Market Watch

Chief Maintenance Engenering

2008-04-28T05:48:00.000-07:00

Perusahaan Kami Sedang Membutuhkan Karyawan Untuk Posisi ( URGENT )

Chief Maintenance Engenering

Laki²
Pendidikan Min S1 Elektro
Berpengalaman Dalam Maintenance Gedung Min 1 Thn
Jujur
Suka Bekerja Keras

Lamaran Dapat Langsung Di Bawa Ke

PT. Cipta Nindita Nusapala
Nuansa Commercial Estate Jl. TB. Simatupang Kav. 17 / B-03, Jakarta 13380 ( Sebelah Makro Pasar Rebo )
Phone: 8778 – 5209

Atau Via Email : ciptanindita@yahoo.co.id

Accounting & Admin

2008-04-23T07:20:00.000-07:00

Kami Perusahaan Outsourcing Sedang Membutuhkan Karyawati ( URGENT ) Untuk Posisi

Accounting :

Wanita
Pendidikan Min S1
Berpengalaman Di Bidang nya min 2 Tahun
Mengerti Tax
Chinese

Admin
Wanita
Pendidikan Min S1
Berpengalaman Di Bidang nya min 2 Tahun
Mengerti Tax
Chinese

Lamaran ditujukan Ke

PT. Cipta Nindita Nusapala
Nuansa Commercial Estate Jl. TB. Simatupang Kav. 17 / B-03, Jakarta 13380 ( Sebelah Makro Pasar Rebo )
Phone: 8778 - 5209

Atau ke ciptanindita@yahoo.co.id

lowongan kerja

2008-03-27T06:31:00.000-07:00

NUSAPALA GROUP

Kami Perusahaan outsourcing yang
bergerak dibidang recruitment membutuhkan
dengan segera Karyawan / Karyawati
untuk posisi :

SATPAM
1 Laki - Laki
2 Usia max 33 tahun
3 Pendidikan SLTA
4 Tinggi Badan 168 CM
5 Berat Badan Proporsional
6 Memiliki Sertifikat Satpam ( DI UTAMAKAN )
7 Sehat Badan ( Ket. Surat Dokter )
8 Tidak ( Bertato, Bertindik, Berkacamata )

Sales Officer
1 Wanita / Laki - Laki
2 Usia max 25 tahun
3 Pendidikan SLTA
4 Berpenampilan Menarik

OB / OG
1 Laki - laki / Wanita
2 Pendidikan SLTA
3 Usia max 25 tahun
4 Pengalaman Minimal 3 bulan
5 Tinggal di Wilayah ( Kantor )

DRIVER
Co. DRIVER
1 Laki - laki
2 Pendidikan SLTA
3 Memiliki SIM A
4 Usia max 35 tahun
5 Pengalaman Minimal 1 Tahun
6 Menguasai Wilayah Jabodetabek
7 Sehat ( Ket. Dari Dokter )

KURIR
1 Laki - laki
2 Pendidikan SLTA
3 Memiliki SIM C
4 Usia max 35 tahun
5 Pengalaman Minimal 1 Tahun
6 Menguasai Wilayah Jabodetabek
7 Sehat ( Ket. Dari Dokter )
8 Memilki Kendaraan Motor

RESEPSIONIS
1 Laki - laki / Wanita Wanita
2 Pendidikan SLTA
3 Usia max 25 tahun
4 Bahasa Inggris ( Min Pasif )
5 Menguasai Korespondensi
6 Sehat ( Ket. Dari Dokter )

DAILY LABOUR
1 Laki - laki
2 Pendidikan SLTA
3 Usia max 24 tahun
4 Bahasa Inggris ( Min Pasif )
5 Tinggi Badan 155 CM
6 Sehat ( Ket. Dari Dokter )
7 Diutamakan Tinggal di Wilayah
( Kantor Clien )

SALES KANVACER
1 Laki - laki
2 Pendidikan SLTA
3 Memiliki SIM C
4 Usia max 25 tahun
5 Pengalaman Minimal 1 Tahun
6 Menguasai Wilayah Jabodetabek
7 Sehat ( Ket. Dari Dokter )
8 Memilki Kendaraan Motor

SALES COUNTER
1 Laki - laki
2 Pendidikan SLTA
3 Memiliki SIM C
4 Usia max 25 tahun
5 Menguasai Wilayah Jabodetabek
6 Sehat ( Ket. Dari Dokter )
7 Memilki Kendaraan Motor

COLEKTOR
1 Laki - laki
2 Pendidikan SLTA
3 Memiliki SIM C
4 Usia max 25 tahun
5 Menguasai Wilayah Jabodetabek
6 Sehat ( Ket. Dari Dokter )
7 Memilki Kendaraan Motor

STAF ADM.
1 Laki - laki / Wanita
2 Pendidikan SLTA , DIII
3 Usia max 25 tahun
4 Menguasai Komputer ( Min. Exel, Work )
5 Penampilan Menarik
6 Sehat ( Ket. Dari Dokter )

SALES HAND SET
1 Laki - laki
2 Usia max 25 tahun
3 Pendidikan DIII
4 Menguasai Komputer
5 Komunikatif

SEKRETARIS
1 Wanita
2 Pendidikan DIII ( Sekretaris )
3 Usia max 25 tahun
4 Menguasai Komputer
5 Penampilan Menarik
6 Mengerti Bahasa Ingris
7 Sehat ( Ket. Dari Dokter )

STAF ACCOUNTING
1 laki - Laki / Wanita
2 Pendidikan S-1 ( Akutansi )
3 Usia max 25 tahun
4 Menguasai Komputer
5 Penampilan Menarik
6 Pengalaman min. 1 tahun
7 Sehat ( Ket. Dari Dokter )

STAF LOGISTIK
1 Laki - laki
2 Usia max 25 tahun
3 Pendidikan SLTA
4 Bisa Komputer
5 Komunikatif

STAF IT
1 Laki - laki / Wanita
2 Usia max 25 tahun
3 Pendidikan S-1
4 Bisa Komputer
5 Komunikatif
6 Pengalaman min 1 tahun

CALL CENTER
1 Laki - laki / Wanita
2 Usia max 25 tahun
3 Pendidikan D-III
4 Bisa Komputer
5 Komunikatif

FINANCIAL
CONTROLER
1 laki - Laki / Wanita
2 Pendidikan S-1 ( Akutansi )
3 Usia max 25 tahun
4 Menguasai Komputer
5 Pengalaman min. 1 tahun
6 Sehat ( Ket. Dari Dokter )

SPG
1 laki - Laki / Wanita
2 Pendidikan SLTA
3 Usia max 25 tahun
4 Penampilan Menarik
5 Pengalaman ( Tidak diutamakan )
6 Sehat ( Ket. Dari Dokter )

HEAD KANVACER
1 laki - Laki
2 Pendidikan S-1
3 Usia max 25 tahun
4 Penampilan Menarik
5 Pengalaman ( Sebagai min. 1 tahun )
6 Mempunyai Kendaraan Motor
7 Memiliki SIM C

Lamaran ditujukan Ke

PT. Cipta Nindita Nusapala
Nuansa Commercial Estate Jl. TB. Simatupang Kav. 17 / B-03, Jakarta 13380 ( Sebelah Makro Pasar Rebo )
Phone: 8778 - 5209

Atau ke ciptanindita@yahoo.co.id

ATTN: Bpk. Immanuel

LOWONGAN INI BERLAKU UNTUK SELURUH WILAYAH INDONESIA!
LOWONGAN INI TIDAK ADA BATASAN WAKTU!
LOWONGAN INI TIDAK DI PUNGUT BIAYA!

Indexes Mixed In Early Trading

2007-11-14T13:30:00.001-08:00

Stocks were mixed Wednesday morning as early enthusiasm faded.

At 11 a.m. EST, the NYSE composite climbed 0.3%, the S&P 500 0.1%. The Dow and Nasdaq were slightly negative. The small-cap S&P 600 fell 0.2%.

Volume was tracking higher on both exchanges.

First Solar FSLR jumped 7.60 to 195.67 in heavy trading. But the solar modules maker is still 15% off its record peak. Most other solar firms rallied, with SunPower SPWR up 13%.

Votorantim Celulose e Papel VCP gapped up, gaining 2.24, or 7%, to 34.03. Last month, the Brazilian paper maker delivered a 103% surge in Q3 profit, but sales slipped.

Fossil FOSL headed higher for the third straight session. Shares of the watch maker rallied 1.54 to a new high of 41.33.

On the downside, IHS IHS dropped 1.27 to 63.31. There was no news, but the stock has already traded more than twice its average daily volume.

Dolby Laboratories DLB reversed early gains and dropped 1.68 to 47.81.

10:15 a.m. ET Update: Stocks Rise, But Gains Fading Fast

By Vincent Mao

Stocks opened higher as expected, but have come well off session highs.

At 10:02 a.m. EST, the NYSE led with a 0.6% gain. The S&P 500 rose 0.4%. The Dow was 0.15% higher after flirting with going into the red a few moments earlier. The Nasdaq climbed 0.3%, after jumping 0.9% minutes after the open.

Leaders continued to improve, though this is only the second day of a rally attempt.

Apple AAPL jumped nearly 3% in fast trade, though off its highs.

Baidu.com BIDU gapped up 6%. Both headed north of their 50-day moving averages on Tue.

Garmin GRMN gained 1.37 to 87.43.

Diana Shipping DSX gapped up, gaining 1.70 to 34.95. Before the open, the Greek dry-bulk shipper reported third-quarter earnings and sales above analysts' estimates. It didn't give an outlook, but said, "We expect the next few quarters to continue to be strong, with China, India and other developing regions moving their economic activity forward at strong rates of growth."

On the downside, Daktronics (NASDAQ:DAKT) DAKT gapped down, plunging 6.40, or 22% to 22.17 in huge trade. The scoreboard maker reported fiscal Q2 earnings and sales below analysts' expectations. It also gave a disappointing outlook for the third quarter.

9:15 a.m. ET Update: Stocks On Track For Strong Start

By Vincent Mao

Stock futures pointed to a higher start Wednesday, boosted by economic data and Bear Stearns. (NYSE:BSC) Nasdaq futures rose 21 points vs. fair value, S&P 500 futures climbed 8 points.

In economic news, retail sales rose 0.2% as expected in October. Excluding autos, sales also rose 0.2%, slightly below expectations of 0.3%. Sept. retail sales were revised to 0.7% from 0.6%.

Producer prices ticked up 0.1% in October, slightly better than estimates of 0.2%. Core prices, which strip out food and energy, were unchanged. Economists expected a 0.2% rise.

The dollar rallied against the yen, but fell against the euro.

Crude oil rebounded from Tuesday's 3.6% tumble. The December contract gained $1.09 to $92.25 a barrel. Due to the Veterans Day holiday, the energy inventory report will be out Thursday.

Bear Stearns BSC jumped 8%. The investment bank expects $1.2 billion in write-downs in the fourth-quarter. It cut its CDO exposure to $884 million from $2 billion. While Bear says market conditions will be tough for some time, the Wall St. bank sounded remarkably upbeat.

Other major financials are indicated higher as a result, extending Tue.'s bounceback.

That includes HSBC HBC, which had been pointing lower in pre-market trading. The global bank said it's taking an additional $3.4 billion in write-downs in Q3. It's also closing 260 branches of its U.S. consumer finance division. HSBC was one of the first banks to report trouble in the subprime mortgage market.

Three S Bio SSRX surged 14% in the preopen. Late Tuesday, the biopharmaceutical firm easily beat views with a 150% pop in third-quarter earnings. Sales jumped 65%, also above estimates.

Excel Maritime Carriers EXM sank 13% in pre-open trading. After Tuesday's close, the shipping firm reported Q3 earnings and sales below analysts' estimates.

Oracle ORCL climbed 2% in the premarket after it received two upgrades. CIBC World Markets lifted the software maker to sector outperform from sector perform. And Broadpoint Capital raised the stock to buy from neutral. On Tuesday, Oracle bounced off its 200-day average.

FOREX-Dollar slips as growth fears linger

2007-11-14T13:20:00.000-08:00

NEW YORK, Nov 14 (Reuters) - The dollar slipped on Wednesday as worries about the struggling U.S. housing sector and lingering credit problems weighed on sentiment, leaving the dollar's long-term downtrend intact.

Data showing U.S. retail sales growth slowed slightly in October, in line with expectations, and flat producer prices supported dealers' decisions to keep pushing the dollar toward record lows against the euro.

"Retail and sales and PPI at the margin support a weaker dollar," said Meg Browne, senior currency strategist at Brown Brothers Harriman in New York. "Retail sales supports the view that growth is slowing."

The euro rose 0.4 percent to $1.4656 , within sight of record highs of $1.4752 reached last week. Against the Swiss franc, the dollar fell to the lowest level since April 1995, at 1.1178 francs before recovering to trade at 1.1244, still down 0.2 percent on the day.

Another prominent theme in the market was the rebound in investors' willingness to take bigger risks for a higher return.

Earlier this week, nervousness about the difficult lending environment caused the yen to surge across the board, rising to an 18-month high against the dollar as investors unwound carry trades, in which a low-yielding currency such as the yen is borrowed to fund purchases of higher-yielding ones.

But by Wednesday carry trades were being put back on.

The euro gained 0.9 percent to 163.37 yen , pulling away from a two-month low of 158.66 yen hit on Tuesday. The dollar was up 0.5 percent to 111.50 yen .

The Australian dollar, often a target of carry traders because of its relatively high interest rate, rose 0.2 percent against the greenback to $0.8975 , though it was well off a 23-year high of $0.9401 reached last week.

Against the yen, the Australian dollar rose 0.7 percent to 100.10 yen .

"The recent rise in risk aversion reflects the broadly anticipated aftershock in the financial sector of the liquidity crisis earthquake of August," said Michael Woolfolk, senior currency strategist with Bank of New York Mellon.

"Risk aversion is likely to abate as incoming data reflect ongoing consumer spending," he said in a note.

Sterling fell against the euro after the Bank of England's Quarterly Inflation Report signaled that the benchmark interest rate would need to be cut in the future. The euro climbed to a four-year high against the pound at 71.36 pence .

Thus far, global growth has held up fairly well outside the United States, but the report added to uncertainty about global economic growth in the wake of this summer's crisis stemming from the U.S. subprime mortgage market.

A report earlier on Wednesday showed euro zone economic growth rebounded more than expected in the third quarter, but economists expected a slowdown in the current quarter would keep the European Central Bank on hold.

Forex - Pound steadies out at weaker levels after BoE inflation report

2007-11-14T13:17:00.001-08:00

LONDON (Thomson Financial) - The pound steadied out at significantly weaker levels against major currencies following a dovish Bank of England inflation report, which gave a clear hint UK interest rates will need to fall.

The euro, meanwhile, was supported by buoyant growth figures that backed up recent firm inflation data, supporting the view that euro zone interest rates -- unlike those in the UK -- are not going down in the near term.

The BoE's inflation report forecasts showed that, if UK interest rates follow market expectations and fall to 5.1 pct by the end of 2009, inflation will meet the BoE target rate of 2.0 pct.

If, on the other hand, interest rates stay as they are at 5.75 pct, CPI inflation would undercut the target, coming in around 1.75 pct.

'November's BoE Inflation Report gives a clear signal that a series of interest rate cuts lie ahead,' said Vicky Redwood at Capital Economics.

The timing of the move is uncertain, particularly given yesterday's stronger-than-expected UK inflation data, but the dovish inflation report will spark talk that a move could come before February.

The pound plunged against the dollar, yen and euro following the report as investors adjusted their expectations for UK interest rates.

The European single currency, in particular, hit a four-year high against sterling of 0.7112. The European Central Bank is not expected to cut interest rates for some months as inflation remains significantly above target.

Growth data this morning backed up the view that the euro zone economy is currently too buoyant for the ECB to cut rates. Official data showed euro zone GDP growth accelerated to 0.7 pct in the third quarter from 0.3 pct in the second.

Howard Archer at Global Insight said that, even though euro zone growth is set to slow in the coming months, elevated inflation means rates should stay at 4.00 pct 'well into 2008'.

Later today, comments from Federal Reserve chairman Ben Bernanke should put the dollar firmly in focus as investors seek further insight on the path of interest rates.

The Fed, like the ECB and BoE, is seeking to steer a path for monetary policy that deals with elevated inflation and signals the economy is slowing.

Wholesale PPI inflation and retail sales data today had little immediate impact on the dollar against most currencies, although it did strengthen against the yen.

'Core PPI was flat which is positive for carry trades and has supported a fresh surge in yen crosses,' said Rhonda Staskow at Thomson IFR Markets.

US producer prices, which measure inflation pressures before they reach the consumer, rose 0.1 pct in October, lower than analysts' expectations for a 0.3 pct rise but nonetheless putting the annual rate at 6.1 pct, the highest since Sept 2005.

Meanwhile retail sales in October rose 0.2 pct, as economists had expected, following an upwardly revised 0.7 pct increase in September.

London 1340 GMT London 0934 GMT

US dollar

yen 111.51 up from 111.16

sfr 1.1209 down from 1.1220

Euro

usd 1.4694 up from 1.4666

stg 0.7098 up from 0.7055

sfr 1.6470 up from 1.6459

yen 163.83 up from 163.01

Sterling

usd 2.0704 down from 2.0789

yen 230.67 down from 231.05

sfr 2.3186 down from 2.3329

Australian dollar

usd 0.9038 down from 0.9045

stg 0.4363 up from 0.4348

yen 100.67 up from 100.55

New Zealand dollar

usd 0.7658 down from 0.7660

Forex - Better risk appetite supports euro at expense of dollar, yen

2007-11-14T13:12:00.000-08:00

LONDON (Thomson Financial) - The dollar and yen remained softer, while the euro gained ground, after encouraging euro zone and US economic data and a higher open in stock markets helped investors' regain risk appetite.

Equities were helped by US retail sales figures that showed a 0.2 pct monthly rise in October, in line with the market consensus. At the same time PPI was up only 0.1 pct, below expectations for a 0.3 pct rate.

The encouraging news helped further improve risk appetite among investors, who returned to selling lower-yielding currencies like the dollar and the yen in favour of the higher-yielding euro and commodities-based currencies.

'Carry trades are revived due to the return of risk appetite -- courtesy of strong US retail sales,' said Ashraf Laidi at CMC Markets.

On top of this, the euro was helped this morning by robust 3Q GDP data, which showed a 0.7 pct quarterly gain for a 2.6 pct yearly rate.

'The data have powered up the euro against the dollar... and with central banks and sovereign wealth funds eyeing an increased allocation into euro-denominated assets, the latest euro zone releases continue to show no considerable drag on growth as has been the case in the US and UK,' Laidi said.

Meanwhile, the pound was lower across the board after the Bank of England today gave its clearest indication yet in its Inflation Report that it would need to cut interest rates in the future.

In its official forecasts, the central bank said that interest rates would have to fall to 5.1 pct by the end of 2009 -- in line with market forecasts -- in order to keep inflation within the 2.0 pct target.

When the first cut will be delivered is now the matter of speculation.

'Given near-term inflationary pressures from the surge in oil prices as well as signs that the economy remains resilient, we believe the BoE is unlikely to ease rates next month already,' said Matthew Sharratt at Bank of America (nyse: BAC - news - people ), who forecasts the first cut in February.

Despite the downside risks to growth, inflationary pressures linger in the economy as oil prices remain near record highs, suggesting more weak UK economic data will be required before the BoE kicks off its monetary easing cycle.

London 1605 GMT London 1340 GMT

US dollar

yen 111.39 down from 111.51

sfr 1.1214 up from 1.1209

Euro

usd 1.4685 down from 1.4694

stg 0.7110 up from 0.7098

sfr 1.6301 down from 1.6470

yen 163.57 down from 163.83

Sterling

usd 2.0652 down from 2.0704

yen 230.04 down from 230.67

sfr 2.3159 down from 2.3186

Australian dollar

usd 0.9009 down from 0.9038

stg 0.4362 down from 0.4363

yen 100.36 down from 100.67

New Zealand dollar

usd 0.7648 down from 0.7658

carlo.piovano@thomson.com

Gold firms after testing $800 support

2007-11-14T13:09:00.000-08:00

LONDON (Reuters) - Gold firmed on Wednesday, having briefly tested support below $800 per ounce, leaving investors nervy over the prospect of more falls from recent 28-year highs.

Analysts said the market was taking its cue from a firmer tone on oil and dollar weakness versus the euro, as bullish momentum had cooled after sharp drops from last week's high at $845.40 -- last seen in January 1980.

Spot gold rose to $810.80.811.60 by 5:57 a.m. EST, having dipped to $799.40 in Asia overnight and up from $798.10/798.90 quoted late in New York on Tuesday.

"We're trading either side of 800 at the moment although the market is looking remarkably strong ... being driven by FX moves," said Simon Weeks, director of metals sales at Bank of Nova Scotia.

The dollar was back on the defensive against the euro reflecting continuing worries that a struggling U.S. housing sector and lingering credit problems could hurt the wider economy.

Dollar weakness makes dollar denominated gold cheaper for non U.S. investors but analysts were wary of ruling out further losses for the metal as wider investment momentum had cooled.

"As we proceed to the year-end, there could be some more profit taking. These volatilities are symptomatic of investors' desire to lock in profits and adjust portfolios," said Pradeep Unni, an analyst with Vision Commodities in Dubai.

"It remains to be seen whether this drop will attract physical buyers again. Near-term psychological support is spotted around $799, a breach of which would take the market to $780."

DATA

Crude oil advanced strongly, moving above $92 a barrel after losing more than $5 in the past two sessions, with analysts expecting U.S. government data due on Thursday to show declines in inventories.

The gains in oil highlighted gold's role as a hedge against oil-led inflation, but crude prices were still well away from a record $98.62 touched a week ago.

In other bullion markets, the key gold futures contract for October 2008 delivery on the Tokyo Commodity Exchange ended 25 yen per gram higher at 2,912 yen due to a weaker Japanese currency.

U.S. COMEX golf futures for December delivery were up $12.50 at 811.40 per ounce.

In other precious metals, platinum firmed to $1,435/1,440 an ounce from $1,415/1,420 in late New York on Tuesday, when it rose about 2 percent on an industry report supporting bullish views on the white metal.

The world platinum market would end 2007 in a big deficit, with the metal seen hitting a record high of $1,575 in six months on strong fundamentals and buoyant gold prices, said Johnson Matthey, the world's top platinum refiner and fabricator.

In mining, the world's third biggest platinum producer Lonmin Plc posted an 11.4 percent rise in annual pretax profit on Wednesday as lower finance charges offset weaker output and higher costs, boosting its shares.

The firm repeatedly trimmed its production outlook during the year due to problems at its mines and in processing operations, including a furnace that had to be rebuilt..

Palladium was unchanged at $369/373 an ounce. Silver rose to $14.96/15.01 an ounce versus $14.65/14.70 in New York on Tuesday.

FOREX-Dollar falls as growth fears linger

2007-11-14T12:51:00.000-08:00

(Recasts, updates prices, adds context)

NEW YORK, Nov 14 (Reuters) - The dollar fell on Wednesday on continued worries that a struggling U.S. housing sector and lingering credit problems could hurt the broader economy.

Data showing moderate U.S. retail sales growth and benign producer price inflation in October was not enough to turn the greenback around.

The euro was up 0.7 percent to $1.4700, not far from a record high of $1.4752 hit last week, according to Reuters data.

The New York Board of Trade's dollar index, a broad gauge of the U.S. currency's value, fell 0.5 percent on the day to 75.488 (.DXY: Quote, Profile, Research).

The dollar rose against the yen, helped by a revival in risk taking, trading up 0.4 percent to 111.35 yen . (Reporting by Kevin Plumberg; Editing by Tom Hals)

FOREX-Rise in risk appetite dents yen, supports high yielders

2007-11-14T12:49:00.000-08:00

LONDON, Nov 14 (Reuters) - The yen fell on Wednesday and high yielding currencies rallied as stronger equity markets bolstered risk appetite, prompting investors to move back into carry trades.

The dollar stayed under pressure versus the euro and a basket of major currencies on continued worries that a struggling U.S. housing sector and lingering credit problems could hurt the broader economy.

Such a view could be confirmed by any signs of weakness in the U.S. retail sales data for October due at 1330 GMT, while any slowdown in producer price inflation data, also due at 1330 GMT, could make it easier for the Federal Reserve to continue cutting interest rates.

A pick up in risk appetite -- sparked on Tuesday after Goldman Sachs (GS.N: Quote, Profile, Research) reassured investors that it does not face big credit market losses -- prompted a rise in global equity markets.

This made currency investors more comfortable about holding risky carry trade bets in high-yielding currencies funded by cheap borrowing in the yen.

"It's all about risk appetite moving back into the ascendency with equity sentiment improving, which is bad news for the yen," said Jeremy Stretch, market strategist at Rabobank.

"Economic weakness in the U.S. is keeping the dollar under pressure and further weak data from the retail sector, if it's combined with higher producer prices, could prove to be a toxic combination as it would make the job much harder for the Fed."

The euro gained 0.5 percent to 162.91 yen , pulling away from a two-month low of 158.66 yen hit on Tuesday.

The New Zealand dollar rose 0.4 percent against the low yielding currency to 84.72 yen .

However the yen trimmed earlier losses and turned flat against the U.S. dollar after U.S. stock futures pointed to a lower opening on Wall Street and European stocks pared back earlier gains [.EU].

By 1207 GMT the dollar was steady at 110.93 , having earlier climbed as high as 111.55 yen.

The euro rose 0.6 percent to $1.4690 , just over half a cent away from record highs hit late last week.

The dollar also fell half a percent against a basket of major currencies to 75.536 (.DXY: Quote, Profile, Research), inching back towards a record low of 74.978 hit late last week.

Touching on recent currency market moves, Bank of Japan board member Atsushi Mizuno said falls in the dollar's trade-weighted value have helped improve global imbalances by boosting U.S. exports and supporting the nation's economy, a benefit he described as "underestimated." [ID:nT89167]

Mizuno made the remarks in a speech on Nov. 7, a text of which was released by the BOJ on Wednesday.

STERLING RETREATS

Sterling fell broadly after the Bank of England's Quarterly Inflation Report signalled that rates would need to be cut in the future. The pound hit its lowest level in four years against the euro at 71.12 pence .

Market attention will also be on Federal Reserve Chairman Ben Bernanke, who will speak about Federal Open Market Committee Communications at 1410 GMT.

Ahead of that, U.S. retail sales growth is seen easing to a monthly 0.2 percent in October from September's 0.6 percent.

"Retail sales are the key release, with markets sensitive to any signs that weakness in the housing market is spreading to consumer spending," said RBC Capital Markets in a note to clients.

Forex - Pound slumps to 4-yr low vs euro after dovish BoE report UPDATE

2007-11-14T12:47:00.000-08:00

(Updating prices to show pound hits 4-year euro low, adds analyst comments)

LONDON (Thomson Financial) - The pound slumped to its lowest level against the euro in over four years as the Bank of England's eagerly awaited inflation report gave a clear hint that UK interest rates will need to fall.

The forecasts in the report showed annual inflation would be at the BoE's 2.00 pct target in two year's time, based on market forecasts that interest rates will fall to 5.2 pct by early 2009 and 5.1 pct by the end of 2009. If interest rates stay as they are at 5.75 pct, however, CPI inflation will fall to around 1.75 pct.

'November's BoE Inflation Report gives a clear signal that a series of interest rate cuts lie ahead,' said Vicky Redwood at Capital Economics.

The timing of the move is uncertain, particularly given yesterday's stronger-than-expected UK inflation data, but the dovish inflation report will spark talk that a move could come before February.

'Despite recent higher inflation, there appears to be a clear possibility that the Bank of England could trim interest rates before February if a flurry of weak data and survey evidence indicate that the economy is slowing sharply,' said Howard Archer at Global Insight.

At 11.19 am, the euro was trading at 0.7106 against the pound, just below a peak of 0.7112 stg which marked its highest level since October 2003. Just before the report was released, the euro was trading at 0.7051 stg. Against the dollar meanwhile the pound was trading at 2.0670, down from 2.0837 usd previously.

At the same time, short sterling futures -- a gauge of interest rate expectations -- pushed higher to reflect the rate cut prospects.

The December short sterling future was up 0.06 at 93.84, up from 93.76 before the release, while the March future was up 0.09 at 94.35, compared with 94.21 previously.

Forex - Pound rises back above 2.08 usd after strong UK labour market data

2007-11-14T12:42:00.000-08:00

LONDON, Nov. 14, 2007 (Thomson Financial delivered by Newstex) -- The pound rose back above the 2.08 mark against the dollar after labour market data showed a further fall in UK unemployment, combined with slightly above-forecast earnings data.

The claimant count measure of unemployment fell by 9,900 in October, above forecasts for a smaller 6,000 drop and marking the thirteenth consecutive decline in the measure.

At the same time, UK headline average earnings growth rose to 4.1 pct in the three months to September from 3.7 pct in August. Though this is still below the 4.5 pct that the Bank of England considers consistent with CPI inflation at its 2.0 pct target, the figure is above forecasts for 4.0 pct and highlights the concerns about rising inflationary pressures in the economy.

'The rise in average earnings to 4.1 pct from 3.7 pct will not go down too well and should encourage the monetary conservatives to dig their heels in against easing too soon,' said David Brown at Bear Stearns. (NYSE:BSC)

Following yesterday's higher-than-expected CPI inflation, this will add to speculation that the Bank of England will not cut interest rates soon.

'The market will probably have to wait until February now for a UK rate cut', Brown said.

The BoE will present its latest forecasts for growth and inflation in its quarterly inflation report later this morning.

At 9.53 am, the pound was trading at 2.0825 usd, up from 2.0781 just before the data were released. The euro meanwhile dipped to 0.7049 stg from 0.7055 previously.

Bull run likely to infuse life in India's paper gold

2007-11-14T12:40:00.001-08:00

NEW DELHI (Reuters) - Indian consumers have long valued gold in all its glittery splendour, but the country's financial sector is hoping surging prices can finally lure more to investing in gold-backed paper.

The sector is set to launch two to three new gold-backed, exchange traded funds over the next six months, industry officials say, so investors can participate in the metal's bull run.

With India's largest mutual fund, Reliance Capital Asset Management, launching the latest ETF, there are now four gold-backed funds to invest in.

The gold behind the funds has risen to 4.7 tonnes, including Reliance which is to be listed shortly, from over 3.0 tonnes at the end of October and 2.73 tonnes in May.

India is the world's largest buyer of physical gold and the elaborate high quality jewelery is tightly interwoven with the country's culture. There has been much doubt whether the country would ever embrace gold as an investment vehicle in a big way.

"Our estimate is that 5 percent of India's gold demand, which is about 40 tonnes, should come from ETFs in the next 12 to 18 months," said Si Kannan, associate vice-president of Kotak Commodities.

He said the change was expected as investors were beginning to break away from their traditional view that gold was a savings instrument, only to be sold during times of distress.

"There is a metamorphosis happening gradually," Kannan said. "It is one of the most effective vehicles for riding the bull run in gold."

Another analyst said that he saw the present volume and investments are likely to grow by 50 to 75 percent in the coming year.

"The awareness level is increasing," said Ashok Mittal, vice-president and country head for the commodity brokerage of Karvy.

STICKER SHOCK

Indian customers thronged jewellery shops during the festive Diwali season this month, but many walked away empty-handed or with a fraction of their usual purchases because of high prices.

Gold prices came close to toppling the 1980 record high of $850 this month but have since dropped back to around $800 an ounce. But gold is still pricey for many looking to buy jewellery sets for festivals and marriages.

"Slowly, people are realising the value of paper gold," said Debashish Mohanty, country head of the retail network at UTI Asset Management Company, which runs a gold ETF.

"If you go to a reputed jeweller to buy gold, you always pay a premium," he added. "But in exchange traded funds, it always replicates the international price."

Mohanty said that the advantage of not having to worry about securing your gold or the metal purity was expected to attract the rising number of salaried investors in cities.

UTI Asset Management was in the process of tying up with some banks to help expand their ETF client base, he added.

"The investor sentiment is quite strong in favour of gold. Now they understand that there is another class of asset available," said Gnanasekhar Thiagarajan, director at Commtrendz Risk Management.

"Clearly, the ETF market is slowly panning out to be a decent alternative to an investor now," he added.

Those looking to make a quick profit may invest in the paper investment, rather than jewellery as Indian households often get emotionally attached to gold given to them on special occasions, Thiagarajan said.

But analysts say the long-term fundamentals are bullish and the metal's price could touch $900 an ounce by March.

"As we go ahead people, will realise the value of ETFs," said Vikram Dhawan, head of commodities, Reliance Mutual Fund. "After all, it took one-and-a-half years in the West to popularise. It is still early days here."

Reliance Capital Asset Management collected over 1.5 billion Indian rupees ($38.25 million) for its gold ETF this month. It is to be listed by end of November.

Industry officials said that not many rural investors, who account for 60 percent of India's gold demand, would immediately invest in ETFs because of the need to have a trading account.

But even if demand picks up in the cities, it would still boost volumes.

"Our aim is to first capture the urban markets," Mohanty said. "Once that happens, it will spread fast."

FOREX-Rising equity markets boost high-yielders, hurt yen

2007-11-14T12:21:00.000-08:00

LONDON, Nov 14 (Reuters) - The yen fell on Wednesday, as stronger equity markets bolstered risk appetite and gave investors the excuse to take profits on this week's rally in the Japanese currency to 18-month highs versus the dollar.

Despite recovering against the yen, the dollar stayed under pressure versus other major currencies, on continued worries that a struggling U.S. housing sector and lingering credit problems could hurt the broader economy.

Such a view could be confirmed by any signs of weakness in the U.S. retail sales data for October due at 1330 GMT, while any slowdown in producer price inflation could make it easier for the Federal Reserve to continue cutting interest rates.

A pick up in risk appetite -- sparked on Tuesday after Goldman Sachs (GS.N: Quote, Profile, Research) reassured investors that it does not face big credit market losses -- made currency investors more comfortable about holding risky carry trade bets in high-yielding currencies funded by cheap borrowing in the yen.

"It's all coming from a very strong recovery in U.S. equity markets, the same in Asia, and then European equity markets opening higher this morning... So high yielders are coming back a little," said Niels Christensen, FX strategist at Nordea.

"We still have to focus on a very weak dollar, especially against the euro... If we don't get some decent numbers in high retail sales and high PPI numbers, we'll see further dollar weakness, that's the risk."

The dollar was up 0.4 percent at 111.35 yen by 0807 GMT, recovering from an 18-month low of 109.10 yen hit on Monday according to Reuters data.

The euro gained 0.7 percent to 163.13 yen , pulling away from a two-month low of 158.66 yen hit on Tuesday.

The Australian dollar climbed over 1 percent against the low-yielding Japanese currency to 100.53 yen and the New Zealand dollar rose 0.8 percent to 84.92 yen .

The euro rose 0.3 percent to $1.4640 , about a cent away from record highs hit late last week.

The dollar also edged lower against a trade-weighted basket of major currencies, and the dollar index fell 0.25 percent to 75.702 (.DXY: Quote, Profile, Research), inching back towards a record low of 74.978 hit late last week.

Touching on recent currency market moves, Bank of Japan board member Atsushi Mizuno said falls in the dollar's trade-weighted value have helped improve global imbalances by boosting U.S. exports and supporting the nation's economy, a benefit he described as "underestimated." [ID:nT89167]

Mizuno made the remarks in a speech on Nov. 7, a text of which was released by the BOJ on Wednesday.

EURO HEADING FOR $1.50?

European equities rallied more than 1 percent in early trade (.FTEU3: Quote, Profile, Research), after Tokyo stocks closed 2.5 percent higher (.N225: Quote, Profile, Research).

The improved risk appetite also boosted sterling ahead of the Bank of England quarterly inflation report at 1030 GMT which should shed some light on whether the BoE is likely to start cutting rates next month or will wait until 2008.

Market attention will also be on Federal Reserve Chairman Ben Bernanke, who will speak about Federal Open Market Committee Communications at 1410 GMT.

Ahead of that, U.S. retail sales growth is seen easing to a monthly 0.2 percent in October from September's 0.6 percent.

"Given the debate between weaker growth and higher inflation the worsening outlook for retail sales will play into the hands of those expecting further rate cuts," Calyon said in a research note, forecasting a December Fed cut.

The dollar "remains vulnerable to further weakness over coming days and is likely to find that once again the path of least resistance lies with the euro, as euro/dollar presses on towards $1.50."

Hold BHP and Let Others

2007-11-14T12:16:00.000-08:00

Sometimes, a cloud has a silver lining, or should I say a gold, iron or aluminum lining?

Amid last week's market slump, it was no small consolation to be the owner of shares in Rio Tinto, the big mining concern that I've recommended repeatedly and most recently bought during the summer. Rio Tinto shares jumped more than 25% on news of a possible takeover bid from rival BHP Billiton, which came through with a $140 billion offer on Monday. Shares surged to $484 before dropping back and closing yesterday at $447.25.

Suddenly, I find myself on both sides of a takeover battle, since I own BHP shares, too. I also own Cia. Vale Rio Doce, the big Brazilian mining concern that could emerge as a rival bidder.

This is an unusual position for me. I've written often about takeovers and arbitrage strategies, most recently in connection with the Whole Foods acquisition of Wild Oats. For some reason, I've usually owned shares in the company doing the bidding rather than vice versa. As readers of my M&A playbook well know, shares of acquiring companies usually drop, while the target's shares soar. It can be both difficult and potentially rewarding to figure out if the acquiring company's shares represent a bargain. I always thought it would be so easy if you own shares of the target. You just sit back and cash in the gains.

Now that I'm actually in this position, of course, it doesn't seem so simple.

I'm in no rush to sell Rio Tinto. BHP's current offer is three BHP shares for each RTP share. According to BHP, this amounts to a 15% premium over Rio Tinto's share price on Nov. 7, a value of approximately $410 for each ADR traded in the U.S. This is far below the $484 RTP reached last week, which may account for this week's decline. But even if BHP doesn't increase its offer, and no other bidder emerges, the BHP bid has pretty much set a floor under RTP's share price. The "just say no" defense no longer works, which means that if Rio Tinto persists in ignoring or rebuffing BHP, it will have to find another scenario to deliver returns to shareholders. A lower share price will only keep the company in play.

Rio Tinto might consider a counterbid for BHP, or try to rustle up a takeover or merger of its own that would make it so big as to be prohibitively expensive. But surely CEOs and their investment-banking advisers have learned by now that tactics that ignore shareholders and serve only to entrench corporate managers are bad for business.

The bid for Rio Tinto has come at a time when commodities mania is at an all-time high. Now that the art craze and real-estate bubble are over, and the credit crisis is in full bloom, where is all the world's liquidity flowing? Into inflation hedges like gold and other commodities. Demand from emerging economies for basic materials continues to soar.

This seems the ideal time for Rio Tinto to auction off its incredibly rich holdings in an array of precious and other metals and ores, either to one bidder, like BHP, or by breaking itself into pieces.

I'd be cautious about being a commodities buyer right now. The RTP bid set off a wave of excitement in the basic-materials sector, with investors rushing into stocks considered vulnerable to similar takeovers. But the same group of candidates could also be rival bidders, in which case their shares, like BHP's, would likely decline. I'd let the gold dust settle, so to speak, before making any precipitous investments.

