20110816 0946 Global Market Related News.

Asia Stocks Climb Amid Mergers, Commodity Prices (Source: Bloomberg)
Asian stocks advanced for a second day amid increasing takeovers and rising commodity prices. Korean shares increased after resuming trade from a holiday yesterday, when the rest of the region recorded its biggest one- day gain since March. Sony Corp. (6758), a Japanese maker of smartphones, climbed 1.5 percent after Google Inc., the biggest maker of smartphone software, agreed to buy Motorola Mobility Holdings Inc. in its largest acquisition. Mitsubishi Corp., Japan’s largest commodities trader, increased 1.7 percent in Tokyo after crude oil and copper prices advanced yesterday in New York. Samsung Electronics Co. surged 3 percent in Seoul. Westpac Banking Corp. (WBC) shares slumped 3.7 percent in Sydney after reporting third- quarter earnings fell.
The MSCI Asia Pacific Index rose 0.7 percent to 125.25 as of 9:41 a.m. in Tokyo. About seven stocks advanced for each that declined, and all 10 industry groups tracked by the index climbed. The gauge completed its third straight weekly loss last week after Standard & Poor’s cut its rating on U.S. credit and concern grew that Europe’s debt crisis may spread. Ten-day historical volatility on the MSCI index climbed last week to the highest level since March.

GLOBAL MARKETS-Cheaper prices, Japan recovery lift world stocks
LONDON, Aug 15 (Reuters) - World stocks climbed further out of their August hole on Monday, lifted by signs of earlier-than-expected recovery in Japan and a growing belief that shares may now be cheap.
"The markets have been technically very oversold and on that basis alone, they are due for a period of remission from the selling," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

Cheap prices, Japan recovery lift world stocks    
LONDON, Aug 15 (Reuters) - World stocks climbed further out of their August hole, lifted by signs of earlier-than-expected recovery in Japan and a growing belief that shares may now be cheap.
"The markets have been technically very oversold and on that basis alone, they are due for a period of remission from the selling," said Mike Lenhoff, chief strategist at wealth manager Brewin Dolphin.

Fed Says Banks Eased Lending Standards in Second Quarter Amid Competition (Source: Bloomberg)
Banks loosened credit standards on most types of loans in the second quarter, with commercial and industrial lenders citing “aggressive competition” as a reason for the easier terms, according to a Federal Reserve survey. “Banks continued to ease lending standards and most terms on all major types of loans other than loans secured by real estate over the past three months,” the central bank said today in its quarterly survey of senior loan officers. Fed Chairman Ben S. Bernanke and his policy-making colleagues pledged on Aug. 9 to hold the main interest rate at a record low near zero at least until mid-2013, saying economic growth is “considerably slower” than anticipated.

Global Investor Demand for U.S. Securities Weakened in June, Treasury Says (Source: Bloomberg)
Global demand for U.S. stocks, bonds and other financial assets weakened in June from a month earlier as the White House and Congress wrangled over raising the debt limit, government figures show. Net buying of long-term equities, notes and bonds totaled $3.7 billion during the month compared with net buying of $24.2 billion in May, according to statistics issued by the U.S. Treasury Department today in Washington. Including short-term securities such as stock swaps, foreigners sold a net $29.5 billion compared with net selling of $48.8 billion the previous month. The Treasury’s reporting on long-term securities is a gauge of confidence in U.S. economic policy, and today’s report may reflect concern about the government’s ballooning debt. Earlier this month, the Standard & Poor’s rating company downgraded the Treasury’s debt rating after the budget stalemate between Congress and the White House.

New York Area Manufacturing Shrinks for Third Month as Inventories Decline (Source: Bloomberg)
Manufacturing in the New York region unexpectedly contracted in August for a third straight month as orders dropped and managers became less optimistic about the future, signaling the industry that has led the economic recovery is at risk of stumbling. The Federal Reserve Bank of New York’s so-called Empire State Index fell to minus 7.7 from minus 3.8 in July, a report showed today. The median forecast in a Bloomberg News survey called for an index of zero, the dividing line between expansion and contraction. The bank’s six-month outlook gauge dropped to the third-weakest level on record. Weaker demand from consumers and businesses, coupled with slowing growth in emerging economies and Europe, means factories are ratcheting down production. The Fed, in its policy meeting last week, said growth this year had been “considerably slower” than forecast and announced it would keep its benchmark lending rate near zero at least though mid-2013 to spur growth.

