20110909 1028 Global Market Related News.

Asian Stocks Swing Between Gain, Loss After Bernanke Talk, Obama Jobs Plan (Source: Bloomberg)
Asian stocks swung between gains and losses, with the regional benchmark index headed for its first weekly loss in three weeks, after U.S. President Barack Obama unveiled a jobs plan and the Federal Reserve chairman failed to outline extra measures to shore up economic growth. Toyota Motor Corp., the world’s biggest carmaker, declined 0.9 percent after Fed Chairman Ben S. Bernanke said policymakers will discuss the economy at a two-day meeting later this month. Canon Inc., which counts Europe as its biggest market for sales, slumped 0.4 percent. Samsung Electronics Co., which counts America as its second-biggest market, rose 0.9 percent in Seoul. Hynix Semiconductor Inc., which receives 27 percent of its revenue from the U.S., jumped 7.8 percent in Seoul on speculation the company will benefit from production cuts by smaller rivals.
The MSCI Asia Pacific Index rose 0.1 percent to 122.17 at 10:13 a.m. in Tokyo after earlier falling as much as 0.5 percent. The measure is on course to fall 1.6 percent this week, its first weekly decline since Aug. 19. Of the 10 industry groups on the measure, eight rose while two declined. About the same number of stocks also rose as fell on the 1,017 member index.

G-7 Says Japan Should Build Yen Support: Tamaki (Source: Bloomberg)
The Group of Seven has signaled it wants Japan to build a consensus before intervening in the foreign-exchange market, according to the nation’s former head of currency policy. Members have indicated intervention “should be done in agreement with the G-7 as opposed to unilaterally,” Rintaro Tamaki, who was a vice finance minister until July and directed two of Japan’s three rounds of yen sales in the past year, said in an interview in Paris yesterday. He was referring to language in an Aug. 8 statement by the G-7 that said officials will “closely consult” each other on currencies. Tamaki’s comments indicate Japan may encounter opposition to further yen sales after acting by itself twice in the past 12 months. Canadian Finance Minister Jim Flaherty said he was concerned about actions by Japan and Switzerland to stem gains in their currencies and that the topic will be discussed by G-7 policy makers, who meet today in Marseille, France.

GLOBAL MARKETS - Euro slips, stocks gain before ECB rate decision
LONDON, Sept 8 (Reuters) - The euro slipped against the dollar on Thursday and stock markets rose ahead of a European Central Bank meeting that is likely to flag a halt to its monetary tightening cycle.
"Markets are a bit cautious going into the ECB rate meeting," said UBS currency analyst Chris Walker.

Obama Offers $447B Spending, Tax-Cut Plan to Spur Jobs (Source: Bloomberg)
President Barack Obama called on Congress to pass a jobs plan that would inject $447 billion into the economy through infrastructure spending, subsidies to local governments to stem teacher layoffs and cutting in half the payroll taxes paid by workers and small-business owners. The package is heavily geared toward tax cuts, which account for more than half the dollar value of the stimulus, and administration officials said they believe that will have the greatest appeal to Republican members of Congress. “The question is whether, in the face of an ongoing national crisis, we can stop the political circus and actually do something to help the economy,” Obama told a joint session of Congress tonight.

Fed to Weigh Stimulus This Month: Bernanke (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke said policy makers will discuss the tools they could use to boost the recovery at their next meeting this month and stand ready to use them if necessary. Policy makers “are prepared to employ these tools as appropriate to promote a stronger economic recovery in the context of price stability,” Bernanke said today in Minneapolis, echoing points from his Aug. 26 remarks in Jackson Hole, Wyoming. The Fed chief, in a speech to economists, stopped short of signaling what he believes is the central bank’s best option to aid the economy. He said in previous remarks that the Fed’s measures to bolster growth include lengthening the duration of securities in its $1.65 trillion Treasury portfolio and buying more government bonds.

Fed Policy Makers Lay Groundwork for Further Action to Foster U.S. Rebound (Source: Bloomberg)
Federal Reserve policy makers are laying the groundwork for further action at this month’s meeting, warning that U.S. economic growth could stall, producing lasting stagnation in the job market. Federal Reserve Bank of Chicago President Charles Evans said yesterday the Fed should consider adding “very significant amounts of policy accommodation” and attacked the notion it should abide by a 2 percent ceiling on inflation. San Francisco Fed chief John Williams cited “a number of steps” that could be taken to support growth, without offering specifics.
The Fed may decide at its Sept. 20-21 meeting to replace some of the short-term Treasury securities in its $1.65 trillion portfolio with long-term debt in a bid to lower rates on everything from mortgages to car loans, according to economists at Wells Fargo & Co., Barclays Capital Inc. and Goldman Sachs Group Inc. Some analysts dub the maneuver “Operation Twist” because it would bend long-term yields lower. Fed Chairman Ben S. Bernanke is due to speak in Minnesota on the economic outlook at 1:30 p.m. New York time.

