Sept. 28 (Bloomberg) -- China raised interest rates on some mortgages and increased minimum down payments in an effort to cool property prices that jumped almost 10 percent last month.
The rate on loans for second homes and on commercial real estate was pushed to at least 1.1 times ``benchmark'' rates that the People's Bank of China didn't specify in a statement late yesterday. Buyers will have to pay not less than 40 percent of a property's value as down payment, up from 30 percent.
The measures tighten controls in a market where the government is concerned that a surge in lending is creating a bubble, which would drive up bad loans should it collapse. Investment in real-estate development jumped 29 percent in the first eight months of this year. The statement also said the maximum mortgage for commercial property is half of its value, and the term can't exceed 10 years.
The decision by the central bank and the China Banking Regulatory Commission is ``to prevent credit risks and protect the borrower's repayment ability,'' according to the statement on the People's Bank of China Web site.
``It's clear they know they're behind the curve, in a hole, at risk of people taking more of their money out of bank deposits and going into other assets where there is already frothiness,'' said Nicholas Lardy, a senior fellow at the Peterson Institute for International Economics in Washington.
Until now, banks were barred from charging less than 90 percent of the benchmark rates for mortgages. Interest rates on loans for first homes are unchanged.
Monetary Policy
China raised its one-year lending rate for the fifth time this year on Sept. 14, to 7.29 percent. Those increases have failed to damp demand for property as China's economic growth raises incomes and people prefer fixed assets amid inflation at a 10-year high of 6.5 percent.
China Vanke Co., the nation's biggest listed property developer, led builders lower for a second day yesterday on anticipation of government moves to limit lending. It fell 0.61 yuan, or 2 percent, to 29.25, extending a 5.3 percent decline on Sept. 26.
Property prices in 70 of China's biggest cities rose 8.2 percent in August, the fastest since August 2005, when the National Development and Reform Commission began collecting the data.
`Nervousness'
The changes are ``a reflection of the central bank's anxiety and nervousness,'' said Lei Wang, co-manager of the $14.5 billion Thornburg International Value Fund in Santa Fe, New Mexico. ``They don't want to see prices go out of control.''
Wang's fund owns shares of Country Garden Holdings Co., China's most profitable property developer.
In the southern city of Shenzhen, which borders Hong Kong, average new home prices rose 18 percent in August, accelerating from 16 percent a month earlier. In Beijing, average home prices rose 14 percent last month.
In addition to one-year rates, the central bank sets benchmarks for longer durations. On Sept. 14, the benchmark rate for a five-year loan rose to 7.83 percent, from 7.56 percent.
China Construction Bank Corp. Chairman Guo Shuqing said this week the company, which controls about 22 percent of the nation's home-loan market, has reduced real-estate loans in areas where property prices have risen ``too much.''
Outstanding mortgage loans in China rose 20 percent in the first quarter to 2.4 trillion yuan ($319 billion), faster than the 16 percent growth in total loans. Non-performing mortgage advances totaled 19.2 billion yuan by the end of 2006, up from 18.4 billion yuan a year ago, according to the central bank.
Thursday, September 27, 2007
China Sells 32 Billion Yuan of 15-Year Bonds to Banks at 4.55%
Sept. 28 (Bloomberg) -- China sold 32 billion yuan ($4.3 billion) of 15-year bonds, the third offering of the securities to the market, to raise funds for the country's reserves management agency.
The debt was auctioned at a coupon of 4.55 percent, according to traders at China Construction Bank Corp. and the Agricultural Bank of China, who are both primary dealers obliged to bid at government bond sales. The highest bids were 4.59 percent. The coupon compares with the 4.63 percent median estimate in a Bloomberg News survey of six finance companies.
The government has now sold about 100 billion yuan of the debt to dealers and 600 billion yuan to the central bank as part of 1.55 trillion yuan planned by the end of this year.
China's lawmakers approved a plan in June to sell the so- called special government bonds to finance the investment fund, whose directive is to use the proceeds to boost returns on the country's $1.33 trillion of currency reserves.
The central bank is using the 600 billion yuan of the bonds to help control money supply through its open market operations, as it strives to reduce funds in the system that have driven inflation to the fastest in a decade and economic growth to the best in 12 years in the second quarter.
In the previous two sales, the ministry sold 32 billion yuan in 15-year bonds Sept. 17 and 35 billion yuan in 10-year notes Sept. 21. The bonds were sold at par value for 100 yuan face amount and dealers bid on the coupon rate.
The state-owned investment firm will be inaugurated Sept. 29 in Beijing.
China's local currency bonds have slumped 2.75 percent this year, the worst performers among 10 Asian debt indexes compiled by HSBC Holdings Plc.
The debt was auctioned at a coupon of 4.55 percent, according to traders at China Construction Bank Corp. and the Agricultural Bank of China, who are both primary dealers obliged to bid at government bond sales. The highest bids were 4.59 percent. The coupon compares with the 4.63 percent median estimate in a Bloomberg News survey of six finance companies.
The government has now sold about 100 billion yuan of the debt to dealers and 600 billion yuan to the central bank as part of 1.55 trillion yuan planned by the end of this year.
China's lawmakers approved a plan in June to sell the so- called special government bonds to finance the investment fund, whose directive is to use the proceeds to boost returns on the country's $1.33 trillion of currency reserves.
The central bank is using the 600 billion yuan of the bonds to help control money supply through its open market operations, as it strives to reduce funds in the system that have driven inflation to the fastest in a decade and economic growth to the best in 12 years in the second quarter.
In the previous two sales, the ministry sold 32 billion yuan in 15-year bonds Sept. 17 and 35 billion yuan in 10-year notes Sept. 21. The bonds were sold at par value for 100 yuan face amount and dealers bid on the coupon rate.
The state-owned investment firm will be inaugurated Sept. 29 in Beijing.
China's local currency bonds have slumped 2.75 percent this year, the worst performers among 10 Asian debt indexes compiled by HSBC Holdings Plc.
Japan's Notes Rise, Set for Biggest Quarterly Rally in a Year
Sept. 28 (Bloomberg) -- Japan's five-year government notes advanced, heading for the biggest quarterly rally in a year, after reports showed a slump in the housing market in the U.S. and a decline in consumer prices in Japan.
Yields fell from a six-week high after the reports prompted traders to cut bets the Bank of Japan will raise interest rates this year. Japan's bonds have returned 1.4 percent this quarter, according to a Merrill Lynch & Co. index, as losses tied to U.S. subprime mortgages sparked demand for government debt.
``It will take time to fully wipe out concerns over the subprime problem and housing slump in the U.S.,'' said Shinji Kunibe, a fund manager in Tokyo at the local unit of JPMorgan Asset Management, which oversee $847 billion in assets. ``A rate increase this year is a tough call under these situations.''
The yield on five-year notes fell 5 basis points to 1.2 percent at 11 a.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price on the 1.1 percent debt due September 2012 rose 0.233 yen to 99.531 yen.
Five-year yields slid from 1.255 percent yesterday, the highest since Aug. 14. For the quarter, yields have fallen about 25.5 basis points. A basis point is 0.01 percentage point.
Treasuries rose yesterday on a Commerce Department report showing the pace of new U.S. home sales fell 8.3 percent to an annual rate of 795,000 last month from a revised 867,000 in July.
Consumer Prices
``Japanese bonds may track the rally in U.S. Treasuries,'' said Makoto Yamashita, Tokyo-based chief bond strategist at Lehman Brothers Japan Inc., one of the 25 primary dealers that are required to bid at auctions. Yamashita said he recommends investors to pick up bonds with 10-year yields above 1.65 percent for the next two weeks.
Trader pared bets that the Bank of Japan will increase rates in October, after a government report today showed consumer prices fell for a seventh month. Core consumer prices excluding fresh food declined 0.1 percent in August from a year earlier, matching the median estimate of 45 economists surveyed by Bloomberg News.
Investors see an 8 percent chance of a rate increase at the central bank's next meeting on Oct. 10-11, down from 9 percent yesterday, according to Credit Suisse Group calculations using overnight index swap rates.
Gains in bonds may be limited by speculation an increase in stocks will erode demand for government debt. The Nikkei 225 Stocks Average has gained 3.1 percent so far this week, heading for the biggest rally in a month.
Stocks Pressure Bonds
Japan's bonds often move in the opposite direction of stocks. Benchmark 10-year yields had a correlation of 0.91 with the Nikkei 225 in the past month, according to Bloomberg data. A value of 1 means the two moved in lock step.
``There's no reason to be bearish on the Nikkei,'' said Hitomi Kimura, a bond strategist at JPMorgan Securities Japan Co. in Tokyo. ``If we break 17,000, there will be more pressure on bonds.'' The Nikkei 225 declined 0.3 percent to 16,783.98.
A separate government report showed Japan's industrial production surged at the fastest pace in almost four years in August. Production climbed a seasonally adjusted 3.4 percent from July, the Ministry of Economy, Trade and Industry said in Tokyo today. The median estimate of 47 economists surveyed by Bloomberg News was for a 3 percent increase.
A technical chart that traders use to predict price changes suggests bonds may rebound. The seven-day relative strength index on 10-year yields was 75 yesterday. A level above 70 implies selling of the security may have lost momentum.
The yield on the benchmark 10-year bond fell 5 basis points to 1.67 percent. Ten-year bond futures for December delivery climbed 0.53 to 134.97 in Tokyo.
Yields fell from a six-week high after the reports prompted traders to cut bets the Bank of Japan will raise interest rates this year. Japan's bonds have returned 1.4 percent this quarter, according to a Merrill Lynch & Co. index, as losses tied to U.S. subprime mortgages sparked demand for government debt.
``It will take time to fully wipe out concerns over the subprime problem and housing slump in the U.S.,'' said Shinji Kunibe, a fund manager in Tokyo at the local unit of JPMorgan Asset Management, which oversee $847 billion in assets. ``A rate increase this year is a tough call under these situations.''
The yield on five-year notes fell 5 basis points to 1.2 percent at 11 a.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price on the 1.1 percent debt due September 2012 rose 0.233 yen to 99.531 yen.
Five-year yields slid from 1.255 percent yesterday, the highest since Aug. 14. For the quarter, yields have fallen about 25.5 basis points. A basis point is 0.01 percentage point.
Treasuries rose yesterday on a Commerce Department report showing the pace of new U.S. home sales fell 8.3 percent to an annual rate of 795,000 last month from a revised 867,000 in July.
Consumer Prices
``Japanese bonds may track the rally in U.S. Treasuries,'' said Makoto Yamashita, Tokyo-based chief bond strategist at Lehman Brothers Japan Inc., one of the 25 primary dealers that are required to bid at auctions. Yamashita said he recommends investors to pick up bonds with 10-year yields above 1.65 percent for the next two weeks.
Trader pared bets that the Bank of Japan will increase rates in October, after a government report today showed consumer prices fell for a seventh month. Core consumer prices excluding fresh food declined 0.1 percent in August from a year earlier, matching the median estimate of 45 economists surveyed by Bloomberg News.
Investors see an 8 percent chance of a rate increase at the central bank's next meeting on Oct. 10-11, down from 9 percent yesterday, according to Credit Suisse Group calculations using overnight index swap rates.
Gains in bonds may be limited by speculation an increase in stocks will erode demand for government debt. The Nikkei 225 Stocks Average has gained 3.1 percent so far this week, heading for the biggest rally in a month.
Stocks Pressure Bonds
Japan's bonds often move in the opposite direction of stocks. Benchmark 10-year yields had a correlation of 0.91 with the Nikkei 225 in the past month, according to Bloomberg data. A value of 1 means the two moved in lock step.
``There's no reason to be bearish on the Nikkei,'' said Hitomi Kimura, a bond strategist at JPMorgan Securities Japan Co. in Tokyo. ``If we break 17,000, there will be more pressure on bonds.'' The Nikkei 225 declined 0.3 percent to 16,783.98.
A separate government report showed Japan's industrial production surged at the fastest pace in almost four years in August. Production climbed a seasonally adjusted 3.4 percent from July, the Ministry of Economy, Trade and Industry said in Tokyo today. The median estimate of 47 economists surveyed by Bloomberg News was for a 3 percent increase.
A technical chart that traders use to predict price changes suggests bonds may rebound. The seven-day relative strength index on 10-year yields was 75 yesterday. A level above 70 implies selling of the security may have lost momentum.
The yield on the benchmark 10-year bond fell 5 basis points to 1.67 percent. Ten-year bond futures for December delivery climbed 0.53 to 134.97 in Tokyo.
ECB Lends 3.9 Billion Euros to Banks, Most Since 2004
Sept. 27 (Bloomberg) -- The European Central Bank lent 3.9 billion euros ($5.5 billion) at its penalty rate, the most in almost three years, suggesting credit markets are still unable to meet banks' borrowing needs.
The three-month London inter-bank offered rate for euros rose to 4.79 percent today, a six-year high, from 4.73 percent, according to the British Bankers' Association. The increase shows that the fallout from losses on subprime mortgages is still making banks reluctant to lend to each other. The U.S. commercial paper market shrank for a seventh straight week as a Federal Reserve interest-rate cut failed to ease credit concern.
``It's likely that money markets are going to be in a state of shock for some time to come,'' said Stuart Thomson, a bond fund manager at Resolution Investment Management in Glasgow, Scotland, which manages $60 billion. ``No one knows where the bodies are buried.''
The ECB lent the cash at its marginal rate of 5 percent yesterday, the Frankfurt-based central bank said in its daily statement today. The last time the ECB lent as much was in October 2004. It didn't identify the borrowers.
The ECB has held seven special auctions to help cash- strapped banks since Aug. 9. The central bank's inability to restore confidence in the money markets may prevent it from raising the region's benchmark interest rate, said David Page, an economist at Investec Securities in London. The ECB is scheduled to announce its next rate decision on Oct. 4. The key interest rate is currently 4 percent, 1 percentage point below the rate at which it loaned the cash today.
``While illiquidity remains and money markets continue to function improperly we do not believe the ECB has any desire to rock the boat,'' said Page.
U.K. Banks Reluctant
In the ECB's seven-day refinancing operation on Sept. 25, the difference between the rate of the lowest accepted bid and the central bank's benchmark widened to the most since Aug. 9, when the ECB lent $130 billion. The spread widened to 27 basis points, or 0.27 percentage point, from 15 basis points at last week's operation.
In the U.K., banks have been reluctant to turn to the Bank of England for emergency funding on concern it would fuel speculation they are having financial difficulties.
London-based Barclays Plc, the U.K.'s third-biggest bank, last month denied it faced liquidity problems after twice tapping the central bank's emergency overnight-lending facility.
`Remain Skittish'
A 10 billion-pound ($20 billion) auction of three-month money at a minimum rate of 6.75 percent by the Bank of England yesterday failed to generate any bids. Banks either had enough cash on hand or were reluctant to be seen to borrow at such a penalty rate, said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt.
``Institutional lenders are likely to remain skittish in this environment,'' said Lena Komileva, an economist in London at Tullett Prebon Plc, the world's second-biggest interdealer broker. ``There is no quick fix in the pipeline at least until the year-end.''
The overnight rate for euros fell 18 basis points to 4.17 percent, the BBA said today, while the corresponding rate for pounds climbed 14 basis points to 5.8 percent. The three-month rate for pounds dropped 1 basis point to 6.31 percent.
The three-month London inter-bank offered rate for euros rose to 4.79 percent today, a six-year high, from 4.73 percent, according to the British Bankers' Association. The increase shows that the fallout from losses on subprime mortgages is still making banks reluctant to lend to each other. The U.S. commercial paper market shrank for a seventh straight week as a Federal Reserve interest-rate cut failed to ease credit concern.
``It's likely that money markets are going to be in a state of shock for some time to come,'' said Stuart Thomson, a bond fund manager at Resolution Investment Management in Glasgow, Scotland, which manages $60 billion. ``No one knows where the bodies are buried.''
The ECB lent the cash at its marginal rate of 5 percent yesterday, the Frankfurt-based central bank said in its daily statement today. The last time the ECB lent as much was in October 2004. It didn't identify the borrowers.
The ECB has held seven special auctions to help cash- strapped banks since Aug. 9. The central bank's inability to restore confidence in the money markets may prevent it from raising the region's benchmark interest rate, said David Page, an economist at Investec Securities in London. The ECB is scheduled to announce its next rate decision on Oct. 4. The key interest rate is currently 4 percent, 1 percentage point below the rate at which it loaned the cash today.
``While illiquidity remains and money markets continue to function improperly we do not believe the ECB has any desire to rock the boat,'' said Page.
U.K. Banks Reluctant
In the ECB's seven-day refinancing operation on Sept. 25, the difference between the rate of the lowest accepted bid and the central bank's benchmark widened to the most since Aug. 9, when the ECB lent $130 billion. The spread widened to 27 basis points, or 0.27 percentage point, from 15 basis points at last week's operation.
In the U.K., banks have been reluctant to turn to the Bank of England for emergency funding on concern it would fuel speculation they are having financial difficulties.
London-based Barclays Plc, the U.K.'s third-biggest bank, last month denied it faced liquidity problems after twice tapping the central bank's emergency overnight-lending facility.
`Remain Skittish'
A 10 billion-pound ($20 billion) auction of three-month money at a minimum rate of 6.75 percent by the Bank of England yesterday failed to generate any bids. Banks either had enough cash on hand or were reluctant to be seen to borrow at such a penalty rate, said Christoph Rieger, a fixed-income strategist at Dresdner Kleinwort in Frankfurt.
``Institutional lenders are likely to remain skittish in this environment,'' said Lena Komileva, an economist in London at Tullett Prebon Plc, the world's second-biggest interdealer broker. ``There is no quick fix in the pipeline at least until the year-end.''
The overnight rate for euros fell 18 basis points to 4.17 percent, the BBA said today, while the corresponding rate for pounds climbed 14 basis points to 5.8 percent. The three-month rate for pounds dropped 1 basis point to 6.31 percent.
Chevron Phillips, Saudi Industrial Seek $1.8 Billion
Sept. 27 (Bloomberg) -- Chevron Phillips Chemical Co. LLC and Saudi Industrial Investment Group plan to borrow $1.8 billion to help finance a $5 billion petrochemical plant they will build at al-Jubail, eastern Saudi Arabia.
The companies invited a group of local and international banks to underwrite 15-year loans for the National Chevron Phillips project and asked for responses by the end of next month, said three people familiar with the plan, who asked not to be identified as the borrowing is private.
National Chevron is the third project with Saudi Industrial for Chevron Phillips Chemical, a venture between Chevron Corp. and ConocoPhillips based in The Woodlands, Texas. The companies opened their first al-Jubail plant in 1999 to produce chemicals including benzene, used to make detergents and insecticides, and in 2001 agreed to build a second plant due to open in the first quarter of 2008.
Banks are being asked to contribute between $125 million and $250 million each to the transaction, according to the people. The rest of the funding will come from the companies, Saudi government funds and the Export-Import Bank of the United States, they said.
National Chevron will produce chemicals including ethylene, propylene and polyethylene, Chevron Phillips spokesman Brian Cain said in an e-mailed statement today. He declined to comment on the project's financing or construction schedule, and calls to Saudi Industrial's Riyadh headquarters went unanswered.
Feedstock Reserves
Ready access to the world's biggest reserves of oil and gas feedstock has helped Saudi chemicals companies expand, while European and North American rivals struggle with rising prices for the same raw materials.
Saudi Basic Industries Corp., or Sabic, the world's biggest chemicals maker by market value, started the Saudi Kayan Petrochemical Co. last year to build the world's largest ethylene-glycol plant at al-Jubail.
Saudi Kayan raised $1.8 billion from an initial share sale earlier this year, and agreed to borrow another $1.8 billion through 15-year loans from ABN Amro Holding NV, Arab Banking Corp., BNP Paribas, HSBC Holdings Plc and Samba Financial Group, two people familiar with the deal said Sept. 24.
Persian Gulf petrochemicals projects worth as much as $90 billion may be delayed as banks hold back from lending until global debt markets stabilize, Abdullah al-Hagbani, secretary general of the Gulf Petrochemicals and Chemicals Association, said in an interview in Dubai today.
Banks are less likely to lend to infrastructure projects after being saddled with as much as $332 billion of unsold leveraged loans, Standard & Poor's said earlier this month. Between 2002 and 2010 petrochemical investment in Persian Gulf states will total about $90 billion, according to the GPCA, which represents 100 chemicals companies in the region.
The companies invited a group of local and international banks to underwrite 15-year loans for the National Chevron Phillips project and asked for responses by the end of next month, said three people familiar with the plan, who asked not to be identified as the borrowing is private.
National Chevron is the third project with Saudi Industrial for Chevron Phillips Chemical, a venture between Chevron Corp. and ConocoPhillips based in The Woodlands, Texas. The companies opened their first al-Jubail plant in 1999 to produce chemicals including benzene, used to make detergents and insecticides, and in 2001 agreed to build a second plant due to open in the first quarter of 2008.
