20120322 1016 Global Market Related News.

Asian Stocks Rise as China Eases Lending Curbs for Rural Banks (Source: Bloomberg)
Asian stocks rose amid further evidence that the U.S. housing sector is stabilizing and as China moved to bolster credit growth by expanding a cut in reserve-requirement ratios to more branches of Agricultural Bank of China Ltd. James Hardie Industries SE (JHX), the building materials supplier that counts the U.S. as its biggest market, advanced 1.8 percent in Sydney. Kubota Corp., a farm equipment makers that gets about 17 percent of sales from Asia excluding Japan, rose 0.7 percent in Tokyo. Fuji Electric Co. gained 2.9 percent after the supplier of factory automation equipment won a 10 billion-yen ($120 million) from Emirates Aluminum Co.
“I don’t see a hard landing happening in China this year because of the policy offsets that can be put in place,” said Andrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “China’s housing sector remains a key concern. The anecdotes coming out of the housing market suggest the weakness is quite pronounced.” The MSCI Asia Pacific Index (MXAP) rose 0.2 percent to 126.42 as of 9:53 a.m. in Tokyo. The measure climbed 11 percent this year through yesterday as signs the U.S. economy is improving boosted confidence in the outlook for Asia’s exporters.

Japan Stock Futures Drop on U.S. Housing Data, Higher Yen (Source: Bloomberg)
Japanese stocks gained after the government reported higher-than-forecast exports and an unexpected trade surplus for February. Rising crude prices lifted energy stocks. Canon Inc., the world’s biggest camera maker, gained 0.9 percent. Japan Petroleum Exploration Co., the nation’s second- largest oil explorer by market value, rose 0.5 percent. Nomura Holdings Inc., Japan’s biggest brokerage, sank 2 percent after saying it was involved in an insider-trading case. The Nikkei 225 Stock Average (NKY) rose 0.2 percent to 10,105.50 as of 9:47 a.m. in Tokyo. The broader Topix Index gained 0.3 percent to 861.12.

U.S. Stocks Fall as Energy Shares Drop on Profit Concern (Source: Bloomberg)
U.S. stocks fell, sending the Standard & Poor’s 500 Index down a second day, on concern the best first-quarter since 1998 has outpaced economic prospects and as Baker Hughes Inc. drove a selloff in energy shares. Baker Hughes, the world’s third-largest oilfield-services provider, tumbled 5.8 percent after saying that a shift away from gas rigs will hurt earnings. Morgan Stanley (MS) and Fifth Third Bancorp dropped at least 1.7 percent to pace losses in financial companies. Hewlett-Packard Co. (HPQ) slumped 2.2 percent for the biggest decline in the Dow Jones Industrial Average. The S&P 500 slipped 0.2 percent to 1,402.89 at 4 p.m. New York time. The Dow retreated 45.57 points, or 0.4 percent, to 13,124.62. About 6.1 billion shares changed hands on U.S. exchanges, or 7.9 percent below the three-month average.
“People won’t play real hard at these levels,” said Jeffrey Saut, chief investment strategist at Raymond James & Associates in St. Petersburg, Florida, which oversees more than $300 billion. “I don’t think you should get bearish. Yet the market’s energy seems to be used up after the strong rally.”

Most European Stocks Fall on U.S. Data; Adidas Declines (Source: Bloomberg)
Most European (SXXP) stocks declined as a report showed sales of previously owned U.S. houses unexpectedly fell in the world’s biggest economy. Adidas AG (ADS) slid 2.3 percent after Morgan Stanley cut its recommendation on the stock. TeliaSonera AB (TLSN), the biggest Swedish telephone company, dropped the most since August 2011 after the Finnish government sold shares. Banco Popolare SC (BP), Italy’s fifth-biggest bank, gained after reporting earnings and a better than expected outlook for its capital position. The Stoxx Europe 600 Index (SXXP) declined 0.1 percent to 268.67 at the close in London. The gauge still has gained 9.9 percent this year as the European (SXXP) Central Bank disbursed 1 trillion euros ($1.3 trillion) to the region’s lenders and U.S. economic data surpassed estimates. The volume of shares changing hands on the Euro Stoxx 50 Index today was 5.7 percent more than the average over the past 30 days, according to data compiled by Bloomberg.
“It’s possible we were a bit too optimistic,” said Benoit de Broissia, an analyst at KBL Richelieu Gestion in Paris, which oversees about $3.4 billion. “There are still a number of headwinds. We can’t say that residential real estate is a motor of growth for the U.S. economy at this point.”

