Dec 11, 2010 ~ Business

Saturday, December 11, 2010

Euro-Zone as Stokes minds flashpoint Bond Market Debt

A proposal to sell the combined debt of the euro-region has become a flashpoint between the new European leaders running out of options to stabilize the bond market.

With a European Union summit next week in Brussels, officials in Italy, Luxembourg, Belgium and Greece, said the proposal should be explored, leading to resistance from Germany, France and Austria. Economists and analysts at Goldman Sachs Group Inc., Morgan Stanley and HSBC Holdings Plc said it would end the debt crisis of the euro-region.

The plan would create a European Agency for the debt to sell bonds to finance up to 50 percent of EU member loans, up to 100 percent for countries unable to attract investors. Opponents say the proposal would raise interest rates for the stronger nations. The weighted average cost of borrowing for five years for the 16-nation euro-region was 3.05 percent yesterday, up from 1.95 percent on German debt.

"It's very important that negotiations continue on the path of a type common bond and a more centralized fiscal policy," said Steven Major, global head of fixed income research at London-based HSBC. "We can not go on with the ECB, doing the heavy work. We need a more sustainable solution."

Euro bonus venture may be the first time a country has issued debt on behalf of another. In 1989, the so-called Brady bonds were issued by nations like Colombia, Brazil and Venezuela, backed by the U.S. government. The bonds are named after former Treasury Secretary Nicholas Brady, who helped create the program.

Credit Agricole

The European Financial Stability Fund, the rescue fund of 440 billion set by the EU following the rescue of Greece, plans to sell bonds in January to pay for aid to Ireland. While supported by most of the same nations that were involved in a bond in euros, has attracted a AAA rating through a series of credit enhancements and are therefore likely to attract the return of a bond in euros according to analysts at Credit Agricole Corporate and Investment Bank.

Politicians are presenting ideas to address the fiscal crisis of the euro-region after the European Central Bank was forced to increase its purchases of government bonds when a rescue plan last month the Irish could not defend markets in the region of bonds to investors betting on a breakup of the euro.

Ireland bonds fell after the nation Nov. 21, said he had demanded a ransom, with the 10-year yield hit a record 680 basis points more than benchmark German dams on 30 November. Yields have declined since the ECB stepped up the purchase of bonds from Ireland, Portugal and Greece on 1 December, reducing the spread from Ireland and Germany to 503 basis points yesterday.

"Intellectually attractive"

Luxembourg Prime Minister Jean-Claude Juncker and Italian Finance Minister Giulio Tremonti, presented a plan for the joint sale of bonds in a commentary in the Financial Times on December 6, increasing the current debate. The idea is intellectually appealing, "said EU Economic and Monetary Affairs, Olli Rehn, the same day, while the Greek Prime Minister George Papandreou, said it was time to" seriously discuss "it.

Juncker, who chairs meetings of finance ministers of the euro group, criticized the German opposition, which led to a replica of a key ally of German Chancellor Angela Merkel.

Germany rejected his proposal for euro area bonds too fast and he was "simple" thinking on the subject, Juncker said on December 8, "Die Zeit reported, citing an interview. Germany is working on European issues "so unEuropean" and the bond proposal was dismissed before Germany had handled the German newspaper quoted him as saying.

The Debate

Michael Meister, the largest finance and economics spokesman for Merkel's Christian Democratic bloc, said in an interview that day.

"We can not put anything else on the table," Meister said in an interview. Juncker and Tremonti, "we can certainly say what they want. You can go ahead with bond set if they want," he said.

The objections can not be definitive, "said Major. Merkel opposed bilateral loans to Greece for the same reasons, before joining the euro-region countries and the International Monetary Fund in the provision of € 110 000 000 000 of loans to the indebted nation. Merkel also supports a change in the European Union treaty that allows the creation of a mechanism of permanent crisis.

Merkel's position is "a negotiating position," said Major. "The worst scenario would be more expensive for Germany" that the common bond, he said.

Euro falls

The euro fell against most of their counterparts of today and yields on government bonds jumped Spanish and Italian as French and German leaders said they are against increasing the EU rescue fund of 440 million euros and refused to set bond euro area.

"Common ties that make governments less accountable, when we want to do otherwise," said French President Nicolas Sarkozy told reporters after meeting with Merkel today in the southern German city of Freiburg.

The creation of common bonds or bills for the euro area would contribute to ending the fiscal crisis in the region by strengthening the liquidity of the market, according to Sander Schol, a London-based director of the Association for Financial Markets in Europe.

Prime AFME European Dealers Association wrote a research paper of the European Parliament on the possibility of a common European issue. Considered "smaller liquidity premium, the most effective coverage and the elimination of market-making obligation would lead to lower interest rates," said the note.

"Sharing optimal risk

These bonds could be the "best rate of distribution of risks," said Goldman Sachs strategist Francesco Garzarelli rate economist and Natacha Valla yesterday. Designed correctly, a bonus program participation would create a financial incentive for fiscal prudence and reduce moral hazard, Arnaud Mares, executive director of Morgan Stanley and former senior vice president at Moody's Investors Service, said on 6 December.

Forcing the theory is unlikely to bring the plan to fruition in the short term, said Michael Leister, a fixed-income analyst at WestLB AG in Dusseldorf.

"In Germany or France would not be attractive, since it would end up paying a higher yield," he said. "This is not a concept that can sell to the German electorate at the moment, and probably the same in Austria and France."

Medicine in Ireland too hard for the others

Last year during a taxi ride in Dublin, I asked my driver how things were going in Ireland.

He said that life was not so bad because, although growth had slowed, things were much better than they were before Ireland joined the euro.

That resonated with me on Monday, when the Irish government unveiled its austerity package of 6 million euros (8 billion) of cuts in social benefits, pensions and capital projects. Ireland is still going to tax Internet gambling.

But Ireland, who accepted a ransom of 85 billion euros last month, is better able to resist compression of the euro area peripheral countries like Portugal, Greece, Spain and even Italy. Ireland is a good deal richer than these countries, and has been an increase in revenue over the membership of the euro. Even after the cuts the chances of people taking to the streets in large numbers are lower than in other countries.

Irish Finance Minister Brian Lenihan, who the Financial Times recently voted the worst in the European Union is optimistic expectation that spending cuts and tax increases will not affect growth at all. The forecast now calls for gross domestic product by 0.3 percent this year, increasing to 3 percent in 2013.

The same day, in contrast to Ireland, the Republicans and Barack Obama agreed in the U.S. welcome to reduce payroll taxes and renew the Bush tax cuts for two years to stimulate growth and reduce unemployment. So we have an interesting economic experiment in our hands. My bet is that tax cuts instead of raising them is better for growth. I am with Obama.

Growth in Europe will decrease, especially in peripheral countries, which will not reassure the bond markets. International Monetary Fund Dominique Strauss-Kahn, visiting Greece this week, said "the problem is growth, growth, growth. No one would be talking about a debt crisis in Europe if there was a high growth in Europe." It is not the truth.

Little Ireland, with its 4 million inhabitants has done well from its membership of the euro. The concern is that others in the periphery do not have and have less room to cut.

As shown in the table below, between 1990 and 2010 the GDP per capita in Spain increased by 107 percent, which was faster than Greece (53 percent), Italy (14 percent), Portugal (32 percent) and Spain (38 percent). By 2010 Ireland had a higher income per capita than any other euro area peripheral countries.

The data in a Eurobarometer survey conducted by the European Commission by the Member States between August and September 2009 suggests that the Irish are considerably happier - graded on a scale where one means very dissatisfied and 10 means very satisfied - that residents of these other countries. If this continues in the future is an open question, as austerity bites.

Country GDP per capita of the population's happiness
1990 2010 (millions)
Ireland $ 38,768 $ 18.694 7.41 04.03
Greece $ 18,735 $ 28,608 6.38 11.3
Italy $ 26,307 $ 30,080 59.0 6.48
Portugal $ 17,418 $ 23,019 10.6 5.59
Spain $ 22,039 $ 30,475 44.7 6.94

Sources: European Commission, International Monetary Fund

The other peripherals are poorer and less happy than the Irish, and have not benefited greatly, especially in terms of revenue growth in membership in the euro. This may well involve greater domestic opposition to any austerity program imposed from outside. In the future, social unrest is likely to be a major problem in these countries.

The International Monetary Fund has urged the EU, even to pump more resources into its bailout program, and also to buy more government debt. Otherwise, the IMF warned that the crisis could escalate, threatening the stability of the euro.

interventions by the German Chancellor, Angela Merkel, have given the crisis some legs. Ruled out the possibility of bonds in euros to scale and largest bailout fund. This, combined with his earlier suggestion that bondholders should take haircuts larger, not aid to countries that are struggling to calm markets.

There are obvious reasons for supporting Merkel. Germans have the benefit of an exchange rate lower than they would outside the area, making their exports less expensive. Any euro bond debt costs would be raised.

German banks have invested heavily in the peripheral countries making it difficult to understand why they are being left adrift. Unless the Germans are willing to pitch in with a lot of money from the bailout, the Irish and the Greeks will have to restructure or repay its debts. The bond vigilantes have a field day.

It is difficult to see how to force an expensive loan in a most indebted country like Ireland, is supposed to contain the crisis of European debt. The maintenance of low corporate tax rate, which obviously will help. The standard of living will inevitably be hit there for years to come. My taxi driver was right. My concern is that some of these peripheral countries are not as well situated. I fear the worst is yet to come.

(David G. Blanchflower, a former member of the Bank of England Monetary Policy, is professor of economics at Dartmouth College and the University of Stirling. The opinions expressed are his own.)

Socrates Says Portugal Does Not Need Aid

Portugal does not need the help of the International Monetary Fund and no country has put pressure on Portugal to ask for help, Portuguese Prime MinisterJose Socrates said in an interview with the Daily News.

"There is no reason for the IMF to enter Portugal, because Portugal does not need that," said Socrates, according to Portuguese daily newspaper. "The government does not need that, you know exactly what to do and do not need someone to come and tell us what to do," Socrates said in the interview.

"Our problem is just a budget problem we have to correct, like other countries," Socrates told Diario de Noticias. "He who does not understand that what we are experiencing is a systemic issue, which refers to the euro, has understood nothing of this crisis," he said, the newspaper said.

"If anyone thinks that this is a problem in this country or not is to see how the sovereign debt crisis is affecting the euro," Socrates told the newspaper. "This is a problem in all European countries and we should do everything possible to fight together: all the European institutions, the Commission has played its role, the European Central Bank, which has played its role, and each countries that are playing their role. "

The European project is going through "a very big challenge", which is to defend the currency, Socrates told Diario de Noticias. All European leaders will commit themselves to defend its currency, Socrates said. "The way we have to defend is by meeting our budgetary targets, that's what we're doing," he said, the newspaper said.

