Markets News

European Economies: French Confidence Holds Near Five-Year High

2006-11-26T06:44:00.003-08:00

European Economies: French Confidence Holds Near Five-Year High
By Gabriele Parussini
Nov. 24 (Bloomberg) -- French business confidence held near a five-year high in November on lower oil prices and declining unemployment as executives anticipate a fourth-quarter pickup in economic growth.
Insee, the Paris-based national statistics office, said today its index of sentiment remained at 107 this month after October's reading was revised down to 107. The gauge reached 109 in April, the highest since March 2001.
The durability in the economy's standstill in the third quarter was temporary. In Germany, France's largest trading partner, a gauge of business confidence rose yesterday to a 15- year high. The expansion in the euro region this year may reach 2.6 percent, the fastest in six years, before slowing to 2.1 percent next year as interest rates and the euro rise, the European Commission estimates.
``The main boost to confidence is from European growth and the exceptional news from Germany,'' said Maryse Pogodzinski, an economist at JPMorgan Chase & Co. in Paris. ``The fall in oil prices is doing the rest.''
A decline in oil prices from a record reached four months ago helped cut companies' costs and put more money in consumers' pockets. Crude oil traded below $59 a barrel yesterday, down from $78.40 on July 14.
A surge in the euro may restrain growth. The euro surged to a 20-month high of $1.3109 at 3:11 p.m. in Paris. The currency has gained 10.7 percent against the dollar this year. It has also risen 9 percent against the Japanese yen the past nine months, reducing euro-region exports' competitiveness.
`Measured' Optimism
``Companies' optimism remains measured,'' said Alexandre Bourgeois, an economist at Natixis in Paris, who expects the European Central Bank to raise interest rates to 4 percent in 2007. ``The euro remains quite high and there's a prospect of a global slowdown next year.''
As French industrial production fell 0.1 percent in the third quarter after a decline of 0.9 percent in September, with carmakers cutting production by 3.1 percent, Prime Minister Dominique de Villepin said Nov. 22 he will present a plan to support the country's struggling auto industry. He's already announced 145 million euros ($189 million) in subsidies to companies in the aviation industry.
With five months before the presidential elections in France, the government is counting on a strong economy to sustain the candidate of the ruling Union for a Popular Movement party, who will probably be Interior Minister Nicolas Sarkozy.
`Very Strong' Growth
Finance Minister Thierry Breton said last week he expects a ``very strong'' fourth quarter, with growth between 0.6 percent and 0.8 percent. He reiterated a forecast of 2 percent to 2.5 percent expansion for both 2006 and 2007.
Consumers in France helped sustain the economy in the third quarter as unemployment fell to 8.8 percent, a five-year low. The economy expanded 1.2 percent in the second quarter, the fastest pace since 2001, before grinding to a halt between July and September.
Morgan Stanley, Goldman Sachs Group Inc. and Unicredit SpA all raised their ECB forecasts this month. They expect the ECB's benchmark rate to reach 4 percent by the end of 2007. The bank is set to raise the rate to 3.50 percent next month on concern the economic expansion will fuel wage demands and lead to more persistent inflation.
``Things are going extremely well,'' Air France-KLM Chief Operating Officer Pierre-Henri Gourgeon told reporters yesterday after Europe's biggest airline reported a 26 percent increase in third-quarter profit.
A gauge of sentiment on past production rose to 15 from 8 in October, while the forecast on prices increased to 9 from 5, indicating that executives think they'll be able to raise prices, the report said

EU's Beres Says ECB Rate Policy Wrong as Euro Rises (Update1)

2006-11-26T06:44:00.001-08:00

EU's Beres Says ECB Rate Policy Wrong as Euro Rises (Update1)
By John Fraher
Nov. 24 (Bloomberg) -- The European Central Bank is wrong to raise interest rates as the euro's climb above $1.30 threatens to hurt export growth, said Pervenche Beres, head of the European Parliament's economic and monetary committee.
``It's not good news for the European economy,'' said Beres, whose committee oversees the ECB's activities, in an interview in Berlin today. ``It's not the right time to raise interest rates.''
Europe's single currency rose above $1.30 for the first time since April 2005 today on speculation ECB President Jean-Claude Trichet will keep raising borrowing costs next year to prevent faster economic growth fueling inflation. The rally puts an additional burden on the region's exporters, who are already coping with the currency's climb against the yen.
The euro is strengthening as the interest-rate gap between Europe and the U.S. narrows. The Federal Reserve has left its key rate at 5.25 percent since June 29, a period in which the ECB has lifted its benchmark 50 basis points to 3.25 percent.
With economists at Goldman Sachs Group Inc. and Merrill Lynch & Co. forecasting that the Fed will ease policy next year and European policy makers including Bundesbank President Axel Weber suggesting ECB rates will have increase rates further next year, the euro may come under even more pressure.
Morgan Stanley on Nov. 21 said the ECB will take its key rate to 4 percent in 2007.
Stronger Euro
Europe's single currency was worth $1.3089 at 12:25 p.m. in London, taking its gain in the past month to 4 percent. It traded at 151.43 yen, after reaching a record of 151.67 on Nov. 20.
The euro is gaining just as a U.S. slowdown threatens to damp export growth. DaimlerChrysler AG, the world's largest truckmaker, said Nov. 17 it expects a ``profound downturn'' in U.S. demand.
German lawmaker Joachim Poss, who sits on the country's budget committee, also said the ECB should be concerned by the currency's appreciation.
``I hope that the ECB will consider it carefully in its assessment'' of the interest rate outlook, Poss told reporters in Berlin.
Peres said the euro's rally also shows the need for ``coordination'' of foreign exchange policy between the ECB and the euro-region's finance ministers.

Dollar Declines to 19-Month Low Versus Euro, Breaches $1.30

2006-11-26T06:43:00.003-08:00

Dollar Declines to 19-Month Low Versus Euro, Breaches $1.30
By Daniel Kruger and Kabir Chibber
Nov. 24 (Bloomberg) -- The dollar fell to its lowest level in 19 months against the euro on speculation the Federal Reserve will lower interest rates early next year as central banks in Europe increase them.
The U.S. currency extended its losses after breaching $1.30 against the euro for the first time since April 2005, a level where traders had placed automatic orders to sell the dollar. The European Central Bank has raised rates to an almost four-year high and President Jean-Claude Trichet on Nov. 20 said inflation remains a threat. The Fed has left rates unchanged since August.
``The break of 1.30 is a strong signal that the dollar has to weaken,'' said Carsten Fritsch, a currency strategist at Commerzbank AG in Frankfurt. ``The sentiment for the dollar is negative. In the euro-zone, growth will remain strong.''
The dollar traded as low as $1.3109 per euro in London earlier today and breached $1.31 in New York trading. The U.S. currency was at $1.3094 at 5 p.m., from $1.2945 yesterday. The dollar also fell to 115.90 yen, from 116.30, and to as low as $1.9351 versus the U.K. pound, the weakest in almost two years.
The euro traded at 151.71 yen, from 150.52 yesterday, after touching a record of 151.76.
The volume of trading today may have been less than usual after public holidays yesterday in the U.S. and Japan.
`Weaker Side'
``It was easier to push through'' $1.30 in an illiquid market, said Firas Askari, head currency trader at BMO Nesbitt Burns in Toronto. ``You had a battle in the ranges. The weaker side was the dollar side.''
Traders place automatic orders, or so-called stop-losses, at preset positions to sell the currency after it breaches certain key levels, such as $1.30. Before this week the euro had been stuck between $1.2458 and $1.2938 during the second half of this year.
``The move we saw overnight was very much driven by some important technical levels,'' said Matthew Strauss, senior currency strategist at RBC Capital Markets Inc. in Toronto, a unit of Canada's biggest bank by assets. ``Some stop-losses were triggered and forced it above the psychological level of $1.30.''
Implied three-month volatility, which measures expected price moves during the period, rose to the highest level in two months for the dollar versus the euro.
Reducing Forecasts
Economic advisers to President George W. Bush on Nov. 21 cut their forecasts for growth next year on a weaker housing market. Gross domestic product will increase 2.9 percent next year, slower than the 3.6 percent forecast in June, the Council of Economic Advisers said.
ECB policy maker Klaus Liebscher told Reuters today that the central bank must remain ``vigilant'' on inflation. Trichet and fellow council member Miguel Angel Fernandez Ordonez also this week said inflation is a risk.
Europe's central bank has lifted borrowing costs five times since December, to 3.25 percent, to stem inflation. The Fed has left its benchmark rate at 5.25 percent for the past three meetings, after 17 straight quarter-percentage point increases since June 2004.
The three-month Euribor futures contract for June trades at a 3.875 percent yield, suggesting traders are nearly certain the ECB will raise interest rates two more times by June to 3.75 percent. The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points above the ECB's benchmark rate since 1999.
Traders see a 51 percent chance the Fed will reduce interest rates at the central bank's March 21 meeting. That compares with an 11 percent chance on Nov. 16.
European Stocks
European stocks slumped today on speculation the stronger euro will hurt exports to the U.S., the region's biggest trading partner. The U.K.'s FTSE 100 Index lost 0.3 percent. France's CAC 40 benchmark dropped 0.7 percent. Germany's DAX slid 1 percent.
The extra yield investors earn on U.S. government bonds over those in Europe has shrunk to near the lowest in 17 months, attracting investors to assets in the euro region and away from the dollar.
The narrowing yield premium on dollar-denominated debt may also encourage central banks to hold more of their foreign- exchange reserves in other currencies.
People's Bank of China Vice-Governor Wu Xiaoling said East Asia needs to reduce its reliance on dollar inflows because of the risk of a further slump in the currency. China's foreign- exchange reserves exceed $1 trillion, the world's largest.
Wu's comments were released today in an article circulated during a press conference in Beijing.
``China holds most of its reserves in the dollar and these comments may lead to speculation they will sell,'' said Tohru Sasaki, a strategist in Tokyo at JPMorgan Chase & Co. and a former chief currency trader at the Bank of Japan. ``Diversifying reserves always puts downward pressure on the dollar.''
The U.S. currency fell for three straight years through 2004 versus the euro and the yen as the country's trade deficit widened, reaching a record $1.3666 per euro on Dec. 30, 2004. It advanced against the euro and yen last year as the Fed pushed borrowing costs higher at every meeting

Putin Deplores Failure of EU Trade Talks on Meat Row (Update3)

2006-11-26T06:43:00.001-08:00

Putin Deplores Failure of EU Trade Talks on Meat Row (Update3)
By Sebastian Alison
Nov. 24 (Bloomberg) -- Russian President Vladimir Putin deplored the failure of his nation and the European Union to start negotiating a key trade deal after Poland vetoed talks due to a Russian ban on its meat exports. The EU vowed to get the talks going.
Russia and the EU were due to start talks, at a summit meeting in Helsinki, on a Partnership and Cooperation Agreement, the fundamental text defining trade and other relations between the two sides. It will replace an existing agreement that expires next year. Over 50 percent of Russia's exports go to the EU, which gets a quarter of its natural gas from Russia.
The European Commission, the EU's executive body, can only start negotiating the text when all 25 EU member states have given it a mandate to do so. Poland refused after Russia banned meat imports, and hasn't signed a separate agreement regulating energy trade.
``I deplore the fact that we haven't started work,'' Putin told a news conference at the end of the one-day summit meeting. ``Russia is prepared to launch these talks,'' he said.
`Common Future'
Jose Barroso, president of the European Commission, acknowledged it was a disappointment that talks had not started, saying the Russian ban on Polish meat was ``disproportionate'' and adding that ``I appealed to the President of Russia to lift it.'' He said the commission would work to relaunch the talks quickly, adding ``we cannot escape our common future.''
The failure of the talks followed days of ultimately fruitless attempts by EU officials to persuade Poland to drop its veto. Putin spokesman Dmitry Peskov said the failure was more a disappointment to the EU than to Russia.
The summit was still a success, EU foreign policy chief Javier Solana said, ``contrary to what public expectations were.''
In an indication the two sides want to develop relations, Finnish Prime Minister Matti Vanhanen announced the EU and Russia reached agreement to end fees on EU airlines flying over Siberia on routes to the Far East. This will have ``major significance for our economies,'' Barroso said.
`Trade Irritant'
``This issue has been a trade irritant for the EU and Russia for a long time,'' EU Trade Commissioner Peter Mandelson said in a statement released in Brussels.
Russian-EU trade has increased since the bloc enlarged to 25 members in 2004, taking in several former communist eastern European states once in the Soviet Union's sphere of influence. That's one reason why a new PCA is needed, Marc Franco, the head of the European Commission's delegation in Moscow, said in an interview.
A provisional draft of the text of the PCA to be negotiated, seen by Bloomberg News, states that ``it will be of long, preferably unlimited duration,'' unlike the current one, which was signed in 1997.
The summit came a day after Alexander Litvinenko, a former Russian spy who sought political asylum in London, died of poisoning in unexplained circumstances. Putin called his death a tragedy, while adding that ``I hope the British authorities will not contribute to the instigation of political scandals.''
He also cast doubt on a letter supposedly dictated by Litvinenko before his death, and added he understood British doctors didn't regard the death as violent.
Energy Charter
The EU wants Russia to agree to use the language of the so- called Energy Charter in the PCA. This sets out terms for trading and transporting energy across the Eurasian landmass. Russia signed it, then later said it won't ratify it. The EU sees the PCA as a way of getting the charter's language into a treaty without requiring Russian ratification of the original document.
Barroso said the two sides were working toward a ``win-win deal'' in which EU consumers would be ensured security of supply, while Russian producers would have a guaranteed market. ``We are basing ourselves on the principles of the Energy Charter treaty,'' he said.
The Russian meat ban was prompted by accusations by the Russian authorities that Polish producers are violating hygiene laws and smuggling. Putin said there's no problem with Polish produce itself.
``This is not about the quality of Polish meat,'' he said, adding that food producers in Poland ``know their business.'' He said the problem lay with meat from outside Poland, for example from China and India, which was imported and then relabelled as Polish for export. ``Please don't link this purely technical issue with the general state of EU-Russian relations,'' he said.
Polish Prime Minister Jaroslaw Kaczynski said in Warsaw it was impossible to reach a new agreement with Russia because Russian authorities have violated the current accord. ``There's no way we can agree to Russia treating Poland as if it wasn't a member of the EU,'' he said

2006-11-26T06:42:00.001-08:00

China's Economy Unlikely to Slow `Sharply' in 2007 (Update1)
By Yanping Li
Nov. 26 (Bloomberg) -- China's economy is unlikely to slow ``sharply'' in 2007 because rising consumer spending and industrial production will underpin growth, said Yao Jingyuan, chief economist of the National Bureau of Statistics.
``The government's policy to boost consumption will show better results next year,'' Yao said in an interview at a business forum in Beijing today. Consumer spending should make a ``greater contribution to economic growth, even though investment may slow amid the government's curbing measures.''
China has raised minimum wages and increased welfare spending to get households to spend more and make the economy less dependent on investment and exports. As it encourages spending by consumers, China has increased interest rates and ordered banks to set aside more money as reserves to damp business investment and clamp down on wasteful factory expansion.
``Growth will continue to be strong, but weaker than this year,'' Federico Bazzoni, head of Asian equities at BNP Paribas SA, said in an interview in Milan on Nov. 24. ``That's good news, as there are fewer risks of overheating. Growth in 2007 will be less than 10 percent.''
China's economic expansion slowed in the third quarter for the first time in a year as lending curbs damped business investment. The economy grew 10.4 percent in the quarter from the same period a year earlier, compared with 11.3 percent in the prior three months.
The world's fourth-largest economy will maintain ``steady and relatively fast growth'' in 2007, Yao said at today's conference, without providing a forecast.
World Bank Forecasts
The World Bank on Nov. 14 raised its estimate for China's 2007 economic growth for a second time in four months. The World Bank said the world's fastest growing major economy may expand 9.6 percent next year after advancing 10.4 percent in 2006.
China's 2006 growth rate may be as high as 10.7 percent, Yao said yesterday. Gross domestic product will rise between 10 percent and 10.7 percent this year, he said in Shanghai.
Consumer spending is gathering pace as curbs on lending and land use slow business investment, helping China's economy skirt a sharp slowdown. Retail sales jumped in October at the fastest pace in almost two years.
China is planning to increase wages for government employees by the end of the year, a move aimed at raising urban incomes and further stoking household spending, Yao said.
The World Bank has urged China to boost spending on healthcare, education and social security to encourage its 1.3 billion citizens to spend rather than putting their money in bank deposits. China's savings rate is double the world average.
Investment Controls
China needs to continue its economic, monetary and administrative measures to control bank lending and fixed-asset investment, Yao said. Growth in investment spending is still ``relatively high,'' he said.
Eight provinces out of the 31 in China had annual investment growth of more than 35 percent at the end of October, and three of those had investment growing faster than 40 percent annually, Yao said.
Investment growth in China's towns and cities slowed to 26.8 percent in the first 10 months from a year earlier, after rising 28.2 percent through September, a government report on Nov. 16 showed.
``Further tightening is expected since the government has failed to control investment growth to its targeted 18 percent for this year,'' said Zhu Baoliang, chief economist at the State Information Center, an affiliate of the country's top planning agency, the National Development and Reform Commission.
``We see next year's economic growth slowing mildly to around 9.5 percent, as investment and trade growth falls after government's curbing measures,'' Zhu said today.

U.S. Retail Sales Rise 6% on Day After Thanksgiving (Update4)

2006-11-26T06:41:00.000-08:00

U.S. Retail Sales Rise 6% on Day After Thanksgiving (Update4)
By Courtney Dentch
Nov. 25 (Bloomberg) -- U.S. retail sales rose 6 percent to $8.96 billion yesterday, the first day of the holiday shopping season, as discounts and lower gasoline costs encouraged consumers to buy more gifts, according to ShopperTrak RCT.
The increase may give retailers reason to be ``cautiously optimistic'' about this year's holiday sales, Chicago-based ShopperTrak said today in a statement. The last quarter of year accounts for almost one-third of U.S. retailers' annual profits.
``This data shows an even larger increase than expected as consumers proved they were more willing to spend,'' Bill Martin, co-founder of ShopperTrak, said in the statement. The firm measures foot traffic in shopping centers and malls using more than 45,000 video devices.
The day after Thanksgiving, called ``Black Friday'' because it was the day retailers traditionally expected to turn profitable for the year, has been the second- or third-busiest shopping day in past years. Stores kicked off the holiday season yesterday with early openings and discounts to win customers.
Wal-Mart Stores Inc., the world's largest retailer, opened at 5 a.m. yesterday with 42-inch plasma televisions for less than $1,000 and cashmere sweaters for $29, sales that lasted the first six hours of the day. It put other electronics on sale three weeks ago, and has reduced prices on toys, small appliances and food.
The Bentonville, Arkansas-based retailer said today its November sales at U.S. stores open more than a year fell 0.1 percent, the worst performance in more than a decade.
Discounts, Stunts
Target Corp., the second-biggest U.S. discounter, hired magician David Blaine to escape from shackles holding him to a spinning gyroscope five stories above New York's Times Square to promote a two-day sale that started yesterday.
Kmart, a unit of Hoffman Estates, Illinois-based Sears Holdings Corp. was open on Thanksgiving Day and offered discounts on games and cameras.
Customers took advantage of lower prices to buy electronics and large items such as furniture yesterday, said Wayne Best, who oversees economic analysis at Visa USA.
``It suggests people are spending more on themselves,'' Best said. About $17 of every $100 spent in the U.S. is paid for with a Visa credit or debit card, he said.
ShopperTrak said earlier this month that it expects Dec. 23, the Saturday before Christmas, to be the biggest shopping day of 2006. The firm estimates consumers will spend $457 billion during the holidays, up 5 percent from last year.
Cheaper Gasoline
A drop in oil prices in recent weeks may have contributed to yesterday's increase. Oil has traded between $54.86 and $61.33 a barrel this month because above-average temperatures in the northern U.S. have delayed demand for heating products. Crude oil hit a record $78.40 a barrel in July.
The price of unleaded gasoline at the pump averaged $2.24 a gallon earlier this week, down 26 percent from $3.04 in August, according to the U.S. Department of Energy.
ShopperTrak's figures exclude discount stores, such as Wal- Mart, and Internet transactions. It also uses U.S. Commerce Department data.

Canada's Dollar Gains This Week on Inflation, Fiscal Surplus

2006-11-25T06:04:00.003-08:00

Canada's Dollar Gains This Week on Inflation, Fiscal Surplus
By Haris Anwar
Nov. 25 (Bloomberg) -- Canada's dollar rose this week, ending a three-week losing streak, after a measure of inflation jumped, and the government said it'll post a surplus double the previous forecast.
The currency rebounded from a seven-month low as investors speculated a robust economy will keep the Bank of Canada from cutting the borrowing cost soon.
``There is no denying that there is a change in momentum for the Canadian dollar,'' said Linda Jespersen, managing director of currency trading at National Bank of Canada in Toronto. ``A lot of this has to do with the strong economy, a record high equity market, and relatively strong mining sector. The near-term trend is still going to be the Canadian dollar strengthening.''
The currency rose 1.1 percent this week, the most since the week ended Oct. 20, to 88.13 U.S. cents. One U.S. dollar buys C$1.1349. Canada's dollar dropped 1.2 percent during the week ended Nov. 17.
The core inflation rate, which tracks prices minus eight volatile goods and the impact of tax changes, rose 2.3 percent last month from a year earlier, the most since 2003, Statistics Canada said Nov. 22.
A day later, the Canadian government said it expected to double the federal surplus to C$7.2 billion ($6.35 billion) in the year ending in March. Finance Minister Jim Flaherty said the Canadian government is committed to buying back C$3 billion in bonds each year, part of a plan to eliminate net debt by 2021.
U.S. Slowdown
The currency also get a boost from a general weakness in the U.S. counterpart, which dropped to 19-month low against euro on speculation the Federal Reserve will reduce the borrowing cost as the world's largest economy slowed.
``We may have a reversal in place in terms of the short-term direction of the Canadian dollar,'' said Reid Farrill, executive director of foreign exchange at CIBC Worlds Markets Inc. in Toronto. ``If the major element of the story is an American recession, then it begs the question does Canada avoid that, or does Canada get dragged down with it?''
More than 80 percent of Canada's exports are to the U.S.
The Bank of Canada kept its key interest rate unchanged at 4.25 percent for a third meeting last month and predicted growth will drop to 2.5 percent next year from 2.8 percent this year.
The Canadian dollar has lost 2.9 percent versus its U.S. counterpart since May 31, when it touched a 28-year high of 91.44 U.S. cents. Traders have pared bets on the currency on declines in the price of energy and commodities.
``If the commodity prices remain relatively firm, then the Canadian dollar can weather the U.S. slowdown quite nicely,'' Farrill said.
Yields Decline
The yield on Canada's benchmark 10-year note fell about 4 basis points to 3.96 percent, the lowest since Sept. 27. The price of the 4 percent security maturing in June 2016 rose 31 cents to C$100.29. Bond yields move inversely to prices.
``This seems to be a knee-jerk reaction for bonds to improve after the news of a higher government surplus,'' said Edward Jong, who oversees C$100 million of fixed-income assets at Majorica Asset Management in Toronto, referring to yield. ``But I can't see this as a long-lasting trade. A lot of it is just a political posturing.''
Canadian 10-year government bonds yielded about 58 basis points less than comparable-maturity U.S. Treasuries. The difference was 77 basis points in May, the largest this year.

Avoid Southbound Dollar Express, Chandler Advises: Chart of Day

2006-11-25T06:04:00.001-08:00

Avoid Southbound Dollar Express, Chandler Advises: Chart of Day
By Thomas R. Keene
Nov. 24 (Bloomberg) -- Today's plunge in the dollar's value against major foreign currencies shows ``a run on the U.S. dollar is underway,'' according to Brown Brothers Harriman & Co. strategists.
The ``extreme'' move comes amid ``relatively thin market conditions'' and may be reversed ``as full liquidity returns,'' writes Marc Chandler, global head of currency strategy at Brown Brothers in New York, in a note to investors today.
``Rather than jump onboard what appears to be a southbound dollar express, traders might be better advised to take some profits and wait for the next train,'' writes Chandler.
The chart of the day shows changes in the value of the British pound sterling versus the dollar during the second half of this year. The blue mesh depicts one measure of trading volatility, a band of three standard deviations on either side of the 20-day moving average in the pound's value. Trading falls within the three-deviation range 99 percent of the time. Note that today's pound-dollar trading (the green circle) is outside the band at $1.93. The pound last traded above $2 in 1992. {GBP TE }
Chandler suggests the dollar may strengthen because of a set of economic and political realities including a tight U.S. labor market that could elevate inflation, weak Japanese domestic demand, and ``objections to further euro appreciation'' among European

U.S. Rate Cut Would Raise Pressure on Yuan, China Official Says

2006-11-25T06:03:00.001-08:00

U.S. Rate Cut Would Raise Pressure on Yuan, China Official Says
By Helen Yuan and Allen T. Cheng
Nov. 25 (Bloomberg) -- Federal Reserve interest rate cuts next year would put pressure on China's yuan to revalue, a Chinese central bank official said today.
``If the Federal Reserve lowers rates in 2007, it definitely would pressure the yuan to revalue further,'' Wang Yu, a director of the financial market division of the People's Bank of China, said at a steel conference in Shanghai today. ``There is the possibility that the Fed may lower rates next year.''
The yuan has risen 3.3 percent since China revalued the currency by 2.1 percent in July 2005. The currency last week made the biggest weekly gain in two months, closing at the strongest since the peg to the dollar was scrapped, on speculation China is allowing faster appreciation before a visit by U.S. Treasury Secretary Henry Paulson.
Fed policy makers voted on Oct. 25 to leave the benchmark lending rate at 5.25 percent for the third straight meeting. Officials are trying to tamp down inflation gradually without accelerating a decline in housing markets.
The U.S. blames an undervalued yuan for a widening trade deficit and the loss of American manufacturing jobs.

SG 0906994679

2006-11-25T06:01:00.001-08:00

China's Economy May Expand as Fast as 10.7% in 2006 (Update3)
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By Helen Yuan and Allen T. Cheng
Nov. 25 (Bloomberg) -- China's economy, the world's fourth- largest, may expand as much as 10.7 percent in 2006, said Yao Jingyuan, chief economist at the National Bureau of Statistics.
Gross domestic product may rise between 10 percent and 10.7 percent this year, Yao told reporters at a steel conference in Shanghai today. Growth close to the top of the range would exceed the World Bank's Nov. 14 estimate for China's economy to advance 10.4 percent in 2006.
China has raised minimum wages and increased welfare spending to get households to spend more and make the world's fastest growing major economy less dependent on investment and exports. Economic expansion slowed in the third quarter for the first time in a year as lending curbs damped business spending.
``Given the pace of growth around the world, I don't think 10.7 percent is excessive,'' said Tai Hui, an economist at Standard Chartered Bank in Hong Kong. ``China definitely needs some rebalancing'' in growth away from business investment.
Standard Chartered forecasts China's economic growth will accelerate to between 10.6 percent and 10.8 percent this year. The economy advanced 10.2 percent in 2005.
The People's Bank of China, the nation's central bank, on Nov. 14 said the economy likely will expand at a more than 10 percent pace in 2006. The central bank raised interest rates twice this year to cool an investment boom that threatens to leave China with idle factories.
Growth in fixed-asset investment and industrial production has moderated since June, reflecting tighter rules on land use, higher rates and efforts by the central bank to remove funds from the financial system. By contrast, retail sales jumped in October at the fastest pace in almost two years as rising incomes spurred consumer spending.
Investment May Rebound
``China's macro-economic measures to rebalance growth are correct, but the question is whether the magnitude or aggressiveness are sufficient enough,'' Hui said.
Profits at industrial companies accelerated in October for a seventh straight month as steelmakers including Baoshan Iron & Steel Co. boosted prices, the statistics bureau reported Nov. 22. Rising profits may cause business investment to rebound as many companies finance capacity expansion from retained earnings.
China's inflation rate will be ``as high as 1.5 percent for 2006,'' Yao also said at the conference today. Rising prices are a sign that deflation, which has plagued China for years, may be on the wane, he said.
The nation's trade surplus will be more than $150 billion this year, Yao said, without giving a comparison for 2005.
Money Supply
China's trade surplus surged to a record $23.8 billion in the month of October as imports grew at the slowest pace in 15 months, raising the likelihood that the U.S. and Europe will intensify demands for currency gains and more market access.
U.S. and European policy makers have accused China of keeping its currency undervalued, ignoring copyrights and protecting local businesses.
The government's fiscal revenues for the year will be 4 trillion yuan ($510 billion), Yao said, without providing a comparison for 2005.
China's money supply measure, M2, will gain between 16 percent and 17 percent in 2007, said Wang Yu, a director of China's central bank. Wang also was speaking at the conference in Shanghai.
M2, the broadest measure of money supply, gained 17.1 percent in October from a year earlier, a Nov. 13 report showed.
China's foreign exchange reserves exceeded $1 billion by the end of October, Wang said. The nation's foreign exchange reserves are the world's largest.

0983112209

2006-11-25T06:00:00.000-08:00

Dollar's Weekly Loss Sends Currency to 19-Month Low Versus Euro

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By Daniel Kruger
Nov. 25 (Bloomberg) -- The dollar dropped to a 19-month low this week versus the euro and fell against the yen on speculation slowing U.S. growth will lead the Federal Reserve to cut interest rates as the European Central Bank boosts them.
Traders raised bets the Fed will reduce borrowing costs as advisers to President George W. Bush on Nov. 21 cut forecasts for growth next year on a weaker housing market. Gross domestic product will rise 2.9 percent next year, slower than the 3.6 percent forecast in June, the Council of Economic Advisers said.
``Everybody knows the ECB wants to hike rates and will do so in December and the first quarter as well,'' said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago. ``We're looking for the dollar to sell off the rest of the year.''
The dollar weakened 2 percent to $1.3094 per euro from $1.2829 on Nov. 17. The U.S. currency dropped as low as $1.3109 yesterday. The dollar fell 1.6 percent to 115.90 yen from 117.75 a week ago. The euro also touched 151.76 yen yesterday, an all- time high, before closing at 151.71 from 151.05 a week ago.
The U.S. currency may reach $1.33 per euro by year-end, Reid said.
``You've got real money that is leaving the dollar,'' such as corporations hedging currency risk and central banks making multi-year allocations, said Firas Askari, head currency trader at BMO Nesbitt Burns in Toronto. ``That's money that doesn't get injected back into the economy. These guys sit on reserves for years at a time.''
The U.S. currency's move through $1.30 per euro, which it had approached several times this year without breaching, may indicate a period of prolonged weakness, according to some dollar bears.
ECB Determined
``The extent of this rise in the euro will be completely determined by the ECB,'' said Matthew Lifson, chief currency trader at PNC Capital Markets in Pittsburgh. ``People ask me, `Can you get to $2 on the pound?' Why not?''
The dollar fell to as low as $1.9351 per pound yesterday, its weakest against the British currency since Dec. 31, 2004. It last traded above $2 in 1992.
The current account deficit in the U.S. may also weigh on the dollar, said Tim Mazanec, senior foreign-exchange strategist at Boston-based Investors Bank & Trust Co.
``The lack of a stimulus to attract investors to the U.S. has the dollar on the defensive,'' Mazanec said. ``The current account deficit is front and center, the number one problem with the dollar.''
The U.S. current account showed a $218.4 billion deficit in the second quarter, near the record $223.1 billion for the fourth quarter of 2005.
Stop Losses
The dollar's drop was assisted by trading volume below the $1.9 trillion daily average because of holidays in the U.S. and Japan and preset orders to sell the currency at certain levels, traders said.
``It was easier to push through'' $1.30 per euro in an illiquid market, BMO's Askari said. ``You had a battle in the ranges. The weaker side was the dollar side.''
Traders place automatic orders, or so-called stop-losses, at preset levels to sell the currency after it breaches certain key levels, such as $1.30. Before this week the euro had been stuck between $1.2458 and $1.2938 during the second half of this year.
Yesterday's decline in the dollar ``was very much driven by some important technical levels,'' said Matthew Strauss, senior currency strategist at RBC Capital Markets Inc. in Toronto, a unit of Canada's biggest bank by assets. ``Some stop-losses were triggered and forced it above the psychological level of $1.30.''
Reduce Borrowing Costs
Traders are betting the Fed will cut borrowing costs in 2007. In contrast, interest-rate futures show investors expect the Frankfurt-based ECB to raise its main interest rate twice more by June 2007.
ECB policy maker Klaus Liebscher told Reuters yesterday that the central bank must remain ``vigilant'' on inflation.
Europe's central bank has lifted borrowing costs five times since December to 3.25 percent. The Fed has left its benchmark rate at 5.25 percent for the past three meetings, after 17 straight quarter-percentage point increases since June 2004.
Traders see a 51 percent chance the Fed will reduce interest rates at the central bank's March 21 meeting. That compares with an 11 percent chance on Nov. 16.
The U.S. currency fell for three straight years through 2004 versus the euro and the yen as the country's trade deficit widened, reaching a record $1.3666 per euro on Dec. 30, 2004. It advanced against the euro and yen last year as the Fed pushed borrowing costs higher at every meeting.