U.S. Trade Deficit Narrowed in July More Than Forecast, to $44.8 Billion (Source: Bloomberg)
The U.S. trade deficit narrowed more than forecast in July as exports climbed to a record, offering a bright spot for an economy at risk of a bigger slowdown. The gap shrank 13.1 percent, the most since February 2009, to $44.8 billion from a revised $51.6 billion shortfall in June, Commerce Department figures showed today in Washington. Exports rose as companies shipped more capital goods and automobiles overseas. Jobless claims unexpectedly rose last week and consumer sentiment waned, indicating the biggest part of the economy will struggle to gain momentum through the end of the year, separate reports showed. President Barack Obama tonight will propose more than $300 billion of tax cuts and spending measures aimed at creating jobs and shoring up the recovery.

U.S. Consumer Borrowing Rose by $12 Billion in July, Twice Amount Forecast (Source: Bloomberg)
Consumer borrowing in the U.S. rose by the most in more than three years in July, led by a gain in non-revolving credit that includes student loans. Credit increased $12 billion after a revised $11.3 billion rise in June, the Federal Reserve said today in Washington. Economists projected a $6 billion gain, according to the median forecast in a Bloomberg News survey. The rise in non-revolving loans was the most since November 2001. Revolving credit showed the biggest decrease in six months, indicating Americans may be cutting back on non-essential items as limited job and wage growth depresses consumer confidence. Employment and income gains may be required to help spark the household spending and the recovery.

U.S. Consumer Sentiment at Second-Lowest Level of Year in Bloomberg Index (Source: Bloomberg)
U.S. consumer confidence last week fell to the second-lowest level this year as Americans grew more pessimistic about the world’s largest economy. The Bloomberg Consumer Comfort Index was minus 49.3 in the period to Sept. 4 compared with minus 49.1 the previous week. This year’s low of minus 49.4 was reached in May, when gasoline prices were the highest in three years. While the drop was within the survey’s 3-point margin of error, the index has been stuck below minus 40 -- the level associated with recessions or their aftermath -- since the end of February. Job creation stagnated in August, the unemployment rate held above 9 percent and hourly wages retreated, giving households little to cheer about. Pessimism stretches across social, economic and political lines, posing a threat to consumer spending that accounts for 70 percent of the economy.

Treasuries Decline After Obama Offers $447 Billion Spending, Tax-Cut Plan (Source: Bloomberg)
Treasuries fell after President Barack Obama called on Congress to pass a jobs plan that would inject $447 billion into the U.S. economy. Ten-year Treasury yields rose three basis points to 2.01 percent as of 9:06 a.m. in Tokyo. Thirty-year yields gained three basis points to 3.34 percent.

U.S. Stocks Decline as Bernanke Avoids Offering New Plans to Boost Economy (Source: Bloomberg)
U.S. stocks fell, after the biggest gain in two weeks for benchmark gauges, as Federal Reserve Chairman Ben S. Bernanke disappointed investors by not detailing new plans to boost growth in the world’s largest economy. Financial and industrial shares had the biggest losses among 10 groups in the Standard & Poor’s 500 Index. JPMorgan Chase & Co. (JPM), Boeing Co. (BA) and DuPont Co. retreated at least 2.1 percent, pacing declines in companies most-tied to economic growth. Dollar General Corp. (DG) tumbled 5.7 percent after the company said holders will sell 25 million shares. The S&P 500 fell 1.1 percent to 1,185.90 at 4 p.m. in New York as all 10 of its groups declined. The Dow Jones Industrial Average slid 119.05 points, or 1 percent, to 11,295.81. Stocks extended losses as Bernanke stopped short of signaling what he thinks is the Fed’s best option to aid the economy, repeating points from his speech on Aug. 26 in Jackson Hole, Wyoming.

China Inflation Eases to 6.2% From 3-Year High (Source: Bloomberg)
China’s inflation eased in August from a three-year high, giving policy makers more room to pause monetary tightening as the economy cools and a global slowdown threatens exports and jobs. Consumer prices climbed 6.2 percent from a year earlier, the National Bureau of Statistics said in Beijing today. That compared with the 6.2 percent median forecast in a Bloomberg News survey of 31 economists and July’s 6.5 percent gain. The moderation may encourage China to keep interest rates on hold after five increases in the past year, joining Asian nations from South Korea to Indonesia that have paused as Europe’s debt crisis and a faltering U.S. recovery dim the outlook for exports. Premier Wen Jiabao said last week that while stabilizing prices remains the top priority, policies must avoid imposing “excessive shocks” on the real economy.

