New York has dropped almost 30 percent from an all-time high of $147.27 a barrel reached on July 11. The UBS Bloomberg Constant Maturity Commodity Index of 26 raw materials has declined 22 percent from a July peak.

"The European Commission cut its growth outlook for the 15- nation euro area for the rest of this year, predicting a recession for Germany, the region's largest economy. The U.K. economy is contracting for the first time in at least a decade and will go through a recession this year, two reports showed yesterday."

"The rupee's slide may be tempered by speculation the Reserve Bank of India will intervene to stem losses, as a weaker currency may add to inflation."

Currency Intervention

"``The pace of the rupee's decline has increased speculation the central bank will intervene,'' said Sudhanshu Shekhar, a currency trader at state-owned State Bank of Travancore in Mumbai. ``That may halt the depreciation.''"

"The central bank intervenes in the currency market by arranging sales or purchases of foreign exchange to curb rupee volatility, Governor Duvvuri Subbarao said on Sept. 9. It will continue with its exchange rate policy, which has served India well, he said."

"India's foreign-currency reserves have dropped in all but four of the 13 weeks starting June, indicating the Reserve Bank sold dollars to slow the pace of the rupee's depreciation."

"Foreign-currency reserves fell to a six-month low of $286.1 billion in the week ended Aug. 29, from a record $306.2 billion reached in May, central bank data show."

"A government report today may show inflation slowed for the third week. Wholesale prices rose 12.01 percent in the week ended Aug. 30 from a year earlier, the slowest pace in more than a month, according to economists surveyed by Bloomberg. The rate climbed to 12.63 percent in the week to Aug. 9, a 16-year high."

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

"Last Updated: September 11, 2008 02:40 EDT"





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European Stock Futures Are Little Changed; Home Retail May Fall

By Sarah Jones

Sept. 11 (Bloomberg) -- European stock-index futures were little changed. Home Retail Group Plc may drop after the owner of Britain's second-largest home-improvement chain reported lower sales.

"BG Group Plc will probably rally on finding an oil field in the Santos Basin offshore Brazil, while Royal Dutch Shell Plc and Total SA might gain on higher oil. Bayerische Motoren Werke AG may fall on a report the world's largest maker of luxury cars may have to increase risk provisions. Allied Irish Banks Plc and Bank of Ireland Plc may retreat after Dresdner Kleinwort recommended selling the shares as the brokerage cut its outlook for earnings."

"Futures on the Dow Jones Euro Stoxx 50 Index, a benchmark for the euro region, fell 10, or 0.3 percent, to 3,228 at 7:45 a.m. in London. The U.K.'s FTSE 100 Index may rise 3, according to CMC Markets, a betting firm."

Energy companies led gains yesterday in the U.S. Asian stocks tumbled today on concern the economic slowdown will damp demand for the region's exports and that credit-market losses will increase.

Home Retail Group Plc may drop after the owner of Britain's second-largest home-improvement chain reported lower same-store sales at its Homebase and Argos stores as a housing slump worsened and consumer confidence slid to a four-year low.

"Revenue at Argos stores open at least a year declined 5.8 percent in the second quarter. At the Homebase chain, sales in the 13-week period fell 8.3 percent on that basis."

BG Group

"BG Group, together with partners Petroleo Brasileiro SA and Portugal's Galp Energia SGPS SA, said they found ``another first-class'' oil field in the Santos Basin."

The Iara oil field holds an estimated 3 billion to 4 billion barrels of recoverable light crude oil.

"American depositary receipts of Shell, Europe's largest oil company, climbed 1.4 percent from the close in London. ADRS of Total, Europe's third-biggest, increased 1.8 percent from the Paris finish."

"Crude oil climbed after Hurricane Ike gained strength while entering the Gulf of Mexico, shutting fields and raising concern that refinery production may be disrupted."

The contract for October delivery rose as much as 1.3 percent to $103.95 a barrel.

"BMW may decline. The carmaker is preparing to set aside higher risk provisions as the problems of its leasing business are increasing, Handelsblatt reported on its Web site."

"``We can't exclude that we'll have to raise risk provisions in the second half again,'' the newspaper cited Chief Financial Officer Michael Ganal as saying."

BMW more than doubled risk provisions to account for bad debt and lower resale values of leased vehicles in the second quarter.

Allied Irish

Allied Irish may drop after Dresdner cut its recommendation for the nation's largest lender by market value to ``sell'' from ``hold.'' Analysts also downgraded Dublin-based Bank of Ireland to ``sell'' from ``reduce.''

"``We forecast a dramatic rise in bad debts across the Irish banks for 2009 and 2010,'' Dresdner analysts wrote in a note to investors. ``Allied and BoI now look short on capital for 2009.''"

Dresdner reduced its earnings per share estimate for Irish lenders next year by an average 33 percent.

Deutsche Postbank AG may be active after Deutsche Bank AG said it was in advanced talks to buy a stake in the German lender. Deutsche Bank said it's in advanced talks with Deutsche Post AG over the potential acquisition of a stake in Germany's biggest consumer bank by clients.

"``The outcome of these discussions is not yet finalized,'' Deutsche Bank said in a statement on the DGAP newswire."

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

"Last Updated: September 11, 2008 02:53 EDT"





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"Brazil Raises Rate to 13.75%, Highest in Two Years (Update1) "

By Joshua Goodman and Andre Soliani

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Sept. 10 (Bloomberg) -- Brazil's central bank raised its benchmark interest rate to the highest in almost two years in a bid to cool accelerating economic growth that's stoking inflation. Policy makers were split over the size of the move for the first time in over a year.

"Policy makers led by Henrique Meirelles voted 5-3, without a bias, to increase the so-called Selic rate to 13.75 percent from 13 percent, as forecast by 40 of 41 economists in a Bloomberg survey. That raised the country's real interest rate, which is the Selic minus inflation, to the highest of all 54 countries tracked by Bloomberg."

"The central bank, in a statement, said it was raising rates ``to promote the conversion of the inflation to the target trajectory in a timely fashion.''"

"It was the first non-unanimous vote since July, 2007, with dissenters favoring a 50 basis-point increase, as forecast by one economist in the same survey."

"Falling commodity prices that pushed inflation lower last month to 6.17 percent, from a three-year high of 6.37 percent, have done little to ease central bank concerns that demand growth is outpacing supply in Brazil's $1.3 trillion economy."

"Economic growth unexpectedly accelerated to 6.1 percent in the second quarter, a government report showed today, fueling concern that rising demand may stoke inflation. Consumer price increases have exceeded the bank's 4.5 percent target since January."

More Rate Increases

"Policy makers, after raising the so-called Selic rate by a larger-than-expected 0.75 percentage point in the previous meeting July 23, used the same language to express their goal of bringing inflation back to its target in a ``timely fashion.''"

"Central bankers will raise the Selic rate further to 14.75 percent by the end of the year, according to the most recent central bank survey of 100 economists published Sept 5."

"The second-quarter gross domestic product expansion, up from 5.9 percent in the previous three months, beat all forecasts in a Bloomberg survey of 36 economists, whose median estimate was 5.5 percent."

"Central bank President Meirelles described the GDP advance as ``robust,'' driven by a record 5.4 percent increase in investments on a quarter-on-quarter basis, according to a statement distributed in Brasilia."

"``Brazil lives today a sustained growth cycle, supported by price stability,'' Meirelles said."

Spending

"Government plans to boost spending excluding interest payments by 13 percent in 2009 are also adding pressure on inflation, said Thomas Trebat, director of Columbia University's Center for Brazilian Studies in New York."

"Manufacturers operated at a record 83.5 percent capacity in July and industrial output grew 8.5 percent that month, more than economists expected."