Banks are being asked to contribute between $125 million and $250 million each to the transaction, according to the people. The rest of the funding will come from the companies, Saudi government funds and the Export-Import Bank of the United States, they said.
National Chevron will produce chemicals including ethylene, propylene and polyethylene, Chevron Phillips spokesman Brian Cain said in an e-mailed statement today. He declined to comment on the project's financing or construction schedule, and calls to Saudi Industrial's Riyadh headquarters went unanswered.
Feedstock Reserves
Ready access to the world's biggest reserves of oil and gas feedstock has helped Saudi chemicals companies expand, while European and North American rivals struggle with rising prices for the same raw materials.
Saudi Basic Industries Corp., or Sabic, the world's biggest chemicals maker by market value, started the Saudi Kayan Petrochemical Co. last year to build the world's largest ethylene-glycol plant at al-Jubail.
Saudi Kayan raised $1.8 billion from an initial share sale earlier this year, and agreed to borrow another $1.8 billion through 15-year loans from ABN Amro Holding NV, Arab Banking Corp., BNP Paribas, HSBC Holdings Plc and Samba Financial Group, two people familiar with the deal said Sept. 24.
Persian Gulf petrochemicals projects worth as much as $90 billion may be delayed as banks hold back from lending until global debt markets stabilize, Abdullah al-Hagbani, secretary general of the Gulf Petrochemicals and Chemicals Association, said in an interview in Dubai today.
Banks are less likely to lend to infrastructure projects after being saddled with as much as $332 billion of unsold leveraged loans, Standard & Poor's said earlier this month. Between 2002 and 2010 petrochemical investment in Persian Gulf states will total about $90 billion, according to the GPCA, which represents 100 chemicals companies in the region.
Royal Bank of Scotland's Notes Financing ABN Bid Soar
Sept. 27 (Bloomberg) -- Royal Bank of Scotland Group Plc notes financing the bid for ABN Amro Holding NV surged on the first day of trading.
The bank's 1.3 billion euros ($1.84 billion) of preference shares rose 4 percent, reducing the yield to 6.37 percent from 7.09 percent, according to UniCredit SpA prices.
Investors returning to the credit markets after the slump in July and August ordered about nine times more than the $7 billion borrowed by the Edinburgh-based bank, a spokesman said. Banks in the U.S. are today selling $10 billion of loans to fund Kohlberg Kravis Roberts & Co.'s acquisition of First Data Corp.
``The mood has definitely turned more positive, ensuring that performance of the issue has been quite spectacular,'' said Nigel Sillis, who helps manage $17 billion as director of fixed income and currency research at Baring Asset Management in London. ``RBS might be kicking themselves that they could've got away the deal a bit cheaper.''
Royal Bank of Scotland is leading a group including Banco Santader SA and Fortis in the biggest ever financial services takeover, vying with Barclays Plc for control of Amsterdam-based ABN Amro. Barclays's President Robert Diamond said Sept. 10 that Royal Bank of Scotland's 71.4 billion-euro bid ``will probably beat'' his offer.
Fixed Dividend
The debt sale included 750 million pounds ($1.52 billion) of preference shares with a fixed dividend of 8.162 percent, according to data compiled by Bloomberg. The lender has the right to buy back securities in October 2012.
The bank also sold C$600 million ($598 million) of 6.666 percent undated variable notes, according to data compiled by Bloomberg. The coupon on the notes will switch to a floating rate if Royal Bank of Scotland doesn't take up its option to buy back the securities in Oct. 2017.
The full of list of securities sold by Royal Bank of Scotland since Sept. 20 is detailed in a table below.
Description Amount Issued Dividend
US$ Preference Share $1.5 billion 7.64%
Fixed/Floating Notes C$600 million 6.66%
Preferred Capital Securities $1.6 billion 6.99%
Preference Shares 750 mln pounds 8.162%
Preference Shares 1.3 bln euros 7.0916%
Preference Shares $1.6 billion 7.25%
The bank's 1.3 billion euros ($1.84 billion) of preference shares rose 4 percent, reducing the yield to 6.37 percent from 7.09 percent, according to UniCredit SpA prices.
Investors returning to the credit markets after the slump in July and August ordered about nine times more than the $7 billion borrowed by the Edinburgh-based bank, a spokesman said. Banks in the U.S. are today selling $10 billion of loans to fund Kohlberg Kravis Roberts & Co.'s acquisition of First Data Corp.
``The mood has definitely turned more positive, ensuring that performance of the issue has been quite spectacular,'' said Nigel Sillis, who helps manage $17 billion as director of fixed income and currency research at Baring Asset Management in London. ``RBS might be kicking themselves that they could've got away the deal a bit cheaper.''
Royal Bank of Scotland is leading a group including Banco Santader SA and Fortis in the biggest ever financial services takeover, vying with Barclays Plc for control of Amsterdam-based ABN Amro. Barclays's President Robert Diamond said Sept. 10 that Royal Bank of Scotland's 71.4 billion-euro bid ``will probably beat'' his offer.
Fixed Dividend
The debt sale included 750 million pounds ($1.52 billion) of preference shares with a fixed dividend of 8.162 percent, according to data compiled by Bloomberg. The lender has the right to buy back securities in October 2012.
The bank also sold C$600 million ($598 million) of 6.666 percent undated variable notes, according to data compiled by Bloomberg. The coupon on the notes will switch to a floating rate if Royal Bank of Scotland doesn't take up its option to buy back the securities in Oct. 2017.
The full of list of securities sold by Royal Bank of Scotland since Sept. 20 is detailed in a table below.
Description Amount Issued Dividend
US$ Preference Share $1.5 billion 7.64%
Fixed/Floating Notes C$600 million 6.66%
Preferred Capital Securities $1.6 billion 6.99%
Preference Shares 750 mln pounds 8.162%
Preference Shares 1.3 bln euros 7.0916%
Preference Shares $1.6 billion 7.25%
European 10-Year Yields Hold Near Six-Week High on Money Supply
Sept. 27 (Bloomberg) -- Ten-year European bond yields held near a six-week high after a report showed money-supply growth was close to the fastest in 28 years last month, reinforcing the European Central Bank's concern about inflation pressures.
Benchmark government debt dropped earlier after reports showed consumer-price inflation quickened in six German states in September. ECB policy makers have this week said there are ``persisting'' risks for price growth in the 13-nation euro- region economy.
``Inflation is picking up again'' in the region, said David Keeble, head of fixed-income strategy at Calyon in London. ``I'm worried that if it stays above 2 percent going into next year the ECB will become increasingly hawkish.''
The yield on the benchmark 10-year German bund fell 1 basis point to 4.37 percent by 4:23 p.m. in London, after earlier rising to 4.41 percent, the highest since Aug. 14.
The price of the 4.25 percent security due July 2017 rose 0.09, or 90 euro cents per 1,000-euro ($1,415) face amount, to 99.01.
Benchmark 10-year bunds have returned investors 2.4 percent this quarter, compared with a return of 1.5 percent on two-year notes, according to indexes compiled by Merrill Lynch & Co.
M3 money supply, which policy makers use to gauge future inflation, expanded 11.6 percent in August from a year earlier, after growing 11.7 percent the month before, the ECB said today.
Policy Makers Speak
ECB forecasts ``indicate continued growth and persisting risks for inflation,'' policy maker Guy Quaden, who is also governor of Belgian's central bank, said yesterday.
Fellow ECB council member Nicholas Garganas said Sept. 24 the euro's advance to a record versus the dollar won't be enough to diminish price pressures in the $10.5 trillion economy. The common European currency rose to the strongest since its 1999 debut for a sixth day running today.
Central bank President Jean-Claude Trichet today said on Dutch television it's ``too early'' to decide whether financial- market turmoil will hurt economic growth in the euro region.
``At this stage, it is probably too early to make a judgment on the impact,'' Trichet said in an interview with the RTLZ channel, recorded yesterday and published on its Web site today. ``I can only say that uncertainty has augmented.''
Consumer prices in North Rhine-Westphalia, Hesse, Brandenburg, Baden Wuerttemberg, Saxony and Bavaria accelerated last month, separate reports today and yesterday showed. Germany is Europe's biggest economy and its bonds are the benchmark European government debt.
German Inflation
Inflation in Germany as a whole may accelerate to 2.5 percent this month from 2 percent in August, based on a harmonized European Union method, according to the median of 22 estimates in a Bloomberg News survey.
Germany's Federal Statistics Office is due to publish an initial CPI estimate later today, based on the reports from the six states.
Bunds reversed earlier declines after the Bloomberg purchasing managers index showed European retail-sales growth slowed in September, led by the sharpest drop in Italy since June 2005.
The gauge measuring retail sales slipped to a seasonally adjusted 50.5 from 51 in August. The index is based on a survey of more than 1,000 executives compiled for Bloomberg LP by NTC Economics Ltd. A reading above 50 indicates expansion.
The European Central Bank said today it loaned at least one bank 3.9 billion euros at its penalty rate, the most in almost three years, suggesting credit markets are still unable to meet the banking system's needs.
Italy today sold at auction 2.5 billion euros of 4.5 percent bonds due August 2010, 1.5 billion euros of seven-year floating- rate notes and 3 billion euros of 10-year 4.5 percent securities due 2018.
Benchmark government debt dropped earlier after reports showed consumer-price inflation quickened in six German states in September. ECB policy makers have this week said there are ``persisting'' risks for price growth in the 13-nation euro- region economy.
``Inflation is picking up again'' in the region, said David Keeble, head of fixed-income strategy at Calyon in London. ``I'm worried that if it stays above 2 percent going into next year the ECB will become increasingly hawkish.''
The yield on the benchmark 10-year German bund fell 1 basis point to 4.37 percent by 4:23 p.m. in London, after earlier rising to 4.41 percent, the highest since Aug. 14.
The price of the 4.25 percent security due July 2017 rose 0.09, or 90 euro cents per 1,000-euro ($1,415) face amount, to 99.01.
Benchmark 10-year bunds have returned investors 2.4 percent this quarter, compared with a return of 1.5 percent on two-year notes, according to indexes compiled by Merrill Lynch & Co.
M3 money supply, which policy makers use to gauge future inflation, expanded 11.6 percent in August from a year earlier, after growing 11.7 percent the month before, the ECB said today.
Policy Makers Speak
ECB forecasts ``indicate continued growth and persisting risks for inflation,'' policy maker Guy Quaden, who is also governor of Belgian's central bank, said yesterday.
Fellow ECB council member Nicholas Garganas said Sept. 24 the euro's advance to a record versus the dollar won't be enough to diminish price pressures in the $10.5 trillion economy. The common European currency rose to the strongest since its 1999 debut for a sixth day running today.
Central bank President Jean-Claude Trichet today said on Dutch television it's ``too early'' to decide whether financial- market turmoil will hurt economic growth in the euro region.
``At this stage, it is probably too early to make a judgment on the impact,'' Trichet said in an interview with the RTLZ channel, recorded yesterday and published on its Web site today. ``I can only say that uncertainty has augmented.''
Consumer prices in North Rhine-Westphalia, Hesse, Brandenburg, Baden Wuerttemberg, Saxony and Bavaria accelerated last month, separate reports today and yesterday showed. Germany is Europe's biggest economy and its bonds are the benchmark European government debt.
German Inflation
Inflation in Germany as a whole may accelerate to 2.5 percent this month from 2 percent in August, based on a harmonized European Union method, according to the median of 22 estimates in a Bloomberg News survey.
Germany's Federal Statistics Office is due to publish an initial CPI estimate later today, based on the reports from the six states.
Bunds reversed earlier declines after the Bloomberg purchasing managers index showed European retail-sales growth slowed in September, led by the sharpest drop in Italy since June 2005.
The gauge measuring retail sales slipped to a seasonally adjusted 50.5 from 51 in August. The index is based on a survey of more than 1,000 executives compiled for Bloomberg LP by NTC Economics Ltd. A reading above 50 indicates expansion.
The European Central Bank said today it loaned at least one bank 3.9 billion euros at its penalty rate, the most in almost three years, suggesting credit markets are still unable to meet the banking system's needs.
Italy today sold at auction 2.5 billion euros of 4.5 percent bonds due August 2010, 1.5 billion euros of seven-year floating- rate notes and 3 billion euros of 10-year 4.5 percent securities due 2018.
Moody's, McGraw-Hill Soar; Firms `Back From the Dead'
Sept. 27 (Bloomberg) -- Moody's Corp. and McGraw-Hill Cos. soared to the highest in more than a month in New York Stock Exchange trading on speculation their credit-rating units won't face penalties for their role in the subprime-mortgage crisis.
Moody's, the parent of Moody's Investors Service, gained $2.98, or 6.3 percent, to $50.37. McGraw-Hill, owner of Standard & Poor's, rose $2.36, or 4.7 percent, to $52.09.
Officials at Moody's and S&P, the two largest credit rating companies, appeared before the Senate Banking Committee yesterday to face criticism that they had inflated credit ratings given to subprime securities to win more business, helping fuel a surge in lending to people with poor credit. Their presentations helped convince investors the companies will successfully defend themselves against any claims.
``The rating agencies are coming back from the dead,'' said Edward Atorino, an analyst with Benchmark Co. in New York. ``Representatives from Moody's and S&P did an outstanding job before Congress explaining how the rating process works. Worries that the rating agencies are going to be found to have been complicit in the subprime meltdown are fading.''
New York-based Moody's was down 31 percent before today and McGraw-Hill was down 27 percent, partly because of concern the companies may be found liable for losses incurred by investors as subprime securities slumped.
Lawmakers on the Senate committee chastised S&P and Moody's for waiting too long to downgrade subprime bonds. Some of the securities had fallen more than 50 cents on the dollar before any ratings downgrades, as defaults on the underlying mortgages rose.
`No Evidence'
S&P Executive Vice President of Credit-Market Services Vickie Tillman, and Michael Kanef, group managing director, asset finance group, of Moody's Financial Services disputed claims that they understated the risk of subprime mortgages to ensure issuers continued to pay for ratings services.
``There is no evidence, none at all, to support this contention with respect to S&P,'' Tillman told the hearing.
S&P doesn't structure debt transactions, and the company's criteria for ratings are ``absolutely transparent,'' Tillman said. There isn't any collaboration between S&P and debt issuers on constructing mortgage-backed securities, she said.
``We have an open dialogue with investment bankers,'' Tillman said. ``We don't tell them how to make it better. That's up to them.''
In his prepared testimony, Kanef of Moody's said the company has ``successfully managed related conflicts of interest and provided the market with objective, independent and unbiased credit opinions.''
Moody's, the parent of Moody's Investors Service, gained $2.98, or 6.3 percent, to $50.37. McGraw-Hill, owner of Standard & Poor's, rose $2.36, or 4.7 percent, to $52.09.
Officials at Moody's and S&P, the two largest credit rating companies, appeared before the Senate Banking Committee yesterday to face criticism that they had inflated credit ratings given to subprime securities to win more business, helping fuel a surge in lending to people with poor credit. Their presentations helped convince investors the companies will successfully defend themselves against any claims.
``The rating agencies are coming back from the dead,'' said Edward Atorino, an analyst with Benchmark Co. in New York. ``Representatives from Moody's and S&P did an outstanding job before Congress explaining how the rating process works. Worries that the rating agencies are going to be found to have been complicit in the subprime meltdown are fading.''
New York-based Moody's was down 31 percent before today and McGraw-Hill was down 27 percent, partly because of concern the companies may be found liable for losses incurred by investors as subprime securities slumped.
Lawmakers on the Senate committee chastised S&P and Moody's for waiting too long to downgrade subprime bonds. Some of the securities had fallen more than 50 cents on the dollar before any ratings downgrades, as defaults on the underlying mortgages rose.
`No Evidence'
S&P Executive Vice President of Credit-Market Services Vickie Tillman, and Michael Kanef, group managing director, asset finance group, of Moody's Financial Services disputed claims that they understated the risk of subprime mortgages to ensure issuers continued to pay for ratings services.
``There is no evidence, none at all, to support this contention with respect to S&P,'' Tillman told the hearing.
S&P doesn't structure debt transactions, and the company's criteria for ratings are ``absolutely transparent,'' Tillman said. There isn't any collaboration between S&P and debt issuers on constructing mortgage-backed securities, she said.
``We have an open dialogue with investment bankers,'' Tillman said. ``We don't tell them how to make it better. That's up to them.''
In his prepared testimony, Kanef of Moody's said the company has ``successfully managed related conflicts of interest and provided the market with objective, independent and unbiased credit opinions.''
KKR's Banks Sell $9.4 Billion of First Data Loans
Sept. 27 (Bloomberg) -- Kohlberg Kravis Roberts & Co.'s banks sold $9.4 billion of loans used for the buyout of First Data Corp. in the biggest offering of high-yield loans since corporate funding dried up in July, according to people with knowledge of the transaction.
Buyers are starting to return to the market after record mortgage foreclosures prompted investors to shun all but the safest debt. Underwriters led by Citigroup Inc. and Credit Suisse Group had to offer a 3 to 4 percent discount to sell the First Data loans, and are still left holding remaining debt to fund the $26 billion buyout of the Greenwood Village, Colorado- based company.
``It's a significant event on the road back to normality,'' said John Pattullo, who manages about $2 billion of mainly high- yield bonds and loans at Henderson Global Investors in London.
Banks for First Data, the biggest processor of credit-card payments, cut the loan sale to $5 billion earlier this month because of a lack of demand. The six banks issued $7.6 billion of the debt at a discount of 4 percent of face value, the people said. A further $1.8 billion was sold at a 3 percent cut, said the people, who declined to be identified because details of the sale are private.
The discounted price represents a loss of about $360 million for the banks before fees. The banks are also hoping to sell $9 billion in high-yield bonds. The banks provided First Data a $2 billion revolving line of credit, which had been parceled out.
Mark Downs
Banks underwriting the financing for LBOs commit to raise the money and earn fees to compensate for the risk of having to take on any debt they can't sell to a wider group of investors. They have to mark down the value of the debt and assume a loss if the price of high-yield loans falls below 100 percent.
Underwriters had about $370 billion in debt they planned to sell as of Sept. 21, according to analysts at Bank of America Corp.
``It's a virtuous cycle,'' said Raja Visweswaran, Bank of America's head of European credit strategy in London. ``The more deals that clear the market, the more confidence from investors and less panic from deal arrangers.''
Leveraged buyouts, which were at a record $613 billion in the first half of the year, slowed to $167.4 billion since then as banks stopped financing new deals, Bloomberg data show. Sales of U.S. leveraged loans declined to a total $12 billion so far this month from more than $50 billion in June, according to Standard & Poor's.
Reluctant to Lend
The European Central Bank in Frankfurt lent 3.9 billion euros ($5.5 billion), the most in almost three years, at its penalty rate today, indicating the fallout from the subprime slump is still making banks reluctant to lend to each other.
The LCDX index, a benchmark indicator for the U.S. leveraged loan market, shows confidence has improved from the low in July. The index has risen 8.1 percent to 97.3 from 90 on July 30, and climbed 0.05 today, according to Goldman Sachs Group Inc.
First Data's loans pay annual interest of 2.75 percentage points over the London interbank offered rate, unchanged since the deal was announced in July.
With a 4 cents on the dollar price discount, that raises the yield to about 4.3 percentage points more than Libor if the loan is called in 3 years, according to data compiled by Bloomberg. A 3 cent discount implies a yield premium over Libor of 3.81 percentage points if called in 39 months.
Mortgage Rout
HSBC Holdings Plc, one of the First Data underwriters, will keep about $2 billion of the loans until the end of the year, according to people familiar with the situation. HSBC spokesman Donal McCarthy in New York declined to comment.
Lehman Brothers Holding Inc., Goldman Sachs Group Inc. and Merrill Lynch & Co. also managed the sale.
New York-based KKR, run by Henry Kravis and George Roberts, agreed to buy First Data in April, before the subprime mortgage rout caused the collapse of collateralized debt obligations that buy leveraged loans.
CDO sales fell to the lowest in more than a year in August to about $16 billion, down from $157 billion in March, the most active month of this year, JPMorgan Chase & Co. analysts said in a Sept. 10 report.
Another KKR deal, the 9 billion-pound ($18 billion) financing for the acquisition of U.K. pharmacy chain Alliance Boots, has languished on underwriters' books since July.
High-yield, or junk-rated, companies have ratings of Ba1 and below at Moody's Investors Service and BB+ and lower at Standard & Poor's. The debt still being prepared for sale may weigh on demand, said John Weaver, a portfolio manager at McGlinn Capital Management in Wyomissing, Pennsylvania.
``It's a pretty scary thing for the market how much supply is out there ready, willing and waiting to come,'' Weaver said. ``People aren't going to forget that.''
Buyers are starting to return to the market after record mortgage foreclosures prompted investors to shun all but the safest debt. Underwriters led by Citigroup Inc. and Credit Suisse Group had to offer a 3 to 4 percent discount to sell the First Data loans, and are still left holding remaining debt to fund the $26 billion buyout of the Greenwood Village, Colorado- based company.
