US & World Daily Markets Financial Briefing 12-11-2008

...For only $29.99 on Investorshub.com NOW! Be one of the first to sign up for this fantastic new service from Investors Hub -- for only $29.99 a month you will gain access to Level 2 Pink sheet and OTCBB data. Click here or call 1-888-99-ADVFN to upgrade your account today.

US STOCKS-Market extends slide after Paulson's comments

NEW YORK - U.S. stocks extended losses  on Wednesday after Treasury Secretary Henry Paulson said his department would consider capital needs of non-bank financial institutions, renewing concerns about the scope of problems in the U.S. economy.
      
The Dow Jones industrial average was down 294.94 points, or 3.39 percent, at 8,399.02. The Standard & Poor's 500 Index was down 30.39 points, or 3.38 percent, at 868.56. The Nasdaq Composite Index was down 44.55 points, or 2.82 percent, at 1,536.35.

US SWAPS-2-year spread tightest since Lehman collapse

NEW YORK - The cost of exchanging  two-year U.S. fixed-rate interest payments for floating rates  fell on Wednesday to its lowest since U.S. investment bank  Lehman Brothers filed for bankruptcy nearly two months ago.
   
This cost, expressed as the yield premium on two-year  interest rate swaps over comparable Treasuries, shrank to 99.25  basis points compared with 104.25 basis points on Monday.
   
The U.S. bond market was shut on Tuesday in observance of  the Veterans Day holiday. Following Lehman's collapse, which roiled the credit market  and became a critical event in the global credit crisis, the  Federal Reserve and central banks elsewhere have flooded the  financial system with cash to avert a prolonged credit freeze.
   
And now for nearly a month, the rates that banks charge  each other for unsecured dollar funds, a closely watched  barometer of credit availability, have fallen steadily.
   
In London, the interbank cost for three-month dollar funds  fell to 2.13250 percent on Wednesday, a level not  seen in more than four years, although its pace of decline has  slowed in recent days. "Money market pressures continue to ease however at a  slower rate," said John Spinello, Treasury bond strategist at  Jefferies & Co. in New York.
  
Meanwhile, longer swap spreads also narrowed ahead of the  U.S. Treasury's $20 billion auction of new 10-year debt.
   
The 10-year swap spread was last quoted at 40.00 basis  points, compared with 42 basis points on Monday. The 30-year  spread turned negative at minus 0.50 basis point compared with  plus 0.75 basis point. 

Subscribers benefit from features such as: advanced search and reading functionality.
Click here for all the action.

FOREX-Euro pares gains on weak data, stg down on BoE

LONDON - The euro pared gains against the dollar on Wednesday after data underlined economic weakness, while sterling tumbled after a grim Bank of England forecast fuelled expectations for more UK interest rate cuts.

Sterling hit a six-year low against the dollar and a record trough against the euro after the BoE's quarterly Inflation Report predicted the UK economy will shrink sharply next year and inflation may fall to just below 1 percent.

A tentative improvement in European share prices offered some support to the euro, but the currency stayed on the back foot after data showed euro zone industrial production fell more than expected by 1.6 percent on month in September.

This bolstered the view that a further fall in European Central Bank rates, now at 3.25 percent, was inevitable to counter the effects of a worldwide downturn.

"The production data confirms that the euro zone is in a technical recession. It confirms that more rate cuts are coming from the ECB," said Lena Komileva, G7 market economist at Tullet Prebon in London.

Eonia interest rate futures indicate that markets are pricing in another big rate cut, with ECB rates seen around 2.5 percent by next month.

By 1204 GMT, the euro rose 0.4 percent to $1.2570, but hovered well below a session high of $1.2632. It hit a two-week low of $1.2481 earlier in the day, according to Reuters data.

European stocks traded 0.6 percent higher, paring gains made earlier in the day. The euro rose 0.3 percent to 122.66 yen but stayed in range after hitting 121.23 yen, its weakest level since late October, on electronic trading platform EBS earlier in the day.

The dollar fell slightly to 97.60 yen. Analysts said risk aversion would keep higher-yielding currencies like the euro under selling pressure, supporting lower-yielding currencies like the dollar and the yen. "Given risks to the global economy, investors are holding cash and holding safe-haven which means heading back into Treasuries and the U.S. dollar," said Geoffrey Yu, currency strategist at UBS in London.

Sterling dropped roughly one percent against the dollar to $1.5204 according to Reuters data, its weakest level since 2002, after BoE Governor Mervyn King told reporters that the central bank was prepared to ease monetary policy even more after a stunning 150 basis point cut to 3.25 percent last week.

The UK currency also fell around one percent against the euro, hitting an all-time low of 82.37 pence according to Reuters data, after the BoE's gloomiest forecast in more than a decade.

Against a basket of currencies, sterling hit a 12-year low. "The overall message of this report is that the UK economy is in recession and likely to stay there for the time being, and that, without further monetary easing, inflation is likely to undershoot the BoE's target," said Daragh Maher, deputy head of currency strategy at Calyon in London. Sonia interest rate futures indicate that markets have fully priced in another 50 basis point cut by next month.

