Tuesday, June 12, 2012

20120612 1805 FCPO EOD Daily Chart Study.

FCPO closed : 2965, changed : -24 points, volume : lower.
Bollinger band reading : correction range bound downside biased.
MACD Histogram : rising, buyer seller battling.
Support :  2970, 2950, 2920, 2900 level.
Resistance : 3020, 3050, 3070, 3100 level.
Comment :
FCPO closed recorded loss with decreasing volume transacted. Soy oil price currently trading firmer after overnight closed recorded gain while crude oil price currently trading lower.
Traders sentiment turned negative as renew concern over European debts contagion risk resisting soy oil, crude oil and FCPO price from moving upwards however yesterday MPOB lower crude palm oil inventory data keep loss limited.
Daily chart study remained suggesting a correction range bound downside biased market development with MACD indicator having little crossed up and MACD histogram forming positive divergence.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistant or strength with quick cut loss and profit target.

20120612 1737 FKLI EOD Daily Chart Study.

FKLI closed : 1574.5 changed : -5.5 point, volume : lower.
Bollinger band reading : side way range bound little upside biased.
MACD Histogram : turned downward, buyer seller battling.
Support : 1570, 1565, 1550, 1530 level.
Resistance : 1580, 1590, 1600, 1610 level.
Comment :
FKLI closed lower surrendered most of yesterday gain with getting lesser volume traded doing 2 points discount compare to cash market that closed little lower. Overnight U.S. markets closed lower by more than 1% and today Asia markets also ended in red while European markets currently trading higher.
Skepticism over Spain's banks bailot will help tame European debt crisis after higher Spanish bond yeilds resulted global markets to surrender some of yesterday gains. China on the other hand continue to reports positive data on better than forecast bank loans.
Daily chart reading remained calling a side way range bound little upside biased market development.
When to buy : buy at support or weakness with quick cut loss and profit target.
When to sell : sell at resistance or strength with quick cut loss and profit target.

20120612 1710 Regional Markets EOD Daily Chart Study.

 DJIA chart reading : correction range bound downside biased.
 Hang Seng chart reading : correction range bound downside biased.
KLCI chart reading :  little upside biased.

20120612 1608 Global Market & Commodities Related News.

Asian markets reversed the previous day's hefty gains with nervous investors far from convinced that a bailout for debt-stricken Spanish banks will halt Europe's spreading debt crisis. U.S. stocks fell on monday as Europe's aid package for Spanish banks did little to alleviate investor concerns about the euro zone's finances and a slowdown in the wider global economy.

The euro struggled to make much headway as worries over Spain's hasty bank bailout were compounded by jitters about the upcoming elections that may determine Greece's future in the euro zone.

FOREX-Euro steadies; Spanish and Greek worries unabated
TOKYO, June 12 (Reuters) - The euro struggled to make much headway on Tuesday as worries over Spain's hasty bank bailout were compounded by jitters about the upcoming elections that may determine Greece's future in the euro zone.
Initial euphoria over Spain's weekend deal quickly waned as investors feared the bailout-related payments could come ahead of regular government debt in the queue for repayment, adding to its high borrowing costs.

U.S. corn slid for a second straight day while wheat edged lower with pressure from broad-based weakness in financial markets as a bailout of Spain's debt-stricken banks failed to convince investors.

Argentine farm strike slows flow of grain to port
Grain trucks entering Argentina's main port of Rosario slowed to a trickle on Monday because of a five-day-old sales strike by farmers, but exports remained uninterrupted due to ample dockside reserves.

Global sugar market in huge surplus, looks to Asia
The global sugar market may see supply vastly exceeding requirement in the next crop year, leaving producers at the mercy of seasonal demand from Asia and weather-related output disruptions, industry experts said on Monday.

Brazil sugar cane gets break before rain returns
Skies cleared over Brazil's center-southern cane belt on Monday and at the two main ports for sugar exports, forecasters and industry representatives said, enabling harvesting work and loading to progress again after unseasonably wet weather.

Macquarie cuts 2012/13 Brazil CS cane output estimate
BANGKOK, June 12 (Reuters) - Macquarie Bank lowered its estimate for 2012/13 cane output in Brazil's centre-south to 506 million tonnes, down 2.7 percent from around 520 million tonnes forecast in February.

Philippines sees marginal increase in 2012/13 sugar output
The Philippines, one of Asia's main exporters of sugar, could see a small increase in production of the sweetener in the crop year to August 2013 after incessant rains hit plantations, Regina Bautista-Martin, chief of the country's Sugar Regulatory Administration (SRA), said on Tuesday.

Brent crude slipped below $98 extending losses on concerns the euro zone debt crisis will worsen and hurt the global economy, threatening growth in oil demand.

Saudi says OPEC may need higher output target
Leading oil producer Saudi Arabia put itself on a collision course with fellow OPEC member countries on Monday by calling for an increase in the cartel's output target despite a recent fall in crude prices.

Insurance to stop India shippers handling Iran oil in July -sources
Indian state-owned refiners will halt planned oil imports of 173,000 barrels per day from Iran when European sanctions take effect in July, unless the government permits them to use insurance and freight arranged by Tehran, industry sources said.

Abu Dhabi seeks investors for aluminum hub
Abu Dhabi wants to create a downstream aluminum hub in its new industrial complex as part of the United Arab Emirates' efforts to diversify beyond oil and gas, a senior official in charge of the strategy told Reuters in a New York interview on Monday.

Indonesia's May refined tin exports up 12 pct y/y- govt
JAKARTA, June 11 (Reuters) - Refined tin shipments from Indonesia, the world's top exporter, rose 12 percent in May to 7,866.24 tonnes from 7,013.28 tonnes a year earlier, a trade ministry official said on Monday.  
Indonesian refined tin exports for May were 5 percent higher compared to April's figure of 7,489.26 tonnes.  

China's Baosteel cuts July prices by 200 yuan/tonne
China's Baosteel Group will cut the prices of its main products by 200 yuan ($31.40) per tonne in July, the first cut of the year as it responds to slackening demand in the world's biggest steel consuming country.

China's Baosteel cuts prices for first time in 2012
BEIJING, June 12 (Reuters) - China's Baosteel will cut prices of its main products by around 4 percent in July, its first reduction this year as it responds to slackening demand in the world's biggest steel consumer,  sending its Shanghai-listed shares down nearly 3 percent.
The Baosteel group's pricing moves are generally seen as an industry bellwether and while demand generally weakens in hot summer months as construction projects slow, analysts said the latest adjustment reflects the company's lack of confidence in the Chinese economy.

Goldman cuts 3-month price targets for base metals
June 11 (Reuters) - U.S. investment bank Goldman Sachs on Monday lowered its 3-month price targets for base metals, citing weaker than expected consumption and a stronger U.S. dollar against the euro.
Recent trips across North America confirmed a near complete lack of conviction in the very short-term outlook for metals prices, with market participants generally paralysed by the banking and sovereign crisis in Europe, Goldman said.

Freeport Indonesia gets green light for ore exports
JAKARTA, June 11 (Reuters) - Indonesia has granted permission to Freeport McMoRan Copper & Gold Inc  to export unprocessed ore, after the government imposed new rules on mining exports, the company said on Monday.
Indonesia in May asked all miners to submit plans to build smelters to add value to the country's mining sector ahead of a 2014 ban on raw mineral exports, as well as imposing a 20 percent export duty on ore exports.

Iran finds more copper, reserves at 21 mln T -Fars
VIENNA, June 11 (Reuters) - Iran has discovered an additional 7 million tonnes of copper reserves, boosting its total by 50 percent, the semi-official Fars news agency said on Monday.
"Numerous mines have been discovered in the exploration drilling, and Iran's copper reserves have increased from 14 million tonnes to 21 million tonnes," Ali Mohammadi, manager of Iran's Sarcheshmeh Copper Complex, was quoted by Fars as saying.

China May copper data does not reflect consumption -trade
Copper players in China are turning attention to export figures after imports by the world's top copper consumer rose 12 percent in May, a figure that traders say did not reflect consumption so that June arrivals may fall if domestic prices stay weak.

London copper slipped giving up part of its previous gains, as relief over the European Union's 100-billion euro bailout of Spain's banks turned to worry over how the funds would affect its borrowing costs.

Gold inched down after optimism about Spain's bank bailout quickly gave way to renewed worries about the euro zone debt crisis ahead of a string of key events later this month.

METALS-Copper falls on Spain, Greece worries
SHANGHAI, June 12 (Reuters) - London copper slipped on Tuesday, giving up part of its previous gains, as relief over the European Union's 100-billion euro bailout of Spain's banks turned to worry over how the funds would affect its borrowing costs.
Uncertainty over Greek elections on Sunday is also keeping investors cautious as European officials discuss contingency plans should Greece exit the euro zone.