``It's a significant event on the road back to normality,'' said John Pattullo, who manages about $2 billion of mainly high- yield bonds and loans at Henderson Global Investors in London.
Banks for First Data, the biggest processor of credit-card payments, cut the loan sale to $5 billion earlier this month because of a lack of demand. The six banks issued $7.6 billion of the debt at a discount of 4 percent of face value, the people said. A further $1.8 billion was sold at a 3 percent cut, said the people, who declined to be identified because details of the sale are private.
The discounted price represents a loss of about $360 million for the banks before fees. The banks are also hoping to sell $9 billion in high-yield bonds. The banks provided First Data a $2 billion revolving line of credit, which had been parceled out.
Mark Downs
Banks underwriting the financing for LBOs commit to raise the money and earn fees to compensate for the risk of having to take on any debt they can't sell to a wider group of investors. They have to mark down the value of the debt and assume a loss if the price of high-yield loans falls below 100 percent.
Underwriters had about $370 billion in debt they planned to sell as of Sept. 21, according to analysts at Bank of America Corp.
``It's a virtuous cycle,'' said Raja Visweswaran, Bank of America's head of European credit strategy in London. ``The more deals that clear the market, the more confidence from investors and less panic from deal arrangers.''
Leveraged buyouts, which were at a record $613 billion in the first half of the year, slowed to $167.4 billion since then as banks stopped financing new deals, Bloomberg data show. Sales of U.S. leveraged loans declined to a total $12 billion so far this month from more than $50 billion in June, according to Standard & Poor's.
Reluctant to Lend
The European Central Bank in Frankfurt lent 3.9 billion euros ($5.5 billion), the most in almost three years, at its penalty rate today, indicating the fallout from the subprime slump is still making banks reluctant to lend to each other.
The LCDX index, a benchmark indicator for the U.S. leveraged loan market, shows confidence has improved from the low in July. The index has risen 8.1 percent to 97.3 from 90 on July 30, and climbed 0.05 today, according to Goldman Sachs Group Inc.
First Data's loans pay annual interest of 2.75 percentage points over the London interbank offered rate, unchanged since the deal was announced in July.
With a 4 cents on the dollar price discount, that raises the yield to about 4.3 percentage points more than Libor if the loan is called in 3 years, according to data compiled by Bloomberg. A 3 cent discount implies a yield premium over Libor of 3.81 percentage points if called in 39 months.
Mortgage Rout
HSBC Holdings Plc, one of the First Data underwriters, will keep about $2 billion of the loans until the end of the year, according to people familiar with the situation. HSBC spokesman Donal McCarthy in New York declined to comment.
Lehman Brothers Holding Inc., Goldman Sachs Group Inc. and Merrill Lynch & Co. also managed the sale.
New York-based KKR, run by Henry Kravis and George Roberts, agreed to buy First Data in April, before the subprime mortgage rout caused the collapse of collateralized debt obligations that buy leveraged loans.
CDO sales fell to the lowest in more than a year in August to about $16 billion, down from $157 billion in March, the most active month of this year, JPMorgan Chase & Co. analysts said in a Sept. 10 report.
Another KKR deal, the 9 billion-pound ($18 billion) financing for the acquisition of U.K. pharmacy chain Alliance Boots, has languished on underwriters' books since July.
High-yield, or junk-rated, companies have ratings of Ba1 and below at Moody's Investors Service and BB+ and lower at Standard & Poor's. The debt still being prepared for sale may weigh on demand, said John Weaver, a portfolio manager at McGlinn Capital Management in Wyomissing, Pennsylvania.
``It's a pretty scary thing for the market how much supply is out there ready, willing and waiting to come,'' Weaver said. ``People aren't going to forget that.''
Mexico to Start Selling Three-Year Inflation Bonds
Sept. 27 (Bloomberg) -- Mexico plans to sell three-year inflation-linked bonds for the first time since 1998 as rising food and fuel prices buoy investor demand for securities linked to the consumer price index.
Mexico plans to issue 300 million inflation units, or about 1.16 billion pesos ($106 million), of the three-year security every four weeks in the fourth quarter, according to the Finance Ministry's quarterly financing plan released today. One inflation unit, or UDI, equals about 3.86 pesos (35 cents). The government will continue offering 10-, 20- and 30-year maturities linked to the consumer price index.
``Inflation bonds are attractive given the current environment,'' said Eduardo Perez, who helps oversee about $5 billion in assets in Mexico City at Grupo Nacional Provincial SA, the country's biggest insurance company.
Average bids in sales of 10-year inflation bonds in the third quarter were two-thirds higher than the previous three months as investors anticipated the approval of a tax bill that threatened to fan inflation. Congressional passage of the tax overhaul earlier this month prompted central bankers to say last week that the inflation outlook has deteriorated.
Banco de Mexico, which kept its benchmark lending rate at 7.25 percent at its Sept. 21 meeting, has failed to meet its 2- to-4 percent inflation target in eight of the past 12 months.
Gasoline Tax
President Felipe Calderon, in a bid to quell inflation, yesterday postponed the imposition of a new 5.5 percent gasoline tax and halted fuel-price increases for the rest of the year.
Mexico's association of retailers also agreed to cap the price of a bread roll at 1 peso to keep soaring wheat prices from hurting the poor.
``This was a positive step,'' Perez said. Still, ``it's a partial solution that just postpones price increases.''
Yields on Mexico's 7.25 percent bond due December 2016, the government's 10-year fixed-rate benchmark in pesos, fell 2 basis points, or 0.02 percentage point, to 7.84 percent at 3:06 p.m. in New York. The price, which moves inversely to the yield, rose 0.14 centavo to 96.13 centavos, according to Banco Santander SA.
The first sale of the three-year inflation bond, known as Udibono, will be on Oct. 2, the Finance Ministry said. Mexico's government introduced the three-year inflation bond in 1996 and stopped selling it two years later.
Break-Even Rate
The re-introduction of the shortest-term inflation bond suggests the government may begin to sell a five-year inflation maturity next year as it seeks to add securities along the yield curve, said Salvador Orozco, head of fixed-income research at Santander in Mexico City.
The government today said the three-year inflation bond will pay a 3.25 percent coupon. The fixed-rate bond of the same maturity yields 7.63 percent. Should the government sell the inflation bonds at par, the gap between the yields on the two securities will be 4.38 percentage points.
This gap, called the break-even rate, represents the average rate of inflation needed over the life of the inflation securities for them to return as much as regular bonds.
In its financing plan today, the government said the amount of fixed-rate debt and peso Treasury bills it sells will remain unchanged in the fourth quarter.
Petroleos Mexicanos, the state-owned oil monopoly, may issue up to 17.5 billion pesos of bonds in the local market, the government said.
Mexico's peso was little changed today at 10.9223 per dollar.
Mexico plans to issue 300 million inflation units, or about 1.16 billion pesos ($106 million), of the three-year security every four weeks in the fourth quarter, according to the Finance Ministry's quarterly financing plan released today. One inflation unit, or UDI, equals about 3.86 pesos (35 cents). The government will continue offering 10-, 20- and 30-year maturities linked to the consumer price index.
``Inflation bonds are attractive given the current environment,'' said Eduardo Perez, who helps oversee about $5 billion in assets in Mexico City at Grupo Nacional Provincial SA, the country's biggest insurance company.
Average bids in sales of 10-year inflation bonds in the third quarter were two-thirds higher than the previous three months as investors anticipated the approval of a tax bill that threatened to fan inflation. Congressional passage of the tax overhaul earlier this month prompted central bankers to say last week that the inflation outlook has deteriorated.
Banco de Mexico, which kept its benchmark lending rate at 7.25 percent at its Sept. 21 meeting, has failed to meet its 2- to-4 percent inflation target in eight of the past 12 months.
Gasoline Tax
President Felipe Calderon, in a bid to quell inflation, yesterday postponed the imposition of a new 5.5 percent gasoline tax and halted fuel-price increases for the rest of the year.
Mexico's association of retailers also agreed to cap the price of a bread roll at 1 peso to keep soaring wheat prices from hurting the poor.
``This was a positive step,'' Perez said. Still, ``it's a partial solution that just postpones price increases.''
Yields on Mexico's 7.25 percent bond due December 2016, the government's 10-year fixed-rate benchmark in pesos, fell 2 basis points, or 0.02 percentage point, to 7.84 percent at 3:06 p.m. in New York. The price, which moves inversely to the yield, rose 0.14 centavo to 96.13 centavos, according to Banco Santander SA.
The first sale of the three-year inflation bond, known as Udibono, will be on Oct. 2, the Finance Ministry said. Mexico's government introduced the three-year inflation bond in 1996 and stopped selling it two years later.
Break-Even Rate
The re-introduction of the shortest-term inflation bond suggests the government may begin to sell a five-year inflation maturity next year as it seeks to add securities along the yield curve, said Salvador Orozco, head of fixed-income research at Santander in Mexico City.
The government today said the three-year inflation bond will pay a 3.25 percent coupon. The fixed-rate bond of the same maturity yields 7.63 percent. Should the government sell the inflation bonds at par, the gap between the yields on the two securities will be 4.38 percentage points.
This gap, called the break-even rate, represents the average rate of inflation needed over the life of the inflation securities for them to return as much as regular bonds.
In its financing plan today, the government said the amount of fixed-rate debt and peso Treasury bills it sells will remain unchanged in the fourth quarter.
Petroleos Mexicanos, the state-owned oil monopoly, may issue up to 17.5 billion pesos of bonds in the local market, the government said.
Mexico's peso was little changed today at 10.9223 per dollar.
U.S. Treasuries Head for Biggest Quarterly Gain in Five Years
Sept. 28 (Bloomberg) -- U.S. Treasuries headed for their biggest quarterly gain in five years on speculation slowing economic growth will lead the Federal Reserve to cut interest rates at least once more in 2007.
Government securities returned 3.8 percent since the end of June, based on an index compiled by Merrill Lynch & Co., as the central bank trimmed borrowing costs by a bigger-than-expected half percentage point this month. Former President Bill Clinton yesterday said the economy may be facing a recession.
``U.S. Treasury yields will fall,'' said Hiromasa Nakamura, who helps oversee the equivalent of $26 billion at Mizuho Asset Management Co. in Tokyo. ``The U.S. economy, especially the housing market, is declining.''
The benchmark 10-year yield was little changed at 4.57 percent as of 11:08 a.m. in Singapore, according to bond broker Cantor Fitzgerald LP. The price of the 4 3/4 percent note due in August 2017 fell 1/32, or 31 cents per $1,000 face amount, to 101 13/32.
The yield will decline to 4 percent in six months, said Nakamura, who has been betting on gains in Treasuries all year. A Bloomberg News survey of economists projects the yield will rise to 4.75 percent by the middle of 2008, with the most recent forecasts given the heaviest weightings.
`A Real Struggle'
The Treasury rally was triggered by a sudden surge in corporate borrowing costs tied to U.S. mortgage defaults among people with poor credit histories. Investors sought the relative safety of debt as the government said the economy lost jobs in August for the first time in four years and sales of new homes fell to the lowest in more than seven years.
``There is a real struggle most Americans are having to keep themselves afloat,'' Clinton said in an interview.
Interest-rate futures show most traders expect quarter-point rate cuts at the Fed's next two monetary policy meetings on Oct. 31 and Dec. 11.
The difference between two- and 10-year yields widened to 61 basis points from 44 basis points a month ago, indicating higher demand for shorter maturities, those most sensitive to what the central bank does with interest rates.
Gains today were limited before a Commerce Department report that economists said will show personal spending rose last month. The figure will show consumption hasn't been hurt as other parts of the economy slow, said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC Co. in Tokyo. Consumption accounts for about 70 percent of U.S. gross domestic product.
``I recommend selling, especially short-term Treasuries, Nagai said. ``I don't think there will be a rate cut in October. U.S. economic growth will continue.''
The central bank lowered its target for the overnight lending rate between banks to 4.75 percent from 5.25 percent on Sept. 18, its first cut since June 2003.
Fed Governor Frederic Mishkin said inflation has come down. ``Tighter monetary policy and a commitment to price stability by central banks throughout the world have led to lower inflation,'' he said yesterday.
Mishkin, along with Fed officials Dennis Lockhart, Janet Yellen and William Poole, are scheduled to speak today.
Government securities returned 3.8 percent since the end of June, based on an index compiled by Merrill Lynch & Co., as the central bank trimmed borrowing costs by a bigger-than-expected half percentage point this month. Former President Bill Clinton yesterday said the economy may be facing a recession.
``U.S. Treasury yields will fall,'' said Hiromasa Nakamura, who helps oversee the equivalent of $26 billion at Mizuho Asset Management Co. in Tokyo. ``The U.S. economy, especially the housing market, is declining.''
The benchmark 10-year yield was little changed at 4.57 percent as of 11:08 a.m. in Singapore, according to bond broker Cantor Fitzgerald LP. The price of the 4 3/4 percent note due in August 2017 fell 1/32, or 31 cents per $1,000 face amount, to 101 13/32.
The yield will decline to 4 percent in six months, said Nakamura, who has been betting on gains in Treasuries all year. A Bloomberg News survey of economists projects the yield will rise to 4.75 percent by the middle of 2008, with the most recent forecasts given the heaviest weightings.
`A Real Struggle'
The Treasury rally was triggered by a sudden surge in corporate borrowing costs tied to U.S. mortgage defaults among people with poor credit histories. Investors sought the relative safety of debt as the government said the economy lost jobs in August for the first time in four years and sales of new homes fell to the lowest in more than seven years.
``There is a real struggle most Americans are having to keep themselves afloat,'' Clinton said in an interview.
Interest-rate futures show most traders expect quarter-point rate cuts at the Fed's next two monetary policy meetings on Oct. 31 and Dec. 11.
The difference between two- and 10-year yields widened to 61 basis points from 44 basis points a month ago, indicating higher demand for shorter maturities, those most sensitive to what the central bank does with interest rates.
Gains today were limited before a Commerce Department report that economists said will show personal spending rose last month. The figure will show consumption hasn't been hurt as other parts of the economy slow, said Yasutoshi Nagai, chief economist at Daiwa Securities SMBC Co. in Tokyo. Consumption accounts for about 70 percent of U.S. gross domestic product.
``I recommend selling, especially short-term Treasuries, Nagai said. ``I don't think there will be a rate cut in October. U.S. economic growth will continue.''
The central bank lowered its target for the overnight lending rate between banks to 4.75 percent from 5.25 percent on Sept. 18, its first cut since June 2003.
Fed Governor Frederic Mishkin said inflation has come down. ``Tighter monetary policy and a commitment to price stability by central banks throughout the world have led to lower inflation,'' he said yesterday.
Mishkin, along with Fed officials Dennis Lockhart, Janet Yellen and William Poole, are scheduled to speak today.
Hong Kong Stocks Set for Best Quarter Since 2003
Sept. 28 (Bloomberg) -- Hong Kong stocks are poised for their biggest quarterly gain since the SARS epidemic was contained in 2003, surging on speculation money from China's mainland will pour in as the government eases investment curbs.
China's government said Aug. 20 it will allow some individual investors to buy shares in Hong Kong, where valuations are less than half those on the mainland. The market got a boost when some Chinese mutual funds were also cleared to invest.
The Hang Seng Index, which yesterday closed above 27,000 for the first time, has gained 24 percent since the end of June. It hasn't done better since a 25 percent advance in the second quarter of 2003, when the World Health Organization declared the city free of the deadly severe acute respiratory syndrome virus.
``Given the prospect of Chinese liquidity moving into the market, there's no telling how quickly, or how high, the index would go,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore. ``Is it thinkable the Hang Seng could reach 30,000 very soon? Definitely.''
Chinese investors may funnel $100 billion into Hong Kong in the next 12 months, Adrian Mowat, JPMorgan Chase & Co.'s Hong Kong-based chief Asian strategist, wrote in a Sept. 18 report. William Liu, CLSA Ltd.'s head of China research, expects as much as $45 billion in the next six months. Daily turnover on the city's bourse has averaged $HK96 billion ($12.4 billion) this quarter and reached a record $HK147 billion yesterday.
Limit Growth
China's government is relaxing curbs on overseas investment to help prevent economic growth and domestic share prices from climbing too far, too fast. Growth reached a 12-year high of 11.9 percent in the second quarter, inflation is at a decade- high 6.5 percent and the CSI 300 Index has quadrupled in the past year, the best performance among 89 global benchmarks tracked by Bloomberg.
The Hang Seng Index had its biggest one-day gain in almost nine years on Aug. 20, when China's currency regulator said Chinese citizens with a Bank of China Ltd. account in Tianjin's Binhai economic zone will be allowed to invest in Hong Kong stocks. It's jumped another 25 percent since then on speculation China's households will pour some of their 17 trillion yuan ($2.3 trillion) of savings into the city's equities once restrictions are fully relaxed.
The market continued to rise this week even after the China Banking Regulatory Commission said on Sept. 21 that a quota on share purchases through the program will be imposed. Easing controls too rapidly may lead to an exodus of funds from the Shanghai and Shenzhen stock markets and increase financial risks, officials from the banking regulator said on Sept. 5.
Quotas Awarded
Signs that more Chinese mutual fund managers will be allowed to invest overseas has also helped boost Hong Kong equities. The government has so far granted $22 billion of quotas for investment abroad to select banks and fund managers under its qualified domestic institutional investor, or QDII, program.
Harvest Fund Management Co., Deutsche Bank AG's partner in China, today said it received regulatory approval to start investing overseas. It joins China Southern Fund Management Co., China Asset Management Co. and Hua An Fund Management Co in gaining official clearance.
The Hang Seng China Enterprises Index, which measures 43 so-called H shares of Chinese companies listed in Hong Kong, has climbed 26 percent in the past month, the best performance among 89 global benchmarks tracked by Bloomberg. The Hang Seng is in second place, with an 18 percent increase.
Too Costly?
``Hong Kong is the sort of market that can attract money quickly,'' said Shun Tak Pang, a Hong Kong-based investor at JPMorgan Chase & Co.'s private banking unit, which looks after more than $400 billion of global assets. ``We have all this news about China money flowing in. It's a very unique story.''
Some analysts caution that the city's stocks have become too expensive given the outlook for profits. The Hang Seng is valued at 19.5 times estimated earnings, the highest since March 2004. That compares with 44 times for China's CSI 300 Index.
The Hang Seng's 14-day relative strength index ended yesterday at 80, 10 points above the threshold some investors view as a trigger to sell.
``The market will face a correction at 28,000,'' said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. ``Whatever goes up, must come down sometime. I have mountain sickness right now. I need to move down to a lower level to breathe.''
Aberdeen's Hugh Young isn't convinced. About a fifth of his company's investments are in Hong Kong stocks.
``We thought the mainland Chinese stock market was expensive at the start of the year, and look what it's done,'' he said.
China's government said Aug. 20 it will allow some individual investors to buy shares in Hong Kong, where valuations are less than half those on the mainland. The market got a boost when some Chinese mutual funds were also cleared to invest.
The Hang Seng Index, which yesterday closed above 27,000 for the first time, has gained 24 percent since the end of June. It hasn't done better since a 25 percent advance in the second quarter of 2003, when the World Health Organization declared the city free of the deadly severe acute respiratory syndrome virus.
``Given the prospect of Chinese liquidity moving into the market, there's no telling how quickly, or how high, the index would go,'' said Hugh Young, who oversees $50 billion at Aberdeen Asset Management Asia Ltd. in Singapore. ``Is it thinkable the Hang Seng could reach 30,000 very soon? Definitely.''
Chinese investors may funnel $100 billion into Hong Kong in the next 12 months, Adrian Mowat, JPMorgan Chase & Co.'s Hong Kong-based chief Asian strategist, wrote in a Sept. 18 report. William Liu, CLSA Ltd.'s head of China research, expects as much as $45 billion in the next six months. Daily turnover on the city's bourse has averaged $HK96 billion ($12.4 billion) this quarter and reached a record $HK147 billion yesterday.
Limit Growth
China's government is relaxing curbs on overseas investment to help prevent economic growth and domestic share prices from climbing too far, too fast. Growth reached a 12-year high of 11.9 percent in the second quarter, inflation is at a decade- high 6.5 percent and the CSI 300 Index has quadrupled in the past year, the best performance among 89 global benchmarks tracked by Bloomberg.
The Hang Seng Index had its biggest one-day gain in almost nine years on Aug. 20, when China's currency regulator said Chinese citizens with a Bank of China Ltd. account in Tianjin's Binhai economic zone will be allowed to invest in Hong Kong stocks. It's jumped another 25 percent since then on speculation China's households will pour some of their 17 trillion yuan ($2.3 trillion) of savings into the city's equities once restrictions are fully relaxed.
