Wednesday, October 19, 2011

20111019 1625 Global Market & Commodities Related News.

Asian stocks rise, but Moody's Spain cut weighs
TOKYO, Oct 19 (Reuters) - Asian shares rose, but gains were capped by a cut to Spain's sovereign credit rating from Moody's Investors Service that kept investors' risk appetite in check.
"It's a familiar pattern these days, to sell stocks whenever there's bad news from Europe and buy them back whenever there's good news, but investors are getting tired of it," said Kenichi Hirano, operating officer at Tachibana Securities, adding that this was one reason for recent thin trade.

Asian Stocks Advance After U.S. Earnings Boost Economic Recovery Outlook (Bloomberg)
Asian stocks rose on signs a global economic recovery may be strengthening after Bank of America Corp. swung to a profit and Intel Corp. forecast sales that beat analyst estimates, boosting the earnings outlook for Asia’s companies. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s largest lender, advanced 0.9 percent, after Bank of America climbed 10 percent in New York. Cnooc Ltd. (883), China’s largest offshore energy explorer, rose 1.2 percent after crude rose to the highest price in more than a month. Suppliers of Apple Inc. (AAPL), fell after the maker of iPhones and iPads posted profit that missed analyst estimates. “There’s bound to be some residual optimism because of the strong gains in the U.S. on the back of some earnings optimism,” said Will Seddon, who helps oversee more than $300 million at White Funds Management in Sydney. “We’re bound to see some positive momentum in Asian markets, but the risks with the European situation are still very, very high.”

Spain Rating Cut for Third Time Since 2010 (Bloomberg)
Spain’s credit rating was cut for the third time in 13 months by Moody’s Investors Service as Europe’s debt crisis threatens to engulf the nation. Moody’s yesterday reduced its ranking to its fifth-highest investment grade, cutting it by two levels to A1 from Aa2, with the outlook remaining negative. Standard & Poor’s downgraded Spain on Oct. 14 to its fourth-highest investment grade, and Fitch Ratings cut it to the same level on Oct. 7, the day it also downgraded Italy. “Moody’s is maintaining a negative outlook on Spain’s rating to reflect the downside risks from a potential further escalation of the euro-area crisis,” it said in a statement. The company cited the “continued vulnerability of Spain to market stress” that is driving up the cost of borrowing, as well as weaker growth prospects. Spanish bonds fell.

‘Time Is Running Out’ in Battle With Debt: King (Bloomberg)
Bank of England Governor Mervyn King said the global recovery is faltering and “time is running out” for authorities to reduce imbalances and strengthen banks. “In 2008-09, it was easy to coordinate international action in the Group of 20 economies,” King said in a speech late yesterday in Liverpool, England. “In the face of a collapse in world trade even faster than that in the 1930s, countries needed no persuasion of the necessity of policy stimulus. But it has proved much harder to form a consensus on how to tackle the underlying problems.” King said monetary policy is limited in its capacity to revive the U.K.’s “reluctant recovery” as governments delay dealing with underlying imbalances between countries with current account surpluses and deficits. As European leaders prepare for a summit on the Greek crisis on Oct. 23 before G-20 leaders meet on Nov. 3, King said the global economy needs a “bold response.”

Thailand Maintains Interest Rate for First Time in 2011 After Flood Damage (Bloomberg)
Thailand kept interest rates unchanged for the first time this year, ending its longest series of increases since 2006, as the nation’s worst floods in five decades and a weakening global economy crimped growth. The Bank of Thailand kept its benchmark one-day bond repurchase rate at 3.5 percent, it said in Bangkok today, a decision predicted by 16 of 17 economists surveyed by Bloomberg News. One analyst expected a rate cut. The central bank had boosted borrowing costs nine times since the start of July 2010, more than any other major Asian economy after India. The floods may shave as much as 1.7 percentage points off economic growth this year after destroying crops, damaging 1,000 factories and disrupting operations at Toyota Motor Corp. and Nikon Corp. Inflation eased last month, giving the central bank room to pause as Prime Minister Yingluck Shinawatra seeks to shore up growth after Thailand’s worst natural disaster.

Papandreou Presses Austerity Amid Strikes (Bloomberg)
Greek Prime Minister George Papandreou vowed to push through a further round of austerity measures in the face of public anger, appealing to European leaders to help cut Greece’s debt burden at a weekend summit. Opening a parliament debate in Athens on the government’s planned tax increases and cuts to pensions and wages, Papandreou said that a 48-hour walkout by workers in schools, hospitals and on public transport that began today “will not help Greece,” contrasting the strikers with his government’s efforts to help the country back to economic growth. “Greece is being held hostage by strikes and protests,” Papandreou told lawmakers late yesterday. “This government has been fighting for two years to save the country and still has much work ahead,” he said. “We will give battle and we will win.”

