Source: www.forbes.com

LONDON, Oct 30 (Reuters) - Emerging equities soared by 9 percent, sovereign debt spreads snapped in and currencies rallied on Thursday as investors took heart from a U.S. rate cut and currency swap lines for emerging market economies.

The Federal Reserve delivered on Wednesday an expected 50 basis point rate cut and launched $120 billion in new currency swap lines with South Korea, Mexico, Brazil and Singapore.

China, Hong Kong, Norway and Taiwan have also cut rates and Japan, the euro zone and Britain are expected to follow soon.

In addition, the International Monetary Fund on Wednesday approved a short-term financing facility for emerging market economies that have a good track record but are having difficulties accessing credit.

Emerging market assets have been crushed in recent weeks by the ongoing global financial crisis, as hedge funds pulled out of riskier assets to cover redemption payments, and several emerging economies appeared on the verge of collapse.

Benchmark emerging equities rose over 9 percent and were trading at 554.37 at 1030 GMT, bringing their gains to 24 percent from four-year lows set on Tuesday. Stocks have still fallen 30 percent this month and 55 percent this year.

'We have had energetic action worldwide from central bank governors and international institutions,' said Elisabeth Gruie, emerging markets strategist at BNP Paribas (other-otc: BNPQY.PK - news - people ).

'There is a sense of a step up in the measures and the market is benefiting from this.'

Russia's MICEX exchange suspended trading for an hour after its index rose more than 14 percent.

Emerging sovereign debt spreads tightened by 50 basis points to 682 bps over U.S. Treasuries, after narrowing by 50 bps in the previous session. Spreads topped 900 bps, their widest levels in six years, less than a week ago.

Russia's five-year credit default swaps, which hit distressed levels above 1,000 bps last week, tightened by 100 bps from the close to 700-850 bps, traders said.

Turkey also tightened by 100 bps, to 500-600 bps.

CURRENCIES UP

Dollar weakness following the U.S. rate cut to 1.0 percent and hints of more to come led to demand for higher-yielding currencies.

The Turkish lira hit two-week highs against the dollar and was trading nearly 2 percent higher from the U.S. close, bringing gains to 17 percent from 27-month lows set last week. The rand also hit two-week highs.

Turkey's economy minister Mehmet Simsek said Turkey had a positive approach to an IMF precautionary deal and a programme could be agreed if differences could be overcome.

Investors are eyeing the next emerging economies to agree IMF help. Ukraine, Hungary and Iceland have already clinched deals, and Turkey, Pakistan, Serbia and Belarus are in talks.

Ukraine's hryvnia spiked up 14 percent against the dollar , recouping the previous day's losses to record lows, in volatile trade after the central bank this week removed the currency's trading band.

The Ukraine president's office said on Thursday the central bank had sold nearly $5 billion in three weeks and criticised its failure to stabilise the currency.

The Icelandic crown continued to show barely any trade in international markets. Only two euro/crown trades have been recorded on Reuters matching dealing system since the central bank raised rates by 6 percentage points on Tuesday, with both trades at 240 per euro.

(Editing by Mike Peacock) Keywords: MARKETS EMERGING

tf.TFN-Europe_newsdesk@thomson.com

vjt

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved.

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KUALA LUMPUR, Oct 28 (Bernama) -- The ringgit was traded flat against the US dollar at close on Tuesday amid losses capped by the selling of the greenback holdings by exporters, dealers said.

At 5pm, the ringgit was little changed at 3.5790/5830 against the greenback from last Friday's closing of 3.5790/5840.

However, a dealer said the ringgit is likely to further weaken to the 3.60 level this week amid the uncertainty on the global front, triggered by investors seeking to liquidate their position.

Against the other major currencies, the ringgit was mixed, depreciating against the Singapore dollar at 2.3735/3780 from last Friday's 2.3713/3765 as well as against the British pound at 5.5706/5786 from 5.5503/5599.

However, compared with the yen, the ringgit appreciated at 3.7814/7873 from 3.8422/8500 and also rose against the euro at 4.4664/4721 from 4.4927/5004 previously.

