India's economy grew faster than economists estimated last quarter

India's economy grew faster than economists estimated last quarter, adding to evidence of a strengthening of domestic demand is fueled inflation by placing strains on the nation's transportation and energy systems.

Gross domestic product rose 8.9 percent in the three months to September last year, matching the revised rate of growth in the previous quarter, the Central Statistical Organization said in a statement today in New Delhi. That was more than the median estimate of 8.2 percent, from 30 economists surveyed.

infrastructure improvements will be critical to sustaining India's rate of expansion, the Indian Prime Minister Manmohan Singh, said this month that inflation is running almost double what the government considers "ideal." The Reserve Bank of India may be necessary to resume interest rates in coming months after raising borrowing costs six times this year.

"Inflationary pressures remain high because the consumer demand strong growth fuels amid growing capacity constraints," said Vishnu Varathan, a Singapore-based economist with Capital Economics Ltd. "The Bank of the Fed will have to come back and probably raise rates further early next quarter to ensure inflation remains under control. "

Central bank governor Duvvuri Subbarao on November 2 raised the benchmark repo rate and reverse repurchase rate by a quarter point each to 6.25 percent and 5.25 percent, saying that inflation continues to above the "comfort zone."

No 'Ideal'

The inflation rate wholesale prices was 8.58 percent in October compared with the "ideal" level of 4 percent to 5 percent, the Finance Minister Pranab Mukherjee. Consumer prices are rising at a rate close to 10 percent, the fastest in the Group of 20 countries after Argentina.

quarter of India's GDP last profit compared with a 1.9 percent expansion in the 16 countries of the euro, 2.5 percent in the U.S. and 9.6 percent in China. The Organization for Economic Cooperation and Development on 18 November, said a high level of unemployment in the U.S., Europe to the sovereign debt crisis and increasing trade imbalances around the world represent a risk to global recovery.

Faster growth is to increase revenue for the government of Prime Minister Singh, giving space to reduce the budget deficit target of 5.5 percent of GDP more than 16 years of 6.9 percent last year even though spending on oil and fertilizer subsidies rises. Officials have sought approval of parliament on November 15 to spend an extra 50 billion rupees (U.S. $ 1 billion) in subsidies to fertilizer after seeking 140 billion rupees to limit oil prices in August.

Boost Bonds

India bonds this month have increased faster growth makes its concern about the budget deficit. Yields on 10-year government bond fell 7 basis points this month until today, to 8.04 percent, the debt only among BRIC nations gather for the period. BRIC refers to Brazil, Russia, India and China. Sensitivity index of Bombay Stock Exchange, or Sensex, was little changed at 19,400.46 as of 12:28 pm in Mumbai trading, erasing earlier declines of up to 1 percent.

Meanwhile, concerns that the political turmoil that impede legislative work has offset the effect of the RBI percentage points of rate increases at 1.5 on the rupee, reducing its earnings for the year against the dollar to about 1 percent.

The currency pared earlier losses and was quoted at 45.95 against the dollar after weakening to 0.4 percent to 46.१२५०.
Federal investigators arrested eight bankers and brokers in India on November 24 amid allegations of improper loan disbursements.

Attracting capital

Anubhuti Sahay Economists including Standard Chartered Bank said faster growth and higher interest rate differential can attract capital flows that contribute to inflation.

The Reserve Bank's benchmark repurchase rate in India is 6.25 percent. In comparison, the U.S. objective Federal Reserve for overnight interbank loans to another is zero and 0.25 percent, where it has been since December 2008.

The rate differential between India and advanced countries stimulated an unprecedented 10 billion U.S. dollars in rupee debt flow this year. Overseas funds also invested a record 28.5 billion U.S. dollars on Indian reservations in the prospects for faster economic expansion in the nation in southern Asia.

1300000000000 economy dollar is likely to expand by 8.5 percent in the fiscal year through March, the biggest in three years, Prime Minister Singh said 20 November. Finance Minister Mukherjee said that economic growth may be higher than the target after the release of today, while Kaushik Basu, Chief Economist at the Ministry of Finance, said that India could achieve a growth of 9 percent before than expected.

Challenges to sustain growth rates include handling "effectively to the threats of corruption," Singh said earlier this month.

Corruption risk

The opposition parties led by Bharatiya Janata Party chief has stalled parliamentary proceedings since 09 November, demanding a deeper investigation against a minister who is responsible for allocating phone licenses at prices below the market.

The increase in car sales and expand bank loans to provide evidence of growing consumer demand in the third largest economy in Asia.

Maruti Suzuki India Ltd., the largest automaker in India, Tata Motors Ltd. and others sold a monthly record of 182,992 vehicles in October, according to the India Society of Automobile Manufacturers. The loans granted by lenders such as State Bank of India Ltd. and its rivals rose 22.3 percent in the fortnight of November 5, the fastest pace since January 2009.

Given the strong demand, high inflation and sticky, "we believe the RBI will raise rates another 25 basis points at its policy meeting in January," said Indranil Pan, chief economist at Kotak Mahindra Bank Ltd. in Mumbai .

Agricultural production grew 4.4 percent in the three months to September compared with a gain of 2.5 percent in the previous quarter, today's report showed. Mining rose 8 percent, manufacturing gained 9.8 percent, while construction increased 8.8 percent.

Read more »

Ireland Gets $113 Billion Aid

European governments "to 85 billion euros (113 billion) rescue package to Ireland to quell the market turmoil threatening the euro as stocks, bonds and the currency fell.

Ireland 10-year bonds fell after an early advance, Spanish bonds fell the most since the launch of the euro and European stocks sank 1.4 percent. The euro weakened against 15 of its top 16 partners and the cost of insuring the debt of Spain and Portugal in the event of default soared to records.

