TOP 50

Canadian Dollar Gains After Harper Says Turmoil `Not Domestic'

By Michael J. Moore

Sept. 24 (Bloomberg) -- The Canadian dollar gained after Prime Minister Stephen Harper said yesterday that domestic banks and insurers are better off than those in the U.S. and the crisis in that country's credit markets isn't spreading to the world's eighth-largest economy.

Canada's dollar strengthened versus 14 of the 16 most- actively traded currencies. It is up 2.7 percent against its U.S. counterpart so far this month.

"``In terms of a vote of confidence, I think that comment by the prime minister was very favorable for the loonie,'' said Michael Woolfolk, senior currency strategist at the Bank of New York Mellon Corp. in New York. ``There is really no reason not to be buying Canadian dollars in the near-term.''"

"The Canadian currency, dubbed the loonie because of the aquatic bird on the one-dollar coin, appreciated 0.3 percent to C$1.0350 per U.S. dollar at 12:54 p.m. in Toronto, from C$1.0384 yesterday. One Canadian dollar buys 96.58 U.S. cents."

"The market turmoil is ``not a domestic problem'' for Canada, Harper, 49, told reporters in Saskatoon, Saskatchewan."

"The Canadian dollar may extend its climb to parity with the U.S. dollar, according to charts that predict price movements, Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc. in London, said in a research note yesterday."

The C$1.0000 level was last traded on July 22.

"``I think the short-term picture is pointing in the direction of a move back towards parity, partly because of the U.S. dollar weakening on concern about the deficit,'' said Maria Jones, currency strategist at TD Securities Canada Inc. in Toronto."

Currency Forecast

"The Canadian currency will slip to C$1.12 against the U.S. dollar by the end of 2009, according to the median forecast of 33 economists surveyed by Bloomberg News. Woolfolk expects the Canadian dollar will decline to C$1.08 per U.S. dollar by the end of this year as oil drops below $100 per barrel. It declined 0.6 percent today to $105.96."

"The yield on the two-year government bond fell 1 basis point, or 0.01 percentage point, to 2.86 percent. The price of the 2.75 percent security due in December 2010 rose 2 cents to C$99.79."

The 10-year government note's yield declined 1 basis point to 3.65 percent. The price of the 4.25 percent note maturing in June 2018 rose 11 cents to C$104.84.

`Not as Volatile'

"``The government benchmarks are not as volatile as they were last week and the yields are retracing a little bit,'' said Benoit Lalonde, vice president of fixed income at Laurentian Bank Securities in Montreal, a unit of Canada's seventh-largest bank. ``You saw some selling off that looked like panic selling, now we're seeing some retracing.''"

"The 10-year bond yielded 79 basis points more than the two- year security, down from 92 basis points on Sept. 18."

"The two-year bond's yield will rise to 2.95 percent by the end of this year, while the 10-year bond's yield will increase to 3.76 percent, according to the median forecasts of economists surveyed by Bloomberg News."

"The yield advantage of the 10-year U.S. Treasury note compared with similar-maturity Canadian government bonds was 14 basis points, up from 3 basis points on Sept. 18. The Canadian 10-year bond yielded 36 basis points more than its U.S. counterpart on Jan. 22."

"Canadian government bonds have returned 4.1 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries have returned 4.2 percent this year."

Bank of Canada Governor Mark Carney will deliver a speech on recent economic developments tomorrow at 1:15 p.m. in Montreal.

To contact the reporter on this story: Michael J. Moore in New York at Mmoore55@bloomberg.net.

"Last Updated: September 24, 2008 12:58 EDT"





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Indian Rupee Falls on Speculation Importers Buying More Dollars

By Anoop Agrawal

Sept. 24 (Bloomberg) -- India's rupee fell for a second day on speculation importers bought foreign currency to settle bills.

The currency declined to the lowest since Sept. 18 as local refiners may have increased dollar purchases to pay for crude oil imports as the cost of the commodity rose. The nation imports almost three-quarters of the oil it uses.

"``The dollar is available at a higher premium and that has made importers, particularly refiners, jittery,'' said P.V. Rao, a currency trader at IndusInd Bank Ltd. in Mumbai. ``Refiners have stepped up dollar purchases as crude prices are not at levels where they can afford to keep open positions.''"

"The rupee dropped 0.5 percent to 45.955 per dollar as of the 5 p.m. close in Mumbai, according to data compiled by Bloomberg. The currency is the third-worst performer among Asian currencies this year with a 14.3 percent loss. It may fall to 46 this week, Rao said."

The price of crude oil for November delivery climbed 2.1 percent to $108.85 a barrel on the New York Mercantile Exchange. The commodity has climbed 13.3 percent this year.

"India's average crude oil import bill climbed to $8 billion a month this year from $5.5 billion in 2007, Bloomberg data show. The rupee is the second-worst performer this year among the 10 most-active Asian currencies excluding the yen."

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

"Last Updated: September 24, 2008 08:23 EDT"





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Brazil Eases Bank Reserves to Soothe Impact of Crisis (Update2)

By Andre Soliani and Telma Marotto

Sept. 24 (Bloomberg) -- Brazil eased rules on reserve requirements that banks must keep at the central bank in response to the credit crunch sparked by the U.S. financial crisis.

"Banco Central do Brasil delayed the introduction of higher rates for mandatory deposits from leasing companies by two months and raised the threshold on exemptions for cash, time and savings deposits, according to an e-mailed statement today. The measures will add 13.2 billion reais ($7.16 billion) to the financial system, the central bank said."

"The measure reverses part of the central bank's efforts to slow lending growth that's fueling domestic demand and stoking inflation. Policy makers began phasing in reserve requirements on cash deposits from lease underwriters for the first time in May, a move that would remove as much as 40 billion reais from credit markets. In Brazil, leases are commonly used as consumer loans."

"``This is a preventive measure to ensure liquidity will be kept at satisfactory levels,'' Roberto Padovani, chief economist at Banco WestLB do Brasil SA in Sao Paulo, said in a telephone interview. ``The current situation in financial markets, especially after last week, requires more caution and the bank is responding to these changes.''"

"Banco Nossa Caixa SA shares gained 3.9 percent to 40.33 reais as of 10:16 a.m. New York time, while Banco Daycoval SA gained 0.8 percent to 7.27 reais. Banco Itau Holding Financeira SA, Brazil's second-biggest non-government bank by assets, rose 0.2 percent to 30.06 reais."

`More Money'

"Under the rules announced today, a reserve requirement of 20 percent of cash deposits from lease underwriters will take effect Jan. 16, two months after the original schedule. The reserve requirement will increase to 25 percent in March, according to the central bank."

"Banks will only have to keep part of their cash, time and savings deposits at the central bank if the reserve requirement exceeds 300 million reais, the central bank said. Previously, this threshold was 100 million reais."

"``This is positive for the banks because they will have more money available to lend in a moment when there's credit restrictions abroad,'' said Aloisio Lemos, an analyst at Agora Corretora in Rio de Janeiro. The higher thresholds will mainly benefit small and medium-sized banks, Lemos said."

Padovani said the measures won't change the central bank's efforts to lower inflation by raising the benchmark interest rate.

`Worse Than Expected'

"Bank lending climbed 33 percent in the 12 months ended in July after a 27 percent expansion in 2007, the fastest in more than a decade. The central bank will release August figures on Sept. 29."

"``Very likely the signs the central bank is receiving from the system is that credit growth is slowing at a faster pace than expected,'' said Andre Caminada, partner at Victoire Finance Capital in Sao Paulo, which manages about $130 million in assets. ``From the central bank's point of view the crisis is worse than expected.''"

To contact the reporters on this story: Andre Soliani in Brasilia at at asoliani@bloomberg.net; Telma Marotto in Sao Paulo at tmarotto1@bloomberg.net

"Last Updated: September 24, 2008 10:56 EDT"





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"Ruble Gains as Rescue Package, Oil Rebound Boosts Local Stocks "

By Emma O'Brien

Sept. 24 (Bloomberg) -- The ruble strengthened for a second day against the central bank's dollar-euro basket as a rebound in oil prices and a government emergency-funding plan bolstered Russian equities.

"The managed currency rose against the dollar and the euro as crude pared back yesterday's 12 percent slump, helping Russia's benchmark Micex Index to rise by the most for three days. A stock-market collapse last week forced markets to close for two days, prompting the government to pledge more than $100 billion in emergency funds to stabilize equities and reduce soaring borrowing costs."

"The ruble's advance is supported by rising ``equity markets and improved risk appetite,'' said Jon Harrison, an emerging- markets currency strategist in London at Dresdner Kleinwort. ``The success of the Russian measures to stem outflows has helped.''"

"Russia's currency gained 0.3 percent to 30.2775 against the basket by 3:21 p.m. in Moscow, bound for its strongest close since Sept. 8. Bank Rossii, the central bank, keeps the ruble confined within a trading band against the basket to limit the impact of its fluctuations on the competitiveness of Russian exports."

"The ruble was at 25.0120 per dollar today, from 25.0998 yesterday, when it fell 0.3 percent. It rose to 36.7084 per euro, from 36.7733. The basket rate is calculated by multiplying the ruble's rate to the dollar by 0.55, the euro rate by 0.45, then adding the two numbers together."

Oil `Driver'

"The Micex Index climbed 4.5 percent to 1,118 today, as oil, Russia's largest export earner, rose 2.3 percent to $109.17 a barrel in New York trading."

"``Oil is clearly the major underlying driver of Russian markets and that helps the ruble,'' said Beat Siegenthaler, chief emerging-markets strategist in London at TD Securities Ltd. ``The ruble is stronger from the weak end of the basket'' at 30.40, he added."

"The 30-member Micex has lost 25 percent since the beginning of August as Russia's war with Georgia and the turmoil in global credit markets spurred investors to withdraw about $52 billion from the country, according to BNP Paribas SA estimates."

"The emergency package, which includes $44 billion to bolster liquidity and $20 billion for buying ``undervalued'' shares in state-run companies, is boosting investor confidence, Paul Biszko, a senior emerging-markets strategist in Toronto at RBC Capital Markets, wrote in a note to clients today."

"``A sense of relative calm has swept through Russian markets this week,'' he said. The ruble has strengthened more than 1 percent against the dollar since Sept. 19."

"Russian government bonds were mixed, with the yield on the benchmark 30-year note declining 4 basis points to 6.93 percent, its first drop in three days. The two-year note yielded 6.18 percent, up 1 basis point. The difference in yield between Russian and U.S. two-year debt narrowed to 410 basis points, after widening to 469 points on Sept. 16."

To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net

"Last Updated: September 24, 2008 07:30 EDT"





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Crude Oil Falls After Report Shows Drop in U.S. Fuel Demand

By Mark Shenk

Sept. 24 (Bloomberg) -- Crude oil fell after a government report showed that U.S. fuel demand declined to the lowest in almost five years.

"Consumption averaged 19.5 million barrels a day during the past four weeks, down 6.6 percent from a year earlier, and the lowest since October 2003, the Energy Department said today in a weekly report. Oil and gasoline supplies dropped as refineries cut operating rates to the lowest in at least 19 years."

"``Demand stinks,'' said Kyle Cooper, an analyst at IAF Advisors in Houston. ``Prices have retreated a bit because of the demand number and because there's a flood of crude oil coming.''"

"Crude oil for November delivery fell 76 cents, or 0.7 percent, to $105.85 a barrel at 1:28 p.m. on the New York Mercantile Exchange. Prices rose as much as $2.89, or 2.7 percent, before the report's release at 10:35 a.m. in Washington."

"Production platforms, refineries and ports along the Gulf of Mexico were shut last week in the aftermath of hurricanes Gustav and Ike, which struck earlier this month."

"U.S. energy producers still have about 67 percent of oil production idled in the Gulf, the U.S. Minerals Management Service said in a statement yesterday on its Web site. The area accounts for about 26 percent of U.S. oil output."

Inventory Decline

"Supplies of crude oil fell 1.52 million barrels to 290.2 million in the week ended Sept. 19, the department said. Crude- oil imports tumbled 16 percent to 7.14 million barrels a day, the lowest since January 2000."

"Gasoline stockpiles dropped 5.9 million barrels to 178.7 million barrels, the lowest since 1967. Inventory levels prior to 1990 were reported on a monthly basis."

"Refineries operated at 66.7 percent of capacity last week, the lowest since the department began compiling weekly figures in 1989. The previous low was 69.8 percent of capacity, touched in September 2005, when refineries along the Gulf Coast were shut after hurricanes Katrina and Rita battered the region."

"Brent crude oil for November settlement declined 43 cents, or 0.4 percent, to $102.65 a barrel on London's ICE Futures Europe exchange."

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

"Last Updated: September 24, 2008 13:59 EDT"





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Europe Confidence Drops as Financial Turmoil Worsens (Update2)

By Fergal O'Brien

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Sept. 24 (Bloomberg) -- Business confidence in the euro area's three largest economies declined more than forecast this month as the worsening financial crisis in the U.S. imperiled expansion around the world.

"In Germany, Europe's biggest economy, the Munich-based Ifo institute's business climate index fell to a three-year low of 92.9 from 94.8 in August, below the 94.3 median forecast of 41 forecasts in a Bloomberg News survey. Business confidence in France declined to the weakest in five years, while sentiment in Italy dropped to a seven-year low, separate reports showed."

"Europe's economy is struggling after shrinking in the second quarter as the yearlong credit squeeze leads to bankruptcy filings and bailouts on Wall Street and cooling economic growth damps demand. Even as expansion slows, the European Central Bank is resisting any cut in interest rates as it seeks to curb inflation that reached a 16-year high in July."

"``Today's Ifo and yesterday's purchasing managers' index contradict any scenario of an imminent recovery in the euro-area business cycle,'' said Jacques Cailloux, chief euro-area economist at Royal Bank of Scotland Plc in London. ``While the ECB will likely acknowledge the weaker growth trajectory at the next policy meeting, it is unlikely in our view to be a step toward an imminent rate cut.''"

Below Forecasts

"In France, the second-biggest euro-area economy, a gauge of business sentiment dropped to 92 this month from a revised 97 in August, below forecasts for a September reading of 97. Italy's business confidence index dropped to 82.7 from 83.5 last month. That is the lowest since October 2001 and less than the median forecast of 83.2."

"Bonds rose after the reports, with the yield on the two- year German note dropping 11 basis points to 3.78 percent as of 12:10 p.m. in London. The yield on the 10-year German bund, the euro region's benchmark government debt security, declined 5 basis points to 4.18 percent."

"The ECB on Sept. 4 kept its key rate at 4.25 percent for a second month, suggesting it's more concerned about faster inflation than slowing growth. ECB Governing Council member Axel Weber said yesterday that while the bank is aware there is a ``phase of weakening,'' slower growth ``won't magic away the inflation problem.''"

Euro-area manufacturing and services contracted for a fourth month in September. The European Commission cut its euro- region growth forecast for this year on Sept. 10 to 1.3 percent from 1.7 percent and projected recessions in Germany and Spain.

Worsening Prospects

"The cooling economy is taking its toll on companies. Fiat SpA, Italy's largest manufacturer, suffered a 23 percent decline in Italian car sales in August. German tire maker Continental AG cut its profit target for fiscal 2008 earlier this month, citing worsening prospects for sales and rising raw-material prices."

"The economic outlook is ``clouded'' by the turmoil in financial markets, the European Forecasting Network said yesterday. In the U.S., Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are pushing Congress to approve a $700 billion plan to remove illiquid assets from the banking system and calm a crisis that already has claimed Lehman Brothers Holdings Inc. and prompted U.S. authorities to bail out American International Group Inc."

Financial institutions worldwide have reported more than $520 billion in losses and writedowns since the lending crisis started. The Dow Jones Euro Stoxx 600 has shed more than a quarter of its value this year.

`Grave Mistake'

Paulson said yesterday it would be ``a grave mistake'' for Congress to delay or curtail the funds he requested to stabilize the financial system.

"``The crisis is a reason for concern,'' said Andreas Scheuerle, an economist at Dekabank in Frankfurt. ``We're facing an extremely difficult time with growth rates around stagnation or possibly even worse.''"

Companies may get some relief from the drop in the price of crude oil and the euro's decline against the dollar. Oil has fallen from a record close to $150 a barrel in July to around $109 today. The euro has dropped 7.8 percent from its July 15 record and was at $1.4660 today.

"Lanxess AG, Germany's largest publicly traded specialty- chemicals maker, said on Sept. 17 it will meet its full-year profit goals as faster growth in Asian economies compensates for the U.S. slowdown. The third quarter is ``going well,'' Lanxess Chief Executive Officer Axel Heitmann said."

"``Consumption is very weak and it will be getting worse over the coming quarters,'' said Paolo Pizzoli, an economist for ING Bank NV in Milan. ``The only hope is if oil stays around $100 a barrel, and that should give some relief. Still, with the financial crisis causing uncertainty, the future doesn't look good.''"

To contact the reporter on this story: Fergal O'Brien in Dublin at fobrien@bloomberg.net.

"Last Updated: September 24, 2008 07:12 EDT"





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Dollar Trades Near One-Month Low on Bets U.S. Bailout to Stall

By Ye Xie and Bo Nielsen

Sept. 24 (Bloomberg) -- The dollar traded near a one-month low against the euro on bets congressional scrutiny will delay passage of a $700 billion U.S. rescue of financial institutions.

"Federal Reserve Chairman Ben S. Bernanke said at a congressional Joint Economic Committee hearing today that the U.S. is facing ``grave threats'' to financial stability. U.S. home resales fell more than forecast in August, and prices dropped the most on record, an industry report showed."

"``The trouble they're having getting this package passed and further underlying economic weakness are sending the dollar lower,'' said Andrew Wilkinson, a senior market analyst in Greenwich, Connecticut, at Interactive Brokers Group, which handles about a fifth of all options traded in the U.S."

"The dollar traded at $1.4664 per euro at 1:32 p.m. in New York, compared with $1.4648 yesterday. It touched $1.4866 on Sept. 22, the weakest level since Aug. 22. The yen fell 0.6 percent to 155.55 per euro, from 154.63 yesterday. The yen dropped 0.5 percent to 106.10 per dollar, from 105.56."

"U.S. lawmakers have balked at rubber-stamping the Treasury's rescue plan, with Democrats demanding that it include support for homeowners and limits on executive pay. Republicans are also resisting the proposal, which economists said would push the budget deficit to an all-time high next year."

Bernanke and Treasury Secretary Henry Paulson told the Senate Banking Committee yesterday that the bailout is needed to avert a U.S. recession.

"``Everyone is still trying to decipher the bailout package,'' said Jeff Gladstein, global head of foreign-exchange trading at AIG Financial Products in Wilton, Connecticut."

Housing Report

"U.S. home resales dropped to an annual rate of 4.91 million units in August, from 5.02 million the prior month, the National Association of Realtors said today in Washington. The median forecast of 73 economists surveyed by Bloomberg News was for a drop to a 4.94 million pace from a previously reported 5 million. The median price declined 9.5 percent from August 2007."

"The yen fell against the euro as Goldman Sachs Group Inc. raised $10 billion, encouraging investors to increase carry trades, in which they get funds in a country with low borrowing costs and invest where returns are higher."

"``Risk appetite is slightly better, but still very fragile,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, the most accurate currency forecaster in a 2007 Bloomberg survey."

"Japan's currency dropped 1 percent to 88.81 against the Australian dollar and 1.3 percent to 72.80 versus the New Zealand dollar. The Bank of Japan's 0.5 percent target lending rate compares with 4.25 percent in Europe, 7 percent in Australia and 7.5 percent in New Zealand."

Goldman Infusion

"Goldman raised $5 billion in a stock offering, twice the amount the firm originally sought, after gaining an endorsement and a $5 billion cash infusion from billionaire investor Warren Buffett's Berkshire Hathaway Inc."

"The U.S. currency has lost almost 6 percent versus the euro since touching a one-year high of $1.3882 on Sept. 11. The dollar reached $1.6038 on July 15, the weakest level since the European currency made its 1999 debut. The greenback may weaken to $1.50 this year, Stannard said."

"The chance of the Fed cutting its 2 percent benchmark rate by a quarter-percentage point at its Oct. 29 policy meeting was 76 percent, compared with 58 percent yesterday, futures contracts on the Chicago Board of Trade showed."

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

"Last Updated: September 24, 2008 13:37 EDT"





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Latin America Currencies: Colombian Peso Drops on Bailout Delay

By Drew Benson

"Sept. 24 (Bloomberg) -- Colombia's peso tumbled for a second day on concern that a U.S. bank bailout plan faces delays in Congress, prompting investors to shun higher-yielding securities."

"The peso sank as much as 2.5 percent after U.S. lawmakers late yesterday met to consider revisions to Treasury Secretary Henry Paulson's $700 billion plan to rescue financial firms saddled by mortgage-loan losses. The peso has dropped 5 percent over the past two days, leading declines in most Latin American currencies."

"``People are a little worried about the bailout because there is a lot of haggling,'' said Win Thin, a senior currency strategist at Brown Brothers Harriman & Co. in New York. ``Some of the politicians are a little reluctant to hand over a $700 billion blank check to Paulson.''"