The one exception might be BHP, whose shares have dropped. Is it now a bargain in a sizzling sector? The danger is that it will overpay, but the potential benefits seem compelling. High-risk investors seeking commodities exposure might want to buy BHP on further weakness. For the rest of us, there will be plenty of time to assess the situation.

For now, my advice is to let others chase the commodities craze. I plan to hold my BHP and RTP shares, and enjoy the show while it lasts.

Forex - Dollar gains vs yen as investors buy stocks using Japanese currency

2007-11-14T12:07:00.000-08:00

HONG KONG, Nov. 14, 2007 (Thomson Financial delivered by Newstex) -- The US dollar gained against the yen in afternoon Asian trade on Wednesday, as lower interest rates in Japan and gains on Wall Street encouraged carry trades.

'Carry trades are back, but we have yet to see whether they are back with a vengeance,' said Callum Henderson, head of currency strategy at Standard Chartered Bank.

Financial markets are still gripped by fears that more banks will report losses from subprime-linked assets and will cut investors' appetite for riskier securities such as stocks. That could trigger an unwinding of yen carry trades, boosting the yen.

Carry trade refers to the practice of borrowing from countries with low interest rates such as Japan to invest in riskier but high-yielding currencies or securities. Japan, which yesterday kept its key interest rate at 0.5 percent, the lowest among developed countries, has been the main source of funding for these transactions.

At 1.00 pm (0500 GMT), the dollar was trading at 111.10 yen, up from 110.99 in Sydney this morning and from 110.90 in late New York trade. The yen fell to as low as 111.17 dollars at noon, losing much of its gains. The yen rose to 109.82 in Asian trade on Monday, the highest level since May 2006.

The euro was quoted at 1.4659 dollars, up from 1.4621 this morning and from 1.4600 last night. The euro rose to as high as 1.4663 dollars at noon.

Comments by Japanese Prime Minister Yasuo Fukuda that the yen is rising 'too fast' and that speculators should 'be careful' also weighed on the Japanese currency.

'His warnings, to some degree, is one of the factors that's propping up the dollar,' Henderson said.

The dollar's recovery against the yen may not be sustained as the US economy is still besieged with problems, particularly its housing and financial sectors, said DBS Bank senior investment strategist Daniel Chan.

'I don't think today's performance of the dollar will distort the trend,' Chan said. 'There are still a lot of downside risks against the dollar.'
These risks include the possibility that the Federal Reserve will again cut interest rates by at least a quarter of a percentage point in December, bringing total rate cuts this year to one percentage point.

Lower rates weaken the greenback because investors usually pull out their funds from dollar-denominated assets like US Treasuries as yields drop and shift their funds elsewhere.

Speculation that the Fed will further reduce interest rates and expectations that the European Central Bank (ECB) may raise interest rates by the year-end lifted the euro.

'The interest rate differential in the US and euro area is helping the euro,' Chan said.

Since the Fed's 50 basis point rate cut in September, its first rate reduction in more than four years, the dollar has tumbled against major currencies. The Fed followed this up with another 25 basis point cut last month to help its troubled financial sector, wobbling from mounting losses due to unpaid mortgages, and keep the economy from slipping into a recession.

Bank of America (NYSE:BAC) yesterday said it would write down about 3 billion dollars in the fourth quarter to reflect a drop in the value of its subprime-linked assets.

Citigroup (NYSE:C) , Morgan Stanley (NYSE:MS) , Merrill Lynch (NYSE:MER) (OOTC:MERIZ) and Wachovia (NYSE:WB) have all reported substantial losses from their subprime exposure.

The ECB may raise rates to curb inflation in the 13-member euro zone, which accelerated to 2.6 percent in October from a year ago, more than the 2.1 percent gain in September.

Hong Kong 1pm (0500 GMT)

US dollar
111.10 yen
1.1225 sfr

Euro
1.4659 usd
162.74 yen
1.6454 sfr
0.7055 stg

Sterling
2.0767 usd
230.59 yen
2.3314 sfr

Australian dollar
0.9022 usd
0.4343 stg
100.17 yen

New Zealand dollar
0.7650 usd

Miami, Puerto Rico Scrap Borrowings as Munis Fall a Third Week

2007-11-09T13:36:00.001-08:00

Nov. 9 (Bloomberg) -- Puerto Rico and Miami-Dade County postponed municipal bond offerings, deterred by rising benchmark interest rates and slack investor demand as state and local government debt declined for a third week.

Officials shelved the two refinancings totaling $1.5 billion as a weekly index of 20-year tax-exempt yields rose the most in three months. Concern that credit quality may deteriorate for bond insurers, which provide backing for almost half of the $2.5 trillion of municipal debt outstanding, weakened bids for tax-exempt debt.

``The market was messy,'' said Raquel Rosenfeld, capital markets director at Government Development Bank for Puerto Rico, the U.S. commonwealth's fiscal adviser. ``It wasn't orderly.''

The Bond Buyer 20 yield index rose 14 basis points, or 0.14 percentage point, to 4.54 percent. Price and yield move in opposite directions. Municipal bond prices have declined 1.3 percent in the past 12 trading days, while Treasuries advanced 0.8 percent, based on Merrill Lynch & Co. indexes.

Municipal bonds were little changed today, according to Municipal Market Advisors, as U.S. bond markets closed early and will remain shut for Veterans Day on Nov. 12.

The Arizona Transportation Board led $4 billion of tax- exempt debt sales this week as issuance fell below the year's average for a second week. The board borrowed $370 million to fund construction on freeways and other major roads around Maricopa County, the most populous in the state.

In postponing its offering, Government Development Bank of Puerto Rico officials cited ``market volatility and uncertainty caused by the insurance companies situation in general and issues related to'' subprime-mortgage losses, Maria Rosario, spokeswoman for the bank, said in an e-mailed statement.

Insurers' Risks

Investors have punished the stocks and debt of insurers that apply their AAA guarantee to municipal bonds, after they posted first-ever losses on the deteriorating value of debt connected to mortgages with risky borrowers.

Moody's and Fitch Ratings this week ranked the companies according to expected risks to their capital, and said they would periodically review them again.

Natixis' CIFG Guaranty was cited in each report as being the most vulnerable. Fitch also gave FGIC Corp. a high probability of falling below AAA standards, while Moody's said the company faces a ``moderate risk.''

MBIA Inc. was labeled ``low'' risk by Fitch and ``unlikely'' to fall below Moody's top standards.

Each rating company's release cited Financial Security Assurance Holdings Ltd. and Assured Guaranty as likely having ``minimal'' exposure; each also placed Ambac Financial Group Inc. in the ``moderate'' category.

`Buying Opportunity'

This week's rise in municipal yields has made tax-exempt bonds more attractive relative to Treasury bonds. For U.S. taxpayers in the top 35 percent federal income bracket, a 4.54 percent tax-exempt yield on the Bond Buyer 20 index would produce a taxable equivalent more than 2.3 percentage points higher than the benchmark 20-year Treasury yield.

``The long end is representing a unique buying opportunity,'' said Terry O'Grady, head of trading at FMS Bonds Inc. in North Miami Beach, Florida. ``Municipals' spreads to Treasuries are at ridiculous levels that are unsustainable.''

The higher rates, meanwhile, have cut into potential savings for state and local governments planning to refinance existing debt.

Record Volume

Issuance for the year is still on pace to exceed the record sales in 2005. States and municipalities have sold about $303 billion of long-term bonds, excluding variable-rate demand notes and auction-rate securities, for a weekly average of $6.7 billion, according to data compiled by Bloomberg.

Including all forms of variable-rate debt, October sales reached a record $43.4 billion. The year-to-date tally soared to $368 billion, the most ever for the first 10 months of the year in the municipal market, based on Thomson Financial figures.

For the third time in five weeks, the week's largest tax- exempt deal came from Arizona, the nation's fastest-growing state based on the latest figures from the U.S. Census Bureau.

Bear Stearns Cos. marketed the Arizona transportation sale, comprising bonds payable from a voter-approved sales tax collected within Maricopa County. The debt is rated AA+ by Standard & Poor's and Aa2 by Moody's Investors Service.

In a $210 million Ohio offering that UBS AG ran this week, FSA insured bonds due from 2012 through 2017. The state raised funds to spend on transportation projects with debt that will be repaid from federal highway grants.

Ohio Yields

Ten-year Ohio bonds were priced to yield 3.97 percent, 13 basis points more than AAA general obligation bonds tracked by Municipal Market Advisors.

The average yield premium paid on insured bonds over unenhanced top-rated debt rose to 18 basis points this week from 15 basis points, based on Lehman Brothers Holdings Inc. indexes.

Among other new issues this week, Houston sold $228 million of bonds, most of which will refinance debt issued for various public improvements around Texas's most-populous city.

New Jersey auctioned $228 million of bonds that Lehman won, and Virginia raised $183 million in another competitive sale in which Merrill submitted the lowest interest cost.

JPMorgan launches commodities index

2007-11-09T13:33:00.002-08:00

NEW YORK, Nov 9 (Reuters) - JPMorgan (JPM.N: Quote, Profile, Research) on Friday launched a new commodity index aimed at capturing returns across the futures curve for 33 commodities.

The JPMorgan Commodity Curve Index (JPMCCI) will allocate investments based on the open interest available in specific commodities, with 46 percent going into energy, 25 percent to industrial metals, 19 percent to agriculture, 8 percent to precious metals and 3 percent to livestock.

"JPMCCI holds exposure along the entire futures curve in proportion to the open interest of each tenor," JPMorgan said in a statement.

Investors traditionally use commodities indexes such as the S&P GSCI and the DJ-AIGCI to hedge portfolios against exposure to other asset classes such as equities.

Many such "long only" indexes invest in the front month of commodities futures contracts and shift their investments to second-month contracts.

But these indexes can rack up losses if the front-month contract is cheaper than the second-month, a market situation called contango.

"The JPMCCI adopts a simple, curve-neutral approach, holding exposure long the commodity futures curve according to the open interest of each tenor," the bank said.

Forex - Dollar steady against euro despite weak consumer confidence figures

2007-11-09T13:33:00.001-08:00

LONDON, Nov. 9, 2007 (Thomson Financial delivered by Newstex) -- The dollar was trading in a tight range against the euro as fresh concerns about the global impact of the credit crunch prevented weak US consumer confidence figures pushing the greenback any lower.

The preliminary University of Michigan consumer confidence indicator for November fell to 75.0 from 80.9 in October, well below expectations for a reading of 80.0.

The figures are likely to boost expectations the Federal Reserve could cut interest rates again in December, with economists expecting US data over the next few weeks to come in on the weak side.

'Unfortunately the situation is likely to deteriorate further given the ongoing deterioration in the housing market, the negative effects of falling equity markets and the erosion of purchasing power caused by the surge in energy costs,' ING economist James Knightley said.

'Consequently we suspect the Fed will be forced into a December rate cut with rates likely to move below 4 pct in the second quarter of 2008,' he added.

However, while gloom over the US economy weighed heavily on the dollar this morning, pushing it to a fresh all-time low against the euro of 1.4751 usd, markets were more concerned about the global implications of the credit crunch this afternoon. This meant the dollar was little moved by the confidence figures, with the greenback gaining some support as investors sold riskier high-yielding currencies.

Rumours that UK banks have sustained heavy losses as a result of the US sub-prime crisis has caused risk aversion to rise, pushing the pound sharply off this morning's highs and sending shares in London and Wall Street lower.

'The pound's dropped sharply due to speculation of large losses in the UK banking sector,' said Steve Pearson, currency strategist at HBOS.

This in turn boosted the yen as increasingly cautious investors pull out of the risky carry trade, where they sell the Japanese currency to invest in higher yielding ones.

Nervousness in financial markets has also been exacerbated by reports that a collateralised debt obligation (CDO) -- a specialist security made up of repackaged debt -- owned by State Street Corp (NYSE:STT) is liquidating its assets. Many CDOs contain assets linked to the troubled US sub-prime sector.

'This is the first CDO to begin unwinding and we believe that more are set to follow,' said BNP Paribas (OOTC:BPRBF) analysts, adding the yen could well benefit as a result.

London 1554 GMT London 1256 GMT
US dollar
yen 110.78 down from 111.20
sfr 1.1213 down from 1.1226
Euro
usd 1.4673 down from 1.4683
yen 162.46 down from 163.29
sfr 1.6450 down from 1.6485
stg 0.7002 up from 0.6995
Sterling
usd 2.0949 down from 2.0985
yen 232.01 down from 233.27
sfr 2.3495 down from 2.3558
Australian dollar
usd 0.9153 down from 0.9172
stg 0.4368 down from 0.4369
yen 101.37 down from 101.98

UPDATE 1-COMMODITIES-Oil, gold consolidate; eye key levels

2007-11-09T13:25:00.000-08:00

LONDON, Nov 9 (Reuters) - Oil and gold lost momentum on Friday as both markets digested this week's choppy trade but confidence of rising to landmark record levels remained, with investors eyeing refuge from credit worries and a weak dollar.

The prospect of a merger between BHP Billiton (BHP.AX: Quote, Profile, Research) (BLT.L: Quote, Profile, Research) and Rio Tinto (RIO.AX: Quote, Profile, Research)(RIO.L: Quote, Profile, Research), two of the world's leading mining firms, also spurred interest in base metals -- helping offset market concerns over rising stock levels.

Crude prices steadied within sight of the $100 milestone supported by supply disruptions ahead of peak winter demand and tracking the dollar's dip to record lows.

The loss of North Sea production due to a storm, coupled with an outage at a diesel refinery unit in Texas, added to fears of a supply shortage, although supplies were not expected to be hit as hard as initially feared.

U.S. crude for December delivery (CLc1: Quote, Profile, Research) was last down 36 cents at 95.10 a barrel, versus the previous day's 91-cent drop and putting prices back on track to record highs above $98 seen earlier this week and the $100 milestone.

Gold was similarly well-positioned, with prices dipping marginally, but still in sight of 28-year peak hit earlier this week above $840. Spot gold stood at $829.45/30.15 an ounce from $832.10/85 late in New York on Thursday, on course for the record high seen in January 1980 at $850.

"My feeling is that the oil price will consolidate over the next couple of days between $94 and $96 before taking the ultimate jump to $100," Commerzbank commodities analyst Eugen Weinberg said.

"With gold, its nice to be in that market right now. It's a safe-haven and there are all kinds of inflation fears, fears about the bank system and the financial system world-wide and positive dynamics on demand," he added.

Both oil and gold have seen investor interest on the back of nerves elsewhere, as stock markets and the dollar were pressured by worries that U.S. financial firms and the wider economy will face further fallout from a crisis in credit markets.

Federal Reserve Bank Chairman Ben Bernanke cemented that view, warning on Thursday that growth would slow in the fourth quarter and in the first half of 2008.

The comments raised expectations of further U.S. rate interest rate cuts, which sent the U.S. dollar to another low against the euro , making dollar-priced commodities cheaper for non-U.S. investors.

METALS EYE MERGER BUZZ

Base metals were steady as consumer buying and the prospect of a merger between two of the world's leading mining companies offset worries about rising stocks.

BHP Billiton's all-share offer for Rio Tinto, which would create a $350 billion mining behemoth, was rejected by Rio. The world's biggest miner may have to sweeten its offer, sending Rio shares 8 percent higher in London. BHP added 4 percent by 1016 GMT. [ID:nL082782]

"If a deal goes through there will be greater supply discipline in the market place," John Meyer, head of resources at investment bank Fairfax, said.

"It could help prices...on a longer term, in a three to five years' view," Meyer said, adding a possible deal gave great confidence to the futures market.

Copper (MCU3: Quote, Profile, Research) for delivery in three months eased $30 to $7,170/7,190 a tonne. On Thursday, benchmark copper dipped to $7,130, matching a low on Sept. 10.

FOREX-Risk aversion pummels dollar vs yen

2007-11-09T13:23:00.001-08:00

NEW YORK, Nov 9 (Reuters) - The dollar fell to 1-1/2 year lows versus the yen on Friday as fears of wider credit-related losses at U.S. financial institutions had investors dumping risky assets and anticipating more Federal Reserve rate cuts.

The greenback's woes were also worsened by news that U.S. consumer confidence dropped to its lowest level in two years in November on falling house prices and high energy costs.

"Now we are getting the confidence numbers, which definitely enforce the theme that the Fed will be forced to cut interest rates at a time of rising inflationary pressure, and that is really not good for the dollar," said Ashraf Laidi, chief market analyst at CMC Markets in New York.

The dollar dropped as low as 110.52 yen , its lowest level since May 2006, according to Reuters data. It was last trading at 110.88 yen, down 1.6 percent on the day.

The euro hit a peak of $1.4752, its highest level since launching in 1999, according to Reuters data, and was last trading flat at $1.4679 .

Fears that more U.S. financial firms will be hit by credit market turmoil escalated on Friday after Wachovia Corp (WB.N: Quote, Profile, Research) said it had incurred about $1.1 billion of further losses from the credit market crisis and that it expects increased loan losses in the fourth quarter.

That raised risk aversion and pushed U.S. stocks down. Heightened risk aversion encouraged investors to unwind carry trades, which are normally funded in low-yielding currencies such as the yen, boosting the Japanese currency.

"The broader currency move is one of risk-aversion. The dollar will do a bit better versus the Europeans while the yen is poised to strengthen more broadly," said Shaun Osborne, senior currency strategist at TD Securities in Toronto.

UPDATE 1-Toronto stocks tumble on commodities, credit fears

2007-11-09T13:08:00.000-08:00

TORONTO, Nov 9 (Reuters) - The Toronto Stock Exchange's main index fell sharply early on Friday with all sectors rattled by sinking commodity prices and news that another big U.S. bank had been burned by this year's credit crisis.

Lower-than-expected earnings from Goldcorp (G.TO: Quote, Profile, Research), Canada's second-biggest producer, added to the drop, while the influential spot gold price stumbled.

Big losses were logged in all of the TSX's main sectors, including a 1.5 percent drop in materials, 1.3 percent in energy, and 1.2 percent in financials -- together accounting for about three-quarters of the overall index.

The S&P/TSX composite index (.GSPTSE: Quote, Profile, Research) was down 184.30 points, or 1.3 percent, at 13,944.29 less than an hour after the market opened.

Wachovia (WB.N: Quote, Profile, Research), the fourth-largest U.S. bank, said on Friday it incurred big credit losses in the third quarter and expects losses tied to risky debt to increase -- the latest installment in this year's credit crisis.

The U.S. subprime mortgage crisis "continues to fester, it may go on for a bit," said Rick Hutcheon, president and chief operating officer at RKH Investments.

"We're stuck in a funk and we're not getting a lot of positive comments out of anybody who seems to want to change the general perception of the market," he said.

In related news, Canadian Imperial Bank of Commerce (CM.TO: Quote, Profile, Research) said it expects to report mark-to-market writedowns of C$463 million pretax for its fourth quarter, offset by a gain of C$456 million pretax from the completion of Visa's restructuring.

CIBC was down 49 Canadian cents at C$95.84.

The influential TSX financials sector has shed 5.7 percent in seven days, and appeared to suffer spillover from the United States, where markets were also sharply lower.

Elsewhere, Goldcorp was down 89 Canadian cents at C$32.79 after its per-share earnings for the third quarter missed expectations.

The resource-heavy index was also under pressure from falling crude oil and base metals prices, including tumbling copper futures.

Research In Motion (RIM.TO: Quote, Profile, Research), which plunged in the previous session, was down another C$5.64 at C$111.46, while Royal Bank of Canada (RY.TO: Quote, Profile, Research) dropped 79 Canadian cents to C$51.06.

Of the previous six sessions this month, the benchmark index has fallen in four.

($1=$0.94 Canadian)

BNP Paribas launches new commodity index

2007-11-09T12:05:00.000-08:00

LONDON, Nov 9 (Reuters) - BNP Paribas (BNPP.PA: Quote, Profile, Research) has created a new commodity index which gives investors exposure to commodities beyond just short-term futures contracts, the French bank said on Friday.

The index -- Commodity Market Representative Index -- includes a weighted basked of commodity futures contracts with different maturities for individual commodities.

Investor demand is growing for products providing exposure to commodities such as oil and precious metals because they tend to behave differently from stocks and bonds and therefore are seen as useful diversifiers of investment portfolios.

Commodity indexes are the favoured route by investors into commodities, but often investors can only gain access to the nearby delivery month on commodity futures markets.

"It has become increasingly clear that investors need diversification across maturities as well as across commodities," said Lionel Semonin, global head of commodity investor derivatives at the bank.

The new BNP Paribas index has 25 constituents, including energy, metals and agriculture.

It joins BNP Paribas's DCI BNP Paribas Enhanced index launched earlier this year.

Forex - Dollar remains weak on increased expectations for December US rate cut

2007-11-09T12:01:00.000-08:00

LONDON, Nov. 9, 2007 (Thomson Financial delivered by Newstex) -- The dollar recovered modestly after hitting a fresh all-time low against the euro overnight as markets raised their expectations that the Federal Reserve will cut interest rates in December.

Fed chairman Ben Bernanke did little to to ease investors' concerns about the US economic outlook yesterday when he testified before a congressional committee yesterday yesterday. Bernanke said he expected US GDP growth to be markedly weaker in the fourth quarter and the first half of next year due to adjustment in the credit markets.

This has prompted markets to factor in a greater chance of another rate cut by the Fed this year, despite Bernanke also stressing the upside risks to inflation posed by the soaring oil price.

'Not even Bernanke's reference to the upside risks for inflation has been able to deter rate cut expectations among investors, in particular as the economic slowdown against the background of rising inflationary pressures can only be considered to be detrimental for the dollar,' said Antje Praefcke, currency strategist at Commerzbank.

Later today focus will be on US trade figures and the University of Michigan Confidence Indicator. The world's largest economy's trade deficit is expected to have widened slightly during September due to the rise in oil prices despite the weak dollar helping to boost exports.

Meanwhile, events on the other side of the Atlantic yesterday did little to help ease the dollar's slide. The European Central Bank kept rates on hold at 4.00 pct, with ECB president Jean-Claude Trichet stressing the upside risks to inflation.

Trichet refused to respond to questions on whether the bank would do anything to curb the euro's recent ascent against the dollar, despite calling the scale of the move 'brutal'.

'This leaves the door open for further euro appreciation,' said Stuart Bennett, currency strategist at Calyon.

'The implication is that the current level of the EUR is not uncomfortable for the ECB and therefore there is little prospect of any action to stem its gains,' he added.

Earlier this morning figures showing French industrial production fell by 1.1 pct during September, below expectations for a 0.4 pct decline had little impact.

Meanwhile, the yen continued to firm as last night's falls on Wall Street were repeated in Japan with the benchmark Nikkei index closing at a near-three-month low on mounting credit crisis fears. The falls were prompted by ongoing fears about the finance sector's exposure to the subprime crisis
This supports the yen as investors become more cautious when equities fall, prompting them to pull out of the risky carry trade in which they sell the yen to invest in currencies with higher interest rates.

'With continued bad news about bank losses and the amount of downgrading of debt securities, the risk of further bad news from the credit sector remains significant,' said analysts at Barclays (NYSE:BCS) Capital.

'In light of all this, we think the yen is likely to appreciate further in the short term,' they added.

Finally the pound was slightly lower after earlier hitting a fresh 26-year high against the dollar of 2.1143. The Bank of England's decision yesterday to keep interest rates on hold at 5.75 pct has kept sterling well-supported.

The only UK data out today -- trade figures for September -- is expected to have minimal market impact.

London 0857 GMT Hong Kong 0500 GMT
US dollar
yen 112.53 down from 112.71
sfr 1.1253 up from 1.1219
Euro
usd 1.4697 down from 1.4717
yen 165.40 down from 165.89
sfr 1.6541 up from 1.6513
stg 0.6967 down from 0.6972
Sterling
usd 2.1088 down from 2.1104
yen 237.32 down from 237.89
sfr 2.3730 up from 2.3682
Australian dollar
usd 0.9265 down from 0.9285
stg 0.4394 down from 0.4399
yen 104.28 down from 104.67

Asian markets to soften further next week as subprime concerns weigh

2007-11-09T12:00:00.001-08:00

SINGAPORE, Nov. 9, 2007 (Thomson Financial delivered by Newstex) -- Asian stock markets are expected to soften further next week as concerns about the subprime crisis in the US outweigh the region's positive economic fundamentals and the strength of corporate earnings.

The continued stress in the market is evident in the recent disclosures from Citigroup (NYSE:C) , Merrill Lynch (NYSE:MER) (OOTC:MERIZ) and Morgan Stanley (NYSE:MS) (NASDAQ:MNDX) of additional writedowns on their subprime assets.

'Investors (will) continue to brace for further fallout from the subprime mortgage crisis in the US,' said Craig James, chief equities economist at CommSec in Sydney.

'The correction in shares is now under way and may have further to run,' agreed Shane Oliver, chief strategist at AMP Capital Markets in Australia. However, 'it's likely to be relatively shallow compared to the July/August falls and the broad trend in shares is likely to remain up.'
Most analysts are positive on valuations across the region and prices are supported by earnings growth, although that may change if global economic growth is braked, he said.

The slowing US economy makes it inevitable for the Federal Reserve to cut rates further and that should support further stock market gains.

'Fears about the strength of the US economy will likely (drag) the market. But it is encouraging to see continuous capital inflow into (Asian) stock funds, which strengthens the view that institutions would step in upon any correction, said Hwang Geum-Dan, analyst at Samsung Securities in Seoul.

Heightened risk
Other analysts said the risk of a correction has been heightened by the strong performance of Asian markets in the last two months with many benchmarks trading at record levels.

'Asian markets have recovered sharply from the bottom in August. When you see something like that correction is inevitable,' said Khiem Do, head of multi-asset strategy at Barings in Hong Kong.

Investors will remain cautious as they worry about the US, a key market for Asian goods, he said.

'Markets will be jittery about any negative news, such as on inflation or a further deterioration in the US and European economies,' said Lorraine Tan, head of Asia-Pacific equity research at Standard & Poor's (NYSE:MHP) in Singapore.

'2008 will be a more difficult year for stock market returns and we would not rule out the risk of a sharp correction,' Tan said.

Asia has held up well during the recent global financial market turbulence but the region's debt and equity markets could face increasing pressure next year, S&P said.

Still, S&P expects that stock markets in China and Hong Kong will continue to outperform because the mainland's economy is expected to sustain its double-digit growth into 2008.

In the meantime, however, the correction will continue, particularly in Hong Kong.

'I believe the (Hong Kong) market could still encounter a deeper correction in the near term as the market has gone up considerably in the last two months,' said Peter Lai, investment manager at DBS Vickers in Hong Kong.

A further correction in the Hong Kong and mainland Chinese markets would pressure other markets in the region, including Japan, which has underperformed the broader region.

BoJ meeting

Trading in Tokyo is expected to remain volatile next week as subprime concern persists, said Mitsushige Akino, chief fund manager at Ichiyoshi Management in Tokyo.

However, 'as Japanese shares have been oversold, the Nikkei 225 index may rebound if overseas (markets) improve,' he said.

Japanese investors are expected to remain cautious ahead of the two-day Bank of Japan meeting that ends on Tuesday and the release of third-quarter GDP data on the same day.

Sluggish economic conditions in Japan will likely prevent the BoJ from raising Japanese interest rates from current ultra-low levels, said Akino.

Economists polled by Thomson Financial are expecting Japanese GDP to grow 0.5 percent in the third quarter compared to the second quarter. Growth is expected to rise 1.8 percent from the same time a year ago.

While that will be a marked improvement from the second quarter when GDP contracted 0.3 percent, Akino remains cautious on the economy.

'Japan's economic situation is not so upbeat as private consumption remains weak,' he said.

Commodity play

Investors are expected to remain focused on commodity-related stocks next week because of strong demand from China.

In Indonesia, there was strong buying interest in miners and plantation stocks this week and that trend should continue.

'I expect these sectors will continue to support our market next week,' said Norico Gaman, analyst at BNI Securities in Jakarta.

Australian miner BHP Billiton's (NYSE:BHP) proposal to take control of rival Rio Tinto and create a 350 billion US dollar mining behemoth should also keep commodity stocks in the limelight.

While some investors are worried that the merger of the two Australian mining giants could signal the peak of the commodities boom, AMP Capital's Oliver said he remains convinced that the resource rally will last a bit longer and that the consolidation may actually help support high commodity prices.

'If successful it (the merger) will result in a further consolidation in the mining sector which in recent years has helped limit the supply response to high commodity prices,' Oliver said.

Consolidation has not been limited to metal mining companies -- palm plantation companies in Malaysia and Indonesia have also been consolidating.

Synergy Drive became the world's largest producer of palm oil after completing the merger of eight Malaysian plantation companies last month. The new entity starts trading on Bursa Malaysia at the end of this month.

Shares of Asian plantation companies have been rising in tandem with soaring crude palm oil prices which have risen with the crude oil price. Higher crude oil prices makes alternative fuels such as ethanol and biodiesel more attractive. Crude palm oil is a popular feedstock for the production of alternative fuels.

Investors will be working their way through the earnings of plantation companies next week.

Singapore-listed Wilmar International (OOTC:WLMIF) , which owns plantations in Indonesia and Malaysia, will release its third-quarter results on Wednesday, while Malaysian palm plantation company IOI Corp will release its first-quarter-to-September results on Thursday.

Third-quarter earnings from commodities suppliers Noble Group and Olam International are also on the calendar.

Noble Group will release its results on Monday, while Olam International will release its results on Wednesday.

Apart from commodities suppliers, bulk shipping companies also provide an indirect exposure to the commodities boom as the strong demand for commodities has driven freight rates to record levels recently.

South Korean bulk shipping company STX Pan Ocean, which is listed in Seoul and Singapore, will also release its quarterly results on Wednesday.

Meanwhile, in the US, Home Depot (NYSE:HD) and Wal-Mart Stores (NYSE:WMT) are due to report on Tuesday. Those reports will be scrutinized by economists looking for clues to the state of consumer spending. October CPI data due on Thursday should provide a good gauge of price trends.

Investors will also closely watch third-quarter GDP data from Hong Kong due Friday. Economists polled by Thomson IFR, are expecting annualized growth of 5.8 percent, down from 6.9 percent in the second quarter.

In Singapore, September retail sales data will be released Thursday, while October non-oil domestic exports will be released on Friday.

BHP May Need to Add Cash to Rio Offer After Rejection (Update9)

2007-11-09T11:49:00.001-08:00

Nov. 9 (Bloomberg) -- BHP Billiton Ltd., the world's biggest mining company, may need to add cash to its all-stock offer for Rio Tinto Group as it seeks to gain greater advantage from a commodities boom fueled by China.

Rio rose to a record in London and Sydney trading, valuing the company at $172 billion, after rejecting Melbourne-based BHP's approach. Rio climbed 6.2 percent to 5,624 pence in London, 15 percent more than BHP's indicative three-for-one share offer.

``Cash is king, and it may be the sweetener that could force the hand of Rio's directors,'' Ric Ronge, who helps manage A$1.9 billion ($1.8 billion) at Pengana Capital including Rio shares, said from Melbourne.

The proposed takeover, the world's largest, underscores Chief Executive Officer Marius Kloppers's prediction that the five-year rally in commodities will be sustained. It would create a company with more than a third of the iron-ore market, the most energy coal and copper reserves, and operations in six continents.

BHP slid 28 pence, or 1.7 percent, to 1,628 pence in London, extending yesterday's 5.7 percent drop. The group's Australian shares slipped 1.8 percent to A$42.47.

Value Fluctuation

Profit at Rio has jumped 11-fold since 2002, the year that copper, iron ore and nickel began a rally that's lifted the UBS Bloomberg CMCI Index of 26 commodities threefold. The company had net income of $7.44 billion last year, compared with BHP's $13.4 billion in the latest fiscal period.

All-stock offers fluctuate in value depending on share prices. The value of America Online Inc.'s acquisition of Time Warner Inc. fell by more than 30 percent between the announcement in January 2000 and the completion date a year later, according to data compiled by Bloomberg.

``We would certainly prefer a cash component,'' Atul Lele, who helps manage the equivalent of $463 million including Rio shares, at White Funds Management in Sydney.

Australia lawmakers may not oppose the bid as the offer is a ``market matter,'' Prime Minister John Howard said on Melbourne radio 3AW. Treasurer Peter Costello's spokesman David Gazard would not offer any comment on the bid.

Asset Sales

Australia's antitrust regulator, the Australian Competition and Consumer Commission, will look closely at any deal that eventuates because of the ``large amounts of iron ore deposits'' and infrastructure, spokeswoman Lin Enright said. BHP, Rio and Brazil's Cia. Vale do Rio Doce control about 80 percent of seaborne trade in iron ore.

BHP yesterday said it ``has examined in detail the regulatory issues and other practicalities of a combination.'' BHP spokeswoman Samantha Evans declined to comment. Rio Tinto spokesman Ian Head couldn't immediately comment today.

Rio, BHP and Vale are in talks with Baoshan Iron & Steel Co., China's largest mill, and rival steelmakers to set annual contract prices for iron ore next year, which may rise 50 percent, Macquarie Bank Ltd. said.

A combination would be ``bad news for Chinese steel and metal producers,'' Lu Yizhen, who helps manage $640 million at Citic-Prudential Fund Management Co., said in Shanghai. ``The foreign firms will tighten their grip on global ore supplies leaving the Chinese with little bargaining power.''

Undervalued

BHP yesterday said it planned to pursue the offer after its approach was rejected. The bid ``significantly undervalues Rio Tinto and its prospects,'' Rio said.

The potential combination would be the biggest in a record year for mergers. The value of transactions through October overtook last year's $3.5 trillion total, according to data compiled by Bloomberg.

Combining BHP and Rio, which just bought aluminum producer Alcan Inc., would create a company with estimated net income of as much as $26 billion, according to Tony Robson, co-head of mining research at BMO Capital Markets in Toronto.

The merged company's assets would include a stake in Chile's Escondida, the world's largest copper mine, and operations in uranium, aluminum, diamonds, lead and nickel. It may generate between $3 billion to $5 billion in pretax cost savings, and a friendly bid would create the most value, UBS said in a report.

Bid Review

``In terms of the synergy, it would be enormous, particularly in iron ore,'' Troy Angus, who helps manage A$4 billion at Paradice Investment Management Ltd., said in Sydney. ``The dynamics for the deal definitely stacks up from the investor perspective.''

BHP's debt rating may be cut from ``A1'' should an offer eventuate because of uncertainties about integrating the businesses and potential regulatory restrictions, said Moody's Investors Services. Standard & Poor's Ratings Services said its ``A+'' rating on BHP wouldn't be affected.

Credit-default swaps tied to the debt of BHP increased 5 basis points to 30.5 basis points after the approach was announced, prices from JPMorgan Chase & Co. show. Rio credit default swaps declined 1 basis point to 46.5 basis points.

Forex - Central European currencies a touch higher, Czech crown at record levels

2007-11-09T11:41:00.000-08:00

PRAGUE (Thomson Financial) - Central European currencies inched higher today, pushing the Czech crown to a record high against the euro and the dollar, as investors bought into riskier emerging market assets instead of a weakening dollar.

Dealers said expectations of a faster rise in Czech interest rates than was expected earlier had helped push the crown higher since inflation data topped expectations earlier this week.

'It is more likely now that a rate hike will come sooner,' said Tomas Vlk, an analyst with Patria Finance.

The crown reached 18.12 to the dollar, besting yesterday's record 18.33 hit, and was up around 0.5 percent against the euro at 26.63.

The Polish zloty hovered around 3.625 against the euro, less than 0.5 pct off the all-time highs it hit late last month, while Hungary's forint, which often weakens when the zloty gains, rose a touch in early trade against the euro before stabilising around 253.1.

Central Europe's emerging currencies surged last month after a pro-business party came from behind to win Polish general elections and investor sentiment toward emerging markets improved.

But there are signs the new Polish coalition may prove less ambitious on reforms than some investors had hoped, leaving markets on tenterhooks ahead of expected official confirmation of the new cabinet next week.

The Czech Republic's borrowing rates remain the lowest in the European Union despite three rises since May, which have brought the central bank's main rate to 3.25 pct.

Central bankers have said the strong crown has helped to tame inflation, although most analysts expect another increase in lending rates by January next year after inflation rose to 4.0 pct last month.

Trichet says recent currency moves 'sharp'; brutal forex moves 'never welcome'

2007-11-08T21:54:00.000-08:00

FRANKFURT (Thomson Financial) - European Central Bank president Jean-Claude Trichet said recent movements in currency markets have been 'sharp' and brutal currency movements are 'never welcome'.

'In the recent period I have observed moves that I would say were undoubtedly sharp and abrupt, and I said already that brutal moves were never welcome,' Trichet told the ECB's monthly news conference.

The euro has surged to new record highs above 1.47 usd as the result of a broad sell-off in the dollar.

Trichet said the message given by G7 finance ministers and central bankers at their meeting in Washington last month is even more valid after the recent sharp currency moves.

'What we have said in Washington, namely that disorderly movements in exchange rates are undesirable for economic growth, is true more than ever,' he said.

And he said it is now even clearer that a strong dollar is in the US interest.

'It seems to me that in the recent period of time it's even clearer that a strong dollar is in the interest of the US,' he said.

Trichet also said that the G7 had appreciated the Japanese authorities' call for the pick-up in the Japanese economy to be recognised by currency markets.

He also recalled that the G7 had called for China to allow more flexibility in the yuan's exchange rate regime.

Trichet said the recent rise in oil prices does not yet put into question the ECB's forecast that euro zone growth will be around its 2.25 pct potential rate next year.

He said the recent acceleration in euro zone inflation, resulting partly from the rise in oil and food prices, should be transitory.

Metals - Copper slides lower on rising inventories; economic woes weigh

2007-11-08T21:51:00.000-08:00

LONDON, Nov. 8, 2007 (Thomson Financial delivered by Newstex) -- Copper prices slipped further below the 7,300 mark as a further rise in stockpiles highlighted lower demand than expected in the fourth quarter so far.

Copper has fallen sharply in recent weeks since demand from China faltered above the 8,000 usd mark, with a surplus of current supplies in the world's number one consumer of the red metal removing the incentive to buy at elevated levels.

With the ongoing current economic turmoil razing fears of a global slowdown, which would almost certainly reduce the demand outlook for copper, prices have slid back towards the lows of mid August when the sub-prime crisis first started to roil global markets.

Equities have fallen sharply this morning, led by the banking sector amid rumours of further sub-prime related writedowns.

'It is suffering from an absolutely perceived slowdown of consumption,' said Alex Heath, head of base metals trading at RBC (NYSE:RY) Capital Markets. 'The rise in stocks by 30 pct in past couple of months are giving off a clear message. Speculation that Chinese demand may not be as strong in the fourth quarter, and an ongoing deterioration in the U.S. housing market have been major contributors to the red metal's near 14 pct decline from its early October highs.'
'We may have to defer expectations of a major re-stocking exercise by the Chinese now until next year,' he added.

At 1.21 pm, LME copper for three-month delivery was down at 7,245 usd a tonne against 7,315 usd at yesterday's close.

Copper inventories monitored by the London Metal Exchange rose 1,700 tonnes this morning to 170,875 tonnes, almost 30 pct higher than they were a month ago. Rising stockpiles are helping to alleviate previous supply concerns.

Also, news that a nationwide workers strike in Peru has been ruled illegal, was easing worries about lower supply from the world's fifth largest copper producer.

The market has been underpinned, however, by investors bargain hunting on the dips, and weakness in the US dollar which makes commodities traded in greenbacks cheaper for overseas buyers.