Portugal this year will meet its goal of a budget deficit of 7.3 percent of gross domestic product, Diario de Noticias quoted Socrates as saying. The market is "slowly" to understand that Portugal is doing what it should do for your budget consolidation, the prime minister said in the interview.

China can’t raise interest rates because of the risk of attracting inflows of cash

China can not raise interest rates bring the risk of cash flows that fuels inflation, said Wu Xiaoling, a former central bank deputy governor.

"The global environment of low interest rates prevent China's central bank to raise interest rates," Wu said in a speech at a conference of hedge funds in today's Shanghai. Emerging markets face capital inflows and "excessive money supply is a major reason for inflation in China," he said.

Business economists, including Australia and New Zealand Banking Group Ltd. and UBS AG. have, in contrast to Wu's opinion, said that China is likely to raise rates this weekend. China's Central Bank yesterday increased requirements of lenders reserve for the sixth time this year as part of efforts to curb inflation that rose to 28 months in November.

In October the central bank raised lending and deposit rates for the first time since 2007.

Analysts have focused on the possibility of another increase this weekend due to the release today of the November data. Consumer prices rose 5.1 percent from the previous year, producer prices rose 6.1 percent, a statistical report showed.

Wu, deputy director Financial and Economic Committee of the National People's Congress, said that M2, the broadest measure of money supply, could rise 19 percent this year.

Saudi Oil Minister Al-Naimi says $ 70 - $ 80 a barrel is a "good" oil price

Saudi Oil Minister Ali al-Naimi, told reporters that $ 70 to $ 80 a barrel is a good price for oil. He spoke before the ministers of the Organization of Petroleum Exporting Countries began a closed-door meeting in Quito, Ecuador, to decide on policy and OPEC production quotas.

He made the following comments.

The price of oil:

"Prices rise, prices fall."

"How many times do I have to say. $ 70 to $ 80 is a good price."

He refused to comment on the current price is near $ 88 a barrel in New York.

On supply and demand:

"The fundamentals are good. The market is in equilibrium at this time."

On why OPEC should leave output unchanged:

"Why do you want to disrupt the market. It is in the balance, everyone is happy, producers and consumers, why all these questions that will cause a disturbance in the market?"

European Central Bank governing council member Christian Noyer said countries pay a higher price for unpaid debt to pay for it, reinforce the ECB's view that euro nations should be ruled out financial restructuring .

"People forget to look at what happens when a country defaults, it's something I've been studying for several decades," Noyer said in a speech in Paris. "Financial markets do you pay for the defect with higher interest rates. I do pay for the present value of losses, plus a big bonus with the uncertainty associated with that. You pay much more for non-compliance, if not in breach their obligations. "

The debate on whether countries such as Greece and Ireland can or should fulfill its commitments to bondholders has shaken financial markets in recent weeks to fight to keep the debt to be less than 100 percent of GDP in the coming years.

Germany led the push for bondholders to share the cost of solving the problems of sovereign debt, causing a rise in borrowing costs for Europe's most indebted countries. The position was well watered down, when finance ministers of the Union agree that any debt restructuring should be considered a "case by case, instead of automatic in the case of bailouts.

Areva SA, the largest supplier of nuclear reactors, plans to issue new shares to holders of certificates of investment as part of a capital increase.

Each holder of 12 investment certificates will be offered a new preferred stock, Areva, said in an emailed statement today. The measure adds to a plan approved by the supervisory board today to raise € 900 million ($ 1.2 million) by selling shares to the French state and a sovereign wealth fund Kuwait.

Kuwait to buy € 600 000 000 worth of stock, while France, which currently owns 91 percent of the company, received an additional 300 million euros, the company said. The Kuwaiti fund will have a seat on the council. Areva also carry out a stock split 10 to one, the statement said.

"These operations will allow the group to strengthen its assets and carry out its development plan with a strengthened capital structure," the statement said.

France has been in talks for a year to sell up to 15 percent of the company in Kuwait, Japan's Mitsubishi Heavy Industries Ltd. and Qatar's sovereign wealth fund. Areva CEO Anne Lauvergeon had aimed to raise 3 billion euros in the capital to help finance spending on equipment, plants and uranium mines to fend off competition and sell more reactors and fuel in Europe, China and India .

Currently, the company also said it aims for revenue as high as 12 million euros in 2012.

Spanish and Portuguese bonds fell below the benchmark German dams

Spanish and Portuguese bonds fell below the benchmark German dams, as divisions EU lawmakers set up a potential for the area eroded the confidence that may end the crisis in the region of the debt.

Spanish bonds fell five days last week after officials from Italy, Luxembourg, Belgium and Greece, said the common bond proposal should be explored, leading to resistance from Germany, France and Austria. German two-year notes slid as U.S. Treasury bonds fell amid speculation economic growth may hold up next year, and investors bid less debt than the maximum offered in the sale of 2,012 German titles.

"The total diversity of comments about 'E-bonds" really highlighted how far sometimes high-profile guys think, "said David Schnautz, fixed income strategist at Commerzbank AG in London." The sell-off walls containment due to side effects Treasury bond market. "

The performance of the Spanish 10-year bond rose to 5.42 percent yesterday afternoon in London, up from 5.08 percent on 3 December. The 4.85 percent securities maturing in October 2020 fell 2.515 or € 25.15 per 1,000 euros ($ 1.322) par value, to 95,685.

German performance two years rose to 1.08 percent from 0.86 percent, reducing the performance gap with 10 - year securities 187 basis points from 200 basis points on 3 December, and both as 208 basis points on 07 December.

European policy makers face in finding a solution to the debt crisis and pushed Ireland and Greece this year to seek international bailouts.

EU Summit

Lawmakers are under pressure to adopt new measures at a summit of 16-17 December in Brussels. French President Nicolas Sarkozy, said yesterday that "common bonds that make governments less accountable," join German Chancellor Angela Merkel, in rejecting the proposal.

Spanish bonds may fall next week amid speculation auction may highlight the growing concern about the debt crisis in Europe is deepening. The nation must be to sell bonds maturing in 2020 and 2025 on 16 December.

German bonds gave investors a profit of 6 percent this year, according to indexes compiled by us and the European Federation of Financial Analysts Societies. Spanish bonds gave investors a loss of 4.1 percent and Portuguese values fell 6 percent.

Chi-X could help NYSE, Nasdaq, bats, direct rim competes with LSE

The bidding war for Chi-X Europe Ltd. shows the growing importance of a comprehensive European strategy for the U.S. exchange operators.

Chi-X Europe, the trading platform in August said he was approached about a takeover has already received offers from the four largest U.S. companies stock, two people with direct knowledge of the matter said yesterday.

NYSE Euronext, Nasdaq OMX Group Inc., bats and Global Markets Direct Edge Holdings LLC have submitted bids to the London-based Chi-X Europe before a deadline next week, according to the people, who declined to be identified because the private deals.

As competition has intensified in the U.S., where up to 50 different places to compete for customers stock brokerage, U.S. companies are looking across the Atlantic Ocean, where only bats Chi-X and all operating platforms region. The acquisition of Chi-X to enable the purchaser to compete directly with the London Stock Exchange Group Plc and Deutsche Boerse AG.

"The four of them have ambitions or a footprint in Europe that could be higher," said Herbie Skeete, Managing Director based in London Mondo Visione Ltd., which advises on trade. "It's easier and cheaper to buy Chi-X to take over the LSE and Deutsche Boerse. It is then an easy way to compete head to head with European bourses and London is a global financial center."

Faster Trading

Chi-X Europe was the electronic market challenge traditional exchanges, offering lower rates and faster trade. The deals are the next step in a process that began in August, when Chi-X Europe said it received a "research" on an agreement. This approach was of bats, which operates the U.S. equity market the third largest and second largest European alternative trading system, people familiar with the situation said at the time.

Julia Streets, a spokeswoman for Chi-X, Ray Pellecchia NYSE Euronext, Nasdaq OMX Frank DeMaria and Stacie Fleming, all declined to comment bats.

Chi-X Europe, launched in 2007 to compete with LSE and Deutsche Boerse, has hired investment bank Lexicon Partners Ltd. for the council in September, two people familiar with the situation said at the time. In October, the Nasdaq chief executive Robert Greifeld said the exchange, ie seven Nordic and Baltic stock exchange and U.S. equity second, is willing to consider an acquisition. Chi-X sent an information memorandum to potential bidders, people familiar with the situation said on November 4.

Prices, Strategy

The information package, which contained no assessment was sent in late October, according to three people familiar with the situation who declined to be identified as talks are private. The memorandum contains information about fee Chi-X Europe on the market, profitability, pricing and strategy, including participation in the expansion into other asset classes, in addition to actions, the people said.

Chi-X Europe is partly owned by Instinet Inc., a New York-based unit of Nomura Holdings Inc., and investment banks and dealers, including Credit Suisse Group AG, GETCO LLC, Bank of America Corp. Citigroup Inc. and Morgan Stanley.

Exchanges like NYSE Euronext, LSE, Deutsche Boerse and Nasdaq are looking for ways to regain lost market share to new rivals after European regulators opened the market to competition in 2007. London Stock Exchange in February completed the purchase of a majority stake in Turquoise, another electronic platform owned by a group of banks.

China's inflation accelerated at its fastest pace in 28 months in November

China's inflation accelerated at its fastest pace in 28 months in November, building the case for Prime Minister Wen Jiabao, to raise interest rates again.

Consumer prices rose more than expected 5.1 percent over the previous year, a statistical report showed today in Beijing. the producer price inflation was 6.1 percent, up from one of 28 economists surveyed by us had expected.

The strength of prices gains and capital flows in the fastest-growing economy may require the central bank to add to October increase in benchmark rates, the first since 2007. Officials yesterday raised the reserve requirements of banks for the third time in five weeks to drain money from the financial system.

"Beijing can and will focus on fighting inflation with all my heart," said Qu Hongbin, an economist at HSBC Holdings Plc in Hong Kong. An "immediate" increase in rates is likely that lenders and the reserve ratios may continue to rise, said Qu.

Consumer prices rose more than forecast 4.7 per cent average of analysts. In October, inflation was 4.4 percent. Today's data was leaked before the announcement, the Economic Information Daily reporting on yesterday's inflation numbers.

China, which overtook Japan as the second largest economy in the world in the second and third quarters, it lags behind Asian countries like Malaysia and South Korea in promoting borrowing costs. In China, inflation in the first 11 months was 3.2 percent, over the government target of 3 percent.

