November 25, 2009

Nov. 25 (Bloomberg) -- The following are the day's top stories on currencies:

U.S. Stocks Retreat as Personal Consumption Trails Economists Estimates
U.S. stocks fell, pulling the Dow Jones Industrial Average down from a 13-month high, as smaller- than-forecast growth in personal spending spurred concern that consumers are struggling to recover from the recession. Financial shares led declines, with JPMorgan Chase & Co. and Bank of America Corp. dropping at least 1.2 percent, after the Federal Deposit Insurance Corp.
said the number of ``problem'' lenders climbed to a 16-year high. Hewlett-Packard Co. slid 1.6 percent after reporting a drop in personal-computer sales. Stocks trimmed losses as Federal Reserve policy makers lowered their unemployment forecast. The Standard & Poor's 500 Index lost 0.1 percent to
1,105.65 at 4:06 p.m. in New York. The Dow fell 17.24 points, or 0.2 percent, to 10,433.71. Fewer than 7 billion shares changed hands on all U.S. exchanges, 23 percent below the
three- month average as trading slowed before the Thanksgiving holiday. ``The stock market is skittish,'' said Michael Holland, who oversees more than $4 billion as chairman of Holland & Co. in New York. ``We had mixed economic data points, personal spending is not feeling good and the FDIC making comments on problem banks. Those are all reminders that we're still in the process of healing. Investors are reacting accordingly.''
Brazilian Stocks Rise on Tax Cut Speculation, Pulp Outlook; Real Declines
Brazilian stocks rose for a second day on speculation the government may announce tax cuts for industries ranging from cars to furniture to bolster sales as an improving outlook for pulp prices sent producers higher. Duratex SA, which makes bathroom fittings and wood panels, jumped to a record after a Brazilian newspaper reported that the government may cut taxes on furniture sales to bolster demand. Lojas Americanas SA, Brazil's biggest discount retailer, rose 3.9 percent after UBS AG said it was one of its preferred stocks in the industry.
Fibria SA, the world's biggest supplier to paper companies, led gains on the Bovespa index on the outlook for higher pulp prices next year. ``You haven't been getting much bad news about the domestic economy,'' Fabio Cardoso, a partner at Adinvest Consultoria, a Rio de Janeiro-based consultancy and fund management firm. ``There's global liquidity and we continue to be a good destination for it.'' The Bovespa stock index gained in the last hour of trade, rising 0.8 percent to 67,317. Thirty-nine stocks fell on the index, while 22 rose.
The BM&FBovespa Small Cap Index gained 0.3 percent. The real added 0.3 percent to 1.7312 per dollar. In other Latin American markets, Mexico's Bolsa fell 0.4 percent and Chile's Ipsa retreated 0.6 percent.
Bond Traders Set for Apocalypse Give Lie to `Hearty' Stocks: Chart of Day
Parallel declines in the yield on three-month U.S. Treasury bills and the cost of insuring stocks against losses mean equity investors are setting themselves up for disappointment, according to PFP Wealth Management. The CHART OF THE DAY shows rates on 90-day bills issued by the U.S. government, which last week turned negative for the first time since financial markets froze, compared with the Chicago Board Options Exchange Volatility Index. The so-called VIX is trading below its level before Lehman Brothers Holdings Inc.'s bankruptcy in 2008.
While stock investors' appetite for risk has ``recovered heartily,'' bond traders ``appear to be living in fear of imminent apocalypse once again,'' Tim Price, PFP's director of investment, wrote in a report yesterday titled ``Eternal Sunshine of the Spotless Bulls.'' Shareholders are being deceived by ``conflicted happy-talkers painting their predictable landscape of perpetually sunlit uplands,'' he wrote. Bond buyers were willing to pay the government to hold their money last week amid speculation an eight-month rally in the highest-yielding securities has outpaced the prospects for growth. Three-month bill rates closed at 0.01 percent yesterday. Six-month bill rates last week fell to the lowest since 1958.
Individuals Inundate Bear-Market Funds From JPMorgan to Pimco During 2009
JPMorgan Chase & Co. and Pacific Investment Management Co.
are inundated with money from individuals attempting to mimic the performance of hedge funds speculating that the stock-market rally is over. So-called bear-market and long-short mutual funds, designed to protect against falling stock prices, attracted a record $10 billion this year through October, more than double the previous high in 2006, according to Morningstar Inc. Asset managers have opened 19 long-short funds, the most in one year. The funds' rising popularity shows how skeptical small investors remain even after the Standard & Poor's 500 Index recouped almost half the 57 percent loss incurred from October 2007 to the March 2009 low. Conventional mutual funds that only buy U.S. stocks posted $4.6 billion of redemptions in the first 10 months of the year, while bond funds added $280 billion. ``Companies are capitalizing on the uncertainty in the market,'' Nadia Papagiannis, an analyst with Chicago-based Morningstar, said in an interview. ``There's also a mystique that comes with hedge-fund investing.''