"The idea that a rescue package for Ireland would set up a firewall and stop the fear of contagion is clearly discredited," said Preston Keat, research director at Eurasia Group, a political consultancy in London. "Portugal and Spain now face market pressures."

Six months after the Greek rescue exposed flaws in the makeup of the euro and fed doubts if 16 countries belong to the same monetary union, political leaders met again in Sunday's race meeting in Brussels to calm markets.

In addition to Ireland's rescue package, the finance chiefs also approved a Franco-German agreement on the post-2013 rescues which means that investors do not automatically take the loss of sharing the cost with taxpayers and German Chancellor Angela Merkel, initially proposed the dismay of bond traders. And Greece was told he could have an extra 4 1 / 2 years to pay off emergency loans to match the term of seven years in Irish business.

Most indebted countries

Movements do not allay concerns for most indebted countries in the region will need additional help. The euro fell 1.1 percent to $ 1.3101 against the dollar at 4:31 pm in London, reaching its lowest level since 21 September. The Stoxx Europe 600 index fell 1.4 percent to 262.83.

The performance of the Spanish 10-year bond rose 25 basis points to 5.46 percent, the highest since 2002. That pushed the German bond premium to 271 basis points, a record of the euro era.

Swaps credit-default in Portugal rose 37 basis points to 539, and contracts in Spain rose from 28.75 to 351.5, according to CMA. The Markit iTraxx Index SovX Western Europe 15 governments swaps rose 9 basis points to a record of 197, based on closing prices.

While Greece that its budget out of control and Ireland fell prey to a housing crisis, Portugal suffers from a lack of competitiveness that keeps the average economic growth below 1 percent in the last decade. His government has also been slower to reduce its deficit than others, with the central government deficit expanded by 1.8 percent in the first 10 months of the year in Spain fell by 47 percent.

Bond sales

Like Ireland, Portugal does not need money immediately to run the government. It has completed this year, sales of bonds and do not face redemption through April. The debt agency plans to hold an auction of tickets for 12 months on 1 December.

Portugal last week approved cuts deeper into spending more than three decades with the aim to get back under the deficit limits of the EU for 2012. HSBC Holdings Plc estimates it needs to find € 51500000000 over the next three years to meet your budget and needs likely to bond redemption.

"Portugal does not see the need to seek help," said German Finance Minister, Wolfgang Schaeuble, yesterday.

Spanish Economy Minister, Elena Salgado, also reiterated that its economy - the euro zone's fourth largest and almost double the size of Portugal, Ireland and Greece combined - do not need the help either. In addition to cutting its budget deficit, the country has led to regional expenditure under better control and half of its debt is held in the country, limiting the threat of withdrawal of foreign investors. It faces the first of its 45 million euros in bond repayments until April next year.

Rescue boat

Investors however, have expressed concern that the EU pot rescue may be smaller than advertised, and not big enough to save Spain. HSBC sums show that the country needs € 351 000 000 000 over the next three years.

In practice, the EU can only be able to deploy € 255 000 000 000 of the 440 million European Global Financial Stability, according to Nomura International Plc. That's because the bailout fund financed by bond issues and to achieve a AAA rating, governments agreed to set aside cash and loans linked to the creditworthiness of the donors. The rest of the rescue party consisting of 60 million euros from the European Commission and € 250 000 000 000 pledged by the IMF.

UBS AG, said in a report published today that the debt crisis will increase next year and that investors should follow to avoid bonds issued by the so-called peripheral countries like Ireland, Portugal and Greece in the short term.

Internal criticism

Germany, which built the euro on the principle of budgetary discipline, he unleashed the last phase of the crisis calls for a "permanent" system from 2013 to allow countries to restructure their tax debt problems and reduce the value of holdings bonds.

German pressure encountered criticism from politicians in other parties, who called at the wrong time, and from the European Central Bank President Jean-Claude Trichet, who warned that disrupt the bondholders. Merkel, who has faced domestic criticism to help the residents of the EU, yesterday left the court for an automatic sanction, pledging to give the IMF a role in the determination of losses on a case by case basis .

The new proposal, the fast lane of a debate scheduled for December, could introduce "collective action clauses" for debt sold in 2013, allowing governments more fiscally concerned to renegotiate bonds. EU governments seek those enshrined in the block in mid-2013 and pair it with a cash emergency fund to replace the then expiring.

"Herd behavior"

Trichet, on Thursday called the commitment to a "useful clarification" and the ECB's Governing Council said the Irish program "to help restore confidence and to safeguard financial stability in the euro area."

"There's a lot of herd behavior in the market," said Commissioner Economic and Monetary Affairs Commissioner Olli Rehn. "We want to clarify any possible confusion."

export-driven economy of Germany has powered through the crisis of the euro, with business confidence at a record level in November and the expansion of the outgoing government of 3.7 percent this year, the fastest pace in more than one decade. That resistance in contrast to recessions in Greece and Ireland, the division of the euro area among the best placed countries in the wake of the German economy and the poorest in the periphery of the continent.

Yesterday's decision "does not refer to problems of long-term solvency," said Andrew Bosomworth, a fund manager based in Munich at Pacific Investment Management Co. "It's a missing-the-power-of-the-road solution instead of recognizing and dealing with the here and now problems of insolvency. "

Cash reserves

Ireland said it would pay average interest of 5.8 percent of loans, which are broken down into 45 million euros from European governments, 22.5 million euros from the IMF and 17.5 million euros of cash reserves Ireland and domestic pension funds.

"I do not think there's any other real options," said Irish Prime Minister Brian Cowen told reporters in Dublin.