Most Emerging Stocks Drop as Chinese Concerns Deter Investors (Source: Bloomberg)
Most emerging-market stocks retreated as concern China’s economy is contributing to a global slowdown deters investors from riskier assets. The MSCI Emerging Markets Index (MXEF) was little changed at 1,048.29 by 12:31 p.m. in New York, as 408 stocks fell while 316 gained. Raw materials producers and industrial companies slipped, while telecommunications companies advanced. Steelmaker Cia. Siderurgica Nacional SA (CSNA3) headed for the biggest loss in three months, dragging Brazil’s Bovespa (IBOV) lower for a second day. OAO GMK Norilsk Nickel (GMKN), Russia’s biggest mining company, slid to the lowest level in more than two months on concern nickel prices may extend declines. The Hang Seng China Enterprises Index (HSCEI) slumped for a sixth day. Metals and commodity prices have fallen as declining Chinese retail sales and home prices add to signs the world’s second-largest economy is slowing. Premier Wen Jiabao cut the economic growth target for this year to the lowest since 2004 on March 5.
“People are increasingly nervous about what may happen in China,” John-Paul Smith, a London-based emerging-market strategist at Deutsche Bank AG, said by phone. “My own big fear is that even though over the medium and long-term a restructuring of the Chinese economy is what’s needed to avoid a hard landing, in the near term you’re likely to see lower growth rates.”

GLOBAL MARKETS-Shares hold below 8-mth high, eyes on US data
LONDON, March 21 (Reuters) - World stocks held below a recent 8-month high as investors anticipated that further evidence of a recovery in the U.S. economy could add fuel to this year's risk rally and ease concerns about slowing China growth.
"This week's retreat is a sign of normal breathing by the market, and more people are jumping on the bandwagon. The liquidity rally is not over," said Franz Wenzel, head of investment strategy at AXA Investment Managers, which has 512 billion euros ($679 billion) under management.

FOREX-Euro up on short-covering; yen on defensive
SINGAPORE, March 21 (Reuters) - The euro edged higher against the dollar on short-covering, while the yen was mostly weaker with traders eager to add to bearish bets against the Japanese currency.  
"The market is a little bit short euros, so that's what's driving it," said Jesper Bargmann, head of G11 spot FX in Asia for RBS in Singapore.  

Treasuries Rise a 2nd Day as Oil Gains, S&P 500 Retreats (Source: Bloomberg)
Treasury 10-year notes rose for a second day as investors took advantage of a surge in yields, while oil jumped above $107 a barrel and U.S. stocks fell. The dollar strengthened against most major peers. Ten-year Treasury yields decreased seven basis points to 2.29 percent at 4 p.m. in New York after yesterday falling for the first time in 10 days, halting the longest increase since 2006. The Standard & Poor’s 500 Index decreased 0.2 percent to 1,402.89 after yesterday retreating from the highest level in almost four years. Spanish bonds slid amid concern the nation faces an increasing risk of a debt restructuring.
Federal Reserve Chairman Ben S. Bernanke said the increase in oil may slow economic growth, at least in the short term. The Fed bought $4.03 billion in U.S. debt today as part of its program to swap $400 billion of shorter-term securities with longer-term bonds. Goldman Sachs Group Inc. said in a report that global stocks are set to follow a “steady upward trajectory,” and prospects for equities versus bonds are “as good as they have been in a generation.” “Even though the U.S. data is picking up, it’s picking up from very low levels, and the housing market still has a lot of problems to deal with, which is why Treasury yields are still at these low levels,” said Suvrat Prakash, an interest-rate strategist in New York at BNP Paribas Securities Corp., one of 21 primary dealers that trade with the Fed. “There are still Fed purchases this week and the sharp sell-off has stopped. And we are seeing investors start to take advantage of the higher rates.”