"The peso was down 2.1 percent to 2,150 per dollar at 11:51 a.m. in New York, from 2,106.5 yesterday, according to the Colombian foreign-exchange electronic transactions system, known as SET-FX. The two-day slide pares much of the peso's 6.7 percent surge on Sept. 19, gains that were sparked by Paulson's initial presentation of the bailout plan."

"``We had this nice relief rally on the bailout package, but my feeling is that these next few months are not conducive'' to investing in emerging-market securities, Thin said."

"The yield on Colombia's benchmark 11 percent bonds due in July 2020 rose 4 basis points, or 0.04 percentage point, to 12.17 percent, according to Colombia's stock exchange. The bond's price fell 0.23 centavo to 92.77 centavos per peso."

To contact the reporter on this story: Drew Benson in Buenos Aires at abenson9@bloomberg.net

"Last Updated: September 24, 2008 12:05 EDT"





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European Stocks Decline for Third Day; Carmakers Drop on Oil

By Adam Haigh

Sept. 24 (Bloomberg) -- European stocks fell for a third day after higher oil prices dragged down automakers and Federal Reserve Chairman Ben S. Bernanke said the credit crisis is damaging household and business spending.

"Renault SA, France's second-largest carmaker, dropped 2.9 percent and Daimler AG slipped 1.1 percent as crude traded above $109 a barrel. Anglo American Plc, the fourth-biggest diversified mining company, fell to a two-year low after copper retreated and Bernanke's remarks heightened concern that the world's largest economy may tip into a recession. Royal Bank of Scotland Group Plc led a rally in financial stocks, climbing 3.3 percent as Goldman Sachs Group Inc. won backing from Warren Buffett's Berkshire Hathaway Inc."

"The Dow Jones Stoxx 600 Index lost 0.6 percent to 265.66. The benchmark has erased more than half of a record 8.3 percent rally on Sept. 19, when the U.S. government announced plans to buy bad loans from banks."

"``There is a lot of uncertainty out there,'' Kevin Daly, a money manager in London at Aberdeen Asset Management Plc, said in a Bloomberg Television interview. ``The worst is probably not going to be over until 2009.''"

The Stoxx 600 has dropped 27 percent this year as credit losses and asset writedowns at financial companies topped $522 billion worldwide. Money-market interest rates increased today as banks sought to bolster balance sheets amid renewed concern a bailout of financial institutions won't happen quickly enough to ease short-term funding constraints.

"The one-month London interbank offered rate, or Libor, for dollars jumped 22 basis points to 3.43 percent, the highest level since January, the British Bankers' Association said."

U.S. Home Sales

"A report today showed sales of previously owned U.S. homes fell more than forecast in August and prices dropped the most on record, a sign the market remained in a slump heading into the latest financial meltdown."

"``Economic activity appears to have decelerated broadly,'' Bernanke said today in remarks prepared for a congressional Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16. ``Stabilization of our financial system is an essential precondition for economic recovery.''"

"Anglo American lost 6 percent to 2,008 pence. Copper fell as much as 2.2 percent in New York."

"National benchmark indexes decreased in 14 of the 18 western European benchmarks. The U.K.'s FTSE 100 Index slipped 0.8 percent as Vedanta Resources Plc dropped. France's CAC 40 Index fell 0.6 percent, while Germany's DAX declined 0.3 percent."

Carmakers

"German business confidence slid to the lowest level in more than three years in September. The Ifo institute's business climate index, based on a survey of 7,000 executives, fell to 92.9 from 94.8 in August."

"Renault declined 2.9 percent to 47.71 euros. Daimler AG, the world's biggest luxury carmaker, slipped 1.1 percent to 38.31 euros."

Oil climbed as much as 2.7 percent to $109.50 a barrel in New York as a U.S. government report showed a decline in inventories of crude and gasoline.

"ProSiebenSat.1 Media AG sank 6.2 percent to 5.19 euros after Germany's biggest private broadcaster cut a profit forecast for 2008, citing falling advertising revenue."

"RBS increased 3.3 percent to 210 pence. UBS AG, the European bank hardest hit by the subprime crisis, added 4.9 percent to 20.08 Swiss francs."

"Goldman raised $5 billion in a stock offering today, twice the amount the firm originally sought, after gaining an endorsement and a $5 billion cash infusion from billionaire investor Warren Buffett."

British Energy

"British Energy Group Plc advanced 5.7 percent to 765 pence. Electricite de France SA said it will pay 774 pence a share for the U.K.'s biggest power producer. That's 35 percent above the stock's closing price on March 14, the last trading session before British Energy said it may receive an offer. EDF climbed 3.2 percent to 51.76 euros."

"Mergers and acquisitions have totaled $471.5 billion in the past three months, compared with $524.5 billion in the year-earlier period, according to Bloomberg data."

"Vedanta, India's largest copper producer, slid 6.8 percent to 1,424 pence as shareholders forced the company to dump reorganization plans unveiled two weeks ago."

"Akzo Nobel NV fell 3.4 percent to 38.145 euros. Cazenove cut its rating on the world's largest maker of paints and coatings to ``underperform'' from ``in-line,'' citing faltering demand in most of its main markets."

"Arcandor AG, Germany's biggest department-store owner, climbed 6.6 percent to 3.57 euros as banks extended the retailer's loan agreement following more than a week of negotiations."

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

"Last Updated: September 24, 2008 13:06 EDT"





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ECB's Bonello Sees Economy Past Worst by Year-End (Update1)

By Gabi Thesing and Blanche Gatt

"Sept. 24 (Bloomberg) -- European Central Bank Governing Council member Michael Bonello said the euro region's economy will probably recover in the fourth quarter, suggesting he sees no need to lower interest rates after the global credit squeeze worsened."

"``I still think by the fourth quarter we should be out of the lowest point, at least past the trough,'' Bonello, who also heads the central bank of Malta, said in an interview in his office in Valletta yesterday. ``Monetary policy cannot fix'' the financial system and inflation risks are ``all on the upside,'' he said."

"Business confidence in the euro area's three largest economies fell this month more than economists forecast as financial turmoil in the U.S. imperiled growth around the world, industry surveys showed today. The ECB has so far said slowing growth isn't enough to overcome concern that the fastest inflation in 16 years will become entrenched through a wage-price spiral."

"In the past two weeks, Lehman Brothers Holdings Inc. collapsed and the U.S. government took over American International Group Inc. The world's biggest financial companies have posted more than $520 billion in writedowns and credit losses since the start of last year after record defaults on housing loans to consumers with poor credit histories, pushing up borrowing costs as banks became reluctant to lend to each other."

No Silver Lining

"An economic slump in the U.S. risks dragging the world economy down by hurting exports. Growth in China and Germany, Europe's biggest economy, has been driven by sales abroad. Some say the ECB needs to start considering rate cuts."

"``We don't see a silver lining in the fourth quarter,'' Gernot Nerb, an economist at the Munich-based Ifo institute, said in a Bloomberg Television interview today. ``The time has come to lower interest rates. That doesn't have to happen next week, but the signal should soon come that rates will fall in the next few months.'' Ifo carries out the German executive sentiment survey."

"Bonello, 63, didn't rule out that the economy may shrink again in the current quarter."

"``The difference between no growth, which is what people were expecting, and slightly negative growth isn't that great,'' he said. ``The world economy is not going into freefall.''"

The policy maker said the fact that last week's German ZEW investor confidence index ``didn't deteriorate further in the midst of all this negative news I think points to a certain degree of resilience to the setbacks which the current turmoil would imply.'' The ZEW index rose more than expected last week as the retreat in oil prices and the euro improved the economic outlook.

Delayed Recovery?

"``I think the ECB shouldn't be so relaxed'' in the light of recent data, said Kenneth Broux, an economist at Lloyds TSB Group Plc in London. ``The numbers suggest the slowdown might be more protracted and the recovery might be delayed.''"

"Germany's Ifo business sentiment indicator declined to the lowest level in three years, French business confidence slumped to a five-year low and Italian executives were the most pessimistic in seven years."

"In the U.S., Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke are cajoling lawmakers to back a $700 billion proposal to use public funds to buy devalued mortgage investments."

Economists at Citigroup Inc. and Societe Generale now forecast that inflation may fall back to below 2 percent as soon as next year as slowing growth keeps a lid on price gains.

Bonello isn't convinced.

Inflation Pressure

"``There is no mechanical trade-off between growth and inflation,'' Bonello said. ``Inflation falling below 2 percent next year cannot be excluded, but only if oil prices stabilize and if we don't have any further negative surprises. Given the many sources of upside pressures I feel more confident in saying that inflation should drop toward the 2 percent threshold in 2010.''"

"Throughout the turmoil the ECB has kept interest rates at a seven-year high. Rebuffing calls from investors to lower borrowing costs, the ECB instead poured cash into the financial system to facilitate lending among commercial banks."

"``It's an immediate problem we have today, monetary policy works in the medium term,'' Bonello said. ``Central banks' primary role is to secure price stability.''"

"Economists expect the ECB to keep rates on hold until February 2009, according to the median of 21 forecasts in a Bloomberg News survey published yesterday."

Wage Demands

The bank raised its key rate to 4.25 percent in July after record oil prices pushed inflation to 4 percent. Policy makers are concerned that workers will try to compensate for the increase in the cost of living by boosting wage demands. Companies may also seek to raise prices to offset higher raw-material and wage costs.

"Even though inflation eased to 3.8 percent in August, it's ``still well above'' the bank's 2 percent limit, Bonello said."

"Germany's IG Metall labor union, representing 3.2 million workers, yesterday said it wants wages to rise 8 percent next year. It would be the biggest pay increase in 16 years. The five- year/five-year forward breakeven rate, the ECB's key gauge of medium-term inflation expectations, yesterday rose to 2.69 percent, 1 basis point short of the record high it reached August."

"For now, ``it's not the cost of money that is perhaps at the forefront of people's concerns,'' Bonello said. ``The effort worldwide to calm things down in the financial markets, I think that is certainly the priority.''"

To contact the reporter on this story: Gabi Thesing in Frankfurt at gthesing@bloomberg.netBlanche Gatt in Malta at bgatt@bloomberg.net

"Last Updated: September 24, 2008 08:29 EDT"





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Brazil May Swap Petrobras Stock for Oil Rights (Update1)

By Jeb Blount

"Sept. 24 (Bloomberg) -- The Brazilian government may give Petroleo Brasileiro SA offshore oil rights in exchange for new shares in the state-controlled oil company, Banco Santander SA analysts said."

"The swap of Brazil's un-leased oil rights in the so-called pre-salt region near Rio de Janeiro would be followed by an offering of shares to minority investors at the same price the government gets for its assets, Santander analysts Christian Audi and Ana Browne said."

"``The key is how fair would this valuation be'' of the oil assets, they wrote in a note to clients. ``In this way, if minorities choose to go ahead and subscribe, their dilution risk would be diminished; if they don't they will be diluted.''"

"The sale would allow Brazilian president Luiz Inacio Lula da Silva to achieve his ``number one priority'' of strengthening Petrobras in the development of pre-salt oil, they wrote. The pre-salt area around Tupi, a 5 billion to 8 billion field that is the largest oil discovery in the Americas since 1976, may hold 50 billion barrels of oil, according to Peter Wells a director of the U.K.'s Neftex Petroleum Consultants Ltd."

"Petrobras rose the most in the Bovespa index, climbing 4 percent to 34.59 reais at 11:27 a.m. New York time in Sao Paulo trading. The shares have gained 15 percent over the past year, compared with a 15 percent decline for the Bovespa."

"The analysts based their speculation on a speech Lula gave this week in New York. Lula's other priorities for the pre-salt area around Tupi are to expand the country's shipbuilding industry, further develop Brazil's refining, chemicals and other oil-related industries and help Brazil's poor, the analysts said."

Petrobras executives were not immediately available for comment.

Oil Taxes

"Taxes on oil production may not be increased very much as that would reduce the amount of cash available to Petrobras to develop the fields, which are among the world's deepest offshore oil prospects, the analysts wrote."

"Nor do they expect any changes to the country's oil concession auction system. Except for the exchange of pre-salt oil rights for Petrobras stock, they expect the country to continue selling oil exploration blocks to Brazilian and foreign companies at annual auctions."

"They believe such a model would be ``positive'' for Petrobras as it would give the company a strategic advantage when it comes to pre-salt drilling. The effect on OGX Petroleo e Gas SA, Brazil's second-largest oil company will be ``marginally negative, as it reduces the chance of getting pre-salt fields while at the same time it will not be hurt by higher taxes."

The pre-salt region runs as much as 800 kilometers (500 miles) along Brazil's Atlantic coast from the state of Espirito Santo south west past Rio de Janeiro and Sao Paulo to the state of Santa Catarina.

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

"Last Updated: September 24, 2008 11:30 EDT"





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Mexico Consumer Prices Increase Less Than Forecast (Update2)

By Jens Erik Gould

"Sept. 24 (Bloomberg) -- Mexico's consumer prices rose less than economists forecast in the first half of September on lower costs for tourism packages, tomatoes and chicken, the central bank said."

"Inflation was 0.44 percent in the first 15 days of September, trailing a forecast of 0.56 percent, the median estimate of 17 economists surveyed by Bloomberg. Annual inflation was 5.42 percent in the first half of the month, less than the rate of 5.57 percent registered in August."

"Slower inflation, including lower-than-expected costs for agricultural products and private education, probably means the central bank won't raise its benchmark interest rate again this year and may cut the rate in the first half of next year, said Bertrand Delgado, an economist at research firm IDEAglobal Inc."

"``It's pretty favorable,'' said Delgado, who is based in New York. ``This gives a lot more options to the bank to stay still, and further ahead they'll start cutting rates.''"

"Mexico's central bank left its benchmark interest rate unchanged at 8.25 percent this month, after three consecutive increases, as policy makers said economic growth may slow and inflation will probably remain within forecasts."

"In July, the bank increased its inflation forecasts through 2010 because of higher-than-expected commodity costs. Since then, the prices of crude oil, wheat, soy and corn have dropped at least 25 percent since their record highs."

Slowing Growth

"The central bank may now be more concerned about the risk of slowing economic growth, especially as today's consumer prices report shows that inflation is beginning to moderate, said Carmen Alcibar, general director at Bursametrica Management in Mexico City."

"``Consumption is losing strength,'' said Alcibar, who predicts a rate cut in the first quarter of next year. ``The bank could relax monetary policy to help the economy.''"

"Finance Minister Agustin Carstens said this month that economic growth will be reduced by the financial crisis in the U.S. Mexico's gross domestic product would have expanded 4 percent this year without the problems in the U.S. housing and credit markets, compared with the government's forecast of 2.4 percent growth, Carstens said in an interview on the Televisa network."

"Inflation will accelerate in the last three months of the year, in part because of higher costs for electricity, said Salvador Moreno, chief economist at ING Groep NV's Mexican unit."

"``It will come back with a lot of force,'' Moreno said."

Inflation Forecasts

The central bank forecasts that inflation will peak at 6 percent in the final quarter of this year and then subside in 2009. It isn't expected to reach the central bank's goal of 3 percent before 2010.

"Economists surveyed by Citigroup Inc.'s Banamex unit predict the bank will leave its benchmark interest rate unchanged for the remainder of the year, according to a survey released Sept. 18."

"Mexico's peso-denominated bonds gained after the inflation report. Yields on Mexico's 10 percent bond due December 2024 fell 5 basis points, or 0.05 percentage point, to 8.55 percent at 11:51 a.m. New York time. The bond's price rose 0.47 centavo to 112.64 centavos per peso, according to Banco Santander SA."

"Mexico's peso fell 0.3 percent to 10.8036 per dollar, from 10.7705 yesterday."

To contact the reporter on this story: Jens Erik Gould in Mexico City at jgould9@bloomberg.net.

"Last Updated: September 24, 2008 12:17 EDT"





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Emerging-Market Bonds Fall on Concern Congress May Delay Rescue

By Lester Pimentel

Sept. 24 (Bloomberg) -- Emerging-market bonds fell for a second day as concern Congress may delay the U.S. Treasury's $700 billion financial industry rescue prompted investors to shun higher-yielding assets.

"The extra yield investors demand to own developing-nation debt instead of U.S. Treasuries widened 3 basis points to 3.67 percentage points at 10:40 p.m. in New York, according to JPMorgan Chase & Co. A basis point equals 0.01 percentage point. The so-called spread has widened 19 basis points in the last two days."

U.S. lawmakers have balked at approving the Treasury's proposal to buy illiquid assets from financial institutions. Republicans resisted the plan's size and scope and Democrats demanded support for homeowners and limits on executive pay.

"``Until a deal goes through, everyone is trying to reduce risk,'' said Silvia Marengo, who manages about $130 million of emerging-market bonds at Clariden Leu in London. ``Something has to be done to restore credibility globally. It needs to be done fast.''"

"Argentine bonds led losses in emerging markets, with the spread on the country's securities swelling 22 basis points to 8.07 percentage points, according to JPMorgan."

"Venezuelan debt posted gains as newspaper El Nacional reported the government is considering buying back $2 billion of government bonds denominated in foreign currencies, without saying how it obtained the information. A Finance Ministry spokesman told Bloomberg News he had no information regarding a buyback. The plan calls for repurchasing debt maturing in 2010, 2013 and 2027, the newspaper said."

Venezuela Yield

"Venezuela's bonds yielded 8.06 percentage points more than comparable Treasuries, down 13 basis points from yesterday."

"The cost of protecting bonds issued by Venezuela fell for a fifth day. Venezuela's five-year credit default swaps dropped 15 basis points to 7.83 percentage points, according to Bloomberg data. That means it costs $783,000 to protect $10 million of the country's debt from default."

"Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent."

To contact the reporter on this story: Lester Pimentel in New York at lpimentel1@bloomberg.net

"Last Updated: September 24, 2008 10:41 EDT"





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U.S. Economy: Home Resales Drop; Bernanke Sees Tighter Credit

By Bob Willis

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Sept. 24 (Bloomberg) -- Sales of previously owned U.S. homes fell more than forecast in August and prices dropped the most on record as Federal Reserve Chairman Ben S. Bernanke suggested the housing market may get worse before it gets better.

"Sales of existing homes dropped 2.2 percent to an annual rate of 4.91 million units from 5.02 million the prior month, the National Association of Realtors said today in Washington. The median price declined 9.5 percent from August 2007 and the number of properties fell from a record."

"Bernanke told lawmakers that lenders will become ``still more cautious,'' with terms on home loans tightening ``significantly.'' The slide in property values threatens to hurt consumer spending, which Bernanke said today would be ```sluggish at best'' in coming months."

"``You have foreclosures which are pushing prices down, but you have tight credit conditions keeping sales from rising,'' Patrick Newport, an economist a Global Insight Inc. in Lexington, Massachusetts, said in a Bloomberg Television interview. ``Sales are probably going to drop 10 to 15 percent more over the next few months.''"

"Treasuries rose, pushing yields lower, as the report and Bernanke's remarks added to speculation that the Fed may lower interest rates by year-end to alleviate the worst financial crisis since the Great Depression. Benchmark 10-year notes yielded 3.77 percent as of 10:56 a.m. in New York, down 3 basis points from yesterday. Stocks were higher."

"Resales were forecast to fall to a 4.94 million annual rate, according to the median estimate of 73 economists in a Bloomberg News survey. Projections ranged from 4.7 million to 5.15 million."

Bernanke Testimony

Bernanke said today in testimony before Congress that the U.S. is facing ``grave threats'' to financial stability and warned that the credit crisis has started to damage household and business spending.

"``Economic activity appears to have decelerated broadly,'' Bernanke said in remarks prepared for a Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16. ``Stabilization of our financial system is an essential precondition for economic recovery.''"

`Some Stabilization'

"While the prospect of still lower prices is deterring some buyers, Bernanke said there are signs of ``some stabilization'' in home sales. Cheaper prices and lower interest rates ``are making housing increasingly affordable over time,'' he said."

Home resales were down 10.7 percent compared with a year earlier. Resales totaled 5.65 million in 2007.

"Today's figures compare with the 4.85 million level reached in June, the lowest in a decade and 33 percent down from the record reached in September 2005."

"The number of previously owned unsold homes on the market at the end of August represented 10.4 months' worth at the current sales pace, down from 10.9 months' at the end of the prior month."

"There were 4.255 million properties on the market in August, down 7 percent from the prior month, the biggest drop since December 2006."

"The median price of an existing home dropped to $203,100 from $224,400 a year ago. For single-family houses, the median price dropped 9.7 percent, the biggest decline since records began in 1968."

"Resales account for about 90 percent of the market, while purchases of new homes make up the rest. Sales of existing homes are compiled from contract closings and may reflect contracts signed one or two months earlier."

New-Home Sales

"Tomorrow, the Commerce Department is forecast to report that sales of new houses dropped to an annual pace of 510,000 from 515,000 in July, according to survey estimates. Sales of new homes are down 63 percent from their July 2005 peak."

