September 11, 2008

Top 50

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 Gregory Viscusi in Paris at

"Last Updated: September 11, 2008 05:22 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; Laura Cochrane in Melbourne at

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

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ECB Says Inflation Risks Prevail Even After Oil-Price Decline

By Gabi Thesing and Simone Meier

Sept. 11 (Bloomberg) -- The European Central Bank said inflation remains its primary concern even after oil prices dropped and the economy contracted.

"Inflation risks are still on the ``upside,'' the Frankfurt- based ECB said in its monthly bulletin today. Vice President Lucas Papademos said in Hamburg the bank will ``do what's necessary to preserve price stability,'' and council member Yves Mersch said in Luxembourg that ``while oil prices have declined, past increases could still trigger a wage-price spiral.''"

"While the price of oil has dropped almost a third since its July record, it is still over 60 percent higher than two years ago. The ECB is worried that higher energy costs will prompt companies to raise prices and workers to demand higher wages to compensate for the increase in the cost of living."

"At the same time, the euro-area economy is struggling to recover from a second-quarter contraction."

"Papademos said the slowdown has been ``more marked and abrupt than previously expected,'' and Mersch said ``growth in the quarters to come will be modest.''"

"Still, the ECB also expects a ``gradual recovery,'' according to today's bulletin."

"Inflation is running at 3.8 percent, almost twice the bank's 2 percent limit. The ECB raised its key rate to a seven-year high of 4.25 percent in July after inflation quickened to the fastest pace in 16 years. The inflation risks identified then ``remain today,'' Mersch said."

"He and Papademos reiterated that the bank's current monetary policy stance will contribute to achieving price stability, signaling policy makers are in no rush to lower interest rates."

The ECB raised its inflation projections last week to around 3.5 percent for 2008 and 2.6 percent for 2009. Mersch said he doesn't expect inflation to ``return to levels that are in line with the definition of price stability until about 2010.''

"At the same time, ECB staff lowered their growth forecasts for this year and next to about 1.4 percent and 1.2 percent respectively."

To contact the reporters on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.netGabi Thesing in Frankfurt at

"Last Updated: September 11, 2008 06:00 EDT"

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"China's Stocks Retreat; Merchants Bank, Zijin Mining Decline "

By Zhang Shidong

"Sept. 11 (Bloomberg) -- China's stocks fell, led by financial companies and gold producers, on concern credit-market losses will widen and after gold touched an 11-month low."

"China Merchants Bank Co., the nation's biggest dual- currency credit-card issuer, dropped 8.9 percent after Lehman Brothers Holdings Inc. posted a larger loss than forecast by analysts. Zijin Mining Group Co., China's largest gold producer, lost 4.7 percent. China Cosco Holdings Co. dropped 9 percent after a measure of shipping rates fell for a 16th session."

"``Investors are still worried about the extent to which earnings growth will slow,'' said Zhang Ling, who manages the equivalent of $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing. ``Before the concern eases, the market won't find a bottom.''"

"The CSI 300 Index, which tracks yuan-denominated A shares listed on China's two exchanges, declined 71.05, or 3.3 percent, to 2,072.13 at the close, the lowest since Jan. 4, 2007."

"Central bank efforts to cool inflation and concern about a slowdown in global demand for the nation's products have helped drive the CSI 300 down 61 percent this year. That's made it the world's worst-performing stock market, and deflated a boom that drove the gauge up sevenfold in the two years through 2007."

"Merchants Bank fell 8.9 percent to 18.04 yuan, the lowest close since April 10, 2007. Industrial & Commercial Bank of China Ltd., the nation's biggest listed lender, dropped 4.7 percent to 4.30 yuan. China Construction Bank Corp., the second- largest, lost 3.2 percent to 4.79 yuan."

Lehman Brothers

"Lehman Brothers 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 fourth-largest U.S. securities firm will stem losses."

"Zijin Mining dropped 4.7 percent to 3.82 yuan. Shandong Gold Mining Co., the country's second-largest by market value, retreated 4.1 percent to 26.72 yuan. Zhongjin Gold Corp., the third-largest by market value, lost 4.2 percent to 23.11 yuan."

"Gold futures for December delivery plunged 3.7 percent to $762.50 an ounce in New York yesterday. Earlier, the price touched $761.50, the lowest for a most-active contract since Oct. 24, on speculation a drop in commodity costs and a stronger dollar will reduce demand for the metal as a hedge against inflation."

China Cosco

"China Cosco, the country's largest container line, slumped 9 percent to 12.26 yuan. China Shipping Development Co., the nation's biggest oil carrier, fell 5.9 percent to 11.10 yuan. The Baltic Dry Index tracking transport costs on international trade routes fell 4.4 percent to 5,026 points, the lowest since March 9, 2007, according to the Baltic Exchange in London."

"The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, fell 3.3 percent to 2,078.98. The Shenzhen Composite Index lost 2.2 percent to 575.33."

The following companies were among the most active in China's markets. Stock symbols are in brackets after companies' names.

"China International Marine Containers Co. (000039 CH), the world's largest maker of shipping containers, fell 0.17 yuan, or 2.1 percent, to 8.12. The company said it plans to sell stakes in two units to Enric Energy Equipment Holdings Ltd. for HK$8.5 billion ($1.09 billion)."

"China Southern Airlines Co. (600029 CH), the nation's biggest carrier by fleet size, slid 0.04 yuan, or 1.1 percent, to 3.49. The carrier said passenger traffic fell 16 percent, the biggest monthly decline since June 2003, to 4.9 million in August after the government restricted air travel for the Beijing Olympic Games."

"Shanxi Coking Co. (600740 CH), the largest publicly traded coke producer in China, advanced 0.25 yuan, or 4 percent, to 6.47. Its second-largest shareholder Shanxi Xishan Coal and Electricity Power Co. (000983 CH) bought 10.9 million shares, or a 1.93 percent stake, in the company for an average price of 6.25 yuan from Aug. 28 to yesterday, Shanxi Coking said in a statement."

"Yanzhou Coal Mining Co. (600188 CH), a unit of China's fourth-largest producer of the fuel, fell 0.44 yuan, or 4 percent, to 10.62, the lowest since April 19, 2007. Coal prices at Australia's Newcastle port, the world's largest coal-export harbor, fell to $161.35 a metric ton in the week ended Sept. 5 from a record $194.79 a metric ton on July 4, according to globalCOAL NEWC Index."

To contact the reporter on this story: Zhang Shidong in Shanghai at

"Last Updated: September 11, 2008 05:07 EDT"

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"China, Stung by Fannie, May Reduce Dollar Holdings, CICC Says "

By Judy Chen and Kim Kyoungwha

"Sept. 11 (Bloomberg) -- China, which holds a fifth of its currency reserves in Fannie Mae and Freddie Mac debt, may cut the portion held in dollars, according to China International Capital Corp., the nation's biggest investment bank."

"The U.S. government this week seized control of the two mortgage-finance companies, which account for almost half of the home-loan market in the world's biggest economy, to prevent defaults from crippling them. China holds up to $400 billion in the two firms' debt, CICC's chief economist Ha Jiming said in a report late yesterday."

"``The crisis has made Chinese officials realize it's a bad idea to put all their eggs in one basket,'' wrote Hong Kong- based Ha. ``This will likely lead to greater diversification of foreign-exchange reserve investments.''"

"China held $447.5 billion of U.S. agency bonds as of June 2008, according to the CICC calculations using disclosures by the U.S. Treasury. It is likely to reduce the portion of reserves in dollar assets from the current 60 percent by purchasing more non-dollar assets with new reserves, he said."

Countries in Asia have stockpiled foreign-exchange reserves since the 1997-98 financial crisis to act as a cushion against a run on their exchange rates. That in turn has increased pressure on policy makers to ensure higher returns from more than $4 trillion in assets.

"China will expand its investments in corporate bonds and equities, according to Ha. Treasury and agency bonds account for 50 percent and 40 percent of total dollar assets held by the central bank, he wrote."

"It's not a ``smart'' move to invest currency reserves in U.S. bonds, Cheng Siwei, former vice chairman of the standing committee of the National People's Congress, China's legislature, said on June 13 at a conference in Beijing. He said the comments represented his ``personal opinion, not the government's policy.''"

To contact the reporters on this story: Judy Chen in Shanghai at; Kim Kyoungwha in Beijing at

"Last Updated: September 11, 2008 06:04 EDT"

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"Italy Stocks Update: Aedes, IT Holding, DMT, UniCredit Shares "

By Armorel Kenna

"Sept. 11 (Bloomberg) -- Italy's S&P/MIB Index fell for a third day, losing 112, or 0.4 percent, to 27,952. Futures expiring in September dropped 158, or 0.6 percent, to 27,970."

The following were among the most active stocks on the Italian market today. Share symbols are in parentheses.

Italian banking stocks fell as concern deepened that the global economic slowdown will hurt earnings.

"UniCredit SpA (UCG IM): Italy's biggest bank fell for the third day, declining 5 cents, or 1.2 percent, to 3.72 euros. Intesa Sanpaolo SpA (ISP IM), the country's second-biggest lender, fell 1.2 percent to 3.84 euros."

"Aedes SpA (AE IM), an Italian real estate and fund- management company, rose after it signed a moratorium agreement with creditors."

"The moratorium, which expires Sept. 30, allows Aedes to continue to operate and to work on the ``financial realignment'' of the company, Milan-based Aedes said yesterday in a stock- exchange statement."

"Aedes rose the most in a week, adding 2 cents, or 1.4 percent, to 1.08 euros."

"Digital Multimedia Technologies SpA (DMT IM) and Atlantia SpA (ATL IM) may offer about 2 billion euros ($2.8 billion) to buy Telecom Italia SpA's (TIT IM) mobile transmission towers, newspaper MF reported, without saying how it got the information."

"Telecom Italia Chief Executive Officer Franco Bernabe may propose at a Sept. 25 board meeting to sell the phone company's 15,000 mobile broadcasting towers, MF said."

"DMT shares gained for a fourth day, adding 71 cents, or 3.1 percent, to 23.81 euros, while Atlantia shares rose 1.9 percent to 17.26 euros."

Telecom Italia fell 1.3 percent to 1.1 euros.

"IT Holding SpA (ITH IM), owner of the Gianfranco Ferre SpA fashion house, advanced the most in 11 weeks in Milan trading after a newspaper reported that founder and Chairman Tonino Perna may be open to a new investor."

"Italian financial newspaper MF reported that China's Hembly International Holdings Ltd. is the most likely investor in PA Investments, which controls IT Holding."

"IT Holding rose the most since June 25, advancing almost 3 cents, or 6.3 percent, to 46.4 cents."

"Tiscali SpA (TIS IM): Management & Capitali SpA became Tiscali SpA's second-biggest investor with a 6.9 percent stake after converting a bond into shares of the Internet company, daily Il Sole 24 Ore reported, without saying where it got the information."

"Tiscali shares rose for the first time in three days, adding 2 cents, or 1.5 percent, to 1.47 euros."

To contact the reporter on this story: Armorel Kenna in Milan at

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

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South Africa's Rand Declines to Five-Year Low Against Dollar

By Gavin Finch

Sept. 11 (Bloomberg) -- South Africa's rand slipped to the lowest level since May 2003 against the dollar before a report that may show manufacturing growth slowed in July.

"The rand also fell for a third day as platinum, the nation's biggest export, slumped to a 30-month low and gold declined. The rand yesterday dropped by the most in a month after an industry survey showed South African business confidence weakened to a seven-year low in the third quarter."

"``The rand is yielding to the bearish mood towards commodities,'' said Elisabeth Gruie, an emerging-markets currency strategist in London at BNP Paribas SA, France's biggest bank. ``The weak streak of macro-economic data we've had recently hasn't helped it either.''"

"The rand dropped as much as 0.9 percent to 8.2821 per dollar, the weakest since May 2003, and was at 8.2465 by 11:07 a.m. in Johannesburg. It was at 11.4710 per euro, from 11.4897."

"South Africa produces about 10 percent of the world's gold and almost 80 percent of its platinum, often causing the rand to move in tandem with their prices."

"Gold slipped as much as 3.1 percent, extending yesterday's 3.8 percent loss. Platinum declined as much as 4.9 percent to its lowest level since January 2007."