-- BERNAMA

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Wed Oct 29, 2008 7:14am EDT - reuters

SAO PAULO, Oct 29 (Reuters) - Perdigao (PRGA3.SA: Quote, Profile, Research, Stock Buzz)(PDA.N: Quote, Profile, Research, Stock Buzz), one of Brazil's top meat processors, posted net losses of 25.4 million reais ($11.6 million) in the third quarter, compared with a net profit of 90.2 million reais in the same three months of 2007.

"The impact of the exchange rate on financial expenditures, with the depreciation of the real against the dollar - at a cost of 200.9 million reais without an effect on cash flow - turned the quarterly results negative," the company said late on Tuesday in a statement.

Earnings before interest, taxes, depreciation and amortization, a key measure of cash flow known as EBITDA, rose 20.7 percent from July through September to 274.9 million reais from the same period a year ago, the company said.

Perdigao is the most recent of several Brazilian companies in the export sector to post large losses due to hedging and speculative positions held on the currency markets. The Brazilian real BRBY has weakened from around 1.57 to the dollar in May-June to 2.183 on Tuesday. (Reporting by Roberto Samora; writing by Reese Ewing; Editing by Derek Caney)

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Source: www.livemint.com

The three firms would get Rs14,956.17 crore worth of oil bonds for selling petrol, diesel, domestic LPG and kerosene below cost in January-March quarter.

New Delhi: Indian Oil (IOC), Bharat Petroleum (BPCL) and Hindustan Petroleum (HPCL) are likely to get oil bonds worth Rs65,942 crore this week to make up for half of their revenue loss on fuel sale during the first nine months of 2008.
“Parliament has already approved (issue of oil bonds). We expect Finance Ministry to intimate of the bonds anytime now,” Petroleum Ministry Additional Secretary S Sundareshan said.
BPCL is to announce tomorrow its earnings in July-September quarter, while HPCL and IOC are to do so on Friday. Without the oil bonds, the three would post huge losses.
“Even with oil bonds, things are not going to be any better,” he said.

The three firms would get Rs14,956.17 crore worth of oil bonds for selling petrol, diesel, domestic LPG and kerosene below cost in January-March quarter. They will get an additional Rs24,408 crore compensation for April-June quarter and the remaining will be for July-September quarter.
Government compensates half of the losses resulting from its dictate to oil companies to not to raise fuel prices in line with cost, through issue of oil bonds.
For 2007-08, the oil companies reported a total revenue loss of Rs70,579 crore of which Rs35,289.50 crore is to be compensated through oil bonds. The government has already issued, oil bonds worth Rs20,333.33 crore for April-December 2007 period.
IOC, BPCL and HPCL in April-September lost Rs92,853 crore on fuel sales (audited figures) and are projected to lose Rs1,47,486 crore in the full fiscal. Half of the projected revenue loss is to be compensated through oil bonds.

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Source; www.bloomberg.com

By Ron Harui

Oct. 29 (Bloomberg) -- Japan's five-year government bonds surged, posting their biggest gain since 1999, after the Nikkei newspaper said the central bank is ``leaning toward'' cutting interest rates by a quarter-percentage point.

Yields fell to a three-week low after the Nikkei said the Bank of Japan may lower its overnight rate to 0.25 percent from 0.5 percent at a scheduled policy meeting on Oct. 31, without citing anyone. The odds of a rate reduction this week jumped to 46 percent from 8 percent yesterday, according to calculations by JPMorgan Chase & Co. using overnight swaps.

``This news is bond-positive,'' said Alessio Caldarera, a debt strategist in Tokyo at BNP Paribas Securities Japan Ltd., a unit of France's biggest bank. ``You can expect monetary policy expectations to affect the curve further out,'' especially the five-year sector, he said.

The yield on the five-year note slid 13.5 basis points, the most since February 1999, to 0.92 percent at 4:10 p.m. in Tokyo at Japan Bond Trading Co., the nation's largest interdealer debt broker. The price gained 0.633 yen to 101.306 yen. The yield touched 0.88 percent, the lowest level since April 16.

The 10-year bond yield dropped 5.5 basis points to 1.485 percent and 10-year bond futures for December delivery advanced 0.65 to 137.90 at the close of the Tokyo Stock Exchange.

Yoshihiro Sugimoto, chief press officer at the Bank of Japan, declined to comment on the Nikkei report.

Japan's central bank is likely to cut its benchmark interest rate by a quarter point to 0.25 percent on Oct. 31, Tomoko Fujii, head of economics and strategy at Bank of America Corp. in Tokyo, wrote in a research note yesterday.