0919 700 510

2006-11-25T05:55:00.000-08:00

Philippine Bonds Rise as Peso Gains: World's Biggest Mover
Huyền 0919 700 510

By Oliver Biggadike
Nov. 24 (Bloomberg) -- Philippine peso-denominated bonds rose, the biggest fluctuation of any government debt market today, on speculation peso gains will allow the central bank to retain this month's partial interest rate cut.
Bangko Sentral ng Pilipinas on Nov. 2 cut the rate it pays to commercial banks on overnight deposits between 5 billion ($101 million) and 10 billion pesos to 5.5 percent from 7.5 percent. The central bank will review the policy next month to see whether it has helped boost loan growth, Deputy Governor Diwa Gunigundo said on Nov. 21.
``The strength of the peso versus the dollar eliminated the worry that lower interest rates will weaken the foreign-exchange rate,'' said Rafael Algarra, head of the treasury at Security Bank Corp. in Manila. ``With most banks having excess cash, this created demand for higher-yielding securities.''
The yield on the benchmark 10-year note fell 22 basis points, or 0.22 percentage point, to 6.83 percent as of 1:03 p.m. in Manila, according to the Money Market Association. The price of the 6.25 percent bond due November 2016 rose 1.5281, or 152.8 pesos per 10,000 pesos face amount, to 95.8624. Bond yields move inversely to prices.
The peso traded at 49.745 against the dollar at 1:11 p.m. in Manila, the strongest since May 2002. The central bank's rate for deposits of more than 10 billion pesos is 3.5 percent.
The world's biggest movers are based on changes in price or yield and are screened for the size of the market and amount of daily trading

0982056396

2006-11-25T05:52:00.002-08:00

China's Economy May Expand as Fast as 10.7% in 2006 (Update3)
Thanh 0982056396
By Helen Yuan and Allen T. Cheng
Nov. 25 (Bloomberg) -- China's economy, the world's fourth- largest, may expand as much as 10.7 percent in 2006, said Yao Jingyuan, chief economist at the National Bureau of Statistics.
Gross domestic product may rise between 10 percent and 10.7 percent this year, Yao told reporters at a steel conference in Shanghai today. Growth close to the top of the range would exceed the World Bank's Nov. 14 estimate for China's economy to advance 10.4 percent in 2006.
China has raised minimum wages and increased welfare spending to get households to spend more and make the world's fastest growing major economy less dependent on investment and exports. Economic expansion slowed in the third quarter for the first time in a year as lending curbs damped business spending.
``Given the pace of growth around the world, I don't think 10.7 percent is excessive,'' said Tai Hui, an economist at Standard Chartered Bank in Hong Kong. ``China definitely needs some rebalancing'' in growth away from business investment.
Standard Chartered forecasts China's economic growth will accelerate to between 10.6 percent and 10.8 percent this year. The economy advanced 10.2 percent in 2005.
The People's Bank of China, the nation's central bank, on Nov. 14 said the economy likely will expand at a more than 10 percent pace in 2006. The central bank raised interest rates twice this year to cool an investment boom that threatens to leave China with idle factories.
Growth in fixed-asset investment and industrial production has moderated since June, reflecting tighter rules on land use, higher rates and efforts by the central bank to remove funds from the financial system. By contrast, retail sales jumped in October at the fastest pace in almost two years as rising incomes spurred consumer spending.
Investment May Rebound
``China's macro-economic measures to rebalance growth are correct, but the question is whether the magnitude or aggressiveness are sufficient enough,'' Hui said.
Profits at industrial companies accelerated in October for a seventh straight month as steelmakers including Baoshan Iron & Steel Co. boosted prices, the statistics bureau reported Nov. 22. Rising profits may cause business investment to rebound as many companies finance capacity expansion from retained earnings.
China's inflation rate will be ``as high as 1.5 percent for 2006,'' Yao also said at the conference today. Rising prices are a sign that deflation, which has plagued China for years, may be on the wane, he said.
The nation's trade surplus will be more than $150 billion this year, Yao said, without giving a comparison for 2005.
Money Supply
China's trade surplus surged to a record $23.8 billion in the month of October as imports grew at the slowest pace in 15 months, raising the likelihood that the U.S. and Europe will intensify demands for currency gains and more market access.
U.S. and European policy makers have accused China of keeping its currency undervalued, ignoring copyrights and protecting local businesses.
The government's fiscal revenues for the year will be 4 trillion yuan ($510 billion), Yao said, without providing a comparison for 2005.
China's money supply measure, M2, will gain between 16 percent and 17 percent in 2007, said Wang Yu, a director of China's central bank. Wang also was speaking at the conference in Shanghai.
M2, the broadest measure of money supply, gained 17.1 percent in October from a year earlier, a Nov. 13 report showed.
China's foreign exchange reserves exceeded $1 billion by the end of October, Wang said. The nation's foreign exchange reserves are the world's largest.

Thu 0919881955

2006-11-25T05:52:00.001-08:00

Australia's Foster's Credit Risk Rises on Buyout Speculation
Thu 0919881955

By Oliver Biggadike
Nov. 24 (Bloomberg) -- The perceived risk of owning debt sold by Australian beverage-maker Foster's Group Ltd. rose 22 percent this week to the highest since September on speculation the company is a takeover target.
Inbev NV, the maker of Beck's beer, is currently considering a bid, the Herald Sun newspaper reported yesterday, without identifying sources. Australia's largest producer of beer and wine said today it can't explain why its share price surged yesterday to a record high.
``When a leveraged buyout happens, the buyers are generally going to put more debt into the company,'' said Tony Adams, portfolio manager in Sydney at Colonial First State, Australia's largest money manager. ``What's potentially changed is the amount of leverage.''
Five-year contracts based on $10 million of Foster's debt rose to $49,300 from $40,300 last week, according to data compiled by Bloomberg. Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on changes in a borrower's ability to repay.
An increase in the cost of credit-default swaps based on $2.1 billion of Foster's bonds signals the companies' credit quality fell.
Qantas Takeover Approach
Foster's shares rose 1.3 percent to A$6.89 at the 4:10 p.m. close of trading in Sydney, giving it a market value of A$14 billion ($11 billion). The stock rose 4.1 percent yesterday and traded as high as A$6.97.
Qantas Airways Ltd., Australia's biggest airline, on Nov. 22 said it received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group. Concerns about rising indebtedness pushed up the price of credit-default swaps based on the airline's bonds to $70,000 from $65,000 yesterday, according to prices from JPMorgan Chase & Co.
Credit-default swaps are the fastest growing market for derivatives, which are financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.
The amount of outstanding credit-default swap contracts jumped to $20.3 trillion from $13.9 trillion at the end of last year, the Basel, Switzerland-based bank said on Nov. 17.

0917609648 Thúy

2006-11-25T05:46:00.000-08:00

Japan Bonds Post Biggest Weekly Gain in a Month on Stocks Drop
0917609648 Thúy

By Issei Morita
Nov. 25 (Bloomberg) -- Japan's 10-year bonds had the biggest weekly gain in almost a month as a drop in the Nikkei 225 Stock Average increased demand for government debt.
Benchmark bonds rose as the Nikkei this week fell the most since July after the government cut its evaluation of the economy for the first time in almost two years on Nov. 22. Bank of Japan policy maker Toshikatsu Fukuma yesterday said asset price gains don't pose an ``immediate'' threat to the economy.
``The drop in stocks was definitely supportive for the Japanese government bond market'' this week, said Keiko Onogi, a fixed-income strategist in Tokyo at Daiwa Securities SMBC Co., a subsidiary of Daiwa Securities Group Inc., Japan's second- largest brokerage.
The yield on the 1.8 percent bond due September 2016 fell 5.5 basis points this week, the biggest decline since the week ended Oct. 27. Yesterday the yield fell half a basis point to 1.655 percent in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. A basis point is 0.01 percentage point.
The Nikkei 225 lost 2.2 percent on the week, the biggest decline since the five days ended July 14. Ten-year yields had a correlation of about 0.88 with the Nikkei during the past two months, according to data compiled by Bloomberg. A value of 1 means the two moved in lock step.
Dovish Enough
``A decline in share prices supported government bonds,'' said Satoshi Yamada, who helps oversee the equivalent of $6.2 billion in assets at Japan Investment Trust Management Co. in Tokyo. ``Central bank's Fukuma avoided giving hawkish signals about the rate policy.''
Japan's government cut its assessment for the economy after the stock market closed on Nov. 22.
The central bank will closely judge when to raise interest rates and does not have any preconceived timing, Fukuma said in a speech to business executives in Ibaraki Prefecture.
``His views on the economy and prices are dovish enough to spur some buying,'' said Katsutoshi Inadome, a debt strategist at Mitsubishi UFJ Securities Co. in Tokyo.
Shares of exporters fell as the yen traded near the highest in more than two months against the dollar, spurring speculation profits at companies such as Honda Motor Co. and Sony Corp. will drop. The yen rose as high as 116.04 against the dollar on Nov. 23, the strongest since Sept. 7.
`Next Rate Increase'
Gains in government bonds were limited on concern Bank of Japan Governor Toshihiko Fukui will signal the central bank is ready to lift borrowing costs. He will speak in Osaka on Nov. 27.
Bonds are set for the worst year in three after the BOJ ended its deflation-fighting policy in March and raised rates in July for the first time since 2000.
``Central bank officials are likely to give clues about the next rate increase,'' said Jun Fukashiro, a fixed-income fund manager in Tokyo at Toyota Asset Management Co., which has the equivalent of $10 billion in assets under management. ``The bank is probably still confident about the economic outlook.''
Government bonds have handed investors a return of 0.06 percent this year, the least since 2003, according to an index of 229 of the securities compiled by Merrill Lynch & Co.
Japanese bonds also rose on speculation investors are buying to match a change in the benchmark index.
Nomura Securities Co. will add debt including 10- and 20- year bonds sold this month to its Bond Performance Index in December and remove securities due in a year and less. The length of the extension will be the largest in three months, according to Mitsubishi UFJ's Inadome.
``I noticed some buying of longer-dated bonds to match the extension of the index,'' said Yamada at Japan Investment Trust. ``Long-dated bonds, such as 10- and 20-years, are solid.''
The yield on 20-year bonds yesterday fell 2 basis points to 2.13 percent.
``There is some room for yields to decline,'' said Hajime Takata, chief strategist in Tokyo at Mizuho Securities Co. and the second-highest ranked bond analyst in Japan according to Nikkei Bonds and Financial Weekly. ``The economic situation in Japan and the U.S. is declining.''

0918198896

2006-11-25T05:45:00.001-08:00

Eurotunnel Creditor Oaktree Won't Vote for Debt Plan (Update2)
Thủy 0918198896

By Tracy Alloway and Evan Roth
Nov. 24 (Bloomberg) -- Eurotunnel SA creditor Oaktree Capital Management LLC said it will vote against an ``unfair'' plan by the struggling tunnel operator to exit bankruptcy protection.
``The proposed method of decision-making is inherently unfair,'' Los-Angeles based Oaktree said in a statement today. ``We are not aiming for special treatment. We have a right to be treated as fairly as other stakeholders.''
Under the proposed plan, creditors have been organized into tiers based on the type of debt they hold. Holders of senior debt, including Deutsche Bank AG, will be repaid in full. Mid-level creditors, or `Tier 3,' will get 150 million pounds ($289.8 million) in cash and 1.05 billion pounds of convertible bonds.
Oaktree, which is classified as ``Tier 3,'' said in the statement that the proposal is less favorable to holders of mid- level credit than an earlier plan. It wants the tiers of creditors to vote on the plan separately, it said.
Today's announcement comes after requests to Eurotunnel management for more information about the plan went unanswered, Oaktree said. ``More than ever we want a sound future for Eurotunnel which presupposes a reopening of negotiations.''
Eurotunnel sent a letter to its creditors with additional information about the plan to be voted upon next week, the company said in an e-mailed statement today.
``After having listened to its creditors and received their comments, Eurotunnel has provided additional information and clarifications through an addendum sent to creditors by the court- appointed representatives,'' the company said.
Long-Term Financing
The letter included points on which legal entities will receive long-term financing under the plan, how creditors who receive convertible bonds would be able to resell them to other creditors, and details on how shareholders can subscribe to convertible bonds, said Eurotunnel spokeswoman Mady Chabrier.
The company said Nov. 14 that it would support a debt plan with changes that didn't ``significantly'' alter the balance among creditors, bondholders and shareholders. The company plan would cut its 6.2 billion pounds of debt by more than half.
Oaktree's main objections to the plan are a reduction in the amount of equity it would get in a new company and lower premiums if Eurotunnel buys back the bonds. The earlier plan and a modified version on July 12 failed because Deutsche Bank AG and other bondholders complained they received too little. Under all plans, shareholders would be left with 13 percent of the company.
Debt Plan
Eurotunnel, operator of the rail link between the U.K. and France, submitted a debt restructuring plan to the Paris commercial court on Oct. 31 after receiving protection from creditors on Aug. 2. Lenders will vote on the proposal on Nov. 27, with suppliers voting the same day. Bondholders will vote a week later in a ``consultation'' whose outcome doesn't determine whether the plan can be accepted by the court.
Oaktree will not attend the creditors' meeting. The investment fund lost an initial decision late yesterday in the Paris Commercial Court. It had said it should be excluded from the creditors committee. It will appeal the court ruling.

0988633992

2006-11-25T05:43:00.001-08:00

Qantas Airways, Foster's, Technip: Credit-Default Swap Movers
nhi 0988633992

By Jennifer Ryan
Nov. 24 (Bloomberg) -- The following is a list of companies whose credit-default swap prices are changing today. Symbols are in parentheses after company names. All credit-default swap prices are as of 2:00 p.m. in London.
The perception of European credit quality as measured by the iTraxx Crossover Index fell today. A credit-default swap based on a 10 million-euro ($13 million) contract on the index, which includes 45 companies with investment-grade and non- investment grade ratings, rose to 241,500 euros, or 1.9 percent, from 237,000 euros according to data compiled by JPMorgan Chase & Co. The index moves an average of about 1.5 percent a day.
Companies in the Crossover Index have more than $80 billion of bonds outstanding. All prices below are based on a contract size of 10 million euros.
Qantas Airways Ltd. {CQTAS1U5 CBIL GP } rose after Macquarie Bank Ltd., which may bid for the airline, said any firm proposal will adhere to rules that majority Australian ownership of the Sydney-based carrier remains. Qantas said it received a ``confidential and incomplete'' takeover approach from Macquarie and Texas Pacific Group. The cost of credit- default swaps based on Qantas bonds rose to $93,000 from $62,000 yesterday, according to Deutsche Bank AG data.
Foster's Group Ltd. {CFBG1U5 CBIL GP }, the Australian beverage-maker, rose after the Herald Sun newspaper reported Inbev NV, the Belgium maker of Beck's beer, is considering a bid. The cost of credit-default swaps based on Foster's debt rose to $54,000 from $47,000, according to Deutsche Bank.
Technip SA {CTEC1E5 CBIL GP }, Europe's second- largest oil-services company, fell after La Tribune reported that Rome-based oil exploration company ENI SpA may bid for the Paris-based company. The cost of credit-default swaps based on Technip debt fell to 17,000 euros at about 7:50 a.m., from 22,000 euros yesterday, according to Deutsche Bank. The cost of a contract was quoted at 23,000 euros after 12:00 p.m., with no trades reported.

Ngọc:0903288248

2006-11-25T05:40:00.000-08:00

Bond Strategists: Buy London Stock Exchange Debt, Barclays Says
Ngọc:0903288248

By Sebastian Boyd
Nov. 24 (Bloomberg) -- A takeover of London Stock Exchange Plc is likely to benefit holders of its bonds because the securities reward investors for any deterioration in credit ratings, Barclays Capital says.
Nasdaq Stock Market Inc. and buyout firms have built equity stakes in the U.K. exchange. A takeover by either could cause LSE to lose its investment-grade credit ratings because Nasdaq is rated high-yield, high-risk and a private-equity deal would be financed by loading the company with debt.
When LSE sold bonds in July, Nasdaq had already said it wanted to buy the U.K. bourse and the borrower included terms to protect investors. Interest payments on the bonds will rise by 25 basis points every time Moody's Investors Service lowers its ranking of the company's credit worthiness. If the rating falls to non-investment grade, or junk, the coupon will increase by 1 percent.
``The bonds are really cheap,'' said Puneet Sharma, a credit strategist in London at Barclays Capital, which has a ``buy'' recommendation. ``These days the risk of a takeover leading to a downgrade is substantial, so people are pushing for protection on bonds.''
`Negative Pressure'
Moody's has indicated it may cut LSE's ratings after a successful takeover by Nasdaq, saying on Nov. 20 that ``negative ratings pressure'' would be likely.
The yield premium, or spread, investors demand to buy the LSE's 250 million pounds of 5.87 percent bonds due in July 2016, compared with similar-maturity U.K. government debt, is 119 basis points.
Moody's Investors Service rates the bonds Baa1, the eighth- highest of 10 possible investment grades. Should Moody's cut the rating the spread would rise by between 10 basis points and 30 basis points. The bonds would return between 200 and 300 basis points more than government debt, according to Barclays' calculations. A basis point is 0.01 percentage point.
Moody's gives Nasdaq a non-investment grade ranking of Ba3, five steps below the London exchange, and three steps below investment grade. Standard & Poor's rates it BB+.
High-yield, high-risk bonds are rated below Baa3 at Moody's and BBB- at S&P.
Were Moody's to cut its rating on LSE in line with its rating on Nasdaq, investors would earn between 300 and 450 basis points more than government bonds, Barclays said.
``If the coupon steps up, the spread will initially widen to keep the price the same, but will then come back in,'' Sharma said.
Stake Building
Nasdaq has amassed 29 percent of the U.K. exchange and said on Nov. 21 it will take its offer directly to LSE's shareholders after the British bourse rejected the bid. LSE, which refused to meet Nasdaq executives for talks, said the U.S. exchange's 2.7 billion-pound ($5.2 billion) offer is too low.
Hedge fund investors, led by corporate raider Samuel Heyman, are also buying stakes in LSE. Heyman, acquired 8.8 percent of the exchange through derivatives including a total return swap and contracts for difference, paying as much as 3.8 percent more than Nasdaq's 1,243 pence-a-share offer, according to regulatory filings. GLG Partners, which controls about 1.3 percent of LSE through derivatives, paid as much as 1,275 pence, the filings show.
Leveraged buyout firms raise investor concerns because they buy companies using a little of their own money and typically borrow to pay about two-thirds of the purchase price. The result is that bond prices and credit ratings fall and spreads widen.
Investors are unlikely to sell, or put, the bonds back to the borrower, Sharma said. ``You'll be able to make a substantial profit on the price, so a put is likely to be excluded,'' he said.

0909862752

2006-11-25T05:37:00.000-08:00

European Bonds Log Weekly Gain; Euro Rise Stokes Growth Concern
Em My, q10 0909862752

By Gavin Finch
Nov. 24 (Bloomberg) -- European government bonds gained this week as concerns a surge in the euro will crimp economic growth and erode company profits drove investors out of stocks and into fixed income assets.
Two-year debt rose by the most in two weeks after the 12- nation currency breached $1.30 for the first time since April 2005, sending all 18 western European benchmark equity indexes except Iceland lower. A stronger euro makes exports from the region more expensive in the U.S., the destination for a fifth of European companies' sales.
The weakening dollar has ``definitely had the positive impact on the euro-region bond markets one would expect,'' said Kornelius Purps, a fixed-income strategist in Munich at UniCredit Markets and Investment Banking. ``A strong euro isn't good for Europe's exporters and we've seen a decline in European stock markets because of that.''
The yield on the benchmark two-year note, which is more sensitive to changes in rate expectations than longer-dated debt, fell 4 basis points in the week to 3.66 percent at 4:25 p.m. in London.
The price of the 3.5 percent security due September 2008 rose 0.07, or 70 euro cents per 1,000 euro ($1,294) face amount, to 99.72. Bond prices move inversely to yields.
The common currency has risen more than 10 percent this year versus the dollar as the European Central Bank has indicated that signs of robust growth will result in higher interest rates in the $10 trillion economy.
Accelerating Inflation
The Dow Jones Stoxx 600 Index slid 0.8 percent to 355.75 as of 4:22 p.m. in London. The Stoxx 50 dropped 0.9 percent and the Euro Stoxx 50, a measure for the 12 nations sharing the euro, fell 1 percent.
A report today showed German consumer-price inflation accelerated more than expected in November. Rising inflation erodes the value of fixed income bonds.
Prices in Europe's largest economy increased 1.5 percent from a year ago, the Federal Statistics office said. Economists surveyed by Bloomberg had forecast a rate of 1.4 percent.
ECB policy maker Klaus Liebscher warned the central bank would ``keep vigilant'' on inflation, Reuters reported today, citing an interview. The phrase has been used before to signal an imminent rate increase.
Several ECB council members have joined Liebscher in voicing their concern this week that inflation is too high, and indicating further rate increases may prove necessary to curb inflation in the region.
Business Confidence
A French government report today showed business confidence in the region's second-largest economy held near the strongest in five years. Insee, the Paris-based national statistics office, said its index of sentiment among manufacturers held at 107 after October's reading was revised to 107. The gauge reached 109 in April, the highest since March 2001.
Benchmark debt fell by the most in three weeks yesterday after an industry report showed business confidence in Germany unexpectedly rose in November to match a 15-year high, its seventh quarterly rise in a row.
The Munich-based Ifo institute's gauge of business sentiment gained to 106.8 from 105.3 in October, its seventh quarterly rise in a row. The median forecast in a Bloomberg survey of economists was for a drop to 105.2. The index matched the 15-year high reached in June.
Traders are betting on at least one more interest-rate increase from the ECB next year, futures prices show. The yield on the three-month Euribor futures contract for March fell 2 basis points to 3.83 percent today.
The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points above the ECB's benchmark rate since 1999.

0909893154

2006-11-25T05:36:00.001-08:00

Treasuries Gain This Week as Fed Rate-Cut Speculation Increases
Lan Q1: 0909893154

By Annie Pinkert
Nov. 25 (Bloomberg) -- Treasuries gained this week, pushing yields on benchmark 10-year notes to a nine-month low, as speculation increased that slower economic growth will prompt the Federal Reserve to reduce interest rates next year.
``We have had somewhat weak data'' including weaker than- expected reports on consumer confidence that pushed yields to the lower end of the recent trading range, said Michael Pond, an interest-rate strategist in New York at Barclays Capital Inc.
Ten-year note yields fell 5 basis points, or 0.05 percentage point, this week to 4.55 percent, according to bond broker Cantor Fitzgerald LP. They touched 4.525 percent yesterday, the lowest since Feb. 23. The price of the 4 5/8 percent note due in November 2016 rose 12/32, or $3.75 per $1,000 face amount, to 100 18/32. Yields move inversely to prices.
Economic reports this week showing increases in jobless claims as well as weaker-than-expected confidence among U.S. consumers prompted investors to raise their bets that the Fed will reduce interest rates next quarter. Interest-rate futures showed that odds of a rate cut in the central bank's target borrowing rate increased to 51 percent from 34 percent last week.
Housing Market
Markets in the U.S. and Japan were closed Nov. 23 for holidays. The Securities Industry and Financial Markets Association recommended a trading stop at 2 p.m. New York time yesterday.
``The environment looks relatively positive for Treasuries,'' said John Canavan, a fixed-income analyst at Stone & McCarthy Research in Princeton, New Jersey. ``The market will continue to buy on dips.''
Advisers to President George W. Bush on Nov. 21 reduced their outlook for economic growth next year to 2.9 percent from 3.6 percent in June, due to a weakening housing market.
A report next week will probably show existing home sales fell to an annualized rate of 6.15 million in October, the lowest since 2004, according to economists surveyed by Bloomberg News. Notes rose the most in almost three weeks on Nov. 17 after a government report showed housing starts fell to the lowest in more than six years last month.
With the ``economic outlook being sort of negative and bullish for the bond market, we see a continued weak picture which will lead investors to revise their Fed easing expectations, which could potentially cause yields to break through 4.53,'' said Bernd Wuebben, a senior bond market strategist at primary dealer BNP Paribas Securities Corp. in New York.
Fed Expectations
The Fed has held its target rate for inter-bank lending at 5.25 percent since June, following 17 straight quarter-percentage point increases since June 2004. Minutes released Nov. 21 from the Fed's October meeting showed all but one of the 12 regional bank heads voted not to boost the discount rate.
St. Louis Fed President William Poole said in a Nov. 22 interview that economic reports may indicate that inflation is ``leveling off or declining,'' and the central bank's target borrowing rate is ``just about right.''
Federal Reserve Governor Kevin Warsh said the prior day that inflation remains too high during a speech at the New York Stock Exchange. All Fed governors vote on interest-rate policy.
Treasuries and European bonds rose yesterday as the dollar weakened to its lowest in 19 months against the euro, raising concern the surge in the currency will slow economic growth in Europe and make exports from the region more expensive.
Consumer Confidence
The U.S. currency extended its losses after breaching $1.30 against the euro for the first time since April 2005, a level where traders had placed automatic orders to sell the dollar.
Initial jobless claims climbed by 12,000 to 321,000 in the past week, the Labor Department said on Nov. 22. Economists had forecast claims of 310,000, according to the median estimate in a Bloomberg News survey.
A separate report showed consumer confidence this month was weaker than analysts projected. The University of Michigan revised down its gauge of sentiment this month among Americans, to 92.1 from an initial estimate of 92.3. The median estimate of economists in a Bloomberg survey was for an adjustment up to 93.3. In October, the gauge reached a 15-month high of 93.6.

0907850729

2006-11-25T05:34:00.002-08:00

Canada to Use Revenue Windfall to Eliminate Net Debt (Update8)
0907850729 Ngọc

By Theophilos Argitis
Nov. 24 (Bloomberg) -- The Canadian government will seek to become the first Group of Seven nation to bring debt levels in line with assets, as it benefits from revenue windfalls stemming from the largest oil reserves outside of the Middle East.
Finance Minister Jim Flaherty moved the country in that direction by pledging yesterday to buy back C$3 billion ($2.63 billion) in bonds each year, as part of a plan to eliminate the country's ``net debt'' by 2021. He also forecast combined budget surpluses of $50.1 billion over six years, according to a fiscal update released in Ottawa late yesterday.
Flaherty's plan builds on a 10-year effort to improve Canada's competitiveness and prepare for an aging population by balancing its budget and cutting debt. Canada was the only Group of Seven country to post a budget surplus last year as the economy benefited from higher commodity prices and record corporate profits.
``Whatever bragging rights that brings, the fact is the lower debt burden you have, the more maneuverability you have down the road,'' said Tim O'Neill, president of O'Neill Strategic Economics and former chief economist at the Bank of Montreal.
Canada's bonds and the currency rose, with the yield on the 10-year note falling to 3.97 percent. The price of the 4 percent security maturing in June 2016 rose to C$100.24. The dollar rose 0.55 percent to 88.06 U.S. cents, the biggest gain in four weeks.
Canada would join countries including Australia, Norway and Finland that have eliminated their net debt, based on figures from the Organization for Economic Cooperation and Development. The Paris-based economic group defines net debt as total obligations of all levels of government, minus assets such as government pension funds.
Nine Surpluses
Canada has posted nine straight years of budget surpluses, allowing it to reduce debt by C$80 billion since 1997. The government estimates the surplus at C$7.2 billion in the year ending in March.
Canada's net debt has fallen to 30 percent of gross domestic product, less than half the rate a decade ago, and well below the average of 52.7 percent for the G-7 countries.
The country's falling debt level has bolstered investor confidence and helped fuel a 38 percent gain in the Canadian dollar over the past four years, the fifth-best performance against the U.S. dollar over the period. The currency reached a 28-year high on May 31.
Net Debt
The surpluses and rising output from Alberta's oil sands allow Flaherty to set out for the first time a target to eliminate the net debt. Flaherty, whose Conservative Party government has been in power since February, said the net debt would be about zero in 15 years because the assets of the Canada and Quebec pension plans will rise fourfold to about C$427 billion.
That will almost match the combined federal and provincial government debts, which are currently about C$525 billion. The federal government debt alone would decline to about C$280 billion from C$353 billion, he said, assuming the government continues to pay back C$3 billion each year. The target also assumes the provincial governments balance their budgets.
Flaherty was accused by opposition lawmakers of using an obscure net debt measurement. The reduction in net debt stems from an expected increase in pension plan assets, not an acceleration of debt repurchases, said John McCallum, the Liberal Party's finance critic.
``It's a pure gimmick,'' McCallum said. ``It's absolutely misleading to talk about eliminating the debt.''
Dominion Bond Rating Service said today that while the plan is ``optimistic'', it will likely result in further credit improvement.
Bonds Remain
The debt reduction may not have a significant impact on the bond market because the stock of government bonds won't be eliminated, economists said.
``While it was a grand announcement of an objective that perhaps all governments should work toward, it doesn't change anything in terms of the way the government is going to be behaving,'' said Ted Carmichael, an economist with JP Morgan Securities in Toronto. ``The financial markets shouldn't have any reaction at all.''
And some economists said the money reserved for debt payments could have been better used for investments or larger reductions in taxes.
``I am really surprised to see the heavy emphasis on debt elimination,'' said Todd Hirsch, chief economist of the Canada West Foundation, a public policy research group based in Calgary. ``When you're doing it at the expense of every other priority, it's akin to a family taking out a mortgage and not feeding the children until the mortgage is paid off.''
Productivity
Flaherty said he would seek in coming years to boost productivity by reducing taxes on savings, including capital gains. Canada will seek to have the lowest tax rates on new investments in the G-7, he said. He didn't say how much the measures would cost. And any unforeseen surpluses in coming years would be used to reduce personal income taxes, he said.
The government plans to put interest savings toward reducing income taxes, starting with C$800 million worth of tax cuts in next year's budget, and rising to C$1.4 billion in 2011, Flaherty said.
Flaherty also pledged to start slowing spending growth to below the pace of economic expansion. Total expenses are forecast to grow 3.9 percent next year, compared with 6.3 percent for the current fiscal year.

0907260463

2006-11-25T05:34:00.001-08:00

Massachusetts Trust Sells Its First Inflation-Linked Bonds
0907260463 tên Mỹ SG

By Jeremy R. Cooke
Nov. 24 (Bloomberg) -- The Massachusetts Water Pollution Abatement Trust sold $828 million of triple-A-rated bonds, including the issuer's first-ever inflation-linked securities, in this week's largest borrowing among U.S. states and localities.
The trust, which helps local governments finance clean-water and drinking-water projects, sold $77.3 million of bonds maturing in 2022 and 2023 that will pay investors interest at a variable rate based on changes in the U.S. consumer price index, or CPI.
The sale brings the total amount of inflation-linked municipal bonds sold in 2006 to more than $750 million, according to data compiled by Bloomberg. That's almost as much as the total amount of such bonds sold from 1997, when this kind of variable- rate debt debuted in the tax-exempt market, through 2005.
``We ended up pulling from the fixed-rate deal two maturities and selling those as CPI bonds instead,'' said Scott Jordan, executive director of the Massachusetts trust.
In connection with its inflation-linked bonds, the trust entered into an interest-rate swap agreement with Bear Stearns Cos., the managing underwriter on the overall sale, in which 22 other investment banks also participated.
A division of New York-based Bear Stearns, acting as the counterparty, will pay the water trust a variable rate matching what the bond investors will get. The trust will in turn pay the bank a fixed rate that's 12 basis points, or 0.12 percentage point, lower than comparable bonds, Jordan said.
``To us, they look and feel and act just like the bonds they replaced, except they're 12 basis points lower than the fixed- rate bonds we would've sold in those maturities,'' he added. ``We saved approximately $1 million, present value, over the life of the deal by using this structure rather than the fixed rate.''
Rate swaps are a kind of derivative, or a contract whose value is derived from tradable securities or linked to events such as interest-rate changes or the weather.
Dallas-based First Southwest Co. acted as the trust's adviser on the swap.
``First Southwest made the pricing fully transparent,'' Jordan said. ``It was done with tax counsel and bond counsel involved every step of the way. I'm comfortable and confident that we got a good deal.''
The trust's variable-rate bonds offer investors a rate equal to the consumer price index, a common measure of inflation, plus 99 basis points. The coupon will change each February and August, based on the year-over-year change in the index.
Officials at the Massachusetts water trust, which is run out of the state treasurer's office in Boston, decided to sell CPI bonds after the commonwealth itself sold $100 million of such securities during its general obligation sale earlier this month.
``We used their general structure,'' Jordan said.
Massachusetts' rates ranged from the consumer price index plus 86 basis points on bonds maturing in 2017 to the index plus 89 basis points on those due in 2020.
Eight other municipal borrowers this year, including the University of Dayton in Ohio and the New York Yankees baseball team, have linked part of their bond sales to inflation.
The Massachusetts Water Pollution Abatement Trust's CPI bonds were part of a $408 million portion of non-callable bonds that will be used to refinance existing higher-interest debt.
Demand for those so-called refunding bonds outstripped the total amount available, allowing the underwriters to raise prices and lower yields by as much as 3 basis points on some maturities.
The rest of the deal featured bonds to raise new money for 70 cities, towns and local authorities in the state that are building or improving water-quality projects.
The new-money piece offered a top yield of 4.45 percent on bonds due in 2036, which can be called, or bought back, by the trust beginning in 2016. That's 10 basis points more than where the Municipal Market Advisors' Consensus index of what top-rated issuers pay to borrow for 30 years stood earlier this week.
Orders from individual investors were equal to about 15 percent of the water trust's overall offering.
``We had great market focus. We were the only deal on the Street this week'' of any substantial size, Jordan said.
U.S. municipal issuers plan to sell $12 billion of fixed- rate bonds next week, after a holiday-shortened week of issuance that saw less than $3 billion of new sales, according to data compiled by Bloomberg.
The U.S. bond markets were closed yesterday and are to close early today in observance of the Thanksgiving holiday weekend

0908321220

2006-11-25T05:27:00.000-08:00

Ecuador Bonds Fall on Concern Correa to Win Presidential Vote

Phung "0908321220

By Helen Murphy
Nov. 24 (Bloomberg) -- Ecuador's benchmark bonds fell to a six-week low on concern that presidential candidate Rafael Correa, who has said he may default on the nation's debt, will win this weekend's election.
Correa, 43, may have moved ahead of banana magnate Alvaro Noboa after finishing second to him in the Oct. 15 first-round vote, said Gianfranco Bertozzi, a Latin America economist at Lehman Brothers Holdings Inc. in New York.
``Correa now has momentum and he seems to have a slight advantage in the polls,'' Bertozzi said. ``Maybe the best that Noboa can hope for is a very slim victory.''
The yield on Ecuador's dollar-denominated bond due 2012 jumped 33 basis points, or 0.33 percentage point, today to 11.88 percent at 4:10 p.m. in New York, leaving it up 84 basis points since July 28, according to JPMorgan Chase & Co.
The bond's price, which moves inversely to the yield, fell 1.4 cents on the dollar to 100.5 cents today. That's the lowest price since Oct. 13, the last trading day before the first-round vote. The average yield spread on Ecuadorean dollar bonds over U.S. Treasuries has widened to 5.35 percentage points from 4.93 points on Nov. 6, according to JPMorgan's benchmark emerging- market index.
Demand for Ecuadorean bonds has sagged as investors have worried that Correa, who served a four-month stint as finance minister last year, will implement policies that will stunt economic growth and spark social conflict. The International Monetary Fund forecasts Ecuador's economy will expand 4.4 percent this year, buoyed by the rally in oil, the country's biggest export, after growing 3.9 percent in 2005.
`Extremely Tight'
In the first-round vote last month, Noboa, who has promised to create jobs and lure investment, took 26.8 percent while Correa, an ally of Venezuelan President Hugo Chavez, took 22.8 percent. The run-off vote is scheduled for Nov. 26.
Correa, who studied economics at the University of Illinois at Urbana-Champaign, has called for a constituent assembly to write a new constitution. He said he would scrap free trade talks with the U.S. and that he wouldn't rule out an Argentine- style default on Ecuador's $11 billion of foreign debt. Argentina halted payment on $95 billion of debt in 2001.
Noboa, a 55-year-old magnate whose holdings include banks and banana and coffee plantations, has pledged to sell bonds to build 300,000 low-cost homes a year and create 3 million jobs in the South American country. Noboa, who carries a bible on the campaign trail, fell to his knees at a rally this week and begged God to help him win.
``Polls are not reliable but it's pretty close,'' said Rodrigo Da Fonseca, an economist with BlueBay Asset Management, which manages about $1.6 billion of emerging-market assets in London. ``I still expect Noboa to win but the margin will be extremely tight.''

