Tuesday, October 11, 2011

20111011 1001 Global Market Related News.

Asia Stocks Rise on Europe Debt Pledge (Source: Bloomberg)
Asian stocks rose, driving a regional benchmark index higher for the fourth straight day, after U.S. and European shares jumped in response to a pledge by German and French leaders to stem Europe’s debt crisis. Rio Tinto Group, the world’s second-largest mining company by sales, rose 1.6 percent in Sydney. Korea Zinc Co. surged 6.5 percent in Seoul. Mitsubishi Corp., which gets 43 percent of its revenue from commodities trading, gained 2.9 percent in Tokyo, while Sony Corp., Japan’s largest exporter of consumer electronics, jumped 5.2 percent. Japanese markets resumed trading today after a public holiday yesterday.
The MSCI Asia Pacific Index gained 1.1 percent to 114.94 as of 9:25 a.m. in Tokyo, led by exporters and mining companies as commodity prices advanced after German Chancellor Angela Merkel and French President Nicholas Sarkozy pledged at the weekend to deliver a plan to recapitalize the Europe’s banks and address Greece’s sovereign-debt crisis by Nov. 3. More than four stocks rose for each that fell on the gauge.

Pimco Sees ‘Cheap’ Emerging-Market Equities (Source: Bloomberg)
Emerging-market stocks are “cheap” and Pacific Investment Management Co. is buying in China after the nation’s shares tumbled this year, said Maria Gordon, an emerging-market equity-fund manager at Pimco. “We are definitely fishing in the more cyclically distressed areas of the market where valuations are very, very cheap,” London-based Gordon said in an interview with Sara Eisen on Bloomberg Television yesterday. “We’re selectively accumulating positions” in China, Gordon said, adding that shares of Hong Kong-based insurer AIA Group Ltd. (1299) are poised for “a lot of capital appreciation.”
The MSCI Emerging Markets Index has tumbled as much as 31 percent from this year’s high, sending its price-to-earnings ratio to 9.4 on Oct. 5, the lowest level since December 2008, according to data compiled by Bloomberg. The Hang Seng China Enterprises Index, a gage of Chinese companies listed in Hong Kong, has slid 38 percent from a 30-month peak in November as tight monetary policy in the biggest emerging economy and Europe’s debt crisis spurred investors to sell riskier securities.

Emerging-Market Stocks Advance as German, French Leaders Pledge Bank Plan (Source: Bloomberg)
Emerging-market stocks rose, with the benchmark index posting the biggest four-day gain in 16 months, after German and French leaders pledged to shield European banks. The MSCI Emerging Markets Index increased 1.6 percent to 898.27 at the close of trading, taking its gains in the past four days to 8.1 percent, the biggest four-day advance since May 31, 2010. Brazil’s Bovespa Index surged 4 percent as commodity prices rose. Mexico’s benchmark rose 1.6 percent. Hungary’s BUX Index jumped 3.2 percent to a one-month high, and the WIG20 Index climbed 3.4 percent after Prime Minister Donald Tusk won Polish general election. India’s Sensex Index climbed 2 percent and South Africa’s benchmark gauge rose 2.1 percent.
German Chancellor Angela Merkel and French President Nicolas Sarkozy will deliver a plan to recapitalize European banks and address the Greek debt crisis by Nov. 3. Belgium will pay 4 billion euros ($5.4 billion) for the local unit of the failing Dexia SA, Belgian Finance Minister Didier Reynders said today. U.S. employers added more workers than expected in September, according to payrolls data on Oct. 7.

U.S. futures signal higher Wall Street opening
LONDON, Oct 10 (Reuters) - U.S. stock index futures pointed to a higher opening for equities on Wall Street  with futures for the S&P 500 , for the Dow Jones  and for the Nasdaq 100   rising 0.9 to 1 percent. U.S. government offices and bond markets are closed for the Columbus Day holiday, although U.S. stock markets will be open.

Euro rises on EU pledge, short-covering
SINGAPORE, Oct 10 (Reuters) - The euro rose buoyed by a flurry of short-covering after leaders of Germany and France promised a new comprehensive plan by the end of the month to recapitalise euro zone banks.    
"The positive response could simply reflect the fact that positioning is now more balanced following earlier risk reduction," Todd Elmer, currency strategist at Citi in Singapore, said in a research note.  

Euro gains on debt promise, stocks flat
LONDON, Oct 10 (Reuters) - The euro rose after German and French leaders promised to announce fresh steps to tackle the euro zone debt crisis by the end of the month, but the lack of details kept government bonds supported and world stocks gave up brief early gains.
"But I do not think it is as jolly as it looks and there is still going to be this uncertainty hanging over the market. Although they are trying to put on a common front, it is very difficult to get deals done."

