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Wednesday, November 17, 2010

Natural gas rose the most in four months on speculation

Natural gas rose the most in four months on speculation that one morning the Department of Energy report showed that stockpiles rose less than the average of five years, eroding a surplus of inventory.

The Energy Department can say that the increased supply 8 billion cubic feet last week, according to the median of 22 analyst estimates compiled by Bloomberg. The five-year average gain for the week is 18 million dollars.

"Rising temperatures are low, and there is the possibility that tomorrow may report a net withdrawal from storage," said Teri Viswanath, director of commodity research at Credit of U.S. Securities Suisse in Houston, who estimated that inventories fell by 5 per thousand cubic feet.

Natural gas for December delivery rose 21.2 cents, or 5.6 percent, to settle at 04.03 dollars per million British thermal units on the New York Mercantile Exchange, the biggest increase in a day since July 15 when for delivery in future months rose almost 6.5 percent to $ 4,586.

Of gas has fallen 28 percent this year, inventories reached record levels. Inventories rose 19 billion cubic feet in the week ended Nov. 5 to 3.84 trillion cubic feet, the Energy Department said last week.

U.S. is nearing the end of the shoulder before making the demand for heating as temperatures drop. About 52 percent of U.S. households the use of natural gas for heating.

Coldest in the forecast

Forecasters call for below normal temperatures in the 11 - to 15-day outlook, reinforcing the demand for fuel. Below-normal temperatures will cover the East Coast from Florida to Maine, commodities Weather Group led by Matt Rogers said in a report released today.

"In any event, the outlook today is looking colder than the eastern half of the country yesterday," for November 28 through December 2, the weather channel WSI Corp. said in a forecast today.

"What we have is a couple of different things pushing up the price," said Jason Schenker, president of Prestige Economics LLC, an energy consultancy in Austin, Texas. "This is the time and number of this week's inventory."

Cumulative heating degree days increased by seven last week, while injections in stock fell 22 percent, indicating that storage may have already begun their seasonal period of complaints, Viswanath said in a note to clients.

Energy demand

The calorific degree days, calculated by subtracting the average daily temperature of 65 degrees base is designed to show energy demand, according to the National Weather Service. The higher the value, the colder the weather, which means more energy consumption is likely to heat homes and businesses.

Natural gas has been shut down near or above the 50-day moving average of $ 3.80 over the past three days, indicating that level support and attract investment Traders seeking to negotiate prices, said Michael Rose, operations director Angus Jackson Inc. Fort Lauderdale, Florida.

"Natural gas is the only one who did not follow the rest of the enormous bull run in commodities, and people are coming and buying things to consider is cheap," said Rose.

Wholesale natural gas at the benchmark Henry Hub in Erath, Louisiana, gained 11.37 cents, or 3.1 percent, to $ 3.7733 per million BTU in the Intercontinental Exchange.

Volume of gas futures in electronic trading on the Nymex was 270.892 as of 14:38, compared with a three-month average of 266,000. Volume was 227,575 yesterday. The open interest was 781,273 contracts, compared with three-month average of 809,000. The change has a delay of a working day in open interest information and full-volume data.

Shares of those companies are having unusual moves in U.S. trading

Shares of the following companies are having unusual movements in U.S. trade. Stock symbols are in parentheses and prices are starting at 1:30 pm in New York.

Homebuilder stocks fell after a U.S. government report showed builders began work on houses less than expected in October. Housing construction fell 12 percent to a 519,000 annual rate, lowest since a record low in April 2009.

D.R. Horton Inc. (DHI U.S.) fell 3.5 percent to $ 10.63. Group Pulte Homes Inc. (PHM U.S.) fell 3.6 percent to $ 6.64.

Home Depot Inc. (HD U.S.), the largest U.S. retailer home improvement, fell 2.7 percent to $ 30.85 for the biggest drop in the Dow Jones Industrial Average.

Sun shares fell after Credit Suisse Group AG cut the recommendation of the industry to "market weight" from "overweight," says the demand-driven subsidies can not keep up with the growing supply. First Solar Inc. (FSLR U.S.) lost 4.9 percent to $ 124.23. ReneSola Ltd. (SOL U.S.) fell 7.3 percent to $ 9.10. JA Solar Holdings Co. (JASO U.S.) fell 4.3 percent to $ 7.51. Trina Solar Ltd. (TSL U.S.) fell 4.3 percent to $ 22.68. MEMC Electronic Materials Inc. (WFR U.S.) fell 3.6 percent to $ 11.90.

Suntech Power Holdings Co. (STP U.S.) sank 7.7 percent to $ 7.70. The biggest Chinese manufacturer of solar panels reported third-quarter earnings that missed analysts' estimates.

Bob Evans Farms Inc. (BOBE U.S.) gained 10 percent to $ 32.83 for the biggest intraday gain since Dec. 4. The sausage maker and restaurant owner reported second-quarter sales that missed some analysts' estimates.
Booz Allen Hamilton Holding Inc. (BAH U.S.) rose 12 percent to $ 19 on the first day of trading. The signing by the government consultancy acquired by Carlyle Group in 2008 raised $ 238 million in an initial public offering.

Chart Industries Inc. (GSL U.S.) rose 15 percent to $ 26.66 and $ 27.08 joined earlier, the highest intraday price since October 2008. The maker of equipment used to produce and store industrial gases was driven to "overweight" from "equal weight" by Morgan Stanley.

Chico's FAS Inc. (CHS U.S.) rose the most in the Russell 1000 index, rising 8.8 percent to $ 10.97. Women's clothing retailer reported third-quarter earnings of 16 cents, beating analysts' average estimate by a penny. Sales were 483 million U.S. dollars, up from 476.6 million U.S. dollars projected by analysts.

China Digital TV Holding Co. (STV U.S.) advanced 6.6 percent to $ 7.26 and an increase of 9.4 percent previously, the most intraday since 14 October. The provider of digital television software forecast fourth-quarter sales of at least $ 20.8 million. That exceeded the average analyst estimate of $ 16.1 million
Nepstad chain pharmacies China Ltd. (NPD U.S.) fell 17 percent to $ 3.99 after falling as much as 19 percent, the intraday since August 2008. The country's largest drugstore chain by number of outlets reported third-quarter earnings of 1 cent per share, behind the average analyst estimate by 67 percent.

Coach Inc. (COH U.S.) had the second highest gain at 500 Standard & Poor's, increased 4 percent to $ 52.88. The largest U.S. manufacturer of luxury leather handbags, including recommended retailers "Mad Money" host Jim Cramer CNBC, who said the companies will benefit from demand in China.

CVR Energy Inc. (CVI U.S.) fell 6.4 percent to $ 10.32 after falling as much as 11 percent, the most intraday since November 2009. The Sugar Land-based oil refinery in Texas said shareholders including Goldman Sachs Group Inc. and Kelso & Co. will sell 15 million shares in a secondary public offering.

Duoyuan Global Water Inc. (U.S. GDP) rose 8.6 percent to $ 13.10 and rose above 11 percent, the most intraday since 28 September. The Chinese supplier of water treatment team scored fourth-quarter earnings of 55 cents per share, up from the 48 - cent average estimate by analysts.