European Stocks Gain on Rescue-Fund Reports (Bloomberg)
European stocks rose for the first time in three days amid conflicting reports that France and Germany have reached a deal on expanding the region’s rescue fund. Asia shares climbed while U.S. index futures fell. Software AG (SOW), Accor SA (AC) and British Sky Broadcasting Group Plc (BSY) advanced after the reporting results. The benchmark Stoxx Europe 600 Index gained 0.4 percent to 236.36 at 8:05 a.m. in London after falling 1.3 percent in the previous two days. The MSCI Asia Pacific Index advanced 0.8 percent, while Standard & Poor’s 500 Index futures fell 0.5 percent after Apple Inc.’s profit missed analyst estimates. “Rumours of a European bailout deal sparked a global surge in risk-on bets,” Jonathan Sudaria, a trader at London Capital Group, wrote in e-mailed comments. “With markets jumping from headline to headline, traders are finding it increasingly difficult to stay with positions, reducing their investment horizon to the next major rumour.”

European commodities markets eye new regulations
LONDON, Oct 18 (Reuters) - The European Union is due to release draft market reform legislation on Thursday that could have significant impact on commodity markets.  
The EU's executive is due to propose "MiFID II" to extend regulation to commodities and bond trading, push derivatives onto trading platforms and make competition possible in clearing.

U.S. wheat ticks up on tight stocks, weather worries
SYDNEY, Oct 19 (Reuters) - U.S. wheat futures for December delivery on the Chicago Board of Trade  rose 0.7 percent to $6.29-1/2 a bushel in early Asian trade.
Wheat turned a touch firmer overnight on gains in top quality spring wheat traded on the Minneapolis Grain Exchange due to tight stocks of that wheat class and on dry weather worries in the U.S. Plains hard red winter wheat region.

Malaysia's Q3 cocoa grindings down 2.8 pct y/y
SINGAPORE, Oct 19 (Reuters) - Cocoa grindings in Malaysia, Asia's largest grinder, slipped 2.8 percent to 71,451 tonnes in the third quarter of 2011 from the same period last year, the Malaysian Cocoa Board (MCB) said.
Cocoa grindings were down 0.9 percent from the second quarter, dropping for a second consecutive quarter, the MCB said in a statement. It gave no further details.

El Salvador coffee harvest has minimal rain damage
SAN SALVADOR, Oct 18 (Reuters) - Heavy rains will cause only minimal damage to El Salvador's next coffee harvest, coffee foundation Procafe said on Tuesday.
Two weeks of rainstorms have killed more than 80 people in Central America and felled coffee trees, ruined roads and threatened to spread fungus on plants.

Canada to downsize Wheat Board, end grain monopoly
WINNIPEG, Manitoba, Oct 18 (Reuters) - The Canadian government put forward long-promised legislation on Tuesday to dismantle Western Canada's grain-marketing monopoly, and gave the Canadian Wheat Board (CWB) five years to implement a business plan to
survive in an open market.
In draft legislation presented to Parliament, the Conservative government offered the CWB certain financial guarantees, but said it would not provide seed capital or regulated access to grain handlers after the board loses its grain marketing monopoly.

Gasoline lifts US producer prices, seen temporary
WASHINGTON, Oct 18 (Reuters) - U.S. wholesale prices rose at their fastest pace in five months in September as the cost of gasoline surged, but a small gain in core prices suggested the price pressure was unlikely to be sustained.
While the jump in gasoline prices was seen as a blip, details of the report on Tuesday pointed to enough inflation pressure to keep the bar high for any further loosening of monetary policy by the Federal Reserve.

Brent dips below $111, Spain downgrade weighs
SINGAPORE, Oct 19 (Reuters) - Brent crude dropped below $111 as concerns over demand growth weighed after Moody's Investors
Service cut Spain's sovereign ratings by two notches, adding to uncertainty over the euro zone's debt crisis and economic
growth. "Participants lack clear confidence in the market and that will result in prices trading in a very narrow range till the outcome of the European Union meeting is known," said Ken Hasegawa, a commodities derivatives manager with Newedge Brokerage in Tokyo. "The U.S. benchmark will inch closer to $90 this week, and that is a very important point technically."