Buffett Seizes Lead in Bet on Stocks Beating Hedge Funds (Source: Bloomberg)
Warren Buffett made a friendly bet four years ago that funds that invest in hedge funds for their clients couldn’t beat the stock market over a decade. So far he’s winning. The wager that began on Jan. 1, 2008, pits the Omaha, Nebraska, billionaire against Protégé Partners LLC, a New York fund of hedge funds co-founded by Ted Seides and Jeffrey Tarrant. Protégé built an index of five funds that invest in hedge funds to compete against a Vanguard mutual fund that tracks the Standard & Poor’s 500 Index. The winner’s charity of choice gets $1 million when the bet ends on Dec. 31, 2017. The Vanguard fund’s low-cost Admiral shares returned 2.2 percent, with dividends reinvested, from the start of the bet through Feb. 29, as stocks rebounded from a 12-year low in March 2009.
The hedge funds fell about 4.5 percent, based on Protégé’s index returns for the first three years and results since then for the Dow Jones Credit Suisse Hedge Fund Index, which has roughly tracked the group of unidentified funds when adjustments are made for extra fees. “Hedge funds of funds have underperformed because of high fees and mediocre manager selection,” said Brad Alford, head of Alpha Capital Management LLC in Atlanta, which runs a mutual fund of funds designed to replicate the performance of hedge funds with lower fees and the flexibility for clients to pull money out daily. Since 2009, his Alpha Defensive Growth (ACDEX) strategy has posted an annual average return of 8.2 percent, almost twice the return of hedge fund of funds.

Stocks to Begin a ‘Steady Upward Trajectory’ Goldman Says (Source: Bloomberg)
Stocks will probably begin a “steady upward trajectory” over the next few years because any declines in economic growth are already reflected in share prices, Goldman Sachs Group Inc. said. “Given current valuations, we think it’s time to say a ‘long goodbye’ to bonds, and embrace the ‘long good buy’ for equities as we expect them to embark on an upward trend over the next few years,” Peter Oppenheimer, chief global equity strategist at Goldman Sachs in London, wrote in a report today. The prospects for returns in equities versus bonds “are as good as they have been in a generation,” he wrote.
The Stoxx Europe 600 Index (SXXP) is trading at 11.2 times estimated earnings, compared with an average of 11.8 over the past five years, according to data compiled by Bloomberg. The index dropped 11 percent last year as policy makers tried to stop Greece’s sovereign-debt crisis from spreading. The MSCI World Index (MXWO) is trading at 13.2 times estimated earnings after falling 7.6 percent last year, data compiled by Bloomberg show.

Korean Bonds Advance on U.S. Housing Data; Won Near One-Week Low (Source: Bloomberg)
South Korea’s government bonds advanced and the won traded near a one-week low as a report showing sales of previously owned U.S. houses unexpectedly fell sapped demand for riskier assets. Purchases of existing homes dropped 0.9 percent to a 4.59 million annual rate, compared with the median forecast for a rise to 4.61 million in a Bloomberg News survey, figures showed yesterday. Federal Reserve Chairman Ben S. Bernanke told Congress yesterday that higher energy prices may weaken the U.S. economy and that Europe’s financial and economic situation “remains difficult”. An index showing the outlook for China’s manufacturing will be released today. “It seems the momentum for Korean yields to gain further is weakening with Fed chairman’s speech also signaling the U.S. economy hasn’t improved much,” Ryan Oh, a Seoul-based fixed- income analyst at Samsung Securities Co., wrote in a note to clients. “The spike in Korean yields spurred by overseas short- term investors may be a buying opportunity.”

Dollar Remains Higher Before U.S. Jobless Claims Data (Source: Bloomberg)
The dollar remained higher after gaining yesterday against most major peers before a U.S. report forecast to show initial jobless claims dropped, damping prospects of further monetary easing by the Federal Reserve. The U.S. currency rebounded from a two-week low against the euro after data yesterday showed sales of previously owned American homes held near the highest level in almost two years. The yen briefly gained after Japan posted an unexpected trade surplus for February. New Zealand’s dollar slid to a one-week low after its economy grew less than economists estimated. “I think the market wants to buy dollars,” said Kurt Magnus, executive director of currency sales in Sydney at Nomura Holdings Inc. “Currently, data is pointing to lower commodity prices and you’ve got resurgent, strong numbers coming out of the United States.”
The dollar bought $1.3228 per euro at 9:59 a.m. in Tokyo from $1.3216 yesterday, when it touched $1.3285, the weakest level since March 8. The U.S. currency was unchanged from yesterday at 83.41 yen, after earlier touching 83.14. The Japanese currency fetched 110.33 per euro from 110.23, after earlier rising as much as 0.3 percent.