Bullish GE Options Trading Surges Following Bet on 40% Advance Before 2011
Trading of bullish General Electric Co. options surged to a five-week high as an investor wagered on a 40 percent jump in the stock before January 2011. More than 245,000 calls changed hands, or 2.7 times the four-week average. Contracts to buy GE shares for $22.50 by Jan. 21, 2011, were the most-active options in the U.S. following a single trade of 131,500 contracts. GE, the Fairfield, Connecticut-based provider of power-generation equipment, television programming and loans, added 0.6 percent to $16.12 in New York Stock Exchange composite trading. ``It's an ambitious trade because the strike price is so far above the actual stock price,'' said Frederic Ruffy, the senior options strategist at, a New York-based provider of options market analysis. ``It reflects expectations for a good year in 2010.'' GE more than doubled after sinking to a 17-year low in March. The company has pledged to shrink GE Capital, the finance business that helped cost GE its AAA rating at Standard & Poor's in March following the credit-market freeze after Lehman Brothers Holdings Inc.'s collapse. The shares lost 0.5 percent since the end of 2008, a year in which the stock fell 56 percent because of the worst financial crisis since the 1930s.
Stocks in Asia, Europe, U.S. Futures Advance; Compass, BHP Billiton Gain
European and Asian stocks advanced and U.S. index futures rose as Japan's exports fell at the slowest pace in a year and Federal Reserve officials increased their forecast for U.S.
economic growth. Compass Group Plc, the world's largest catering company, gained 4 percent after earnings topped analysts' estimates. BHP Billiton Ltd., the largest mining company, climbed 2.3 percent in London as metals increased and Australia's central bank said the country's economy entered a ``new upswing.'' Europe's Dow Jones Stoxx 600 Index added 0.9 percent to 249.15 at 8:24 a.m. in London. The gauge has advanced 58 percent since March 9 amid signs government spending and record-low interest rates are helping to drag the economy out of recession. ``The macro setting is clearly improving,'' said Franz Wenzel, deputy director of investment strategy at Axa Investment Managers in Paris, which oversees about $600 billion. ``GDP is going to continue to expand and central banks will remain fairly accommodative. A lot of investors have been reluctant to buy equities so there is a lot of cash waiting on the sidelines,'' he said in a Bloomberg television interview.
U.K. Stocks Advance; HSBC, Anglo American, BHP Billiton Shares Lead Gains
The U.K.'s benchmark stock index, the FTSE 100, rose 0.81 percent at 8:05 a.m. The index of 102 stocks traded on the London Stock Exchange rose 43.37 to 5,367.33. Among the stocks in the index, 90 rose, 8 fell and 4 were unchanged. Gains in the FTSE 100 were led by Hsbc Holdings Plc (Hsba Ln), Anglo American Plc (Aal Ln) and Bhp Billiton Plc (Blt Ln). About
19.31 million shares traded in the FTSE 100. --Editor: Hauck.
London Stock Exchange Profit Falls on Lower Trading, Loss of Market Share
London Stock Exchange Group Plc, Europe's biggest exchange by value of listed companies, said fiscal first-half profit fell 40 percent as trading slowed and the company lost market share to new rivals. Net income for the six months ended Sept.
30 declined to 49.3 million pounds ($82 million) from 81.7 million pounds in the comparable period a year ago, the exchange said in a Regulatory News Service statement today.
That missed the 51.7 million-pound average of four analyst estimates compiled by Bloomberg. The results ``reflectedßmarket conditionsßdepressed byßthe fall-out from turmoilßin financial marketsßlast yearßand increased competition, particularly in U.K. cash equities trading which, as expected, resulted in a weaker performance in the Capital Markets division,'' Chief Executive Officer Xavier Rolet said in the statement.
Traditional exchanges including the LSE, Frankfurt-based Deutsche Boerse AG, and NYSE Euronext have been losing market share to so-called multilateral trading facilities including Turquoise, Bats Europe and Chi-X Europe Ltd., which have offered lower fees and faster trading. For the past five days, LSE accounted for 60 percent of FTSE 100 trading, according to data from Bats Europe.
Russia Micex to Jump to 1,400 This Year as Oil Rallies: Technical Analysis
Russia's Micex Index, the world's best-performing benchmark equity gauge this year, will surpass 1,400 by the end of December as oil prices rally, said Richard Ross, a technical strategist at brokerage Auerbach Grayson & Co. The Micex will gain more than 5 percent to a 14-month high by the end of 2009 as crude rises to $82 a barrel, Ross said, citing 50-day moving averages. Oil, which traded at $76.02 a barrel yesterday, may climb to $90 in the next six to nine months if the U.S.
maintains its economic recovery, he said. ``A breakout is imminent and could certainly occur by yearend,'' Ross said in a telephone interview from New York. ``Oil should catch up and provide the catalyst for that breakout above 1,400 and beyond.'' The Micex has surged 115 percent this year to 1,331.12, the best performance among 89 benchmark equity indexes tracked by Bloomberg, as oil and metals prices jumped amid a global economic recovery. Russia's dollar-denominated RTS Index is up 130 percent. Oil, the country's biggest export, has soared 74 percent this year.
Asian Stocks Advance as Australia's Central Bank Fuels Growth Speculation
Asian stocks rose, led by mining companies and automakers, after Australia's central bank said the country's economy had entered a ``new upswing'' and a Japanese export report beat economist estimates. BHP Billiton Ltd., the world's largest mining company, added 2.4 percent in Sydney on optimism metals demand will pick up. Fuji Heavy Industries Ltd., the maker of Subaru-brand cars, rose 5.3 percent in Tokyo as Japanese exports last month fell at the slowest pace in a year. James Hardie Industries NV, the top seller of home siding in the U.S., gained 2.6 percent after an index of U.S. home prices rose. ``There should be higher growth in Asia than any other region next year,'' said Christian Jin, a fund manager at HI Asset Management Co. in Seoul, which manages the equivalent of
$7.8 billion in assets. ``Domestic demand is good and exports to developed economies are likely to improve.'' The MSCI Asia Pacific Index added 0.8 percent to 117.67 as of 3:26 p.m. in Tokyo. The gauge climbed 67 percent from a more than five-year low on March 9 amid signs government stimulus measures were reviving economies around the world.