"Finance Minister Guido Mantega said today in Brasilia economic growth isn't stoking inflation. Growth this year will exceed the government's 5 percent forecast, he said."

"``The economy can grow at a pace of 5 percent to 5.5 percent keeping inflation within the target,'' Mantega told reporters. ``The increase of GDP comes as inflation is slowing and therefore growth is sustainable.''"

The central bank started to raise the Selic rate at the April 15-16 meeting after holding it unchanged for six months at a record low of 11.25 percent. Policy makers had increased the rate by half a percentage point twice before accelerating the pace in July. Today's rate increase puts the Selic rate at the level it was in November 2006.

"Brazil's real fell today to the lowest level in seven months and yesterday Mantega predicted further weakening because of reduced investment and a narrowing trade surplus. The real is down 8.7 percent this month, the worst performance among the 16 most-traded currencies tracked by Bloomberg."

Inflation Peak

"Economists began trimming their inflation forecasts in August after consumer prices rose at the slowest pace in 11 months. Citigroup Inc. said in a report yesterday that inflation ``likely peaked'' in July at 6.37 percent. Consumer price increases will slow to 6.27 percent by the end of 2008, according to the central bank weekly survey."

"Parts of the economy are showing signs of slowing following the central bank's rate increases. Vehicle sales grew 4 percent in August from a year ago, the slowest pace in almost two years, after car-loan costs jumped."

To contact the reporters on this story: Joshua Goodman in Rio de Janeiro at Jgoodman19@bloomberg.net; Andre Soliani in Brasilia at at soliani@bloomberg.net

"Last Updated: September 10, 2008 19:52 EDT"





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New Zealand Dollar Drops as Rates Cut; Australia Currency Falls

By Candice Zachariahs and Tracy Withers

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Sept. 11 (Bloomberg) -- The New Zealand dollar slid to the weakest in two years after the central bank lowered borrowing costs more than expected and signaled further cuts to combat the first recession in a decade. Australia's dollar fell.

"New Zealand's dollar has fallen 19 percent in the past six months, the worst among the 16 most-traded currencies against the greenback, as central bank Governor Alan Bollard cut rates 0.5 percentage point today, reducing the premium offered by the nation's assets. ``We've got room to move,'' Bollard said in an interview from Wellington today. ``We're in a loosening mode.''"

"``There's no doubt that both the Australian household sector and the New Zealand household sector have slowed,'' said Robert Rennie, chief currency strategist in Sydney at Westpac Banking Corp., Australia's fourth-largest bank. ``In the short- term both currencies will see further downside pressure.''"

"The New Zealand currency fell 2.7 percent to 64.99 U.S. cents at 4:55 p.m. in Sydney. The currency touched 64.88 cents, the lowest since September 2006. It fell to 69.66 yen, the weakest since July 2006, before trading at 69.73 yen from 71.72 yen yesterday."

"Australia's dollar slipped 1 percent to 79.59 U.S. cents from 80.44 cents late in Asia yesterday. It earlier touched 79.44, the lowest since August 2007. The currency fell 1.1 percent to 85.42 yen."

The Australian and New Zealand dollars were the worst performers among the 16 most-traded currencies as the UBS Bloomberg Constant Maturity Index of 26 raw materials fell for the second day. Raw materials account for 60 percent of Australia's exports and sales of commodities such as lumber make up 70 percent of New Zealand's overseas shipments.

The New Zealand dollar dropped 1.7 percent against the Australian currency to NZ$1.2246.

Recession

"The New Zealand economy is in its first recession since 1998 as the jobless rate rises, retail sales drop and a drought cuts farm exports, Bollard, 57, said. The country's dollar, a favorite of the so-called carry trade, has dived 12.5 percent since July 24, when Bollard cut the benchmark for the first time in five years."

"Today's interest rate cut reduces the premium that New Zealand enjoys over Japan and the U.S., where borrowing costs are 0.5 percent and 2 percent, respectively. The New Zealand and Australian currencies over the past two years as Bollard raised interest rates to a record and Australia's benchmark rate reached a 12-year high. Reserve Bank of Australia Governor Glenn Stevens this month cut rates for the first time since 2001."

"The U.S. Federal Reserve reduced borrowing costs seven times from 5.25 percent in September through April, the fastest pace of declines in two decades, to boost the economy. Japan's target rate has been steady at 0.5 percent since February 2007."

"The kiwi, as the New Zealand dollar is called, also dropped as the difference in yield between three-year New Zealand and similar-maturity U.S. government debt narrowed to 2.70 percentage points, the lowest since October 2007."

Currency Concern

"Bollard signaled during an interview with Bloomberg Television that he may slow the pace of interest rate cuts if the New Zealand dollar drops too fast. That would ``import inflation,'' he said. ``It's not so much the level, but whether it was to move too fast in a downward direction.''"

Traders expect the central bank to reduce rates a further 1.22 percentage point over the next 12 months according to a Credit Suisse Group index based on overnight swaps trading today.

"``There are real reasons for the Reserve Bank of New Zealand to be quite worried about the economy,'' said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. ``It's clear conditions are far too tight.''"

Ong was the only one of 15 economists surveyed by Bloomberg to predict the half-point cut. The rest forecast a quarter-point reduction.

Australian Jobs

"The Australian dollar pared losses after a government report showed employers hired almost three times as many workers as economists forecast in August, adding to evidence the nation's mining boom is helping offset weaker domestic demand."

"The number of people employed rose 14,600 last month, the statistics bureau said in Sydney today. The median estimate of 25 economists surveyed by Bloomberg News was for a 5,000 gain. The jobless rate fell to 4.1 percent from 4.3 percent."

"Traders see a 77 percent probability the Reserve Bank of Australia will reduce rates at its next meeting on Oct. 7, down from 91 percent before the jobs data was released, according to another Credit Suisse index. The Australian dollar has dropped 18 percent since reaching a 25-year high on July 16."

"Australian government bonds fell. The yield on the 10-year note rose 3 basis point, or 0.03 percentage point, to 5.66 percent. The price of the 5.25 percent bond maturing in March 2019 fell 0.192, or A$1.92 per A$1,000 face amount to 96.786. Bond yields move inversely to prices."

"New Zealand government debt rose. The yield on the 10-year benchmark bond fell 4 basis points to 5.83 percent. The price of the 6 percent security due in December 2017 increased 0.309, or NZ$3.09 per NZ$1,000 face amount, to 101.17."

To contact the reporter on this story: Candice Zachariahs in Sydney at Czachariahs2@bloomberg.net

"Last Updated: September 11, 2008 03:06 EDT"





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"European Stocks Fall, Led by Home Retail; U.S. Futures Decline "

By Sarah Jones

"Sept. 11 (Bloomberg) -- European stocks fell for a third day as concern deepened the economic slowdown will hurt earnings for retailers and financial firms, overshadowing a rebound in mining and oil shares. U.S. index futures and Asian shares also declined."

"Home Retail Group Plc dropped 5 percent after the home- improvement chain reported lower sales. Bank of Ireland Plc retreated 3.5 percent and Allied Irish Banks Plc lost 1.9 percent after Dresdner Kleinwort recommended selling the shares. BHP Billiton Ltd. gained 1.9 percent as mining shares at their cheapest in seven years lured investors, while BG Group Plc rallied 3.9 percent on an oil discovery."

"Europe's Dow Jones Stoxx 600 Index slipped 0.3 percent to 276.59 as of 9:44 in London, extending this year's decline to 24 percent. Futures on the Standard & Poor's 500 Index fell 0.5 percent, and the MSCI Asia Pacific Index decreased 2.7 percent."