Elsewhere, the majority of the complex was largely lower to mixed. Speculative fund money may be coming out of the market to cover losses in equities elsewhere, analysts said.

'With the stock markets under pressure and with the margin clerks sharpening their knives, the commodity markets have taken a hit as speculators go once again to those markets they can sell to get the margins to support the market they wish not to sell...or cannot sell due to a lack of liquidity,' said Dennis Gartman, editor of The Gartman Letter trading note.

Tin was trading at 16,650 usd against 16,950 usd, after profit taking knocked the top off prices following yesterday's contract high of 17,225 usd. Possible limitations on both Chinese and Indonesian exports continue to support the market, with supply fears fueling yesterday's highs, according to analysts.

Indonesia, the world's second biggest tin producer after China, is considering setting tin export quotas to stop tin prices falling, with the quota for 2008 in the range of 90,000-100,000 tons, an official of the Energy and Mineral Resources Ministry said yesterday.

The government is studying its options and hopes to make a final decision on a tin export quota system before the year-end, the ministry's director for coal and mineral development, Mangantar Marpaung, told Thomson Financial.

Meanwhile in China, the export quota is to be reduced by 3,700 tonnes from this year, analysts said.

Among other metals, nickel recovered slightly following recent losses, trading at 32,450 usd against 32,300 usd at the close yesterday. Further gains in stockpiles are capping any gains. Nickel stocks have risen to 40,536 tonnes since hitting a record low of 2,982 tonnes in February.

Aluminium edged up slightly to 2,630 usd a tonne against 2,625 usd at yesterday's close. Lead was trading down at 3,472 usd usd against 3,590 usd yesterday, while zinc slipped to 2,763 usd against 2,765 usd.

American Stock Exchange Launches Six New Rydex ETFs

2007-11-07T13:13:00.001-08:00

NEW YORK, Nov. 7 /PRNewswire/ -- The American Stock Exchange(R) (Amex(R)) today announced that it has launched trading in six new exchange traded funds (ETFs) by Rydex Investments (Rydex). These new products bring the total number of Amex-listed ETFs to 370.

"We are pleased to be working with Rydex as they expand their family of ETFs to provide the investors with new tools for their portfolios," said Scott Ebner, Senior Vice President of the Amex ETF Marketplace. "These six new Rydex ETFs offer investors inverse and leveraged inverse exposure to major stock benchmarks."

The new Rydex ETFs are:

Rydex 2x S&P 500 ETF seeks to provide investment results that will match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund's current benchmark is 200% of the performance of the S&P 500 Index.

Rydex Inverse 2x S&P 500 ETF seeks to provide investment results that will match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund's current benchmark is 200% of the inverse (opposite) of the performance of the S&P 500 Index.

Rydex 2x S&P MidCap 400 ETF seeks to provide investment results that will match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund's current benchmark is 200% of the performance of the S&P MidCap 400 Index

Rydex Inverse 2x S&P MidCap 400 ETF seeks to provide investment results that will match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund's current benchmark is 200% of the inverse of the performance of the S&P MidCap 400 Index.

Rydex 2x Russell 2000 ETF seeks to provide investment results that will match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund's current benchmark is 200% of the performance of the Russell 2000 Index.

Rydex Inverse 2x Russell 2000 ETF seeks to provide investment results that will match the performance of a specific benchmark, before fees and expenses, on a daily basis. The Fund's current benchmark is 200% of the inverse of the performance of the Russell 2000 Index.

Goldman Sachs Execution & Clearing, LP is the specialist for all of the new Rydex ETFs.

About the American Stock Exchange

The American Stock Exchange(R) (Amex(R)) offers trading across a full range of equities, options and exchange traded funds (ETFs), including structured products and HOLDRS(SM). In addition to its role as a national equities market, the Amex is the pioneer of the ETF, responsible for bringing the first domestic product to market in 1993. Leading the industry in ETF listings, the Amex lists 370 ETFs to date. The Amex is also one of the largest options exchanges in the U.S., trading options on broad-based and sector indexes as well as domestic and foreign stocks. For more information, please visit www.amex.com

Indexes Remain Near Intraday Lows In Late Trading

2007-11-07T13:12:00.001-08:00

After reaching an intraday low in early afternoon, stocks struggled lamely to mount a comeback.

At 2:55 p.m. ET, the Nasdaq and the blue-chip Dow were down 1.8% while the S&P 500 slid 1.9%.

The NYSE composite dropped 1.6% on slightly higher volume as it headed for a possible distribution day. Nasdaq volume was off the previous session's pace.

For the past 12 sessions, the S&P 500 had been finding support at the 1490 mark. Today it violated that level, but it did seem to be finding support at the 200-day average, which is 1483.

Among market leaders, Baidu.com (NASDAQ:BIDU) BIDU corrected for a second-straight session, shaving off 4.70 to 403. The Chinese search engine has not had three consecutive down days since mid-August.

Google GOOG, meantime, appeared to be heading toward a small gain. It was up 1.57 to 743.36.

Other market leaders were facing some headwinds.

Among the top 10 stocks listed in the IBD 100, only two were up in afternoon trade. The gainers were BlackBerry maker Research In Motion (NASDAQ:RIMM) RIMM, up 4.92 to 135.96 on brisk trade; and Potash POT, up 3.18 to 124.98 also on fast trade.

Potash, a fertilizer manufacturer, is the No. 1 stock in Overall Rank in its No. 1 rated Chemicals-Fertilizers industry group.

Leaders taking a heavy hit included dry-bulk shipper DryShips (NASDAQ:DRYS) DRYS, down 7.88 to 108.10 on more than double its usual trade, and virtualization software provider VMware VMW, down 5.54 to 105.40 on 25% heavier trade.

VMware was looking at a loss for its fifth-straight session. Until recently, it had not registered more than two down days in a row since its Aug. 14 initial public offering.

1 p.m. ET update: Stocks Tumble On Mixed Volume

By Paul Whitfield

Stocks took an early tumble on Wednesday despite a smaller-than-expected drawdown in oil inventories, a better-than-expected rise in productivity and the best showing in more than a year in wage costs.

Volume was mixed: slightly higher on the NYSE and a bit lower on the Nasdaq.

At 12:55 a.m. EST all the major indexes were down 1.4% or more.

The large-cap S&P 500 and the midcap 400 slipped below their 50-day averages one day after regaining that key support level. The tech-laden Nasdaq remains the only major index that has held above its 50-day line through the market's recent choppy action.

Google continued to resist any downdrafts as it tacked on 0.90 to 742.69. The search-engine company's stock has risen for 12 straight weeks.

Many other market leaders didn't fare as well on Wednesday.

Among the top 10 stocks listed in the IBD 100, only two were up in morning trade. The gainers were BlackBerry maker Research In Motion RIMM, up 5.12 to 136.16 on fast trade; and Potash Corp. (NYSE:POT) (TSX:POT) Saskatchewan POT, up 3.03 to 124.83 on above-average trade.

Potash, a fertilizer manufacturer, is the No. 1 stock in Overall Rank in its No. 1 rated Chemicals-Fertilizers industry group.

Leaders in the red for the day included dry-bulk shipper DryShips DRYS, down 6.52 to 109.46 on heavy volume despite beating Q3 views on earnings and sales; virtualization software provider VMware VMW, down 6.44 to 104.50 for a fifth-straight loss; and China Life Insurance LFC, down 4.36 to 88.62 in busy trade.

Yet market leaders were not among the day's hardest-hit stocks. Among the heavy-volume decliners listed in Stocks On The Move, few were A-rated stocks and none were No. 1 in their industry group.

The story was different for the gainers. Of the 20 stocks rising on heavy volume, more than half carried A+ ratings in investors.com's Stock Checkup.

The day's reports included data from the Labor Department that said worker productivity increased 4.9% in the third quarter, beating expectations for a 3.1% gain. It was the best performance in four years.

In the oil sector, the EIA reported that crude inventories fell by 800,000 barrels, about half the expected drop.

11:15 a.m. ET Update: Indexes Extend Losses In Morning Trade

By Vincent Mao

Stocks hit new lows early Wednesday, as rebound efforts faded. Near-record oil prices and a sliding dollar continued to be a drag.

At 10:50 a.m ET, the S&P 500 tumbled 1.2%, the Dow 1.1. The Nasdaq and NYSE composite were each lower by 1%.

Decliners swamped advancers by more than 4-to-1 on the NYSE and more than 3-to-1 on the Nasdaq. Volume was mixed with NYSE tracking higher and Nasdaq lower.

According to the Energy Department, crude oil inventories fell by 800,000 barrels last week. Traders were expecting a drawdown of as much as 2 million barrel. Still, December crude slipped 14 cents to $96.56 a barrel.

Euroseas ESEA gapped down, sinking 1.12, or 6%, to 17.01 in heaving trading. The shipper firmed an offering of 6.3 million shares at 17 a piece.

Excel Maritime Carriers EXM lost 3.37 to 58.20, piercing its 50-day line. The dry-bulk shipping firm reports earnings on Nov. 13. Analysts see profit suring 114% to $1.07 a share.

On the upside, China Finance Online (NASDAQ:JRJC) JRJC gapped up, gaining 4.86, or 15%, to 38.90. Brean Murray upgraded the financial data provider to buy from hold.

Research In Motion RIMM headed higher for the fourth straight session. Shares added 5.69 to 156.75. RBC (NYSE:RY) Capital Markets raised its target price to 180 from 120.

10:15 a.m. ET Update: Stocks Open Lower, Trim Losses

By Ed Carson

The major averages sold off at the open on the weaker dollar and record oil prices, but have come off their very worst levels.

As of 10:01 a.m. ET, the S&P 500 is down nearly 1%. The Nasdaq and Dow have fallen 0.8% while the NYSE composite is off 0.7%.

The big-cap Nasdaq 100 is only down 0.5%. Some of the very top-tier companies are rising. Research In Motion RIMM rose 2.5% and Nokia (NYSE:NOK) NOK 2%. Google and Intuitive Surgical (NASDAQ:ISRG) ISRG are both slightly higher

However, hot IPO VMware VMW is falling for a 5th straight session, down nearly 4%.

Among other big-cap techs, Cisco CSCO, which moved out to a 6.5-year high Tue., retreated 1%. The networking giant reports earnings after the closing bell.

Yahoo YHOO fell 4% in the early going after sinking nearly 5% Tue. as U.S. lawmakers ripped the Net giant for helping China identify a political dissident by turning over an e-mail.

Foster Wheeler FWLT shot up 7% after the engineering, construction and energy firm said it more than doubled Q3 profit. It all set a 2-for-1 stock split.

Garmin GRMN fell 5% as the GPS device maker faces a growing bidding war. TomTom raised its bid for digital mapmaker Tele Atlas after Garmin trumped its original offer last week. Investors thought Garmin's $3.3 bil bid was too much.

9:15 a.m. ET Update: Stocks Set For Nasty Open

By Vincent Mao

Stock futures pointed to a sharply lower open Wednesday as the dollar dived, pushing oil to new highs. Nasdaq futures dropped 14 points vs. fair value, S&P 500 futures fell 17 points and Dow futures gave up 137 points.

In economic news productivity surged 4.9% in the third quarter, the fastest pace in four years and easily topping views of a 3.1% annual rate. Unit labor costs dipped 0.2%. A number of Fed members are due to speak today.

But investors' focus is on the dollar, which slumped to another record low vs. the euro after a top Chinese official said Beijing would favor stronger currencies over the dollar. The greenback also fell against the yen. Meanwhile gold surged to nearly $850 an ounce.

Crude oil traded as high as $98.62 a barrel in electronic trading. Though it has pulled back some, the December contract was last up $1.18 to $97.88. Weekly U.S. energy inventories will be out at 10:30 a.m. ET.

General Motors GM skidded 4% in pre-market trading. Due to a tax-related charge, the automaker posted a third-quarter loss of $39 billion, or $68.85 per share.

Rival Toyota TM climbed 3% after it reported strong earnings and raised its full-year outlook.

Blue Nile NILE surged 12% in the pre-market. Late Tuesday, the online jewelry retailer reported third-quarter earnings of 18 cents a share, up 64% from a year ago and two cents above views.

Fluor FLR tumbled 8% in the premarket after it delivered Q3 earnings and sales below views. The engineering, procurement and construction firm also guided full-year 2007 and 2008 profit below estimates.

MGM Mirage MGM edged higher in pre-open trading. The casino operators announced a joint venture with Mubadala Development Co. to build the $3 billion MGM Grand Abu Dhabi.

Banks Face $100 Billion of Writedowns on Level 3 Rule (Update2)

2007-11-07T13:08:00.000-08:00

Nov. 7 (Bloomberg) -- U.S. banks and brokers face as much as $100 billion of writedowns because of Level 3 accounting rules, in addition to the losses caused by the subprime credit slump, according to Royal Bank of Scotland Group Plc.

The Financial Accounting Standards Board's rule 157 will make it harder for companies to avoid putting market prices on securities considered hardest to value, known as Level 3 assets, Royal Bank's chief credit strategist Bob Janjuah in London wrote in a note today. The new rule is effective Nov. 15.

``This credit crisis, when all is out, will see $250 billion to $500 billion of losses,'' Janjuah said. ``The heat is on and it is inevitable that more players will have to revalue at least a decent portion'' of assets they currently value using ``mark- to-make believe.''

Wall Street's biggest firms have written down at least $40 billion as prices of mortgage-related assets dwindle because of record foreclosures. Morgan Stanley, the second-biggest U.S. securities firm, has 251 percent of its equity in Level 3 assets, making it the most vulnerable to writedowns, followed by Goldman Sachs Group Inc. at 185 percent, according to Janjuah.

Morgan Stanley fell $3.63, or 6.7 percent, to $50.85 at 2:14 p.m. in New York. The New York-based bank is down 24 percent this month. New York-based Goldman Sachs dropped 3.2 percent to $216.08.

Morgan Stanley may write down $6 billion of assets, David Trone, an analyst at Fox-Pitt Kelton Cochran Caronia Waller, said yesterday.

Merrill is Healthiest

Citigroup Inc., which this week said losses from subprime assets may be $11 billion, has 105 percent of its equity in Level 3 assets, Janjuah wrote. The New York-based bank fell 2.51 percent to $34.20, a four-and-a-half year low.

Merrill Lynch & Co., which wrote down $8.4 billion of subprime mortgage debt and other debt securities, has Level 3 assets equal to 38 percent of its equity ``and may well come out of all of this in the best health,'' Janjuah said. Merrill lost 4.36 percent at $53.91.

``If you look at the writedowns just at Citi and Merrill already it's about $20 billion, so $100 billion may be on the conservative side globally,'' said Sajiv Vaid, who manages the equivalent of about $10.5 billion of corporate debt at Royal London Asset Management in London, a unit of the U.K.'s biggest customer-owned insurer.

The losses are likely to hurt shareholders more than bondholders because the banks may be forced to sell stock to raise additional capital, Vaid said.

`Unobservable' Inputs

Banks may be forced to write down as much as $64 billion on collateralized debt obligations of securities backed by subprime assets, from about $15 billion so far, Citigroup analysts led by Matt King in London wrote in a report e-mailed today. The data excludes Citigroup's own projected writedowns.

Under FASB terminology, Level 1 means mark-to-market, where an asset's worth is based on a real price. Level 2 is mark-to- model, an estimate based on observable inputs and used when there aren't any quoted prices available. Level 3 values are based on ``unobservable'' inputs reflecting companies' ``own assumptions'' about the way assets would be priced.

ABX indexes, which investors use to track the subprime-bond market, are showing ``observable levels'' that would wipe out institutions' capital if the benchmark's prices were used to value their Level 3 assets, according to Janjuah.

The indexes have tumbled this year because investors expected rising numbers of borrowers to default on home loans, cutting the cash flowing to the bonds that package the mortgages.

Lehman Brothers Holdings Inc. has the equivalent of 159 percent of its equity in Level 3 assets, and Bear Stearns Cos. has 154 percent, according to Janjuah's note, called ``Bob's World: Feast and Famine.''

Investors bet on commodities supercycle marathon

2007-11-07T13:00:00.000-08:00

By Veronica Brown - Analysis

LONDON (Reuters) - A "win, win" market is a rarity at the best of times, let alone in periods of financial stress, but investors are betting big on a hyper-extended commodities bull run to hedge against worst-case scenarios elsewhere.

Evidence of an impressive run is stacking up, with oil surging 60 percent on the year and tripling since late 2003 towards a landmark $100 per barrel. Gold is near a historic high at $850 after rising 235 percent from lows hit in 1999.

On crude, forecasts for a long period of elevated prices have come in thick and fast.

"The oil rally will continue as long as it wants to. It's not my opinion or anyone's opinion that matters, it's the market's opinion," GlobalMacroResearch.com analyst Adam Sarham said.

Investment guru Jim Rogers went further. "I will be holding it (oil) for years...it will go to $100/150 a barrel."

The feel good factor doesn't stop there, with gold fervor also apparent in other metals -- platinum hitting record highs and silver running to 27-year peaks.

Copper prices have increased five times in value since 2003, hitting a record $8,800 in 2006, while lead and tin are now at historic levels.

Agricultural commodities have been equally impressive, with U.S. and European wheat prices more than doubling to record highs this year on worries about global supply.

"We are believers in the commodities supercycle. I think it's perfectly obvious to everybody that the current cycle is powerful and quite long lasting," said Graham Birch, head of BlackRock's natural resources fund.

SEEDS OF CHANGE

For many, the kernels of this current rally can be traced back to emerging market developments and favorable currency fundamentals.

At the end of 2001, worldwide manufacturing demand began to tick higher and China's industrial revolution was starting.

Back then analysts said they expected China's voracious appetite for raw materials for industrialization to continue, leading to a commodity supercycle that would last for years.

Such a cycle might compare with the period of U.S. economic growth from the late 1800s to early 1900s.

Explosive emerging market growth has also coincided with a period of dollar weakness, with the U.S. currency hitting record lows against the euro and a basket of currencies.

A weak dollar makes commodities priced in the U.S. currency cheaper for non-U.S. buyers.

For those subscribing to a supercycle theory, its longevity is pinned on the progression of China's urbanization.

"Approximately two billion people are moving from an agricultural existence to an industrial existence, often moving to a more energy intensive urbanized environment," Philippe Bonnefoy at hedge fund firm Cedar Partners said.

RISK

Financial markets have been thrown into a spin as investors try to decipher how much impact an ongoing crisis in global credit markets stemming from the U.S. high-risk mortgage sector will have on growth in the world's biggest economy.

A key measure of equity market volatility (.VIX: Quote, Profile, Research) -- known as the "fear index" and a closely watched gauge of market risk aversion -- is up more than 85 percent on the year, while the dollar is down almost 10 percent against a basket of currencies.

Some analysts have said real proof of the supercycle theory can be found in how well commodity markets are weathering the financial storm thus far, with fresh safe-haven interest created by uncertainty in other asset classes.

But some point to sharp falls in key commodities in August when volatility spiked in the investor dash for cash.

"The commodities with the most physical liquidity are vulnerable to liquidity crises. This became apparent in August of this year," said Douglas Hepworth, director of research at commodity fund manager Gresham Investment Management.

CORRECT: Dow drops to pre-rate cut levels amid commodities spike, GM's huge loss

2007-11-07T12:40:00.000-08:00

NEW YORK (Thomson Financial) - The Dow industrials fell sharply Wednesday, with all of its components losing ground at one point, as a surge in commodities prices, a drop in the U.S. dollar and a large quarterly loss reported by General Motors (nyse: GM - news - people ) all conspired to unnerve investors.

Washington Mutual (nyse: WM - news - people )'s worse-than-expected outlook for the mortgage industry also weighed on sentiment.

The Dow slumped 161 points to 13,500, putting the blue chip barometer on track for its lowest closing price since Sept. 17. That was the day before the Federal Reserve first cut its target for overnight interest rates.

The Dow had been down as much as 172.08 points in intraday trading.

December crude oil prices surged to an all-time high of $98.62 a barrel in intraday trading, and December gold ran up to a high of $848 an ounce. Helping provide a spark for a commodities rally was the slide in the U.S. Dollar Index to an all-time low of 75.075, amid reports that China may be considering adjusting its foreign currency reserve mix to focus on stronger currencies.

Front-month crude has since pared gains, and was up 39 cents at $97.09 a barrel, after government data showed that crude inventories declined less than expected in the latest week.

General Motors shares dropped 3.5% to $34.91 to lead Dow decliners, after the automaker said it recorded a $39 billion loss in the third quarter, to reflect a charge related to a valuation allowance against deferred tax assets.

Washington Mutual told analysts and investors Wednesday that it expects industry-wide mortgage originations to fall to $1.5 trillion in 2008, compared with industry forecasts, as provided by Fannie Mae (nyse: FNM - news - people ), of $2.4 trillion in 2007 and $2 trillion in 2008. WaMu's stock was down 9.2% at $22.01, the lowest price seen since August 2000.

Forex - Dollar at new lows after comments China may diversify reserves

2007-11-07T12:32:00.000-08:00

LONDON (Thomson Financial) - The dollar hit new record lows against the euro and a new 26-year low against the pound, after comments from a Chinese official suggested the country might diversify its reserves away from the dollar.

Cheng Siwei, vice chairman of the National People's Congress, said China should consider shifting its forex reserves to 'stronger' currencies like the euro, but he denied these comments meant China should buy more euros.

'This comment, although more confusing than anything else and only presented by a third-tier Chinese official, caused the dollar to sell-off,' said analysts at BNP Paribas (other-otc: BNPQY.PK - news - people ).

The US currency, more generally weighed on by fears of a US recession, was weak across the board, hitting new all-time lows against the euro and Aussie dollar and multi-decade lows against the Canadian dollar and pound.

The euro briefly tipped over 1.47 usd and looks set for a more permanent break above that level.

'Further gains to 1.50 usd are on the horizon as underlying fundamentals for the dollar continue to weaken,' said BNP Paribas analysts.

The pound meanwhile hit 2.10 usd, a new high since 1981.

The dollar is weakening progressively as bad news about the US economy continues to emerge, including monthly reports on the falling property market and a wave of top-level resignations from US investment banks.

All of this is supporting expectations that US interest rates will drop further while those in other leading economies should stay level for the time being.

The Federal Reserve has cut interest rates by a total of 0.75 percentage points since the falling US housing market sparked turmoil on credit markets over the summer, and is widely expected to reduce borrowing costs again, perhaps in December.

The European Central Bank and the Bank of England, meanwhile, have both held off on rate cuts so far. Both will announce their latest rate decisions tomorrow and neither is widely expected to cut, although speculation is growing that the BoE could surprise markets with a pre-emptive reduction to 5.50 pct from 5.75 pct.

As for the ECB, some strong inflation data in October has raised the possibility the central bank could actually hike interest rates above the current 4.00 pct to dampen price growth.

'There may be a chance that the ECB will increase the interest rate Thursday because of rising inflation,' said Daniel Chan, senior investment strategist at DBS Bank.

Today, focus will be on speeches from Federal Reserve members Lacker, Lockhart, Poole, Mishkin and Warsh for further signals on the health of the US economy.

London 0941 GMT Hong Kong 0500 GMT

US dollar

yen 113.56 down from 114.10

sfr 1.1323 down from 1.1372

Euro

usd 1.4686 up from 1.4634

yen 166.80 down from 167.07

sfr 1.6634 down from 1.6649

stg 0.6987 down from 0.6990

Sterling

usd 2.1010 up from 2.0836

yen 238.67 down from 238.97

sfr 2.3802 down from 2.3812

Australian dollar

usd 0.9383 up from 0.9367

stg 0.4462 down from 0.4474

yen 106.51 down from 106.93

Commodities sink Sara Lee 1Q profits

2007-11-07T12:22:00.001-08:00

DOWNERS GROVE, Ill. (AP) - Food maker Sara Lee Corp. (NYSE:SLE) said Wednesday its fiscal first-quarter profit dropped 40 percent due to higher commodity costs and an increase in marketing and advertising spending.

For the quarter ending Sept. 29, net income fell to $200 million, or 28 cents per share, from $333 million, or 44 cents per share in the prior year quarter.

Analysts polled by Thomson Financial expected earnings per share of 27 cents.

The company said its profit was hurt by 'a very challenging input cost environment' as prices rose for commodities such as wheat, poultry, pork and green coffee.

Higher marketing and advertising spending also impacted profit, the company said.

Discontinued operations also added 10 cents per share to the year-ago quarter's results.

Revenue at the company -- which is in the midst of a restructuring meant to boost sales -- rose 8 percent to $3.13 billion, from $2.89 billion in the first quarter of 2007. Analysts predicted revenue of $3.12 billion.

Sales in the company's international beverage division jumped 25 percent. Household and body care sales, meanwhile, rose 12 percent in the quarter.

Forex - Euro hits new high above 1.47 usd as dollar's relentless falls continue

2007-11-07T11:45:00.000-08:00

LONDON, Nov. 7, 2007 (Thomson Financial delivered by Newstex) -- The euro hit fresh record highs of 1.4929 against the dollar as the US unit's relentless falls continued, taking major currencies surging past levels which only a few months ago would have seemed astonishing.

Today's trigger came from China, where a key official warned that the Asian giant may well diversify its reserves away from the dollar.

'Almost one month to the day after Chinese officials addressed the option of destabilizing the already beleaguered US dollar by selling some of its reserves, a vice chairman of the Chinese People's Political and Consultative Conference, parliament's top advisory body, said China should diversify its 1.43 trln usd in currency reserves by buying more strong currencies such as the euro,' observed Ashraf Laidi at CMC Markets.

The news sent an already weak dollar tumbling across the board, taking the euro above 1.47 usd and the pound over 2.10 usd. The euro's rise also marks a key event -- at current levels the euro is now higher against the dollar than the Deutschmark ever was.

While the Chinese official in question, Cheng Siwei, went on to add: 'I didn't mean we should buy more euros', the hapless dollar could not make any significant comeback.

Furthermore, the dollar is not expected to recover any time soon, given the ongoing credit market concerns and the fairly dismal outlook for the US economy.

The dollar's weakness has also been further exacerbated by sharp rises in commodities, with global investors piling into safe-haven gold for protection against the falling US currency.

'The current macro environment does not bode well for the US dollar. With commodity prices remaining strong, and uncertainty regarding the US economy high, we see no scope for the dollar to appreciate at present,' said Manuel Oliveri at UBS. (NYSE:UBS)

Oil prices have also smashed through record highs this morning and commodity currencies have proved the most significant gainers against the dollar as a result.

The Canadian dollar has risen by well over 1 pct against its US counterpart to hit another multi-decade high of 0.9056 per usd, while the Australian dollar -- which gained an additional boost from the Reserve Bank of Australia's rate hike overnight -- has come very close to the 0.94 usd mark.

'When the value of the world's foremost reserve currency is falling just as fast as the oil price is rising, what better choice is there than the currencies of gold and commodity producers, whose values are also being underpinned by central banks pursuing fairly aggressive monetary policies?,' said Neil Mellor at the Bank of New York Mellon. (NYSE:BK)

London 1305 GMT London 0941 GMT

US dollar
yen 112.81 down from 113.56
sfr 1.1262 down from 1.1323

Euro
usd 1.4721 up from 1.4686
yen 166.09 down from 166.80
sfr 1.6585 down from 1.6634
stg 0.6997 up from 0.6987

Sterling
usd 2.1037 up from 2.1010
yen 237.40 down from 238.67
sfr 2.3700 down from 2.3802

Australian dollar
usd 0.9377 down from 0.9383
stg 0.4456 down from 0.4462
yen 105.76 down from 106.51

Forex - Dollar continues to lose ground

2007-11-06T12:32:00.000-08:00

LONDON, Nov. 6, 2007 (Thomson Financial delivered by Newstex) -- The dollar's woes continued today, with concerns about the financial sector denting sentiment.

The high profile write-down, to the tune of 8-11 bln usd, at US financial giant Citigroup (NYSE:C) over the weekend had left markets nervous about just how entrenched the current financial crisis is. Many expect more bad news from other financial entities.

Against this backdrop, the euro rose to a fresh record high of 1.4569 usd while the pound flirted briefly with the 2.09 usd level.

'It sounds like we are only scratching the surface with this sub-prime debt,' said Mic Mills, a trader at TradIndex.com.

This is leading to intensified speculation that the Federal Reserve will cut interest rates again in December, he said.

Meanwhile, the market continues to stick to the 'decoupling' theme -- that the crisis will be largely contained to the US, while economies in the rest of the world emerge relatively unscathed.

'The dollar is under pressure from US equities underperforming their European counterparts ... global investors continue to invest heavily in Europe, while pulling out of US markets,' said Manuel Oliveri at UBS. (NYSE:UBS)

That aside, the euro also got a mild boost from the final estimate to the euro zone services PMI index this morning, which showed an upward revision to 55.8 in October from the provisional estimate of 55.6, a sizeable rise from 54.2 in September.

Meanwhile, although euro zone retail sales numbers came in below forecasts, higher-than-expected PPI data meant that the European Central Bank is likely to continue its hawkish stance on interest rates on the grounds of rising inflationary pressure.

Elsewhere, the Swiss franc rose to its highest level against the dollar since early 2005, boosted by news that the OECD has raised its forecast for Swiss growth, commenting that the Swiss National Bank may have to raise interest rates again.

The Australian and New Zealand dollars also saw significant gains on the back of sharp rises in commodity prices, while further increases in oil prices took the Canadian dollar to yet another multi-year high of 0.9234 per US dollar.

The Australian dollar is also benefiting from expectations that the Reserve Bank of Australia will raise interest rates by 25 basis points when it announces its decision later tonight.

Later today, attention will focus on a speech scheduled for this evening by US Federal Reserve chairman Ben Bernanke.

London 1652 GMT London 1252 GMT
US dollar
yen 114.40 down from 114.72
sfr 1.1450 down from 1.1453

Euro
usd 1.4555 up from 1.4541
stg 0.6977 up from 0.6966
yen 166.50 down from 166.81
sfr 1.6665 up from 1.6655
Sterling
usd 2.0850 down from 2.0867
yen 238.66 down from 239.41
sfr 2.3880 down from 2.3902
Australian dollar
usd 0.9256 unchanged 0.9256
stg 0.4436 up from 0.4435
yen 105.88 down from 106.18

Consumer discretionary stocks are set up to fall much further

2007-11-06T12:28:00.001-08:00

NEW YORK, Nov. 6, 2007 (Thomson Financial delivered by Newstex) -- The relative resilience of consumer discretionary stocks over the last few weeks given anemic economic and earnings news has surprised some in the market, leading to speculation that the sector may be due for a lot more pain.

With about 78% of Standard & Poor's (NYSE:MHP) 500 Index companies having reported quarterly results as of Friday, the financial companies within the index have fared the worst, showing an aggregate 16% year-over-year decline in earnings, according to Thomson Proprietary Research, amid high-profile writedowns of subprime mortgage debt. But the consumer discretionary sector is a very close second, with an aggregate decline of 15%, Thomson research noted.

While shares of both sectors have underperformed the broader market, the financial sector has fared much worse. Since the third-quarter earnings season kicked off on Oct. 9, the Consumer Discretionary SPDR ETF (XLY) has dropped about 7%, versus a 4% drop in the S&P 500. During the same period, the Financial Select Sector SPDR ETF (XLF) declined 12.6%.

Since the beginning of the year, the consumer discretionary ETF has lost 8.2% and the financial sector ETF has dropped 15%, while the S&P 500 rose 5.9%.

One reason that the financials have taken a greater hit in the third quarter, according to Keith Lerner, market strategist at SunTrust Robinson Humphrey, is the 'complexity and opaqueness' of the balance sheets of many financial institutions, which has increased investor fears that bad debt write-offs may continue.

The sharper swing in earnings expectations for financials may have also played a role. Back on July 1, earnings for the third-quarter were projected to grow 9% for financials and 3% for consumer discretionary, according to Thomson Proprietary Research's The Director's Report.

During the current quarter, as many as 39% of the 87 companies in the financial sector reported earnings below analyst expectations as of last Friday. The financial sector has recorded 'the largest percentage of companies missing estimates to date,' according to John Butters, director of earnings for Thomson Financial.

In contrast, Butters noted the 'substantial impact' homebuilders have had on the consumer discretionary sector. If you take out the five companies in this industry from the S&P 500, earnings for the consumer discretionary sector would have grown 7%.

The big question is if U.S. consumers can remain resilient and consumer discretionary stocks can be supported during the upcoming holiday season. The National Retail Federation has recently forecast a 'somewhat challenging holiday season' for retailers. With the weak housing market and credit crunch, as well as oil approaching $100 a barrel, consumers will be forced to be more prudent with their spending.

Goldman Sachs (NYSE:GS) analyst David Kostin said from a valuation perspective, consumer discretionary stocks are already looking overvalued relative to the S&P 500 on a variety of metrics. 'With exactly eight weeks remaining in the marathon year 2007 we advocate reducing yet again consumer discretionary holdings,' Kostin said.

Potential downward revisions to earnings estimates are other worrying signals. Analysts are currently forecasting earnings growth of 26% for the consumer discretionary sector for 2008, the highest of all 10 sectors of the S&P 500, according to The Director's Report.

But Merrill Lynch (NYSE:MER) (OOTC:MERIZ) strategists noted last week that current earnings expectations for the sector appear to be another set of data that 'rely on assumptions about the health of the U.S. consumer sector' and therefore look 'overly optimistic' because of the ongoing problems in housing and credit markets.

If there is a day of reckoning, how far can consumer discretionary stocks fall?
Michael Krestell, analyst at M Partners in Toronto, said the sector is poised for a 15% to 25% decline.

'The U.S. consumer faces a growing mountain of challenges throughout the end of this year and into 2008,' he wrote to clients in a note last Wednesday. 'The list of negative results and expectations seems to grow each day.'

CORRECTED - FOREX-Dollar hits record low vs euro on rate-cut fears

2007-11-06T12:12:00.000-08:00

NEW YORK, Nov 6 (Reuters) - The dollar fell to all-time lows against the euro and a basket of major currencies on Tuesday as investors feared the fallout from the credit turmoil was far from over and the Fed will have to cut interest rates some more.

Analysts said Citigroup Inc's (C.N: Quote, Profile, Research) announcement on Sunday of a potential $11 billion write-off in subprime mortgage losses had led many to believe that the worst from the housing market's slump was still to come.

The credit crisis, stemming from U.S. home loans to people with poor credit histories, which were packaged and sold to investors around the globe, has caused liquidity problems and contributed to negative sentiment toward the dollar.

With the tightening of lending standards, companies and individuals are finding it difficult to borrow, a fact that analysts said could crimp U.S. economic growth.

"Throughout the banking system, there is a real belief that a lot of U.S. banks haven't come clean yet on what their exposures are to this subprime fallout and as a result, the view is that the Fed will have to cut rates again at the December meeting," said Greg Salvaggio, senior currency trader at Tempus Consulting in Washington.

Those expectations of further monetary easing in the United States have seen investors focusing on the yield play, driving the euro to successive record peaks against the dollar.

The euro rose as high as $1.4571 , according to Reuters data, its highest level since its 1999 launch. It was last trading at $1.4557, up 0.7 percent on the day.

The dollar index, which tracks the greenback's performance against a basket of six major currencies, dipped to 75.986, the lowest in its more than 30-year history. The index (.DXY: Quote, Profile, Research) was last trading at 76.028, down 0.5 percent on the session.

EURO EYES $1.50

"There is certainly no change in the dollar's weak trend," said Steven Butler, director of foreign-exchange trading at Scotia Capital in Toronto. "It looks like $1.50 is the next target for euro/dollar. It may take a long time to get there, but I see no major hurdles for the euro to get to $1.50."

In contrast to the Fed, which has slashed the fed funds rate target by 75 basis points in the past two months, the European Central Bank (ECB) has kept up hawkish rhetoric due to concerns about inflationary pressures.

Interest-rate futures are pricing in a roughly 64 percent chance of a quarter-point cut in the overnight benchmark lending rate to 4.25 percent at the December policy meeting.

Analysts said while the ECB was expected to hold interest rates at 4 percent on Thursday, it was likely to stress its vigilance on inflation, setting the tone for future monetary policy tightening.

"With that as a backdrop, the market will target higher eurozone interest rates and lower U.S. interest rates. We will continue to see the flow of capital moving to the eurozone," said Salvaggio of Tempus.

The dollar gave up gains versus the yen as U.S. stocks turned lower. The yen has become a barometer of risk appetite, with its moves strongly correlated to global stock markets.

Lower U.S. stocks encouraged investors to exit some risky carry trade bets funded by cheap borrowing in the Japanese currency. The dollar last traded down 0.05 percent at 114.38 yen after rising to 114.79 earlier.

But the yen eased against the euro. The euro added 0.6 percent to 166.50 yen . An index gauging Japan's economic outlook fell below a key threshold for the second straight month in September and hit a decade low of zero.

The Australian dollar rose ahead of the Reserve Bank of Australia's interest-rate decision on Wednesday, gaining 0.7 percent against the dollar to US$0.9262 , near a 23-year peak around $0.9345 hit last week.

U.S. Stocks Advance, Led by Commodities Producers; Exxon Gains

2007-11-06T11:41:00.000-08:00

Nov. 6 (Bloomberg) -- U.S. stocks rose the most in four days, led by producers of commodities, after oil climbed to a record and gold advanced to a 27-year high.

Exxon Mobil Corp., the largest U.S. oil company, led energy shares to the biggest gain in seven weeks. Newmont Mining Corp., the world's second-largest gold producer, rallied to the highest since July 2006. Goldman Sachs Group Inc. helped spark a rebound in financial stocks after the biggest securities firm denied speculation it was preparing to announce a large writedown.

The Standard & Poor's 500 Index added 7.68, or 0.5 percent, to 1,509.85 at 2:23 p.m. in New York. The Dow Jones Industrial Average increased 50.48, or 0.4 percent, to 13,593.88. The Nasdaq Composite Index rose 4.59, or 0.2 percent, to 2,799.77. About four stocks gained for every three that fell on the New York Stock Exchange. Benchmark indexes in Asia and Europe also climbed.

``Materials are feeding the global boom,'' said Michael Williams, who helps oversee $2.8 billion as managing director of Genesis Partners in New York. As for financial stocks, ``they're coiled like a spring, and people don't recognize their power and the short-term nature of the writedowns.''

Today's gains were led by this year's best performing industries. Energy companies in the S&P 500 have rallied 29 percent since December, the top advance among 10 groups, as oil prices climb toward $100 a barrel. Producers of raw materials have added 23 percent as an expanding global economy boosts demand.

Energy Rally

Exxon gained $2.20 to $89.86. Chevron Corp., the second- biggest U.S. oil company, added $1.95 to $90.43.

Crude oil rose to a record above $97 a barrel in New York as a storm forecast to produce 36-foot waves in the North Sea forced BP Plc and ConocoPhillips to evacuate workers and cut production.

Newmont added $1.84 to $54.18. Freeport-McMoRan Copper & Gold Inc., the world's second-biggest copper miner, gained $1.82 to $111.99.

Gold futures for December delivery rose $14.40, or 1.8 percent, to $825.20 an ounce as record oil prices and a slumping dollar increased concern that inflation will accelerate. Copper also rose, halting a six-session decline, on speculation the dollar's slump will boost demand from buyers holding other currencies.

The S&P 500 Financials Index reversed a loss and rose 0.8 percent after Goldman denied market speculation that the most- profitable securities firm was preparing to announce a large writedown.