Human Genome Sciences Inc. (HGSI U.S.) fell 3.7 percent to $ 24.93. The Rockville, Maryland-based company fell to a "hold" from "buy" by Citigroup Inc. analyst Yaron Werber.

Stocks rose earlier after winning a U.S. advisory panel along with support from GlaxoSmithKline Plc (GSK U.S.) to sell the first new drug lupus, Benlysta in more than 50 years. While the Food and Drug Administration is not bound to follow its recommendations outside usually does.

Hypercom Corp. (HYC U.S.) met 15 percent to $ 7.07 to $ 7.14 after rising earlier, the highest intraday price since November 2006. VeriFone Systems Inc. (PAY U.S.), the second largest manufacturer of electronic payment equipment, agreed to buy the maker of electronic payment software for $ 485 million in an attempt to help it expand in European markets. VeriFone rose 2.9 percent to $ 32.75.

Ladish Co. (LDSH USA) had the biggest gain in the Russell 2000, up 56 percent to $ 45.81. The manufacturer of jet engines agreed to be bought by Allegheny Technologies Inc. (ATI U.S.) in cash and stock transaction valued at 778 million U.S. dollars. Allegheny fell 1.5 percent to $ 49.17.

Merck & Co. (MRK U.S.) rose the most in the Dow Jones Industrial Average climbing 1.7 percent to $ 34.69. the company's experimental drug, anacetrapib, high levels of good cholesterol, reduce bad cholesterol and may have helped patients avoid cardiac complications, without the security risks that prompted Pfizer Inc. (PFE U.S.) to leave a similar product for four years, according to a study funded by Whitehouse Station, New Jersey, Merck.

MetroPCS Communications Inc. (PCS U.S.) rose the most in the S & P 500, gaining 5.1 percent to $ 11.87. U.S. "Pay-as-you-go" mobile phone company will save 35.4 million U.S. dollars a year in interest payments after refinancing some debt and the transaction will give a modest boost "to income, Credit Suisse Group AG analysts led by Jonathan Chaplin wrote in a note.

Petroleum Development Corp. (PETD U.S.) fell 9.6 percent to 32.99 dollars, fell 9.7 percent previously, the most intraday since 11 August. The oil and gas company, said it would offer $ 100 million convertible notes due 2016 and 3,000,000 shares. Proceeds will be used to finance an acquisition.

Quanta Services, Inc. (PWR U.S.) rose 3.7 percent to $ 17.68 and up 4.5 percent previously, the most intraday since 17 August. A provider of utility infrastructure network has been added as Wedbush Securities Inc. 'list of the best ideas.

Regions Financial Corp. (RF U.S.) fell 6.3 percent to $ 5.55 for the biggest loss in the S & P 500. Alabama's biggest bank had its credit rating cut for the second time this month by Moody's Investors Service after the lender ousted three directors who oversaw risk assets and acidification.

Rino International Corp. (RINO U.S.) slumped 15 percent to $ 6.07 to $ 5.68 after falling earlier, the lowest intraday price since May 2009. The supplier of water treatment systems for steel makers postponed a conference call originally scheduled yesterday to discuss third-quarter profit without giving a reason. Faruqi and Faruqi LLP, a securities firm in New York, said it is investigating the company on behalf of shareholders on possible violations of federal securities laws and breaches of fiduciary duties of its officers.

Sina Corp. (SINA U.S.) rose 5.7 percent to $ 60.24 after rising 8.3 percent earlier, the most intraday since 16 September. The owner of the third China visit website reported third-quarter earnings that beat analysts' estimates as revenue from online advertising increased.

Target Corp. (TGT U.S.) rose 4.1 percent to $ 55.71 after gaining as much as 4.3 percent. The U.S. discount retailer second recorded a profit, excluding a tax gain of 68 cents per share, matching analysts' average estimates.

Ventana Gold Corp. (VENGF U.S.) rose 35 percent to $ 13.31 after rising as much as 39 percent, the intraday since June 2009. EBX Group Ltd., an investment company controlled by Brazilian billionaire Eike Batista, said it plans to acquire Canadian gold explorer for about C $ 1.5 billion ($ 1,470,000,000).

Wesco International Inc. (CMI U.S.) rose 6.1 percent to $ 46.55 after touching $ 47.10, the highest intraday price in three years. The distributor of electrical and building materials, said the purchase of TVC Communications LLC of 246.5 million U.S. dollars and the transaction is expected to increase 2011 earnings per share of 30 cents.

The Bank of Korea's second increase in interest rates this year left its benchmark rate below inflation



The Bank of Korea's second increase in interest rates this year left its benchmark rate below inflation, a sign that the central bank will add to its movement in the coming months and the risk of erosion household savings.

Governor Kim Choong Soo increased borrowing costs by 0.25 percentage points to 2.5 percent yesterday. The reference point is 1.6 percentage point lower annual rate of inflation in October, and has remained in profits in consumer prices for 12 consecutive months, the longest streak since the introduction of basic type 1999,.

"The Bank of Korea has finally realized that it is dangerously behind the curve in terms of monetary policy," said Erik Lueth, Hong Kong senior economist at Royal Bank of Scotland Group Plc, previously worked at the International Monetary Fund .

Negative real interest rates, when the reference value is less than the rate of inflation, incentives bias toward spending rather than saving, raising the pressure on consumer prices. With the central bank might raise rates again as early as next quarter, the currency of the nation is about to rise, according to Goldman Sachs Group Inc.

The won appreciated 0.2 percent yesterday to close at 1,129.47 per dollar in Seoul. It has risen 7.2 percent since late June, the third strongest performance in Asia, excluding Japan. The currency will reach 1,050 in the next 12 months, Goohoon Kwon, a Seoul-based economist at Goldman Sachs, said in a note.

The Kospi stock index fell 0.8 percent to a minimum of two weeks of 1,899.13. The yield of 3.75 percent due June 2013 fell 16 basis points to 3.32 percent, the most in a month, according to the Korea Exchange.

Capital flows

At the risk of stronger exchange rate crimping exports, which account for about half of the economy of $ 832,500,000,000. South Korea is preparing to fight against earnings through the introduction of a system to cope with capital inflows that have boosted the currency.

"Korea will not be able to introduce capital controls strong enough to scare off foreign investors, but it is very likely to take minor steps," said Oh Suk Tae, an economist at SC First Bank Korea Ltd. in Seoul. The won is likely to increase to less than 1,100 per dollar next year, Oh said.

Other analysts also expect an appreciation. The currency will end the year 1090 and June 1080, Ho Woei Chen, a regional economist at United Overseas Bank Ltd. in Singapore, said in a note yesterday.

100 points

The central bank is likely to raise interest rates by another 100 basis points to 3.5 percent next year after holding it back up next month, Credit Suisse Group AG analysts and Tuntono Dong Tao wrote in a report Christiaan .

South Korea joined the India and Australia in boosting borrowing costs this month. The central bank rate had halted its campaign from August to October, citing concerns that growth in advanced economies was slowing.

"With the economy of coastal potential that exists around the need to raise interest rates," said Frederic Neumann, co-chief economist for Asia at HSBC Group Plc in Hong Kong, in an email interview. "Prolonged monetary accommodation increases the risk of asset bubbles and overheating."