Japan's Topix Rises Most This Month on Utilities' Payouts; Developers Fall
Japanese stocks climbed, sending the Topix index to its sharpest gain this month, as falling returns on government bonds boosted the appeal of dividends paid by power companies and as indicators suggested stocks will rise. Tokyo Electric Power Co., whose dividend yield was twice as high as returns on 10-year government bonds, rose 1.3 percent. Honda Motor Co., a carmaker that gets 81 percent of its sales abroad, added 2.6 percent after a government report showed Japan's exports climbed the most month-on-month since April. Mitsui Fudosan Co., the country's largest property developer, sank 2.6 percent after Anabuki Construction Inc. filed for bankruptcy. The Topix index rose 0.5 percent to close at 833.29 in Tokyo, the steepest climb since Oct. 30. The Nikkei 225 Stock Average added 0.4 percent to 9,441.64, ending a five-day losing streak.
The Topix's 14-day relative strength index fell to 22.4 yesterday, below the 30 threshold that some traders see as a sign to buy. ``Valuations on defensive shares are coming down and investors seeking long-term returns are starting to be attracted by these stocks,'' said Naoki Fujiwara, chief fund manager at Shinkin Asset Management Co., which oversees the equivalent of $4 billion in Tokyo. ``Various indicators show the market is coming close to a technical rebound.''
China's Stocks Rebound From Biggest Loss in Three Months; Zijin Advances
China's benchmark stock index rebounded from its biggest loss in almost three months on speculation yesterday's decline was excessive relative to earnings prospects. SAIC Motor Co.
rallied 2.9 percent and Jiangxi Copper Co. added 3.8 percent.
Zijin Mining Group Co., the nation's largest gold producer, surged 6.5 percent as bullion climbed to a record for a second time this week. The Shanghai Composite Index rose 66.64, or 2.1 percent, to close at 3,290.17, after changing direction at least nine times. The measure plunged 3.5 percent yesterday, the most since Aug. 31, on concern banks will sell more shares to replenish capital. The CSI 300 Index advanced 2.3 percent to 3,629.63. ``The bull market in China is still underway,'' said Shane Oliver, Sydney-based head of investment strategy at AMP Capital Investors, which oversees about $89 billion in assets.
``Any pullbacks present opportunities for investors who missed out on the earlier rally to get in.''
Off-Exchange Trading Climbs to Record in Japan, Restoring Lead Over Jasdaq
Japan's alternative stock-trading systems handled a record amount of transactions in October, restoring their lead over the country's third-largest exchange. The six proprietary trading systems handled 1 percent of the value of stocks traded, the highest level on record, PTS Information Network said yesterday on its Web site. The 357 billion yen ($4
billion) managed by the platforms was 51 billion yen more than the value processed by the Jasdaq, the No. 3 exchange behind Tokyo and Osaka. The trading systems handled more than the Jasdaq in July and August, though lost that lead in September, PTS and Jasdaq data showed. Alternative systems have cut the New York Stock Exchange's share of U.S. stock trading to less than 30 percent, according to its Web site. The Tokyo bourse has said its Arrowhead trading system will start on Jan. 4, seeking to accelerate execution speed and stream more data to traders. ``We're going to fight to make sure that we continue to be the main trading destination in Japan,'' said Hironaga Miyama, an executive officer at the Tokyo Stock Exchange.
``Competition works to the benefit of both parties.''

Top Stories: Commodities

Nov. 25 (Bloomberg) -- The following are the day's top stories on currencies:
Dollar Weakens on Global Optimism; Aussie Gains on RBA's `Upswing' Remarks
The dollar fell against higher- yielding currencies and slipped to a two-week low against the euro as renewed signs the global economy is recovering encouraged investors to buy riskier assets. The U.S. currency weakened beyond $1.50 per euro after a Japanese report showed the nation's exports dropped at the slowest pace in a year as government spending worldwide boosted demand. Australia's dollar jumped as Reserve Bank of Australia Deputy Governor Ric Battellino said the economy has entered a ``new upswing,'' fueling speculation the central bank will raise rates for a third month in December.
``Japan's trade data clearly indicates that overseas demand is recovering,'' said Tomohiro Nishida, a foreign-currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan's seventh-largest banking group. ``The bullish remarks from the RBA also added to the revival of risk demand.'' The dollar depreciated to $1.5018 per euro as of 8:10 a.m. in London, from
$1.4968 in New York yesterday, after dropping to $1.5024, the weakest since Nov. 11. The greenback slid to 92.78 cents per Australian dollar, from 91.92 cents, and declined to 73.21 cents against the New Zealand dollar, from 72.58 cents. The U.S. currency was at 88.28 yen, from 88.50 yen, after touching 88.20 yen, the lowest since Oct. 8.