`No Truth'

``The rumors seem to be getting more fanciful by the minute,'' said Lucas van Praag, a spokesman at Goldman in New York. ``We said there was no truth to them last week and the situation has not changed.''

Goldman, which had dropped 12 percent in the past three trading sessions, gained $3.60 to $221.99. JPMorgan Chase & Co., the third-biggest U.S. bank by assets, added $1.17 to $43.94. Bank of America Corp., the second largest, climbed 91 cents to $45.36.

MasterCard Inc. advanced $15.47 to $201.40. Deutsche Bank Securities raised its recommendation on the second-biggest payment-card network to ``buy'' from ``hold,'' increased its price estimate for the stock by 88 percent to $250 and lifted its revenue and earnings forecasts for 2007.

Financial companies in the S&P 500 have dropped 12 percent as a group in the past month as firms announced writedowns on their holdings of mortgage securities and corporate loans, and investors speculated more losses lie ahead.

Google Inc. helped push computer-related stocks higher. The owner of the world's most popular search engine increased $9.77 to $735.42 after Sanford C. Bernstein & Co. lifted its 12-month share-price forecast to $850 from $720, saying Google's expansion into mobile-phone software and Internet video will improve revenue and earnings.

Tech Earnings

Research In Motion, maker of the BlackBerry e-mail phone, added $2.78 to $130.75. Credit Suisse Group upgraded the company to ``outperform'' and said the shares may reach $160 in the next 12 months. Annual profits may increase at a 40 percent pace in the next three to five years, boosted by higher demand from international markets, analysts including Michael Ounjian said.

Earnings at technology companies in the S&P 500 may climb 10.3 percent this year and 24 percent next year, according to the average of analysts' estimates compiled by Bloomberg on Nov. 2. The 2008 profit growth estimate is the highest among 10 industry groups.

Emerson Electric Co. led a 0.4 percent advance in the S&P 500 Industrials Index after the world's largest maker of power equipment for oil companies said fourth-quarter earnings rose 18 percent on sales of products used to automate plants and refineries. Emerson also raised its quarterly dividend by 14 percent. The stock gained $2.66 to $54.19.

Archer Daniels Midland Co. climbed $2.35 to $36.87. The world's largest grain processor said first-quarter profit rose 9.4 percent as increased sales of wheat, corn and soybeans more than made up for declines in ethanol prices.

The Morgan Stanley Capital International Asia Pacific Index added 0.6 percent, while Europe's Dow Jones Stoxx 600 Index increased 0.4 percent.

Commodities, results seen boosting Toronto stocks

2007-11-06T11:16:00.000-08:00

TORONTO, Nov 6 (Reuters) - The Toronto Stock Exchange's main index was seen rebounding from recent losses on Tuesday, as robust commodity prices buoy the resource-heavy market, while investors keep an eye on a string of corporate results.

But analysts warned U.S. lending worries may have left investors jittery.

"Clearly credit developments remain the key focus. The market will continue to key off that in the short-term, but we will probably see a bounce at the open this morning," said Fergal Smith at Action Economics.

The Toronto Stock Exchange's S&P/TSX composite index (.GSPTSE: Quote, Profile, Research) begins the day at 14,273.37 after dropping more than 90 points in the previous session amid fallout from the U.S. subprime crisis.

However, firmer resource prices could return the market to positive territory after three days of losses.

U.S. crude oil was up 2.4 percent at $96.20 a barrel on winter supply concerns and a weak U.S. dollar.

Gold also surged to a 28-year high of $820.15 an ounce amid the falling U.S. dollar and rising oil prices.

"I think we will open strongly supported by the resource stocks," Smith said. "Crude futures are off to the races and gold has had a big spike overnight."

Investors will peruse a ream of corporate results.

Nortel Networks Corp (NT.TO: Quote, Profile, Research)(NT.N: Quote, Profile, Research) reported a third-quarter profit on Tuesday but fell short of revenue expectations, as trouble fulfilling certain orders forced it to defer revenue.

Rona Inc (RON.TO: Quote, Profile, Research) reported a 6-percent increase in third-quarter profit, helped by acquisitions and efficiency gains.

Magna International (MGa.TO: Quote, Profile, Research) reported a higher third-quarter profit as sales rose. Profit rose to $155 million, or $1.38 a share, from $94 million, or 86 cents a share, a year earlier. ($1=$0.93 Canadian)

Forex - US dollar weaker against major currencies after gaining ground overnight

2007-11-05T23:52:00.000-08:00

SYDNEY (Thomson Financial) - The US dollar was slightly weaker against most major currencies in midmorning trade Tuesday after recovering some ground overnight as better-than-expected growth in the services sector increased support for the greenback.

''The market positioning feels as if it's still very short on the US dollar so it doesn't take too much for some of those positions to be pared back,'' said Tony Morriss, senior currency strategist at ANZ Markets.

After skidding to record lows against the euro and multi-year lows against the sterling last week, the dollar edged higher in New York trading Monday after the Institute for Supply Management's index gauging the health of non-manufacturing industries in the United States rose to 55.8 in October from 54.8 in September.

The result was stronger than the 54 reading economists had expected. A reading above 50

indicates expansion, while below 50 shows contraction.

The dollar found new friends even though Wall Street fell further on concerns about the

weakening housing market and fears of more credit-related writedowns by investment banks.

At 10.30 am (2330 GMT), one US dollar was buying 114.435 yen compared with 114.48 yen in late New York trade. The euro was up at 1.4473 dollars from 1.4466 dollars, below its all-time high of 1.4528 dollars set last week.

Elsewhere, the sterling was buying 2.0812 dollars after closing around 2.0802 dollars overnight.

Traders are betting on a 25 basis point increase in the Australian target cash rate to 6.75

percent when the central bank announces the outcome of its policy meeting Wednesday morning.

With an increase already priced into the local currency, traders will be looking for clues about the Reserve Bank of Australia's thoughts on the domestic economy.

''With a 25 basis point interest rate hike by the RBA on Wednesday morning considered a fait accompli the Australian dollar's immediate response will be conditioned on the hawkishness of the accompanying statement,'' said John Kyriakopoulos, head of currency strategy at National Australia Bank (nyse: NAB - news - people ).

''If the Reserve is ambiguous on future intent then the Australian/US dollar will be lower.''

Sydney 10.30 am (2330 GMT)

US dollar

114.435 yen

1.1533 sfr

Euro

1.4473 usd

165.625 yen

1.6692 sfr

0.6955 stg

Sterling

2.0812 usd

238.161 yen

2.39985 sfr

Australian dollar

0.9218 usd

0.4424 stg

105.475 yen

New Zealand dollar

0.7716 usd

How Smart Investors Crack Commodities Markets

2007-11-05T12:38:00.001-08:00

Oil is marching toward $100 a barrel, largely due to China's boom. Demand for ethanol is pushing corn prices up. Soybean prices are rising because so many bean fields have been switched to corn. In short, prices of commodities worldwide are soaring, making for frenzied action in commodities futures markets, where traders buy and sell contracts setting prices to be paid months down the road.

Everyone knows that supply and demand govern prices. But much remains unclear about the subtleties of that interaction in the commodities markets--and about the best ways to wring profits from it. "Commodities futures are an asset class that has been under-researched compared to equities in particular," says Wharton finance professor Gary B. Gorton.

New work by Gorton, Fumio Hayashi of the University of Tokyo and K. Geert Rouwenhorst of Yale, shows how investors can win bigger profits with futures-trading strategies based on the amount of a given commodity that is held in storage. Returns--or "risk premiums"--are bigger when low inventories make prices more volatile, Gorton and his colleagues conclude.

Over the period studied, 1990 through 2006, a trading strategy focusing on low-inventory commodities would have produced average annual returns of 13.34%, compared to 4.62% for a high-inventory strategy, and about 9% for an approach that did not take inventory levels into account. "What we show is that you get paid more if the risk is higher," Gorton says.

Most important, the research shows how to gauge hard-to-measure inventory levels by looking at the relationship between prices on the futures market and the spot, or cash, market where commodities are bought for immediate delivery. When the spot price rises more than the futures price, traders can infer that the inventory level has fallen--and that the opportunities to earn outsized profits are especially good. The findings, which could be especially useful to institutional investors and commodities trading advisers (CTAs), are described in a paper titled, "The Fundamentals of Commodity Futures Returns."

The new paper follows on Gorton and Rouwenhorst's earlier work, which found that, over long periods, commodity returns are as high as those of stocks, while experts had long thought them to be lower. That work, described in a paper titled "Facts and Fantasies about Commodities Futures," also concluded, surprisingly, that commodities are not as risky as stocks. "Part of what we're doing is trying to understand the determinant of those returns," Gorton says about the follow-up study. "We get much more specific ... [to] see if we can explain what moves that risk premium around through time and on individual commodities."

Insurance Against Price Declines
The work comes as commodities markets are booming. Rapid economic growth in China, India and other countries has spurred demand for oil, metals and many other commodities, as has use of grain for ethanol, a gasoline alternative. The action has attracted more investors. New commodities exchanges are being established and older ones are expanding and converting to for-profit models searching for new products to trade, such as futures contracts.

Heavy demand means that many commodity inventories are especially low. That makes prices more volatile because commodities buyers are less certain of future supplies.

Commodities producers are thus drawn to the futures markets, which provide insurance against price declines by locking in tomorrow's prices today. Investors are eager to earn the premiums that come from providing that insurance through futures contracts. As a result of all this, futures contracts have become more liquid, or easy to trade, Gorton says. "The whole futures industry is expanding by an amazing amount."

A futures contract is an agreement for the seller to deliver a specified quantity of a commodity on a certain date for a price agreed upon in the present. Once created, a standardized contract can be traded in the secondary market. In practice, only about 2% of contracts are used to effect an actual delivery of the commodity. In most cases, the parties simply buy or sell other contracts to offset the obligations incurred earlier. Their profits or losses are determined by the differences in prices between the two contracts.

A corn futures contract traded at the Chicago Board of Trade, for example, provides for delivery of 5,000 bushels of corn. Recently, contracts for delivery in March 2008 traded at a price of about $3.90 per bushel. The holder of the contract, therefore, is obligated to pay $19,500 to buy 5,000 bushels next March.

A producer, such as a corn farmer, might write, or sell, such a contract to lock in a price for a sale at a later date. That way, the farmer is insured against the risk that the market, or spot, price falls. On the other side of the deal, the investor or speculator is providing the insurance and hopes the price will rise.

If the price next March is $4 a bushel, the investor will make 10 cents a bushel, or $500 per contract, using the contract to buy--for $3.90--corn that can be sold for $4. The farmer would, in effect, have paid, or given up, 10 cents a bushel to avoid the risk of getting less than $3.90. If the price falls to $3.80, the contract holder would lose 10 cents a bushel, or $500 per contract, and the farmer would avoid a $500 loss.

In their earlier work, Gorton and Rouwenhorst looked at 36 commodity futures markets over 45 years. They found that, on an annualized basis, futures contracts underestimated future spot prices by 5%, offering a healthy return for futures investors.

The new work looks at the key role played by inventories--commodities stored for future sale. Inventories serve as buffers against fluctuations in supply, and the Theory of Storage says that when inventories are low, spot prices are more volatile, since commodity buyers cannot be certain of sufficient supplies.

Futures markets provide insurance against future price volatility. So, when low inventories heighten the risk of price volatility, the cost of this insurance can be expected to rise. That translates into bigger returns for the contract holders who take on these bigger risks.

Predicting Inventory Levels
Gorton and his colleagues used inventory and futures pricing data on 31 commodities to see how two portfolios of futures contracts would have performed from 1969 through 2006. One portfolio was adjusted each month so that it always contained futures contracts for commodities with higher-than-normal inventories. It returned an average of 4.62% a year. The second portfolio, tracking low-inventory commodities, returned 13.34% a year. A third portfolio, a simple index composed of equal amounts of each commodity, returned 8.98% a year.

The low-inventory portfolio was slightly more risky than the simple, equally weighted index, but the extra risk was more than offset by the extra return, Gorton says.

By itself, this finding does not offer a useful trading strategy because inventory data is generally not available quickly enough. So the authors looked at ways to infer inventory levels from the futures- and spot-pricing data. The first approach looks at the "futures basis"--the difference between the spot price one would pay today and futures price one would agree upon today but not pay until later. When inventories fall, the spot price rises because supply is low relative to demand. The futures price rises as well but not so much, because traders believe inventories will gradually be replenished before the contracted delivery dates arrive. As a result, the gap between spot and futures prices widens.

Looking at data for the 31 commodities, the authors found that an above-average basis did indeed coincide with low inventories, and vice versa. "The empirical evidence is consistent with the prediction of the Theory of Storage, and suggests that the basis is a useful indicator of the level of a commodity's inventory," the authors conclude.

Similarly, they found that past returns on futures contracts are a good indicator of present inventory levels. High returns, for example, coincide with reduction in supply, which equates to reduced inventories. Traders, therefore, can use prices to determine when inventories have fallen to levels likely to make futures contracts especially profitable, Gorton and his colleagues note.

The authors created two portfolios to test this. For the first, they ranked commodities according to their futures basis. In this case, that was defined as the difference between the price in the contracts maturing the soonest minus the price in the contracts maturing after that--three months later, for example. The High Basis portfolio contained equal amounts of contracts for commodities in the top half of the rankings, and it was adjusted every month as the rankings changed. The authors found that from 1990 through 2006, this portfolio produced average annual returns of 14.67%, compared to about 9% for an index of futures contracts that did not take bases into account.

For the second portfolio, they ranked commodities according to their futures contract returns for the prior 12 months. The 50% with the highest returns were put into the portfolio and adjusted every month as the rankings changed. For the 1990 to 2006 period, this Relative Strength portfolio would have returned 16.67% a year. While both portfolios were slightly more risky than the index, this was more than compensated for by the outsized returns.

Finally, the authors looked at how their trading strategies would stack up against competition in the real world --the CTAs, which operate investment pools similar to hedge funds. For this they used the High Basis and Relative Strength portfolios, assuming an investor would buy these contracts, or go long. In addition, they assumed the investor would short, or sell, contracts that were in the bottom half of the two rankings. That strategy would profit from the poor performance of the commodities with low basis and poor relative strength. The study also assumed the investor would pay annual fees of 2% of assets, similar to those paid by CTA investors.

From 1990 through 2006, this approach would have returned an average of 10.88% a year, compared to 5.76% for a standard CTA performance index published by Barclay Trading Group. "If you constructed trading strategies based on these signals, you would do rather well," Gorton said. "You would do much better than CTAs."

Bank Indonesia end-Oct forex reserves 54.1 bln usd vs 52.88 bln end-Sept

2007-11-05T11:45:00.001-08:00

JAKARTA (Thomson Financial) - Bank Indonesia, the country's central bank, said Monday its foreign exchange reserves rose to 54.10 billion US dollars as of end-October from 52.88 billion dollars the previous month.

Base money increased to 315.21 trillion rupiah from 300.30 trillion rupiah at end-September, it said.

Money in circulation increased to 196.18 trillion rupiah from 179.29 trillion rupiah, the central bank said.

(1 US dollar = 9,136 rupiah)

India gold seen rising on U.S. credit fears

2007-11-05T11:37:00.000-08:00

By Ruchira Singh

MUMBAI (Reuters) - Indian gold prices are likely to inch higher in the week, when the festive season culminates with Dhanteras and Diwali, on a weak outlook for the U.S. dollar raising the metal's safe haven appeal, analysts said on Monday.

Gold prices were around their year's highs in the local market and analysts said it had the potential to climb even further as global investors could flock to gold fearing the U.S. credit market problems may worsen.

"More than the economic indicators in the U.S., it is the news on the credit market that is affecting gold," said Pranith Tunguri, analyst at Indiabulls Commodities Pvt. Ltd.

The dollar, the big driver for gold along with crude oil, was weighed down by fears of major losses at financial firms from the credit market after Citigroup Inc said on Sunday it may write off more subprime mortgage losses.

"If there is any more negative news on the credit market, investors may sell off equity-based products and that could give impetus to gold," said Alex Mathews, head of research at Geojit Financial Services Ltd.

All three analysts surveyed expected near month gold futures prices to target around 10,300 rupees per 10 grams in the week.

Somnath Dey, head of metals and energy research at Religare Commodities Ltd said India's physical demand could also be fuelling the precious metal.

"Dhanteras is day after tomorrow... it may have been factored in, but it is still supporting gold," said Dey.

Analysts said they would be watching key U.S. economic indicators including non-manufactuing index and trade data, both expected to weaken the dollar.

Plus crude oil inventories in the U.S. would be watched on Wednesday for cues on the oil market that rose to its all-time high last week.

The following are weekly recommendations for the December contract on the Multi Commodity Exchange of India Ltd. in rupees per 10 grams:

Brokerage Recommendation Stop Loss Target

=========================================================================

Religare Buy 10,150-10,170 10,090 10,250, 10,300

Indiabulls Buy around 10,135 10,090 10,260, 10,335

Geojit Buy around 10,138 10,091 10,260, 10,408

* At 5:00 p.m., the December contract on the MCX was trading at 10,183 rupees per 10 grams, down 54 rupees over the previous session.

For a technical look at international spot gold, double click (www.reutersindia.net/gold.htm)

U.S. Stocks Decline, Led by Financials; Citigroup, Merrill Fall

2007-11-05T11:36:00.001-08:00

Nov. 5 (Bloomberg) -- U.S. stocks fell to the lowest in seven weeks after Citigroup Inc. said it will write down as much as an additional $11 billion, heightening concern that financial companies will report more losses tied to subprime home loans.

Citigroup, the largest U.S. bank by assets, tumbled for the fifth straight day after it said the charges will cut profit by as much as $7 billion. Morgan Stanley, Merrill Lynch & Co. and Goldman Sachs Group Inc. also dropped on speculation securities firms face more writedowns on top of the $40 billion announced in the past four months. Home Depot Inc. and Lowe's Cos. led a gauge of retailers to the lowest in a year after Deutsche Bank Securities said the housing slump will hurt profits through 2008.

The Standard & Poor's 500 Index slid 14.34, or 1 percent, to 1,495.31 at 2:10 p.m. in New York. The Dow Jones Industrial Average lost 113.48, or 0.8 percent, to 13,481.62. The Nasdaq Composite Index decreased 26.37, or 0.9 percent, to 2,784.01. More than nine stocks dropped for every two that rose. Financial firms also led benchmark indexes lower in Europe and Asia.

Citigroup's report ``typifies the market's anxiety,'' said Douglas Ciocca, who helps oversee $1.4 billion as a portfolio manager at Renaissance Financial Corp. in Leawood, Kansas. ``The bad stuff in any market environment is typically easier to believe, and there's plenty of that for people to sink their teeth into right now.''

Credit-market losses dragged financial companies to their worst quarterly earnings decline since Bloomberg began tracking the data in 1997. Members of the S&P 500 Financials Index that have released third-quarter results so far have reported an average profit drop of 22 percent, the biggest among 10 industries, and analysts expect a 4 percent decrease this quarter, according to Bloomberg data.

Global Drop

Global stocks also fell today after Pakistan's president imposed emergency rule and suspended the country's constitution.

Citigroup retreated $2.40, or 6.4 percent, to $35.33, its lowest price since March 2003. Chief Executive Charles O. ``Chuck'' Prince stepped down after credit-market losses contributed to a 32 percent decline in Citigroup's shares this year. The company had its credit rating cut by Fitch Ratings and placed on review for possible downgrade by S&P. Citigroup also reduced its third-quarter earnings per share by 3 cents after correcting the value of some securities backed by pools of bonds.

Morgan Stanley, Merrill

Morgan Stanley dropped $4.40 to $54.50. The second-biggest U.S. securities firm by market value will have a $3 billion writedown tied to securities, CNBC reported, citing unidentified ``sources.'' The company is ``eyeballing'' that amount right now, CNBC on-air editor Charles Gasparino reported. Morgan Stanley spokesman Mark Lake declined to comment.

Merrill, the world's biggest brokerage, lost $2.42 to $54.86. Lehman Brothers analysts cut their recommendation on the shares to ``equal weight'' from ``overweight,'' saying the company may face further writedowns related to debt securities.

Goldman, the biggest securities firm by market value, dropped $13.32 to $216.28.

Federal Reserve Governor Randall Kroszner said conditions for subprime-mortgage borrowers may get worse because house prices will probably stay ``sluggish'' into next year, according to the text of his speech today in Arlington, Virginia.

The S&P 500 Financials Index, which has lost 16 percent this year for the worst performance among 10 industries, fell 2.4 percent today and contributed the most to the overall index's loss. Financial companies account for about 18 percent of the S&P 500's value, according to Bloomberg data.

``There's a bit more uncertainty out there and it's bringing down the financial sector,'' said Giri Cherukuri, who helps oversee $1.2 billion as a portfolio manager at Oakbrook Investments LLC in Lisle, Illinois. ``There's more bad news to come.''

Retailers Decline

Home Depot and Lowe's, the two biggest U.S. home-improvement chains, led a drop in retailers after Deutsche Bank downgraded the shares and lowered its profit estimates for this year and next because of the housing slump.

Home Depot dropped 72 cents to $29.68. Lowe's declined 86 cents to $25.14. A gauge of retailers in the S&P 500 dropped 2.4 percent.

``These credit concerns will continue to hit certainly the financial area, the homebuilding area and more broadly the consumer,'' said Robert Doll, who helps manage about $1.3 trillion as chief investment officer of global equities at BlackRock Inc. in Princeton, New Jersey. ``Our guess is that it does slow the U.S. economy and the global economy to some degree.''

$250 Billion

U.S. mortgage losses will be as much as $250 billion over the next five years, according to bond analysts at Lehman Brothers. Commercial banks, government-chartered firms Fannie Mae and Freddie Mac, and mortgage and bond insurers would be affected the most by losses, which will be about $50 billion in 2008, analysts led by Jack Malvey wrote today.

Fannie Mae slipped 82 cents to $51.79. Freddie Mac lost $1.15 to $47.18. Bank of America Corp., the second-largest U.S. bank by assets, declined $1 to $44.11. MBIA Inc., the biggest bond insurer, retreated $1.95 to $33.56.

Europe's Dow Jones Stoxx 600 Index dropped 0.7 percent and the Morgan Stanley Capital International Asia Pacific Index retreated 1.8 percent. Hong Kong's Hang Seng Index, which has risen 45 percent this year, dropped 5 percent today.

Pervez Musharraf, the president of Pakistan, suspended the constitution on Nov. 3 for the second time since he took power in a 1999 military coup, saying judicial interference in government affairs had helped terrorism and extremism peak throughout the country. Pakistan's stocks fell the most since June 2006.

ISM Report

The Institute for Supply Management's index of non- manufacturing businesses, which make up almost 90 percent of the economy, rose to 55.8 in October from 54.8 the previous month. Anything greater than 50 indicates growth. Economists in a Bloomberg survey had forecast a drop to 54.

Entergy Corp. led a 0.4 percent advance in the S&P 500 Utilities Index, the only gain among 10 industries, after saying it plans to spin off more than half of its nuclear reactors to capture the full value of the assets. Entergy, the second-largest U.S. operator of nuclear power plants, gained $4.32 to $123.01.

Google Inc. climbed $5.18 to $716.43. The owner of the world's most-popular Internet search engine said it plans to create a mobile-phone operating system and work with 33 companies to build applications that could change how consumers find stores and download files from the Web while on the go.

AIG, IAC/Interactive

American International Group Inc., the world's biggest insurer, increased 11 cents to $59.23. Former Chairman and Chief Executive Officer Maurice ``Hank'' Greenberg said he wants to shake up management and explore asset sales. Greenberg still controls more than 11 percent of AIG shares through two private firms and personal holdings.

IAC/InterActiveCorp added $1.66, or 5.6 percent, to $31.28 for the biggest gain since August 2006. The owner of Ticketmaster and the HSN home-shopping network will split into five publicly traded companies, dismantling a media and Internet company Barry Diller spent more than a decade assembling.

Indexes Battle Back In Early Trading

2007-11-05T11:34:00.001-08:00

Stocks remained lower, but continued to improve from sharp losses.

At 10:58 a.m. ET, the Nasdaq was down 0.2% as it fought back from a 1.3% deficit. The Dow and S&P 500 both gave up 0.4%. Volume was tracking lower on both exchanges.

Stifel Financial SF gapped and tumbled 3.60, or 7%, to 49.72. That put shares below its 200-day moving average. The investment banker reported Q3 earnings of 80 cents a share, missing views by 13 cents.

Recent IPO VMware VMW lost ground for the third straight session. Shares gapped down, losing 4.57 to 112.54 in brisk turnover. The maker of virtualization software is still up more than 50% since breaking out of a short high tight flag.

Flotek Industries FTK dropped 2.98, or 8%, to 35.75 in brisk trading. Last week, the drilling equipment maker reported Q3 earnings below views and gave a disappointing outlook.

On the upside, Research In Motion (NASDAQ:RIMM) RIMM added 3.79 to a new peak of 130.74. AmTech Research reiterated its buy rating on the BlackBerry device maker.

Cellcom Israel CEL cleared a 27.06 buy point of a cup-shaped base. Shares gapped up and leapt 1.63 , or 6%, to 24.48 in heaving volume. The provider of voice and data services reports earnings on Thursday. Analysts see profit rising 66% to 48 cents a share.

PharmaNet Development Group PDGI gapped up and rallied 1.16 to 37.46. Last week, the provider of drug development services delivered a 160% surge in Q3 profit, smashing views. Sales grew 20%, the third straight quarter of accelerating growth.

10:15 a.m ET Update: Stocks Open Lower, But Making Comeback

By Vincent Mao

The major stock indexes stumbled at the open, but they have pared a big chunk of losses.

At 10:05 a.m. ET, the Nasdaq lost 0.5%, Dow 0.4% and S&P 500 0.3%.

The ISM services index unexpectedly jumped to 55.8 in October. Economists expected 54. Stocks shook off more losses following the 10 a.m. ET release.

Decliners trounced advancer by more than 4-to-1 on the NYSE and more than 2-to-1 on the Nasdaq.

Some dry-bulk shipping firms were under pressure. TBS International Limited (NASDAQ:TBSI) TBSI 4.70, or 8%, to 55.35.

It reports earnings on Friday. Analysts see profit surging 79% to 77 cents a share.

Diana Shipping DSX dropped 3.36, or 8%, to 39.56. And DryShips (NASDAQ:DRYS) DRYS slumped 6.22, or 5%, to 107.77.

Chinese stocks also took heat. China Mobile Limited CHL shed 10.40, or 10%, to 88.75.

Aluminum Corp. of China ACH dropped 6.19, or 8%, to 61.

On the upside, Google GOOG added 6.66 to 717.91, a new high. It's expected to release an operating system for cell phones.

Tsakos Energy Navigation TNP gapped up and regained its 50-day moving average. Shares climbed 4.30, or 6%, to 70.28. The crude oil shipping firm reported better-than-expected Q3 earnings and announced a 2-for-1 stock split.

9:15 a.m. ET Update: Stocks Headed For Lower Open As Citigroup (NYSE:C) Weighs

By Vincent Mao

Stock futures pointed to a sharply lower open Monday as Citigroup said it sees even bigger writedowns as it CEO departs.

Nasdaq futures lost 21 points vs. fair value, S&P 500 futures gave up 4 points and Dow futures dropped 106 points.

Overseas markets were lower with Asian stocks taking big hits. Hong Kong's Hang Seng index plunged 5%. The Shanghai composite tumbled 2.5%. London's FTSE 100 dropped 1.3% and Germany's Dax fell 0.5%.

The dollar gained ground against the euro and the yen.

Crude oil pulled back from record levels. The December contract fell $1.24 to $94.69 a barrel.

Citigroup C lost 3% in the premarket. Over the weekend, the nation's largest bank said it would take another $8 billion to $10 billion in writedowns in mortgage securities. And it announced the resignation of CEO Charles Prince. The company also lowered its third-quarter earnings by $166 million.

Other financials will be under pressure again. Group mates Merrill Lynch (NYSE:MER) (OOTC:MERIZ) MER, Bear Stearns (NYSE:BSC) BSC and Credit Suisse CS all received downgrades.

Dell DELL fell 2% in premarket trading. The computer maker said it would buy EqualLogic, a provider of network storage solutions, for $1.4 billion in cash.

Force Protection FRPT won a $91 million contract from the U.S. Marine Corp. Shares climbed 3% in preopen trading.

PetroChina PTR surpassed Exxon Mobil's (NYSE:XOM) XOM market value in its debut on the Shanghai Stock Exchange. But U.S. shares — based on Hong Kong shares — are down over 10% in pre-market trading after Bear Stearns cut the oil giant to underperform from sell on valuation.

The ISM services index for Oct. will be out at 10 a.m. Economists expect a dip to 54 from September's 54.8. Readings over 50 indicate growth.

Taiwan end-Oct forex reserves 265.92 bln usd vs 262.94 bln end-Sept

2007-11-05T03:33:00.000-08:00

TAIPEI (XFN-ASIA) - Taiwan's foreign exchange reserves totaled 265.92 bln usd at the end of October, up from the 262.94 bln registered in the preceding month, the central bank said.

As well as income from interest, the increase in the reserves also reflects the appreciation of the euro and other major currencies against the US dollar, it said in a statement.

Foreign exchange reserves denominated in these currencies were therefore worth more in terms of the base currency -- the US dollar.

Forex - Dollar gains vs euro on speculation ECB will keep rates on hold

2007-11-05T02:20:00.000-08:00

HONG KONG, Nov. 5, 2007 (Thomson Financial delivered by Newstex) -- The US dollar gained against the euro in afternoon Asian trade Monday as investors bet the European Central Bank (ECB) will likely keep its key interest rate steady when council members meet this week to decide on monetary policy
'There is significant uncertainty in the market and on the economy that the ECB has to consider, including higher oil prices and a weak financial sector,' said Thomas Lam, treasury economist at United Overseas Bank. 'I don't think the current backdrop warrants a rate hike.'
At 1.00 pm (0500 GMT), the euro was trading at 1.4490 dollars, down from 1.4518 in Sydney this morning. The euro on Friday rose to an all-time high of 1.4527 dollars in New York.

Against the Japanese currency, the dollar was quoted at 114.56 yen, little changed from 114.54 this morning.

The ECB is meeting on November 8 and most economists are expecting European policy makers to keep the benchmark rate at 4 percent.

Some economists expect the ECB to increase the key rate in coming months to curb inflation, which accelerated to 2.8 percent in October from 2.1 percent in September.

'There is a little bit of profit-taking, so the dollar strengthened a bit,' said Tim Concon, research head at ING Financial Markets.

The dollar's gain is expected to be short-lived on growing speculation of another rate cut in the US by the year-end, which would weaken the greenback further.

The Federal Reserve on Oct 31 cuts its key rate by 25 basis points, sending the dollar plunging against other major currencies. It was the Fed's second rate hike this year as policymakers struggled to rescue the troubled financial sector and keep the economy from slipping into a recession.

Aside from falling to record lows against the euro, the dollar also slumped to a 57-year low against the Canadian dollar and a new 26-year low against the sterling last week, as investors switched to higher-yielding currencies.

The euro's recent strength is supported by 'real portfolio flows' such as purchases by other central banks to boost their foreign exchange reserves. Thus, even if the ECB decides to keep its rate unchanged for the rest of the year, the single currency won't suffer a major correction against the dollar.

'It seems that in recent weeks, there appears to be real portfolio flows into the euro zone and these are non-speculative flows. So even if there is a sudden shift in expectations, the euro won't retreat aggressively,' Lam said.

Meanwhile, the yen strengthened against the dollar this morning from 114.85 in New York on Friday, as money flowed back into the Japanese economy.

Citigroup Inc (NYSE:C) , the world's biggest bank, said it expects to make additional writedowns of up to 11 billion US dollars to reflect the declining value of the roughly 55 billion dollars in US subprime-related securities it holds on its books.

The bank said its subprime assets have experienced 'significant declines' in value since September 30, following downgrades by major ratings agencies and other market developments.

The writedowns will shave about 5 to 7 billion dollars off net income, Citigroup said in a statement.

Citigroup made the disclosure a day after it announced the resignation of chief executive Charles Prince. Prince is the second CEO of a major US financial institution to quit in the last week because of massive losses from subprime assets. Merrill Lynch (NYSE:MER) (OOTC:MERIZ) CEO Stanley O'Neal also resigned last week after Merrill disclosed its biggest-ever quarterly loss.

'The yen's movement is consistent with what's happening in the equities market,' said ING's Condon. 'The unwinding of carry trades is the theme today as investors become more risk-averse.'
Under the yen carry trade, investors borrow from Japan, where the 0.5 percent rate is the lowest among developed countries, and invest the proceeds in higher-yielding securities including stocks.

The greenback was buying 93.62 Canadian cents this morning compared with 93.35 cents at the end of last week, off a low of 93.20 cents, its lowest level against the Canadian currency, or ''loonie,'' since the latter was floated in 1950.

Hong Kong 1.00 pm (0500 GMT)
US dollar
114.56 yen
1.1535 sfr
Euro
1.4490 usd
166.05 yen
1.6719 sfr
0.6939 stg
Sterling
2.0878 usd
239.20 yen
2.4086 sfr
Australian dollar
0.9205 usd
0.4407 stg
105.47 yen
New Zealand dollar
0.7640 usd
jun.ebias@thomson.com
Copyright Thomson Financial News Limited 2007. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

Forex - Dollar gains vs euro on speculation ECB will keep rates on hold

2007-11-04T23:00:00.001-08:00

HONG KONG (Thomson Financial) - The US dollar gained against the euro in afternoon Asian trade Monday as investors bet the European Central Bank (ECB) will likely keep its key interest rate steady when council members meet this week to decide on monetary policy

'There is significant uncertainty in the market and on the economy that the ECB has to consider, including higher oil prices and a weak financial sector,' said Thomas Lam, treasury economist at United Overseas Bank (other-otc: UOVEY.PK - news - people ). 'I don't think the current backdrop warrants a rate hike.'

At 1.00 pm (0500 GMT), the euro was trading at 1.4490 dollars, down from 1.4518 in Sydney this morning. The euro on Friday rose to an all-time high of 1.4527 dollars in New York.

Against the Japanese currency, the dollar was quoted at 114.56 yen, little changed from 114.54 this morning.

The ECB is meeting on November 8 and most economists are expecting European policy makers to keep the benchmark rate at 4 percent.

Some economists expect the ECB to increase the key rate in coming months to curb inflation, which accelerated to 2.8 percent in October from 2.1 percent in September.

'There is a little bit of profit-taking, so the dollar strengthened a bit,' said Tim Concon, research head at ING (nyse: IND - news - people ) Financial Markets.

The dollar's gain is expected to be short-lived on growing speculation of another rate cut in the US by the year-end, which would weaken the greenback further.

The Federal Reserve on Oct 31 cuts its key rate by 25 basis points, sending the dollar plunging against other major currencies. It was the Fed's second rate hike this year as policymakers struggled to rescue the troubled financial sector and keep the economy from slipping into a recession.

Aside from falling to record lows against the euro, the dollar also slumped to a 57-year low against the Canadian dollar and a new 26-year low against the sterling last week, as investors switched to higher-yielding currencies.

The euro's recent strength is supported by 'real portfolio flows' such as purchases by other central banks to boost their foreign exchange reserves. Thus, even if the ECB decides to keep its rate unchanged for the rest of the year, the single currency won't suffer a major correction against the dollar.

'It seems that in recent weeks, there appears to be real portfolio flows into the euro zone and these are non-speculative flows. So even if there is a sudden shift in expectations, the euro won't retreat aggressively,' Lam said.

Meanwhile, the yen strengthened against the dollar this morning from 114.85 in New York on Friday, as money flowed back into the Japanese economy.

Citigroup Inc (nyse: C - news - people ), the world's biggest bank, said it expects to make additional writedowns of up to 11 billion US dollars to reflect the declining value of the roughly 55 billion dollars in US subprime-related securities it holds on its books.

The bank said its subprime assets have experienced 'significant declines' in value since September 30, following downgrades by major ratings agencies and other market developments.

The writedowns will shave about 5 to 7 billion dollars off net income, Citigroup said in a statement.

Citigroup made the disclosure a day after it announced the resignation of chief executive Charles Prince. Prince is the second CEO of a major US financial institution to quit in the last week because of massive losses from subprime assets. Merrill Lynch (nyse: MER - news - people ) CEO Stanley (nyse: SXE - news - people ) O'Neal also resigned last week after Merrill disclosed its biggest-ever quarterly loss.

'The yen's movement is consistent with what's happening in the equities market,' said ING's Condon. 'The unwinding of carry trades is the theme today as investors become more risk-averse.'

Under the yen carry trade, investors borrow from Japan, where the 0.5 percent rate is the lowest among developed countries, and invest the proceeds in higher-yielding securities including stocks.

The greenback was buying 93.62 Canadian cents this morning compared with 93.35 cents at the end of last week, off a low of 93.20 cents, its lowest level against the Canadian currency, or ''loonie,'' since the latter was floated in 1950.

Hong Kong 1.00 pm (0500 GMT)

US dollar

114.56 yen

1.1535 sfr

Euro

1.4490 usd

166.05 yen

1.6719 sfr

0.6939 stg

Sterling

2.0878 usd

239.20 yen

2.4086 sfr

Australian dollar

0.9205 usd

0.4407 stg

105.47 yen

New Zealand dollar

0.7640 usd

Forex - US dollar mixed after recovering some ground overnight

2007-11-04T22:46:00.000-08:00

SYDNEY (Thomson Financial) - The US dollar was mixed in midmorning trade Friday after clawing back some of its losses overnight as a string of bad news fuelled credit concerns and triggered a stampede to safer and lower-yielding assets.

Investors aggressively unwound yen-funded carry trades after the Dow Jones Industrial Average plummeted more than 360 points in response to weak economic data, broker downgrades for Bank of America (nyse: BAC - news - people ) and Citigroup (nyse: C - news - people ) and Credit Suisse's 31 percent fall in third-quarter earnings.

The unwinding of yen-funded carry trades weighed on the euro, Australian dollar and Canadian

'loonie', giving some much-needed support to the US dollar which was left friendless after the Federal Reserve cut interest rates on Wednesday.

The Aussie and Canadian dollar were also hurt by a sharp fall in commodity prices.

''Risk appetite plunged along with Wall Street with some of the yen-crosses taking a nasty beating,'' said John Noonan, an analyst at Thomson IFR.

John Kyriakopoulos, head of currency strategy at National Australia Bank (nyse: NAB - news - people ), said the bank's risk-appetite index fell to 59.1 percent - the lowest level in two weeks - from 73.9 percent due to ''vicious carry trade unwinding'.

At 10.30 am (2330 GMT), one dollar was buying 114.465 yen compared with 114.60 yen in late New York trade. The euro was up at 1.4429 dollars from 1.4425 dollars overnight, well below the record high of 1.4508 dollars reached in the previous session.

After falling to a 50-year low of 94.19 Canadian cents in the wake of the US rate cut, the greenback bounced back to 95.20 cents overnight. It was trading at 95.06 cents in Asian trading.

The Australian dollar fell off a cliff Thursday, closing around 91.25 US cents, after piercing 93

cents in the previous session. It was slightly higher at 91.58 cents in midmorning trade.

''The heavy fall in the Aussie/US dollar did some technical damage, but might attract bargain hunters from those who have missed the swift move higher, '' Noonan said.