A day after more than 50,000 demonstrators marched through Dublin to report Cowen cuts budget to avoid financial ruin, the EU gave Spain a year until 2015 to get its government budget deficit limit of 3 per euro percent of gross domestic product.

Including the bill to shore up Irish banks, the deficit is expected to reach 32 percent of GDP this year, the highest in the history of Euro 12.

Emergency Measures

Cowen has overseen the collapse of Ireland's banking system and public finances, leading to recession and unemployment near 14 percent. Cowen's government is pulling the thread. The Green Party, a partner in the coalition, wants the elections in January, last week his party lost a special election for a vacant seat and some of his colleagues are hitting your leadership.

led banking close links to Britain, a user of the euro did not contribute to rescue Greece 110 billion euros in May, to contribute to the package of € 3,800,000,000 Ireland.

The revival of the crisis, the ECB may again postpone his departure from the emergency measures as it did at the height of the Greek crisis. It is also likely to provide more help to banks in Spain and Portugal, and ultimately, could expand its program of bonds with an option to purchase of Spanish stocks and perhaps make larger purchases of assets, said Janet Henry, chief economist for Europe at HSBC in London.

"We have removed the doubts and uncertainty and we must maintain the elimination of the reasons for panic, our goal is to bring the tools of speculators," said Finnish Finance Minister Jyrki Katainen reporters in Helsinki today. However, "there is no guarantee that the crisis will continue and even expand, in spite of the loans in Ireland."

Read more »

Gold swung between gains and losses and the speculation

Gold swung between gains and losses and the speculation that Europe's problems of debt can be extended beyond Ireland boosted demand for shelter, while the concern that China may take more measures to cool price inflation slowed commodity.

Gold for immediate delivery advanced 0.3 percent to $ 1,370.43 an ounce and fell into the same amount of $ 1,361.90 before trading little changed at $ 1,368.05 at 5:23 pm in Seoul. Prices are set for a monthly gain of sessions. The February contract for delivery also was little changed at $ 1,369.20 in the Comex in New York.

There is no "speculation Spain and Portugal could be the next to ask for help, which caused an increase in safe-haven flows into gold," wrote Mark Pervan, head of commodities research in Australia and New Zealand Banking Group Ltd., in a report released today.

The euro fell to a two-month high against the dollar, while the Spanish and Portuguese bonds fell on speculation that the Irish 85 million euros (113 billion) bailout will not stop the financial contagion. Gold priced in euros hit a record in June, when Greece sought a ransom.

The dollar index, which is the currency against six colleagues, was little changed after rising yesterday to the highest level since 20 September. Gold typically moves in the opposite direction to the U.S. currency.

Curbing inflation

China needs to raise interest rates by 200 basis points to curb inflation as the excess liquidity, Zhong Jiyin, an economist at the China Academy of Social Sciences, wrote in a commentary in today's China Daily.

"Gold seems to be weighed by concerns market that China may raise interest rates," said CS Oh, future team leader abroad at NH Investment & Futures Co. in Seoul. "That seems to be affecting other products."

China, the top user of raw materials, has ordered banks to set aside large reserves twice this month after rising interest rates in October. Consumer prices rose 4.4 percent last month, the statistics bureau reported on 11 November.

The International Monetary Fund said Monday it sold 19.5 tonnes of gold in October to shore up its finances. The sale to cut funding from the lender based in Washington later this month to 2,846.7 tons, said Alistair Thomson, a spokeswoman.

The IMF said that in 2009, 403.3 tons would be made for sale as part of a program of loans at reduced rates to low-income countries. The bank sold 212 tons to India, Sri Lanka and Mauritius. In February, the bank said it would begin "in the market" sales.

Silver for immediate delivery rose 0.3 percent to $ 27.2325 an ounce, set for a fourth monthly advance. The metal has risen 61 percent this year, to $ 29.36 an ounce on 09 November, the highest since 1980.

palladium immediate delivery rose 0.5 percent to $ 694.65 an ounce, heading for a monthly gain of sessions. Platinum for immediate delivery was unchanged at $ 1,647.53 an ounce, ready for the first monthly decline in three years.

Read more »

Islamic bonds fell in November

Islamic bonds fell in November, breaking a five-month rally, as the crisis of Europe's concern extend debt reduced demand for higher-yielding assets in emerging markets.

Average yields of sukuk rose 19 basis points, or 0.19 percentage point in November to 5.04 percent, the highest level in two months, according to HSBC / NASDAQ U.S. Dollar Dubai sukuk index. Yields had fallen 194 basis points from 31 May until late October. The extra yield investors demand to hold emerging market debt-Islamic rather than U.S. Treasuries rose 22 basis points in the month to 267, according to JPMorgan Chase & Co. 's EMBI index.

"The sukuk market does not work in isolation," said Scott Lim, chief executive of Kuala Lumpur-based MIDF Bhd Amanah Asset Management, which oversees the equivalent of $ 670 million of assets, in an interview on 26 November. "Europe is having too many structural problems and this is just the beginning. It will be a challenge for the bond market."

The declines pared gains this year Islamic bond to 11.2 percent, compared with an increase of 13.3 percent for the debt of JPMorgan EMBI Global Diversified index.

Spain at the weekend agreed to a package of € 85000000000 (112 million dollars) in aid from European governments to help prop up its banking system. The bond yields Portugal and Spain to 10 years rose to records this month on speculation the countries will Ireland in search of a bailout.

Larger spreads

Investor demand for the safety of German debt drove the extra yield investors demand to hold the bonds to 10 years in Portugal on bonds to a record high of 460 points on 11 November. Spain premium widened to 286 points today. The difference between the average yield of sukuk and interbank offered rate in London fell 12 basis points to 349 basis points in November, according to HSBC / NASDAQ U.S. Dollar Dubai sukuk index.