Fed Officials Say Zero Interest Rates May Be Fueling Undue Risk in Markets
Federal Reserve policy makers said for the first time that their decision to cut interest rates to zero may be fueling undue financial-market speculation even as they called the dollar's decline ``orderly.'' The Federal Open Market Committee said its policy of keeping rates low might cause ``excessive risk-taking'' or an ``unanchoring of inflation expectations,''
according to minutes of its Nov. 3-4 meeting released yesterday. Central bankers also said further dollar depreciation that might ``put significant upward pressure on inflation would bear close watching.'' The dollar weakened as investors wagered the central bank will tolerate further declines in a currency that has slid more than 6 percent against the yen in three months. Policy makers are wary of fueling a third asset-price bubble in about a decade as they hold the benchmark interest rate near a record low to revive growth, economists said. ``Financial markets have been doing much better than people might have expected,'' said Marvin Goodfriend, a former policy adviser at the Richmond Fed who is now a professor at Carnegie Mellon University in Pittsburgh.
``The Fed is saying to markets, `Don't overdo it.'''
Consumer Spending, Income in U.S. Probably Rose at Start of Fourth Quarter
Consumer spending probably rebounded in October, an indication that mounting unemployment has yet to stifle Americans' willingness to buy. Purchases increased 0.5 percent after dropping by the same amount in September, according to the median estimate of 75 economists surveyed by Bloomberg News. Other figures may show orders for durable goods and home sales climbed. Uneven gains in spending signal consumers are unlikely to provide sustained support to the U.S. economy as it emerges from the worst recession since the 1930s. A jobless rate that is projected to exceed 10 percent through the first half of next year means households will contribute less to growth. ``Consumers have only minimally loosened their purse strings over the past several months,'' said Chris Low, chief economist at FTN Financial in New York. ``But the economy is very much on track.''
IMF Secures $600 Billion Credit Line to Assist Nations in Financial Crises
The International Monetary Fund said it will have access to a credit line of up to $600 billion to make loans during financial crises after contributing countries agreed to fold commitments into one pool. The agreement, yet to be approved by the IMF board, adds as many as 13 members from the current 26 to the so-called New Arrangements to Borrow, including emerging nations China, Russia, Brazil and India, the IMF said in an e-mailed statement. The decision ``marks an important moment for multilateralism and the fund, which will help the IMF's effectiveness in its response to crises,'' Managing Director Dominique Strauss-Kahn said in yesterday's statement. The deal goes beyond a pledge by leaders of the Group of 20 nations to contribute up to $500 billion to a credit arrangement that's currently worth $54 billion, the IMF said. The worst financial crisis since the Great Depression prompted more nations to seek aid from the fund, created after World War II to help ensure the stability of the global monetary system.
Company Profits in U.S. Stage Lopsided Gain as Financial Firms Pull Ahead
Profits at U.S. companies climbed in the third quarter by the most in five years as earnings at banks surged. Corporate profits rose 11 percent from the prior three months to $1.36 trillion, the biggest gain since the first quarter of 2004, the Commerce Department reported yesterday in Washington.
Domestically, earnings at financial institutions jumped by $97 billion, or 36 percent, while those at other companies climbed by $12.9 billion, or 2 percent. Firms from Goldman Sachs Group Inc. to Morgan Stanley boosted results last quarter through trading as financial markets continued to rebound from the declines that followed the collapse of Lehman Brothers Holdings Inc. last year. Other companies prospered by cutting costs, indicating they will not be quick to boost payrolls. ``The weakness in the non-financials tells you how limited this recovery is at this point,'' said Joel Naroff, chief economist at Naroff Economic Advisors Inc. in Holland, Pennsylvania.
``Businesses are going to be very cautious in increasing the cost side, and the biggest part of the cost side is labor. They aren't going to rush out and hire.''
Lehman Creditors Want Data on Barclays Brokerage Deal From U.K.'s FSA. PwC
Lehman Brothers Holdings Inc. creditors want the U.K.'s Financial Services Authority and PricewaterhouseCoopers International Ltd. to turn over information about Barclays Plc and the bank's purchase of Lehman's North American brokerage business last year. The official committee of Lehman's unsecured creditors asked U.S. Bankruptcy Judge James Peck to seek ``judicial assistance'' from the U.K. High Court of Justice to get the documents. Lehman's creditors claim Barclays got a $5 billion discount when it bought Lehman and are seeking to recover assets. Earlier this month, Lehman and James Giddens, the trustee liquidating Lehman's brokerage on behalf of the U.S. Securities Investor Protection Corp., sued Barclays in U.S. Bankruptcy Court in New York, seeking the return of what they said was a $5 billion windfall. The Lehman executives who negotiated the deal on its behalf, and were in line to receive job offers from Barclays once the deal was complete, knew the deal had a built-in discount, the company has said.
Stuyvesant Tenants May Seek to Wrest Control of $16 Million From Tishman
Tenants of Stuyvesant Town and Peter Cooper Village, the Manhattan apartment complexes facing default by landlords Tishman Speyer Properties LP and BlackRock Realty, may seek control of an account holding disputed rent payments. A portion of the rents has been going into escrow since March, pending resolution of a lawsuit, lawyers for the tenants said yesterday in a statement. They may ask for control of the money, which will total $16 million by January. ``If necessary, plaintiffs'
counsel will be making an application to the court asking it to issue an order to set January 2010 rents, and to turn over to plaintiffs' counsel the escrow account,'' lawyers from Wolf Haldenstein Adler Freeman & Herz LLP and Bernstein Liebhard LLP said in a statement. Tishman and its partners are on the verge of defaulting on $3 billion in loans against the 80-acre apartment developments, the largest residential community in Manhattan. A New York court ruled last month that some rent increases were illegal because the apartments were under a rent stabilization program and the property was built with and subsidized by tax breaks.