``Lower JGB yields are expected,'' said Fujii in an e-mail today to Bloomberg News, confirming the note.

The five-year yield may fall to 0.73 percent and the 10- year yield may drop to 1.30 percent by year-end, Fujii forecast.

Stock Rally

The gain in bonds was tempered after the Nikkei 225 Stock Average climbed 7.7 percent, damping demand for the relative safety of government debt.

Some investors sold Japanese bonds after Treasuries slumped yesterday on speculation the U.S. will increase debt issuance. A senior Treasury official said the U.S. faces ``unprecedented'' financing needs and may sell more long-term bonds to meet them.

The Nikkei 225 gained for a second day after the Standard & Poor's 500 Index yesterday climbed 10.8 percent and the Dow Jones Industrial Average surged 10.9 percent.

Japanese bonds typically move in the opposite direction to stocks. Benchmark 10-year yields had a correlation of 0.83 with the Nikkei 225 last week, according to data compiled by Bloomberg. A value of 1 would mean the two moved in lockstep.

Production Outlook

Ten-year notes also gained after a government report today showed Japanese companies plan to cut production this month and next as the global financial crisis increases the likelihood of a worldwide recession.

``Definitely it's economic fundamentals,'' said Guthrie Williamson, a portfolio manager in Sydney at Principal Global Investors, which manages $228 billion in assets globally. ``I've been bullish on JGBs since May. There have been dips at times that have presented buying opportunities in recent weeks.''

The 10-year bond yield may decline to 1.2 percent by year- end, Williamson said.

Industrial production will fall 2.3 percent in October and 2.2 percent the following month, according to the Trade Ministry report. Output climbed 1.2 percent in September from August, when it declined 3.5 percent, the steepest decline in five years, the report also showed. The government downgraded its assessment of production.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.

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Source:

By PAN PYLAS

LONDON (AP) — Europe's stock markets opened mostly higher Wednesday after a stunning rally on Wall Street and further gains in Asia overnight as investors awaited possible interest rate cuts from central banks in the U.S. and Japan.

The FTSE 100 index of leading British shares was 149.47 points, or 3.8 percent, higher at 4,075.85 and France's CAC-40 was up 184.53 points, or 5.9 percent, at 3,299.45.

Germany's DAX index though was sharply lower as shares in Volkswagen AG, which have risen fivefold since Friday, dropped back by over 40 percent after the car maker's biggest shareholder Porsche AG said it will offer some stock to ease liquidity constraints.

Earlier, Japan's Nikkei index closed 589.98 points, or 7.7 percent, higher at 8,211.90 in the wake of the Dow Jones' 889 point, or 11 percent, rally Tuesday. The Dow's percentage rise Tuesday was its second biggest ever.

The renewed buying has been stoked by expectations that both the U.S. Federal Reserve and the Bank of Japan will cut interest rates this week and provide a further stimulus to the world economy which should foster some renewed risk appetite in markets.

The Fed is expected to cut its target fed funds rate by half a percentage point to 1 percent later Wednesday. Markets are also holding out the hope the Bank of Japan would trim its interest rate a quarter percentage point from the already low 0.5 percent.

The European Central Bank and Bank of England are also expected to follow suit and cut borrowing costs at their next scheduled rate-setting meetings next Thursday.

Despite signs that investors are looking for bargains after the turmoil of the last month, a sense of unease still prevails with the world economy and financial system fragile, evidenced overnight by the $25 billion package to help Hungary.

"This is still a volatile world as the bizarre 11 percent rose in the Dow overnight demonstrates," said Daragh Maher, an analyst at Calyon.

"Given that this was reportedly on the back of bargain hunting, one has to query why the market did not see similar value on Monday when the Dow continued to languish," he added.

Wall Street is expected to give up some of those gains when it opens later with futures markets predicting signaling a weaker opening for the two main U.S. indices in Wednesday trade. Dow and Standard & Poor's index futures were both down about 2 percent.

"After such huge gains yesterday a degree of profit taking at the open on Wall Street would pose few surprises," said Matt Buckland, a dealer at CMC Markets.

Elsewhere in Asia, the regional rally fizzled by the afternoon as traders cashed in profits amid fresh worries about company earnings.