0906413652

2006-11-25T05:22:00.000-08:00

Saudi Arabia's Tadawul and Kuwait's Index Decline: Arab Stocks

Mỹ Vân - 0906413652

By Marc Wolfensberger
Nov. 25 (Bloomberg) -- Stocks in Saudi Arabia fell, paced by Samba Financial Group, Saudi Arabia's largest publicly traded bank, and Banque Saudi Fransi. Shares in Kuwait fell for a second day.
Saudi Arabia's Tadawul All Share Index fell 0.2 percent to 8,687.02 at 1:12 p.m. in Riyadh.
The measure added 3.6 percent last week as investors took advantage of the low valuation of Saudi Arabian stocks following four weeks of index decline. The Tadawul All Share Index has lost more than 52 percent of its value since the beginning of the year. It's the second-worst performance among indexes tracked worldwide by Bloomberg this year. Only Dubai's gauge, in the United Arab Emirates, has tumbled further.
``We expect that the market will stabilize in the coming period until year-end,'' Saudi Arabia's Bakheet Financial Advisors wrote in its weekly report, published Nov. 22.
Shares of Samba Financial fell 1.3 percent to 151 riyals after rising for six consecutive trading days. Saudi Arabia's largest publicly traded bank said on Nov. 20 it plans to invest 6 billion rupees ($98.5 million) in Crescent Commercial Bank of Pakistan, seeking to tap accelerating economic growth in the South Asian country.
Banque Saudi Fransi, Saudi Arabia's fourth-biggest bank by market value, fell 2.7 percent to 135.75 riyals.
``Investors will keep eyeing'' the upcoming annual results of large companies, Bakheet wrote in its outlook for the week.
The Kuwait Stock Exchange Index declined for a second day, falling 101.80, or 1 percent, to 9,886.7, according to the exchange's Web site. The measure has gained 5.5 percent this month.
Exchanges in Saudi Arabia and Kuwait are the only Arab markets open on Saturdays that are followed by Bloomberg. Exchanges in the United Arab Emirates, Qatar, Bahrain, Oman, Egypt, Morocco, Tunisia, Jordan, Lebanon, and the Palestinian territories are shut today

0908460692

2006-11-25T05:20:00.000-08:00

U.K. FTSE 100 Drops After Pound Soars; HSBC, Kingfisher Slide
Thanh - 0908460692
By Poppy Trowbridge and Jason Carey
Nov. 24 (Bloomberg) -- The U.K. FTSE 100 Index declined after the pound surged to its highest in almost two years against the dollar.
``All equity markets are responding to the currency movements,'' said Grahame Exton who helps manage $5 billion at Tilney Investment Management in Liverpool. ``Generally, a weak dollar does put more pressure on central banks. A weaker dollar does have an inflationary impact.''
HSBC Holdings Plc, Europe's biggest bank by market value, led a retreat by banks. Kingfisher Plc fell after Deutsche Bank AG lowered its recommendation on the shares. Marks & Spencer Group Plc declined following a report U.K. retail sales may barely grow over the Christmas holiday.
The FTSE 100 lost 17.9, or 0.3 percent, to 6122.10 at the close in London, bringing its drop to 1.1 percent this week. The FTSE All-Share Index fell 11.74, or 0.4 percent, to 3148.68. Ireland's ISEQ Index slid 26.8, or 0.3 percent, to 8872.70.
HSBC declined 8 pence, or 0.8 percent, to 968. Barclays Plc, the U.K.'s third-biggest bank by market value, dropped 7.5, or 1.1 percent, to 692 pence. HBOS Plc, Britain's biggest mortgage lender, declined 9, or 0.8 percent, to 1060 pence.
The pound surged to its highest in almost two years against the dollar on speculation the Bank of England will continue lifting interest rates to curb inflation. Against the dollar, the pound was at $1.9308 at 4:46 p.m. in London from $1.9165 late yesterday and $1.8946 a week ago. It earlier touched $1.9351, the highest since Dec. 31, 2004.
`Currency Movements'
``Currency movements appear to be underlying the current market decline,'' said Keith Bowman, a U.K. equity analyst at Hargreaves Lansdown in Bristol, England. ``There is not much to concentrate on in terms of earnings. The market is looking to other factors.''
Minutes from the Bank of England's latest rate-setting meeting showed the nine-member committee, led by Governor Mervyn King, voted 7-2 in favor of raising the key rate by a quarter point to a five-year high of 5 percent.
Lloyds TSB Group Plc, the U.K.'s fifth-largest bank by market value, dropped 7, or 1.3 percent, to 554.5 pence after Morgan Stanley downgraded the shares to ``equal-weight'' from ``overweight.'' The brokerage set a price estimate of 575 pence.
Kingfisher slipped 6.75 pence, or 2.3 percent, to 249.75. Deutsche Bank lowered its recommendation on the stock to ``sell'' from ``hold.'' The bank cited lower expected profits from Kingfisher's B&Q chain of home improvement stores.
``B&Q's profits are not likely to rebound as fast as the market expects,'' Deutsche Bank analyst Rod Whitehead wrote in a note. ``The shares are ahead of events.''
``With evidence pointing to a more cautious consumer, there is every possibility that consumers will start to reign in their spending even before Christmas,'' Richard Perks, Mintel's director of retail research, wrote in the report.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Adept Telecom Plc (ADT LN) slumped 33.5 pence, or 33 percent, to 69.5. The U.K. telecommunications provider whose shares have halved in the past six months said its fiscal-year results will be below market expectations because of ``increased competition.''
Eckoh Technologies Plc (ECK LN) slipped 1 pence, or 8.2 percent, to 11.25. The U.K. maker of speech-recognition software said takeover talks with an unidentified third party have been terminated.
Inion Oy (IIN LN) dropped, slipping 1 pence, or 3.9 percent, to 24.75. The Finnish maker of biodegradable medical implants whose shares trade in London said it won't meet sales targets for 2006.
Kiln Plc (KIN LN), a Lloyd's of London insurer, climbed 1.25 pence, or 1.2 percent, to 106. The company said the performance of its insurance pools from 2005 is ``very stable'' after last year's record storm losses.
Monstermob Group Plc (MOB LN) slid 5 pence, or 10 percent, to 42.75. Yesterday, the U.K. provider of cell phone ring tones and logos said it's ``unlikely'' to receive a takeover offer.
Regency Inns Plc (REG LN) dropped 1.25 pence, or 1.4 percent, to 87.5. The bar, comedy club and restaurant company said the late-night entertainment market continues to be ``highly competitive.'' The company also plans to sell its remaining 27 Old Orleans restaurants.
Robinson Plc (RBN LN), a maker of packaging for clients including Nestle SA, retreated 12.5 pence, or 14 percent, to 75 after the company said contracts with Goldenfry Foods Ltd. won't be renewed.
Trifast Plc (TRI LN) rose 3 pence, or 4.5 percent, to 70. The U.K. maker of industrial fasteners said fiscal first-half profit surged 86 percent after the company passed increased metals costs to clients and cut jobs to save money following an acquisition.

0907741949

2006-11-25T05:18:00.000-08:00

European Stocks Slide as Dollar Falls; Daimler, Aegon, BMW Drop
Thảo - 0907741949
By Alexis Xydias
Nov. 24 (Bloomberg) -- European stocks declined to a three- week low after the dollar slumped against the euro. DaimlerChrysler AG and Aegon NV led a slide by companies that rely most on the U.S. for sales.
``The weak dollar is poison for European exporters and the region's economy,'' said Guenther Gerstenberger, a fund manager at Oberursel, Germany-based PEH Wertpapier AG, which oversees about $2.5 billion.
The Dow Jones Stoxx 600 Index slid 0.8 percent to 355.98 in London, its lowest since Nov. 3 and the second weekly decline. The Stoxx 50 and the Euro Stoxx 50, a measure for the 12 nations sharing the euro, both lost 0.9 percent.
European companies get a fifth of their sales from the U.S. and the dollar's slide to a 19-month low of $1.3082 per euro means there's less profit for exporters to take home. The Stoxx 600 this week touched a 5 1/2-year high as earnings growth powered a rally in equities.
``Should the euro rise beyond $1.35, it will get dangerous,'' said PEH Wertpapier's Gerstenberger.
The pound surged to its highest in almost two years against the dollar while the Swedish krona and Swiss franc also rose.
National benchmarks fell in all 18 western European markets except Iceland. The U.K.'s FTSE 100 Index lost 0.3 percent. France's CAC 40 benchmark dropped 0.7 percent and Germany's DAX slid 1 percent.
Party Over?
DaimlerChrysler, the German carmaker that gets about 45 percent of sales in the U.S., fell 1.8 percent to 45.54 euros. Aegon, the second-largest Dutch insurer, fell 2 percent to 14.11 euros. About half of its revenue comes from the Americas.
Bayerische Motoren Werke AG, the world's largest maker of luxury cars, slumped 2.7 percent to 42.81 euros. North America accounts for a quarter of BMW's sales.
``The rising euro is going to hurt sentiment in Europe,'' said Gerhard Grebe, chief investment strategist at Bank Julius Baer & Co. in Frankfurt. Should the euro go to $1.35, the equity market's ``year-end party will be over shortly.''
Volvo AB, Europe's second-largest truckmaker, fell 1.2 percent to 454.5 kronor. Western European heavy-truck sales slid 1.7 percent in October as customers slowed purchases following the introduction of regulations making vehicles more costly.
Kingfisher Plc, the region's biggest home-improvement retailer, lost 2.6 percent to 249.75 pence. Deutsche Bank AG lowered the stock to ``sell'' from ``hold,'' saying there will be ``more pain before the gain'' as earnings growth falters.
Takeover Talks
Air France-KLM Group, Europe's largest airline, fell 1.1 percent to 29.82 euros, extending yesterday's 6.5 percent drop. Analysts at ABN Amro Holding NV cut the shares to ``sell'' from ``hold'' after the airline said it's revived takeover talks with unprofitable Alitalia SpA.
Technip SA, Europe's second-largest oil-services company, rose 7.6 percent to 55.7 euros, the biggest gain on the Stoxx 600. Eni SpA, Europe's fourth-largest oil company, plans to make an offer to buy the France company, La Tribune said, without citing anyone. The offer may come at the start of next week, the newspaper said.
Eni Chairman Roberto Poli declined to comment. Eni fell 0.4 percent to 24.66 euros.
RWE AG, Germany's second-largest utility, jumped 3.3 percent to 86.54 euros. The Rheinische Post reported the company may be a takeover target, without identifying possible bidders.
The newspaper said RWE managers are ``unsettled'' by large purchases of the company's stock and held a special meeting to discuss the situation. The report didn't say where it got the information.
Boost Payout
RWE spokeswoman Barbara Woydtke said no special meeting took place and declined to comment further.
Scania AB rose 2.2 percent to 475 kronor. Sweden's second- largest truckmaker again rejected MAN AG's hostile takeover bid as too low and said it may boost its payout to shareholders to 17 billion kronor ($2.46 billion) through next year to fend off MAN. MAN shares fell 2.2 percent to 69.94 euros.
Erste Bank AG, Austria's second-biggest lender, fell 2.4 percent to 54.22 euros. Morgan Stanley was selling shares worth about 100 million euros ($131 million) in Erste Bank, based on yesterday's closing price, said a person with knowledge of the transaction.
The U.S. brokerage offered 1.8 million shares in the Vienna- based bank, said the person, who asked to remain unidentified. The person declined to give a price for the offer.
Renova Energy Plc jumped 7 percent to 230 pence. The U.K. company that makes ethanol for use in the U.S. Rocky Mountains said first-half profit rose 45 percent on higher sales.
Ipsen SA, a French drugmaker controlled by the Mayroy family, added 2.9 percent to 33.33 euros. Analysts at Goldman, Sachs & Co. rated the shares ``buy'' in new coverage, citing new and planned drugs. The U.S. brokerage also added the stock to its ``conviction buy'' list of favorite stocks.

0919881955

2006-11-25T05:16:00.002-08:00

Asian Stocks Fall in U.S. on Oil; Advanced Semiconductor Jumps

Thu - 0919881955 SG

By Lu Wang
Nov. 24 (Bloomberg) -- Asian stocks fell in U.S. trading as an increase in oil prices rekindled concern higher energy costs may hurt consumer spending. Toyota Motor Corp., the region's largest automaker, led the decline.
The Bank of New York Co.'s Asia ADR Index, which tracks the region's American depositary receipts, lost 0.3 percent to 147.70. For the week, the measure dropped 0.4 percent.
Crude oil for January delivery climbed 52 cents to $59.76 a barrel in electronic trading in New York on a report that Eni SpA halted delivery of 60,000 barrels of oil a day from Nigeria, Africa's biggest supplier, because of attacks by militants. Floor trading on the New York Mercantile Exchange was closed today for the Thanksgiving holiday.
Toyota dropped $1.08 to $118.61. Matsushita Electric Industrial Co., the largest maker of consumer electronics, slipped 6 cents to $19.28.
Advanced Semiconductor Engineering Inc. jumped 80 cents to $6.06. The world's largest packager of computer chips was offered a $5.7 billion bid by Carlyle Group as demand for computer and mobile-phone components increases.
Carlyle and Advanced Semiconductor Chairman Jason Chang, who holds 18.4 percent of the Taiwan-based company, may bid NT$39 a share for the company, 9.9 percent more than its last closing price, the buyout firm said in a statement.
ASE Test Ltd., a unit of Advanced Semiconductor, climbed $1.79 to $11.50.
Nikkei 225 Stock Average futures expiring in December were at 15,615 in Chicago, compared with 15,640 in Singapore and 15,730 in Osaka.

0909.212.300

2006-11-25T05:16:00.001-08:00

Merrill, UBS Plan Istanbul Offices as Markets Grow (Update2)
Tuyền - 0909.212.300

By Ben Holland
Nov. 24 (Bloomberg) -- Merrill Lynch & Co., the largest U.S. retail brokerage, and UBS AG, the world's biggest wealth manager, are opening offices in Turkey to take advantage of its growing stock market and boost fees from company takeovers.
Merrill agreed to buy Tatbank in August to gain a banking license in Turkey and aims to start equity trading by year-end at an office staffed by as many as 40, said Kubilay Cinemre, head of the Turkish unit. Merrill will add a banking team by March and plans to be one of Turkey's top three brokers in a year.
Turkey's benchmark stock index has tripled since 2003. That plus slowing inflation and a move toward European Union membership have lured banks such as Merrill, UBS and Morgan Stanley. There's also money to be made from takeovers: Turkey's government reckons direct investment may double this year from $9.8 billion in 2005.
``There's a big push for everyone to become more efficient and productive, from the individual investor up to the biggest holding company,'' Cinemre said in Istanbul. ``That means there are going to be huge opportunities for a firm like Merrill.''
The ISE-100 Index of Turkey's biggest companies surged 59 percent in 2005, extending rallies of 34 percent and 80 percent the previous two years. Stocks in the index have dropped 5 percent this year amid concern over inflation and global interest rates.
UBS, Citigroup
Turkish brokerages received about $650 million in commissions from stock trading last year, the Turkish brokers association says. Foreign investors, who pay higher commissions, currently account for about 20 percent of trading and that's increasing, said Feyza Sensoy, head of UBS's new office in Istanbul's Kanyon complex.
Sensoy, who spoke in an interview Nov. 20, said the Swiss bank will expand its current staff in Turkey and also start brokerage operations there ``soon.''
The move comes as the number of investment banking deals has surged in Turkey the past two years.
Turkey sold about $16 billion worth of state-owned companies last year as foreign direct investment surged fourfold to a record.
Bank acquisitions were the biggest contributor. UBS advised on the sale of a 20 percent stake in Akbank TAS, the most valuable company on the Istanbul Stock Exchange, by the Sabanci family. Citigroup Inc. agreed to pay $3.1 billion for the shares last month.
General Electric Co. spent $1.8 billion to buy a stake in the Turkish lender Turkiye Garanti Bankasi AS last year. Garanti said today it plans to spend $1 billion to grow outside Turkey.
BNP Paribas, Merrill
More government asset sales are due next year, and investment banks also may earn higher fees from initial public offerings, as companies seek to raise funds to expand.
France's BNP Paribas SA, which bought a Turkish bank last year, is advising the government on an initial offering of shares in Turk Telekomunikasyon AS, the national fixed-line phone company. The government sold 55 percent of Turk Telekom to Saudi Oger Ltd. for $6.6 billion, the biggest acquisition of a Turkish company.
Merrill's Cinemre said he expects about $1.5 billion worth of new shares to be sold in Turkish IPOs next year compared with $920 million so far in 2006.
UBS, Merrill and Morgan Stanley, the No. 2 U.S. securities firm by market value, aren't alone in moving into Turkey. Lehman Brothers Holdings Inc., the fourth-largest U.S. securities firm, last month appointed Uzay Kozak to open an office in Istanbul.
Morgan Stanley aims to open its Istanbul office in the first quarter of 2007 and to employ as many as 40 people there within a year, said Gulnaz Aricanli, who heads the office.
Morgan Stanley expects the flow of international funds into ``emerging, high-growth economies such as Turkey'' to accelerate as well as a rising number of mergers and acquisitions in areas such as insurance and telecommunications, Aricanli said in an e-mail.
Dubai-based Shuaa Capital PSC, the biggest investment bank in the United Arab Emirates, also is opening a Turkish office.
Turkey's economic growth and deregulation, coupled with the oil riches amassed by its neighbors in the Middle East and central Asia, may turn the country into a regional center for finance, Cinemre said.
``There's new wealth being built around Turkey,'' he said. ``And Istanbul, culturally and geographically, is much better- placed than any European city to serve that part of the world.''

0903754427 - 0903234122

2006-11-25T05:15:00.001-08:00

Malaysian Stocks Jump, Led by Genting: World's Biggest Mover
Linh - 0903754427 - 0903234122

By Angus Whitley
Nov. 24 (Bloomberg) -- Malaysian stocks had their biggest jump in 10 months, the largest fluctuation among markets included in global benchmarks. Genting Bhd. climbed to a 19-year high after the casino operator said profit increased.
``It's not just the results, it's the whole picture,'' said Steven Tan, an analyst at CIMB Securities Sdn. in Kuala Lumpur. ``Things are still looking very decent.'' Tan has a ``neutral'' rating on the shares.
RHB Capital Bhd., Malaysia's fourth-biggest lender, rose as investors bet overseas banks may make more acquisitions. IOI Corp. fell after the government said it will combine rival plantation assets into the world's top palm-oil producer.
The Kuala Lumpur Composite Index added 13.92, or 1.3 percent, to 1060.43 at the 5 p.m. close. Today's gain was its steepest one-day jump since Feb. 3. The index rose 1.9 percent this week, its fifth straight week of advances. The smaller Second Board index rose 0.4 percent to 90.23. The FTSE Bursa Malaysia Emas Index climbed 1.5 percent to 6900.98.
Genting, Asia's largest publicly traded casino operator, surged 2 ringgit, or 7.1 percent, to 30 ringgit. Third-quarter profit rose 3.2 percent to 418.7 million ringgit ($115 million) from a year earlier on higher income from gaming and power units. The stock has climbed 40 percent this year, buoyed by speculation it may win Singapore's second casino license.
RHB Capital added 4 sen, or 1.2 percent, to 3.5 ringgit, boosting gains this year to 58 percent. Australia & New Zealand Banking Group Ltd. said today it agreed to pay A$383 million ($296 million) for 14 percent of AMMB Holdings Bhd., Malaysia's fifth-largest bank.
Hope for Deals
``We certainly hope this will lead to more than one deal,'' said Tan Teng Boo, who oversees about $100 million of investments at Capital Dynamics Asset Management in Kuala Lumpur.
IOI, the world's largest oil-palm plantation company by market value, fell 10 sen, or 0.5 percent, to 18.60 ringgit.
Malaysia Deputy Prime Minister Najib Razak said today the government plans to combine the plantation assets of Sime Darby Bhd., Kampulan Guthrie Bhd. and Golden Hope Plantations Bhd. Shares in the three companies, which are partly owned by state asset manager Permodalan Nasional Bhd., were suspended today.
The following stocks rose or fell. Stock symbols are in parentheses after company names.
Affin Holdings Bhd. (AHB MK) dropped 1 sen, or 0.5 percent, to 1.91 ringgit. The financial services group said profit in the third quarter fell 36 percent to 27.7 million ringgit as it set aside more money for bad loans.
Boustead Holdings Bhd. (BOUS MK) added 1 sen, or 0.5 percent, to 1.93 ringgit. The Malaysian plantation and property group expects to make a 193 million ringgit gain from selling some plantation assets to its real estate investment trust, the Star reported, citing Managing Director Tan Sri Lodin Wok Kamaruddin.
Resorts World Bhd. (RNB MK) jumped 80 sen, or 6.4 percent, to 13.40 ringgit. The casino company said profit in the third quarter rose 37 percent to 377.5 million ringgit from a year earlier. Sales gained 6.8 percent as it made more from its leisure, hospitality and cruise businesses.

0906284963

2006-11-25T05:12:00.000-08:00

Asian Energy Stocks Gain on Higher Oil Prices; Japan Declines
Hạnh - 0906284963
By George Hsu
Nov. 25 (Bloomberg) -- Asian energy stocks gained this week after crude oil had it biggest weekly advance this month. PetroChina Co. and Singapore Petroleum Co. climbed.
``Chinese demand for resources is going to drive the market for the foreseeable future,'' said Richard Wallace, who manages $100 million at Wallace Funds Management in Sydney. ``Investors are predicting the good times are going to last.''
Japanese stocks fell for a fourth week after the government cut its evaluation of the economy for the first time in almost two years and as companies trimmed earnings forecasts. Mizuho Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. paced declines among the nation's lenders. Sanyo Electric Co. had its worst week in more than five years.
The Morgan Stanley Capital International Asia-Pacific Index rose 0.4 percent this week to 132.53. A measure of energy stocks rose 2.3 percent, the biggest advance among the regional gauge's 10 industry groups.
Benchmarks in Hong Kong, Indonesia, India and Singapore climbed to all-time highs during the week. China's Shanghai 300 Index jumped 4.8 percent, its biggest weekly advance in six months.
PetroChina, China's largest oil producer, climbed 7.7 percent this week. Citigroup Inc. initiated coverage on PetroChina with a ``buy'' rating, according to a research report published this week. Singapore Petroleum, the nation's only publicly traded refiner, rose 2.3 percent. SK Corp., Asia's fourth-largest oil refiner, climbed 1.9 percent, the Seoul-based company's sixth weekly advance.
Crude oil in New York climbed 6.2 percent this week. It may rise next week on speculation increased demand for heating fuel during the U.S. winter will cut inventories. Seventeen of 35 analysts, traders and brokers, or 49 percent, said prices will gain, according to a Bloomberg News survey. Eight expect a decline and 10 forecast little change.
Worries About Japan
Mizuho Financial Group, Japan's second-biggest lender, lost 4.2 percent after dropping to a one-year low this week. Mitsubishi UFJ Financial Group Inc., the nation's largest lender by assets, declined 4.8 percent. Nomura Holdings Inc., the nation's biggest brokerage, dropped 2.4 percent, its fifth weekly decline.
``There are worries in Japan about global and domestic consumption,'' said Jon Easton, who manages about $200 million in Japanese equities at EN Asset Management in Tokyo. ``That's the major negative in investors' minds.''
Japan's government, on Nov. 22, lowered its assessment for the nation's economy. ``The economy is recovering, despite some weakness in consumption,'' Japan's Cabinet Office said in its report for November. ``Private consumption is almost flat,'' it added, lowering the assessment for the first time since December 2004. In its reports between February and October the note had said Japan's economy was ``recovering.''
Sumitomo Mitsui, Japan's third-largest lender by assets, slumped 5.8 percent. The bank said on Nov. 22 second-quarter profit dropped 40 percent to 123.6 billion yen ($1.05 billion) as interest income and fees dropped.
Sanyo Electric's 12 percent plunge make the stock the second-worst performer in the region. Sanyo, the world's largest maker of rechargeable batteries, after the market closed yesterday, forecast a third year of losses because of slumping sales and unveiled plans to trim 2,200 more jobs.
Hong Kong, Taiwan Growth
Hong Kong's Hang Seng Index rose 0.4 percent this week, the eighth weekly advance. It closed at a record 19,260.30 on Nov. 23. The city's economic growth expanded 6.8 percent in the third quarter, more than economists forecast.
BOC Hong Kong (Holdings) Ltd., the city's second-largest bank by assets, climbed 5.7 percent in the week. Bank of East Asia Ltd., the third largest, added 3.2 percent.
``The growth mainly comes from the financial sector,'' said Wilfred Sit, who helps manage about $4 billion of Asian equities at Baring Asset Management (Asia) Ltd. in Hong Kong. ``If the economy continues to be strong, it certainly helps'' improve the outlook for company earnings and boost market sentiment, he said.
Cheung Kong (Holdings) Ltd. this week climbed to its highest in more than five years after Credit Suisse Group initiated coverage on the stock with an ``outperform'' rating, citing the company's growth in China. Cheung Kong, the city's second-largest developer by market value, jumped 5.9 percent.
``Upside potential is great for Cheung Kong,'' said Tat Auyeung, who helps manage $400 million in Asian stocks at Apex Capital Management in Hong Kong. China exposure ``definitely helps them.''
Taiwan's Taiex index rose 2.3 percent this week. The island's gross domestic product climbed 5 percent from a year earlier in the third quarter, outpacing the 4 percent increase forecast in a Bloomberg News survey of economists. Hon Hai Precision Industry Co., Taiwan's largest electronics company by sales, climbed 5.1 percent. Acer Inc., the world's fourth- biggest personal-computer supplier, surged 15 percent.
Qantas Bid
Qantas Airways Ltd., Australia's largest airline, jumped 12 percent. The company said it received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group.
``Interest from private equity firms is a vote of confidence for the market,'' said Shane Oliver, who helps manage about $64 billion at AMP Ltd. in Sydney. ``M&A activity in Australia is in early days yet. This could go on for another couple of years.''
Hong Kong-traded Foxconn International Holdings Ltd., the world's biggest contract cell-phone maker, slumped 9.9 percent after Merrill Lynch & Co. downgraded the stock on concern that growth of handset orders may slow.
Elsewhere, Shanghai Pudong Development Bank Co. rallied 6.4 percent this week after the Chinese partner of Citigroup Inc. raised 6 billion yuan ($762 million) from a share offering.
Chinese stocks also climbed after the yuan strengthened against the dollar, raising speculation a firming currency will boost the value of local assets, attracting more overseas investors. China Merchants Bank Co., the country's most profitable lender, advanced for a fourth week, adding 2.9 percent.

0908425471

2006-11-25T05:08:00.000-08:00

Asian Stocks Fall in U.S. on Oil; Advanced Semiconductor Jumps
Đào, 0908425471

By Lu Wang
Nov. 24 (Bloomberg) -- Asian stocks fell in U.S. trading as an increase in oil prices rekindled concern higher energy costs may hurt consumer spending. Toyota Motor Corp., the region's largest automaker, led the decline.
The Bank of New York Co.'s Asia ADR Index, which tracks the region's American depositary receipts, lost 0.3 percent to 147.70. For the week, the measure dropped 0.4 percent.
Crude oil for January delivery climbed 52 cents to $59.76 a barrel in electronic trading in New York on a report that Eni SpA halted delivery of 60,000 barrels of oil a day from Nigeria, Africa's biggest supplier, because of attacks by militants. Floor trading on the New York Mercantile Exchange was closed today for the Thanksgiving holiday.
Toyota dropped $1.08 to $118.61. Matsushita Electric Industrial Co., the largest maker of consumer electronics, slipped 6 cents to $19.28.
Advanced Semiconductor Engineering Inc. jumped 80 cents to $6.06. The world's largest packager of computer chips was offered a $5.7 billion bid by Carlyle Group as demand for computer and mobile-phone components increases.
Carlyle and Advanced Semiconductor Chairman Jason Chang, who holds 18.4 percent of the Taiwan-based company, may bid NT$39 a share for the company, 9.9 percent more than its last closing price, the buyout firm said in a statement.
ASE Test Ltd., a unit of Advanced Semiconductor, climbed $1.79 to $11.50.
Nikkei 225 Stock Average futures expiring in December were at 15,615 in Chicago, compared with 15,640 in Singapore and 15,730 in Osaka

HN

2006-11-25T05:05:00.001-08:00

Banc of America Raises Apple Price Target to $93 (Update4)
HN
By Michael Patterson and Ville Heiskanen
Nov. 24 (Bloomberg) -- Apple Computer Inc. had its 12-month share price estimate raised to $93 from $84 by Banc of America Securities, which cited higher sales of laptop computers.
Unit sales of notebook computers should grow 20 percent in fiscal 2008, analyst Keith Bachman wrote today. He estimated 2008 profit would be $3.25 a share on sales of $26.9 billion. Analysts in a Thomson Financial survey expect profit of $3.20 on sales of $26.3 billion.
Apple will attract more customers for the laptop because the company is making it easier for users to run both its own operating system and Microsoft Corp.'s Windows, Bachman said. He rates the shares a ``buy.''
Shipments of the company's iPod music players will rise 12 percent in fiscal 2008 and desktop computer shipments will increase 3 percent, Bachman wrote. Apple's fiscal year ends Sept. 30.
Apple also may introduce mobile phones next year, which will help bolster revenue, Bachman wrote. His projection is for Apple to sell 3.9 million phones in 2007 and 6.7 million in 2008. Spokesman Steve Dowling didn't immediately return a call seeking a comment on whether Apple plans to start selling mobile phones. Dowling on Nov. 15 declined to comment on the issue.
The shares climbed $1.32, or 1.5 percent, to $91.63 as of 1 p.m. New York time in Nasdaq Stock Market composite trading. They've risen 28 percent this year. U.S. markets were closed yesterday for the Thanksgiving Day holiday, and trading ended three hours early today.
Apple shipped a record 1.61 million Macintosh computers in the latest quarter, equal to 30 percent growth, according to a statement last month. Fiscal 2006 earnings per share were $2.27 on sales of $19.3 billion, Apple said then.

0915191169

2006-11-25T05:04:00.000-08:00

Bolsa Index Rises on Mexico Cabinet Appointments: Latin Stocks
0915191169 Nhi HN

By William Freebairn and Alexander Ragir
Nov. 24 (Bloomberg) -- Mexico's main stock index had a fourth weekly gain on expectations government ministers named by President-elect Felipe Calderon will help the economy and keep corporate profits growing.
The Bolsa index rose 62.88, or 0.3 percent, to a record 24,792.89. Mexican shares rose 2.5 percent on the week, led by retailer Wal-Mart de Mexico, and have gained for seven of the past eight weeks. In Brazil, the Bovespa index fell 312.11, or 0.7 percent, to 41,757.72, paring its weekly gain to 1.8 percent.
``What we're seeing this week is primarily a response to the naming of Calderon's cabinet,'' said Carlos Hermosillo, senior analyst at Vector Casa de Bolsa in Mexico City.
Calderon, who takes office Dec. 1, named his economic ministers Nov. 21 and filled education, health and agriculture cabinet posts today. The individuals chosen by Calderon have given investors confidence that corporate profits will continue to grow, even as the economy slows, Hermosillo said.
He estimated corporate profit growth will outpace the expected 3.5 percent expansion in the economy next year.
The political news took on greater importance as trading volume was lower than usual this week because of a holiday Monday in Mexico and the Thanksgiving holiday yesterday in the U.S., Hermosillo said.
Brazil's Bovespa index fell from a record, led by Tele Norte Leste Participacoes SA, on concern the market may be slow to adopt equitable treatment of shareholders, after the company delayed a vote to reorganize shares.
Telemar postponed a capital reorganization vote today because too few minority shareholders registered for the meeting, said Valmir Celestino, who manages 1.8 billion reais ($830 million) of Brazilian stocks for Banco Safra de Investimentos SA. The vote scheduled for Monday will be a ``signal'' to the market on whether attempts in Brazil to combine preferred and common shares into one voting unit will be successful in the future.
``If the vote doesn't pass, common shares, in general, will tend to fall and preferred share, especially Telemar's, will tend to rise,'' said Celestino.
The Bovespa rose to a record 42,069.83 yesterday, as U.S. markets were closed for the Thanksgiving holiday, on the lowest daily volume this month.
Police were called to the stock exchange this afternoon after a man forced his way in and threatened to detonate a bomb, Band television station reported. The man was apprehended and taken away in an armored vehicle without incident, according to images broadcast by Band.
Elsewhere in Latin America, Colombia's index fell while those in Peru, Argentina and Venezuela rose. Chile's index was little changed. The Morgan Stanley Capital International index of Latin American shares fell 0.3 percent to 2782.22, for a 1.7 percent gain for the week.
The following are the most-active stocks in Latin American markets today. In Brazil, the preferred share is usually a company's most-traded class of stock.
Brazil
Centrais Eletricas Brasileiras SA (ELET3 BS), or Eletrobras, the state-controlled electricity holding company, fell 1.00 reais, or 2.1 percent, to 47.85 reais. Yesterday Eletrobras shares rose 7.4 percent.
Cia. Energetica de Minas Gerais (CMIG4 BS), or Cemig, fell 2.64 reais, 2.6 percent, to 97.21 reais.
Lojas Americanas SA (LAME4 BS), a retailer, rose 4.70 reais, or 4.7 percent, to 104.70 reais. Yesterday Lojas fell 8.3 percent on plans to purchase Submarino SA (SUBA3 BS), an Internet retailer. Submarino shares rose 4.19 reais, or 6.9 percent, to 64.99 reais, adding to a 16 percent gain yesterday.
Tele Norte Leste Participacoes SA (TNLP4 BS), or Telemar, fell 1.14 reais, or 3.4 percent, to 32.46 reais. Investors in the company will be given a chance Monday to vote on a plan to convert preferred shares into common stock as part of a company reorganization. The vote was postponed from today. Common shares (TNLP3 BS) of the company, also known as Telemar, fell 3.24 reais, or 4.5 percent, to 69.65 reais.
Mexico
Grupo Aeroportuario del Pacifico SA (GAPB MM), the operator of 12 Mexican airport, rose 2 pesos, or 4.8 percent, to 43.60 pesos. IXE Grupo Financiero initiated coverage of the stock with a ``buy,'' citing growing demand for air travel in Mexico. U.S. shares may trade at $46.10 in 12 months, the analysts said in an unsigned research report dated Nov. 21 and e-mailed today. Deutsche Bank analyst Daniel Mcgoey also initiated coverage with a ``buy'' recommendation, on Nov. 20. American depositary receipts (PAC US) rose $1.15, or 3 percent, to $39.35.
Kimberly-Clark de Mexico SA (KIMBERA MM), Mexico's largest producer of paper goods for consumers, rose 80 centavos, or 1.7 percent, to 48.80 pesos. The paper-maker said yesterday it would pay a special dividend of 2.50 pesos a share on Nov. 30.
Wal-Mart de Mexico SA (WALMEXV MM), Latin America's largest retailer, rose 51 centavos, or 1.3 percent, to 40.38 pesos. The company on Nov. 22 received final approval to open a bank.