"Today's report showed resales of single-family homes fell 1.4 percent to an annual rate of 4.35 million. Sales of condos and co-ops declined 8.2 percent to a 560,000 rate."

"The Northeast suffered a 6.6 percent decline in sales, followed by a 5.3 percent drop in the West. Purchases rose in the Midwest and Southeast."

"``Some of the declines in sales were due to tighter lending standards that Fannie Mae and Freddie Mac had imposed prior to the takeover,'' Lawrence Yun, chief economist at the Realtors' group, said in a press conference."

Builders Scale Back

"As sales shrank, builders scaled back construction projects to pare swelling inventories. Work began in August on the fewest houses since 1991, the Commerce Department reported last week. The number of building permits issued also fell, signaling construction cutbacks will continue to hurt the economy."

"``The biggest issue is consumer confidence in housing right now,'' Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., New Jersey's largest homebuilder, said in a Sept. 19 interview on Bloomberg Television. ``It remains a very challenging environment.''"

"Hovnanian said sales in ``some select markets,'' such as northern California and the Washington suburbs in Virginia, ``have really started to pick up.'' It's ``absolutely'' too early to call a bottom for the market, he said."

"Resales stabilized in recent months as some Americans took advantage of depressed property values. One-third to 40 percent of July purchases reflected distressed properties, including foreclosures, the real-estate agent's group said last month."

"Stricter lending regulations and tumbling home prices make it harder for Americans to tap home equity for extra cash. Consumer spending in the third quarter will probably be the weakest since 1991, according to economists surveyed earlier this month."

"The housing slump is the ``root cause'' of the turmoil in financial markets, Treasury Secretary Henry Paulson said in testimony before the Senate yesterday. It ``has resulted in illiquid mortgage-related assets that are choking off the flow of credit which is so vitally important to our economy.''"

Bernanke joined Paulson in urging lawmakers to quickly pass a $700 billion rescue plan for financial institutions and warned the economy will shrink if markets don't begin functioning normally.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

"Last Updated: September 24, 2008 11:11 EDT"





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"Platinum, Palladium Rise as Dollar Declines, Commodities Gain "

By Halia Pavliva

"Sept. 24 (Bloomberg) -- Platinum and palladium gained as the dollar fell against the euro, boosting demand for the precious metals as an alternative investment."

"The dollar fell as much as 0.7 percent against the euro today. The Reuters/Jefferies CRB Index of 19 raw materials gained as much as 1.2 percent, led by silver. Some investors buy energy, metals and grains as a store of value."

"``The precious metals are up again as investor interest continues,'' Miguel Perez-Santalla, a Heraeus Precious Metals Management sales vice president in New York, said in a report. ``With few choices, most money is going into commodities, specifically precious metals and crude oil.''"

"Platinum futures for October delivery rose $29.80, or 2.5 percent, to $1,241.80 an ounce at 10:21 a.m. on the New York Mercantile Exchange. On Sept. 22, the metal jumped 7.7 percent the most since April 2000. Before today, the metal still dropped 48 percent from a record $2,308.80 on March 4."

"Palladium futures for December delivery gained $2.75, or 1.1 percent, to $253.50 an ounce. Before today, the metal declined 34 percent this year."

Platinum and palladium are used in jewelry and catalytic converters that reduce noxious gases from automobile and truck engines.

"Platinum consumption by carmakers accounts for more than 60 percent of global demand for the metal, according to Johnson Matthey Plc. Auto sales in 2008 are headed for a 15-year low in the U.S., the world's biggest market."

"Demand by automakers may fall as Chrysler LLC plans a full line of electric vehicles and will sell a battery-powered car in its home market in 2010, Jon Nadler, a senior analyst at Kitco Metals & Minerals Inc. in Montreal, said in a report"

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net.

"Last Updated: September 24, 2008 10:23 EDT"





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"Italian Stocks Update: Fiat, Tenaris, Telecom Italia, UniCredit "

By Francesca Cinelli

"Sept. 24 (Bloomberg) -- Italy's S&P/MIB Index fell for a third day, losing 138, or 0.5 percent, to 26,929. Futures expiring in December declined 43, or 0.2 percent, to 27,180."

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

"Anima SGRpA (ANM IM), an Italian money manager, surged 5.5 cents, or 4 percent, to 1.43 euros. Milan-based regional bank Banca Popolare di Milano Scrl (BPM IM) offered to buy the stock it doesn't already own in Anima for 107 million euros ($157 million) and delist the company, according to a statement late yesterday. The lender offered to pay 1.45 euros a share."

"Mediobanca Securities, which previously rated Anima a ``neutral,'' recommended that investors tender shares. Banca Popolare di Milano is being assisted in the offer by Mediobanca."

"Popolare Milano shares rose 4.4 cents, or 0.7 percent, to 6.07 euros."

"``The transaction on Anima is not too expensive for Popolare Milano in terms of impact on capital ratios and could have a significant strategic value,'' Dresdner Kleinwort analyst Elena Perini wrote."

Cassa Lombarda downgraded Popolare di Milano to ``hold'' from ``buy'' on concern about the outlook for Anima's inflows.

"Autogrill SpA (AGL IM), the world's biggest manager of airport restaurants, fell for a third day, losing 19 cents, or 2.3 percent, to 8.07 euros. ``According to Air Transport Association's data, air traffic in North America (37 percent of Autogrill group Ebitda) fell by 5.9 percent in August,'' Euromobiliare Sim analysts wrote. ``The recent negative trend is therefore confirmed.''"

"Fiat SpA (F IM), Italy's largest manufacturer, dropped 47.3 cents, or 4.4 percent, to 10.25 euros on continued speculation it may lower its financial targets."

"``Fiat's third-quarter earnings, to be published on Oct. 23, are not likely to surprise on the downside, in our view,'' Societe Generale analysts Eric-Alain Michelis and Philippe Barrier wrote. ``We think it would be wise for management to acknowledge the current economic environment and adjust its 2009 targets accordingly.'' The brokerage cut its price estimate to 11 euros from 12 euros."

"``Rumors of a possible profit warning are unfounded,'' Simone Migliarino, head of communications for the Turin, Italy- based company, said in a statement distributed through the Italian exchange today after markets closed. The company also confirmed its 2008 financial targets."

"Fondiaria-Sai SpA (FSA IM), Italy's second-largest insurer, advanced 28 cents, or 1.6 percent, to 17.42 euros. The company cut its stake in Assicurazioni Generali SpA (G IM), Italy's biggest insurer. ``We welcome this step to a more diversified equity portfolio,'' Atanasio Pantarrotas, an analyst at Cheuvreux, wrote."

"Gruppo Editoriale L'Espresso SpA (ES IM), the Italian publisher controlled by businessman Carlo De Benedetti, dropped to the lowest in almost a month, losing 7.6 cents, or 4.3 percent, to 1.69 euros. Deutsche Bank AG and Citigroup Inc. both downgraded the stock to ``sell'' yesterday."

"``Earnings momentum remains weak, expecting a bottom line to decrease by 43 percent to 54 million euros in 2008,'' Anna Ragni, an analyst at Berenberg Bank who rates the stock a ``sell,'' wrote in a report."

"Mediolanum SpA (MED IM), the Italian financial-services company partly owned by Prime Minister Silvio Berlusconi, advanced 9.9 cents, or 3.1 percent, to 3.3 euros. Financial stocks gained in Europe after Goldman Sachs Group Inc. won the backing of financier Warren Buffett."

"Parmalat SpA (PLT IM), Italy's biggest food company, added 2.4 cents, or 1.5 percent, to 1.65 euros. ``The shares are rebounding after being among the most hit by stake disposals catalyzed by Lehman's bankruptcy,'' said Alessandro Frigerio, a fund manager at RMJ Sgr in Milan."

"Telecom Italia SpA (TIT IM), Italy's biggest phone company, gained 1.4 cents, or 1.3 percent, to 1.09 euros. Libyan Investment Authority, a government-owned sovereign fund, may buy about 10 percent of Italy's biggest phone company for 4 billion euros, Il Sole 24 Ore reported, without saying where it got the information."

"A direct purchase of Telecom Italia shares ``would certainly be a positive issue for the stock value,'' while buying a stake in its biggest investor, Telco SpA, would be ``neutral,'' Euromobiliare Sim analysts wrote."

The company said that it won't discuss ``extraordinary'' transactions at a board meeting tomorrow.

"Tenaris SA (TEN IM), the world's biggest maker of seamless steel tubes for pipelines, dropped 69 cents, or 4.3 percent, to 15.32 euros. Chesapeake Energy Corp., the second-biggest U.S. independent natural gas producer, said it plans to reduce its drilling rigs to 140 from 157 by the end of the year. The company also said other gas producers may also curtail production and capital spending in the wake of slumping energy prices."

"Saipem SpA (SPM IM), Europe's largest oil-field services contractor by market value, declined 92 cents, or 3.9 percent, to 22.85 euros."

"UniCredit SpA (UCG IM), Italy's largest bank, declined 11.8 cents, or 3.4 percent, to 3.32 euros after losing as much as 5 percent. Gruppo Banca Leonardo cut its price estimate on the stock by 13 percent to 5.2 euros. The brokerage lowered its aggregate fair value on Italian banks by 8.6 percent to take into account their exposure to Lehman Brothers Holding Inc."

"``The sudden decline in share prices could be tied to the closing of positions held by Lehman or its clients,'' said Luigi Bocchino, a trader with Banca Intermobiliare."

To contact the reporter on this story: Francesca Cinelli in Milan at fcinelli@bloomberg.net

"Last Updated: September 24, 2008 12:08 EDT"





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"Treasuries Lose Allure for Asia, Europe Investors (Update2) "

By Daniel Kruger and Kyoungwha Kim

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"Sept. 24 (Bloomberg) -- Investors outside the U.S., who own more than half of all Treasuries outstanding, say the government's $700 billion plan to revive the banking system will diminish the appeal of the nation's bonds."

"Treasury Secretary Henry Paulson's proposal, which seeks funds to rescue banks by purchasing devalued securities, would drive the country's debt to more than 70 percent of gross domestic product. The last time taxpayers owed as much was in 1954, when the U.S. was paying down costs from World War II."

"``The image of U.S. Treasuries as a safe haven has been tainted by the ongoing financial debacle,'' said Kwag Dae Hwan, head of global investment in Seoul with South Korea's $220 billion National Pension Fund, which holds about $14 billion of U.S. government debt. ``A big question mark hangs over whether the U.S. can deal with an unprecedented amount of debt. That is unnerving all the investors, including me.''"

"The government depends on foreign money to finance the budget deficit, which UBS AG estimates will increase to $1 trillion next year from $407 billion if the bailout is approved. Investors outside the U.S. own 56 percent of the $4.8 trillion in marketable Treasuries outstanding, up from 42 percent of the $3.4 trillion outstanding five years ago, according to data compiled by the government."

Keeping Rates Low

"U.S. long-term interest rates would be 1 percentage point higher without demand from foreign governments and central banks, according to Professors Francis and Veronica Warnock at the University of Virginia in Charlottesville, who have done research for the Federal Reserve."

"The benchmark 4 percent note due in August 2018 ended yesterday at 101 21/32 to yield 3.80 percent, according to BGCantor Market Data. The yield fell to 3.78 percent as of 6:50 a.m. in New York today."

"Demand for all but the safest of government debt increased in the past two weeks as the government seized control of Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac, the country's biggest mortgage finance companies, and agreed to take over New York-based American International Group Inc., the largest insurer. The bankruptcy of Lehman Brothers Holdings Inc., also located in New York, on Sept. 15 caused credit markets to seize up."

Yields on 10-year notes fell as low as 3.25 percent on Sept. 16 from the high this year of 4.27 percent on June 13. The rate on the three-month Treasury bill fell to as little as 0.02 percent on Sept. 18 as investors sought the safest securities.

`Unbelievably Expensive'

"The drop in yields combined with the likelihood that the government will sell more debt makes Treasuries ``unbelievably expensive,'' said Theodora Zemek, global head of fixed income at Axa Investment Managers in London, which has about 120 billion euros ($177 billion) invested in debt assets."

"``There is little value other than panic value in government bonds,'' Zemek said. ``We've potentially got a big sell-off.''"

"While Treasuries of all maturities have returned an average of 4.2 percent this year, including reinvested interest, Japanese investors lost money on U.S. debt, according to Merrill Lynch & Co. index data. A yen-based investor would have lost 0.4 percent as Japan's currency strengthened 5.9 percent against the dollar."

"The U.S. may have to borrow an extra $700 billion to $1 trillion to fund the bailout, according to Barclays Capital Inc. interest-rate strategist Michael Pond in New York. The proposal, sent to Congress Sept. 20, would increase the nation's debt ceiling by 6.6 percent to $11.315 trillion."

New Deal

"Paulson and Federal Reserve Chairman Ben S. Bernanke made their case for the plan to Congress yesterday, pushing for the biggest federal intrusion into markets since the New Deal. The Fed and Treasury failed to stem the credit crisis sparked by the collapse of the subprime mortgage market by cutting its target interest rate for overnight loans between banks to 2 percent from 5.25 percent in September."

"``If the credit markets are not functioning,'' Bernanke told the Senate Banking Committee yesterday in Washington, ``the economy will just not be able to recover.''"

"The cost to hedge against losses on 10-year Treasuries with credit-default swaps stood at 26.4 basis points, up from 2 basis points when the credit markets began to seize up in July 2007, according to BNP Paribas SA prices. That's higher than countries including Germany, Japan and France."

"Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a borrower's creditworthiness. An increase indicates deterioration in the perception of credit quality. A basis point on a contract hedging $10 million of debt for five years is equivalent to $1,000 annually."

Deteriorating Economy

"Treasuries may appreciate as a slowing U.S. economy and inflation sparks demand for fixed-income, according to some investors. Growth may decelerate to 1.7 percent this year and 1.5 percent in 2009 from 2 percent in 2007, according to the median estimate of 80 analysts surveyed by Bloomberg."

"``Yields are driven by the economy, the financial system and the inflation rate,'' said Robin Marshall, director of fixed-income in London at Smith & Williamson Investment Management in London, which oversees about $20 billion in assets. ``I'm not sure supply will be the conclusive driver.''"

"Even with the economy slowing, the yield on the 10-year note has climbed from 3.25 percent on Sept. 16, which was the lowest since 2003, amid concern about increased debt supply and a widening budget deficit. The dollar has dropped 5.5 percent against the euro since reaching a one-year high on Sept. 11."

Supply Concern

"``Bond yields are reflecting supply concerns,'' said Felix Stephen, senior investment strategist in Sydney at Advance Asset Management Ltd., which oversees the equivalent of $6.56 billion. ``The currency is also reflecting that, because global investors, predominantly the ones who will be buying this paper, want to make it as cheap as possible,'' Stephen said."

"Stephen, whose International Fixed Interest bond fund returned 5.1 percent this year, beating 83 percent of its peers, said he expects the 10-year Treasury yield to rise to 4.75 percent in the second half of next year."

"He may be right. Back in the 1950s, the last time debt as a percentage of GDP was as high as economists are now predicting, yields on long term government bonds rose to 4.27 percent from 2.32 percent, according to Sidney Homer's ``A History of Interest Rates.''"

To contact the reporters on this story: Daniel Kruger in New York at dkruger1@bloomberg.net; Kim Kyoungwha in Beijingt .

"Last Updated: September 24, 2008 06:54 EDT"





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Bernanke Sees `Grave Threats' to Financial Stability (Update3)

By Craig Torres

Sept. 24 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke said the U.S. is facing ``grave threats'' to financial stability and warned that the credit crisis has started to damage household and business spending.

"``Economic activity appears to have decelerated broadly,'' Bernanke said today to a congressional Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16. ``Stabilization of our financial system is an essential precondition for economic recovery.''"

"Bernanke's comments, his most dire about the economy since he became central bank chief in 2006, may stoke investors' expectations the Fed will lower interest rates by year-end to alleviate the credit crisis. He reiterated his call for Congress to pass Treasury Secretary Henry Paulson's plan for a $700 billion fund to remove devalued assets from the banking system."

"Without the bailout, ``credit will be restricted further for homeownership, for small business, for individual consumers and so on, but that is not just an inconvenience,'' Bernanke said. ``What that is going to do is affect spending and economic activity and it will cause the economy as a whole to decline and be much weaker than it otherwise would be.''"

"The Federal Open Market Committee left its benchmark rate unchanged at 2 percent this month for a third straight meeting after seven cuts since September 2007. Policy makers next gather Oct. 28-29, when traders see a 76 percent chance of a reduction, futures prices show."

`Downside Risks'

"``The downside risks'' to economic growth ``remain a significant concern,'' Bernanke said."

"Representative Baron Hill of Indiana, speaking near the end of the nearly three-hour hearing, said he has received more than 200 telephone calls opposing the bailout. Hill said if he gathered with his constituents to say the rescue was needed to increase the availability of auto loans and other credit, ``they'd laugh me out of that town-hall meeting.''"

"When Hill, a Democrat, asked if he could tell his constituents their stock portfolios would drop ``dramatically'' without the rescue, Bernanke said, that's ``very likely.''"

"Bernanke is ``very much leaning to seeing downside risks to growth as much greater,'' said James O'Sullivan, senior economist at UBS Securities LLC in Stamford, Connecticut. ``If we don't get credit market relief, the risks tilt overwhelmingly to growth rather than inflation.''"

"After their Sept. 16 meeting, policy makers said ``growth appears to have slowed recently.''"

Below Potential

The Fed chairman's testimony today signaled that restrictive credit has now slowed the economy from its 3.3 percent annualized pace in the second quarter to a pace ``appreciably below its potential rate.''

"Tumbling housing prices and waning mortgage credit have pushed up borrowing costs for both banks and consumers, and will probably slow the expansion to a 1.7 percent annual rate in 2008, according to the median forecast of 80 economists in a Bloomberg News survey."

Unemployment rose in August to a five-year high of 6.1 percent and payrolls have fallen for eight straight months.

"``The weakness in fundamentals underlying consumer spending suggest that household expenditures will be sluggish, at best, in the near term,'' the Fed chairman said. ``The continuing decline in house prices reduces homeowners' equity and puts continuing pressure on balance sheets of financial institutions.''"

"Bernanke said construction of commercial office buildings and business spending on equipment and software are likely to slow. Slowing growth abroad could reduce the lift the U.S. economy received from exports in the first half, he also said."

`Quite Adverse'

"``If financial conditions fail to improve for a protracted period, the implications for the broader economy could be quite adverse,'' Bernanke said."

Bernanke also said slowing growth should help moderate inflation pressures. The consumer price index rose 5.4 percent for the year ending in August.

"``The inflation outlook remains highly uncertain,'' Bernanke said. ``The upside risks to inflation remain a significant concern.''"

"Responding to questions from lawmakers, Bernanke said that should the rescue succeed and spur an economic recovery, that may lead the Fed to raise interest rates sooner than it otherwise would. For the plan itself, ``I don't expect any effect on inflation,'' Bernanke said."

Quick Rescue

The Fed chief's remarks are the second of three testimonies in two days. Bernanke yesterday told the Senate Banking Committee in a joint appearance with Paulson that lawmakers should pass the rescue plan quickly. He appears later today at the House Financial Services Committee.

Bernanke today reiterated his support for what would be the biggest federal intrusion into markets since the New Deal. Fed officials have so far failed to stem the credit crisis even after the steepest rate cuts in two decades and interventions in Bear Stearns Cos. and American International Group Inc. this year.

The Treasury this month also took over Fannie Mae and Freddie Mac as the turmoil engulfed the two largest mortgage finance companies.

Lawmakers have balked at approving the Treasury's proposal to buy illiquid assets from financial institutions without changes. Republicans resisted the plan's size and scope and Democrats demanded support for homeowners and limits on executive pay.

"The Fed has also pumped billions of dollars into banks to try to restore liquidity, while invoking extraordinary powers to loan to securities firms."

Credit Collapse

"Along with the bailout, Bernanke supports a regulatory overhaul for a U.S. financial industry upended by $523 billion in losses from the collapse of mortgage credit. The Fed approved this week bids by Goldman Sachs Group Inc. and Morgan Stanley to become banks, ending an investment banking era sealed last week by the bankruptcy of Lehman Brothers Holdings Inc."

Merrill Lynch & Co. agreed to a merger with Bank of America Corp. earlier this month.

"Some 6.41 percent of outstanding mortgages were delinquent at the end of June, and 2.75 percent were in foreclosure, according to the Mortgage Bankers Association."

To contact the reporter on this story: Craig Torres in Washington at ctorres3@bloomberg.net.

"Last Updated: September 24, 2008 13:59 EDT"





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OPEC President Says Dollar Rate Determining Oil Price (Update1)

By Ahmed Rouaba and Maher Chmaytelli

"Sept. 24 (Bloomberg) -- The dollar's exchange rate will determine crude oil prices as investors are likely to buy commodities as a hedge against any depreciation of U.S. assets, OPEC President Chakib Khelil said."

"``The price depends on the dollar, it has nothing to do with oil demand and supply,'' Khelil, who is also Algeria's energy minister, told reporters today in Algiers. ``If the dollar weakens, oil will go up.''"