PRECIOUS-Gold inches down as Spain bailout boost fades
SINGAPORE, June 12 (Reuters) - Gold inched down on Tuesday after optimism about Spain's bank bailout quickly gave way to renewed worries about the euro zone debt crisis ahead of a string of key events later this month.
The rally in risk assets on Monday fizzled, as investors sounded the alarm on the bailout's impact on public debt, while worries about Greece's future in the euro zone heightened in the run-up to elections there.

20120612 1134 Global Market & Commodities Related News.

GLOBAL MARKETS-Markets reverse gains on Spanish debt concerns
TOKYO, June 12 (Reuters) - Asian markets reversed the previous day's hefty gains on Tuesday as a European bailout for Spain's debt-stricken banks failed to convince investors that the spread of the debt crisis in Europe will be halted.
"The 'risk-on' trade is over as investors look to the Greek elections and Italy," said Jeff Sica, president of SICA Wealth Management, which manages more than $1 billion in client assets, real estate and private equity holdings.

COMMODITIES-Markets reverse gains on worry over Spain bailout
NEW YORK, June 11 (Reuters) - Many commodities finished lower, after being higher early, with oil tumbling and corn posting its sharpest drop in two weeks as investors became doubtful that Spain and its ailing banking sector will benefit much from an European bailout.
"At the moment there are fears still of a possible contagion in the euro zone ahead of the Greek elections on the weekend", said Eugen Weinberg, a commodities analyst at Frankfurt's Commerzbank.

On oil, Goldman sees reasons to be bullish
--John Kemp is a Reuters market analyst. The views expressed are his own--
LONDON, June 11 (Reuters) - The overdone selloff in commodity prices, especially crude oil, has created the potential for a strong rally once fundamentals reassert themselves and hedge funds re-enter the market, according to researchers at Goldman Sachs.
"We believe that the selloff in commodity prices is likely overdone and the price risks are shifting more to the upside," Goldman wrote in a note published on Monday ("Commodity Watch: Stepping back into the markets" June 11, 2012).

OIL-Brent crude slips more than $1 on euro zone debt fears
SINGAPORE, June 12 (Reuters) - Brent crude futures extended losses in early Asian trade on growing concerns the euro zone debt crisis will worsen and threaten oil demand.
Brent  slipped as low as $96.62 a barrel, inching close to the low for the year of $95.63, struck on June 4. The benchmark was trading $1.16 lower at $96.84 by 0007 GMT.

POLL-US crude stocks forecast down on lower imports
June 11 (Reuters) - U.S. crude oil supplies were forecast to have fallen  last week for the second straight time, due to lower imports, a preliminary Reuters poll showed on Monday.
Commercial crude stocks were projected down 1.5 million barrels for the week ended June 8, with four of five analysts expecting a draw and the other a build.

Saudi says OPEC may need higher output target
VIENNA, June 11 (Reuters) - Leading oil producer Saudi Arabia put itself on a collision course with fellow OPEC member countries on Monday by calling for an increase in the cartel's output target despite a recent fall in crude prices.
"Our analysis suggests that we will need a higher ceiling than currently exists," Saudi Oil Minister Ali al-Naimi said in an interview with the Gulf Oil Review ahead of a meeting of the Organization of the Petroleum Exporting Countries on Thursday.

NATURAL GAS-US natgas futures end down, front hits 6-wk low
NEW YORK, June 11 (Reuters) - U.S. natural gas futures ended lower for the third time in four sessions, with the front-month contract driven to a six-week low on moderating weather forecasts, record high inventories and still-strong production.
"It's hot in Texas, but (overall) the weather's not helping much," a Houston-based trader said, noting forecasts for the Northeast and Midwest turned a bit milder this week which should slow air conditioning demand.

EURO COAL-ARA trades at two-year low of $84.90/T
LONDON, June 11 (Reuters) - European delivered coal prices traded at a fresh two-year low of $84.90 a tonne, down over $1.00 from Friday as oversupply and a slowdown in spot buying weighed on the market.
"There's so little buying overall, nothing wanted in China now, they have hit their maximum import capacity and can't physically take more till inventories start to be used," one trader said.

20120612 1016 Malaysia Corporate Related News.

Ananda Krishnan hires CIMB to advise on pay-TV IPO
Malaysian tycoon Ananda Krishnan has mandated CIMB Investment Bank to advise him on the initial public offering of Astro All Asia Networks Plc in a deal expected to raise around USD1bn in the fourth quarter, a source with direct knowledge of the deal said. The IPO plan by Ananda, Malaysia's second richest man, comes on the heels of a USD2.8bn sale of his power assets and proposal to hive off a stake in his satellite operator MEASAT Global in March. The IPO could well become the third largest in Malaysia this year after palm oil giant Felda Global Ventures Holdings' USD3.4bn deal and IHH Healthcare's USD2bn planned flotation. (StarBiz)

Gas Malaysia ends first day at RM2.42
Gas Malaysia Bhd ended its first trading day on Monday at RM2.42, which was a premium of 22 sen above its offer price of RM2.20. The counter was very actively traded, with 87.13m shares done. However, Gas Malaysia was off its day's best when it reached an intra-day high of RM2.52. Under Gas Malaysia's initial public offering, 25.68m shares were offered to the public, which was oversubscribed by 21.64 times. The institutional offering of 303.31m shares was offered to institutions at RM2.20 per share. (StarBiz)

Yinson wins RM2.33bn oil contract in Vietnam
Oil and gas services provider Yinson Holdings has bagged a USD737.3m (RM2.33bn) contract in Vietnam, its second big job overseas in less than two years. Yinson said yesterday the company and its Vietnam partner, PetroVietnam Technical Services Corp (PTSC), had won the contract from Lam Son Oil Management, Exploration and Exploitation Joint Stock Company. Lam Son is a joint venture between Vietnam‟s state oil firm PetroVietnam and Malaysia‟s Petroliam Nasional Bhd. Yinson and PTSC will provide floating production, storage and off-loading (FPSO) facility to Lam Son. The contract entails a 10-year charter of the FPSO facilities. (BT)

MAS, JAL code-share arrangement starts 1 July
Malaysia Airlines (MAS) and Japan Airlines (JAL) will start a code-share cooperation from 1 July 2012 covering up to 347 weekly flights of 51 sectors, including the Malaysia-Japan trunk routes. In a statement yesterday, MAS said the cooperation would also include selected domestic and international flights operated by both airlines. Sales for this code-share will commence today. MAS group executive chief officer Ahmad Jauhari Yahya said the agreement would give the airline an excellent opportunity to expand its reach without having to mount its own flights to cities in Japan and beyond in North Asia and the US. (Malaysian Reserve)

Handal wins RM120 crane job
Handal Resources has been awarded a RM120m contract from Petronas Carigali SB to provide integrated crane services. The duration of the contract is for five years commencing from June 2012, said Handal in an exchange filing. The contract is expected to contribute positively to the earnings of Handal for the financial year ending 31 Dec 2012, said the company. (Malaysian Reserve)

Hubline to raise RM75m from proposed rights
Shipping company Hubline expects to raise RM75.63m from its proposed renounceable rights issue, to be completed in the second-half of the year. The company has proposed a two-call rights issue of 1.08bn rights shares on the basis of one rights share for every two existing Hubline shares held, together with 432.2m free detachable new warrants, on the basis of two additional warrants for every five rights shares subscribed at an entitlement date to be determined later. The indicative price is 20 sen per rights share. (Malaysian Reserve)

RRI land deal to be sealed soon
The Employees Provident Fund Board (EPF) is set to complete the acquisition of the Rubber Research Institute of Malaysia (RRI) land in Selangor from the federal government by month's end for over RM2bn, a property executive close to the deal said. "The land, about 2,200 acres [890ha] of which are available for development, is to be bought as agricultural land for over RM2bn," said an executive who asked not to be identified. Under the proposed plan, the federal government will be entitled to a further share of the profit should certain tracts of the land be tendered out are sold for higher than expected prices, the executive said. "Announcements in relation to RRI should come by end of this month", he said. (Financial Daily)

UEML-Khazanah JV for RM5bn project
UEM Land Holdings (UEML) is taking a 51% stake in a proposed high-end residential resort development in Desaru, Johor, with an estimated gross development value (GDV) of RM5.4bn. The project is in collaboration with Khazanah Nasional's subsidiary, Desaru Development Corp SB (DDC), which will own 49% of the JV. UEM Land said in a statement yesterday the land for the proposed 20-year development - 25 parcels totaling 678.7 acres - will be acquired from DDC for a total of RM485.3m. Khazanah, through DDC, is spearheading the development of Desaru as an international tourist destination. The completion of the 27km Senai-Desaru Expressway in June 2011, is expected to be a catalyst for the area's development. (Financial Daily)

Daibochi Plastic eyes regional market
Daibochi Plastic and Packaging Industry Bhd is positive on tapping into the growing prospects of the regional flexible packaging market. “We are optimistic on the tremendous potential in the regional food and beverage (F&B) market as multinational manufacturers increasingly source their flexible packaging requirements from Asia,” managing director Thomas Lim said in a statement. (Source: The Star)

Elements model for Pudu project?
UDA Holdings may redevelop Pudu Jail into an integrated transport hub, a la Elements of Hong Kong, to attract domestic and foreign direct investments. The plan could generate more than RM8 billion in gross development value, said UDA chairman Datuk Nur Jazlan Mohamed. (Source: Business Times)

MAHB eyes foreign projects
Malaysia Airports Holdings Bhd (MAHB) is looking to bid for new airport projects in Indonesia, China, and the Philippines, its managing director said. "We are in initial discussion with them ... (to bid for) maybe one airport in each country," its MD Tan Sri Bashir Ahmad said on the sidelines of an International Air Transport Association (IATA) airline conference. (Source: Business Times)

20120612 1016 Local & Global Economy Related News.