"Factory output, which accounts for 16 percent of Africa's biggest economy, expanded an annual 4.1 percent, compared with 6.1 percent in June, according to the median estimate of five economists surveyed by Bloomberg. The statistics office will publish the data at 1 p.m. in Pretoria."

"The business confidence index fell 11 points to 34, the eighth quarterly decline, Rand Merchant Bank, a unit of FirstRand Ltd., said yesterday. The survey is compiled by RMB and the University of Stellenbosch's Bureau for Economic Research. The index was last lower in the first quarter of 2001."

To contact the reporter on this story: Gavin Finch in London at

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

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Platinum Sinks to 30-Month Low After Ford Plans Auto Layoffs

By Dave McCombs

"Sept. 11 (Bloomberg) -- Platinum futures in Tokyo sank to a 30-month low, plunging by the exchange-imposed limit for a second day, as declining U.S. auto sales cut demand for the metal and palladium, both used in exhaust systems."

"The metals dropped after Ford Motor Co., the second-biggest U.S. automaker, yesterday said it planned to cut 500 jobs at a Canadian plant as it slashes North American output by 30 percent in the second half of this year. Palladium slumped to an almost three-year low in Tokyo."

"``It seems there is no bottom for platinum,'' Yuichi Ikemizu, head of commodity trading at Standard Bank Plc in Tokyo, said today in an interview. ``The problems at the Big Three automakers in the U.S.'' are cutting demand for platinum group metals."

"Platinum for August delivery declined 6 percent to close at 3,895 yen a gram ($1,132 an ounce) on the Tokyo Commodity Exchange. The most-active contract earlier fell to 3,844 yen, the lowest since March 13, 2006."

"August-delivery palladium dropped 1.7 percent to 777 yen a gram, after earlier declining to 760 yen a gram, the lowest since Oct. 14, 2005."

"Ford and bigger rival General Motors Corp. lost $24.1 billion in the second quarter as consumers, faced with record gasoline prices, shunned the light trucks that provide most of the companies' sales. Total U.S. auto sales may drop to a 15-year low this year and fall even more in 2009, analysts have said."

"Platinum consumption by automakers accounts for more than 60 percent of global platinum demand, according to Johnson Matthey Plc, which makes about a third of the world's auto catalysts."

"Aquarius Platinum Ltd., which produces the metal in South Africa and Zimbabwe, dropped to an almost two-year low in Sydney trading. The Hamilton, Bermuda-based company shed 0.3 percent to A$8.10, the lowest since Nov. 3, 2006. It has dropped 24 percent so far this month."

To contact the reporter for this story: Dave McCombs in Tokyo at

"Last Updated: September 11, 2008 04:55 EDT"

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"U.K. Stocks Decline; Home Retail, AstraZeneca Lead the Retreat "

By Henrietta Rumberger and Adam Haigh

Sept. 11 (Bloomberg) -- U.K. stocks fell for a third day on renewed concern the slowing U.K. economy and inflationary pressures are weighing on retailers and travel companies.

Home Retail Group Plc sank 7 percent after Britain's second- largest home-improvement chain reported lower sales. British Airways Plc led a retreat in airline stocks. The U.K.'s two largest drugmakers AstraZeneca Plc and GlaxoSmithKline Plc both dropped more than 2 percent after two brokerages recommended selling the shares.

"The FTSE 100 dropped 60.4, or 1 percent, to 5,305.8 at 11:01 a.m. in London. The FTSE All-Share Index lost 1.2 percent and Ireland's ISEQ Index retreated 1.6 percent."

"``Eyes have now turned back to the underlying difficulties which haven't changed,'' said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers, a unit of Hargreaves Lansdown Plc, which has $21.5 billion under management. ``The general slowdown has meant people are less likely to spend on discretionary items. We need corporate earnings to start improving and this is not happening,'' he added."

The benchmark FTSE 100 today extended its 18 percent slump so far this year as the economy cools and banks from Barclays Plc to Royal Bank of Scotland Group Plc have been forced to raise capital as losses topped $500 billion at financial companies worldwide.

"Home Retail retreated the most in two months, down 7 percent to 224.75 pence after saying second-quarter same-store sales fell at its Homebase and Argos outlets as a housing slump worsened and consumer confidence slid to a four-year low."

Revenue Drops

"Revenue at stores open at least a year declined 5.8 percent at Argos and 8.3 percent at Homebase in the three months ended Aug. 30, the Milton Keynes, England-based company said in a statement."

"William Morrison Supermarkets Plc declined 4.9 percent to 257.25 pence, the steepest retreat in almost six months. The smallest of the four main U.K. food retailers said first-half profit fell 3.1 percent after income from real-estate sales dwindled and its tax bill rose."

"British Airways, Europe's third-biggest airline, lost 4 percent to 249.5 pence. Ryanair Holdings Plc, the region's largest discount airline, slid 2.9 percent to 2.67."

"AstraZeneca fell the most in almost eight months, off 4.6 percent to 2,520 pence. The U.K.'s second-largest drugmaker was cut to ``sell'' from ``neutral'' at Goldman Sachs Group Inc."

`Likely to Underperform'

"``The shares are not supported at current levels by near- term fundamentals and we believe AstraZeneca is likely to underperform its pharma peers,'' London-based analyst John Murphy wrote in a note."

"GlaxoSmithKline lost 2.4 percent to 1,249 pence. Exane BNP Paribas downgraded the shares to ``underperform'' from ``outperform,'' saying the stock now enters ``a more risky period'' having outperformed the industry by 10 percent during the last three months."

"Separately, Moody's gave the European pharmaceutical industry outlook a negative rating for the second straight time, saying drugmakers are struggling to develop products to replace sales lost when the patents expire."

The following stocks also rose or fell in the U.K. markets. Stock symbols are in parentheses.

U.K. companies:

"Galliford Try Plc (GFRD LN) slid 2 pence, or 3.1 percent, to 63.25. The U.K. construction company that's upgrading Wimbledon's Centre Court tennis stadium said annual profit fell 2.5 percent after it revamped its housing division amid a slump in demand."

"Premier Farnell Plc (PFL LN), the U.K. electronic and industrial products supplier founded in 1939, lost 9 pence, or 4.8 percent, to 179.5 after saying sales dropped in the U.S., Europe, and the U.K."

"``Results are slightly behind our expectations and, while they detail impressive earnings growth, they also show a continued slowdown in sales growth and lower operating margins,'' Investec Securities analyst Guy Hewett wrote in a note today. ``We expect this negative trend to continue as the economic slowdown bites and now believe the group will do well to maintain earnings next year.''"

To contact the reporters on this story: Henrietta Rumberger in Frankfurt at; Adam Haigh in London at

"Last Updated: September 11, 2008 06:14 EDT"

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Mersch Says Past Oil Gains May Trigger Price Spiral (Update1)

By Stephanie Bodoni and Gabi Thesing

Sept. 11 (Bloomberg) -- European Central Bank council member Yves Mersch said the drop in oil prices hasn't damped inflation risks and past gains may still ``trigger a wage-price spiral.''

"``The decline in oil prices on world markets is partially compensated by the higher value of the dollar,'' Mersch said in the bi-annual economic bulletin of the Luxembourg central bank, which he heads. The inflation risks identified when the ECB raised interest rates in July ``remain today.''"

"While the price of oil has dropped almost a third since its July record, it is still over 60 percent higher than two years ago. Policy makers remain concerned that higher energy costs will prompt companies to raise prices and workers to demand higher wages to compensate for the increase in the cost of living."

"``The Governing Council stressed its determination to avoid the emergence of such an inflationary spiral and to ensure the solid anchoring of inflation expectations in the medium to long term at a level that is compatible with price stability,'' Mersch said in the bulletin."

"Inflation is running at 3.8 percent, almost twice ECB's 2 percent limit. Mersch said it is ``likely that inflation won't return to levels that are in line with the definition of price stability until about 2010.'"

"The ECB raised its inflation projections last week to around 3.5 percent for 2008 and 2.6 percent for 2009. At the same time, ECB staff lowered their growth forecasts for this year and next to about 1.4 percent and 1.2 percent respectively."

"The euro-region economy is struggling to recover from a second-quarter contraction. Slower growth won't necessarily help to mitigate inflation pressures, Mersch told reporters during a briefing. While ``growth in the quarters to come will be modest,'' Mersch also said he expects ``a progressive pick up.''"

The ECB kept its key interest rate at a seven-year high of 4.25 percent last week. Mersch said the current policy stance ``contributes to the fulfillment of our mandate in the medium term.''

To contact the reporters on this story: Stephanie Bodoni in Luxembourg at sbodoni@bloomberg.netGabi Thesing in Frankfurt at

"Last Updated: September 11, 2008 04:47 EDT"

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Aluminum Falls on Slowing Demand Amid Oversupply; Copper Slips

By Claudia Carpenter

Sept. 11 (Bloomberg) -- Aluminum fell in London as rising stockpiles indicated weakening demand amid a global oversupply of the metal. Copper also declined.

"Inventories of aluminum in warehouses monitored by the London Metal Exchange jumped 14,250 metric tons, or 1.2 percent, to 1.18 million tons, the highest since April 2004, according to the exchange's daily warehouse report. Supplies will outpace demand through next year, according to Triland Metals Ltd., one of 12 companies that trade on the LME floor."

"``I find it very hard to come up with a big deficit next year,'' said Michael Widmer, an analyst at Lehman Brothers Holdings Ltd. in London. ``You would need to create a shortage of aluminum by closing down a lot of capacity and demand is relatively weak at the moment.''"

"Aluminum for delivery in three months dropped $21 to $2,605 a ton as of 9:32 a.m. local time on the LME. Copper slipped $12 to $6,828 a ton after earlier gaining as much as $100."

"Producers of aluminum 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. The premium will be $75 to $77 a ton over the LME cash price for the three months to Dec. 31, down from $87 in the current quarter, according to four executives involved in the talks. The drop is the first in a year."

"Tin gained $280 to $18,605 a ton as inventories fell 20 tons to 5,645 tons, the lowest since Aug. 21."

"Lead dropped $14 to $1,785 a ton, zinc fell $15 to $1,735 a ton and nickel declined $95 to $18,405 a ton."

To contact the reporter on this story: Claudia Carpenter in London at

"Last Updated: September 11, 2008 04:51 EDT"

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"German Stocks Fall for Third Day; Deutsche Bank, Postbank Drop "

By Stefanie Haxel

"Sept. 11 (Bloomberg) -- German stocks declined for a third day, led by Deutsche Postbank AG on speculation that Deutsche Bank AG will buy less than 30 percent of the lender and won't pay a high price."

Postbank fell the most in three weeks and Deutsche Bank retreated for a second day after the largest German bank said it's in advanced discussions to buy a stake in Postbank from parent Deutsche Post AG. E.ON AG dropped for a third day as Goldman Sachs Group Inc. removed shares of Germany's biggest utility from its ``conviction buy'' list.

"The benchmark DAX Index slipped 79.1, or 1.3 percent, to 6,131.26 as of 11:56 a.m. in Frankfurt. DAX futures expiring in September decreased 1 percent to 6,131. The HDAX Index of the country's 110 biggest companies lost 1.1 percent."

"Deutsche Bank may acquire less than 30 percent of Postbank, rather than purchase the whole company, to thwart rival bidders and avoid making a mandatory takeover offer, a person with knowledge of the matter said Sept. 9."

"``This is a bad deal for Postbank and its investors,'' said Johannes Thormann, a Dusseldorf-based analyst at HSBC Trinkaus & Burkhardt AG who recommends investors buy the stock. ``Deutsche Bank gets its foot in the door but doesn't have to pay a high premium and make an offer to remaining shareholders.''"

"Deutsche Postbank shares plunged 2.36 euros, or 5.1 percent, to 44.19, the steepest drop since Aug. 19. Parent Deutsche Post increased 25 cents, or 1.6 percent, to 16.20 euros."

"Deutsche Bank lost 1.76 euros, or 2.9 percent, to 59.24."

UFG Invest Stake

"``Overall, we do not see much rationale for Deutsche Bank to acquire 30 percent in Postbank with the option to buy a majority holding,'' JPMorgan Chase & Co. analysts Kian Abouhossein, Jacob Kruse and Delphine Lee wrote in a note to clients today."