Google Threatens Samsung-Led Handset Makers (Source: Bloomberg)
HTC Corp. (2498), Samsung Electronics Co. and a host of smaller handset makers are at risk of losing their cachet after Google Inc. (GOOG) buys Motorola Mobility Holdings Inc. Google said yesterday it will pay $12.5 billion for Motorola Mobility, purchasing more than 17,000 patents it can use to defend against allegations of infringement as competition accelerates in the $206.6 billion mobile-phone market. The rival handset manufacturers, which have been building devices with Google’s Android software since 2008, may have a harder time cranking out bestselling devices because Motorola Mobility may get earlier access to the newest Android technology, said Michael Gartenberg, an analyst at research firm Gartner Inc. The acquisition gives Google an incentive to favor Motorola Mobility, and association with the Internet company will give Motorola handsets a leg up in competing for consumers.

U.S. Stocks Advance Amid Low Valuation Levels, Flurry of Corporate Deals (Source: Bloomberg)
U.S. stocks rose, erasing last week’s drop, as $21.5 billion in takeovers and valuations near the cheapest level in two years helped the Standard & Poor’s 500 Index extend its best three-day rally since 2009. Motorola Mobility Holdings Inc. soared 56 percent as Google Inc. (GOOG) agreed to buy the company for about $12.5 billion in cash. Bank of America Corp. (BAC) rallied 7.9 percent on plans to exit the international credit-card business by selling its $8.6 billion card business in Canada to TD Bank Group and leaving the U.K. and Irish markets. Exxon Mobil Corp. (XOM) advanced 3.2 percent, pacing gains in energy companies, as oil climbed. The S&P 500 added 2.2 percent to 1,204.49 at 4 p.m. in New York and was up 7.5 percent in three days. The gauge traded at 12.9 times reported earnings on Aug. 12, near the lowest valuation level since 2009. The Dow Jones Industrial Average climbed 213.88 points, or 1.9 percent, to 11,482.90.

China Raised Treasuries Holdings for Third Month (Source: Bloomberg)
China boosted its holdings of U.S. government debt by 0.5 percent to $1.17 trillion in June, the third straight monthly increase, while other foreign investors were sellers of Treasuries for the first time since 2009. The nation raised its note and bond holdings by $1.655 billion to a record $1.16 trillion and added $1.57 billion of bills to $4.55 billion, according to the Treasury Department data released yesterday. The bill purchases were the first since January by the largest foreign lender to the U.S. as the Federal Reserve completed its $600 billion in purchases in June. China’s trade surplus surged to $31.5 billion, the highest level in more than two years, as exports rose to a record, the customs bureau reported on Aug. 10. Outbound shipments climbed 20.4 percent from a year earlier in July, compared with the 17 percent median forecast in a Bloomberg News survey of 25 economists. Imports jumped 22.9 percent. The surplus exceeded a median forecast of $27.4 billion.

China Growth Slowing ‘Significantly’: Conference Board (Source: Bloomberg)
Growth in China, the world’s second- biggest economy, is slowing “significantly,” according to The Conference Board, a New York-based research organization. “The economy is significantly moderating right now and also over the next couple of months,” Bart van Ark, the organization’s chief economist, told Bloomberg Television from New York ahead of the release of the organization’s leading indicator for China. “We still expect it to be pretty much a soft landing.” The data is due at 10 a.m. Beijing time today. China’s economy is cooling after the government raised interest rates and banks’ reserve requirements and extended curbs on the real- estate market, adding to concerns about the outlook for the global economy. Christine Lagarde, the International Monetary Fund’s managing director, today urged developed countries to support economic growth even as they make fiscal cuts.

China Home Sales Skirt Policies With Fake Divorces (Source: Bloomberg)
Frank He said he faked a divorce from his wife of 10 years to skirt China’s ban on third mortgages and obtain a bank loan for a third property, a 12 million yuan ($1.9 million) suburban villa. “My wife and I love each other, but as long as we can get the mortgage from the bank for the deal, we’ll take it,” said He, a 40-year-old manager at a chemical company. The forged document, which cost the Shanghai couple 20,000 yuan, helped them get a loan amounting to 60 percent of the purchase price, he said. Chinese homebuyers and developers are finding loopholes as they come under pressure from government policies to curb gains in residential prices, such as limits on the number of properties owned. Builders are refraining from cutting prices, offering free parking lots and attics instead, as they face higher borrowing costs after Standard & Poor’s downgraded their outlook in June.

Smallest Yield Gap in 19 Years Adds to Yen Struggle for BOJ: Japan Credit (Source: Bloomberg)
The Bank of Japan, struggling to keep the strengthening yen from derailing efforts to repair the world’s third-largest economy, is facing a new challenge -- the shrinking yield gap between two-year sovereigns and Treasuries. The extra yield two-year Treasuries offer over similar- maturity Japanese notes fell to the least since 1992. BOJ Governor Masaaki Shirakawa said on Aug. 4 there’s a “relatively high” correlation between that rate gap and the dollar-yen rate, as falling yield premiums in the U.S. damp dollar-buying demand from Japanese investors. The central bank may need to lengthen the maturity of bonds in its asset purchase program to stop the yen’s appreciation, according to Mizuho Securities Co. The BOJ, whose policy rate is already near zero, bolstered stimulus by 10 trillion yen ($130 billion) on Aug. 4, the same day Japan intervened in the currency market for the first time since March.