Rate speculation

London-based Capital Economics Ltd. said yesterday that a rate increase after senior officials to conclude an economic policy meeting in Beijing this weekend can not be excluded. " The Politburo has already officially announced that the country will change next year to a stricter "prudent" monetary policy.

Today's data indicate that the economy is bucking the monetary tightening curbs on energy use in industry and the enforcement of property speculation. The industrial-production growth accelerated to 13.3 percent last month from a year earlier, exceeding economists' estimates, the median of 13 percent.

Urban fixed asset investment also grew at a faster pace, rising 24.9 percent in the first 11 months of 2010 over the previous year, the report showed. Retail sales gained 18.7 percent in November from a year earlier.

"Big Guns"

"Inflation is emerging as the main challenge for policy makers in the coming months, and it makes sense for them to bring out the big guns," said Brian Jackson, an analyst at Hong Kong's Royal Bank of Canada, before today's data. Tools may include a faster pace of yuan appreciation and higher rates later this year, he said.

Food prices rose 11.7 percent in November from a year earlier, the most in more than two years, and costs related to the residence, such as water charges, electricity and rent were also a key factor inflation, the statistics office said today. Overall consumer prices rose 1.1 percent from the previous month.

The jump in producer prices exceeded analysts forecasts an average increase of 5.1 percent. The costs of manufacturers of raw materials like cement, steel, fuel and cotton have increased, according to a survey of purchasing managers said on December 1.

The benchmark rate for one-year deposits stood at 2.5 percent, less than the annual rate of consumer price inflation and the interest rate is 5.56 percent. The Shanghai Composite Index of stocks has fallen 10 percent from November 08 high, the policy of extending the loss this year to 13 percent, on concern tighter monetary reduce economic growth and profits.

Blocking of funds to

The central bank yesterday announced a 50 basis point increase in reserve ratios, from 20 December. This measure can block nearly 350 million yuan ($ 53 billion), according to Barclays Capital Asia Ltd. In addition to monetary policy, Wen is using administrative tools such as the sale of state food reserves, to cool prices.

The signs of inflationary pressures have included McDonald's Corp., the world's largest restaurant chain, pushing up prices, citing rising costs. The southwestern city of Kunming has imposed temporary price limits on "daily needs", says retailers like Wal-Mart Stores Inc. and Carrefour SA, to report any increase in price expectations.

Flow of cash into the economy of trade, foreign direct investment and betting on gains by the yuan has been added to a credit boom in exacerbating inflation risks. The trade surplus was $ 22.9 billion in November and also banks extended more than expected a 564 billion yuan of local currency loans.

Target Loan

Broad money supply, or M2, rose last month by 19.5 percent, the biggest increase in six months, the People's Bank of China said yesterday. M2 has grown 55 percent over the past two years and outstanding yuan-denominated loans have risen to 47.4 trillion yuan, 60 percent more than in November 2008.

Authorities are looking for slower credit growth, and economists, including Societe General SA, expect the government to establish a loan ceiling lower in 2011 than this year's target of 7.5 trillion yuan .

Inflation may have peaked in November and probably soften this month as "intervention price" to take effect and the impact of price increases earlier this year lava-year comparisons, Wang Qing, an economist in Hong Kong Morgan Stanley, said in a note of 06 December.

Building American borrowers Race countdown clock before year-end

From California to New York, issuers are rushing to take advantage of Build America grant by accelerating sales of bonds values before the program ends.

States and municipalities were set up to sell more than $ 3 billion of securities next week. In Chicago, San Francisco, Los Angeles and New York state, said that issuers who are running in the market before the program expires on December 31 in the absence of an extension.

"We were trying to beat the clock, so the fast track to leverage funding," said Charles Perl, assistant financial director of the San Francisco Public Utilities Commission yesterday. The district rose 350 million U.S. dollars provided for Building America's debt sale next week, months ahead of its previous schedule, said yesterday in an interview.

The U.S. government pays 35 percent of the cost of interest on the bonds to help communities build roads, bridges and other infrastructure. The securities pay interest expense, making them similar to corporate debt and attractive to a larger market compared to tax-exempt municipal bonds. The program began as part of a package of President Barack Obama economic stimulus to boost public works projects by a reduction in borrowing costs.

An agreement between Obama and Republican congressional leaders this week to keep tax rates of increase will extend the Build America program, if approved in the form of a Senate measure that was formed on 9 December. That leaves emitting less than three weeks to make the cost savings allowance before it disappears in new indebtedness.

Continuing Need

"The need does not go away for us," says Perl. "If it ends, we will return to the tax-exempt financing that we have always done."

After the sale next week, San Francisco Perl committee has raised about half of the 4.5 billion dollars needed to improve water system, "he said.

More than 179 billion U.S. dollars Manufacturing of America Securities have been sold since April 2009 when the program began, making the fastest growing segment of the market 2.86 trillion U.S. dollars of municipal bonds. The issuers have sold 37.2 billion U.S. dollars of debt only in California, USA most populous state, according to state Treasurer Bill Lockyer.

Officials from the Water Authority of Monroe County, northwest of New York, on Lake Ontario, the plan to issue 90.7 million U.S. dollars in building values of America next week. Selling accelerated for release before the end of the program, said Nicholas Noce, acting executive director of the authority.

Expedited Sale

"We had planned to subject before, but it does speed up the process to take advantage of the subsidy," Noce said yesterday in a telephone interview. "Insurers have all worked hard and worked a few hours to put this business in the market and take advantage of the maximum grant."

In Illinois, the Water Reclamation District of Greater Chicago Metropolitan ran "a little" to the offer of $ 400 million in building America's debt next week, said Harold Downs, treasurer of the district. Said he was not happy with time.

"The market is terrible," Downs said in a telephone interview yesterday.

The average yield of generation of American securities rose to a 11-month high of 6.37 percent this week as investors demanded a higher premium to buy municipal debt, according to an index of Wells Fargo. The yield on the benchmark 30-year Treasury hit 4.50 percent this week, the highest since May.

Saved $ 118 million

The Chicago district values America used to generate a $ 600 million in August 2009 to help finance the $ 2.7 billion, five-year rehabilitation of sewer lines, said Downs. He said the district saved about 118 million U.S. dollars through the program, reduce the effective interest rate on the $ 600 million to 3.72 percent, compared with 4.88 percent prevailing market duty-free the time.

If the Build America program is not renewed, Downs said the district could sell tax-exempt bonds.

"Of course, if the program is renewed, we note that the next time too," he said.

In Los Angeles, the Metropolitan Water District of Southern California plans to offer $ 250 million in building the values of America, as soon as next week. The theme was originally created to go to market next March, said Brian Thomas, the district chief financial officer.

The possibility of extending the program by the Congress played an important role in the original program, Thomas said yesterday.

Renewal was expected

"We had expected to be renewed in one way or another, but when that time began to decline, we are ready to go," said Thomas.

After the planned issuance, the district has funded approximately 600 million $ 1.8 billion, the capital improvement plan five years, said Thomas.

The district fund projects through a combination of income and tax-exempt debt in the absence of the subsidy program, said Thomas.

"I think it highly unlikely that they will not allow a grant in the future," Noce said Monroe's perspective, whether for an extension of the current or subsequent rebirth.

European shares advanced for a second week

European shares advanced for a second week as investors speculated that corporate profits and improving macro-economic data to overcome the crisis in the region of sovereign debt.

Prudential Plc led gains as UBS AG recommended the largest insurer in Britain. Bank of Ireland Plc jumped 22 percent that lawmakers backed the Irish government's budget. Burberry Group Plc rose amid takeover speculation. ASML Holding NV rose 7.2 percent after the company raised its outlook for bookings in the fourth quarter.

The benchmark Stoxx Europe 600 Index gained 1.9 percent this week, extending a 1.6 percent advance last week. It is the first week of five days from June to the European benchmark. The index has risen 8.8 percent this year, corporate profits rose, the Federal Reserve announced a program of 600 billion U.S. dollars of bonds with an option to purchase to help the U.S. economic recovery and rescued the European Union, Greece and Ireland.

"In the medium term, it makes sense to invest in equities, especially from Europe," said Markus Steinbeis, head of portfolio management in Unterfoehring, Germany-based unit KGmbH Pioneer Investments, which oversees about 221 billion U.S. dollars worldwide. "The market valuation is reasonable. We see positive results in 2011, but volatility will remain."

European shares rise 12 percent by the end of 2011 as rising incomes and historically low interest rates to help businesses overcome the sovereign debt crisis, a survey of 13 strategists shows. Goldman Sachs Group Inc., the most optimistic forecaster, said that the Stoxx 600 will join the 20 percent, because the benefits can extend twice as fast as the rate of 14 percent over 26,000 average analyst estimates compiled by us.

Just Enlarge

Federal Reserve chairman, Ben S. Bernanke said the economy barely expands to a more sustainable pace and that it is possible that the Fed could expand the purchase of bonds beyond the $ 600 billion announced last month to stimulate growth.

The purchase of more bonds than expected is "certainly possible", said Federal Reserve chairman, Ben S. Bernanke, in an interview broadcast by CBS Corp. s' "60 Minutes" program. "It depends on the effectiveness of the program" and the outlook for inflation and the economy.

European finance ministers ruled out immediate aid to Portugal and Spain, or an increase of 750 million euros ($ 999 billion) fund crisis, European bond purchases telling the central bank to calm the debt markets and scared. German Chancellor Angela Merkel and French President Nicolas Sarkozy, said he was opposed to increasing the bailout fund and sets bonds rejected the euro area.

U. K. Manufacturing

In the UK, a report showed manufacturing expanded in October, double what economists forecast, a sign that economic recovery maintains its momentum in the fourth quarter. In Germany, Europe's biggest economy, industrial production increased almost three times more than economists forecast in October, driven by demand for investment goods such as machinery.

Fewer Americans filed first-time claims for unemployment insurance payments last week, showing the labor market continues to improve. Meanwhile, President Barack Obama said he is committed to keeping the Bush cuts taxes for high income taxpayers in exchange for extending federal unemployment benefits and cut the payroll tax by $ 120 million in one year.

Confidence among U.S. consumers increased more than expected in December to the highest level in six months at the same time, Americans began to increase holiday spending. The index of Thomson Reuters / University of Michigan preliminary consumer sentiment rose to 74.2 from 71.6 in late November. Economists expected a December reading of 72.5, according to the median estimate in a survey.