Hong Kong's Hang Seng Index, up nearly 5 percent in early trading, trimmed its gain to just under 0.9 percent in volatile trade after a spectacular 14.4 percent rise the day before. Australia's S&P/ASX200 climbed 1.3 percent, helped by higher commodity prices.

South Korea's index pared its morning gains and dropped 3 percent as bank stocks pulled back on fears they may cut dividends after the government guaranteed their foreign currency loans.

Japan's stocks were helped by another fall in the value of the yen, which prompted investors to buy exporters like Toyota Motor Corp., which shot up 10.4 percent. Honda Motor Co. jumped 18 percent even though on Tuesday it reported a 41 percent drop in quarterly profit and lowered its forecast for the full year.

The yen has softened since jumping to about 91 to the dollar Friday. On Wednesday, the dollar was trading at about 97 yen after surging above 98 yen Tuesday, but up sharply from 94 yen late Monday.

Oil prices have also risen on the back of the rebound in global stock markets. Light, sweet crude for December delivery advanced $1.70 to $64.43 a barrel in London trade on the New York Mercantile Exchange. The contract slid 49 cents overnight to settle at $62.73, the lowest closing price since May 15, 2007.

On the currency front, the euro was 0.1 percent higher at $1.2744, while the pound was up 0.5 percent at $1.60.

AP Business Writers Jeremiah Marquez in Hong Kong and Kelly Olsen in Soeul contributed to this report.

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Japanese Bought Foreign Stocks and Bonds In Third Week of October

Asian Economy | Written by CEP News | Oct 23 08 00:30 GMT |

(CEP News) - Foreigners sold Â¥792.2 billon worth of Japanese bonds and sold Â¥300.1 billion worth of stocks in the week ending Oct. 17, according to the Japanese Ministry of Finance's international transactions in securities report on Thursday morning (Wednesday night EDT). Foreigners sold ¥861.0 billion worth of bonds the week prior, and bought ¥34.7 billion in Japanese stocks. The Japanese bought ¥348.4 billion worth of foreign stocks and bought ¥113.6 billion worth of foreign bonds for the week ending Oct. 17.

The Japanese bought ¥172.8 billion in foreign stocks the week before, and sold a downwardly revised ¥794.6 billion in bonds.

By Megan Ainscow, mainscow@economicnews.ca mainscow@economicnews.ca mainscow@economicnews.ca This email address is being protected from spam bots, you need Javascript enabled to view it

CEP Newswires - CEP News © 2008. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

By Jason Alan Jankovsky on October 23, 2008
Source: dailymarkets.com

Today’s US Dollar Trading

• Traders note volumes and conditions at almost zero
• Stops drive a lot of the majors lower
• USD/JPY into the 97.00 area

Overnight Preview

• Look for consolidation and a quiet night
• USD likely to be sideways ahead of data

Looking Ahead to Thursday
All times EASTERN (-4 GMT)

• 8:30am USD Unemployment Claims
• 10:00am USD HPI m/m
• 10:35am USD Natural Gas Storage

Summary

The USD continued to advance against most majors but lost ground against Yen to end the day mixed and at new highs for the year.

Stops were triggered in thin trade traders report suggesting that some bottom-picking has been done recently but the relentless one-way USD advance Wednesday made quick work of the USD bears today. Traders report that conditions were horrible and volumes almost non-existent suggesting that a potential bottom is once again forming. With most traders focusing almost exclusively on liquidity, bank lending and the financial crisis, it appears evident that finding a USD bear will be hard work. In my view, the charge higher by the USD is suspect because it can’t last due to the underlying fundamentals being what they are. Lately traders have ignored US economic data preferring to trade on rumor and conjecture; Thursday is regular unemployment and Friday is Existing home sales; both expected to be negative for the Greenback.

On the day, Cable sank like a stone for a low print at 1.6138 after the London fix as more dovish rhetoric from the BOE filtered through the markets. Traders note that order boards are blank after the 500 point move overnight and the 1200 point move the past 48 hours; most are looking for a bounce to at least hang a hat on. EURO likely fell in sympathy although some suggest the EURO led the decline; either way the EURO dropped through the 1.3000 handle for a low print at 1.2737 before a bounce was seen. Traders report model accounts selling the rate under the 1.2900 area. USD/CHF rallied also for a high print at 1.1714 in NY before falling back on profit-taking; mist expect a test for stops again over the 1.1720 area near-term and that may finally be the sell for a potential top.