Dubai Credit Risk Rises for First Time Since June as $9 Billion Debt Due
Investor confidence in Dubai is falling for the first time in five months after the emirate didn't disclose how it will pay more than $9 billion of debt coming due. Credit-default swaps that insure bondholders in case the Persian Gulf emirate ruled by Sheikh Mohammed Bin Rashid Al Maktoum misses debt payments rose 20 basis points this month to 318, the first increase since June, according to prices on Bloomberg from CMA Datavision. Dubai and its companies owe $4.3 billion next month and another $4.9 billion in the first quarter of 2010, Deutsche Bank AG data show. While the rate to protect against default has fallen 67 percent since February, concerns are mounting again because the government hasn't said how it will pay. Last week Sheikh Mohammed swept aside four aides who helped lead the expansion in banking, real estate and transportation that saddled the emirate with $80 billion in debt. ``Something needs to be done now,'' said Abbas Hasan, the Dubai-based co-head of corporate investment banking at Mashreqbank PSC, the United Arab Emirates' third-biggest bank by revenue. ``If nothing happens in the next week or so, then there will be little choice but to draw from the central bank.''
RBS, U.K. Banks Look to Supreme Court to Overturn Ruling on Fee Regulation
Royal Bank of Scotland Group Plc, HSBC Holdings Plc and six other lenders are counting on Britain's highest court to overturn a ruling that may allow a regulator to oversee fees charged on bounced checks. The U.K. Supreme Court in London is scheduled to rule today on whether the Office of Fair Trading can proceed with a trial challenging the amounts banks charge when customers exceed limits on checking accounts. Banks'
profit margins are under pressure as they face increased competition for customer accounts to fund lending, after wholesale credit markets seized last year. The U.K. Treasury said Nov. 3 that RBS, Britain's biggest government- controlled bank, and Lloyds Banking Group Plc will ensure consumer account fees are ``transparent and fair'' in return for taxpayer support. ``If the OFT wins this week, it will then decide whether individual current account terms are in fact unfair,''
Ed Crosse, a finance litigation partner at U.K. law firm Osborne Clarke said. ``If the banks still have the appetite to challenge those decisions, they will need to do so in court and the matter could go all the way to the Supreme Court again.''
ECB Is Said to Debate Putting Adjustable Interest Rate on 12-Month Loans
European Central Bank officials are debating whether to put an adjustable interest rate on December's 12-month loans, with some saying it risks being interpreted as a signal they will tighten monetary policy in 2010, according to people familiar with the discussions. As the ECB moves closer to withdrawing emergency support for the economy, officials are examining whether to make the rate on next month's loans track any increase in the bank's key rate. While a final decision hasn't been made, the 22-member Governing Council is leaning toward sticking with a fixed rate of 1 percent, said the people, who declined to be identified because the discussions are private.
The ECB is offering banks unlimited funds for 12 months as part of its strategy to get them lending again. Some officials fear putting a floating rate on the loans would prematurely fuel expectations that the ECB will lift its benchmark rate from 1 percent next year, which could in turn raise the cost of money on markets and propel the euro higher. The risk of lending at a fixed rate is that it may undermine the effect of any increase in the benchmark should the ECB deem it necessary. Altering the rate ``is always going to be interpreted as a signal for future monetary policy,'' said Laurent Bilke, an economist at Nomura International in London who used to work at the ECB. ``The only way to avoid that problem is to continue as they have been doing.''
U.K. Economy Probably Shrank 0.3% in Third Quarter After Revised Estimate
The U.K. economy shrank less than previously estimated in the third quarter as the longest recession on record eased, a survey of economists shows. Gross domestic product probably fell 0.3 percent from the second quarter, less than the 0.4 percent drop reported on Oct. 23, according to the median of 28 economists' forecasts in a Bloomberg News survey. The Office for National Statistics will release its second estimate at 9:30 a.m. today in London. ``The shrinkage looks a bit overdone,'' said Alan Clarke, an economist at BNP Paribas SA in London. ``Other surveys are showing output isn't nearly as downbeat. I wouldn't be surprised to see it eventually put close to zero.'' The Bank of England this month expanded its bond purchase plan by 25 billion pounds ($41 billion) after the economy's third-quarter contraction took policy makers and economists by surprise. Governor Mervyn King said yesterday the bank has been encouraged by signs of a recovery even if it isn't ``particularly strong.''
Australian Dollar Rises as RBA's Battellino Sees `New Upswing' for Economy
The Australian dollar rose after central bank Deputy Governor Ric Battellino said the economy has entered a ``new upswing,'' fueling speculation policy makers will raise interest rates for a record third month next week. New Zealand's currency also advanced as data showing Japan's exports improved last month supported gains in regional stocks and other high-yielding assets. There's a 77 percent chance the Reserve Bank of Australia will increase borrowing costs when it meets on Dec. 1, according to a Credit Suisse AG index based on interest-rate swaps. ``The idea that the central bank can say the economy has entered a new upswing which could last for a few more years is pretty optimistic,'' said Robert Rennie, head of currency research at Westpac Banking Corp. in Sydney.