Japan’s Stocks Rise for Second Day as S&P Rally Boosts Investor Confidence (Source: Bloomberg)
Japanese stocks rose for a second day after the biggest three-day rally on the Standard & Poor’s 500 Index since 2009 boosted investor confidence. Sony Corp., an exporter of consumer electronics that earns half of its revenue in the U.S. and Europe, climbed 1.5 percent. Mitsubishi Corp. (8058), Japan’s largest commodities trader, gained 1.8 percent, after crude prices jumped. Nippon Yusen K.K., the country’s biggest shipping line by sales, advanced 1.7 percent after cargo rates increased. The Nikkei 225 Stock Average rose 0.6 percent to 9,137.43 as of 9:39 a.m. in Tokyo. The broader Topix index gained 0.7 percent to 782.86. The gauge has lost about 7 percent this month amid concern Europe’s debt crisis will spill into the banking system and damp demand in one of Japan’s biggest export markets.

Hong Kong Recession Risk Is Global Warning, Most Accurate Forecaster Says (Source: Bloomberg)
Hong Kong’s export-led economy, a barometer of global growth, is sinking into a recession that is likely to last for at least a year, said Daiwa Capital Markets economist Kevin Lai. Of nine economists in a Bloomberg News survey, Lai came closest to predicting a 0.5 percent contraction in the city’s economy in the second quarter. Only two of the analysts expected gross domestic product to decline from the previous three months. The government released the data Aug. 12. “Global demand is really weak and we expect the U.S. and Europe will see a sharp slowdown, or near-zero growth, next year,” Lai said in a phone interview in the city today. “A recession is a reality for Hong Kong.”

IMF’s Lagarde Urges ‘Short-Term’ Support for Growth Even Amid Fiscal Cuts (Source: Bloomberg)
Christine Lagarde, the International Monetary Fund’s new managing director, urged policy makers to include measures to support economic growth in the short term as they implement fiscal tightening plans under market pressure. “For the advanced economies, there is an unmistakable need to restore fiscal sustainability through credible consolidation plans,” Lagarde wrote in the Financial Times. “At the same time we know that slamming on the brakes too quickly will hurt the recovery and worsen job prospects.” Central bankers are racing to shield their economies from fiscal tightening and lopsided currency swings that threaten a new global recession. The European debt crisis has shown no sign of abating with investors’ concerns rattling France last week and the European Central Bank starting to buy Spanish and Italian debt.

European Stocks Advance for Third Day; Insurers, Energy Companies Increase (Source: Bloomberg)
European stocks rose, extending the biggest three-day rally for the benchmark Stoxx Europe 600 Index in 15 months, after last week sliding to the cheapest valuation in more than two years. Nokia Oyj jumped 9.1 percent after Google Inc. agreed to buy U.S. rival Motorola Mobility Holdings Inc. for about $12.5 billion. Swatch Group AG (UHR) paced gains among Swiss exporters as the franc headed for its largest three-day decline on record against the euro. Michael Page International Plc (MPI) tumbled 8.1 percent after the recruiter’s earnings missed analyst estimates. The Stoxx 600 advanced 0.2 percent to 237.85 at the 4:30 p.m. close in London after swinging between gains and losses at least 20 times today. The gauge has rallied 6.4 percent over the past three days after a global equity rout left stocks trading at the cheapest since March 2009 amid concern the economic recovery is stalling.

Euro Is Near Three-Week High Before Sarkozy, Merkel Meet About Debt Crisis (Source: Bloomberg)
The euro traded 0.3 percent from a three-week high on prospects a meeting between French President Nicolas Sarkozy and German Chancellor Angela Merkel will result in action to contain the region’s debt crisis. The dollar was 0.7 percent from its lowest in two weeks against the yen ahead of a report that economists said will show U.S. housing starts dropped last month. The Australian dollar fell versus New Zealand’s before the larger nation’s central bank releases minutes from an Aug. 2 meeting when policy makers left interest rates unchanged. “The euro is supported by the expectation that something will be decided at tonight’s meeting between France and Germany’s leaders on the pan-European bond issue,” said Imre Speizer, an Auckland-based strategist at Westpac Banking Corp., Australia’s second-largest lender. “The euro is trading higher mainly because of better risk sentiment.”

FOREX-Swiss franc hit by talk of SNB target level
LONDON, Aug 15 (Reuters) - The Swiss franc slumped to two-week lows against the euro and the dollar on Monday on speculation the Swiss National Bank would act further to counter strength in the currency by setting an exchange rate target.
Speculation of a target level against the euro gained ground after Swiss newspaper SonntagsZeitung reported on Sunday a lower limit for the euro/Swiss pair was poised to be set.