Neumann expects the central bank to raise the benchmark rate by one percentage point higher than 0.75 the next year. Royal Bank of Scotland Lueth expected quarter-point increases each quarter through 2012. neutral interest in South Korea, which supports employment and occupation without creating inflation would be around 4 percent, the IMF said in September.

Consumer inflation in prices accelerated to a maximum of 20 months from 4.1 percent in October. The Bank of Korea has 2 percent to 4 percent on average through 2012.

The bank yesterday reduced its commitment to monetary policy "accommodative" for the first time since the global financial crisis. While the reference is not currently in a neutral, the economy is not prepared to "normal" rates, however, Governor Kim said.

GM Increases IPO Size $15.8 billion as Treasury.




General Motors Co. 's initial public offering could raise 15.8 billion U.S. dollars after the U.S. Treasury and the United Auto Workers' trust in health care for retirees has increased the shares being sold, according to a regulatory filing.

The initial public offering was expanded by 31 percent to 478 million shares, GM said in a filing with the Securities and Exchange Commission, a day after increasing the offer price up to $ 33 per share. An over-allotment and a preferred stock offering may increase the total amount raised nearly $ 22,700,000,000. Agricultural Bank of China Ltd. 's $ 22,100,000,000 initial sale is the largest initial public offering of common stock-in history.

The initial sale, scheduled for today will bring CEO Dan Akerson near his goal of returning the 49.5 billion U.S. dollars in GM received taxpayer bailout last year. The Treasury Department, which is leading to a loss in its portion of the sale, point of balance only if the shares rise at least 60 percent, Bloomberg data shows.

"Finance is the demand for insurance is that for these actions to get wet," said Michael Yoshikami, which oversees $ 1,000,000,000 in YCMNet Advisors in Walnut Creek, California. "It makes sense for them to do this because we are talking about leaving shares at a price that is far above what you think everyone would be in demand."

The offer would be the IPO of common values, the second largest in U.S. history, after Visa Inc. 's 19.7 billion U.S. dollars in sales in March 2008, Bloomberg data shows. With the over-allotment option or call greenshoe, GM could sell nearly 550 million common shares and raise about 18.1 billion U.S. dollars.

Offering oversubscribed

Noreen Pratscher, a GM spokesman, and Eric Henry, chief investment officer of the UAW trust, did not return phone messages seeking comment yesterday. A Treasury spokesman Mark Paustenbach, declined comment.

GM insurers stopped taking orders for the IPO yesterday, which was more than seven times oversubscribed, according to a person familiar with the operation.

"Even with the high demand, can not go too high in terms of price, and that is why we are offering more shares," said Alan Baum, director of Baum & Associates, a market research firm in West Bloomfield car, Michigan.

While the IPO has not been priced yet the stock is likely to be sold for about $ 33, said a person familiar with the plans who asked not to be identified because the talks are private.

Larger deals

The Treasury will provide measures about 95 million more than originally planned, and the UAW trust sold 18 million more, shows today's presentation. The over-allotment option will increase by an additional 14,300,000 shares issued by the Treasury and 2.7 million by the trust of the UAW.

The offer would be the lowest bid of the Treasury at 37 percent, or 33 percent over-allotment option, 61 percent, the filing shows. The UAW trust investment would drop to 14 percent, or 13 percent to 20 percent option.

The Treasury does not sell GM shares for an average of $ 43.67 per share to break even on its total investment, according to data compiled by Bloomberg.

"We just get our money back if they are very patient and if GM performs very well," said Joe Phillippi, director of AutoTrends Consulting Inc. in Short Hills, New Jersey. "GM really has to hit the ball out of the park over the next two years."

Compare Ford

A $ 33 per share, GM is valued at 7.8 times earnings this year, based on its net income in the first nine months of 2010. Dearborn, Michigan, Ford Motor Co. in the trades 8 times analysts' estimates for 2010 earnings, the data show. Ford has been most profitable automaker in the world this year through September.

GM, which lost 82 billion U.S. dollars from 2005 to 2008, was valued at an average of 10.3 times earnings from 2000 to 2004, monthly data compiled by Bloomberg. Ford traded at an average of 13 times earnings in the same period.

GM reported a third quarter net profit of 2.16 billion U.S. dollars last week, bringing his earnings this year to 4.77 billion. While GM will have positive earnings before interest and taxes in the fourth quarter, which will be "significantly lower" than the first three quarters, Akerson said in a conference call on November 10.

The automaker is selling shares after Standard & Poor's 500 rose to a maximum of two years this month on speculation the U.S. economy will not slip back into recession. The benchmark for U.S. equities fell for a fourth day yesterday, the worst losing streak since August.

Foreign investors

The Kuwait Investment Authority may buy a stake in GM for 1 percent or less, a person familiar with the deal said yesterday. Shanghai-based SAIC Motor Corp., GM's partner in China, will probably be one of the buyers, three people familiar with the plans said last week.

Morgan Stanley, JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. is a leader in initial public offering that includes 35 subscribers, according to a GM with the Securities and Exchange Commission. Barclays Plc, Credit Suisse Group AG, Deutsche Bank AG, Goldman Sachs Group Inc. and Royal Bank of Canada are also included in the prospectus.

General Motors Corp. sought bankruptcy protection under Chapter 11 on June 1, 2009, after the failure of New York, Lehman Brothers Holdings Inc. in September 2008, froze credit markets and helped make the longest recession since the Great Depression.

GM's common stock is traded on the New York Stock Exchange under the symbol of GM and the Toronto Stock Exchange under the symbol GMM, the filing with the SEC showed.

Stocks in Europe rebounded from the biggest drop

European shares rebounded from the biggest drop in four months and U.S. futures index rose. Irish bonds fluctuated as European officials discussed the aid, while commodities fell on China's commitment to curb inflation.

The Stoxx Europe 600 index added 0.2 percent at 7:40 am in New York, linking yesterday's 2.3 percent drop. 500 of Standard & Poor's Index gained 0.2 percent, after rising as much as 0.5 percent earlier. The Shanghai Composite Index sank 1.9 percent, extending its drop November 08 to 10 percent higher. Ireland 10-year bond yield fell two basis points to 8.44 percent while the cost of insuring against a default on the country's debt grew for the first time in four days. The S & P GSCI index of 24 commodities fell to a minimum of three weeks.

Finance ministers from the 16-country euro zone started to work on a possible rescue plan for banks in debt in Ireland, without reaching an immediate rescue. China's Cabinet, said today that the government can impose temporary price controls on "high needs of each day" and production materials to counter the fastest inflation in two years.

The "flow of news and commentary following the meeting of ministers of the Eurogroup of finance five hours during the night seems to have increased the likelihood that a rescue package that goes to the Irish banking sector problems," Jim Reid, a strategist Deutsche Bank AG in London, wrote in a report released today. "However, as with all things EU, there seems to be total agreement but in any of the essential components that are needed to provide help."

Actelion, Amgen

Three companies rose for every two that fell in the Stoxx 600. Health care stocks led the gains, as Actelion Ltd. jumped 10 percent after people briefed on the matter, said Amgen Inc., the world's largest biotechnology company, is considering a bid for the Swiss pharmaceutical. Roche Holding AG advanced 1.8 percent as the largest maker of cancer medicines announced a cost reduction program. Thales SA, the largest European manufacturer of defense electronics, sank 3.8 percent as UBS AG downgraded the shares.