China’s Stock Futures Rise Amid Obama Jobs Plan, Easing Inflation Outlook (Source: Bloomberg)
China’s stocks rose, narrowing a weekly drop, after inflation eased from a three-year high and investors speculated President Barack Obama’s jobs plan will boost growth in the world’s biggest economy. Industrial & Commercial Bank of China Ltd. led a gauge of financial companies to the biggest gain among industry groups. PetroChina Co., the largest oil producer, climbed 0.7 percent and Yunnan Copper Industry Co. advanced 1.4 percent. “Investors are reacting to Obama’s plan as it may ease concerns about a possible recession,” said Zhang Han, a strategist at Guotai Junan Securities Co. in Shanghai. “Even though inflation eased in August, it will stay at a high enough level that the central bank won’t ease its monetary policy in the near term.”

Food-Price Gains Driven by Chinese Consumers Defy Easing Global Inflation (Source: Bloomberg)
Rising food prices may be an exception to easing inflation worldwide, posing dilemmas for policy makers, particularly in emerging markets including China, panelists at a forum said today. A growing middle class seeking higher-protein foods is contributing to increased demand and prices, Abby Joseph Cohen, partner and senior U.S. investment strategist at Goldman Sachs Group Inc. (GS), said at the Bloomberg Global Inflation Conference in New York hosted by Bloomberg Link. Central banks “should be concerned” about food-price inflation, said Roberto Rigobon, a Massachusetts Institute of Technology professor, while James Rickards, senior managing director of Tangent Capital Partners, said China risks harming employment if the country tries too hard to contain inflation. Their comments compare with signals today from the Federal Reserve and European Central Bank that the inflation outlook is benign enough to allow further easing.

Yuan Will Be Fully Convertible by 2015, Chinese Officials Tell EU Chamber (Source: Bloomberg)
Chinese officials told European Union business executives that the yuan will achieve “full convertibility” by 2015, EU Chamber of Commerce in China President Davide Cucino said. “We were told by those officials by 2015,” Cucino told reporters in Beijing yesterday, declining to identify the government departments involved. People’s Bank of China Governor Zhou Xiaochuan said that while there is no timetable for convertibility, the offshore yuan market is “developing faster than what we had imagined.” China has accelerated the use of the yuan in international trade and investment to curb its reliance on the dollar. A fully convertible currency is one of the criteria the U.S. and Europe are demanding from china as a condition for allowing it to be part of the International Monetary Fund’s currency basket. A 2015 target would be a year faster than the schedule expected by 57 percent of 1,263 global investors in a Bloomberg survey published in May.

Japan’s Economy Contracts More Than Initial Estimate as Yen Hurts Recovery (Source: Bloomberg)
Japan’s economy contracted more than the government initially estimated in the second quarter as capital spending decreased, adding to concern the stronger yen may derail the nation’s recovery from the March earthquake. Gross domestic product shrank at an annualized 2.1 percent rate in the three months ended June 30, more than the 1.3 percent contraction reported last month, the Cabinet Office said today in Tokyo. The reading was in line with the median forecast of 21 economists surveyed by Bloomberg News. Reports in the past week indicate growth in the world’s third-largest economy may stall toward the end of the year. Machinery orders, a leading indicator of capital spending, fell the most in 10 months in July and companies are also struggling with a yen near a postwar record, risking an erosion of oversea profits when they’re repatriated.

Japan Stocks Swing Between Gains, Losses on Obama Job Plan, Risk in Europe (Source: Bloomberg)
Japan’s Topix index swung between gains and losses as U.S. President Barack Obama’s $447 billion plan to spur growth countered downside risks to Europe’s economy. Banks gave the biggest support to the Topix index with Mitsubishi UFJ Financial Group Inc. (8306), Japan’s biggest lender, advancing 1.2 percent. Toyota Motor Corp. (7203), the world’s No. 1 carmaker, dropped 0.9 percent. Fanuc Corp. (6954), which gets 75 percent of its sales outside of Japan, fell 4 percent, the biggest slide on the Nikkei 225 Stock Average, after a report yesterday showed growth in Japan’s machine tool orders slowed in August. The Topix was little changed at 757.93 as of 10:02 a.m. in Tokyo after rising 0.3 percent and falling 0.4 percent. The Nikkei 225 (NKY) Stock Average was 0.2 percent lower at 8,774.30 after earlier declining as much as 0.7 percent. For the week, the Nikkei has fallen 2 percent, while the Topix is down 1.5 percent.