For stock market quotes, company information, stock charts, historical quarterly reports and historical annual reports, click here

European shares add to losses; banks and oils fall

LONDON - European shares fell in early trade on Wednesday, adding to the previous session's sharp losses and tracking global equity weakness as banks and energy shares fell on continuing worries over a deep recession.

At 1011 GMT, the FTSEurofirst 300 index of top European shares was down 0.5 percent at 879.02 points, after slipping more than 4 percent in the previous session.

The index has lost more than 41 percent this year, hit by the credit crisis and resulting economic slowdown.

UK unemployment data on Wednesday provided the latest evidence of economic weakness. The Office for National Statistics said the number of people without a job rose to 1.825 million in the three months to September, the highest level since the three months to December 1997. The claimant count rose 36,500, the biggest rise in claimant count since December 1992.

Across Europe, Britain's FTSE 100, Germany's DAX and France's CAC-40 were down between 0.5 and 0.6 percent.

Analysts were sceptical about the prospects for a significant recovery, and an early rally, which had seen the index more than 2 percent earlier in the session, faded.

"I can't see anything which will give the market strength," said Justin Urquhart Stewart, director at Seven Investment Management. "It's going to be a bit soggy today. People are not willing to participate in the market. There's a buyers' strike at the moment. We're expecting a rally by the end of year, but it's only a rally."

He added that much bad earnings news was already priced into shares. "People are assuming things are bad, and they're having their assumptions thoroughly fulfilled," he said.

Banks took most points off the index. France's Natixis, fell 11 percent after it said it had a tough month in October. Natixis denied a newspaper report that it had lost 975 million euros ($1.24 billion) in trading operations in October but said its core investment banking unit had a torrid time last month.

BNP Paribas and HSBC were down 2.2 and 0.9 percent respectively. But Italy's second-biggest bank UniCredit was 4.4 percent higher despite posting a 54 percent fall in third-quarter net profit to 551 million euros ($701.8 million), citing the "dramatic conditions" in the markets.

The bank, which is boosting capital by 6.6 billion euros by skipping its cash payout and doing a capital increase to try to match the strength of European rivals, said changes to IAS accounting boosted profits by 856 million euros.

Oils fell as crude prices slipped more than 2 percent to $58 a barrel. BP and Statoil fell 1.8 and 4.5 percent respectively. Tullow Oil sank 4 percent after it said output in 2008 would undershoot its forecast.

Insurer Swiss Life was down 14 percent after saying third-quarter premium volumes fell 11 percent to 3.075 billion Swiss francs ($2.61 billion) and warning it would not meet its full-year net profit guidance.

J. Sainsbury, Britain's third-biggest supermarket group, rose 1.7 percent after posting first-half profit towards the top end of forecasts, but said the economic environment in the second half was "particularly challenging."

French power group Electricite de France SA (EDF) was up 2.1 percent after it maintained existing 2008 earnings guidance as third-quarter sales rose.

Shares in Holcim, the world's second-largest cement maker, fell 9.6 percent after it posted a drop in third-quarter net profit and warned that business would be weak in the final quarter as global construction slows.

Mobile telecoms were the strongest-performing sector, with Vodafone up 5.9 percent, extending gains from Tuesday, when its first-half results beat forecasts. Spain's Telefonica was up 1.7 percent, while BT, which reports first-half results on Thursday, was up 2 percent.

Mining stocks gave up early gains as copper prices slipped back. BHP Billiton, Anglo American and Vedanta Resources were down between 0.7 and 6.7 percent.

Tenaris was up 5.8 percent after equity index provider MSCI Barra added the Italian oil and gas equipment services company to its World Index, as part of its November 2008 semi-annual index review. The change will be at the close on Nov 25.

Fast-loading, feature-rich and highly customizable interfaces for reading and posting messages. click here

HK shares close 0.7 pct lower as properties fall

HONG KONG - Hong Kong shares fell 0.7 percent in a volatile session on Wednesday as local developers slid on a grim economic outlook, but Li & Fung jumped after it signed an outsourcing agreement abroad.

Other export-oriented stocks also gained, with sports shoemaker Yue Yuen Industrial Holdings, supplier to the likes of Nike, up 7.5 percent and Foxconn International Holding, which makes mobile phones for Motorola, up 5 percent.

Consumer goods exporter Li & Fung gained 11.6 percent after it won a contract with fashion retailer Liz Claiborne Inc.

But Hong Kong's top developer, Sun Hung Kai Properties, fell 4 percent, while smaller rivals Hang Lung Properties shed 2.8 percent and billionaire Li Ka-shing's Cheung Kong (Holdings) down 3.7 percent.

Hong Kong may have tipped into a recession in the third quarter for the first time since the SARS outbreak in the spring of 2003, half of the economists in a Reuters poll said.

"We are going to see more volatility in the market, with more negative news expected from the U.S. this week. The market tends to react very quickly to anything negative and is very sceptical about any good news," said Howard Gorges, vice chairman at South China Securities.