"``Economies around the world are clearly slowing,'' said Jeremy Beckwith, London-based chief investment officer at Kleinwort Benson, which oversees the equivalent of $13.1 billion. ``We will see substantial earnings revisions. I think people are getting fearful now and will get more fearful.''"

"National benchmark indexes dropped in 11 of the 17 western European markets that were open. Germany's DAX declined 0.5 percent, and the U.K.'s FTSE 100 lost 0.3 percent, while France's CAC 40 fell 0.4 percent."

Stocks retreated yesterday after the European Commission cut its forecast for the region's economic growth and investors speculated bank losses will increase. More than $15 trillion has been erased from global equities in 2008 as accelerating inflation and $512 billion in bank writedowns and losses threaten economic growth.

Home Retail

"Home Retail sank 5 percent to 229.75 pence, the steepest drop since at least October 2002. The owner of Britain's second- largest home-improvement chain reported lower same-store sales at its Homebase and Argos stores as a housing slump worsened and consumer confidence slid to a four-year low."

"Revenue at Argos stores open at least a year declined 5.8 percent in the second quarter. At the Homebase chain, sales in the 13-week period fell 8.3 percent on that basis."

"Analysts slashed earnings estimates this year as the global economy cooled and the biggest surge in mortgage defaults in at least three decades pushed banks to write down assets. Profit for companies in the Stoxx 600 will slump 2.1 percent in 2008, down from 11 percent growth forecast at the end last year, according to data compiled by Bloomberg."

Allied Irish dropped as much as 1.9 percent to 7.95 euros after Dresdner cut its recommendation for the nation's largest lender by market value to ``sell'' from ``hold.'' Analysts also downgraded Dublin-based Bank of Ireland to ``sell'' from ``reduce.'' The stock sank 3.1 percent to 5.35 euros.

Cutting Estimates

"``We forecast a dramatic rise in bad debts across the Irish banks for 2009 and 2010,'' Dresdner analysts wrote in a note to investors. ``Allied and BoI now look short on capital for 2009.''"

Dresdner reduced its earnings per share estimate for Irish lenders next year by an average 33 percent.

"BHP, the world's largest mining company, rallied 1.9 percent to 1,411 pence. Rio Tinto Group, the world's third- biggest mining company, added 2 percent to 4,235 pence. Anglo America Plc, the second-largest, advanced 2.9 percent to 2,258 pence."

"``We are long overdue a bounce'' in mining shares, said Tom Hougaard, the London-based chief market strategist at City Index Ltd. ``When you look at the mining sector, there has been a large drop in all the parameters. So much of the bad news has already been priced in.''"

"The Stoxx 600 Basic Resources Index has slumped 21 percent since July, pushing shares to their cheapest since April 2001. The index yesterday traded at 8.1 times earnings."

BG Group

"BG Group climbed 3.9 percent to 1,096 pence after the U.K.'s largest oil and gas company, together with partners Petroleo Brasileiro SA and Portugal's Galp Energia SGPS SA, said they found ``another first-class'' oil field in the Santos Basin."

The Iara oil field holds an estimated 3 billion to 4 billion barrels of recoverable light crude oil.

"Galp Energia, Portugal's largest oil company, jumped 6.4 percent to 12.08 euros."

CNP Assurances SA and Aegon NV led a retreat by insurers after UBS AG downgraded the shares.

"CNP, France's largest life insurer, lost 2.4 percent to 79.09 euros and Aegon, the owner of the U.S. insurer Transamerica Corp., slid 1.8 percent to 8.31 euros. UBS cut its rating on the companies' shares to ``sell'' from ``neutral.''"

"``Aegon needs to boost return on equity to improve the risk/return profile,'' London-based analyst Marc Thiele wrote in a note to clients today. He also fears ``more setbacks to new business'' at CNP."

"Axa, BMW"

Axa SA dropped 2.6 percent to 22.15 euros. UBS also lowered its recommendation for Europe's second-biggest insurer to ``neutral'' from ``buy.''

"Bayerische Motoren Werke AG, the world's largest maker of luxury cars, declined 1.4 percent to 28.60 euros after Handelsblatt reported on its Web site that the carmaker is preparing to set aside higher risk provisions as problems with its leasing business are increasing."

"`We can't exclude that we'll have to raise risk provisions in the second half again,'' the newspaper cited Chief Financial Officer Michael Ganal as saying."

BMW more than doubled risk provisions to account for bad debt and lower resale values of leased vehicles in the second quarter.

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

"Last Updated: September 11, 2008 04:50 EDT"





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Velarde May Raise Peru Lending Rate to 6.5% to Slow Inflation

By Alex Emery

Sept. 11 (Bloomberg) -- Peru's central bank President Julio Velarde will probably raise the overnight lending rate for the fifth time this year in a bid to slow the fastest inflation in a decade.

"The bank will increase borrowing costs a quarter percentage point to 6.5 percent, the highest in more than 7 years, according to 14 of 16 economists surveyed by Bloomberg. One analyst predicts a half-point increase and one expects no change."

"Annual inflation in Peru is more than double policy makers' target of no more than 3 percent. Raising borrowing costs may help slow record consumer spending that's contributing to higher prices, said Boris Segura, a Latin America economist at Morgan Stanley in New York."

"``Rate increases are several steps behind inflation and aren't biting,'' Segura said in a telephone interview. ``Monetary policy has to be tighter.''"

"Consumer prices climbed 0.6 percent last month, pushing annual inflation to 6.27 percent, the fastest since 1998. Since mid-2006, prices for oil, wheat, corn and soybeans have doubled, spurring inflation in Peru, which is a net importer of the commodities. Food prices rose 10.3 percent in the past year."

Velarde called on the government to cut public spending on Aug. 28 after the economy expanded 10.1 percent in the first half. Federal government outlays rose 18.4 percent and private investment jumped 26.5 percent in the first six months of the year as record commodity earnings spurred consumer demand for homes and cars.

"Bank lending jumped 25 percent to a record $26 billion through the first half on surging credit card spending, consumer loans and mortgages, according to Peru's banking association."

`Healthier' Growth

"``It would be healthier to grow at a slower rate in the long term,'' Jorge Monsante, chief executive of Credibolsa SAB, Peru's largest brokerage, said in an interview. ``Consumer spending and bank loans have grown too fast over the past year.''"

"Economic growth will slow to 7 percent next year as demand for Peruvian exports drops in the U.S. and Europe, Peru's main trading partners, according to the central bank."

"Peru's exports have risen fourfold since 2001 on rising prices for copper, gold, fishmeal and natural gas. Peru is the world's third-largest copper producer, No. 1 in fishmeal and fifth-largest in gold."

Velarde joins monetary policy makers across Latin America who have pushed rates up in the last year seeking to tame prices and meet their inflation targets. The decision on interest rates is slated to be announced after 6 p.m. New York time.

To contact the reporter on this story: Alex Emery in Lima at aemery1@bloomberg.net

"Last Updated: September 11, 2008 01:00 EDT"





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Japanese 10-Year Bonds Advance on Decline in Machinery Orders

By Theresa Barraclough

Sept. 11 (Bloomberg) -- Japanese 10-year bonds advanced after a government report showed machinery orders declined for a second consecutive month in July.

Ten-year yields fell from near a one-month high as a report tomorrow is forecast to show the government revised down second- quarter figures for gross domestic product. A slide in stocks helped support demand for the security of debt.

"``The relatively weak number for machinery orders has helped the market,'' said Tomohiko Katsu, deputy general manager of capital markets at Shinsei Bank Ltd. in Tokyo. ``People are still thinking about the fundamentals and don't want to sell.''"