"The Organization of Petroleum Exporting Countries won't hold a meeting before its planned conference on Dec. 17 in Oran, Algeria, where the group will discuss production levels for the first quarter of 2009, he said."

"OPEC, which supplies 40 percent of the world's oil, will assess in Oran the impact of a decision taken at its Sept. 9 meeting in Vienna to cut production by about 500,000 barrels a day, said Khelil."

"Crude oil for November delivery gained as much as $2.89, or 2.7 percent, to $109.50 a barrel in electronic trading on the New York Mercantile Exchange. It was at $109.22 at 11:35 a.m. London time."

"The group resolved at Dec. 9 meeting to stick more closely to official quotas by trimming production, after oil prices plunged from their July 11 record of $147.27 a barrel."

"OPEC's oil supply will probably decrease this month by 800,000 barrels a day, or 2.4 percent, because of lower exports from Saudi Arabia, Iran, Iraq and Nigeria, according to preliminary estimates from PetroLogistics Ltd."

"OPEC will provide 32.6 million barrels daily this month, compared with 33.4 million a day in August, PetroLogistics founder Conrad Gerber said by telephone from Geneva."

"Global oil demand will increase by 0.9 million barrels a day next year, said Khelil."

"OPEC's membership will drop to 12, from 13, in 2009, after Indonesia decided to quit the organization because it became a net oil importer. The group announced at its last meeting a production target of 28.8 million barrels a day, excluding Indonesia and Iraq. Iraq is allowed to produce at will to finance reconstruction."

To contact the reporters on this story: Ahmed Rouaba in Algiers through the newsroom in London at rouaba@hotmail.comMaher Chmaytelli in Nicosia at mchmaytelli@bloomberg.net

"Last Updated: September 24, 2008 08:44 EDT"





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Home Resales in U.S. Fall 2.2% to 4.91 Million Pace (Update1)

By Bob Willis

"Sept. 24 (Bloomberg) -- Sales of previously owned U.S. homes fell more than forecast in August and prices dropped the most on record, a sign the market remained in a slump heading into the latest financial meltdown."

"Sales of existing homes dropped 2.2 percent to an annual rate off 4.91 million units from 5.02 million the prior month, the National Association of Realtors said today in Washington. The median price declined 9.5 percent from August 2007 and the number of properties fell from a record."

"The collapse in lending that brought down American International Group. Inc. and Lehman Brothers Holdings Inc. this month may also make mortgages more difficult to get. A lack of credit raises the odds sales will again slump after hovering around a 10-year low this year, even as borrowing costs drop."

"``The headwinds facing housing have intensified,'' Peter Kretzmer, a senior economist at Bank of America Corp. in New York, said before the report. ``Delinquencies and foreclosures continue to rise while credit conditions remain tight.''"

"Resales were forecast to fall to a 4.94 million annual rate, according to the median estimate of 73 economists in a Bloomberg News survey. Projections ranged from 4.7 million to 5.15 million."

Federal Reserve Chairman Ben S. Bernanke said today in testimony before congress that the U.S. is facing ``grave threats'' to financial stability and warned that the credit crisis has started to damage household and business spending.

Bernanke Testimony

"``Economic activity appears to have decelerated broadly,'' Bernanke said in remarks prepared for a Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16. ``Stabilization of our financial system is an essential precondition for economic recovery.''"

Home resales were down 10.7 percent compared with a year earlier. Resales totaled 5.65 million in 2007.

"Today's figures compare with the 4.85 million level reached in June, the lowest in a decade and 33 percent down from the record reached in September 2005."

"The number of previously owned unsold homes on the market at the end of August represented 10.4 months' worth at the current sales pace, down from 10.9 months' at the end of the prior month."

"There were 4.255 million properties on the market in August, down 7 percent from the prior month, the biggest drop since December 2006."

Median Prices

"The median price of an existing home dropped to $203,100 from $224,400 a year ago. For single-family houses, the median price dropped 9.7 percent, the biggest decline since records began in 1968."

"Resales account for about 90 percent of the market, while purchases of new homes make up the rest. Sales of existing homes are compiled from contract closings and may reflect contracts signed one or two months earlier."

"Tomorrow, the Commerce Department is forecast to report that sales of new houses dropped to an annual pace of 510,000 from 515,000 in July, according to survey estimates. Sales of new homes are down 63 percent from their July 2005 peak."

"Today's report showed resales of single-family homes fell 1.4 percent to an annual rate of 4.35 million. Sales of condos and co-ops declined 8.2 percent to a 560,000 rate."

"The Northeast suffered a 6.6 percent decline in sales, followed by a 5.3 percent drop in the West. Purchases rose in the Midwest and Southeast."

Less Credit

"``Some of the declines in sales were due to tighter lending standards that Fannie Mae and Freddie Mac had imposed prior to the takeover,'' Lawrence Yun, chief economist at the Realtors' group, said in a press conference."

"As sales shrank, builders scaled back construction projects to pare swelling inventories. Work began in August on the fewest houses since 1991, the Commerce Department reported last week. The number of building permits issued also fell, signaling construction cutbacks will continue to hurt the economy."

"``The biggest issue is consumer confidence in housing right now,'' Ara Hovnanian, chief executive officer of Hovnanian Enterprises Inc., New Jersey's largest homebuilder, said in a Sept. 19 interview on Bloomberg Television. ``It remains a very challenging environment.''"

"Hovnanian said sales in ``some select markets,'' such as northern California and the Washington suburbs in Virginia, ``have really started to pick up.'' It's ``absolutely'' too early to call a bottom for the market, he said."

Stabilization

"Resales stabilized in recent months as some Americans took advantage of depressed property values. One-third to 40 percent of July purchases reflected distressed properties, including foreclosures, the real-estate agent's group said last month."

"Stricter lending regulations and tumbling home prices make it harder for Americans to tap home equity for extra cash. Consumer spending in the third quarter will probably be the weakest since 1991, according to economists surveyed earlier this month."

"The housing slump is the ``root cause'' of the turmoil in financial markets, Treasury Secretary Henry Paulson said in testimony before the Senate yesterday. It ``has resulted in illiquid mortgage-related assets that are choking off the flow of credit which is so vitally important to our economy.''"

Federal Reserve Chairman Ben S. Bernanke joined Paulson in urging lawmakers to quickly pass a $700 billion rescue plan for financial institutions and warned the economy will shrink if markets don't begin functioning normally.

To contact the reporter on this story: Bob Willis in Washington at bwillis@bloomberg.net

"Last Updated: September 24, 2008 10:17 EDT"





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"Most Asian Stocks Gain, led by Mitsubishi UFJ; Sony Declines "

By Chua Kong Ho and Kyung Bok Cho

Enlarge Image/Details

"Sept. 24 (Bloomberg) -- Most Asian stocks rose, led by financial companies, as a share sale by Goldman Sachs Group Inc. eased concern that the global credit crisis will deepen."

Macquarie Group Ltd. surged 11 percent in Sydney after Warren Buffett'sBerkshire Hathaway Inc. said it will buy $5 billion of Goldman stock. Mitsubishi UFJ Financial Group Inc. rose 4.2 percent in Tokyo after saying it will purchase as much as 20 percent of Morgan Stanley. Honda Motor Co. and Sony Corp. dropped at least 2 percent on concern demand for cars and consumer electronics will fall as economic growth slows.

"``Buffett has given Goldman his seal of approval,'' said Kim Jae Dong, who oversees the equivalent of $2.6 billion as head of equities at SEI Asset Korea Co. in Seoul. ``That has helped lift peoples' worries that the big investment banks would fail, but there's still lingering concern about a recession.''"

"The MSCI Asia Pacific Index was down 0.1 percent at 116.23 as of 7:40 p.m. in Tokyo. About five stocks gained for every four that fell. The benchmark index dropped as much as 6.9 percent last week after Lehman Brothers Holdings Inc. filed for bankruptcy, American International Group Inc. was taken over by the U.S. government and Merrill Lynch & Co. sold itself to Bank of America Corp."

"Standard & Poor's 500 Index futures rose 1.4 percent today. Goldman, which this week transformed itself from the biggest U.S. securities firm to the fourth-largest bank by assets, advanced 7.8 percent in after-hours trading in New York after saying Berkshire will purchase $5 billion of perpetual preferred shares."

"Nikkei, Hang Seng"

"Japan's Nikkei 225 Stock Average rose 0.2 percent to 12,115.03. The country's markets were shut yesterday. Australia's S&P/ASX 200 Index gained 1.2 percent, led by National Australia Bank Ltd., the nation's biggest by assets."

"The S&P 500 Index dropped 1.6 percent yesterday, capping a two-day decline of 5.3 percent, as Congress members expressed skepticism about Treasury Secretary Henry Paulson's $700 billion bank bailout plan, which Federal Reserve Chairman Ben S. Bernanke said is critical for preventing a recession."

The Federal Reserve arranged today to channel $30 billion into the global financial system by opening currency swap lines with four central banks to relieve short-term dollar funding in markets worldwide.

"Macquarie, Australia's biggest securities firm, gained 11 percent to A$40, while National Australia Bank advanced 7.3 percent to A$25.60."

Goldman also said it plans to sell at least $2.5 billion of common stock to the public. It will be the firm's first such offering since 2000.

`Cheap Prices'

"Sumitomo Mitsui Financial Group Inc., Japan's second-largest listed bank by value, may invest in Goldman's public offering, two people with knowledge of the matter said, declining to be identified before a decision is announced. Kyodo news reported earlier that Sumitomo Mitsui will invest in Goldman. Spokespeople for the banks declined to comment. Sumitomo Mitsui gained 1.2 percent to 684,000 yen."

"Mitsubishi UFJ, Japan's largest bank, gained 4.2 percent to 936 yen. The lender said on Sept. 22 it agreed to buy 10 percent to 20 percent of Morgan Stanley, adding that it will start due diligence before determining a final price."

"Nomura Holdings Inc., Japan's biggest securities firm, rose 5.2 percent to 1,505 yen after agreeing to pay less than a month's revenue for units of bankrupt Lehman Brothers Holdings Inc. in Asia and Europe."

"``It's smart for Japan's financial institutions to pick up assets at cheap prices and expand overseas,'' said Roger Groebli, Singapore-based head of financial market analysis at LGT Capital Management, which oversees about $20 billion."

"Cars, Electronics"

"MSCI's Asian index has dropped 26 percent this year, as a U.S. housing recession triggered a global credit crisis that has saddled financial companies with more than $520 billion in writedowns and losses, crippled lending and threatened to drag the global economy into a recession."

"The Asian benchmark was valued at 13.18 times estimated earnings as of yesterday, the cheapest valuation since Nov. 20, 2007, according to data compiled by Bloomberg."

"Honda, Japan's second-largest automaker, slid 2 percent to 3,430 yen. Toyota Motor Corp., which counts North America as its largest market, fell 1.2 percent to 4,810 yen. Sony, the world's second-largest consumer electronics maker, dropped 2.6 percent to 3,430 yen."

"In Hong Kong, China Petroleum & Chemical Corp., Asia's biggest oil refiner, added 2.8 percent to HK$6.66."

Crude oil for November delivery fell 2.5 percent to $106.61 a barrel in New York yesterday and was recently trading at $107.80.

"Jiangxi Copper Co., China's second-biggest copper smelter, slumped after the price of the metal fell 3.2 percent, the most since Sept. 5. Jiangxi lost 2.7 percent to HK$8.39 in Hong Kong."

Palm Oil

"Sumitomo Chemical Co. declined 5.2 percent to 516 yen, after Deutsche Bank AG lowered its price estimate for the chemicals maker, citing weak demand and a delay in a joint venture."

"Plantation stocks declined in Kuala Lumpur after Standard Chartered Plc lowered its 2008 and 2009 price estimates for crude palm oil. IOI Corp., Malaysia's second-biggest oil-palm grower, slid 1.3 percent to 4.5 ringgit."

"ZTE Corp., China's second-biggest maker of telephone network equipment, plunged 9.7 percent to HK$27.10, the lowest since March 31. The China Securities Journal reported yesterday ZTE won fewer orders from China Telecommunications Corp. than rival Huawei Technology Co."

"Paladin Energy Ltd., the Australian company producing uranium in Namibia, rose 6.5 percent to A$4.62 after more than doubling its estimated ore reserves."

To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.netl; Kyung Bok Cho in Seoul at kcho7@bloomberg.net

"Last Updated: September 24, 2008 06:47 EDT"





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Canada Small Business Confidence Rebounds From Lowest Since `01

By Alexandre Deslongchamps

"Sept. 24 (Bloomberg) -- Canadian small-business confidence rebounded from the lowest in almost seven years this quarter as fuel costs eased, an industry survey showed."

"The Canadian Federation of Independent Business's quarterly barometer was 101.8 in September, compared with 100.7 in June, the group said today in an e-mailed statement. The index, which rose for the first time in a year, is still close to the lowest since the third quarter of 2001."

"The report shows that while Canadian businesses saw an improvement, they're still struggling to cope as the U.S. economy slows and energy prices hurt profit margins. The world's eighth-largest economy grew at a 0.3 percent pace between April and June, rebounding from a 0.8 percent contraction in the first quarter."

"Economic growth will slow to 1 percent this year, the least since 1992, the Bank of Canada said in a July forecast. Central bankers left the benchmark lending rate unchanged at 3 percent on Sept. 3. The next decision is scheduled for Oct. 21"

"Thirty-four percent of companies surveyed by CFIB said they've performed better in the current year than in the previous one, and 32 percent said the opposite. Over the next 3 months, 32 percent of businesses predict an improvement, against 21 percent who say conditions will deteriorate."

"The business organization, which polled 1,681 members from Sept. 2-12, says it represents more than 100,000 small and mid- sized businesses accounting for C$75 billion ($73 billion) of Canada's C$1.5 trillion gross domestic product."

To contact the reporter on this story: Alexandre Deslongchamps in Ottawa at adeslongcham@bloomberg.net.

"Last Updated: September 24, 2008 11:43 EDT"





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"Russia, India Lead Emerging Market Gains on Goldman, Fed Deals "

By Emma O'Brien

Sept. 24 (Bloomberg) -- Emerging market stocks gained as Warren Buffett's backing of Goldman Sachs Group Inc. and the Federal Reserve's currency swap deal with four central banks lured investors back to riskier assets.

"Russia's dollar-denominated RTS Index gained 3.9 percent to 1,321.62 in Moscow and the government's 30-year dollar bonds increased for the first time in three days, lowering the yield by 4 basis points to 6.93 percent. The Bombay Stock Exchange Sensitive Index, or Sensex, jumped as much as 2 percent, helping lift the MSCI Emerging Markets Index by 0.2 percent to 831.67."

"``When a big investor shows he has confidence in Goldman Sachs that's naturally supportive for financials and the Fed's swap deal addresses one of the biggest problems at the moment which is limited liquidity,'' said Beat Siegenthaler, chief strategist for emerging markets in London at TD Securities Ltd. ``Emerging markets are at the mercy of the global story and that is overriding most country-specific issues at the moment.''"

"Goldman will raise more than $7.5 billion by selling stakes to Buffett's Berkshire Hathaway Inc. and through public stock offerings. The Fed arranged to channel $30 billion into the global financial system by opening currency swap lines with central banks in Australia, Norway, Denmark and Sweden, helping to ease dollar shortages."

"Russia's ruble-denominated Micex Index climbed 2.7 percent to 1,100.08 before trading was halted at 4:20 p.m. in Moscow because of ``technical'' problems, according to spokesman Alexei Gerasyuk. Trading will resume an hour after the suspension, he said."

"China's CSI 300 Index, which tracks yuan-denominated A shares, advanced 0.7 percent to 2,138.85."

Romania Rises

"Romania's benchmark BET Index rose 0.5 percent to 4,626.19 after the government suspended a 16 percent capital gains tax on stock market investments and cut transaction fees. The Bucharest Stock Exchange index has lost 53 percent in the past year."

"Romania also plans to sell stock in state companies such as Nuclearelectrica SA, operator of the country's nuclear reactors. Romania's leu strengthened 0.3 percent against the dollar today."

"The ruble strengthened 0.6 percent to 24.9407 against the dollar. Russian markets were boosted by a jump in the price of oil, the country's biggest export earner. Crude for November delivery gained as much as 2.7 percent to $109.50 a barrel in electronic trading on the New York Mercantile Exchange, as investors anticipate a government report will show U.S. crude and fuel inventories fell last week."

Oil `Comfort'

"``We're seeing a relief rally driven by low valuations after recent declines in emerging markets,'' said Peter Westin, an equities strategist at JPMorgan Chase & Co. in Moscow. ``Oil is definitely providing some comfort.''"

"OAO Lukoil, the biggest non-state oil company in Russia, gained 0.6 percent to 1,659 rubles on the Micex before trading stopped. The yield on Lukoil's 7.1 percent bond maturing in 2011 dropped 100 basis points to 9.12 percent today, the lowest in two weeks."

"OAO Gazprom, the world's largest natural-gas producer and Russia's biggest borrower, jumped 5.7 percent to 215 rubles after Kommersant reported it plans to pay back 230 billion rubles ($9.2 billion) of debt by the end of the year."

"Emerging-market stocks are the cheapest relative to their earnings since July 2005, with the MSCI Emerging Markets Index valued at 10.9 times the profits of its companies last week, according to data compiled by Bloomberg."

"``There's really some excellent bargains out there,'' Mikhail Galkin, director of fixed-income and credit research at MDM Bank in Moscow, said in an interview with Bloomberg Television today."

"The extra yield investors demand to own developing nations' bonds instead of U.S. Treasuries increased 4 basis points to 3.63 percentage points, according to JPMorgan's EMBI+ index at 1:47 p.m. in London. A basis point is 0.01 percentage point."

To contact the reporter on this story: Emma O'Brien in Moscow at eobrien6@bloomberg.net

"Last Updated: September 24, 2008 09:07 EDT"





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"U.S. Stocks Rise on Buffett's Goldman Investment, Tech Rally "

By Elizabeth Stanton

Sept. 24 (Bloomberg) -- U.S. stocks rose as investor Warren Buffett's $5 billion investment in Goldman Sachs Group Inc. bolstered confidence in the banking system and technology shares rallied on expectations of stronger demand.

"Goldman, the most profitable firm on Wall Street, added 3.8 percent after Buffett's Berkshire Hathaway Inc. bought preferred shares and the company raised an additional $5 billion by selling common stock. Intel Corp. climbed for a second day as Wedbush Morgan Securities analysts said chipmaker valuations are too low and sales may pick up next year."

"The Standard & Poor's 500 Index advanced 7.38 points, or 0.6 percent, to 1,195.6 at 1:28 p.m. in New York. The Dow Jones Industrial Average increased 55.99 to 10,910.16. The Nasdaq Composite Index added 22.43 to 2,175.76. About the same number of stocks advanced as fell on the New York Stock Exchange."

Benchmark indexes rebounded from their steepest two-day plunge in six years. U.S. stocks declined yesterday as members of the Senate Banking Committee expressed objections to recommendations by Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson for Congress to quickly pass a $700 billion plan to buy toxic assets from financial firms.

The S&P 500 swung between gains and losses after Federal Reserve Chairman Ben S. Bernanke said the credit crisis is a ``grave threat'' to financial stability. A rally in energy shares helped the benchmark index for U.S. equities resume its advance.

Buffett's Buy

"Goldman rose $4.80 to $129.85, extending yesterday's 3.5 percent increase. In addition to Buffett's investment, Goldman raised $5 billion in a stock offering at $123 a share."

"Berkshire's preferred shares pay a 10 percent dividend and the company is also getting warrants to buy $5 billion of common stock at $115 a share, 8 percent less than Goldman's closing share price yesterday."

"Buffett endorsed Paulson's plan in an interview this morning on CNBC, saying it was ``absolutely necessary'' to stem an ``economic Pearl Harbor.''"

"``The market could not have taken another week'' like last week, Buffett told the news channel. ``I think it was the last thing Hank Paulson wanted to do, but there's no Plan B for this.''"

"JPMorgan Chase & Co. added 1 percent, while Wachovia Corp. and KeyCorp climbed more than 3 percent."

"Intel rose 15 cents to $18.78. The shares should be purchased as stock values for the semiconductor industry become more ``attractive,'' according to Wedbush Morgan Securities."

"``We think we are several quarters away from the cyclical trough and, at current levels, feel that semi stocks present relatively attractive risk/reward,'' analysts Patrick Wang and Michael Lucarelli, based in New York, wrote in a note today."

"They reiterated their ``buy'' rating for Intel, the world's largest maker of computer chips."

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

"Last Updated: September 24, 2008 13:29 EDT"





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India's Bonds Slide as Government to Hold Unscheduled Debt Sale

By Anil Varma

"Sept. 24 (Bloomberg) -- India's 10-year bonds fell, pushing yields to the highest this month, after the government said it will hold an unscheduled debt sale this week."