The market continued to rise this week even after the China Banking Regulatory Commission said on Sept. 21 that a quota on share purchases through the program will be imposed. Easing controls too rapidly may lead to an exodus of funds from the Shanghai and Shenzhen stock markets and increase financial risks, officials from the banking regulator said on Sept. 5.
Quotas Awarded
Signs that more Chinese mutual fund managers will be allowed to invest overseas has also helped boost Hong Kong equities. The government has so far granted $22 billion of quotas for investment abroad to select banks and fund managers under its qualified domestic institutional investor, or QDII, program.
Harvest Fund Management Co., Deutsche Bank AG's partner in China, today said it received regulatory approval to start investing overseas. It joins China Southern Fund Management Co., China Asset Management Co. and Hua An Fund Management Co in gaining official clearance.
The Hang Seng China Enterprises Index, which measures 43 so-called H shares of Chinese companies listed in Hong Kong, has climbed 26 percent in the past month, the best performance among 89 global benchmarks tracked by Bloomberg. The Hang Seng is in second place, with an 18 percent increase.
Too Costly?
``Hong Kong is the sort of market that can attract money quickly,'' said Shun Tak Pang, a Hong Kong-based investor at JPMorgan Chase & Co.'s private banking unit, which looks after more than $400 billion of global assets. ``We have all this news about China money flowing in. It's a very unique story.''
Some analysts caution that the city's stocks have become too expensive given the outlook for profits. The Hang Seng is valued at 19.5 times estimated earnings, the highest since March 2004. That compares with 44 times for China's CSI 300 Index.
The Hang Seng's 14-day relative strength index ended yesterday at 80, 10 points above the threshold some investors view as a trigger to sell.
``The market will face a correction at 28,000,'' said Francis Lun, general manager at Fulbright Securities Ltd. in Hong Kong. ``Whatever goes up, must come down sometime. I have mountain sickness right now. I need to move down to a lower level to breathe.''
Aberdeen's Hugh Young isn't convinced. About a fifth of his company's investments are in Hong Kong stocks.
``We thought the mainland Chinese stock market was expensive at the start of the year, and look what it's done,'' he said.
Japanese Stocks Fall on Signs Economy Is Not Recovering
Sept. 28 (Bloomberg) -- Japanese stocks fell, led by domestic-demand oriented companies on signs the world's second- largest economy isn't recovering after unemployment unexpectedly rose and consumer prices dropped for a seventh month.
Circle K Sunkus Co. declined 4 percent after the convenience store chain said it expects first-half profit to slide 20 percent. Millea Holdings Inc., the largest publicly traded insurer, lost 2.8 percent. The Bank of Japan's Tankan survey will probably show business sentiment dropped to the lowest level since June 2006.
``A fundamental perspective does not favor domestic demand companies, as their opportunities for growth look slim,'' said Hiroyoshi Nakagawa, who helps oversee about $1 billion in Asian equities at Societe Generale Asset Management Co. ``Disposable income in Japan is not increasing, and the middle class is shrinking, which indicates that earnings at domestic companies are not going to improve.''
The Nikkei 225 Stock Average dropped 47.57, or 0.3 percent, to 16,784.65 as of the 11 a.m. break in Tokyo. The Topix index lost 6.04, or 0.4 percent, to 1,609.11. For the week, the Nikkei has gained 2.9 percent and Topix has risen 3.7 percent.
Inpex Holdings Inc., Japan's largest oil explorer, gained after oil prices rose 3.2 percent to the second-highest close ever.
Circle K Sunkus, Japan's third-largest convenience store operator, fell 74 yen to 1,760. Millea Holdings lost 130 yen to 4,570.
The consumer price index excluding fresh food fell 0.1 percent in August from a year earlier, as retailers absorbed higher costs to keep prices low and attract customers. Unemployment rose to 3.8 percent from 3.6 percent. Economists had forecast the rate would be unchanged.
Tankan Survey
The Tankan survey, set to be released on Oct. 1, will probably show business sentiment among major manufactures fell to 21 points in the third quarter from 23, according to economists.
``Next week's Tankan is expected to be weak as the yen has started to strengthen and the subprime problem is in the back of everyone's mind,'' said Daisuke Shimazu, an investment manager at Sumitomo Trust & Banking Co., which has about $200 billion in assets. ``There's no reason to be buying domestic demand stocks.''
Inpex rose 10,000 yen, or 0.9 percent, to 1.18 million. Japan Petroleum Exploration Co., the nation's second-biggest oil explorer, added 100 yen, or 1.2 percent, to 8,450. Crude oil for November delivery rose $2.58 to settle at $82.88 a barrel in New York, the biggest one-day gain since May 17.
Mitsubishi Heavy
Mitsubishi Heavy Industries Ltd., Asia's biggest maker of power equipment, rose 22 yen, or 3 percent to 759 after the company said it will sign a contract today to supply a nuclear station in China, the world's fastest-growing major economy.
Daiichi Sankyo Co., Japan's third-largest drugmaker, climbed 80 yen, or 2.4 percent, to 3,380 after it won U.S. approval for a new blood-pressure treatment that combines its Benicar with the active ingredient in Pfizer Inc.'s Norvasc.
Takefuji Corp., Japan's fourth-largest consumer lender, jumped 105 yen, or 4.9 percent to 2,260 yen. It earlier rose as much as 11 percent after announcing a plan to buy back its shares.
Limiting declines, industrial production rose 3.4 percent from July to a record, the trade ministry said today. Spending by households climbed 1.6 percent from a year earlier, beating forecasts for a 1.2 percent gain.
Circle K Sunkus Co. declined 4 percent after the convenience store chain said it expects first-half profit to slide 20 percent. Millea Holdings Inc., the largest publicly traded insurer, lost 2.8 percent. The Bank of Japan's Tankan survey will probably show business sentiment dropped to the lowest level since June 2006.
``A fundamental perspective does not favor domestic demand companies, as their opportunities for growth look slim,'' said Hiroyoshi Nakagawa, who helps oversee about $1 billion in Asian equities at Societe Generale Asset Management Co. ``Disposable income in Japan is not increasing, and the middle class is shrinking, which indicates that earnings at domestic companies are not going to improve.''
The Nikkei 225 Stock Average dropped 47.57, or 0.3 percent, to 16,784.65 as of the 11 a.m. break in Tokyo. The Topix index lost 6.04, or 0.4 percent, to 1,609.11. For the week, the Nikkei has gained 2.9 percent and Topix has risen 3.7 percent.
Inpex Holdings Inc., Japan's largest oil explorer, gained after oil prices rose 3.2 percent to the second-highest close ever.
Circle K Sunkus, Japan's third-largest convenience store operator, fell 74 yen to 1,760. Millea Holdings lost 130 yen to 4,570.
The consumer price index excluding fresh food fell 0.1 percent in August from a year earlier, as retailers absorbed higher costs to keep prices low and attract customers. Unemployment rose to 3.8 percent from 3.6 percent. Economists had forecast the rate would be unchanged.
Tankan Survey
The Tankan survey, set to be released on Oct. 1, will probably show business sentiment among major manufactures fell to 21 points in the third quarter from 23, according to economists.
``Next week's Tankan is expected to be weak as the yen has started to strengthen and the subprime problem is in the back of everyone's mind,'' said Daisuke Shimazu, an investment manager at Sumitomo Trust & Banking Co., which has about $200 billion in assets. ``There's no reason to be buying domestic demand stocks.''
Inpex rose 10,000 yen, or 0.9 percent, to 1.18 million. Japan Petroleum Exploration Co., the nation's second-biggest oil explorer, added 100 yen, or 1.2 percent, to 8,450. Crude oil for November delivery rose $2.58 to settle at $82.88 a barrel in New York, the biggest one-day gain since May 17.
Mitsubishi Heavy
Mitsubishi Heavy Industries Ltd., Asia's biggest maker of power equipment, rose 22 yen, or 3 percent to 759 after the company said it will sign a contract today to supply a nuclear station in China, the world's fastest-growing major economy.
Daiichi Sankyo Co., Japan's third-largest drugmaker, climbed 80 yen, or 2.4 percent, to 3,380 after it won U.S. approval for a new blood-pressure treatment that combines its Benicar with the active ingredient in Pfizer Inc.'s Norvasc.
Takefuji Corp., Japan's fourth-largest consumer lender, jumped 105 yen, or 4.9 percent to 2,260 yen. It earlier rose as much as 11 percent after announcing a plan to buy back its shares.
Limiting declines, industrial production rose 3.4 percent from July to a record, the trade ministry said today. Spending by households climbed 1.6 percent from a year earlier, beating forecasts for a 1.2 percent gain.
Australia Stocks Rise to Record, Led by BHP Billiton, Woodside
Sept. 28 (Bloomberg) -- Australia's stock index climbed, extending a record, led by BHP Billiton Ltd. and Woodside Petroleum Ltd., after metals and oil prices rose on the prospect another U.S. rate cut will boost the world's biggest economy.
``The commodities are driving it today on the likelihood of further cuts to U.S. rates,'' said Rob Patterson, who manages the equivalent of $3.8 billion at Argo Investments Ltd. in Adelaide. ``Since the last rate cut our market's been on fire because it had a reassuring effect.''
The S&P/ASX 200 gained 44.60, or 0.6 percent, to 6,584.10 as at 11:20 a.m. in Sydney, headed for its fourth record close this week and a 5.4 percent gain this month. About two stocks rose for each that fell.
BHP, the world's largest mining company, added A$1.22, or 2.8 percent, to A$44.75,set for its highest ever close. Rio Tinto Group, the third biggest, rose A$1.35, or 1.3 percent, to A$108.80, a record. Zinifex Ltd., the world's No. 3 zinc producer, gained 18 cents, or 1 percent, to A$18.18.
A measure of six metals traded on the London Metal Exchange climbed 0.7 percent yesterday. Copper gained 1 percent and zinc jumped 3 percent.
Newcrest Mining Ltd., Australia's largest gold miner, added 75 cents, or 2.6 percent, to A$29.35. Sino Golding Mining Ltd., the Sydney-based owner of China's second-largest gold mine, jumped 34 cents, or 4.8 percent, to A$7.48.
Gold traded close to the highest in 27 years as a decline in the U.S. dollar boosts its appeal as an alternative investment.
Woodside, Beach
Woodside, Australia's second-biggest oil producer, rose A$1.37 cents, or 2.8 percent, to A$50.29. Beach Petroleum Ltd., the No. 4 oil and gas company by reserves, added 3.5 cents, or 2.4 percent, to A$1.50.
Crude oil rose more than $2 a barrel in New York yesterday after the U.S. dollar fell to a record low against the euro, boosting the appeal of commodities as alternative investments. Oil for November delivery was recently at $83.11 a barrel in after-hours trading after jumping 3.2 percent yesterday.
The S&P/ASX 200's futures contract for December gained 0.7 percent to 6,582.20. The broader All Ordinaries Index rose 0.6 percent to 6,589.80.
The following shares also gained or declined. Stock symbols are in brackets after the company names.
Coca-Cola Amatil Ltd. (CCL AU), Australia's biggest soft- drink maker, fell 20 cents, or 2.2 percent, to A$9.05. Coca-Cola Co. is planning to sell A$166.5 million ($147 million) stake in the Australian Coca-Cola Amatil. The Atlanta-based company will sell about 18 million shares to fund the purchase of a 10 percent stake in South Korea's Coke bottler, according to a statement to the exchange yesterday.
Energy Resources of Australia Ltd. (ERA AU), producer of more than a 10th of the world's mined uranium, gained a second day, rising 93 cents, or 5 percent, to A$19.38. The unit of Rio Tinto Group said yesterday it will spend A$57 million expanding its Ranger mine in Australia's Northern Territory.
Essa Australia Ltd. (ESS AU), a manufacturer of sampling equipment for the mining industry, surged 15 cents, or 14 percent, to A$1.20. Essa said a company had agreed to install two of their new laboratory automation systems.
Midwest Corp. Ltd. (MIS AU), an Australian iron-ore producer, added 8 cents, or 2.5 percent, to A$3.24. Midwest was cut to ``sector perform'' from ``outperform'' by RBC Capital Markets analyst Chris Lancaster. The company said yesterday it had been granted an extension until Oct. 20 on its permit to haul ore by road to Western Australia's Geraldton port. The Western Australia state government scrapped legislation granting the permit Sept. 26.
STW Communications Group Ltd. (SGN AU), Australia's only publicly traded advertising company, rose 16 cents, or 6.4 percent, to A$2.66. The United Kingdom's WPP Group Plc may bid for STW in a hostile takeover, the Australian newspaper reported. WPP is understood to have built a 19.9 percent stake in STW over the past few weeks, the report said.
XRF Scientific Ltd. (XRF AU), a laser and fusion equipment manufacturer, jumped 1 cent, or 8.3 percent, to 13 cents. XRF posted a A$517 million operating profit after tax, 25 percent more than the unedited result previously reported.
``The commodities are driving it today on the likelihood of further cuts to U.S. rates,'' said Rob Patterson, who manages the equivalent of $3.8 billion at Argo Investments Ltd. in Adelaide. ``Since the last rate cut our market's been on fire because it had a reassuring effect.''
The S&P/ASX 200 gained 44.60, or 0.6 percent, to 6,584.10 as at 11:20 a.m. in Sydney, headed for its fourth record close this week and a 5.4 percent gain this month. About two stocks rose for each that fell.
BHP, the world's largest mining company, added A$1.22, or 2.8 percent, to A$44.75,set for its highest ever close. Rio Tinto Group, the third biggest, rose A$1.35, or 1.3 percent, to A$108.80, a record. Zinifex Ltd., the world's No. 3 zinc producer, gained 18 cents, or 1 percent, to A$18.18.
A measure of six metals traded on the London Metal Exchange climbed 0.7 percent yesterday. Copper gained 1 percent and zinc jumped 3 percent.
Newcrest Mining Ltd., Australia's largest gold miner, added 75 cents, or 2.6 percent, to A$29.35. Sino Golding Mining Ltd., the Sydney-based owner of China's second-largest gold mine, jumped 34 cents, or 4.8 percent, to A$7.48.
Gold traded close to the highest in 27 years as a decline in the U.S. dollar boosts its appeal as an alternative investment.
Woodside, Beach
Woodside, Australia's second-biggest oil producer, rose A$1.37 cents, or 2.8 percent, to A$50.29. Beach Petroleum Ltd., the No. 4 oil and gas company by reserves, added 3.5 cents, or 2.4 percent, to A$1.50.
Crude oil rose more than $2 a barrel in New York yesterday after the U.S. dollar fell to a record low against the euro, boosting the appeal of commodities as alternative investments. Oil for November delivery was recently at $83.11 a barrel in after-hours trading after jumping 3.2 percent yesterday.
The S&P/ASX 200's futures contract for December gained 0.7 percent to 6,582.20. The broader All Ordinaries Index rose 0.6 percent to 6,589.80.
The following shares also gained or declined. Stock symbols are in brackets after the company names.
Coca-Cola Amatil Ltd. (CCL AU), Australia's biggest soft- drink maker, fell 20 cents, or 2.2 percent, to A$9.05. Coca-Cola Co. is planning to sell A$166.5 million ($147 million) stake in the Australian Coca-Cola Amatil. The Atlanta-based company will sell about 18 million shares to fund the purchase of a 10 percent stake in South Korea's Coke bottler, according to a statement to the exchange yesterday.
Energy Resources of Australia Ltd. (ERA AU), producer of more than a 10th of the world's mined uranium, gained a second day, rising 93 cents, or 5 percent, to A$19.38. The unit of Rio Tinto Group said yesterday it will spend A$57 million expanding its Ranger mine in Australia's Northern Territory.
Essa Australia Ltd. (ESS AU), a manufacturer of sampling equipment for the mining industry, surged 15 cents, or 14 percent, to A$1.20. Essa said a company had agreed to install two of their new laboratory automation systems.
Midwest Corp. Ltd. (MIS AU), an Australian iron-ore producer, added 8 cents, or 2.5 percent, to A$3.24. Midwest was cut to ``sector perform'' from ``outperform'' by RBC Capital Markets analyst Chris Lancaster. The company said yesterday it had been granted an extension until Oct. 20 on its permit to haul ore by road to Western Australia's Geraldton port. The Western Australia state government scrapped legislation granting the permit Sept. 26.
STW Communications Group Ltd. (SGN AU), Australia's only publicly traded advertising company, rose 16 cents, or 6.4 percent, to A$2.66. The United Kingdom's WPP Group Plc may bid for STW in a hostile takeover, the Australian newspaper reported. WPP is understood to have built a 19.9 percent stake in STW over the past few weeks, the report said.
XRF Scientific Ltd. (XRF AU), a laser and fusion equipment manufacturer, jumped 1 cent, or 8.3 percent, to 13 cents. XRF posted a A$517 million operating profit after tax, 25 percent more than the unedited result previously reported.
Asian Commodity, Technology Stocks Advance, Led by BHP, Hynix
Sept. 28 (Bloomberg) -- Asian commodity and technology stocks climbed after the cost of oil, copper and zinc increased and on speculation the price of memory chips will rise.
Inpex Holdings Inc. jumped to a one-week high and BHP Billiton Ltd. advanced to a record after crude oil and metals prices gained on expectations the U.S. will trim borrowing costs to avert a recession. Hynix Semiconductor Inc. rose after it stopped selling its products on the spot market, fueling speculation chip prices are set to rebound.
``Commodities are driving the market today on the likelihood of further cuts to U.S. rates,'' said Rob Patterson, who manages the equivalent of $3.8 billion at Argo Investments Ltd. in Adelaide, Australia. ``Since the last rate cut our market's been on fire because it had a reassuring effect.''
The Morgan Stanley Capital International Asia-Pacific Index added 0.5 percent to 162.90 as of 10:41 a.m. in Tokyo, after yesterday closing at a record. The benchmark has gained 4.6 percent this week and climbed 6.9 percent in September, its best monthly performance since December 2005.
Japan's Nikkei 225 Stock Average was little changed at 16,819.12 after a three-day, 3.2 percent rally. Benchmarks climbed in Australia, Taiwan and Malaysia and were little changed in other markets open for trading. The CSI 300 Index added 1.6 percent in China, where the central bank yesterday raised interest rates on some mortgages and increased minimum down payments on property purchases to cool rising real-estate prices.
U.S. stocks rose yesterday, lifting the Standard & Poor's 500 Index by 0.4 percent to the highest since July as investors speculated a drop in new home sales will give the Federal Reserve more reason to lower interest rates.
Oil, Metals Climb
Inpex, Japan's largest explorer, added 0.9 percent to 1.18 million yen. Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, rose 2.9 percent to A$50.32.
Crude oil for November delivery increased 3.2 percent to $82.88 a barrel in New York yesterday, the biggest one-day gain since May 17 and the second-highest close. A measure of six metals traded on the London Metal Exchange rose 0.7 percent. Copper gained 1 percent while zinc jumped 3 percent.
BHP, the world's largest mining company, added 2.1 percent to A$44.44. Rio Tinto Group, the third biggest, climbed 1.3 percent to A$108.80.
Hynix, the world's second-largest computer-memory maker, added 1.5 percent to 31,400 won in South Korea. Samsung Electronics Co., the biggest, advanced 2.5 percent to 572,000 won.
Hynix said yesterday it stopped selling memory chips through the spot market ``for the time being.'' Spot prices of the benchmark dynamic random access memory, or DRAM, chip have fallen 23 percent this month, according to Dramexchange.com, Asia's biggest spot market for chips.
DRAM prices may stabilize as other chipmakers may follow Hynix in reining in production, wrote Lim Seung Bum, an analyst at Hanwha Securities Co., in a report.
Inpex Holdings Inc. jumped to a one-week high and BHP Billiton Ltd. advanced to a record after crude oil and metals prices gained on expectations the U.S. will trim borrowing costs to avert a recession. Hynix Semiconductor Inc. rose after it stopped selling its products on the spot market, fueling speculation chip prices are set to rebound.
``Commodities are driving the market today on the likelihood of further cuts to U.S. rates,'' said Rob Patterson, who manages the equivalent of $3.8 billion at Argo Investments Ltd. in Adelaide, Australia. ``Since the last rate cut our market's been on fire because it had a reassuring effect.''
The Morgan Stanley Capital International Asia-Pacific Index added 0.5 percent to 162.90 as of 10:41 a.m. in Tokyo, after yesterday closing at a record. The benchmark has gained 4.6 percent this week and climbed 6.9 percent in September, its best monthly performance since December 2005.
Japan's Nikkei 225 Stock Average was little changed at 16,819.12 after a three-day, 3.2 percent rally. Benchmarks climbed in Australia, Taiwan and Malaysia and were little changed in other markets open for trading. The CSI 300 Index added 1.6 percent in China, where the central bank yesterday raised interest rates on some mortgages and increased minimum down payments on property purchases to cool rising real-estate prices.
U.S. stocks rose yesterday, lifting the Standard & Poor's 500 Index by 0.4 percent to the highest since July as investors speculated a drop in new home sales will give the Federal Reserve more reason to lower interest rates.