USD/JPY fell in line with equities weakness; the DJIA losing 460 points on the day heading into the close. Low prints in USD/JPY at 97.29; aggressive traders can sell more on the close at the 97.50 area. In my view, the USD rally has got to be nearing the end of this move; fundamentals don’t support it and the financial crisis is showing signs of mitigating as some banks are returning to normal operations. Once USD bulls figure out they are holding expensive USD, I think at least a small correction will force a top in the rate. Look for quiet overnight action as volumes are light and a steady open in NY Thursday ahead of US data.
GBP/USD Daily

Resistance 3: 1.6800
Resistance 2: 1.6730
Resistance 1: 1.6500
Latest New York: 1.6234
Support 1: 1.6130
Support 2: ?
Support 3: ?

Comments

Follow-on selling surprises to the downside; stops cleared and orders thin. Traders note solid bids but offers remain. Rate at new support level but ranges appears wider. Drop under the 1.6500 handle finds light stops. Monthly lows give way as sentiment won’t rally. Traders note quality bids on the dip suggesting a bottom is in here somewhere. Aggressive traders can buy anytime but expect more whippy action. Follow-on selling likely from technicals but spillover strength from EURO likely to be better to end the week. Look for a recovery back to the 1.8000 handle near term; two-way action likely to continue. Confirmed sovereign interest on the dip last night as semi-officials seen on dips in both EURO and GBP recently. Traders report cross-spreading for Sterling crosses likely driving the rate near-term. Model accounts seen selling GBP and EURO overnight.
Data due Thursday: All times EASTERN (-4 GMT)
4:30am GBP Retail Sales m/m
4:30am GBP BBA Mortgage Approvals
Tentative GBP MPC Member Gieve Speaks

EURO/USD Daily

Resistance 3: 1.3300
Resistance 2: 1.3120/30
Resistance 1: 1.3060
Latest New York: 1.2832
Support 1: 1.2735
Support 2: 1.2660
Support 3: ?

Comments

More lows overnight; stops drive trade into next technical support. After all is done today the rate is unchanged from US opens. Option barriers reported on the dip but those are cleared. Model accounts seen selling the rate under the 1.2800 area. Official interest noted traders say but rate continued to sell-off. OK to look to the buy side now; rotation off the lows will likely signal a near-term bottom. Rate is an absolute screaming buy in my view-I can’t see further weakness being ignored by the buyers. Oil two-way spills over into pricing and if oil rallies it might take EURO with it. Traders note stops building above the market along with offers. Expect more two-way action with upside bias; traders note the rate is finding profit-taking bids on dips so far despite the uncertainty in the market. Traders suggesting that the rate is continuing to trade technically. Traders note official names overnight this time.
Data due Thursday: All times EASTERN (-4 GMT)
2:45am EUR French Consumer Spending m/m
4:00am EUR Current Account
5:00am EUR Industrial New Orders m/m
9:00am EUR Belgium NBB Business Climate

Disclaimer:
Trading Futures and Options on Futures and Cash Forex transactions involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.

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Source: Hurriyet.com

The Turkish lira fell to a 28-month low, while bond yields rose to a four-year high on Thursday, as worries over the economic outlook and growing global risk aversion undermined market confidence. (UPDATED)

Turkish assets tumble, lira hits 28-month low against the U.S. dollar

The lira eased more than 6 percent in afternoon trade to above1.73 levels against the dollar from its Wednesday interbank bank close of 1.63.

The currency has lost around a quarter of its value against the U.S. dollar this month as investors and hedge funds have been selling their assets and demanding U.S. dollar while leaving the emerging market.

The yield on the benchmark June 23, 2010, rose almost 3 percent jumped above 24.00 percent to hit its highest level in four years.

Turkish stocks which lost 2.64 percent at the close of the morning session, also extended their losses and fell nearly 5 percent in afternoon trade. It has lost more than half of its value this year amid the mounting global risk aversion.

Markets were eyeing the possibility of additional steps from the government and central bank to stabilize markets and prop up investor sentiment.

"Every kind of measure that the government announces in connection with the economy will have a positive impact (on the markets)," Reuters reported citing a forex trader.