Investors are now bracing themselves for the release of key nonfarm payrolls later Friday which is now seen more crucial in providing clues about the state of the US economy given the recent spate of poor data.

''We expect that the message on US economic growth from tonight's much anticipated payrolls report will be key to currencies over the next 24 hours. Solid payrolls growth of 100,000-150,000 would likely provide reassurance that the US economy is not headed for a recession,'' Kyriakopoulos said.

Sydney at 10.30 am (2330 GMT)

US dollar

114.465 yen

1.1574 sfr

Euro

1.4429 usd

165.15 yen

1.6701 sfr

0.6945 stg

Sterling

2.078 usd

237.910 yen

2.40565 sfr

Australian dollar

0.9152 usd

0.4403 stg

104.745 yen

New Zealand dollar

0.7594 usd

allison.jackson@thomson.com

aj/ms

bhx/ms

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The Long And Short Of Emerging Markets

2007-11-04T19:48:00.000-08:00

The MSCI Emerging Markets Index has outperformed the S&P 500 by an astonishing 134.46% over the past three years.

Take Hong Kong as an example, which is just a bit behind the mainland in terms of a booming market. The stock market, which hit new highs this Thursday, has risen 11% in the past month for a year-to-date gain of 58%. The currency, pegged to the U.S. dollar, is bumping against its ceiling, which is forcing the de facto central bank to intervene five times on Wednesday alone.

Hong Kong has always been a bit volatile and tied to real estate in particular, but the latest rally does not seem excessive at this point. The benchmark Hang Seng Index is trading at about 22 times next year's earnings, comfortably below the excesses of the tech frenzy of 2000. The stock market itself is a far different beast from those days. Now, Chinese companies make up over half the market capitalization.

In Pictures: 12 Top Chinese Gainers

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Many are divided over whether emerging markets can continue this sort of performance or whether there will be a sharp pullback. Two new ETFs launched this week will allow you to play emerging markets up or down.

WisdomTree launched this week the first exchange-traded fund that tracks an emerging market small-cap index. It has an expense ratio of 0.63%. The ETF is designed to track the WisdomTree Emerging Markets Small-Cap Dividend Index and will be the first ETF to offer pure international exposure to primarily small-cap stocks selected from 19 emerging market nations, including countries in Europe, Asia and Latin America.

Stocks are selected and weighted based on fundamental factors rather than by market cap. The indexes performance over the last few years is close to that of the MSCI Emerging Market index but over a 10-year period, it does quite a bit better. In downturns, DGS is likely to hold up better since there is less concentration in the larger cap companies.

In terms of country exposure, here is how it stacks up right now.

Among the top countries represented: Taiwan (24.21%); South Africa (14.36%), South Korea (12.53%), Thailand (11.66%), Malaysia (9.97%) and Israel (9.48%).

When the iShares MSCI Emerging Market (EEM) was down 4% last Thursday, ProShares launched its new Short ETF (EUM) that moves 100% the inverse of EEM. It was good timing as investors wake up to the fact that emerging markets do not always go up.

It may be a good idea to have a slice of this new ETF to buffer your global ETF portfolio from what seems to be an inevitable pullback. However, the timing of and the allocation to such short ETFs is a tricky manner and it is best to seek professional advice. There are also hedging techniques whereby you can pair this ETF with long positions in specific emerging market country ETFs like China (nyse: FXI - news - people ) and South Korea (amex: EWY - news - people ) or Brazil (amex: EWZ - news - people ). You should be aware of the country distribution within the EEM exchange-traded fund. Currently, the distribution is China, 15.5%, South Korea, 14.9%, Brazil, 12.4%, Taiwan, 9.3% and Russia, 8.9%.

FOREX-Dollar hits record low ahead of Fed rate decision

2007-11-04T19:40:00.000-08:00

(Updates with dollar at record low vs euro, currency index)

NEW YORK, Oct 31 (Reuters) - The dollar hit a record low against the euro and a major currency basket on Wednesday as investors focused on risks to the U.S. economy that could prompt the Federal Reserve to cut interest rates later in the day.

The euro rose against the dollar to a fresh lifetime high at $1.4472, according to Reuters data. The dollar index, which tracks the U.S. currency's performance against a basket of six major currencies, fell to 76.605 (.DXY: Quote, Profile, Research), the lowest in the index's more than 30-year history.

The Fed is widely expected to cut rates by a quarter percentage point when it concludes a policy meeting later on Wednesday.

Market Report: Hourly In Play

2007-11-04T19:36:00.000-08:00

18:02 ET Anixter International announces share repurchase program of up to 1 mln shares
17:59 ET Willis Group Reaffirms Shaping our Future Strategy and Long Term Financial Goals; Board Authorizes New $1 Billion Stock Buy Back Plan ...
17:33 ET Regal-Beloit acquires Alstom's motors and fans business in India; to add $.06-0.08 to diluted earnings per share in '08 The business will be reported as part of the co's Electrical Segment. Terms of the deal were not disclosed. The purchase price was paid in cash. Regal Beloit expects the business to add approximately $10 mln and $80 mln to sales for the fourth quarter of 2007 and full year 2008, respectively. It is expected that the acquired business will be effectively neutral to diluted earnings per share for 2007 and add between $.06 and $.08 to diluted earnings per share in 2008, including planned synergies. The co's estimates include the impact of purchase accounting and estimates for the allocation of the purchase price.
16:57 ET American Intl: Maurice Greenburg files 13D; considering strategic alternatives In the filing, Greenburg states they are "considering and evaluating strategic alternatives designed to lead to the maximization of their investment in the Issuer. The Reporting Persons believe that there are opportunities to significantly improve the Issuer's performance and strategic direction, as well as the value of their investment. In this connection, the Reporting Persons anticipate holding discussions with stockholders and third parties that may address a number of issues, including without limitation, their respective views on the Issuer's business and prospects, the suggested disposition of certain of its operations, investment opportunities and concerns over the direction and management of the Issuer generally, and other opportunities to improve or realize on the value of their investment in the Issuer. At this time, the Reporting Persons have not made any decisions regarding their future intentions with regards to their plans and proposals with respect to the Issuer."
16:55 ET Fuel Tech awarded air pollution control orders totaling $8.4 mln
16:52 ET Freedom Acquisition: GLG Partners announces repurchase authorization of $100 mln Co announces that its Board of Directors approved a warrant and stock repurchase plan, authorizing GLG to repurchase up to a total $100 mln of warrants and stock over the next six months.
16:33 ET Cirrus Logic announces an informal SEC investigation into the co's stock option practices in today's 8-k The co announces it has received a letter from the Division of Enforcement of the SEC indicating that the SEC is conducting an informal investigation into the co's historical stock option practices. On October 29, 2007, the co was informed that the SEC is now conducting a formal investigation into this matter. The co has cooperated with the SEC regarding this matter and intends to continue to do so.
16:33 ET WellCare Group: Special committee of WellCare's Board to conduct independent investigation Co announces that the previously formed special committee of its Board of Directors will conduct an independent investigation into matters raised as part of the ongoing investigation and inquiries by certain federal and state agencies or other regulatory bodies or organizations as well as other governmental or private party proceedings that may commence. The special committee will also develop and recommend to the Board of Directors for its consideration any remedial measures the special committee finds may be warranted. As previously disclosed, on October 24th, certain federal and state agencies executed a search warrant at the co's headquarters in Tampa, Florida. WellCare is cooperating with the U.S. Department of Justice, the U.S. Federal Bureau of Investigation, the U.S. Department of Health and Human Services Office of Inspector General and the Florida Attorney General's Medicaid Fraud Control Unit. To date, the co has not been advised by these federal and state agencies as to the subject matter of their investigations and does not know whether or the extent to which such investigations might lead to fines, penalties, operating restrictions or impacts on the co's historical financial statements. However, the U.S. Department of Justice said in a press release dated October 24, 2007, that "the ongoing investigation does not directly concern, nor should it have any impact upon, the delivery of any health care service to any person." In addition, the co has received requests for information from the Securities and Exchange Commission, and the co has communicated with regulators in the states in which the co's HMO and insurance operating subsidiaries are domiciled regarding the federal and Florida investigations.
16:12 ET Market View: Stock indices recover off early lows Despite the ugly action Thursday and overseas losses, the market focus off the open was on the stronger than expected Non-Farm Payroll report (166K vs. consensus of 80K). The early gains proved fleeting, however, with the credit/sub-prime black cloud (C yesterday) making its presence felt again. MER triggered the Financial led market decline on a story that they may have tried to delay reckoning of losses and a downgrade. The pressure continued into late morning action (tech still outperforming as Nasdaq bottomed for the day in the first 40 minutes) but a midday bounce and late session jump left most of the indices at slightly higher levels. Remember that the high TRIN close yesterday (a measure of selling pressure) suggested watching for a stabilization/bounce today. Commodity/Energy moved to the front of the line again (XLE +1.8%, OIH +2.5%, Gold/Silver +3.4%, Mining +3%, Coal +2.2%, Oil +1.2%, Natural Gas +1.2%) with Disk Drive +2.4%, Computer-Hardware +2%, Networking +1.2%, Software +0.9% leading the to Nasdaq 100/Comp outperformance. This outperformance was noted for the week as a whole as well as only the Nasdaq 100/Comp posted gains this week.
15:51 ET Market View: Late day push in stock indices Noted in the 15:03 update with the S&P 500 at 1498 that based on intraday patterns that if the market were going to stage a late day bounce it would have to begin right then. Have seen a modest late day advance develop (S&P hit 1509.50) bringing the index back near unchanged. The bounce off the low fits the pattern highlighted yesterday based on the extreme reading in TRIN at the close.
15:45 ET Earnings Preview for the week of Nov 5th-9th: Of the hundreds of companies reporting earnings the week of Nov 5th-9th some of the bigger names include: Monday: BKC, CAPA, MVL, MFLX, NXG, OMRI, TTI, TLCV, ASEI, APC, AUDC, CECO, CDR, DIVX, LOCM, and WMS... Tuesday: ABY, ADM, CTSH, EXPD, FTEK, LEA, TAP, NT, VLO, BEXP, INAP, and OVEN... Wednesday: DTV, FLR, FWLT, FTO, GM, MGAM, PLA, WNR, GRRF, CSCO, CTRP, FSLR, IO, JCOM, KNXA, NTES, and WBMD... Thursday: AIRM, CVC, CRZO, XTXI, FLO, F, RMIX, URBN, VG, CELL, CEPH, COGO, JDSA, MIPS, NVDA, QCOM, PCLN, and DIS... Friday: BRKS, CLWR, DRS, GG, JASO, IART, and SIN.
15:35 ET Bond Watch: Heads Out Higher The market was bounced on safe-haven buying as well as rumors & assorted talk about the fate of big shops in the financial world (not even going to mention street bonuses). The bonds will continue to benefit from the uncertainty surrounding the "value" of items on the books as well as talk that, even as they have already seen some dramatic write-downs, they have managed to "arrange" things so that this may be only the kick-off of further drama to come. "There is so much unknown depth [of potential trouble] here," notes one wise dealer who is "very, very short" financials, the "rash is just beginning to spread." Global bonds also reaped the benefits of flight-to-quality buying, helping support prices further. The short end of the curve continued to lead the way with 3-mos running to take yields off over 20 basis points with the 2-yr seeing a near 19 bps yield trim. The week ahead should see more of the same as the fear & uncertainty remain the watch words & the beginning of the week offers little in the way of data. As for Fed officials, they may not be running into the usual tame & rapt audiences & will most definitely have some explaining to do (although the market may not be willing to buy into whatever they choose to say. The curve was pushed well steeper, heading out near the steepest point since Apr 05 with the 2-10-yr yield spread now 64.7. The dollar is edging back from another test of its worst levels ever against the euro while the yen is trying to rally as equities revisit the day's lows. The dollar index dipped to new record lows intraday around 76.22. Spot gold cracked the 800 level to 805.15 (+17.84) while crude oil settled way up at 95.93 (+2.44). The week ahead has ISM services & some other mid-tier stuff while currencies will be eyeing an ECB meeting. Fed govs Mishkin, Kroszner speaks on Mon & Treasury will sell $18B via their quarterly refunding. The euro is at 1.4511 & the yen is at 114.7700 while the 10-yr yield is +10/32 yielding 4.307%. For more bond & economic commentary click here.
15:32 ET Conference/Events Calendar for the week of November 5th - 9th: (Part 2 of 2) Events of interest for the week of, November 5th - 9th, include: Wednesday: CCJ Analyst Meeting; ABI Analyst Meeting; DNR Fall Analyst Meeting; EQIX Analyst Meeting Session 1; EQIX Analyst Meeting Session; MKTX Investor Day; PHTN Analyst Event; STR Semi-Annual Equity Analyst Meeting; WM Investor Day; TSRA at Deutsche Bank Securities Semiconductors Industry Day; WCC, BLT, KNX, CNW, TWIN at Robert W. Baird & Co., Inc. Industrial Conf; ALK, ROP, AG, VMC, MMM, ETN at Goldman Sachs Industrial Conf; ARTE, ITI at Southern California Investment Association Conf; BKHM, EFJI, HILL, LCRY, MFLO at American Electronics Association Classic Financial Conf; BOE Policy Meeting; CCRN, EMAG, HOLX, CNU, CVTX at CIBC World Markets 18th Annual Healthcare Conf; COGN, CVLT, SYMC, ADSK at Goldman Sachs Software Retreat 2; GSOL at Credit Suisse China Emerging Corporate Day - Boston; HAL, BHI, FTI, PTEN at Merrill Lynch Global Energy Conference; ICAD, SGXP, BMTI, EXAS, ACAD at Acumen BioFin Rodman & Renshaw 9th Annual Healthcare Conf; MKTX, ITG, JEF, TRAD at Keefe, Bruyette & Woods Securities Brokerage Conf; NVEC, LMRA, VECO at Global Crown Capital LLC Nanotechnology Investment Conf; NWBN, MBLX, MMCE, MICG, ELON at Pacific Growth Equities Clean Technology & Industrial Growth Conf; OIIM at Deutsche Bank Securities' Corporate Marketing Forum... Thursday: ATHR Analyst Day; BBI Analyst Meeting; BRCM 2007 Analyst Day; CY Analyst Meeting; DNR Fall Analyst Meeting; ECB Policy Meeting; JDSU Analyst Meeting; JNJ Analyst Meeting; QLTI Investor & Analyst Day; MEI to Host its Analyst and Investor Day; APC, KWK, NBR, DVN, TDW at Merrill Lynch Global Energy Conf; ARQL, DYAX, NTMD, OSCI, ALSE at Mass Opportunities: A Biotechnology Investment Conf; COF at Banc of America Securities Investment Conf; DHR, FWLT, HON, TRS, JOYG at Goldman Sachs Industrial Conf; FIGI at Sanders Morris Harris Investor Growth Conf; GSOL at Credit Suisse China Emerging Corporate Days - New York; IEX, ITW, OSK, FSS at Goldman Sachs Capital Goods Conf; LUNA at Global Crown Capital LLC Nanotechnology Investment Conf; NTRS, WFC, SNV, JPM, HBAN, WM at BancAnalysts Association of Boston Conf; RDWR Executives to Present Q3 07 Results to Investors at NY's 21 Club... Friday: GAS Analyst Presentation; HNT Annual Investor Conf; Early close for financial futures & option pits at 1 EST.
15:29 ET Conference/Events Calendar for the week of November 5th - 9th: (Part 1 of 2) Events of interest for the week of, November 5th - 9th, include: Monday: NUS Analyst Meeting; AFFX, SIRT, UNF, MTD, SAFM at JPMorgan SMid Cap Conf; ARGN at Argus Eyes on the Global Economy Conf; ARRY, CNSO, IMCL, MEMY, RSYS at Acumen BioFin Rodman & Renshaw 9th Annual Healthcare Conf; BRLC, ELON, GRB, PSEM, IVAC at American Electronics Association Classic Financial Conf; DUSA, DVAX, UHCO, DRRX, MLNM at CIBC World Markets 18th Annual Healthcare Conf; MDS, GPX, DLX at Sidoti & Company, LLC Third Annual Midwest Cash Flow Value Conf; MSL, FSCO, BAYN, WSBC, TMCV at Super-Community Bank Conferences Mid-Atlantic Conf; SHW, SONS, KBH, CTX, MDC at UBS 2007 Building & Building Products CEO Conf; Tuesday: CCJ Analyst Meeting; DECK Analyst Meeting; FLEX Analyst and Investor Meeting; SPWR Analyst Meeting; STR Semi-Annual Equity Analyst Meeting; VARI Investor Luncheon; ADCT, ARRS, CALD, GSOL, SEAC at Brean Murray, Carret & Co., Inc One-On-One Small Cap Technology Conf; AEP, AVA, CNP, NST, MDU at Edison Electric Institute 42nd EEI Financial Conf; ALTH, HLCS, SMTS, VPHM, AMGN at Acumen BioFin Rodman & Renshaw 9th Annual Healthcare Conf; ARIA, MAXY, MHS, DRAX, AVGN at CIBC World Markets 18th Annual Healthcare Conf; AWRE, AXTI, CAMD, CSCD, KOPN at American Electronics Association Classic Financial Conf; BMS, BLL, ATR, CCK, GEF at Longbow Research Packaging Conf; CMCO, TMP, EVBN, CTGX, HPOL at Western New York Investors Conf; GHL at Keefe, Bruyette & Woods Securities Brokerage Conf; GKSR, TECD at G&K Services at FTN Midwest Securities Business Services and Technology Conf; HTGC, ALNY, ALTU, AZN, PFE at IBF Biotech Investing Conf; HWCC, MOD, OSK, ITW, WSO at Robert W. Baird & Co., Inc. Industrial Conf; LLL Holdings Investor Conference and Financial Guidance for the Year Ending December 31, 2008; MSFT, ATVI, GLUU at BMO Capital Markets Interactive Entertainment Conf; ORCL, TLEO, CDNS, MFE, SCUR at Goldman Sachs Software Retreat; POOL, PPO, UTEK, BOOM, PALM at JPMorgan SMid Cap Conf; RYL, HOV, MTH, BZH, LEN at Ryland Group at UBS 2007 Building & Building Products CEO Conf.
15:03 ET Market View: Steady drift lower off midday highs for market averages Slow but steady march lower this afternoon (Finance, RIET, Broker, Bank, Housing pacing the way) for the stock indices. Based on intraday patterns, if the indices are going to stage a late day bounce it will have to come now.
14:57 ET REITs Index -IYR- pacing the way lower this afternoon Financial XLF, Broker IAI and Home Construction XHB have all moved to new afternoon lows in recent trade but it is the REITs Index IYR, that is the weaker performer as it has pushed through its morning low to reach its lowest level since early Sep -- VNO -3.6%, BXP -3.4%, SPG -2.7%, PSA -3.1%, PEI -2%, MAC -2.3%, PLD -2.4%, AIV -7.7%, GGP -4.6%, KIM -4.1%.
14:38 ET Nymex Energy Closing Prices Crude closed the session up $2.21 to $95.70pbl, nat gas ended lower by 22.2 cents to $8.415mbtu, heating oil finished higher by 5.74 cents to $2.5697/gal and RBOB closed higher by 8.97 cents to $2.4329/gal.
14:30 ET Oil Service HOLDRs -OIH- push up toward afternoon range top/session peak and yesterday's high at 194.11/194.24
14:01 ET Air Tran Holdings sets new records for October AirTran Airways, a subsidiary of AirTran Holdings reported record October traffic with revenue passenger miles, available seat miles, enplaned passengers and load factor setting new highs for the month. October traffic surged 34.5% compared to the same month last year on a 16.4% increase in capacity. Load factor rose 10.5 points to 77.8%, and the number of enplaned passengers for the month increased 25.8% to 2.0 mln.
13:51 ET Comex Metals Closing Prices Gold closed the session higher by $15.10 to $808.60/oz, silver ended up by 32 cents to $14.645/oz and copper finished off 3.75 cents to $3.3250/lb.
13:47 ET Market View: Home Construction -XHB- rebound attempts stalls, testing intraday support The XHB held slightly above its Oct/52-wk low of 20.53 during the morning slide (session low 20.65) and stabilized. Reports that PHM had its debt rating cut coincided with an upside extension in the stock and the sector ETF but the XHB stalled near yesterday's midday range top at 21.48/21.57 (session high 21.49) and has been edging back. Intraday support is at 20.95/20.90 in front of the 20.70/20.65 (congest/session low). The next supports if unable to hold these short term levels (just hit 20.91) below the Oct trough is at the 20.00 psych level and 19.83 (Fib extension target based on the 10-22/10-31 bounce to its 50 day sma.
13:32 ET American Airlines Reports October traffic of 80.6%; an increase of 3.0 points YoY Co reported an October load factor of 80.6%, an increase of 3.0 points compared to the same period last year. Traffic increased 3.6% YoY as capacity decreased 0.2%. Domestic traffic increased 2.8% YoY on 1.1% more capacity. International traffic increased by 5.1% relative to last year on a capacity decrease of 2.5%. American boarded 8.2 mln passengers in October. American Eagle Airlines reported systemwide traffic for October decreased 1.2% from October 2006, on a capacity decrease of 0.5%. System load factor was 73.5%, down 0.6 points YoY.
13:03 ET Finance -XLF- edges to new recovery highs Noted support for the XLF in the 31.09/31.00 area as it was being tested at 11:40 ET and have seen the rebound off the session/52-wk low of 30.99 extended in recent trade. Initial intraday resistance is at 31.85 with a secondary barrier at 32.00/32.10
13:02 ET Northwest Pipe announces $11 mln order Co announces that it has received a verbal order and notice to proceed as pipe supplier to W.W. Clyde of Springville, Utah for the Spanish Fork Reach near Spanish Fork, Utah. The Company will supply approximately 11,500 feet of 96 inch steel pipe valued at approximately $11 million for an engineered and custom fabricated piping system. The pipe is expected to be manufactured in the Company's Pleasant Grove, Utah division with delivery scheduled to begin in the second quarter of 2008.
12:43 ET Market View: Russell 2000/IWM testing morning rebound high at 79.36 after holding at the Oct low this morning at 78.35 -- session low 78.35
12:02 ET Market View: Another try for Nasdaq Comp bulls The index held at support in the 2778/2772 area this morning (congestion and 20 day exp) and recovered as high as 2802 before weakening. A secondary pullback held above the early low (hit 2780 at 11:40) setting up a possible favorable intraday technical formation as long as these lows hold.
11:56 ET Bond Watch: Twisted System Unraveling Trade remains bid, ticking higher as the market's view of the world looks murkier by the minute. Payrolls had their moment in the sun, but that's over as the underlying problems overshadows the (very skeptically viewed) report. The 10-yr run has knocked the yield off to crack through 4.3% for the first time since the start of 06 while the 2-yrs have sent yields to the lowest July 05. Trade is getting a nice safe-haven play as stock-land quakes in the face of news that some, yeah, the subprime problems & the nasty exigent run-off is just starting to show up on balance sheets. The curve has been twisted well steeper as the 2-yrs have knocked off nearly 19 basis points again, & is poised to remain the front runner. The 2-10-yr yield spread is now 65.5, also knocking around the steepest point since mid-05. The also-fan factory orders were up only a bit. The dollar skated lower on the jobs data initially but then swung to fresh lifetime lows on the euro as currencies are not quite sure if they're coming or going. Spot gold is holding up at 795.40 (+8.09) while crude oil has bubbled up to 94.69 (+1.20). The afternoon has...nothing. The euro is at 1.4487 & the yen is at 114.7050 while the 10-yr is +14/32 yielding 4.291%. For more bond & economic commentary click here.
11:53 ET Merrill Lynch says "We have no reason to believe that any such inappropriate transactions occurred. Such transactions would clearly violate Merrill Lynch policy"
11:53 ET Merrill Lynch: Details of response to Wall Street Journal story Co announces "this morning, an article in the Wall Street Journal about Merrill Lynch(MER), relying on unidentified sources, speculated about inappropriate transactions that "may have been designed" to avoid write-downs that "might have been" required earlier in the year. The story is non-specific and relies on unidentified sources. We have no reason to believe that any such inappropriate transactions occurred. Such transactions would clearly violate Merrill Lynch policy."
11:46 ET Pep Boys riles previously anticipated amended exchange act reports Co announces it filed a Form 10-K/A for the fiscal year ended February 3, 2007 and a Form 10-Q/A for quarterly period ended May 5, 2007 to include restated financial statements, which contain a corrected presentation of the co's accounting for certain inter-company subsidiary investments in its Supplemental Guarantor Information footnote and certain other immaterial corrections.
11:44 ET XM Satellite: I.S.S recommends stockholders vote 'for' XM and SIRIUS merger proposals (SIRI)
11:40 ET Finance -XLF- slides to new low of 31.03 The XLF attempted to stabilize near its 2006 lows (31.18/31.16) and the 62% retrace 2004-2007 rally (31.14) this morning but has recent dropped to a minor new session low (31.03). As far a next support there is a minor zone between 31.09/31.00 being tested with the next level near 30.80. It takes a sustained intraday push back through 31.15 and 31.40 to start to improve the very short term bias-- MER -11.3%is testing its Aug 2005 low near 55.00.
11:30 ET Market View: Dow -108 and S&P 500 -14.46 slide to minor new session lows
11:27 ET Barr Pharma's subsidiary Barr Laboratories confirms patent challenge of Ritalin LA Co confirms that its subsidiary, Barr Laboratories, has initiated a challenge of the patents listed by Novartis Pharmaceuticals Corporation in connection with its Ritalin LA (methylphenidate hydrochloride) extended-release capsules, 10mg, 20mg, 30mg and 40mg... On November 2, 2007, Celgene (CELG) Novartis Pharmaceuticals and Novartis Pharma AG filed suit in the U.S. District Court of New Jersey (Newark) to prevent Barr from proceeding with the commercialization of its product. This action formally initiates the patent challenge process under the Hatch-Waxman Act.
11:08 ET Hewlett-Packard probing trendline resistance Stock has been locked within a narrowing trading range for several weeks with today's recent upside extension bringing the trendline off the Oct highs and yesterday's peak into play at near 51.30 (session high 51.24). This is a difficult day to get a breakout (which would argue for a run to and potentially through the Oct peak at 53.00) but the resilient action of late and the consolidative pattern (triangle) suggest keeping it on your watch-list particularly if the stock indices are able to recover short term (click for chart).
11:04 ET Bond Watch: Flipping Higher The bonds flipped higher as better jobs data was a near non-event & equities fell apart after another bank downgrade. The 10-yr yield is down plumbing 2 year lows as last week's trend lows were knocked out. Bonds will be looking to square up positions as volume thins out into midday but should prices hold current levels the prospect for bonds just got a bit better. The dollar is struggling to find direction as flows are well mixed up with those looking to cover shorts on oversold-ness butt heads with those looking to take another run at 1.4525 lifetime highs. The yen is backing off as its surge higher on risk aversion wanes. The euro is at 1.4490 & the yen is at 114.7500 while the 10-yr yield is +13/32 yielding 4.295%. The euro is at 1.4492 & the yen is at 11.8100 while the 10-yr is +11/32 yielding 4.301%. For more bond & economic commentary click here.