"By looking at the challenges of the euro zone, of course, is easy to see the gravity of capital to safe havens," wrote Rafael Martínez Dalmau, of the Singapore-based head of portfolio management that meet the Shariah of BNP Paribas, in an e-mail response to questions on 29 November. "While the markets may suffer sporadic attacks of volatility, higher profits in sukuk is likely to continue, albeit at a slower pace than we have seen in recent months."

The yield on the note of Malaysia Islamic percent of 3,928 due June 2015 fell three basis points to 2.87 percent today, up 38 basis points in November, according to prices provided by the Royal Bank of Scotland. It has advanced 54 basis points from a record low of 2.33 percent on Nov. 4. The difference in yield between the notes of Dubai and Malaysia fell by three basis points today and dropped 15 basis points this month to 379.

Sales Sukuk

Sales of Shariah-compliant bonds, which pay yields of assets to comply with Islam's ban on interest, have plunged 31 percent this year to $ 13.7 million in restructuring of debt and falling prices properties in the confidence of investors in the Middle East harm. It reached a record $ 31 billion in 2007.

sukuk offerings is likely to pick up next year as growth in Asia and the Persian Gulf continues to outpace Europe and the U.S., Dalmau wrote.

developing economies of Asia will expand 8.4 percent in 2011, compared with growth of 2.2 percent in advanced countries, the International Monetary Fund forecast on Oct. 6. The economies of the Middle East and North Africa will grow by 5.1 percent next year, the IMF estimates.

Dubai Sale

Dubai government hired CIMB Investment Bank Bhd, a unit of Kuala Lumpur-based CIMB's Holdings Bhd Group as lead manager to sell between $ 1 billion and $ 1.5 billion sukuk, a person familiar with the plan said 24 November. Prime Minister of Malaysia, Najib Razak, said Oct. 26 the Dubai Department of Finance proposes a program of multi-currency sukuk.

National Commercial Bank, Saudi Arabia's largest lender, plans to sell its first Islamic bond in the second quarter of 2011, Abdulrazzak Elkhraijy, executive vice president and head of the Islamic development bank, said in an interview in Manama, Bahrain in November 1922.

"We expect that sukuk issuance to be affected only because the market is in a corrective phase," said Rafael de BNP Paribas.

Read more »

China distances itself from North Korea.

North Korea sent a top aide to Kim Jong Il to Beijing the same day it was leaked U.S. diplomatic offices show that China is increasingly willing to consider the unification of Korea under the control of the South.

Choe Thae Bok, chairman of North Korea's Supreme People's Assembly, left for Beijing today for talks with Chinese leaders, the state-run Central News Agency of Korea reported. Choe met with China's President Hu Jintao in China's capital October 2 Kimon accompanied a trip to the city in May, according to KCNA.

Choe visit comes after China proposed on 28 November that the negotiators of the two Koreas, Japan, Russia and USA meet in Beijing next month to ease tensions after an artillery attack on 23 November North Korea on an island in South Korea, which killed four people. A U.S. Navy carrier aircraft is conducting exercises in the Yellow Sea off the coast of Korea.

Japan rejected China's proposal yesterday. The conversation is not only North Korea out of control'','' Japanese Foreign Minister Seiji Maehara, Wall Street Journal said in an interview. Nicholas Snyder, a spokesman for the U.S. Embassy in Beijing, said that "clearly the steps North Korea are required to demonstrate a change in behavior." said the South Korean Ministry of Foreign Affairs and Trade would consider China to call for caution conversaciones''con. ''

China is the largest North Korean trading partner and source of much of the country's food, fuel and foreign currency. The two countries have been allies for 60 years since fighting together against the US-led forces during the Korean War of 1950-53. The two countries share a 1,415 kilometer (880 mile) border.

Unreliable

A leak of 22 February diplomatic cable provided to The Guardian by WikiLeaks.org said the then minister of South Korea's Deputy Foreign Minister Chun Yung Woo said U.S. Ambassador Kathleen Stephens, the young Chinese Communist Party leaders do not think North Korea is a reliable ally. Chun also said that two unidentified Chinese officials said they believed that Korea must be unified in the South.

U.S. Secretary of State, Hillary Clinton said yesterday Obama "strongly condemns" the unauthorized release of more than 250,000 documents that Wikileaks diplomats began publishing two days ago. State Department spokeswoman Nicole Thompson said he "can not give veracity of Wikileaks has posted anything to the media" and said the agency's policy is to refrain from commenting on certain filtering materials.

China hopes U.S. will "properly handle" the situation created by the filtered messages, Foreign Ministry spokesman Hong Lei, told reporters in Beijing.

South Korean foreign ministry spokesman, Kim Young Sun said it would be "inappropriate to comment on the documents of other countries diplomatically.

'Regrettable'

''While the details of diplomatic discussions have been leaked, it is regrettable,''said Kim.

U.S. China is pushing to censure North Korea for the bombing of Yeonpyeong island. China has avoided blame his partner of 60 years instead of criticizing joint naval exercises in South Korea and the U.S. in the Yellow Sea, which began Nov. 28.

Chun, now national security adviser to South Korea, said Stephens China''tiene much less influence than most people cree''sobre the regime of Kim Jong Il, according to the February 22, quoted in The Guardian cable , a UK newspaper.

Chinese officials told U.S. diplomats that their efforts to persuade North Korea had been rejected, and that the U.S. was the only country with real influence, as an escape wire for June 17, 2009. "The United States was the key, while China was only able to apply a little oil to the lock, the cable quoted a unnamed Chinese official as saying.