National Benchmarks

national reference rates increased in all 18 western European markets except Finland and Sweden. The French CAC 40 Index rose 2.9 percent. Britain's FTSE 100 Index gained 1.2 percent while Germany's DAX rose 0.8 per cent rate. Portugal PSI 20 Index and Ireland's ISEQ index posted the best results, both rising more than 3 percent.

European insurance companies recorded the best performance among 19 industry groups, increasing by 4.7 percent. Prudential rose 9.7 percent in UBS shares added to its European "key calls" list.

S & P yesterday raised its outlook on U.S. life insurers to "stable" from "negative", saying the industry can cut aside next year after raising funds in the stock and bond sales. Zurich Financial Services AG, Switzerland's biggest insurer, rose 4.4 percent, while Axa SA, France's largest insurer, rose 8.1 percent.

Irish banks

Bank of Ireland Plc rose 21 percent, extending last week's 22 per cent increase. Irish Finance Minister Brian Lenihan won the support of legislators in the first votes in its budget of 6 million euros to tackle what he called the "worst crisis in our history."

Moreover, J. Christopher Flowers, founder of New York private equity firm JC Flowers & Co., said it was continuing the search for Irish banking assets.

"If we can find the right opportunity to invest in Spain, we would do it," he said in an interview.

Alstom SA rose 9.2 percent, the biggest weekly rise since July 2009 as a global manufacturer of power-equipment third largest, said it has signed a long-term cooperation with the Ministry of Railway of China to develop the rail infrastructure in the second largest economy in the world and some international markets.

Burberry, the largest UK retail estate, rose 2.7 percent on speculation that PPR SA, the French owner of Gucci and Puma brand, you can submit a bid.

"There have been reports that PPR was close to a deal to sell Conforama Steinhoff," said Peter Farren, an analyst at Bryan Garnier & Co. "That would fuel speculation in Burberry." Charlotte Judet declined spokesman PPR, for comment.

PPR, ASML

PPR said on 06 December is in talks with "several" investors on the sale of its unit Conforama, including Steinhoff International Holdings Ltd., the largest furniture manufacturer in Africa.

ASML rose 7.2 percent as the largest European manufacturer of semiconductor equipment said it now expects reserves to more than 2 million euros.

Hochtief AG rose 8.1 percent as the Financial Times Deutschland reported that potential new investors Qatar Holding LLC plans to increase its stake in German construction company above the 9.1 percent announced.

Deutsche Postbank AG lost 7.2 percent. Shares of retail lender will leave the German MDAX index benchmark for midsize companies on 8 December after its share trading free stock dropped below 10 percent.

Carmakers showed the worst performance in China said it would end tax incentives for the purchase of cars next year. Volkswagen AG, the largest European carmaker, fell 4.6 percent, while Bayerische Motoren Werke AG, the world's largest maker of luxury cars, fell 1.8 percent.

Fiat, De La Rue

Fiat is advanced by 6.7 percent in Mediobanca values maintained its "outperform" recommendation for the automaker, saying that "the separation between Fiat Auto and Fiat's industrial might trigger M & A appetite."

Agco Corp. Italian daily MF reported that he is interested in purchasing decisions of Fiat tractor, CNH Global, citing CEO Martin Richenhagen.

De La Rue Plc jumped 29 percent, the biggest weekly rise since 2002. world's largest banknote printer rejected a takeover approach 896 million pounds (1.4 million) closely held rival, François-Charles Oberthur Fiduciaire SA.

Asian stock markets fluctuated this week

Asian stock markets fluctuated this week as benchmarks Japanese and Australian rose after reports showed economic growth better than expected or employment, while China-related companies fell to policy makers relate to raise interest rates to curb inflation.

Mitsubishi UFJ Financial Group Inc., Japan's biggest bank, traded, rose 4.2 percent. Westpac Banking Corp., the second largest bank in Australia by market value, rose 2.9 percent. Industrial & Commercial Bank of China Ltd., the world's largest bank by market value, fell 2.5 percent in Hong Kong and the Agricultural Bank of China Ltd., the country's third largest lender, fell 5, 1 percent.

"Markets tend to go hot and cold water on expectations that the Chinese authorities to take further steps in its tightening campaign," said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors Ltd., which manages about 93 billion and is a unit of AMP Ltd., Australia's second largest asset manager. "There is pressure on interest rates in China, but do not think there is no reason why you had to want to crush the growth."

The MSCI Asia Pacific Index fell 0.3 percent to 133.09 this week, keeping close up to a month. It jumped 3.5 percent last week after three drops straight week in which he lost by 4.4 percent. The index has risen 22 percent this year low on 25 May.

Japan's Nikkei 225 Stock Average rose 0.3 percent this week. Gross domestic product grew at an annualized rate of 4.5 percent in the three months ended September 30, faster than the 3.9 percent reported last month, the Cabinet Office said on 9 December. The median forecast of 19 economists surveyed by us was for an expansion of 4.1 percent.

'Good management'

"Investors already know that increased capital spending in the July-September period would increase the GDP of Japan, but took it as a good direction once the result was announced," said Masaru Hamasaki, who helps oversee about U.S. $ 17 billion as chief strategist at Toyota Asset Management Co. in Tokyo.

Australia S & P / ASX 200 rose 0.9 percent. The number of people employed 54,600 won as of October, the statistics office said on 9 December. That compares with the median forecast of an increase of 20,000 in a News survey of 26 economists. The unemployment rate fell to 5.2 percent from 5.4 percent a month earlier.

Hong Kong Hang Seng index declined 0.7 percent. Shanghai, China Composite Index fell to less than 0.1 percent. Taiwan's TAIEX index rose 1.1 percent and the Kospi index in South Korea rose 1.5 percent.

Sumco plunges

Mitsubishi UFJ Financial rose 4.2 percent to 419 yen in Tokyo this week. Nippon Steel Corp., the largest Japanese steelmaker, rose 3.9 percent to 293 yen. Westpac increased 2.9 percent to $ 22.57 in Sydney and Commonwealth Bank of Australia gained 2.4 percent to $ 50.59.

Also in Tokyo, Sumco Corp. fell 18 percent to 1,103 yen this week, the largest percentage drop in the MSCI Asia Pacific. The company increased its forecast net loss for the year and Credit Suisse Group AG cut its recommendation on the shares to "underperform" from "neutral."

The MSCI Asia Pacific index has gained nearly 11 percent this year, economic data and corporate earnings helped offset concerns that China's measures to curb property prices and the crisis of Europe by the government debt is hampering global economic recovery. Shares in the indicator value at about 14.7 times estimated earnings on average, compared with 23 times at the beginning of the year.

Chinese banks

developers and Chinese banks fell this week after the statistics office has brought forward the publication of economic data, including inflation, for two days to 11 December. The measure indicates an increase in interest rates may be imminent, said Glenn Maguire, chief Asia economist at Paris-based Societe Generale SA.

After yesterday's close of the stock market in Asia, China's central bank said it would raise the amount of the nation's lenders must keep as reserves by 50 basis points.

Industrial and Commercial Bank of China slumped 2.5 percent to $ 5.83 in Hong Kong in Hong Kong. China Resources Land Ltd., a developer controlled by the state, fell 2.6 percent to $ 13.76 in Hong Kong, while the Agricultural Bank of China fell 5.1 percent to HK $ 4.06. China Vanke Co., the nation's largest publicly traded property developer, fell 4.6 percent to 8.10 yuan in Shenzhen, China.

yesterday by the Chinese government initiated the so-called Central Economic Work Conference, a three-day conclave in Beijing. Participants include heads of key ministries and China's largest state-owned enterprises.

The Taiwan dollar and Philippine peso led gains in Asian currencies this week as China's exports exceeded economists' estimates, augurs well for regional economic recovery and trade.

The yuan has completed its best week in a month after China's trade surplus increased to $ 22.9 billion in November as exports and imports rose to records. Malaysia's ringgit rose for the second consecutive week, its longest winning streak in two months, after reports showed overseas shipments and manufacturing grew faster than analysts had forecast.

"China's export Surprise mean strong demand for products made elsewhere in Asia," said Julie Yu, a currency trader based in Taipei in Taiwan Shin Kong Commercial Bank. "Economic growth in the region will continue to support gains in Asian currencies."

The peso rose 0.5 percent to 43.675 per dollar this week, according to data compiled by us. Taiwan dollar appreciated 0.5 percent to NT $ 30,585, the ringgit rose 0.2 percent and 3.1345 yuan gained 0.12 percent to 6.6556.

Global funds bought a total stocks of 1.3 billion U.S. dollars more than they sold in Indonesia, South Korea, Taiwan and Thailand this week, the serial data exchange. The International Monetary Fund predicts that Asia's developing economies will expand 9.4 percent in 2010, while the advanced economies will grow by 2.7 percent.

"Durable recovery"

The ringgit traded near a two weeks after the government reported December 9 that factory production rose 3 percent in October from a year earlier, beating the average estimate of 2.1 percent in polled by us. Exports grew by 1.3 percent this month compared with the predictions of a decline of 1.4 percent, a report showed on 3 December. The currency has appreciated by 9.3 percent this year, went to its best annual performance since 1973.

"Economic data have been flexible, and recovery in this region is seen as durable," said D. Sivadass, a currency trader at EON Capital forward Bhd in Kuala Lumpur. "The overall picture is still on the market for the ringgit to appreciate next year."

The yuan rose for a second week on speculation central bank of China will raise interest rates to moderate inflation. Consumer prices accelerated to its fastest pace in 28 months in November, up more than expected 5.1 percent over the previous year, a statistical report showed today in Beijing. the producer price inflation was 6.1 percent, up from one of 28 economists surveyed by us had expected.

President Hu Jintao and Premier Wen Jiabao will meet for a three-day Central Economic Work Conference to discuss monetary policy in 2011.

Inflation Forecast

"The Central Economic Work Conference is likely to approve general tightening of monetary conditions," said Frances Cheung, a Hong Kong senior strategist at Credit Agricole CIB. It is estimated that the central bank increased the benchmark interest rate by 1 percentage point in mid-2011.

Taiwan dollar advanced for a second week after the government reported December 7 that exports rose more than forecast to 21.8 percent in November from a year earlier. Consumer prices rose 1.53 percent, the fastest pace in nine months, data showed yesterday.

"The strong growth in Taiwan will continue to attract foreign funds," said Yu Shin Kong, Taiwan. "The central bank will continue to slow progress on the coin, but I still think it's very likely that the currency will reach NT $ 30 soon."

Elsewhere, South Korea's won fell 0.4 percent in the week to 1,143.60 per dollar and the Indonesian rupiah fell 0.1 percent to 9,018. India's rupee was little changed at 45.11 and the Thai baht was trading at 30.08 from 30.05 the previous week.