``There's a fairly strong and consistent message coming from the RBA. We expect them to raise 25 basis points next week.''
Australia's currency strengthened 0.7 percent to 92.58 U.S.
cents as of 4:36 p.m. in Sydney from 91.92 cents in New York yesterday. It gained 0.5 percent to 81.76 yen from 81.34 yen.
Asian Currencies Rise, Led by Rupiah, After Japan Export Decline Abates
Asian currencies strengthened, led by Indonesia's rupiah, after a Japanese report showing the smallest decline in exports in a year added to evidence regional economies are recovering from a slump. Malaysia's ringgit advanced after the central bank held its benchmark interest rate at a record low to spur spending. South Korea's won was little changed near a 14-month high after Finance Minister Yoon Jeung Hyun said a stronger currency may hurt the profitability of the nation's companies, fueling speculation the central bank will intervene to curb appreciation. ``Japan, like Korea and Taiwan, is very leveraged to what's happening in China,'' said Patrick Bennett, a foreign-exchange strategist at Societe Generale SA in Hong Kong. ``The Bank of Korea has already stated the firmer currency is mitigating inflationary pressure, so our opinion is it will allow a moderately stronger currency as a counter to raising rates early in the recovery cycle.'' The rupiah rose
0.6 percent to 9,458 per dollar as of 10:06 a.m. in Jakarta, according to data compiled by Bloomberg. The ringgit climbed
0.3 percent to 3.3791 and Taiwan's dollar firmed 0.1 percent to NT$32.258. The won added 0.1 percent to 1,156.25, taking its gain for the past three months to 8 percent.

Top Stories: Commodities

Top Stories: Commodities
2009-11-25 08:06:34.415 GMT

Nov. 25 (Bloomberg) -- The following are the day's top stories on commodities:
Gold Rallies to Record in Asia as Weakening Dollar Increases Investment
Gold climbed to a record from New York to Shanghai as the dollar extended its decline and the Financial Chronicle newspaper reported India may buy more bullion for its central bank reserves. Gold has rallied 11 percent since India bought 200 metric tons of gold from the International Monetary Fund on Nov. 3. The metal reached an all-time high of $1,180.20 an ounce today following the newspaper report that said the world's largest consumer was open to buying more gold from the IMF. The Reserve Bank of India Governor Duvvuri Subbarao declined to comment. ``The actions from the central banks are a very important factor at the moment,'' said Eugen Weinberg, analyst at Commerzbank AG. ``The purchase from India was like a seal of the prices above $1,000 an ounce. Also, other central banks are buying gold.'' Gold for immediate delivery traded 0.8 percent higher at $1,179.20 an ounce at 3:13 p.m. in Singapore.
February-delivery gold reached a record $1,181.60 an ounce on the New York Mercantile Exchange's Comex division and last traded at $1,180.40. Futures in Mumbai and Shanghai also jumped to their highest prices ever.
Sugar May Climb 36% on India Production Shortfall, Bajaj Hindusthan Says
Sugar may jump 36 percent to a 29- year high after a drought damaged crops in India, forcing the nation to import for a third year, according to Bajaj Hindusthan Ltd., the country's top producer. Prices may advance to 30 cents a pound after March as the country doubles imports to as much as 7 million metric tons in the year ending Sept. 30, said Joint Managing Director Kushagra Nayan Bajaj. Bajaj correctly predicted in July that sugar will reach 25 cents. Sugar has almost doubled in the past year to the highest level since 1981 as rains delayed the harvest in Brazil, while a drought and a shift to other crops made India the biggest buyer. Global stockpiles likely plunged 92 percent to 1.1 million tons at the end of the 2008-2009 season, according to F.O. Licht. ``If we are going to double our imports, you can have a wild guess what's going to happen,'' Bajaj said yesterday in an interview in Mumbai. There's a ``consensus on the fact that it will definitely reach 30 cents,'' he said.
Indonesian Palm Oil Exporters Threatened by Rupiah at 9,000, Groups Say
Indonesia's coal and palm oil exporters' profit margins may narrow should the rupiah rise 5 percent to 9,000 per dollar and costs of fuel and rice keep climbing, industry groups said.
Seven of 16 analysts in a Bloomberg News survey predict a gain in the currency, Asia's best performer this year, to 9,000 or stronger against the dollar by the end of 2010. The median estimate is 9,150, compared with 9,413 today. Indonesia is the world's biggest producer of palm oil and the largest exporter of power-station coal. The currency rising to 9,000 ``is a critical level,'' Bob Kamandanu, chairman of the Indonesian Coal Mining Association, said in an interview in Jakarta on Nov. 20. ``It's too strong.'' Indonesia's exports, which account for 24 percent of gross domestic product, fell 19.9 percent in September from a year earlier after dropping 15.4 percent the previous month, statistics bureau data showed on Nov. 2. The rupiah has risen 16 percent this year, nearly double the pace of the South Korean won. It reached 9,280 on Oct. 15, the strongest level since September 2008, and last traded at 9,000 in July 2007.