Malaysia: Industrial output growth quickens on manufacturing
Malaysia‟s industrial production growth quickened in April as rising demand spurred an increase in output of manufacturing and electricity. Production at factories, utilities and mines gained 3.2% y-o-y after rising a revised 1.5% in March, the statistics department said. The output gains may be short-lived as slowing growth in China and a worsening European debt crisis damp the outlook for goods made in Asia, prompting policy makers to spur domestic demand to boost their economies. Malaysia‟s exports unexpectedly fell for a second month in April, and purchasing managers‟ indexes in export-dependent Asian economies including China and South Korea signal manufacturing is still slowing. (Bloomberg)

Singapore: Exports rose in May on sales of electronics, drugs
Singapore‟s export growth quickened in May as shipments of electronics and pharmaceuticals increased. Non-oil domestic exports climbed 3.2% y-o-y, after a revised 1.7% gain in April, the trade promotion agency said. Growth in overseas shipments may be tempered in coming months as purchasing managers‟ indexes in export-dependent Asian economies including China and South Korea signal manufacturing is still slowing, forcing officials to evaluate whether to add stimulus to spur growth. Policy makers across the globe are girding for a deeper impact from Europe‟s debt woes, with China and Australia lowering interest rates last week. (Bloomberg)

China: Trade surprise signals domestic stimulus focus
China‟s exports rose in May at more than double the pace analysts estimated while industrial output and retail sales trailed forecasts, signaling that last week‟s interest-rate cut was aimed at countering a domestic slowdown. Overseas shipments climbed 15.3% y-o-y, the customs bureau said. Industrial output gained by less than 10% for a second month and retail sales increased the least in almost six years excluding holiday-month distortions, statistics bureau reports showed. China‟s trade resilience signals Europe‟s crisis has yet to spark a collapse in world commerce on the scale of 2008, even as Spain‟s banking woes threaten to deepen the trauma. (Bloomberg)

China: Record May lending seen helping Wen to stabilize growth
China‟s new loans exceeded estimates in May and more money went into longer-term lending, signaling support for investment projects that may help to prevent a deeper economic slowdown. Local-currency lending was RMB793.2bn (USD125bn), the People‟s Bank of China said. Loans extended for a year or more accounted for 34% of the total, up from 28% in April. Premier Wen Jiabao‟s efforts to engineer resurgence in the world‟s second-biggest economy may be aided by the jump in lending and signs of resilience in exports. At the same time, industrial-output growth was close to the lowest since 2009 in May, indicating additional measures will still be needed after last week‟s interest-rate cut. (Bloomberg)

US: Fed says US wealth fell 38.8% in 2007-2010 on home values
The average American family lost 38.8% of its wealth from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows. Median net worth declined to USD77,300 in 2010, an 18-year low, from USD126,400 in 2007, the central bank said. Mean net worth fell 14.7% to a nine-year low of USD498,800 from USD584,600, the central bank said. The declines in household wealth in the course of the longest and deepest recession since the Great Depression have held back the consumer spending that makes up about 70% of the economy (Bloomberg)

US stocks drop as optimism about Spain bailout fades
US stocks fell, following the biggest weekly rally in the Standard & Poor‟s 500 Index this year, as optimism over Spain‟s bailout plan gave way to skepticism it will succeed in halting the debt crisis. The S&P 500 fell 1.3% to 1,308.93 at 4 pm New York time, after futures on the index surged as much as 1.5% following Spain‟s request. The Dow Jones Industrial Average lost 142.97 pts, or 1.1%, to 12,411.23. Spain requested as much as EUR100bn (USD125bn) of European bailout funds to shore up its banking system. The crisis in Spain, coinciding with the prospect of Greece leaving the euro after elections, roiled markets around the world, sending the euro to an almost two-year low and pushing Spanish borrowing costs to near euro-era records. (Bloomberg)

20120612 1012 General News Reading.

Who's Afraid of French Socialists (Source: CME)
By CME Group - Mon Jun 11 17:00:00 CDT 2012 CT
Shifting Investor Attitudes toward Gold, Silver, and Regulation
On Sunday 6 May the French people elected Francois Hollande, a Socialist, as President of France. On that same day Greek voters marginalized the previous two largest political parties, giving more votes to two parties that previously were marginalized and sending a signal that they too were disgruntled with recent trends in governance, both in Greece and in Europe more broadly. There were those who saw this as a terrible blow against the austerity programs being imposed across the European Union, and thus as a major obstacle to economic reconstruction on the continent. Indeed it is. It is not, necessarily, a turning against real economic reform. It most likely reflects the strong, multi-generational concept toward a social contract between the governments of Europe and their populations, a contract that in fact has its roots in the centuries of feudal governance and social structure. However, it also may be nothing more than a very rational reaction to premature austerity in the midst of recession, a rejection in Europe of the very policies that turned a deep recession into the Great Depression in Europe and the United States in the early 1930s, which led inevitably to World War Two.

Hot Rolled Futures & Commodity Derivatives: Hedging vs. Speculating (Source: CME)
By Steel Market Update - Mon Jun 11 16:43:00 CDT 2012 CT
Ingrained Volatility Led to Development of Financial Derivative Instruments
Recently the trading of commodity derivatives has made news, particularly in regards to a how Chesapeake Energy used derivatives to both hedge and speculate in energy markets. As is often the case when discussion of derivatives comes up, many misconceptions arise. It must be noted that the use of commodities derivatives for both hedging and speculative purposes has been around for hundreds of years and is an ingrained tool of doing business in many commodities markets. The rise of derivatives markets originally gained footing in the US in the 1800s when farmers were looking for ways to protect themselves from the volatile swings in prices that weather related events had on their crops. This ingrained volatility in agricultural markets led to the development of financial derivative instruments that allowed users of the underlying market (farmers, consumers) to offset their risk onto speculators who took on the price risk. This symbiotic relationship between those who have natural exposure to price risk due to their underlying business and those who are looking to gain exposure to volatile price movement’s lead to the development of commodity futures exchanges such as the Chicago Board of trade, NY Board of trade etc…

20120612 1011 Global Market Related News.

Asian Stocks Decline on Doubt Over Spain’s Bailout Plan (Source: Bloomberg)
Asian stocks fell as surging Spanish bond yields stoked concern that a bailout for the nation’s banks won’t tame the European debt crisis. Canon Inc. (7751), a camera maker that gets about 31 percent of sales from Europe, slipped 2 percent in Tokyo. Mitsubishi Chemical Holdings Corp. fell 2.9 percent after saying it will halt production at its ethylene and benzene plant as part of structural reforms. BHP Billiton Ltd., the world’s biggest mining company and Australia’s largest oil producer, lost 1.1 percent in Sydney as crude and copper futures declined. The MSCI Asia Pacific Index (MXAP) fell 0.8 percent to 112.61 as of 9:40 a.m. in Tokyo, with more that six shares sliding for each that rose. The gauge dropped 12 percent from its peak this year on Feb. 29 through yesterday amid concern economic growth is slowing in China and the U.S. and as Europe’s debt crisis intensified.
“There appears to be plenty of cynicism,” said George Boubouras, Melbourne-based head of investment strategy at UBS AG’s Australian wealth-management unit. The Swiss bank has about $1.5 trillion in assets under management. “Spain will remain the focus for a few days as markets review all possible outcomes and implications for other troubled euro-zone members. More firewalls will be required for other euro-zone countries.”

U.S. Stocks Retreat, Treasuries Gain on Spain Skepticism (Source: Bloomberg)
Asian stocks fell, after yesterday rising the most in four months, and oil dropped to its lowest since October on skepticism Spain’s 100 billion euro ($125 billion) bailout will halt the debt crisis. The yen rose. The MSCI Asia Pacific Index fell 0.8 percent as of 9:28 a.m. in Tokyo, where the Nikkei 225 Stock Average (NKY) lost 1.7 percent. Futures on the Standard and Poor’s 500 Index were little changed. Oil futures slumped as much as 2 percent, while copper slid 1.1 percent. The yen climbed against all of its major counterparts. Spanish and Italian bond yields surged yesterday as investors turned their attention to debt auctions in Italy this week and elections on June 17 that may determine whether Greece stays in the euro. In China, new loans exceeded economist estimates in May, signaling support for investment projects that will help counter a slowdown in Asia’s biggest economy.
“It used to be after one of these bailouts you’d get a month’s worth of good reaction, now $100 billion buys you 24 hours,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “The bond market is now demanding more integration and the focus is coming back to growth. Nobody is looking to go back into risk-on positions until they see how Greece plays out.”