The dollar rose the most since September against the euro following an agreement to extend and expand tax cuts fueled speculation the U.S. economy will accelerate, driving the stock and bond yields higher and increasing demand for assets denominated in U.S. currency.

The U.S. currency strengthened against most of its counterparts this week as reports showed that applications for unemployment benefits declined, exports increased a sense of two-year high and consumer prices rose. The euro fell against the dollar after Ireland's credit rating was downgraded and the region's political leaders differ on how to stem the debt crisis. The Federal Reserve maintains a policy meeting next week as it continues buying treasury bonds to boost the economy.

"Many of the positive news we've seen outside the U.S. has helped strengthen the dollar," said Mary Nicola, a strategist at BNP Paribas SA in New York. "We have seen the 10-year yields push up. It seems that is helping push the dollar up."

The dollar rose 1.4 percent to $ 1.3226 per euro from $ 1.3414 on Dec. 3. It touched 1.3165 dollars per euro to 09 December, the strongest since Dec. 2. The U.S. currency added 1.7 percent to 83.95 yen, from 82.53 last week. The euro was up 0.3 percent from 111.04 yen from 110.73.

Earnings index

The dollar index, which tracks the greenback against the currencies of six major U.S. trading partners, including the euro, yen and sterling, rose 0.9 percent to 80,107. He got up every day this week, the longest streak since the five days ended Nov. 11.

500 of Standard & Poor's rose 1.3 percent this week.

The dollar has fallen 1.1 percent this year, a measure of the currencies of 10 developed countries,indexes of correlation-weighted currencies. The euro has fallen 9.5 percent. The yen is up 10.8 percent.

The dollar rose after President Barack Obama on 06 December broke a deadlock over extending tax cuts for the middle class made by the administration of George W. Bush. Obama said he would accept lower rates of income tax high earners, dividends, capital gains and multimillion dollar properties for the next two years in exchange for extending federal unemployment insurance and a reduction in one year payroll taxes.

The yield on the benchmark 10-year Treasury reached 3.33 percent yesterday, the highest since June 4.

Euro problems

The euro has fallen 6.9 percent since 04 November when the European Central Bank president said the plans to end the emergency stimulus. The common currency declined this week after Fitch Ratings downgraded Ireland and after German Chancellor Angela Merkel and French President Nicolas Sarkozy in talks yesterday, said they are opposed to increasing the European Union 440 million euros ( $ 581000000000) rescue fund rejected as a whole euro area bonds.

"The euro area has much to do structurally to right the ship," said Carl Forcheski, director of corporate currency sales desk at Societe Generale SA in New York. "We continue to maintain the euro a little defensively."

Fitch lowered the credit rating of BBB + from Ireland to A +, three notches above non-investment grade, citing the mounting cost to rescue the country's banking system.

"Structural weaknesses"

Merkel said there were "structural weaknesses" in the euro area to be addressed. Sarkozy met Merkel in Freiburg, Germany, before a summit on December 16-17 EU. The leaders of the two largest economies in the euro area said that the continued existence of the common currency is "not negotiable."

"If the euro, Europe," Merkel said.

sovereign debt crisis of Europe was held in late 2009 after a new government in Greece said that the budget deficit was twice the previous administration disclosed. nations of the region put together a rescue fund in May, Greece and Ireland have benefited.

The reports showed improvements in the U.S. economy after a report of 03 December showed an unexpected jump in the unemployment rate to 9.8 percent.

The U.S. trade deficit fell 13 percent to 38.7 billion U.S. dollars, less than the lowest estimate of 78 economists surveyed by us and the smallest since January, Commerce Department figures showed yesterday.

Economic output

"That is good news for the U.S. economy and the dollar, if sustained," said Greg Anderson, currency strategist at Citigroup Inc. in New York. "If U.S. yields hold where they have moved to this week, then the dollar should rally."

The index of Thomson Reuters / University of Michigan preliminary consumer sentiment rose in December to 74.2, the highest since June, from 71.6 at the end of last month.

The Australian dollar fell this week on concern inflation tomorrow China will back the data in the case of China to tighten monetary policy. Australia's currency fell 0.8 percent to 98.53 U.S. cents from 99.31 cents on Dec. 3.

The People's Bank of China increased reserve requirements by 50 basis points from December 20, the central bank said on its website today. It is the third increase in five weeks.

"The danger is China raises interest rates sharply, causing a hard landing of China's economy, which obviously would harm Australia's exports," said Derek Mumford, a Sydney-based director in Richford Capital, one of the exchange rate and strong rates of risk management.

Fed officials will leave the benchmark interest rate unchanged at a range from zero to 0.25 percent, according to the 84 estimates in a survey. The central bank will meet on December 14.

The Federal Reserve yesterday announced plans to buy $ 105 billion of Treasuries in 18 rounds from December 13 and ends Jan. 11. The central bank said after its meeting on November 2 to 3 the policy of his intention to purchase an additional $ 600 billion in debt of U.S. government through June to support economic recovery and prevent deflation.

Saudi Oil Minister said there is no need to increase oil production at a meeting tomorrow of the Organization of Petroleum Exporting Countries

Saudi Oil Minister Ali al-Naimi, said there is no need to increase oil production at a meeting tomorrow of the Organization of Petroleum Exporting Countries.

OPEC, which supplies about 40 percent of the world's oil, has not changed the fees since late 2008, when he announced the largest reduction in the history of production as global demand fell.

Crude oil rose 3.3 percent last month in the New York Mercantile Exchange topped $ 90 a barrel on Dec. 7 for the first time in over two years.

"You really worry too much about the prices," said al-Naimi told reporters on arrival in Quito, Ecuador, for the producer group meeting. "They go up, down. What is new?"

Oil may reach $ 100 a barrel next year as demand from Europe and the U.S. collects, Goldman Sachs Group Inc., the analyst Jeffrey Currie said last month.

"Demand is up, the offer is," said al-Naimi, whose country is OPEC's largest producer. Asked if the $ 100 per barrel of oil would be acceptable to producers and consumers, he said, "What else you got?"

Angolan Oil Minister Jose Maria Botelho de Vasconcelos, said there is no reason for OPEC to change output.

"The situation is stable right now, and oil at $ 90 a barrel compensates for the weakness of the dollar, he said.

Crude oil for January delivery fell 58 cents to $ 87.79 a barrel today in New York, the lowest close since Dec. 1. Futures fell 1.6 percent this week and up 24 percent from a year ago.

The 12 OPEC members are Algeria, Angola, Ecuador, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, UAE and Venezuela. Iraq is exempt from the quota system.

U.S. Trade Gap Strait more than estimated as exports hit in two years

The U.S. trade deficit shrank more than expected in October that a weaker dollar and growing economies boosted exports abroad to a maximum of two years.

The gap narrowed 13 percent to 38.7 billion U.S. dollars, less than the lowest estimate of 78 economists surveyed by us and the smallest since January, Commerce Department figures showed today in Washington. Exports were the strongest since August 2008 as Mexico and China bought record amounts of U.S. products.

3M Co. and General Dynamics Corp. are among the companies likely to benefit from growing demand in markets such as China, Brazil and South Korea, which this year are among the top 10 purchasers of goods manufactured in the U.S.. Imports were flat in October as U.S. demand Crude oil fell for a result that can be temporary, as the U.S. economy recovers.

"Exports continue to do so the weaker dollar and strong growth in emerging markets are helping," said Nariman Behravesh, chief economist at IHS Inc. in Lexington, Massachusetts, which provides that the trade deficit would be reduced. "Things are improving the economy so we expect to see imports pick up too. We'll have an export-led growth in the U.S. next year as exports grow faster than imports."

Stocks rose, led by rising shares of commodity producers in the growing evidence that global demand is improving. 500 of Standard & Poor's rose 0.2 percent to 1,235.82 at 9:44 am in New York. Treasuries fell, bringing the yield on the benchmark 10-year to 3.27 percent from 3.21 percent late yesterday.

Increased costs

Another report showed that the cost of imported goods in the U.S. increased in November by the largest amount in one year, led by increases in the prices of commodities such as fuels, agricultural products and metals. The 1.3 percent increase in the import price index and exceeded the median forecast in a survey and followed a revised 1 percent gain in October, showed Labor Department figures.

The trade deficit was projected to be little changed at 43.8 billion U.S. dollars from the beginning reported $ 44 billion in September, according to the median forecast of economists surveyed. Estimates ranged from deficits of 39.5 billion U.S. dollars to 46.6 billion U.S. dollars. The Commerce Department revised the September deficit to 44.6 billion U.S. dollars.

After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit narrowed to 45.2 billion, the lowest since April, from $ 50,300,000,000. The figure was lower than the average for the third quarter, indicating trade contribute to growth this quarter.

Overseas sales

Exports rose 3.2 percent to 158.7 billion U.S. dollars, boosted by sales of food, cars, engines and industrial supplies such as fuel oil and natural gas.

Since reaching a maximum of one year on 7 June, the dollar has fallen 6.6 percent against a trade-weighted basket of currencies. The decline makes American products cheaper for overseas buyers and keep encouraging the production, which was extended for a month straight in November sixteenth.

Growing economies abroad are also contributing to the demand for U.S. goods. China become the second largest economy in the world this year, a gain of 9.6 percent in the third quarter gross domestic product a year ago. Singapore, in the race to be the fastest growing economy in the world this year, it expanded 10.6 percent while Brazil, South America's largest economy, grew 6.7 percent.

Manufacturers benefit

General Dynamics, headquartered in Falls Church, Virginia, is seeing "a strong international order activity and interest, especially in emerging markets," said CEO Jay Johnson in a December 2 conference presentation in the industry.

St. Paul, Minnesota-based 3M, the maker of Scotch tape and film to illuminate television screens, is expanding in emerging markets, which constitute one third of its sales and can go up to 45 percent by 2015, according to company estimates.

"These opportunities for growth," said George W. Buckley, executive director, in a conference call on December 7. overseas sales will benefit from the "India and Latin America, gaining momentum in a sort of China-like style."

President Barack Obama is seeking to double U.S. exports over the next five years. The Commerce Department has asked industry groups to revise its proposal to relax controls on export of technology with military applications, which covers sales to 37 allies, including Germany, Japan and Canada.

Less crude oil

Imports fell 0.5 percent to 197.4 billion U.S. dollars to 198.4 billion U.S. dollars in the previous month. The value of purchases of crude oil fell to 18.9 billion U.S. dollars of $ 21 billion in September, the lowest level since February swamped an increase in fuel costs.

The trade deficit with China dropped to $ 25.5 billion from $ 27,800,000,000.