0906682998

2006-11-25T05:03:00.000-08:00

Canadian Stocks Notch Third Weekly Gain as Metals Shares Rise
NgọcAnh- 0906682998 HN

By John Kipphoff
Nov. 24 (Bloomberg) -- Canadian stocks notched a third week of gains, as raw-materials producers including Goldcorp Inc. and LionOre Mining International Ltd. extended a rally alongside prices of gold and nickel.
The market was little changed today as industrial companies declined on concern the North American economy is slowing.
``The market wants to go higher, though it's beginning to look a little stretched,'' said John Johnston, who helps manage about $2.2 billion as chief strategist at RBC Dominion Securities Inc.'s The Harbour Group in Toronto. ``People are taking a chance to make their year look better. They're optimistic that the global economy is strong enough to weather an American slowdown.''
The Standard & Poor's/TSX Composite Index added 2.1 percent this week, the third straight and the biggest weekly advance since July. Today the benchmark slipped 13.82, or 0.1 percent, to 12,631.08 in Toronto.
The S&P/TSX climbed to an intraday high of 12,663.10 earlier in the day in trading that was slower than normal as stock exchanges in the U.S., which were closed yesterday for the Thanksgiving holiday, ended trading three hours early today.
Gold rose 1.2 percent to $637.25 an ounce today as the dollar fell to a 19-month low against the euro, spurring demand for bullion as an alternative investment. It notched a 2.8 percent gain this week.
The U.S. currency declined to the lowest since February 2005 as the economy of the 12-nation euro region is poised to expand at its fastest pace in six years, fueling speculation the European Central Bank may raise interest rates.
U.S. Growth
In the U.S., economic advisers to President George W. Bush on Nov. 21 cut their forecasts for growth next year on a weaker housing market. Gross domestic product will increase 2.9 percent in 2007, slower than the 3.6 percent forecast in June, the Council of Economic Advisers said.
Canada's dollar climbed the most in more than a month after the federal government yesterday doubled its budget surplus forecast for the year amid revenue windfalls stemming from the largest oil reserves outside of the Middle East.
Goldcorp, Canada's second-largest miner of the precious metal, increased 77 cents to C$32.07. The stock has gained 6.9 percent this week. Larger rival Barrick Gold Corp. added 33 cents to C$33.52. Barrick is the world's biggest bullion producer.
A gauge of raw-materials shares, which includes the gold miners, added 0.2 percent today to extend its weekly advance to 4.9 percent.
Metals' Gains
Nickel rose today to its highest since at least 1987 on concern that supply will keep lagging behind demand after a French court ordered construction to stop at a $2.15 billion mine belonging to Brazil's Cia. Vale do Rio Doce.
Copper prices gained the most in a month as the declining U.S. dollar made the metal cheaper for buyers using other currencies. Hindalco Industries Ltd., India's biggest refiner of the metal, shut a smelter, triggering supply concerns.
LionOre Mining, which produces nickel in Australia and Botswana, added 51 cents to C$10.88 today and had a weekly gain of 22 percent, the best in the S&P/TSX.
Teck Cominco Ltd., the biggest miner of zinc and a producer of copper, climbed for a fifth straight day, increasing C$1.50 to C$86.17. It's gained 9.3 percent this week.
Railroads led a 0.5 percent decline for industrial companies.
Canadian National Railway Co., the nation's biggest, slipped 38 cents to C$53.90. Smaller rival Canadian Pacific Railway Ltd. fell 39 cents to C$64.65.
A measure of financial stocks fell 0.4 percent today. The banks begin reporting fourth-quarter earnings next week. They led the S&P/TSX to advance to a record close yesterday.
Financial Stocks
Bank of Nova Scotia, Canada's third-largest bank by assets, eased 21 cents at C$52.59. Manulife Financial Corp., the nation's biggest insurer, retreated 33 cents to C$38.22.
``When an index hits an all-time high, you see some people selling,'' said Sergio Di Vito, head of trading at Mavrix Fund Management Inc., which oversees $712 million in Toronto. ``Things that move up this fast become vulnerable.''
Research In Motion Ltd. fell 43 cents to C$160.60. The supplier of BlackBerry mobile e-mail phones bought software maker Epoch Integration Inc. to add network management programs. The stock has still doubled this year, leading an index of technology shares to the second-best performance this year. Barrick Gold Corp.
Bank of Nova Scotia
Canadian National Railway Co.
Canadian Pacific Railway Ltd.
Goldcorp Inc.
LionOre Mining International Ltd.
Manulife Financial Corp.
Research In Motion Ltd.
Teck Cominco Ltd.

0982231988

2006-11-25T05:01:00.000-08:00

Apple, Eldorado Gold, Newmont Mining: U.S. Equity Movers Final
Lan HQV 0982231988 HN

By Eric Martin
Nov. 24 (Bloomberg) -- The following is a list of companies whose shares had unusual price changes in U.S. exchanges. Trading in the U.S., which was closed yesterday for the Thanksgiving holiday, closed three hours early today. Stock symbols are in parentheses after company names. Share prices are as of 1:10 p.m. New York time.
Shares of gold producers climbed after the dollar's slide spurred demand for bullion as an alternative investment. Gold for immediate delivery rose 1.2 percent to $639 an ounce in London. The commodity is up 2.8 percent this week.
Newmont Mining Corp. (NEM US), the world's third-biggest gold producer, rose 67 cents, or 1.5 percent, to $45.55. AngloGold Ashanti Ltd. (AU US) American depositary receipts, each representing one ordinary share, gained $1.54, or 3.4 percent, to $46.65. Iamgold Corp. (IAG US) climbed 29 cents, or 3.1 percent, to $9.54. Meridian Gold Inc. (MDG US) rose $1.17, or 4.1 percent, to $29.96. Yamana Gold Inc. (AUY US) added 42 cents, or 3.7 percent, to $11.64. Agnico-Eagle Mines Ltd. (AEM US) rose $1.33, or 3.3 percent, to $41.36. Miramar Mining Corp. (MNG US) rose 20 cents, or 4.3 percent, to $4.90. Eldorado Gold Corp. (EGO US) rose 32 cents, or 6.2 percent, to $5.48.
Advanced Semiconductor Engineering Inc. (ASX US) ADRs, each representing five ordinary shares, gained 80 cents, or 15 percent, to $6.06. The world's largest packager of computer chips was offered a $5.7 billion bid by Carlyle Group as demand for computer and mobile-phone components increases. Carlyle and Advanced Semiconductor Chairman Jason Chang, who holds 18.4 percent of the Taiwan-based company, may bid NT$39 a share for the company, 9.9 percent more than its last closing price, the buyout firm said in a statement.
ASE Test Ltd. (ASTSF US), a unit of Advanced Semiconductor, climbed $1.79, or 18 percent, to $11.50.
Air France-KLM Group (AKH US) ADRs, each representing one ordinary share, fell $2.51, or 6 percent, to $39.16. ABN Amro cut its recommendation on the stock to ``sell'' from ``hold,'' citing anticipated slower earnings growth and a ``no-win situation'' with Italy's unprofitable Alitalia SpA.
Apple Computer Inc. (AAPL US) rose $1.32, or 1.5 percent, to $91.63. The maker of Macintosh notebook computers and iPod music players had its share-price forecast raised at Banc of America Securities to $93 from $84. Analyst Keith Bachman wrote that he expects sales of notebook computers to grow 20 percent in fiscal 2008. He estimated 2008 profit of $3.25 a share on sales of $26.9 billion. Analysts in a Thomson Financial survey on average expect a per-share profit of $3.20 on sales of $26.3 billion.
China Unicom Ltd. (CHU US) ADRs, each representing 10 shares, rose 72 cents, or 6.5 percent, to a two-year high of $11.83. The smaller of China's two cell-phone operators was raised to ``overweight/in-line'' from ``equal-weight/in-line'' by Hong Kong-based analyst Lina Choi at Morgan Stanley.
DryShips Inc. (DRYS US) rose 81 cents, or 5.9 percent, to $14.61. The Greek owner of ships that haul raw materials such as iron ore and coal appointed Gregory Zikos chief financial officer today.
Mills Corp. (MLS US) rose $1.12, or 5.5 percent, to $21.55. The U.S. shopping-mall owner said Nov. 22 in a statement that it reached a final agreement for Colony Capital Acquisitions LLC to take over the $2 billion Meadowlands Xanadu shopping-and- entertainment complex in New Jersey. The agreement ends all of Mills's financial obligations related to the 104-acre project, Mills Chief Executive Officer Mark Ordan said in a Nov. 22 interview.
Systemax Inc. (SYX US) rose $2.08, or 17 percent, to $14.20. The distributor of personal computer hardware said its second- quarter profit increased to 19 cents a share from 4 cents a year earlier.
Technip SA (TKP US) ADRs, each representing one share, rose $3.79, or 5.6 percent, to $71.45. Europe's second-largest oilfield-services provider may receive a bid next week from Eni SpA. The company's market value is 6.2 billion euros ($8.1 billion). Eni, Europe's fourth-biggest oil company, may bid to merge Technip with Saipem SpA, the Milan-based services company in which it holds a 43 percent stake, the La Tribune newspaper said, without citing anybody. A spokesman for Technip said no approach had been made and Eni declined to comment.
Tickers: ASX AAPL NEM

0912728366

2006-11-25T04:59:00.000-08:00

U.S. Stocks Finish Week Little Changed; Phelps Dodge Advances
HUYỀN 0912728366 bạn a PHONG

By Michael Patterson(Bloomberg)
Nov. 25 -- U.S. stocks were little changed in a holiday-shortened week as a burst of corporate takeovers failed to ease concerns that holiday sales may falter amid slowing economic growth.
Materials and real-estate companies advanced after Phelps Dodge Inc., the world's third-biggest copper producer, and Equity Office Properties Trust, the largest U.S. office landlord, were acquired. Retailers declined as a drop in home prices and rising fuel costs sparked concern that consumers will have less money to spend during the holiday shopping season.
``Investors are trying to sort out whether the economy's going to slide into a recession with the hard landing that everyone worries about,'' said Tom Laming, who oversees $400 million as president and chief investment officer of Trendstar Advisors LLC in Overland Park, Kansas. ``Private equity is probably helping returns for certain stocks and certain sectors'' that are being eyed for mergers and acquisitions, he said.
The Standard & Poor's 500 Index ended the week down less than 1 percent at 1400.95, snapping a two-week winning streak. General Motors Corp. dragged down the Dow Jones Industrial Average after billionaire investor Kirk Kerkorian reduced his stake in the world's largest automaker. The 30-stock gauge fell 0.5 percent to 12,280.17, its first weekly decline since Nov. 3.
Gains in Dell Inc. helped lift the Nasdaq Composite Index to its third straight weekly advance. The Nasdaq, which gets two- fifths of its value from computer-related shares, rose 0.6 percent to 2460.26.
Trading slowed as investors took off early for the Thanksgiving holiday. The stock market was closed on Nov. 23 and shut three hours early yesterday.
Takeovers
Takeovers helped spur gains in materials and real estate companies this week.
Phelps Dodge surged 29 percent to $122.37 after Freeport- McMoRan Copper & Gold Inc. agreed on Nov. 19 to buy the copper producer for $25.9 billion in cash and stock in the world's biggest mining takeover. Phelps Dodge stockholders will get $88 in cash and 0.67 share of Freeport.
The deal values Phelps Dodge at $126.46 a share, or 33 percent more than its closing price Nov. 17.
Freeport, which fell the day after announcing the purchase, recouped its loss to finish the week up 7.8 percent at $61.86 on speculation the company may also be a takeover target.
Real-estate companies in the S&P 500 climbed 6.4 percent for the best performance among two dozen industry groups.
Shares of billionaire Sam Zell's Equity Office Properties Trust jumped 9.6 percent to $49. Blackstone Group LP, manager of the world's largest buyout fund, agreed to buy the top U.S. office landlord for about $20 billion in the biggest private- equity deal in history.
Other REITs
The deal helped lift other real estate investment trusts. Boston Properties Inc., the U.S. office-building owner founded by Mortimer Zuckerman, climbed 8.6 percent to $117.95. Vornado Realty Trust rallied 7.2 percent to $125.44.
In terms of M&A, ``there's plenty more in the pipeline,'' said Frank Aquila, a senior partner at New York-based law firm Sullivan & Cromwell LLP in New York. ``Looking at what I'm seeing just personally, the early part of next year is going to be very busy.''
The deals followed news of acquisitions last week in the media and airline industries. Companies have announced about $1.51 trillion of U.S. deals this year, according to data compiled by Bloomberg. Around the world, mergers and acquisitions rose to a record $3.1 trillion.
Retailers Drop
A gauge of retailers in the S&P 500 dropped 0.8 percent on concern higher oil prices and a slumping housing market may hold back consumers as the holiday shopping season kicks off. The dollar's drop to a 19-month low against the euro also hurt retailers because it boosts the cost of some imported goods.
Kohl's Corp., the fourth-largest U.S. department-store company, dropped 3 percent to $71.05. Target Corp., the second- biggest U.S. discount chain, slipped 0.9 percent to $57.71.
Home prices fell in about a third of U.S. metropolitan areas last quarter, the National Association of Realtors said on Nov. 20. Crude oil for January delivery increased 0.5 percent this week to $59.24 a barrel in New York.
Bed Bath & Beyond Inc., the largest U.S. home furnishings retailer, dropped 3.2 percent to $39.25. Staples Inc., the world's largest office-supplies retailer, lost 3.9 percent to $25.62.
GM had the steepest retreat in the Dow average, falling 12 percent to $31.23. Kerkorian's Tracinda Corp. cut its stake in the company to 42 million shares, or 7.4 percent. Tracinda had been GM's second-largest shareholder, with a 9.9 percent stake.
Dell Jumps
Dell jumped 9.2 percent to $27.33. The second-largest maker of personal computers, whose accounting is under investigation by regulators, said third-quarter net income was 30 cents a share, topping the 24-cent average estimate of analysts in a Thomson Financial survey.
Bear Stearns & Co. raised its rating on Dell to ``outperform'' from ``peer perform.'' Deutsche Bank AG increased its price estimate for the shares by 14 percent to $32. Credit Suisse Group and UBS AG also lifted their price estimates.
Medtronic Inc., the world's biggest maker of heart-rhythm devices, advanced 9.7 percent to $53.45. Fiscal second-quarter sales of the company's $30,000 implantable defibrillators increased 4 percent from a year earlier to $764 million, topping analysts' estimates.

China Central Bank Suspends Open Market Operations (Update1)

2006-11-22T05:32:00.002-08:00

China Central Bank Suspends Open Market Operations (Update1)

Trà, q1, 0902957972
By Zhang Dingmin and Jake Lee
Nov. 22 (Bloomberg) -- The People's Bank of China will halt regular open-market operations for a day tomorrow, adding to speculation that increases in the reserves requirements are succeeding in draining cash from the economy.
A Chinese central bank spokesman said the decision was based on an evaluation of market conditions and declined to elaborate. Three increases this year in the amount of reserves banks need to set aside have pushed up money-market yields.
The yield on a 2 billion yuan ($254 million) sale of one- year central bank bills was 2.82 percent yesterday, compared with 2.79 percent at sales in the past seven weeks. The central bank has been selling its own currency to stop it from strengthening, pumping funds into the financial system.
``They're startled by the ongoing rise in yields and they're signaling enough is enough,'' said Tim Condon, chief Asia economist at ING Bank NV in Singapore. ``Every day they don't intervene is going to put downward pressure on yields.''
The central bank's open market operations include selling bills to banks and repurchasing bonds on Tuesdays and Thursdays to adjust liquidity in the financial system. The bank has ordered banks to set aside more funds three times this year to reduce their lending capacity and slow down loan growth.
Since the end of a fixed exchange rate in July 2005, China's central bank has limited gains in the yuan to 2.9 percent against the U.S. currency by purchasing dollars and keeping yuan money-market rates stable.
The central bank lifted its one-year lending rate twice this year to 6.12 percent to cool the world's fastest-growing major economy. While the lending rate sets a minimum borrowing cost for bank loans, it doesn't directly influence money-market rates.

Goldman Says China's Bond Market to Gain in Influence (Update1)

2006-11-22T05:32:00.001-08:00

Goldman Says China's Bond Market to Gain in Influence (Update1)
Nhung, 0986263204 SG
By Christina Soon
Nov. 22 (Bloomberg) -- China's bond market will gain in influence in the next 10 years as the economy grows and the government deregulates the market, Goldman Sachs Group Inc. said.
Outstanding debt may reach 60 percent of the economy in 2016 from about 27 percent now, as the yuan and interest rates are allowed to fluctuate more freely, according to a Nov. 20 Goldman report. An aging, increasingly affluent population will spur demand for bonds, said Francesco Garzarelli, director of macro and markets research in London.
Higher per-capita incomes ``usually translate into greater sophistication or maturation of capital markets,'' Garzarelli said in an interview yesterday.
China wants to encourage companies to borrow through debt issuance instead of taking loans from banks, which have been saddled with $163 billion of non-performing debt. An expanding bond market will help sustain economic growth, by putting a more accurate price on investment risks, Goldman said.
The government's decision this month to let banks lend bonds for the first time shows determination to develop the market, Garzarelli said.
Banks can lend their bonds for a period of one year starting Nov. 20, the People's Bank of China, the central bank, said on Nov. 6. The rules allow for short positions, where an investor borrows an asset in anticipation of making a profit by buying it back after its price has fallen.
Growing Economy
China's seven-year government bonds fell today. The yield on the 2.51 percent local-currency bond due in February 2013 rose 1 basis point, or 0.01 percentage point, to 2.99 percent at 2:30 p.m. in Shanghai, according to the Shanghai Stock Exchange.
Should the market reach 60 percent of the economy's estimated size in 10 years, it would be worth the equivalent of $4.5 trillion, the current size of the U.S. Treasury market, Goldman's report said.
The economy of China, the world's most populous country, expanded 10.4 percent in the third quarter after growing 11.3 percent in the previous three months. Growth in the second quarter was the fastest in more than a decade.
``The sound situation of the Chinese economy since the mid- 1990s, with high growth and low inflation'' was contributed by factors including the increase in employment as a percentage of total population, Li Yang, a former member of the PBOC's monetary policy committee, said today in Beijing.
``Because those factors will continue for another 10 years, the Chinese economy will continue to be in such a sound position for a long period of time,'' Li said at the Chinese Academy of Social Sciences' Institute of Finance & Banking, which he heads.
Goldman Sachs based its estimation on the assumption of average annual GDP per capita growth of around 6 percent, the report showed.
Pricing Risks
To promote market growth, borrowing costs should be more flexible so investors can price risks, Garzarelli said. The central bank lifted its one-year lending rate twice this year to 6.12 percent to cool the world's fastest-growing major economy. While the lending rate sets a minimum borrowing cost for bank loans, it doesn't directly influence money-market rates.
The yield on a 2 billion yuan ($254 million) sale of one- year central bank bills was 2.82 percent yesterday, compared with 2.79 percent at sales in the past seven weeks.
Since the end of a fixed exchange rate in July 2005, China's central bank has limited gains in the currency to 2.9 percent by purchasing dollars and keeping yuan money market rates stable.
Exchange Rate
``China's current exchange rate regime constrains the use of market-oriented instruments -- interest rates chief among them -- in the conduct of monetary policy,'' Garzarelli co-wrote in the report with economist Sandra Lawson and strategist Michael Vaknin. `This has the unfortunate side-effect of curtailing the pace of local debt market development.''
China's national household savings rate at 24 percent of disposable income is more than three times the Organization for Economic Cooperation and Development's average, the report showed. The country has one of the highest rates of bank deposits to GDP in the world, it said.
``A more robust debt capital market could facilitate the conduct of monetary policy and underpin the sustainability of the long-running economic boom,'' the report said. It could also ``channel funds into institutional investments and reduce the need for precautionary household and corporate savings.''

Japan's Bonds Rise on Speculation Funds Buying to Track Index

2006-11-22T05:31:00.000-08:00

Japan's Bonds Rise on Speculation Funds Buying to Track Index
Ngọc ,Q6, 0908414948
By Chris Cooper
Nov. 22 (Bloomberg) -- Japanese government bonds rose on speculation investors are buying to match a change in a benchmark index followed by the nation's largest pension fund.
Nomura Securities Co. will add debt including 10- and 20-year bonds sold this month to its Bond Performance Index in December and remove securities due in a year and less. The Government Pension Investment Fund, Japan's largest pension fund with 25.5 trillion yen ($217 billion) in domestic debt as of March-end, matches 80 percent of its yen bond holdings to the index.
``There is buying of longer maturity bonds to match the index change,'' said Shinji Kunibe, a fund manager in Tokyo at the local subsidiary of JPMorgan Asset Management, which oversees $847 billion in assets. ``We're going to see more buying as we approach the end of the month.''
The yield on the benchmark 10-year bond dropped 1 basis point to 1.66 percent at 3:18 p.m. in Tokyo, according to Japan Bond Trading Co., the nation's largest interdealer debt broker. The price of the 1.8 percent bond due September 2016 advanced 0.085 yen to 101.181 yen. A basis point is 0.01 percentage point.
Yields on 2.2 percent bonds due September 2026 fell 1 basis point to 2.15 percent. Prices rose 0.139 yen to 100.694 yen.
The gap in yield between five- and 20-year debt narrowed to 93.1 basis points today, from 97.9 basis points at the start of the month. A close below 93 basis points would be the tightest spread since 90.9 basis points on Aug. 24.
Stock Gains
Kunibe said he is keeping the average duration of his bond holdings slightly longer than his benchmark. Duration estimates how much a bond price will change when yields move. The higher the duration, the more the debt returns when yields fall.
Ten-year bond yields may drop to 1.60 percent by the end of the month, Kunibe said.
Bond futures fell earlier as the Nikkei 225 Stock Average headed for a two-day recovery from losses over the past week.
Benchmark 10-year yields, which move inversely to prices, had a correlation of 0.85 with the Nikkei in the past week, Bloomberg data showed. A value of 1 means the two moved in lock step.
``Signs that a slide in stocks is slowing may push up bond yields,'' said Jun Ishii, chief fixed-income strategist in Tokyo at Mitsubishi UFJ Securities Co., part of Mitsubishi UFJ Financial Group Inc., Japan's biggest bank.
The Nikkei gained as much as 1.1 percent today. On Nov. 20, it tumbled 2.3 percent, the biggest drop since July 18.
Change in Index
Bond futures erased earlier declines, ending up on the day, amid speculation the government will downgrade its view of the economy for the first time in two years, weakening the central bank's case for a second interest-rate increase this year.
Today's Cabinet Office report will describe the economy as ``recovering although weakness is detected in consumption,'' according to a Nihon Keizai article yesterday. The report compiled in October said the economy was ``recovering,'' using the same expression for the ninth straight month, the newspaper said.
``The Bank of Japan isn't going to be able to raise rates next month,'' said JPMorgan Asset's Shinji Kunibe. ``It's a good time to buy bonds.''
Ten-year bond futures for December delivery rose 0.05 to 134.96 as of the afternoon close on the Tokyo Stock Exchange.
The central bank increased rates in July for the first time in six years. Ten-year yields have gained, pulling yields down from 1.855 percent since the day the central bank pushed up rates.
The difference between the yield on 10-year bonds and the overnight lending rates between banks, the central bank's key rate, shrank to 1.41 percentage points yesterday from its high for the year of 2 percentage points on May 10.

Ngọc, Q1, 0909600409

2006-11-22T05:28:00.002-08:00

Qantas Credit Risk Soars as Leveraged Buyout Threatens Ratings
Ngọc, Q1, 0909600409
By John Glover and Patricia Kuo
Nov. 22 (Bloomberg) -- The risk of owning Qantas Airways Ltd. debt jumped today after Australia's biggest airline received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group, according to traders betting on the creditworthiness of companies in the credit-default swap market.
Contracts based on $10 million of Qantas bonds rose to $53,500 from $30,500 yesterday, according to prices from JPMorgan Chase & Co. Credit-default swaps are financial instruments based on corporate bonds and loans that are used to speculate on an increase or decrease in indebtedness.
``This is a wake-up call to the credit market that those companies which appear safe are not as safe as we assumed,'' said Stephen Miller, who helps manage $1.5 billion of credit at Blackrock Investment Management (Australia) Ltd. in Sydney. ``There had been some drumbeats about companies wanting to take a stake in Qantas, but investors had ignored it because they thought Qantas is safe from an LBO.''
Investors are concerned Sydney-based Macquarie and U.S. private equity firm Texas Pacific will load Qantas with debt to fund the acquisition. Standard & Poor's said it may cut the company's investment-grade debt rating to high-yield, high-risk because a leveraged buyout would lead to a ``significant weakening'' in the company's credit quality.
An increase in the cost of credit-default swap contracts based on Qantas's $1.2 billion of bonds indicates a deterioration in credit quality.
Investors who buy the securities, sold by financial firms such as New York-based JPMorgan Chase & Co. and Frankfurt-based Deutsche Bank AG, are paid $10 million in exchange for the notes should the company fail to adhere to debt agreements during the next five years.
Deal `Conditional'
Macquarie, Australia's biggest investment bank, said the proposed deal is ``conditional upon the support of the Qantas board.'' Qantas shares jumped 15 percent, valuing the airline at $7.6 billion.
Qantas's bonds don't have covenants protecting holders against a change of ownership or increased leverage, S&P said. The company's $1.47 billion of bank loans are protected from an LBO, the ratings firm said.
``When these private equity people come in, they traditionally leverage up these businesses,'' said Jeanette Ward, a Melbourne-based analyst with S&P. ``If Qantas were to become much more highly leveraged then, yes, there is the potential that they could fall out of investment grade.''
Ratings Review
Moody's Investors Service said it would review its ratings on Qantas for a possible downgrade if a bid is made.
Qantas's bonds are rated BBB+ by S&P, three levels above non-investment grade, and an equivalent Baa1 at Moody's. High- yield, high-risk bonds are rated below Baa3 at Moody's and BBB- at S&P.
The yield premium, or spread, investors demand to hold Qantas's $450 million of 5.125 percent bonds due 2013, rather than government debt of similar maturity, soared to 118 basis points today from 97 basis points yesterday, according to BNP Paribas SA. The spread is now the widest since the end of July.
A basis point is 0.01 percentage point.
Qantas, which operates 213 planes making 5,000 domestic and 700 international flights a week, has avoided the worst of the airline industry's woes, reporting a profit every year since 1994, including record earnings in 2004 and 2005. The company is part of a duopoly in the domestic market, where discount carrier Virgin Blue Holdings Ltd. is the only competitor with a national network.
The approach is ``incomplete and is being investigated,'' Qantas said in a statement. Edna Hedstrom, a Melbourne-based spokeswoman for Texas Pacific, declined to comment.
Credit Quality
Credit-default swaps are the fastest growing market for derivatives, financial instruments derived from stocks, bonds, loans, currencies and commodities, or linked to specific events like changes in the weather or interest rates.
The perception of European credit quality as measured by the iTraxx Crossover Index improved today. A credit-default swap based on a 10 million-euro ($12.8 million) contract on the index, which includes 45 companies with investment-grade and non-investment grade ratings, fell to 236,167 euros, or 0.43 percent, from 237,188 euros yesterday, according to data compiled by JPMorgan. The index moves an average of about 1.5 percent a day.

0902174953

2006-11-22T05:28:00.001-08:00

U.K. Bonds May Gain; BOE Minutes Show 7-2 Vote on Rate Increase
Nghi, 0902174953 SG
By Gavin Finch
Nov. 22 (Bloomberg) -- U.K. government bonds may gain after the Bank of England said two policy makers voted against raising interest rates at this month's meeting.
The minutes of the BOE's meeting this month showed David Blanchflower and Rachel Lomax opposed raising rates a quarter point to 5 percent, against a majority of seven policy makers who favored the increase. Gilts have gained for the past two weeks on speculation the central bank will raise rates only once more.
``Inflation pressures aren't as bad as had previously been supposed and the BOE could have scope for relaxing its vigilance,'' said Steven Major, head of fixed-income strategy at HSBC Holdings Plc in London. ``Short-dated gilts look very good value.''
The yield on the two-year benchmark gilt, among the securities most sensitive to interest-rate expectations, was little changed at 5.02 percent at 11:22 a.m. in London. The price of the 5 percent security due March 2008 was at 99.97. Bond yields move inversely to prices.
Lomax argued a rate increase was less pressing now and Blanchflower said there were downside risks to demand and inflation, according to the minutes of the BOE's Nov 8-9 meeting.
The BOE said Nov. 9 in a statement it expects inflation to ``rise further above the target in the near term, but then fall back as energy and import price inflation abate.''
Manufacturing Rebound
Gains for gilts may be limited after a report yesterday which showed factory orders rebounded from a nine-month low in November as a gauge of export demand rose to the highest in 11 years.
A measure of new orders, based on a survey of manufacturers, rose to minus 6 from minus 20 in October, the Confederation of British Industry, the U.K.'s biggest business lobby, said yesterday. The index of export orders rose to 3, the highest since August 1995, from minus 11.
Lehman Brothers Holdings Inc. last week raised its forecast for U.K. lending rates, predicting the BOE will lift its main rate a quarter-point to 5.25 percent in February, before cutting the rate to 5 percent in February 2008. The bank had previously forecast a cut in the rate to 4.75 percent in August 2007.
Investors still expect one more rate rise from Bank of England next year. The implied yield on the March 2007 contract was at 5.34 percent today. The contracts settle to the three- month London inter-bank offered rate for the pound, which averaged about 15 basis points more than the benchmark rate for the past decade.

0918919278

2006-11-22T05:27:00.001-08:00

Moody's May Cut Ratings on 300 Hybrid Bonds Under New Criteria
Mai 0918919278 SG
By Sebastian Boyd
Nov. 22 (Bloomberg) -- Moody's Investors Service may cut credit ratings on 300 so-called hybrid bonds after a review of its criteria for assessing the securities.
Hybrid bonds combine elements of equity and debt and often allow the issuer to suspend or cancel interest payments without defaulting. In the past, Moody's has rated the bonds one or two levels below its grade for the company.
The New York-based rating company yesterday revealed proposals to measure the probability of companies deciding to cancel interest payments on bonds. The new methodology may mean Moody's cuts its ratings on debt sold by Rueil-Malmaison, France- based Vinci SA, the world's biggest construction company, and Boulogne-Billancourt, France-based Thomson SA, the world's biggest maker of television set-top boxes, Dresdner Kleinwort said in a note published today.
``Without examining every security in detail, it is difficult to determine the exact number of expected rating changes, but an initial survey indicates that ratings could change for roughly 300 securities if the proposal is adopted,'' Moody's said in a document on its Web site.
The extra yield, or spread, over the euro asset-swap rate investors demand to buy Vinci's hybrid bonds rose 11 basis points today to 252 basis points, according to RBC Capital Markets. The asset-swap rate is a measure of the cost of swapping between fixed and floating interest rate payments and is used to measure the cost of company borrowing

0902002077

2006-11-22T05:25:00.000-08:00

European Bonds May Drop; French October Consumer Spending Rose
Loan , Tân Bình, 0902002077
By Gavin Finch
Nov. 22 (Bloomberg) -- European government bonds may decline after a report showed consumer spending in France, Europe's third largest economy, rose in October and unemployment dropped.
Benchmark debt fell yesterday after Morgan Stanley joined Goldman Sachs Group Inc. and Commerzbank AG in raising its forecasts for European Central Bank borrowing costs next year. ECB President Jean-Claude Trichet said yesterday there's no room ``for complacency in terms of inflationary pressure.''
``Shorter-dated debt is going to remain under pressure from all the hawkish rhetoric coming out of the ECB on inflation and the need for future rate hikes,'' said Cyril Beuzit, head of interest-rate strategy in London at BNP Paribas SA. ``No doubt Trichet will continue to be hawkish.''
The yield on the benchmark two-year note, which is more sensitive to changes in rate expectations than longer-dated debt, was little changed at 3.68 percent at 11:55 a.m. in London. The price of the 3.5 percent security due September 2008 rose 0.01, or 10 euro cents per 1,000 euro ($1,286), face amount to 99.69.
French consumer spending rose in October as unemployment fell to a five-year low. Spending gained 0.9 percent from September, when it fell a revised 2.5 percent, Insee, the national statistics office, said. Economists expected a 1 percent gain, according to a Bloomberg survey.
Rate Forecasts
The ECB kept its benchmark rate at 3.25 percent on Nov. 2, after lifting it five times since last December. Morgan Stanley raised its forecast for borrowing costs today to 4 percent by the end of 2007, from a previous forecast of 3 percent.
Morgan Stanley said it now expects the economy of the dozen euro nations to expand 2.6 percent this year and 1.9 percent in 2007, compared with September forecasts of 2.1 percent and 1.4 percent respectively.
The International Monetary Fund is also raising its growth forecasts for Germany, the Financial Times Deutschland said yesterday, citing an interview with Ajai Chopra, who heads the fund's Germany unit.
The IMF expects the German economy to grow 2.5 percent this year, up from its current prediction of 2 percent, and 1.5 percent in 2007, up from 1.3 percent.
Goldman expects the ECB to lift its key rate to 4 percent by the middle of next year, and Commerzbank said it would be raised to 3.75 percent. Both previously anticipated the Frankfurt-based ECB would keep rates on hold after raising it a quarter point to 3.5 percent next month.
Optimism Slipping
Trichet has already signaled the central bank will lift borrowing costs to 3.5 percent next month. He said yesterday the ECB must be ``strongly vigilant'' on the risk of inflation, the phrase used to signal an imminent rate increase.
Benchmark two-year yields rose to a four-year high last week on speculation the ECB would need to keep raising rates in the $10 trillion economy into 2007.
Declines for bunds may be limited before two reports which are expected to show German and French business confidence fell this month, surveys of economists show.
The Ifo institute will report tomorrow its sentiment index, based on a poll of German executives, fell to 105.2 from 105.3 in October, according to a Bloomberg survey. A gauge of French business optimism, due on Nov. 24, probably fell to 107 from 108, a separate survey shows.
Traders are betting on at least one more interest-rate increase from the ECB next year, futures prices show. The yield on the three month Euribor futures contract for March was at 3.83 percent today.
The contract settles to the three-month interbank offered rate for the euro, which has averaged about 16 basis points above the ECB's benchmark rate since 1999.