Deutsche Bank also agreed to purchase a 40 percent holding in Russian investment management company UFG Invest to bolster its asset management business.

"E.ON retreated 59 cents, or 1.6 percent, to 35.41 euros, the lowest in more than a year."

"The utility is looking at building a nuclear power station in England, the Financial Times said. E.ON has signed an agreement with National Grid Plc to connect to the electricity network a 1,600 megawatt nuclear power plant in Gloucestershire, the site of an old reactor that is to be shut in 2009, the newspaper reported."

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

"Conergy GY (CGY GY) rallied 70 cents, or 8.6 percent, to 8.80 euros, the biggest increase in two weeks. South Korea's LG Electronics Inc. agreed on a joint-venture with Germany's second- largest solar company to make solar cells."

"Fresenius Medical Care AG (FME GY) rose for a second day, increasing 83 cents, or 2.2 percent, to 38.04 euros. JPMorgan Chase & Co. raised its share-price estimate for the world's biggest provider of kidney dialysis 11 percent to 47 euros."

"Nordex AG (NDX1 GY) rallied 1.23 euros, or 6 percent, to 21.83, the steepest gain in six weeks. The windmill maker received a 500 million-euro ($698 million) order from Danish energy provider Scan Energy A/S."

"Separately, Chief Executive Officer Thomas Richterich warned of hostile takeover dangers in the environmental technology industry, Financial Times Deutschland said, citing an interview."

"Premiere AG (PRE GY) advanced for a second day, adding 16 cents, or 1.4 percent, to 12.05 euros. Deutsche Bank raised its recommendation for the pay-television company partly owned by News Corp. to ``buy'' from ``hold,'' saying the naming of a new chief executive officer may turn around financial performance. Premiere said earlier CEO Michael Boernicke is being replaced by a senior News Corp. executive."

"Roth & Rau AG (R8R GY) gained 86 cents, or 3.3 percent, to 27.26, snapping a two-day slide. The world's largest maker of equipment used to coat solar panels said orders rose in the first eight months of the year as demand for its automated control systems increased."

To contact the reporter on this story: Stefanie Haxel in Frankfurt at

"Last Updated: September 11, 2008 06:26 EDT"

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East European Currencies: Polish Zloty Declines Against Euro

By Ewa Krukowska

"Sept. 11 (Bloomberg) -- The zloty fell against the euro, a day after the biggest jump in 5 1/2 years, on speculation Poland will fail to adopt the European currency by its target date."

"``Some investors are skeptical about the government's ability to introduce the euro in 2011,'' said Piotr Kalisz, an economist at Citigroup Inc. in Warsaw. There is a ``technical correction after a wave of optimism about the euro yesterday.''"

"To adopt the euro, Poland needs to keep its budget deficit within 3 percent of gross domestic product, its public debt less than 60 percent of GDP and 12-month inflation to within 1.5 percent of the 12-month average inflation of the three lowest EU members. The nation also needs to spend at least two years in the exchange-rate mechanism, which will test the zloty's stability. In the mechanism, it will be pegged to the euro and allowed to trade within a band."

"The zloty slid to 3.4266 per euro as of 11:58 a.m. in Warsaw, from 3.3878 yesterday, when it surged 2.4 percent. Against the dollar, Poland's currency declined to 2.4627, from 2.4202."

"The currency may trade at 3.35 against the euro at the end of this year, supported by the euro-adoption plans and expectations of further rate increases by the central bank, Kalisz said."

Poland and other countries that have joined the European Union since May 2004 have to adopt the euro as part of their membership agreements.

Rate Increases

"The country may need to raise the benchmark 6 percent interest rate more than twice to meet the inflation limits for adopting the euro in 2011, policy maker Dariusz Filar told TVN CNBC Biznes today. Entering the euro zone was possible from July 1, 2011, Filar told the broadcaster."

"Poland needs one further interest-rate increase as soon as possible and maybe more if the zloty continues weakening, central bank policy maker Andrzej Wojtyna said in an interview for Rzeczpospolita."

"The zloty has lost 4.6 percent against the common currency in the past two months on concern that the economic slowdown in the 15-nation euro zone will spread to eastern Europe. In the period, the euro has slid 13 percent against the dollar."

"The drop by the zloty is also being driven by the falling euro against the dollar, Kalisz said. The euro fell to the lowest level in about a year against the dollar today."

"The effect of the slowdown in Europe on Poland won't be ``very strong'' as the country is not as dependent on exports as the Czech Republic or Hungary, Wojtyna told the newspaper. He said he believed in a ``soft landing'' for the Polish economy, according to Rzeczpospolita."

Euro Adoption

"Poland would become the third former communist country to drop its currency for the euro, following Slovenia and Slovakia, which is set to do so on Jan. 1. Hungary aims to meet the terms for membership next year."

"In other trading, the Czech koruna dropped to 24.626 against the euro, from 24.469 yesterday. The Hungarian forint declined to 239.97 per the euro, from 239.57."

"Hungary's inflation slowed to 6.5 percent in August 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."

"The Turkish lira fell as much as 1.5 percent to a three-month low of 1.2639 against the dollar. It was at 1.2576 as of 1:04 p.m. in Istanbul, from 1.2454 yesterday."

To contact the reporter on this story: Ewa Krukowska in Warsaw at

"Last Updated: September 11, 2008 06:36 EDT"

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Postbank Declines as Deutsche Bank Seen Buying Less Than 30%

By Aaron Kirchfeld

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"Sept. 11 (Bloomberg) -- Deutsche Postbank AG, Germany's biggest bank by customers, fell in Frankfurt trading on speculation Deutsche Bank AG will buy less than 30 percent of the bank rather than purchase the whole company."

"Postbank declined 2.16 euros, or 4.6 percent, to 44.39 euros by 11:14 a.m., valuing the Bonn-based lender at 7.3 billion euros ($10.2 billion). Frankfurt-based Deutsche Bank fell 1.01 euros, or 1.7 percent, to 60 euros."

"Deutsche Bank is in advanced talks with Deutsche Post AG, the majority owner of Postbank, over the potential acquisition of a stake, the companies said late yesterday. Deutsche Bank may buy less than 30 percent of Postbank to thwart rival bidders and avoid making a mandatory takeover offer, a person with knowledge of the matter said on Sept. 9."

"``This is a bad deal for Postbank and its investors,'' said Johannes Thormann, a Dusseldorf-based analyst at HSBC Trinkaus & Burkhardt AG, who recommends buying the stock. ``Deutsche Bank gets its foot in the door but doesn't have to pay a high premium or make an offer to remaining shareholders.''"

"Deutsche Bank Chief Executive Officer Josef Ackermann yesterday said Postbank would help it strengthen its consumer banking unit. The investment would come less than two weeks after Commerzbank AG agreed to buy Allianz SE's Dresdner Bank for 9.8 billion euros, leapfrogging Deutsche Bank in terms of retail customers and branches."

`Limited' Rationale

"Deutsche Post, Europe's biggest postal service, may decide on a sale of the Postbank stake at a supervisory board meeting tomorrow, two people with knowledge of the matter said Sept. 9. The mail company owns just over 50 percent of the lender. Postbank would offer a buyer more than 14 million customers and 850 branches."

"By buying a stake now, Deutsche Bank might avoid having to raise capital to finance the deal and leave open the possibility of a full acquisition of Postbank in the future."

"``A defensive transaction in our view is the most likely rationale for the Deutsche Bank announcement,'' JPMorgan Chase & Co. analysts led by Kian Abouhossein said in a note to investors today. The strategic rationale is ``pretty limited'' for Deutsche Bank because a 30 percent stake doesn't offer ``real cash flow'' and there are limited synergies, he said."

"Banco Santander SA, Spain's biggest bank, revived talks aimed at an acquisition of Postbank after the lender's market value fell, two people with knowledge of the matter told Bloomberg News on Sept. 9. ``In our view, Deutsche Bank would not be interested in having Santander plus Postbank in their backyard,'' Abouhossein said."

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at

"Last Updated: September 11, 2008 05:16 EDT"

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Hong Kong Stocks Fall Most in 2 Months on Credit-Loss Concerns

By Chua Kong Ho

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Sept. 11 (Bloomberg) -- Hong Kong stocks fell the most in two months on concern credit-market losses will widen and after Europe cut its economic growth forecast.

"HSBC Holdings Plc slumped 1.5 percent after Lehman Brothers Holdings Inc. posted a bigger loss than analysts estimated. TPV Technology Ltd., which gets about a quarter of its sales from Europe, tumbled a record 13 percent after it cut its forecast for shipments. China Mobile Ltd. slid 5.3 percent after Nanfang Daily reported measures planned by the government to limit the company's dominance."

"``All looks grim as there's a complete absence of any buyers,'' said James Johnstone, chief investment officer at Alcor Investment Management in Singapore, which manages about $100 million. ``We're halfway through the developed world problems and Asia will find it hard to go up from here.''"

"The Hang Seng Index lost 611.06, or 3.1 percent, to 19,388.72 at the close, its steepest drop since July 15 and the lowest close since March 20, 2007."

"The Hang Seng Index has tumbled 30 percent this year, as a global slowdown and more than $510 billion in writedowns and credit losses at financial institutions hurt profits."

"All 11 industry groups on the broader Hang Seng Composite Index declined, with only 13 of the 201 stocks on the index advancing."

"HSBC, Europe's largest bank by market value, retreated 1.5 percent to HK$122.20. It also dropped after South Korea's Financial Services Commission said the bank was unlikely to get a ruling on its purchase of Korea Exchange Bank this month. Bank of China Ltd., the country's largest foreign exchange bank, fell 1.2 percent to HK$3.39."

TPV Tumbles

"Lehman said yesterday it posted a $3.9 billion third- quarter loss on $5.6 billion of writedowns, worse than the $2.2 billion analysts had predicted."

"The European Commission 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. The commission lowered its full-year growth forecast to 1.3 percent, from 1.7 percent earlier, and signaled the 2009 outlook may also be cut."

"TPV, the world's biggest contract maker of computer monitors, tumbled 13 percent to HK$2.73, the most since it sold shares in October 1999. The company reduced its forecast for full-year shipments of liquid-crystal display TVs to 6 million from 7 million, citing slowing demand."

"Li & Fung Ltd., a supplier of clothes, toys and home furniture that counts Europe as its second-largest market, lost 2.8 percent to HK$24."

China Cosco

"China Mobile dropped 5.3 percent to HK$77, the biggest drag on the Hang Seng Index. The Nanfang Daily reported today that Chinese regulators plan to allow China Mobile subscribers in the cities of Tianjin and Shenzhen to retain their phone numbers if they switch to other carriers. Users moving to China Mobile would have to change numbers, according to the report."

"Shipping stocks retreated, led by China Cosco Holdings Co. as transport rates slumped for a 16th day. The Baltic Dry Index tracking cargo costs fell 4.4 percent to 5,026 points, the lowest since March 9, 2007, according to the Baltic Exchange in London. China's exports rose 21.1 percent in August from a year earlier, down from July's 26.9 percent, the official Xinhua News Agency reported yesterday."

"China Cosco, the world's biggest dry-bulk ship operator, dropped 5.7 percent to HK$9.60, the lowest since June 11, 2007. China Shipping Development Co., a crude oil and dry-bulk carrier, declined 7.7 percent to HK$12.22."

"The Hang Seng China Enterprises Index, which tracks so- called H shares, fell 4.2 percent to 10,052.03. Futures expiring in September fell 3 percent to 19,330."

The following shares also rose or fell in Hong Kong. Stock symbols are in parentheses after company names:

"Coal producers: Yanzhou Coal Mining Co. (1171 HK), a unit of China's fourth-largest producer of the fuel, fell HK$0.80, or 7.5 percent, to $9.90, a third-straight decline. Hidili Industry International Development Co. (1393 HK), southwestern China's largest producer of coking coal, dropped HK$0.49, or 8.6 percent, to HK$5.24."

"Coal prices at Australia's Newcastle port, the world's largest coal-export harbor, have fallen from a record $194.79 a metric ton reached on July 4, according to globalCOAL NEWC Index."

"Anhui Conch Cement Co. (914 HK), China's largest producer of the building material, slumped HK$4.05, or 12 percent, to HK$29.50, the most since April 2004, on concern third-quarter sales may fall short due to slowing property demand, said Jay Zhou, a Shanghai-based analyst at Sinopac Asia Securities Ltd."