"The yield on the 1.5 percent bond due September 2018 declined half a basis point to 1.5 percent as of 4:12 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price rose 0.044 yen to 100.000 yen. The yield touched 1.55 percent on Sept. 8, the highest level since Aug. 6. A basis point is 0.01 percentage point."

"The yield will range between 1.4 percent and 1.6 percent this year, Shinsei's Katsu said."

Ten-year bond futures for December delivery were little changed at 137.29 as of the afternoon close at the Tokyo Stock Exchange. The Nikkei 225 Stock Average lost 2 percent and the broader Topix index fell 2.5 percent.

"Equipment orders, an indicator of capital spending in the next three to six months, declined 3.9 percent from June, when they fell 2.6 percent, the Cabinet Office said today in Tokyo."

"The economy contracted an annualized 3.1 percent, compared to a contraction of 2.4 percent originally announced on Aug. 13, according to the median estimate of 27 economists surveyed by Bloomberg News."

Stock Losses

"Benchmark bonds have handed investors a return of about 1 percent so far this quarter through yesterday, the least among Group of Seven nations, according to indexes compiled by Merrill Lynch & Co. The Nikkei has declined 8 percent in the same period."

"``The continuous decline of the Nikkei is a big'' reason why investors bought bonds, said Mari Iwashita, chief market economist at Daiwa Securities SMBC Co. in Tokyo."

"Gains in bonds were limited on concern Japan will issue additional government debt to help finance economic stimulus packages. Increasing bond sales may prompt investors to demand a higher risk premium, according to Mitsubishi UFJ Securities Co., a unit of Japan's largest bank by assets."

"Japan will sell more than 400 billion yen ($3.73 billion) of bonds to pay for a supplementary budget this fiscal year, the Nikkei newspaper reported today, without saying where it obtained the information."

`Larger Fiscal Stimulus'

"``If global growth slows down further, it is possible that Japan will have to take on a larger fiscal stimulus package,'' which may weigh on bonds, said Takashi Nishimura, an analyst at Mitsubishi UFJ in Tokyo. ``The new issues may be absorbed by the good demand in the super-long sector, but the 10-years may have some fiscal premium.''"

"Taro Aso, who said spending more to save an economy on the verge of a recession should be the government's top priority, is a front runner to become Japan's prime minister."

"``The fiscal expansionist, Aso, is the favorite choice'' for the next prime minister, said Eiji Dohke, chief strategist at UBS Securities Japan Ltd. in Tokyo. ``There still is a large possibility of additional debt.''"

"Aso said last month that the government should consider postponing its goal of balancing the budget by 2011 because the economy is probably in a recession. Japan already has 778 trillion yen of outstanding debt, which at 147 percent of gross domestic product is the largest among industrialized nations."

Inflation Expectation

"Longer-dated bonds also gained after a report yesterday showed Japan's wholesale inflation rate slowed for the first time in 11 months, easing concern higher prices will erode the value of the fixed interest debt pays. The yield on the 20-year bond fell half a basis point to 2.095 percent."

"``Inflation expectations coming down will have an impact on the bond market,'' said Alessio Caldarera, a debt strategist at BNP Paribas Securities Japan Ltd. in Tokyo. ``Inflation expectations are strongly dependent on energy prices.''"

"Prices companies pay for energy and raw materials rose 7.2 percent from a year earlier after gaining 7.3 percent in July, the Bank of Japan said in Tokyo yesterday. From July, producer prices fell 0.1 percent, the first drop since September 2007. Crude oil for October delivery rose as much as 1.3 percent, to $103.95 a barrel today."

"The extra yield paid by 10-year conventional government debt compared with similar-maturity inflation-linked bonds fell to 4 basis points today from 13 basis points a month ago, according to data compiled by Bloomberg."

The so-called breakeven inflation rate reflects investors' expectations for average annual increases in consumer prices over the next decade.

"Japan's consumer prices, excluding fresh food, climbed 2.4 percent in July, the fastest in a decade."

"Inflation-linked bonds ``remain cheap,'' Caldarera said."

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

"Last Updated: September 11, 2008 03:29 EDT"





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Brazil Bank's Split Decision Signals Pace of Increases to Slow

By Joshua Goodman and Andre Soliani

"Sept. 11 (Bloomberg) -- Brazil's central bank decision to lift the benchmark interest rate three-quarters of a percentage point yesterday was too much for three of eight directors, signaling the pace of increases is set to slow."

"Policy makers, by a vote of 5-3, raised the so-called Selic rate a fourth time since April to 13.75 percent from 13 percent to tame consumer prices. The decision raised Brazil's real interest rate, which is adjusted for inflation, to the highest of all 54 countries tracked by Bloomberg. The dissenters voted for a half-point increase."

"The split decision, the first since July 2007, suggests policy makers expect Latin America's biggest economy to slow and inflation to ease, said Pedro Tuesta, an economist at 4Cast Inc. in New York. Consumer prices rose in August at the slowest pace in 11 months after food costs declined."

"``The vote count signals the central bank will slow the pace of interest rate increases,'' said Tuesta. ``The central bank is looking ahead and there are signs aggregate demand growth will slow in the second half.''"

"Central bankers led by Henrique Meirelles raised the Selic rate to the highest in almost two years on the same day that a report showed economic growth unexpectedly accelerated to 6.1 percent in the second quarter, fueling concern that rising demand may stoke inflation. Consumer price increases have exceeded the bank's 4.5 percent target since January."

"Tuesta said the jump in growth, which beat all estimates in a Bloomberg survey of 36 economists, was ``part of the past.'' Policy makers, he said, are counting on easing commodity prices to cool annual inflation."

Slowdown

"Citigroup Inc. in a report this week said inflation ``likely peaked'' in July, at 6.37 percent. Inflation slowed in August for the first time in 11 months to 6.17 percent."

"The previous split decision in 2007, when three board members also dissented, foreshadowed a halt to Brazil's longest cycle of interest rate cuts two meetings later."

"Meirelles said on Aug. 29 he was ``seeing real signs'' inflation was converging to the government's target. The following week, carmakers said vehicle sales grew 4 percent in August from a year ago, the slowest pace in almost two years, after car-loan costs jumped."

"The central bank will raise interest rates further to 14.75 percent in the remaining two meetings this year, according to the most recent central bank survey of economists published Sept. 5."

"Roberto Padovani, chief economist at WestLB in Sao Paulo, said in a Bloomberg Television interview that the additional rate increases ``will be enough to bring GDP growth down to 4.5 percent from 5 percent this year.''"

Markets

"Though inflation forecasts for next year remain ``stubbornly high'' at 5 percent, the central bank may shift gears in the face of tightening global credit and a worsening outlook for Brazil's commodity exports, said Alvise Marino, an emerging-markets analyst at research firm IDEAglobal in New York"

"Marino, in an e-mail to clients, said that the split vote would ``resonate in the fixed income market, reinforcing expectations of softer monetary policy in the remainder of 2008 and weighing on yield on the long end of the curve.''"

"Brazil's real fell yesterday to the lowest level in seven months and Mantega this week predicted further weakening because of reduced investment and a narrowing trade surplus. The real is down 8.7 percent this month, the worst performance among the 16 most-traded currencies tracked by Bloomberg."

Bond Yields

"The yield on Brazil's zero-coupon bonds due in January 2010 fell 8 basis points to 14.80 percent yesterday, according to Banco Votorantim. The yield on the overnight futures contract for January delivery rose 1 basis point to 13.96 percent."

"Previous central bank rate increases were accompanied by a message that demand was growing faster than supply. Government plans to boost spending excluding interest payments by 13 percent in 2009 is also adding pressure on inflation, said Thomas Trebat, director of Columbia University's Center for Brazilian Studies in New York."