The gain in U.S. futures indicated that the S & P 500 can compare some of yesterday's fall of 1.6 percent. A Labor Department report due at 8:30 am in Washington today may show the cost of living rose for the fourth month of October. The consumer price index rose 0.3 percent after rising 0.1 percent the previous month, according to the median forecast of 80 economists.Other figures may show housing starts fell to its lowest level since July.

Emerging Markets

MSCI Emerging Markets Index declined 1 percent and headed toward the lowest close since Oct. 1. Chongqing Brewery Co. fell by 10 percent limit in Shanghai trading on concern the government will prevent the transmission companies increased costs to consumers. China's central bank could raise interest rates for the second time this year, as soon as November 19 to combat inflation, the China Securities Journal reported today.

The difference in yield, or spread, between the Irish 10-year bonds and similar maturity German bonds, the reference values of the region's government, was extended for the second day, rising to 563 basis point points. Swaps credit-default secure the Irish government bonds rose 17 basis points to 537, according to CMA, a data provider.

LCH Clearnet Ltd. doubled the margin requirement that charges extra for bond trading in Ireland and 30 percent of the net positions. The increase is based on the positions outstanding at the close of business tomorrow, HCL said in a statement on its website.

Treasuries were little changed, with the spread between the 10 - and 30-year values, near the narrowest in two weeks.

Sugar, metals slip

The raw sugar futures fell 1.1 percent after China said it would sell a sweetener of reservations. The GSCI index slipped to 1.4 percent to 557.68, the lowest since Oct. 27, before trading up 0.6 percent. Zinc fell 2.8 percent after falling 8.5 percent yesterday in London, and copper fell 0.8 percent. Oil fell 0.9 percent to $ 81.60 a barrel in New York.

The yen fell against all 14 of his 16 fellow seniors. The euro rose 0.2 percent to 112.59 yen and was little changed at $ 1.3474. The dollar rose 0.2 percent to 83.47 yen.

falling the Oil for the fourth consecutive day.



Oil fell for a fourth day as speculation that China's oil demand may fall passed signs that U.S. consumption is increasing.

Futures dropped as much as 1.4 percent after Chinese Premier Wen Jiabao said the government is preparing measures to combat inflation in the world's largest consumer of energy. Prices also fell on concerns the crisis of debt in Europe is worsening as ministers consider a rescue package for Irish banks. Crude inventories fell most U.S. since September 2008 and rising gasoline demand, reports showed yesterday.

"The risk is being taken at the table through the entire complex products as the dollar gets stronger," said Carsten Fritsch, an analyst at Commerzbank AG in Frankfurt. "In an environment of foundations such as the sharp drop in crude stocks do not matter."

Crude for December delivery fell to $ 1.16 to $ 81.18 a barrel in electronic trading on the New York Mercantile Exchange. It was at $ 81.98 at 12:50 hours London time. Brent crude oil for January settlement traded at $ 84.48, down 25 cents, on the ICE Futures Europe exchange in London. Yesterday the New York contract fell $ 2.52 to $ 82.34, the lowest since Oct. 29, while Brent lost $ 2.03 to $ 84.73.

Oil fell as Wen's comments, broadcast on state television yesterday, fueled speculation the government may raise interest rates to dampen economic growth. Yesterday the Bank of Korea increased borrowing costs after inflation rose last central bank's ceiling.

Crisis in Europe

European finance ministers began work on possible assistance for banks in debt in Ireland, without a rescue package immediately. The country's crisis is stoking concerns that Europe's problems of debt are spreading, weakening of the euro against the dollar and reduce investor demand for commodities denominated in U.S. currency.

The dollar rose 1 percent to $ 1.3448 against the euro yesterday, the highest since Sept. 28. It was at $ 1.3483 against the euro at 12:50 London time.

Crude inventories fell 7.7 million barrels last week, the American Petroleum Institute said yesterday. An Energy Department report today will probably show that supplies were unchanged. estimates of oil supply of the two organizations have moved in the same direction in seven of the last eight weeks.

"We finally have some good news on the central front and everything else is weakening," said Ben Westmore, a minerals and energy economist at National Australia Bank Ltd. in Melbourne. "Part of this seems to be concern that China may tighten policy. You have what markets perceive a greater likelihood of a further loss of global confidence in the European debt problems rejuvenation."

The demand for holidays

U.S. Travel during the weekend of Thanksgiving increase by 11 percent over last year in improving economic conditions, AAA, the nation's largest motoring organization said yesterday. The consumption of gasoline at the pump climbed for the first time in four weeks, MasterCard Inc. said in its report SpendingPulse.

U.S. inventories gasoline fell 1.65 million barrels to 214.6 million weeks ago, the report showed the API. Supplies likely fell by 750,000 barrels, according to the survey report by the Department of Energy.

European companies sales fell to its lowest level becauseof the irish crisis

sales of European companies in U.S. dollar bonds fell to its lowest level in nearly a decade on concern the crisis in the region, the budget deficit will spiral out of control as Ireland is closer to Greece after getting a ransom.

Borrowers in Europe have increased 1.4 billion U.S. dollars this month the sale of debt in the U.S., only 2.7 percent of the total issuance of investment grade, the lowest since February 2001 below $ 9,300,000,000, or 32 percent, in the same period of the month of October. Until this month, sales of U.S. bonds by companies in Europe made an average of 29 percent of the issue in 2010, according to the data.

Six months after Greece appealed for help in paying your bills, credit markets in Europe again shaken by a fiscal crisis, which limits the ability of firms to raise funds in the bond market. the region's problems of debt are driving up borrowing costs on a time that are shrinking elsewhere. Finance ministers of the EU began work on possible assistance for banks in debt in Ireland, without a rescue package immediately.

"The world is awakening to the fact that the European sovereign crisis is just beginning," said Scott Minerd, chief investment officer of New York, Guggenheim Partners LLC, which has been avoiding lenders bonds Italians and Irish and cut their exposure to Spanish banks. "The only solution is a weaker euro," said Minerd, who helps oversee 76 billion U.S. dollars.

Italian yields

Yields on Italian corporate debt sold in dollars have risen 11 basis points, or 0.11 percentage point to 229 basis points more than benchmark since 31 October, while bond spreads Portuguese widened 13 basis points to 322, according to Bank of America Merrill Lynch index data.

The raw performance of the Spanish company in the U.S. increased 13 basis points to 205, and the United Kingdom extended ranges 5-197. Margins for U.S. companies tightened one basis point to 170.

Elsewhere in credit markets, the extra yield investors demand to own company rather than similar government bond maturity climbed 1 basis point to 167 basis points, compared to 164 on October 31, according to Global Bank of America Merrill Lynch Corporate Market General Index. The average yield of 3.639 percent from 3.645 percent on Nov. 15.

The cost of the protection of Fortune Brands Inc. of debt default rose to its highest level in nearly 19 months in Pershing activist investor William Ackman concern Square Capital Management LP could break the bourbon maker Jim Beam.