"Benchmark notes dropped the most in a week after India said late yesterday it plans to sell 100 billion rupees ($2.2 billion) of bonds on Sept. 26, advancing a part of its borrowing from the second half of the fiscal year that started April 1. The additional borrowing is for meeting the ``emerging requirements of the government,'' the finance ministry said."

"``Bonds have fallen in reaction to the announcement of unscheduled debt supply,'' said Chidambaram Lakshmanan, a fixed- income trader at IndusInd Bank Ltd. in Mumbai. ``Yields could rise further in the coming days.''"

"The yield on the benchmark 8.24 percent note due April 2018 rose 19 basis points to 8.63 percent as of the 5:30 p.m. close in Mumbai, according to the central bank's trading system. The price fell 1.18 per 100 rupee face amount, to 97.5. A basis point is 0.01 percentage point."

India will sell 60 billion rupees of 7.94 percent debt due 2021 and 40 billion rupees of 8.28 percent notes maturing in 2032 at the Sept. 26 auction. The sale will boost government borrowings in the first half of the current fiscal year by more than 10 percent beyond the budgeted 960 billion rupees.

Bonds also declined on concern a government report will show tomorrow inflation quickened.

"The Ministry of Commerce and Industry may say that wholesale prices gained 12.23 percent in the week ended Sept. 13, compared with 12.14 percent in the previous week, according to the median estimate of 11 economists surveyed by Bloomberg News. The pace of price increases in Asia's third-largest economy reached 12.63 percent, the most in 16 years, in August."

Inflation Concerns

"``Pressure may increase on yields to rise as inflation stays high in the coming weeks,'' Indusind's Lakshmanan said."

"The cost of benchmark Indian interest-rate swaps, or derivative contracts used to guard against rate fluctuations, rose. The five-year swap rate, a fixed payment made to receive floating rates, climbed to 8.5 percent, the highest since Sept. 12, from 8.36 percent yesterday."

"India's five-year borrowing costs are set to climb faster than one-year rates as the government increases debt sales and investors should use swaps to profit from the move, according to HDFC Bank Ltd."

"Five-year rates, currently lower than shorter-term costs, will rise faster as the government sells more debt, said Ashish Vaidya, head of interest-rate trading at the nation's third- biggest bank by market value. Traders should enter two simultaneous swap contracts, agreeing to make five-year fixed- rate payments in exchange for a floating rate in one and making an opposite transaction in the one-year segment."

"Investors will make money from the so-called ``steepener'' trade, which combines two swaps to bet long-term interest rates will rise more, as the spread between five-year and one-year rates narrow. The spread, currently at 46 basis points, will disappear in two months, according to Vaidya."

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

"Last Updated: September 24, 2008 08:50 EDT"





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"German Stocks Fall, Led by Volkswagen, Henkel; Munich Re Gains "

By Stefanie Haxel and Sarah Jones

Sept. 24 (Bloomberg) -- German stocks retreated as business confidence in the country declined more than expected and oil gained in New York after a U.S. government report showed a drop in inventories of crude and gasoline.

"Volkswagen AG, Europe's largest carmaker, sank to a one-week low after saying vehicle sales fell in August. ProSiebenSat.1, Germany's biggest private broadcaster, plunged 6.2 percent after cutting its earnings forecast. Munich Re, the world's biggest reinsurer, rose after it reiterated a profit forecast."

"The benchmark DAX Index slipped 15.66, or 0.3 percent, to 6,052.87. DAX futures expiring in December lost 0.6 percent as of 5:45 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies fell 0.2 percent to 3,061.32."

"Billionaire investor Warren Buffett invested $5 billion in Goldman Sachs Group Inc., after the firm lost 40 percent of its market value in the past year."

"``Buffett's move should have been positive for sentiment,'' said Matthias Jasper, head of equities at WGZ Bank in Dusseldorf. ``However, third-quarter reports are imminent and I expect disastrous results.''"

The Ifo institute's business climate index fell to a three- year low of 92.9 in September as the worsening financial crisis in the U.S. damped the outlook for global economic growth. Economists in a Bloomberg survey forecast a drop to 94.3.

"Crude oil for November delivery climbed as much as $2.89, or 2.7 percent, to $109.5 a barrel in New York. Prices also rose as Kinder Morgan Energy Partners shut its Pasadena terminal in Texas after a fire yesterday."

"ProSieben, Munich Re"

"Volkswagen declined 5.8 percent to 252.34 euros, the lowest since Sept. 17. Vehicle deliveries declined 3 percent last month because of slowing economies in Western Europe and in the U.S."

"Bayerische Motoren Werke AG, the world's biggest maker of luxury cars, fell 1.6 percent to 28.465 euros. Daimler, the second-largest, sank 1.1 percent, to 38.305 euros."

"ProSiebenSat.1 tumbled 6.2 percent to 5.19 euros. Full-year earnings before interest, taxes, depreciation and amortization will be between 670 million euros ($983 million) and 700 million euros compared with the previous forecast of matching last year's Ebitda of 783 million euros, the broadcaster said, citing falling advertising revenue."

"Henkel AG, the maker of Persil detergent, lost 2.4 percent to 27.01 euros, the steepest gain in almost five weeks."

"Munich Re gained 4.6 percent, to 108.80 euros, the highest since August. The world's biggest reinsurer reiterated a forecast that it will increase earnings per share to more than 18 euros in 2010, helped by share buybacks, and confirmed a target to return more than 8 billion euros in capital to investors via share buybacks and dividends between 2007 and 2010."

Reinsurance Demand

"Separately, reinsurers may benefit from the shortage and cost of capital available to insurers, JPMorgan Chase & Co. wrote in a note to investors dated today."

"``Reinsurance is effectively an alternative to traditional sources of capital for primary insurance companies, competing against debt or equity financing,'' the note said. ``As these latter two sources of capital have become more limited and expensive, it seems logical to us that reinsurance demand will increase (and possibly therefore bring pricing power).''"

"Arcandor rallied 6.6 percent to 3.57 euros after Germany's biggest department-store owner said it reached an agreement with Royal Bank of Scotland Group Plc, Bayern LB and Dresdner Bank AG on the extension of the loan."

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

"Nordex AG (NDX1 GY) climbed 72 cents, or 3.3 percent, to 22.40 euros. UniCredit Markets & Investment Banking raised the wind mill maker to ``hold'' from ``sell.''"

"Phoenix Solar AG (PS4 GY) rallied 5.65 euros, or 15 percent, to 43.81, the steepest gain since July 16. UniCredit Markets & Investment Banking raised its recommendation for the maker of sunlight-powered electricity plants to ``hold'' from ``sell.''"

"Solarworld AG (SWV GY) gained 2.17 euros, or 6.6 percent, to 35.19, the highest since Sept. 1. UniCredit Markets & Investment Banking raised its recommendation for Germany's third-largest solar power company to ``buy'' from ``hold,'' saying Solarworld should benefit U.S. senate approved the extension of the renewable energy tax credits."

"Suedzucker AG (SZU GY), the world's biggest sugar processor, gained 67 cents, or 6.5 percent, to 10.94 euros, the highest in two weeks. Futures for the commodity advanced in New York on speculation a jump in crude oil prices will increase demand for ethanol, which is made from cane, and cut supplies of the sweetener."

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

"Last Updated: September 24, 2008 12:24 EDT"





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Libor Jumps as Banks Seek Cash to Shore Up Finances (Update3)

By Gavin Finch and Kim-Mai Cutler

Sept. 24 (Bloomberg) -- Money-market interest rates increased as banks hoarded cash amid deepening concern that the U.S. government's plan to bail out financial institutions may get delayed.

"The one-month London interbank offered rate, or Libor, that banks charge each other for loans in dollars jumped 22 basis points to 3.43 percent, the highest level since January, the British Bankers' Association said today. The corresponding euro and pound rates also rose, and yields on Treasury bills tumbled as investors fled all but the shortest-maturity government debt."

Banks are balking at lending to each other on speculation more institutions will fail following the collapse of Lehman Brothers Holdings Inc. and the U.S. government takeover of American International Group Inc. A $700 billion bank rescue plan from Treasury Secretary Henry Paulson has met resistance from Congressional Democrats and Republicans.

"``There's no real term funding markets except for central banks,'' said Meyrick Chapman, a fixed-income strategist in London at UBS AG. ``The Libor is meaningless. It's for unsecured lending and there is no unsecured lending as far as I can see.''"

"Efforts by central banks to revive money markets with emergency cash auctions haven't worked. The Federal Reserve, European Central Bank and Bank of Japan joined with counterparts in Switzerland, the U.K. and Canada to pump hundreds of billions of dollars into the financial system."

Year-End Demand

"Typical demand for cash in the final months of the year, as banks seek to bolster their balance sheets before closing their books, is being exacerbated by concern that Paulson's proposals will get held up in Congress. One-month dollar Libor soared 40 basis points at the end of November as banks refused to lend funds for year-end."

"The difference between the Libor for three-month dollar loans and the overnight indexed swap rate, the Libor-OIS spread that measures the availability of funds in the market, widened 31 basis points to 166 basis points today, the highest level since at least December 2001. That compares with an average of 8 basis points in the 12 months to July 31, 2007, before the credit squeeze started."

"The Treasury and Fed last week unveiled the $700 billion proposal to move troubled assets from the balance sheets of U.S. financial companies and put them in a new institution. Congressional leaders are weighing new strategies, including the possibility of approving only a $150 billion initial installment for the government to purchase the tainted securities."

`System Restructured'

"``We're seeing the financial system being restructured before our eyes,'' said Peter Hahn, a London-based research fellow at Cass Business School and a former managing director at Citigroup Inc. ``We really have to accept the fact that the central banks are replacing the entire interbank market.''"

"Demand for euros at today's ECB auction of three-month loans was the strongest on record, while banks paid a record premium for dollar loans at yesterday's Fed sale."

"The ECB allotted 50 billion euros ($73.3 billion) at a marginal rate of 4.98 percent. That's the highest since 2000. Banks bid for 155 billion euros. Banks paid 3.75 percent at yesterday's 28-day Fed term auction facility, or TAF. That's 57 basis points more than yesterday's one-month rate, the widest spread since the TAF program began in December."

"The one-month Libor rate for euros rose 7 basis points today to 4.91 percent, and the pound rate also advanced 7 basis points, to 5.91 percent. The overnight rate for dollars doubled to 6.44 percent on Sept. 16 after the Lehman bankruptcy and AIG rescue."

Bill Yields Plunge

Libor loans aren't secured and typically command rates above those of secured loans of similar maturities.

"``We've seen quite a bit of upward pressure in the past couple of weeks and the fact that the TAF came in at over 50 basis points above yesterday's one-month Libor will no doubt add to that,'' said Barry Moran, a Dublin-based money-market trader at Bank of Ireland, the country's second-biggest bank."

"Investors and traders around the world piled into the safest of government debt securities. Rates on three-month Treasury bills plunged to 0.43 percent from 0.72 percent. They fell to 0.02 percent on Sept. 17, the lowest since World War II, from 1.64 percent two weeks ago. Yields on longer-maturity bonds from the U.S., Europe and the U.K also declined."

The U.S. sold seven-day supplementary financing bills today at a high discount rate of 0.05 percent. That compares with 1.93 percent at a sale on July 8.

"To help ease the gridlock in dollar funding, the Fed arranged $30 billion in swap lines today with central banks in Norway, Sweden, Denmark and Australia."

"The world's biggest financial companies posted $522 billion in subprime-related losses and writedowns since the start of last year. That's more than last year's gross domestic product of Ireland and Finland combined, according to data compiled by Bloomberg."

To contact the reporters on this story: Gavin Finch in London at gfinch@bloomberg.net; Kim-Mai Cutler in London at kcutler@bloomberg.net

"Last Updated: September 24, 2008 12:32 EDT"





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"ConocoPhillips, EnCana Start U.S. Refinery Expansion (Update2) "

By Jim Polson

"Sept. 24 (Bloomberg) -- ConocoPhillips, the second-largest U.S. oil refiner, and Calgary-based EnCana Corp. began construction this week on a $3.6 billion Illinois refinery expansion to boost Canadian heavy-oil processing."

"The Wood River refinery will more than double its capacity to refine heavy oil from Canada's oil sands into fuels such as gasoline and diesel to 240,000 barrels a day in 2011, EnCana said today in a statement. Crude-oil processing capacity at the plant will increase 16 percent to 356,000 barrels a day."

"The venture between the companies plans to more than double total heavy-oil production from Canadian tar sands to 180,000 barrels a day by 2012, EnCana said."

"Foundation-piling installation at Wood River, near St. Louis, began this week after the project received U.S. regulatory approval, EnCana said. The expansion includes a 65,000 barrel-a-day coker to process the tar-like oil."

"Output of so-called clean products with less pollution will rise 32 percent to 330,000 barrels a day and production of asphalt, a cheaper product, will be eliminated."

"Canadian oil sands contain as much as 173 billion barrels of economically recoverable oil, a reserve second only to that of Saudi Arabia, according to the Canadian Association of Petroleum Producers. The group has forecast that production will rise to almost 4 million barrels a day in 2020 from 1 million barrels now."

"EnCana, Canada's largest natural-gas producer, announced plans in May to split into separate gas and integrated-oil companies. The oil company will hold stakes in a Borger, Texas, refinery as well as Wood River."

Expansion Venture

"EnCana and ConocoPhillips agreed to form the joint venture in October 2006, with the purpose of expanding the Wood River and Borger refineries, as well as tar-sands output in Canada."

"ConocoPhillips, based in Houston, rose 1 percent to $75.32 as of 9:30 a.m. in composite trading on the New York Stock Exchange. EnCana gained 40 cents to C$73.76."

"Valero Energy Corp., based in San Antonio, is the largest U.S. oil refiner."

To contact the reporter on this story: Jim Polson in New York at jpolson@bloomberg.net.

"Last Updated: September 24, 2008 09:39 EDT"





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Israeli Economy to Show Slowest Growth in Five Years (Update2)

By David Rosenberg

"Sept. 24 (Bloomberg) -- Israel's economy will probably expand 4.5 percent in 2008, its slowest pace since 2003, as export growth eases, the Central Bureau of Statistics said."

"Exports will increase 5.8 percent, compared with 8.5 percent in 2007, the Jerusalem-based bureau said at a press conference today. The forecasts were based on data for the first six to eight months of the year."

"The growth rate has been falling as the global financial crisis hurts Israel's key exports markets of Europe and the U.S. and a strong shekel makes Israeli goods more expensive abroad. The Bank of Israel held its benchmark lending rate steady on Sept. 22, after four consecutive increases, so as not to depress growth further."

"``The 2008 figures were very much influenced by the first half, which was very strong,'' Vered Dar, an economist at Psagot Investment House Ltd., said in an interview. ``The last part of 2008 and all 2009 aren't going to be so rosy. We see growth next year of 2 percent to 2.5 percent.''"

"The shekel has gained 28 percent against the dollar during the past three years and traded at 3.4030 at 4:48 p.m. today. Merrill Lynch & Co., in a report today, said the shekel will probably keep gaining and estimated its ``fair value'' at 3.18."

Weathering the Storm

Central bank Governor Stanley Fischer told parliament's finance committee yesterday that tight government budget policies and conservative bank lending would help Israel weather the global turmoil.

"While Israeli GDP expanded at a 5.3 percent annual pace in the first half of the year, beating economist estimates, the rate will probably slow in the second half, said Soli Peleg, the head of the macroeconomics division at the bureau."

"``Growth will be under 4 percent in the second half, mainly because of exports and investment,'' she said."

Israeli exports have been driven by companies like Israel Chemicals Ltd. which has benefited from the increased demand for fertilizers in emerging markets. Other industries are performing less well. The bureau estimates that exports of polished diamonds will fall 16.8 percent this year.

The bureau's 2008 growth estimate compares with 4.2 percent forecasts by the Bank of Israel and the Finance Ministry. They both expect growth to slow next year to 3.5 percent or less. Merrill Lynch said in a Sept. 12 report that gross domestic product will probably expand 4.4 percent this year and 2.9 percent in 2009.

"Israeli growth will outpace the average expansion for countries belonging to the Organization for Economic Cooperation and Development for the fifth year in a row. The OCED, to which Israel is seeking membership, says average growth among its 30 members this year will be 1.8 percent."

"Consumer spending will probably grow 4.4 percent this year, slowing from 6.7 percent in 2007, the bureau said. Investment in fixed assets will probably drop to 4.9 percent from 15.5 percent, it said."

To contact the reporters on this story: David Rosenberg in Jerusalem at drosenberg1@bloomberg.net

"Last Updated: September 24, 2008 10:37 EDT"





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Copper Drops in N.Y. as Falling Home Sales Signal Slower Demand

By Millie Munshi

Sept. 24 (Bloomberg) -- Copper fell for a second day on speculation that the depressed U.S. housing market will continue to stifle economic growth and reduce metals demand.

"Sales of previously owned homes dropped more than forecast last month in the U.S. and the median price plunged the most on record, an industry report said today. Builders put about 400 pounds (181 kilograms) of copper in the average U.S. home. The metal fell 3.2 percent yesterday, the biggest drop in more than two weeks."

"``There's no light at the end of the tunnel for the housing market and it's feeding into this whole idea that prospects for the U.S. economy don't look very bright,'' said Michael Gross, an analyst at OptionSellers.com in Tampa, Florida."

"Copper futures for December delivery fell 5.85 cents, or 1.9 percent, to $3.0935 a pound at 12:06 p.m. on the Comex division of the New York Mercantile Exchange. Before today, copper dropped 12 percent in the past year."

"August home sales sank 2.2 percent to an annual rate of 4.91 million units from a 5.02 million rate in July, the Washington-based National Association of Realtors said today. Compared with a year earlier, the August rate slid 11 percent, the industry group said. The median sale price fell 9.5 percent."

"Sales were forecast to slip to a 4.94 million annual pace, the median estimate of 73 economists surveyed by Bloomberg News. Richard Gaylord, president of the Realtors association, cited the difficulty that potential buyers have in obtaining loans for the market's decline."

"``We urge Congress to restore access to sound mortgage credit,'' Gaylord said in the group's report on August sales."

Bailout Plan Hearings

"At a congressional hearing on a U.S. plan to revive financial markets, Federal Reserve Chairman Ben S. Bernanke said that the country faces ``grave threats'' to financial stability as ``economic activity appears to have decelerated broadly.'' Bernanke and Treasury Secretary Henry Paulson met with lawmakers for a second day seeking passage of a $700 billion proposal to acquire illiquid assets from lenders to ease the credit crunch."

"``The generally slowing economic conditions will weigh on copper,'' said Frank McGhee, the head dealer at Integrated Brokerage Services LLC in Chicago. ``Copper will be an underperformer until the economy starts to look better.''"

"Commodity demand is also ``subsiding'' because of slowing growth in China, Stephen Roach, chairman and acting chief executive of Morgan Stanley Asia Ltd. said today in an interview."

"Growth in China, the biggest metals buyer, will slow to 10 percent this year, down from 11.9 percent in 2007, according to a survey of economists by Bloomberg."

Copper Market Outlook

"Still, the copper market will remain ``tight'' as producers struggle to increase supplies, Bret Clayton, chief executive officer of Rio Tinto Group Copper, said today in an interview in London."

"Inventories monitored by the London Metal exchange fell for a third straight day, dropping 0.5 percent to 201,050 metric tons. That's the lowest level since Sept. 8."

"On the London Metal Exchange, copper for delivery in three months dropped $95, or 1.4 percent, to $6,885 a metric ton ($3.12 a pound). Before today, the metal gained 4.6 percent this year."

To contact the reporter on this story: Millie Munshi in New York at mmunshi@bloomberg.net.

"Last Updated: September 24, 2008 12:09 EDT"





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East European Currencies: Zloty Falls as Rates Stay Unchanged

By Ewa Krukowska and Yon Pulkrabek

"Sept. 24 (Bloomberg) -- The Polish zloty fell against the euro, declining for a third day, after the central bank left interest rates unchanged amid signs of an economic slowdown. The Turkish lira rose against the dollar."

"Narodowy Bank Polski left the seven-day reference rate at 6 percent today, as forecast by 15 out of 19 economists in a Bloomberg survey, and said rates may need to rise to quell inflation."

"Futures trading shows investors expect the central bank to increase interest rates at least once more this year to curb price growth before it adopts the euro, which the government targets in 2011. Poland must keep inflation, the budget deficit and public debt in check, meeting the so-called Maastricht criteria, to qualify for joining the euro bloc."

"``The Monetary Policy Council prefers to wait until October, when the new inflation projection will help to assess how much tightening is needed to meet the Maastricht inflation criterion,'' said Rafal Benecki, economist at ING Bank NV in Warsaw."

"The zloty traded at 3.3249 per euro by 5:12 p.m. in Warsaw, compared with 3.3251 before the decision and 3.3112 yesterday."

"The Polish currency has gained 7.9 percent against the euro so far this year as policy makers raised borrowing costs four times to curb inflation, which held at 4.8 percent last month."

"``We expect another 50 basis points'' of rate increases this year, ``most likely in October and November,'' analysts at Goldman Sachs wrote in a client note today."