"Manufacturers operated at a record 83.5 percent capacity in July and industrial output grew 8.5 percent that month, more than economists expected."

"Finance Minister Guido Mantega said today in Brasilia economic growth isn't stoking inflation. Growth this year will exceed the government's 5 percent forecast, he said."

`Sustainable'

"``The economy can grow at a pace of 5 percent to 5.5 percent keeping inflation within the target,'' Mantega told reporters. ``The increase of GDP comes as inflation is slowing and therefore growth is sustainable.''"

The central bank started to raise the Selic rate at the April 15-16 meeting after holding it unchanged for six months at a record low of 11.25 percent. Policy makers had increased the rate by half a percentage point twice before accelerating the pace in July. Last night's rate increase puts the Selic rate at the level it was in November 2006.

To contact the reporters on this story: Joshua Goodman in Rio de Janeiro at Jgoodman19@bloomberg.net; Andre Soliani in Brasilia at at soliani@bloomberg.net

"Last Updated: September 10, 2008 23:00 EDT"





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Malaysia Output Growth Slows to 11-Month Low on Manufacturing

By Shamim Adam

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Sept. 11 (Bloomberg) -- Malaysia's industrial production grew at the slowest pace in 11 months in July as demand for manufactured goods waned and electricity output eased.

"Production at factories, utilities and mines rose 1.8 percent from a year earlier after a revised 2.2 percent gain in June, the Putrajaya, Malaysia-based Statistics Department said today. That was below the median estimate of 16 economists surveyed by Bloomberg News for a 2.1 percent gain. Output rose 4.2 percent in the first seven months."

"Orders for electronics produced by Intel Corp. and other manufacturers in Asia may weaken further as a U.S. slowdown spreads to economies including Europe and Japan. Commodities sales, which have been holding up Malaysian exports this year, may also ease as palm oil and crude prices fall from records."

"``The downtrend will continue because of softening demand for electronics, which is dependent on overseas sales,'' said Joanna Tan, an economist at Forecast Singapore Pte. ``There are strong headwinds and we may see a recovery in global demand only in the third quarter of next year.''"

"The Southeast Asian economy expanded at the slowest pace in a year last quarter as manufacturing eased. Economic growth in 2008 may slow to a three-year low of 5.7 percent as exports ease and higher food and fuel prices leave consumers with less to spend domestically, the Ministry of Finance said in its annual economic report last month."

"Manufacturing grew 5.6 percent in the three months ended June, compared to a revised gain of 7 percent in the previous period, the central bank said on Aug. 29. The industry accounts for more than 30 percent of Malaysia's economy, and almost four- fifths of the country's exports."

Manufacturing

"Production by companies including Unisem (M) Bhd. and Malaysian Pacific Industries Bhd., Malaysia's two largest publicly-traded semiconductor assemblers, grew 1.5 percent in July from a year earlier, slower than the previous month's revised 2.8 percent gain."

"Mining output increased 3.1 in July, compared with a contraction of 0.8 percent in June. The industry grew 1.9 percent in the first seven months."

Electricity production gained 1.3 percent in July after expanding 3.5 percent the month before. It expanded 3.5 percent in the January-to-July period.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

"Last Updated: September 11, 2008 00:01 EDT"





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"Japan Stocks Fall on Lehman's Loss, Decline in Machine Orders "

By Masaki Kondo and Kotaro Tsunetomi

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"Sept. 11 (Bloomberg) -- Japan stocks tumbled, sending the Topix index to the brink of a three-year low, on concern falling asset values will batter global financial companies and the slowing economy will reduce manufacturing investment."

"Nomura Holdings Inc., Japan's biggest brokerage, sank 5.9 percent after Lehman Brothers Holdings Inc. posted a record loss. Mitsubishi Heavy Industries Ltd. led equipment makers to the lowest in three years after machine orders declined. Mazda Motor Corp. plunged the most in seven years after the euro strengthened against the yen, reducing the value of its European sales."

Today's drop undoes a surge on Sept. 8 after the U.S. government took over mortgage lenders Fannie Mae and Freddie Mac.

"``With the takeover of Fannie and Freddie the feeling was the problems of the financial system were over, and we could focus on the economy,'' said Kazuya Nakamura, who helps manage $10 billion at Norinchukin Zenkyoren Asset Management Co. in Tokyo. ``But now Lehman has sent us back to square one.''"

"The Nikkei 225 Stock Average retreated 244.13, or 2 percent, to close at 12,102.50 in Tokyo. The broader Topix index slumped 29.66, or 2.5 percent, to 1,162.72, the lowest since March 17, when the gauge reached a level not seen since June 2005."

"Lehman, the fourth-biggest U.S. brokerage, yesterday reported a $3.9 billion third-quarter loss, the biggest in its 158-year history. That helped push global writedowns and credit losses caused by the collapse in the U.S. mortgage market to $511 billion, according to figures compiled by Bloomberg News."

Credit Concerns

The Nikkei soared 3.4 percent on Sept. 8 on optimism the Fannie and Freddie takeovers would quell credit-market concerns. The gauge has lost 21 percent this year as oil-driven inflation deterred spending and the credit squeeze caused a spate of corporate bankruptcies.

"Nomura slid 5.9 percent, the most since Sept. 18, 2007, to 1,440 yen, while Shinko Securities Co. sank 6.6 percent to 299 yen. Mizuho Financial Group Inc., Japan's second-biggest publicly traded bank, retreated 5.3 percent to 445,000 yen, and Resona Holdings Inc., the fourth largest, plunged 9.7 percent to 106,600 yen, after having gained 26 percent in the past three days."

Four of the five biggest losers among the Topix's 33 industry groups were financial-related sectors.

"``Investors expected positive news from Lehman, which, as it turns out, didn't deliver anything good,'' Mitsushige Akino, who oversees about $468 million at Ichiyoshi Investment Management Co. in Tokyo, said in an interview with Bloomberg Television."

Equipment Orders

"Mitsubishi Heavy Industries, Japan's largest maker of power equipment, fell 5.5 percent to 464 yen, while Sumitomo Heavy Industries Ltd. declined 5.3 percent to 469 yen. Daikin Industries Ltd., the world's second-biggest maker of air conditioners, slumped 3.9 percent to 3,430 yen. Machinery makers as a group sank to the lowest since July 2005."

"Equipment orders fell in July for a second-straight month, declining 3.9 percent from June, the Cabinet Office said today before markets opened. Economists had estimated orders, an indicator of capital spending in the next three to six months, fell 3.6 percent."

"Mitsubishi Paper Mills Ltd. tumbled 4.7 percent to 223 yen, leading peers to the steepest decline since Aug. 4. Oji Paper Co., the nation's biggest papermaker, fell 3.9 percent to 547 yen, and closest rival Nippon Paper Group Inc. lost 4 percent to 333,000 yen. Papermakers had gained 47 percent since March 17, the most among Topix groups."

"Mazda sank 10 percent to 463 yen, the biggest drop since September 2001, after the euro fell against the yen, cutting earnings from the carmaker's most profitable market. It was the second-biggest loser on the MSCI World Index, followed by Resona."

`Big Impact'

"The European Commission cut its growth outlook for the region for the rest of this year, sending the euro to the lowest in 13 months against the yen. A weaker euro hurts Japanese exporters by reducing the value of repatriated sales."

"``The recent strength in the yen against the euro has a big impact,'' Noriyuki Matsushima, a Tokyo-based analyst at Nikko Citigroup Ltd., said in a report today. He cut his rating on Mazda, Japan's fourth-largest automaker, to ``sell'' and on Suzuki Motor Corp. to ``hold.''"