'Darling'

A separate message from Beijing, said China's Vice Foreign Minister He Yafei, in April 2009, an American diplomat said that North Korea tests missiles were designed to capture the attention of the U.S. and that the Pyongyang government was actuando''como a spoiled child. "Two months later, U.S. Ambassador to Kazakhstan Richard Hoagland, sent a wire saying that his Chinese counterpart, Cheng Guoping, said that North Korea was a" threat to world security, "said The Guardian.

The cables are above all an increase in diplomatic activity between China and North Korea this year.

Kim made an unprecedented two visits to China this year, meeting with President Hu Jintao, on both occasions. In October, Zhou Yongkang, member of China's ruling Politburo Standing Committee, was with Kim at a military parade in Pyongyang. Later that month, top Chinese general Guo Boxiong visited North Korea, marking the two countries "victory" over the forces of "imperialism" led by the United States during the Korean War of 1950-53.

China also failed to criticize or blame North Korea for the March sinking of a warship in South Korea. An international panel found evidence that North Korea torpedo was responsible for the collapse, which killed 46 sailors.

WikiLeaks.org, a nonprofit group that released the information that governments and companies want to keep secret, has over the last two days posted on its website what it says are secret, confidential or, in some unclassified cases leads the U.S. embassy.

Read more »

The Bank of Thailand may refrain from raising its policy rate

The Bank of Thailand may refrain from raising its policy rate, while maintaining unchanged borrowing costs for a second straight game as the risks to increase the nation's economic recovery.

The central bank will leave its benchmark rate by one-day bond repurchase to 1.75 percent, according to 12 of 17 economists surveyed . The rest expect an increase of a quarter percentage point. The decision is due at 2:30 am in the morning from Bangkok.

Thailand and neighboring Malaysia have paused after raising rates earlier this year, choosing to support growth and rising currency export earnings threaten Asia. Higher borrowing costs would attract capital inflows that have boosted profits in the baht and the central bank will maintain a "flexible" policy, the governor said Prasarn Trairatvorakul November 24.

"The central bank may be able to delay the rate increase as price pressures are not so worrying now, while the latest economic data point of a slowdown," said Somprawin Manprasert, economist at Tisco Securities Co. in Bangkok . "They may need to make a move in the second quarter of next year as the inflation risk will be more evident."

Thailand's economy grew 6.7 percent last quarter, the slowest pace this year, as exports declined and agriculture declined, prompting the government planning agency to predict that the central bank will refrain from raise interest rates next year.

Exports Threatened

The baht has fallen more than 2 percent since reaching a maximum of 13 years of 29.46 a dollar on 10 November. However, the currency of 11 percent increase this year is the biggest gain in Asia outside Japan, led to companies like General Motors, Ford Motor Co. and Siam Cement Pcl strength of the baht that is a threat to exports. Thailand is an exporter of cars, rice and electronics.

The currency lost 0.1 percent to 30.23 per dollar as of 11:24 am Prasarn said yesterday despite the pressure on the baht has subsided for now, capital inflows are still "a phenomenon that we have be careful. "

To reduce pressure on the baht appreciation of capital inflows, the government last month to withdraw a 15 percent exemption from tax for foreign income of domestic bonds. Prasarn said last week the central bank has additional tools you can use, including a financial transactions tax, sometimes called Tobin tax after James Tobin, American economist and Nobel laureate, who first suggested the idea in 1971.

Consumer Confidence

Export growth in Thailand fell to 15.7 percent in October, the slowest pace in a year. manufacturing growth slowed to 6.2 percent last month while consumer confidence fell in October for the first time in six months.

The current account surplus widened to 2.91 billion U.S. dollars in October of $ 2,770,000,000 the previous month, due to a rebound in tourism, the central bank said today.

"The export growth may slow in November and December," said the Bank of Thailand Director Mathea Supapongse today. "We had expected earlier in line with the economic slowdown of trading partners, but do not know the extent of the slowdown, however, as the progress of orders abroad are still good."

Seasonally adjusted GDP, which contracted for the second consecutive quarter in the three months through September, may shrink again in the last three months of 2010 due to the global slowdown, the strong baht and the effect of flooding, according to a study Kasikornbank Pcl unit.

However, the Bank of Thailand may increase the rate of monetary policy this week because the central bank has already taken into account the slowing economy and the baht is not a "one-way bet more," said Sathirathai Santitarn one in Singapore economist at Credit Suisse Group AG.

"Many challenges'

"The central bank should start early to anchor expectations of inflation" because monetary policy takes time to affect the economy, Santitarn said. Inflation will accelerate next year once government subsidies expire, he said.

The central bank has said inflation, which used to guide policy, you can reach the upper end of its target range of up to 3 percent next year. headline inflation slowed to 2.8 percent last month from 3 percent in September due to government subsidies. Core inflation remained at 1.1 percent.

Abhisit Vejjajiva Prime Minister, said last week the nation can not be "complacent" about economic growth because it is facing "many challenges", including global economic uncertainties and politics.

Constitutional Court yesterday said the nation's ruling Democratic Party of the complaints Abhisit embezzled state funds to campaign, helping to avoid becoming the third leader forced from office since the 2007 elections.

The Democratic Party still faces separate charges dissolution of illegally accepted a 258 million baht ($ 8.5 million) donation of TPI Polene Pcl, the nation's third largest cement maker. A guilty verdict in this case could disqualify Abhisit, who took power in 2008 after a court dismissed the ruling party linked to Thaksin Shinawatra, ex-leader.