Iron ore pricing revolution (V2.0): Andy Home
--Andy Home is a Reuters columnist. The opinions expressed are his own--
LONDON, Oct 18 (Reuters) - The current slide in the spot iron ore price is set to trigger another step-change in how the steel industry prices its key metallic input.
The widening gap between the spot price, now at 11-month lows, and the price charged by miners for Q4 deliveries has laid bare the problems with the quarterly price mechanism that replaced the annual benchmark system over the course of 2009 and 2010.

India iron ore exports in Aug fall 43.4 pct - trade body
Oct 18 (Reuters) - Iron ore exports in August from India, the world's third biggest exporter, fell 43.4 percent on year to 2.65 million tonnes, data from a trade body showed, as monsoon dented shipments and there were no exports from a key state even after lifting of a ban.
Exports in the first five months of the fiscal year to August fell 24.38 percent to 28.02 million tonnes, the Federation of Indian Mineral Industries (FIMI) said in a statement.

China Sept steel output lowest since Feb - stats bureau
BEIJING, Oct 18 (Reuters) - Chinese crude steel production in September fell to its lowest point in seven months, shrinking 3.5 percent from August to 56.7 million tonnes, figures from the country's statistics bureau showed on Tuesday.
On a daily basis, the decline was less dramatic, with production at 1.89 million tonnes compared with 1.895 million tonnes in the previous month, according to Reuters calculations.

Copper up on report of euro zone rescue fund
SHANGHAI, Oct 19 (Reuters) - Copper edged up after a report that Europe will strengthen the region's rescue fund boosted investor confidence, while strikes at two Freeport-McMoran Copper & Gold mines also supported prices.
Three-month copper on the London Metal Exchange edged up 0.01 percent to $7,450 a tonne by 0119 GMT, after dropping 0.6 percent in the previous session.

China copper output falls 7.5 pct in Sept, nickel at record
HONG KONG, Oct 18 (Reuters) - China's refined copper output fell 7.5 percent in September from August after three straight months of record output as some smelters briefly shut for regular maintenance, but should pick up again this month.
Production of nickel rose 0.6 percent on the month to hit a record for the fifth straight month.

European, Chinese copper demand firm -Aurubis
HAMBURG, Oct 18 (Reuters) - Chinese and European copper demand remains firm which should help support global prices, Aurubis , Europe's biggest copper producer, said on Tuesday.
"There is little to indicate a sharp drop in demand just now," Aurubis said in a report. "In view of the continuing inadequate level of copper production, the copper price should therefore be fundamentally well buttressed against any decrease."

Gold steady, awaits cues on Europe plan
SINGAPORE, Oct 19 (Reuters) - Gold prices held steady, shrugging off the downgrade of Spain's sovereign credit rating, as investors wait for clarity on Europe's plans to tackle the debt crisis at this weekend's European Union summit.
"Gold has nowhere to go unless there is clarity on what Europe wants to do," said Ronald Leung, a physical dealer at Lee Cheong Gold Dealers in Hong Kong.

METALS-Copper up on report of euro zone rescue fund
SHANGHAI, Oct 19 (Reuters) - Copper edged up after a report that Europe will strengthen the region's rescue fund boosted investor confidence, while strikes at two Freeport-McMoran Copper & Gold  mines also supported prices.
Gains may, however, be capped by concern that the euro-zone debt crisis may drag on after Moody's Investors Service cut Spain's sovereign ratings.

PRECIOUS-Gold steady after Moody's downgrades Spain
SINGAPORE, Oct 19 (Reuters) - Gold prices held steady, after Moody's cut Spain's credit ratings, adding to uncertainties over whether European leaders would come up with a solution to the bloc's debt crisis at a meeting this weekend.
Spot gold  was little changed at $1,657.89 an ounce by 0031 GMT, after falling 0.9 percent in the previous session.

FOREX-Euro inches down after Moody's cuts Spain
TOKYO, Oct 19 (Reuters) - The euro inched lower after Moody's cut Spain's government debt rating by two notches, giving up some gains made on a report that France and Germany have reached a deal to bolster the euro zone's bailout fund.  
It was last down 0.1 percent at $1.3737 , coming off an overnight high of $1.3818 hit after the Guardian said leaders of euro zone's two largest economies agreed to boost the European Financial Stabilisation Facility to two trillion euros.

Indonesia mine strike seen hurting Freeport profit
Oct 18 (Reuters) - Freeport-McMoRan Copper & Gold's  threat to close its Grasberg mine in Indonesia would hurt the company's bottom line and could further tighten global copper supplies and drive up the metal's price.
"Any shutdown will have a serious impact on the prices and market psychology," Terry Ortslan, a mining analyst with TSO & Associates in Montreal, said on Tuesday.

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