Finance Minister Kemal Unakitan said Turkey would introduce ceilings on the budget deficit and the public debt stock to protect the country from the financial crisis.

He said the government will keep a 10 percent withholding tax on local bond investors' earnings but remove it for equities to help the country weather the financial crisis.

Foreign investors are exempt from withholding tax on bonds, bills and equities.

Central Bank Governor Durmus Yilmaz said the bank will double borrowing limits in the forex depo market to $10.8 billion starting from Friday and said that there was no problem with foreign exchange liquidity.

Global stocks also fell on fears of a recession. Asian stocks fell to a 4-year low on Thursday on growing fears that emerging market weakness would prolong a global recession and depress corporate earnings, pushing the yen to a 6-year high against the euro.

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23 Oct, 2008, 0016 hrs IST,T K Arun, ET Bureau

Unusual times call for unusual measures. The Indian stock market today calls for government-orchestrated investment on a large scale. The primary aim of such a proposal is not to prop up the market but to increase liquidity, stabilise the exchange rate and allow Indian companies to keep funding India’s growth.

There is a view, fairly widespread in India, that stock markets matter only for a tiny minority. After all, household savings invested in shares and debentures are less than 2% of India’s gross output and only about 10% of household financial savings. The percentage of households that own shares, too, is in small single digits.

So, many people, including economists, tend to dismiss stock market gyrations as of little consequence in overall policymaking. This would be a big mistake.

The battering that Indian stocks have received hurts the financial system as a whole and, therefore, the economy. This transmission of pain takes place not just by making it difficult for companies to raise fresh capital by way of equity. A nose-diving stock market dries up domestic liquidity and blocks access to foreign debt as well.

This is how it works. Fear of further losses on Indian stocks — India’s has been the worst performing stock market in Asia of late — forces foreign investors on our bourses to sell out and repatriate their money. When they buy dollars and take their money out, they reduce domestic liquidity and depreciate the currency. The tendency for the rupee to depreciate wildly makes foreign loans unviable.

Thanks to the financial crisis, developed country banks have lost faith in one another and are reluctant to lend amongst themselves. The London Inter-bank Offered Rate (Libor) is now significantly above the yield on treasury bonds, whereas, in the normal course, Libor is marginally above government bond rates.

When Indian companies borrow abroad, their rates are fixed as Libor plus a premium. Libor itself has shot up, and so has the premium. These loans are now expensive, without taking into account rupee depreciation.

If the rupee, which has now depreciated some 25% from its peak vis-à-vis the dollar in the last 12 months, continues to depreciate in an unpredictable fashion, these expensive loans become exorbitant, after taking into account the cost of hedging against wild swings in the exchange rate.

Unwarranted depreciation of the rupee will hurt domestic liquidity in three ways. Few fresh external loans would be contracted. External loans accounted for over Rs 80,000 crore last fiscal.

Indian companies that have to roll over their existing foreign loans would take rupee loans in India, convert the money into dollars and take out this money. This would suck out liquidity and further depreciate the rupee.

And a declining rupee would make the Indian stock and debt markets unattractive for fresh foreign flows. The return in dollars on their investment would be the rupee rate of return less the rate of depreciation of the rupee. All the government’s plans to bump up domestic liquidity by allowing greater FII flows into the domestic market for corporate as well as government debt would come unstuck.

So how do we prevent unwarranted rupee depreciation? The RBI can keep selling dollars from its forex hoard. It can, and should, help the fledgling currency derivatives market mature and do its work. Alongside, directly arranging for investment inflows into the stock market would help a lot.

Investing in Indian blue-chips at current valuations is a no-risk enterprise. Investors stand to make huge gains over a time-frame of three-four years. But retail investors are a scared lot and follow the herd mentality that sells when others sell and buy when others have already pushed up prices to unrealistic levels.

Long-term contractual savings — provident funds, pension funds — are, perversely enough, not present in the stock market at all. This is the time for the government to channel these funds into the market. Whereas the employees’ provident fund struggles to pay out a return of 8%, if they buy Indian blue chips at their current prices, they would generate returns that are many multiples of the original investment.