Read more »

Rubber game for a monthly gain session & rose as a weakening of the yen

Rubber game for a monthly gain session, rose as a weakening of the yen and limited supply in Thailand, the largest exporter, improving the appeal of raw materials used to manufacture tires and gloves.

Rubber May delivery on the Commodity Exchange in Tokyo rose to 2.6 percent at 366.4 yen per kilogram ($ 4,353 per metric ton) before settling at 360.2 yen. The most active contract, 30 years reaching a high of 383 yen on Nov. 11, surged by 10.2 percent this month, the biggest gain since December.

The dollar headed for its first monthly gain since April against the yen on speculation U.S. economic recovery is accelerating and the tension on the Korean peninsula escalates. Wet weather in southern Thailand continues to cut supply, raise prices, according to the Rubber Research Institute of Thailand. The South accounts for about 80 percent of production.

"The tone of weakening the yen and rising oil prices continue to rubber support," said Varut Rungkhum, commodities analyst agent wealth Agro Ltd. "persistent rain is likely to worsen the low supply situation in Thailand" , said by telephone today from Bangkok.

Supply Association of Natural Rubber Producing Countries, which accounts for about 92 percent of world production would fall 3.8 percent in the three months to December 31 as the rains have stopped playing in Thailand, said the group on 25 November.

Thailand's production is estimated to fall by 28 percent during the period October to December, which will reduce production this year by 1.4 percent to 3.12 million tons, the group said.

The spot price of natural rubber in Thailand stood at 131.55 baht ($ 4.35) per kilogram at present. Auctioned ribbed smoked sheets prices rose 0.4 percent to 123.45 baht, driven by a weaker yen and a shortage of supply, Rubber Research Institute of Thailand, said on its website.

The limited gains

Shanghai Futures Exchange fell as much as 3.8 percent to 29,500 yuan ($ 4.425) per tonne before closing 0.8 percent, to 30,880 yuan. The contract, which reached a record high on November 11, provides for monthly progress meetings.

Gains were limited by concern that the European debt crisis from spreading and speculation that China will raise interest rates, Navarat Kaewpratarn, senior marketing officer in the future Agro Trade Co., said by telephone from Bangkok.

European governments "to 85 billion euros ($ 111 billion) rescue package for Ireland failed to quell market turmoil, threatening the euro as stocks, bonds and the currency fell.

China's recent increases in the reserve requirement ratio for banks is not enough to reverse the excessive liquidity in the system, Zhong Jiyin, an economist at the China Academy of Social Sciences, wrote in a commentary today in the newspaper China Daily. China needs to raise interest rates by another 200 basis points, or 2 percentage points to curb inflation as the excess liquidity, wrote Zhong.

Read more »

Europe and U.S. Stock index futures fell

Europe and U.S. Stock index futures fell as investors awaited economic reports that may provide further evidence of the health of the global economy. Asian stocks retreated.

BHP Billiton Ltd. and Rio Tinto Group fell in Sydney. Hochtief AG may be active after Actividades de Construccion y Servicios SA won approval from Germany's financial regulator for its 2.7 billion euros ($ 3.5 billion) bid for German construction company. ThyssenKrupp AG may move after saying it returned to profit in the fiscal year to September.

Futures on the Euro Stoxx 50 fell 0.4 percent to 2,665 at 7:40 am in London. The FTSE 100 index futures fell 0.1 percent. The benchmark Stoxx Europe 600 Index is directed to a decrease of 1.4 percent this month. The Stoxx 600 sank an eight-week low yesterday in the rescue of Ireland failed to reassure investors that the region will contain the crisis of sovereign debt. 500 of Standard & Poor's Index lost 0.3 percent today, while the MSCI Asia Pacific Index declined 0.7 percent.

"No escape from the possibility of purchase of the euro area to continue the dissemination and nervousness associated with this have the potential to further erode confidence even before you look at the current state of affairs in Korea," Ben Potter research analyst based in Melbourne at IG Markets Ltd., said.

The euro traded near its lowest level in two months and the risk of Asia-Pacific bonds rose as concern mounted that the Irish banking crisis will spread to Spain and Portugal, while the recovery in Asia showed signs of lose momentum. Data scheduled for release today may show unemployment in Europe was held near 12-year high in October, following reports that showed Japan's jobless rate unexpectedly rose in industrial production in the third largest economy in the world fell for the fifth month.

Fund for North Korea

Confirmed that North Korea has a uranium enrichment facility with thousands of centrifuges, further fueling security concerns after the deadly attack on an island in South Korea on 23 November.

the confidence of UK consumers unexpectedly fell to a four-month in November as looming cuts in public spending dented prospects for the British in 2011, a report by GfK NOP Ltd showed.

In the U.S., a report today may show housing prices in 20 cities rose in September at the slowest pace in eight months, which shows the latest slump in home sales is destabilizing.

The S & P / Case-Shiller index of home prices rose 1 percent from September 2009, the smallest year-over-year gain since February, when the market began to recover after a fall of three years according to the median forecast of 28 economists surveyed by us. The figures are due at 9 am New York. Other reports may show consumer confidence increased and expanded businesses.

BHP Billiton, Hochtief

BHP Billiton, the world's largest mining company, fell 1.2 percent to $ 42.74. Rio Tinto, the third-largest, lost 1.9 percent to $ 82.21.

Hochtief be moved. "During its investigation, requested BaFin significant improvements to the ACS," BaFin said in a statement. Offer document filed yesterday revised ACS "provided all necessary improvements. Therefore BaFin has approved the proposal," the regulator said.

ACS, based in Madrid on September 16 announced an offer to purchase all shares Hochtief, proposing eight of its own shares for every five in the German builder.