Oil, Metals Climb
Inpex, Japan's largest explorer, added 0.9 percent to 1.18 million yen. Woodside Petroleum Ltd., Australia's second-biggest oil and gas producer, rose 2.9 percent to A$50.32.
Crude oil for November delivery increased 3.2 percent to $82.88 a barrel in New York yesterday, the biggest one-day gain since May 17 and the second-highest close. A measure of six metals traded on the London Metal Exchange rose 0.7 percent. Copper gained 1 percent while zinc jumped 3 percent.
BHP, the world's largest mining company, added 2.1 percent to A$44.44. Rio Tinto Group, the third biggest, climbed 1.3 percent to A$108.80.
Hynix, the world's second-largest computer-memory maker, added 1.5 percent to 31,400 won in South Korea. Samsung Electronics Co., the biggest, advanced 2.5 percent to 572,000 won.
Hynix said yesterday it stopped selling memory chips through the spot market ``for the time being.'' Spot prices of the benchmark dynamic random access memory, or DRAM, chip have fallen 23 percent this month, according to Dramexchange.com, Asia's biggest spot market for chips.
DRAM prices may stabilize as other chipmakers may follow Hynix in reining in production, wrote Lim Seung Bum, an analyst at Hanwha Securities Co., in a report.
Qatari Shares Gain; Masraf al-Rayan, Industries Qatar Advance
Sept. 27 (Bloomberg) -- Qatari shares rose to the highest in more than a year on speculation stock market regulators may raise the limit on the amount of shares foreigners can hold.
Masraf al-Rayan gained after saying it will seek regulatory permission to increase foreign ownership. Industries Qatar and Qatar Shipping Co. also advanced.
Qatar's Doha Securities Market Index rose 1.4 percent to 8,003.95, its highest close since July 13, 2006. The measure has gained 6.9 percent this month.
``There are rumors regulators might raise the foreign ownership limits from 25 percent to 49, since several companies have requested it,'' Samer Al-Jaouni, head of international sales at Ahli Bank QSC in Qatar, said in a phone interview from Doha today. ``Local investors are buying as they try to get a head start on foreign investors.''
Calls to the Qatar Financial Market Authority seeking comment were not answered.
Masraf al-Rayan, the Qatari Islamic bank that raised $1.1 billion in an initial share sale last year, added 1.8 percent to 17 riyals. The company approved a plan allowing foreign investors to buy as much as 49 percent of its shares. The bank will seek regulatory permission for the change. Masraf is not a member of Qatar's benchmark.
Industries Qatar, the largest company on the Doha Securities Market, climbed 3.5 percent to 127 riyals. Qatar Shipping Co., a marine-freight transportation company, advanced 3.6 percent to 63.3 riyals.
Nine-Day Gain
Four of the six benchmarks in Persian Gulf markets tracked by Bloomberg News rose, including measures in Dubai and Bahrain. Gauges in Abu Dhabi and Kuwait declined. Saudi Arabia's market is closed for the weekend.
The Dubai Financial Market General Index added 0.2 percent. In the neighboring emirate, the Abu Dhabi Securities Market Index lost 0.2 percent, falling for the first time in four days.
The Kuwait Stock Exchange Index declined 0.3 percent. Oman's Muscat Securities Market 30 Index increased 0.1 percent, bringing the nine-day gain to 5.6 percent. The Bahrain All Share Index added 0.4 percent.
The following stocks rose or fell in Persian Gulf markets. Stock symbols are in parentheses.
AlBaraka Banking Group (BARKA BI) climbed 2 percent to $2.50. The largest publicly traded Islamic lender in Bahrain combined its Al Amin Bank with a bigger unit.
Aldar Properties PJSC (ALDAR UH) advanced 1.2 percent to 7.48 dirhams. Time Warner Inc. will develop a theme park, hotel, cinemas and a movie studio in Abu Dhabi with the local developer.
Kuwait Finance House (KFIN KK) rose 0.8 percent to 2,920 fils. The Persian Gulf's biggest Islamic investment bank plans to start a new company to trade Islamic bonds. The venture will have 100 million dinars ($357 million) of capital, the state-run Kuwait New Agency reported, citing the bank's director-general.
Masraf al-Rayan gained after saying it will seek regulatory permission to increase foreign ownership. Industries Qatar and Qatar Shipping Co. also advanced.
Qatar's Doha Securities Market Index rose 1.4 percent to 8,003.95, its highest close since July 13, 2006. The measure has gained 6.9 percent this month.
``There are rumors regulators might raise the foreign ownership limits from 25 percent to 49, since several companies have requested it,'' Samer Al-Jaouni, head of international sales at Ahli Bank QSC in Qatar, said in a phone interview from Doha today. ``Local investors are buying as they try to get a head start on foreign investors.''
Calls to the Qatar Financial Market Authority seeking comment were not answered.
Masraf al-Rayan, the Qatari Islamic bank that raised $1.1 billion in an initial share sale last year, added 1.8 percent to 17 riyals. The company approved a plan allowing foreign investors to buy as much as 49 percent of its shares. The bank will seek regulatory permission for the change. Masraf is not a member of Qatar's benchmark.
Industries Qatar, the largest company on the Doha Securities Market, climbed 3.5 percent to 127 riyals. Qatar Shipping Co., a marine-freight transportation company, advanced 3.6 percent to 63.3 riyals.
Nine-Day Gain
Four of the six benchmarks in Persian Gulf markets tracked by Bloomberg News rose, including measures in Dubai and Bahrain. Gauges in Abu Dhabi and Kuwait declined. Saudi Arabia's market is closed for the weekend.
The Dubai Financial Market General Index added 0.2 percent. In the neighboring emirate, the Abu Dhabi Securities Market Index lost 0.2 percent, falling for the first time in four days.
The Kuwait Stock Exchange Index declined 0.3 percent. Oman's Muscat Securities Market 30 Index increased 0.1 percent, bringing the nine-day gain to 5.6 percent. The Bahrain All Share Index added 0.4 percent.
The following stocks rose or fell in Persian Gulf markets. Stock symbols are in parentheses.
AlBaraka Banking Group (BARKA BI) climbed 2 percent to $2.50. The largest publicly traded Islamic lender in Bahrain combined its Al Amin Bank with a bigger unit.
Aldar Properties PJSC (ALDAR UH) advanced 1.2 percent to 7.48 dirhams. Time Warner Inc. will develop a theme park, hotel, cinemas and a movie studio in Abu Dhabi with the local developer.
Kuwait Finance House (KFIN KK) rose 0.8 percent to 2,920 fils. The Persian Gulf's biggest Islamic investment bank plans to start a new company to trade Islamic bonds. The venture will have 100 million dinars ($357 million) of capital, the state-run Kuwait New Agency reported, citing the bank's director-general.
U.K. Stocks Climb, Led By Northern Rock; British Airways Gains
Sept. 27 (Bloomberg) -- U.K. stocks rose for a second day, led by banks after a newspaper reported JC Flowers & Co. LLC made a takeover approach for Northern Rock Plc. HBOS Plc and Alliance & Leicester Plc paced the advance.
British Airways Plc climbed after the airline ordered new planes to keep pace with rival Virgin Atlantic Airways. Marks & Spencer Group Plc paced a rally in retail stocks.
The FTSE 100 Index gained 53.4, or 0.8 percent, to 6486.4. The FTSE All-Share Index rose 0.9 percent to 3325.87. Ireland's ISEQ Index jumped 2.3 percent to 7792.98.
Northern Rock, which sought emergency funding this month, added 6.3 percent to 193.5 pence. The Daily Telegraph reported that JC Flowers has been given access to the U.K. mortgage lender's books after making a takeover proposal for the bank.
Flowers' approach may be the only one that will keep the bank as one entity, the Telegraph said, without saying where it got the information.
Moody's Investors Service today said Northern Rock is likely to be acquired saying the bank ``still has attractive assets.''
HBOS Plc, Britain's biggest mortgage bank, added 4.9 percent to 916 pence. Alliance & Leicester Plc increased 8.5 percent to 795 pence. The shares have dropped more than 30 percent since reaching their highest this year in May.
``There seems to be more confidence in the banking sector, which has also seen Alliance & Leicester rally towards more sensible levels,'' said David Buik, market analyst at BGC Partners in London.
RBS, British Airways
Royal Bank of Scotland Group Plc gained 2.2 percent to 528 pence as the bank's notes financing the bid for ABN Amro Holding NV surged on the first day of trading.
Investors returning to the credit markets after the slump in July and August ordered about nine times more than the $7 billion borrowed by the Edinburgh-based bank, a spokesman said.
British Airways climbed 4.1 percent to 384.25 pence. Europe's third-largest airline has agreed to buy 36 Airbus SAS and Boeing Co. planes valued at $8.2 billion to add flights from London's Heathrow airport.
Marks & Spencer, Britain's largest clothing retailer, added 4.1 percent to 612.5 pence. Home Retail Group Plc, owner of the Argos and Homebase chains, gained 4.5 percent to 372.5 pence.
U.K. retail stocks advanced as investors said a four-month slide caused by concern about shrinking consumer spending may have gone too far.
M&S, Home Retail
``Many of them have been underperforming recently,'' said Claire Collingwood, a trader at CMC Markets in London. ``With the sector trading quite weak, we are seeing bargains picked up.''
The FTSE 350 General Retailers Index, which has fallen 22 percent since reaching a record on May 9, climbed 3.2 percent today.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Erinaceous Group Plc (ERG LN) plunged 5.5 pence, or 9.4 percent, to 53 after the real estate services company which has broken its loan agreements said today it had a loss in the first half. The company said it is in talks with its banks and may need additional funds in unforeseen circumstances.
Jessops Plc (JSP LN) surged 3.45 pence, or 39 percent, to 12.25. The camera retailer, whose shares have lost most of their value this year, said Chief Executive Officer Chris Langley quit. The company also said it will meet its full-year loss forecast.
The company reiterated it expects a loss of 7.5 million pounds, excluding exceptional costs.
Prudential Plc (PRU LN) climbed 14.5 pence, or 2 percent, to 746.5 after Bear Stearns upgraded the insurers' shares to ``outperform'' from ``peer perform,'' citing strong cash flow.
Silverjet Plc (SIL LN) dropped 5 pence, or 5.8 percent, to 81.5 after a competitor said it sued the trans-Atlantic business- class airline over control of a Boeing Co. 767 airplane.
C First Class Corp., owner of FlyFirstClass, said it had a contract with FlyJet Ltd. for the use of a 767-200ER airliner until Silverjet bought FlyJet in November 2006 to take control of the plane, according to the lawsuit filed in federal court in New York.
Taylor Wimpey Plc (TW/ LN) rallied 17 pence, or 6.6 percent to 275 as the Nationwide Building Society said U.K. house prices rose at the fastest pace in three months in September, a sign higher credit costs have yet to affect homebuyers. Persimmon Plc (PSN LN) climbed 4.7 percent to 953 pence. Barratt Developments Plc (BDEV LN) gained 3.7 percent to 753.
British Airways Plc climbed after the airline ordered new planes to keep pace with rival Virgin Atlantic Airways. Marks & Spencer Group Plc paced a rally in retail stocks.
The FTSE 100 Index gained 53.4, or 0.8 percent, to 6486.4. The FTSE All-Share Index rose 0.9 percent to 3325.87. Ireland's ISEQ Index jumped 2.3 percent to 7792.98.
Northern Rock, which sought emergency funding this month, added 6.3 percent to 193.5 pence. The Daily Telegraph reported that JC Flowers has been given access to the U.K. mortgage lender's books after making a takeover proposal for the bank.
Flowers' approach may be the only one that will keep the bank as one entity, the Telegraph said, without saying where it got the information.
Moody's Investors Service today said Northern Rock is likely to be acquired saying the bank ``still has attractive assets.''
HBOS Plc, Britain's biggest mortgage bank, added 4.9 percent to 916 pence. Alliance & Leicester Plc increased 8.5 percent to 795 pence. The shares have dropped more than 30 percent since reaching their highest this year in May.
``There seems to be more confidence in the banking sector, which has also seen Alliance & Leicester rally towards more sensible levels,'' said David Buik, market analyst at BGC Partners in London.
RBS, British Airways
Royal Bank of Scotland Group Plc gained 2.2 percent to 528 pence as the bank's notes financing the bid for ABN Amro Holding NV surged on the first day of trading.
Investors returning to the credit markets after the slump in July and August ordered about nine times more than the $7 billion borrowed by the Edinburgh-based bank, a spokesman said.
British Airways climbed 4.1 percent to 384.25 pence. Europe's third-largest airline has agreed to buy 36 Airbus SAS and Boeing Co. planes valued at $8.2 billion to add flights from London's Heathrow airport.
Marks & Spencer, Britain's largest clothing retailer, added 4.1 percent to 612.5 pence. Home Retail Group Plc, owner of the Argos and Homebase chains, gained 4.5 percent to 372.5 pence.
U.K. retail stocks advanced as investors said a four-month slide caused by concern about shrinking consumer spending may have gone too far.
M&S, Home Retail
``Many of them have been underperforming recently,'' said Claire Collingwood, a trader at CMC Markets in London. ``With the sector trading quite weak, we are seeing bargains picked up.''
The FTSE 350 General Retailers Index, which has fallen 22 percent since reaching a record on May 9, climbed 3.2 percent today.
The following stocks also gained or fell in the U.K. market. Stock symbols are in parentheses.
Erinaceous Group Plc (ERG LN) plunged 5.5 pence, or 9.4 percent, to 53 after the real estate services company which has broken its loan agreements said today it had a loss in the first half. The company said it is in talks with its banks and may need additional funds in unforeseen circumstances.
Jessops Plc (JSP LN) surged 3.45 pence, or 39 percent, to 12.25. The camera retailer, whose shares have lost most of their value this year, said Chief Executive Officer Chris Langley quit. The company also said it will meet its full-year loss forecast.
The company reiterated it expects a loss of 7.5 million pounds, excluding exceptional costs.
Prudential Plc (PRU LN) climbed 14.5 pence, or 2 percent, to 746.5 after Bear Stearns upgraded the insurers' shares to ``outperform'' from ``peer perform,'' citing strong cash flow.
Silverjet Plc (SIL LN) dropped 5 pence, or 5.8 percent, to 81.5 after a competitor said it sued the trans-Atlantic business- class airline over control of a Boeing Co. 767 airplane.
C First Class Corp., owner of FlyFirstClass, said it had a contract with FlyJet Ltd. for the use of a 767-200ER airliner until Silverjet bought FlyJet in November 2006 to take control of the plane, according to the lawsuit filed in federal court in New York.
Taylor Wimpey Plc (TW/ LN) rallied 17 pence, or 6.6 percent to 275 as the Nationwide Building Society said U.K. house prices rose at the fastest pace in three months in September, a sign higher credit costs have yet to affect homebuyers. Persimmon Plc (PSN LN) climbed 4.7 percent to 953 pence. Barratt Developments Plc (BDEV LN) gained 3.7 percent to 753.
European Stocks Advance; Siemens, Porsche, Nordea Pace Gains
Sept. 27 (Bloomberg) -- European stocks climbed for a second day after a report showed U.S. home sales declined, giving the Federal Reserve more reason to cut interest rates.
Siemens AG, the region's largest engineering company, and Porsche AG, the maker of the 911 Carrera and Boxster sports cars, led gains by companies dependent on the U.S. for earnings. Nordea Bank AB jumped the most in more than four years after a report said SEB AB plans to buy the Swedish state's 19.9 percent stake in the bank.
``The data fits into the view that the Fed will go on cutting interest rates,'' said Herbert Perus, who helps oversee the equivalent of $57 billion as head of global equities at Raiffeisen Capital Management in Vienna. ``We expect the Fed to cut its benchmark rate by half a percentage point this year.''
The Dow Jones Stoxx 600 Index added 0.8 percent to 377.96. All 18 industry groups advanced except for health-care stocks. The Stoxx 50 gained 0.7 percent, and the Euro Stoxx 50, a measure for the euro region, rose 0.6 percent.
Sales of new homes in the U.S. declined more than forecast in August, and prices tumbled by the most in almost four decades. The dollar traded near a record low on speculation rates will fall further. The Fed cut its benchmark rate by half a percentage point on Sept. 18.
Purchases of homes decreased 8.3 percent to an annual pace of 795,000, the lowest level in more than seven years, from a revised 867,000 rate in July, the Commerce Department said today. Economists forecast sales would fall to 825,000. The median price dropped 7.5 percent from August 2006, the most since 1970.
`More Positive'
``The economic data we are seeing suggests another rate cut is on the cards,'' said Espen Furnes, who helps manage the equivalent of $7.1 billion at Storebrand Asset Management in Oslo. ``Investors are more positive.''
The risk of owning European corporate bonds declined, according to traders of credit-default swaps.
National benchmarks increased in all 18 western European markets except Greece and Italy. France's CAC 40 rose 0.8 percent, as did the U.K.'s FTSE 100. Germany's DAX gained 0.6 percent.
``I feel very optimistic about global equity markets,'' said James Bevan, who helps manage $10 billion as chief investment officer for CCLA Investment Management in London. ``Companies are generating enormous internal rates of return.
Siemens rose 1.9 percent to 96.23 euros and Porsche increased 1.2 percent to 1,494.59 euros. The U.S. accounted for about a fifth of Siemens's revenue last year, and made up about one third of sales for the carmaker.
DSM, Havas
Nordea jumped 7.8 percent to 110.9 kronor, the steepest gain since Aug. 2003. SEB plans to offer 138 kronor for each Nordea share, or about 71 billion kronor ($10.9 billion) in total, Swedish business daily Dagens Industri reported today, citing two unidentified people familiar with the plan.
``It is a rumor and our policy is never to comment on rumors,'' SEB spokeswoman Katja Margell said in a telephone interview today. Nordea spokesman Boo Ehlin also declined to comment.
Royal DSM NV gained 3.8 percent to 38.11 euros after the world's biggest maker of vitamins raised its profit forecast for this year and announced a share buyback.
Havas SA rallied 6.1 percent to 4.19 euros. The owner of the Euro RSCG Worldwide advertising agency said first-half profit increased 67 percent, lifted by new contracts, including an advertising deal with Dell Inc.
Cie. de Saint-Gobain SA advanced 5.2 percent to 73.09 euros. Wendel, an investment firm, said it owns a 6 percent stake in Europe's biggest supplier of building materials. Wendel's stake gives it 5 percent of Saint-Gobain's voting rights.
Northern Rock
Northern Rock Plc climbed 6.3 percent to 193.5 pence. The Daily Telegraph reported that J.C. Flowers & Co. has been given access to the U.K. mortgage lender's books after making a takeover proposal for the bank. Flowers may be the only approach that might keep the U.K. bank as one entity, the Telegraph said, without saying where it got the information.
SLM Corp., the largest U.S. student-loan company, said it would press J.C. Flowers to complete its $25.3 billion takeover under the original terms.
Escada AG, whose luxury women's fashions cost as much as $7,000, fell 6 percent to 24.60 euros after reporting a third- quarter loss and reducing its sales forecast.
Berenberg Bank, Germany's oldest private bank, cut its price estimate on the stock by 25 percent to 30 euros.
Siemens AG, the region's largest engineering company, and Porsche AG, the maker of the 911 Carrera and Boxster sports cars, led gains by companies dependent on the U.S. for earnings. Nordea Bank AB jumped the most in more than four years after a report said SEB AB plans to buy the Swedish state's 19.9 percent stake in the bank.
``The data fits into the view that the Fed will go on cutting interest rates,'' said Herbert Perus, who helps oversee the equivalent of $57 billion as head of global equities at Raiffeisen Capital Management in Vienna. ``We expect the Fed to cut its benchmark rate by half a percentage point this year.''
The Dow Jones Stoxx 600 Index added 0.8 percent to 377.96. All 18 industry groups advanced except for health-care stocks. The Stoxx 50 gained 0.7 percent, and the Euro Stoxx 50, a measure for the euro region, rose 0.6 percent.
Sales of new homes in the U.S. declined more than forecast in August, and prices tumbled by the most in almost four decades. The dollar traded near a record low on speculation rates will fall further. The Fed cut its benchmark rate by half a percentage point on Sept. 18.
Purchases of homes decreased 8.3 percent to an annual pace of 795,000, the lowest level in more than seven years, from a revised 867,000 rate in July, the Commerce Department said today. Economists forecast sales would fall to 825,000. The median price dropped 7.5 percent from August 2006, the most since 1970.
`More Positive'
``The economic data we are seeing suggests another rate cut is on the cards,'' said Espen Furnes, who helps manage the equivalent of $7.1 billion at Storebrand Asset Management in Oslo. ``Investors are more positive.''
The risk of owning European corporate bonds declined, according to traders of credit-default swaps.
National benchmarks increased in all 18 western European markets except Greece and Italy. France's CAC 40 rose 0.8 percent, as did the U.K.'s FTSE 100. Germany's DAX gained 0.6 percent.