No U.S. Recession as Forecasts Improve (Source: Bloomberg)
The U.S. has likely dodged a recession for now, even though it’s too early to sound the all- clear for the economy. A string of stronger-than-projected statistics -- capped by the news on Oct. 7 of a 103,000 rise in payrolls last month -- has prompted economists at Goldman Sachs Group Inc. and Macroeconomic Advisers LLC to raise their growth forecasts for third quarter growth to 2.5 percent from about 2 percent. That’s nearly double the second quarter’s 1.3 percent rate and would be the fastest growth in a year. “The U.S. economy doesn’t look like it’s double-dipping at all,” said Allen Sinai, president of Decision Economics Inc. in New York. “But it is a crummy recovery.”

S&P 500 Caps Biggest Gain Since August on Europe Support Pledge (Source: Bloomberg)
U.S. stocks advanced, giving the Standard & Poor’s 500 its biggest rally since August, after the leaders of France and Germany pledged a plan to support European banks and stem the region’s debt crisis. All 10 groups in the S&P 500 advanced. Bank of America Corp. (BAC) and JPMorgan Chase & Co. (JPM) added more than 5.2 percent. Chevron Corp. (CVX) and Alcoa Inc. (AA) climbed at least 3.9 percent. Caterpillar Inc. (CAT) and Boeing Co. (BA) increased more than 3.5 percent, pacing gains in companies most-tied to the economy. Sprint Nextel Corp. (S) tumbled 7.9 percent as at least seven analysts cut their ratings after the carrier’s investor meeting.
The S&P 500 advanced 3.4 percent to 1,194.89 at 4 p.m. New York time. It had the biggest rally over five days since March 2009, gaining 8.7 percent. The Dow Jones Industrial Average added 330.06 points, or 3 percent, to 11,433.18. The Russell 2000 Index of small companies surged 4.4 percent. About 6.9 billion shares changed hands on U.S. exchanges as of 4:27 p.m., the lowest volume since Aug. 29, according to Bloomberg data.

Short Sales Rise the Most Since 2006 (Source: Bloomberg)
Investors are increasing bearish trades around the world by the most in at least five years, convinced the lowest valuations since 2009 will prove no barrier to losses after $11 trillion was erased from equities. Borrowed shares, an indication of short selling, climbed to 11.6 percent of stock last month from 9.5 percent in July, the biggest increase since at least 2006, according to information compiled for Bloomberg by Data Explorers, a London-based research firm. Trades that profit when Chinese equities decline have reached a four-year high and bearish bets in the U.S. are the most since 2009, exchange data show.
Slowing economies are spurring short sellers after indexes in 37 out of 45 major countries tumbled 20 percent, the common definition of a bear market. Bulls say declines have gone too far, with the MSCI All-Country World Index’s valuation at about half the 16-year average, just above the level three years ago, following the collapse of Lehman Brothers Holdings Inc. Losses since May exceed the combined gross domestic product of Brazil, Russia, India and China, data compiled by Bloomberg show.

China Record Boosts Confidence This Is No Bubble: Daniel Arbess (Source: Bloomberg)
As the debtor economies of the developed world sputter, the health of China grows ever-more central to the fate of the global economy. Yet, the debate on China’s prospects remains polarized and often superficial, with commentary either baselessly bullish or derisively bearish. Reality, of course, is usually more nuanced. China’s model is unbalanced and its economy has misallocated capital, but its policy makers are using the country’s plentiful reserves and policy tools to keep inflation under control and growth on a sustainable path. China’s growth will probably slow, as its model evolves from depending on exports and investment to relying on greater consumption, but the economy is unlikely to implode.
The financial crisis in the West marked the end of the export-dependent phase of China’s growth. As the U.S. and Europe deleveraged, China compensated by plugging its export deficit with internal fixed-asset investment, largely in housing, which has represented the majority of the country’s GDP growth since 2008. With its population now about 50 percent urban (the comparable figure for the U.S. is roughly 80 percent), China is still building the infrastructure it needs to keep urbanizing over a million people a month. However, the Chinese can’t rely on investment much longer without running the risk of inflation and a treacherous bubble.

China State Investor Boosts Stakes in Big Banks (Source: Bloomberg)
China’s state-run Central Huijin Investment Ltd. began buying shares in the nation’s four biggest banks after valuations dropped below levels reached during the global financial crisis. Central Huijin started acquiring existing stock in Industrial & Commercial Bank of China (601398) Ltd., China Construction Bank Corp. (939), Agricultural Bank of China Ltd. (3988) and Bank of China Ltd. yesterday, according to a statement on its website. The fund will continue with “related market operations,” it said, without providing details on how much it will invest and whether it will buy the shares in Hong Kong or Shanghai. The MSCI China Financials Index is trading at 6.3 times estimated earnings, below the 6.9 reached during the 2008 crisis, after slumping on speculation defaults will rise as the economy slows. The gauge lost 36 percent this year as China’s property market showed signs of cooling and concern grew that $1.7 trillion of local-government debt will lead to bad loans.