Contracts in Deerfield, Fortune Brands, headquartered in Illinois increased 6.7 points to 219.4 basis points, according to data provider CMA. The swaps trade at the highest since April 22, 2009, have increased from 127.4 basis points on Oct. 7, the day before Ackman disclosed a 11 percent stake in the company, making its headquarters in New York hedge fund of its largest investor.

Most traded bonds

Bonds Fairfield, Connecticut-based General Electric Co. were the most actively traded U.S. corporate securities by dealers yesterday, with 110 transactions of $ 1 million or more, according to Trace, the bond price reporting system of the Financial Industry Regulatory Authority.

The Standard & Poor's / LSTA U.S. leveraged loan 100 Index fell for a fourth straight day, falling 0.16 cent to 92.22 cents. Prices in the index, which measures the 100 largest dollar loans first lien leveraged, have fallen 92.72 cents on Nov. 9, the highest since May 3.

Six Flags Entertainment Corp., Grand Prairie, theme park operator based in Texas that emerged from bankruptcy in May, sets prices in a term loan of $ 950000000.

Six Flags Loans

Six Flags is offering to pay 375 basis points more than the rate for London interbank offered the loan within six years, according to a person familiar with the deal who requested anonymity because the terms are private. Libor, the rate banks charge to lend to each other, have a floor of 1.5 percent, the source said.

The company intends to sell the debt to 99.75 cents, said the source, reducing income to the borrower and increased profitability for investors.

In emerging markets, the extra yield investors demand to own property rather than government bonds rose 18 basis points, the biggest gain since Sept. 21 to 249 basis points, according to JPMorgan Chase & Co. data index. The differential had fallen to 229 basis points on November 5, lowest since December 2007.

European finance ministers expressed confidence that Ireland will weather the fiscal crisis, avoiding motives of investors for a bailout package and the risk of renewed turmoil in the bond markets.

Finance chiefs from the euro zone of 16 countries commended the Irish budget cuts, echoing the rhetoric of support offered in the early stages of the trauma of Greece's debt before aid was necessary.

"Significant efforts"

"We welcomed the significant efforts of Ireland to meet the challenges they face," said Luxembourg Prime Minister Jean-Claude Juncker told reporters after chairing the meeting of ministers in Brussels yesterday afternoon.

European crisis erupted two weeks ago after Germany proposed to force bondholders to share the pain of any future rescue, bringing yields throughout the region. Central Bank Ireland, Patrick Honohan said Nov. 10 that loan losses to lenders in the country, including foreign-owned banks, the total of at least 85 million euros (115 billion U.S. dollars).

The European Central Bank officials are urging Ireland, which says it is funded entirely by mid-2011, to set aside national pride and touch the bottom of 750 billion euros six months ago designed to deficit nations periphery of Europe.

The crisis of May brought the issue close to links with European companies selling $ 782 million in the U.S., or 3 percent of all investment grade deals of the month.

Margin doubled

Ireland was an increase in insurance costs of defaults among the European nations today after LCH Clearnet Ltd. doubled the margin requirement for trading bonds of Ireland.

Swaps credit-default in Ireland rose 35 basis points to 554.5, according to data provider CMA. Contracts in Greece increased by 22 basis points to 950, Portugal rose 7 to 429, Italy was 6 over 192 and in Spain rose 9.5 to 266.

The Markit iTraxx Index SovX Western Europe 15 governments swaps rose 2 basis points to 170. A basis point on a credit agreement default swaps protecting $ 10 million debt from default for five years is equivalent to $ 1.000 a year.

Swaps credit-default pay the buyer face value in exchange for the underlying securities or the cash equivalent of a company fail to adhere to its debt agreements.

Spreads Spike

"When peak extends up, the issue is postponed," said Alberto Gallo, credit strategist at Goldman Sachs Group Inc. in New York. "Companies will be removed when the outlook is negative peripheral and it will affect their funding costs."

Guggenheim is "generally well" with the market in the region of corporate debt, while drawing the line on most lenders peripherals and European government bonds, said Minerd.

European lenders are avoiding the market for dollar-denominated debt, partly due to the crisis of the sovereign will weaken the euro and U.S. liabilities more expensive, he said. The euro has shot up by 19 percent against the dollar since June 7.

The setback comes at a time in Wind Telecomunicazioni SpA, the mobile phone company based in Rome, whose father is a merger with Russia's VimpelCom Ltd., plans to sell $ 1 billion of debt in the U.S. as part of a supply of 3200 million euros to refinance existing debt, according to a person familiar with the operation.

Postpones Ferrexpo

Ferrexpo Plc postponed its sale of bonds denominated in dollars and five years due to market conditions, Ingrid McMahon, a spokesman for the producer Baar, iron ore, based in Switzerland, said on 10 November.

BNP Paribas SA, the world's largest bank by assets, fellow Paris-based lender Societe Generale SA and Royal Bank of Scotland Group Plc were among European issuers to sell bonds of at least $ 100 million in the U.S. this month. BNP Paribas raised $ 650 million on November 5 in the sale of 3.25 percent notes maturing in 2015, while Societe Generale and Edinburgh-based RBS sold $ 100 million variable rate debt.

Sales in euros have also fallen this month, with the issuance of 17 million euros, compared with $ 24.4 million during the same October period.

"There is concern about what is happening in Europe, particularly the exposure of banks to sovereign economic and weaker nations," said Mirko Mikelic, portfolio manager at Fifth Third Asset Management, which oversees $ 13 000 million in fixed income assets in Grand Rapids, Michigan. "The issuance has slowed, as it has become more expensive, investors have been much more selective and there are other opportunities for the U.S. dollar."

Fed may hesitate to further ease after critics question the mandate of Employment

The Federal Reserve faces fierce political assault on their powers in three decades in its fight to help revive the U.S. economy.

The Fed's plan to expand their purchases of Treasuries has drawn criticism from Republicans, some economists wrote an open letter to the Federal Reserve to protest the move, and finance officials from Germany, China and Brazil.

While central bank officials are pushing ahead with the program of $ 600 000 000 000 gift vouchers announced this month, analysts said the criticism may dissent from supporters inside the Federal Reserve's policy of quantitative easing. This may limit the ability of its chairman, Ben S. Bernanke 's to take further action if the economy remains weak.

"Economists Republicans are reflecting a widespread feeling within the Republican Party, and do not think the Fed wants to get into a major confrontation with one of the two parties in Congress," said Vin Weber, managing partner at the lobbying firm Clark and Weinstock and a former Republican congressman from Minnesota. "It will not kill the QE 2, but will limit further expansion."

Democrats say that the adverse reaction that is not political, monetary policy. Alan Blinder, former Fed vice chairman who once led President Bill Clinton's Council of Economic Advisers, dismissed allegations that the central bank's step was a "radical change", which he described as "garden-variety policy monetary. "

Representative Barney Frank, Democrat of Massachusetts and chairman of the Financial Services Committee, said he was "appalled" by Republican attacks. Blaming the reports of a "very rigid ideology," Republicans accused the tail with China and Germany in opposing the Fed's easy credit.