"Lira, Rates"

"Elsewhere, the Turkish lira advanced to 1.2394 against the dollar, from 1.2453 yesterday. Central bank Governor Durmus Yilmaz said he won't cut interest rates until he sees inflation is slowing, Dunya newspaper reported."

"The Hungarian forint rose 0.2 percent to 241.22 per euro. Hungary's retail sales fell an annual 1.8 percent in July, after a 1.9 percent decline in June, the Budapest-based statistics office said today. Economists in a Bloomberg survey had expected a drop of 1.5 percent."

"Hungary's outlook for economic growth and inflation over the next two years has worsened because of a deteriorating global economy, the government's Ecostat research institute said today. The Budapest-based forecasters cut their forecast for growth this year to 2.2 percent from 2.6 percent and raised their inflation estimate to 6.5 percent from 6.2 percent."

"The Romanian leu fell to 3.6813 against the euro, from 3.6638, and the Czech koruna dropped to 24.435 per euro, from 24.131 yesterday. The Slovak koruna was little changed at 30.292."

To contact the reporters on this story: Yon Pulkrabek in Bratislava at ypulkrabek@bloomberg.net; Ewa Krukowska in Warsaw at ekrukowska@bloomberg.net

"Last Updated: September 24, 2008 11:29 EDT"





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Germany Sells New Five-Year Bond; Demand Tops Previous Auction

By Anchalee Worrachate

"Sept. 24 (Bloomberg) -- Germany auctioned 5.62 billion euros ($8.3 billion) of a new five-year government bond, with demand exceeding that at a sale of a similar note in March, as concern about a possible recession drew investors to the safest assets."

"The sale today drew bids for 1.2 times the amount of securities on offer, compared with 1.06 times in the March auction, according to figures from the German central bank. The Bundesbank retained 1.38 billion euros, or 20 percent of the total, less than the 1.67 billion euros kept last time. The auction took place after an industry survey showed business confidence in Germany fell to the lowest level in three years."

"``The demand improved from the previous auction primarily because of higher yields and risks of recession in the euro region,'' said Riccardo Barbieri, head of trading strategy in London at Bank of America Corp., who correctly predicted the so- called bid-to-cover ratio for the sale. The bank is one of 33 institutions authorized to participate in the auctions. ``It might not be a strong result and German debt sales have generally done poorly this year, but overall the backdrop was more favorable for this auction.''"

Appetite was so poor at the March sale of new five-year securities that the Frankfurt-based Bundesbank was obliged to retain almost 31 percent of the 7 billion euros offered. Today's offering of 7 billion euros in new 2013 notes is Germany's first debt sale since the collapse of Lehman Brothers Holdings Inc. and the U.S. government's takeover of American International Group Inc. sent markets into a tailspin last week.

"Governments are struggling to sell debt after financial companies posted $522 billion in writedowns and losses since the start of 2007, shrinking balance sheets and limiting their ability to assume more risk."

"Spain, France"

"Last week, Bank of America agreed to buy Merrill Lynch & Co., which is the top-ranked bidder at bund auctions, according to the German Finance Agency."

Demand fell at an auction of Spanish bonds last week and France offered its debt at a discount to market prices as some investors shunned the securities.

"U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke on Sept. 19 proposed measures to remove tainted assets from bank balance sheets. The yield on the benchmark two-year German note rose 33 basis points, the most in 18 years, on the day of the announcement. The five-year yield climbed almost 30 basis points."

The Munich-based Ifo institute's business confidence index slid to 92.9 from 94.8 in August as the deteriorating financial crisis in the U.S. imperiled the outlook for global growth.

"``Yields have backed up last week and that will probably support the bond,'' Sean Maloney, a fixed-income strategist in London at Nomura International Plc, another member of the bund- auction group, said before the sale."

The yield on five-year German bonds fell 9 basis points to 3.98 percent today.

"In June, the Bundesbank was forced to retain 40 percent of new two-year notes offered in an 8 billion-euro sale, the most in at least 11 years, because it couldn't find enough buyers."

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

"Last Updated: September 24, 2008 07:17 EDT"





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Sugar Futures Rise as Crude-Oil Gain May Spur Ethanol Demand

By Yi Tian

Sept. 24 (Bloomberg) -- Sugar rose for the second time this week on speculation that a jump in crude-oil prices will increase demand for ethanol made from cane and cut supplies of the sweetener.

"Crude rose on expectations that a government report will show U.S. oil and fuel inventories declined last week. Higher energy costs often boost the value of ethanol and have prompted Brazil, the world's biggest cane grower, to turn more sugar into the gasoline additive. Crude rose to a record in July, helping to push sugar to a 31 percent jump this year."

"``Sugar is following crude,'' said Marius Sonnen, the president of Sonnen & Co., a New York-based sugar trader. ``Countries like Brazil are not putting sugar on the sugar market.''"

"Raw-sugar futures for March delivery rose 0.21 cent, or 1.5 percent, to 14.15 cents a pound at 9:33 a.m. on ICE Futures U.S. in New York. The most-active contract has climbed 3.7 percent this week."

"Sugar also rose as confidence in the economy improved after billionaire Warren Buffett agreed to purchase a $5 billion stake in Goldman Sachs Group Inc., Sonnen said."

"Buffett's investment in Goldman, which this week transformed itself from a securities firm into a bank holding company, ``provides hope that economic growth will resume,'' Sonnen said."

"The Reuters/Jefferies CRB Index of 19 raw materials rose as much as 1.2 percent, led by sugar."

"Brazil, the biggest ethanol exporter, will almost triple output of the fuel by 2020, an industry group said last week."

To contact the reporter on this story: Yi Tian in New York at ytian8@bloomberg.net.

"Last Updated: September 24, 2008 10:04 EDT"





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"French Stocks: Axa, Credit Agricole, Dexia, EDF and NicOx "

By Adria Cimino

"Sept. 24 (Bloomberg) -- France's CAC 40 Index lost 1.87, or 0.1 percent, to 4,137.95 at 12:27 p.m. in Paris, retreating for a third day. The SBF 120 Index also slipped 0.1 percent."

Financial companies climbed after billionaire investor Warren Buffett put up $5 billion for Goldman Sachs Group Inc. after the firm lost 40 percent of its market value in the past year. Buffett's Berkshire Hathaway Inc. is buying a stake in Goldman after three of the investment bank's biggest competitors went bankrupt or were forced into emergency sales.

"Credit Agricole SA, France's second-biggest bank by assets, gained 51 cents, or 3.7 percent, to 14.21 euros. Axa SA, Europe's second-largest insurer, increased 31 cents, or 1.4 percent, to 22.80 euros. Dexia SA, the world's biggest lender to local governments, advanced 14 cents, or 1.4 percent, to 10.32 euros."

The following shares rose or fell in Paris. Stock symbols are in parentheses.

"Aedian (AEDI FP) gained 10 cents, or 2.3 percent, to 4.40 euros, rising for a second day. The company, which offers computer services, said it will target improved profitability in fiscal year 2009. Net income for 2008 rose to 0.76 million euros ($1.11 million) from 0.46 million euros."

"Electricite de France SA (EDF FP) surged 1.79 euros, or 3.6 percent, to 51.94, the first increase this week. Europe's largest power utility has agreed to buy British Energy Group Plc for $23 billion after raising its offer. EDF will pay 774 pence a share for the utility. That's 35 percent above the stock's closing price on March 14, the last trading session before British Energy said it may receive an offer."

"Mindscape (ALMIN FP) sank 1.09 euros, or 7.2 percent, to 14.10, falling for a second day. The designer of interactive entertainment software reported a first-half net loss of 661,000 euros compared with a profit of 170,000 euros a year earlier."

"NicOx SA (COX FP), the drugmaker that's developing treatments with Pfizer Inc. and Merck & Co., advanced 27 cents, or 3.1 percent, to 8.95 euros, extending yesterday's 7.6 percent gain. The company said yesterday that it signed an agreement with Pfizer's Capsugel unit for capsules to deliver the experimental osteoarthritis treatment naproxcinod."

"``The stock is extending gains after yesterday's agreement with Capsugel,'' said Marie-Caroline Messager, senior equities manager at Newedge in London. ``They also are at a UBS conference in New York today where they might announce a partnership.''"

"Visiodent SA (SDT FP) jumped 26 cents, or 7.9 percent, to 3.55 euros, rising for a second day. The developer of computer software signed a Swedish distribution deal."

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

"Last Updated: September 24, 2008 06:34 EDT"





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Most U.S. Stocks Drop as Congress Debates $700 Billion Bailout

By Elizabeth Stanton

Sept. 24 (Bloomberg) -- Most U.S. stocks fell for a third day as investors waited for Congress to reach agreement on a $700 billion bank bailout that Federal Reserve Chairman Ben S. Bernanke said is crucial to resolving ``grave threats' to the financial system.

"Citigroup Inc. slid 4.3 percent and General Electric Co. lost 1.9 percent after Bernanke said losses in credit markets are damaging spending by businesses and households. Home Depot Inc., the biggest home-improvement retailer, dropped 2 percent on a report showing sales of previously owned houses slumped more than forecast. Goldman Sachs Group Inc. rallied 6.1 percent after billionaire investor Warren Buffett bought a $5 billion stake in Wall Street's most profitable firm."

"About five stocks retreated for every four that gained on the New York Stock Exchange. The Standard & Poor's 500 Index climbed 5.04 points, or 0.4 percent, to 1,193.26 at 2:36 p.m. in New York. The Dow Jones Industrial Average increased 20.23 to 10,874.4. The Nasdaq Composite Index added 20.83, or 1 percent, to 2,174.16, helped by a rally in chipmakers."

"``The concern is that this is not resolved fast enough or completely enough to restore our credit markets to health,'' said Lawrence Creatura, a fund manager at Clover Capital Management in Rochester, New York, which oversees $2.8 billion. ``If credit markets are not restored to health, the economic implications are likely to be broad and deep.''"

"The S&P 500 resumed a three-day drop as Bernanke, speaking to Congress in a second day of testimony on the Bush administration's bailout plan, said ``economic activity appears to have decelerated broadly.'' The assessment was a downgrade of a forecast Fed officials gave a week ago."

Gains Erased

Stocks rose earlier as Buffett's purchase of a $5 billion stake in Goldman and endorsement of the Treasury's plan to shore up banks bolstered confidence in the financial system.

"Nearly 635 million shares changed hands on the New York Stock Exchange, about half the level seen at the same time a week ago."

"Citigroup declined for a third day, losing 91 cents to $19.08. GE fell 44 cents to $24.52, bringing its decline this week to 8 percent."

"Money-market interest rates increased as banks sought to bolster balance sheets amid deepening concern a bailout of financial institutions won't happen quickly enough to ease short-term funding constraints. The one-month London interbank offered rate, or Libor, for dollars jumped 22 basis points to 3.43 percent, the highest level since January, the British Bankers' Association said today."

`Decelerated Broadly'

"Home Depot slid 26 cents to $25. Rival Lowe's Cos. lost 3 cents to $23.59. Sales of existing homes dropped 2.2 percent to an annual rate of 4.91 million units, topping the 1.2 percent decrease forecast by economists. The National Association of Realtors also said the median price declined 9.5 percent from August 2007."

"The Morgan Stanley Cyclical Index of companies considered most sensitive to economic growth slumped 1.2 percent, bringing its 3-day decline to almost 8 percent. Citigroup led the gauge's retreat, followed by a 4 percent slide in Eaton Corp., a manufacturer of products for industrial and automotive markets."

"``Economic activity appears to have decelerated broadly,'' Bernanke said today in remarks prepared for a congressional Joint Economic Committee hearing, downgrading the assessment of Fed officials when they met on Sept. 16. ``Stabilization of our financial system is an essential precondition for economic recovery.''"

"Public Service Enterprise Group Inc., owner of New Jersey's largest utility, and PPL Corp., owner of Pennsylvania's second- largest utility, retreated about 2 percent after Wachovia Corp. analysts downgraded the shares on concern that lower natural gas prices will reduce earnings."

Buffett's Buy

"Goldman rose $6.95 to $132, extending yesterday's 3.5 percent increase. In addition to Buffett's investment, the most profitable firm on Wall Street raised $5 billion in a common stock offering."

"Berkshire's preferred shares pay a 10 percent dividend and the company is also getting warrants to buy $5 billion of common stock at $115 apiece, 8 percent less than Goldman's closing share price yesterday. Berkshire's Class A shares climbed 3.5 percent to $133,250."

"Buffett endorsed Paulson's plan in an interview this morning on CNBC, saying it was ``absolutely necessary'' to stem an ``economic Pearl Harbor.''"

`No Plan B'

"``The market could not have taken another week'' like last week, Buffett told the news channel. ``I think it was the last thing Hank Paulson wanted to do, but there's no Plan B for this.''"

"American International Group Inc. fell the most in the S&P 500, losing 20 percent to $4.01. The insurer said it will pay at least 8.5 percent interest per year on its entire $85 billion credit line from the government, regardless of how much is used. The interest rates are ``hugely punitive,'' according to Rob Haines, a debt analyst at CreditSights Inc."

"-- Editors: Michael Regan, Chris Nagi"

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

"Last Updated: September 24, 2008 14:38 EDT"





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"Barrick Gold, HudBay Minerals, Open Text: Canada Equity Movers "

By John Kipphoff

"Sept. 24 (Bloomberg) -- The following companies were having unusual price changes in Canadian trading. Stock symbols are in parentheses, and share prices are as of 11:53 a.m. in Toronto."

"The Standard & Poor's/TSX Composite Index advanced 0.4 percent to 12,579.09."

"Barrick Gold Corp. (ABX CN) climbed 2.6 percent to C$39.79, the highest in almost eight weeks. Chairman Peter Munk said the U.S. government's $700 billion bailout of credit markets will erode the value of the dollar and support gold prices."

"Barrick's standing as the largest gold producer and owner of the world's largest gold reserves will make it easy to attract buyers for its debt even as credit tightens, Munk said. The stock has surged 42 percent from a three-year low after Barrick raised $1.25 billion on Sept. 9 in its biggest offering of U.S. bonds."

"HudBay Minerals Inc. (HBM CN) rose 8.4 percent to C$7.25, the highest in a week. The zinc mining company was raised to ``sector outperform'' from ``sector perform'' by Cliff Hale- Sanders at CIBC World Markets. The Toronto-based analyst set a share-price target of C$13.50."

"Junex Inc. (JNX CN) gained the most in three weeks, advancing 11 percent to C$2.44. The oil and natural gas exploration company that owns leases in the Quebec Lowlands was rated ``buy'' in new coverage by Fraser Mackenzie Ltd. analyst Victor Vallance in Toronto."

"Open Text Corp. (OTC CN) dropped the most in more than two years, falling 8.2 percent to C$36.65. The maker of networking software was downgraded to ``sector perform'' from ``sector outperform'' by Paul Steep at Scotia Capital."

"Open Text's U.S.-traded stock has more than doubled since November 2006 when he upgraded it to ``sector outperform,'' the Toronto-based analyst wrote in a report today. With the economy now slowing, Open Text's software-licence sales growth could also cool, Steep wrote."

"Westport Innovations Inc. (WPT CN) gained 1.9 percent to C$11.21, the highest in a week. The developer of technology that allows engines to use cleaner-burning fuels was rated ``buy'' in new coverage by Laurence Alexander at Jefferies & Co. The New York-based analyst set a share-price target of C$13.44 ($13)."

Analysts at ThinkPanmure and Lazard Capital Markets also started coverage with ``buy'' ratings.

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

"Last Updated: September 24, 2008 12:13 EDT"





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Treasury Bill Rates Tumble on Concern Bailout Won't Happen Soon

By Daniel Kruger

"Sept. 24 (Bloomberg) -- Treasuries rose, led by three-month bills, as investors sought the safety of government debt amid concern that a bailout of financial institutions won't happen quickly enough to ease short-term funding constraints."

Bill rates dropped for a third day as lawmakers balked at the $700 billion bank plan pushed by Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson. Bernanke told Congress the U.S. faces ``grave threats'' to financial stability and warned that the credit crisis has started to damage household and business spending. The government sold $34 billion of two-year notes at the lowest yield since March.

"``When bills lead the way, usually there's some kind of financial stress in the market,'' said Tom di Galoma, head of U.S. Treasury trading at Jefferies & Co., a brokerage for institutional investors in New York."

"Rates on three-month Treasury bills plunged 26 basis points, or 0.26 percentage point, at 1:33 p.m. to 0.45 percent. The Treasury's four-week bill, which is sold at a discount in weekly auctions, was priced at $99.977 at the Sept. 16 auction, the highest since at least July 2001. The bill was auctioned at $99.973 yesterday."

"Three-month Treasury bill rates fell to 0.02 percent Sept. 17, the lowest since World War II, on concern credit market losses would widen after the bankruptcy of Lehman Brothers Holdings Inc., Bank of America Corp.'s purchase of Merrill Lynch & Co. and the U.S. takeover of insurer American International Group Inc."

`A Lot of Uncertainty'

"Billionaire investor Warren Buffett, likening the market turmoil to an ``economic Pearl Harbor,'' said his $5 billion investment in Goldman Sachs Group Inc. is a vote of confidence in the Treasury's $700 billion plan, known as the Troubled Asset Relief Program, or TARP."

"``The short-end of the Treasury market continues to get a flight-to-quality bid'' from the bailout plan, said Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc., one of 19 primary dealers that trade with the Fed. ``There's just a lot of uncertainty regarding the timing and the passage and what eventually gets passed.''"

"The yield on the two-year note fell 4 basis points to 2.03 percent, and the benchmark 10-year note's yield was little changed at 3.80 percent."

"The Treasury's auction of two-year securities drew a yield of 2.115 percent, the lowest in six months. Demand was stronger than at the last sale, judging by the bid/cover ratio, which compares the number of bids with the amount of securities sold. It was 2.21 today, compared with 2.18 at the Aug. 27 auction."

Reluctance to Lend

"Demand for all but the safest of government debt increased in the past two weeks after the government seized control of Fannie Mae and Freddie Mac, the country's biggest mortgage- finance companies, and agreed to take over AIG, the largest insurer, and after Lehman's bankruptcy filing on Sept. 15."

The Fed failed to stem the credit crisis sparked by the collapse of the subprime mortgage market by cutting its target interest rate for overnight loans between banks to 2 percent from 5.25 percent a year ago. Financial firms worldwide have posted more than $522 billion in subprime-mortgage related losses and writedowns since the start of last year.

"Lawmakers have resisted approving the Treasury's proposal to buy illiquid assets from financial institutions without changes. Republicans criticize its size and scope, and Democrats demand support for homeowners and limits on executive pay."

"In a sign of banks' reluctance to lend, the rates charged for short-term loans relative to Treasury bill rates, known as the TED spread, rose to 3.06 percent, higher than the 3 percent level reached during the stock-market crash of 1987."

"TAF, Libor"

"The one-month London interbank offered rate, or Libor, for dollars jumped 22 basis points to 3.43 percent, the highest level since January, the British Bankers' Association said."

"Financial institutions bid for nearly two times the amount of loans offered at the Federal Reserve's term auction facility this week, paying more than a half-percentage point premium over Libor. The 28-day TAF auction rate was 3.75 percent, compared with one-month Libor of 3.18 percent, the widest spread since the TAF began."

"Demand for secured loans backed by collateral, such as through the TAF auction, has risen as banks hoard cash and limit unsecured lending amid fears more financial institutions will fail. Libor loans aren't secured, and typically command rates above similar secured loans."

To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net

"Last Updated: September 24, 2008 13:37 EDT"





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Loans Prices Tumble to Record Lows as Bailout Plan Is Debated

By Pierre Paulden

"Sept. 24 (Bloomberg) -- Prices of high-risk, high-yield loans fell to record lows as Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke sought to convince Congress to pass legislation to stabilize financial markets."

"The price of the average actively traded leveraged loan fell 0.42 cent to 83.74 cents on the dollar, according to Standard & Poor's LCD. Prices have slumped 3.84 cents since Sept. 11, four days before Lehman Brothers Holdings Inc. filed for bankruptcy protection."

"Price declines will make it harder for junk-rated companies to borrow as investors opt instead to buy existing debt trading at distressed levels. Lehman's withdrawal from lending, the acquisition of Merrill Lynch & Co. by Bank of America Corp. and other potential finance mergers may exacerbate already tight lending conditions, Fitch Ratings said in a Sept. 22 report."

"``The bottom line is that if world-class former investment- grade companies are finding it difficult to raise capital, speculative-grade companies will find it even harder to obtain funding,'' said Christopher Garman, chief executive officer of Garman Research LLC in Orinda, California."

"Some hedge fund managers are selling assets to prepare for client redemptions at the end of the month and Lehman could unload holdings, Garman said. Lehman had $7.1 billion of high- yield loans and bonds on its book, the bank reported Sept. 10."

"Leveraged lending has dropped 66 percent year-to-date to $267 billion compared with the same period in 2007, according to Bloomberg data, as banks dealt with a backlog of loans they promised to private-equity firms before the credit crisis started in July 2007."