Japan’s Nikkei 225 Heads for Biggest Advance in Two Weeks on Europe Pledge (Source: Bloomberg)
Japanese stocks rose for a third day, with the Nikkei 225 (NKY) Stock Average headed for its biggest gain in two weeks, after German and French leaders pledged to support European banks and stem the region’s debt crisis. Sumitomo Mitsui Financial Group Inc. (8316), Japan’s second- largest publicly traded lender, climbed 2.6 percent. Kyocera Corp. (6971), an electronics maker that gets almost 20 percent of its sales in Europe, gained 2.7 percent. Mitsubishi Corp. (8058), Japan’s biggest commodities trader by revenue, rose 2.9 percent after prices of oil and metals advanced. The Nikkei 225 rose 2 percent to 8,774.51 as of 9:34 a.m. in Tokyo, the biggest gain since Sept. 27. The broader Topix gained 1.8 percent to 754.75, with almost five times as many shares rising as falling. Japan’s Stock markets were closed yesterday for a national holiday.

Thailand Prepares as Floods Threaten Bangkok (Source: Bloomberg)
Thai officials rushed to reinforce barriers and widen canals in Bangkok on concern the nation’s worst floods in more than half a century may spread to the capital later this week. The deluge swept across the country starting in late July, killing 269 people, swamping factories operated by Honda Motor Co., Nikon Corp. and Canon Inc. and damaging more than 10 percent of rice farms in the biggest exporter of the grain. Prime Minister Yingluck Shinawatra opened army camps to help house some of the 2.4 million people displaced by the floods, and asked authorities to accelerate efforts to protect the capital. The finance ministry yesterday cut its forecast for economic growth to 3.7 percent from 4 percent and said the disaster may cause 120 billion baht ($3.9 billion) of damage.

Euro Trades Near Three-Week High on Chinese Bank Buying, European Pledge (Source: Bloomberg)
The euro traded 0.4 percent from its strongest in almost three weeks after a China state-run fund said it’s purchasing shares of the nation’s biggest banks, bolstering Asian stocks and demand for higher-yielding assets. The 17-nation euro maintained yesterday’s advance against the yen which came after Germany and France pledged to deliver a plan to support banks. The U.S. currency traded near one-week low versus the Swiss franc before the Federal Reserve releases minutes of September’s policy meeting when it decided to replace much of the short-term debt it holds with longer-term Treasuries in a bid to reduce borrowing costs. “This is the government of China thinking their own bank stocks are cheap, and that’s going to boost the entire Asia equity market again,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “You have to be chasing yield now and that will keep currencies like the dollar and yen on the back foot.”

Euro Chiefs Push Back Debt Crisis Summit Amid Tension Over Greek Writedown (Source: Bloomberg)
European leaders pushed back a debt- crisis summit amid opposition to German Chancellor Angela Merkel’s drive for deeper-than-planned writedowns of Greek bonds.  The Oct. 18 meeting was postponed to Oct. 23 as Europe gropes toward a master plan for dealing with Greece’s oversized debt, insulating the Spanish and Italian markets, and shielding banks from the fallout. Europe needs a strategy for shoring up banks before unstitching a July accord to cut Greek bond values by an average of 21 percent, Belgian Prime Minister Yves Leterme said.

ECB Financing to Portuguese Banks Fell to 45.6 Billion Euros in September (Source: Bloomberg)
The European Central Bank’s financing to Portuguese lenders fell in September from the previous month, the first decline in three months, the Bank of Portugal said. ECB financing decreased to 45.6 billion euros ($62 billion) from 46 billion euros in August, the Lisbon-based Bank of Portugal said today on the BPStat portion of its website. ECB financing levels peaked at 49.1 billion euros in August 2010. Portugal in April became the third euro-area country to seek a bailout after Greece and Ireland. It will receive 78 billion euros under the agreement with the International Monetary Fund and the European Union. ECB President Jean-Claude Trichet said on April 7 that the central bank “encouraged” Portugal to seek aid and urged the country’s banks to reduce their reliance on ECB funding.