"Belle International Holdings Ltd. (1880 HK), China's largest retailer of women's shoes, dropped HK$0.48, or 7.7 percent, to HK$5.75, after UBS AG, Goldman, Sachs & Co., Citigroup Inc. and JPMorgan Chase & Co. cut their share price estimates."

"China Overseas Land & Investment Ltd. (688 HK), a real- estate developer, tumbled HK$0.90, or 8.8 percent, to HK$9.30. August property sales declined 41 percent from July to HK$1.13 billion, the company said yesterday."

"China Southern Airlines Co. (1055 HK), China's largest carrier by passenger numbers, declined HK$0.08, or 4.6 percent, to HK$1.66. Traffic fell 16 percent to 4.9 million in August, the biggest monthly decline since June 2003, due to government restrictions on air travel during the Beijing Olympic Games."

"Hopewell Holdings Ltd. (54 HK), a real-estate developer controlled by billionaire Gordon Wu, rose HK$0.50, or 1.8 percent, to HK$27.70, after full-year profit more than doubled on one-time gains to HK$5.97 billion. The South China Morning Post reported Co-Managing Director Thomas Wu as saying the company remains a possible investor in a proposed 37.45 billion yuan bridge linking Hong Kong, Zhuhai and Macau."

"K Wah International Holdings Ltd. (173 HK), a real-estate developer, slid HK$0.12, or 5.7 percent, to HK$1.97. The company will put land purchases in Hong Kong and China on hold because of weakening demand and the slowing global economy, the South China Morning Post reported, citing Chairman Lui Che-woo."

To contact the reporter responsible for this story: Chua Kong Ho in Shanghai at

"Last Updated: September 11, 2008 05:25 EDT"

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IT Holding Gains on Report Perna Adding New Investor (Update1)

By Armorel Kenna

"Sept. 11 (Bloomberg) -- IT Holding SpA, owner of the Gianfranco Ferre SpA fashion house, advanced the most in 11 weeks in Milan trading after financial newspaper MF reported that Chairman Tonino Perna may bring in a new investor."

"IT Holding, based in Milan, gained as much as 4 cents, or 9.7 percent to 47.9 cents, its biggest rise since June 25. The stock traded at 46 cents at 11:25 a.m., giving the company a market value of 114 million euros ($159 million)."

"MF reported that China's Hembly International Holdings Ltd. is the most likely investor in Perna's PA Investments SA, the controlling shareholder in GTP Holding SpA, which in turn owns 61.6 percent of IT Holding."

Perna said June 23 that IT Holding had been undervalued by investors and that private equity funds had ``come courting'' to buy a stake in the company.

A spokeswoman for IT Holding declined to comment on the report.

To contact the reporter on this story: Armorel Kenna in Milan at

"Last Updated: September 11, 2008 05:29 EDT"

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"King Says BOE Can't Give Banks Long-Term Help, Points to Brown "

By John Fraher and Brian Swint

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Sept. 11 (Bloomberg) -- Bank of England Governor Mervyn King said its planned money-market reforms won't provide long- term assistance to banks to unfreeze lending and any decision on the matter should be left to Prime Minister Gordon Brown.

"The central bank ``will not and cannot solve the shortage of funding to finance bank lending, including mortgage lending'' over the long term, King told lawmakers in London today. ``Only private savers or taxpayers via the government can provide such funds.''"

"King's central bank will next week unveil proposals to revamp its money-market operations to better cope with financial- market turmoil. With Brown under pressure to ease the U.K.'s house-price slump, King is distancing the central bank from any plan to prop up the country's mortgage market with public funds."

Chancellor of the Exchequer Alistair Darling is scheduled to make a decision on how to help the market for home loans in coming weeks. A Treasury-commissioned report said in July that Brown could consider guaranteeing mortgage-backed securities.

"While King today edged away from comments made last month opposing such a guarantee, saying he was just outlining the consequences of such a step, he was forced to deny that he is giving too much advice to the finance minister."

"``I am not giving the chancellor a public lecture,'' said King in testimony to Parliament's Treasury Select Committee. ``It is perfectly reasonable to explain what central banks can and can't do and that is what I am doing.''"

`Stressed' Conditions

The Bank of England will publish proposals to change its money-market rules at the end of next week. King said in June they will be designed to cope with both ``normal'' and ``stressed'' conditions.

"``The objective of the new facility will be to provide short-term liquidity insurance to smooth the adjustment of financial institutions hit by unexpected shocks,'' King said. It will help banks trying to cope with ``temporary'' liquidity ``shocks,'' but won't provide long-term funds, he said."

"Central-bank policy makers are also concerned that inflation at more than double the 2 percent target will become embedded in the economy. U.K. inflation expectations reached the highest since at least 1999 last month, a Bank of England survey showed today."

"``It would be most surprising if, next week, I were not required to write a further open letter to the Chancellor explaining why inflation is more than a percentage point away from target,'' King said today."

To contact the reporters on this story: John Fraher in London at; Brian Swint in London at

"Last Updated: September 11, 2008 06:45 EDT"

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Russian Foreign Car Sales Fell 12% in August Amid Georgia War

By Torrey Clark

"Sept. 11 (Bloomberg) -- Foreign car sales in Russia, Europe's biggest auto market, declined 12 percent last month amid a war with neighboring Georgia that soured relations with the West and helped drive the ruble lower against the dollar."

"Sales of foreign-brand cars, including those made in Russia, fell to 175,557 from 199,332 the previous month, data released today by the Association of European Businesses shows."

"Russia sent warplanes and troops into Georgia on Aug. 8, following a Georgian attack on its Moscow-backed breakaway region of South Ossetia. The five-day incursion was the country's first major foreign military operation since the Cold War. The ruble declined 5.2 percent against the dollar in August, the biggest monthly decline in more than nine years."

"``This is the first sign of a slowdown, the growth rate couldn't last forever,'' said Elena Sakhnova, a transportation analyst at VTB Group in Moscow. The ruble decline versus the dollar in the period made imports more expensive, Sakhnova said."

"Hyundai Motor Co. and Toyota Motor Corp. posted the biggest sales gains in August. Hyundai sold 7,606 Accent sedans, followed by the Toyota Corolla at 6,860."

"Russia surpassed Germany as Europe's biggest auto market in the first half as sales rose 41 percent to 1.65 million cars, according to PricewaterhouseCoopers LLP. August sales increased 23 percent from the same month last year, versus 40 percent growth in July."

To contact the reporter on this story: Torrey Clark in Moscow at

"Last Updated: September 11, 2008 05:39 EDT"

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South African Corn Prices Jump for Second Day as Rand Weakens

By Mkhululi Mancotywa

"Sept. 11 (Bloomberg) -- Corn prices in South Africa, the biggest producer of the grain on the continent, advanced for a second consecutive day after the rand declined against the dollar, making imports more expensive."

"The currency traded at 8.2638 a dollar at 12:06 p.m. in Johannesburg, compared with 8.0243 at the close of grain trading at noon yesterday."

"White corn for delivery in December, the most active contract on the South African Futures Exchange, rose 17 rand, or 0.9 percent, to close at 1,920 rand ($233) a metric ton. Meal made from white corn is the staple food in South Africa."

"Yellow corn for December delivery gained 10 rand, or 0.5 percent, to 1,931 rand a ton. The grain is used mainly for animal feed in South Africa."

"The U.S., China and Argentina are the world's biggest corn exporters."

"Wheat for December delivery fell 14 rand, or 0.4 percent, to 3,286 rand a ton."

"South Africa is the continent's third-biggest wheat producer, after Morocco and Egypt."

The gains or losses for the most active contracts of the following crops today were as follows. All prices are in rand and the crops are sold in tons:

Today's price Previous Close % Change
"Sunflowers 4,520 4,535 -0.3"
"Soybeans 3,940 3,920 +0.5"

To contact the reporter on this story: Mkhululi Mancotywa in Johannesburg at

"Last Updated: September 11, 2008 06:35 EDT"

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Kia Motors Unionized Workers Reject Preliminary Wage Agreement

By Seonjin Cha

"Sept. 11 (Bloomberg) -- Workers of Kia Motors Corp., South Korea's second-biggest carmaker, rejected a tentative wage accord reached with the company, threatening to prolong strikes that have cost 220 billion won ($198 million) in lost output."

"The majority of Kia's nearly 28,000 union members voted against the pay deal, which includes a 5.6 percent rise in basic pay, union spokesman Song Ho Chang said by telephone today."

"The rejection follows a similar move at Hyundai Motor Co., whose employees turned down a tentative agreement last week. Kia has failed to build 16,676 vehicles since July because of partial strikes by workers."

"Employees at Hyundai have staged partial strikes for 11 days since July, costing the company 42,294 vehicles worth 652.2 billion won in lost production until today, according to a company statement."

"Kia's shares declined 8 percent today to 13,300 won. Hyundai dropped 1.7 percent to 69,300 won."

GM Daewoo Auto & Technology Co. and Ssangyong Motor Co. have already completed their wage negotiations for the year.

To contact the reporter on this story: Seonjin Cha in Seoul at

"Last Updated: September 11, 2008 06:04 EDT"

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"Home Retail Declines as Argos, Homebase Sales Slump (Update1) "

By Thomas Mulier

"Sept. 11 (Bloomberg) -- Home Retail Group Plc, the owner of Britain's Homebase do-it-yourself stores, fell the most ever in London trading after saying it would write down the value of the chain's assets amid worse-than-estimated sales."

"Home Retail dropped as much as 9.6 percent. Revenue at stores open at least a year declined 5.8 percent at Argos and 8.3 percent at Homebase in the three months ended Aug. 30, the Milton Keynes, England-based company said today in a statement. Dresdner Kleinwort analysts had estimated a 4 percent drop at both divisions."

"Home Retail will have writedowns of ``several hundred millions'' of pounds after the value of Homebase's assets declined, Chief Executive Officer Terry Duddy said on a conference call. The biggest decline in U.K. housing prices in two decades, consumer confidence at a four-year low and wet weather have kept customers away from Argos, whose outlets sell everything from jewelry to power tools, and the Homebase do-it- yourself chain."

"``With second-quarter revenues so weak, we think the portents here are poor,'' Mark Photiades, an analyst at Landsbanki in London, said in a note. He has a ``hold'' rating on the stock."

"The decline in Homebase same-store sales in August was ``not far'' from 15 percent, executives said on a conference call that was available on the company's Web site. The drop was caused by poor weather, the company said."

Home Retail fell as much as 23.25 pence to 218.5 pence and traded at 224.5 pence as of 10:21 a.m. in London trading. A close at today's low would be the steepest drop since the shares began trading in 2006.

Full-Year Results

"Full-year results, excluding one-time items, will meet the company's forecasts, Duddy said on the call, without specifying what those are. September through November will be ``difficult,'' he added. The analyst consensus is for first-half pretax profit before one-time items to fall 17 percent to 125 million pounds ($219 million), and full-year profit on that basis of 362 million pounds, executives said on the call."

"Home Retail gets about 70 percent of its revenue from Argos, which has capitalized on a boom in demand for video games to offset weaker sales of garden tools and products for the home. The company will close an Argos distribution center in the coming weeks, cutting its total to five, and is eliminating jobs at Homebase. Homebase, Britain's second-largest home-improvement chain, also plans to scale back plans to open as many as 10 stores this year and next, executives said."

"Argos's gross margin narrowed by 0.25 percentage point in the quarter because a large proportion of sales came from video games, which are less profitable than the likes of garden furniture. At Homebase, the gross margin widened by 1.25 percentage points on gains from combining the chains' product buying."

Declining Retail Sales

"The British Retail Consortium, which represents 80 percent of all U.K. stores, this week said sales by retailers at stores open at least a year fell 1 percent in August. DSG International Plc, the country's largest consumer-electronics retailer, on Sept. 3 reported a 7 percent decline in first-quarter sales. Kesa Electricals Plc yesterday said the faltering home market will push its Comet appliance chain to a first-half loss."

Home Retail was created in 2006 when GUS Plc split its retail unit from Experian Group Plc. The company has a market value of about 2 billion pounds.