China Leads Record Low-Grade Iron Ore Project Spending to Counter BHP, Rio
Citic Pacific Ltd., an arm of China's biggest state-owned investment company, is leading record spending on low-grade iron ore mines in Australia to profit from surging demand as well as to diversify supply. As much as A$18 billion ($16.6
billion) is being spent on so-called magnetite iron ore projects, 36 percent more than a year ago, according to data from the Australian Bureau of Agricultural and Resource Economics. Citic Pacific this month said it signed sales accords for its $4 billion project. China is pumping cash into developing the mines as its steel mills are forecast by Rio Tinto Group to consume more iron ore during the next five years than Australia has shipped throughout history. Bankrolling rival suppliers will help counter the market dominance of Rio and BHP Billiton Ltd. who are forming a production joint venture in Australia. ``If this BHP-Rio joint venture goes ahead, the Chinese will feel even more under threat,'' said Peter Chilton, who holds BHP and Rio shares at Constellation Capital Management Ltd. in Sydney. ``There are a lot of small projects on the go. If China takes more direct control of these and promotes them with an Australian partner or on their own, at least it guarantees them extra supply.''
Japan Buys Least Milling Wheat in Two Weeks in Tender, From U.S., Canada
Japan, Asia's biggest wheat importer, bought 106,000 metric tons of milling wheat at a regular tender today, the Ministry of Agriculture, Forestry and Fisheries said. It was the smallest purchase since Nov. 13, when Japan bought 97,000 tons, according to the ministry. Shipment for 85,000 tons of U.S.
wheat is set between Dec. 21 and Jan. 20, while that for 21,000 tons of Canadian wheat is scheduled for January, the ministry said. Japan has so far bought 2.82 million tons of milling wheat through regular tenders this fiscal year, compared with
3.91 million tons in the previous year ended March 31. Details for this week's tender are listed below:
Locusts Devouring Wheat Crop Prompts Argentina to Send In Air Force Attack
Argentina will deploy two air force planes to contain a potential locust plague and said rains may help control the insect in the country's largest wheat province. ``We have decided not only to give money for local governments to fumigate but will also send two air force planes to spray crops,'' Argentine Agricultural Minister Julian Dominguez said.
``It's raining and some climate conditions have changed, which will also help us control the situation.'' The government last week promised farmers 15 million pesos ($3.95 million) for fumigation, with the money expected to be sent to city governments this week. Farmers need about 50 million pesos to eradicate the insect, said Diego Raimundi, an agronomist at the Regional Agricultural Experimentation Consortium in Coronel Pringles, Buenos Aires province. Argentina, the world's fourth-largest exporter of wheat in 2008, is set to slip down the rankings to eighth in the year through June 2010 after the worst drought in a century harmed crops, according to U.S.
Department of Agriculture data.
Nippon Mining Seeks Higher 2010 Copper Processing Fees After Yen Advances
Nippon Mining & Metals Co., Japan's top copper smelter, wants to charge mining companies higher 2010 processing fees compared with mid-year levels after the yen's gain and lower byproduct prices cut revenue. ``Given the tough business environment for smelters, we want higher treatment and refining charges for 2010,'' Masanori Okada, president and chief executive officer of Nippon Mining & Metals, said today in an interview in Tokyo, without specifying a level. The company is a unit of Nippon Mining Holdings Inc., which owns 66 percent of Pan Pacific Copper Co. Japanese smelters have met with Freeport-McMoRan Copper & Gold Inc. and BHP Billiton Ltd., the world's largest mining company, in the past two weeks and outlined the effect of lower byproduct prices, such as sulfuric acid, a slowing economy and the yen's strength, Okada said. The two sides earlier this year agreed to a 33 percent fee cut for contracts started in July. ``We are hearing that one mining company has indicated the 2010 fees at $45 a ton and 4.5 cent a pound'' while smelters have wanted around $60 and 6 cents, Okada said. Fees were set at $50 a metric ton and 5 cents a pound mid-year, down from $75 a ton and 7.5 cents a pound for contracts started January.
Chinese Pipe Duties Revised Down to 13.2% by U.S. as Case Heads to Agency
The U.S. Commerce Department cut the average duties on $2.7 billion of Chinese pipe imports to 13.2 percent from the 21.3 percent set in September, a measure taken after both countries last week agreed to ease trade tensions. The decision, on imports of steel pipe used in oil wells, is the final ruling by the Commerce Department, and sends the case to the U.S.
International Trade Commission. China will probably seek mediation through the World Trade Organization, Wu Xinchun, the deputy secretary general of the China Iron & Steel Association, said today. Tariffs have been a point of tension between the two nations since President Barack Obama in September imposed duties on tire imports from China. Obama, during a visit to Beijing Nov. 17, pledged along with President Hu Jintao to work on easing trade frictions. ``No matter what the final duty is, we think the character of this action is pure trade protectionism,'' Wu said by telephone in Beijing. ``The duty, if applied, will seriously hurt Chinese exports of steel pipe next year, and even worse, it sets a bad example and may trigger other nations to follow suit.''
Soybeans Extend Rally on Chinse Demand for Oilseeds; Corn, Wheat Advance
Soybeans rose for the fourth time in five days after reports showed stronger demand from China, the world's biggest oilseed importer. Corn and wheat also gained. Chinese imports in December may exceed 4 million metric tons (147 million bushels), with shipments in November expected to be about 3 million tons, the China National Grain & Oils Information Center said yesterday. Argentine farmers, already suffering after the worst drought in a century, are raising funds to fight an imminent locust plague in the nation's biggest wheat-growing region. ``Chinese demand remains firm and there are not many choices to replace U.S. supplies at the moment,''
said Han Sung Min, a manager at the international marketing division of Korea Exchange Bank Futures Co. in Seoul.