10:47 ET Market View: Nasdaq 100/Comp inch into positive territory Strength noted this morning from Disk Drive +2.4%, Computer-Hardware +1.8%, Networking +1.1% has helped lift the Nasdaq indices to positive territory. Intraday posture above support at 2786 Comp and 2192 for the 100 keeps the door open to follow through gains.
10:32 ET Market View: S&P 500 Intraday Pattern -- stabilizes at 1494 support and works higher The index extended the Finance led decline (largest segment of the S&P 500) to support from The Technical Take at 1494 and has recently notched a minor new recovery high. Remember the extreme TRIN close yesterday suggested watching for signs of stabilization today. Also, we potentially have a complete short term wave pattern off of yesterday's midday high. Intraday resistance is at 1506 and the early high/50 day sma at 1513/1512.
10:11 ET Finance ETF -XLF- tests its June 2006 low at 31.18 and edges higher-- session low 31.17
10:09 ET 10Yr bond yield <$TNX> makes new 52Wk lows @ 4.297% as bond prices rise as flight to quality continues
10:09 ET Republic Airways reports 37% increase in Oct 2007 traffic Co reports preliminary passenger traffic results for Oct 2007. The co generated 818.9 mln rev passenger miles (RPMs), a 36.6% increase over the same month last year, while available seat miles (ASMs) increased 29.7% to 1.1 bln. Block hours were 62,994 in Oct 2007, a 22.1% increase over Oct 2006. Load factor was 74.8% vs 71.1% in Oct 2006. A total of 1,551,739 passengers were carried during the month, a 32.5% increase over the same month last year.
10:08 ET Market View: Nasdaq Comp tests support in the 2778/2772 area This marks congestion and its 20 day exp and was noted in The Technical Take . A secondary zone is in the 2760/2757 area. Intraday resistance is bumped down to 2788/2790 and 2800. Also noted the extreme sell pressure yesterday marked by the close above 2.00 in TRIN which suggests watching for signs of potential stabilization the next session.
10:03 ET Digimarc beats by $0.02, misses on revs As mentioned at 10:01 co reports Q3 (Sep) earnings of $0.04 per share, $0.02 better than the Reuters Estimates consensus of $0.02; revenues rose 1.5% year/year to $27.1 mln vs the $28.8 mln consensus.
10:01 ET IDM Pharma announces updated phase 2 UVIDEM results showing durable disease control and tolerability in advanced melanoma patients Co announces updated results from a Phase 2 UVIDEM (IDD-3) melanoma vaccine clinical trial. The updated results showed that the investigational agent UVIDEM showed evidence of clinical activity and induction of immune response and was well tolerated in patients with advanced melanoma... "The early analysis of data from the Phase 2 clinical trial with IDM Pharma's cancer vaccine, UVIDEM, has demonstrated that a small portion of patients is able to gain control of their disease through stimulating their bodies' natural defenses -- their immune system cells, and they were able to do so with minimal side effects."
09:57 ET Alltel announces plans for new management structure pending close of acquisition Co announces announced a new management structure that will be effective at close of its pending acquisition. Alltel is expected to close its merger with TPG Capital and GS Capital Partners on Nov. 16. At close, Jeffrey Fox, Alltel's group president of shared services, will become chief operating officer of the company. Fox will report to Scott Ford, who will remain as president and chief executive officer. Also reporting to Ford will be Rick Massey, in a new role as chief strategy officer while continuing as general counsel
09:56 ET Market View: Stock indices reverse into the red amid pressure in Finance -2.2%, Material -1.1%, Internet -2.2%, Housing -1%
09:53 ET Broker, Bank extend early slide, Finance ETF -XLF- sets new 52-wk low The Finance Sector ETF -XLF -1.4%- has dropped to a new session/52-wk low as it slipped slightly under the Aug trough at 31.51 (session low 31.44). Broker XBD has taken out its Oct low (MER -7.9%, GS -3.8%, LEH -4.3%, MS -4.7%).
09:43 ET Force Protection and General Dynamics announce they broke vehicle production records in October Force Protection and General Dynamics (GD) announce they broke vehicle production records in October. Force Dynamics produced 208 Mine Resistant Ambush Protected Category I and Category II Cougar vehicles and Category III Buffalo vehicles in the past month, exceeding delivery objectives and M.R.A.P contract requirements. To date, Force Dynamics is 55 vehicles ahead of schedule on all M.R.A.P Category I and II competitive contracts for the year. In addition, Force Protection is one vehicle ahead of schedule on their sole-sourced Category III Buffalo contracts for the year.
09:42 ET Sector Watch: Seeing relative strength in Computer-Hardware, Disk Drive, Energy -XLE +1.1%, OIH +1.4%, Utility XLU +1.1% and Housing XHB +0.9%
09:40 ET Sector Watch: Financial XLF, Broker XBD, Regional Bank RKH weigh on the market
09:38 ET Market View: S&P 500 slips back near unchanged after only minor breach of its 50 sma at 1512
09:32 ET Market View: S&P 500 edges back above 50 sma, 50 ema and recent range floor resistance is at 1518/1519
09:28 ET Datascope: Ramius files definitive proxy materials to elect two nominees to Datascope's Board of Directors Starboard Value and Opportunity Master Fund, an affiliate of RCG Starboard Advisors and Ramius Capital Group, announce that it has filed with the SEC a definitive proxy materials in connection with its nomination of two highly qualified and independent candidates for election to the Board of Directors of DSCP at the co's 2007 Annual Meeting. Ramius believes that its nominees will strengthen the quality of Datascope's Board by providing better leadership and oversight that will lead to greater stability within the Company's management and help reverse the Company's disappointing track record in the area of corporate governance.
09:17 ET Chelsea Therapeutics announces it will offer 7.4 mln shares to institutional and accredited at a price of $6.62/share
09:17 ET Market View: Support and Resistance A sizeable hit for the market on Thursday but the extreme selling pressure as measured by TRIN suggested potential for a stabilization/reversal today. This morning's data has triggered a move higher in pre-market action. For a look at the important resistance/support levels for today go to The Technical Take.
09:15 ET S&P futures vs fair value: +7.7. Nasdaq futures vs fair value: +19.0.
09:14 ET Sulphco announces continuous test runs in Europe Co announces that, in concert with its European test partner, it has commenced continuous test runs of heavy crude through a 15,000 bpd Sonocracking unit. Trial runs began on October 30th running a heavy crude through a 5,000 bpd skid. Sufficient crude oil capacity has been allocated by the Company's European test partner to allow continuous operation at maximum design flow rates without interruption.
09:10 ET Warren Resources misses by $0.01, beats on revs Reports Q3 (Sep) earnings of $0.05 per share, $0.01 worse than the Reuters Estimates consensus of $0.06; revenues rose 81.2% year/year to $17.2 mln vs the $15.3 mln consensus.
09:08 ET Altair Nanotechnologies: Phoenix Motorcars says featuring more compact packaging of the Nanosafe battery than projected Phoenix Motorcars announces that it is 'on the road' to producing over 500 Phoenix Sport Utility Trucks featuring more compact packaging of the ALTI Nanosafe battery than originally projected.
09:05 ET Progen Industries gives update on phase 3 clinical program for PI-88 in liver cancer; will no longer continue with the special protocol assessment process Co announced that in light of the recent Fast Track designation awarded to PI-88 for the prevention of tumour recurrence following curative resection of primary liver cancer and in order to commence the Phase 3 program as rapidly as possible, the Co will no longer continue with the Special Protocol Assessment process. The Company has used the Special Protocol Assessment process to obtain valuable FDA feedback on specific elements of our trial design. By incorporating this feedback into the trial design and with Fast Track designation for the assessment of delaying tumour recurrence following curative resection, Progen is confident that its Phase 3 trial meets the FDA requirements for approval under the Fast Track designation.
09:04 ET Bristol-Myers says 91% of Baraclude treated patients in a 4 yr cohort demonstrated virologic supression to undetecable levels CO announecs data from a four-year cohort, which showed that 91 percent of patients treated with BARACLUDE suppressed the amount of hepatitis B virus in the blood, or viral load, to undetectable levels at week 192. Suppression of viral load to undetectable levels is a measure of antiviral treatment response; maintenance of viral load suppression is an important goal of chronic hepatitis B treatment.
09:01 ET Fuwei Films announces receipt of non-compliance letter from Nasdaq Co announces that it received a NASDAQ Staff Deficiency Letter on Oct 30, 2007. The letter was a result of the resignation of each of Tongju Zhou and Mark Stulga from its Board of Directors, effective Oct 18, 2007. Stulga was a member of the co's audit committee. As a result, the co does not have enough independent directors on its audit committee to be in compliance with the Nasdaq Marketplace Rules. The co plans to present its plan of compliance and request continued listing pending the completion of the plan.
09:01 ET Qmed announces it was unable to raise adequate capital; exploring seeking protection under the federal bankruptcy laws Co announced that it continues to incur losses. The co has been unable to raise adequate capital to support both its operational needs and statutory reserve requirements related to its business and certain of its subsidiaries. As a result, it will be limiting or disengaging from Special Needs Plan related activity in South Dakota, and will be working to transition or conclude involvement in its New Jersey Special Needs Plan. The co is investigating strategic alternatives to maximize the value of its other businesses, which may include selling various assets. There can be no assurances the co will be able to maintain its other businesses, or to sell assets at amounts, which would be greater than its liabilities. In addition, it is exploring seeking protection under the federal bankruptcy laws.
09:01 ET Kona Grill announces a 650k common stock offering with certain accredited instituional investors at a price of $16.25/share
09:01 ET Shuffle Master announces resignation of CFO Co announces that Richard Baldwin, Senior Vice President and Chief Financial Officer, has resigned to pursue other opportunities. Mr. Baldwin will remain available to the Company as a part-time employee for a period of time. Mr. Baldwin's resignation does not involve any disagreement over any financial matters concerning the Company, nor any disagreement with the Company's auditors.
09:00 ET S&P futures vs fair value: +8.2. Nasdaq futures vs fair value: +19.0. Futures continue to point to a positive opening following the solid employment data. Crude oil is up 0.6% to $94.08 a barrel.
08:55 ET AMDL launches expanded distribution with 3rd round of agreements valued at $6.84 mln annually for new health & beauty product line Co announces that its JPI's subsidiary JJB has signed the third round of regional distribution agreements for its new anti-aging and skin care injectable product under the brand name "Goodnak." This initial product is the first in a new line of anti-aging & skin care products currently under development by JJB.
08:47 ET On The Wires NRG Energy (NRG) and Powerspan announce their memorandum of understanding to demonstrate at commercial scale one of the most promising technologies for carbon dioxide capture from conventional coal-fueled, electric power plants-Powerspan's ECO2 technology... Harsco (HSC) announces that its MultiServ mill services division has signed a 12-year agreement valued at more than $50 mln over its term to support one of China's newest and largest steel operations Ningbo Iron & Steel.
08:45 ET Southwest Air says flew 6.0 bln revenue passenger miles in October 2007 Co announces that it flew 6.0 bln revenue passenger miles in Oct 2007, compared to 5.7 bln RPMs flown in Oct 2006. Available seat miles increased 5.3% to 8.6 bln from the Oct 2006 level of 8.1 bln. The load factor for the month was 70.5%, compared to 70.1% for Oct 2006.
08:33 ET Coleman Cable to acquire the electrical products business of Katy Industries Co announces it has entered into a definitive agreement to acquire the electrical products business of Katy Industries (KATY.OB), which operates in the United States as Woods Industries and in Canada as Woods Industries. CCIX will purchase certain assets of the U.S. subsidiary and all the stock of the Canadian subsidiary for a total cash purchase price of $45 mln. For the full year of 2008, CCIX estimates that the acquisition will contribute to its financial results approx $125 mln of additional revs, approx $10 mln of additional operating income and approxi $0.20 of additional earnings per share. CCIX expects to derive additional benefits from the acquisition over time through cross-selling opportunities, logistics and purchasing synergies, and the implementation of best practices throughout the entire organization.
08:33 ET Chevron misses by $0.11 Reports Q3 (Sep) earnings of $1.94 per share, excluding non-recurring items, $0.11 worse than the Reuters Estimates consensus of $2.05; revenues rose 1.8% year/year to $55.17 bln.
08:33 ET S&P futures vs fair value: +9.2. Nasdaq futures vs fair value: +21.3. Futures jump immediately following the employment data. October nonfarm payrolls increased by 166k, which is up from the previous month's reading of 96k. Unemployment came in at 4.7%, hourly earnings increased by 0.2% and the average workweek was 33.8. Economists were expecting the nonfarm payrolls to increase by 80k, a 4.7% unemployment rate, a 0.3% increase in hourly earnings and an average workweek of 33.8.
08:32 ET Gerdau AmeriSteel prices offering of 110 mln its common shares at $12.25/share
08:32 ET IntercontinentalExchange says ICE Futures Europe sets volume record Co reported "solid volume growth" in all of its business segments for the month of October, including record volume at ICE Futures Europe and the Winnipeg Commodity Exchange. In October 2007, ICE's average daily commissions represented the second highest month ever, reaching $952,374, an increase of 12% compared to $849,463 in October 2006. Average daily commissions reflect daily trading activity in ICE's OTC markets. ICE Futures Europe reported record total volume in October 2007 of 13,449,030 contracts, up 30% from 10,367,903 contracts in October 2006.
08:32 ET TheStreet.com acquires BankingMyWay and RateWatch Co announces the acquisition of Bankers Financial Products Corp., including BankingMyWay and RateWatch. "This is an accretive content acquisition..." The purchase price of Bankers Financial Products is approximately $25.0 mln, consisting of approximately $16.9 mln in cash and 636,081 shares of unregistered common stock of TheStreet.com.
08:31 ET Regenerex Biopharam receives first ophthalmic wound-healing patent in China Co announces that it has received official notice from Chinese Patent Office that CSIPO intends to grant a patent for reversing or inhibiting eye degeneration associated with dry eye syndrome, as well as certain surgical eye procedures, including LASIK and P.R.K., with TB4, analogues, and derivatives. The patent claims are based on a significant body of data supporting the use of TB4 for wound healing of the cornea and other areas in and around the eye.
08:20 ET Bond Watch: Still Better Bid The market is seeing a little positive follow-through this morning as the push into less-risky assets remains a driving force on the woeful state of the financial sector & key jobs data that is feared to be on the weak side. The 2-10-yr yield spread poked out to 60.7 as curve trade leans steeper on the outsized interest in the shorter end after yesterday's equity drubbing. Bond prices in the EuroZone & Japan are bid on risk aversion. Treasuries are parked just off Oct price highs as trade has worked itself up into a coil with today's payrolls report about to hit. It will take a big miss to support prices while an even bigger miss is needed to get prices over the Oct hump. An upside surprise will pull the bottom out of the market. Hourly earnings will be eyed for inflation pressures & the unemployment rate for labor looseness. Revisions could hold the key. Beyond the data, the market will likely be supported by the underlying economic uncertainty as tapebombs are appearing around every corner. And its the weekend, so bonds should have that going for them. Dollar shorts remained on overnight as most of the majors remained rangebound, with the exception of the pound & Canadian loonie which continue to outperform. Currency trade is all lined up to take the buck down another notch, but a good jobs report may send those shorts running for cover. Spot gold shot up to 794.30 (+7.00) while crude oil is up at 94.40 (+0.91). Other than payrolls (8:30) the economic calendar has factory orders (10). The euro is at 1.4487 & the yen is at 114.7050 while the 10-yr is +01/32 yielding 4.342%. For more bond & economic commentary click here.
08:16 ET GB&T Bancshares to be acquired by SunTrust in transaction valued at $153.70 mln SunTrust Banks (STI) and GB&T Bancshares (GBTB) announce the signing of a definitive agreement under which STI will acquire GBTB. On Sep 30, GBTB had assets of approx $2 bln, deposits of approx $1.5 bln and approx 500 employees. Under the terms of the agreement announced today, GBTB shareholders would receive .1562 shares of STI common stock for each share of GBTB common stock held. Based on STI's closing price of $69.13 on Nov 1, and the 14,230,796 shares of GBTB outstanding as of Oct 31, the transaction value would be approx $153.7 mln.
08:16 ET EDS beats by $0.01, reports revs in-line; guides FY07 EPS in-line, revs in-line Reports Q3 (Sep) earnings of $0.42 per share, $0.01 better than the Reuters Estimates consensus of $0.41; revenues rose 6.4% year/year to $5.63 bln vs the $5.66 bln consensus. Co issues in-line guidance for FY07, sees EPS of $1.55-1.60, excluding non-recurring items, vs. $1.57 consensus; sees FY07 revs of $22.0-22.5 bln vs. $22.26 bln consensus.
08:15 ET Fiserv agrees to sell health businesses to UnitedHealthcare Co announces it has signed a definitive agreement to sell substantially all of its Health businesses to UnitedHealthcare, a business of UnitedHealth Group (UNH), for $775 mln in cash. FISV expects to receive approximately $475 mln of net transaction proceeds, and depending upon reinvestment, may experience slight dilution to its 2008 earnings per share in a range of 1% to 3%. The co also expects the transaction to be accretive to its 2008 revenue, earnings and margin growth rates.
08:12 ET Economic Calendar Payrolls report & all its detail at 8:30 followed by factory orders at 10.
08:11 ET Intl Paper reports EPS in-line, beats on revs Reports Q3 (Sep) earnings of $0.57 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.57; revenues rose 2.1% year/year to $5.54 bln vs the $5.36 bln consensus.
08:09 ET On The Wires G. Willi-Food (WILC) announces that it had signed a binding letter of intent to form a new joint co with the owners of Shamir Salads, an Israeli manufacturer and distributor of pre-packaged chilled kosher Mediterranean dips and spreads in Israel and abroad... Metavante Technologies announces that it has completed its spin-off from Marshall & Ilsley (MI). Shares of common stock for Metavante Technologies will begin trading today on the New York Stock Exchange under the symbol "(MV).".. Raytheon (RTN) announces it won the F-15E radar modernization program to equip 224 aircraft. The development program is expected to start in 2008.
08:08 ET Edison beats by $0.11, misses on revs; guides FY07 EPS in-line Reports Q3 (Sep) earnings of $1.41 per share, excluding non-recurring items, $0.11 better than the Reuters Estimates consensus of $1.30; revenues rose 3.7% year/year to $3.94 bln vs the $4.08 bln consensus. Co issues in-line guidance for FY07, sees EPS of high end of previous guidance of $3.24-3.59 vs. $3.48 consensus.
08:08 ET Houston Wire & Cable misses by $0.02, beats on revs; guides FY07 EPS below consensus Reports Q3 (Sep) earnings of $0.41 per share, $0.02 worse than the Reuters Estimates consensus of $0.43; revenues rose 10.0% year/year to $98.9 mln vs the $97.2 mln consensus. Co issues downside guidance for FY07, sees EPS of $1.45-1.52 vs. $1.59 consensus. Co repurchased 7% of its shares outstanding in Q3 at a cost of $27.9 mln. Co says "With respect to our Repair and Replacement sector through the balance of 2007, we anticipate a continued sales contraction because of the moderation and near-term uncertainty within the US economy."
08:07 ET Pediatrix Medical correction: reports Q3 EPS in-line, revs above consensus Co reports Q3 EPS of $0.81, ex items, vs $0.81 Reuters Estimates consensus; revs rose 9.8% yr/yr to $241.1 mln vs $236.9 mln consensus. (Briefing.com note: Earlier we reported that the company has missed, this was incorrect as the reported actual included $0.02 charge that we had not backed out. We have removed the original comment.)
08:06 ET RBC Bearings misses by $0.02, misses on revs; guides Q3 revs below consensus Reports Q2 (Sep) earnings of $0.40 per share, $0.02 worse than the Reuters Estimates consensus of $0.42; revenues rose 6.8% year/year to $78.2 mln vs the $80.1 mln consensus. Co issues downside guidance for Q3, sees Q3 revs of $80-82 mln vs. $82.45 mln consensus.
08:05 ET CenterPoint reports EPS in-line, misses on revs; guides FY07 EPS in-line Reports Q3 (Sep) earnings of $0.27 per share, in-line with the Reuters Estimates consensus of $0.27; revenues fell 2.7% year/year to $1.88 bln vs the $2.13 bln consensus. Co issues in-line guidance for FY07, sees EPS of at high end of previous range of $1.02-1.12 vs. $1.07 consensus.
08:03 ET ADVENTRX Pharma says will discontinue enrolling patients in its Phase 3 clinical trial of CoFactor for the first-line treatment of metastatic colorectal cancer Co announces that it will discontinue enrolling patients in its Phase 3 clinical trial of CoFactor for the first-line treatment of metastatic colorectal cancer. This decision follows advice ADVENTRX received from the Data Safety Monitoring Board, and comprehensive analysis of the recently completed Phase 2b clinical trial of CoFactor for the treatment of metastatic colorectal cancer. While the DSMB did not identify safety concerns with CoFactor, it recommended closure of the Phase 3 study, citing a slow accrual rate due, in part, to current and projected treatment preferences for colorectal cancer. Further analysis of the Phase 2b study, in which 5-FU was administered by infusion, has uncovered no significant differences between the study arms with regard to either efficacy or safety. Overall survival data from the Phase 2b study and data from the Phase 3 study are anticipated in the second quarter of 2008.
08:01 ET S&P futures vs fair value: -0.1. Nasdaq futures vs fair value: +3.0. Futures point to an opening very close to the unchanged mark. Investors are currently in a wait-and-see mode ahead of the market moving October employment report, which is slated to be released at 8:30 ET.
08:01 ET Pep Boys enters into $166.2 mln sale lease back transaction Co announces that it has agreed to sell, subject to the satisfaction of certain closing conditions, 34 properties for an aggregate purchase price of $166.2 mln.
07:44 ET Martha Stewart beats by $0.05, reports revs in-line; guides Q4 revs Reports Q3 (Sep) loss of $0.08 per share, $0.05 better than the Reuters Estimates consensus of ($0.13); revenues rose 13.4% year/year to $69.3 mln vs the $69.2 mln consensus. Co issues guidance for Q4, sees Q4 revs of approx $120 mln vs. $125.50 mln consensus; co sees adjusted EBITDA of $37.0-39.0 mln.
07:42 ET Arch Chemicals beats by $0.02, misses on revs; guides Q4 EPS in-line Reports Q3 (Sep) earnings of $0.45 per share, excluding non-recurring items, $0.02 better than the Reuters Estimates consensus of $0.43; revenues rose 8.0% year/year to $376.5 mln vs the $381 mln consensus. Co issues in-line guidance for Q4, sees EPS of $0.17-0.27 vs. $0.22 consensus.
07:36 ET First Charter Corp. misses by $0.07, misses on revs Reports Q3 (Sep) earnings of $0.33 per share, excluding non-recurring items, $0.07 worse than the Reuters Estimates consensus of $0.40; revenues rose 11.5% year/year to $56.3 mln vs the $58.8 mln consensus.
07:36 ET SCANA Corp beats by $0.01, reports revs in-line; reaffirms FY07 EPS guidance; guides FY08 EPS above consensus Reports Q3 (Sep) earnings of $0.79 per share, $0.01 better than the Reuters Estimates consensus of $0.78; revenues rose 1.6% year/year to $1.08 bln vs the $1.07 bln consensus. Co reaffirms guidance for FY07, sees EPS of $2.70-2.85 vs. $2.68 consensus. Co issues upside guidance for FY08, sees EPS of $2.90-3.05 vs. $2.84 consensus.
07:35 ET NiSource misses by $0.02, beats on revs; reaffirms FY07 EPS guidance; guides FY08 EPS below consensus Reports Q3 (Sep) earnings of $0.08 per share, $0.02 worse than the Reuters Estimates consensus of $0.10; revenues rose 8.5% year/year to $1.26 bln vs the $1.19 bln consensus. NI sees EPS of $1.25-1.35 for 2008-2010. Co reaffirms guidance for FY07, sees EPS of approx $1.35 vs. $1.39 consensus. Co issues downside guidance for FY08, sees EPS of $1.25-1.35 vs. $1.43 consensus. Co also sees 2009-2010 EPS of $1.25-1.35.
07:32 ET Tractor Supply says Board of Directors appoints Jim Wright as Chairman Co announces that its Board appointed Jim Wright, President and Chief Executive Officer, as Chairman of the Board. As part of the Company's previously announced succession plan, Joe Scarlett is retiring from his role as non-executive Chairman of the Company's board of directors; he has been named Chairman Emeritus.
07:32 ET Environmental Tectonics simulation division awarded contract to deliver disaster management simulator to Hong Kong Fire Service Co's Simulation Division announces the signing of a contract with the Hong Kong Fire Services Department to deliver a multi-station ADMS-COMMAND, the next- generation Advanced Disaster Management Simulator training system. The contract includes three open-ended, dynamic scenarios within a regionalized virtual environment. The scenarios include a multi-vehicle highway traffic accident, a B-747 crash-landed in a residential area and a high-rise apartment building fire. The scenarios can be changed to fit various training objectives.
07:24 ET Allis-Chalmers Energy beats by $0.01, beats on revs Reports Q3 (Sep) earnings of $0.37 per share, $0.01 better than the Reuters Estimates consensus of $0.36; revenues rose 70.4% year/year to $147.9 mln vs the $143.2 mln consensus.
07:10 ET Encysive Pharma misses by $0.01, misses on revs Reports Q3 (Sep) loss of $0.32 per share, $0.01 worse than the Reuters Estimates consensus of ($0.31); revenues rose 39.7% year/year to $8.8 mln vs the $8.9 mln consensus.
07:09 ET Duke Energy beats by $0.09, beats on revs; guides FY07 EPS in-line Reports Q3 (Sep) earnings of $0.48 per share, $0.09 better than the Reuters Estimates consensus of $0.39; revenues rose 16.4% year/year to $3.82 bln vs the $3.42 bln consensus. Co issues guidance for FY07, sees EPS of well above previous guidance of $1.15 vs. $1.19 consensus.
07:09 ET OM Group beats by $0.13, beats on revs Reports Q3 (Sep) earnings of $1.30 per share, $0.13 better than the Reuters Estimates consensus of $1.17; revenues rose 55.3% year/year to $264.6 mln vs the $212.6 mln consensus. Co said, "Looking ahead, we continue to believe that our efforts will result in a company with consolidated revenues of $2 billion to $4 billion by 2010 and a ranking in the top quartile of specialty chemicals and specialty materials companies in terms of EBITDA margins and other financial metrics".
07:07 ET Emergent Biosolutions beats by $0.19, beats on revs Reports Q3 (Sep) earnings of $0.10 per share, $0.19 better than the Reuters Estimates consensus of ($0.09); revenues rose 3.3% year/year to $43.6 mln vs the $30.3 mln consensus. "Based on the strength of our revenues and the new multi-year contract with HHS, we have revised upward our expectations for annual revenue growth for 2007. We continue to push forward the development of our product pipeline, while maintaining a commitment to sustain our trend of annual profitability."
07:07 ET Elizabeth Arden beats by $0.09, reports revs in-line; guides Q2 EPS below consensus; guides FY08 EPS in-line Reports Q1 (Sep) earnings of $0.04 per share, $0.09 better than the Reuters Estimates consensus of ($0.05); revenues rose 6.7% year/year to $271.8 mln vs the $270.4 mln consensus. RDEN sees Y08 revs up 5-7%. Co issues downside guidance for Q2, sees EPS of $1.11-1.16 vs. $1.21 consensus. Co issues in-line guidance for FY08, sees EPS of $1.65-1.75 vs. $1.68 consensus.
07:06 ET Westar Energy beats by $0.14, beats on revs; guides FY07 EPS in-line Reports Q3 (Sep) earnings of $0.99 per share, $0.14 better than the Reuters Estimates consensus of $0.85; revenues rose 6.3% year/year to $548.5 mln vs the $517.6 mln consensus. Co issues in-line guidance for FY07, sees EPS of $1.63-1.78 vs. $1.70 consensus.
07:05 ET Viacom beats by $0.05, beats on revs Reports Q3 (Sep) earnings of $0.65 per share, excluding non-recurring items, $0.05 better than the Reuters Estimates consensus of $0.60; revenues rose 24.2% year/year to $3.27 bln vs the $3.01 bln consensus.
07:04 ET PrivateBancorp announces intention to issue common stock in a private placement offering; aggregate dollar amount of the offering has not yet been determined
07:03 ET Qiao Xing announces sale of common stock Co announces that it has obtained a binding commitment from an investor to purchase 1,300,000 shares of its common stock at a price of $11.80 per share, for gross proceeds of $15,340,000.
07:02 ET Vanda Pharma announces that it no longer intends to offer convertible senior notes Co announces that, despite strong demand, it no longer intends to offer convertible senior notes. The decision not to pursue a convertible note offering at this time was due principally to prevailing market conditions resulting in note terms that were not acceptable to the co.
07:01 ET Cincinnati Bell beats by $0.01, beats on revs; guides FY07 revs in-line Reports Q3 (Sep) earnings of $0.09 per share, $0.01 better than the Reuters Estimates consensus of $0.08; revenues rose 7.5% year/year to $344 mln vs the $331.8 mln consensus. Co issues in-line guidance for FY07, sees FY07 revs of $1.3 bln vs. $1.31 bln consensus.
06:48 ET Aladdin Knowledge Systems announces a $10 mln common stock buyback program (a maximum of 500k shares)
06:32 ET Harris Interactive reports EPS in-line, misses on revs; reaffirms FY08 EPS guidance, revs guidance Reports Q1 (Sep) earnings of $0.02 per share, in-line with the Reuters Estimates consensus of $0.02; revenues rose 16.9% year/year to $55.2 mln vs the $57.1 mln consensus. Co reaffirms guidance for FY08, sees EPS of $0.17-0.18 vs. $0.17 consensus; sees FY08 revs of $258-265 mln vs. $259.20 mln consensus.
06:20 ET Memory Pharma announces positive phase 2a results for MEM 3454 in Alzheimer's Disease Co announces positive top-line data from the randomized, placebo-controlled, multi-center Phase 2a proof-of-concept trial of MEM 3454, the co's lead nicotinic alpha-7 receptor partial agonist, in 80 patients with mild to moderate Alzheimer's disease over an eight week treatment period. The trial was an exploratory efficacy study to learn about MEM 3454 as a potential treatment for Alzheimer's disease. The primary endpoint of the trial was the change from baseline in the Quality of Episodic Secondary Memory factor score of the Cognitive Drug Research battery. QESM is a composite score derived from memory tests in the CDR battery that measure the ability to store, hold and retrieve information. There were three oral daily doses of MEM 3454 tested in the trial, 5 mg, 15 mg and 50 mg. The CDR battery was administered at baseline and on six days during the treatment period, at four time points each day. For the eight hour post-dose time points over the treatment period, subjects receiving 5 mg and 15 mg of MEM 3454 demonstrated a statistically significant effect on the QESM compared to placebo.
06:19 ET European Markets FTSE...6524.40...-61.70...-0.9%. DAX...7811.20...-69.65...-0.9%.
06:19 ET Nelnet reports EPS in-line Reports Q3 (Sep) earnings of $0.45 per share, excluding non-recurring items, in-line with the Reuters Estimates consensus of $0.45.
06:19 ET S&P futures vs fair value: +1.7. Nasdaq futures vs fair value: +7.3.
06:17 ET Alliant Energy beats by $0.11, reports revs in-line; guides FY07 EPS above consensus Reports Q3 (Sep) earnings of $1.05 per share, excluding non-recurring items, $0.11 better than the Reuters Estimates consensus of $0.94; revenues rose 1.9% year/year to $907.3 mln vs the $903 mln consensus. Co issues upside guidance for FY07, sees EPS of $2.52-2.62 vs. $2.49 consensus.
06:16 ET Pioneer Drilling beats by $0.02, beats on revs Reports Q2 (Sep) earnings of $0.23 per share, $0.02 better than the Reuters Estimates consensus of $0.21; revenues fell 0.4% year/year to $106.5 mln vs the $100.4 mln consensus.
06:14 ET CIGNA beats by $0.21, reports revs in-line; guides FY07 EPS above consensus, revs in-line Reports Q3 (Sep) earnings of $1.14 per share, excluding non-recurring items, $0.21 better than the Reuters Estimates consensus of $0.93; revenues rose 7.3% year/year to $4.4 bln vs the $4.4 bln consensus. Co issues mixed guidance for FY07, sees EPS of $3.80-4.00 vs. $3.74 consensus; sees FY07 revs of $ vs. $17.58 bln consensus.
06:12 ET A.S.V., Inc. misses by $0.06, misses on revs; guides FY07 EPS below consensus, revs below consensus Reports Q3 (Sep) earnings of $0.13 per share, $0.06 worse than the Reuters Estimates consensus of $0.19; revenues fell 10.6% year/year to $56.3 mln vs the $61.8 mln consensus. Co issues downside guidance for FY07, sees EPS of $0.41-0.47 vs. $0.56 consensus; sees FY07 revs of $200-210 mln vs. $212.30 mln consensus.
06:08 ET Barnes Group beats by $0.03, beats on revs; guides FY07 EPS below consensus Reports Q3 (Sep) earnings of $0.47 per share, $0.03 better than the Reuters Estimates consensus of $0.44; revenues rose 11.9% year/year to $360.4 mln vs the $356.5 mln consensus. Co issues downside guidance for FY07, sees EPS of $1.79-1.83 vs. $1.84 consensus.
03:56 ET First studies demonstrating greater than 60% sustained viral response with half the standard treatment duration in genotype 1 chronic hepatitis C patients Co announces results from interim analyses of PROVE 1 and PROVE 2, two Phase 2b clinical trials evaluating the investigational hepatitis C protease inhibitor telaprevir, dosed in combination with pegylated interferon and ribavirin. In 24-week telaprevir-based treatment regimens, genotype 1 treatment-naive HCV patients achieved sustained viral response rates of 61% and 65% in PROVE 1 (SVR 12 and SVR 24) and PROVE 2 (SVR 12), respectively. In addition, clinical researchers reported a correlation between achieving rapid viral response and achieving SVR in a 24-week telaprevir-based regimen. Interim analyses of telaprevir safety from PROVE 1 and PROVE 2 appear consistent with prior analyses, with the most common adverse events, regardless of treatment assignment, being fatigue, rash, headache and nausea.
03:53 ET On The Wires DSM Biologics, a business unit of DSM Pharmaceutical Products and Crucell N.V. (CRXL) announce that they have signed a non-exclusive PER.C6 technology research licensing agreement with Brazilian-based Recepta Biopharma S.A. This agreement allows Recepta Biopharma to use the PER.C6 technology to develop four antibodies it has licensed-in from the Ludwig Institute for Cancer Research. Financial details were not disclosed.
03:40 ET NYSE Euronext beats by $0.04, beats on revs Reports Q3 (Sep) earnings of $0.76 per share, excluding an activity assessmetn fee, $0.04 better than the Reuters Estimates consensus of $0.72; revenues rose 77.2% year/year to $1.07 bln vs the $0.99 bln consensus.
01:14 ET Danaher prices 6.0 mln shares of common at $82.25 per share
01:11 ET Arena Pharma announces the pricing of its offering of 11.0 mln shares of common at $9.91 per share
01:10 ET McMoRan Exploration prices $426.5 mln in offerings Co prices 16.25 mln shares of common at $12.40 per share and 2.25 mln shares of 6.75% mandatory convertible preferred at $100 per share.
01:08 ET On The Wires Digital Realty Trust's (DLR) Board declared a quarterly common stock dividend of $0.31, an increase of 8.3% over the previous quarterly dividend... McMoRan Exploration (MMR) announces that it intends to offer a total of $400 mln aggregate principal amount of senior notes to the public... Parker Hannifin (PH) announces that it has acquired Kay Pneumatics Ltd., a manufacturer of pneumatic valves, cylinders and precision electro-pneumatic control systems for transportation, semi-conductor, medical and general industrial markets; financial terms weren't disclosed.
01:03 ET Crocs Board of Directors authorizes stock repurchase of up to 1 mln shares Co announces that its Board approved an authorization to repurchase up to 1 mln shares of its common stock, effective immediately.
00:58 ET Portec Rail Products beats by a penny, misses on revenues Reports Q3 (Sep) earnings of $0.20, $0.01 better than the Reuters Estimates consensus of $0.19; revenues rose 15.3% YoY to $28.0 mln vs the $28.5 mln consensus.
00:51 ET Talisman Energy misses by a penny Reports Q3 (Sep) earnings of $0.24, excluding non-recurring items, $0.01 worse than the Reuters Estimates consensus of $0.25; revenues rose 9% YoY to 1.99 bln vs the $1.94 bln consensus.
00:44 ET Hawaiian Electric Industries misses by a penny Reports Q3 (Sep) earnings of $0.34, excluding non-recurring items, $0.01 worse than the Reuters Estimates consensus of $0.35; revenues were flat YoY ($673.5 mln vs $673.9 mln) vs the $683.22 mln consensus.
00:36 ET NTELOS Holdings beats by $0.04, beats on revs; guides FY07 revenue in-line Reports Q3 (Sep) earnings of $0.18, $0.04 better than the Reuters Estimates consensus of $0.14; revenues rose 14% YoY to $126.9 mln vs the $125.25 mln consensus. Co issues in-line guidance for FY07, sees revenues of $497-501 mln vs the $498 mln consensus.
00:29 ET Unisource Energy misses by $0.14, beats on revenues; guides EPS lower for FY07 Reports Q3 (Sep) earnings of $0.66, $0.14 worse than the Reuters Estimates consensus of $0.80; revenues rose 6.0% to $398.2 mln YoY vs the $370.25 mln consensus. Cio issues downside guidance for FY07, sees EPS of $1.50-1.75 vs $1.79 consensus.
00:18 ET Black Hills misses by $0.07; guides EPS in-line for FY08 Reports (Sep) earnings of $0.46, $0.07 worse than the Reuters Estimates consensus of $0.53; revenues rose 3.0% to $162.4 mln YoY vs $176.37 mln consensus. Co issues in-line guidance for FY08, sees EPS of $2.35-2.55 vs $2.54 consensus.
23:59 ET Superior Essex
23:57 ET Titanium Metals misses by $0.10; misses on revenue Reports Q3 (Sep) earnings of $0.29, $0.10 worse than the Reuters Estimates consensus of $0.39; revenues increased 9% YoY to $297.3 mln vs the $333.6 mln consensus.
23:48 ET Vectren beats by $0.05; guides FY07 EPS higher Reports Q3 (Sep) earnings of $0.22, excluding non-recurring items, $0.05 better than Reuters Estimates consensus of $0.17; revenues rose 12% YoY to $381.4 mln vs the $374.85 mln consensus. Co issues upside guidance for Q4, sees EPS of $1.80-1.90 vs $1.75-1.85 consensus. Co issues in-line guidance for FY08, sees EPS of $1.85-2.00 vs $1.91 consensus.
23:35 ET U-Store-It misses by $0.02, beats on revs; guides Q4 EPS below consensus Reports Q3 (Sep) funds from operations of $0.22 per share, excluding non-recurring items, $0.02 worse than the Reuters Estimates consensus of $0.24; revenues rose 4.2% year/year to $58.3 mln vs the $57.4 mln consensus. Co issues downside guidance for Q4, sees FFO of $0.19-0.21 vs. $0.25 consensus.
23:32 ET Camden Property reports EPS in-line, misses on revs; guides Q4 EPS in-line; guides FY07 EPS in-line Reports Q3 (Sep) funds from operations of $0.91 per share, in-line with the Reuters Estimates consensus of $0.91; revenues rose 3.5% year/year to $155 mln vs the $158.8 mln consensus. Co issues in-line guidance for Q4, sees FFO of $0.91-0.96 vs. $0.93 consensus. Co issues in-line guidance for FY07, sees FFO of $3.62-3.67 vs. $3.66 consensus.
23:30 ET Bucyrus beats by $0.10, beats on revs Reports Q3 (Sep) earnings of $1.00 per share, excluding non-recurring items, $0.10 better than the Reuters Estimates consensus of $0.90; revenues rose 170.5% year/year to $500.3 mln vs the $488.5 mln consensus.
18:48 ET Avnet to acquire ChannelWorx Co announced that it has acquired ChannelWorx Pty Ltd of Australia. A Melbourne-based networking and security value-added distributor established in 1989, ChannelWorx is known in the market as a leader in security and networking.
18:42 ET Chemtura misses by $0.06, reports revs in-line Reports Q3 (Sep) earnings of $0.08 per share, excluding non-recurring items, $0.06 worse than the Reuters Estimates consensus of $0.14; revenues rose 8.8% year/year to $950 mln vs the $942.5 mln consensus.
18:39 ET Boston Private increases investment in Coldstream Holdings Co announced it has increased its investment in Coldstream Holdings, the parent of Coldstream Capital Management ("Coldstream"), a multi-client family office that provides comprehensive wealth management services to high net worth private clients. BPFH now owns ~46% of the firm. BPFH completed its initial investment in Coldstream in December 2002, and as of September 30, 2007 owned 27.5%. Coldstream remains an unconsolidated affiliate partner of BPFH.
18:33 ET Parker Hannifin acquires aerospace equipment manufacturer Shaw Aero Devices Co announced that it has acquired Shaw Aero Devices, a producer of aerospace components and equipment. Terms of the deal were not disclosed. The business had sales of $45 mln in 2007. The acquisition is expected to be accretive to earnings in its first full year of operations.
18:13 ET Western Union acquires 25% stake in GraceKennedy's remittance, Cambio and bill payments businesses in the Caribbean Co announced that they have closed on an agreement in which Western Union has purchased a 25% equity interest in GraceKennedy Money Services Caribbean SRL ("GKMS Caribbean"), the parent co for the GraceKennedy group's remittance, cambio and bill payments companies within the Caribbean region.
18:07 ET Continental Airlines reports October 2007 operational performance Co reported an October consolidated (mainline plus regional) load factor of 79.5%, 0.2 points above the October 2006 consolidated load factor, and a mainline load factor of 79.8%, 0.3 points above the October 2006 mainline load factor. Both load factors were records for the month. In addition, the carrier reported a domestic mainline load factor of 82.5%, 0.6 points below October 2006, and an international mainline load factor of 76.7%, 1.3 points above October 2006.

UPDATE 3-COMMODITIES-Oil, gold falter at brink of key levels

2007-11-04T19:24:00.000-08:00

(Adds quotes, updates prices)

By Veronica Brown

LONDON, Nov 1 (Reuters) - Oil and gold fell from their peaks on Thursday after moving tantalisingly close to key levels of $100 and $800 respectively as investors cashed in after sharp gains.

Base metal prices buckled on worries about rising stock levels and worries over Chinese sales.

Oil (CLc1: Quote, Profile, Research) was last quoted down $1.00 at $93.52 a barrel, having earlier gained nearly 2 percent to a record $96.24.

Gold vaulted to $799.30 an ounce, a 28-year high and just a razor's edge away from $800. It later pulled back to $788.80.

Currency fundamentals were still broadly supportive as the dollar hovered near a record low versus the euro [FRX/] after the U.S. Federal Reserve cut interest rates by 25 basis points as expected to 4.50 percent.

Lower U.S. interest rates reduce the dollar's yield appeal to foreign investors and tend to boost other dollar-priced assets, including commodities.

But investors said volatility would become a watchword for oil as prices reached for the key $100 level, with several drivers behind the moves including geo-political tension.

"The only thing you can guarantee is volatility. This market is a Tasmanian devil in as much as it's going to spin, go up and down in a big way because of the fact that it's not exactly supply and demand driving it," said Lars Steffensen, a partner and managing director of hedge fund Pamplonic Capital Management.

"Can you see $80 crude in the next three months? Yes, but I also think you could see $120 crude," he added.

INFLATION

In league with crude, bullion prices gave way to investors looking for profit from its lightning rally.

"Gold has really run out of steam with not enough volume around to justify or sustain higher prices," said Simon Weeks, director of precious metal sales at Bank of Nova Scotia.

"Overall, I am sure it ($800) will happen but we just need to take a breather," he said. "With some people late to the party, I think that there are some longs to be squeezed out."

After adjusting for inflation, gold's lifetime high is equal to $2,079 an ounce at 2006 prices. Prices have jumped 25 percent since the latest rally began in mid-August, while oil prices are heading towards an inflation adjusted peak of $101.70 from April 1980.

Philip Klapwijk, chairman of metals consultancy GFMS, said inflation worries and a weak dollar were likely to push gold towards the record high of $850 in the first half of next year.

"Inflation is beginning to become a bit more of a concern, particularly in the context of lower U.S. interest rates," he told Reuters in an interview.

"We could see negative real-term interest rates in the U.S. next year as the Federal Reserve is likely to cut rates further. This will make gold more attractive."

Copper prices were softer as the market focused on rising stocks and worried about falling demand from China.

Benchmark three-month copper (MCU3: Quote, Profile, Research) on the London Metal Exchange was down at $7,550 a tonne compared with $7,720 on Wednesday.

"Although U.S. metals demand has year-to-date been relatively weak, (the data) suggests that prices will not receive any support from Northern America," said Michael Widmer, analyst at Calyon.

"Looking particularly at the copper market and with China still seemingly de-stocking, it is likely that further metal will be delivered into inventories."

(Additional reporting by Pratima Desai in London)

Forex - US dollar mixed as investors prepare for another rate cut, more bad news

2007-11-04T19:22:00.001-08:00

SYDNEY, Nov. 4, 2007 (Thomson Financial delivered by Newstex) -- The US dollar was mixed against major currencies in midmorning trade Monday after ending last week at fresh record lows as investors braced themselves for another rate cut in December and more bad news from the banking sector.

The greenback slumped to an all-time low against the euro, a 57-year low against the Canadian dollar and a new 26-year low against the sterling as investors switched to higher-yielding currencies.

A stronger-than-expected increase in non-farm payrolls on Friday was overshadowed by a Deutsche Bank (NYSE:DB) analyst's prediction that investment banks will need to take another 10 billion dollars in writedowns in the fourth quarter and Standard & Poor's (NYSE:MHP) decision to downgrade much of the banking sector.

''These fuelled fears that further credit-related losses were in store and weighed on the US financial sector,'' said John Kyriakopoulos, head of currency strategy at National Australia Bank. (OOTC:NABZY)

Kyriakopoulos said those fears 'saw traders price in more Fed easing.'
The Federal Reserve cut its benchmark rate by 25 basis points last week as widely expected. That followed a heftier half-point reduction in September.

At 10.25 am (2325 GMT), one US dollar was buying 114.54 yen compared with 114.85 yen in late New York trade Friday. The euro was up at 1.4518 dollars from 1.4505 dollars after touching a fresh record of 1.4527 dollars on Friday.

The greenback was buying 93.62 Canadian cents compared with 93.35 cents at the end of last week, after sinking to 93.20 cents, the lowest level since the ''loonie'' was floated in 1950.

The sterling closed around its 26-year high of 2.0898 dollars on Friday. The British currency was at 2.0884 dollars in Asian morning trade Monday.

In Sydney, the direction of the local currency will be determined by the outcome of the Reserve Bank of Australia's (RBA) meeting on Tuesday. One Australian dollar was buying 91.99 US cents in midmorning trade, below last week's close of 92.30 cents
Traders have priced in a more than 90 percent chance of the RBA raising interest rates by a
further 25 basis points to 6.75 percent. It would be the first time the Australian central bank has hiked rates during an election campaign.

There's a 70 percent chance of another rate hike in February.

''As such, the RBA statement accompanying a hike will need to be hawkish to sustain the current level of yield support for the Australian dollar,'' Kyriakopoulos said.

Sydney at 10.25 am (2325 GMT)
US dollar
114.54 yen
1.1513 sfr
Euro
1.4518 usd
166.27 yen
1.6713 sfr
0.6952 stg
Sterling
2.0884 usd
239.157 yen
2.40418 sfr
Australian dollar
0.9199 usd
0.4406 stg
105.395 yen
New Zealand dollar
0.7644 usd
allison.jackson@thomson.com
aj/ms
Copyright Thomson Financial News Limited 2007. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

ETF INVESTING: Credit Market Concerns Rattle Financials, Home Builder ETFs

2007-11-04T19:16:00.000-08:00

BOSTON (Dow Jones) -- U.S. financial stocks fell to multiyear lows this week over growing concern that banks may be on the hook for additional write-downs for subprime mortgages and other impaired credit obligations, while the Federal Reserve hinted it may be through cutting interest rates in the near term.

Worries about Wall Street's exposure to bad debt and a worsening housing market returned to the stock market with a vengeance during the sell-off, with exchange-traded funds tracking financials and home-builder shares suffering a major blow.

One of the most highly traded ETFs, Select Sector SPDR Financial (XLF) , shed about 6% of its value over Thursday and Friday and would have hit a new 52-week low if not for a late rebound Friday afternoon.

Pessimism is so widespread that some noted value investors are saying that the financial-services and housing sectors are not only the market's best bargains, but could be its next leaders.

"Fear dominates the pricing of housing stocks, of mortgage-related securities, of financials, and of many consumer stocks," Bill Miller, the veteran manager of Legg Mason Value Trust (LMVTX) , wrote in a letter to shareholders published Friday.

"The greatest gains over the next five years," Miller added, "will be made in those securities people are panicked about today,"

Another sharp jolt to the financial sector came on Thursday when an analyst at CIBC World Markets predicted that global banking giant Citigroup Inc. (C) may be forced to cut its dividend or take other steps to make up for a $30 billion capital shortfall. Shares of Citigroup lost about 7% for the session and the selling quickly spread into other banks and financial services stocks.

Late Friday, the Wall Street Journal reported on its Web site that Citigroup CEO Charles Prince would offer his resignation as early as Sunday when the bank's board meets in an emergency meeting. Citigroup shares fell 2% in Friday's regular session, but recouped the loss in after-hours trading.

November brings no respite

It's been a rough quarter for Wall Street so far, with investment banks recording billions of dollars of losses and mark-downs on home loans and other fixed-income investments due to the turmoil in credit markets.

Large financials stocks setting new 52-week lows late this week included Citigroup, Bank of America Corp. (BAC) , Washington Mutual Inc. (WM) and Merrill Lynch & Co. (MER) .

At Merrill Lynch, Stan O'Neal, was forced out as CEO this week after the company wrote down nearly $8 billion of mortgages and related assets in the third quarter, well above its earlier forecast.

More bad news piled up when a report surfaced Friday in The Wall Street Journal that alleged Merrill Lynch engaged in deals with hedge funds to delay when it had to record losses on risky mortgage-backed securities. The Securities and Exchange Commission is investing how Wall Street valued mortgage-backed securities, according to the report. Merrill Lynch denied the story in a statement Friday.

Washington Mutual's shares were also under pressure this week on news that New York Attorney General Andrew Cuomo has filed a suit alleging that First American Corp. (FAF) and its eAppraiseIT unit had been "colluding" with Washington Mutual to inflate the appraisal value of homes.

The swoon in financials stocks took such a large bite out of the major market indexes because the sector in recent years has accounted for a growing portion of the U.S. economy. At the end of the third quarter, financials comprised the largest sector slice of the Standard & Poor's 500 Index (SPX) at roughly 20%, although that's likely decreased since then given the recent downturn. Citigroup and Bank of America were among the top 10 holdings in the index, according to Standard & Poor's.

At the end of 2000, financials accounted for 17.3% of the S&P 500, up from 13.1% in 1995 and 7.2% in 1990.

Short-sellers stock up

The sell-off in financials stocks evidently didn't catch everyone by surprise, as some ETFs with the highest levels of short interest invest in the sector. Since they're baskets of securities that trade like individual stocks, ETFs can be traded throughout the day, sold short or bought on margin.

Hedge funds are increasingly using ETFs to take a position on an entire sector, rather than pick individual names. Traders also short ETFs to take a bearish view on an industry or to hedge an existing position.