To contact the reporter on this story: Thomas Mulier in Geneva at

"Last Updated: September 11, 2008 05:27 EDT"

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Tokyo Office Vacancies Rise Seventh Straight Month (Update1)

By Kathleen Chu and Eijiro Ueno

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"Sept. 11 (Bloomberg) -- Tokyo office vacancies rose for the seventh month in August, the longest period of increases since June 2003, as companies cut spending."

"The Tokyo office vacancy rate rose to 3.86 percent from 3.75 percent in July, real estate brokerage Miki Shoji Co. said in a report released today through the Ministry of Land, Infrastructure and Transportation."

"Japan's economy probably shrank more than initially estimated in the second quarter as business spending declined, the government is expected to report tomorrow. As demand for office buildings decreases, landlords are more willing to negotiate lower rents, said Andy Hurfurt, Tokyo-based director of CB Richard Ellis Inc.'s Japan subsidiary."

"``We are seeing occupiers or potential occupiers becoming a lot more cautious about committing to more expensive properties,'' said Hurfurt. ``Landlords have started to become more flexible and realistic on the rental level they will accept.''"

"Landlords are now willing to negotiate rent levels at a margin of 5 to 10 percent less than quoted prices, Hurfurt said. CB Richard Ellis is the world's largest commercial real estate broker."

"The Topix Real Estate Index fell 1.8 percent in Tokyo. The index has risen 3.2 percent in the past six months, compared with a 5.9 percent decline of the benchmark Topix index."

"The average office rent in the capital's five main business districts of Chiyoda, Chuo, Minato, Shinjuku and Shibuya rose to 22,901 yen per tsubo ($64 per square meter) in August, from 22,860 yen a month earlier, Miki Shoji said. One tsubo, a standard measure of property in Japan, is 3.3 square meters, or 35.5 square feet."

To contact the reporter on this story: Kathleen Chu in Tokyo at

"Last Updated: September 11, 2008 06:04 EDT"

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"WellPoint Will Have Charge on Fannie, Freddie Stock Holdings "

By Kristen Hallam

Sept. 11 (Bloomberg) -- WellPoint Inc. said it will take a charge because its perpetual preferred stock holdings in Fannie Mae and Freddie Mac have declined by about $214 million.

"The precise amount of the impairment charge that may be incurred in the third quarter is ``difficult to determine,'' the Indianapolis-based company said in a filing to the U.S. Securities and Exchange Commission."

WellPoint also reaffirmed its forecast for 2008 earnings per share of $5.42 to $5.57.

To contact the reporter on this story: Kristen Hallam in London at

"Last Updated: September 11, 2008 06:18 EDT"

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"India Seeks Nuclear Agreements With Russia, France (Update1) "

By Archana Chaudhary

Sept. 11 (Bloomberg) -- India is seeking nuclear energy agreements with France and Russia while it awaits approval by the U.S. Congress for a deal allowing the South Asian nation to buy atomic technology and fuel after a three-decade ban.

"India is ``moving toward finalizing bilateral agreements'' with the two countries, the foreign ministry said in a statement in New Delhi today. The government has also conveyed its intention to buy nuclear technology and facilities from the U.S., according to the statement."

"France's Areva SA and Russia's Rosatom Corp. may get a head start on Indian orders after the 45-nation Nuclear Suppliers Group lifted the ban on Sept. 6. U.S. companies such as General Electric Co., which want a shot at selling atomic fuel and technology to an economy that needs to power growth of more than 8 percent annually since 2003, have to wait until Congress ratifies the agreement reached with India."

"President George W. Bush submitted the accord to Congress for final approval, saying it meets the terms set by lawmakers almost two years ago and poses no risk to security."

"``The proposed agreement provides a comprehensive framework for U.S. peaceful nuclear cooperation with India,'' Bush said in a statement issued late yesterday. The accord ``will promote, and will not constitute an unreasonable risk to, the common defense and security.''"

"India needs nuclear technology and fuel from the U.S., France and Russia to fire 40,000 megawatts of power planned to help cut peak electricity shortages of 15 percent. The nuclear- supplier nations allowed India to engage in the trade of nuclear fuel and supplies, swayed by the promise of the country keeping its moratorium on nuclear-bomb testing."

Preliminary Talks

"India plans to acquire nuclear equipment worth $14 billion next year, Shreyans Kumar Jain, chairman of state-run monopoly Nuclear Power Corp., said on Sept. 8."

"The company plans to buy reactors from General Electric and Toshiba Corp.'s Westinghouse Electric Co., Jain said. Nuclear Power has also short-listed Areva and Rosatom."

"Nuclear Power has started a ``preliminary dialogue with U.S. companies'' to buy atomic technology, according to the foreign ministry statement."

"Three percent of India's electricity is generated from Russian-designed nuclear reactors. The country has 17 atomic reactors in six states that produce 4,120 megawatts of power, according to Nuclear Power's Web site."

"General Electric, the world's biggest maker of energy- generation equipment, said Aug. 25 it may lose contracts in India to French, Russian and Japanese rivals if the U.S. Congress doesn't ratify the U.S.-India nuclear deal soon after the agreement gets the approval of the suppliers group."

Secretary of State Condoleezza Rice said the U.S. has talked to India about the potential competitive disadvantage.

"``I think they recognize and appreciate American leadership on this issue,'' she said. ``Because of that, I think we'll have ways to talk to them about not disadvantaging American companies.''"

To contact the reporter on this story: Archana Chaudhary in Mumbai at

"Last Updated: September 11, 2008 04:51 EDT"

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TPV Shares Fall by Record After Shipment Forecast Cut (Update2)

By John Liu

"Sept. 11 (Bloomberg) -- TPV Technology Ltd., the world's biggest contract maker of computer monitors, fell by a record in Hong Kong trading after cutting this year's forecast for shipments."

"The maker of monitors and flat-panel televisions dropped 13 percent to close at HK$2.73 on the city's stock exchange, the biggest one-day fall since its shares began trading in October 1999. Hong Kong-based TPV reduced its prediction for liquid- crystal display TV shipments to 6 million sets from 7 million after the market's close yesterday."

"TPV is the latest LCD-related company to cut 2008 forecasts as U.S. consumer demand slows amid the worst housing crisis to hit the world's biggest economy in three decades. LG Display Co., the world's second-biggest maker of LCD displays, and Corning Inc., the world's biggest maker of glass for flat-panel TVs, both lowered earnings growth projections this month."

"``LCD TVs aren't something people have to have, and so when there's economic uncertainty and people conserve more, they conserve on TVs,'' said Vincent Gu, an analyst at research company iSuppli Corp. in Shanghai. ``The LCD market isn't doing as well this year as we'd expected.''"

"TPV's shares have declined 52 percent this year, compared with a 30 percent drop in Hong Kong's benchmark Hang Seng Index."

"``Although the demand for LCD TVs remained healthy at the end of the first half, we see our order flow to the U.S. market impacted by the sluggish economy,'' the company said. Demand for LCD computer monitors has also fallen in the second half of this year, TPV said."

"The price of 17-inch computer-monitor panels has dropped 28 percent in the third quarter from the end of June, while 42-inch television displays have fallen 10 percent, according to Taipei- based WitsView Technology Corp."

"TPV's computer monitor business accounted for 80 percent of the company's first-half revenue, while LCD TVs was 17 percent."

To contact the reporter on this story: John Liu in Shanghai at

"Last Updated: September 11, 2008 05:01 EDT"

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Nigeria to Issue $500 Million Bonds to Finance Infrastructure

By Dulue Mbachu

"Sept. 11 (Bloomberg) -- Nigeria plans to sell sovereign bonds worth $500 million to provide funding for infrastructure projects, Information Minister John Odey said."

"Approval for the 10-year bonds, to be raised from the international capital market, was given yesterday by President Umaru Yar'Adua's government, Odey said on state-owned Nigerian Television today."

"``It would be a means of raising substantial capital needed to finance infrastructure,'' Odey said. ``Also, a sovereign bond issuance will serve as benchmark for subsequent issues by the federal government.''"

To contact the reporter on this story: Dulue Mbachu in Lagos via Johannesburg at

"Last Updated: September 11, 2008 05:00 EDT"

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"Kawasaki Plans High-Speed Trains to Win Orders in U.S., Brazil "

By Masumi Suga

"Sept. 11 (Bloomberg) -- Kawasaki Heavy Industries Ltd., Japan's largest maker of rail cars, will develop trains able to run as fast as 350 kilometers (217 miles) an hour, aiming to win orders from the U.S., Brazil and emerging markets."

"The efSET, as the new train will be called, will use the Shinkansen high-speed technology and be ready by March 2010, Kobe, Japan-based Kawasaki Heavy said today in a faxed statement. The maximum speed of the trains running on the Shinkansen, a network of high-speed railway lines in Japan, is 300 kilometers an hour."

"Kawasaki Heavy will seek contracts as developed and emerging economies build 10,000 kilometers of high-speed rail links in the next 20 years, according to the statement. It will compete globally with France's Alstom SA, Canada's Bombardier Inc. and Germany's Siemens AG."

To contact the reporter on this story: Masumi Suga in Tokyo at

"Last Updated: September 11, 2008 05:42 EDT"

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Sun Hung Kai Full-Year Underlying Profit Rises 6% on Rents

By Kelvin Wong

"Sept. 11 (Bloomberg) -- Sun Hung Kai Properties Ltd., Hong Kong's biggest developer by market value, said underlying full- year profit rose 6 percent because of higher rental income."

"Net income excluding property revaluations was HK$12.19 billion ($1.6 billion) for the year ended June 30, compared with HK$11.5 billion a year earlier, the developer said today in a statement to Hong Kong's stock exchange. The median estimate of 14 analysts was HK$11.9 billion."

"Sun Hung Kai's earnings were helped by growth in office and shopping mall rentals, which compensated for a decline in profit from property development after several apartment projects were delayed. The company may start selling as many as six projects in the next two years, Deutsche Bank AG said last month."

"``Developers are still selling properties at some really good prices,'' Francis Lun, general manager at Hong Kong-based Fulbright Securities Ltd., said before the earnings. ``You can expect Sun Hung Kai's earnings to stay strong over the next couple of years.''"

"Sun Hung Kai dropped 1.6 percent to HK$91.30 in Hong Kong trading today. The stock is down 45 percent this year, compared with the 30 percent drop in the benchmark index."

Revenue from residential sales fell 32 percent to HK$11.5 billion after the company delayed the launch of its Cullinan project in the West Kowloon district to the fourth quarter.

"Rental income rose 14.5 percent to HK$8.26 billion as major companies continued to expand. Hong Kong's prime office rents may grow 15 percent in the 12 months to July, property consultant Colliers International Ltd. said in a July report."

"Net income climbed to HK$27.6 billion, or HK$10.87 a share, from HK$21.2 billion, or HK$8.52, a year earlier, on increased gains from property revaluation."

To contact the reporter for this story: Kelvin Wong in Hong Kong at

"Last Updated: September 11, 2008 05:17 EDT"

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Aedes Advances After Signing Moratorium Deal With Creditors

By Armorel Kenna

"Sept. 11 (Bloomberg) -- Aedes SpA, an Italian real estate and fund-management company, rose the most in a week in Milan trading after signing a moratorium agreement with creditors."

"Aedes advanced as much as 7 cents, or 6.5 percent, to 1.12 euros, its biggest rise since Sept. 3, and traded at 1.09 euros at 9:54 a.m., giving the Milan-based company a market value of 111.2 million euros ($155 million)."

"The moratorium agreement, signed with a group of banks, expires Sept. 30 and allows Aedes to continue to operate and work on the ``financial realignment'' of the company, Milan- based Aedes said yesterday in a stock-exchange statement."

"Aedes said Aug. 13 that it had started negotiations on asset sales and was working on details of a 200 million-euro capital increase. The company's auditor, Ernst & Young LLP, said in an Aug. 9 letter that it had ``doubts'' about Aedes's ability to continue operating."

To contact the reporter on this story: Armorel Kenna in Milan at

"Last Updated: September 11, 2008 04:16 EDT"

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EU Parliament Panel Approves 10% Renewable Energy in Transport

By Jonathan Stearns

Sept. 11 (Bloomberg) -- The European Parliament's energy committee voted to require at least 10 percent of road transport fuel in 2020 to come from renewable sources led by biofuels while adding checks to prevent land damage and food shortages.