0902997851

2006-11-22T05:24:00.000-08:00

HCA $5.7 Billion Bond Sale Turns Into Windfall for Investors
Linh - Thảo , tân bình, 0902997851
By Mark Pittman
Nov. 22 (Bloomberg) -- HCA Inc.'s $5.7 billion sale of below-investment-grade bonds has become the biggest bonanza for investors in at least three years.
The securities rose as high as 104 cents on the dollar, cutting yields by 70 basis points since the Nov. 8 sale, according to Deutsche Bank AG prices. The drop in yield is the biggest for new bonds of more than $1 billion since before 2003, according to data compiled by New York-based research firm FridsonVision LLC.
HCA, the biggest U.S. hospital company, sold the securities at 100 cents on the dollar with yields higher than on its existing debt to make sure there was demand for the largest junk bond offering in 17 years. Proceeds will help pay for the $33 billion takeover of the Nashville, Tennessee-based company by a group led by Kohlberg Kravis Roberts & Co.
``It was obvious that the bonds were going to trade up pretty substantially, given where they priced it,'' said Michael Difley, who bought the debt from underwriters led by Citigroup Inc. for the $200 million he manages at the Mountain View, California-based fixed-income unit of American Century Investments.
HCA sold $1 billion of 9.125 percent senior secured second- lien notes due in 2014, $3.2 billion of 9.25 percent second-lien debt maturing in 2016 and $1.5 billion of so-called toggle notes with a 9.625 percent coupon due in 2016. The toggle notes have ``pay-in-kind'' interest for the first five years, meaning HCA can make coupon payments with additional debt instead of cash.
`Deal of the Year'
HCA was rated BB- by Standard & Poor's and B2 by Moody's Investors Service. Debt ranked below BBB- by S&P and Baa3 at Moody's is considered non-investment grade.
The gains on the bonds have handed investors a $228 million profit this month, according to data compiled by Bloomberg. Yields on new bonds fall by less than 10 basis points on average when trading begins, according to FridsonVision. A basis point is 0.01 percentage point.
The HCA sale was the ``deal of the year'' for investors, according to bond research firm KDP Investment Advisers Inc. in Montpelier, Vermont. The returns of more than 4 percent, including accrued interest, compare with 0.65 percent for junk bonds on average in the same period, according to Merrill Lynch & Co. indexes.
Citigroup originally offered a 9.25 percent yield on the eight-year notes and between 9.375 and 9.5 percent on the toggle notes, KDP said in a Nov. 8 report. HCA's existing 6.5 percent notes due in 2016 yielded 9.6 percent on Nov. 6. Increasing demand for the new bonds allowed underwriters to cut the yields by about 12.5 basis points.
Left on Table
If the debt had been sold at current prices, HCA and its new owners, New York-based KKR and Merrill Lynch, Boston-based Bain Capital and HCA co-founder Thomas F. Frist Jr., would have saved $389 million in interest over the term of the notes.
``We're pleased with the way the offering went,'' said HCA spokesman Ed Fishbough. He declined to elaborate.
As an underwriter, ``you want the deal to go well, but this one went a little too well,'' said Martin Fridson, who led Merrill Lynch's high-yield strategy group until he left in 2003 to start FridsonVision. ``There was a lot of money left on the table there.''
Spokesmen for Citigroup, KKR, Merrill Lynch and Bain declined to comment.
The size of HCA's bond sale was surpassed a week later when Austin, Texas-based Freescale Semiconductor Inc. sold $5.95 billion of bonds at 100 cents on the dollar. The debt, which financed the purchase of the company by private equity firms led by Blackstone Group Inc., are unchanged, according to Deutsche Bank prices.
Citigroup Underwriting
Bonds sold by Citigroup, the second-biggest high-yield underwriter in 2006 with $164 billion, don't typically perform as well as HCA's securities, according to FridsonVision.
Fridson examined 360 deals in the past four quarters, totaling $129 billion. Yields on those bonds typically decline 7.6 percent compared with the entire U.S. high-yield market in the four weeks after they are sold.
Citigroup bonds, on average, increase by 4 basis points, the second-worst performance of any underwriter. The worst performers were securities sold by UBS AG, where yields rose 10 basis points on average. Credit Suisse's were the best, narrowing 18.6 basis points on average.

0918 514376

2006-11-22T05:23:00.000-08:00

Bernanke's Programs May Dilute Greenspan Intuition (Update2)
Kiều , Gò Vấp, 0918 514376
By Scott Lanman
Nov. 22 (Bloomberg) -- Inside the U.S. Federal Reserve headquarters, a small team is testing a forecasting program that does the work of hundreds of economists. Never before has the Fed been able to crunch in real time such a large mountain of data -- as many as 150 indicators -- to divine where the economy is headed.
Chairman Ben S. Bernanke is pushing the ``factor model'' program -- so named because it reduces everything from home sales to mining capacity into a few weighted averages for making predictions. The Fed could use the help: Its gross domestic product forecasts, which influence its interest rate decisions, have missed the mark by an average of 1 percentage point since 2000.
``It's a powerful tool that can potentially improve the Fed's forecasts,'' says Richard Clarida, a global strategic adviser at Pacific Investment Management Co. and Columbia University economist who developed a factor model as an assistant Treasury secretary in 2001. ``Forecasting, especially in real time, is a challenge, and these programs are not swayed by the emotions or the conventional wisdom of the moment.''
Bernanke called the models ``especially promising'' in a speech in 2004. He should know. In 2000, as an economist at Princeton University, Bernanke created one that examined 78 economic indicators. He found that its short-term inflation and unemployment predictions were about as accurate as those produced by some 200 economists at the Fed, according to his published paper.
Human Superiority
``That was widely regarded as a successful piece of empirical work,'' says Princeton economist Mark Watson, a pioneer in the field.
Bernanke, 52, also found that computers have their limits. As part of his research at Princeton, he ran a program to see what would have happened if a computer had set monetary policy from 1987 to '98.
Forecasts from Bernanke's factor model were fed into the program, which adjusted rates based on certain rules. The result: Inflation and unemployment fluctuated by larger amounts than in real life, proof that Fed officials are better than software at making calls on interest rates.
``We find this evidence for human superiority comforting,'' Bernanke wrote.
Columbia professor Edmund Phelps, winner of the 2006 Nobel Memorial Prize in Economic Sciences, agrees. ``There's going to be a huge element of uncertainty left that is not captured by the computer models,'' Phelps says. ``Now is a time when there happens to be an unusual amount of uncertainty.''
Betting Against Recession
In February 2006, when Bernanke became Fed chairman, the economy was speeding ahead, expanding at a 5.6 percent annual pace, and inflation was holding steady. He gained credibility by halting the two-year run of interest rate hikes in August as growth started to slow. Now, he faces a more daunting set of facts: A plummeting housing market has raised the specter of a recession while inflation has nudged up.
Economists aren't providing much clarity. Their predictions for 2007 are sharply divided compared with their earlier calls for 2006. JPMorgan Chase & Co. argues that inflation will spur benchmark rate increases up to 6 percent. Goldman Sachs Group Inc., taking the opposite position, sees the distinct possibility of a recession and rate cuts to 4 percent. According to the median forecast of economists in an October-November Bloomberg News survey, officials will lower rates by half a percentage point to 4.75 percent in 2007.
Worst Over?
The Fed is betting against a recession even after the economy expanded at an estimated pace of 1.6 percent in the third quarter. The central bank has held its rate at 5.25 percent since June, hoping that growth is slowing just enough to bring inflation down to about 2 percent or lower.
The drop in crude-oil prices from July's peak of $78.40 a barrel and higher stock prices may provide a cushion for the economy, says former Fed Governor Laurence Meyer, now vice chairman of St. Louis-based Macroeconomic Advisers LLC.
``The worst may be behind us,'' concurs New York-based Neal Soss, chief economist at Credit Suisse Group. ``Consumer outlays have been very strong.'' A barrel of crude was worth $59.92 a barrel at 7:33 a.m. in London today.
Housing is a dark cloud in the calculations of other economists. Goldman Sachs says a recession is increasingly likely because this housing slump is worse than the last two, in 1995 and 1998-2000. New single-family home sales fell 23 percent in the third quarter, and the housing market has yet to hit bottom, says David Rosenberg, chief North America economist at Merrill Lynch & Co. ``The chance of a recession is a coin flip right now,'' Rosenberg says.
`Hard Time'
The Fed isn't any better at GDP predictions than private economists, though it does outperform them on inflation, according to research by the Federal Reserve Bank of St. Louis. ``Economists have a hard time forecasting turning points,'' Fed economist William Gavin says.
Factor models, which run on a basic desktop computer, may help officials with those twists and turns in GDP, inflation and employment. ``It makes it easier to see margins on which we could improve our reading on the ongoing state of the economy,'' says Jeffrey Fuhrer, research director at the Federal Reserve Bank of Boston.
The models emulate in a way how Bernanke's predecessor, Alan Greenspan, discerned economic trends from reams of data, says Princeton's Watson. ``Greenspan was someone who had great intuition and understanding about the economy,'' Watson says.
The central bank won't say when its factor model will be used to help set policy. For now, Bernanke will have to rely on his old tool kit to try to avert runaway inflation or recession -- whatever the case may be

0907682900

2006-11-22T05:20:00.000-08:00

U.S. Notes May Decline Before Report on Consumer Confidence
Hồng , Q1, 0907682900
By Aaron Pan and Oliver Biggadike
Nov. 22 (Bloomberg) -- U.S. Treasuries may snap a three-day winning run before a report today expected to show U.S. consumer confidence is near the highest since July last year.
The University of Michigan is forecast to revise up its gauge of sentiment among Americans when it releases the final results for November. The report will probably show cheaper gasoline and higher stock prices are lifting consumer optimism, according to a Bloomberg News survey.
``The U.S. confidence numbers won't help us,'' said Steven Major, head of fixed-income strategy at HSBC Holdings Plc in London. ``It's going to be a tough move for the bond market to rally much further from here. It's not the right time to be going massively overweight'' on Treasuries.
The yield on the benchmark 10-year note was little changed at 4.58 percent at 7:12 a.m. in New York, according to broker Cantor Fitzgerald LP. The price of the 4 5/8 percent bond due November 2016 fell 1/32, or 31 cents per $1,000 face amount, to 100 3/8. Bond yields move inversely to prices.
The final sentiment reading for November probably increased to 93.3 from an initial estimate of 92.3, according to the median estimate of 57 economists. In October, the gauge reached a 15- month high of 93.6. The University of Michigan's report is due at 10 a.m. local time.
``There's upside risk in yields,'' said Peter Munckton, head of debt research at Commonwealth Bank of Australia in Sydney. ``Given what we've seen from consumer sentiment, the inflation risk is still to the high side.''
Growth Forecasts
Any decline in bonds may be limited on speculation the Federal Reserve will cut interest rates after economic advisers to President George W. Bush lowered their growth forecasts for next year.
U.S. economic growth will slow in 2007 because of a weaker housing market, Bush's economic advisers said in their semi- annual forecast. Gross domestic product will increase 2.9 percent next year, down from 3.1 percent in 2006 and slower than the 3.6 percent forecast in June, the Council of Economic Advisers said.
Minutes released yesterday from the Fed's October meeting showed all but one of the 12 regional bank heads voted not to boost the discount rate.
Investors see a 39 percent chance the Fed will lower its target overnight lending rate between banks at its March 21 meeting, compared with 17 percent odds on Nov. 15, according to interest-rate futures. Policy makers left the rate on hold for the past three months, after 17 quarter-percentage-point increases to 5.25 percent, the highest in more than five years.
Housing Market
Losses for Treasuries may also be curbed on speculation consumers will opt to save their extra cash as the housing market slows.
``The decline in gasoline prices hasn't found its way into other components of retail sales,'' said Peter Jolly, head of research at nabCapital, the investment banking unit of National Australia Bank Ltd. in Sydney. Consumer spending ``is going to moderate for sure,'' he said.
Housing starts fell to the lowest in six years, a government report showed Nov. 17. Builders broke ground on new dwellings at an annual rate of 1.486 million in October, down from 1.74 million the previous month, the Commerce Department said in Washington.
The 10-year yield may fall to 4.5 percent this month, Jolly said, a level last reached in February.

0907260463

2006-11-22T05:19:00.000-08:00

Kenanga's Ngo Sells Palm Oil Stocks, Keeps Cash on Oil's Slide

0907260463 Mỹ

By Dominic G. Diongson
Nov. 22 (Bloomberg) -- Kenanga's Johan Tazrin Ngo, whose funds got a boost from palm oil producers, is moving to cash because he expects a slowdown to affect Malaysia.
Ngo's investments in companies such as IOI Corp. helped make one of the funds he manages the third-best performer in Malaysia in 2005. The edible oil, which is made from the fruit of palm trees grown on vast plantations in the Southeast Asian nation, is used for cooking and in processed food and can be mixed with diesel to fuel trucks and buses.
Ngo, 34, has profited from expectations of increasing demand for biofuels, which last year drove up the price of palm oil and shares of the commodity's producers. Yet he has turned wary because of the drop in crude oil prices since July.
``It looks like a fantastic business when you have high oil prices,'' said Ngo, chief executive officer at Kenanga Investment Management Sdn., a subsidiary of Kuala Lumpur investment bank K&N Kenanga Holdings Bhd. If crude oil prices drop enough, though, there could be excess biodiesel capacity two years from now, he says. ``You need $60-$70 a barrel to be profitable,'' he says.
Lower petroleum prices are likely to drag down palm oil, Ngo says. The price of benchmark West Texas Intermediate crude oil declined 24 percent to $55.81 a barrel on the New York Mercantile Exchange on Nov. 17 from a record $78.40 on July 14.
Palm oil futures, which traded at 1,408 ringgit ($373) per metric ton on the Malaysia Derivatives Exchange in January, rose 31 percent to 1,848 ringgit on Nov. 21.
Turning Cautious
Shares of IOI, Malaysia's biggest publicly traded palm oil plantation company, have risen 52 percent in 2006 through Nov. 21 to 18.90 ringgit. Kuala Lumpur Kepong Bhd., the second largest, is up 65 percent to 13.90 ringgit. In 2005, IOI shares rose 31 percent, and Kuala Lumpur Kepong rose 21 percent.
The Kenanga Syariah Growth Fund that Ngo manages held 19,000 shares of Kuala Lumpur Kepong and 3,000 shares of IOI at the end of 2005, according to data compiled by Bloomberg.
Ngo, whose family has operated a company that trades the commodity since the mid-1970s, says he's been slowly reducing his stakes in the plantation companies because of uncertainties about the price of crude oil.
It's not just palm oil that Ngo has turned cautious on. Because he's concerned that slowing economic growth and weak consumer demand in the U.S. will affect economies in Asia, including Malaysia, Ngo is keeping as much as 20 percent of assets in the two unit trust mutual funds KIM oversees in cash, he says.
On the Defensive
``We're making sure we're shifting more toward a defensive posture for the portfolio as opposed to growth,'' said Ngo, who enjoys polo, kickboxing and reading. ``Going forward, the market will be less tolerant of a negative earnings surprise. The risk is more to the downside than to the upside.''
About 95 percent of the $140 million KIM oversees are in funds it manages for the Malaysian government, overseas investors and individuals. The remainder is in the two unit trusts.
One of them, the Syariah fund, invests in stocks that comply with sharia, or Islamic law. Muslim Malays constitute a majority in the ethnically and religiously diverse country.
The fund doesn't buy shares of alcohol or gaming companies because those activities are banned under sharia. It also doesn't invest in banks because the payment of interest is barred under Islamic principles. With the equivalent of $1.3 million in assets, the fund was up 15.3 percent in 2006 as of Nov. 21.
Searching for Dividends
The other unit trust, the $4.5 million Kenanga Growth Fund, has no sharia restrictions and can invest in any stock in Malaysia. It has performed worse than the Syariah fund, gaining 14.4 percent from the beginning of 2006 through Nov. 21. To help boost returns in the non-sharia fund, Ngo is turning to companies that have been providing steady earnings growth and paying dividends, he says.
``Companies know now that they want investors to stay with them,'' he says. ``There has to be a reason for it, so they're either going to show really good growth or give a nice dividend yield.''
Ngo is investing in Malayan Banking Bhd., or Maybank, as the country's biggest lender is known, for the non-sharia- compliant fund. On Nov. 21, the lender's dividend yield, or the ratio of payout to stock price, was 7.5 percent during the trailing-12-month period. Malaysian stocks had an average dividend yield of 3.9 percent in as of Nov. 21, the fifth highest among 14 markets in the Asia-Pacific region, according to Bloomberg data.
The non-sharia fund bought shares of Affin Holdings Bhd., a financial services group, in January 2004 and sold them in September 2005 after they rose 45 percent.
Money off the Table
Ngo graduated with a bachelor's degree in business economics from the University of Reading in the U.K. He started his career as a portfolio manager covering equities in Japan, Malaysia and other Asian countries with Coutts & Co. in London in 1993. In 1997, he returned to Kuala Lumpur and started at what's now KIM.
Ngo, a nephew of the sultan of Pahang state in Malaysia, made his first stock investment at age 16. He bought shares in the initial public offering of Marks & Spencer Group Plc. When he sold a few years later, Ngo says, the stock of the U.K.'s largest clothing retailer had almost doubled.
For now, Ngo says, he doesn't expect to deploy the cash he's got on hand anytime soon.
``It's very easy for people to get disappointed,'' he says. ``Sometimes it's better to get some money off the table, just find something else.''

0907850729

2006-11-22T05:18:00.000-08:00

Hong Kong's Hang Seng Index Rises to Record; Sun Hung Kai Gains
0907850729 Ngọc SG
By Hanny Wan
Nov. 22 (Bloomberg) -- Hong Kong's Hang Seng Index closed at a new high, after economic growth accelerated more than economists forecast. Property developer Sun Hung Kai Properties Ltd. and Hong Kong Exchanges & Clearing Ltd. gained.
``The growth mainly comes from the financial sector,'' said Wilfred Sit, who helps manage about $4 billion of Asian equities at Baring Asset Management (Asia) Ltd. in Hong Kong. ``If the economy continues to be strong, it certainly helps'' improve company earnings outlooks and boost market sentiment, he said.
Cnooc Ltd. rose after oil topped $60 a barrel in New York for the first time in 10 days and China Resources Enterprise Ltd. gained after reporting higher earnings.
The Hang Seng added 242.49, or 1.3 percent, to 19,250.79 at the 4 p.m. close in Hong Kong. The Hang Seng China Enterprises Index, which tracks the shares of 37 mainland companies, rose 3.4 percent to 8610.04, the highest since December 1993.
Sun Hung Kai, Hong Kong's biggest developer by market value, climbed HK$1.40, or 1.6 percent, to HK$90.70. Hong Kong Exchanges, operator of Asia's second-biggest stock market, gained HK$2.10, or 3.1 percent, to HK$70.40, the highest since its trading debut in June 2000.
Gross domestic product climbed 6.8 percent in the third quarter from a year earlier after expanding 5.5 percent in the previous three months, the government announced yesterday. That beat the 5.4 percent growth forecast by economists in a Bloomberg News survey.
Thirty one stocks on the 34-member Hang Seng Index advanced while three fell. The November futures rose 1.5 percent to 19,277.
Cnooc, PetroChina
Cnooc, China's biggest offshore oil producer, added 16 cents, or 2.4 percent, to HK$6.77. PetroChina Co., the nation's largest oil producer, jumped 46 cents, or 5.2 percent, to HK$9.39, its biggest gain since July 21, 2005. Citigroup Inc. initiated coverage on PetroChina with a ``buy'' rating, according to a research report published today.
``Energy stocks have the potential to perform well,'' Baring's Sit said. ``As winter approaches, it's peak season'' for energy consumption.
Crude oil futures advanced 2.3 percent to $60.17 a barrel in New York yesterday, the biggest gain since Oct. 25. The contract was recently at $60.06 in after-hours trading.
China Resources, a retailer and brewer backed by the Chinese government, rose 70 cents, or 3.5 percent, to HK$20.70. Profit in the three months ended Sept. 30 rose 4 percent from a year earlier to HK$629.8 million ($81 million) on increased earnings from retailing, food and beverage units, the company announced yesterday.
The following stocks also rose or fell.
Beijing Capital International Airport Co. (694 HK) gained 5 cents, or 1 percent, to HK$5.11. The operator of Asia's second- busiest airfield handled 16 percent more passengers in October than a year earlier because of China's rising travel demand. A total of 4.45 million travelers used the airport last month, Beijing Capital said in a statement.
Hutchison Whampoa Ltd. (13 HK), controlled by Hong Kong billionaire Li Ka-shing, climbed HK$2.75, or 3.8 percent, to HK$74.40, its highest since May 11. Hutchison has no intention of selling its third-generation, or 3G, mobile-phone business in Europe, said Euginie Kwok, a spokeswoman for Hutchison. Hutchison is in discussions to sell the 3G business, called ``3,'' in Europe to France Telecom SA's (FTE FP) Orange unit, Ming Pao newspaper reported today, citing people it didn't identify.
Link Real Estate Investment Trust (823 HK), which runs 180 parking garages and shopping malls previously owned by the city government, gained 22 cents, or 1.4 percent, to HK$16.50, its highest since Aug. 9. Link REIT proposed a dividend of 32.81 Hong Kong cents per unit as it benefited from rising rental income. The dividend was 6.3 percent higher than committed distribution on an annualized basis, the company said in a statement. Total income for distribution to shareholders for the six months ended September was HK$702 million.
New World Development Co. (17 HK), a Hong Kong developer that also invests in transport and telecommunications, gained 22 cents, or 1.5 percent, to HK$14.60, its highest since May 11. The company is planning to buy back the mobile-phone venture it formed with Telstra Corp.'s (TLS AU) Hong Kong unit, the Hong Kong Economic Journal reported. The transaction will give New World direct ownership of its mobile-phone and fixed-line units and make it easier for the company to sell the business ``at the right opportunity,'' the Hong Kong-based newspaper quoted New World Chairman Henry Cheng as saying. Telstra is Australia's biggest telephone company.
Zijin Mining Group Co. (2899 HK), which runs China's largest gold mine, climbed 21 cents, or 4.5 percent, to HK$4.93, the highest since its trading debut in December 2003. The company said it dropped a plan to buy 10 percent of Australia's Allied Gold Ltd. (ALD AU) because due diligence conditions weren't ``fully satisfied.'' Zijin has told Allied Gold, a gold explorer, that it won't proceed, it said in a statement, without giving more details.

0909893154

2006-11-22T05:17:00.002-08:00

Japan's Shares Gain, Led by Banks; Inpex Rises on Oil Above $60

Lan Q1: 0909893154

By Makiko Suzuki
Nov. 22 (Bloomberg) -- Japan's Topix index climbed for the first time in six days, led by banks, as investors judged recent declines excessive.
``Concern over the earnings outlook and slower-than-expected growth in the Japanese economy had been pushing shares lower, but all the bad news is out now,'' said Tomokatsu Mori, who helps oversee $7.4 billion at Fukoku Capital Management Inc. in Tokyo. ``I'm more bullish than before and looking for domestic-demand related shares that have been hit severely.''
Mitsubishi UFJ Financial Group Inc., Japan's largest lender by assets, and Seven & I Holdings Co., the nation's No. 1 retailer, climbed after hitting one-year lows in the past two days. Mitsubishi Estates Co., the biggest property developer, rebounded from this quarter's low.
The Topix index rose 19.92, or 1.3 percent, to 1552.87 at the 3 p.m. close in Tokyo. The Nikkei 225 Stock Average advanced 180.09, or 1.1 percent, to 15,914.23.
Sumitomo Mitsui Financial Group Inc. gained after the Nihon Keizai newspaper said the lender plans to raise its dividend by about 50 percent. A rating upgrade from Nikko Citigroup Ltd. helped Mitsui Trust Holdings Inc. recover some of yesterday's 6 percent drop.
Inpex Holdings Inc. and Sumitomo Metal Mining Co. led commodity producers higher after crude oil prices topped $60 a barrel for the first time in 10 days, and copper and nickel gained the most in five weeks.
Nikkei futures expiring in December advanced 1 percent to 15,860 in Osaka and 0.9 percent to 15,855 in Singapore.

0909862752

2006-11-22T05:17:00.001-08:00

Asian Stocks Advance, Led by BHP; Qantas Surges on Takeover Bid
My, q10 0909862752
By Darren Boey
Nov. 22 (Bloomberg) -- Asian stocks rose the most in six weeks, led by BHP Billiton and PetroChina Co. after commodity prices increased. Benchmarks in Hong Kong, Singapore, India and Indonesia closed at record highs.
``Chinese demand for resources is going to drive the market for the foreseeable future,'' said Richard Wallace, who manages $100 million at Wallace Funds Management in Sydney. ``Investors are predicting the good times are going to last.''
Qantas Airways Ltd. surged on a takeover approach, leading the Australia's S&P/ASX 200 Index to the region's biggest advance. Sumitomo Mitsui Financial Group Inc. led gains among financial- related shares after the Nihon Keizai newspaper reported the bank will raise its dividend.
Samsung Electronics Co. led technology stocks higher after Dell Inc., the world's No. 2 maker of personal computers, reported better-than-expected earnings.
The Morgan Stanley Capital International Asia-Pacific Index gained 1.6 percent to 132.01 at 7:33 p.m. in Tokyo, set for its biggest advance since Oct. 5. All 10 industry groups rose. Japan's Nikkei 225 Stock Average added 1.1 percent while the Topix rose 1.3 percent, its first gain in six days.
Hong Kong's Hang Seng Index rose 1.3 percent to close at a record high after economic growth accelerated. Singapore's Straits Times Index added 1 percent and Indonesia's Jakarta Composite Index advanced 1.4 percent, both to close at new highs. India's Sensitive Index gained 0.7 percent for its second straight record.
Oil and Metals
BHP, the world's biggest mining company by market value, added 2.9 percent to A$26.43. PetroChina , the nation's largest oil company, advanced 5.2 percent to HK$9.39 in Hong Kong. Citigroup Inc. initiated coverage on PetroChina with a ``buy'' rating, according to a research report published today.
Inpex Holdings Inc., Japan's largest oil explorer, climbed 4.6 percent to 937,000 yen. Sumitomo Metal Mining Co., its biggest gold and nickel producer, rose 3.4 percent to 1,414 yen.
Crude-oil in New York yesterday climbed 2.3 percent to $60.17 a barrel, the biggest percentage gain since Oct. 25. Nickel futures in London rose 3.5 percent, while Copper in New York gained 2.2 percent. Both commodities posted their biggest gains since Oct. 16.
``Inpex and other commodity shares are closely tied to a movement in oil and metals prices so today's gain is a direct reaction to the jump in raw-material prices,'' said Katsunori Hirai, who helps oversee $20 billion at Tokio Marine Asset Management Co. in Tokyo.
Qantas Bid
Australia's Qantas, the country's largest airline, jumped 15 percent to A$5. The company said it received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group. Buyout offers for Australian companies surged to $27.3 billion this year from $1.4 billion in 2005, according to data compiled by Bloomberg.
``Interest from private equity firms is a vote of confidence for the market,'' said Shane Oliver, who helps manage about $64 billion at AMP Ltd. in Sydney. ``M&A activity in Australia is in early days yet. This could go on for another couple of years.''
A measure of financial-related stocks was the biggest contributor to the MSCI Asia-Pacific Index's gain today, climbing 2 percent.
Sumitomo Mitsui, Japan's third-biggest bank, rose 1.7 percent to 1.19 million yen. The lender plans to raise its annual dividend to about 6,000 yen from 4,000 yen, the Nihon Keizai newspaper reported.
Mitsui Trust Holdings Inc. gained 3.5 percent to 1,166 yen, rebounding from yesterday's drop of 6 percent after Nikko Citigroup Ltd. raised its rating on the stock to ``neutral'' from ``sell.''
ANZ, Samsung
Australia & New Zealand Banking Group Ltd., Australia's third-largest bank, advanced 0.8 percent to A$28.05. The lender received approval from Malaysia's central bank to begin talks to buy a minority stake in AMMB Holdings Bhd., ANZ Bank said in a statement today. AMMB stocks are suspended from trading.
Samsung Electronics, the world's second-largest semiconductor maker, advanced 1.5 percent to 660,000 won. Hynix Semiconductor Inc., Asia's second-biggest maker of computer- memory chips, added 2.3 percent to 35,750 won.
Taiwan's Hon Hai Precision Industry Co., which makes computer connectors for clients such as Dell, climbed 2.1 percent to NT$241.50 Singapore's Chartered Semiconductor Manufacturing Ltd., the world's third-biggest made-to-order chipmaker, gained 3.1 percent to S$1.34.
Dell Earnings
``Dell's report provides evidence that the computer industry is on solid ground,'' said Dennes Chang, who helps manage $2.5 billion of assets at Jih Sun Securities Investment Trust Co. in Taipei. ``Asian PC-related makers are benefiting from their role as suppliers.''
Dell yesterday reported third-quarter net income of $677 million, without providing comparable year-earlier figures. Per- share profit was 30 cents, higher than the 24 cents estimated by JPMorgan Securities.
The results came less than a week after Hewlett-Packard Co., the world's largest personal-computer maker, said fiscal fourth- quarter profit rose fourfold.
Sun Hung Kai Properties Ltd., Hong Kong's biggest developer by market value, climbed 1.6 percent to HK$90.70. Cathay Pacific Airways Ltd., Asia's second-most profitable carrier, added 2.1 percent, to HK$18.78.
Hong Kong's economic growth accelerated 6.8 percent in the third quarter, more than economists forecast.
``The growth mainly comes from the financial sector,'' said Wilfred Sit, who helps manage about $4 billion of Asian equities at Baring Asset Management (Asia) Ltd. in Hong Kong. ``If the economy continues to be strong, it certainly helps'' improve company earnings outlooks and boost market sentiment, he said.
NEC Corp., Japan's largest PC maker, slid 5.6 percent to 557 yen, set for its biggest decline in three years, after the company's first-half loss widened fivefold on slumping sales. Australia & New Zealand Banking Group Ltd. (ANZ AU)
BHP Billiton (BHP AU)
Chartered Semiconductor Manufacturing Ltd. (CSM SP)
Cathay Pacific Airways Ltd. (293 HK)
Hynix Semiconductor Inc. (000660 KS)
Hon Hai Precision Industry Co. (2317 TT)
Inpex Holdings Inc. (1605 JP)
Mitsui Trust Holdings Inc. (8309 JP) NEC Corp. (6701 JP)
PetroChina Co. (857 HK)
Qantas Airways Ltd. (QAN AU)
Sumitomo Mitsui Financial Group Inc. (8316 JP)
Samsung Electronics Co. (005930 KS)
Sumitomo Metal Mining Co. (5713 JP)
Sun Hung Kai Properties Ltd. (16 HK)

0903288248

2006-11-22T05:16:00.001-08:00

Suez-GDF Deal Joins Hedge Funds, Unions in Opposition (Update2)
Ngọc:0903288248 HN
By Tom Cahill
Nov. 22 (Bloomberg) -- Tim Gittos, a hedge fund adviser who says he's politically to the ``right of Margaret Thatcher,'' has allied with Communist-backed unions to lobby against the plan to combine Gaz de France SA and Suez SA, Europe's biggest utility merger.
``We may not share the same politics, but our target is the same: stopping this merger,'' Gittos, a merger-arbitrage analyst at Aurel Leven Securities in Paris, said earlier this month.
Investors who own at least 15 percent of Suez stock plan to vote against the 42.7 billion euro ($54.8 billion) merger because Paris-based Suez is worth billions more, said Eric Knight, chief investment officer of New York-based Knight Vinke Asset Management. They want GDF, the operator of Europe's largest natural gas network, to pay a special dividend or make way for another suitor to bid for Suez, whose board may meet as soon as today to vote on the deal.
Labor groups led by the Confederation Generale du Travail, France's biggest energy union, oppose the combination, brokered by the French government in February. The union, founded by the Communist Party of France, says the plan to cut the state's GDF stake to 34 percent from 70 limits government power to cap energy costs.
The takeover would create Europe's second-largest utility and block a potential offer for Suez from Rome-based Enel SpA. The state won't force the merger if GDF has to pay more than ``the fair price,'' Finance Minister Thierry Breton said Nov. 20. The deal, backed by the Union for a Popular Movement Party, is opposed by the opposition Socialist Party and comes five months before France's presidential elections.
Final Hurdle
``In the event that GDF is unable or unwilling to agree to satisfactory terms, the board of Suez should not hesitate to call off the merger,'' Vinke said in a statement yesterday. Suez would have ``an attractive choice of merger partners.''
The Suez board meeting was reported by the Wall Street Journal yesterday. A spokeswoman for Suez, Caroline Lambrinidis, declined to comment. A GDF board meeting for today was postponed after the company's workers' council won a court ruling to delay it, and GDF lost an appeal, said Martine Feuillerat, secretary for the company's workers' council, a group consisting of elected employee representatives.
The delay in the GDF board meeting may push a shareholder vote into 2007, with a close before March ``unlikely,'' Per Lekander, an analyst at UBS AG in London with a ``buy'' rating on Suez shares, wrote in a report today.
GDF shares fell 59 cents, or 1.8 percent, to 32.59 euros, and Suez slid 29 cents, or 0.80 percent, to 36.19 euros as of 12:56 p.m. in Paris. Before the ruling yesterday, GDF shares hit a record and shares of Suez were at the highest in six-years.
`Not Normal'
Since the deal was announced 10 months ago, parliament passed a law to permit the merger. GDF and Suez met demands from Belgium's government and agreed to sell units to satisfy the European Union.
Cooperation between unions and hedge funds ``is not normal,'' Jean-Francois Cirelli, GDF's chief executive officer, said last week at the inauguration of the world's largest liquefied natural gas tanker at Port Saint-Nazaire. ``Indirectly they may have the same goals, but that's it.''
Former U.K. Prime Minister Thatcher broke unions in the 1980s, making it easier for companies to fire striking workers and restricting protests.
A minority of Suez stockholders have said they oppose the terms of the deal -- a one-for-one share swap plus a 1-euro dividend for each share of Suez. The merger requires approval by two-thirds of Suez investors.
Trading in Suez shares suggests investors expect the dividend to be increased by at least 2.3 euros because the stock has traded above the terms offered by the French government since the deal was announced.
Neuville, Frere
Colette Neuville, who leads a French shareholder group known as Adam, said yesterday that shareholders should get at least 4 euros a share more. That would require GDF to pay another 5.08 billion euros.
Belgian billionaire Albert Frere, Suez's biggest investor, is demanding a special dividend of at least 4 euros, La Tribune reported yesterday, without saying where it got the information. Frere didn't return calls to his office in Paris.
Analysts expect a dividend of at least 3.3 euros, according to the median of eight analysts in a Bloomberg survey. Knight Vinke said yesterday that a dividend of 3.50 euros wouldn't be enough. The firm didn't say what amount would be satisfactory.
Unions say any extra dividend is a ``gift'' to investors paid by French natural gas customers and oppose the payment. They are challenging France's new law allowing the state's stake in GDF to fall because it may violate terms of the 1946 constitution.
``We may both be opposed to the merger, but we don't have the same position,'' said Eric Buttazzoni, a union member on GDF's board. ``We're against any special dividend.''