Since the board of trustees of the Employees’ Provident Fund has never demonstrated the sense that foreign pension funds display by entering the Indian market even today, the government could, as a special, short-term measure, give a guarantee of both capital and a return of 8% on investments, for funds deployed in the stock market now. The special guarantee can be extended to upto say, a fifth of nearly Rs 200,000 crore corpus.

Not only that. The government can guarantee borrowings by, say, the National Investment Fund from the RBI’s forex hoard, to bring in dollars to invest in the Indian stock market. Rather than finance FII exit, this way, the RBI would push its dollars directly into the stock market, improve valuations, discourage exit and put brakes on rupee depreciation. This would augment inflows of foreign capital and ease liquidity to lubricate growth.

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Mon, Oct 20 2008, 14:06 GMT
http://www.afxnews.com

NEW YORK, Oct 20 (Reuters) - U.S. crude futures bounced

higher on Monday on expectations that OPEC oil ministers will move to cut output at their Friday meeting and on higher global stock markets which bolstered credit confidence.

"Crude and products futures are higher ... after comments by several OPEC members over the weekend made it apparent that a production cut of at least 1 million (bpd) is the likely result of the extraordinary meeting of cartel members that will take place on Friday in Vienna," Addison Armstrong, analyst at Tradition Energy, wrote in a research note.

"Looks like we may have an 'abstract' bottom for now," said

a NYMEX broker in New York. "Panic selling may be drying up

both in commodities and equities. OPEC may cut, but will it be

enough?"

PRICES

* On the New York Mercantile Exchange at 9:32 a.m. EDT (1332 GMT), November crude was up $1.73, or 2.41 percent, at $73.58 a barrel, trading from $71.81 to $74.28. The November contract expires on Tuesday. Last Thursday's $68.57 intraday bottom was lowest front-month crude price since $67.07 was struck on June 27, 2007. Despite a $2 rise on Friday, for the week the contract fell $5.85 or 7.53 percent.

* In London, December Brent was up $1.74, or 2.5 percent, at $71.34 a barrel, trading from $70.00 to $71.95.

* NYMEX November RBOB rose 4.15 cents, or 2.49 percent, to $1.7076 a gallon, trading from $1.6691 to $1.7203.

* NYMEX November heating oil rose 5.86 cents, or 2.75 percent, to $2.1915 a gallon, trading from $2.1333 to $2.1985.

* The heating oil crack spread was at $18.33 a barrel, and the RBOB crack spread was in negative territory at minus $2.02.

TECHNICALS

NYMEX crude 10-day/20-day moving average: $80.72/$91.94

Technical support/resistance:

NYMEX crude: $68.90/$75.00

NYMEX heating oil: $1.9875 $2.2975

NYMEX RBOB: $1.5820/$1.8615

For a report on oil market technicals click

MARKET NEWS

* OPEC might not need a hefty oil output cut when it meets on Friday, an OPEC source told the Saudi-owned al-Hayata newspaper, as others in OPEC talked of a possible cut of over a million barrels per day, perhaps in stages.

* An OPEC output cut may hurt economic recovery, the International Energy Agency's head said.

* Russia will not discuss oil output cuts with OPEC's visiting secretary general this week, Energy Minister Sergei Shmatko said.

* World stocks put in strong gains as investors took comfort in global efforts to prop up the banking system.

* China's GDP rate slipped into single digits in the third quarter for the first time in at least four years.

* Crude oil speculators on the NYMEX shifted to a net short

position in the week to Oct. 14, the U.S. Commodity Futures Trading Commission reported on Friday.

* FACTBOX-OPEC comments ahead of Friday's meeting

* For a list of top energy news stories, click

(Reporting by Robert Gibbons; editing by Jim Marshall)

Keywords: MARKETS ENERGY NYMEX

tf.TFN-Europe_newsdesk@thomsonreuters.com

cmr

COPYRIGHT

Copyright Thomson Financial News Limited 2008. All rights reserved.

The copying, republication or redistribution of Thomson Financial News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Financial News.

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Mon, Oct 20 2008, 14:27 GMT
http://www.afxnews.com

NEW YORK, Oct 20 (Reuters) - The U.S. dollar extended gains versus the yen on Monday after Federal Reserve Chairman Ben Bernanke told Congress that another stimulus plan may be needed to boost the sluggish economy.

The dollar was last up 0.2 percent at 101.83 yen, versus 101.69 yen before Bernanke's testimony. The euro last traded down 0.5 percent at $1.3346, compared to $1.3360 before Bernanke's speech.

