Bloomberg News

Europe Day Ahead: Asian Stocks Fall, OPEC Postpones Decision

December 01, 2008

Asian stocks fall; OPEC failure to agree on oil policy may lead to lower prices; Oil prices decline; Asian car sales decline; Goldman, Morgan Stanley, attract bond investors.

EUROPEAN MARKETS

The FTSE 100 Index will fall 21 points, the DAX will decline 17 points and the CAC will decline 10 points, according to Cantor Index.

TOP STORIES and MOST READ

Japan, Australia Stocks Decline as Global Recession Deepens

Japanese and Australian stocks dropped as falling commodity prices dragged mining shares lower and the failure of homebuilder Morimoto Co. drove bankruptcies by listed companies to a postwar record in Japan.

The MSCI Asia Pacific Index declined 0.5 percent to 82.27 as of 2:48 p.m. in Tokyo, ending a four-day, 7.6 percent advance. The gauge has tumbled 48 percent this year during the worst financial crisis since the Great Depression. The index is valued at 12 times estimated profit, down from 17 at the start of 2008.

OPEC Failure Foretells Steeper Drop 10 Years After Glut Ended

A decade after OPEC failed to prevent oil from collapsing to $10 a barrel, the world’s biggest producers are delaying actions needed to arrest the steepest slide in energy prices.

Ministers from the Organization of Petroleum Exporting Countries postponed debate on a second cut in output in as many months during meetings in Cairo on Nov. 29. They will wait until later this month, after a slump in global economies and the popping of the commodities bubble sent oil down almost $100 from its record price in July to as low as $48.25 a barrel in New York on Nov. 21.

Oil Falls Before OPEC Discusses Output Cut to Stem Price Slump

Oil fell in New York on speculation a potential OPEC production cut to support prices may not outweigh declining fuel demand amid the global recession.

Crude oil for January delivery dropped 79 cents, or 1.5 percent, to $53.65 a barrel at 12:26 p.m. Singapore time in electronic trading on the New York Mercantile Exchange. Nymex was open only for electronic trading yesterday because of the U.S. Thanksgiving holiday. Futures closed at $54.44 on Nov. 26 after rising 7.2 percent.

Toyota, Nissan Lead Biggest Drop in Japan Car Sales in 34 Years

Toyota Motor Corp. (7203) and Nissan Motor Co. (7201) led the biggest drop Japan’s auto sales in 34 years as the country’s recession cut wages.

Sales of cars, trucks and buses, excluding minicars, fell 27 percent to 215,783 vehicles in November, the Tokyo-based Japan Automobile Dealers Association said in a statement today. Toyota Motor Corp., Japan’s largest automaker, sold 106,342 vehicles excluding the Lexus brand, down 28 percent. Sales at Nissan Motor Co., the country’s third-biggest, fell 30 percent to 30,134.

‘Next to Nothing’ Yields Pull Funds to Goldman, Morgan

Dec. 1 (Bloomberg) -- In the best year for Treasuries since 2002, fund managers who only buy government bonds are seeking permission to invest in corporate debt they considered toxic just a month ago.

Treasuries “are yielding next to nothing,” said Robert Millikan, who manages $5 billion at BB&T Asset Management in Raleigh, North Carolina, including the $51 million BB&T Short U.S. Government Fund. “Trying to do something for your shareholders, it’s hard to sit there and buy a bond that yields less than any fees you charge.”

Mumbai Attack Undermines India’s Political, Economic Confidence

India’s deadliest terrorist attack in 15 years has left a shaken population, shorn of confidence that its leaders can keep them safe and revive an economy growing at its slowest pace since 2004.

MAIN COMPANIES

Austriamicrosystems AG (AMS) : The Austrian chipmaker whose shares are listed in Switzerland expects to post a “significant’ loss for full year 2008 because of a charge for certain euro-dollar hedging transactions. The shares fell 0.6 percent to 16 Swiss francs.

Barclays Plc (BARC) : Barclays Capital has started to rebuild its equities unit, taking advantage of the economic decline to employ analysts and traders less expensively, the Financial Times reported, without saying where it got the information. Barclays rose 2.5 pence, or 1.5 percent, to 169.4 pence.

Electricite de France SA (EDF FP): The world’s biggest operator of nuclear reactors sold 1 billion Swiss francs ($824 million) of bonds. The stock rose 65 cents, or 1.4 percent, to 45.55 euros.