Yen Gains Versus Dollar, Euro After Japan Trade Balance Data (Source: Bloomberg)
The yen gained against the dollar and euro after Japan said exports fell 2.7 percent in February from a year earlier, less than economists had forecast. The Japanese currency climbed 0.2 percent to 83.25 per dollar as of 8:53 a.m. in Tokyo. It added 0.2 percent to 110.00 against the euro.

Bernanke Says Europe Must Aid Banks Even as Strains Ease (Source: Bloomberg)
Federal Reserve Chairman Ben S. Bernanke told Congress that higher energy prices may weaken the U.S. economy by sapping consumer spending. “Higher energy prices would probably slow growth, at least in the short run,” Bernanke said today in response to questions from the House Committee on Oversight and Government Reform. Rising fuel prices “create at least short-term inflation pressures, and moreover, they act as a tax on household purchasing power and reduce consumption spending, and that also is a drag on the economy.” Bernanke and his colleagues on the Federal Open Market Committee are watching oil and gasoline prices that threaten U.S. growth and are likely to push up inflation “temporarily,” according to their statement last week, when they said interest rates are likely to remain near zero through at least late 2014.
Crude oil for May delivery climbed $1.36, or 1.3 percent, to $107.43 a barrel at 11:38 a.m. today on the New York Mercantile Exchange. The national average price of a gallon of gasoline rose to $3.86 yesterday from $3.28 on Jan. 1, according to the American Automobile Association.

Existing U.S. Home Sales Hold Near Two-Year High: Economy (Source: Bloomberg)
Sales of previously owned U.S. houses held in February near an almost two-year high, adding to evidence the market that triggered the recession is firming. Purchases dropped 0.9 percent to a 4.59 million annual rate from a revised 4.63 million pace in January that was faster than previously estimated and the highest since May 2010, a report from National Association of Realtors showed today in Washington. The median price increased over the past year for the first time since November 2010. “The U.S. housing market is stabilizing and very gradually carving out a recovery,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, who correctly projected the February sales rate. “Housing demand should pick up in response to falling unemployment and attractive affordability.”
Buying a house is coming within reach for more Americans as hiring picks up, incomes grow, property values steady and mortgage rates hold near record lows. The report also showed the number of houses for sale climbed in February by the most in 10 months, a reminder that foreclosures continue to loom as a headwind for the market.

China Cuts Reserve Ratios for 379 Agribank Branches (Source: Bloomberg)
China boosted rural credit by cutting reserve requirements for an additional 379 branches of Agricultural Bank of China Ltd. (601288), the nation’s third-biggest lender by market value. Effective March 25, the ratio falls by 2 percentage points for the branches in the provinces of Heilongjiang, Henan, Hebei and Anhui, the People’s Bank of China said in a statement on its website yesterday. The move expands a trial that previously lowered requirements for 563 branches in eight provinces. The latest move means a total of 23 billion yuan ($3.6 billion) has been freed up, the PBOC said. The ruling Communist Party has pledged to fine-tune economic policies as needed as a cooling real-estate market and faltering export demand limit the nation’s expansion. Mining company BHP Billiton Ltd. (BHP) said March 20 that China’s steel output growth has flattened, adding to concern that a slowdown may deepen.
“This is a marginal and targeted easing aiming at encourage more lending in rural areas and to smaller businesses,” said Lu Ting, a Hong Kong-based economist at Bank of America Corp. The reserve-ratio level for the nation’s largest lenders stands at 20.5 percent after a cut in February.