"Suzuki, the nation's second-largest minicar maker, sank 4.7 percent to 2,110 yen. Hino Motors Ltd. fell 4.9 percent to 465 yen, the lowest since March 2003, after Credit Suisse Group cut its recommendation on the truckmaker to ``neutral.''"

"Nikkei futures expiring in September retreated 1.7 percent to 12,120 in Osaka and 1.5 percent to 12,135 in Singapore."

To contact the reporter for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

"Last Updated: September 11, 2008 04:15 EDT"





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Crude Oil Falls as Stronger Dollar Dims Commodities' Appeal

By Alexander Kwiatkowski

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"Sept. 11 (Bloomberg) -- Crude oil fell, giving up earlier gains, as the dollar rose to a one-year high against the euro, reducing the appeal of commodities as a hedge."

Oil fell after the dollar rose to a one-year high against the euro on speculation that growth in Europe will slow more than in the U.S. Investors looking to hedge against the dollar's decline helped lead crude oil and other commodities to records earlier this year. The situation reversed in the past month as the dollar rallied against the euro.

"``The sentiment in the market is very negative at the moment since demand for oil and commodities has declined sharply,'' said Thina Saltvedt, an analyst at Nordea Bank AB in Oslo. ``Quite a lot of investors are pulling out of commodities.''"

"Crude oil for October fell as much as 73 cents, or 0.7 percent, to $101.85 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $102.06 at 9:19 a.m. London time. It earlier rose as much as $1.37 on concern Hurricane Ike would threaten oil production as it enters the Gulf of Mexico."

Crude has fallen about 30 percent from a record $147.27 a barrel on July 11 as high prices and slowing global economic growth reduce demand for fuels.

"The dollar climbed to $1.3924 per euro, the strongest since Sept. 18, 2007, before trading at $1.3930 as of 8:57 a.m. in London from $1.3998 late yesterday in New York."

"Hurricane Ike's eye was estimated to be about 645 miles (1,040 kilometers) east of Brownsville, Texas, and moving west- northwest at 9 miles per hour, the U.S. National Hurricane Center said in an advisory at 1 a.m. Houston time today."

"Ike strengthened to a Category 2 hurricane with sustained winds of 100 mph, up from 80 mph yesterday. The storm is forecast to sweep through the center of the Gulf, missing the offshore Louisiana oil and natural gas fields."

"Brent crude oil for October settlement fell as much as 79 cents, or 0.8 percent, to $98.18 a barrel on London's ICE Futures Europe exchange. It was at $98.38 at 9:21 a.m. London time."

To contact the reporter on this story: Alexander Kwiatkowski in London at akwiatkowsk2@bloomberg.net

"Last Updated: September 11, 2008 04:39 EDT"





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Bollard Cuts N.Z.'s Key Rate to 7.5%; Currency Slumps (Update1)

By Tracy Withers

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"Sept. 11 (Bloomberg) -- New Zealand's central bank cut its benchmark interest rate by a half point to 7.5 percent, more than forecast by most economists, saying the economy is in a recession and inflation will slow."

"The nation's currency dropped to a 22-month low, and bond yields fell after the decision. ```We've got room to move,'' Reserve Bank Governor Alan Bollard said in an interview from Wellington today ``We're in a loosening mode.''"

"Bollard, 57, said the economy is in its first recession since 1998 as the jobless rate rises, housing slumps, retail sales drop and a drought cuts farm exports. The New Zealand dollar, a favorite of the so-called carry trade, has dived 13 percent since July 24, when Bollard cut the benchmark for the first time in five years from a record."

"``There are real reasons for the Reserve Bank of New Zealand to be quite worried about the economy,'' said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. ``It's clear conditions are far too tight.''"

Ong was the only one of 15 economists surveyed by Bloomberg to predict the half-point cut. The rest forecast a quarter-point reduction.

"New Zealand's dollar fell to as low as 64.95 U.S. cents from 66.26 cents immediately before the decision. That's the lowest since Oct. 2, 2006. It traded at 65.15 cents at 5:10 p.m. in Wellington. The three-year bond yield fell 19 basis points to 5.72 percent."

Economic Risk

Today's reduction is the largest since 2001 when the Reserve Bank cut by a half point twice in the months following the U.S. terrorist attacks.

"Traders expect Bollard will cut rates a quarter point at his next meeting on Oct. 23, according to a Credit Suisse index based on swaps trading. Bollard said the timing and size of future reductions depends on the outlook for inflation and the currency."

New Zealand's economy contracted in the first quarter and Bollard today joined the Treasury Department and economists in forecasting the recession.

"The central bank said the economy probably shrank 0.2 percent in the second quarter, after forecasting 0.2 percent growth in its June policy statement. The economy will also contract 0.3 percent in the third quarter, it said."

"Growth in the year ending March 31, 2009, will be 0.3 percent, the weakest in 10 years, the bank forecast. The economy expanded 3.1 percent in 2007."

Fuel Prices

"Drought, the increasing cost of credit, higher fuel prices and a housing slump combined to stall the economy, Bollard said. The outlook for the global economy has deteriorated in the wake of financial-market turmoil, he said."

"Exports fell for a second straight quarter in the three months to June 30 as dry weather curbed dairy production and shipments of milk powder and cheese slumped, according to a government report yesterday."

Dairy products are the nation's largest export. Total overseas sales make up 30 percent of the economy.

Retail sales fell by the most in at least 13 years in the second quarter as consumer confidence slumped and record-high gasoline prices left households with little to spend on discretionary goods.

"``Consumers are watching what they spend very carefully,'' said Rod Duke, managing director of retailer Briscoe Group Ltd. ``The downturn in consumer confidence affected by steep increases in basic cost of living, petrol and bank interest rates, has hit retailers hard.''"

House Sales

Auckland-based Briscoe said on Sept. 5 that first-half profits at its sporting goods and home-ware stores slumped 71 percent amid declining sales.

House sales fell to a 16-year low in June and residential construction dropped for three consecutive quarters. The jobless rate rose to a two-year high in the second quarter.

Central bankers around the world are grappling with slowing economic growth while surging fuel and food prices fan inflation.

The Reserve Bank of Australia this month lowered its benchmark interest rate for the first time in seven years as economic growth weakens. Governor Glenn Stevens said this week it may be six months before inflation eases.

"The European Central Bank last week kept interest rates unchanged at a seven-year high, citing inflation concerns. Yesterday, it lowered its forecast for euro-region growth and said Germany faces a recession. The Bank of England kept its rate steady after economic growth stalled in the three months ended June 30."

Inflation Forecast

"New Zealand's inflation rate will probably accelerate to 4.9 percent in the year ending Sept. 30, the fastest pace since 1990, the Reserve Bank said today."

"Annual inflation will be 4.5 percent by March 2009 before slowing to 2.8 percent a year later, Bollard said in a statement today. In June, the central bank expected inflation would stay above 3 percent until mid-2010."

"``We remain mindful of the risks to inflation,'' said Bollard. The extent of the decline will depend on the responses of wage inflation and inflation expectations, he said. A weaker exchange rate will underpin the price of imports."

To contact the reporter on this story: Tracy Withers in Wellington at twithers@bloomberg.net.

"Last Updated: September 11, 2008 01:57 EDT"





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"Euro May Rise to $1.42 on U.S. Rate Cut Speculation, UBS Says "

By Stanley White

"Sept. 11 (Bloomberg) -- Ashley Davies, currency strategist in Singapore at UBS AG, the second-largest foreign exchange trader, comments on the dollar and the euro."

"``The unemployment rate in the U.S. has risen sharply. The bright spot is exports, but with the dollar strengthening rapidly and with global growth softening, there's some concern on that front."