China's trade surplus with the U.S. remains a thorny issue as some members of Congress accuse the Asian nation of keeping its currency too low to boost sales abroad. The yuan's advance of 0.1 percent last month and 0.3 percent in October dropped below the 1.7 percent rise in September that Treasury Secretary Timothy F. Geithner said was appropriate.

China today reported a monthly trade surplus of $ 22.9 million in November, beating the median forecast in a survey. The excess of exports to the United States on imports was about 16.7 billion U.S. dollars, equivalent to about three quarters of the total.

Improving U.S. demand and the need to replenish stocks led the gains in imports that flooded the increase in exports over the past two quarters. An increase in the deficit subtracted 1.76 percentage points of GDP in the third quarter the economy expanded at a rate of 2.5 percent.

Imports are likely to grow at a slower rate than inventories are better aligned with sales, indicating that the deficit will stabilize and the trade can no longer be an obstacle to the GDP.

Consumer spirits lift as the economic recovery accelerates

Confidence among U.S. consumers increased in December to a maximum of six months, coinciding with the strongest holiday sales showing that the economy is gaining speed.

The index of Thomson Reuters / University of Michigan preliminary consumer sentiment rose to 74.2 from 71.6 in late November. A Commerce Department report showed the U.S. trade deficit shrank more than expected in October of 38.7 billion U.S. dollars in the economies in export-led growth abroad to a maximum of two years.

Retailers such as Neiman Marcus Group Inc., have benefited during the year's biggest purchases, Americans grew more optimistic about the job market. Treasuries fell after the trade report said the U.S. economy is getting a boost from a jump in exports resulting from increasing demand in markets such as China, Brazil and South Korea.

"There is a wave of good news in this moment," said Jonathan Basile, an economist at Credit Suisse in New York. "That to me is a sign that households and businesses can make purchases with a little more confidence."

Economists expected a reading of 72.5 in December feeling, according to the median estimate in a survey. The survey forecast of 67 economists ranged from 69 to 76.5. The average indicator 89 in the five years preceding the recession that began in December 2007.

As the survey of current conditions, which reflects Americans' perceptions of their financial situation and whether it is a good time to buy expensive items like cars, rose to 85.7, the highest since January 2008, from 82 1 the previous month.

Consumer Expectations

consumer expectations for six months from now, which more closely projects the direction of consumer spending, rose to a six-month high of 66.8 from 64.8.

Stocks rallied, sending 500 of Standard & Poor's at the highest level since the week of bankruptcy Lehman Brothers Holdings Inc. s. The S & P 500 gained 0.6 percent to 1,240.4 at the close at 4 pm in New York. The yield on the benchmark 10-year Treasury, which moves inversely to price, rose to 3.33 percent from 3.21 percent late yesterday.

Higher stock prices this month in tax rates and the signs will be maintained can sustain the growing minds of Americans. Since late November, the S & P 500 gained 5.1 percent. President Barack Obama this week agreed with the Republicans to extend the income tax cuts introduced by President George W. Bush.

"Consumers are taking their keys to the stock market, and private employment is increasing, despite the disappointing numbers in November," said Ryan Sweet, senior economist at Moody's Analytics Inc. in West Chester, Pennsylvania, who designed the confidence index would rise to 74.

Holiday Forecast

The National Retail Federation predicts November-December sales rise by 2.3 percent from the same time in 2009, making it the holiday season the best stores in four years. The ICSC said it expects December sales to rise to 3.5 percent compared to last year.

"Usually I would say the main customer is absolutely new business," said Neiman Marcus CEO Karen Katz in a conference call on December 8. However, consumers' spending is not back up to levels before the recession and we have no expectation that they will get to that level. "

Michigan's survey showed that the purchase of plans durable household goods rose to the highest level since January 2008. The proportion of Americans saying they were hearing of job gains rose to its highest level since 1983.

November unemployment

The figure is at odds with the Labor Department last week showed unemployment in November rose to 9.8 percent, the highest since April, and close to a maximum of 26 years. The economy added 39,000 jobs after 172,000 the previous month.

The Commerce Department report showed that imports of trade stagnated in October as U.S. demand for crude oil fell. The overall trade deficit, which decreased by 13 percent, is expected to be little changed at 43.8 billion, according to the median forecast of economists surveyed. Estimates ranged from deficits of 39.5 billion U.S. dollars to 46.6 billion U.S. dollars.

"Trade is certainly going to provide a decent local growth in the fourth quarter," said Sweet.

Exports, benefiting from a cheaper dollar, increased 3.2 percent to 158.7 billion U.S. dollars, boosted by sales of food, cars, engines and industrial supplies such as fuel oil and natural gas.

Dollar

Since reaching a maximum of one year on 7 June, the dollar has fallen 6.6 percent against a trade-weighted basket of currencies. The decline makes American products cheaper for overseas buyers and keep encouraging the production, which was extended for a month straight in November sixteenth.

The weak dollar and increased demand from emerging markets have led to higher raw material costs, helping to explain why U.S. import prices rose in November by the most in a year. The Labor Department said today that prices paid for imported goods rose 1.3 percent.

Separate figures from the Treasury showed the U.S. government recorded a larger deficit in November as spending increased compared with the same period last year, when a change in the schedule of payments for programs such as Medicare and Social Security costs damped. The November deficit was 150.4 billion U.S. dollars, more than 120.3 billion U.S. dollars in the same month in 2009.

Constancio Urges European Fund for the recovery of "flexibility" as ECB pressure Leaders

European Central Bank Vice President Vitor Constancio said European governments should be prepared to increase the size and flexibility of its rescue fund like the ECB urges leaders to do more to fight the fiscal crisis.

Asked whether the fund could be used to purchase government bonds, Constancio said in an interview that "more flexibility in the euro zone resources would be helpful." Constancio, who spoke on Television late yesterday, refused to speculate whether the rest of the ECB Governing Council would support this measure.

ECB officials are pressuring governments to intensify their response to market turmoil that forced last month to Ireland to seek a ransom. While the ECB has bought government bonds to help stabilize markets, the policy has been criticized by Germany's Axel Weber, who says that threatens the independence of the ECB. Weber said last month that governments could increase the size of the bailout fund and Constancio said the measure could be "useful."

Constancio, ECB chief executive after President Jean-Claude Trichet was speaking after presenting the semi-annual Financial Stability Report. The central bank said a "small" number of banks rely heavily on their emergency liquidity funds and the "global economic and financial system is still full of risks."

Officials are debating its next step following the rescue of Ireland does not end the fears of contagion across markets in the euro area bonds. Attention turns to the financial rescue group formed in May, after the Greek crisis threatened to destroy the euro. European Union governments have committed themselves to € 440,000,000,000 (582 billion U.S. dollars) to a European Financial Stability Fund.

ECB pressure

While the use of EFSF could take some pressure off the ECB, the measure could be fraught with legal issues and the funds should be raised before they could be spent, said Carsten Brzeski at ING Groep NV.

Constancio's comments "clearly show that the ECB does not want to be the only savior of the euro area," says Brzeski, economist at ING Groep in Brussels. But "at this time, the EFSF could not do because he has no money. Even if governments decide to cash it will be difficult legally for the principle of non-rescue."

The Maastricht Treaty stipulates that governments can not directly take the debt of other nations.

investor concern over excessive deficits in some countries in the euro zone this year led a rout in the bond market forced Ireland and Greece to find international bailout to refinance its debt. Hindering the access of some banks to finance in the financial markets, forcing to rely increasingly on the ECB.

Too dependent?

"A small number of institutions" are "too dependent on central bank liquidity" and represent "a substantial part of the global refinancing volume," the ECB said yesterday in his report. "The main source of concern stems from the interaction of sovereign debt problems and vulnerabilities in the segments of the banking sector in the euro zone."

The central bank has not provided new data on the losses faced by banks in the coming years and did not name the institutions it sees as too dependent on their funds.

The ECB also urged the Government to take "swift and decisive action" to disable the risks created by a "limited" number of financial institutions.

"It is necessary that the responsible authorities in the form of restructuring, de-risk and, where appropriate, reducing the balance sheets of those companies," the ECB said.

financing euro-region governments "need" will remain important and there is a risk of increased competition for funding, "the ECB said in its report." Any additional request to support troubled banks may further exacerbate the risk of adverse comments from the financial sector and public finances. "

U.S. should take steps to improve its long-term competitiveness

U.S. should take steps to improve its long-term competitiveness and reduce its budget deficit over the medium term after using a "large amount" of encouragement to spur economic growth next year, Mohamed El-Erian, chief executive of Pacific Investment Management Co. he said.

"The U.S. is using the fiscal and monetary policy to try to reach the escape velocity for the economy," said El-Erian said in a telephone interview yesterday from his office in Newport Beach, California. "We do not know if that will still not be enough just to change the trajectory of the economy for a year, but to put on a medium-term sustainable path."

Pimco, which manages the world's biggest bond fund, raised its forecast for growth next year in response to stimulation, he said. Now sees the economy growing 3 percent to 3.5 percent in the fourth quarter of next year over the same period this year. That compares with its previous estimate of 2 percent to growth of 2.5 percent and 2.2 percent forecast profit for this year by the International Monetary Fund.

U.S. stocks extended gains after news that Pimco had raised its forecast for U.S. growth 2011. 500 Standard & Poor's rose 0.4 percent to 1233.00, closing yesterday at its highest level since September 2008.

Pimco ago began using the term "new normal" almost two years to describe the changing state of the world economy after the worst recession since the Great Depression. Under the new normal, the U.S. looks like they are loaded with slow growth and high unemployment for years in their struggle to overcome the consequences of the crisis.

'Unconventional' Strategies

responsible for U.S. policy are reacting to the new normal by applying "increasingly unconventional" strategies to help the economy, El-Erian said. The Federal Reserve intends to purchase $ 600 billion of longer-term U.S. Treasury bonds mid-2011 to help stimulate growth. President Barack Obama has reached agreement with Republican lawmakers in a budget package that includes a cut of 120 billion dollars in payroll taxes.

"The New Normal is still here," said El-Erian, 52 years. "What politicians are doing is kick the can down the road, in response to the symptoms of the new normal, but still not changing the dynamics of the medium term."

While the U.S. economy is recovering - it expanded 3.2 percent in the third quarter last year - unemployment has remained close to a maximum of 26 years, reaching 9.8 percent in November from 9.6 percent in October .

Tax relief package

The main objective of the tax package cut between Obama and Republicans - to generate jobs long term - will only be possible if part of a broader political agenda, El-Erian, wrote in a commentary on December 08.