``I feel very optimistic about global equity markets,'' said James Bevan, who helps manage $10 billion as chief investment officer for CCLA Investment Management in London. ``Companies are generating enormous internal rates of return.
Siemens rose 1.9 percent to 96.23 euros and Porsche increased 1.2 percent to 1,494.59 euros. The U.S. accounted for about a fifth of Siemens's revenue last year, and made up about one third of sales for the carmaker.
DSM, Havas
Nordea jumped 7.8 percent to 110.9 kronor, the steepest gain since Aug. 2003. SEB plans to offer 138 kronor for each Nordea share, or about 71 billion kronor ($10.9 billion) in total, Swedish business daily Dagens Industri reported today, citing two unidentified people familiar with the plan.
``It is a rumor and our policy is never to comment on rumors,'' SEB spokeswoman Katja Margell said in a telephone interview today. Nordea spokesman Boo Ehlin also declined to comment.
Royal DSM NV gained 3.8 percent to 38.11 euros after the world's biggest maker of vitamins raised its profit forecast for this year and announced a share buyback.
Havas SA rallied 6.1 percent to 4.19 euros. The owner of the Euro RSCG Worldwide advertising agency said first-half profit increased 67 percent, lifted by new contracts, including an advertising deal with Dell Inc.
Cie. de Saint-Gobain SA advanced 5.2 percent to 73.09 euros. Wendel, an investment firm, said it owns a 6 percent stake in Europe's biggest supplier of building materials. Wendel's stake gives it 5 percent of Saint-Gobain's voting rights.
Northern Rock
Northern Rock Plc climbed 6.3 percent to 193.5 pence. The Daily Telegraph reported that J.C. Flowers & Co. has been given access to the U.K. mortgage lender's books after making a takeover proposal for the bank. Flowers may be the only approach that might keep the U.K. bank as one entity, the Telegraph said, without saying where it got the information.
SLM Corp., the largest U.S. student-loan company, said it would press J.C. Flowers to complete its $25.3 billion takeover under the original terms.
Escada AG, whose luxury women's fashions cost as much as $7,000, fell 6 percent to 24.60 euros after reporting a third- quarter loss and reducing its sales forecast.
Berenberg Bank, Germany's oldest private bank, cut its price estimate on the stock by 25 percent to 30 euros.
Buy Yahoo! Options, Sell EBay's Before Earnings, Goldman Says
Sept. 27 (Bloomberg) -- Investors should use stock options to bet that shares of Yahoo! Inc. will swing more than shares of EBay Inc. after the two Internet companies report earnings next month, Goldman, Sachs & Co. said.
A strategy of buying Yahoo options and selling EBay contracts may also benefit because the price of options on EBay, the world's biggest Internet auctioneer, are ``expensive,'' derivative strategists Maria Grant and John Marshall wrote in a note. EBay is scheduled to report earnings Oct. 17.
For Yahoo, owner of the world's second-most used search engine, ``uncertainty is heightened'' before it reports results on Oct. 16 because it is developing a strategy to compete with Google Inc. and the stock tends to make bigger moves than EBay's after earnings, the strategists wrote.
``Key uncertainties are the timing of acceleration in display ad growth, the magnitude of the ramp in search growth, the levels of increased investment, and the impact of a changing business mix on the margin profile,'' Grant and Marshall wrote.
Yahoo's profit declined from a year earlier in the first two quarters of this year, while sales growth fell below 10 percent for the first time since 2002. Chief executive officer Jerry Yang said in July that he would spend 100 days improving technology and hiring engineers to regain market share from Google, owner of the most-used search engine.
Yahoo's review and earnings may increase implied volatility over the next two months, the strategists said. An increase in implied volatility, the key factor in the pricing of options, indicates traders anticipate bigger swings in the stock price.
`Solid results'
For EBay, ``business trends are more well-known and our analyst expects solid results'' and therefore less volatility, the strategists wrote in a note dated yesterday. ``EBay shares are likely to rise modestly into year end.''
Goldman equity analyst Anthony Noto rates EBay at ``buy'' and Yahoo at ``neutral.'' The New York-based analyst is top- ranked in earnings accuracy for EBay, according to Starmine.com.
Sunnyvale, California-based Yahoo shares moved an average of 9 percent on the days of its last eight quarterly earnings releases, compared with an average swing of 7 percent for EBay, according to the strategists.
San Jose, California-based EBay may report third-quarter profit before some items of 33 cents a share, the average of 21 analyst estimates compiled by Bloomberg. Analysts expect Yahoo to report earnings of 8 cents a share, the average of 17 estimates.
Investors who create and then sell options contracts are paid a premium. They are betting that the price of the option will decrease as it becomes less likely that the stock price will reach the strike price.
A strategy of buying Yahoo options and selling EBay contracts may also benefit because the price of options on EBay, the world's biggest Internet auctioneer, are ``expensive,'' derivative strategists Maria Grant and John Marshall wrote in a note. EBay is scheduled to report earnings Oct. 17.
For Yahoo, owner of the world's second-most used search engine, ``uncertainty is heightened'' before it reports results on Oct. 16 because it is developing a strategy to compete with Google Inc. and the stock tends to make bigger moves than EBay's after earnings, the strategists wrote.
``Key uncertainties are the timing of acceleration in display ad growth, the magnitude of the ramp in search growth, the levels of increased investment, and the impact of a changing business mix on the margin profile,'' Grant and Marshall wrote.
Yahoo's profit declined from a year earlier in the first two quarters of this year, while sales growth fell below 10 percent for the first time since 2002. Chief executive officer Jerry Yang said in July that he would spend 100 days improving technology and hiring engineers to regain market share from Google, owner of the most-used search engine.
Yahoo's review and earnings may increase implied volatility over the next two months, the strategists said. An increase in implied volatility, the key factor in the pricing of options, indicates traders anticipate bigger swings in the stock price.
`Solid results'
For EBay, ``business trends are more well-known and our analyst expects solid results'' and therefore less volatility, the strategists wrote in a note dated yesterday. ``EBay shares are likely to rise modestly into year end.''
Goldman equity analyst Anthony Noto rates EBay at ``buy'' and Yahoo at ``neutral.'' The New York-based analyst is top- ranked in earnings accuracy for EBay, according to Starmine.com.
Sunnyvale, California-based Yahoo shares moved an average of 9 percent on the days of its last eight quarterly earnings releases, compared with an average swing of 7 percent for EBay, according to the strategists.
San Jose, California-based EBay may report third-quarter profit before some items of 33 cents a share, the average of 21 analyst estimates compiled by Bloomberg. Analysts expect Yahoo to report earnings of 8 cents a share, the average of 17 estimates.
Investors who create and then sell options contracts are paid a premium. They are betting that the price of the option will decrease as it becomes less likely that the stock price will reach the strike price.
Canadian Stocks Rise on Commodities; Suncor, Barrick Advance
Sept. 27 (Bloomberg) -- Canadian stocks rose for a fifth day, led by commodity producers Suncor Energy Inc. and Barrick Gold Corp., as prices of oil, gold and wheat gained, signaling that the companies' profits may grow. Banks also advanced.
Speculation that the Federal Reserve may again lower borrowing costs to boost the economy in the U.S., Canada biggest export market, helped lift stocks after a report showed that new home sales fell more than expected last month and prices dropped by the most since 1970.
``The tone is better. Markets are settling from the subprime volatility,'' said Greg Eckel, who helps manage the equivalent of $1.3 billion as a fund manager at Toronto-based Morgan Meighen & Associates. ``People are picking away. It's good to see it's pretty broad-based. We're also getting the impact of rate cuts and there may be expectations of more cuts creeping in.''
The Standard & Poor's/TSX Composite Index rose 94.76, or 0.7 percent, to 14,129.73 in Toronto. The benchmark, which fell as much as 12 percent from a July 19 record on concern tighter credit might tip the U.S. into recession, has recovered more than two-thirds of the lost ground.
The Reuter/Jefferies CRB Index advanced 1.4 percent as prices of 15 of 19 commodities it tracks increased. Crude oil rose more than $2 to $82.88 a barrel, the second-highest close ever, after the U.S. dollar fell to a record low against the euro, boosting commodities' appeal of as alternative investments.
The U.S. last year took 87 percent of Canada's exports, more than half of which consist of metals, natural gas and other resources. The Fed cut its key lending rate last week to keep a housing slump and credit market turmoil tied to subprime mortgages losses from worsening.
Suncor Energy, the second-largest oil-sands miner, rose C$2.17 to C$95.71. Talisman Energy Inc., which produces oil and gas in the North Sea, increased 25 cents to C$19.55. Canadian Natural Resources Ltd., the nation's second-biggest natural-gas producer, added 91 cents to C$75.20. Nexen Inc., another oil and gas company, gained 63 cents to C$30.53.
Gold Miners
Barrick Gold, the world's biggest bullion miner, climbed 58 cents to C$39.33. Kinross Gold Corp., Canada's third-largest producer of the precious metal, rose 29 cents to C$14.99. First Quantum Minerals Ltd., a miner of copper in Africa, added C$2.99 to C$95.06. Potash Corp. of Saskatchewan Inc., the biggest maker of fertilizer by market value, added C$1.03 to C$104.11.
Measures of materials and energy shares gained 1.2 percent and 0.8 percent, respectively. An index of financial shares added 0.6 percent. The three groups account for three quarters of the S&P/TSX's value. Seven of 10 sub-indexes in the S&P/TSX rose.
Toronto-Dominion Bank, Canada's third-biggest lender by assets, climbed C$1.13 to C$76.26, gaining for a fifth day. Canadian Imperial Bank of Commerce added C$1.29 to C$99.53. TD Bank and its smaller rival both gave presentations this morning at an investor conference in Mont-Tremblant, Quebec, sponsored by CIBC World Markets, Canadian Imperial's investment banking unit.
Bank of Nova Scotia climbed 50 cents to C$53. Canada's second- largest bank is negotiating to pay $200 million for Chilean bank Altas Cumbres' holdings in Banco del Trabajo in Peru, Banco de Antigua in Guatemala and Banco de Ahorro y Credito Altas Cumbres in the Dominican Republic, Chilean newspaper Diario Financiero reported, citing people it didn't identify in Peru.
Speculation that the Federal Reserve may again lower borrowing costs to boost the economy in the U.S., Canada biggest export market, helped lift stocks after a report showed that new home sales fell more than expected last month and prices dropped by the most since 1970.
``The tone is better. Markets are settling from the subprime volatility,'' said Greg Eckel, who helps manage the equivalent of $1.3 billion as a fund manager at Toronto-based Morgan Meighen & Associates. ``People are picking away. It's good to see it's pretty broad-based. We're also getting the impact of rate cuts and there may be expectations of more cuts creeping in.''
The Standard & Poor's/TSX Composite Index rose 94.76, or 0.7 percent, to 14,129.73 in Toronto. The benchmark, which fell as much as 12 percent from a July 19 record on concern tighter credit might tip the U.S. into recession, has recovered more than two-thirds of the lost ground.
The Reuter/Jefferies CRB Index advanced 1.4 percent as prices of 15 of 19 commodities it tracks increased. Crude oil rose more than $2 to $82.88 a barrel, the second-highest close ever, after the U.S. dollar fell to a record low against the euro, boosting commodities' appeal of as alternative investments.
The U.S. last year took 87 percent of Canada's exports, more than half of which consist of metals, natural gas and other resources. The Fed cut its key lending rate last week to keep a housing slump and credit market turmoil tied to subprime mortgages losses from worsening.
Suncor Energy, the second-largest oil-sands miner, rose C$2.17 to C$95.71. Talisman Energy Inc., which produces oil and gas in the North Sea, increased 25 cents to C$19.55. Canadian Natural Resources Ltd., the nation's second-biggest natural-gas producer, added 91 cents to C$75.20. Nexen Inc., another oil and gas company, gained 63 cents to C$30.53.
Gold Miners
Barrick Gold, the world's biggest bullion miner, climbed 58 cents to C$39.33. Kinross Gold Corp., Canada's third-largest producer of the precious metal, rose 29 cents to C$14.99. First Quantum Minerals Ltd., a miner of copper in Africa, added C$2.99 to C$95.06. Potash Corp. of Saskatchewan Inc., the biggest maker of fertilizer by market value, added C$1.03 to C$104.11.
Measures of materials and energy shares gained 1.2 percent and 0.8 percent, respectively. An index of financial shares added 0.6 percent. The three groups account for three quarters of the S&P/TSX's value. Seven of 10 sub-indexes in the S&P/TSX rose.
Toronto-Dominion Bank, Canada's third-biggest lender by assets, climbed C$1.13 to C$76.26, gaining for a fifth day. Canadian Imperial Bank of Commerce added C$1.29 to C$99.53. TD Bank and its smaller rival both gave presentations this morning at an investor conference in Mont-Tremblant, Quebec, sponsored by CIBC World Markets, Canadian Imperial's investment banking unit.
Bank of Nova Scotia climbed 50 cents to C$53. Canada's second- largest bank is negotiating to pay $200 million for Chilean bank Altas Cumbres' holdings in Banco del Trabajo in Peru, Banco de Antigua in Guatemala and Banco de Ahorro y Credito Altas Cumbres in the Dominican Republic, Chilean newspaper Diario Financiero reported, citing people it didn't identify in Peru.
Brazil Bovespa Passes 60,000 Mark, Led by Metals: Latin Stocks
Sept. 27 (Bloomberg) -- Brazilian stocks gained, pushing the benchmark index above 60,000 for the first time, led by materials companies, on expectation further U.S. interest rate cuts will drive up commodity prices.
Steelmakers Usinas Siderurgicas de Minas Gerais SA and Cia. Siderurgica Nacional and iron miner Cia. Vale do Rio Doce rose to records, leading the Bovespa Index as it gained 1,337.61, or 2.2 percent, to 61,052.44. The Morgan Stanley Capital International index of Latin American shares rose to a record, surpassing its July 19 peak. Mexico's Bolsa gained 0.7 percent, led by cement producer Cemex SAB.
``This is definitely a basic materials story, and emerging markets like Brazil have lots of basic materials in their indexes,'' said Alfredo Rotemberg, portfolio manager at Boyd Watterson Asset Management in Cleveland.
The Federal Reserve's half-percentage point cut in its main interest rate to 4.75 percent on Sept. 18 will spur economic growth and may also accelerate inflation, both of which create investor demand for materials, Rotemberg said. Weaker-than-expected new home sales reported in the U.S. increased speculation that the Fed will cut rates again at its next meeting, said Januario Hostin Jr., fund manager at Leme Investimentos in Florianopolis, Brazil.
``We're seeing that when these bad numbers come out, the market goes up,'' Hostin said in a phone interview. ``The market is working with future cuts, and that's elevated investment in stocks.''
Metals Rally
Usiminas, as the country's second largest steelmaker is known, jumped 2.9 percent to 130.40 reais, while CSN, the third largest, rose 4.4 percent to 131.49 reais. The Bloomberg World Iron/Steel Index of 67 companies gained 1.1 percent to a record.
Vale, the world's biggest iron ore producer, gained 4.3 percent to 53 reais, while Cemex gained 3.4 percent to 31.99 pesos, its first gain in seven days.
The Commodities Research Board index of 19 raw materials gained 1.4 percent today to the highest level in more than a year, paced by petroleum products and metals. Separately, analysts surveyed by Bloomberg estimated that iron-ore prices may jump by 30 percent next year, driven by demand from Chinese steelmakers.
Falling interest rates in the U.S. also make investments in higher-yielding Brazilian equities more attractive, said Amaury Fonseca Jr., partner at Vision Brazil Investments.
``Brazil, because it's a more liquid market, benefits when the appetite for risk returns,'' Fonseca said in an interview in Sao Paulo.
The Bovespa index, which fell last month as losses from U.S. subprime loans led investors to sell assets in Brazil, has jumped 27 percent since hitting a four month-low Aug. 16.
The index has gained 37 percent this year, led by Vale and state-controlled oil company Petroleo Brasileiro SA.
Nickel Prices
Vale, the world's second-biggest nickel producer, has jumped 85 percent this year, boosted by higher nickel prices and iron-ore demand. Petrobras has gained 19 percent this year as oil climbed to records, trading above $80 a barrel during the past two weeks. Petrobras gained 50 centavos, or 0.8 percent, to a record 60.35 reais.
The Mexican Bolsa rose 224.82, or 0.7 percent, led by Cemex and mobile-phone company America Movil SAB, which advanced for a second day after Brazilian regulators said the company gained market share there in August. Copper miner Grupo Mexico SAB gained 1.4 percent to 79.67 pesos as copper prices rose in New York.
Corp. Geo SAB, Mexico's largest homebuilder by sales, fell for the second day after the company said sales wouldn't meet estimates because of heavy rain in the country. Competitor Desarrolladora Homex SA recovered more than a third of yesterday's 5.3 percent decline and traded at 101.09 pesos. Company executives said Homex would meet its earlier forecast, Cecilia del Castillo, an analyst at Citigroup Inc.'s Accival unit in Mexico, told clients in a note today.
In other Latin American markets, the main indexes in Argentina, Chile, Colombia, Peru and Venezuela all gained. The MSCI Latin American index added 2.3 percent to 4,177.81.
Steelmakers Usinas Siderurgicas de Minas Gerais SA and Cia. Siderurgica Nacional and iron miner Cia. Vale do Rio Doce rose to records, leading the Bovespa Index as it gained 1,337.61, or 2.2 percent, to 61,052.44. The Morgan Stanley Capital International index of Latin American shares rose to a record, surpassing its July 19 peak. Mexico's Bolsa gained 0.7 percent, led by cement producer Cemex SAB.
``This is definitely a basic materials story, and emerging markets like Brazil have lots of basic materials in their indexes,'' said Alfredo Rotemberg, portfolio manager at Boyd Watterson Asset Management in Cleveland.
The Federal Reserve's half-percentage point cut in its main interest rate to 4.75 percent on Sept. 18 will spur economic growth and may also accelerate inflation, both of which create investor demand for materials, Rotemberg said. Weaker-than-expected new home sales reported in the U.S. increased speculation that the Fed will cut rates again at its next meeting, said Januario Hostin Jr., fund manager at Leme Investimentos in Florianopolis, Brazil.
``We're seeing that when these bad numbers come out, the market goes up,'' Hostin said in a phone interview. ``The market is working with future cuts, and that's elevated investment in stocks.''
Metals Rally
Usiminas, as the country's second largest steelmaker is known, jumped 2.9 percent to 130.40 reais, while CSN, the third largest, rose 4.4 percent to 131.49 reais. The Bloomberg World Iron/Steel Index of 67 companies gained 1.1 percent to a record.
Vale, the world's biggest iron ore producer, gained 4.3 percent to 53 reais, while Cemex gained 3.4 percent to 31.99 pesos, its first gain in seven days.
The Commodities Research Board index of 19 raw materials gained 1.4 percent today to the highest level in more than a year, paced by petroleum products and metals. Separately, analysts surveyed by Bloomberg estimated that iron-ore prices may jump by 30 percent next year, driven by demand from Chinese steelmakers.
Falling interest rates in the U.S. also make investments in higher-yielding Brazilian equities more attractive, said Amaury Fonseca Jr., partner at Vision Brazil Investments.
``Brazil, because it's a more liquid market, benefits when the appetite for risk returns,'' Fonseca said in an interview in Sao Paulo.
The Bovespa index, which fell last month as losses from U.S. subprime loans led investors to sell assets in Brazil, has jumped 27 percent since hitting a four month-low Aug. 16.
The index has gained 37 percent this year, led by Vale and state-controlled oil company Petroleo Brasileiro SA.
Nickel Prices
Vale, the world's second-biggest nickel producer, has jumped 85 percent this year, boosted by higher nickel prices and iron-ore demand. Petrobras has gained 19 percent this year as oil climbed to records, trading above $80 a barrel during the past two weeks. Petrobras gained 50 centavos, or 0.8 percent, to a record 60.35 reais.
The Mexican Bolsa rose 224.82, or 0.7 percent, led by Cemex and mobile-phone company America Movil SAB, which advanced for a second day after Brazilian regulators said the company gained market share there in August. Copper miner Grupo Mexico SAB gained 1.4 percent to 79.67 pesos as copper prices rose in New York.
Corp. Geo SAB, Mexico's largest homebuilder by sales, fell for the second day after the company said sales wouldn't meet estimates because of heavy rain in the country. Competitor Desarrolladora Homex SA recovered more than a third of yesterday's 5.3 percent decline and traded at 101.09 pesos. Company executives said Homex would meet its earlier forecast, Cecilia del Castillo, an analyst at Citigroup Inc.'s Accival unit in Mexico, told clients in a note today.
In other Latin American markets, the main indexes in Argentina, Chile, Colombia, Peru and Venezuela all gained. The MSCI Latin American index added 2.3 percent to 4,177.81.