"The committee said at least 4 percent of energy in European Union road transport in 2020 should come from biofuels that don't compete with food crops or from other renewable sources like green electricity. The panel today in Brussels also urged a review by 2014 of the overall 10 percent goal, part of an EU push to fight climate change and reduce reliance on oil imports."

"In addition, the committee imposed an interim target for renewables in EU road transport of 5 percent in 2015 and said at least a fifth of this goal should be met without traditional biofuels, made from crops such as rapeseed, wheat, corn and sugar. These biofuels, the main renewable energy for transport, risk displacing food production unless a ``second generation'' of fuels from non-food sources like farm and industry waste is developed."

"``We are beginning in a gentle way,'' said Fiona Hall, a U.K. member of the 27-nation EU Parliament. ``This is a good way.'' The draft law, which would impose the targets for renewable energy in transport on each member country, still needs the support of the full 785-seat assembly and European national governments."

"Biofuels, which include ethanol and biodiesel, offer the prospect of reducing the use of fossil fuels blamed for global warming. They also help the EU diversify its energy mix and lessen dependency on oil- and natural-gas producing countries. The European Commission, the EU's regulatory arm, proposed in January the 10 percent requirement for renewable energy in transport in 2020 on every member state."

Food-Price Increases

"Since then, food-price increases have revived concerns in Europe and elsewhere about biofuels. Wheat and corn prices will probably rise as much as 7 percent in the next 10 years as a result of greater U.S. and European production of alternative fuels, the Organization for Economic Cooperation and Development said in July."

The Parliament's energy committee set environmental protection standards for biofuels to be counted toward the renewable targets in a bid to prevent growth in trade from leading to land damage in exporting nations such as Brazil.

The draft EU law goes beyond transport fuel by aiming to raise the overall share of energy from renewable sources including wind and solar power in the EU to an average 20 percent by 2020 from 8.5 percent. The 20 percent average goal would also be achieved through varying binding overall renewable-energy targets on individual member states. The targets are as a percentage of energy consumption.

Overall Targets

The energy committee endorsed the country-specific overall targets proposed by the commission. These range from 10 percent for Malta to 49 percent for Sweden.

"The U.K., Germany and Poland are leading a push to let EU countries combine their targets, highlighting concerns about the cost of the planned rules. The idea gained backing from other EU governments in July."

"The targets for the three countries sponsoring the flexibility plan are 15 percent for the U.K., 18 percent for Germany and 15 percent for Poland. Those compare to 2005 market shares of 1.3 percent for the U.K., 5.8 percent for Germany and 7.2 percent for Poland."

To contact the reporter on this story: Jonathan Stearns in Brussels at

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

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Tiscali Says Management & Capitali Converts Bonds Into Stock

By Chiara Remondini

Sept. 11 (Bloomberg) -- Tiscali SpA said investment company Management & Capitali SpA converted bonds into shares in the Italian Internet provider corresponding to a 6.9 percent stake.

"Tiscali in December sold Management & Capitali 60 million euros ($84 million) of bonds convertible into its own shares, to help the Internet service provider fund the acquisition of Pipex Communications Plc's broadband and voice telephone units."

To contact the reporters on this story: Chiara Remondini in Milan at

"Last Updated: September 11, 2008 06:35 EDT"

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Conergy Climbs After Creating Solar Venture With LG Electronics

By Stefanie Haxel

"Sept. 11 (Bloomberg) -- Conergy AG, Germany's second-largest solar company, rose the most in six weeks in Frankfurt trading after agreeing on a joint venture with LG Electronics Inc. to make solar cells."

"Conergy rallied as much as 97 cents, or 12 percent, to 9.07 euros, the steepest one-day gain since July 30. The stock traded at 8.98 euros as of 11:02 a.m. local time, valuing the Hamburg- based company at 313 million euros ($435 million)."

"LG, South Korea's second-largest electronics maker, will acquire a 75 percent stake in a Conergy solar-panel plant in Frankfurt an der Oder, the Seoul-based company said today in an e-mailed statement. The partnership is expected to start at the end of the year, it said."

To contact the reporter on this story: Stefanie Haxel in Frankfurt at

"Last Updated: September 11, 2008 05:31 EDT"

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South African Mining Production Declined 13% in July (Update1)

By Ron Derby

"Sept. 11 (Bloomberg) -- South Africa, the world's biggest precious-metals producer, said mining output fell 13 percent in July from a year earlier as metals companies carried out maintenance work that had been deferred from the first half."

"Output of so-called platinum group metals was a third lower, Pretoria-based Statistics South Africa said today on its Web site. Gold production declined 16 percent."

"South African mines were disrupted in the first half by an electricity shortage after the government delayed Eskom Holding Ltd.'s expansion plans. Faced with a potential collapse of its electricity network, the utility cut power supplies to most gold and platinum mines in South Africa in January for five days."

"July's drop in mining is unlikely to be extended, said Henk Groenewald, an analyst at Cape Town-based Coronation Fund Managers."

"``Most mining sectors are going to increase production, except possibly for gold, in the medium term,'' Groenewald said by telephone."

To contact the reporter on this story: Ron Derby in Johannesburg at

"Last Updated: September 11, 2008 06:30 EDT"

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"South African Stocks: AngloGold, Datatec, SABMiller Are Active "

By Janice Kew

"Sept. 11 (Bloomberg) -- South Africa's FTSE/JSE Africa All Share Index rose for the first time in three days, adding 184.47, or 0.7 percent, to 25,458.07 at 10:58 a.m. in Johannesburg."

The following are among the most active stocks in the South African market today. Stock symbols follow company names.

"AngloGold Ashanti Ltd. (ANG SJ), Africa's largest producer of the metal, rose for the first time in three days, climbing 8 rand, or 4.6 percent, to 181. Gold Fields Ltd. (GFI SJ), Africa's second-largest, rallied 1.41 rand, or 2.4 percent, to 59.51. DRDGold Ltd. (DRD SJ) jumped 38 cents, or 11 percent, to 3.75 rand."

South Africa's rand fell against the dollar to the lowest level since May 2003. A weaker rand boosts profits at the local gold mining companies because they sell metal for dollars and pay most costs in rand.

"Datatec Ltd. (DTC SJ) gained 35 cents, or 1.3 percent, to 27.70 rand, rising for a second day. The biggest computer- services company based in Africa bought 50.01 percent of Inflow Technologies Private Ltd., an Indian seller of computer equipment."

"SABMiller Plc (SAB SJ), the world's third-largest brewer, added 1.25 rand, or 0.7 percent, to 172.25, extending yesterday's 1.2 percent increase. Rival InBev NV's planned $52 billion purchase of Anheuser-Busch Cos. would limit consumer choice and violate U.S. antitrust laws, 10 beer buyers said in a lawsuit against the two brewers."

To contact the reporters on this story: Janice Kew in Johannesburg at

"Last Updated: September 11, 2008 05:02 EDT"

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News Corp. May Sell Russia Billboard Unit to JCDecaux (Update2)

By Torrey Clark

"Sept. 11 (Bloomberg) -- News Corp., the New York-based media company controlled by Rupert Murdoch, may sell a billboard unit to JCDecaux SA as the world's second-largest seller of outdoor advertising seeks to expand in Russia."

"News Corp. and the French advertising company are negotiating the sale of Moscow-based News Outdoor Group, both companies said today. JCDecaux would pay for the purchase using cash and shares, the company, based in Neuilly-sur-Seine, France, said in an e-mailed statement."

"JCDecaux will pay for News Corp.'s 80 percent stake in News Outdoor with more than $1 billion of new shares, Russian newspaper Vedomosti reported, citing unidentified News Outdoor executives. The two companies have agreed on terms and the deal will be announced today, the newspaper said."

"``The chances that it will go through are high because the company has said several times it wants to grow in Russia,'' said Bruno Hareng, an analyst at Oddo & Cie. in Paris, commenting on JCDecaux. He said the French company is attracted by ``the strong growth'' of the Russian ad market."

"A spokeswoman for News Outdoor confirmed the talks in a telephone interview today. She declined to be identified, citing company policy, or to confirm details."

"JCDecaux shares fell 72 cents, or 4.6 percent, to 14.99 euros at 12:27 p.m. in Paris trading."

Office Raid

"``The more I read about investments in Russia, the less I like the feel of it,'' Murdoch said, according to a report in the Financial Times on Aug. 6. ``The more successful we'd have been, the more vulnerable we'd be to having it stolen from us. Better we sell now.''"

"News Outdoor's offices were raided by Russian state investigators this month, part of a case against a Moscow city official accused of allowing the unit access to billboards for cut prices. The investigators have no claims against News Outdoor, the company said."

"``Obviously there are a lot of risks, that's why JCDecaux is taking its time,'' Hareng said. He has an ``add'' rating on the stock, which he said will not change in case of a deal."

Clear Channel Outdoor Holdings Inc. of the U.S. is the world's biggest outdoor advertising company.

To contact the reporter on this story: Torrey Clark in Moscow at

"Last Updated: September 11, 2008 06:32 EDT"

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"Finland Loses Strawberry Summer to Hail, Coldest Snap Since '93 "

By Kati Pohjanpalo and Diana ben-Aaron

More Photos/Details

July 15 (Bloomberg) -- Mika Karinen's months of work vanished in minutes when hail devastated his strawberry fields in eastern Finland.

"``The ripe strawberries were all wiped out straight away, pureed instantly,'' said the 36-year-old, second-generation farmer from Suonenjoki, 333 kilometers (207 miles) northeast of Helsinki. ``I've talked to some old neighbors, people over 80 years old, they've never seen anything like this before.''"

"The hail storm in the first week of July and coldest weather in more than 15 years mean farmers of Finland's most widely cultivated fruit face their worst harvest in at least a decade. In the country that holds an annual festival to honor the strawberry, the crop, worth 100 million euros ($159 million) in sales, may drop by almost half, according to the Helsinki-based Finnish Association for Fruit and Berry Growers."

"``It's really sad,'' said Sara La Fountain, a Finnish television chef. ``Strawberries are a really big part of the Finnish summer. It's a big thing when the first strawberries come, like, `Oh, the Finnish strawberries are here.'''"

"As the price for the fruit rose by 25 percent, national broadcasters YLE, MTV3 and Nelonen have covered the destruction in their main evening broadcasts. The tabloid newspaper Iltalehti published the headline, ``Wow, What a Hail Storm.''"

"In support of the industry, about 25,000 people attended the strawberry carnival, held this past weekend in Suonenjoki. A highlight was the crowning of ``Miss Strawberry,'' said Pertti Nyyssoenen, the festival's director."

Strawberry Clothes

"The Finns' love of the fruit also is reflected at Marimekko Oyj, the clothing company whose dresses were made famous by Jacqueline Kennedy Onassis. Marimekko's main store, on the promenade running from Helsinki's center to the ferry harbor, displays clothes and cups with strawberry motifs."

"In the city's main market square, Janica Toikka, 23, has been selling what's left of Karinen's hail-damaged berries, which have little holes in them and don't fetch the top price."

"``They don't provide any prime quality berries this year,'' said Toikka, a fourth-generation seller at her family's produce stand."

"Finland has already lost about 30 percent of what farmers anticipated would be a 15 million-kilogram (33 million-pound) harvest. The loss will increase to as much as 47 percent without improved weather, said Hannu Salo, the Finnish berry growers association's executive director."

"Showers, Storms"

"Rain showers and thunderstorms are likely through July 19, according to Finland's Meteorological Institute. The first week of July was the coldest since 1993, with the temperature falling as low as -2.7 Celcius (27.1 Fahrenheit) in the western town of Alajaervi, while parts of Finland had 2.5 times more rain than usual in June, the institute said."

"Finland has 3,800 hectares of strawberry production, the fifth-largest area in the European Union, the EU statistics office says."

"The shortage has pushed prices across the country up to 5 euros per 500 grams (1.1 pounds) from 4 euros last year, said Antti Oksa, a purchasing manager with the S Group supermarket chain, which has 783 grocery stores around Finland."

"``We're getting less product than we normally would be and there's high demand so it costs us much more,'' he said. ``What can we do? There are not so many strawberries on the market.''"