U.S. Stocks Drop as Optimism About Spain Bailout Fades (Source: Bloomberg)
U.S. stocks fell, following the biggest weekly rally in the Standard & Poor’s 500 Index this year, as optimism over Spain’s bailout plan gave way to skepticism it will succeed in halting the debt crisis. Equities extended losses as Apple Inc. (AAPL), the world’s most valuable company, slumped 1.6 percent after updating its MacBook line of laptops and announcing new iPhone features. Bank of America Corp. (BAC) and Morgan Stanley slid at least 2.4 percent. AK Steel Holding Corp. lost 14 percent as Goldman Sachs Group Inc. said there is “no relief in sight” for a drop in the metal.
The S&P 500 fell 1.3 percent to 1,308.93 at 4 p.m. New York time, after futures on the index surged as much as 1.5 percent following Spain’s request. It climbed 3.7 percent last week. The Dow Jones Industrial Average lost 142.97 points, or 1.1 percent, to 12,411.23. The Russell 2000 Index of small companies slid 2.4 percent. The Nasdaq Composite Index lost 1.7 percent. Trading volume for exchange-listed stocks in the U.S. was about 6.1 billion shares, 9.5 percent below the three-month average.

Japan Stocks Fall as Optimism Fades on Spain Bank Bailout (Source: Bloomberg)
June 12 (Bloomberg) -- Japan stocks fell, paring gains from yesterday’s rally, as surging Spanish bond yields stoked concern a bailout for the nation’s banks won’t ease Europe’s debt crisis. Nippon Sheet Glass Co. (5202), which gets 39 percent of its sales in Europe, lost 6 percent. Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, dropped 2 percent. Nissei Build Kogyo Co., a builder of houses and parking lots, surged 9.8 percent on a share buyback plan. The Nikkei 225 Stock Average (NKY) dropped 1.9 percent to 8,465.41 as of 9:16 a.m. in Tokyo, retreating from its 2 percent advance yesterday, the biggest gain since April 18. The broader Topix Index lost 1.7 percent to 718.03 with 32 of 33 of its industry groups declining. Stocks also fell ahead of a Greek election on June 17 which may determine whether the nation exits the euro.
“It used to be after one of these bailouts you’d get a month worth of good reaction, now $100 billion buys you 24 hours,” said Andrew Pease, Sydney-based chief investment strategist at Russell Investment Group, which manages about $150 billion. “The bond market is now demanding more integration and the focus is coming back to growth. Nobody is looking to go back into risk-on positions until they see how Greece plays out.”

European Stocks Erase Gain in Final Hour; Banks Retreat (Source: Bloomberg)
European stocks erased gains in the final hour of trading, led by a selloff in Spanish and Italian lenders, as optimism faded that Spain’s 100 billion euro ($125 billion) bank bailout will contain the sovereign debt crisis. Banco Santander SA (SAN) and Banco Bilbao Vizcaya Argentaria SA (BBVA) erased gains after Fitch Ratings Services downgraded Spain’s two biggest lenders. UniCredit SpA and Intesa Sanpaolo SpA (MB) both tumbled more than 5 percent as bond yields rose. Volkswagen AG (VOW) paced advancing shares. The Stoxx 600 was little changed at 241.92 at the close of trading after rallying as much as 1.9 percent earlier. The gauge climbed 2.9 percent last week after China cut interest rates and the European Central Bank said it’s ready to add more stimulus if the economy worsens.
“We are not prepared to add risk at this stage,” said Bill O’Neill, chief investment officer for Europe, the Middle East and Africa at Merrill Lynch Wealth Management, on Bloomberg Television. “Getting the deal right in Spain is the key litmus test of success with turning the euro crisis around.”

Wien Unbowed by U.S. Shares Slump Joins Birinyi Seeing Rally (Source: Bloomberg)
The $1 trillion erased from U.S. equities in May has left bulls from Byron Wien to Laszlo Birinyi and Jonathan Golub unbowed in their predictions that the rally in shares will continue. Blackstone Group LP’s Wien, who foresaw the bear market’s end in 2009, said the Standard & Poor’s 500 Index’s biggest monthly retreat since September lowered investment sentiment so much that it’s safe to buy. Birinyi, president of Birinyi Associates Inc., and Golub, the chief U.S. market strategist at UBS AG, say the largest first-quarter rally in 14 years left shares due for a decline and that gains will resume. For a third straight year, losses in May have heightened concern that the slowest U.S. recovery from any recession in seven decades is fizzling out. While the 6.3 percent decrease in the S&P 500 was enough for Birinyi to say he’s “tempering” his enthusiasm, Wien said declining forecasts for economic growth have aligned investor expectations with reality and more disappointments are unlikely.
“The best time to buy stocks is when people hate them and they sure hate them now,” said Wien, the New York-based vice chairman of the advisory services unit at Blackstone whose forecast that the S&P 500 would exceed 1,400 in 2012 came true on March 15. Blackstone has $190 billion under management. “Who would’ve thought that 2 percent growth would be impressive? But that’s what we have. Everybody’s bearish.”

Yen Gains Versus Peers Before Italy Debt Sale, Greek Vote (Source: Bloomberg)
The yen climbed against all of its major counterparts amid concern the bailout of Spain’s banks will move Italy to the forefront of the debt crisis, spurring demand for the Japanese currency as a haven. The 17-nation euro remained lower versus the dollar following a three-day slide before Italy auctions debt this week and Greeks vote in a general election on June 17. The euro climbed early yesterday after Spain asked European governments for as much as 100 billion euros ($125 billion) to save its banking system, making it the fourth member of the currency bloc to seek a rescue. “There is no conviction and there is no belief that things are going to get better” in the euro region, said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc., Japan’s biggest brokerage. “This is the reason we’re seeing the U.S. dollar and yen so well bid.”
The yen climbed 0.3 percent to 98.86 per euro as of 10 a.m. in Tokyo from the close in New York yesterday. It gained 0.3 percent to 79.20 against the dollar. The euro traded at $1.2483 after falling 0.3 percent to $1.2482 yesterday. Italy’s 10-year debt dropped yesterday as the yields climbed 26 basis points, the most since Dec. 8, to 6.03 percent. The nation is scheduled to auction securities on June 14 maturing in 2015, 2019 and 2020.

Aussie, Kiwi Dollars Fall Versus Yen on Euro Debt-Crisis Concern (Source: Bloomberg)
The Australian and New Zealand dollars fell against the yen for a second day as share gains evaporated following a bailout of Spain’s banks amid concern Italy will be come the next focus of Europe’s debt crisis. Australia’s bonds rose as Asian stocks extended a global rout before Italy sells debt this week and Greeks vote in a general election on June 17. National Australia Bank Ltd. (NAB) releases its business confidence survey for May today. Losses in New Zealand’s currency were limited after a private index showed home prices climbed last month. “Markets in New Zealand and Australia are priced for very ugly economic conditions in Europe,” said Gavin Stacey, the Sydney-based chief interest-rate strategist at Barclays Capital. “The tendency is for the Australian dollar to remain on the weak side.”
The so-called Aussie bought 78.27 yen as of 11:15 a.m. in Sydney from the close in New York yesterday, when it weakened 0.6 percent. The Aussie rose 0.2 percent to 98.78 U.S. cents from yesterday, when it declined 0.5 percent. New Zealand’s dollar slid 0.2 percent to 60.98 yen. It bought 76.96 U.S. cents from 76.91 yesterday.

Euro Drops as Spain’s Bailout Fuels Debt-Crisis Concern (Source: Bloomberg)
The euro fell against most of its major peers as Spain’s bailout spurred concern that the sovereign-debt crisis is deepening as it spreads among indebted nations before Greek elections June 17. The 17-nation currency earlier rose, touching a two-week high, after Spain asked for as much as 100 billion euros ($126 billion) to save its banking system, making it the fourth member of the currency bloc to seek a rescue. The bailout helped move Italy to the front lines of the crisis, as bets increased Europe’s third largest economy may be the next one to succumb. Norway’s krone strengthened as consumer prices rose more than economists forecast last month. “Given that we’ve decisively rejected any sustained price action above $1.26 and have a lot of unanswered questions around the Spanish bank package and the Greek elections this weekend, the near-term prognosis for the euro is not good,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. (WBC) in New York.
The euro fell 0.3 percent to $1.2482 at 5 p.m. New York time. It earlier climbed as much as 1.2 percent to $1.2671, the highest since May 23 and the biggest intraday advance since Nov. 30. The euro fell 0.3 to 99.16 yen after rising as much as 1.5 percent. The dollar declined 0.1 percent to 79.44 yen.