BigBand, Christopher & Banks, Silverstar: U.S. Equity Preview
Sept. 27 (Bloomberg) -- The following is a list of companies whose shares may have unusual price changes in U.S. exchanges tomorrow. This preview includes news that broke after exchanges closed. Stock symbols are in parentheses after company names.
Accenture Ltd. (ACN US) rose 48 cents, or 1.3 percent, to $38.50 after the official close of U.S. exchanges. The world's second-biggest consulting firm said fourth-quarter profit fell less than analysts estimated because of increasing outsourcing work in Asia and Europe.
BigBand Networks Inc. (BBND US) fell $2.76, or 30 percent, to $6.31 in extended trading. The online video-equipment maker cut its revenue forecast for the third quarter, predicting sales of as much as $39 million. The average estimate from analysts in a Bloomberg survey was $55.9 million.
Christopher & Banks Corp. (CBK US): The women's clothing retailer said that, excluding some items, it earned 13 cents a share in the second quarter. That's 2 cents higher than the average analyst estimate in a Bloomberg survey. The stock fell 22 cents to $11.43 in regular trading.
Silverstar Holdings Ltd. (SSTR US) rose 67 cents, or 27 percent, to $3.12 in extended trading. The owner of Fantasy Sports Inc. said profit from continuing operations was 24 cents a share in the fiscal fourth quarter, compared with a loss of 26 cents a year earlier.
Wynn Resorts Ltd. (WYNN US) fell $5.72, or 3.4 percent, to $161.26 in extended trading. The casino company founded by billionaire Steve Wynn said in a Securities and Exchange Commission filing that it intends to sell an undisclosed amount of shares. The creation of new shares tends to dilute future earnings for existing shareholders.
Accenture Ltd. (ACN US) rose 48 cents, or 1.3 percent, to $38.50 after the official close of U.S. exchanges. The world's second-biggest consulting firm said fourth-quarter profit fell less than analysts estimated because of increasing outsourcing work in Asia and Europe.
BigBand Networks Inc. (BBND US) fell $2.76, or 30 percent, to $6.31 in extended trading. The online video-equipment maker cut its revenue forecast for the third quarter, predicting sales of as much as $39 million. The average estimate from analysts in a Bloomberg survey was $55.9 million.
Christopher & Banks Corp. (CBK US): The women's clothing retailer said that, excluding some items, it earned 13 cents a share in the second quarter. That's 2 cents higher than the average analyst estimate in a Bloomberg survey. The stock fell 22 cents to $11.43 in regular trading.
Silverstar Holdings Ltd. (SSTR US) rose 67 cents, or 27 percent, to $3.12 in extended trading. The owner of Fantasy Sports Inc. said profit from continuing operations was 24 cents a share in the fiscal fourth quarter, compared with a loss of 26 cents a year earlier.
Wynn Resorts Ltd. (WYNN US) fell $5.72, or 3.4 percent, to $161.26 in extended trading. The casino company founded by billionaire Steve Wynn said in a Securities and Exchange Commission filing that it intends to sell an undisclosed amount of shares. The creation of new shares tends to dilute future earnings for existing shareholders.
U.S. Stocks Advance on Rate-Cut Speculation Sallie Mae Rallies
Sept. 27 (Bloomberg) -- The U.S. stock market rose to the highest since July as investors speculated a drop in new home sales will give the Federal Reserve more reason to lower interest rates.
SLM Corp. posted its biggest rally in five months on expectations the largest U.S. student-loan company will negotiate a new takeover agreement. Exxon Mobil Corp. and Chevron Corp. climbed after crude oil prices increased for a second day. Morgan Stanley and Citigroup Inc. helped lead financial shares to their steepest gain since the Fed cut its benchmark rate on Sept. 18.
The Standard & Poor's 500 Index added 5.96, or 0.4 percent, to 1,531.38. The Dow Jones Industrial Average rose 34.79, or 0.3 percent, to 13,912.94. The Nasdaq Composite Index advanced 10.56, or 0.4 percent, to 2,709.59.
The Dow average climbed to within 0.7 percent of a record after the biggest plunge in new home prices in almost four decades spurred expectations policy makers will continue to lower borrowing costs to stem an economic slowdown. The S&P 500 has rallied an average 15 percent during periods when the Fed was reducing interest rates, according to data going back to 1945 compiled by Bespoke Investment Group LLC.
``The Fed has done the right thing, the market has appreciated it and I think you'll see some more rate drops before the year is out,'' said Harry Clark, who oversees $1.3 billion as chief executive officer of Clark Capital Management in Philadelphia. ``There's a lot of good values out there. The market's going to be very strong through the end of the year.''
Global Shares Advance
Equity indexes in Hong Kong, Singapore, Australia, India and Brazil climbed to records today and European shares rose on expectations that lower U.S. interest rates will stoke demand for exports to the world's largest economy. U.S. Treasuries gained and the dollar traded near a record low against the euro.
The S&P 500 has gained 8.5 percent since the central bank cut its discount rate on Aug. 17 to revive investor confidence in credit markets. On Sept. 18, the Fed lowered the benchmark federal funds rate by half a percentage point and said it will ``act as needed'' to sustain economic growth.
SLM, also know as Sallie Mae, rallied $4.11, or 9.1 percent, to $49.12. Friedman Billings Ramsey & Co. reiterated its ``outperform'' rating on the lender, saying it doesn't expect a buyout group led by J.C. Flowers & Co. to walk away from the takeover even after telling the company yesterday it was no longer willing to pay $60 a share. Sallie Mae led the S&P 500 Financials Index to a 0.8 percent gain.
Citigroup, the largest U.S. bank, added 33 cents to $46.88. Morgan Stanley, the second-largest securities firm, climbed $1.58 to $64.55.
Energy Rally
Energy shares in the S&P 500 advanced 1 percent as a group. Exxon added 60 cents to $92.97. Chevron rose $1 to $93.51.
Crude oil for November delivery gained 3.2 percent to $82.88 a barrel in New York as the dollar's drop boosted the appeal of commodities as alternative investments.
New home purchases declined 8.3 percent to an annual pace of 795,000, the lowest level in more than seven years, the Commerce Department said today in Washington. The median price dropped 7.5 percent from August 2006. The figures suggest home construction will extend its deepest slump since 1991, and consumers will have less home equity to tap for spending.
Fannie Mae Chief Executive Officer Daniel Mudd said in an interview with Bloomberg News today that the housing slump will last beyond next year.
Rate-Cut Bets
Traders increased wagers that the Fed will lower its target rate for overnight loans between banks to 4.25 percent by the end of the year. The odds of a quarter-percentage point rate cut to 4.5 percent at the central bank's Oct. 31 policy meeting are 88 percent, up from 86 percent yesterday, futures contracts show. Futures are also pricing in a 67 percent chance of another quarter-percentage point cut at the Dec. 11 meeting.
``The way the market's been reacting here I think investors are looking for the Fed to cut,'' said Kurt Brunner, who helps manage $1.5 billion at Swarthmore Group Inc. in Philadelphia. ``People are expecting that because these numbers are a little difficult, that the Fed has to come in and cut again.''
Moody's Corp. and McGraw-Hill Cos. rallied for a second day on speculation their credit-rating units won't face penalties for their role in the subprime-mortgage crisis. Officials at the two largest ratings companies appeared before the Senate Banking Committee yesterday to face criticism that they had inflated credit ratings given to subprime securities to win more business.
Moody's, parent of Moody's Investors Service, gained $2.98 to $50.37. McGraw-Hill, owner of Standard & Poor's, rose $2.36 to $52.09.
Returning Cash
Wyeth, Lockheed Martin Corp., Tyco Electronics Ltd. and ConAgra Foods Inc. climbed after saying they plan to return cash to shareholders by raising their dividends and buying back stock.
Wyeth, the drugmaker that had three products postponed by U.S. regulators this year, climbed 9 cents to $44.79. Lockheed, the world's largest defense company, gained $1.07 to $106.79. Tyco Electronics, the biggest maker of electric connectors, added 64 cents to $35.18. ConAgra, the maker of Hunt's ketchup and Orville Redenbacher popcorn, gained 39 cents to $25.82.
Freeport-McMoRan Copper & Gold Inc. added $2.89 to $106.80. The world's second-largest copper producer said it expects to repay a $10 billion loan early next year and may consider returning cash to shareholders through a dividend or stock buyback.
The prospects for more share buybacks and leveraged takeovers improved after Kohlberg Kravis Roberts & Co.'s banks sold $9.4 billion of loans used for the buyout of First Data Corp. in the biggest offering of high-yield debt since corporate funding dried up in July, according to a person with knowledge of the transaction.
`Starting to Calm Down'
``This is just people starting to calm down and not be freaked out in the short term, and the deals are unlocking,'' said Kenneth Fisher, who helps oversee $42 billion as chief executive officer of Fisher Investments in Woodside, California. ``Money is flowing back into finance deals.''
Wal-Mart Stores Inc. climbed 31 cents to $43.61. The biggest retailer added 24 prescriptions to a list of $4 generic drugs to lure more customers into its pharmacies and said it will consider adding a 90-day prescription program.
Micron Technology Inc. increased 61 cents to $11.36. The largest U.S. maker of computer-memory chips is likely to report fiscal fourth-quarter earnings that will exceed analysts' estimates on Oct. 2, Lazard Capital Markets LLC analyst Daniel Amir wrote.
More than two stocks gained for every one that fell on the New York Stock Exchange. Some 1.2 billion shares changed hands on the Big Board, 29 percent less than the three-month daily average.
Bear Stearns
Bear Stearns Cos. retreated $1.85 to $121.15 after financial news network CNBC said billionaire Warren Buffett isn't in talks about acquiring a stake in the fifth-biggest U.S. securities firm. The S&P 500 rallied yesterday after the New York Times reported that Bear Stearns is in discussions with several outside investors including Buffett to sell up to 20 percent of the firm.
Starbucks Corp. declined 72 cents to $26.97. Banc of America Securities lowered its recommendation for shares of the world's largest chain of coffee shops to ``sell'' from ``neutral'' and cut its price estimate 15 percent to $23 on expectations profit growth will slow.
Rite Aid Corp. lost 21 cents to $4.84. The third-biggest U.S. drugstore chain said its second-quarter loss widened on costs from its purchase of the Eckerd and Brooks chains. The company lowered its sales forecast and expects a wider loss for the year.
Jobless Claims, GDP
In other economic data today, initial jobless claims declined by 15,000 to a four-month low of 298,000 in the week that ended Sept. 22, the Labor Department said.
Separately, the Commerce Department said gross domestic product rose at a revised 3.8 percent annual rate from April though June, propelled by a surge in exports. The economy advanced at a 0.6 percent rate in the first quarter.
The Fed's preferred inflation measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.4 percent annual rate in the second quarter and was up 2 percent from the same time in 2006.
The Russell 2000 Index, a benchmark for companies with a median market value of $647 million, gained 0.6 percent to 814.01. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, climbed 0.5 percent to 15,411.42. Based on its advance, the value of stocks increased by $91.7 billion.
In other markets, the yield on the benchmark 10-year Treasury note declined almost 0.05 percentage point to 4.57.
In Europe, the Dow Jones Stoxx 600 Index added 0.8 percent to 377.96. Hong Kong's Hang Seng Index climbed 2.4 percent to 27,065.15, while Brazil's Bovespa Index gained 2.2 percent to 61,052.44.
Bear Stearns Cos. (BSC US)
Chevron Corp. (CVX US)
Citigroup Inc. (C US)
ConAgra Foods Inc. (CAG US)
Exxon Mobil Corp. (XOM US)
Fannie Mae (FNM US)
Freeport-McMoRan Copper & Gold Inc. (FCX US)
Lockheed Martin Corp. (LMT US)
McGraw-Hill Cos. (MHP US)
Micron Technology Inc. (MU US)
Moody's Corp. (MCO US)
Morgan Stanley (MS US)
Rite Aid Corp. (RAD US)
SLM Corp. (SLM US)
Starbucks Corp. (SBUX US)
Tyco Electronics Ltd. (TEL US)
Wal-Mart Stores Inc. (WMT US)
Wyeth (WYE US)
SLM Corp. posted its biggest rally in five months on expectations the largest U.S. student-loan company will negotiate a new takeover agreement. Exxon Mobil Corp. and Chevron Corp. climbed after crude oil prices increased for a second day. Morgan Stanley and Citigroup Inc. helped lead financial shares to their steepest gain since the Fed cut its benchmark rate on Sept. 18.
The Standard & Poor's 500 Index added 5.96, or 0.4 percent, to 1,531.38. The Dow Jones Industrial Average rose 34.79, or 0.3 percent, to 13,912.94. The Nasdaq Composite Index advanced 10.56, or 0.4 percent, to 2,709.59.
The Dow average climbed to within 0.7 percent of a record after the biggest plunge in new home prices in almost four decades spurred expectations policy makers will continue to lower borrowing costs to stem an economic slowdown. The S&P 500 has rallied an average 15 percent during periods when the Fed was reducing interest rates, according to data going back to 1945 compiled by Bespoke Investment Group LLC.
``The Fed has done the right thing, the market has appreciated it and I think you'll see some more rate drops before the year is out,'' said Harry Clark, who oversees $1.3 billion as chief executive officer of Clark Capital Management in Philadelphia. ``There's a lot of good values out there. The market's going to be very strong through the end of the year.''
Global Shares Advance
Equity indexes in Hong Kong, Singapore, Australia, India and Brazil climbed to records today and European shares rose on expectations that lower U.S. interest rates will stoke demand for exports to the world's largest economy. U.S. Treasuries gained and the dollar traded near a record low against the euro.
The S&P 500 has gained 8.5 percent since the central bank cut its discount rate on Aug. 17 to revive investor confidence in credit markets. On Sept. 18, the Fed lowered the benchmark federal funds rate by half a percentage point and said it will ``act as needed'' to sustain economic growth.
SLM, also know as Sallie Mae, rallied $4.11, or 9.1 percent, to $49.12. Friedman Billings Ramsey & Co. reiterated its ``outperform'' rating on the lender, saying it doesn't expect a buyout group led by J.C. Flowers & Co. to walk away from the takeover even after telling the company yesterday it was no longer willing to pay $60 a share. Sallie Mae led the S&P 500 Financials Index to a 0.8 percent gain.
Citigroup, the largest U.S. bank, added 33 cents to $46.88. Morgan Stanley, the second-largest securities firm, climbed $1.58 to $64.55.
Energy Rally
Energy shares in the S&P 500 advanced 1 percent as a group. Exxon added 60 cents to $92.97. Chevron rose $1 to $93.51.
Crude oil for November delivery gained 3.2 percent to $82.88 a barrel in New York as the dollar's drop boosted the appeal of commodities as alternative investments.
New home purchases declined 8.3 percent to an annual pace of 795,000, the lowest level in more than seven years, the Commerce Department said today in Washington. The median price dropped 7.5 percent from August 2006. The figures suggest home construction will extend its deepest slump since 1991, and consumers will have less home equity to tap for spending.
Fannie Mae Chief Executive Officer Daniel Mudd said in an interview with Bloomberg News today that the housing slump will last beyond next year.
Rate-Cut Bets
Traders increased wagers that the Fed will lower its target rate for overnight loans between banks to 4.25 percent by the end of the year. The odds of a quarter-percentage point rate cut to 4.5 percent at the central bank's Oct. 31 policy meeting are 88 percent, up from 86 percent yesterday, futures contracts show. Futures are also pricing in a 67 percent chance of another quarter-percentage point cut at the Dec. 11 meeting.
``The way the market's been reacting here I think investors are looking for the Fed to cut,'' said Kurt Brunner, who helps manage $1.5 billion at Swarthmore Group Inc. in Philadelphia. ``People are expecting that because these numbers are a little difficult, that the Fed has to come in and cut again.''
Moody's Corp. and McGraw-Hill Cos. rallied for a second day on speculation their credit-rating units won't face penalties for their role in the subprime-mortgage crisis. Officials at the two largest ratings companies appeared before the Senate Banking Committee yesterday to face criticism that they had inflated credit ratings given to subprime securities to win more business.
Moody's, parent of Moody's Investors Service, gained $2.98 to $50.37. McGraw-Hill, owner of Standard & Poor's, rose $2.36 to $52.09.
Returning Cash
Wyeth, Lockheed Martin Corp., Tyco Electronics Ltd. and ConAgra Foods Inc. climbed after saying they plan to return cash to shareholders by raising their dividends and buying back stock.
Wyeth, the drugmaker that had three products postponed by U.S. regulators this year, climbed 9 cents to $44.79. Lockheed, the world's largest defense company, gained $1.07 to $106.79. Tyco Electronics, the biggest maker of electric connectors, added 64 cents to $35.18. ConAgra, the maker of Hunt's ketchup and Orville Redenbacher popcorn, gained 39 cents to $25.82.
Freeport-McMoRan Copper & Gold Inc. added $2.89 to $106.80. The world's second-largest copper producer said it expects to repay a $10 billion loan early next year and may consider returning cash to shareholders through a dividend or stock buyback.
The prospects for more share buybacks and leveraged takeovers improved after Kohlberg Kravis Roberts & Co.'s banks sold $9.4 billion of loans used for the buyout of First Data Corp. in the biggest offering of high-yield debt since corporate funding dried up in July, according to a person with knowledge of the transaction.
`Starting to Calm Down'
``This is just people starting to calm down and not be freaked out in the short term, and the deals are unlocking,'' said Kenneth Fisher, who helps oversee $42 billion as chief executive officer of Fisher Investments in Woodside, California. ``Money is flowing back into finance deals.''
Wal-Mart Stores Inc. climbed 31 cents to $43.61. The biggest retailer added 24 prescriptions to a list of $4 generic drugs to lure more customers into its pharmacies and said it will consider adding a 90-day prescription program.
Micron Technology Inc. increased 61 cents to $11.36. The largest U.S. maker of computer-memory chips is likely to report fiscal fourth-quarter earnings that will exceed analysts' estimates on Oct. 2, Lazard Capital Markets LLC analyst Daniel Amir wrote.
More than two stocks gained for every one that fell on the New York Stock Exchange. Some 1.2 billion shares changed hands on the Big Board, 29 percent less than the three-month daily average.
Bear Stearns
Bear Stearns Cos. retreated $1.85 to $121.15 after financial news network CNBC said billionaire Warren Buffett isn't in talks about acquiring a stake in the fifth-biggest U.S. securities firm. The S&P 500 rallied yesterday after the New York Times reported that Bear Stearns is in discussions with several outside investors including Buffett to sell up to 20 percent of the firm.
Starbucks Corp. declined 72 cents to $26.97. Banc of America Securities lowered its recommendation for shares of the world's largest chain of coffee shops to ``sell'' from ``neutral'' and cut its price estimate 15 percent to $23 on expectations profit growth will slow.
Rite Aid Corp. lost 21 cents to $4.84. The third-biggest U.S. drugstore chain said its second-quarter loss widened on costs from its purchase of the Eckerd and Brooks chains. The company lowered its sales forecast and expects a wider loss for the year.
Jobless Claims, GDP
In other economic data today, initial jobless claims declined by 15,000 to a four-month low of 298,000 in the week that ended Sept. 22, the Labor Department said.
Separately, the Commerce Department said gross domestic product rose at a revised 3.8 percent annual rate from April though June, propelled by a surge in exports. The economy advanced at a 0.6 percent rate in the first quarter.
The Fed's preferred inflation measure, which is tied to consumer spending and strips out food and energy costs, rose at a 1.4 percent annual rate in the second quarter and was up 2 percent from the same time in 2006.
The Russell 2000 Index, a benchmark for companies with a median market value of $647 million, gained 0.6 percent to 814.01. The Dow Jones Wilshire 5000 Index, the broadest measure of U.S. shares, climbed 0.5 percent to 15,411.42. Based on its advance, the value of stocks increased by $91.7 billion.
In other markets, the yield on the benchmark 10-year Treasury note declined almost 0.05 percentage point to 4.57.
In Europe, the Dow Jones Stoxx 600 Index added 0.8 percent to 377.96. Hong Kong's Hang Seng Index climbed 2.4 percent to 27,065.15, while Brazil's Bovespa Index gained 2.2 percent to 61,052.44.
Bear Stearns Cos. (BSC US)
Chevron Corp. (CVX US)
Citigroup Inc. (C US)
ConAgra Foods Inc. (CAG US)
Exxon Mobil Corp. (XOM US)
Fannie Mae (FNM US)
Freeport-McMoRan Copper & Gold Inc. (FCX US)
Lockheed Martin Corp. (LMT US)
McGraw-Hill Cos. (MHP US)
Micron Technology Inc. (MU US)
Moody's Corp. (MCO US)
Morgan Stanley (MS US)
Rite Aid Corp. (RAD US)
SLM Corp. (SLM US)
Starbucks Corp. (SBUX US)
Tyco Electronics Ltd. (TEL US)
Wal-Mart Stores Inc. (WMT US)
Wyeth (WYE US)
Wednesday, September 26, 2007
South Korean Stocks Climb to Two-Month High; Samsung Advances
Sept. 27 (Bloomberg) -- South Korean stocks rose to a two- month high after domestic consumers became the most optimistic in five years and on speculation the effects of a U.S. housing slump will be contained. Kookmin Bank and Samsung Electronics Co. paced the advance.