"Professional cultivation of the fruit began in the country in the 1960s, according to Finfood, a state-supported group that promotes Finnish cuisine. Finnish farmers say their strawberries are sweeter and softer than those in continental Europe because of the long hours of summer daylight."

"With much of the early crop destroyed, all Karinen can hope for is that the weather proves forecasts wrong."

"``Before the hail storm, we were looking at a really good harvest,'' Karinen said. ``In 10 minutes, that all came to an end. It's impossible now to estimate the total damage, we'll have to look at that in the fall.''"

To contact the reporters on this story: Kati Pohjanpalo in Helsinki at; Diana ben-Aaron in Helsinki at

"Last Updated: July 14, 2008 18:07 EDT"

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Premiere Shares Rise as New CEO Raises Takeover Speculation

By Phil Serafino

"Sept. 11 (Bloomberg) -- Premiere AG, the German pay- television company partly owned by News Corp., rose the most in eight months in Frankfurt trading after the naming of a new chief executive officer increased speculation about a takeover."

"Premiere climbed as much as 7.6 percent. CEO Michael Boernicke is being replaced by Mark Williams, News Corp.'s chief financial officer for Europe and Asia, Premiere said late yesterday. The company said last month its second-quarter loss widened on costs for a license to broadcast Germany's top soccer league, a higher tax charge and piracy."

"Williams' appointment may lead to a financial turnaround at the company, and News Corp. may then increase its stake or make an offer for the rest of Premiere, Paul Reynolds, a Deutsche Bank analyst in London wrote in a report today. He raised his rating on the stock to ``buy'' from ``hold.''"

"``We have long argued News Corp. would one day bid for Premiere,'' Reynolds wrote. ``In putting their own man in charge of Premiere, they can conduct further due diligence, improve the operational performance of Premiere and perhaps most critically, control Premiere's Bundesliga football rights bid.''"

"Premiere shares rose 23 cents, or 1.9 percent, to 12.12 euros as of 10:37 a.m. in Frankfurt. The stock gained the most since Jan. 7, when News Corp. first announced it had acquired a stake in Premiere. Before today, the stock fell 7.8 percent this year, giving the Unterfoehring, Germany-based company a market value of 1.34 billion euros ($1.87 billion.)"

Rupert Murdoch

"News Corp., based in New York, bought 14.6 percent of Premiere in January, saying it anticipated ``enormous'' growth in the German TV market. The media company controlled by Rupert Murdoch increased its stake and now holds 25 percent of the pay- TV company's shares."

"Boernicke, 47, has stepped down with immediate effect, citing personal reasons, Premiere said in a statement yesterday. News Corp. spokeswoman Teri Everett declined to comment when contacted by Bloomberg News."

"Since the Christmas period, sales had been hurt by hackers exploiting a breach in its smartcard encryption system, Premiere said Feb. 6. The company said it has started swapping out smartcards of satellite customers and will complete the work by the end of this quarter, closing the security gap."

"Williams is the ``right-hand man'' to James Murdoch, News Corp.'s CEO for Europe and Asia, Deutsche Bank's Reynolds said. Investors will expect Williams to generate margins of 15 percent to 20 percent on earnings before interest, tax and amortization, versus negative margins now, Reynolds said."

"``New brooms sweep clean, that's what we've seen often,'' Fidel Helmer, head of equity trading at Hauck & Aufhaeuser in Frankfurt, said in a Bloomberg Television interview today. ``I could imagine that to be the case at Premiere as well.''"

`Great Potential'

"Boernicke, previously Premiere's chief financial officer, had been CEO since August 2007 when he succeeded Georg Kofler. Williams, the chief operating officer of News Corp.'s Sky Italia satellite-television unit, took up his role as CFO for Europe and Asia at the end of March. In April, Premiere named Williams as one of three additional supervisory board members."

"``I am convinced of the great potential of pay-TV in Germany,'' Williams said in an e-mailed statement. ``I know this view is shared by News Corp.'' He said the new responsibility ``came unexpectedly.''"

To contact the reporter on this story: Phil Serafino in Paris at

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

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France Second Quarter Final Employment: Summary (Table)

By Ainhoa Goyeneche

Sept. 11 (Bloomberg) -- Following is a summary of the second quarter final employment report from the French Statistics Office in Paris:

2Q 1Q 4Q 3Q 2Q
2008 2008 2007 2007 2007
----------- Quarterly percentage change -----------
Total Employment* -0.2% 0.3% 0.4% 0.4% 0.4%
Industry excl. Construction -0.4% -0.3% -0.3% -0.4% -0.3%
Manufacturing Sector -0.5% -0.4% -0.3% -0.4% -0.3%
Services Sector -0.2% 0.4% 0.5% 0.5% 0.5%
Construction Sector 0.3% 0.8% 0.9% 1.4% 0.9%
------------ Yearly percentage change -------------
Total Employment* 0.9% 1.5% 1.9% 1.7% 1.7%
Industry excl. Construction -1.4% -1.3% -1.2% -1.4% -1.4%
Manufacturing Sector -1.5% -1.3% -1.3% -1.4% -1.4%
Services Sector 1.4% 2.1% 2.6% 2.4% 2.4%
Construction Sector 3.4% 4.0% 4.3% 4.6% 4.3%
2Q 1Q 4Q 3Q 2Q
2008 2008 2007 2007 2007
--------------- Employment Levels -----------------
"Total Employment* 18,139.3 18,158.4 18,097.3 18,021.9 17,950.8"
"Industry excl. Construction 2,870.3 2,884.6 2,895.1 2,903.0 2,914.2"
"Manufacturing Sector 10,895.5 10,913.8 10,866.1 10,807.5 10,748.9"
"Services Sector 5,933.9 5,963.6 5,922.9 5,887.8 5,847.7"
"Construction Sector 3,090.6 3,086.1 3,082.7 3,074.7 3,065.4"
"NOTE: *Total excludes farm, government, education, health and social"
scheme employment. Data is adjusted for seasonal variations.
Levels are measured in thousands.

SOURCE: INSEE - Institut National de la Statistique et des Etudes Economiques
(French Statistics Office)

To contact the reporter on this story: Ainhoa Goyeneche in Madrid at

"Last Updated: September 11, 2008 02:45 EDT"

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European Bonds Advance on Speculation Credit Losses to Spread

"Sept. 11 (Bloomberg) -- European government bonds rose as falling stocks boosted speculation credit market losses may spread, increasing demand for the safest assets."

"The difference in yield between two-year and 10-year German bonds widened to the most in more than a week as European and Asian stocks dropped amid concern a deepening economic slowdown will hurt earnings. More than 30 percent of European high-risk, high-yield bonds are trading at distressed levels, the most in five years, according to a Merrill Lynch & Co. index. Bonds rose yesterday as Lehman Brothers Holdings Inc. reported a $3.9 billion third-quarter loss."

"``The only story out there at the moment is what happens to the banking sector,'' said Padhraic Garvey, head of investment- grade strategy at ING Bank NV in Amsterdam. ``It's a nervous environment and it augurs for a bullish'' outlook for bonds."

"The yield on the German bund, Europe's benchmark government security, was at 4.07 percent as 11:36 a.m. in London, after earlier rising as much as 3 basis points to 4.09. The 4.25 percent note due July 2018 rose 0.02, or 20 euro cents per 1,000-euro ($1,391) face amount, to 101.43. The yield on the two-year note fell 3 basis points to 3.99 percent. Yields move inversely to bond prices."

Investors are demanding 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.

"Europe's Dow Jones Stoxx 600 Index lost 0.9 percent, extending this year's drop to 25 percent. Futures on the Standard & Poor's 500 Index fell 0.8 percent, and the MSCI Asia Pacific Index decreased 2.6 percent."

To contact the reporters on this story: Lukanyo Mnyanda in London at

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

By Agnes Lovasz and Ron Harui

Enlarge Image/Details

"Sept. 11 (Bloomberg) -- The dollar rose to the highest level 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 $1.3893 per euro, the strongest since Sept. 18, 2007, before trading at $1.3912 as of 10:37 a.m. in London, from $1.3998 yesterday in New York. The Japanese yen advanced to 148.38 per euro, the highest since Nov. 2, 2006, and was last at 148.60, from 150.75. It also gained to 106.89 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."

ECB Versus Fed

"The ECB will cut its main refinancing rate a quarter point to 4 percent in the first three months of next year, while the Federal Reserve raises its target rate for overnight bank loans by the same amount to 2.25 percent, according to Bloomberg surveys of economists."

"The diverging interest-rate outlook narrowed the so-called yield spread between German and U.S. two-year government notes today. The spread was 1.81 percentage points, down from 1.88 percentage point a week ago."

"The ICE's Dollar Index touched 80.375 today, the highest since September 2007, when the U.S. central bank began cutting its target rate from 5.25 percent to 2 percent to stave off 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. It was last at 80.308."

"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."

New Zealand Dollar

"The New Zealand dollar declined to as low as 64.38 U.S. cents before trading at 64.60 cents, down 2.4 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."

"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."

Implied Volatility

"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."

"``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."

"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; Ron Harui in Singapore at

"Last Updated: September 11, 2008 06:09 EDT"

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Pound Falls Against Dollar as Blanchflower Sees Jobless Rising

By Andrew MacAskill and Lukanyo Mnyanda

Sept. 11 (Bloomberg) -- The British pound fell against the dollar after Bank of England policy maker David Blanchflower said job losses will triple as the economy slows.

"The British currency traded near a 2 1/2-year low against the dollar after Blanchflower said in testimony to lawmakers today unemployment in Europe's second-largest economy will rise to 60,000 a month, from its current level of 20,000."

"``My concern is that we will see this coming quite quickly,'' Blanchflower told Parliament's Treasury Select Committee. In the ``October numbers, you will start to see quite a big kick-through and that will be an unpleasant shock.''"

"The U.K. currency fell 0.2 percent to $1.7502 as of 11:26 a.m. in London, the weakest since April 2006, from $1.7530 yesterday. Against the euro, the pound traded at 79.53 pence, from 79.88 pence 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 was 4.45 percent. The 5 percent security due March 2018 slipped 0.01, or 10 pence per 1,000-pound ($1,746) face amount, to 104.19."

"The yield on the two-year note, which is more sensitive to interest-rate expectations, was little changed 4.41 percent. Bond yields move inversely to prices."

To contact the reporter on this story: Andrew MacAskill in London at

"Last Updated: September 11, 2008 06:28 EDT"

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"U.S. Stock-Index Futures Decline; GM, Chevron, Lehman Retreat "

By Adria Cimino

Sept. 11 (Bloomberg) -- U.S. stock-index futures declined as investors speculated reports today will fail to allay concern the economy is sliding into recession and lower oil prices weighed on energy shares.

"General Motors Corp., the largest U.S. automaker, lost 2 percent and Microsoft Corp. fell 1.1 percent in Germany. Chevron Corp., the second-biggest U.S. oil company, retreated 1.3 percent on crude's third straight drop. Lehman Brothers Holdings Inc. slipped 3.4 percent as Citigroup Inc. cut its recommendation on the stock. Reports on the trade balance, import prices and jobless claims will provide clues about the U.S. economy."

"Standard & Poor's 500 Index futures expiring this month sank 10.9, or 0.9 percent, to 1,222.8 as of 12:10 p.m. in London. Dow Jones Industrial Average futures decreased 86 to 11,205 and Nasdaq-100 Index futures fell 16.25 to 1,721.25."

"``We're cautious,'' said Clemence Bounaix, a fund manager at Richelieu Finance in Paris, which oversees about $6.2 billion in Paris. ``The price index will be watched as inflation is a critical point. Employment data is an indication of the extent of the slowdown.''"

"The S&P 500 is poised for its first annual decline since 2002 as more than $500 billion in credit losses and asset writedowns at financial firms worldwide and slowing economic growth damp the outlook for earnings. Analysts expect profits at companies in the measure to fall 1.7 percent on average in the third quarter and slip 2.1 percent in 2008, according to estimates compiled by Bloomberg."

Economy Watch

"The trade deficit probably widened to $58 billion in July from $56.8 billion a month earlier, according to economists' estimates. The cost of goods made overseas slipped 1.8 percent last month from the previous month, the Bloomberg survey median showed. The Labor Department is projected to say initial jobless claims last week fell to 440,000 from 444,000 the previous week. The figures are set for release at 8:30 a.m. in Washington."