0988633992

2006-11-22T05:15:00.002-08:00

Spanish Stocks Rise, Led by Iberia and Gamesa; PSI-20 Advances
nhi 0988633992 SG
By Sharon Smyth
Nov. 22 (Bloomberg) -- Spanish stocks rose, paced by Iberia Lineas Aereas de Espana SA. Airline stocks gained across Europe after Qantas Airways Ltd. received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group.
Gamesa Corporacion Tecnologica SA also advanced after Danish rival Vestas Wind Systems A/S said third-quarter profit increased 13 percent and forecast higher earnings for the next two years.
The IBEX 35 Index climbed 0.7 percent to 14,329.20 as of 10:27 a.m. in Madrid as 28 stocks rose, six fell and one was unchanged. Portugal's PSI-20 Index added 0.1 percent to 10,642.74.
Iberia, Spain's largest airline, gained 5 cents, or 1.9 percent, to 2.65 euros. Qantas, Australia's biggest airline, said it's received a takeover approach from Macquarie Bank and Texas Pacific Group, sparking an 18 percent gain in its shares.
Gamesa, Spain's largest wind-turbine maker, advanced 83 cents, or 4.3 percent, to 20.16 euros. Vestas, the world's largest maker of wind turbines, said third-quarter net income rose to 18 million euros from 16 million euros a year earlier.
The company also forecast that revenue will increase 22 percent to about 4.5 billion euros ($5.8 billion) in 2007 from an estimated 3.7 billion euros this year because of higher demand for wind power. Vestas had 3.58 billion euros in sales last year.
Galp Energia SGPS SA, Portugal's biggest oil company, added 9 cents, or 1.4 percent, to 6.39 euros.
The following stocks also rose or fell. Symbols are in parenthesis after company names.
Abengoa SA (ABG SM) added 54 cents, or 2.1 percent, to 26.54 euros. Analysts at Deutsche Bank AG raised their price estimate on the stock of the Spanish company with businesses ranging from ethanol production to computer services by 17 percent to 30 euros. They cited Abengoa's strategy to become a market leader in solar thermal energy in Spain.
Banco Bilbao Vizcaya Argentaria SA (BBVA SM) rose 14 cents, or 0.7 percent, to 19.39 euros. Spain's second-biggest bank agreed to buy stakes in units of Citic Group for 989 million euros ($1.27 billion) as it expands in China.
BBVA will pay 501 million euros for a 5 percent stake in China Citic Bank and 488 million euros for a 15 percent holding in Citic International Financial Holdings Ltd., the Spanish lender said today in a filing. The agreement also includes an option allowing BBVA to raise its stake in China Citic Bank to 9.9 percent.
Endesa SA (ELE SM) climbed 24 cents, or 0.7 percent, to 35.70 euros. Spain's largest utility told Spain's Supreme Court that German utility E.ON AG is able to raise its bid again for the Spanish power company, Expansion reported, citing documents Endesa filed to courts.
Telefonica SA (TEF SM), Spain's biggest phone company, advanced 6 cents, or 0.4 percent, to 15.83 euros. JPMorgan Chase & Co. raised its price estimate on the shares by 3.2 percent to 16.8 euros.
``Telefonica remains a top pick within our coverage universe thanks to what we see as its better, safer growth prospects that are underpinned by its diversity,'' the analysts wrote in a note to investors.

0918198896

2006-11-22T05:15:00.001-08:00

U.K. Stocks Rise, Paced by Imperial Chemicals, British Airways
Thủy 0918198896
By Poppy Trowbridge
Nov. 22 (Bloomberg) -- U.K. stocks rose, led by Imperial Chemical Industries Plc after Givaudan SA of Switzerland agreed to buy a fragrances unit from the company. British Airways Plc led airlines higher after Qantas Airways Ltd. received an offer.
The benchmark FTSE 100 Index rose 21.3, or 0.3 percent, to 6223.9 at 11:18 a.m. in London. The FTSE All-Share Index added 10.46, or 0.3 percent, to 3201.32. Ireland's ISEQ Index climbed 36.54, or 0.4 percent, to 8926.61.
``Almost everyone in the FTSE is in play for acquisitions,'' said Richard Hunter, head of U.K. equities at Hargreaves Lansdown Stockbrokers in London. ``We have the perfect conditions for acquisitions to continue to buoy the market.''
Imperial Chemicals, the U.K.'s largest specialty chemical maker, rose 32 pence, or 8.3 percent, to 419. Givaudan, the world's biggest flavoring supplier, said it agreed to buy Quest International flavors from Imperial Chemicals for 1.2 billion pounds ($2.28 billion).
ICI will use proceeds of the sale to reduce its pension deficit by 230 million pounds.
British Airways advanced 12.75, or 2.7 percent, to 493.75 pence. Europe's third-largest airline rose after Qantas Airways Ltd. received a takeover approach. Australia's biggest airline received an offer from Macquarie Bank Ltd. and Texas Pacific Group. The price was not disclosed.
EasyJet Plc, Europe's second-largest discount airline, added 11 pence, or 2 percent, to 569.
BHP Billiton and Anglo American Plc led advancing mining stocks after copper prices increased. Copper rose to $7,000 a metric ton in London for the first time since Nov. 10, after stockpiles declined for two straight days, suggesting demand for the metal is picking up. Zinc jumped 3.3 percent.
BHP Billiton gained 23 pence, or 2.4 percent, to 989. Anglo American added 47 pence, or 1.9 percent, to 2,480.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Avocet Mining Plc (AVM LN) rose 5.75, or 5.3 percent, to 113.75 pence, an eight-week high. The company that mines gold in Tajikistan and Malaysia reported ``significant'' results from exploration at its Mangkaluku prospect in South Sulawesi, Indonesia.
DSG International Plc (DSGI LN) dropped 9.5 pence, or 4.4 percent, to 209. The U.K.'s largest consumer electronics retailer said first-half profit was little changed because of a slump in revenue at its Italian unit and a decline in net finance income.
Great Portland Estates Plc (GPOR LN) added 9.5 pence, or 1.5 percent, to 627.5. Merrill Lynch & Co raised its recommendation on shares of the London property developer to ``buy'' from ``neutral.''
Kensington Group Plc (KGN LN), a U.K. lender to people with below-average credit records, slumped 84.5 pence, or 9.3 percent, to 820.5. The company said profit will be at the lower range of estimates this year because of competition from new entrants.
Legal & General Group Plc (LGEN LN), Britain's fourth- biggest insurer, climbed 3 pence, or 2 percent, to 156.5. Credit Suisse Group upgraded the stock to ``neutral'' from ``underperform.''
Liberty International Plc (LII LN), the U.K.'s largest shopping-center company, slid 58 pence, or 4.1 percent, to 1,353. The company is raising as much as 346 million pounds in a share sale to cut debt following its August acquisition of London's Covent Garden market.
London Stock Exchange (LSE LN) rose 16, or 1.2 percent, to 1,317 pence. Hedge fund investors, led by corporate raider Samuel Heyman, are buying stakes in London Stock Exchange Plc through the derivatives market, paying more than Nasdaq Stock Market Inc.'s hostile bid on speculation of a higher offer.
Heyman yesterday acquired 8.8 percent of LSE through derivatives including a total return swap and contracts for difference, according to regulatory filings. He paid as much as 3.8 percent more than Nasdaq's 1,243 pence-a-share offer. GLG Partners, which controls about 1.3 percent of LSE through derivatives, paid as much as 1,275 pence, the filings show.
Northern Foods Plc (NFDS LN) gained 5.3 pence, or 5.1 percent, to 107.75. The U.K. maker of Goodfella's frozen pizzas, concluded disposals unveiled in May by agreeing to sell four units to private-equity firm Vision Capital Group Ltd. for 160 million pounds

0917609648

2006-11-22T05:14:00.001-08:00

European Stocks Rise to Highest Since 2001; ICI, BA Advance
0917609648 Thúy
By Alexis Xydias
Nov. 22 (Bloomberg) -- European stocks rose on speculation that a record year for takeovers and better-than-expected earnings will help extend a rally that has sent the Dow Jones Stoxx 600 Index to its highest in almost six years.
Imperial Chemical Industries Plc jumped after it sold a fragrance unit to Givaudan SA for 1.2 billion pounds ($2.28 billion). British Airways Plc led gains by airlines after Australia's Qantas Airways Ltd. became an acquisition target. Vestas Wind Systems A/S surged as it forecast higher sales.
``We are seeing a lot of mergers and positive earnings'' from companies, said Albert Duran, who helps manage $1.9 billion at Caixa Manresa in Manresa, Spain. ``People should not worry, stocks will keep delivering.''
The Stoxx 600 Index added 0.5 percent to 361.79 as of 12:08 p.m. in London, set for its highest since Jan. 31, 2001. The Stoxx 50 and the Euro Stoxx 50, a measure for the 12 nations sharing the euro, both rose 0.4 percent.
ASML Holding NV and STMicroelectronics NV climbed after profit at Dell Inc., the world's No. 2 personal computer maker, topped analysts' predictions. Credit Agricole SA slid after revenue at the French lender fell short of estimates.
Mergers and acquisitions worldwide have surged to an all- time high of $3.1 trillion this year, with Europe accounting for 47 percent of the deals. Analysts have increased their forecast for 2006 profit growth throughout 2006 as earnings beat estimates.
Consumer Spending
French consumer spending on manufactured goods rose in October after unemployment fell to a five-year low, the government said. Investors will also look at a report on U.S. consumer confidence to gauge the strength of the global economy.
Analysts have raised earnings estimates for companies in the Stoxx 600 throughout the year, to match better-than-expected releases. They now forecast earnings will grow on average 14 percent this year, from the 9 percent predicted in January, according to estimates compiled by FactSet Research Systems Inc.
National benchmarks rose in all 18 western European markets, except Iceland. The U.K.'s FTSE 100 Index added 0.2 percent while France's CAC 40 Index climbed 0.6 percent. Germany's DAX increased 0.5 percent.
ICI, the U.K.'s largest specialty chemical maker, surged 9 percent to 422 pence. Givaudan, the world's biggest flavors and fragrances maker, agreed to buy ICI's Quest International fragrance unit for 1.2 billion pounds to become the largest supplier of scents used in perfumes.
Givaudan rose 6.2 percent to 1,092 Swiss francs.
Techem AG, the German company that reads utility meters, jumped 10 percent to 55.25 euros. BC Partners Ltd. agreed to buy Techem for 1.28 billion euros ($1.7 billion), topping a bid by Macquarie Bank Ltd. by 18 percent.
Steelmakers Gain
Rautaruukki Oyj, Finland's biggest maker of carbon steel, rose 3 percent to 27.65 euros. Acerinox SA, the world's fourth- largest stainless-steel maker, added 3.1 percent to 20.08 euros.
U.S. Steel Corp. yesterday jumped 2 percent. The biggest U.S.-based steelmaker has risen 11 percent in the past three days on speculation that it may be a takeover target, according to analysts including David Lipschitz at Merrill Lynch & Co.
``This M&A trend will continue,'' said Daniel Broby, who helps manage $14 billion as chief investment officer at Copenhagen-based Bankinvest. ``The reason that I have confidence is the size of private-equity bids. No company is sacrosanct.''
British Airways, Europe's third-biggest airline, added 2.5 percent to 493 pence and Deutsche Lufthansa AG, the second largest, rose 2.4 percent to 19.36 euros.
Qantas Bid
Qantas, Australia's biggest airline, said it's received a takeover approach from Macquarie Bank Ltd. and Texas Pacific Group, sparking an 18 percent gain in its shares.
Vestas Wind, the world's largest maker of wind turbines, surged 17 percent to 205 kroner, the biggest gain on the Stoxx 600. Revenue will rise to about 4.5 billion euros ($5.8 billion) in 2007 from an estimated 3.7 billion euros this year, the Randers, Denmark-based company said. Vestas had 3.58 billion euros in sales last year.
ASML, Europe's largest maker of semiconductor equipment, added 1 percent to 20.04 euros. STMicroelectronics, Europe's largest semiconductor maker, gained 1.4 percent to 14.39 euros.
Dell reported third-quarter net income of 30 cents a share, topping the 24-cent average estimate of analysts in a Thomson Financial survey. Gross margin, the percentage of sales left after production costs, also beat predictions.
`Positive Surprise'
``Dell's margins were a tremendous positive surprise and tell us that global demand is good,'' said Sanjay Jhaveri, a technology analyst who helps manage the equivalent of $25.7 million at Vontobel Asset Management in Zurich. It could be ``very good'' from companies such as ASML.
Credit Agricole, France's second-biggest bank by assets, lost 3.8 percent to 32.98 euros. Revenue advanced 15 percent to 3.81 billion euros ($4.9 billion), missing the 3.91 billion-euro median estimate of 11 analysts surveyed by Bloomberg. Before today, the shares gained 29 percent in 2006.
Nokia Oyj, the world's largest mobile-phone maker, rose 3 percent to 16.25 euros as it widened its lead over competitors in the third quarter on demand in Asia. Nokia's market share increased to 35.1 percent from 32.5 percent in the year-earlier quarter, researcher Gartner Inc. said.
European Aeronautic Defence & Space Co., the parent of planemaker Airbus SAS, advanced 4.7 percent to 23.9 euros. Goldman Sachs Inc. added EADS to its ``conviction buy list'' of favorite stocks in the region, with a 12-month stock price estimate of 27 euros.
``We believe the perceived major negatives for EADS are largely priced in,'' wrote Goldman analysts in a report to investors. ``We now believe both management and stakeholders accept the need for radical restructuring at Airbus.''
Real Estate Slump
DSG International Plc fell 4.8 percent to 208 pence, the worst decline on the Stoxx 600. The U.K.'s largest consumer electronics retailer said first-half profit was little changed because of a slump in revenue at its Italian unit and a decline in net finance income.
Confidence among U.S. consumers probably held close to a 15- month high in November as lower gasoline prices and more jobs helped Americans cope with the slump in real estate, economists said before a report due at 3 p.m. London time today

0919881955

2006-11-22T05:12:00.000-08:00

Manning & Napier to Beat S&P 500 for Eighth Year on Tech Stocks
Thu - Bình Thạnh 0919881955
By Danielle Kost
Nov. 22 (Bloomberg) -- The Manning & Napier Pro Blend Maximum Term Series Fund is joining the handful of mutual funds that are beating the Standard & Poor's 500 Index for an eighth straight year.
The Manning & Napier fund's investments in computer-related companies including Cisco Systems Inc., Research in Motion Inc. and EMC Corp. helped produce a return of 19.3 percent, exceeding the S&P 500's 12 percent gain.
Manning & Napier is one of 10 ``large-company'' mutual funds to outperform the benchmark U.S. index since 1999, according to Chicago-based research firm Morningstar Inc. The longest streak is held by Bill Miller, whose $20 billion Legg Mason Value Trust topped the S&P 500 for 15 consecutive years. That record is on the verge of ending, with Miller's fund up 4.4 percent so far in 2006.
``We don't view this as a horserace,'' said Patrick Cunningham, a managing director who supervises the eight-person team overseeing the $303 million Manning & Napier fund in Fairport, New York. ``It's fun to talk about, but our charge is to stick to our disciplines.''
The fund's advance ranks second this year of 197 funds tracked by Bloomberg with at least $250 million of assets that invest in companies with above-average earnings growth. The $850 million Thornburg Core Growth Fund, run by Alex Motola of Thornburg Investment Management Inc. in Santa Fe, New Mexico, is first, with a 19.4 percent return.
Tech Stocks
Cunningham's team raised its bets on tech stocks in the past year as companies upgraded equipment to take advantage of productivity gains from new software and services. Tech stocks accounted for 18 percent of the Manning & Napier fund as of September, up from 11 percent 12 months earlier. Miller's Legg Mason fund had 20 percent invested in information-technology companies at the end of September.
Miller's Value Trust lost money this year from investments in Seattle-based Internet retailer Amazon.com Inc., online auctioneer EBay Inc. of San Jose, California, and search-engine provider Yahoo! Inc. in Sunnyvale, California, which plunged 30 percent. Miller declined to comment on his fund's performance.
By contrast, the Manning & Napier fund added to holdings of network-equipment manufacturer Cisco of San Jose, California, and bought shares of Waterloo, Ontario-based Research in Motion, maker of the BlackBerry Internet handset, and business-computer company EMC in Hopkinton, Massachusetts.
Shares of Cisco and Research in Motion rose more than 50 percent this year, and EMC gained 17 percent since the end of the second quarter, when the stock was added to the Manning & Napier fund.
`Different Animal'
The Manning & Napier fund also has 8.3 percent of its assets in energy companies, including Schlumberger Ltd., which are among the stock market's best performers. Miller has said he regretted avoiding the industry as the price of crude rose to more than $70 a barrel this year from less than $20 in 2002.
Russel Kinnel, director of fund research at Morningstar, said the Manning & Napier fund has five times as many holdings as Miller. The managers also make more trades than Miller, he said.
``It's clearly a different animal from Miller's concentrated portfolio,'' Kinnel said.
Morningstar gives the Manning & Napier fund its highest five-star rating. It has a Sharpe ratio of 1.52, compared with the average 0.96 for similarly managed funds, according to Morningstar. The greater a fund's Sharpe ratio, the better its risk-adjusted performance.
Cunningham, 51, said his managers typically look for companies with market values of more than $7.5 billion that trade at discounts to their estimated cash flow and earnings, and have problems that the managers perceive as temporary, such as a business disruption caused by a natural disaster.
Blackberry Suit
The Manning & Napier fund first purchased stock in Research in Motion in March, when the company settled a patent lawsuit that threatened to shut down Blackberry service in the U.S. It bought shares for $70 to $80 each and sold them at $100 to $110 in October. The stock had been the fund's fourth-largest holding in September.
``There was some litigation scare,'' said Cunningham, who has a bachelor's degree in biology from the Massachusetts Institute of Technology in Cambridge, Massachusetts. ``We felt that would abate and their subscription rates would go up. We're looking for the strongest survivors.''
Cunningham joined Manning & Napier in 1992, and the Pro Blend fund's team has worked for the firm 12 years on average. The company oversees a total of $13 billion.
The fund raised its stake in Cisco by almost a quarter to 212,275 shares after the stock dropped a cumulative 29 percent in 2004 and 2005. It bought EMC as the company's stock slid 20 percent in the second quarter, the most of any member on the S&P Computer Storage and Peripherals Index.
Miller has 1.4 percent of his fund's assets in Cisco, and he doesn't own EMC.

0982056396

2006-11-22T05:11:00.000-08:00

U.S. Telecom Shares Poised to Rebound After Post-Election Slump
0982056396
By Hilary Johnson
Nov. 22 (Bloomberg) -- U.S. telecommunications stocks, losers since Democrats swept to power in Congress this month, are poised to bounce back as earnings prospects prove too attractive for investors to resist.
The industry is the Standard & Poor's 500 Index's best performer this year and is on pace to outperform the benchmark for the first time since at least 1990. Investors who fled the shares on concern that Democrats would block a federal overhaul of telecommunications rules may have sold too soon.
``We've had Democratic administrations before, and we've had Democratic Congresses, and we've still had phone companies and they still made money,'' said Timothy O'Brien, who manages the $450 million Evergreen Utility and Telecommunications Fund in Boston. ``Earnings growth ought to be very competitive with the broader market.''
O'Brien's fund owns shares of the two largest phone companies in the U.S., San Antonio-based AT&T Inc. and New York- based Verizon Communications Inc. They have fallen 4.5 percent and 1.1 percent, respectively, since the election.
A gauge of telecommunication stocks in the S&P 500 has lost 2.6 percent since Nov. 7 -- equal to 57 percent on an annualized basis -- when Democrats captured both houses of Congress for the first time since 1994. The S&P 500 has gained 1.4 percent in that period.
Investors speculated that AT&T's $78 billion purchase of BellSouth Corp. may be delayed and that a pending overhaul of phone laws might be canceled.
2006 Rally
The drop this month dented a rally that has lifted telephone stocks by 25 percent this year, six percentage points ahead of energy shares, the next-best performers in the S&P 500. AT&T has gained 34 percent; Verizon is up 21 percent.
The stocks had been rallying as analysts boosted estimates for profit growth. Telecommunication companies' earnings are forecast to increase 13.8 percent in the fourth quarter, up from an estimate of 12.2 percent at the end of September, according to Thomson Financial data. Overall, the S&P 500 will show fourth- quarter profit growth of 9.8 percent, Thomson said.
AT&T said last month that third-quarter earnings jumped 74 percent, helped by growth at its cellular unit, Cingular Wireless LLC. If its pending takeover of BellSouth Corp. clears legislative and regulatory approval, AT&T would get the 40 percent of Cingular it doesn't currently own.
Investors also were attracted to price-earnings ratios of about 17 for telephone stocks at the start of the year and dividend yields of around 3.3 percent, said Jeffrey Halpern, a telecommunications analyst at Sanford Bernstein in New York. Phone stocks have traded at about 37 times earnings, on average over the past five years, while the dividend yield was about double that of the S&P 500.
`Any Reasonable Venue'
Still, the Democratic victory spooked some investors.
Senator Daniel Inouye of Hawaii, the senior Democrat on the Senate's Commerce, Science and Transportation Committee, said last week that he wants more information on AT&T's BellSouth purchase. Representative John Dingell, the top Democrat on the House Energy and Commerce Committee, said the Justice Department ``handled the matter in too cursory a fashion'' when it approved the deal without conditions.
New telecommunications rules, which would eliminate local and state clearances for phone companies that want to sell video service, were part of a bill that stalled after the Senate failed to take it up this year. The new regulations would make it easier for phone companies to compete with cable-television operators.
The Democratic-led Energy and Commerce Committee will try again to overhaul telecommunications regulation ``in a responsible way,'' said Dingell, of Michigan.
``In any reasonable venue, the argument for allowing this to go through should stand,'' said Louis Cimino, an analyst at W.H. Reaves & Co., which manages $2.6 billion in Jersey City, New Jersey. ``Our expectation is that this agenda will still move forward.'' The firm's holdings include AT&T and Sprint Nextel Corp., the third-largest U.S. wireless services provider.
`Just Don't See It'
Verizon is in the process of building a $22.9 billion fiber- optic network to carry video and Internet to residences. It already offers the service in seven states. AT&T is spending $4.6 billion on its own network, and plans to be in 15 markets by the end of the year.
Some investors remain skeptical that telephone companies will be profitable enough to invest in, given the amount they have to spend to compete with Internet, cable and mobile-phone companies.
Malcolm Polley, chief investment officer at S&T Wealth Management in Indiana, Pennsylvania, which manages $1.3 billion, sold nearly all his holdings of Verizon after the company said costs for its video service, called FiOS, would shave as much as 32 cents from full-year earnings per share. The earlier estimate was as much as 30 cents.
``Our concern with Verizon specifically, and telecom in general, is really the same -- are they going to earn an adequate return on invested capital?'' Polley said. ``We just don't see it.'' He called the amount that Verizon is spending on fiber so far ``a drop in the bucket.''
Growing Market
With or without streamlined regulation, the market for new telecommunications services is growing. Annual broadband revenue in the U.S. is expected to nearly double to $33.4 billion in 2010, from $17 billion in 2005, according to Yankee Group, a Boston-based research firm.
The market for so-called Internet Protocol TV, part of what phone companies plan to provide to customers, is expected to increase to 11.9 million subscribers by 2010, up from 786,000 this year, Stamford, Connecticut-based Gartner Group said.
``People mistakenly perceive the Bell companies as nothing more than consumer telephone operators,'' said Sanford Bernstein's Halpern. ``They're wireless, they're wireline, they're consumer, they're business. They're not just companies who are in the battle of their lives with the cable industry.''

0919 700 510

2006-11-22T05:09:00.000-08:00

ConjuChem, GMP, Reitmans (Canada): Canadian Equity Preview
Huyền 0919 700 510

By Jeff Kearns
Nov. 22 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in Canadian markets tomorrow. This preview includes news that broke after markets closed yesterday. Symbols are in parentheses after company names and prices are from the last close.
The Standard & Poor's/TSX Composite Index rose 185.67, or 1.5 percent, to 12,602.30.
ConjuChem Biotechnologies Inc. (CJB CN): The drug developer filed for an offering of 57.7 million units at 65 cents each. The shares rose 2 cents, or 3.1 percent, to 66 cents.
GMP Capital Trust (GMP-U CN): The Canadian investment bank will pay a special dividend of 50 cents a unit to shareholders of record as of Dec. 29. The shares rose 43 cents, or 2.2 percent, to C$19.73.
Reitmans (Canada) Ltd. (RET/A CN): The country's biggest retailer of specialty women's clothing may report third-quarter earnings of 33 cents a share, the average of two estimates in a survey by Thomson Financial, which disclose the parameters of its estimates to Bloomberg News. Reitmans rose 12 cents to C$22.02.
Van Houtte Inc. (VH CN): The seller of coffee products said in a statement distributed by Canada NewsWire that it raised its 2007 earnings guidance to 88 cents to 96 cents a share, excluding some items. Analysts expect 88 cents, the average of five estimates in a survey by Thomson. Van Houtte fell 2 cents to C$17.68.

0906994679

2006-11-22T05:08:00.000-08:00

Diẹu. 0906994679 SG
Cyberonics, Friedman Billings: U.S. Equity Preview (Correct)
By Danny King
(Corrects to show Brocade Communications Inc. reported fourth-quarter earnings in the fifth paragraph.)
Nov. 22 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.S. exchanges. This preview includes news that broke after exchanges closed yesterday. Stock symbols are in parentheses after company names.
Shares that will join the Standard & Poor's 500 Index gained in trading after the official close of U.S. exchanges following S&P's announcement. DirecTV Group Inc. (DTV US), the largest U.S. satellite television service that will replace Freescale Semiconductor Inc. (FSL US), rose $1.01, or 4.5 percent, to $23.41. Questar Corp. (STR US), an oil and natural- gas producer due to fill in for North Fork Bancorporation Inc. (NFB US), added $1.91, or 2.3 percent, to $84.38.
IAC/InterActiveCorp (IACI US) climbed $1.84, or 5.4 percent, to $35.61. The collection of businesses assembled by billionaire Barry Diller will take the place of Lucent Technologies Inc. (LU US), S&P said in a statement.
Borders Group Inc. (BGP US): The second-largest U.S. bookstore company said that, excluding some items, it had a loss of 60 cents a share for the third quarter. Nine analysts surveyed by Thomson Financial had expected a loss of 64 cents, on average. Thomson declined to disclose the parameters for the estimates in its survey. The stock lost 27 cents to $23 in regular trading.
Brocade Communications Systems Inc. (BRCD US) rose 39 cents, or 4.6 percent, to $8.88 in trading after the official close of U.S. markets. The biggest maker of switches for data- storage networks said that, excluding some items, it earned 14 cents a share for the fourth quarter. A Thomson Financial survey of analysts had an average estimate of 12 cents. McData Corp. (MCDT US), which Brocade agreed to buy for $713 million in August, advanced 31 cents, or 5.3 percent, to $6.15.
Cray Inc. (CRAY US) rose $2.58, or 26 percent, to $12.50 in trading after the official close of U.S. markets. The maker of commercial supercomputers said in a statement sent by MarketWire that it won a $250 million contract from the U.S. Defense Advanced Research Projects Agency.
Cyberonics Inc. (CYBX US) rose $1.51, or 6.1 percent, to $26.14 in extended trading yesterday. The medical device company's chairman and chief executive officer resigned Nov. 20 after a stock-options probe found improper dating of grants from 1999 to 2003, and Cyberonics' stock should rise under new management, CNBC host Jim Cramer said on his ``Mad Money'' show.
Dell Inc. (DELL US) climbed $2.22, or 8.9 percent, to $27.04 in extended trading. The personal computer maker said in a statement of preliminary results that third-quarter profit was 30 cents a share. That topped the average 24-cent estimate by analysts in a Thomson Financial survey.
Friedman Billings Ramsey Group Inc. (FBR US) rose 36 cents, or 4.9 percent, to $7.73 in trading after the official close of U.S. markets. The investment bank agreed to pay $4.5 million to CompuDyne Corp. and a unit of William Blair & Co. related to the October 2001 offering of a private investment in public equity on behalf of CompuDyne.
Hasbro Inc. (HAS US) rose 35 cents, or 1.3 percent, to $27.45 in extended trading yesterday. The toymaker will benefit from its deal to sell merchandise licensed from Marvel Entertainment Inc. (MVL US) as movies such as Spiderman 3 and Transformers come out, CNBC host Jim Cramer said on his ``Mad Money'' show.
Incyte Corp. (INCY US) fell 54 cents, or 9.8 percent, to $4.98 in trading after the official close of U.S. markets. The drugmaker said in a statement distributed today by Business Wire that it filed to sell $151.8 million in debt due 2011.
J. Crew Group Inc. (JCG US) rose $1.25, or 3.5 percent, to $36.60 in extended trading. The clothing retailer that sold shares to the public in June said it expects to earn 95 cents to 97 cents a share this year, boosting forecast from its earlier prediction of as much as 88 cents.
Openwave Systems Inc. (OPWV US) fell 21 cents, or 2.5 percent, to $8.24 in trading after the official close of U.S. markets. The maker of software for e-mail on mobile phones said in a statement sent by PR Newswire that it's subject to delisting from the Nasdaq Stock Market because of delays in filing its fiscal first-quarter results.
PDL BioPharma Inc. (PDLI US) fell 92 cents, or 4.1 percent, to $21.75 in extended trading. The company said Roche Holding AG (ROG VX) is discontinuing their agreement to jointly develop and sell daclizumab, a drug for organ transplant maintenance.
Varsity Group Inc. (VSTY US): The online retailer targeting college students said in a statement sent by MarketWire that Chief Executive Officer Mark Thimmig resigned to pursue other opportunities. Financial chief Jim Craig was named interim CEO. The shares fell 18 cents, or 8.5 percent, to $1.93 in regular U.S. trading.
VeriSign Inc. (VRSN US) fell 34 cents, or 1.5 percent, to $22.95 in trading after the official close of U.S. markets. The company, which registers Web addresses on the Internet, said it may take charges totaling $250 million to correct its accounting.
Wal-Mart Stores Inc. (WMT US): The world's largest retailer said a Massachusetts judge granted its motion to decertify a class-action lawsuit brought against the company by current and former Wal-Mart and Sam's Clubs employees. It also said it won't make contributions to ``highly controversial issues,'' causing conservative group the American Family Association to rescind a two-day boycott slated for after Thanksgiving Day. The shares rose 9 cents to $47.81 in regular U.S. trading.
Tickers: CYBX FBR HAS

0983112209

2006-11-22T05:05:00.000-08:00

Thu 0983112209
U.S. Stock-Index Futures Advance After Dell Beats Estimates
By Sarah Jones
Nov. 22 (Bloomberg) -- U.S. stock-index futures rose after Dell Inc., the world's second-biggest maker of personal computers, reported profit that beat analysts' estimates.
``We're a seeing a lot of strength in terms of earnings,'' said Erik Ristuben, director of investment strategy at Russell Investment Group in New York. ``Stocks, even after this very good run in 2006, look still to be good value for money.''
Brocade Communications Systems Inc. also gained as earnings at the biggest maker of switches for data-storage networks topped predictions.
Standard & Poor's 500 Index futures expiring in December added 2.6 to 1408.8 at 11:58 a.m. in London. Dow Jones Industrial Average futures were up 18 at 12,365. Nasdaq-100 Index futures gained 3 to 1818.5.
Stocks rose yesterday in the U.S., resuming a November rally, after oil prices lifted energy shares higher and Google Inc. surpassed $500 for the first time. The S&P 500 has gained in 10 out of the last 12 days on better-than-expected earnings.
Third-quarter earnings at companies in the S&P 500 have climbed 18.9 percent on average, the most since the fourth quarter of 2004, based on figures compiled by Thomson Financial. The index has advanced 12 percent so far this year.
A report today will probably show consumer confidence held close to a 15-month high this month. The University of Michigan's final index of consumer sentiment slipped to 93.3, from 93.6 in October, according to a survey of economists by Bloomberg News. The report is scheduled for release at 10 a.m. in Washington.
European stocks climbed today, approaching a six-year high, while shares in Asia gained the most in six weeks.
Beating Estimates
Dell advanced $2.10 to $26.92 in Germany. The company, whose accounting is under investigation by regulators, said net income was 30 cents a share in the third quarter, higher than the 24-cent average estimate of analysts.
Gross margin, the percentage of sales left after production costs, was 17 percent, beating the 15.7 percent anticipated by UBS AG's Benjamin Reitzes, Institutional Investor magazine's second-ranked computer analyst.
``Dell's margins were a tremendous positive surprise,'' said Sanjay Jhaveri, who helps manage the equivalent of $25.7 million at Vontobel Asset Management in Zurich. ``Things are improving.''
Bear Stearns & Co. raised its recommendation on the stock to ``outperform'' from ``peer perform.'' Deutsche Bank AG increased its price estimate for Dell's shares by 14 percent to $32. Credit Suisse Group and UBS also lifted their price estimates.
Brocade rose 45 cents to $8.94 after the company said fourth-quarter earnings, excluding some items, was 14 cents a share, more than the 12-cent estimate in a Thomson survey.
S&P 500 Entrants
IAC/InterActiveCorp, the collection of businesses assembled by billionaire Barry Diller, rose $2.23 to $36 in Germany. AC/InterActiveCorp, DirecTV Group Inc., the largest U.S. satellite television service, and Questar Corp., an oil and natural-gas producer, were picked to join the S&P 500.
DirectTV shares fell 51 cents to $21.89 in Germany. Questar didn't trade in Europe.
The companies will replace Freescale Semiconductor Inc., Lucent Technologies Inc. and North Fork Bancorp.
VeriSign Inc. lost 19 cents to $23.10. The company, which registers Web addresses on the Internet, said it may take charges totaling $250 million to correct its accounting.
Cray, Incyte
Cray Inc. rose $2.56 to $12.48 in Germany. The maker of commercial supercomputers said it has won a $250 million contract from the U.S. Defense Advanced Research Projects Agency.
Incyte Corp. fell 44 cents to $5.08 in Germany after the drugmaker said that it filed to sell $151.8 million in debt due 2011.
PDL BioPharma Inc. lost $1.43 to $21.24 after the company said Roche Holding AG is discontinuing their agreement to jointly develop and sell daclizumab, a drug for organ transplant maintenance.
The S&P 500 added 2.31, or 0.2 percent, to 1402.81 yesterday. The Dow average gained 5.05 to 12,321.59. The Nasdaq Composite Index rose 2.12, or 0.1 percent, to 2454.84.