The Dow Jones Industrial Average has added 1 percent since the Federal Reserve cut interest rates on Sept. 18 on speculation lower borrowing costs will buoy the economy and revive takeovers.
``Investors were comforted to see U.S. stocks' gains were stable following the rate cut, and there's definitely optimism about the Korean economy,'' said Kim Woo Sik, who manages the equivalent of $290 million at SH Asset Management Co. in Seoul. ``We think the Fed can cut rates further once or twice.''
The Kospi index gained 24.01, or 1.3 percent, to 1,943.27 as of 11:16 a.m. in Seoul, set for the highest since July 26. The Kosdaq rose 0.7 percent to 793.91. Financial markets in South Korea were shut Sept. 24 to Sept 26 for holidays.
Kookmin, South Korea's biggest bank, gained 1,400 won, or 1.9 percent, to 75,100. Lotte Shopping Co., the largest department store chain, advanced 5,000 won, or 1.3 percent, to 390,000.
South Korea's consumer sentiment index increased to 112 in the third quarter from 108 in the previous three months, the Bank of Korea said in a report. A reading higher than 100 indicates optimists outnumber pessimists.
Subprime Concern Abates
Hyundai Department Store Co., South Korea's second-largest department store operator, climbed 4,000 won, or 3.7 percent, to 111,500. Shinhan Financial Group Ltd., the second-biggest financial-services company, gained 2,300 won, or 4 percent, to 60,000.
Samsung Electronics, which gets about 15 percent of its sales from the Americas, rose 17,000 won, or 3.2 percent, to 551,000. LG.Philips LCD Co., the world's second-biggest maker of liquid-crystal displays, added 1,350 won, or 3.2 percent, to 43,200.
U.S. shares rallied the most in a week yesterday, helped by a New York Times report that Bear Stearns Cos., the second- biggest U.S. underwriter of mortgage bonds, is in ``serious talks with several outside investors'' including Warren Buffett to sell as much as 20 percent of itself to stem losses from the housing slump.
Samsung, Armani
Separately, Samsung Electronics, Asia's biggest mobile- phone maker, and Italian fashion designer Giorgio Armani SpA said on Sept. 23 that they will start selling a jointly developed handset in Europe in November. Financial details weren't provided. The companies also plan to introduce a liquid- crystal display television in January.
Hyundai Motor Co., South Korea's largest automaker, climbed 1,900 won, or 2.7 percent, to 72,500. LG Electronics Inc., South Korea's second-largest exporter, advanced 3,700 won, or 4.6 percent, to 84,400.
Kospi 200 futures expiring in December climbed 1.7 percent to 249.90, while the underlying index advanced 1.3 percent to 246.61.
The following shares also rose or fell. Stock symbols are in brackets after company names.
Hansol Paper Co. (004150 KS), which makes newsprint and art paper, gained 1,050 won, or 5.6 percent, to 19,900. UBS AG recommended investors ``buy'' the shares in new coverage, in a report. The stock may rise to 25,000 won in a year as the company will enter a ``multi-year earnings upcycle'' on falling pulp costs and rising paper prices, wrote Seoul-based analysts including Seung Shin.
Hyundai Engineering & Construction Co. (000720 KS), the fourth-biggest builder in South Korea, added 300 won, or 0.3 percent, to 90,500, compared with a 1.7 percent loss by the Korea Construction Index. The company may be awarded a $1 billion contract jointly with Italy's Snamprogetti SpA to build three fertilizer plants in Qatar, Khalifa Abdulla al-Sowaidi, managing director of Qatar Fertilizer Company, said on Sept. 23.
SK Telecom Co. (017670 KS), the biggest of South Korea's three mobile-phone operators, rose 2,000 won, or 1 percent, to 209,500, trailing gains by its peers in the Korea Communication Services Index. The company said on Sept. 21 that it will spend as much as $200 million to buy new shares of its U.S. unit, which owns 50 percent of a joint venture with Earthlink Inc. SK Telecom also plans to invest as much as $110 million to form an Internet company in the U.S.
Ssangyong Engineering & Construction Co. (012650 KS), a builder, gained 1,050 won, or 4.5 percent, to 24,200. The company said it won a $686 million order to build a hotel in Singapore.
STX Engine Co. (077970 KS), which makes ship engines, advanced 3,300 won, or 5.1 percent, to 68,300. Samsung Securities Co. raised its estimates for the company's annual new orders for 2007 to 2009, in a note, citing high demand for vessels including bulk carriers.
The Dow Jones Industrial Average has added 1 percent since the Federal Reserve cut interest rates on Sept. 18 on speculation lower borrowing costs will buoy the economy and revive takeovers.
``Investors were comforted to see U.S. stocks' gains were stable following the rate cut, and there's definitely optimism about the Korean economy,'' said Kim Woo Sik, who manages the equivalent of $290 million at SH Asset Management Co. in Seoul. ``We think the Fed can cut rates further once or twice.''
The Kospi index gained 24.01, or 1.3 percent, to 1,943.27 as of 11:16 a.m. in Seoul, set for the highest since July 26. The Kosdaq rose 0.7 percent to 793.91. Financial markets in South Korea were shut Sept. 24 to Sept 26 for holidays.
Kookmin, South Korea's biggest bank, gained 1,400 won, or 1.9 percent, to 75,100. Lotte Shopping Co., the largest department store chain, advanced 5,000 won, or 1.3 percent, to 390,000.
South Korea's consumer sentiment index increased to 112 in the third quarter from 108 in the previous three months, the Bank of Korea said in a report. A reading higher than 100 indicates optimists outnumber pessimists.
Subprime Concern Abates
Hyundai Department Store Co., South Korea's second-largest department store operator, climbed 4,000 won, or 3.7 percent, to 111,500. Shinhan Financial Group Ltd., the second-biggest financial-services company, gained 2,300 won, or 4 percent, to 60,000.
Samsung Electronics, which gets about 15 percent of its sales from the Americas, rose 17,000 won, or 3.2 percent, to 551,000. LG.Philips LCD Co., the world's second-biggest maker of liquid-crystal displays, added 1,350 won, or 3.2 percent, to 43,200.
U.S. shares rallied the most in a week yesterday, helped by a New York Times report that Bear Stearns Cos., the second- biggest U.S. underwriter of mortgage bonds, is in ``serious talks with several outside investors'' including Warren Buffett to sell as much as 20 percent of itself to stem losses from the housing slump.
Samsung, Armani
Separately, Samsung Electronics, Asia's biggest mobile- phone maker, and Italian fashion designer Giorgio Armani SpA said on Sept. 23 that they will start selling a jointly developed handset in Europe in November. Financial details weren't provided. The companies also plan to introduce a liquid- crystal display television in January.
Hyundai Motor Co., South Korea's largest automaker, climbed 1,900 won, or 2.7 percent, to 72,500. LG Electronics Inc., South Korea's second-largest exporter, advanced 3,700 won, or 4.6 percent, to 84,400.
Kospi 200 futures expiring in December climbed 1.7 percent to 249.90, while the underlying index advanced 1.3 percent to 246.61.
The following shares also rose or fell. Stock symbols are in brackets after company names.
Hansol Paper Co. (004150 KS), which makes newsprint and art paper, gained 1,050 won, or 5.6 percent, to 19,900. UBS AG recommended investors ``buy'' the shares in new coverage, in a report. The stock may rise to 25,000 won in a year as the company will enter a ``multi-year earnings upcycle'' on falling pulp costs and rising paper prices, wrote Seoul-based analysts including Seung Shin.
Hyundai Engineering & Construction Co. (000720 KS), the fourth-biggest builder in South Korea, added 300 won, or 0.3 percent, to 90,500, compared with a 1.7 percent loss by the Korea Construction Index. The company may be awarded a $1 billion contract jointly with Italy's Snamprogetti SpA to build three fertilizer plants in Qatar, Khalifa Abdulla al-Sowaidi, managing director of Qatar Fertilizer Company, said on Sept. 23.
SK Telecom Co. (017670 KS), the biggest of South Korea's three mobile-phone operators, rose 2,000 won, or 1 percent, to 209,500, trailing gains by its peers in the Korea Communication Services Index. The company said on Sept. 21 that it will spend as much as $200 million to buy new shares of its U.S. unit, which owns 50 percent of a joint venture with Earthlink Inc. SK Telecom also plans to invest as much as $110 million to form an Internet company in the U.S.
Ssangyong Engineering & Construction Co. (012650 KS), a builder, gained 1,050 won, or 4.5 percent, to 24,200. The company said it won a $686 million order to build a hotel in Singapore.
STX Engine Co. (077970 KS), which makes ship engines, advanced 3,300 won, or 5.1 percent, to 68,300. Samsung Securities Co. raised its estimates for the company's annual new orders for 2007 to 2009, in a note, citing high demand for vessels including bulk carriers.
Australia Stocks Rise to Record, Led by Banks, Energy Resources
Sept. 27 (Bloomberg) -- Australia's S&P/ASX 200 Index rose to a record, led by National Australia Bank Ltd., after durable goods orders fell more than expected in the U.S., adding to expectations the Federal Reserve will cut interest rates again.
``The chance of another rate cut in the U.S. helps banks; it's like petrol to a fire,'' said Hans Kunnen, who helped manage the equivalent of $117 billion at Colonial First State Global Asset Management in Sydney. ``Lower interest rates mean more people will be out to borrow money.''
Energy Resources of Australia Ltd. climbed on plans to expand its Ranger uranium mine. Seven Network Ltd. gained after it bid to take Unwired Group Ltd. over.
The S&P/ASX 200 increased 60.90, or 0.9 percent, to 6,540.90 as at 11:11 a.m. in Sydney, set for its highest-ever close. About four stocks rose for each that fell.
National Australia Bank, the nation's biggest lender, added 81 cents, or 2.1 percent, to A$39.83. Australia and New Zealand Banking Group Ltd., the third-largest, gained 46 cents, or 1.6 percent, to A$29.26. St. George Bank Ltd., the fifth-largest bank, rose 40 cents, or 1.2 percent, to A$35.25.
Demand for American-made durable goods such as jetliners and telephone network switches fell 4.9 percent in August, the most in seven months, the U.S. Commerce Department said yesterday. Total orders were forecast to fall 4 percent, according to economists surveyed by Bloomberg.
The report spurred traders to increase bets the Fed will cut borrowing costs for the second time in two months when it meets Oct. 31. Futures contracts yesterday suggested about 86 percent odds of a quarter-percentage point cut in the 4.75 percent target rate at its next meeting Oct. 31, compared with a 72 percent chance a week ago.
Energy Resources
A measure of financial stocks on Australia's index climbed 2.3 percent Sept. 19, the day after the Fed cut the rate a half- percentage point in a bid to stimulate the world's largest economy.
Energy Resources, the Rio Tinto group unit that produces more than a 10th of the world's mined uranium, jumped 82 cents, or 4.7 percent, to A$18.14. The company will spend A$57 million expanding its Ranger mine in Australia's Northern Territory, in order to add 4,857 metric tons of uranium oxide to the site's reserves.
Seven, Australia's most watched television broadcaster, gained 16, or 1.2 percent, to A$13.28. It offered 45 cents a share for Unwired, in a bid recommended by the company's board, and will increase its offer to 50 cents should it get 90 percent of Unwired.
Unwired, an Australian wireless Internet operator, also rose, adding 2.5 cent, or 5.3 percent, to 50 cents.
The S&P/ASX 200's futures contract for December added 0.8 percent to 6,599. The broader All Ordinaries Index rose 0.9 percent to 6,546.70.
The following shares also gained or declined. Stock symbols are in brackets after the company names.
Babcock & Brown Ltd. (BNB AU), Australia's second-largest investment bank, rose A$1.14, or 4.3 percent, to A$27.65. The bank sold 18.7 million American depositary receipts in Babcock & Brown Air Ltd. at $23 apiece, its first U.S. capital raising.
Boart Longyear Ltd. (BLY AU), a provider of drilling services to mining companies, added 2 cents, or 0.8 percent, to A$2.41. Boart was rated a ``buy'' in new coverage at Merrill Lynch & Co. because of the positive outlook for its shares and earnings.
Macquarie Bank Ltd. (MBL AU), Australia's largest investment bank, jumped A$2.14, or 2.7 percent, to A$82.41. Macquarie agreed to buy Canadian securities firm Orion Financial Inc. for C$147 million ($146 million) in cash and shares in order to expand its presence in Canada. Orion has offices in Montreal, Toronto, Calgary and Montreal and focuses on the resources industry.
Midwest Corp. (MIS AU), an Australian iron ore producer, dropped 21 cents, or 6.4 percent, to A$3.08. Midwest has been denied a request to extend its permit to haul ore by road from its Koolanooka stockpile to Geraldton port, Western Australia state. The company is seeking an urgent meeting about the matter with the state's Minister for Planning and Infrastructure, it said in a statement to the exchange yesterday.
Nufarm Ltd. (NUF AU), Australia's biggest supplier of farm chemicals, declined 42 cents, or 3 percent, to A$13.83. Nufarm was cut to ``sell'' from ``neutral'' by UBS AG analyst Owen Evans after it missed its own profit forecast in results released yesterday. UBS set a 12-month price target for the stock of A$14.50 per share.
Pacifica Group Ltd. (PBB AU), a manufacturer of parts for General Motors Corp., lost 6.5 cents, or 3.3 percent, to A$1.92. Pacifica said a general strike at GM's North American plants is expected to ``adversely impact'' on earnings for the 2007 fiscal year. Pacifica closed it Knoxville factory yesterday, which will affect operations in Chinese, Thai and Australian plants, according to a statement to the exchange.
Rams Home Loans Group Ltd. (RHG AU), the Australian lender that last month failed to refinance $5.3 million of short-term debt, fell 1.5 cent, or 1.5 percent, to 97 cents. Rams was cut to ``neutral'' from ``buy'' by Merrill Lynch & Co. analysts.
Rocklands Richfield Ltd. (RCI AU), a coal mining company with exploration tenements in Queensland state's Bowen Basin, slipped 0.5 cent, or 1.8 percent, to 28 cents. Bowen Energy Ltd. will not proceed with its takeover of Rocklands, it said in a statement yesterday. Rocklands shareholders voted in favor of the company acquiring China Coke Chemicals Ltd. and Bowen's bid was conditional on Rocklands not buying China Coke. Bowen (BWN AU), a coal and uranium miner, slid 1.5 cent, or 6.1 percent, to 23 cents.
Seek Ltd. (SEK AU), Australia's biggest Internet job site, fell 6 cents, or 0.7 percent, to A$8.82. Merrill Lynch & Co. reduced the stock to ``neutral'' from ``buy''.
Tattersall's Ltd. (TTS AU), Australia's second-largest gaming company, added 8 cents, or 2.1 percent, to A$3.98. Credit Suisse AG raised Tattersall's to ``neutral'' after its stock dropped more than 8 percent this month.
``The chance of another rate cut in the U.S. helps banks; it's like petrol to a fire,'' said Hans Kunnen, who helped manage the equivalent of $117 billion at Colonial First State Global Asset Management in Sydney. ``Lower interest rates mean more people will be out to borrow money.''
Energy Resources of Australia Ltd. climbed on plans to expand its Ranger uranium mine. Seven Network Ltd. gained after it bid to take Unwired Group Ltd. over.
The S&P/ASX 200 increased 60.90, or 0.9 percent, to 6,540.90 as at 11:11 a.m. in Sydney, set for its highest-ever close. About four stocks rose for each that fell.
National Australia Bank, the nation's biggest lender, added 81 cents, or 2.1 percent, to A$39.83. Australia and New Zealand Banking Group Ltd., the third-largest, gained 46 cents, or 1.6 percent, to A$29.26. St. George Bank Ltd., the fifth-largest bank, rose 40 cents, or 1.2 percent, to A$35.25.
Demand for American-made durable goods such as jetliners and telephone network switches fell 4.9 percent in August, the most in seven months, the U.S. Commerce Department said yesterday. Total orders were forecast to fall 4 percent, according to economists surveyed by Bloomberg.
The report spurred traders to increase bets the Fed will cut borrowing costs for the second time in two months when it meets Oct. 31. Futures contracts yesterday suggested about 86 percent odds of a quarter-percentage point cut in the 4.75 percent target rate at its next meeting Oct. 31, compared with a 72 percent chance a week ago.
Energy Resources
A measure of financial stocks on Australia's index climbed 2.3 percent Sept. 19, the day after the Fed cut the rate a half- percentage point in a bid to stimulate the world's largest economy.
Energy Resources, the Rio Tinto group unit that produces more than a 10th of the world's mined uranium, jumped 82 cents, or 4.7 percent, to A$18.14. The company will spend A$57 million expanding its Ranger mine in Australia's Northern Territory, in order to add 4,857 metric tons of uranium oxide to the site's reserves.
Seven, Australia's most watched television broadcaster, gained 16, or 1.2 percent, to A$13.28. It offered 45 cents a share for Unwired, in a bid recommended by the company's board, and will increase its offer to 50 cents should it get 90 percent of Unwired.
Unwired, an Australian wireless Internet operator, also rose, adding 2.5 cent, or 5.3 percent, to 50 cents.
The S&P/ASX 200's futures contract for December added 0.8 percent to 6,599. The broader All Ordinaries Index rose 0.9 percent to 6,546.70.
The following shares also gained or declined. Stock symbols are in brackets after the company names.
Babcock & Brown Ltd. (BNB AU), Australia's second-largest investment bank, rose A$1.14, or 4.3 percent, to A$27.65. The bank sold 18.7 million American depositary receipts in Babcock & Brown Air Ltd. at $23 apiece, its first U.S. capital raising.
Boart Longyear Ltd. (BLY AU), a provider of drilling services to mining companies, added 2 cents, or 0.8 percent, to A$2.41. Boart was rated a ``buy'' in new coverage at Merrill Lynch & Co. because of the positive outlook for its shares and earnings.
Macquarie Bank Ltd. (MBL AU), Australia's largest investment bank, jumped A$2.14, or 2.7 percent, to A$82.41. Macquarie agreed to buy Canadian securities firm Orion Financial Inc. for C$147 million ($146 million) in cash and shares in order to expand its presence in Canada. Orion has offices in Montreal, Toronto, Calgary and Montreal and focuses on the resources industry.
Midwest Corp. (MIS AU), an Australian iron ore producer, dropped 21 cents, or 6.4 percent, to A$3.08. Midwest has been denied a request to extend its permit to haul ore by road from its Koolanooka stockpile to Geraldton port, Western Australia state. The company is seeking an urgent meeting about the matter with the state's Minister for Planning and Infrastructure, it said in a statement to the exchange yesterday.
Nufarm Ltd. (NUF AU), Australia's biggest supplier of farm chemicals, declined 42 cents, or 3 percent, to A$13.83. Nufarm was cut to ``sell'' from ``neutral'' by UBS AG analyst Owen Evans after it missed its own profit forecast in results released yesterday. UBS set a 12-month price target for the stock of A$14.50 per share.
Pacifica Group Ltd. (PBB AU), a manufacturer of parts for General Motors Corp., lost 6.5 cents, or 3.3 percent, to A$1.92. Pacifica said a general strike at GM's North American plants is expected to ``adversely impact'' on earnings for the 2007 fiscal year. Pacifica closed it Knoxville factory yesterday, which will affect operations in Chinese, Thai and Australian plants, according to a statement to the exchange.
Rams Home Loans Group Ltd. (RHG AU), the Australian lender that last month failed to refinance $5.3 million of short-term debt, fell 1.5 cent, or 1.5 percent, to 97 cents. Rams was cut to ``neutral'' from ``buy'' by Merrill Lynch & Co. analysts.
Rocklands Richfield Ltd. (RCI AU), a coal mining company with exploration tenements in Queensland state's Bowen Basin, slipped 0.5 cent, or 1.8 percent, to 28 cents. Bowen Energy Ltd. will not proceed with its takeover of Rocklands, it said in a statement yesterday. Rocklands shareholders voted in favor of the company acquiring China Coke Chemicals Ltd. and Bowen's bid was conditional on Rocklands not buying China Coke. Bowen (BWN AU), a coal and uranium miner, slid 1.5 cent, or 6.1 percent, to 23 cents.
Seek Ltd. (SEK AU), Australia's biggest Internet job site, fell 6 cents, or 0.7 percent, to A$8.82. Merrill Lynch & Co. reduced the stock to ``neutral'' from ``buy''.
Tattersall's Ltd. (TTS AU), Australia's second-largest gaming company, added 8 cents, or 2.1 percent, to A$3.98. Credit Suisse AG raised Tattersall's to ``neutral'' after its stock dropped more than 8 percent this month.
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