"We need a more significant boost to improve long-term competitiveness of the United States, which has threatened to delays in infrastructure improvements and education and a misallocation of resources," he wrote.

Europe is also struggling with the consequences of the new normal as the region has been hit with a sovereign debt crisis. Pimco expects the euro zone economy will grow 0.5 percent to 0.75 percent next year, El-Erian said. Headquarters in Washington, the IMF has forecast growth for the region of 1.9 percent this year.

"Europe is in a completely different track to the U.S.," said El-Erian. "We are trying to achieve sustainable growth, getting your economic house in order through fiscal austerity."

The problem is that some countries - Greece, among them - might not be able to achieve growth or fiscal or economic consolidation, he said.

ECB purchases

Europe to the debt crisis has led to bailouts of Greece and Ireland this year, EU leaders are discussing plans for a permanent financial support. The European Central Bank has increased the purchase of bonds of the most indebted countries in the region to avoid loss of market goes.

The ECB is "basically to provide liquidity support of a solvency issue," said El-Erian. "The question is whether the market is going to cooperate with that," he added. "If not, will restructuring public disorder in some peripheral countries and even economic contraction."

France, Italy Industrial Output Falls, Euro Emphasizing Economic Divide

the French and Italian industrial production unexpectedly fell in October, underscoring the growing economic gap between Germany and the rest of Europe as the crisis of sovereign debt jeopardizes the recovery.

French output of factories, mines and utilities fell 0.8 percent after gaining 0.1 percent in September, the Paris-based statistics office INSEE said today. Italian production fell 0.1 percent after falling 2.1 percent in September, based in Rome, Istat said. Economists expect an increase of 0.3 percent in France and 0.7 per cent increase in Italy.

The recovery of the euro-region is led by Germany, where unemployment is the lowest in almost two decades, while others struggle to catch up. The debt crisis, which pushed the cost gap between Italian and German loans to the wider life of the euro in the last month, threatens to further widen the gap between members and the high-deficit countries cut spending.

"If you look at the last three months of industrial production in Germany, and do the same for France and Italy, which are the weakest, rather large differences," said Nick Kounis, head of macro research at ABN Amro Bank NV in Amsterdam. "But as we move into next year, the areas to see are spending and consumer spending as we are on the verge of a higher tax burden, and exports and industrial production are probably the areas in which we to see a bit of relief. "

Strikes

The euro was little changed at $ 1.3246 at 1:15 pm in London. The extra yield on 10-year Italian bonds compared to their German equivalents rose to 160 basis points from 159 basis points yesterday.

French production was affected by strikes and the blockade of the country's major ports as part of protests against President Nicolas Sarkozy plan to increase the retirement age. The demonstrations, which began Sept. 7 and reached its peak in late October, cost the economy € 200,000,000 ($ 265 million) to 400 million euros a day at its best, estimates of the Ministry of Finance .

Separate data today showed economic growth slowed to Italy by 0.3 percent in the third quarter from 0.5 percent in the last three months. That compares with an initial estimate of 0.2 percent reported on 12 November. The country's growth, industrial production slowed to 2.9 percent annually in October from 4.4 percent in September, the report showed today.

"Even assuming a reasonably strong recovery in the coming months, production in the fourth quarter is likely to be the best planes in the quarter, supporting our call that growth will remain moderate," Luigi Speranza, chief economist inflation tax and BNP Paribas in London, said in an emailed note on industrial production data. Also expects consumption growth to be "crowned by a high level of uncertainty and a further slowdown in the growth of real disposable income."

Italian unemployment rose to 8.6 percent in October, the highest since 2003, according to the office of the European Union statistics. The French unemployment rate fell to 9.8 percent in October from 9.9 percent in September and a decade high of 10 percent in November 2009. That compares with 6.7 percent in Germany, the lowest rate since 1992.

The plan of the U.S. Federal Reserve to promote purchases of bonds presents "considerable" risk by increasing capital flows to emerging markets, Nobel Prize-winning economist Joseph Stiglitz said today in Santiago.

"All this liquidity is going to create is not going to re-grow the American economy is going to Asia and other emerging markets, where it is not wanted," said Stiglitz. "Most countries around the world have begun to react. They put on capital controls, interventions in the exchange rate, taxes on these capital flows -. A variety of interventions"

The Fed will buy an additional $ 600 billion of Treasuries through June in a program called quantitative easing two or Queen Elizabeth 2. The program is designed to boost U.S. economic growth, the Fed chairman, Ben S. Bernanke said in an opinion article in the November 3 Washington Post.

The banks invest the money delivered to the Federal Reserve program in the emerging markets of Asia and other economies which have recovered faster than the U.S. and Europe last year's recession, Stiglitz said at an economic seminar in the Chilean capital organized by the Banco de Credito e Inversiones.

The increase in capital flows could cause emerging market currencies to appreciate and could lead to asset bubbles, said.

The net private capital flows to emerging market economies will increase by 42 percent to $ 825 million in 2010 compared with $ 581,000,000,000 in 2009, according to a report in October at the Institute of International Finance, a trade group that represents more than 400 financial institutions.

Regional Response

Brazil in October raised the IOF tax denominated in foreign purchases of debt to 6 percent - three times the level a year ago - to help depreciate the real, which has gained 1.5 percent against the dollar U.S. So far this year.

Finance Minister Guido Mantega, as recently as yesterday, said Brazil is open to take additional measures if necessary.

Countries such as Chile, have chosen not to apply capital controls or intervene in currency markets could suffer an unwanted increase in capital flows, said Stiglitz.

Chile's peso has appreciated 6.6 percent against U.S. dollar in 2010, the seventh best performance among the 26 emerging market currencies tracked by us. The last country to intervene in the market for pesos in 2008, when the central bank bought $ 5,750,000,000 in pre-announced daily auctions of $ 50 million.

The South American country will have to consider intervention in the market weight again and could take into account the implementation of capital control measures, Stiglitz told reporters after his speech.

"Unintentionally, QE2 is leading to a fragmentation of the global financial markets, as each country takes steps to protect themselves," he said during the seminar. "As more and more so, pressure is increasingly those who do not, and finally forced to take some action."

Moody's, Fitch and S & P Are Protected Speech, Judge Rules California

Ratings by Moody's Investors Inc., Standard & Poor's and Fitch Ratings Ltd. are protected speech, a California judge said in a provisional ruling in a lawsuit of $ 1 billion for the Public Employees Retirement System California against companies .

Judge Richard Kramer in state court in San Francisco, said today that scores of companies in the three structured investment vehicles that lost pension money is a form of speech on a topic of public interest is protected a California law designed to defend the cases meant to cool the debate.

The law aims to protect the good guys trying to exercise freedom of speech of his adversaries who try to stifle the voice by submitting claims without merit, "said Kramer.

"There is a public interest in the country's economy and the types of investment opportunities that exist," Kramer said in a hearing today. "They are potentially good here."

Calpers is suing the three bond rating firms in July 2009 for losses it said were caused by its risk assessments "very vague" on three structured investment vehicles. The IMS call, after receiving of the most high ratings in 2006, collapsed in 2007 and 2008, the complaint says Calpers.

Anti-SLAPP

Moody's and the two companies are looking for other qualifications that the case be dismissed under California law on anti-SLAPP. The 1992 law was passed in California in response to lawsuits filed by real estate developers and other businesses against opponents to their projects. SLAPP stands for "strategic lawsuits against public participation."

The resolution does not end the case, said Kramer. Calpers, the largest U.S. pension fund, may seek to demonstrate that it is likely to win on the merits of his claim. In May, rejected the request of companies index "to close the case, saying the issue of ratings SIV is not a matter of public interest, but an" activity designed for the sole purpose of making money "is not protected by the First Amendment.

Kramer said today that its earlier decisions "have absolutely nothing to do with this hearing." The earlier ruling on the dismissal did not consider whether the ratings were protected speech under the terms of the anti-SLAPP law.

The companies gave their highest rating of Cheyne Finance LLC, Stanfield Victoria Funding LLC and Sigma Finance Inc., which led Calpers to invest $ 1.3 billion in 2006, the fund said in its complaint.

Specific buyers

The SIV, bearer bonds could only be sold to specific classes of buyers. SIV's underlying assets were known only to the SIV and ratings companies, which published the ratings on the materials available on its website for a short period and in the private financial information services, the complaint said Calpers. The underlying assets of the three SIV consisted primarily of subprime mortgages at risk, the report said.

José del Snuff, a lawyer for Calpers, Kramer said the ratings companies were working "hand and glove" with customers and structured the SIV could not be sold to investors without ratings.

Kramer said that no matter which not only the dissemination of skills to select investors who could buy. He said that making predictions about the economic performance of investment vehicles is protected speech and it's up to Calpers to demonstrate that his claims have substance.

"No Refuge Behavior '

The anti-SLAPP law "not the behavior of shelter," said Kramer. Calpers can now search for information on business classifications to support his claims, he said.

The snuff, said Calpers would review the options and expects to prevail.

"We are pleased that once the judge had the opportunity to look beyond bare allegations by the applicant, confirmed that the ratings are a form of protected speech," said Michael Adler, a spokesman for Moody's in New York.

"We are very happy with this decision, which reaffirmed the longstanding precedent that credit opinions be considered protected speech," said Daniel Noonan, a spokesman for Fitch said in an e-mail.

Edward Sweeney, S & P spokesman did not immediately return a call.

The case is Calpers v. Moody's, 09-490241, Superior Court of California, County of San Francisco.

Options Bullish ETF Japan in calendar 2010 U.S. high The only trade Bet

Trading in options on the rise in Japanese stocks rose to the top of this year's U.S. trade after a single bet that companies in the third largest economy in the world will advance in the next 12 months.

One operation than 50,000 calls in January 2012 $ 11 to buy the iShares MSCI Japan Index Fund helped to increase the volume of contracts rising to 10 times the average of four weeks and 15 times the number offered for sale after 4 pm in New York. The exchange-traded fund fell 0.3 percent to $ 10.58, near its seven-month high of $ 10.69 reached on December 6.

Japan's economy grew faster than the government initially estimated in the third quarter due to an increase greater than that reported in capital spending. Gross domestic product grew at an annualized rate of 4.5 percent, faster than the 3.9 percent reported last month, the Cabinet Office said on 9 December.

"Someone may be seeing this as a possible indicator that Japan is ready for a strong 2011," said Steve Oh, a merchant sales Foundation Newedge Group in New York. "Especially coming on the heels of the stimulus package."

The lower house of Japan on 16 November passed legislation to fund a 5.1 trillion yen stimulus ($ 61 million).