0987421105

2006-11-18T20:24:00.001-08:00

Thư,0987421105

Thai Baht Falls on Currency Sale Concern: World's Biggest Mover
By Yumi Kuramitsu and Jake Lee
Nov. 17 (Bloomberg) -- Thailand's baht, Asia's best performer this year, weakened on concern the central bank will sell the currency to prevent its gains from hurting exports.
Thai exporters such as Thai Union Frozen Products Pcl, the world's second-biggest tuna canner, this week asked the central bank to curb the appreciation, saying it has undermined their competitiveness. Bank of Thailand Governor Tarisa Watanagase said on Nov. 15 the central bank is ready to buy or sell the currency, which this week touched a seven-year high.
``Exporters raising their voices led to speculation the central bank will come in,'' said Koji Fukaya, chief economist and currency analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. The central bank ``will probably be successful in putting a break on the currency's gain.''
The baht dropped 0.4 percent to 36.63 at 9.52 a.m. in Bangkok, erasing its weekly gain and posting the world's biggest currency move so far today. It may trade between 36.50 and 37 in a week, Fukaya said.
The baht reached the highest since 1999 on Nov. 14 as overseas investors bet the economy will pick up after armed forces ousted Thaksin Shinawatra as prime minister in the Sept. 19 coup. Consumer confidence rose for the second straight month in October to a seven-month high, according to the University of the Thai Chamber of Commerce.
Exporters Complain
Thai exporters of chicken meat, shrimps, soybean and other products are losing orders to competitors in China, Indonesia and Vietnam, whose currencies are strengthening at a slower pace than the baht, Poj Aramwattananont, president of Thai Frozen Foods Association, said yesterday at a press conference held by 10 industry groups.
A stronger currency increases the costs of Thai products overseas and reduces baht-denominated profits of exporters. The baht climbed 12 percent this year against the dollar, the best performer among 15 most actively traded Asia-Pacific currencies. China's yuan rose 2.5 percent, Indonesia's rupiah climbed 7.2 percent and Vietnam's dong fell 1.1 percent.
Thailand is relying on overseas sales to achieve its growth forecast of as much as 5 percent this year. Thailand's exports rose 16 percent from a year earlier to $35 billion in the third quarter, based on customs data compiled by Bloomberg.
The central bank, which holds its next monetary policy- setting meeting on Dec. 13, halted a run of nine straight rate increases in July. The interim government said last month it plans to boost state spending next year to help economic growth.
Thailand's baht is fluctuating too much because of foreign money flowing into the country and the region, Tarisa said on Nov. 15. Fund managers outside of the nation bought $3.2 billion more of Thai equities than they sold this year through yesterday, according to stock exchange data.
The world's biggest movers are based on changes in price or yield and are screened for the size of the market and amount of daily trading

0904678800

2006-11-18T20:22:00.000-08:00

Ngọc 0904678800 Q1,TPHCM

Asian Currencies: Won Declines on Growth Concern, Baht Falls
By Yumi Kuramitsu and Jake Lee
Nov. 18 (Bloomberg) -- South Korea's won posted a weekly loss, snapping three weeks of gains, on concern investors will take funds out of the country as economic growth slows.
The government may lower its growth forecast for 2007 to the low end of 4 percent from a previous target of 4.6 percent, Chosun Ilbo reported yesterday, citing an unidentified finance ministry official. Investors overseas have this year sold a net $11.68 billion in Korean shares, according to stock exchange data.
``There are certainly some fundamental reasons undermining the won,'' said Sean Callow, senior foreign-exchange strategist at Westpac Banking Corp. in Singapore. ``Korea's economy is going to slow next year.''
The won weakened 0.5 percent this week to 938.90, according to Seoul Money Brokerage Services Ltd. The currency will trade at 938 at the end of this year, said Callow.
The likelihood of lowering the forecast is increasing because private consumption is declining and exports may drop to single-digit growth next year, Chosun Ilbo quoted the finance ministry official as saying. A Commerce Ministry report on Nov. 16 showed department store sales growth almost stalled in October.
Asia's third-largest economy faces risks including the possibility of weaker-than-expected U.S. growth that may damp demand for exports, the International Monetary Fund said Nov. 10.
Weekly Losses
The Singapore dollar weakened 0.2 percent this week to S$1.5596. The city-state's exports rose less than expected in October, a report from the government's trade promotion body showed yesterday.
Non-oil domestic exports increased a seasonally adjusted 2.1 percent from September, when they gained a revised 4.5 percent. The number compared with the median forecast of 2.7 percent growth in a Bloomberg News survey of eight economists.
Elsewhere in Asia, the Taiwan dollar dropped 0.4 percent in the five-day period to NT$32,934, ending two weeks of gains, according to Taipei Forex Inc. The Malaysian ringgit weakened 0.4 percent on week to 3.6525. The Philippine peso fell 0.2 percent to 49.99, according to data compiled by Bloomberg.
Indonesia's rupiah slumped 0.6 percent to 9,167, posting the third weekly loss, on speculation lower interest rates will prompt overseas investors to sell the currency. Bank Indonesia, the central bank, said yesterday the rupiah exchange rate against the U.S. dollar may be stable until the end of the year.
``The rupiah is at a good level now and is conducive for export and import activities,'' Deputy Governor Aslim Tadjuddin told reporters at the central bank's compound in Jakarta yesterday.
Thailand's baht, Asia's best performer this year, weakened on concern the central bank will sell the currency to prevent gains from hurting exports.
Raising Their Voice
Exporters such as Thai Union Frozen Products Pcl, the world's second-biggest tuna canner, this week asked the central bank to curb the appreciation, saying it has undermined their competitiveness. Bank of Thailand Governor Tarisa Watanagase on Nov. 15 said the central bank is ready to buy or sell the currency, which this week touched a seven-year high.
``Exporters raising their voices led to speculation the central bank will come in,'' said Koji Fukaya, chief economist and currency analyst in Tokyo at Bank of Tokyo-Mitsubishi UFJ Ltd. The central bank ``will probably be successful in putting a break on the currency's gain.''
Thai Exporters
The baht dropped 0.3 percent yesterday to 36.61, almost erasing its weekly gain. It may trade between 36.50 and 37 in a week, Fukaya said.
The baht on Nov. 14 reached the highest since February 1999 as overseas investors bet the economy will pick up after armed forces ousted Thaksin Shinawatra as prime minister in a Sept. 19 coup. Consumer confidence rose for a second month in October to a seven-month high, according to the University of the Thai Chamber of Commerce.
Thai exporters of chicken meat, shrimps and soybean are losing orders to competitors in China, Indonesia and Vietnam, whose currencies are strengthening at a slower pace than the baht, Poj Aramwattananont, president of Thai Frozen Foods Association, said on Nov. 16 at a press conference held by 10 industry groups.
A stronger currency increases the costs of Thai products overseas and reduces baht-denominated profits of exporters. The baht climbed 12 percent this year against the dollar. China's yuan rose 2.5 percent, Indonesia's rupiah climbed 7.3 percent and Vietnam's dong fell 1.1 percent

0908321220

2006-11-18T20:21:00.001-08:00

Hoa 0908321220 Tân Bình

Zhou Says Banks Can Cope With More Flexible Currency (Update4)
By Rob Delaney
Nov. 18 (Bloomberg) -- People's Bank of China Governor Zhou Xiaochuan said the nation's banks are ``stronger'' and can cope with a more flexible yuan.
``The Chinese financial sector has become much stronger compared with the period of the Asian financial crisis'' of 1997-1998, Zhou said during a meeting in Melbourne of the world's 20 biggest economies. This ``creates better conditions for them to accept more financial reform, including a more flexible exchange rate and interest rate liberalization.''
In September, Zhou told lenders to prepare for changes to the currency so they can better manage risk created when a stronger yuan makes exporter sales worth less in local currency terms. He said at the time that the range within which the yuan trades against the U.S. dollar would be widened ``sooner or later,'' and if the banks aren't pressured, their reforms would ``move too slowly.''
``I don't think these statements are a change in policy, but they give the markets increased potential for greater appreciation for the yuan in the next six months,'' said Greg Gibbs, a currency strategist at ABN Amro Holding NV in Sydney. ``Gradualism is still an important part of the message.''
The yuan has climbed 2.9 percent since July 2005, when China revalued it and let it trade 0.3 percent either side of the dollar on a daily basis. Rising trade surpluses with the U.S. and the European Union have prompted calls from those trading partners for faster appreciation.
European Deficit
The European Union's trade deficit with China grew 21 percent in the eight months through August to a record 55.1 billion euros ($70.4 billion), the EU's statistics office said yesterday. China is poised to overtake the U.S. this year as the second-biggest source of imports to the euro area, behind the U.K. The U.S. had a record $23 billion trade gap with China in September alone.
The yuan fell 0.04 percent to 7.8715 against the U.S. currency yesterday in Shanghai, the weakest since Nov. 7, according to the China Foreign Exchange Trade System.
China's central bank hasn't been pressured about the yuan so far at the two-day meeting, Zhou said today.
The G-20 ministers and central bankers will release a final statement tomorrow. Australian Treasurer Peter Costello said the policy makers discussed ``currency levels'' today.
`Accelerate Move'
The world's fourth-largest economy needs to ``accelerate the movement'' of its exchange rate reform, Robert Kimmitt, deputy secretary at the U.S. Treasury, said yesterday. European and U.S. officials claim China keeps the yuan undervalued to promote exports, which accounted for about 35 percent of growth last year.
China is violating international trade rules and running up a record trade surplus with the U.S. because of its undervalued currency, according to the annual report of the United States- China Economic and Security Review Commission released in Washington on Nov. 16.
China wants banks to get ready to more volatile currency trading by learning how to use derivative products that have been introduced to help manage risk.
The Chinese president, Hu Jintao, said yesterday that his government ``will further restructure the pattern of its economic growth to improve the efficiency of resource consumption and ease trade imbalances.'' Hu spoke at a gathering of company executives during the Asia Pacific Economic Cooperation summit in Hanoi, Vietnam.

0984272576

2006-11-18T20:17:00.000-08:00

Hien luong su 0984272576

S. African Rand Declines for First Week in Four on Gold, Bonds
By Nasreen Seria
Nov. 18 (Bloomberg) -- South Africa's rand dropped for a first week in four, snapping its longest winning run in three months, as demand for the country's bonds slipped and the price of gold, its main export earner, fell.
Foreign purchases of bonds slumped 60 percent to 1.8 billion rand ($245 million) in the week ended Nov. 16 compared with the previous week, according to the Bond Exchange of South Africa. Demand for bonds slid on speculation the central bank will increase its interest rate in December.
Against the dollar, the rand declined to 7.27 by late yesterday in Johannesburg, from 7.22 on Nov. 10. The rand has dropped 13 percent this year, the worst performer of the 71 currencies tracked by Bloomberg.
South Africa's Reserve Bank Governor Tito Mboweni said Nov. 14 the bank won't hesitate to raise its key lending rate from a three-year high of 8.5 percent if the inflation target is threatened. Higher interest rates boost the yield advantage of local assets.
``If the inflation target is being threatened by inflationary pressures, then the MPC will have the courage of its conviction to do the correct thing, even as we enter the festive period,'' said Mboweni. ``Once again, our message is that we should all try to tighten our belts.''
The Reserve Bank has lifted interest rates three times since June as the Federal Reserve has kept its key rate at a 5 1/2-year high of 5.25 percent at three straight meetings since August.
The rand also fell as the price of gold and platinum, which together account for a fifth of South African exports, dropped for the first time in six weeks. South Africa is the world's largest gold and platinum producer and the currency often moves in tandem with the precious metals.
Gold fell for a second week and was recently at $622.40 an ounce, while platinum snapped a two-week gain and was at $1,164.0 an ounce.
South African government bonds fell this week. The yield on the 10 percent bond, due February 2008, rose 8 basis points to 8.71 percent. The price of the note, also known as the R194, fell 0.11, or 11 cents, per 100 rand ($13.74) face amount, to 101.52. Bond yields move inversely to the price

0984761702

2006-11-18T20:16:00.000-08:00

Em Phương 0984761702
U.S.'s Kimmitt Says China Must Accelerate Yuan Reform (Update2)
By Gemma Daley
Nov. 17 (Bloomberg) -- China needs to ``accelerate the movement'' of its exchange rate reform, said Robert Kimmitt, deputy secretary at the U.S. Treasury.
Kimmitt said he will discuss currencies in a meeting with People's Bank of China Governor Zhou Xiaochuan, on the sidelines of the annual summit of the world's 20 largest economies in Melbourne on Nov. 18-19.
``We believe the Chinese need to accelerate the movement of their exchange rate to reflect underlying market conditions,'' Kimmitt told reporters in Melbourne today. ``I will be meeting with the China central bank governor and I would expect that issue will come up.''
China is under pressure to allow its currency to gain faster as European and U.S. officials claim the Asian nation keeps the yuan undervalued to promote exports, which accounted for about 35 percent of growth last year. The yuan has advanced 3 percent since China ended its link to the U.S. currency in July 2005.
When asked about whether about currencies, such as the yuan and Japan's yen, will be talked about at the Group of 20 meeting, Kimmitt said that ``what will come up in discussion this weekend is the fact that the whole economy works best on the basis of free and fair trade, flexible exchange rates determined by the market place and the free flow of capital across borders.''
Japan's Yen
Kimmitt's comments raised speculation weakness in the yen will be discussed, said Minoru Shioiri at Mitsubishi UFJ Securities Co. The U.S., European Union, China and Japan are among nations at the G-20 talks.
``The yen is weak even among Asian currencies and some European officials have been complaining about it,'' said Shioiri, senior manager of the credit and foreign-exchange trading division in Tokyo. ``Speculation is that should China be encouraged to accelerate currency reform, the yen issue could also be raised. That led to some yen buying.''
Japan's currency was at 118.31 per dollar as of 7:56 a.m. in London from as low as 118.47, compared with 118.21 late yesterday in New York. It traded at 151.23 per euro, from 151.26.
The U.S. is seeking ways to ``raise its economic dialogue with China to a strategic level,'' Kimmitt also said. Kimmitt said Treasury Secretary Henry Paulson would ``be heading this strategic economic dialogue.''
The U.S. trade deficit with China rose to $166.3 billion in the first nine months of this year, putting it on a pace to exceed last year's record $201.6 billion by more than 9 percent.
People's Bank of China Deputy Governor Wu Xiaoling said yesterday the central bank will ``steadily advance'' its currency reforms and that companies and households have gradually adapted to a floating exchange rate.
China's central bank calculates a daily rate by taking a weighted average of quotes from commercial banks designated to act as market makers in the currency. The yuan is allowed to trade by up to 0.3 percent against the dollar either side of the so-called central parity rate

0983259299

2006-11-18T20:15:00.000-08:00

Thảo Nguyên 0983259299

Canada's Dollar Falls Third Week as Oil Approaches 17-Month Low
By Haris Anwar
Nov. 18 (Bloomberg) -- Canada's dollar fell for the third straight week as commodity prices dropped and factory shipments declined at triple the rate economists expected.
Traders who analyze technical charts to make investment decisions said the currency's close weaker than C$1.1423 for the first time since April may signal further losses.
The oil tumble is ``undermining the Canadian dollar,'' said Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York. ``The next week doesn't look to be a good one either because many people are calling for a bigger drop'' in the currency.
The currency dropped 1.3 percent this week to 87.20 U.S. cents. One U.S. dollar buys C$1.1468.
Canada's currency has fallen 3.9 percent since May 31, when it touched a 28-year high of 91.44 cents.
Crude oil fell to a 17-month low in New York this week as warm weather in the northern U.S. reduced fuel consumption and analysts questioned whether OPEC will cut output by 1.2 million barrels a day as it had pledged.
Commodities such as crude oil and natural gas account for 54 percent of Canadian exports. Oil for December delivery fell 0.8 percent at $55.81 a barrel on the New York Mercantile Exchange, the lowest close since June 15, 2005.
Copper Tumbles
Copper for delivery in three months dropped to a five- month low of $6,810 a ton on the London Metal Exchange as slowing industrial production in the U.S., the world's second-largest user of the metal, eased worries about tight supplies. Aluminum and other base metals also declined.
``The Canadian dollar is very vulnerable to the plunge in oil prices and the sell-off in base metals,'' said Monica Fan, head of currency strategy at RBC Capital Markets in London. ``The risk is that the Canadian dollar will overshoot a long-standing and non-consensus call for a move to C$1.1500.''
Lehman Brothers Holdings Inc. advised investors to sell the Canadian dollar as the growth outlook for the world's eighth-largest economy fades.
Factory shipments in September fell 3.3 percent to C$47.9 billion, the lowest since December 2004, Statistics Canada said Nov. 15.
The Bank of Canada kept its key interest rate unchanged at 4.25 percent for a third meeting last month and predicted growth will drop to 2.5 percent next year from 2.8 percent this year.
``We remain steadfast Canadian dollar bears,'' said David Mozina, a senior currency strategist at Lehman Brothers in New York, in an interview on Nov. 16. ``All the key fundamentals continue to lean on the currency -- deteriorating trade position, slowing growth and a more distant central bank.''
Lehman's Mozina recommended selling the Canadian currency against the U.S. dollar, Swedish krona, yen and Swiss franc. Fan of RBC Capital Markets suggested buying Australian and New Zealand dollars against the Canadian currency.
The yield on Canada's benchmark 10-year bond was little changed this week at 4 percent. The price of the 4 percent bond due June 2016 rose 1 cent to C$99.98. Bond yields move inversely to prices.

0906284963

2006-11-18T20:11:00.000-08:00

HẠNH 0906284963

Dollar Has Weekly Advance as Fed Highlights Inflation Risks
By Min Zeng
Nov. 18 (Bloomberg) -- The dollar gained this week against the euro and yen after Federal Reserve officials signaled concern inflation remains a risk.
Dallas Fed Bank President Richard Fisher said yesterday policy makers have ``no tolerance'' for inflation above 2 percent. Fed Bank of St. Louis President William Poole said Nov. 16 the U.S. is not ``out of the woods'' on inflation. The dollar trimmed some of its weekly advance after a U.S. report yesterday showed housing starts tumbled to a six-year low.
``The Fed is keeping an eye on inflation,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``A rate cut is still a long way off.''
The dollar strengthened 0.1 percent this week versus the euro and yen. It increased to $1.2829 per euro in New York yesterday from $1.2841 a week earlier.
The U.S. currency rose to 117.75 yen yesterday from 117.62 on Nov. 10.
Higher interest rates boost the allure of dollar- denominated assets. The Fed has kept its overnight interest rate on loans between banks at 5.25 percent since August, after lifting borrowing costs 17 consecutive times over two years.
Measure of Inflation
A price gauge tied to U.S. consumer spending patterns excluding food and energy costs, the Fed's preferred measure of inflation, rose 2.4 percent in September on a year-over-year basis after a 2.5 percent increase a month earlier, the Commerce Department said on Oct. 30.
Fed Chairman Ben S. Bernanke is among policy makers who have said they would be comfortable with a 1 percent to 2 percent increase in the measure over a 12-month period.
``Most members judged that the downside risks to economic activity had diminished a little,'' the Fed said in minutes of its gathering on Oct. 24-25 released in Washington on Nov. 15. ``All members agreed that the risks to achieving the anticipated reduction in inflation remained the greatest concern.''
Fed Bank of Chicago President Michael Moskow said Nov. 16 that ``some additional firming'' of policy may be needed.
``Hawkish commentaries from the Fed officials are giving the dollar a bit of support,'' said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago. ``The Fed got a rate cut well off the table as they are still concerned about inflation.''
The dollar pared some of its gains after a Commerce Department report yesterday said builders broke ground on an annual rate of 1.486 million new homes in October, down 14.6 percent from September's pace.
Building permits dropped to a 1.535 million annual pace, a record ninth straight decline and the lowest since December 1997, from a revised 1.638 million.
The data ``raised concern that the housing slowdown will continue to be a drag on growth in the fourth quarter,'' said Brian Dolan, research director at Forex.com, a unit of online currency trading firm Gain Capital in Bedminster, New Jersey, which has about $250 million under management. ``This puts the dollar under pressure.''

0912562084

2006-11-18T20:06:00.000-08:00

Nhi-0912562084
Tata Had No Contingency Plan for Rival Corus Offer, Times Says
By Nick Allen
Nov. 18 (Bloomberg) -- Tata Steel Ltd. had no contingency plan in place when Cia. Siderurgica Nacional SA made a rival bid for Corus Group Plc, the Times reported, citing Tata Group Chairman Ratan Tata.
Ratan learned of the new offer during a visit to the Times office in London yesterday and described the bid as ``interesting,'' the paper said. Corus had told Tata that another offer was unlikely, the chairman told the paper, declining to comment on what his company's response would be.
CSN, based in Rio de Janeiro, proposed a 475 pence-a-share offer, 20 pence more than Tata's bid on Oct. 20. Shares of Corus, the U.K.'s biggest steelmaker, closed at 495.5 pence in London, signaling investors expect a higher bid.

0914.609.597

2006-11-18T20:05:00.000-08:00

0914.609.597 Van

Gold Drops 1.2% in Week, Snapping Five-Week Rally on Lower Oil
By Choy Leng Yeong and Claudia Carpenter
Nov. 17 (Bloomberg) -- Gold in New York dropped 1.2 percent this week, ending a five-week rally, after declining energy costs reduced the appeal of the precious metal as a hedge against inflation.
Crude-oil prices fell to a 17-month low today as warm weather in the northern U.S. reduced fuel consumption, and a consulting company said shipments by the Organization of Petroleum Exporting Countries will climb. Gold has dropped 15 percent from a 26-year high of $732 an ounce in May, and oil has tumbled 29 percent from a record $78.40 a barrel in July.
``I'm bearish on gold,'' said Ronald Goodis, retail trading director at Equidex Brokerage Group Inc. in Closter, New Jersey. ``Oil has broken down severely. There's expectation for a mild winter. If that occurs, prices will go down even more.''
Gold futures for December delivery were little changed at $622.50 an ounce on the Comex division of the New York Mercantile Exchange. Prices climbed 9.2 percent in the past five weeks and were up 20 percent this year.
A futures contract is an obligation to buy or sell a commodity at a set price for delivery by a specific date.
Oil futures for December delivery fell 36 cents, or 0.6 percent, to $55.90 at 1:45 p.m. New York time on the Nymex. Prices earlier fell as much as 2.1 percent.
The drop in oil has reduced the appeal of gold, said Peter Fertig, a director of debt asset allocation and commodities at Dresdner Kleinwort in Frankfurt. Commodities should represent only close to 5 percent of assets for the rest of the year, he said. The company had recommended a range of 5 percent to 10 percent.
Gold futures still headed for the sixth straight annual gain amid declines in mining output and increased investment demand. Purchases of gold through exchange-traded funds, or ETFs, rose to 16.9 million ounces from 15.8 million on Oct. 30, figures from the World Gold Council show.
``The fact that gold is down a few bucks one day doesn't really phase me in the slightest,'' said Graham Birch, who helps manage about $6 billion in gold equities at Merrill Lynch & Co. in London. ``Investment demand for gold in the ETF seems to be very steady.''
Prices will probably end this year ``a little better'' than today, Birch said

0989803760

2006-11-18T19:59:00.000-08:00

Thuy 0989803760

Coffee Falls Most in 2 Months as Vietnam Crop Output Improves
By Marianne Stigset and Shruti Daté Singh
Nov. 17 (Bloomberg) -- Coffee fell the most since September on speculation that newly harvested supplies from Vietnam, one of the world's largest producers, will ease a shortage that sent prices to a nine-month high yesterday.
The Vietnam Coffee & Cocoa Association is forecasting a 26 percent increase in the current crop season, to 870,000 metric tons. Prices are up more than 20 percent in London and New York during the past four months as world inventories fell to a record low and drought damaged Vietnam's previous crop.
``Vietnam is expecting a big crop this year and shipments are already under way, even though it's mainly going to industry,'' said Ralph Hawes, head of coffee trading at Sucden (U.K.) Ltd. in London. ``There are no great fears being reflected in the market structure right now.''
Coffee for January delivery fell $96, or 6.1 percent, to $1,466 a metric ton on London's Euronext.liffe, the biggest decline since Sept. 18. Coffee for March delivery fell 3 cents, or 2.5 percent, to $1.1795 a pound on the New York Board of Trade, the biggest drop for a most-active contract since Oct. 2.
Coffee had reached a seven-year high of $1,653 a ton in London on Nov. 9 and a nine-month high of $1.2475 a pound in New York Nov. 16.
``We've been screaming on the upside,'' said Raymond Keane, a coffee trader at Balzac Bros. & Co. in Charleston, South Carolina. ``We were due for a correction.''
More Vietnam Coffee
The decline in London came on speculation coffee output in Dak Lak, Vietnam's biggest coffee-producing province, will rise 20 percent to 300,000 tons in the crop year that began Oct. 1, Nguyen Van Sinh, deputy director of the provincial agriculture department said last week.
Vietnam was tied with Columbia as the second-largest coffee producer after Brazil in 2005, according to the International Coffee Organization.
New York ``sure didn't get any help from London,'' said Jack Scoville, a vice president at Price Futures Group in Chicago. ``We ran into profit-taking there from the speculators and some producer selling from Colombia.''
Opening stocks in exporting countries for the crop year starting October will be 18.9 million bags, the lowest ever, the ICO said.

095.330.5219

2006-11-18T19:58:00.000-08:00

Trang 095.330.5219 Thái Nguyên

Babcock Shares Climb After UBS Lifts Profit Estimates (Update1)

By Joyce Moullakis

Nov. 17 (Bloomberg) -- Shares of Babcock & Brown Ltd., Australia's second-largest investment bank, had their biggest one-day gain in 10 months after UBS AG and Deutsche Bank AG increased their earnings estimates for the firm.

Babcock & Brown shares closed A$1.45, or 6.3 percent, higher to a record A$24.38 in Sydney, their biggest gain since Jan. 17. The Sydney-based bank this week said it planned to boost property investments in Europe and start an investment fund in Singapore.

GPT Group, Australia's fourth-largest real estate investment trust, and Babcock said they'd inject a further A$800 million ($613 million) into their European property venture to buy more assets and start new funds. Babcock & Brown Chief Executive Officer Phil Green wants to start funds in Europe and the U.S., buying assets and bundling them into investment vehicles the bank sells to investors and manages for a fee.

Jonathan Mott, a Sydney-based UBS analyst who rates Babcock a ``buy,'' increased his fiscal 2007 earnings-per-share growth estimate for the company to 31.8 percent from 20.1 percent because of the firm's ``strong pipeline and fee generation.''

Babcock raised its full-year EPS growth forecast to 45 percent in August 35 percent. Net income in the six months to June 30 rose 55 percent to A$121 million from a year earlier.

Singapore Fund

On Wednesday, Babcock said its planned new fund in Singapore would hold rail, aircraft and energy assets, and is expected to start trading on the Singapore Exchange in late December. The firm has spent S$394 million ($252 million) on aircraft and rail cars which it leases to companies, loan books and renewable energy assets for the Singapore fund.

Babcock's funds and assets under management rose 84 percent to A$31.2 billion in the six months to June 30.

Last week, Babcock & Brown Power, an energy investment fund managed by the bank, said it planned to raise A$446 million in an initial public offering to professional investors and preferred clients in Australia.

Andrew Hill, an analyst at Deutsche Bank in Sydney, raised his 2007 EPS estimate by 5 percent to A$1.38 and his share price target to A$26 from A$24, in a report yesterday.

0914 401 609

2006-11-18T19:56:00.000-08:00

Nhật 0914 401 609

Mitsui Fudosan, Japan Property Stocks May Rise as Economy Booms
By Finbarr Flynn
Nov. 17 (Bloomberg) -- Shares of Japan's property developers may rebound from a three-week slump as the companies raised earnings forecasts on signs the economy is accelerating, sustaining demand for new houses, shopping centers and offices.
Mitsui Fudosan Co., Mitsubishi Estate Co., and Sumitomo Realty & Development Co. posted average first-half profit increases of 91 percent. The Topix Real Estate Index was the best performer in Japan in the past year before dropping 12 percent in three weeks on concern economic growth may slow. The government's Nov. 14 announcement that growth last quarter was twice as fast as economists forecast may help revive the stocks.
``It isn't the end of the party yet,'' said Simon Rivett- Carnac at London-based Sarasin Investment Management, who helps manage the equivalent of $485 million in global real estate shares, including Japan's three biggest developers. ``Leasing business fundamentals continue to improve and we are still seeing operating forecasts being lifted.''
Japan's property market is still recovering from a collapse after the country's asset bubble burst in the early 1990s. Land prices in central Tokyo, up as much as 30 percent in the past year, are still 86 percent below their peak in 1990 in some areas, according to the Ministry of Land, Infrastructure and Transport.
Mitsui Fudosan's first-half profit rose 70 percent for the six months ended Sept. 30 on increased income from property leasing and condominium sales, the company said on Oct. 31.
Mitsubishi Estate on Nov. 9 raised its full-year earnings forecast to 71 billion from 62 billion and on the same day it said interim profit rose 46 percent. Sumitomo Realty said its half-year profit more than doubled, and lifted its full-year earnings forecast 6.4 percent to 50 billion yen ($423 million) on Nov. 16.
`Extremely Bullish'
The Topix Real Estate Index rose 70 percent in 12 months to a peak on Oct. 23, more than three times the gain of the broader measure. Japan's economy grew an annualized 2 percent in the three months ended Sept. 30, the government said.
``Overseas investors are extremely bullish about the Japanese real estate market,'' said Takashi Ishizawa, senior real estate analyst at Mizuho Securities Co. ``The probability of the market collapsing over the next two years is quite low.''
Land prices in Tokyo, Osaka and Nagoya, Japan's three largest urban areas, rose in September for the first time in 16 years. The office vacancy rate in central Tokyo fell to 2.92 percent in October, the lowest since December 2000, as average rents grew 7 percent from a year earlier, Miki Shoji Co., a real estate brokerage, reported last week.
``You are still seeing solid returns coming through,'' said Jim Quille, chief executive of Macquarie Global Property Advisors. The firm, a joint venture between Macquarie Bank and nine investors started its first Japan-specific real estate fund this week with $865 million from foreign investors. It was oversubscribed by more than $300 million.
Expensive
As land has become more expensive, so have real estate stocks relative to earnings. Sumitomo Realty and Mitsui Fudosan are both trading at 35 times estimated earnings for this year, compared with an average of 19 for the Topix.
``The P/Es appear high but earnings will catch up with the stocks,'' said Mark Brown, a Tokyo-based real estate analyst at Japaninvest KK, an equity research firm. ``A stronger economy means stronger demand for offices and higher rents, and higher demand for condominiums and higher prices.''
Shares of Japan's three-largest developers slipped in the last month on speculation the Bank of Japan may raise rates a second time this year to damp inflation as the economy expands.
``Selling of Mitsui Fudosan and other developer shares spread on concern about the increased interest burden on the companies' debt,'' said Kazuhiro Takahashi, general manager at Daiwa Securities SMBC Co. in Tokyo.
The three biggest developers had total interest-bearing debt of 3.5 trillion yen for the year ended March 31, against sales of 2.7 trillion yen.
Stretched Stocks
Concern about a slowdown in the Japanese economy also weighed on the stocks, said Naoki Fujiwara, who oversees $720 million at Shinkin Asset Management Co. in Tokyo.
``The equity prices of major real estate shares have been stretched, therefore we don't see a lot of attractiveness there,'' said Yuichi Chiguchi, who helps oversee $83 billion in assets at DLIBJ Asset Management Co. in Tokyo.
Japan's Topix Real Index outpaced the Morgan Stanley Capital International World Real Estate Index of 107 real estate stocks by 4.5 percent over the previous 12 months.
``As long as a sustainable recovery continues, we believe there should be further upside'' for the biggest real estate stocks, UBS Securities LLC wrote in a Global Real Estate report last month. ``We think it is too early to become bearish on their share performance.''
Sumitomo Realty and Mitsubishi Estate both climbed more than 4 percent on the day the government announced GDP figures, their biggest gain in more than four months. Mitsui Fudosan climbed 2.2 percent.
``Japan offers the best value anywhere in the world,'' Quille at Macquarie Global Property Advisors said.