North Korea’s Gaeseong Pushed for Inclusion in FTA (Source: Bloomberg)
South Korea is pushing to include the Gaeseong industrial zone in North Korea in its free-trade deals with the U.S. and Europe, a step that would deepen cross- border ties after the North’s leadership transition. “Unification is already taking place in Gaeseong, with daily encounters and shared interests,” said Yoo Dong Ok, the chairman of Daewha Fuel Pump Industries and a spokesman for South Korean companies operating in the manufacturing enclave. Shipments from the factories, mostly textiles and car parts, would quickly surge 15 percent if they win free-trade status, Yoo estimated in a March 20 interview. Yoo and the government in Seoul want the fruits of North Korean workers’ labors on the shelves of stores in Chicago and Berlin, even as they condemn the regime of new leader Kim Jong Un for a planned rocket launch. The U.S. warned the test-firing jeopardizes a food-aid deal and breaks international agreements.
“It may help any efforts by North Korea to open up if the South wins inclusion for Gaeseong,” said Cho Bong Hyun, a researcher at IBK Economic Research Institute in Seoul who has visited the communist country more than 30 times since 2000 and advises companies seeking to do business there. “North Koreans have lived in a closed society under tight state control but now through Gaeseong, they’re learning about and experiencing the outside world.”

Europe Revival Seen in Most Bond Sales Since ’10: Credit Markets (Source: Bloomberg)
Europe’s comeback from the brink is extending to the region’s corporate debt market, where borrowers are selling bonds at the fastest pace in two years. Fiat SpA (F), Italy’s biggest manufacturer, Daimler AG and Electricite de France SA led 6.6 billion euros ($8.7 billion) of offerings in the busiest day of issuance since Jan. 12, 2010, according to data compiled by Bloomberg. Daimler in Stuttgart, Germany raised 750 million euros after boosting the sale from 500 million euros, while EDF (EDF) in Paris sold 1.6 billion euros of bonds and Fiat issued its first benchmark deal since July. The European Central Bank’s injection of cash into banks through loans and Greece’s debt restructuring is raising optimism that the region’s sovereign crisis will be contained. The cost to borrow for European non-financial companies has fallen at a faster rate this year than for issuers in the U.S., Bank of America Merrill Lynch data show.
“While Europe still faces many obvious challenges, there has been a combined regulatory and political response to euro- area problems,” Edward Marrinan, macro credit strategist at Royal Bank of Scotland Group Plc in Stamford, Connecticut, said in a telephone interview. “The follow-on risk appetite has been reflected in robust new issuance.”

Osborne Says U.K. to Avoid Recession as He Keeps Austerity Push (Source: Bloomberg)
Chancellor of the Exchequer George Osborne said Britain will avoid sliding back into recession as he delivered a budget intended to maintain his austerity drive. Forecasts from the nonpartisan Office for Budget Responsibility show the economy expanding 0.8 percent this year, up from a November estimate of 0.7 percent, Osborne told Parliament in London today. Gross domestic product shrank 0.2 percent in the last three months of 2011. Prime Minister David Cameron’s government is seeking to retain the U.K.’s AAA credit rating by erasing the bulk of the deficit by 2017 and taking measures to support growth that don’t require additional borrowing. The shortfall unexpectedly increased last month, data released today showed. “Britain is going to earn its way in the world,” Osborne said. “There is no other road to recovery.”
With Fitch Ratings revising its U.K. outlook last week to “negative” from “stable,” Osborne is sticking to plans to ax a budget deficit now totaling more than 8 percent of gross domestic product, a shortfall greater than in France, Germany and Italy.

U.K. Budget Deficit Doubles as Taxes Fall, Spending Jumps (Source: Bloomberg)
Britain’s budget deficit almost doubled in February as taxes fell and spending surged, leaving Chancellor of the Exchequer George Osborne little room to meet his full-year goal as he prepares to announce the annual budget. Net borrowing excluding support for banks was 15.2 billion pounds ($24.1 billion), the highest for any February on record, compared with 8.9 billion pounds a year earlier, the Office for National Statistics said in London today. The median of 17 forecasts in a Bloomberg News survey was for a shortfall of 8 billion pounds. Osborne has rejected calls to relax his program of cuts, saying warnings from Fitch Ratings and Moody’s Investors Service that Britain could lose its top credit rating reinforce the need to stick to his plan to erase the structural deficit by 2017.
“It provides a very uncomfortable background for the budget,” said Philip Shaw, an economist at Investec Securities in London. “We’ll get tough talk today but against a really nasty number for February. The fact there has been a worsening on this scale is a big surprise.”