According to a recent report from Morgan Stanley analyst Paul Mazzilli, the KBW Regional Banking ETF (KRE) had short interest equal to about 547% of shares outstanding. ETFs can see short interest in excess of 100% because unlike individual stocks, more shares can be created to cover the short positions. Multiple borrowings can also bolster reported short-interest levels in ETFs, analysts say.

The KBW Capital Markets ETF (KCE) recently had short interest of about 351% and Select Sector SPDR Financial had 176%, according to Morgan Stanley.

Dan Dolan, director of wealth management strategies at the Select Sector SPDR ETFs, pointed out the Select Sector SPDR Financial, which holds 93 stocks, is by far the largest financials ETF in terms of assets. Top holdings include Bank of America, Citigroup, American International Group Inc. (AIG) and J.P. Morgan Chase & Co. (JPM) .

Although the assets and cash flows have been jumping around recently on market volatility, Dolan said it's essentially a $4 billion fund in terms of assets.

For example, he said the financials ETF saw more than 23 million net shares redeemed during Thursday's market plunge. He said the ETF has been swinging between 110 million shares outstanding on the high side to 40 million shares on the low end.

"Investors are going long or short very quickly," Dolan said. "This looks extreme, but trading is one of the uses of ETFs because they provide liquidity to segments of the market."

Most of the trading and shorting in the ETFs is done by large institutions and hedge funds, rather than by individual investors.

Tail wagging the dog?

Even though the financials ETF has seen a lot of trading, Dolan said that with assets averaging $4 billion, he doubts the activity has had any meaningful impact on shares of the companies in the tracking index. The market capitalization of the financials slice of the S&P 500 is about $2.5 trillion, he estimated. Instead, he said, it's the underlying components that move the ETF, and not vice versa.

At the end of the third quarter, Select Sector SPDR Financial had nearly half its assets in the top 10 holdings, which include highly traded names such as Wells Fargo Co. (WFC) , Goldman Sachs Group Inc. (GS) and American Express Co. (AXP) . The average market cap of a stock in the financials ETF was $53.1 billion, according to investment researcher Morningstar Inc.

Meanwhile, ETFs designed to carve the financials sector into smaller pieces such as banks and insurance companies have also felt the pain. Likewise, ETFs investing in builders and mortgage REITs have suffered large declines as a result of the credit crunch.

Heading into Friday, KBW Regional Banking ETF was off 11.9% for the trailing month, iShares Dow Jones U.S. Regional Banks (IAT) dropped 10.4%, PowerShares Dynamic Banking (PJB) lost 9.8%, iShares FTSE NAREIT Mortgage REITs (REM) shed 8.8%, KBW Bank ETF (KBE) shed 8.7% and Select Sector SPDR Financial dropped 8.5%, according to Morningstar.

In particular, home-builder ETFs have been walloped this year after the subprime mess intensified the housing slump. Sales and prices are down, inventories of unsold homes are stretching and home builders are taking impairment charges on land that's fallen in value.

Through Thursday's close, iShares Dow Jones U.S. Home Construction Index ( ITB) was down 52.7% so far this year, while SPDR S&P Homebuilders ETF (XHB) suffered a 43.2% loss over the same period, according to Morningstar.

The home-builder ETFs plunged on Thursday after a report from RealtyTrac said U.S. home foreclosures in the third quarter doubled from the year-ago period and rose 30% from the second quarter as home sales continue to weaken and adjustable-rate mortgages reset higher.

Bay Street Week Ahead-Commodities keep the bull alive

2007-11-04T19:06:00.000-08:00

By Leah Schnurr

TORONTO, Nov 2 (Reuters) - Despite steep summer declines and nagging fears over the health of the U.S. economy, analysts say smoking-hot commodity prices may keep Canadian stocks charging ahead as the bull market enters its sixth year.

The Toronto Stock Exchange's key S&P/TSX composite index (.GSPTSE: Quote, Profile, Research) embarked on a month-long dive in mid-August, but has been able to recover most of its losses as resource shares prove resilient due to high prices for oil, gold and other commodities.

Resource companies make up about 45 percent of the index and analysts say that heavy weighting could help insulate the market from any economic slowdown in the United States.

"I'm not particularly optimistic about the U.S. but I don't think the TSX is really about the U.S. any more," said Jeff Rubin, chief economist and chief strategist, CIBC World Markets.

"What we're seeing is strong global growth that no longer seems to be dependent on the U.S. and that's what allows the Canadian market, and indeed the broader Canadian economy, to have the measure of independence from the U.S. that it didn't have in past cycles," Rubin said.

Investors are hoping that if there is a U.S. downturn, demand for fuel from markets such as China and India will help keep oil prices high and investor interest in Canada's oil patch keen.

"It may be true that Canada sells all of its oil to the United States but the price that it does depends on what's happening in global oil markets," Rubin said.

Shares in oil and gas producers have climbed 11 percent since the mid-August slump, mirroring a big advance in crude oil prices, which hit a record high of $96.24 a barrel this past week

Gold producers have done even better, soaring 4 percent over July's peak as the price of bullion surges. Gold broke the $800 mark for the first time since 1980 on Friday to move up to $807.70 an ounce.

Betting on commodities, however, could have a downside if a U.S. slowdown is worse than anticipated or if it infects the global economy.

"If we get some slowing in the U.S., as long as it doesn't, in too meaningful a fashion, spill over outside of the U.S., then that should still provide a bid for our commodity stocks," said Paul Taylor, chief investment officer at BMO Harris Investment Management Inc.

A resource-fueled rally, along with corporate tax cuts and an interest rate cut from the U.S. Federal Reserve, helped push the TSX index to within reach of its record high last Wednesday, but it retreated the next day, due in part to brokerage downgrades in the U.S. financial sector.

The downgrading of Citigroup (C.N: Quote, Profile, Research) in particular heightened fears about the U.S. economy and highlighted the tug-of-war between optimism over commodities and pessimism over the slumping U.S. housing market that has been the hallmark of the Toronto market for the past few months.

After hitting a new high in mid-July, the key index tumbled in August due to the onset of a global credit squeeze that was sparked by the U.S. subprime mortgage crisis. The TSX skidded 12 percent from its peak, but has been able to recover the lion's share of those losses.

While most analysts expect the Toronto market will end the year higher for a sixth year in a row, the push and pull is likely to continue, making for high volatility and equally high anxiety.

Based on Friday's close, the market is up 11.3 percent for the year so far.

Opinion is split over how long investor confidence will hold or if the woes in the United States will lead to the end of the bull run.

"It won't really surprise me to have the first down market in six years (in 2008)," said Elvis Picardo, investment strategist at Northern Securities Inc., in Vancouver, British Columbia.

"We've had such a fantastic run, it's really been amazing, but expecting it to continue this way may be a little foolhardy."

The Bad Boy of Buzz and His PR Problem

2007-11-04T18:54:00.000-08:00

Ronn Torossian's 5W represents rappers and evangelicals, but blue-chip clients are more elusive

Even in an industry fueled by hype, Torossian stands out. He claims to have evangelist Pat Robertson and Israel's Prime Minister on speed dial. He carouses with celebrities. He courts controversy--sliming rivals, scrapping with journalists, lobbing public insults on behalf of clients. And, at 33, he has built his New York-based 5W Public Relations into one of America's fastest-growing independent agencies. "It's easy to hire [firms like] Burson-Marsteller or Edelman," Torossian brags. "It takes guts to hire 5W."

Torossian has anointed himself the brash new face of PR. And it's true that few seem better equipped to navigate a celebrity-obsessed culture. One of his biggest coups was getting a newborn Shiloh Nouvel Jolie-Pitt photographed in a T-shirt sold by a Denver retailer, 5W's client Belly; the photo then made the cover of People magazine. Torossian--loud, crass, buzz-obsessed--also echoes the raw, unvarnished discourse of the blogosphere, which he claims to understand better than anyone. Brian Connolly, who founded the irreverent PR blog Strumpette, says Torossian represents "what the industry has become."

Perhaps, but Torossian and his 85-person agency face a conundrum. The tactical provocations may cut through the media noise. They also could sabotage an agency that has worked with the likes of McDonald's (MCD ) and Coca-Cola (KO ) but failed to sign many blue-chip companies (though Torossian says there are several he can't name). Torossian's rivals quietly suggest he is more fad than change agent and that modern PR is less about generating buzz than backroom strategy. Not that Torossian, a guy who has been known to issue press releases about himself, expresses any self-doubt. "One of the reasons I've grown so quickly is that I'm bright," he says. "Another is that my competitors are not so bright."

Torossian started 5W--who, what, where, when, why--in early 2003 and soon caused a stir with his choice of clients. As he's a rap fan with hip-hop connections, it was no surprise that he began representing the likes of Sean John Combs. But the Christian Coalition? As always, he has a press release-ready explanation, paraphrased here: Both religious groups and hip-hop artists have been mischaracterized as extremists when, in fact, they are warm family people who want only to win. (Torossian says he no longer represents the Christian Coalition but still provides consultation. The group did not return calls for comment.)

As the business grew, a handful of corporate clients signed on. The agency is a minnow next to an Edelman (revenues: about $375 million). But Jack O'Dwyer, whose industry newsletter produces an annual ranking of PR agencies, this year put 5W at No. 22 out of 140 indie firms surveyed and says 2006 billings surged 85%, to $9.3 million.

Almost from the start, Torossian has made a point of taunting his rivals, calling them "dinosaurs," "old men in suspenders," and "brain-dead." He has taken regular jabs at New York PR king Howard Rubenstein. And in an e-mail to Rubenstein's son Richard, he called him a "daddy's boy," though Richard, 42, has long had his own firm. "He's posturing as a streetfighter," says the younger Rubenstein. Another rival points out that trash-talking the competition can build buzz but eventually could backfire. "These tactics are great for your first $5 million," says this person. "It starts to hurt you during the second $5 million."

Torossian brings similar combativeness to client crises. When Trinity Broadcasting Network President Paul Crouch was battling allegations of a homosexual tryst with a former employee (who had earlier received a settlement), Torossian publicly told Crouch's accuser he should keep his mouth shut. And when a Florida judge ordered Girls Gone Wild boss Joe Francis to surrender to U.S. marshals earlier this year on contempt charges (he's now in a Nevada jail, awaiting trial on tax evasion charges), Torossian was quoted calling the order an example of "judges gone wild."

Torossian's admirers say his bombast serves clients in an era when celebrities and bloggers can have more sway than journalists. "Of all the people I interviewed, he had unlimited energy," says Morton A. Klein, president of the Zionist Organization of America, a fringe activist group. "And he got me an article in The New York Times!" Torossian also earns praise from Jeff Caswell, who runs marketing for Evian North America. "He has a different way of looking at public relations," says Caswell. That means anything from "seeding products with celebrities" to knowing which blogs are influential.

Still, it can't be easy juggling such an eclectic roster. Torossian risks alienating corporate clients by continuing with Girls Gone Wild. And one can only imagine how Regent University, founded by Pat Robertson to infuse education with "God's glory," feels about sharing billing on 5W's Web site with LifeStyle Condoms and Pamela Anderson. When asked, Regent put the query to Torossian, who told BusinessWeek: "Clearly, many of our clients have nothing to do with one another."

Yet some of 5W's listed clients seem anxious to distance themselves. "They are not currently representing us," says a McDonald's spokeswoman. Anheuser-Busch declined to comment. One ex- client says: "I saw more press releases on him than any work for my firm." Torossian seems aware he may have, well, a PR problem. Days after saying "I've met every major hip-hop artist," he has a new angle: "Ninety-seven percent of my revenue comes from corporate clients. In two years of representing Ice Cube, I've met him twice for 12 seconds.... We are not a celebrity agency." Could PR's enfant terrible be growing up?

Wall Street ends volatile session higher

2007-11-04T18:51:00.001-08:00

NEW YORK

Wall Street twisted its way through another difficult session Friday, discouraged about the economy's prospects but still managing a higher finish after some concerns about the beleaguered financial sector lifted late in the session. The major indexes ended the week mixed.

Word shortly before the close that Citigroup Inc.'s board plans to meet in an emergency session over the weekend helped that stock and other financials pare steep losses.

Friday's session ended a week made turbulent not only by bad news from the financial sector but also by spiking commodity prices and hints from the Federal Reserve that it might be less generous with interest rate cuts in the coming months. A highly anticipated Labor Department report Friday showed employers added 166,000 jobs in October -- the most in five months and nearly double what analysts expected -- but didn't give stocks much of a lift a day after a sharp pullback as investors' unease about the financial sector blanketed trading.

Wall Street remained shaky after Thursday's sharp pullback, which took the Dow Jones industrial average down more than 360 points -- the fourth biggest drop of the year. The market has been mercurial lately, with economic data coming in mixed and the possibility of interest rate cuts ending, and Friday's trading saw the major indexes alternating between gains and losses.

"I think there is a lot of uncertainty in the markets about the financial institutions in particular," said Subodh Kumar, global investment strategist at Subodh Kumar & Assoc. in Toronto. "This market will remain volatile until these issues are resolved or until it's had a full 10 percent correction," he said, referring to unease about the extent of write-downs.

The Dow rose 27.23, or 0.20 percent, to 13,595.10 after being down more than 120 points at one point in the session.

Broader stock indicators also closed higher. The Standard & Poor's 500 index rose 1.21, or 0.08 percent, to 1,509.65, while the Nasdaq composite index rose 15.55, or 0.56 percent, to 2,810.38.

The Dow and the S&P 500 ended the week with losses, the Dow dropping 1.53 percent and the S&P off 1.67 percent. The Nasdaq managed a gain of 0.22 percent.

Bond prices rose as investors pulled more money out of stocks. The yield on the 10-year Treasury note, which moves opposite the price, fell to 4.32 percent from 4.35 percent late Thursday.

Oil prices rebounded on the New York Mercantile Exchange, after dropping sharply Thursday. Prices have been exceptionally volatile in recent days as the market treads through record territory. A barrel of oil settled up $2.44 at $95.93.

The dollar traded mostly lower against other major currencies. The euro bought a record $1.4527 on Friday.

Some of the biggest losers in the stock market Friday, as they have been in the past few months, were financial institutions -- including Merrill Lynch & Co., Washington Mutual Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. Several analysts have issued research notes in recent days expressing concern about banks' and brokerages' exposure to the tight credit markets and the likelihood that further write-downs are in the offing.

It's likely that as strong as the jobs number was, investors will need to see more evidence of a stronger economy and more stability in the credit markets before they can make any major commitments to stocks, observers said.

The market on Thursday was unnerved by news that consumers cut back their spending in September and that the manufacturing sector expanded in October at the slowest pace since March. But earlier in the week, an initial estimate of third-quarter economic growth came in stronger than economists had expected, at 3.9 percent.

The economic news that arrived Friday added to the mixed picture. The unemployment rate held steady at 4.7 percent, in line with September and analysts' consensus forecast. And while the increase in jobs was well above what economists polled by Thomson/IFR had expected, the size of the civilian labor force shrank.

Jack Ablin, chief investment officer at Harris Private Bank, contends investors were downplaying an upbeat jobs figure and that the decrease in the labor force should be a lesser concern.

"I think investors who are worried about the direction of the economy should take comfort that we still have an engine," he said, referring to the overall employment picture. "We know we can't rely on the consumer to keep spending the way that they have but we can point to job growth and wage gains as solid evidence that our economy is on solid footing."

As has occurred frequently in recent weeks, technology and small-capitalization issues outperformed much of the broader market Friday.

"Certainly there are problems surrounding several financial institutions and investors seem like they are channeling their investments away from financials and toward growth stocks and things like consumer staples, health care and technology," said Ablin.

But enthusiasm for some corners of the market, concerns about the financials continued to weigh on investors. The Wall Street Journal, citing two people familiar with the matter, reported in the final minutes of the session Friday that Citi's board plans to meet over the weekend and that the discussion will include whether the bank will book further write-downs.

Citigroup, fresh off its biggest decline in years on Thursday, fell again Friday but pared much of the day's losses following report of the planned meeting. The stock closed down 78 cents, or 2 percent, at $37.73.

In addition to Citi, Merrill fell $4.91, or 7.9 percent, to $57.28; Washington Mutual fell $1.94, or 7.5 percent, to $23.81; Goldman Sachs fell $10.61, or 4.4 percent, to $229.60; and JPMorgan fell $1.17, or 2.6 percent, to $43.15.

Declining issues outnumbered advancers by about 6 to 5 on the New York Stock Exchange, where consolidated volume came to 4.18 billion shares, compared with 4.20 billion shares traded Thursday.

The Russell 2000 index, which tracks the performance of small-capitalization stocks, rose 2.60, or 0.33 percent, to 797.78.

Overseas, Britain's FTSE 100 fell 0.84 percent, Germany's DAX index shed 0.40 percent, and France's CAC-40 declined 0.18 percent. Asian markets tumbled in the wake of Wall Street's losses on Thursday. Japan's Nikkei stock average closed down 2.09 percent, while Hong Kong's Hang Seng index fell 3.25 percent.

------

The Dow Jones industrial average ended the week down 211.60, or 1.53 percent, at 13,595.10. The Standard & Poor's 500 index finished down 25.63, or 1.67 percent, at 1,509.65. The Nasdaq composite index ended up 6.19, or 0.22 percent, at 2,810.38.

The Russell 2000 index finished the week down 23.61, or 2.87 percent, at 797.78.

The Dow Jones Wilshire 5000 Composite Index -- a free-float weighted index that measures 5,000 U.S. based companies -- ended Friday at 15,268.82, down 249.30 points, or 1.61 percent, for the week. A year ago, the index was at 13,683.52.

Indexes Erase Losses In Midday Trading

2007-11-04T18:41:00.000-08:00

The stock market bounced off lows in midday trading and peeked into the black.

The Nasdaq was ahead 0.8%, reinforcing its role as the current uptrend's leading index.

The S&P 500 and Dow rose 0.2%. The NYSE composite gained 0.4%.

The small-cap S&P 600 was also bouncing back from Thursday's beating. It was up 0.2%.

Volume was tracking higher across the board.

Energy, transportation and some industrial industry groups were higher. Financial and gaming groups were among the weakest.

Besides Wynn Resorts (NASDAQ:WYNN) ' WYNN 4% loss, the market's leading stocks were holding up well.

Earnings news again drove the big movers.

Itron ITRI sliced through its 50-day moving average, tumbling 16.71 to 84.34. The maker of meter-reading equipment for utilities, missed third-quarter earnings and gave a disappointing full-year profit outlook.

Psychiatric Solutions PSYS, which has been forming a base for months, slid 0.96 to 37.97. The provider of mental-health services had been down lower earlier today, after its third-quarter sales missed estimates. Its 2008 guidance was below analysts' consensus.

On the upside, eHealth EHTH soared 4.10, or 15%, to 32.09 on heavy trading, making a record high. The online health insurance firm broke out Sept. 20 from a cup-shaped base. It then pulled back to its 10-week line, where it found support.

Open Text OTEX sprang up 3.37 to 34.87, passing prior highs from April 2004. Late Thursday, the content management software publisher beat earnings expectations. The stock is extended from a pullback to its 10-week line.

11 a.m. ET update: Nasdaq Pulls Into Positive Territory; Financials Hold NYSE In The Red

By Alan R. Elliott

Stocks whipsawed in morning trading, but moved generally lower as investors responded to a wave if earnings, economic and company news.

The NYSE composite was down 0.2%, the Nasdaq up 0.2% at 10:58 a.m. ET. The Nasdaq's (NASDAQ:NDAQ) telecommunications and biotech indexes showed strong advances, while financials fell 1.3%. The S&P 500 was down 0.4%. An early rise among small cap issues petered out, with the S&P 600 slipping into the red.

Census Bureau factory orders data for September showed a 0.2% gain, vs. expectations for a 0.4% decline versus a record high a year ago. The numbers weren't as rosy as they first looked, however, with the advance driven primarily by higher gasoline prices. Transportation orders fell off steeply and shipments numbers were flat.

Declining issues led gainers by nearly 2-to-1 on the NYSE and by a narrow margin on the Nasdaq.

Flowserve FLS leapt 10.81 to 86.20 after trouncing Q3 earnings estimates. The pump and valve maker also reaffirmed full year guidance. The 15% jump bumped the stock above an 81.92 buy point on a pullback to its 10-week moving average line.

Mettler Toledo MTD gapped up, adding 11.25 to 116.24. The industrial scale and scientific equipment maker also topped Q3 views, and issued upside guidance for Q4. The 11% jump lifted the stock above its 110.03 buy point on a pullback to its 10-week moving average line.

GFI Group GFIG gained 8.24 to 90.40 after topping Q3 earnings views on strong sales growth. A brokerage and analysis services provider to institutional clients, its stock was in buying range on a rebound from its 10-week moving average line.

Another gap-up gain, Taleo TLEO popped up 4.16 to 31.44. The headhunting and human resources software products maker reported late Thursday its Q3 results topped views by a wide margin. KeyBanc Capital Markets upgraded it to an aggressive buy Friday morning. The stock was 2% above a 26.30 buy point after a September breakout from a seven week cup-shaped base.

Downside stocks included online educational products maker Blackboard BBBB, which gapped down hard, losing 6.20 to 41.63. The Washington, D.C.-based company met views and issued midline guidance. But a Robert W. Baird analyst downgraded the stock to neutral.

Dialysis services provider Davita DVA also gapped down, dropping 6.15 to 59.30. IT reports Q3 earnings slowed to just below analyst views, and said full-year operating income could land near the low end of prior guidance. The 9% tumble knocked the stock well off its recent highs, to well below support at its 10-week moving average line.

10:15 a.m. ET Update: Stocks Reverse On Revived Credit Worries

By Alan R. Elliott

Markets opened to solid gains on a robust jobs report, but sold off hard as credit crunch fears quickly regained investors' attention.

As of 10:12 a.m., the Nasdaq fell 0.3% after already rising 0.7% and falling 0.7% early on. The NYSE composite and Dow slid 0.4%. The S&P 500 lost 0.5% on its exposure to financials.

Merrill Lynch MER dropped 6% to a fresh multi-year low after news reports detailed efforts by the investment bank to use hedge funds to delay reporting losses on certain mortgage backed assets. The reports suggest continued deepening of damage to credit markets tied to the subprime mortgage sector.

Among its peers, Goldman Sachs (NYSE:GS) GS fell 4% and Bear Stearns (NYSE:BSC) BSC 2%.

Meanwhile, some of the institutional quality leaders are under pressure today. VMware VMW tumbled nearly 4% on no apparent news. The stock has retreated from its high on Oct. 23.

Intuitive Surgical ISRG also has lost 4%.

Chipotle Mexican Grill CMG also is down 4%.

Microsoft MSFT is down 1%. Google is flat while Baidu BIDU and Research In Motion (NASDAQ:RIMM) RIMM are up.

HMS Holdings HMSY shot up 17% after reporting better than expected Q3 earnings and raising full year guidance. The stock is just above a buy point of 28.60 on a pullback to its 10-week moving average line.

Iris Int'l IRIS added 8% after reporting late yesterday its Q3 earnings met views for 80% growth. The stock is in its second week below its 10-week moving average line and may be building a base.

9:15 a.m. ET Update: Stocks On Track For Stronger Open As Payrolls Surge

By Vincent Mao

Stock futures pointed to a stronger start Friday, thanks to a robust jobs report. Nasdaq futures rose 18 points vs. fair value, S&P 500 futures gained 8 points and Dow futures tacked on 69 points.

Nonfarm payrolls surged by 166,000 in October, the best growth since May and more than doubled economists' expectations of 80,000 new jobs. Payrolls in August and September were downwardly revised by a total of 10,000, far less than many had feared. Although the pop in jobs growth is a sign of a healthy economy, this lessens the chance that the Fed would cut rates in December.

The jobless rate held steady at 4.7%, as expected. Average hourly earnings rose 0.2%, slightly below forecast, easing inflation fears

The dollar gained ground against the euro and the yen.

Crude oil bounced a bit after Thursday's reversal. The December contract gained 51 cents to $94 a barrel.

Chevron CVX edged lower after it reported a wider-than-expected loss. The nation's second-biggest oil firm reported Q3 profit of $1.75 a share, down 24% from a year ago, missing views of $2.07. Revenue also came in shy. Like Exxon earlier in the week, Chevron blamed weak refinery margins. Simply put, crude prices soared, but gasoline prices didn't rise much in Q3.

EBay EBAY fell 2% in preopen trade after Bear Stearns cut the Internet auction firm to peer perform from outperform. Bear cited a likely decline in margins.

Las Vegas Sands LVS sank 13% in the preopen. Late Thursday, the casino operator reported Q3 profit of 12 cents a share, down 64% from a year ago and well below views of 61 cents. The company blamed the shortfall on expenses related to the opening of the Venetian Macao, The Palazzo and other properties.

Rival Wynn Resorts WYNN also sold off. Both casino operators have fallen hard since hitting record highs on Monday.

NYSE Euronext NYX climbed 3% in pre-market trading on strong earnings. Ex items, the exchange operator earned 76 cents a share in the third quarter, up 77%, beating views. Revenue surged to $1.2 billion from $602 million a year ago. Results were helped by its acquisition of Euronext.

Synaptics SYNA vaulted 9% in pre-open trading. After Thursday's close, the maker of touchpad controls reported fiscal first-quarter earnings ex items of 54 cents a share, up 135% from a year ago and 13 cents above views. Sales jumped 58% to $86.7 million.

Factory orders for September will be out at 10 a.m. ET.

Pension funds still shy about surging commodities

2007-11-04T18:31:00.000-08:00

By Barani Krishnan and Veronica Brown - Analysis

NEW YORK/LONDON (Reuters) - Many pension funds are not sure they need commodities in their portfolios even after the blistering rally of the past few years, while others with limited exposure are debating whether to put in more money.

Crude oil futures in New York have tripled to a record of more than $95 a barrel from around $30 in late 2003, while gold futures have nearly doubled to $800 an ounce. Commodities from grains to copper and other base metals also have outperformed.

But pension funds' allocation for commodities have generally stayed at around 3 percent to 5 percent. The lion's share of their money -- about 60 percent -- remains in stocks, with the balance in bonds and investments like real estate and private equity.

Some funds who have missed the ride up are wondering if it is too late to get in.

"You're seeing a debate across funds that have become better funded because of better equity market returns or higher interest rates in recent years as to whether they should move a bigger portion of their assets into non-equity portfolios," said Dallas Salisbury, president and chief executive of the Washington-based Employee Research Benefit Institute.

"But a lot of it at this point is just discussion."

Pension funds, along with mutual funds and endowments run by universities, insurers and charities, have been among the most influential investors in commodities in recent years.

These institutional investors typically view commodities as a diversification to equities and fixed income. Their commodities exposure often is tied to performance of commodity indexes like the S&P GSCI (.SPGSCI: Quote, Profile, Research), the Reuters-Jefferies CRB (.CRB: Quote, Profile, Research) and the Dow Jones-AIG (.DJAIG: Quote, Profile, Research). Most use "long-only" strategies that benefit when these indexes rise from higher energy, metals and agricultural prices.

While current prices of oil and gold, and other high-flying commodities like nickel and wheat, have meant big returns for long-only investors, those who have yet to get in wonder how long the rallies will last.

"The very good returns that commodities have produced has actually been an argument not to invest because of a perception that they are overvalued," said Robert Howie, head of hedge fund research in Europe at Mercer Investment Consulting.

"So, the enormous performance has been a source of concern," he said, adding that Mercer's U.K. clients seemed particularly hesitant about commodities now while funds the company worked with in the Netherlands viewed the long-term benefits from such diversification as more important than immediate gains and losses.

NEED FOR OUTSIZED GAINS GROWING

Increasingly, Howie said, pensions were also looking at long-short strategies for commodities that combine passive index-type investments with active trades. Such combinations often aim for alpha, or returns above market expectations.

Despite booming commodity prices, returns from index-related investments were poor last year. The underperformance was related to a peculiarity with oil prices. Until July, forward months of crude oil contracts in New York were more expensive than the expiring spot month. This created losses for funds and other investors who rolled their position, selling the expiring contract and buying a future month.

Pension funds were attracted to commodities because of their non-correlation to stocks and bonds but "poor index performance has really held them back a long way", said Mark Mathias, chief executive at Dawnay Day Quantum, a commodity fund in London.

"Pensions have been very slow but the signs are they are starting to move," Mathias said. "It's always been in my mind a question of time as to how long it would take them to increase their weightings rather than whether they will or not."

The need for alpha or outsized gains is growing.
"As America ages, the liquidity needs of retirement plans are growing because more participants are taking money out," said Gary Amelio, former chief executive of the U.S. Federal Retirement Thrift Investment Board.

"Because liabilities are bellying up, you're seeing more pressure on the plans' trustees to get more alpha and the way to do that is to invest more aggressively in alternative investments like hedge funds, private equity and commodities," said Amelio, now president for retirement systems at Ullico, Washington-based insurer for unions.

The supercycle now in commodities also may be a big factor in whetting the appetites of pensions, analysts said.

Standard & Poor's predicted on Friday investments in commodities indexes would rise to $150 billion next year from $110 billion this year.

For investors with limited exposure, "this summer has been a very important test for the complex as it may well have actually enhanced commodities' appeal as a diversification asset class because it has done very well," said Michael Lewis, global head of commodities research at Deutsche Bank.

Green: The Color Of Money -- Applied Materials Bets Big on Solar

2007-11-02T13:26:00.000-07:00

Solar energy is hot. Venture caital firms have seen the light and even the U.S. government is upping its investment efforts.

Among the true believers is Michael Splinter, president and CEO of Applied Materials. Splinter, a semiconductor industry veteran who left Intel in 2003 to take the helm at Applied Materials. made a strategic decision to enter the solar business, a move that has already meant more than $1 billion dollars in investment.

Applied Materials makes the equipment used to build solar panels and expects some $600 million in orders in 2007 fiscal year, ending in October. Its premier product, SunFab Thin Film Line, sprays a large sheet of glass with a thin coat of light-sensitive silicon, which generates power when hit by rays of the sun. Customers include companies in Europe and India.

Splinter says his goal is to reduce solar costs from the current $2-$3 per watt to $1 per watt within the next two years and to 70 cents by about 2010, making it a competitive energy source.

Splinter, an engineer and technologist, is also member of the Technology CEO Council and Governors’ Council of the World Economic Forum.

What were the key factors in entering the solar business?

We started to think about core capabilities of our company -- where there are markets and areas to grow. We had looked at a lot of options. One of the options with great opportunity we thought was the energy market, which is very, very large. We had capability no one else had. It certainly was not a mature market. It was open to new players and capabilities.

You’re a technologist among other things. How excited are you about the technological potential?

I think we have the opportunity to set the standard in the market place. It is an exciting opportunity that doesn’t come along very often in the lifetime of the marketplace.

Is this a place where personal philosophy and business opportunities meet?

I certainly have philosophical views on clean energy and steering the company to the energy market. I believe the great social issues of our time are energy and the environment and you have to couple them with solutions that have to be economically viable.

Just how competitive can it be?

Over a period of time, it has to be directly competitive with other forms of energy -- when all the other costs are accounted. Now that it going to take us some time – somewhere between five and ten years, maybe three to seven years.

When it comes to the green movement, is some of it corporate fashion versus a legitimate search for cost-effective alternatives?

I don’t know about fashion so much. It depends on what kind of activity you are talking about. For companies talking about reducing their carbon footprint, it is something that could be taken as corporate fashion but you have to look inside their plans to see what they are about.

What we’re really doing is bringing technology to bear on real problems that face the world for the next 50 years. The environment and energy are two fundamental problems we face. We have to do some serious thinking, create some interesting technology to bring the world forward.

I was thinking about this the other morning. In a time period of 50 years, if every person in India uses the same amount of energy as someone in the United States does, it would require eight times the amount of energy currently available in the U.S.

What are your customers telling you?

A lot of our customers are really aiming at the European market where there are requirements to have a menu of different technologies. Since our technology is the most cost effective today, customers are pretty excited about it even given today’s capabilities.

How big of an investment are you prepared to make?

We think this market can be very, very big. Capital spending in the energy field right now is about $350 billion a year. If solar could be just 1% of that, it’s a giant step.

What sort of revenue projections do you have for down the road?

If we’re talking on a five-year horizon, I would like to see solar energy take 1% of all cap-ex energy investment. Now how much of that share we’d be able to get is a competitive issue.

The thing to realize in our company, this is really a start up. In 2007 we have a very small amount of revenue in this area. We have a relatively large number of contracts coming in. I’ve been surprised at how fast this thing has progressed.

In the push for globalization, energy consumption was something corporations didn’t accurately factor in, did they?

Certainly not. That has been a huge factor that has come to the fore recently, partly because of the increase in prices.

What’s the biggest mistake that corporations and people are making in dealing with the sustainability and growth?

I would think, because it constantly surprises me, it is the size of the problem and the size of the opportunity.

Stocks Fall On Credit Fears, Ignoring Jobs Growth

2007-11-02T13:15:00.000-07:00

A much stronger than expected nonfarm payrolls report took a backseat to lingering worries that the end of the subprime fallout isn't in sight

Even a blowout U.S. employment report for October couldn't make investors forget the bogeyman on Wall Street: fears of new subprime-related demons that could still seriously impede U.S. economic growth.

Major U.S. stock indexes opened higher on Friday, but quickly reversed lower, extending the sharp losses from Thurday, led again by financial stocks after a report that Merrill Lynch & Co. (MER) may have had some questionable dealings intended to hide losses from subprime mortgages.

On Friday, the Dow Jones industrial average was down 48.12 points, or 0.35%, to 13,519.75. The broader S&P 500 index slipped 6.82 points, or 0.45%, to 1,501.62. The tech-heavy Nasdaq composite index was off 2.02 points, or 0.07%, to 2,792.81.

In economic news, nonfarm payrolls leaped by 166,000 in October, more than double the 80,000 that were expected. The September figure was revised downward to 96,000 from 110,000. Not surprisingly, another 21,000 manufacturing jobs were lost, while retail was down 22,000 jobs and construction down 5,000. Professional business jobs rose 65,000 and temporary jobs were up 20,000. The unemployment rate held at 4.7%, while average hourly earnings edged 0.2% lower.

Some market players were skeptical about the report, predicting a significant downward revision in the future.

That, and more negative economic data in the interim, would likely put new pressure on the central bank to lower rates, as many investors are convinced the broader economy has yet to register the full impact of the housing and financial sectors' turmoil.

September factory orders increased 0.2%, where a 0.5% decline was anticipated. Shipments were unchanged, while inventories rose 0.6%. The durable goods data revisions were negligible, leaving durable orders down 1.7%, with durable shipments down 2.1% and durable inventories flat at 0.4%. Nondurable orders/shipments jumped 2.1%, led by a 10.6% price-related surge in petroleum.

Worries about damage to the broader economy promise a longer roller coaster ride in the markets. Citigroup Global Markets Equity Research predicts an extended period of volatility that will keep investors dizzy even as the markets trend higher. Driving that volatility are steepness in the yield curve, the equity risk premium and growth in private sector credit, Citigroup said in a Nov. 2 research note, making a return to the relatively benign market conditions of 2005 and 2006 unlikely.

The oil markets reacted positively to the employment report. Crude oil for December delivery in New York climbed 87 cents to $94.36 per barrel after gaining some strength in overnight trading. The contract ranged between $93.05 and $94.69 in overnight trade. Oil traders continue to look at the dollar, though the greenback appears to have seen its worst levels for the time being. Elsewhere, front-month gasoline has spiked to five-month highs of $2.3850.

Among stocks in the news Friday, Chevron (CVX) earnings came in lower than expected The oil giant posted $1.75 a share in third-quarter profit, which includes 19 cents in charges, down from $2.29 a share a year ago due to weak refining and marketing conditions in U.S. Revenue rose to $55.17 billion from $54.21 billion a year ago, but missed analysts' estimate of $58.29 billion. Even without the charge, Chevron's earnings fell short of analysts' consensus forecast of $2.07 a share.

More trouble may be in store for Merrill Lynch after The Wall Street Journal reported the investment bank engaged in deals with hedge funds that may have been designed to delay recognition of losses from mortgage securities. The Securities & Exchange Commission will probably investigate. Standard & Poor's downgraded the stock to hold from buy.

International Paper Co. (IP) reported income from continuing operations of 57 cents a share in the third quarter, compared with 45 cents in the year-ago period, on a 1.9% rise in sales. It expects slightly higher income from continuing operations in the fourth quarter, but noted that volumes will slow seasonally in most segments. Pricing continues to improve and the costs for wood, energy and transportation will continue to increase, it said.

Martha Stewart Living Ominimedia (MSO) narrowed its net loss in the third quarter to eight cents a share from a 49-cent loss a year ago, thanks to a 13% revenue increase. The company expects $120 million in revenue and $33 million to $35 million in operating income in the fourth quarter. For 2007, it sees revenue of $330 million, operating profit of $7.5 million to $9.5 million and adjusted earbings before interest, taxes, depreciation and amortization of $33 million to $35 million.

EBay (PRU)was downgraded to peer perorm by Bear Stearns on projectios tghat profit margins will fall next year.

European equity indexes were trading lower on Friday. In London, the FTSE 100 index fell 1.25% to 6,503.80. Germany's DAX index dropped 0.85% to 7,813.66. In Paris, the CAC 40 lost 0.86% to trade at 5,684.90.

Asian markets ended mostly lower. In Japan, the Nikkei 225 index was down 2.09% at 16,517.48. In Hong Kong, the Hang Seng index dropped 3.25% to 30,468.34. The Shanghai composite index slid 2.31% to 5,777.81.

Treasury Market

Treasury prices barely reacted to the positive jobs data and then climbed higher as stocks resumed their downward trend, as credit concerns continue to dominate trading. The two-year notes gained 06/32 to trade at 99-30/32 for a yield of 3.65%; 10-year notes rose 11/32 to 103-16/32 for a yield of 4.30%; and the 30-year bond rose 19/32 to 106-14/32 for a yield of 4.60%.

European Indexes End Lower

2007-11-02T12:48:00.000-07:00

London

The London market closed in the red as Wall Street continued to trade lower, despite a surprisingly high reading of non-farm payrolls. The main fear haunting markets appeared to be that major investment banks will continue issuing hefty subprime-related write-downs. One stock especially being stamped on today was BARCLAYS (-5.95%), on talk of funding worries and the bank talking down estimates in New York. Merrill Lynch analysts issued a buy reiteration note on Barclays, claiming these stories 'look like a Friday bear raid in a skittish market'. Elsewhere, WTI was above US$95 a barrel, with prices supported by worries over tight supplies. £ was at US$2.0853. In earnings news, BRITISH AIRWAYS (-2.73%) reported a 25.9% rise in first half pretax profit. The airline lowered revenue guidance to 3% from 3.5% on a weak US$. BSKYB (-4.35%) added ahead-of-forecast 83,000 net new customers in first quarter. However, the pay-TV company's adjusted operating profit of £150 million missed forecasts. In other news: CARPHONE WAREHOUSE (+0.88%) expects to sell 10,000 Apple iPhones when the gadget is launched in the UK next Friday, The Times reported. SKYEPHARMA (+6.56%) said asthma drug Flutiform has cleared a Phase III safety study.