FOREX-Euro gains on relief at Spain aid deal
LONDON, June 11 (Reuters) - The euro rose  after Spain secured aid for its banks, allaying some of the concerns about the country's debt problems, but the currency's gains were seen limited as investors were cautious ahead of elections in Greece at the weekend.
"It is positive that politicians have reacted so quickly and ahead of the Greek elections, and this will hopefully contain the risks within the Spanish banking sector," said Niels Christensen, currency strategist at Nordea in Copenhagen.

Fed Says U.S. Wealth Fell 38.8% in 2007-2010 on Housing (Source: Bloomberg)
The median net worth of U.S. families plunged 38.8 percent from 2007 to 2010, with the biggest losses concentrated among households with the most assets tied to their homes, a Federal Reserve study shows. Median household net worth declined to $77,300 in 2010, an 18-year low, from $126,400 in 2007, the central bank said in its Survey of Consumer Finances. Mean net worth fell 14.7 percent to a nine-year low of $498,800 from $584,600, the central bank said today in Washington. “The impact has been a massive destruction of wealth all across the board,” said Lance Roberts, who oversees $500 million as chief executive officer of Streettalk Advisors LLC in Houston. “What you see is an economy that’s really very, very stressed for the bottom 60 to 70 percent of the population that’s struggling just to make ends meet.”
The declines in household wealth in the course of the longest and deepest recession since the Great Depression have held back the consumer spending that makes up about 70 percent of the economy. Fed policy makers led by Chairman Ben S. Bernanke meet next week to consider whether the central bank needs to add to its record stimulus after employment grew at the slowest pace in a year in May. The Fed has already taken unprecedented steps to boost the economy as it battled the 18-month recession that ended in June 2009, slashing its key interest rate almost to zero and purchasing $2.3 trillion in debt to lower long-term borrowing costs. Even so, the jobless rate has stayed above 8 percent since February 2009, compared with the central bank’s long-range goal of 4.9 percent to 6 percent.

Lockhart Says Lower Yields Bolster Case for No New Action (Source: Bloomberg)
Federal Reserve Bank of Atlanta President Dennis Lockhart said falling Treasury yields take pressure off the central bank for further action as policy makers prepare for a meeting next week. Lockhart, in a speech in Chicago, said recent U.S. economic data indicate the recovery may be losing steam, and that policy makers will need to take more steps to stimulate the economy if it becomes clear growth is slowing. “I don’t think any of the options should be taken off the table under the current circumstances,” Lockhart told reporters after the speech. “But I am not convinced at this moment that the circumstances quite yet call for additional action.” The Federal Open Market Committee meets June 19-20 to decide on policy with May’s unemployment rising to 8.2 percent and last month’s jobs creation the least in a year. Fed Vice Chairman Janet Yellen said last week that “stalled” improvement in the labor market and weak financial conditions could call for more accommodation.
Lockhart, who votes on the FOMC this year, said he would go into next week’s sessions with an “open mind” to review the Fed’s “very thorough” staff analysis and other participants’ views, though he was not ready to back additional action today.

Home Refinancing Boosts Florida, Nevada: Economy (Source: Bloomberg)
Harold Fuller said he’s planning a cruise with his wife to Bermuda, their first vacation in two years, after cutting his mortgage payments by $400 a month after refinancing their $212,000 home in Apopka, Florida. “The key is to have cash flow to do some additional things,” said Fuller, 65, who’s also planning more weekend trips around the state. Fuller took advantage of the government’s Home Affordable Refinance Program, which allows the refinancing of homes worth less than their mortgage. The combination of easier lending standards and record-low mortgage rates is beginning to shore up real estate markets in states where home values plunged. It has breathed new life into some regional economies as Americans spend the savings at malls and auto dealers, spurring a pickup in sales-tax receipts that is also helping replenish state coffers.
“HARP and refinancing more broadly is providing a meaningful boost to homeowners’ cash flow, particularly in the stressed housing states like Florida,” said Mark Zandi, chief economist at Moody’s Analytics Inc. in West Chester, Pennsylvania, who testified last month on the program before the Senate Banking Committee. “This is going to be a big plus for stressed homeowners in very stressed markets with negative equity.”

China’s Loans Exceed Estimates in Sign Slowdown May Be Reversed (Source: Bloomberg)
China’s new lending in May exceeded analysts’ estimates and money-supply growth accelerated, aiding Premier Wen Jiabao’s efforts to reverse a slowdown in the world’s second-biggest economy. Local-currency loans were 793.2 billion yuan ($125 billion), the People’s Bank of China said on its website today. That compared with the 700 billion yuan median forecast in a Bloomberg News survey of 29 economists and 681.8 billion yuan in April. M2 money supply grew 13.2 percent last month from a year earlier, compared with an estimate of 12.9 percent. Government efforts to bolster growth span cuts in interest rates and bank reserve requirements and delays in tightening lenders’ capital requirements. Citigroup Inc. said today that the central bank has signaled “aggressive” monetary easing that may include two more interest-rate reductions this year.
“China’s economy is still on a downward trend,” Citigroup economist Ding Shuang, who formerly worked for the PBOC, told Bloomberg Television in Hong Kong today ahead of the release. “We do not see a clear turning point yet, and policy support is very much needed in order to stabilize growth.”

Jump in China Loans Helps Wen’s Efforts to End Slowdown (Source: Bloomberg)
China’s new loans exceeded estimates in May and more money went into longer-term lending, signaling support for investment projects that may help to prevent a deeper economic slowdown. Local-currency lending was 793.2 billion yuan ($125 billion), the People’s Bank of China said on its website yesterday. That was the most on record for the month of May and more than analysts’ 700 billion yuan median forecast. Loans extended for a year or more accounted for 34 percent of the total, up from 28 percent in April. Premier Wen Jiabao’s efforts to engineer a resurgence in the world’s second-biggest economy may be aided by the jump in lending and signs of resilience in exports. At the same time, industrial-output growth was close to the lowest since 2009 in May, indicating additional measures will still be needed after last week’s interest-rate cut.
“Over the past several months, investors have been concerned that a large share of loans was for short-term financing, and hence would not help boost growth as much as large investment projects,” said Zhang Zhiwei, the Hong Kong- based chief China economist at Nomura, who previously worked for the International Monetary Fund. “The rising share of medium and long-term loans in May helps address this concern.”

Malaysia Beating Hong Kong With Felda’s IPO: Southeast Asia (Source: Bloomberg)
Southeast Asia is weathering a slump in initial share sales better than markets including Hong Kong, as optimism about the region’s economic outlook draws investors to offerings in Malaysia, Thailand and the Philippines. Felda Global (FGVH) Ventures Holdings Bhd., Malaysia’s biggest plantation owner, will tomorrow set the price of an initial public offering that may raise as much as $3.2 billion. The IPO, the biggest this year after Facebook Inc.’s (FB) sale, may bring proceeds in the region to $5 billion this year, compared with $1.4 billion in Hong Kong, data compiled by Bloomberg show. With IPO markets worldwide roiled by Facebook’s plunging value and Europe’s sovereign debt crisis, Felda Global and IHH Healthcare Bhd. are pushing ahead with deals. Companies that went public in Southeast Asia since the start of last year have outperformed IPO stocks globally, helping bolster confidence in the region’s equity capital markets as China’s and India’s economies cool.
“Southeast Asia is becoming more visible and interesting to investors,” said Vineet Mishra, JPMorgan Chase & Co.’s head of equity capital markets for the region. “The strength of the local economies is driving investor interest.”

Japan Picks Stimulus Advocates for BOJ as Lawmakers Urge Action (Source: Bloomberg)
Japan’s government nominated two economists to the central bank’s board who previously signaled support for stimulus, underscoring forecasts for policy makers to expand asset purchases in coming months. Prime Minister Yoshihiko Noda’s administration yesterday tapped Takahide Kiuchi of Nomura Securities Co. and Takehiro Sato of Morgan Stanley MUFG Securities Co., pending confirmation by the Diet. The picks broke with a practice of choosing candidates from similar backgrounds to the board members they replace; the retired members had business backgrounds. The nominees would join a central bank that’s boosted its asset fund by 20 trillion yen ($252 billion) this year yet been faulted by lawmakers for failing to do enough to end deflation and stoke growth. Sato said in an interview last month the BOJ’s inflation forecast for next year was “wishful thinking,” and Kiuchi said the bank may need to cut growth and price forecasts.
“Both nominees have indicated that the BOJ has to take more actions,” said Chotaro Morita, chief strategist for fixed income at Barclays Capital Japan Ltd. “Whether they join or not, the BOJ may have to do more soon as uncertainties remain high in the global economy especially in Europe.”