"With the economy likely to be weak for several quarters, and with some risk of a protracted slowdown, consideration of a fiscal package by the Congress at this juncture seems appropriate," Bernanke said in prepared remarks for delivery to a congressional panel.

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NEW YORK (AP) — Wall Street is gearing up for another surge following the Dow Jones industrial average's historic 936-point jump, with investors encouraged by the U.S. government's plans to buy stock in private banks. The Dow Jones industrial average futures are up 221, or 2.32 percent, to 9,729.

Standard & Poor's 500 index futures are up 27.60, or 2.71 percent, to 1,044.30, and Nasdaq 100 index futures are up 28.50, or 1.95 percent, to 1,487.00.

President Bush said Tuesday the government will use a chunk of the $700 billion bailout to inject capital into the nation's banks, which have been slammed by souring mortgage investments. The move follows a similar one announced Monday by European governments to invest about $2 trillion in their own troubled banks.

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Source: www.nytimes.com
By DAVID JOLLY and BETTINA WASSENER
Published: October 20, 2008

Stocks in New York followed shares in Europe and Asia higher on Monday, after a new round of government actions to backstop financial institutions and as investors watched for more signs that credit markets are loosening up.

European stocks rallied after the Dutch government announced late Sunday that it would inject about $13.4 billion of new capital into ING, one of the country’s largest financial institutions.

Asian financial markets gained after the South Korean government said over the weekend that it would guarantee as much as $100 billion in foreign debt held by its banks and would pump an additional $30 billion into the banking sector. The South Korean currency, the won, and the stock market had come under increasing strain last week because of the exposure of Seoul’s big banks to foreign-currency loans.

In New York, the Dow Jones industrial average opened slightly higher, up about 65 points in early trading. The broader Standard & Poor’s 500-stock index was up about about 1.3 percent. One crucial indicator, overnight lending of banks, also eased somewhat overnight.

Crude oil futures for November delivery in New York trading rose $1.82 to $73.67 a barrel.

In early afternoon European trading, the Amsterdam benchmark AEX index rose 2.3 percent, as shares of ING gained 23 percent. The DJ Euro Stoxx 50 index, a barometer of euro zone blue chips, rose 1.75 percent. The FTSE 100 index in London was up 2.1 percent, the CAC-40 in Paris rose 1.3 percent, and the DAX in Frankfurt added 0.38 percent.

In Tokyo, the benchmark Nikkei 225 stock average rose 3.6 percent. The S&P/ASX 200 index in Sydney gained 4.3 percent, and the Straits Times index in Singapore rose 3.1 percent.

Late in Hong Kong trading, the Hang Seng index was up 4.3 percent. Stocks in Bombay rose 4.4 percent after the Indian central bank took the market by surprise with a full one-percentage point cut in its main rate, to 8 percent.

Nonetheless, the gains Monday were modest compared to the massive global selloffs of the past two weeks, and a sense of caution prevailed in the market. While measures of credit market liquidity have shown improvement since coordinated actions by the major industrialized countries last week, they remain uncomfortably high.

The so-called Ted spread, the gap between yields on three-month government securities and the rate that banks charge each other for loans of the same duration, was unchanged at 3.63 percentage points early Monday. That is down from the peak last week of more than 4.6 percentage points, but still far above the pre-crisis average of between 0.5 and 1.0.

And the London interbank offered rate, or Libor, the rate banks charge each other for three-month loans in dollars fell, by the most in almost nine months.

Meanwhile, economic data Monday from China provided new evidence that the global economy is in for a period of slower or declining growth. Growth in China’s gross domestic product country slowed to 9 percent in the third quarter because of weak exports, a slumping real estate market and temporary restrictions imposed during the Olympics, marking the slowest expansion in five years.

Separately, the Bank of Japan cut its economic outlook for all of the country’s nine regions for the first time, citing slowing exports and weak household spending.

The dollar was mixed against other major currencies. The euro rose to $1.3497 from $1.3409 , while the British pound rose to $1.7500 from $1.7281. The dollar rose to 102.19 yen from 101.68 and to 1.1356 Swiss francs from 1.1372 francs.

David Jolly reported from Paris and Bettina Wassener reported from Hong Kong.

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