European Stocks Advance for a Second Day as Home Retail, KBC Shares Rally (Source: Bloomberg)
European stocks climbed, extending the Stoxx Europe 600 Index’s largest rally in three weeks, as oil producers and retailers advanced. Total SA (FP) and Tullow Oil Plc (TLW) advanced at least 2.5 percent as oil rose. KBC Groep NV rallied 5.9 percent following a report that Banco Santander SA (SAN) seeks to buy KBC’s Polish unit. Home Retail Group Plc (HOME) gained 2 percent after saying the sales decline at its Argos chain slowed. The Stoxx 600 climbed 0.7 percent to 230.47 at the 4:30 p.m. close in London. The benchmark measure has swung between gains and losses at least 12 times today. The gauge has still tumbled 21 percent from this year’s high in February as concern mounted that Europe’s debt crisis is spreading. The decline has cut the index’s valuation to 9.6 times estimated earnings, near the cheapest since March 2009, according to data compiled by Bloomberg.

Trichet Loses His Cool at Prospect of Deutsche Mark’s Revival in Germany (Source: Bloomberg)
Almost 13 years after its demise, the deutsche mark retains enough potency to haunt Jean-Claude Trichet’s final days as European Central Bank president. Trichet, 68, lost his cool yesterday with a reporter who asked whether Germany should abandon the euro and return to the mark as Europe’s debt crisis roils markets and spooks voters. “I would like very much to hear the congratulations for an institution which has delivered price stability in Germany for almost 13 years,” Trichet said in Frankfurt in an uncharacteristically raised voice. “It’s not by chance we have delivered price stability,” he said. “We do our job, it’s not an easy job.”

Trichet Opens Path for Further Steps as Euro Region’s Growth Forecasts Cut (Source: Bloomberg)
European Central Bank President Jean-Claude Trichet said threats to the euro region have worsened and inflation risks have eased, giving officials the option to take further action should the debt crisis worsen. The economy faces “particularly high uncertainty and intensified downside risks,” Trichet said at a press conference in Frankfurt today after the ECB left its benchmark rate at 1.5 percent. While monetary policy is still “accommodative,” financing conditions have worsened in parts of the 17-member euro region and the ECB stands ready to pump more cash into markets if needed, he said. The yield on German 10-year bunds fell to a record as some investors speculated the ECB could cut interest rates or open up more emergency credit lines for banks. The spreading debt crisis is sapping confidence in Europe’s financial institutions, driving up market borrowing costs and forced the ECB to widen its bond purchase program to Italy and Spain.

Inflation Bets Approach Year-Low as Unemployment Climbs: Australia Credit (Source: Bloomberg)
Bond investors’ expectations of inflation in Australia are falling toward the lowest level in a year after global market turmoil helped drive the nation’s unemployment rate to a 10-month high in August. Consumer prices will rise at a 2.58 percent annual pace over the next five years, yields on inflation-linked debt showed as of 10:28 a.m. in Sydney, four basis points above the lowest level since September 2010. The so-called breakeven rate is the highest across eight developed markets Bloomberg tracks, as a mining boom boosts export revenue. The second consecutive increase in the jobless rate backs Reserve Bank of Australia Governor Glenn Stevens’s view that global financial instability and local consumers retrenching may “curtail” inflationary pressures. Stevens signaled a willingness this week to keep the developed world’s highest interest rate on hold as the local dollar’s record advance and slumps in manufacturing and construction prompt companies including BlueScope Steel Ltd. to shed workers.

Dollar, Yen Drop as Obama’s Job Creation Proposals Curbs Demand for Safety (Source: Bloomberg)
The dollar and yen declined against the majority of their most-traded counterparts today after President Barack Obama unveiled proposals to create jobs and boost the U.S. economy, damping demand for safer assets. The dollar snapped yesterday’s advance versus the euro as Asian stocks erased early losses after Obama urged Congress to pass his $447 billion plan. The yen slid after Japan’s Finance Minister Jun Azumi said he will tell his counterparts in the Group of Seven nations that his country remains prepared to take “bold” action in currency markets. “We can say that Obama’s plan is seen favorably in the market, boosting risk appetite and spurring selling of the dollar and yen,” said Daisaku Ueno, president of Gaitame.com Research Institute Ltd. in Tokyo, a unit of Japan’s largest online currency broker. “Expectations for stimulus measures are strong and are prone to run ahead.”

FOREX - Euro slips before ECB rate decision, may bounce
LONDON, Sept 8 (Reuters) - The euro eased against the dollar on Thursday, as investors struck a cautious tone ahead of an European Central Bank rate decision, with policymakers likely to change tack and flag a pause in its monetary tightening cycle.
"Markets are a bit cautious going into the ECB rate meeting," said UBS currency analyst Chris Walker. "We could see a bounce in the euro as pricing in for rate cuts in October is a bit far-fetched. But any lift is likely to see some more selling."