S&P Says India May Be First in BRIC to Lose Investment Grade (Source: Bloomberg)
India may become the first BRIC nation to lose its investment-grade credit rating, Standard & Poor’s said, citing slowing growth and political roadblocks to economic policy making. The rupee weakened and stocks fell. “Setbacks or reversals in India’s path toward a more liberal economy could hurt its long-term growth prospects and, therefore, its credit quality,” Joydeep Mukherji, an analyst at Standard & Poor’s in New York, said in a statement today. India is rated BBB- by S&P, one level above junk and the lowest in the BRIC group, which also includes Brazil, Russia and China. Indian gross domestic product rose 5.3 percent last quarter from a year earlier, the least in nine years, stoking concern the nation’s economic prospects have deteriorated as policy gridlock deters investment and Europe’s debt crisis crimps exports. S&P lowered India’s credit outlook to negative from stable in April, contrasting with ratings upgrades in Asian nations from Indonesia to the Philippines in recent months.
“It’s another warning signal reflecting weakening growth fundamentals, and if it happens it may have a negative impact on inflows,” said Sonal Varma, an economist at Nomura Holdings Inc. in Mumbai. “The government urgently needs to take steps to reverse this negative spiral.”

Italy Moves Into Debt-Crisis Crosshairs After Spain (Source: Bloomberg)
The 100 billion-euro ($126 billion) rescue for Spain’s banks moved Italy to the front line of Europe’s debt crisis, as the country’s bonds and equities slumped on concern it may be the next to succumb. Italy’s 10-year bonds reversed early gains today in the first trading after the Spanish bailout. Their yield rose by the most in a day since Dec. 8, adding 27 basis points to 6.04 percent. Shares of UniCredit SpA (UCG), the country’s largest bank, had their steepest decline in five months. “The scrutiny of Italy is high and certainly will not dissipate after the deal with Spain,” Nicola Marinelli, who oversees $153 million at Glendevon King Asset Management in London, said in an interview. “This bailout does not mean that Italy will be under attack, but it means that investors will pay attention to every bit of information before deciding to buy or to sell Italian bonds.”
Italy has 2 trillion euros of debt, more as a share of its economy than any developed nation other than Greece and Japan. The Treasury has to sell more than 35 billion euros of bonds and bills per month -- more than the annual output of each of the three smallest euro members, Cyprus, Estonia and Malta.

Spain’s Bailout Defeat Weakens Rajoy’s Deficit Goal (Source: Bloomberg)
Prime Minister Mariano Rajoy’s surrender to European officials on taking a bailout for Spain’s banks may weaken his political authority and his credibility in financial markets. Rajoy’s June 9 request for as much as 100 billion euros ($125 billion) after stating two weeks ago that Spain wouldn’t need a rescue marks a swift reversal for the premier who won the biggest majority in 30 years in November. It may fuel skepticism he can meet his deficit-cutting promises. “The emperor’s clothes are tattered,” Simon Maughan, financial strategist at Olivetree Securities Ltd., said in a telephone interview yesterday. “Unless he uses this money to attack the regions and control the failed cajas, what threads he has left will be stripped off him.”
Rajoy is trying to persuade regional leaders and voters to accept austerity, and convince bond investors the cuts will deliver the deficit goals he has pledged. Should he fail, he may have to return for a larger rescue for the Spanish sovereign, potentially draining the euro area’s financial ammunition.

Spain’s Bailout Gives Rajoy Best Chance to Fix Banks (Source: Bloomberg)
Spain’s request for as much as 100 billion euros ($125 billion) of European bailout funds may provide the country with enough money to shore up its banking system after three failed attempts in as many years. “Now that they have this money, it will hopefully finally be possible to recognize all the hidden losses and clean up the system,” Luis Garicano, a professor at the London School of Economics, said in a phone interview. The amount sought is about 2.7 times the funds deemed necessary for Spanish banks by the International Monetary Fund in a report released June 8 and five times the total requested by the Bankia group, the country’s third-biggest lender, to cleanse its balance sheet. Spain sought aid for its banks on June 9, becoming the fourth euro member to seek a bailout since the debt crisis began almost three years ago.
The rescue request followed weeks of escalating concern that bad loans at Spain’s banks might overwhelm public finances. The Spanish crisis, coinciding with the prospect of Greece exiting the euro after elections on June 17, roiled financial markets around the world, sending the euro to an almost two-year low on June 1 and raising Spanish borrowing costs to near euro- era records.

Euro Strength Seen by Stiglitz Removing Greek Debt (Source: Bloomberg)
Rather than a euro failure, an orderly Greek exit from the currency has Nobel laureate Joseph Stiglitz and Nomura Holdings Inc. chief strategist Jens Nordvig predicting a stronger and more stable monetary union. While Societe Generale SA suggests that the euro might break up because of the cost of Greece’s departure, the nation accounts for just 2.3 percent of the 17-nation trading bloc’s gross domestic product. It also has 356 billion euros ($449 billion), or 4.3 percent of the region’s total debt, according to data compiled by Bloomberg. The area’s trade deficit last year would have been a surplus without its weakest member, according to European Union data. “If you can weather the storm and haven’t put your bets too short term, probably the euro is going to go up,” Stiglitz, a professor at Columbia University and winner of the 2001 Nobel Prize in economics, said in a June 4 interview at Bloomberg’s New York headquarters. Stiglitz, 69, said losing Greece would strengthen the bloc.
“It’s likely there will survive some rump version,” centered on Germany, he said. If it includes countries such as France, the “euro would likely appreciate.” Foreign-exchange markets display little evidence of the euro being dismembered. The currency traded at $1.2603 at 9:01 a.m. in London, 53 percent above its record low of 82.30 U.S. cents in October 2000. Bond yields of Austria, Belgium, Finland, France, Germany and the Netherlands have fallen to record lows, as investor demand for their debt increases. Removing Greece from the euro would reduce the bloc’s debt-to-GDP ratio to 85.5 percent from 87.3 percent.

French Factory Output, Italian GDP Drop During Crisis (Source: Bloomberg)
French factory output dropped and Italy’s economy contracted as consumers, businesses and governments across Europe retrenched during the debt crisis. French manufacturing production fell 0.7 percent in April from March, Paris-based statistics office Insee said today, adding to concerns Europe’s second-largest economy may struggle to revive growth as the crisis deepens. Italy’s economy, the region’s third largest, shrank 0.8 percent in the first quarter as household spending and exports declined, Rome-based statistics institute Istat said in its final report on gross domestic product. The data underline the euro area’s faltering growth prospects more than two years into a sovereign debt crisis that over the weekend forced the region’s finance ministers to agree to provide as much as 100 billion euros ($126 billion) to prop up Spanish banks.
While the European Central Bank kept its benchmark rate at 1 percent on June 6, President Mario Draghi said policy makers discussed cutting the rate to a new record low af ter downside economic risks increased. “All the signs received so far point to a rapid deterioration in the economic outlook at the start of the second quarter,” said Tobias Blattner, an economist at Daiwa Capital Markets in Europe. “We expect the ECB to cut interest rates in July. Draghi has left the door wide open.”

20120612 1011 Global Commodities Related News.

Speculators Fail to Reap Rally in Crops After Wager Cut (Source: Bloomberg)
Speculators reduced wagers on a rally in agricultural prices to a five-month low just as returns from crops and livestock beat most other commodities on concern that parched fields from Iowa to Russia will curb supply. Hedge funds and other money managers cut net-long positions across 11 U.S. farm goods by 20 percent to 312,099 futures and options in the week ended June 5, the lowest since Dec. 27, Commodity Futures Trading Commission data show. Corn holdings tumbled to the lowest since June 2010 and traders switched to betting on a decline in wheat prices. Agricultural commodities accounted for nine of the 10 best performers in the Standard & Poor’s GSCI Spot Index of 24 raw materials last week. Speculators cut combined bullish bets across the S&P GSCI by 13 percent to the lowest this year on mounting concern that Europe’s widening debt crisis will derail global growth and curb demand for commodities.
Agricultural prices rallied as dry weather harmed the corn crop in Iowa and Illinois, the biggest U.S. growers, and Russia’s government declared a state of emergency in some areas because of drought. “People don’t look at fundamentals when the crisis overshadows everything,” said Stanley Crouch, who helps oversee $2 billion of assets as chief investment officer at New York- based Aegis Capital Corp. “The tug of war gets tough when the correlation between the economy and agricultural commodities is very high.”