"``Also, there's the financial sector problems the U.S. is experiencing. It's not a one-way street for the dollar. You're likely to see renewed speculation of rate cuts by the Federal Reserve. That can be one catalyst for a rebound in the euro versus the dollar.''"

"The euro fell to $1.3974 at 10:51 a.m. in Tokyo from $1.3998 late yesterday in New York. It may rise to $1.42 in one month, Davies said."

To contact the reporter on this story: Stanley White in Tokyo at swhite28@bloomberg.net

"Last Updated: September 10, 2008 22:30 EDT"





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Nomura Leads Asian Financials Down After Lehman Loss (Update2)

By Finbarr Flynn and Shingo Kawamoto

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"Sept. 11 (Bloomberg) -- Nomura Holdings Inc. and Mitsubishi UFJ Financial Group Inc. led declines in Asian financial stocks after Lehman Brothers Holdings Inc. reported a record $3.9 billion loss, worse than analysts expected."

"Nomura, Japan's biggest investment bank, fell 5.9 percent, the most in almost a year, to 1,440 yen at the 3 p.m. close of trading in Tokyo. Mitsubishi UFJ, Japan's largest bank, declined 5.1 percent. China Merchants Bank Co., the nation's biggest dual- currency credit-card issuer, dropped 7 percent to 18.39 yuan, the lowest since April 2007, in Shanghai."

"Lehman fell 6.9 percent in New York after posting a bigger- than-expected $3.9 billion third-quarter loss on $5.6 billion of writedowns. The company said it's auctioning off about 55 percent of its asset-management group, including fund-manager Neuberger Berman, and didn't name potential bidders."

"``Lehman's release failed to clear the concerns weighing on financials,'' said Azuma Ohno, a Tokyo-based analyst at Credit Suisse Group."

"Mitsubishi UFJ and Mizuho Financial Group Inc., which dropped 5.3 percent, were the two biggest contributors to a 2.5 percent decline in Japan's benchmark Topix index. Resona Holdings Inc., the country's fourth-biggest bank, fell 9.7 percent, the most among 84 companies in the Topix Banks Index."

ICBC Drops

"Industrial & Commercial Bank of China Ltd., the world's most profitable bank, fell 4.4 percent in Shanghai to 4.30 yuan."

Uncertainty about Lehman is adding to concern that financial firms may book more losses from investments in the U.S. mortgage market. A government report showing a decline in machinery orders for a second month today added evidence that Japan's economy is slowing.

"The global credit-market meltdown has led to more than $510 billion of writedowns and credit losses since it began a year ago, sending financial shares around the world swooning."

"``It's very questionable whether Lehman will be saved,'' said Edwin Merner, president of Atlantis Investment Research Corp. in Tokyo, whose parent company manages about $3.1 billion. Concern that Japanese banks and Nomura have lent money to Lehman or hold investments from the Wall Street firm may be fueling declines among the nation's financial firms today, Merner said."

To contact the reporters on this story: Finbarr Flynn in Tokyo at fflynn3@bloomberg.net; Shingo Kawamoto in Tokyo at skawamoto2@bloomberg.net

"Last Updated: September 11, 2008 03:00 EDT"





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Japan July Core Machinery Orders: Statistical Summary (Table)

By Shizuka Muragishi

"Sept. 11 (Bloomberg) -- Japanese machinery orders, excluding shipbuilding and utilities, fell 3.9 percent in July from June, seasonally adjusted, the Cabinet Office in Tokyo said."


===============================================================================
July June May April March Feb.
2008 2008 2008 2008 2008 2008
===============================================================================
------------Month-on-Month Percent Change------------
Total orders -8.5% -4.8% 10.8% 4.5% -7.8% -14.4%
Private -6.6% 5.5% 4.9% -5.3% 4.8% -11.1%
-------------------------------------------------------------------------------
"Ex-ships, utils (core) -3.9% -2.6% 10.4% 5.5% -8.3% -12.3%"
3-month % change 7.7% 0.6% -5.1% -7.3% 2.2% 5.2%
3-month annualized 34.8% 2.5% -18.9% -26.1% 9.1% 22.4%
-------------------------------------------------------------------------------
Manufacturers -10.4% 3.9% 12.2% 1.9% -7.0% -9.2%
Non-manufacturers* -2.4% -3.3% 8.8% 8.8% -9.5% -13.6%
Public -4.9% 4.4% -13.9% 23.7% -12.7% 6.3%
===============================================================================
July June May April March Feb.
2008 2008 2008 2008 2008 2008
===============================================================================
Foreign -14.4% -12.1% 21.1% 4.6% -16.1% -13.2%
Agency 2.0% -19.7% 15.2% 3.3% -5.7% 4.0%
-------------Year-on-Year Percent Change-------------
Total orders -4.6% 4.9% 3.6% -0.6% 4.2% 1.0%
Private -2.4% 17.9% 2.3% 2.5% 12.6% -1.2%
-------------------------------------------------------------------------------
" Ex-ships, utils (core) -4.7% 9.7% 5.1% 0.5% -6.2% 2.4%"
-------------------------------------------------------------------------------
Manufacturers -4.9% 13.8% -1.0% 0.9% -4.9% -1.5%
Non-manufacturers* -4.9% 12.4% 10.5% 0.3% -7.1% 5.2%
Public -2.4% -31.1% -17.5% 5.8% 32.7% -10.1%
Foreign -7.2% 0.8% 6.8% -4.7% -13.7% 5.9%
Agency -3.7% -9.5% 14.8% -1.3% -1.1% 8.4%
---------------------Yen Levels----------------------
"Total orders 2,470.6 2,699.3 2,835.2 2,560.0 2,448.7 2,656.4"
" Private 1,177.1 1,260.8 1,195.6 1,139.5 1,202.8 1,147.7"
-------------------------------------------------------------------------------
===============================================================================
July June May April March Feb.
2008 2008 2008 2008 2008 2008
===============================================================================
" Ex-ships, utils (core) 1,042.8 1,085.1 1,114.6 1,009.4 956.8 1,043.3"
Manufacturers 459.2 512.4 493.3 439.9 431.9 464.2
Non-manufacturers* 588.4 603.1 623.4 573.0 526.7 582.3
Public 229.3 241.0 230.7 268.0 216.6 248.2
" Foreign 928.5 1,084.6 1,233.4 1,018.2 973.8 1,160.6"
Agency 102.2 100.1 124.8 108.3 104.8 111.2
===============================================================================


NOTE: Monthly data are seasonally adjusted. Yen levels in billions. Three-month percentage changes are calculated as the three-month average change from the prior three-month average. *: Excludes shipping and utilities.

"SOURCE: Economic and Social Research Institute, Cabinet Office"

To contact the reporter on this story: Shizuka Muragishi in Tokyo at smuragishi@bloomberg.net

"Last Updated: September 10, 2008 19:52 EDT"





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Platinum Extends Drop to 20-Month Low on Outlook for Car Sales

By Stuart Wallace

Sept. 11 (Bloomberg) -- Platinum fell to a 20-month low in London and palladium retreated to its lowest since October 2005 on expectations that weakening global car sales will curb demand for the metals used in autocatalysts. Gold also dropped.

"Ford Motor Co., the second-biggest U.S. automaker, yesterday said it would cut jobs in Canada as it reduces North American output by 30 percent in the second half. U.S. auto sales dropped to a 15-year low in July and Toyota Motor Corp., the world's second-largest carmaker, is cutting production in Europe."

"``The autocatalyst makers are decreasing their stockpiles because the prognosis for car sales is very bad,'' Bayram Dincer, a commodity research analyst at Dresdner Bank AG in Zurich, said by phone. That's ``having a huge impact on the platinum price.''"