In the lightest day of trade since Oct. 1, the Nikkei shed 113.79 points to end at 8,695.51. It has gained 1.3 percent so far this week, after diving 24 percent in October, the biggest monthly fall in its 58-year history.

 The broader Topix  declined 1.6 percent to 875.23. Fears of a global slowdown grew after shares in General Motors Corp plummeted to a 65-year low on Tuesday, extending recent steep declines on concerns the automaker could run short of cash by early next year.

The benchmark Hang Seng Index ended the session down 101.81 points at 13,939.09, led by a 2 percent drop in HSBC on bad loan worries.

A total of HK$47.2 billion ($6 billion) changed hands, down from HK$54.4 billion on Tuesday.

Hutchison Telecommunications International Ltd surged 11.4. The stock rose as much as 31 percent earlier, its biggest one-day percentage gain ever afer it declared a bigger-than-expected special dividend.

Alibaba.com rose 9.4 percent after China's biggest e-commerce firm said its board of directors had approved a plan to buy up to $258 million worth of shares.

Coal producer China Shenhua Enery lost 2.1 percent, while offshore oil producer CNOOC shed 1.3 percent, after crude oil prices settled below $60 a barrel in Asian trade. The China Enterprise Index of top locally listed mainland Chinese companies was steady at 7,134.54.

But China Merchants Holdings lost 6 percent after JP Morgan cut its target on the company to HK$16.50 from HK$24.00 and its earnings forecast by 24 percent for 2009.

Insulator maker Vitar International rose 10.5 percent on its trading debut. The company issued 28 million new shares at HK$2.1 each, raising HK$58.8 million ($7.5 million).

Stocks due to be added to the MSCI China Standard Index this month traded higher. Beer maker Tsingtao Brewery gained 6.3 percent and juice maker China Huiyuan Juice Group rose 2.8 percent.

The most traded market in the world; 24 hr market platform with the latest news, prices and charts gives you the knowledge to invest in this exciting and fast moving market.
Click here

Gold dips in line with oil, soft dollar supports

LONDON - Gold dipped a touch in Europe on Wednesday as easing oil and industrial metals prices weighed on prices, but the softer dollar limited losses.

Traders are awaiting data on U.S. crude inventories later in the session for fresh direction. Spot gold was at $730.30/732.30 at 1028 GMT against $731.70 an ounce late in New York on Tuesday. The metal fell 2 percent in that session as the dollar firmed against the euro.

A stronger dollar tends to dent interest in gold, which is often bought as an alternative investment to the U.S. currency.

"A lot of people are standing on the sidelines and are not wanting to get involved until they have some kind of confirmation of direction," said Afshin Nabavi, head of trading at MKS Finance. "All the hints we are getting from the physical market are positive," he said. "Demand is still very, very strong."

Crude oil futures shed more than $1 a barrel in early trade as fears the economic slowdown will knock demand offset news of supply reductions.

Traders are awaiting fresh direction from U.S. oil stockpiles data, due out at 1535 GMT. "We will have a better idea about oil after the inventories come out," Nabavi said.

Base metals prices were also generally soft on demand fears. Softer commodity prices usually pressure gold, as they dent interest in the asset class as a whole and reduce fears over inflation, against which bullion is often bought as a hedge.

Equities recovered some ground in Europe on Wednesday after a slide in the previous session, despite losses on Wall Street and overnight in Asia. "Equity index futures are pricing gains in the U.S. and Asian markets today," Standard Bank analyst Manquoba Madinane said. "This, amid increasing oil price weakness, could draw more funds from commodity markets."

The dollar provided some support to gold in early trade, however, as it retreated from two-week highs against the euro. The U.S. currency managed to pare some losses as risk aversion took to the fore.

Physical demand for gold jewellery, coins and bars was also underpinning prices at lower levels, with dealers reporting firm buying in major bullion market India as the wedding season gets underway.

In Europe, refiners are struggling to keep up with demand for certain products, according to traders. "Gold and silver should continue to be supported by strong physical offtake, although the strength of the U.S. dollar is hampering attempts by the metals to trade up towards our one and three month forecasts," said UBS strategist John Reade.

Chinese investment demand is gathering pace this year, with investment reaching 38.4 tonnes in the first nine months of 2008 against 24 tonnes for the whole of 2007, the China National Gold Corp said at a conference.

Among other precious metals, platinum rose 3 percent to a high of $840 an ounce, recovering some of Tuesday's $34 an ounce dip, but quickly shed gains in later trade as oil and other commodities softened.

Spot platinum was later quoted at $821.50/841.40 an ounce against $812.50 an ounce late in New York on Tuesday. Spot palladium was at $213/221 an ounce against $212. Spot silver was at $9.73/9.81 an ounce against $9.74. 

The latest streaming prices and news on major commodities from precious metals to crude oil, so you can keep up-to date and never miss a trading opportunity again.
Click here

Investors Hub Services