``Soybeans may continue to be strong through early next year, lifting corn and wheat.'' Soybeans for January delivery rose
3.5 cents, or 0.3 percent, to $10.495 a bushel in electronic trading on the Chicago Board of Trade at 12:55 p.m. Singapore time. The most- active contract reached $10.6675 this week, the highest level since June 15. Prices have jumped 13 percent since the end of September, as China increased purchases of soybeans from the U.S., the world's biggest grower and exporter.
Rio Tinto, Still a Target, Set to Better BHP on Talk of Bid: Chart of Day
Rio Tinto Group shares, up 116 percent in the year since BHP Billiton Ltd. abandoned a hostile takeover bid, are a better bet than those of its larger rival because rising iron ore prices may trigger another offer, according to UBS AG. The CHART OF THE DAY shows shares of the world's largest and third-biggest mining companies in the past year since Melbourne-based BHP dropped its bid for Rio on Nov. 25, 2008.
Glyn Lawcock, a commodities analyst at UBS, said Rio shares may rise to A$82 as its earnings benefit twice as much from gains in iron ore prices than BHP. Rio closed at A$71.70 in Sydney. A new bid ``is part of the reason why Rio is again outperforming BHP,'' Sydney-based Lawcock said in an interview. The chance of BHP renewing its bid is about 20 percent, said Lawcock, the top-rated analyst on Rio's Australia-traded shares the past year, according to data compiled by Bloomberg. Citigroup Inc.
said this month that BHP buying Rio is the growth option that makes the ``most sense.'' Rio has cut net debt by 42 percent in the past nine months by selling $21 billion in shares, meaning BHP's original offer of 3.4 BHP shares for every one of Rio's now equates to about 1.6 BHP shares, Lawcock said. BHP had cited Rio's debt and a plunge in metal prices for dropping its
$66 billion hostile bid. BHP and Rio both produce coal, copper and aluminum.
Japan's Trading Houses Rethink Share Holdings in Partners, Marubeni Says
Japanese trading houses are reconsidering their shareholdings in customer companies as a plunge in stock prices has eroded earnings, according to Nobuo Katsumata, chairman of Marubeni Corp. ``Trading companies are reexamining if they need to take equity stakes in partner companies as such investments have had large effects on their earnings due to writedowns,''
Katsumata said today at a Japan Foreign Trade Council press conference. He didn't elaborate on whether Marubeni would sell its stakes in companies including Mizuho Financial Group Inc., Inpex Corp. and Yamazaki Baking Co. Mitsui & Co., Japan's second-largest trading company, said yesterday it sold all its
11.7 million shares of Japan Airlines Corp. between April and September as the carrier lurched toward bankruptcy. Mitsui's net income slid 57 percent last year, partially due to writedowns on shares. Mitsubishi Corp., the nation's biggest trading company, has holdings worth more than $11 billion in publicly traded companies. Marubeni took a 38.4 billion yen
($435 million) writedown on securities holdings in the year ending March 31. Shares of Mizuho, Japan's second-largest publicly traded bank, plunged 49 percent in that period. Inpex, the nation's largest oil explorer, fell 39 percent. Marubeni has stakes worth more than $80 million in both companies.
China to Double Environmental Protection Budget to $454 Billion to 2015
China, the world's largest emitter of greenhouse gases, plans to more than double its spending on environmental protection in the five years through 2015, the Shanghai Securities News reported. The Asian nation may invest 3.1 trillion yuan ($454 billion) during the period, compared with
1.4 trillion yuan allocated for the five years between 2006 and 2010, the Chinese-language newspaper said today, citing an unidentified official from the Ministry of Environmental Protection. China, pressed by the U.S. to set emission targets for the Copenhagen global-warming summit next month, said in September it will lower emissions per unit of economic growth through 2020. Greenhouse gases increased to record concentrations last year, the United Nations said yesterday.
``The doubling of the budget is beyond our expectations,'' Yan Biao, an analyst with Century Securities Co. said by phone from the southern city of Shenzhen. ``The increase in spending will benefit equipment manufacturers in water treatment, air pollution control, and also developers in the renewable energy sector.''
Rubber Declines as Weak U.S. Growth Data Spurs Concern About Tire Demand
Rubber declined for a second time in three days after data showed the U.S. economy expanded less than initially estimated last quarter, raising concern that demand for the commodity used in tires may be slow to recover. Futures in Tokyo dropped as much as 0.9 percent after reaching the highest level since Oct. 2, 2008 yesterday on supply concerns. U.S. gross domestic product grew at a 2.8 percent annual pace, compared with its prior estimate of 3.5 percent, the Commerce Department said yesterday. ``The data added to concern that a slow economic recovery may curb raw material demand,'' Kazuhiko Saito, chief analyst at commodity broker Fujitomi Co. in Tokyo, said today by phone. Rubber for April delivery fell as much as 2.2 yen to
245.3 yen a kilogram ($2,780 a metric ton) on the Tokyo Commodity Exchange before trading at 246.9 yen at 11:01 a.m.
local time. May-delivery rubber, which was listed on the exchange today, traded at 248.6 yen after opening at 248.5 yen.

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