Distressed Prices

"While banks have reduced that backlog to less than $45 billion by selling loans at a discount to buyout firms, debt investors can purchase loans and bonds of companies in the secondary market at distressed prices, Garman said."

"Loans for Tribune Co., the media company taken private by Sam Zell last year, are quoted as low as 61 cents on the dollar, according to Barclays Capital research. The loans may recover between 67 and 90 cents in a bankruptcy, analysts led by Hale Holden wrote in a report Sept. 22."

"Average loan prices have fallen from 94.89 cents on the dollar since the start of the year, according to S&P. The decline has boosted spreads to 781 basis points from 394 basis points over the London interbank offered rate, assuming four years to repayment, according to an S&P index. A basis point is 0.01 percentage point. Three-month Libor, a lending benchmark, is 3.47 percent. The previous low before Lehman's bankruptcy in February was set when prices hit 86.3 cents on the dollar."

Bailout Push

"High-yield, or leveraged, loans are graded below Baa3 by Moody's Investors Service and lower than BBB- by S&P. Loan creditors are repaid before high-yield bonds in bankruptcy."

"Bernanke today reiterated his call for Congress to pass a $700 billion rescue plan to remove devalued assets from the banking system. The U.S. faces ``grave threats'' to financial stability and the credit crisis has started to damage household and business spending, Bernanke said at a congressional Joint Economic Committee hearing."

Bernanke yesterday told the Senate Banking Committee in a joint appearance with Paulson that lawmakers should pass the rescue plan quickly. Bernanke and Paulson are set to appear later today before the House Financial Services Committee.

To contact the reporter on this story: Pierre Paulden in New York at ppaulden@bloomberg.net

"Last Updated: September 24, 2008 11:42 EDT"





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"U.K. Stocks Decline; Anglo American, Vedanta Lead Retreat "

By Sarah Thompson and Alexis Xydias

"Sept. 24 (Bloomberg) -- U.K. stocks fell for a third day, led by mining companies, after U.S. Federal Reserve Chairman Ben S. Bernanke said the world's largest economy faces ``grave threats.'' Anglo American Plc and Vedanta Resources Plc dropped."

British Energy Group Plc rallied 5.7 percent after France's Electricite de France SA agreed to buy the company for 12.5 billion pounds ($23 billion).

"The FTSE 100 Index lost 40.55, or 0.8 percent, to 5,095.57, after earlier gaining as much as 0.6 percent. The FTSE All-Share Index dropped 0.7 percent. Ireland's ISEQ Overall Index added 1 percent."

Bernanke said today U.S. financial stability is at risk and warned that the credit crisis has started to damage household and business spending. The Fed chief reiterated his call for Congress to pass Treasury Secretary Henry Paulson's plan for a $700 billion rescue fund to remove devalued assets from the banking system.

"``Traders look across the Atlantic for further clarity of bail-out plans before committing to any bold moves in the market,'' said Jimmy Yates, a trader at CMC Markets in London. ``Declining metals prices are continuing to weigh on the mining sector.''"

"Mining companies, among the most sensitive to an economic slowdown, led the decline."

"Anglo American, the world's fourth-biggest diversified mining company, lost 6 percent to 2,008 pence. Vedanta Resources, India's largest copper producer, slipped 6.8 percent to 1,424 pence. Nickel, copper and lead fell in the London Metals Exchange."

Vedanta also fell as shareholders forced the company to dump reorganization plans unveiled two weeks ago.

"British Energy jumped 5.7 percent to 765 pence after EDF, the world's largest operator of nuclear reactors, agreed to buy the Scotland-based utility for 774 pence a share."

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

U.K. companies:

"Arden Partners Plc (ARDN LN) plunged 40 pence, or 48 percent, to a record low of 43. The U.K. stockbroker said it's no longer in takeover talks and that full-year revenue will decline."

"Derwent London Plc (DLN LN) fell 20 pence, or 1.8 percent, to 1,080. The office developer focused on central London was cut to ``sell'' at UBS AG, which noted the economic background continues to worsen."

"Eaga Plc (EAGA LN) added 7.75 pence, or 5.9 percent, to 140. The company, which runs a program to provide heating and energy insulation for the elderly, was rated ``buy'' in new coverage at Goldman Sachs Group Inc., citing expectations that Eaga will continue winning contracts."

"Hansard Global Plc (HSD LN) added 5 pence, or 3.8 percent, to 137. The U.K. asset manager said full-year profit rose 18 percent on revenue from Latin America and Asia."

"Imperial Tobacco Group Plc (IMT LN) added 60 pence, or 3.4 percent, to 1,818. Europe's second-largest cigarette maker said its annual financial performance met managers' forecast after February's takeover of Spain's Altadis SA."

"Laura Ashley Holdings Plc (ALY LN), the U.K. furnishings and clothes chain known for floral patterns, rose 3.5 pence, or 24 percent, to 18. The company maintained its first-half dividend, attracting income investors."

"Man Group Plc (EMG LN) added 10 pence, or 2.5 percent, to 408. The U.K.'s biggest hedge fund has asked to be put on the list of stocks in which short-selling is banned following fears that rival hedge funds are targeting it as an alternative to now protected banks and insurers, the Financial Times reported, citing no one."

"Media Corp Plc (MDC LN) slumped 0.42 pence, or 24 percent, to 1.38. The U.K. Internet advertising company said revenue and profit for the year ending Sept. 2008 will be lower than forecast as its Internet publishing division is expected to perform ``below market expectations.''"

"Ricardo Plc (RCDO LN) added 5.75 pence, or 1.9 percent, to 304.75. The U.K. developer of fuel-efficient engines for automakers said fiscal 2008 increased 15 percent to 197.7 million pounds ($366 million)."

Irish companies:

"Providence Resources Plc (PRP ID) added 0.6 cents, or 12 percent, to 6 cents. The Irish oil and natural-gas explorer posted a first-half profit."

To contact the reporters on this story: Sarah Thompson in London at Sthompson17@bloomberg.net; Alexis Xydias in London at axydias@bloomberg.net.

"Last Updated: September 24, 2008 12:18 EDT"





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Polish Central Bank Leaves Benchmark Rate Unchanged (Update2)

By Dorota Bartyzel and Monika Rozlal

Sept. 24 (Bloomberg) -- Poland's central bank left its key interest rate unchanged for a third month as policy makers assess the impact of previous increases and global economic turmoil on the country's inflation.

"Narodowy Bank Polski in Warsaw held the seven-day reference rate at 6 percent, in line with the expectations of 15 out of 18 economists in a Bloomberg survey. Three expected a quarter-point increase."

"A majority of the 10-member rate-setting Monetary Policy Council has already rejected a motion to boost rates at the two past meetings, saying more time is needed to evaluate the economy's reaction to the cumulative 2 percentage-point increase in the base rate over the past 16 months. Since August, all but core inflation data have indicated a deeper economic slowdown that may help damp price growth."

"``The data we have received recently signal that the pace of economic growth may visibly slow in the coming quarters,'' the bank said in a statement today. ``In the face of growing uncertainty about the scale of the slowdown, the council has decided that a more complete assessment of future inflation will be possible only after seeing more data and the inflation projection due in October.''"

"The zloty traded at 3.33 per euro at 4:10 p.m. in Warsaw, down from 3.32 before the decision and yesterday's close. Yield on the government's two-year bond maturing in July 2010 rose to 6.337, 4 basis points above the level before the rate decision and 5 basis points from yesterday."

Slowing Growth

"Slowing economic growth and easing inflation pressures throughout central Europe are giving central banks time to pause in their interest rate cycles. The Czech Republic is expected to leave policy unchanged at a meeting tomorrow, while rate setters in Hungary and Slovakia are seen doing the same next week."

"August retail sales grew 7.7 percent, the smallest increase since January 2006, compared with 14.3 percent in July, while industrial output fell in August for the first time in three years and wages rose at the slowest pace this year."

"Full-year economic growth in Poland is expected by the government to fall to 5.5 percent from 6.6 percent in 2007, while next year's forecast was recently revised to 4.8 percent from an initial 5 percent."

Euro Adoption

"While data may support keeping the rate unchanged, a plan to meet euro-adoption criteria in 2011, a goal agreed by the government and the central bank last week, will require another rate increase, said Jaroslaw Janecki, chief economist at Societe Generale in Warsaw."

"``As Poland announced a firm entry date to the euro zone, the council must curb inflation more efficiently because in the euro zone it should go below 3 percent next year,'' Janecki said, adding the council may increase the key rate at its next meeting on Oct. 28-29."

"``Further tightening of monetary policy cannot be ruled out'' to reduce inflation, which is seen remaining above 3.5 percent, the upper end of the central bank's target range, in the coming months, the council said in the statement."

"Before adopting the euro, Poland needs to meet inflation, debt, deficit and interest rate criteria. It will also need to spend at least two years in the exchange-rate mechanism, which will test the zloty's stability. The inflation rate, at 4.8 percent in August, has remained above the Polish central bank's target of 2.5 percent since October last year."

"``A formal decision on entering ERM-2 will fundamentally influence our monetary policy,'' central bank Governor Slawomir Skrzypek said at a press conference today. ``Technically, the earliest date of possible euro adoption is 2012.''"

To contact the reporter on this story: Dorota Bartyzel in Warsaw at dbartyzel@bloomberg.net. Monika Rozlal in Warsaw at mrozlal@bloomberg.net.

"Last Updated: September 24, 2008 10:45 EDT"





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Wal-Mart Mexico Drops as UBS Advises Selling on `Weak' Sales

By William Freebairn

"Sept. 24 (Bloomberg) -- Wal-Mart de Mexico SAB, Latin America's largest retailer, erased its gain for the year in Mexico City trading after UBS AG recommended selling the shares, citing slowing sales and a declining profit margin."

"Walmex, as the company is known, dropped 2.3 percent to 37.31 pesos as of 10:09 a.m. in New York. Walmex has fallen 1 percent in 2008, while the Bolsa index has dropped 16 percent."

"The retailer may report the lowest monthly same-store sales in 10 years, UBS analysts Tomas Lajous and Monica de la Grange wrote in a research note today. September sales at stores open at least a year may rise by 0.8 to 1 percent, which represents an inflation-adjusted decline of as much as 4.4 percent, the analysts wrote."

"``Negative catalysts ahead should erode Walmex's premium valuation,'' Lajous and de la Grange wrote, cutting their recommendation to ``sell'' from ``neutral.''"

"Earnings before interest, taxes, depreciation and amortization, a measure of cashflow known as Ebitda, may be lower than analysts estimate as costs and competition increase this year, Lajous and de la Grange wrote."

"Citigroup Inc. reduced the price at which it expects Walmex to trade in a year by 7 percent to 46.50 pesos in a report e- mailed today. A ``tough short-term outlook could affect the stock temporarily,'' analyst Eduardo Estrada Lopez wrote, keeping his ``buy'' rating on shares."

To contact the reporter on this story: William Freebairn in Mexico City at wfreebairn@bloomberg.net

"Last Updated: September 24, 2008 10:26 EDT"





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U.S. Stock Futures Rise on Buffett's Goldman Sachs Investment

By Elizabeth Stanton

Enlarge Image/Details

Sept. 24 (Bloomberg) -- U.S. stock futures rallied after investor Warren Buffett's purchase of a $5 billion stake in Goldman Sachs Group Inc. and endorsement of the Treasury's plan to shore up banks bolstered confidence in the financial system.

"Goldman, which this week transformed itself from a securities firm into a bank holding company, added 5 percent after saying Buffett's Berkshire Hathaway Inc. will buy preferred shares and the company will issue common stock in a $10 billion capital-raising plan. Morgan Stanley, which is also converting into a bank, climbed 4.3 percent. Shares in Europe and Asia were little changed."

Futures indicated the Standard & Poor's 500 Index will rebound after concern that Congress will hold up a $700 billion bank bailout plan helped send the benchmark for American equities to its worst two-day slump in six years.

"``It's definitely a vote of confidence, one of the smartest long-term investors putting money up,'' said Ralph Shive, chief investment officer at South Bend, Indiana-based 1st Source Corp. Investment Advisors, which manages $3 billion. ``In the context of the financial bonfire, he poured a little water on the fire, which is positive in the short term.''"

"S&P 500 futures expiring in December rallied 9.7 points, or 0.8 percent, to 1,196.7 at 9:13 a.m. in New York. Dow Jones Industrial Average futures added 76 to 10,930. Nasdaq-100 Index futures rose 17.5 to 1,668. Europe's Dow Jones Stoxx 600 Index added 0.1 percent. The MSCI Asia Pacific Index fell less than 0.1 percent."

Bailout Debated

"U.S. stocks declined yesterday as Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson urged Congress to quickly pass a rescue for financial institutions, saying the U.S. economy will shrink if markets don't begin functioning normally. Lawmakers expressed objections."

"Senator Sherrod Brown, a Democrat from Ohio, said his constituents hold a ``universally negative'' opinion toward the proposal, while Senator Jim Bunning, a Kentucky Republican, said the plan would ``take Wall Street's pain and spread it to the taxpayers.''"

The S&P 500 is down 24 percent since its October record on concern more than $500 billion in credit losses and writedowns at financial firms globally and a slowing economy will curb profits. The bankruptcy of Lehman Brothers Holdings Inc. and emergency sale of Merrill Lynch & Co. to Bank of America Corp. this month fueled concern about firms that rely on bond markets for funding.

Buffett's Buy

"Goldman rose $5.95 to $131, extending yesterday's 3.5 percent increase. In addition to Buffett's investment, the most profitable firm on Wall Street plans to raise $5 billion in a stock offering, two people familiar with the situation said. Sumitomo Mitsui Financial Group Inc., Japan's second-biggest bank by market value, may invest in Goldman's offering, two people familiar with the plans said."

"Berkshire's preferred shares pay a 10 percent dividend and the company is also getting warrants to buy $5 billion of common stock at $115 apiece, 8 percent less than Goldman's closing share price yesterday."

"Buffett endorsed Paulson's plan in an interview this morning on CNBC, saying it was ``absolutely necessary'' to stem an ``economic Pearl Harbor.''"

`No Plan B'

"``The market could not have taken another week'' like last week, Buffett told the news channel. ``I think it was the last thing Hank Paulson wanted to do, but there's no Plan B for this.''"

Morgan Stanley added $1.20 to $29.20. Japan's Mitsubishi UFJ Financial Group Inc. said Sept. 22 it will buy as much as 20 percent of the company.

"Goldman and Morgan Stanley this week said they are converting to bank holding companies supervised by the Fed, a move that gives them permanent access to central bank borrowing and permits more flexible accounting for some assets."

"JPMorgan Chase & Co., Bank of America Corp. and Washington Mutual Inc. all climbed at least 2 percent."

American International Group Inc. increased 4 percent to $5.20. The insurer taken over by the U.S. will give the government convertible preferred stock instead of the warrants originally proposed.

"Investors looking for a way to modify or derail the takeover, which may give the U.S. a 79.9 percent stake, have been waiting for AIG to disclose definitive terms. Shareholders represented by attorney Mickey Kantor and including former Chief Executive Officer Maurice ``Hank'' Greenberg may try to raise money for AIG to avoid having their stakes diluted."

"The Fed today said it has agreed to channel $30 billion into the global financial system by opening currency swap lines with central banks in Norway, Sweden, Denmark and Australia to address ``elevated pressures'' in dollar funding in markets worldwide."

Housing Slump

"A National Association of Realtors' report to be released at 10 a.m. in Washington is forecast to show fewer Americans signed contracts to buy previously owned homes in August than in July, signaling the market remained in a slump heading into the latest financial meltdown, economists said."

"Sales of existing homes probably dropped 1.2 percent last month to a 4.94 million annual pace, matching the year's average, according to the median estimate of economists surveyed by Bloomberg News."

Sequenom Inc. jumped 17 percent to $24. The company said its test to detect Down syndrome before birth correctly identified more than 200 samples in a study.

"Juniper Networks Inc. declined 1.5 percent to $23.88 in Germany. Merrill Lynch & Co. downgraded shares of the second- largest maker of networking equipment to ``underperform'' from ``neutral'' and cut its price estimate to $24 from $27, citing concerns over a slowdown for networking vendors."

To contact the reporters on this story: Daniela Silberstein in Zurich at dsilberstei2@bloomberg.net; Kyung Bok Cho in Seoul at kcho7@bloomberg.net.

"Last Updated: September 24, 2008 09:15 EDT"





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"Oil Rises on U.S. Inventory Forecasts, Texas Terminal Shutdown "

By Mark Shenk

"Sept. 24 (Bloomberg) -- Crude oil rose on forecasts that a government report will show U.S. oil and fuel inventories dropped, and after an oil terminal in Texas was shut by a fire."

"Crude-oil supplies probably dropped for a fifth week, according to a Bloomberg News survey of analysts. Kinder Morgan Energy Partners LP shut its Pasadena terminal in Texas, which connects refineries from along the Gulf of Mexico coast to pipelines serving the eastern U.S, after the blaze yesterday."

"``Traders are positioning before the storage report, which is expected to show a substantial drawdown in supplies,'' said Brad Samples, a commodity analyst for Summit Energy Inc. in Louisville, Kentucky. ``We are seeing tightness in physical markets along the Gulf. In this climate the market is sensitive to any loss of supply.''"

"Crude oil for November delivery rose $2.54, or 2.4 percent, to $109.15 a barrel at 9:01 a.m. on the New York Mercantile Exchange. Prices are down 26 percent from the record $147.27 a barrel reached on July 11."

"Yesterday, oil fell 2.5 percent to $106.61 a barrel as U.S. lawmakers debated a $700 billion government bailout plan for financial companies."

"U.S. crude-oil inventories probably declined 2.5 million barrels from 291.7 million barrels last week after hurricanes Gustav and Ike closed Gulf of Mexico production facilities, according to the median of 12 responses the Bloomberg survey."

"Gasoline stockpiles probably fell 3.6 million barrels from 184.6 million barrels the week before, the survey showed. Supplies of distillate fuel, including heating oil and diesel, probably fell 1.5 million barrels from 129.6 million barrels."

The Energy Department's inventory report is due to be released at 10:35 a.m. in Washington.

`Trading on Fundamentals'

"``Oil is coming out from the shadow of the financial crisis and trading on fundamentals,'' said Michael Fitzpatrick, vice president for energy risk management at MF Global Ltd. in New York. ``It's DOE day and we expect that the report will reflect the slow return of production in the Gulf after the hurricanes and a cutback of OPEC production.''"

"The Organization of Petroleum Exporting Countries will supply 32.6 million barrels of crude a day this month, 800,000 barrels a day less than in August, according to preliminary estimates from consultants PetroLogistics Ltd. The group, which provides more than 40 percent of global supply, resolved at a Sept. 10 meeting to stick more closely to its official quotas."

Terminal Fire

"Kinder Morgan's Pasadena plant is part of the company's Houston complex, taking oil products from refineries in Houston, Texas City, Corpus Christi, Baytown and Sweeny and pumping them into the Colonial, Teppco, Explorer and Magellan pipeline systems, according to a diagram on the company's Web site."

"One employee was injured in the fire, which started at about 10:30 p.m. local time yesterday in a manifold where two pipelines connect, spokeswoman Emily Thompson said in a telephone interview from Houston today. The fire has been brought under control and operations will resume later today, she said."

"The Pasadena site, along the Houston Ship Channel, has a storage capacity of 15.2 million barrels in 117 tanks."

"Brent crude oil for November settlement increased $2.40, or 2.3 percent, to $105.48 a barrel on London's ICE Futures Europe exchange."

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net.

"Last Updated: September 24, 2008 09:27 EDT"





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CME Group Plans to Introduce New Steel Futures Contract in U.S.

By Dale Crofts

"Sept. 24 (Bloomberg) -- CME Group Inc., the world's largest futures exchange, will offer a steel contract beginning Oct. 19 after the rival London Metal Exchange introduced a similar product earlier this year."

"The contract for U.S. Midwest domestic hot-rolled coil will be financially settled against an index developed by CRU International and reflect current market prices, the Chicago- based Exchange said today in a statement. The contract of 20 short tons will be listed for 18 consecutive months, CME said."

"CME Group is adding the contracts after the 131-year-old LME introduced steel futures in February. The exchanges have said futures contracts allow metals buyers to hedge against volatility by guaranteeing supplies at a fixed price. Steel is the second- largest commodity market after oil and gas, according to the London Metal Exchange."

"``In these uncertain financial markets, an exchange-traded contract will provide customers with market transparency and integrity,'' said Rick Redding, CME Group managing director of products and services."

"Prices for hot-rolled coil in the U.S. fell 2 percent in August to an average $1,047 a ton, from $1,068 in July, Purchasing magazine said Aug. 29. Record prices for raw materials such as scrap metal, coal and iron ore caused steel prices to almost double this year."

"Steel producers such as ArcelorMittal, the world's largest, argue futures contracts will allow speculators to play an increased role in the market."

"CME Group rose $11.85, or 3.2 percent, to $382.50 as of 10:28 a.m. New York time in Nasdaq Stock Market composite trading. The shares dropped 46 percent this year through yesterday."