"``The one item that will carry some bearing today is the U.S. weekly jobless claims, and after last week's bigger-than- expected decline in the non-farm payrolls, expectations are certainly rather muted,'' Matthew Buckland, a London-based dealer at CMC Markets, wrote in a note."

"The U.S. lost more jobs than forecast in August and the unemployment rate climbed to a five-year high of 6.1 percent, according to figures last week."

"GM slipped 23 cents to $11.19 in Germany. Microsoft, the world's biggest software maker, dropped 30 cents to $26.14."

Crude Oil

"Chevron declined 90 cents to $80.26 in Germany and Exxon Mobil Corp., the world's largest oil company, retreated 37 cents to $74.88."

"Crude oil for October delivery sank as much as 1.1 percent to $101.43 on the New York Mercantile Exchange as the dollar rose to a one-year high against the euro, reducing the appeal of commodities as a hedge."

"Lehman declined 25 cents to $7 in Germany. The shares were downgraded to ``hold'' from ``buy'' at Citigroup, which cited a possible cut in the credit rating and deteriorating capital."

"Oppenheimer & Co. analyst Meredith Whitney lowered her full- year earnings estimate for Lehman, saying the bank faces further writedowns after posting the biggest loss in its 158-year history yesterday. Whitney said Lehman may have an annual per-share loss of $10.24, compared with an earlier forecast of a $6.67 loss."

Actel Corp. dropped 5 percent to $10.74 in after-hours trading in New York. The maker of electronic equipment said revenue may fall as much as 9 percent from the second quarter. The company had previously predicted growth of as much as 1 percent. Actel shares didn't trade in Europe.

"U.S. stocks advanced yesterday 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."

To contact the reporter on this story: Adria Cimino in Paris at

"Last Updated: September 11, 2008 07:16 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 sank 6.1 percent after the home- improvement chain reported lower sales. William Morrison Supermarkets Plc tumbled the most in eight months after Chief Executive Officer Mark Bolland said he expects ``a tough second- half.'' Bank of Ireland Plc fell 4.4 percent after Dresdner Kleinwort warned of rising bad-debt levels.

"Europe's Dow Jones Stoxx 600 Index lost 0.7 percent to 275.34 as of 12:07 p.m. in London, extending this year's drop to 25 percent. Futures on the Standard & Poor's 500 Index fell 0.8 percent, and the MSCI Asia Pacific Index decreased 2.5 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 15 of the 18 western European markets that were open. Germany's DAX declined 1.1 percent, and the U.K.'s FTSE 100 lost 0.9 percent, while France's CAC 40 fell 0.9 percent."

"BHP Billiton Ltd. gained 1.4 percent as mining shares at their cheapest in seven years lured investors, while BG Group Plc rallied 4.3 percent on an oil discovery."

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 6.1 percent to 227 pence, the steepest drop since July. 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."

Morrison declined 5.9 percent to 254.25 pence after the smallest of the four main U.K. food retailers said it sees a ``highly competitive'' second half and plans to invest in price cuts. First-half profit declined 3.1 percent after income from real-estate sales dwindled and the tax bill rose.

Negative Data

"Kingfisher Plc, Europe's largest home-improvement retailer, sank 6.6 percent to 128.5 pence."

"Bernstein Research downgraded the shares to ``market- perform'' from ``outperform,'' saying the Confederation of British Industry data has been as ``negative as it gets'' in July and August on U.K. furniture and home appliances sales."

"Analysts have 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."

Bank of Ireland sank 4.4 percent to 5.28 euros after Dresdner cut its recommendation for the Dublin-based lender to ``sell'' from ``reduce.'' Allied Irish Banks Plc lost as much as 3 percent to 8.03 euros after analysts also downgraded the nation's largest lender by market value to ``sell'' from ``hold.'' The shares recently traded at 8.03 euros.

Bad Debts

"``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 1.4 percent to 1,405 pence. Rio Tinto Group, the world's third-biggest mining company, added 1.1 percent to 4,195 pence. Anglo American Plc, the second-largest, advanced 4.4 percent to 2,291 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."

First-Class Oil Field

"BG Group climbed 4.3 percent to 1,100 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 6.5 percent to 12.10 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 1.8 percent to 79.50 euros and Aegon, the owner of the U.S. insurer Transamerica Corp., slid 2.1 percent to 8.28 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 SA dropped 3.1 percent to 22.02 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, lost 2.3 percent to 28.33 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."

To contact the reporter on this story: Sarah Jones in London at

"Last Updated: September 11, 2008 07:13 EDT"

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Crude Oil Falls as Stronger Dollar Dims Commodities' Appeal

By Alexander Kwiatkowski

Enlarge Image/Details

"Sept. 11 (Bloomberg) -- Crude oil fell for a third day as the dollar rose 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. Hurricane Ike was set to miss platforms off the Louisiana coast as it passes through the U.S. Gulf.

"``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 $1.15, or 1.1 percent, to $101.43 a barrel in electronic trading on the New York Mercantile Exchange. The contract traded at $101.74 at 10:21 a.m. London time."

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 International Energy Agency lowered its 2008 oil demand forecasts yesterday on an expectation of weakening fuel consumption in the U.S., the world's biggest gasoline consumer."

"The dollar climbed to $1.3897 per euro, the strongest since Sept. 18, 2007, before trading at $1.3907 as of 10:04 a.m. in London from $1.3998 late yesterday in New York."

Hurricane's Eye

"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."

"Some rigs, refineries and platforms shut down by Hurricane Gustav last week are staying closed as Ike tracks across the region. Gulf operators have evacuated personnel from 63 percent of the production platforms, the Minerals Management Service said on its Web site yesterday."

"The agency estimates that as much as 96 percent of Gulf of Mexico oil production, and 73.1 percent of natural gas output, is shut. That is about 1.25 million barrels a day of oil and 5.4 billion cubic feet a day of gas."

"``Ike appears to be skirting away from the oil and gas production fields and should make land around the Corpus Christi area,'' said Robert Laughlin, senior broker at MF Global Ltd. in London. ``The oil market may have escaped again.''"

"Brent crude oil for October settlement fell as much as $1.12, or 1.1 percent, to $97.85 a barrel on London's ICE Futures Europe exchange. It was at $98.28 at 10:02 a.m. London time."

"Natural gas for October delivery rose 1.3 percent to $7.489 per million British thermal units on Nymex, while gasoline futures rose 0.9 percent to $2.6861 a gallon."

To contact the reporter on this story: Alexander Kwiatkowski in London at

"Last Updated: September 11, 2008 05:23 EDT"

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"Ten-Year Treasuries Advance, Yields Decline to 3.62 Percent "

By Anchalee Worrachate

"Sept. 11 (Bloomberg) -- Treasuries advanced after European shares and U.S. stock futures declined, boosting demand for the safest assets."

"The yield on the 10-year note fell 2 basis points to 3.62 percent as of 6:24 a.m. in New York, according to BGCantor Market Data. The 4 percent security maturing in August 2018 rose 4/32, or $1.25 per $1,000 face amount, to 103 6/32."

To contact the reporters on this story: Anchalee Worrachate in London at; Wes Goodman in Singapore at

"Last Updated: September 11, 2008 06:25 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

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

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"Oil Demand Driven by China, India's Growth, Subsidies (Update1) "

By Pratik Parija

"Sept. 11 (Bloomberg) -- Global demand for oil is being driven by fuel subsidies and high economic growth in India and China, Nobuo Tanaka, Executive Director of the International Energy Agency, said."

"Both the world's fastest-growing economies must ``certainly'' phase out fuel subsidies, Tanaka told reporters in New Delhi today. The agency doesn't see a slowdown in demand for oil in India, China and the Middle East because of their strong economic growth, he said."

"China and India continue to consume more oil, driven by power shortages and fuel substitution, Lehman Brothers Holdings Inc. said in a report on July 21. Declining consumption in developed economies is partly offset by higher fuel demand forecasts for China, India and Iran, the IEA said in a report."

"Additions in oil capacities don't match rising demand and the ``market is still very tight,'' Tanaka said. IEA, an adviser to 27 industrialized countries, is concerned about high prices which are ``a burden on emerging economies,'' he said."

"Oil rose as high as $104.97 a barrel today after Abdalla El- Badri, Secretary-General of the Organization of Petroleum Exporting Countries, called for members to trim an ``oversupply'' of output by about 500,000 barrels a day. OPEC agreed yesterday on a total production limit for 11 members of 28.8 million barrels a day, unchanged from the previous targets."

"Oil prices have fallen about 30 percent since reaching a record $147.27 in New York in July on declining demand in U.S., the world's biggest gasoline consumer."

"The IEA lowered its 2008 forecast for global oil demand by 100,000 barrels to 86.8 million barrels a day, and the 2009 estimate by 140,000 barrels to 87.6 million barrels a day in its monthly report released yesterday. The IEA warned that the drop in U.S. consumption may last longer than previously expected."

To contact the reporter on this story: Pratik Parija in New Delhi at

"Last Updated: September 11, 2008 05:10 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."


"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

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

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

"Sept. 11 (Bloomberg) -- Indonesia's 10-year bonds fell the most since September 2005, the biggest fluctuation of any government debt market today, on concern a slide in the currency will erode fixed-income payments."

"The yield jumped 80 basis points as the rupiah declined, taking the currency's loss to 3.1 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 percent note maturing in September 2018 climbed to 13.167 percent, the highest since July 11, according to closing prices by the Inter Dealer Market Association in Jakarta. The price dropped 3.7649, or 37,649 rupiah per 1 million rupiah face amount, to 77.1950. 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.

"Overseas investors sold more Indonesian stocks than they bought on five of the last nine trading days, helping send 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 10.475 percent."

"Stock Losses, Rupiah"

The rupiah was the second-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. Nine of the currencies fell today.

"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 9,456, the lowest since Jan. 23, and traded at 9,448 per dollar as of 4:57 p.m. in Jakarta, compared with 9,358 late yesterday, according to data compiled by Bloomberg."

"``Commodity prices have been coming down and Indonesia has to some extent been seen as a commodity play,'' said Thomas Harr, senior currency strategist at Standard Chartered Plc in Singapore."

"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

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Barclays Cuts Fourth Quarter Oil Forecast to $97.50 (Update1)

By Stephen Voss

Sept. 11 (Bloomberg) -- Barclays Capital slashed its fourth-quarter oil price forecast by 21 percent after weakening demand prompted OPEC to yesterday urge members to curb excess supply.

"``A war of attrition is happening in the market, which we expect will make stabilization a drawn out process,'' London- based analysts Paul Horsnell and Kevin Norrish wrote in a weekly report published late yesterday. ``Our price forecasts have been adjusted accordingly.''"

"Barclays expects West Texas Intermediate crude oil, the benchmark traded in New York, to average $97.50 a barrel in the fourth quarter. That's $26.40 less than a forecast of $123.90 in its previous weekly report."

"The bank's Brent crude forecast was reduced to $95.90, from $122.20, for the fourth quarter."

"For 2009, the WTI forecast was lowered to $115.50 from $123.20 and Brent to $114.20 from $121.70. The bank left its 2010 forecasts unchanged at $126.10 for WTI and $121.30 for Brent."

Crude oil for October fell 0.8 percent to $101.73 a barrel in electronic trading on the New York Mercantile Exchange as of 11:05 a.m. London time. Brent crude oil was down 0.5 percent at $98.44 on London's ICE Futures Europe exchange.

Output Limit

"OPEC yesterday urged its members to ``strictly'' adhere to existing production quota limits. OPEC said the limit for 11 members is 28.8 million barrels a day, having reduced that total by about 875,000 barrels a day, to reflect the suspension of Indonesia as a member."

"``While we believe that Saudi Arabia would be perfectly happy with prices in the $90 to $100 range, it seems that other OPEC members wished to give a stronger signal,'' Barclays said."

"Some press reports ``created confusion as to whether the target ceiling had reverted to a previous level, which it most definitely has not done,'' because the allocations ``are those that were current before the latest meeting, and which remain current now,'' the Barclays report said."

"Barclays Capital is the investment banking arm of London- based Barclays Plc, the U.K.'s third-biggest bank."

To contact the reporter on this story: Stephen Voss in London at

"Last Updated: September 11, 2008 06:08 EDT"

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