Goldman Sees a 29% Return From Commodities Over 12 Months (Source: Bloomberg)
Goldman Sachs Group Inc. (GS) predicted a 29 percent return over the next year from the Standard & Poor’s GSCI Enhanced Commodity Index, led by energy and industrial- metals investments. European policy makers will be able to contain the euro-area debt crisis, while recovery in the U.S. and China is set to continue, Jeffrey Currie, head of commodities research in New York, said today in a report. Returns may be 41 percent in a year for energy investments, compared with 23 percent for industrial metals and 18 percent for precious metals, while agriculture is forecast to lose 14 percent, the report showed. “Although the macroeconomic backdrop still remains uncertain, particularly in Europe, we believe that the selloff in commodity prices is likely overdone and the price risks are shifting more to the upside,” Currie wrote.
Commodities as measured by the S&P GSCI Enhanced Commodity Index dropped 13 percent in May and are down 9.1 percent this year on mounting concern that Europe’s widening debt crisis will derail global growth and curb demand for commodities. Coffee, natural gas, cotton and crude oil paced declines. Goldman Sachs cut its three-month outlook on commodities to neutral from overweight on March 28, while sticking with an overweight recommendation for a one-year period. Commodities may return 13 percent in a year, the bank said in April.

Pro Farmer: After the Bell Wheat Recap (Source: CME)
Wheat futures settled narrowly mixed in Chicago and Minneapolis, while Kansas City wheat closed mostly around 3 cents lower. After-hours trading was very quiet. Wheat futures were firmer for much of the session as traders covered short positions ahead of USDA's June crop reports Tuesday morning. Traders expect USDA to cut its estimate of the winter wheat crop.

Wheat Market Recap Report (Source: CME)
July Wheat finished up 1/4 at 630 1/2, 11 3/4 off the high and 1 1/2 up from the low. December Wheat closed down 1 at 671 3/4. This was 1 3/4 up from the low and 11 off the high. Late weakness in corn and a turn sharply lower in the US stock market helped to pressure the wheat market to give back all of the early gains to close near unchanged on the day. The rally in the US dollar and weakness in other commodity markets and weakness in the stock market turned outside forces from bullish to bearish and this sparked selling pressure. The outlook for declining US and world ending stocks and an adjustment lower for winter wheat production for the USDA reports in the morning are forces which helped to support the market earlier today. Weekly export inspections came in at 21.5 million bushels which was right in the range of estimates. Inspections need to average 22 million bushels per week to reach the USDA projection for the new season. July Oats closed down 8 1/4 at 295. This was 3/4 up from the low and 15 1/4 off the high.

Pro Farmer: After the Bell Corn Recap (Source: CME)
Corn futures faced pressure for much of today's session and settled low-range with losses of 5 1/2 cents in the July contract, while deferred months were mostly around a dime lower. Most contracts extended losses slightly in after-hours trade. Corn futures were pressured by overnight rains that lingered into today and the market extended losses as the dollar firmed.

Corn Market Recap for 6/11/2012 (Source: CME)
July Corn finished down 6 at 592, 11 3/4 off the high and 3 1/4 up from the low. December Corn closed down 10 at 534. This was 3 1/2 up from the low and 9 3/4 off the high. July corn closed moderately lower on the day with December corn down 12 cents late in the session as fund traders were aggressive sellers. Central and southern sections of Illinois look to receive more rain than traders had anticipated with the rain system today but some of the northern parts of the state may be missed. The July contract tested Friday's highs last night and was still trading higher into the pit opening but a turn down in outside market forces helped to pressure. In addition, December corn has been under pressure as the weather outlook is not as threatening as Friday's outlook for next week and the market is still absorbing the outlook for 1/4 to 3/4 inches of rain over the short-term moving across the Midwest in the next day or two. Traders see the rain easing topsoil moisture concerns into the early pollination period. In addition, more rains are suggested for the middle of neat week. Positioning ahead of the supply/demand report for release tomorrow morning has helped to keep the trade choppy. Dryness concerns persist for the northern China plains as well and this helped to provide some underlying support but even here, some of the longer-term models show rain chances for part of the dry areas. Weekly export inspections came in at 17.029 million bushels which was about 10 million below trade expectations. Inspections need to average 37.5 million bushels per week to reach the USDA projection for the season. Traders look for a 3-4% decline in crops rated good to excellent for this afternoon's update. July Rice finished up 0.005 at 14.055, 0.115 off the high and 0.015 up from the low.

Corn near two-week high on dry US weather; soy firm
SINGAPORE, June 11 (Reuters) - Chicago corn rose for a fourth straight session to trade near last week's two-week high on forecasts of dry weather in the U.S. grain-belt threatening the early planted crop as it enters the pollination phase.
"There is some strength in grains and oilseeds today with the fact that we have forecasts of unfavourable weather in the U.S. which could hurt the early planted crops," said Ker Chung Yang, a commodities analyst at Phillip Futures in Singapore.

Thai govt to start releasing record rice stocks
BANGKOK, June 11 (Reuters) - Unmilled rice stocks held by the Thai government have jumped to a record 15 million tonnes, Commerce Ministry data showed on Monday, and prices could be forced down if it starts releasing some of the grain into local and overseas markets, as planned.
A senior Commerce Ministry official said the grain in stock was equivalent to around 9 million tonnes of milled rice. In recent years, Thailand has exported between 8 million and 10 million tonnes a year.

Rising temperatures to stress U.S. corn, soybeans
CHICAGO, June 8 (Reuters) - Developing corn and soybean crops in the U.S. Midwest will be stressed by hot and dry weather forecast for the region this weekend, meteorologists said on Friday.
Temperatures in key growing areas were expected to reach into the low 90s degrees Fahrenheit, said Kyle Tapley, meteorologist for MDA EarthSat Weather. Some light rains could bring 0.5 to 1.0 inch of rain Sunday through Tuesday.

Inclement weather may take a bite off US corn yield
CHICAGO, June 11 (Reuters) - Earlier this year, U.S. farmers reveled in what was the warmest spring ever, sowing corn seeds on a near-record number of acres in record time.
Their haste may now be their undoing, however, as the crop enters a critical growth phase weeks earlier than normal, pollinating during a period of unusually dry weather that threatens to eat into its yield potential.

Thai Mills Seen Boosting Refined Sugar Output as Premium Climbs (Source: Bloomberg)
Millers in Thailand, the world’s second-largest exporter, are increasing production of refined sugar after the premium over the raw variety soared, according to the country’s biggest shipper. The refined premium climbed 62 percent in 2012, reaching the highest in almost a year, data compiled by Bloomberg show. Demand from the Middle East and North Africa, combined with the end of the crop in the European Union and a delay to harvesting in top producer Brazil, are limiting supplies of the refined or white sweetener, according to Naim Beydoun, a broker at Rolle, Switzerland-based Swiss Sugar Brokers. “Prices of white sugar are attractive, drawing some mills to buy raws to re-melt them into the white variety,” Piromsak Sasunee, chief executive officer at the Thai Sugar Trading Corp., said in an interview yesterday in Bangkok.
The refined price has also been bolstered by demand from Muslim nations before the fasting month of Ramadan, Piromsak said. Ramadan begins next month. White sugar was $143.27 a metric ton more expensive than raws yesterday, the most since July 1, according to the data.

US coffee roasters stick with less costly robusta
NEW YORK, June 11 (Reuters) - U.S. coffee roasters quietly pulled off a financial feat last year that went unnoticed by most customers: Adding a higher proportion of cheaper, lower-grade robusta to their grounds as the price of top-notch arabica beans surged.
As new data reveals the surprising extent of that substitution, which appears to have been far more widespread than experts had thought possible, the industry faces a vexing question: As the price premium for arabica beans returns to historically normal levels, will roasters switch back?

Sugar, coffee, cocoa on ICE rise
LONDON, June 11 (Reuters) - Raw sugar, coffee and cocoa futures on ICE firmed, supported by stronger shares and the euro after a bailout for Spain's banking sector eased some concern about its ability to survive the euro zone debt crisis.
“New York July sugar  will retest its June 7 high of 20.43 cents per lb as rebound from the June 4 low of 19.46 cents will continue, according to Reuters market analyst Wang Tao.

Czarnikow keeps 2011/12 global sugar surplus f'cast at 7.7 mln T
BANGKOK, June 11 (Reuters) - Merchant Czarnikow expects a 2011/12 global sugar surplus at 7.7 million tonnes, unchanged from a prior estimate, Director Toby Cohen said on Monday.
"For 11/12 we will be keeping our forecast unchanged at 7.7 million tonnes," Cohen told Reuters on the sidelines of a Kingsman sugar conference.    

Thailand aims to be sugar bowl of Asia
BANGKOK, June 11 (Reuters) - Thailand, the world's second-biggest sugar exporter, has revised up its forecast for 2012/13 sugar production to 10.4 million tonnes and aims to produce more every year in order to supply rising consumption in Asia, a top industry official said.
That new forecast is up 1 to 2 percent from a May estimate of 10.2 million to 10.3 million tonnes. A crop of that size would beat the current 2011/12 season's record of 10.2 million tonnes.