ThyssenKrupp, Postbank

ThyssenKrupp may be active. Germany's largest steelmaker reported a net profit of 824 million euros in the fiscal year through September compared with a net loss of 1.86 billion euros a year earlier. That topped the average estimate of 752.4 million euros from 11 analysts surveyed .

Deutsche Postbank AG may move. The German lender being acquired by Deutsche Bank AG is nearing a deal to sell its operations in India for about 11 billion rupees (239.1 million U.S. dollars), according to a person with direct knowledge of the matter.

GlaxoSmithKline Plc, the biggest drugmaker in the UK, said more research and production investments in more than 500 million pounds ($ 777,700,000) in their home country if the government reduces the tax rate profits generated by intellectual property owned UK.

Northumbrian Water Group Plc may move as the company supplying water to about 4.4 million customers in the UK reported a net profit of 87.8 million pounds in the six months to the end of September, compared with 62.9 million pounds a year earlier.

Read more »

China Stocks Drop Since June on Rates

China's stocks fell, sending the benchmark index to its first monthly decline since June, as speculation that the government will increase interest rates and debt crises can spread threatened European economic outlook.

Industrial & Commercial Bank of China Ltd. losses for lenders pace after China Academy of Social Sciences economist said the government needs to increase borrowing costs by another 200 basis points. Kweichow Moutai and Harbin Pharmaceutical Group Co. led declines for consumer goods and stocks of drugs after industry groups exceeded the benchmarks of this month and the government reduced the prices of medicine to control inflation.

"Measures of adjustment of government, as increases in interest rates can go faster than the market expects, and that proved to be in the previous rounds," said Leo Gao, who helps oversee about $ 600 million in APS Asset Management Ltd . in Shanghai. "The stock market will face downward pressure."

The Shanghai Composite Index, which remains the largest stock exchanges in China, fell 46.18, or 1.6 percent, to close at 2,820.18. That ended a decrease of 5.3 percent this month, the first decline since June. The CSI 300 Index fell 1.7 percent to 3,136.99.

The Shanghai index has lost 11 percent since reaching a peak almost seven months, on 8 November when the government ordered banks to set the largest reserves set aside twice this month after raising rates Interest in October to fight inflation. Consumer prices rose 4.4 percent last month, more than 4 percent median forecast in a  survey of 28 economists, the statistics bureau reported on 11 November.

Less liquidity

The repurchase rate seven days, which measures the availability of funds in the money market, rose 63 basis points to 3.31 percent, the highest since October 2008, according to a published tariff setting by the Center National Interbank Funding.

ICBC reduced rate for banks, slipping 2.1 percent to 4.20 yuan. China Construction Bank Corp. fell 1.7 percent to 4.62 yuan.

Recent increases in the reserve requirement ratio will not be enough to reverse the excessive liquidity in the system, Zhong Jiyin, an economist at the China Academy of Social Sciences, wrote in a commentary in today's China Daily.

China may see inflation accelerating this month from October prices driven up food costs, so it is "almost certain" that inflation will exceed 3 percent for the year, Sheng Songcheng, former director of the Shenyang branch of the central bank, wrote in a commentary in the official Financial News.

The central bank should clearly indicate that is changing at a "prudent" monetary policy and allow the yuan to fight rising inflation, said Sheng. There is scope for further increases in reserve requirements for banks, Sheng wrote.

Economic Conference

The government will hold an annual economic conference in Beijing late next week to establish guidelines for monetary and fiscal policy in 2011, two people briefed on the matter, he said.

Officials may consider the objectives of loans and inflation in the December 10-12 meeting, one person said, speaking on condition of anonymity.

The purchasing managers index, a gauge of manufacturing could increase to 54.8 percent this month from 54.7 percent last month, according to the median estimate of economists surveyed by us. The measure is scheduled to be released tomorrow.

An indicator of consumer goods companies slipped for the first time in nine days, losing 3.2 percent. Kweichow Moutai, a spirits maker, fell 5.4 percent to 204.81 yuan, to reduce profits this month to 26 percent. Rival Wuliangye Yibin fell 4 percent to 39.13 yuan. The measure won 10 percent this month, most among the 10 industry groups.

Citigroup 'bullish'

Harbin Pharmaceutical led declines by drug manufacturers, sliding 3.5 percent to 24.92 yuan. The health indicator has increased by 4.5 percent this month for the second best performance among the groups.

China will reduce the prices of 17 types of drugs such as antibiotics and cardiovascular drugs from December 12, the National Development and Reform Commission, said today. The cuts were announced after the national planning agency, above, said in an urgent appeal on 23 November will cut prices of selected drugs to stabilize costs in the country.

Property developers fell after Moody's Investors Service said it has a stable outlook for China's property sector, despite a "moderate correction to the bottom" in prices is expected during 2011.

China Vanke Co., the country's largest developer by market value, fell 0.5 percent to 8.13 yuan. Poly Real Estate Group Co. lost 1.3 percent to 12.12 yuan.

Ticket Fund

Emerging markets funds have capital in 84.3 billion U.S. dollars this year, surpassing the record $ 83,300,000,000 received last year, EPFR Global said in a statement via email. China sent its biggest weekly earnings in the week to November 24 since September, he said.

"The liquidity-driven rally is likely to continue over the next six months," wrote Citigroup Inc. analysts led by Shen Minggao in a note to clients. "We remain optimistic about China."

The A-share index may touch 3,800 to 4,000 in 2011, they said. Given the inflationary environment and prospects for further yuan appreciation, Citigroup said he recommended an "overweight" allocation for cement companies, automobile manufacturers, health care companies and technology stocks.