Endesa SA (ELE) and Iberdrola SA (IBE) : The Spanish utilities won 71 percent of a 233 million-euro ($296 million) contract to provide power to Spain’s railways in 2009, Europa Press said. Endesa shares rose 21 cents, or 0.9 percent, to 23.01 euros. Iberdrola added 4 cents, or 0.7 percent, to 5.82 euros.

Eni SpA (ENI) : Libya expects to choose a partner early next year to revamp and possibly expand Azzawiya Oil Refining Company Inc., its second-largest oil-processing plant, Shokri Ghanem, the chairman of Libya’s state-owned National Oil Corp., said in an interview. Eni, Italy’s largest oil company, fell 52 cents, or 2.9 percent, to 17.73 euros.

Fiat SpA (F) : Italy’s transport ministry plans to publish car sales figures for November after the close of markets.

Separately, the country’s largest carmaker will confirm Luca Cordero di Montezemolo as its chairman, Il Sole 24 Ore said, citing an interview with Vice Chairman John Elkann. Chief Executive Officer Sergio Marchionne will keep his position at Fiat, Elkann said. The stock rose 4.5 cents, or 0.8 percent, to 5.78 euros.

Fortis (FORB BB): The financial-services company, once Belgium’s, will hold a shareholders meeting. The shares climbed 6 percent to 74 cents.

HSBC Holdings Plc (HSBA) : Europe’s biggest bank is to eliminate about 500 jobs in Britain, including positions at its head office in London, two people familiar with the plan said. HSBC advanced 9.25 pence, or 1.3 percent, to 715 pence.

Infineon Technologies AG (IFX GY): Europe’s second-largest maker of semiconductors is talking to employees about further cost cuts. The company aims to further “intensify” its existing program and is currently discussing short-time working or extended company holidays with employee representatives, Ralph Driever, a spokesman for the company said in a telephone interview on Nov. 29. Separately, Qimonda AG, a unit Infineon, will report fourth-quarter results. The shares fell 8 cents, or 4.2 percent, to 1.85 euros.

Mediaset SpA (MS) : The television company controlled by Italian Prime Minister Silvio Berlusconi said a planned tax increase on pay-television would hurt its business.

Separately, Berlusconi may increase his stake in Premiere AG, Germany’s biggest pay-television company, through a share sale, La Stampa reported. The shares advanced 9.25 cents, or 2.2 percent, to 4.24 euros.

Nestle SA (NESN) : The world’s biggest food company’s Swiss unit head, Roland Decorvet, expects electricity costs to increase in 2009 by about 5 million Swiss francs ($4.1 million), or about 30 percent, Le Matin reported. The shares rose 1.42 francs, or 3.3 percent, to 43.94.

StatoilHydro SA (STL) : The region’s biggest oil producer may move after OPEC deferred a decision on reducing production this year by two weeks to gauge the impact of earlier cuts. The shares fell 4 percent to 118.1 kroner.

Swisscom AG (SCMN) : Switzerland’s biggest phone company doesn’t expect any “extraordinary” need for writedowns in 2009 relating to its repurchase of Vodafone Group Plc’s stake in its mobile unit or the acquisition of FastWeb SpA, Chief Executive Officer Carsten Schloter told Finanz und Wirtschaft. The shares fell 1.75 francs, or 0.5 percent, to 347.25.

UPGRADES/DOWNGRADES PUNCH CUT TO ‘UNDERWEIGHT’ VS ‘EQUAL WEIGHT’ AT MORGAN STANLEY; JD WETHERSPOON CUT TO ‘UNDERWEIGHT’ AT MORGAN STANLEY; PARK PLAZA CUT FROM ‘OVERWEIGHT’ AT MORGAN STANLEY; ERDEMIR CUT TO ‘UNDERWEIGHT’ AT MORGAN STANLEY; EMAAR RESTARTED ‘NEUTRAL’ AT MERRILL LYNCH; BRITVIC CUT TO ‘NEUTRAL’ VS ‘BUY’ AT MERRILL LYNCH; TEKFEN RATED NEW ‘NEUTRAL’ AT MERRILL LYNCH; ENEL CUT TO ‘NEUTRAL’ VS ‘BUY’ AT UBS; TERNA CUT TO ‘UNDERWEIGHT’ VS ‘NEUTRAL’ AT JPMORGAN; FOSCHINI, MR PRICE CUT TO ‘UNDERWEIGHT’ AT JPMORGAN; PICK’N PAY CUT TO ‘NEUTRAL’ VS ‘OVERWEIGHT’ AT JPMORGAN; NEW CLICKS RAISED TO ‘NEUTRAL’ VS ‘UNDERWEIGHT’ AT JPMORGAN; JD GROUP RAISED TO ‘OVERWEIGHT’ AT JPMORGAN