To contact the reporter on this story: Dale Crofts in Chicago at dcrofts@bloomberg.net.

"Last Updated: September 24, 2008 10:55 EDT"





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Barrick Sees `Large-Scale' Gold Buying on Bailout (Correct)

By Stewart Bailey and Rob Delaney

(Corrects spelling of name in second paragraph.)

"Sept. 24 (Bloomberg) -- Barrick Gold Corp. Chairman Peter Munk said bullion prices will go higher, driven by large-scale buying by ``major, major'' holders of dollars who fear the effects of the U.S. government's bailout plan on the currency."

"Central banks or sovereign wealth funds are among those likely to buy gold to diversify their investments and hedge against the risk of a weaker dollar, given the government's $700 billion plan to support the banking system, Munk said today."

"``That impact on holders of U.S. dollars in China or Russia or Abu Dhabi or Kuwait is that they're going to say, `What is that going to mean for the U.S. dollar, and what alternative are we going to have?''' Munk said in an interview in New York. ``So gold is going to have very powerful support.'' Munk, 80, founded Barrick in 1983 and made it the world's largest gold producer."

Gold has surged more than 20 percent since Sept. 11 as investors shifted assets into precious metals as a haven after the bankruptcy of Lehman Brothers Holdings Inc. Treasury Secretary Henry Paulson plans a $700 billion rescue fund to allow banks to dispose of devalued assets such as mortgage-backed securities.

"Paulson and Federal Reserve Chairman Ben S. Bernanke told lawmakers this week that failure to approve the plan would threaten markets and the U.S. economy. Gold may be set to benefit both from the weaker dollar if the plan is approved by Congress, or from the potential failure of the banking system if it isn't."

Hoping for Rescue Package

"``I, like anybody else, hope the package will go through because we do not want the system to collapse,'' Munk said. ``From a gold point of view, a bailout package just means a further devaluation'' of the dollar, he said."

"Gold futures for December delivery rose $2.80, or 0.3 percent, to $894 an ounce at 12:55 p.m. on the Comex division of the New York Mercantile Exchange. Earlier today it reached $907.80. The metal, often bought as a hedge against inflation or at times of market volatility, gained 13 percent last week, the most since October 1999."

"The price could surpass the $1,033.90 record touched on March 17, Barrick Chief Financial Officer Jamie Sokalsky said in a separate interview. The bailout plan is another ``big'' reason to buy the metal, he said. Barrick is based in Toronto."

Investor Support

"The bullish view on gold has support from investors, with Jean-Marie Eveillard, who manages the $22 billion First Eagle Global Fund, and John Hathaway, manager of the $800 million Tocqueville Gold Fund, predicting the inflationary effects of the Fed's plan will help push prices higher. Chief executive officers of rival producers such as Newmont Mining Corp. and Goldcorp Inc. also predict new records for bullion."

"Munk, Barrick's founder, has been acting chief executive officer since March, when Greg Wilkins stepped down because of illness. He's overseeing a plan to dig mines in the Americas and Africa to benefit from seven straight years of price gains."

"Barrick's standing as owner of the world's largest gold reserves will make it easy to attract buyers for its debt even as credit tightens, Munk said. The company sold $1.25 billion of bonds on Sept. 11."

"``We have to look long term, and we have to make billions of dollars of investments and investment decisions,'' Munk said. There were ``people lining up for our bonds. We are really the counterplay to the market -- in market turbulence, people do like gold.''"

To contact the reporter on this story: Rob Delaney in Toronto at robdelaney@bloomberg.net; Stewart Bailey in New York at sbailey7@bloomberg.net.

"Last Updated: September 24, 2008 13:18 EDT"





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"Brazilian Stocks Rise, Led by Petrobras; Chile's Ipsa Gains "

By Alexander Ragir

"Sept. 24 (Bloomberg) -- Brazilian stocks climbed for the first time in three days, led by metal and energy producers, on higher commodity prices and speculation Petroleo Brasileiro SA may gain an advantage in developing new oil fields."

"Petrobras surged after Banco Santander SA analysts said the government may give oil rights to the pre-salt region in exchange for new shares in the company. Cia. Siderurgica Nacional SA, the third-largest steelmaker, rose the most on the Bovespa on the prospect of higher prices next year. Cia. Vale do Rio Doce, the world's biggest iron ore miner, paced gains for metal producers."

"``We are still very bullish on commodities, especially oil, because there is clear limitations on supply,'' said Marco Franklin, who helps manage 50 million reais ($27 million) at Rio de Janeiro-based hedge fund Paraty Investimentos. ``They suffered too much from talk about pre-salt regulations and there was an exaggerated fall. There's also rumors that they will announce another discovery today.''"

"The Bovespa index rose 401.67, or 0.8 percent, to 49,994.84 at 11:19 a.m. New York time. Petrobras contributed to more than half the gain in the index. The BM&FBovespa MidLarge Cap index fell 0.3 percent. The BM&FBovespa Small Cap index advanced 3 percent. Chile's Ipsa jumped 0.7 percent. Mexico's Bolsa was little changed."

Petrobras Gains

"Petrobras gained 2.3 percent to 34 reais. The swap of Brazil's un-leased oil rights in the so-called pre-salt region near Rio de Janeiro would be followed by an offering of shares to minority investors at the same price the government gets for its assets, Santander analysts Christian Audi and Ana Browne said. The region may contain about 50 billion barrels of oil, according to Peter Wells, director of the U.K.'s Neftex Petroleum Consultants Ltd."

Vale gained 1.4 percent to 34 reais. Petrobras and Vale made up the entire gain in the Bovespa index. The Reuters Jefferies Commodities index rose 0.6 percent.

"CSN led gains for steelmakers, jumping 4.2 percent to 48.01 reais."

"Steel prices are set to rebound in 2009 as demand recovers in China and production cuts quicken, Credit Suisse Group analyst Michael Shillaker said."

"The last time Chinese ``apparent demand'' was negative it rebounded the next year to a positive 25 percent, Shillaker said. With faster output cuts, the company expects a rebound in prices into 2009."

"In Chile, Distribucion y Servicio D&S SA paced gains for stocks, rising 1.5 percent to 201.5 pesos. The owner of Chile's biggest supermarket chain was raised to ``hold'' from ``sell'' at Deutsche Bank."

To contact the reporters on this story: Alexander Ragir in Rio de Janeiro at aragir@bloomberg.net;

"Last Updated: September 24, 2008 12:13 EDT"





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"Canadian Stocks Rise With Oil, Gold; EnCana, Potash Lead Gain "

By John Kipphoff

"Sept. 24 (Bloomberg) -- Canadian stocks gained for the first time in three days, led by commodity producers, as rising oil, gold and corn prices boosted energy and materials shares including EnCana Corp. and Potash Corp. of Saskatchewan Inc."

"Bombardier Inc. led a decline in industrial shares, as higher commodity prices signaled increased costs."

"The Standard & Poor's/TSX Composite Index advanced 0.8 percent to 12,627.06 at 10:40 a.m. in Toronto. The main Canadian stock fell the two previous days on speculation that the U.S. government's $700 billion bailout of banks won't be approved speedily enough by Congress to avert an economic slowdown."

EnCana gained 1.6 percent to C$74.52. Canada's biggest energy company by market value and partner ConocoPhillips began construction this week on a $3.6 billion Illinois refinery expansion to boost Canadian heavy-oil processing in the U.S.

"Suncor Energy Inc., the world's second-largest oil-sands mining company, rose 2.9 percent to C$49.42. Canadian Natural Resources Ltd. increased 3 percent to C$86.54."

"Crude oil gained 1.8 percent to $108.54 a barrel in New York, after a government report showed that U.S. crude and fuel inventories declined last week. Gold, copper and corn prices also advanced, helped in part by speculation that a weaker U.S. dollar will revive demand for commodities denominated in the American currency from investors seeking a hedge against inflation."

"Potash Corp., the world's largest maker of crop nutrients by market value, advanced 3.8 percent to $174.15."

"Barrick Gold Corp., the biggest bullion mining company, climbed 3.1 percent to C$40."

"Measures of energy and raw-materials shares, together accounting for more than two-fifths of the S&P/TSX's value, added 1.9 percent and 2.5 percent, respectively. An index of industrial shares lost 0.6 percent."

"Commodity prices will stay ``stronger for longer'' as financing becomes a real constraint on supply growth because of the global credit turmoil, Goldman Sachs Group Inc. said."

"Bombardier, the world's third-largest maker of commercial aircraft, fell 1.9 percent to C$6.27."

"Other transport-related companies retreated on the prospect of higher fuel prices. Canadian National Railway Co., the nation's biggest railroad, slipped 0.6 percent to C$52.94."

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

"Last Updated: September 24, 2008 10:50 EDT"





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Brazil's Real Advances on Buffett's Goldman Sachs Investment

By Adriana Brasileiro

"Sept. 24 (Bloomberg) -- Brazil's real rose after Warren Buffett's Berkshire Hathaway Inc. agreed to invest $5 billion in Goldman Sachs Group Inc., easing concern U.S. financial market weakness will hurt higher-yielding, emerging-markets assets."

"``It's a good sign to see deals like this in an environment where confidence is still very, very weak,'' said Hideaki Iha, a currency trader at Fair Corretora in Sao Paulo. ``More liquid emerging-market currencies like the real are suffering a lot with the crisis.''"

"The real rose 0.3 percent to 1.8411 per dollar at 11:34 a.m. New York time, from 1.8465 yesterday. The gain pared September's loss to 11.4 percent. The real remains the biggest loser against the dollar among the 16 most-active currencies tracked by Bloomberg this month."

U.S. Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson are testifying before lawmakers in Washington today on a proposed $700 billion bailout of the financial system.

"``Investors are waiting to see when and under what terms the U.S. Congress will approve the bailout package,'' Iha said."

"The yield on Brazil's zero-coupon bonds due in January 2010 fell 5 basis points, or 0.05 percentage point, to 14.9 percent. The yield on the overnight futures contract for January delivery was little changed at 14.08 percent."

In an effort to increase liquidity in local markets Brazil's central bank today eased rules on required reserves their banks must keep at the institution.

Reserve Requirements

"The bank said today that a reserve requirement of 20 percent of cash deposits from lease underwriters will only take effect Jan. 16, two months later than scheduled. The reserve requirement will increase to 25 percent in March, according to the central bank."

"Banks need only keep part of their cash, time and savings deposits at the central bank if their required reserve amount exceeds 300 million reais ($162.9 million). Previously, the limit was 100 million reais."

"Brazil's mid-month inflation rate fell to the lowest since March, increasing speculation the central bank will slow the pace of interest-rate increases."

"Inflation as measured by the benchmark IPCA-15 index slowed for a third consecutive month, to 0.26 percent from 0.35 percent by mid-August, the national statistics agency IBGE said today on its Web site. The increase was more than a 0.23 percent median forecast in a Bloomberg survey of 31 analysts."

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

"Last Updated: September 24, 2008 11:35 EDT"





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Brazil's Inflation Rate Falls to Lowest Since March (Update2)

By Joshua Goodman

"Sept. 24 (Bloomberg) -- Brazil's mid-month inflation rate fell to the lowest since March, fueling speculation the central bank will slow the pace of interest-rate increases."

"Consumer price increases as measured by the benchmark IPCA- 15 index slowed for a third consecutive month to 0.26 percent, from 0.35 percent by mid-August, the national statistics agency said today on its Web site. The increase was more than a 0.23 percent median forecast in a Bloomberg survey of 31 analysts."

"Falling commodity prices and slower global economic growth may help lower inflation that has been above the 4.5 percent government target since January, the central bank said in the minutes of its Sept. 9-10 meeting."

"``This confirms the trend of falling prices, which will allow the bank to reduce the pace of rate increases,'' said Thais Zara, economist for Rosenberg & Associates Inc in Sao Paulo."

Four central bank rate increases since April have failed to cool domestic demand that fueled a bigger-than-expected 6.1 percent annual expansion in second-quarter gross domestic product. Growth of retail sales accelerated in July to 11 percent from an 8.2 percent gain in June.

"Inflation on non-food items accelerated to 0.41 percent in September, from 0.38 percent last month, the IPCA report said. The pressure on prices from strong demand was offset by a 0.25 percent drop in food prices, compared to an increase by the same amount last month."

Policy makers led by central bank President Henrique Meirelles voted 5-3 to raise the so-called Selic rate to 13.75 percent from 13 percent at their most recent meeting. The dissenters voted to raise the rate by a half-point to 13.5 percent.

Food deflation helped push annual inflation lower to 6.20 percent in mid-September from 6.23 percent a month earlier.

"The decline in food prices ``should continue for a few more weeks is helping relieve some of the pressure on the central bank caused by still very strong domestic demand,'' said Leonardo Sapienza, chief economist for Banco Votorantim SA in Sao Paulo."

"The yield on Brazil's zero-coupon bonds due in January 2010 rose 4.7 basis points, or 0.047 percentage point, to 14.978 percent at 10:07 a.m. New York time. The yield on the overnight futures contract for January delivery rose almost 2 basis points to 14.10 percent, a two-year high."

To contact the reporter on this story: Joshua Goodman in Rio de Janeiro jgoodman19@bloomberg.net or

"Last Updated: September 24, 2008 10:11 EDT"





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Norwegian Krone Falls as Central Bank Leaves Key Rate on Hold

By Bo Nielsen

Sept. 24 (Bloomberg) -- The Norwegian krone fell against the euro after the central bank kept its main interest rate at a 5 1/2-year high and said there are ``clear signs'' economic growth is slowing.

"While inflation has risen above the central bank's 2.5 percent target, the risks the economy will slow prevented an increase in borrowing costs, Norges Bank said today."

"``In Norway, there are also clear signs that economic growth is slowing,'' Deputy Governor Jan Qvigstad wrote in a statement on the bank's Web site. ``There is now an unusually high degree of uncertainty linked to the turbulence in financial markets. It is therefore appropriate to keep the interest rate unchanged now.''"

"The Norwegian currency fell to 8.2687 per euro before trading at 8.2509 at 4:13 p.m. in Oslo, from 8.2274 yesterday. It was little changed at 5.6219 against the dollar. Sweden's krona was at 9.6543 per euro from 9.6318, and was little changed at 6.5799 versus the dollar."

"UBS AG and Citigroup Inc. were among the banks in the past week that altered their rate forecasts to unchanged, from an earlier estimate of a quarter-point increase, as inflation slowed."

"Norway's underlying inflation rate, which excludes energy costs and taxes, fell to 2.8 percent in August, from 2.9 percent in July, Oslo-based Statistics Norway said on Sept. 10. Norges Bank's inflation target is 2.5 percent."

"``The risk of a long economic downturn abroad has increased,'' the central bank said in today's statement."

"The bank, which raised its key rate twice this year, indicated in June it may deliver one more increase by December to curb inflation."

High-Yield Demand

"Demand for higher-yielding currencies also rose after the Federal Reserve arranged to channel $30 billion into the global financial system by opening currency swap lines with Australia, Denmark, Norway and Sweden, and Goldman Sachs Group Inc. said it raised $5 billion in a stock offering and $5 billion from Warren Buffett's Berkshire Hathaway Inc. to shore up its capital base."

Buffett's investment in Goldman alleviated concern that firms reliant on bond markets for funding will be starved of finance following a surge in borrowing costs. Money-market rates soared after Lehman Brothers Holdings Inc. filed for bankruptcy last week and Bank of America Corp. bought Merrill Lynch & Co.

"When risk aversion wanes, investors borrow in low-yielding currencies such as the yen to buy assets in higher-interest-rate assets such as the krone, in so-called carry trades. When risk aversion increases the trades are reversed."

Changed Forecasts

Sweden's interest rate of 4.75 percent and Norway's main rate of 5.75 percent are exceeded only by New Zealand and Australia among the Group of 10 nations.

"In other trading, the Icelandic krona slipped 0.2 percent to 95.14 versus the dollar, after a government report showed the consumer-price index rose 14 percent in the year ended in September, down from 14.5 in the prior period."

"Nordic government bonds climbed, with the yield on Sweden's 5.25 percent note due March 2011 falling 11 basis points to 3.90 percent. The yield on Norway's 6 percent bond maturing in May 2011 fell 14 basis points to 4.75 percent, according to Danske Bank A/S prices. Yields move inversely to bond prices."

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

"Last Updated: September 24, 2008 10:48 EDT"





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European Bonds Climb; German Confidence Falls to Three-Year Low

By Anchalee Worrachate

"Sept. 24 (Bloomberg) -- European government bonds rose after an industry survey showed business confidence in Germany, the euro region's largest economy, fell to the lowest level in three years, strengthening the case for a cut in interest rates."

"The gains pushed the difference in yield, or spread, between two- and 10-year notes to the widest in five months as investors increased bets the economy will enter a recession. The Munich- based Ifo institute's business climate index, based on a survey of 7,000 executives, fell to 92.9 in September, from 94.8 in August. Economists in a Bloomberg survey expected a drop to 94.3."

"``Economic fundamentals in the region will be supportive of bonds,'' said Peter Mueller, a fixed-income strategist in Frankfurt at Commerzbank AG, Germany's second-biggest lender. ``We expect the next European Central Bank move to be a cut, even though it might not happen this year. That argues for lower bond yields.''"

"The yield on the two-year note dropped 14 basis points to 3.76 percent as of 4:26 p.m. in London. The 4 percent note due September 2010 climbed 0.26, or 2.6 euros per 1,000-euro ($1,468) face amount, to 100.44."

"The yield on the 10-year German bund, the euro region's benchmark government debt security, fell 8 basis points to 4.16 percent. It will decline to 4 percent in coming weeks, and below that level by the end of the year, Mueller said. Yields move inversely to bond prices."

`Grave Threats'

Bonds also gained after money-market interest rates increased as banks sought to bolster balance sheets amid deepening concern a U.S. bailout of financial institutions won't happen quickly enough to ease short-term funds constraints.

"The one-month London interbank offered rate, or Libor, for dollars jumped 22 basis points to 3.43 percent, the highest level since January, the British Bankers' Association said. The corresponding rate in euros rose 7 basis points to 4.91 percent and the pound rate also advanced 7 basis points, to 5.91 percent."

Federal Reserve Chairman Ben S. Bernanke said today the U.S. is facing ``grave threats'' to financial stability and warned that the credit crisis has started to damage household and business spending.

German growth shrank in the second quarter as Europe's economy showed few signs of recovery after a yearlong credit squeeze led to bankruptcies and bailouts on Wall Street. French business confidence dropped to the lowest level in five years in September and in Italy it was the weakest since October 2001.

`Widespread Fallout'

"``The Ifo survey points to the first recession in Germany since the early 1990s,'' said Lena Komileva, an economist at Tullett Prebon Plc, the second-biggest broker of transactions between banks. ``A year into the financial crisis, evidence of widespread fallout from the crisis across real economies in the euro zone defies any perceptions of an ongoing expansion.''"

"The spread between two- and 10-year European notes widened to 41 basis points, the most since April 16. A wider spread, or steeper yield curve, indicates investors raised bets the economy will slow."

"Appetite for German debt recovered at an auction today following a surge in yields. The nation sold 5.6 billion euros of a new 4 percent five-year note, with bids exceeding the securities offered by 1.2 times, compared with a so-called 1.06 bid-to-cover ratio at a March auction of new debt. The Bundesbank retained 1.38 billion euros of the securities, down from 1.67 billion euros at the previous sale."

"The yield on the two-year German note jumped 33 basis points on Sept. 19, the most in at least 18 years, after U.S. Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke proposed measures to remove tainted assets from bank balance sheets."

"``Demand improved from the previous auction primarily because of higher yields and risks of a recession in the euro region,'' said Riccardo Barbieri, head of trading strategy in London at Bank of America Corp. ``It might not be a strong result and German debt sales have generally done poorly this year, but overall the backdrop was more favorable.''"

The yield on Germany's benchmark five-year note fell 10 basis points to 3.97 percent today.

To contact the reporter on this story: Anchalee Worrachate in London at aworrachate@bloomberg.net

"Last Updated: September 24, 2008 11:54 EDT"





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Drop on Oil .txt>> <<2.626_20080924192757ECB's Bonello Sees Economy
Past Worst by YearEnd (Update1) .txt>> <<2.624_20080924190033Brazil
May Swap Petrobras Stock for Oil Rights (Update1) .txt>>
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Economy Home Resales Drop Bernanke Sees Tighter Credit .txt>>
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to Financial Stability (Update3) .txt>> <<2.619_20080924180539OPEC
President Says Dollar Rate Determining Oil Price (Update1) .txt>>
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<<2.616_20080924191051German Stocks Fall Led by Volkswagen Henkel Munich
Re Gains .txt>> <<2.616_20080924190824Libor Jumps as Banks Seek Cash
to Shore Up Finances (Update3) .txt>>
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<<2.604_20080924194437Oil Rises on US Inventory Forecasts Texas Terminal
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Gold EnCana Potash Lead Gain .txt>> <<2.642_20080924190237Brazil's
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