World stocks extended losses into a fourth week, the euro depreciated by 85 Ireland million (113 billion) bailout to alleviate the concern not most indebted countries in the region will need additional help.

European debt

Ireland, flooded by the bursting of a housing bubble a decade and unemployment is about 14 percent, became the second country to take advantage of European aid. Spain is the "big elephant" in the European debt crisis and can not be enough money to rescue the Iberian nation, "said Nouriel Roubini, chairman of Roubini Global Economics, who predicted the 2008 global economic crisis.

Europe is the largest export market for China, which accounts for about 20 percent of overseas shipments of the nation.

The Shanghai index has rebounded 19 percent since reaching this year under the 5 July on expectations central banks worldwide will inject more money into their economies to boost growth. The rate remains 14 percent this year, the benchmark worst performing in Asia, after the government tightened monetary policy and curb lending growth to cool the economy.

"The rebound is doomed to be short," said Li Jun, a strategist at Central China Securities Co. in Shanghai. "With less liquidity and a weakening global economy, there is significant support for a large increase."

Read more »

Nikkei 225, the majority of depressions in seven weeks of concern about China's growth

Japan's Nikkei 225 Stock Average fell over seven weeks on concerns that China do more to curb inflation and as banks and steel fell as analysts cut ratings on investment.

TDK Corp., a manufacturer of electronic products that received more than 30 percent of its sales in China fell by 3.6 percent. Nippon Steel Corp. and JFE Holdings Inc., Japan's two steel makers, fell at least 2.6 percent after Mizuho Securities Co. cut its recommendation on the shares. Mitsubishi UFJ Financial Group Inc., the largest bank by market value, fell 2.2 percent after a rating cut by Credit Suisse Group AG.

"Fears that China will raise interest rates are rising," said Hideyuki Ishiguro, assistant director of investment strategy department at Okasan Securities Co. in Tokyo. "People are worried about China's growth would be slower if the country tightens its policies."

The Nikkei 225 fell 1.9 percent to 9937.04 at 3 pm in Tokyo, the most since Oct. 12 and the first close below 10,000 since November 17. The broader Topix index lost 1.6 percent to 860.94, with six times as many stocks in retreat as progress. All but one of the industry groups of 33 Topix fell.

The Nikkei fell more among the major equity indicators in the Asia-Pacific. The decline accelerated this week after a fall on the Shanghai Composite Index in China, the largest destination for exports from Japan and the euro weakened against the yen, cutting the outlook for corporate profits in Europe.

Japan's industrial production fell and the unemployment rate unexpectedly rose in October, the government said the statistics office today, providing the first signs that the economy probably will shrink this quarter.

Best Performer

The Nikkei 225 rose at the fastest rate among the indicators for 40 major world capital markets this month yesterday, when it rose to its highest level since June. The increase of 8 percent for all of November was the largest monthly gain indicator since March.

This year, the Nikkei fell 5.8 percent, compared with an increase of 6.5 percent for the 500 Standard & Poor's in the U.S. and 3.3 percent for the Stoxx Europe 600 index. Stocks in the Japanese benchmark is valued at 17.4 times estimated earnings on average, versus 14 times for the S & P 500 and 11.6 times for the Stoxx 600.

TDK, the world's largest maker of magnetic heads for disk drives, fell 3.6 percent to 5.390 yen. Hitachi Construction Machinery Co., which is the world's largest maker of giant excavators and receives more than a quarter of its sales in China, sank 3.1 percent to 1.908 yen. Komatsu Ltd., the maker of bulldozers which receives about 20 percent of its sales in China, fell 2.4 percent to 2.318 yen.

Inflation in China

China needs to raise interest rates by another 200 basis points to contain inflation, given the excess liquidity, Zhong Jiyin, an economist at the China Academy of Social Sciences, wrote in a commentary in today's China Daily.

China Purchasing Managers' Index, a gauge of manufacturing, is scheduled to be released tomorrow.

The yen rose to 109.99 against the euro today, the highest since Sept. 15. A stronger yen reduces the value of foreign earnings in Japanese companies when converted into local currency.

Steelmakers declined more among the 33, the Topix industry groups today. Nippon Steel fell 4.5 percent to 277 yen, the most since October 2009. JFE Holdings lost 2.6 percent to 2.661 yen. The companies declined to "neutral" from "outperform" from Mizuho Securities, said earnings will miss forecasts for the fiscal year ending in March. Sumitomo Metal Industries Ltd., which was cut to "underperform" from "neutral", slipped 3.3 percent to 203 yen.

Put steel makers

The Nikkei newspaper reported, without saying where it got the information that the Japanese steelmakers may have to increase spending on raw materials for more than 50 billion yen (590 million) for the period January to March, from the current quarter due to higher prices of iron ore and coking coal.

Nintendo Co., the world's largest maker of portable game machines, was the biggest support for the Topix. The shares rose 3.4 percent to 22.730 yen, the highest since Aug. 18. Nintendo said it sold more Wii game consoles in the U.S. in the week as "Black Friday" on Friday following the Thanksgiving holiday, so named because when many U.S. retailers to be profitable.

haircuts for Credit Suisse dragged a group of banks in the Topix by the most since Oct. 15. Shinichi Ina, an analyst at the brokerage, cut its recommendations on Mitsubishi UFJ, Mizuho Financial Group Inc., Sumitomo Trust & Banking Co. and Chuo Mitsui Trust Holdings Inc. to "neutral" from "outperform."

Mitsubishi UFJ fell 2.2 percent to 396 yen. Mizuho fell 1.5 percent to 133 yen. Sumitomo Trust retreated 2.8 percent to 444 yen. Chuo Mitsui fell 2.3 percent to 295 yen.

Read more »