Paris

The CAC 40 (-0.18%) ended Friday's session a shade lower, held back by the down force of banking stocks, although the likes of SCHNEIDER and DANONE helped to lift the index off lows. In the US, the Dow was also trading with slight losses, as weighty concerns that the credit crisis could deepen further pulled banking stocks lower. The pressures were felt on the CAC 40: SOCGEN (-3.6%), BNP PARIBAS (-2.03%), CREDIT AGRICOLE (-2.6%) and DEXIA (-3.22%) dropped. The latter was downgraded to sell from neutral by UBS. In stock specific news, RENAULT (-1.87%) was driven lower after its October French sales fell by 4.9%. Outperformers included defensive stock France
TELECOM (+1.47%) and DANONE (+2.82%). Merrill Lynch raised its target on Danone to €64 (settled at €59.85) and broker looks for third quarter organic growth of 8-10%. SCHNEIDER (+2.37%) also gained as it is seen as a potential target for ABB. L'OREAL (+0.69%) benefited from a positive article in the FT's Lex column, being viewed as a better stock than Reckitt Benckiser. In broker news, SocGen downgraded PPR (-2.77%) and HERMES (-3.37%) to sell from hold. Merrill Lynch downgraded THALES (-1.18%) to neutral from buy.

Frankfurt

As Wall Street traded mixed, amid jobs data showing surprisingly strong growth, Xetra-Dax (-0.5%) ended Friday's session below breakeven - but off intra-day lows. Of local note, reports had it that CEO Klaus-Peter Mueller will become chairman of COMMERZBANK's (-1.5%) supervisory board next year and will be succeeded as CEO by Martin Blessing. ARCANDOR (-0.37%) is to take over METRO's (+3.03%) Kaufhof department stores, reported Handelsblatt. Efficiency gains of €350-400 million a year are expected. There was talk, based on Swedish press reports, of private equity group Cevian building up a stake in BASF (-0.23%). Speculation that Micron Technology is eyeing INFINEON (+0.2%) brought the German chip maker in focus. Auto data showed BMW's (-1.58%) North American vehicle sales rose 9.6% in October, boosted by demand for the 3 series car and a new version of the X5 sport utility vehicle. PORSCHE's (+0.67%) North American sales were up 21%, helped by new models of the Cayenne and 911 cars. VW's (-0.9%) US sales saw a 8.3% rise to 17,260 units. DAIMLER's (-1.13%) US sales rose 6.5% to 22,820 units last month. In other news pertaining to Daimler, the auto giant is in talks with India's Hero Group about an alliance to make commercial vehicles, according to the Economic Times.

Nordics

All the Nordic bourses ended the last session of the week in the red. Across the Atlantic, Dow Jones and S&P 500 extend yesterday's losses as financials continue to weigh. Oil rose above US$95/bbl on worries over tight supplies. Back in the Nordics, SAMPO (+1.81%) was the bright spot of the day bucking the negative trend as Cheuvreux was buying the name aggressively. Meanwhile, rumours that the Finnish bank may bid for the Swedish government's 20% stake in Nordea surfaced again today. On the reporting agenda, SCHIBSTED (-9.70%) fell sharply as third quarter core earnings came in short of expectations. S&P Eq Res pointed out the biggest weakness comes from Sweden, where Aftonbladet had to absorb SEK 41 million losses. NORSKE SKOG (-14.19%) delivered results for third quarter below expectations, with the numbers being even worse than the profit warning last month. PROSAFE (+2.00%), meanwhile, announced third quarter EBIT ahead of forecasts, with a positive market outlook for 2009-'11. In other news: Warner Music will withdraw its contract with NOKIA (unch.) following concerns about illegal downloading, The Wall Street Journal reported. TELENOR (unch.) was in focus as it may sell its 18.3% stake in Russian Golden Telecom for NOK4 billion to VimpelCom, Dagens Naeringliv reported. Key broker action, Goldman added NESTE OIL (+3.60%) to its conviction buy list.

Spain

The Ibex 35 ended Friday's session comfortably higher while major European financials extended losses. Although yesterday's All Saints Day broke the positive trend, in which the Spanish bourse benefitted from five profitable continued sessions, it seems that investors are still confident on Spanish banks. TELEFONICA and IBERDROLA were among the star performers. Of note, TELEFONICA (+1.89%) contributed with c.60 points. ING lifted its target price on the operator while the Mexican government said the investment in GTM does not contravene the law. In addition, shares were boosted amid expectations of strong iPhone sales when the device launches in the UK next week. Elsewhere, IBERDROLA (+0.63%) will invest €8.6 billion in its renewables unit to install 2,000 MW pa over the next three years, wrote La Gaceta. SACYR-VALLEHERMOSO's (+1.22%) unit Somague won a €75 million contract to build a light railway line in Dublin, according to Diario Economico. OHL (-1.04%) was confirmed as winner of five sets of Brazilian highway concessions. In addition, the construction group is reported to be seeking to make a third acquisition in the US to boost its civil works business, according to Cinco Dias. Cheuvreux downgraded TECNICAS REUNIDAS (-3.66%) on valuation grounds.

Canadian Dollar Reaches Record as Local Job Growth Accelerates

2007-11-02T09:01:00.001-07:00

Nov. 2 (Bloomberg) -- Canada's dollar surged to a record level after a Canadian government report showed the economy added five times more jobs than forecast in October and the unemployment rate fell to a 33-year low.

A strengthening job sector and rising wages may give the central bank more reason to keep interest rates on hold, while the U.S. economy, which consumes more than 75 percent of the nation's exports, suffers from a housing recession.

``It's very difficult to call a top for the Canadian dollar,'' said Shaun Osborne, chief currency strategist at TD Securities in Toronto. ``The job number is incredibly strong. I'm somewhat surprised.''

Canada's dollar advanced 1.6 percent to $1.0684 at 10:28 a.m. in Toronto and was the best performer among the 16 most- actively traded currencies today. One U.S. dollar buys 93.60 cents. It earlier touched $1.0721, the highest since the currency was floated. The Bank of Canada let the currency float for the first time in 1950. That era ended in 1962 when the country experienced fixed exchange rates until 1970.

The economy created 63,000 jobs and the employment rate dropped to 5.8 percent from 5.9 percent in September, Statistics Canada said today in Ottawa. Economists were expecting 12,000 new jobs last month, according to the median estimate of 24 economists surveyed by Bloomberg.

The Bank of Canada on Oct. 16 left its main interest rate unchanged and cut its 2008 economic growth forecast, citing the drag on exports from a U.S. housing slowdown and a higher currency.

Prior Decline

The currency declined the most in two weeks yesterday after investors sold risky assets, including stocks and equities, on concern the U.S. subprime mortgage losses will hurt corporate profits and global demand for commodities.

``There is nothing that's going against the Canadian dollar,'' said Karen Chen, a portfolio manager at Fischer Francis Tress & Watts in New York, with $32 billion in assets. ``The economy is strong, oil prices are higher, and the U.S. dollar is weakening. I don't see any turnaround unless the Bank of Canada cuts rate, or there is a joint global intervention to shore up the U.S. dollar.''

Canada's dollar is the best performer this year against the 16 most-actively traded currencies, gaining 24.6 percent versus its U.S. counterpart in 2007. The Canadian dollar reached parity with the U.S. dollar on Sept. 20 for the first time since 1976.

The Bank of Canada's commodity price index touched the highest since October 2005, as prices of the nation's commodity exports surged. The index represents the spot prices of 23 commodities produced in Canada and sold worldwide. Commodities account for about half of Canada's exports.

The yield on the government benchmark 10-year bond rose about 2 basis points, or 0.02 percentage point, to 4.28 percent. The price of the 4 percent security maturing in June 2017 declined 17 cents to C$97.83. Bond yields move inversely to prices.

Proposed 4th bourse to focus on agri commodities

2007-11-02T08:59:00.001-07:00

MUMBAI (Reuters) - India's fourth national commodity futures exchange, proposed by Indiabulls Financial Services Ltd and state-run commodities trading company MMTC Ltd, plans to focus on agricultural commodities.

We have received their proposal to set up a fourth commodity futures exchange at the national level. They are planning to focus on agricultural commodities, said B.C. Khatua, chairman, Forward Markets Commission, the regulator.

India has three national level exchanges, with two of them -- National Commodity and Derivatives Exchange and National Multi Commodity Exchange -- focusing on agricultural commodities.

"We are in the process of reviewing the proposal and decide on its feasibility," said Khatua.

The turnover of all commodity bourses put together were down 7.6 percent to 17,55 trillion rupees, during the first six-month period of April to September 2007, mainly due to falling trade in agricultural commodities.

India banned few grain futures early in the year to curb a rise in food grain prices and to tame rising inflation.

MMTC last week got trade ministry approval to set up the commodity exchange with Indiabulls.

Indiabulls will hold 74 percent in a special purpose vehicle (SPV) to set up the exchange and MMTC will hold the rest. The two firms will invest a total of one billion rupees in the equity capital of the SPV.

Wall Street Pulls Back After Jobs Report

2007-11-02T08:56:00.000-07:00

NEW YORK (AP) - Wall Street waffled Friday after a surprisingly strong October jobs report failed to alleviate escalating worries about the beleaguered financial sector.

The Labor Department said employers added 166,000 jobs to their payrolls in October, the most since May. The figure was nearly double what economists had expected, according to a Thomson/IFR survey. The unemployment rate held steady at 4.7 percent, in line with September and analysts' consensus forecast.

But Wall Street was clearly still shaky after Thursday's plunge, which took the Dow Jones industrials down more than 360 points. The market has been mercurial lately, with economic data coming in mixed and the possibility of interest rate cuts ending, and Friday's trading saw the major indexes alternating between gains and losses.

The biggest losers in the stock market Friday, as they have been in the past few months, were financial institutions -- including Merrill Lynch & Co., Washington Mutual Inc., Goldman Sachs Group Inc. and JPMorgan Chase & Co. Multiple analysts have issued research notes in recent days expressing concern about banks' and brokerages' exposure to the tight credit markets and the likelihood of subprime mortgage problems spilling into other types of consumer debt.

It's likely that as strong as the jobs number was, investors will need to see more evidence of a stronger economy and more stability in the credit markets before they can make any major commitments to stocks.

The Dow fell 41.95, or 0.31 percent, to 13,525.92 in mid-morning trading, partly reflecting the pullback in financial stocks.

Broader stock indicators also fell. The Standard & Poor's 500 index fell 5.43, or 0.36 percent, to 1,503.01, while the Nasdaq composite index rose 2.53, or 0.09 percent, to 2,797.36.

Bond prices rose. The yield on the 10-year Treasury note, which moves opposite the price, fell to 4.30 percent from 4.35 percent late Thursday.

This week has brought a jumble of contradictory economic news.

The market on Thursday was unnerved by news that consumers cut back their spending in September and that the manufacturing sector expanded in October at the slowest pace since March. But earlier in the week, an initial estimate of third-quarter economic growth came in stronger than economists had expected, at 3.9 percent.

Oil prices rebounded on the New York Mercantile Exchange, after dropping sharply Thursday. Prices have been exceptionally volatile in recent days as the market treads through record territory. A barrel of oil rose 79 cents to $94.28.

The dollar traded mixed against other major currencies.

Declining issues outnumbered advancers by about 3 to 2 on the New York Stock Exchange, where volume came to 415.2 million shares.

The Russell 2000 index, which tracks the performance of small-company stocks, fell 0.50, or 0.06 percent, to 794.68.

European stock markets followed Wall Street lower. Britain's FTSE 100 fell 0.59 percent, Germany's DAX index shed 0.47 percent, and France's CAC-40 declined 0.58 percent.

Asian markets tumbled in the wake of Wall Street's losses on Thursday. Japan's Nikkei stock average fell 2.09 percent, while Hong Kong's Hang Seng index fell 3.25 percent.

Big Banks Flock to 'Notes,' Try to Cash In on ETF Boom

2007-11-02T05:11:00.000-07:00

The latest financial titans rushing to capitalize on the boom in exchange-traded funds: investment banks.

Several big banks, including units of Deutsche Bank AG and J.P. Morgan Chase & Co., are planning to launch exchange-traded notes, a type of debt security that is marketed as being similar to exchange-traded funds. Both ETFs and ETNs typically track an index and trade on a stock market throughout the day.

For investment banks, ETNs are shaping up as an easy way to repackage and sell investment products known as "structured notes," which previously were offered only to wealthy clients or to big institutional investors. In one of the most recent moves, two weeks ago Barclays PLC launched eight commodity-oriented ETNs under its iPath brand, bringing its total to 16.

Also last month, Deutsche Bank entered the fray with a note under the Elements brand, which promises the return of a stock index managed by research firm Morningstar Inc. In May, Goldman Sachs Group Inc. launched a note tracking an enhanced commodity index, and in July Bear Stearns & Co. launched an ETN tracking an index of master limited partnerships.

"ETNs are going to explode in popularity," says Christopher Yeagley, head of Global Investment Solutions Americas at Deutsche Bank. "From an investor's standpoint, it looks feels and smells similar" to ETFs.

For investors, ETNs can be a tool to access certain investments, such as commodities and currencies, which aren't widely available in the fund format.

However, they have significant differences from their ETF cousins. For instance, ETNs don't have to adhere to some of the regulations that apply to ETFs and regular mutual funds.

In addition, fund-industry trade group Investment Company Institute is pressing for an examination of tax advantages that ETNs are marketed as having.

The ICI says it is preparing to send a formal letter to the House of Representatives' Ways and Means Committee, which has oversight of taxation issues, arguing that tax laws inappropriately treat ETNs and mutual funds differently. "We think that situation ought to be fixed," says Paul Schott Stevens, ICI president.

A key structural difference between ETFs and ETNs: ETFs hold a basket of securities like stocks and bonds, and a share in the ETF represents a portion of those assets. An ETN, by contrast, isn't backed by a specific pool of assets. Rather, it represents a promise by its issuer to match the returns of, say, a particular index or commodity (minus fees).

As a result, ETN investors need to pay attention to the credit rating of the issuer: Because while if an ETF company were to go bust, investors would get a share of the underlying assets, if an ETN issuer went bust, investors would have to wait in line like other debt holders.

ETNs are registered with the Securities and Exchange Commission, just like any other security. But they don't have to comply with regulations under the Investment Company Act that apply to ETFs and mutual funds. For instance, the notes aren't required to have a board of directors overseeing each product.

A key attraction of ETNs has been their tax treatment. Some commodity-oriented ETNs, such as those issued by Barclays and Goldman Sachs, say that their lawyers expect that the Internal Revenue Service will treat the notes as "prepaid forward contracts," which could lead to lower capital-gains tax on these investments.

That taxation issue is under question. "The IRS is looking at [prepaid forward contracts] and similar derivatives," said an IRS spokesman, without specifically commenting on ETNs' status.

The structured notes that underpin many of these new ETNs have been around for many years, and can be very complex, offering features like protection from a decline in value of the principal even if the market goes down.

The ETN version is "much more of a mass-marketed, simple index product," says Mike Camacho, head of Americas Structured Investments in J.P. Morgan's investment bank. J.P. Morgan doesn't have an ETN so far, but Mr. Camacho's team expects to launch a product early next year.

Goldman Sachs is hoping to launch its second product within the next few months. Its investments will aim to "either enhance the returns of traditional established indices, or...provide access to really unique markets and sectors," says Karen Fang, a managing director at Goldman Sachs Group.

The BearLinx Alerian MLP Select Index ETN provides access to an index of master limited partnerships, which are entities that engage in businesses like energy and oil exploration. Investing directly in a partnership results in complex tax-filing structure, but the ETN is created in a way that investors simply get a periodic cash distribution on which they pay income tax.

Some ETF companies are looking at ETNs to see if there might be an opportunity for them to distribute them, says Cliff Weber, head of development & strategy at American Stock Exchange.

Stocks Tumble a Day After Rate Cut

2007-11-02T05:01:00.000-07:00

Stocks logged painful losses Thursday as investors re-thought yesterday's Fed rate cut and absorbed a series of shocks, including a downgrade of Citigroup that helped sink the financial sector.

All three major indexes lost more than 2% of their value, falling steeply in late-afternoon trade. The Dow Jones Industrial Average fell 362.14, or 2.6%, to 13567.87. It was the Dow's fourth-worst performance of the year. The S&P 500 fell 40.94, or 2.6%, to 1508.44, its worst percentage decline since Aug. 9. The Nasdaq fell 64.29, or 2.3%, to 2794.83. Trading curbs were put in effect at the New York Stock Exchange shortly after the opening bell, and stayed in place all day.

Thursday's declines vaporized gains, and then some, from a Wednesday rally after Federal Reserve policy makers delivered a highly anticipated quarter-point rate cut. Apparently, after clamoring for the cut and getting it, despite recent strong economic data, traders somewhat belatedly began to fret about its implications for the economy's health. The Fed's policy statement, which seemed to forestall future cuts, also triggered losses.

"Besides the downgrades and credit worries, investors are having second thoughts about the Fed cut," said Peter Cardillo, of Avalon Partners. "The market had also been ignoring things like the prices of oil and gold, and they've been flashing warning signs. The Fed abandoned the fight to contain inflation. [Now] we might have sluggish growth, but is stagflation around the corner?"

Wednesday's cut also led to "nervousness that there's another shoe to drop in the financial sector," said Matthew Johnson, head of U.S. stock trading at Lehman Brothers. On Thursday, the Fed injected $41 billion in liquidity into the financial system, its largest insertion of funds since the credit crisis began this summer. But economist Drew Matus, also at Lehman Brothers, said the size and timing of the shot were "completely meaningless. The Fed is doing what's needed to keep the effective [rate] close to 4.5%."

Still, uncomfortable reminders of risks to the financial sector abounded. CIBC World Markets analyst Meredith Whitney downgraded Citigroup to "sector underperformer," saying the giant bank needed to raise more than $30 billion in capital through asset sales, a dividend cut, another stock float, or a "combination thereof." Citigroup was the worst performer in the Dow, losing 6.9%. American Depositary Shares of Credit Suisse Group fell 5% on news that its quarterly net profit fell 31% and that it had written down 2.2 billion Swiss francs ($1.9 billion) for unsold leveraged loans and structured products. Other financial stocks followed, including AIG, which dropped 6.1%, Morgan Stanley, which shed 7.2%, and Bank of America, which fell 5.3%. The four financial companies in the Dow -- American Express, AIG, Citi and J.P. Morgan Chase -- accounted for 27.7% of the drop in the index.

As at other major banks, profits at Citi have been slammed by huge writedowns of mortgage-backed credit instruments on its balance sheet, after this summer's credit crunch reduced the value of many such assets or made them impossible to trade. After stabilizing recently, a key measure of such derivatives -- the ABX index tracking AAA mortgage bonds -- has fallen to fresh lows, adding to lingering worries about the credit market.

"These strange instruments don't trade regularly, and maybe [Citi] didn't write off enough," said Alfred Kugel, of Atlantic Trust. "Merrill Lynch made an estimate weeks ago and…it wasn't really enough. This is such a complicated situation that it's very difficult to properly evaluate it."

The sense that subprime losses would affect other parts of the financial sector deepened when credit-risk management and mortgage-insurance firm Radian Group reported a loss in the third quarter, due to tightening credit markets, writedowns and losses related to a subprime mortgage joint venture. Its shares tumbled 14%. Bond insurer Ambac plunged 19.7%, and bond insurer MBIA fell 11.6%.

Michael Grasher, who covers Ambac for Piper Jaffray, cited Radian's earnings and concern about the ABX index as potential sector movers, but added that the index wasn't always indicative of insurers' underlying portfolios.

Adding to the Dow's woes, Exxon shares fell 3.8% after the oil and gas giant posted a bigger-than-expected 10% drop in third-quarter net income on lower refining and chemical margins, even as Exxon set a quarterly revenue record.

Crude-oil prices settled down $1.04, or 1.1%, at $93.49, after spiking above $95 in electronic trading and gyrating all day. "Oil [was] all over the place," said Phil Flynn, of Alaron Trading. Weak earnings and manufacturing data prompted drops, as other traders tried to buy on dips, he said.

The dollar gained slightly against the euro and fell against the yen. December gold futures also were down after rising as high as $802.50 an ounce. Overseas, Asian stock markets closed mixed, with the Nikkei 225 adding 0.8% in Tokyo, while the FTSE 100 lost 2% in London.

In major market action:

Stocks declined. On the New York Stock Exchange Thursday, 2,826 stocks declined and 442 advanced, on composite volume of 1.7 billion shares traded in stocks listed on the exchange.

The dollar was mixed. The euro was at $1.4435 from $1.4486 late Wednesday, while the dollar was at 114.56 yen from 115.35 yen.

Bonds gained. The benchmark 10-year note added 1, or $10.00 for every $1,000 invested, yielding 4.348% Thursday. The 30-year note gained 1 26/32, yielding 4.635%.

Mitsui Raises Profit Forecast as Record Oil Price Boosts Sales

2007-11-02T04:58:00.001-07:00

Nov. 2 (Bloomberg) -- Mitsui & Co., Japan's second-largest trading company, raised its profit forecast for this year as record oil prices will boost revenue.

Net income will probably climb to 420 billion yen ($3.67 billion) in the year ending March 2008, compared with an April forecast of 370 billion yen, the Tokyo-based company said today in a stock exchange filing. That will be a 39 percent surge from a 301.5 billion yen profit in the year ended March 2007.

``Soaring prices of oil, natural gas, copper and nickel are driving forces'' behind Mitsui's profit revision, Chief Financial Officer Kazuya Imai told reporters in Tokyo.

Mitsui joined larger rival Mitsubishi Corp. in revising up profit outlook as Japanese trading companies benefit from rising prices for commodities. Oil, gas and metals generate more than half of profits at the two trading houses. Oil reached a record $96.24 a barrel in New York yesterday as a weaker U.S. dollar spurred demand for commodities.

Mitsui shares have gained 83.3 percent in the past year compared with a 1 percent increase in the Nikkei 225 Stock Average index. The stock declined 2.7 percent to close at 2,910 yen a share on the Tokyo Stock Exchange today, after falling 4.4 percent earlier.

The company's earnings prediction is based on an average crude oil import cost of $67 a barrel, compared with an April forecast of $58, according to the statement. A gain of $1 in oil prices could bolster Mitsui's profit by 1.8 billion yen.

Oil Prices

``Oil prices aren't likely to fall below the $50 a barrel mark in the medium term because demand for the fuel from developing nations looked solid,'' Imai said.

Net income grew 63 percent to 251.9 billion yen in the six months ended Sept. 30, on sales of 8.21 trillion yen, up 8 percent from a year earlier.

Mitsui this year sold its Australian oil and gas exploration units to ARC Energy Ltd. for $315 million, contributing to the profit growth in the six months, Imai said.

The trading company sold Wandoo Oil Development Co. and Wandoo Petroleum Pty, which have stakes in 10 Australian oil and gas areas, the company said in April. Mitsui is keeping its subsidiary Mitsui E&P Australia, which owns a stake in the Enfield oilfield and Casino gas field.

``We are investing more on our existing energy projects including the Enfield in Australia with our annual capital expenditure totaling 800 billion yen this fiscal year,'' he said.

Net income for the three months ended Sept. 30 fell 1.8 percent to 70.9 billion yen. The second-quarter figure was derived by subtracting first-quarter results from first-half earnings reported by the company today.

Mitsubishi on Oct. 31 raised its net income forecast for this fiscal year to a record 430 billion yen from its original projection of 400 billion yen.

Tokyo rubber off 16-mth high, but bull trend stays

2007-11-02T04:43:00.000-07:00

TOKYO, Nov 2 (Reuters) - Tokyo rubber futures edged down after hitting a 16-month high on Friday, but sentiment stayed bullish, supported by firm demand from investment funds and firm physical prices.

Japanese rubber futures fell by late afternoon in response to declines in energy and other commodities as investors locked in their profits after seeing them surge about 20 percent in the last month, traders said.

Renewed credit concerns linked to the U.S. subprime mortgage crisis hit Wall Street stocks the previous day, leading to strong fund sales of commodities, such as rubber.

"Overall falls in commodities prices put pressure on rubber, but there is plenty of interest by funds to roll over into the distant end of the market," said Hisaaki Tasaka, market analyst at Ace Koeki Co Ltd in Tokyo.

"Fundamentals are important, but more than that, demand from funds is strong in the current market sentiment," Tasaka said.

The key April 2008 contract on the Tokyo Commodity Exchange <0#JRU:> touched an intraday high of 307.4 yen a kg -- the highest for any benchmark contract since July 4, 2006.

Benchmark TOCOM rubber closed at 301.7 yen, down 2.0 yen or 0.7 percent from Thursday's close. It fell to as low as 301.5 yen in the morning trade.

Other contracts closed down 0.9 to 2.8 yen.
The next key technical point for the key contract would be 324.5 yen -- last year's high reached on June 13.

Speculative sales in TOCOM rubber could have intensified after seeing a big build up of Japanese rubber stocks.

The Rubber Trade Association of Japan said on Thursday crude rubber inventories held at domestic warehouses rose 10.6 percent to 8,618 tonnes by Oct. 20 from 7,792 tonnes by Oct. 10. [ID:nT280608]

In the longer term, the market was watching crude oil prices and developments in financial markets before building more buy positions.

U.S. crude oil futures fell on Thursday from a record high amid worries over the health of the U.S. economy.

Oil's decline came as brokerages downgraded the two largest U.S. banks, renewing fears of further fallout from the credit crisis. [ID:nN01435827]

But rubber is expected to be supported by firmness in tyre grade rubber, with persistent rains in Thailand, the world's top producer.

Asian physical rubber prices were slightly lower to unchanged on Friday, but supported by supply concerns.

PRICES OF RUBBER COMPARED WITH THURSDAY

Thai USS3 80 baht/kg unchanged

Thai 60-percent latex (drums, Dec) $1,700/tonne unchanged

Thai 60-percent latex (bulk, Dec) $1,600/tonne unchanged

Euro Zone Factory Growth Slows Down Sharply

2007-11-02T04:34:00.000-07:00

Euro zone factory growth sank to its slowest pace in over two years in October, led by a sharp slowdown in Germany and a contraction in Spain, final figures from a key monthly survey showed on Friday.

The RBS/NTC Eurozone Manufacturing Purchasing Managers Index (PMI) was confirmed at 51.5, unmoved from the flash estimate and the consensus forecast and at its lowest since August 2005.

Germany saw its sharpest monthly slowdown since its survey started in early 1996, with its factory PMI falling more than three points to 51.7, still above the 50.0 mark that divides growth from contraction.

The Spanish factory PMI showed contraction, at 49.6, for the first time since June 2005.

Slower demand from within the euro zone as well as elsewhere, alongside a euro at all-time highs against the dollar were the principal factors holding back growth, the survey showed.

Financial markets and the euro showed minimal reaction to the unrevised data.

A German Story

"It's clearly a Germany story, much the same as Germany was the centre of attention in last month's services PMI weakness," said Mark Wall at Deutsche Bank.

"The fact that Germany is so weak means its surrounding neighbour countries are at risk."

The data support the majority view of economists, who see the European Central Bank keeping interest rates on hold through 2008.

It confirmed a western European trend indicated on Thursday when Britain's October manufacturing PMI came in at 52.9, down from 54.7 in September.

Euro zone manufacturing output growth sank to its slowest pace since August 2005 in October at 52.6, although this was a touch higher than the 52.5 reported for the flash estimate.

New orders and export orders indexes were also revised up 0.1 point each higher from the flash estimate to 50.7 and 51.4 respectively, though still at a level not seen since May 2005.

ECB Wait-and-See

Inflationary pressures also eased slightly in October, though remained at high levels, with the input prices index revised up to 59.0 from 58.9 but below September's 59.6.

Separately, the Economic Cycle Research Institute said its Eurozone Inflation Gauge, which aims to predict future inflation trends, rose to a fresh seven-year high in September.

"The ECB are in something of a bind, but that just keeps them firmly in wait-and-see territory," said Deutsche's Wall of the bank's problem in setting interest rates as inflation creeps up while growth slows.

The output prices index, still at its lowest since January 2006, was revised up to 53.2 from 53.1.

Official euro zone data showed inflation hit 2.6 percent in October, well above the 2.3 percent expected by economists, and the ECB's 2.0 percent ceiling.

Forex - Dollar at near all-time low vs euro as weaker data raise rate cut hopes

2007-11-02T00:15:00.000-07:00

HONG KONG, Nov. 2, 2007 (Thomson Financial delivered by Newstex) -- The US dollar was near its all-time low against the euro in Asian afternoon trade Friday, as a string of economic data including slowing manufacturing and consumer spending raised hopes the Federal Reserve will cut its key rates by year-end.

Analysts are also expecting the October non-farm jobs data, to be released later today, to add to evidence that the US economy is still reeling from the subprime mortgage crisis and another cut is needed to avoid a recession.

'We've been getting a lot of disappointing data from the US and the market is looking at another 25 basis point rate cut in December,' said David Mann, currency strategist at Standard Chartered Bank.

At 1.00 pm (0500 GMT), the euro was trading at 1.4450 dollars, up from 1.4429 in Sydney this morning and from 1.4425 in late New York trade. The euro rose to a record 1.4504 dollars on Oct 31, after the Fed announced a quarter-point rate cut.

The dollar was quoted at 114.660 yen, up from 114.465 this morning and from 114.60 last night.

Standard Chartered Bank is forecasting a 90,000 gain in non-farm payrolls in October, slower than the 110,000 increase in September.

On Thursday, the Institute for Supply Management said last month's factory index fell to a seven-month low of 50.9 versus 52 in September. Consumer spending rose 0.3 percent in September and was below market expectations.

'There are a lot of reasons why there should be another rate cut,' Mann said. 'The jobs data has been disappointing for some time now and we expect it to continue to expand at a slower pace.'
The Fed on Wednesday trimmed its key rates by 25 basis points, following a half-point cut in September. Lower interest rates diminished the returns on dollar-denominated assets, prompting investors to dump these securities, weakening the dollar.

The yen declined against the dollar on expectations the Bank of Japan will keep interest rates unchanged at 0.50 percent for the rest of the year, encouraging so-called yen-carry trades.

Carry trade refers to the practice of borrowing money in low-yielding currencies such as the yen, where the rate is the lowest among developed countries, for investment in higher-yielding currencies.

The yen rose against the dollar this morning as Wall Street's overnight plunge caused investors to be wary of investing on risky assets.

The Dow Jones Industrial Average fell more than 360 points in response to weak economic data, broker downgrades for Bank of America (NYSE:BAC) and Citigroup (NYSE:C) and Credit Suisse's 31 percent fall in third-quarter earnings.

''Risk appetite plunged along with Wall Street with some of the yen-crosses taking a nasty beating,'' said John Noonan, an analyst at Thomson IFR.

Currency markets are expected to remain volatile given the uncertainty about the US economy and interest rates.

'In general, we are indeed in a more uncertain environment, both with respect to the growth trajectory of the US economy and the future path of Fed policy, since the recent adverse adjustments in the credit market in August,' said Thomas Lam, treasury economist at United Overseas Bank.

'Presumably, a continued sense of caution should keep major currency pairs in recognizable ranges ahead of today's psychologically important US employment release,' Lam said.

Hong Kong 1.00 pm (0500 GMT)

US dollar
114.660 yen
1.1561sfr

Euro
1.4450 usd
165.74 yen
1.6710 sfr
0.6945 stg

Sterling
2.0798 usd
238.53 yen
2.40475 sfr

Australian dollar
0.9173 usd
0.4409 stg
105.19 yen

New Zealand dollar
0.7609 usd

How $800 Gold Hits Consumers, Investors

2007-11-01T23:59:00.000-07:00

NEW YORK (AP) - An ounce of gold has reached $800 for the first time since 1980. Here are some questions and answers about what the 27-year high in gold prices means for consumers and investors.

Q: How will rising gold prices affect the average consumer?

A: Not a whole lot. Some jewelry retailers, especially small ones, might have to pass along some of the higher costs to consumers in order to make a profit. It's important to note, though, that craftsmanship accounts for jewelry pricing more than raw materials do. Gold is used in small amounts in electronics, too, but not enough to affect price tags noticeably.

Growing demand for gold jewelry in India and China is one reason gold prices have increased over the past several years. Other reasons include the falling dollar and the fact that the commodities markets have become very popular for speculators.

What affects people more than surging gold prices is the rise in prices of everyday commodities, like oil, corn and industrial metals. The weakening dollar is also a concern for Americans, because it makes international travel more expensive and could start making imported goods pricier.

Q: So it looks like gold is on the upswing. Should I invest in it?

A: Many experts will tell you that precious metals are a good way to diversify for your portfolio, particularly as a hedge against inflation. But as with any investment, they advise against putting too much money in one basket.

Over the long term gold is apt to hold its value -- it's one of the oldest forms of currency, after all -- but in the short-term, it can be very volatile.

"To a certain extent the nature of gold has changed from a safe-haven asset to a trader's asset," said Matthew Hougan, editor of IndexUniverse.com, a Web site that collects and analyzes information on financial market indexes. "You see gold now rise when the market rises and drop when the market drops. A lot of fast money has gone into gold."

In August, gold sold off temporarily when tightness in the credit markets scared people out of commodities and into safer securities like Treasury bonds. The financial markets are about as jittery now as they were then, despite a half-point rate cut by the Fed in September and a quarter-point cut on Wednesday.

"The metal remains quite vulnerable to a correction of about half of the more than $100 move it traced since the initial Fed cut," wrote Jon Nadler, senior analyst at Kitco Bullion Dealers in Montreal, in a note.

Q: What kinds of gold-related investments are there?

A: There are a few choices.

One is a gold bullion exchange-traded fund, or ETF, which tracks the price of physical gold in the commodities market. However, Hougan said, income on these investments is taxed at a rate of 28 percent, because the government treats them the same way they would if you owned actual gold.

A second option is a gold futures ETF, which essentially tracks what traders expect the price of gold to be at a later date. These investments are taxed at a maximum rate of 23 percent, depending on your income, but also earn 5 percent annual interest, Hougan said.

Another choice is investing in mining companies, either through an index fund that tracks mining companies or by buying individual company stock. These investments have lower tax rates than gold ETFs and can provide better returns if the companies hedge their bets properly. But as with any company stock, investors are at the mercy of labor or management problems that might arise.

What's probably most prudent for inexperienced investors is to buy into a mutual fund that has some exposure to gold. That way, you benefit from any jumps in gold prices but don't lose your shirt if the market turns south.

Q: What about those gold coins they advertise on TV and the Internet?

A: There's nothing wrong with buying physical gold, but once you have it, you need a place to put it. You may end up spending more insuring and locking up your gold than you make on its rise in value.

Rogers Bets Against U.S. Investment Banks, Housing (Update1)

2007-11-01T23:14:00.000-07:00

Rogers Bets Against U.S. Investment Banks, Housing (Update1)

Oct. 31 (Bloomberg) -- Jim Rogers, co-founder of the Quantum Hedge Fund with billionaire George Soros, boosted his bets against U.S. securities firms because of their salary ``excesses'' and money-losing investments.

Rogers said he increased his year-old short positions in the past six weeks in U.S. investment banks, using exchange-traded funds and bets against individual companies he declined to name. Stocks in the industry, which pays too much in bonuses, may fall as much as 70 percent in a bear market, he said.

``You see 29-year-olds on Wall Street making $10 million to $20 million a year, and they think it's normal,'' Rogers, 65, said in an interview in London today. ``There have been lots of excesses,'' said Rogers, chairman of Beeland Interests Inc.

The top five U.S. securities firms will probably earn a combined $29.3 billion this year, according to analysts surveyed by Bloomberg, breaking a three-year record streak after Merrill Lynch & Co. reported a $2.2 billion third-quarter loss. Goldman Sachs Group Inc., Morgan Stanley, Merrill, Lehman Brothers Holdings Inc. and Bear Stearns Cos. earned $30.7 billion last year, three times more than their profit in 2002.

Goldman Sachs, Wall Street's most-profitable securities firm, said Sept. 20 that it set aside $16.9 billion to pay salaries, benefits and bonuses in the first nine months of the year, topping the record amount for all of last year.

A month later, Merrill Lynch reported its biggest quarterly loss amid $8.4 billion of writedowns for subprime mortgages, asset-backed bonds and bad loans. The 12-member AMEX Securities Broker/Dealer Index has fallen 13 percent since the start of June, while the Standard & Poor's 500 Index was little changed.

`Bad Paper'

``Who knows how bad the balance sheets are,'' Rogers said. ``They took on gigantic amounts of bad paper.''

Money managers such as Rogers take short positions by selling borrowed shares. They aim to buy them back at a lower price and pocket the difference.

Rogers said he made the investments using his own money. He declined to say how much he oversees.

The slump in the U.S. housing market ``still has a long way to go'' before recovering, he said. ``Market excesses don't clear themselves out in just four or five months; they take years.''

Sales of previously owned homes in the U.S. dropped 8 percent in September to 5.04 million, the lowest since record-keeping began in 1999, the National Association of Realtors said Oct. 24. Rogers said he started shorting U.S. home stocks three years ago.

Still, Rogers said he managed to offload his six-story townhouse in New York, which he put up for sale last year, for more than his asking price of $15 million. He declined to disclose the selling prices for the Riverside Drive property because the sale is still being processed.

`Doing Well'

``Some part of the U.S. housing market are doing well and some aren't,'' he said.

Rogers is best known for being a commodities bull since 1999, before the market started to rally in 2001. His Rogers International Commodity Index has more than quadrupled since its start in 1998, while the Dow Jones Industrial Index gained 56 percent.

``History shows that the bull market in commodities will last a long time,'' Rogers said last year. He predicted in 2005 that commodities will rally at least until 2014 and perhaps until 2022.

Rogers also has taken high-profile investment stances that didn't pan out. He said last year, for example, that India was a losing investment idea.

``I just don't think it's going to work,'' he said in a Nov. 1, 2006, interview. ``As far as investing in India as a whole, you will get wind in your face.''

Since that time, India's main stock index, the BSE Sensex, has climbed 52 percent, reaching a record high yesterday.

This week's Mutual Funds and ETF stories

2007-11-01T22:59:00.000-07:00

It says a lot about investors' expectations when a stock fund that has more than tripled its shareholders' money over the past 10 years gets a tepid reception. Yet some people look at the stunning performance of Fidelity Low-Priced Stock Fund and say "Is that all there is?"
Yes, and be thankful for it. Realistic investors know that the parabolic bull market of the late 1990s was an aberration. Sure, it was wonderful, but hardly typical. For that matter, the same is true of the painful bear market, and even the strong double-digit gains of recent years.
In the last decade, the Standard & Poor's 500 Index -- the key U.S. market benchmark -- has gained about 7% a year on average. Maybe that doesn't seem like much, but at 7% your money doubles about every 10 years, and not incidentally beats inflation handily.
To put this in perspective, Fidelity Low Priced Stock's manager Joel Tillinghast put up gains almost twice the decade's average while exposing investors to below-average market risk. That's highly unusual, too, and an important reason why Tillinghast is MarketWatch's Stockpicker of the Decade.
In this week's top story, meet Tillinghast and decide for yourself whether he deserves the honor. Then, see why one investment adviser says that the housing sector could unearth some attractive values, and read about religious-based funds that are giving investors the chance to do well at the same time they do good.
Plus, check out reasons to consider stocks in Canada and Mexico, look at what could be in store for gold, and see which portfolio trades are timely now, all on MarketWatch's Mutual Funds/ETF page this week.
Shareholders who've jumped from Fidelity Low-Priced Stock are poorer for their decision. Not Joel Tillinghast. The manager's stake in his own fund exceeds $1 million.