Kingsman boosts 2012/13 sugar surplus forecast
SINGAPORE, June 8 (Reuters) - A global sugar surplus was revised higher to 9.3 million tonnes in the 2012/13 crop year from a previous projection of 5.7 million because high prices earlier in the year had spurred planting, consultancy Kingsman SA said on Friday.
Sugar production in 2012/13 (October/September) was put at 179.9 million tonnes.

Brazil rain-blighted cane harvest set for dry week
BRASILIA, June 8 (Reuters) - Brazil's cane harvest will see dry weather for most of next week, forecaster Somar said on Friday, helping the progress of harvesting which has been blighted by wet weather since the outset and speeding loading of sugar at the ports.
"It should be a drier week with rains only from the end of next week when a new cold front comes in," said meteorologist Tatiane Martins at Sao Paulo-based Somar.

Algeria's Cevital targets Ivory Coast expansion
ABIDJAN, June 8 (Reuters) - Algerian food processing company Cevital plans to make investments in Ivory Coast in rice growing and cocoa processing as a first big step in a plan to expand abroad, its owner and president said.  
Cevital, North Africa's biggest sugar refiner, is in negotiations with the West African nation's government to lease 300,000 hectares of farmland on which it initially intends to grow rice.

Oil Declines as al-Naimi Says OPEC May Need Higher Quota (Source: Bloomberg)
Oil dropped for a fourth day in New York after Saudi Arabian Oil Minister Ali al-Naimi said OPEC may need to increase its production quota. Futures slumped as much as 2 percent, after sliding 1.7 percent yesterday. The Organization of Petroleum Exporting Countries “maybe” needs a collective output ceiling higher than the current 30 million barrels a day, al-Naimi said in Vienna. U.S. gasoline stockpiles probably climbed to the highest level in five weeks even as crude supplies fell, according to a Bloomberg News survey before an Energy Department report. Oil for July delivery dropped as much as $1.63 to $81.07 a barrel in electronic trading on the New York Mercantile Exchange, and was at $81.41 at 9:30 a.m. Sydney time. The contract declined to $82.70 yesterday, the lowest close since Oct. 6. Prices are down 18 percent this year.
Brent oil for July settlement slipped $1.47, or 1.5 percent, to $98 a barrel on the London-based ICE Futures Europe exchange yesterday. The European benchmark contract’s premium to West Texas Intermediate closed at $15.30. Al-Naimi was responding to questions from reporters yesterday after the Gulf Oil Review quoted him as saying in a June 2 to June 3 interview that Saudi Arabia’s analysis suggests OPEC needs a higher production ceiling. The cartel, which supplies 40 percent of the world’s crude, meets in Vienna on June 14 to decide on output levels for the second half of the year. Its 12 members exceeded their quota by 1.9 million barrels a day in April, according to the International Energy Agency.

OPEC Set to Break 10-Year Habit of Supply Cuts During Routs (Source: Bloomberg)
For the first time in a decade, OPEC will maintain oil-output quotas while prices plunge as Europe’s debt crisis and China’s slowing growth curb fuel demand. The Organization of Petroleum Exporting Countries, which supplies 40 percent of the world’s crude, will keep its official daily production ceiling at 30 million barrels when its 12 members meet in Vienna on June 14, all 20 traders and analysts surveyed by Bloomberg News said. The group has agreed to cuts at every meeting in the past 10 years that coincided with a price drop of more than 10 percent in the preceding three months, data compiled by Bloomberg News show. OPEC will probably keep the limit unchanged, a Middle East member state delegate said today. Crude has fallen 22 percent in London since March 13 on mounting concern that Europe’s debt crisis will derail global growth and curb demand for energy. Saudi Arabia, the biggest OPEC member, is pumping the most in 33 years to bring prices below $100, a target set by its Oil Minister Ali al-Naimi.
The group exceeded its official output level by 6 percent in April, according to the International Energy Agency. “They’re not going to want to rock the boat,” said Mike Wittner, head of oil research for the Americas at Societe Generale SA in New York. “This is a very fragile time for the global economy so I don’t think they’re going to take any action. There’s no way that OPEC is going to announce any cut or even say that very strongly.”

OIL-Oil climbs above $100 on Spanish banks rescue, Iran
LONDON, June 11 (Reuters) - Brent crude oil rose above $100  after a weekend rescue package for Spanish banks calmed fears of an imminent euro zone collapse and a breakdown in nuclear talks between the UN and Iran renewed concerns over oil supplies.
"The aid for Spanish banks has revived risk appetite, for a while at least," said Carsten Fritsch, commodity analyst at Commerzbank in Frankfurt. "This positive market sentiment could last some days although there is still event risk -- the Greek elections, Iran -- that could prevent big gains from here."

Taiwan halts Iran crude imports in April
SINGAPORE, June 11 (Reuters) - Taiwan did not import Iranian crude in April, government data showed on Monday, halting purchases from the country earlier than expected ahead of Western sanctions on oil exports from the Islamic Republic.  
A company official at Taiwan's state-run refinery CPC Corp had said in March it would temporarily stop buying Iranian crude from July. Taiwan imported close to 3 million barrels of crude from Iran in March.

Saudi cuts oil output in May to 9.8 mln bpd
DUBAI, June 9 (Reuters) - Top oil exporter Saudi Arabia pumped 9.8 million barrels per day (bpd) of crude oil in May, cutting output by 300,000 bpd from the month before, an industry source said on Saturday.
The Saudi kingdom's oil production was 10.1 million bpd in April, its highest for more than 30 years, as it bid to meet growing demand and curb oil prices.

20120612 1010 Soy Oil & Palm Oil Related News.

Reuters Survey :
India May 2012 refined palm oil imports seen up 51.2% vs April 2012.
India May 2012 total palm oil imports seen up 24.5% vs April 2012.
India May 2012 soy oil imports seen down 48.4% vs April 2012.

Pro Farmer: After the Bell Soybean Recap (Source: CME)
Soybean futures settled mostly 1 to 2 cents lower, which was a mid- to low-range finish for most contracts. Losses were extended to the 3- to 10-cent range in after-hours trade, with new-crop feeling the most pressure. The outside market strength that supported soybean futures overnight faded during daytime trade, which led to choppy price action.

Soybean Complex Market Recap  (Source: CME)
July Soybeans finished down 1 1/2 at 1424 3/4, 20 3/4 off the high and 6 3/4 up from the low. November Soybeans closed down 1 1/4 at 1331 1/4. This was 10 3/4 up from the low and 18 off the high. July Soymeal closed down 3.3 at 426.5. This was 2.1 up from the low and 7.5 off the high. July Soybean Oil finished up 0.28 at 49.74, 0.64 off the high and 0.86 up from the low. July soybeans closed lower on the day after first moving to the highest level since May 17th. Overnight, the market pushed up as high as 19 1/4 higher on the day but a less threatening weather forecast plus a major shift from bullish to bearish for outside market forces helped to pressure. The forecast for next week is not as hot and a little wetter for the western Corn Belt which could keep some areas in the East needing rain. The system moving across Iowa overnight and across Illinois and Indiana and south but rain amounts seem less than expected in the northern parts of these states but a bit better than expected south. Areas that miss out on the moisture in the next two days (1/4 to 3/4 inches of about 75% coverage) could be under significant stress into next week. Temperatures are still expected to be above normal next week; just not as hot as the models indicated on Friday. The outside markets turned sour with weakness in metal and energy markets and a move sharply lower in the stock market and this helped to pressure the market into the mid-day and into the close as the stock market pushed to new lows for the day late in the grain session. Weekly export inspections came in at 14.2 million bushels which was right on expectations. Inspections need to average 10.9 million bushels per week to reach the USDA projection for the season. Traders look for a 2-3% decline in crops rated good to excellent for this afternoon's update.

Palm gains on Spain bank rescue; data in focus
SINGAPORE, June 11 (Reuters) - Malaysian palm oil futures rose after euro zone finance ministers agreed on a rescue package for Spain's struggling banks, temporarily easing concerns that the ongoing crisis could slow the global economy and hurt commodity demand.
"We see some defensive play ahead of the MPOB and USDA numbers. The relief in Europe is bringing some money back to riskier assets," said a trader with a foreign commodities brokerage in Malaysia.

Ukraine to raise '12 sunoil, sunseed output-analyst
KIEV, June 11 (Reuters) - Ukraine, the world's top sunflower oil producer and exporter, is likely to increase its sunoil output to 3.77 million tonnes in 2012 from 3.73 million in 2011, the ProAgro consultancy said on Monday.
It said Ukraine could also increase sunoil exports to 3.25 million tonnes in 2012/13 season from 3.22 million in 2011/12.

Rain leaving fields fallow in Canada's canola belt
WINNIPEG, Manitoba, June 8 (Reuters) - Some fields were flooded in the heart of Western Canada's canola belt as farmers headed into the final week of planting, raising the chances of acres going fallow.
Much of Saskatchewan, the top canola-growing province, has received as much as 1-1/2 times more precipitation than normal in the past month, according to the Canadian government's Drought Watch website.