Strengthened opposition

In his statement of 03 November, the Fed said it intended to buy the securities at the end of June, however, that "tweak" the program if circumstances change. Some analysts said the storm on the quantitative easing - so named because it focuses on changes in the amount of money the Fed created through purchases of bonds rather than changes in interest rates - could cause the Fed reach $ 600 billion.

"This will only strengthen the internal opposition," said Vincent Reinhart, who led the Fed's Monetary Affairs Division from 2001 to 2007, Bernanke. "He will have more difficulties in the future."

Some Republican lawmakers are talking about rewriting the central bank's description of work. The Fed on the sidelines of the law may further restrict the ability of government to counteract the effects of the worst recession since the Great Depression, because legislators are likely to oppose a new stimulus.

Change Mandate

Sen. Bob Corker, a Tennessee Republican who serves on the Banking Committee, said yesterday he was in favor of limiting the Fed's mandate to promote price stability, although he said he is not opposed to the purchase of bank bonds central.

Corker became at least the third Republican in Congress to support the responsibilities of the Fed cuts to eliminate the task of promoting full employment. Other lawmakers include Rep. Paul Ryan of Wisconsin, who heads the Budget Committee of the House in January, and Rep. Mike Pence of Indiana, chairman of the House Republican Conference.

Corker, who also suggested that Congress consider setting targets for inflation from the Fed, rejected the idea that move risked politicizing the central bank.

"We were given the mandate of the Fed, first, that could easily change that," he said. "That's not politicize, to clarify further what the role of the Fed."

"The worst kind of message '

Senate Banking Committee Chairman Chris Dodd, a Connecticut Democrat, said in an interview that strip the Fed of its mandate to use "would be the worst kind of message." He also said that "it is beyond the jurisdiction" of Congress to set targets for inflation.

The unemployment rate is 9.6 percent and consumer price index for all items rose 1.1 percent during the 12 months ended in September, the Labor Department said last month.

The decision by the Fed also sought to increase inflation. Expectations of future inflation, as measured by government bonds of all types are increasing. The difference in yields between Treasury bonds maturing in the short and long has been extended to the most since June. The prices of bonds that protect against rising consumer prices show investors are preparing for an increase.

Open Letter

A group of 23 economists, money managers and former government officials issued an open letter to Bernanke on November 15 saying the central bank bond purchases planned "currency debasement and inflation risk" and not boost employment . That capped a series barrage of attacks from conservatives, including Sarah Palin and Glenn Beck.

In a November 10 after Facebook, Palin, former governor of Alaska, accused the Fed to carry out "dangerous experiments with our money."

Hostility toward the Federal Reserve is strong among Republican voters and especially the followers of the tea party, a large group of activists who want to curb the power of government. Forty-one percent of Republicans and 55 percent of Tea Party supporters believe that the Fed should be abolished or radically changed, according to a Bloomberg survey conducted National October 7 to 10.

The attacks recalled earlier times when the Fed policy led the political opposition as in the 1980's when then-Fed Chairman Paul Volcker battle against inflation led to the unemployment rate to a postwar peak of 10, 8 percent. Volcker stood firm and helped usher in an unprecedented era of price stability and growth.

'Out of History "

In the early episodes of the popular criticism of the Fed typically requires easier monetary policy. This time, the political right wants a more restrictive policy. That represents an "out of history," said Jeffrey Frankel, a professor at Harvard University Kennedy School of Government.

The Fed said yesterday that he was comfortable with the status quo. "The Federal Reserve is looking for a change in its legal mandate," said Fed spokeswoman Michelle Smith. "The dual mandate is appropriate."

Eric Rosengren, president of the Federal Reserve of Boston, said that moving to a single term would not have much immediate effect on Federal Reserve policy.

"Right now, there is no conflict," he said in an interview. "The unemployment rate is very high and the inflation rate is lower than we expected in the long term."

"Less optimistic

However, Federal Reserve Governor Kevin Warsh, who voted for purchases of Treasury, said he is not sure that quantitative easing will be completed as planned.

"I am less optimistic than some additional purchases of assets will have significant benefits, lasting for the real economy," Warsh said in a speech of 08 November in New York. "I think the Fed action as necessarily limited, circumscribed, and subject to periodic review."

The attack on the quantitative easing won the support of the presumed speaker of the House, John Boehner, whose spokesman Michael Steel said the Republican leader "has serious concerns about recent actions by the Federal Reserve."

However, with the White House and the Senate in Democratic hands, the ability of critics of the Fed to put pressure on the central bank can not go beyond an oversight.

Republicans "have been trying to politicize the Fed during the time I can remember," said Sen. Ben Nelson of Nebraska. "This seems to be a greater effort."

Start scanning the books in the debt-laden banks of Ireland in Dublin tomorrow



European Union and the International Monetary Fund experts will begin to scan books in the debt-laden banks of Ireland in Dublin tomorrow in the prelude to a possible aid package to stop the expansion of Europe's fiscal crisis.

Finance chiefs from the 16-country euro zone, said the joint assessment will determine whether Ireland can patch the banking system alone or must rely on the EU and IMF, 750 million euros (1 billion dollars) bailout fund .

"If the banking problems are too big for this small country to manage, Europe has made it clear that they will help," said Irish Finance Minister Brian Lenihan today's state broadcaster RTE as the meetings of European finance ministers in Brussels in question .

As Europe struggled to present a united front to maintain fiscal credibility, Great Britain, said again that support for Ireland, the abandonment of a policy of nonintervention toward the euro region to prevent propagation problems Bank of Ireland in the UK market.

In a blow to Ireland, LCH Clearnet Ltd. raised the margin requirement for trading of bonds in Ireland and 30 percent of net positions, making it more expensive to buy securities of Ireland.

Ireland bonds fell for a second straight day, pushing the 10-year yield up 5 basis points to 8.51 percent. The extra yield on German bonds rose 6 basis points to 567 basis points. The spread, a measure of the risk of investing in Spain, reached a peak of 646 basis points on November 11.

Dublin consultations with the ECB, the European Commission and the IMF will "see if the state is able to meet the needs of the banking sector," said Belgian Finance Minister Didier Reynders told reporters today. "If that's not the case probably will be a European intervention."

'Days' was

This package could meet soon, officials said. "It's six months or a few days I would say is closer to the day," said French Finance Minister Christine Lagarde.

Ministers refused to speculate on the financial requirements of Spain, Barclays Capital estimated at about 80 million euros. Klaus Regling, director of the rescue center, said the EU could get the money within five to eight working days.

Britain, which do not contribute to the 860 million euros in loans and pledges in the wake of the Greek crisis "is ready for Ireland's support," said British Foreign Secretary of the Treasury, George Osborne today in Brussels.

five members of Ireland's ISEQ financial index of bank shares is now worth 2 percent of its peak value in February 2007. Officials that the cost of cleaning up the banking system up to 50 million euros, equivalent to about a third of economic output of Ireland.

Budget Ireland

To increase confidence, Lenihan can release the 2011 budget before the publication date of December 7 and will release a four-year plan to reduce the deficit in the next week.

The measures already taken to save the banking system in Spain, which is increasingly dependent on ECB funding, lay down the deficit to 32 percent of gross domestic product in 2010. That is a record in the history of 12 years of the euro and more than 10 times the block limit of 3 percent.