AHEAD IN MARKETS

Dollar Is Near Lowest in a Week as Recession May Be Prolonged

The dollar traded near the lowest level in almost a week against the yen before U.S. reports that may show manufacturing shrank and employers cut jobs by the most since 2001, fueling speculation a recession will be prolonged.

The dollar was little changed at 95.51 yen as of 8:25 a.m. in Tokyo from late in New York on Nov. 28. It fell to 94.61 yen on Nov. 26, the lowest since Nov. 21. The euro bought $1.2708, little changed from the end of last week. The euro was quoted at 121.38 yen from 121.22 on Nov. 28. The U.S. currency may decline to 94.80 yen and $1.2550 per euro today, Shimizu said.

Treasuries Rise; 10-Year Yield Extends Decline to Record Low

Treasuries rose, sending 10-year yields to a record low, before U.S. reports that economists estimate will show manufacturing contracted and employers cut the most jobs since 2001.

The 10-year note yield fell 2 basis points to 2.91 percent as of 2:47 p.m. in Tokyo, according to BGCantor Market Data. The price of the 3.75 percent security due November 2018 rose 5/32, or $1.56 per $1,000 face amount, to 107 7/32.

The yield fell as low as 2.89 percent, the least since Federal Reserve daily records started in 1962. A basis point is 0.01 percentage point.

NEWSPAPER HIGHLIGHTS

BayernLB Faces Reorganization, Job Cuts, FT Deutschland Says

Bayerische Landesbank faces reorganization, with a reduction in the number of employees and a smaller balance sheet, the Financial Times Deutschland reported, citing a bank spokesman.

EDF Wants Government to Lift Electricity Rates, Figaro Says

Electricite de France SA (EDF) wants the government to raise state-regulated electricity rates to help pay for investments in nuclear and hydroelectric power, Le Figaro reported, without saying where it got the information.

Saab, Volvo Seek Financial Aid From Sweden, FT Says

Volvo Car Corp. Chief Executive Officer Stephen Odell and Saab Automobile AB CEO Jan-Aake Jonsson have separately spoken to Swedish government officials about receiving aid, the Financial Times reported.

RBS Will Promise Six-Month Repossession Respite, FT Reports

Royal Bank of Scotland Group Plc will promise to give mortgage holders who are behind with payments at least six months before starting repossession proceedings, the Financial Times reported.

More Companies to Sell Equity as Debt Markets Dry Up, FT Says

There will probably be a surge in corporate equity issuance in coming months as opportunities dry up in the debt markets, the Financial Times said, citing Timothy Harvey-Samuel, head of equity capital markets at Citigroup Inc. in London.

Paying Bills Worries One in Four British Borrowers, FT Reports

More than one in four borrowers are worried about how to pay bills, the Financial Times reported, citing research conducted by YouGov Plc for professional services company PricewaterhouseCoopers.

General Motors Board Maintains Bankruptcy Option, WSJ Says

General Motors Corp. board members are keeping open the option for a bankruptcy filing, should Chief Executive Officer Richard Wagoner fail to win Congressional support for financial aid, the Wall Street Journal reported.

CNN Pushes Into Newspaper Market With Wire Service, NYT Says

CNN is trying to expand into the newspaper market by offering a wire service that will compete with the Associated Press and other news companies, the New York Times reported.

Morgan Stanley Revving Up Push into Retail Banking, WSJ Says

Morgan Stanley is considering buying regional banks with a customer base overlapping with its own as one option to increase deposits, the Wall Street Journal reported today, citing co-present James Gorman.

$140 Billion in Private-Equity Investments May Be Sold, FT Says

Investors are likely to sell $140 billion of private-equity investments during the next 18 months, many at a loss, the Financial Times reported.


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