Trichet Throws Away Script, Reminding American Skeptics Euro Built to Last (Source: Bloomberg)
Jean-Claude Trichet stood on a stage at Washington’s Willard Hotel, leafed through his prepared speech, and cast it aside. The reason for the European Central Bank president’s Sept. 23 ad-libbing: a desire to rebut what he called the “particularly gloomy” economic outlook of the previous panel featuring former U.S. Treasury Secretary Lawrence Summers and Pacific Investment Management Co. Chief Executive Officer Mohamed El-Erian. “The overall picture when you look at the euro area as a whole is very, very different from the perception,” Trichet told the conference organized by the Bretton Woods Committee.

Euro Leaders Target Bank Capital in Crisis Plan (Source: Bloomberg)
Angela Merkel and Nicolas Sarkozy turned their crisis-fighting focus to banks, promising a recapitalization blueprint this month that will overtake a 12- week-old rescue plan that has yet to be put into place. “We will recapitalize the banks,” the French president said in Berlin yesterday at a joint briefing with the German chancellor without providing details. “We’ll do it in complete agreement with our German friends because the economy needs it, to assure growth and financing.” Facing rising pressure to defuse turmoil that’s raged for 19 months and growing concern Greece is headed to a default, Merkel said European leaders will do “everything necessary” to ensure that banks have enough capital. Sarkozy said they would deliver a plan by the Nov. 3 Group of 20 summit.

Stoxx Europe 600 Index Posts Biggest Four-Day Jump Since 2008 on Bank Plan (Source: Bloomberg)
European stocks advanced, with the Stoxx Europe 600 Index posting its biggest four-day rally since November 2008, as the leaders of Germany and France gave themselves three weeks to create a plan to recapitalize banks. BP Plc contributed the most to the gauge’s advance. Premier Oil Plc rose 3.3 percent after HSBC Holdings Plc upgraded its shares. Erste Group Bank AG (EBS) plunged 9.2 percent after saying it will post a full-year loss because of writedowns at its units in Hungary and Romania. Dexia SA (DEXB) dropped 4.7 percent after earlier falling as much as 36 percent when trading in the shares resumed.
The benchmark Stoxx 600 advanced 1.7 percent to 235.94 at the 4:30 p.m. close in London, extending the gauge’s rally over the last four days to 8.5 percent. National benchmark indexes rose in 15 of the 18 western European markets. The U.K.’s FTSE 100 Index gained 1.8 percent. France’s CAC 40 Index climbed 2.1 percent and Germany’s DAX Index jumped 3 percent. All three gauges posted their biggest four-day rallies since 2008.

U.K. Stocks Post Biggest Four-Day Advance Since November 2008 (Source: Bloomberg)
U.K. stocks climbed, as the benchmark FTSE 100 Index (UKX) posted its biggest four-day gain since November 2008, as German and French leaders pledged to create a plan in three weeks to recapitalize banks. Premier Oil Plc (PMO) gained 3.3 percent as the U.K. oil explorer said it began production at its Chim Sao project in Vietnam and after UBS AG, Morgan Stanley and HSBC Holdings Plc upgraded its shares. Burberry Group Plc (BRBY), the U.K.’s largest luxury-goods maker, advanced 1.7 percent. Kazakhmys Plc increased 3.4 percent after Morgan Stanley picked it as a preferred copper miner. The FTSE 100 Index rose 95.60, or 1.8 percent, to 5,399 at the 4:30 p.m. close in London. The gauge surged 9.2 percent in the last four days. The broader FTSE All-Share Index also added 1.8 percent today and Ireland’s ISEQ Index increased 1.1 percent.

Australia Stocks Rise as Commodity Prices Gain on Europe Pledge (Source: Bloomberg)
Australian shares rose, led by commodity producers as oil and metal prices surged after German and French leaders pledged to stem Europe’s sovereign-debt crisis. Japanese stock futures advanced. BHP Billiton Ltd. (BHP), the world’s No. 1 mining company, advanced 1.1 percent in Sydney, while Rio Tinto Group, the second-largest miner by sales, rose 2 percent. American depositary receipts of Mitsubishi Corp., which gets 43 percent of its revenue from commodities trading, rose 1.1 percent from the last closing price in Tokyo. Chinese banks may be active in Hong Kong after state-run Central Huijin Investment Ltd. said it began buying shares in the nation’s four biggest lenders following a drop in valuations below levels reached during the global financial crisis.
Australia’s S&P/ASX 200 Index gained 0.7 percent to 4,232 as of 10:23 a.m. in Sydney. New Zealand’s NZX 50 Index rose 0.6 percent in Wellington. Japanese markets, which were closed for a public holiday yesterday, will resume trading today. Futures on Japan’s Nikkei 225 Stock Average expiring in December closed at 8,790 in Chicago yesterday, compared with 8,590 in Osaka, Japan, on Oct. 7. They were bid in the pre-market at 8,730 in Osaka at 8:05 a.m. local time.

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