Investors saw the EU's handling of Ireland in search of clues to the fate of Portugal and Spain, two countries bound by the EU to impose spending cuts to curb the excessive deficit.

A statement late on Monday, 11 February shows a show of support for Greece, which led to three months of politicking - focused on the reluctance of Germany part with taxpayer money - before the bloc designed a formula recovery of 110 million euros.

Greek Payment

Greece and the European Commission considered a complaint from Austria to the European part of the next nine million payment will be delayed until January. The January payment was in the original program, EU spokesman Amadeu Altafaj said. The Greek Ministry of Finance said that the time is not a liquidity problem. "

German demands led to the final phase of the crisis when EU leaders on October 29 agreed to consider the demand for German Chancellor Angela Merkel, a crisis resolution mechanism that requires bondholders to share the cost of the bailouts in the future.

That promise has fired 13 consecutive days of losses in the bond market values dragged Irish and Portuguese, Greek and Spanish. To stop the damage, Merkel on November 12 signed a statement of the five countries that exempt bonds now on the market from a restructuring that could be imposed under a permanent system to be created by 2013.

Merkel wants to penalize bondholders to bet against governments fiscally unsound after the EU rescue fund run time in 2013. In Paris, 15 November, the Greek Prime Minister George Papandreou, the blame for the creation of a "self-fulfilling prophecy" that damage to the peripheral countries.

Greece has made a critical German criticism yesterday. "When I heard the comments of the Greek prime minister I thought, with all due respect, Greece has enjoyed a lot of German and European solidarity," said German Finance Minister, Wolfgang Schaeuble in Brussels. "But solidarity is not a one way street. It should be remembered in Greece."

`Dim-Sum' Debt Shows Yuan Opening Amid Hot Money Crackdown: China Credit

HSBC Holdings Plc and Standard Chartered Plc, the largest foreign insurers yuan of bonds sold in Hong Kong, say they have never been busier, even as China seeks to curb capital inflows to limit the appreciation.

Justin Chan, deputy head of global markets HSBC Asia Pacific, said the bank has organized 10 conferences outside China to promote the use of currency in world trade and has "a very strong pipeline" of companies seeking sell bonds dim sum called the yuan-denominated debt issued in the city. Sundeep Bhandari, head of Standard Chartered's global markets in Northeast Asia, said the bank has made 25 similar events in 2010 and is advising a fund that plans to focus exclusively on debt.

While Chinese regulators have joined their counterparts from Brazil to Thailand last week in the setting of limits on cash flows, central bank governor Zhou Xiaochuan said yesterday that China will press ahead with reforms of the exchange rate of the yuan. Issuers are paying 40 percent fewer loans in the currency of Hong Kong than they pay in Shanghai because of demand from foreign investors betting on the exchange rate appreciation.

"China still wants to develop the land market by opening a controlled manner," said Chan at HSBC, Europe's biggest lender, in an interview Nov. 12 in Hong Kong. Last week's measures, including stricter rules on the repatriation of capital and foreign loans were the precautions "to prevent new flows of hot money in China," he said.

Elevation demand

The yuan may rise 6.2 percent to 6.26 per dollar by the end of next year, mostly among the BRIC countries, which also include Brazil, Russia and India The average estimate is an increase of 1.3 percent in the Brazilian real, an increase of 4.2 percent in the Indian rupee and an increase of 5 percent in the Russian ruble.

Chan, HSBC, said he expects the currency to appreciate by 3 percent to 5 percent annually for the next one to two years. He said the yuan may become one of the three major world currencies, the dollar and euro, in 20 to 30 years.

The yuan fell 0.16 percent to 6.6488 per dollar at 1:25 pm in Shanghai. The rate at sea in Hong Kong of 6.6075 was 0.6 percent stronger than the earth. yuan non-deliverable reflect currency bets will advance 2.4 percent in the next 12 months.

China is allowing greater use of its currency in trade and global investment to reduce dependence on the U.S. dollar after Prime Minister Wen Jiabao said in March that he is "concerned" about the holdings of assets denominated in the U.S. currency. The U.S. currency purchases to contain the appreciation of the yuan increased the reserves of the nation's exchange rate to 2.65 trillion U.S. dollars in September.

Trade Settlement

The value of international trade transactions settled in the Chinese currency rose by 160 percent in the three months to June to 126.5 billion yuan ($ 19 billion) in the third quarter, the People's Bank of China reported November 2. Yuan deposits in banks in Hong Kong more than doubled to a record 149 billion yuan in the six months ended 30 September, Hong Kong Monetary Authority data show.

"Our customers want to know about the yuan," said Bhandari of Standard Chartered in an interview Nov. 12 in Hong Kong. "I'm flying back from London at 5 pm on Wednesday and get a morning flight to Tokyo."

Bhandari refused to give details about the fund provided debt focused on the yuan or the name of its director. The very weak bond market has grown by 42 percent to 50 billion yuan from July 19, Royal Bank of Scotland Group Plc. said in a report on 15 November.

HSBC said it signed 11 issues of debt instruments denominated in yuan this year in Hong Kong, including dim sum bonds and certificates of deposit. Standard Chartered said it has been an insurer in a total sales of 8400 billion yuan in 2010.

Sales Planning

Export-Import Bank of China plans to sell up to 5 billion yuan of bonds in Hong Kong next month. International Finance Corporation, private investment arm of the World Bank aims to sell about 100 billion yuan of five-year bonds in Hong Kong, according to the Treasurer Nina Shapiro.

''We like to buy renminbi bonds on the high seas because of the regulations are not so boring,''said Tse Chern Chia, director at UOB Asset Management, which oversees the equivalent of $ 10.6 billion and is a unit of second largest bank Singapore's largest. ''They want to develop the renminbi bond market and, possibly, do not want more capital flows into the continent. So they are allowing the market grew out of Hong Kong. "

Attractive Returns

The appreciation of yuan in interest payments can result in annual yields of up to 7 percent, he said.

The average yield of yuan bonds in the city, including those sold by the state-controlled lenders, including China Development Bank and Bank of China Ltd., is 1.77 percent, according to Market Association Treasury, which is still 23 outstanding issues with maturities of not more than four years. The average rate in China for one to three years in bonds issued by government-linked companies is 2.99 percent, according to Bank of America Merrill Lynch China quasi-government index.

The yield on the government of China 3.28 percent in August 2020 was little changed at 3.74 percent, according to the National Interbank Funding. The extra yield investors demand to hold bonds to 10 years in China instead of similar maturity of U.S. government has increased 63 basis points from June 30 to 101.

Bond Risk

The perceived risk of investing in China's debt has fallen this year. credit-default contracts to five years in exchange for government debt rose two basis points to 63 basis points yesterday, CMA prices show in New York. They have fallen 11 basis points this year. The contracts pay the buyer face value in exchange for the underlying securities or the cash equivalent of a government or a company fail to adhere to debt agreements.

Chan, HSBC said that China will not reduce the openness of its financial market as it wants to make the yuan an international currency. The central bank allowed financial institutions abroad August 17 yuan to invest funds in the bond market in the nation. Hong Kong units of HSBC and Standard Chartered won approval last month.