0915952229

2006-11-18T19:49:00.000-08:00

Nga Kim mã 0915952229
Deutsche Bank Says Boerse Stake Remains Support Sign (Update1)
By Elena Logutenkova and Richard Weiss
Nov. 17 (Bloomberg) -- Deutsche Bank AG's 1 percent stake in Deutsche Boerse AG remains a signal of support for the operator of the Frankfurt stock exchange, Chief Executive Officer Josef Ackermann said today.
The bank, Germany's biggest, in July bought the stake to express support for Deutsche Boerse's plan to merge with Euronext NV. Deutsche Boerse earlier this week abandoned its bid for Euronext, clearing the way for NYSE Group Inc. to buy the Paris- based exchange and create the first trans-Atlantic stock market.
``It was a signal for the financial market and the world that we stand behind Deutsche Boerse,'' Ackermann said at a banking conference in Frankfurt. ``I think it remains necessary still.''
Ackermann said he remains a supporter of a pan-European exchange.
``It would have been good to have a European solution, and then to think about global solutions from the position of European strength,'' he said today. ``We forget sometimes that the world doesn't differentiate between France, Germany and Italy, but between Asia, America and Europe.''
Seven securities firms including Deutsche Bank, Citigroup Inc. and Goldman Sachs Group Inc. said this week they plan to start their own pan-European equity trading platform next year. The group ``wouldn't go so far'' that the traditional bourses such as London Stock Exchange Group Plc. become unnecessary in the future, Ackermann said

0912118232

2006-11-18T19:34:00.000-08:00

Thuý 0912118232

Sumitomo Trust to Expand Investment, Lending in China (Update1)
By Mariko Yasu and Ichiro Suzuki
Nov. 17 (Bloomberg) -- Sumitomo Trust & Banking Co., Japan's fifth-largest bank by assets, plans to increase lending, investment and alliances in China to seek more profit in the world's fastest-growing major economy.
``China, with the scale of its economy, can at least double or triple our revenue in Asia,'' Hideo Amemiya, an executive who oversees the bank's international strategy, said in an interview in Tokyo on Tuesday. ``I'd like to draw up a plan and carry it through within two to three years.''
China's $2.22 trillion economy is drawing Japanese banks including Sumitomo Trust, which are looking for earnings drivers after reducing bad debts at home. The longest postwar economic expansion in Japan is also encouraging manufacturers to bolster their overseas operations, providing banks with increased lending opportunities.
Sumitomo Trust, which specializes in managing pension funds and property assets for clients, is seeking to increase its investment in China buyout funds. It has invested in CITIC Capital China Partners LP, which raised $220 million last month, its first such investment in the country, said Amemiya, 52, without giving further details.
China Buyouts
The Osaka-based bank is also looking at other funds run by managers based in China and Hong Kong, including CDH Investments, ACTIS and Capital Today, he said.
``We came to believe China buyouts are better managed by local firms,'' Amemiya said. Global private equity firms active in China such as Carlyle and Newbridge ``have met obstacles as corporate governance there is a difficult issue for them.''
Sumitomo Trust is considering alliances with Chinese financial institutions, Amemiya said. ``Chinese investors are becoming more interested in asset management after QDII was introduced. Part of their assets will likely be invested in the Japanese market.''
Banks and fund managers in China, Japan's largest trading partner, have won approval to invest $12.6 billion in overseas products under the qualified domestic institutional investor program, or QDII, which started in April. China's asset managers may invest $75 billion abroad in the next two years, a Shanghai- based economist at Standard Chartered Bank said last week.
``Japanese banks will have to gain non-Japanese clients to expand further in Asia,'' said Keisuke Moriyama, a Tokyo-based banking analyst at Nomura Holdings Inc. ``They need to catch up with their global competitors, which have bigger investment and business platforms, before the gap between them widens.''
Lending Decline
Lending at large banks in Japan including Sumitomo Trust declined 0.4 percent last month, the Bank of Japan said last week. Growth in bank lending slowed for a third month after a spate of borrowing before the central bank raised interest rates for the first time in almost six years in July.
Mitsubishi UFJ Financial Group Inc., Japan's largest bank by assets, bought a $180 million stake in Bank of China in a June initial public offering. Tokyo-based Mitsubishi UFJ and the Beijing-based bank said in August they will expand cooperation in international settlements, online banking and risk management.
China will fully open its banking market to overseas competition next month. Foreign banks are eager to offer loans, mortgages and credit-card services in the local currency to spur expansion in the $5.1 trillion industry. Their growth in China so far has been hampered by operating restrictions.
China is the most popular destination for Japanese corporations expanding business overseas, according to a poll by a research arm of Mizuho Financial Group Inc. last month. Direct investment to China by Japanese companies rose 14.1 percent to 384.3 billion yen in the first half this year, according to the Ministry of Finance.
`Trade Flows'
``Growing trade flows will give Japan's banks a prominent role to play in China, since a lot of this business will require Japanese banking services,'' May Meizhi Yan, a Hong Kong-based analyst with Moody's Investors Service. ``There's a chance we'll see an improved investment climate under Prime Minister Shinzo Abe, as the new Japanese leadership tries to warm up its relationship with China.''
Relations between Japan and China were strained by former Prime Minister Junichiro Koizumi's visits to the Yasukuni Shrine, which includes convicted war criminals among the dead it honors.
Japan's ``mega banks'' are also expanding in other overseas markets. Mitsubishi UFJ last month formed an alliance with Malaysia's CIMB Group Sdn. to develop Islamic and investment banking. It also said it was buying a controlling stake in an Indonesian bank, PT Bank Nusantara Parahyangan, with Tokyo-based consumer lender Acom Co. to tap demand for personal loans.
Mizuho Financial Group Inc., Japan's No. 2 bank, said last month it will buy Michinoku Bank Ltd.'s Russian unit to find new revenue sources in a country where Toyota Motor Corp. and other Japanese companies are increasingly opening new operations.
Sumitomo Trust's revenue in Asia-Oceania more than doubled to 15.4 billion yen in the year ended March 31. Sumitomo Trust has four overseas branches, and opened its first China branch in Shanghai last year. Before this, it had barely any footprint in China. It is set to report half-year earnings on Monday.

0904182296

2006-11-18T19:33:00.000-08:00

Thư 0904182296
BlueBay Raises 189 Million Pounds in Share Offering (Update2)
By Andrei Postelnicu
Nov. 17 (Bloomberg) -- BlueBay Asset Management Plc, a London-based manager of fixed-income funds, raised 189 million ($356.7 million) pounds in an initial public offering that will allow its backers to reduce or eliminate their stake.
BlueBay sold 63 million shares at 300 pence each, the company said in a statement today. Investors have been offered an additional 7 million shares under the so-called over- allotment option. The IPO values BlueBay at 571 million pounds and the stock begins trading today on the London Stock Exchange.
BlueBay, which had $8 billion under management at the end of September, is selling shares to allow Barclays Plc to exit the business and Shinsei Bank Ltd. to halve its stake. The two banks financed BlueBay when it was founded in 2001 by Hugh Willis, chief executive officer, and Mark Poole, chief financial officer.
New York-based Lehman Brothers Holdings Inc. will buy a 5 percent stake in BlueBay, according to a statement earlier this month from the asset manager. Lehman will not be able to sell the shares for 12 months from the date of purchase.
After the offer, Willis and Poole each own about 12 percent of BlueBay each while other employees own about 33 percent, the company said in its statement today.
The shares added 15 pence, or 5 percent, to 315 pence in London.
BlueBay's income funds invest in high-yield debt, as well as investment-grade debt and bonds issued by emerging-market countries.
The asset gatherer joins rivals including New Star Asset Management Group Plc and Charlemagne Ltd. that have sold shares to the public in the last year amid rising stock markets, which have boosted their valuations.
Credit Suisse sponsored the offering while Citigroup Inc. and Fox-Pitt, Kelton Ltd. managed the sale.

0904256831

2006-11-18T19:32:00.000-08:00

0904256831
Thomas Lee Plans to Sell Shares in Hedge Fund Early Next Year
By Elisa Martinuzzi
Nov. 17 (Bloomberg) -- Thomas Lee, the billionaire buyout executive, pushed back plans to raise $400 million in an initial public offering for a fund to invest in hedge funds until early next year.
``We plan to begin marketing the fund in the new year and we are quite optimistic about the prospects,'' Lee said in an interview. His firm had intended to sell shares by the end of 2006. ``The entire process has taken somewhat longer than originally foreseen,'' he said.
The delay comes as London-based Marshall Wace LLP attempts to raise 1.5 billion euros ($1.9 billion) in the largest initial public offering of a hedge fund. Goldman Sachs Dynamic Opportunities Ltd. raised $507 million in an IPO in July. Its London-listed shares are unchanged at 100 pence since the share sale.
Lee, known for making more than 10 times his money from the takeover of Snapple Beverage Corp., will sell shares in London for the Lee Diversified Opportunities Ltd. fund. Lee, 62, stepped down in March from Thomas H. Lee Partners LP, the Boston-based takeover firm he founded 32 years ago, to expand his hedge-fund business.
Thomas H. Lee Capital Management's Blue Star I hedge fund ranks third by returns among funds that invest in hedge funds in the five years ended Aug. 31, the company said last month, citing MARhedge, a hedge-fund research company. The fund has returned 22.1 percent annually, net of fees, over the past four years, the company said.
Marshall Wace
Thomas H. Lee Capital Management oversees $1.9 billion. Lee had committed to contribute as much as 5 percent of the $400 million sought by the fund.
Hedge funds are largely unregistered pools of capital that are typically limited to wealthy investors. They allow the managers to participate in the gains they generate. By selling shares of closed-end investment companies and listing them on an exchange, asset managers are granting access to individual investors.
To lure buyers to its MW Tops Ltd., Marshall Wace is capping the listing fees at 1 percent of the proceeds, with the remainder covered by Marshall Wace itself.
Lee's most profitable investments include the $135 million purchase of Snapple in 1992, which he sold two years later for $1.7 billion

0983985653

2006-11-18T19:31:00.000-08:00

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Merrill Gains From Hertz Bolster O'Neal's Buyout Push (Update1)
By Bradley Keoun
Nov. 17 (Bloomberg) -- Merrill Lynch & Co. more than doubled the value of its $800 million investment in Hertz Global Holdings Inc. in less than a year, bolstering Chief Executive Officer Stan O'Neal's decision to expand the firm's leveraged-buyout unit.
Earlier this week, Hertz, the world's largest rental-car company, raised $1.32 billion in an initial public offering that valued Merrill's shares at about $1.2 billion. Add to that the dividends that New York-based Merrill and buyout partners Clayton Dubilier & Rice Inc. and Carlyle Group paid themselves, and the value of Merrill's stake increased to about $1.6 billion.
Gains from takeovers such as Hertz and British department store Debenhams Plc may help Merrill narrow the gap with Goldman Sachs Group Inc., whose private-equity investments helped make it Wall Street's most profitable firm. O'Neal, 55, said in a speech this week that expanding in leveraged buyouts was a top priority for Merrill, the world's third-largest securities firm.
``With the huge turnaround that you can get on these deals, the operating margins are going to be substantial,'' said William Fitzpatrick, an analyst at Johnson Asset Management in Racine, Wisconsin, which oversees about $1.5 billion. ``That's going to jack up the return on equity, no question about it.''
Merrill spokeswoman Jessica Oppenheim declined to comment, citing a ``quiet period'' that restricts public statements following an IPO.
HCA Deal
Merrill's has participated in at least 12 buyouts since the firm returned to private equity in 2000 after a seven-year absence. In July, Merrill, Bain Capital LLC and Kohlberg Kravis Roberts & Co. agreed to buy hospital chain HCA Inc. of Nashville for $33 billion including debt in the largest LBO ever. The firms each put up about $1.5 billion of capital for the transaction, which was completed today.
LBO firms use a mix of cash from investors, their own capital and debt secured against the assets of their acquisition targets to finance deals. They typically seek to expand companies or improve performance before selling them within five years to other funds or in initial public offerings. Merrill differs from firms such as Washington-based Carlyle and New York-based Goldman because it doesn't raise buyout funds from outside investors.
Goldman's private-equity gains helped produce a return on equity, a gauge of profitability based on shareholders' equity, was 29.6 percent in the first nine months of the year. Merrill's was 19.7 percent. New York-based Morgan Stanley, which had a return on equity of 22.7 percent for the nine-month period, now plans to raise a buyout fund of its own after exiting the business in 2004.
Profitable and Cyclical
Private equity is highly profitable because the operating costs, mainly compensation, are lower than in many other businesses, said Jeff Harte, an analyst at Sandler O'Neill & Partners in Chicago, who rates Merrill shares ``buy'' and doesn't own them.
``It tends to be a pretty cyclical business,'' Harte said. ``During bad times you post losses, during good times you post pretty substantial gains.''
There's also a risk of investor or regulatory backlash. The U.S. Justice Department in investigating the buyout industry for possible antitrust behavior and a shareholder lawsuit filed Nov. 15 accused 13 private-equity investors, including the three Hertz partners, of conspiring illegally to hold down the prices they pay when taking companies private.
Pacific Investment Management Co. and Advantus Capital Management are among the bondholders who have criticized LBO firms for overloading the companies they buy with debt. More than 80 companies controlled by LBO firms have borrowed at the expense of workers and bond investors just so they can pay themselves dividends, according to data compiled by Bloomberg and Standard & Poor's.
LBO Boost
Merrill's buyout unit, led by Nathan Thorne, 52, a 22-year veteran of the firm with an English degree from Yale University, reaped $700 million in gains in the second quarter, according to estimates by Douglas Sipkin, a Wachovia Securities analyst in Charlotte, North Carolina. That helped Merrill beat analysts' revenue estimates by $623 million, or 8.3 percent, based on a Thomson Financial survey.
In the third quarter, private-equity gains were less than $350 million, estimates Fox-Pitt Kelton analyst David Trone in New York.
Merrill says on its Web site that it typically holds private-equity investments for three to seven years. In the Hertz case, it exited in 11 months.
More Debt
Ford Motor Co. sold Park Ridge, New Jersey-based Hertz to Merrill and its partners for $15 billion, including debt, after failing to take the company public on its own.
``They found the first big cash player to come along, and these guys were it,'' William Smith, who tracks initial stock sales as president of Renaissance Capital in Greenwich, Connecticut. ``The market has moved in their favor.''
Merrill, Carlyle and Clayton Dubilier paid themselves $1.26 billion in dividends after increasing Hertz's debt by 32 percent to $14 billion. Hertz's interest expenses in the first nine months of the year almost doubled to $672.6 million.
Hertz sold shares in the IPO at $15, lower than the $16 to $18 range targeted by the sale's underwriters, which included Merrill. The stock fell 7 cents to $15.65 yesterday in 10:28 a.m. composite trading on the New York Stock Exchange today.
``Private equity investors try and get a full price when they take a company public rather than leaving a lot of money on the table, and that $16 to $18 offer price range reflects that,'' said Jay Ritter, a professor at the University of Florida who analyzes IPOs. ``With the quick flip here, it still looks like a good investment.''

0904177.889

2006-11-18T19:28:00.000-08:00

Tâm 0904177.889 (483 Kim Ngưu)(copy from bloomberg)

Australia Sells A$15.5 Billion of Telstra Stock (Update1)
By Fergus Maguire
Nov. 19 (Bloomberg) -- Australia's government completed the world's second-biggest share sale this year, selling A$15.5 billion ($11.9 billion) in Telstra Corp. after luring investors with free stock and fat dividends.
The government sold 35 percent of the nation's biggest telephone company at A$3.70 a share, 5 cents less than Friday's close, Finance Minister Nick Minchin said in a statement today. Its remaining 17 percent stake will go to a state-run investment fund, which will hold the stock for at least six months.
Prime Minister John Howard retreated from plans to sell the government's entire 51.8 percent stake in Melbourne-based Telstra after a slump in earnings and a yearlong clash with management sent the shares to a record low in August. Inducements, including a dividend yield of 14 percent in the first year, attracted buyers, averting a threatened scrapping of the sale.
``The government will be very relieved,'' said Adrian Mulcahy, who helps manage $1.5 billion at Perennial Growth Management in Melbourne and bid for Telstra shares in the sale. ``The structure of the offer was very attractive.''
The sale ends the government's control of Telstra, nine years after it first sold stock, and removes its conflict as regulator and owner of the phone company.
To stoke demand for Telstra stock, which has slumped more than 50 percent since the last offering in 1999, the government allowed investors to pay for their shares in two installments.
Individuals will pay A$2 a share, a 10 cent discount to institutional investors, and A$1.60 in 18 months time. One bonus share for every 25 held will be paid for investors who hold the stock until the second installment is due.
`Big Dividend'
Investors who pay the first installment will be entitled to full dividend payments. Telstra has said it will pay a 28 cents- a-share dividend for the year ending June 30, 2007. It hasn't forecast dividends beyond then.
The dividend yield on the installment receipts, which will start trading at 11:30 a.m. tomorrow in Sydney, is more than three times the 4 percent average offered by Australia's 200 biggest companies, according to data compiled by Bloomberg.
``Investors are chasing that big dividend,'' said Tom Elliott, managing director of hedge fund MM&E Capital Ltd. in Melbourne, which manages $90 million. ``The outlook for the business itself isn't that great.''
The sale's chief arrangers were ABN Amro Holding NV, Goldman Sachs JBWere Pty, and UBS AG.
Earlier Offerings
The government sold 33 percent of Telstra in a A$14.2 billion initial public offering in 1997, and a further 16.6 percent for A$16 billion two years later.
The rest of the government's shares in Telstra will be placed in the Future Fund, an investment pool run to cover pension liabilities for politicians, defense workers and bureaucrats.
The shares will be placed in escrow for two years, after which they can be sold by the fund. An exception to the lockup will be allowed after six months if a ``cornerstone'' investor agrees to buy at least 3 percent of the company.
Telstra shares closed 2 cents lower to A$3.75 in Sydney on Friday. That's less than half the A$7.80 a share offered by the government in the 1999 sale.
Telstra Chief Executive Officer Sol Trujillo's cuts to profit forecasts, blamed on regulations, have soured government relations and pummeled investor confidence. The stock has fallen 25 percent since he was appointed in July last year.
Destroying Value
Trujillo has warned the company's value is being ``destroyed'' by rules giving rivals below-cost access to its network of copper wires and optic fiber linking the nation's homes and businesses.
Howard has returned fire, blaming Telstra's management for talking down the company's prospects, and said he won't be ``blackmailed'' into easing regulations. In July, Minchin warned the sale might not proceed because of the tensions.
The government ceding control is unlikely to end the feud.
Last week, the government used its majority holding to appoint Geoff Cousins, a former Howard adviser, to the board. Telstra objected, saying he may lack independence and investors raised concerns the government was seeking to rein in the company.
Telstra Chairman Donald McGauchie said he won't be silenced.
``A lot of the rules are designed quite specifically to advantage our competitors,'' he told shareholders at the company's annual meeting on Nov. 14 in Melbourne. ``We will resist very vigorously any further regulations.''
Behind the clash over regulations, competition and changing technology are undermining Telstra's earnings, which slumped 46 percent in the latest half.
Like other carriers such as Deutsche Telekom AG in Germany and Verizon Communications Inc. in the U.S., Telstra is suffering as customers shift from high-margin landline phones to low-margin wireless and Internet services.
The offer is the biggest Australian share sale for seven years and the second-largest worldwide this year after Industrial & Commercial Bank of China Ltd. sold $19.1 billion of stock in October.
The Telstra offer takes the value of global equity sales this year to about $464 billion, compared with $453.7 billion for the whole of 2005, according to Bloomberg.

0912.423.976

2006-11-18T19:27:00.000-08:00

Quỳnh 0912.423.976
Thanks for Bloomberg to this news
Oil Falls to 17-Month Low on OPEC Skepticism, Warm U.S. Weather
By Mark Shenk
Nov. 17 (Bloomberg) -- Crude oil fell to a 17-month low in New York as warm weather in the northern U.S. reduced fuel demand and on signs OPEC won't cut production as much as pledged.
The Organization of Petroleum Exporting Countries agreed to reduce output by 1.2 million barrels a day starting Nov. 1. Prices plunged yesterday after consultant Oil Movements said November OPEC shipments will rise. The U.S. Climate Prediction Center said yesterday the El Nino weather pattern will cause a mild winter in the northern third of the U.S.
``A lot of what's happening is technical, we broke through $57 and that created a lot of selling,'' said Adam Sieminski, chief energy economist at Deutsche Bank Securities AG in New York. ``There's a huge amount of skepticism about the level of OPEC output. There seems to be a game right now between OPEC and the trading community.''
Crude oil for December delivery fell 45 cents, or 0.8 percent, to $55.81 a barrel on the New York Mercantile Exchange, the lowest close since June 15, 2005. Oil touched $54.86, the lowest intraday price since June 14, 2005. Prices fell 6.3 percent this week, the biggest one-week decline since October 2005. Futures are down 0.9 percent from a year ago.
The December contract expires today. The more-active January contract rose 40 cents, or 0.7 percent, to close at $58.97 a barrel.
``There's always volatility when the contract expires,'' Sieminski said. ``You either have to sell it or take delivery. A lot of people obviously don't need deliveries next month.''
OPEC Production Cuts
OPEC, which produces about 40 percent of the world's oil, will discuss production at its next meeting, which is scheduled for Dec. 14 in Abuja, Nigeria.
The OPEC crude oil basket price rose 14 cents to $55.47 a barrel yesterday, the group said in an e-mail. The price is a weighted average of 11 crude oil grades.
``Now that the basket is approaching $50 OPEC is likely to get serious about making cuts,'' said Antonio Szabo, chief executive officer of Houston-based consultant Stone Bond Technologies. ``OPEC's behavior only becomes good when they are under pressure.''
OPEC shipments will rise 0.9 percent in the month to Dec. 2 to 24.8 million barrels a day, compared with 24.6 million barrels a day in the four weeks ended Nov. 4, Oil Movements said yesterday.
``Some credit for the fall in prices has to be attributed to the tanker movement report, which raised fresh skepticism about OPEC's cuts,'' said Eoin O'Callaghan, an analyst with BNP Paribas SA in London. ``It's more important to look at the wider context. There is a slower global economy and that's reducing liquidity in the markets.''
Economic Growth
Housing starts in the U.S. tumbled in October to the lowest level in more than six years, raising the prospect that the economy will be further weakened after growing last quarter at the slowest pace since 2003.
Home construction shaved 1.12 percentage points off of third-quarter gross domestic product. The economy expanded at a 1.6 percent annual rate last quarter, the slowest in more than three years. The U.S. consumes 25 percent of the world's oil.
Home-heating demand in the Northeast, the region responsible for 80 percent of U.S. heating-oil use, will be 10 percent below normal through Nov. 24, said Weather Derivatives, a forecaster in Belton, Missouri.
``The decline is driven in large part by forecasts for mild weather,'' said Antoine Halff, a vice president and head of energy research at Fimat USA Inc. in New York. ``High distillate stocks in the U.S. are largely a legacy of the mild winter last year. I think this move lower will be short-lived because there have been a series of incredibly strong draws.''
Fuel Inventories
Supplies of distillate fuel, including heating oil and diesel, fell 11 percent to 135 million barrels the past six weeks, according to an Energy Department report on Nov. 15. The declines left inventories last week 6.3 percent higher than the five-year average for this time of year, the department said.
``I'm expecting to see a reversal in commodities, which could send oil back up to $70 by the end of the year,'' said Stephen Leeb of Leeb Capital Management, which overseas $150 million in New York. ``We've had near-record draws in products the last few weeks. There's very little spare capacity and I think OPEC will make most of the promised cuts.''
Brent crude oil for January settlement rose 45 cents, or 0.8 percent, to $58.99 a barrel on the London-based ICE Futures exchange

0913.300.646

2006-11-18T19:26:00.000-08:00

Vân 0913.300.646

Bank of Communications May Sell $7 Bln Shares, Bonds (Update4)
By Matthew R. Miller and Luo Jun
Nov. 17 (Bloomberg) -- Bank of Communications Ltd., China's fifth-largest, plans to raise as much as $7.4 billion by selling shares and bonds to domestic investors as it seeks funds to extend more loans and credit cards.
The Shanghai-based bank will seek approval to sell as many as 4.5 billion yuan-denominated shares and 25 billion yuan ($3.18 billion) of subordinated bonds, it said in a statement to the Hong Kong stock exchange today. Based on yesterday's closing price in Hong Kong, its stock offering could raise $4.2 billion.
Bank of Communications, 19.9 percent owned by HSBC Holdings Plc, follows bigger rivals Industrial & Commercial Bank of China and Bank of China Ltd. in tapping domestic investors after Shanghai's benchmark index surged 68 percent this year. The bank needs to replenish capital that's failed to keep pace with loan growth in the world's fastest-growing major economy.
``Chinese banking stocks are all the rage right now as investors bet on potential benefit from the robust economic growth,'' said Zhang Ling, who helps manage the equivalent of $2.4 billion at ICBC Credit Suisse Asset Management Co. in Beijing. ``Bank of Communications is expanding faster than the bigger rivals and therefore demand for capital is more urgent.''
Shares of Industrial & Commercial Bank of China Ltd., the nation's biggest, have gained 22 percent on the mainland since their Oct. 27 debut after an initial public offering. Bank of China, which also had an IPO this year, has risen 19 percent on the domestic market since July 5.
Chinese banking stocks dropped today. Shares of Bank of Communications fell 2.9 percent in Hong Kong to HK$7.13 at 11:56 a.m.
Capital Adequacy
Proceeds from the share and bond sales will be used to shore up Bank of Communications' capital. The lender's capital- adequacy ratio, an indicator of its financial health, fell to 11.09 percent as of Sept. 30 from 11.52 percent at the end of 2005.
Although above the minimum required, the ratio still lags behind those of Hong Kong banks, which are generally above 16 percent, said Victor Tsang, who helps oversee $50 million of assets at Quam Asset Management in Hong Kong.
Increasing lending reduces the proportion of capital to risk-weighted credit, forcing banks to raise more funds to sustain growth. Bank of Communications had 911.2 billion yuan of outstanding loans as of Sept. 30, an 18 percent increase from the end of 2005. China's banking regulator requires a minimum capital adequacy ratio of 8 percent to protect depositors and absorb losses in case of bankruptcy.
Growth Opportunities
``There's still ample opportunity for growth'' in China, Tsang said. Also bank stocks are currently trading at high valuations, he said, making this a good time to raise money through the markets.
Chinese companies have sold $14.7 billion of A shares since a sales ban was lifted in May, according to data compiled by Bloomberg. The one-year restriction had been imposed to allow time for the conversion of mostly state-held non-tradable stock to common equity.
Industrial & Commercial Bank of China last month raised $5.1 billion on the mainland as part of a $19.1 billion simultaneous offering that included a Hong Kong sale. Bank of China sold $2.5 billion of shares in China in June after an $11.2 billion Hong Kong IPO earlier in the same month.
Mutual Funds, Credit Cards
Bank of Communications' third-quarter profit rose 42 percent to 2.99 billion yuan as economic growth spurred demand for consumer loans and asset-management services. New yuan lending by China's banks rose 40 percent in the first nine months from a year earlier, even as the government tried to cool the fastest economic expansion in a decade.
Its profit growth may average 33 percent between 2005 and 2008 as loans increase by 19 percent annually, according to Goldman Sachs Group Inc. analyst Ning Ma. Bank of Communications focuses on offering loans, mutual funds and credit cards to the wealthiest Chinese, those with savings of more than $50,000.
The bank will hold a shareholders meeting on Jan. 9 to vote on the share offering, which is subject to approval by the China Securities Regulatory Commission, the China Banking Regulatory Commission and other relevant regulatory authorities, the announcement said.
Shares of Bank of Communications, which raised HK$16.84 billion ($2.17 billion) in a Hong Kong initial public offering last year, have doubled in price since the sale.

0912.073.683

2006-11-18T19:25:00.001-08:00

Loan 0912.073.683 De Rato Says Rate Rises May Be Needed to Curb Prices (Update2)
By Matthew Brockett and Oriel Morrison
Nov. 17 (Bloomberg) -- Central banks may need to raise interest rates further to cool inflation amid the fastest global economic growth in decades, International Monetary Fund Managing Director Rodrigo de Rato said.
``There is no clear slowdown,'' de Rato said in an interview in Melbourne, where he will attend the meeting of the Group of 20 industrial and emerging economies this weekend. ``In many important economies inflationary pressures have not yet disappeared. That's why monetary policy is crucial today.''
Central bankers including Federal Reserve Chairman Ben S. Bernanke, European Central Bank President Jean-Claude Trichet and People's Bank of China Governor Zhou Xiaochuan, who are attending the G-20 summit, raised borrowing costs this year to head-off inflationary pressure. The fastest period of global growth since the early 1970s is encouraging companies to raise prices, prompting workers to demand higher wages.
The Fed raised its key rate 17 times before pausing in August at 5.25 percent amid signs growth was slowing. The ECB is poised to deliver its sixth increase in a year next month, taking its benchmark rate to 3.5 percent. Central banks in Japan, China, Australia and the U.K. may also raise rates.
The Fed will probably cut its target rate for overnight loans among banks to 5 percent in the second quarter of next year, according to the median of 83 economists' forecasts in a Bloomberg News survey early this month.
The dollar weakened today after a U.S. government report showed home construction tumbled to a six-year low last month. The dollar fell to 117.69 yen at 11:39 a.m. in New York from 118.21 late yesterday. It declined to $1.2824 per euro, from $1.2796 yesterday.
Growth Forecasts
The IMF forecasts the global economy will expand 4.9 percent next year after growing 5.1 percent this year, 4.9 percent last year and 5.3 percent in 2004 -- the longest period growth rates have held above 4 percent since the early 1970s.
De Rato said the IMF expects slower U.S. growth to be partly offset by faster expansion in Europe and Asia. There are risks that tight ``capacity and wage pressures could make inflation pick up,'' he said.
The U.S. economy, the world's largest, will rebound from a third-quarter slowdown and inflation will remain elevated through early next year, according to a survey of 85 economists by Bloomberg News from Oct. 30 to Nov. 9.
The world's second-largest economy, Japan, grew at twice the expected pace in the third quarter, spurring speculation the Bank of Japan may increase borrowing costs for a second time this year as soon as next month.
In Europe, the dozen-nation euro region is expanding at the fastest pace in six years, prompting investors to increase bets the ECB will keep raising borrowing costs next year.
`Accommodative'
De Rato said ECB rates are still ``accommodative,'' and with the economic upswing in Europe set to continue, monetary policy should be moved ``to a neutral situation.''
``We don't see the need in Europe for a restrictive monetary policy right now,'' he said. ``Of course, in due course we will see how things are moving.''
Economists including Gernot Nerb of the Munich-based Ifo institute say the ECB's ``neutral'' rate is around 3.5 percent.
In the U.S., ``most of the monetary stimulus, if not all, has been taken away'' and the Fed's future policy steps should be determined by data, de Rato said.
He dismissed concern that higher interest rates might hurt economic growth, saying ``monetary policy in most places pays the most to citizens if it's guided by inflation.''

Emerging Markets

2006-11-18T19:15:00.000-08:00

Emerging Markets

CSN Offers $8 Billion for Corus, Countering Tata Bid (Update5)
By Claudia Carpenter and Matthew Craze
Nov. 17 (Bloomberg) -- Cia. Siderurgica Nacional SA of Brazil offered $8 billion for Corus Group Plc to create the world's fifth-biggest steelmaker, countering a bid last month by Tata Steel Ltd.
Corus investors would receive 475 pence a share, subject to due diligence, Rio de Janeiro-based CSN said today in a statement. The proposal is 4.4 percent higher than Tata's Oct. 20 offer of 455 pence. Shares of Corus closed at 495.5 pence in London, signaling investors expect a higher offer.
``This is not the end of the story,'' said Stephen Pope, head of equity research at Cantor Fitzgerald LP in London. ``Tata is in a position to put up a counter-offer.''
Acquiring London-based Corus, formerly British Steel Plc, will add mills in the U.K. and the Netherlands to CSN's iron-ore mines and blast furnaces in Brazil. The deal would be the industry's second biggest this year after Mittal Steel Co.'s $38.3 billion purchase of Arcelor SA and would scupper Mumbai- based Tata's plan to pull off the biggest foreign purchase by an Indian company.
Shares of Corus rose 22.5 pence, or 4.8 percent, valuing the company at 4.43 billion pounds ($8.4 billion), the highest since May 2000. The stock reached a record low of 18.22 pence in March 2003 on concern Corus would go bankrupt.
Credit Line
CSN said it will finance the acquisition partly with a credit line provided by Barclays Plc, Goldman Sachs Group Inc. and BNP Paribas SA. A spokeswoman at CSN in Sao Paulo who asked not to be identified declined to comment on the company's offer. CSN said today it already indirectly owns 3.8 percent of Corus.
Lazard Ltd. is the lead financial adviser to CSN. Goldman and UBS AG are also CSN's corporate brokers. Credit Suisse Group and JPMorgan Cazenove advise Corus.
Shares of CSN dropped 2.40 reais, or 3.6 percent, to 65.11 reais at the close in Sao Paulo, valuing the company at 17.77 billion reais ($8.2 billion).
``CSN shares are hurting because if they do buy Corus there will be less dividends,'' said January Hostin Junior, who helps manage 50 million reais ($23 million) in stock and fixed-income securities at Leme Investimentos in Florianopolis, Brazil. ``In the long-term, it's a good strategy with good synergies.''
Outside Brazil
CSN had sought to expand in the U.S., where it is competing with Chicago-based steel distributor Esmark Inc. to merger with Wheeling-Pittsburgh Corp. Wheeling-Pittsburgh, which had agreed to merge with CSN, said today that its shareholders voted out the board of directors in favor of a rival slate from Esmark, which may scuttle CSN deal.
Standard & Poor's placed CSN's corporate credit rating at ``BB'' with negative implications.
Corus confirmed in a statement that it got an offer from CSN, adding that an announcement will be made ``in due course.''
Tata's Deputy Managing Director T.K. Mukherjee, speaking by mobile phone from Jameshedpur, India, refused to comment.
Steelmakers want greater control over production to bolster their bargaining power with clients and suppliers. Arcelor Mittal accounts for about 10 percent of global production. That compares with three-quarters control of the seaborne iron-ore trade held by Cia. Vale do Rio Doce, BHP Billiton Ltd. and Anglo American Plc, the largest iron-ore miners.
Fifth-Largest
A combination of CSN and Corus would produce 23.4 million metric tons of steel, based on last year's production, ranking it as the world's fifth-biggest steelmaker, behind Arcelor Mittal, Nippon Steel Corp., Posco and JFE Holdings Inc. Arcelor Mittal produces almost 110 million tons, based on 2005 output.
CSN produces enough iron ore from its mines in Brazil to supply all of Corus's needs, CSN Chairman and Chief Executive Officer Benjamin Steinbruch said in the statement today.
Corus was created through the combination of British Steel and the Netherlands' Royal Hoogovens in 1999. Chief Executive Officer Philippe Varin, who took over in 2003, has returned the company to profit after job cuts and plant closures.
Corus in 2002 offered to buy CSN for $3.5 billion. The U.K. steelmaker withdrew its offer four months later after its shares lost about half their value. Investors had judged the additional debt was too high for Corus, which hadn't reported an annual profit since 1998.
Spurring Alliances
The success of Mittal's hostile takeover of Arcelor is spurring alliances in the steel industry, as producers seek to erect defenses against rival bids. As many as 252 transactions worth about $78 billion have either been completed or are pending. That compares with 219 deals worth less than $20 billion in all of 2005.
The CSN bid fueled speculation of more transactions. Shares of Pittsburgh-based U.S. Steel Corp. rose $6, or 9.3 percent, to $70.57 in New York Stock Exchange composite trading. Russia's OAO Severstal may combine with iron-ore miners and bid for U.S. Steel, Russian newspaper Kommersant reported today.
Mittal's offer for Arcelor was 4.56 times the Luxembourg- based company's earnings before interest, taxes, depreciation and amortization, or Ebitda. CSN's offer is 4.95 times Corus's Ebitda, based on the U.K. steelmaker's earnings in the 12 months through June 30. Tata's offer is 4.84 times Ebitda.
``Tata are not going to walk away from this easily,'' said Herman Bots, an analyst at Theodoor Gilissen Bankiers in Amsterdam. ``They want the access to the western European markets. They're not going to give up. They're not out of the game yet.''
Higher Prices
Corus's share price in the past month has signaled some of the company's biggest shareholders were holding out for a higher offer. Russia's OAO Novolipetsk Steel won't rule out making a bid, the Financial Times said Oct. 18. Standard Life Plc, the biggest investor in Corus, said on Oct. 20 the Tata offer undervalues the Anglo-Dutch steelmaker.
``It is not a surprise that another bidder has emerged,'' Standard Life said in an e-mailed statement today.
Other investors, such as AllianceBernstein LLC and Jupiter Asset Management Ltd., have sold shares.
A parcel of 13.2 million Corus shares changed hands at 473.14 pence a share at 2:54 p.m. in London, 40 minutes before CSN's announcement today, according to data from the London Stock Exchange. Only the 11 biggest shareholders in Corus have that many shares, according to data compiled by Bloomberg.

(Bloomberg)