Nikkei drops

Japan's Nikkei 225 Stock Average fell 0.7 percent to 10,211.95 today. Most Asian stocks fell amid speculation Chinese policy makers raise interest rates to curb inflation in the fastest growing economy in the world. The Nikkei has lost 4.2 percent this year compared with a gain of 9.4 percent for the 500 Standard & Poor's.

Contracts accounted for the bulk of the 57,080 calls and 3,193 puts on the ETF that changed hands today. Block calls traded at 1:08 pm New York at 69 cents, which means that the buyer paid $ 3,450,000.

"It is an opening of markets and want to maintain the position for several months at least to benefit from anything in Asia, which would make the Japanese market higher," said ETAI Friedman, head of derivatives trading at MKM Partners LP in Stamford , Connecticut.

Crude oil fell after China took steps to counter inflation

Crude oil fell after China took steps to counter inflation, which could slow economic growth and fuel demand in the largest energy consuming country in the world.

Prices fell 0.7 percent after the Bank of China requires lenders to increase financial reserves by 50 basis points from December 20. Oil rose earlier as China said in November crude oil imports jumped 26 percent and the International Energy Agency raised its forecast for 2011 oil demand for the third month.

"Increasing reserve requirements is probably the first shot in the bow," said Phil Flynn, an analyst with Chicago-based merchant and investment adviser PFGBest. "The market is worried that the Chinese will follow this movement with an increase in interest rates during the weekend."

Crude oil for January delivery fell 58 cents to $ 87.79 a barrel on the New York Mercantile Exchange, the lowest close since Dec. 1. Futures fell 1.6 percent this week and up 24 percent from a year ago.

Brent crude oil for January settlement fell 51 cents, or 0.6 percent, to close the session at $ 90.48 a barrel on London's ICE Futures exchange in Europe.

China said it will release data from the consumer price index tomorrow, two days earlier than expected, fueling speculation of a rise in interest rates. The report may show inflation in November was 5.1 percent, the highest since July 2008, according to the Economic Information Daily, a newspaper affiliated to the government news agency.

meeting Chinese leaders in Beijing this weekend to set economic policy for next year have said they will move to a stricter "prudent" monetary policy.

Chinese Imports

China increased net imports of crude oil by 26 percent in November from the previous month as refiners stepped up processing rates to alleviate the shortage of diesel. Net purchases were 20.3 million tonnes, or 5 million barrels a day, the highest amount since the September record of 22.9 million tonnes, figures from the Beijing-based Customs General Administration showed today.

The International Energy Agency raised its forecast for global oil demand next year, citing increases in consumption in North America and China. Global oil use will average 88.8 million bpd, 260,000 barrels more than its previous forecast, the Paris-based adviser, said today in its monthly report on the oil market.

"The headlines were upside down on worries about economic policy in China as the country tries to control inflation," said Bill O'Grady, chief market strategist Confluence Investment Management in St. Louis.

The Organization of Petroleum Exporting Countries, which accounts for about 40 percent of world supply, will meet tomorrow in Quito, Ecuador, to review production quotas.

$ 100 oil

Oil prices of $ 100 a barrel can take the group to act, Abdalla El-Badri, the organization's secretary general, said yesterday in Quito. Demand is growing very fast in China and India and moderate members of the Organization for Economic Cooperation and Development said.

"When the price rises to $ 100, that means that there is something wrong with the fundamentals, then we have to do something," said El-Badri told reporters. "If it goes to $ 100 due to speculation, OPEC could not move."

There is no reason for OPEC to change quotas at tomorrow's meeting, the Angolan Oil Minister Jose Maria Botelho de Vasconcelos, said in Quito. The "stable condition" and oil at $ 90 a barrel compensates for the weakness of the dollar, he said.

OPEC raised its forecast for 2011 oil production outside the group on the increases in Russia and China. The non-OPEC supply will rise by 410,000 barrels to 52.62 million barrels a day next year, OPEC said in its monthly report today. That's 50,000 barrels a day more than previously expected.

Price Outlook

Oil may reduce next week in the Chinese moves to curb potential inflation, a survey showed. Eighteen of 39 analysts, or 46 percent, forecast oil will fall through Dec. 17. Thirteen respondents, or 33 percent, predicted that prices will rise and eight estimates that there are few changes.

"Oil likely will move down next week," said John Kilduff, a new partner of Capital LLC, a hedge fund in New York that focuses on energy. "Concern about the degree of fiscal adjustment in response to China's inflation reading this weekend will undermine the confidence about the continued strength of China's energy demand."

volume of oil on the Nymex was 507,899 contracts as of 15:08 in electronic trading in New York. Volume was 742,817 contracts yesterday, down 6 percent above the average of the last three months. Open interest was 1.35 million contracts.

Colombia's government has no immediate plans to increase sales of local or international debt

Colombia's government has no immediate plans to increase sales of local or international debt to finance reconstruction after floods left thousands homeless and destroyed roads, German Director of Public Credit, said Arce.

The initial cost for humanitarian assistance may be 1 billion pesos ($ 525,000,000), Arce said in an interview in his Bogota office. The government will decide in the coming months if the additional sales of debt is needed after assessing the damage to infrastructure and determine the costs, he said.

"We are not considering selling more debt for the first two stages, which are humanitarian and rehabilitation" of roads, bridges and other infrastructure, Arce, 38, said. The government is considering raising taxes to finance part of the rehabilitation phase, while a loan of $ 150 million World Bank will be used for humanitarian aid, said Arce.

Yields on benchmark peso bonds pared losses after Arce's comments. It had risen this week on speculation that the government can issue more debt to finance the local costs of recovery, and the concern that the worst rains in 30 years would increase food prices and add to inflation. The rains in recent weeks caused flooding and landslides, killing nearly 200 people, destroying roads and damaging crops such as coffee.

2011 Financing Plan

11 percent by 2020 bond fell 0.39 cents to 122.604 centavos per peso at 3:02 pm, New York. Declined as low as 122.298 cents earlier in the day. The yield rose 5 basis points, or 0.05 percentage point to 7.59 percent. The peso strengthened 1.4 percent, the biggest daily gain since May, to 1881.85 per U.S. dollar.

Arce said that the Treasury will not announce changes in its financial plan for 2011 this month. The country aims to sell 28 billion of bonds in the local market next year, 18 billion pesos of which will be sold at auction. Also plans to issue 2.24 billion U.S. dollars in foreign bonds next year.

The ministry in January is likely to issue bonds indexed to inflation in the longer term, known as TES UVR, and sell new fixed rate bonds, known as TES, said Arce.

In its last auction of this year, the Ministry of Finance sold TES bonds maturing in July 2024, June 2016 and April 2013 and TES UVR by February 2023 and May 2017.

New peso bonds

Colombia plans to have at least three "hot spots" in the TES and TES UVR curves in order to have reference points in the medium and long-short, he said.

"We need a benchmark and UV radiation," said Arce. He said the government is likely to replace at least two of the three TES bonds sold this year.

"This is something we are currently discussing with market makers, but the idea is to start the new year with new references," Arce said.

Maple also said he is considering holding a "couple" debt swap in 2011.

From next year the government plans to reduce the amount of bonds in dollars in the short term, known as TCO, gives back to the levels that were sold before the sale of debt increased in October. The increase in emissions between October and December TCO was performed to compensate, in part, by the dollars that the government maintains abroad this year to facilitate the concentration of weight.

Echeverry said Oct. 29 that the government keep $ 1.5 billion abroad "at least during the first months of 2011" instead of bringing money to Colombia and its conversion to pesos.

Flood

Finance Minister Juan Carlos Echeverry, said yesterday that the cost of repairing damage to roads and aid to victims of heavy rains could surpass 4 billion pesos. The government said the above average rainfall last until the first quarter.

Colombia, the second largest producer of Arabica coffee, will see its fall in crop production by at least 7.6 percent next year as the rain hurts plant growth, Hector Falla, executive director of the province of Huila, the nation growing area's second largest, said last week. The National Federation of Coffee Growers also said that production will decline, without giving a figure.

Chairman Juan Manuel Santos, declared on 7 December economic and social emergency that will enable the government for the next 30 days - extendable to 90 days - to find new sources of income. Options include raising taxes or issuing more debt, according to Andrew Brown, chief analyst at the Corporación Financiera Colombiana SA in Bogota.

Deficit Outlook

Consumer prices rose 0.19 percent last month, nearly double the median forecast of an increase of 0.10 percent of the 20 economists surveyed by us. Correval SA brokerage said in a report Monday that monthly inflation expected to accelerate to 0.3 percent in December due in part to food prices.

Annual inflation accelerated to 2.59 percent in November, within the central bank's target this year from 2 to 4 percent.

Colombia hopes that the central government deficit reduced to 4.1 percent of gross domestic product in 2011 from 4.3 percent this year. The consolidated budget deficit was reduced to 3.2 percent of GDP next year from 3.6 percent last month said Echeverry.

Both Moody's Investors Service and the rate of Standard & Poor's Colombia one level below investment grade with a positive outlook.

Business

Welcome to our website

Saturday, December 11, 2010

Euro-Zone as Stokes minds flashpoint Bond Market Debt

Medicine in Ireland too hard for the others

Socrates Says Portugal Does Not Need Aid

China can’t raise interest rates because of the risk of attracting inflows of cash

Saudi Oil Minister Al-Naimi says $ 70 - $ 80 a barrel is a "good" oil price

ECB's Noyer says default is more expensive than debt repayment

Areva plans to issue new shares to holders of certificates of investment

Spanish and Portuguese bonds fell below the benchmark German dams

Chi-X could help NYSE, Nasdaq, bats, direct rim competes with LSE

China's inflation accelerated at its fastest pace in 28 months in November

Building American borrowers Race countdown clock before year-end

European shares advanced for a second week

Asian stock markets fluctuated this week

The Taiwan dollar and Philippine peso led gains in Asian currencies this week

The dollar rose the most since September against the euro

Saudi Oil Minister said there is no need to increase oil production at a meeting tomorrow of the Organization of Petroleum Exporting Countries

U.S. Trade Gap Strait more than estimated as exports hit in two years

Consumer spirits lift as the economic recovery accelerates

Constancio Urges European Fund for the recovery of "flexibility" as ECB pressure Leaders

U.S. should take steps to improve its long-term competitiveness

France, Italy Industrial Output Falls, Euro Emphasizing Economic Divide

Stiglitz says QE2 Fed Creates 'significant' risks

Moody's, Fitch and S & P Are Protected Speech, Judge Rules California

Options Bullish ETF Japan in calendar 2010 U.S. high The only trade Bet

Crude oil fell after China took steps to counter inflation

Colombia's government has no immediate plans to increase sales of local or international debt

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