China had approved qualified foreign institutional investors to buy 18.97 billion U.S. dollars of assets in China on 30 September, compared to 16.67 billion U.S. dollars of shares at the end of last year, according to a statement on the SAFE website on 10 November. Authorities to grant Hong Kong Monetary Authority QFII license in October.

Charles Li, executive director of Hong Kong Exchanges and Clearing Ltd., has suggested that Chinese companies to sell shares at prices of yuan in Hong Kong, where investors are exempt from the fees imposed by Beijing on foreign ownership of income Continental variable.

"If you want high demand for yuan on the high seas, it is necessary to create channels for yuan funds to be invested offshore," said Chan. "This will help large and open the door for moving the capital account."...

South African Central Bank will reduce its key interest rate tomorrow for the third time this year

South African Central Bank will probably reduce its key interest rate tomorrow for the third time this year as a rally in the rand keeps inflation under control and erodes the competitiveness of exports.

The Pretoria-based Reserve Bank will lower the repo rate by half a percentage point to 5.5 percent, according to 17 of 22 economists. The rest expect the rate to remain unchanged.

The rand has gained 34 percent against the dollar since early 2009, reducing the cost of imports and helping to push the inflation rate to its lowest level in more than five years. The progress of the coin also has dampened manufacturing, which grew annually by 1.4 percent in September, the slowest pace in 11 months, fueling calls for the unions to the central bank to do more to stimulate growth and create jobs work.

"The production figures were poor and give the impression that the economy is recovering not just" fast enough, "said Don Egginton, London's chief long-term analysis and models of Daiwa Europe's capital markets. The central bank "has been quite negative on direct measures to weaken the rand, leaving them with reduced interest rates."

Companies like Platinum Ltd. Johannesburg-based Anglo and Sasol Ltd., which incur costs in rand and make sales in dollars, have said the rand's strength is eroding their profit margins. Grain SA, a group of farmers, said Oct. 13 that the rally in the currency was hampering efforts to export a surplus of 4.5 million metric tons of grain.

Accelerates sales growth

The release of more-than-expected retail sales data today may have remained the case for further rate cuts, said Kevin Lings, an economist at Stanlib Asset Management in Johannesburg.

Sales growth accelerated to 6.1 percent annually in September from 4.6 percent the previous month, the government's statistics agency. The median estimate of 13 economists  was for growth of 4.3 percent.

Inflation slowed to 3.2 percent in September, the lowest since June 2005 and has remained within the range of 3 to 6 percent target the central bank since February. The Reserve Bank, which has reduced the repurchase rate eight times since December 2008, expects inflation to remain within the band at least until the end of 2012.

End of Cycle

"There is no real reason for them not to cut rates," said Rashaad Tayob, a fund manager in Cape Town-based management Aeon Investments. "You could cut again after this, but we are nearing the end of the cycle."

A rate cut would reduce the gap with advanced countries and relieve pressure on the rand. reference rate South Africa compares with rates of between zero and 0.25 percent in the U.S., up 1 percent in the countries using the euro and 0.1 percent in Japan.

South Africa, China and Brazil have criticized the U.S. Federal Reserve of its latest round of monetary stimulus, saying it will push more money into emerging markets, the strengthening of their currencies and undermine exports.

The rate decision takes place in "a global context that adds downside risk to both growth and inflation prospects," said Adena Hardie, chief economist at Cape Town-based Cadiz Asset Management.

The growth in South Africa slowed to an annualized rate of 3.2 percent in the second quarter from 4.6 percent in the last three months, mining exports plummeted. In the medium term budget released on 27 October, the National Treasury, said he expects the economy to grow 3 percent this year.

Weak growth

The sluggish growth pushed the unemployment rate to 25.3 percent in the second quarter, the highest of the 62 countries tracked by our team

the largest union in South Africa for manufacturing workers placed a half-page ad in a newspaper on 4 November criticize the economic policy of the government and calls for more measures to weaken the rand.

"The Treasury and the Reserve Bank not to manage our economy to promote growth and development," said National Union of Metalworkers of South Africa, which has more than 260,000 members in the notice published in the based Business Day in Johannesburg.

Budget Deficit

The unions have called for a weaker rand, lower interest rates and increased government spending.

Instead, the government aims to reduce the budget deficit to 4.6 percent of GDP in the year to March 2012 from 5.3 percent this fiscal year.

A smaller deficit would give "more space for the central bank" to cut rates, according to Finance Minister Pravin Gordhan.

"Businesses would welcome lower interest rates," he said in an interview on 27 October in Cape Town. "It would be advantageous to encourage investment, it would be advantageous to the exchange rate."

temporary price controls to counter the fastest inflation in two years In China

China may impose temporary price controls to counter the fastest inflation in two years, the cabinet said.

The maximum prices of "major needs every day," and production materials will be used if necessary, the State Council said on its website today, after a meeting chaired by Premier Wen Jiabao.

acceleration of inflation in China has sent stocks and commodities sliding on speculation that efforts to curb prices will cool the world's fastest growing economy. The State Council's announcement came after the Shanghai Composite Index now spread to 10 percent of its decline from a peak of nearly seven months, on 8 November.

"This is the strongest signal that the government could give its determination to curb price increases," said Mark Williams, London-based economist with Capital Economics Ltd. and a former adviser to China for the UK Treasury . "Whether or not the controls end up being widely implemented, the government hopes that the mere fact of the call will help curb inflation expectations."

The cabinet also pledged to stabilize natural gas prices, ending speculation in agricultural commodities and to ensure the supply of vegetables, grains, oil and sugar. State television reported yesterday that the Council of State was working on measures to curb prices.

Last record

The government is struggling with inflation that accelerated to an annual rate of 4.4 percent in October, driven primarily by the cost of food. The cash inflows of trade and investors betting on the growth of China and the yuan gains complicates the management of the economy.

China in January 2008 temporarily froze prices of petroleum products, natural gas and electricity, as well as dairy products and school fees and transport, to combat inflation, which rose at its fastest pace in more than a decade. Shanghai index fell shares in 2008 after peaking in October 2007.

"It feels like the winter of 2007 again," said Gavin Parry, executive director Parry International Trading Ltd., a securities trading desk in Hong Kong. "The last time China has enacted price controls, ending the bull market of Shanghai. The chain reaction could be higher this time given the global focus on China."

Shanghai's benchmark index fell 1.9 percent today, after a decline of 4 percent yesterday.

Punish speculation

The statement today also said the government should try to stop the illegal processing of cotton, followed by a report in China Securities Journal yesterday that the price limits for food possible, and the punishment could be strengthened to the speculation in agricultural commodities.

The government must recognize the "importance and urgency" to deal with prices, the State Council.

October inflation rate was higher than any of the estimates in the economists. The government is also trying to cool property prices after record earnings this year.

"It is good that the government begins to take seriously the problem of inflation, but has not yet touched the root of the problem - excess liquidity," said Dong Tao, an economist at Hong Kong by Credit Suisse Group AG.

Citigroup Inc., the economist Ken Peng sees the central bank to raise interest rates next month and said the government also seeks to limit credit growth after targeting 7.5 trillion yuan (1.1 billion dollars) of new loans this year, 22 percent below the record extended in 2009.