"Platinum for immediate delivery fell as much as $36.75, or 3.1 percent, to $1,143.25 an ounce in London, the lowest since Jan. 18, 2007. The metal traded down $35.50 at $1,144.50 as of 8:59 a.m. local time. Platinum has dropped 50 percent from a record $2,301.50 reached March 4."

"Dincer said he expects a ``volatile consolidation phase'' in the next week or two, with prices trading at $1,125 to $1,200 and a year-end target of $1,300. ``I don't see this as a buying opportunity,'' he said."

"Prices surged in the first quarter after South Africa restricted power supplies to mines to cope with an energy shortage. The country accounts for about three-quarters of world platinum supply, according to Johnson Matthey Plc."

"About half of demand comes from carmakers, taking into account recycling from used autocatalysts. Jewelry and the chemical and electrical industries make up most of the rest of consumption."

Palladium Declines

"Palladium for immediate delivery fell as much as $9.25, or 4.1 percent, to $218.50 an ounce, the lowest since October 2005. The metal last traded down $2.75 at $225. Palladium rose as high as $595 on March 4, compared with a record $1,125 in January 2001."

"Platinum futures sank to a 30-month low on the Tokyo Commodity Exchange, while palladium slumped to its lowest in almost three years."

"Gold for immediate delivery in London fell $3.09 to $749.36 an ounce, after earlier trading at $748.66, the lowest since Oct. 22, 2007. The metal declined as the dollar strengthened against currencies including the euro, diminishing the appeal of gold as a hedge against a weaker U.S. currency."

"``With the bears still in the driving seat and investors continuing to free up cash in their most liquid assets, gold looks set to remain under pressure,'' James Moore, an analyst at TheBullionDesk.com in London, wrote in a report."

"Assets in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, fell 2.7 percent to 614.35 metric tons yesterday, according to figures on the company's Web site."

"Silver rose 10.51 cents, or 1 percent, to $10.79 an ounce."

To contact the reporter on this story: Stuart Wallace in London at swallace6@bloomberg.net

"Last Updated: September 11, 2008 04:11 EDT"





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"Germany Stocks Update: DAX Index Falls 30.63 to 6,179.69 "

By Daniel Hauck

"Sep. 11 (Bloomberg) -- Germany's benchmark stock index, the DAX Index, fell 0.49 percent at 9:05 a.m."

"The index of 30 companies traded on the Frankfurt Stock Exchange fell 30.63 to 6,179.69. Among the stocks in the index, 6 rose, 23 fell and 1 was unchanged."

"Declines in the DAX were led by Deutsche Bank Ag, E.on Ag and Allianz Se. About 2.53 million shares traded in the DAX."

"Last Updated: September 11, 2008 03:05 EDT"





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<<2.622_20080911105722UK Price Expectations Highest Since at Least 1999
(Update1) .txt>> <<2.622_20080911105649Australian Employment Rises
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Stocks Rally Most in 7 Months EnCana Barrick RIM Gain .txt>>
<<2.622_20080911103535Yuan Drops Most in Week as Inflation Dips Bonds
Little Changed .txt>> <<2.622_20080911102825Asia Pacific Stocks `Very
Close' to Trough Morgan Stanley Says .txt>> <<2.622_20080911102305Asian
Currencies Fall Led by Korean Won Rupiah on Stock Sales .txt>>
<<2.621_20080911110828Petrobras Oil Reserves Likely to Swell on Iara
Field Estimate .txt>> <<2.621_20080911110154Asian Stocks Decline to
Lowest Since November 2005 Banks Fall .txt>>
<<2.621_20080911103321Hungarian Inflation Slowed in August on Food and
Oil (Update1) .txt>> <<2.619_20080911105633Japan Machine Orders Fall
39% Second Monthly Drop (Update2) .txt>> <<2.619_20080911101401Copper
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<<2.618_20080911110409Galp BG Rise on Petrobras Assessment of Iara Field
(Update1) .txt>> <<2.617_20080911110210Junk Bond Distress Levels Surge
Signaling Defaults (Update1) .txt>> <<2.617_20080911104914Fannie
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Forecast (Update2) .txt>> <<2.615_20080911102335Sept 11 (Bloomberg)
Indonesia's sevenyear bonds fell the most since August 2007 the .txt>>
<<2.614_20080911111239Fed May Expand Funding Aid to Banks in a `Mother
of YearEnds' .txt>> <<2.614_20080911104809US Stocks Rise as Energy
Shares Rally FedEx Climbs on Profit .txt>>
<<2.613_20080911104200Australia May Harvest Less Wheat ProFarmer Says
(Update2) .txt>> <<2.649_20080911102051Brazil's Real Weakens to
SevenMonth Low on Commodity Decline .txt>>
<<2.645_20080911101711Sweden's Krona Unchanged After Unemployment
Unexpectedly Drops .txt>> <<2.643_20080911104616Dollar Rises to OneYear
High Against Euro on Growth Outlook .txt>> <<2.641_20080911105739US
Trade Gap in July Probably Widened on Rise in Imported Oil .txt>>
<<2.640_20080911104600Soybeans Advance Amid Speculation US May Lower
Crop Forecasts .txt>> <<2.640_20080911104409Treasuries Little Changed
Yields May Damp Demand at Auction .txt>>
<<2.639_20080911102108Brazilian Stocks Rise on Faster Economic Growth
Ipsa Gains .txt>> <<2.637_20080911104456Sept 11 (Bloomberg) European
government bonds fell on speculation the region's centr.txt>>
<<2.637_20080911102723Indian Bonds Gain a Third Day Report May Show
Inflation Slowed .txt>> <<2.636_20080911101655Pound Advances Versus
Euro Before King Testimony to Parliament .txt>>
<<2.635_20080911110917Lee Says South Korea Inflation Is Elevated Leaves
Rates Steady .txt>> <<2.635_20080911102602India's Rupee Falls to
TwoYear Low on Importers Dollar Rally .txt>>
<<2.634_20080911110609European Stock Futures Are Little Changed Home
Retail May Fall .txt>> <<2.634_20080911105755Brazil Raises Rate to
1375% Highest in Two Years (Update1) .txt>> <<2.634_20080911104632New
Zealand Dollar Drops as Rates Cut Australia Currency Falls .txt>>
<<2.632_20080911102451European Stocks Fall Led by Home Retail US Futures
Decline .txt>> <<2.631_20080911104440Velarde May Raise Peru Lending
Rate to 65% to Slow Inflation .txt>> <<2.631_20080911102405Japanese
10Year Bonds Advance on Decline in Machinery Orders .txt>>
<<2.629_20080911102020Brazil Bank's Split Decision Signals Pace of
Increases to Slow .txt>> <<2.628_20080911105812Malaysia Output Growth
Slows to 11Month Low on Manufacturing .txt>>
<<2.627_20080911102755Japan Stocks Fall on Lehman's Loss Decline in
Machine Orders .txt>> <<2.627_20080911101917Crude Oil Falls as Stronger
Dollar Dims Commodities' Appeal .txt>> <<2.626_20080911110756Bollard
Cuts NZ's Key Rate to 75% Currency Slumps (Update1) .txt>>
<<2.626_20080911101727Euro May Rise to $142 on US Rate Cut Speculation
UBS Says .txt>> <<2.625_20080911110536Nomura Leads Asian Financials
Down After Lehman Loss (Update2) .txt>> <<2.625_20080911105829Japan
July Core Machinery Orders Statistical Summary (Table) .txt>>
<<2.625_20080911104545Platinum Extends Drop to 20Month Low on Outlook
for Car Sales .txt>> <<2.625_20080911102547Germany Stocks Update DAX
Index Falls 3063 to 617969 .txt>>