Oil jumps to new record near $142 as equities wilt

Friday, June 27, 2008; 5:37 AM

LONDON (Reuters) - Oil leapt to a new record high near $142 a barrel on Friday, extending gains after surging nearly 4 percent in the previous session, as tumbling global stock markets triggered a wider commodities rally.

U.S. light crude for August delivery was $1.71 up at $141.35 a barrel by 5:25 a.m. EDT, off highs of $141.71. London Brent crude was $1.56 up at $141.39, off highs of $141.98.

World stocks fell to a three-month low as a fast deteriorating global inflation picture fanned concerns over the outlook for corporate profits, hastening the rush of investors' funds into commodities.

"It has a lot to do with asset allocations. The equity markets are under serious pressure, breaking support levels. When equities are going nowhere, the money is parked into commodities," said Olivier Jakob at Petromatrix.

The MSCI main world equity index <.MIWD00000PUS> fell more than 0.6 percent to its lowest since March, with the index on track for the worst monthly performance in percentage terms since September 2002, according to Reuters data.

By contrast, commodities fared better, with gold steady near a one-month record high while U.S. corn futures jumped to a fresh record high.

CURB SPECULATION

Oil's latest surge comes despite moves in the U.S. to curb energy market speculation.

U.S. lawmakers on Thursday have approved legislation which directs the Commodity Futures Trading Commission (CFTC), the futures market regulator, to use all its authority including emergency powers to "curb immediately" the role of excessive speculation in energy futures markets.

Oil prices have doubled from $70 a year ago on supply disruptions and geopolitical tensions in the Middle East. Rising flows of cash into commodities from investors seeking to hedge against inflation and the weak dollar have also added to gains.

"It may be months away before the legislation comes into effect but just the fact that it was passed is definitely enough to give the market a little bit of a bearish sentiment," said Toby Hassall, analyst at Commodities Warrants Australia.

Oil, which had been trading in a range for most of the week, broke out of that range after Libya said it was studying possible options to cut output in response to potential U.S. actions against OPEC countries.

"We are studying all the options," Libya's most senior oil official, Shokri Ghanem, told Reuters, adding oil producers needed protection from what he viewed as U.S. attempts to extend its jurisdiction beyond its territory.

OPEC President Chakib Khelil's comments that prices could reach $170 a barrel in the coming months, also fuelled the rally. "I forecast prices probably between $150 and $170 during this summer. That will perhaps ease towards the end of the year," he told France 24 television.

Talks between oil workers and Chevron continued in Nigeria, with the oil minister saying he was confident a deal could be reached, but union officials left open the possibility of a strike early next week.

Latest Honda Runs on Hydrogen, Not Petroleum

TAKANEZAWA, Japan — It looks like an ordinary family sedan, costs more to build than a Ferrari and may have just moved the world one step closer to a future free of petroleum.

On Monday, Honda Motor celebrated the start of production of its FCX Clarity, the world’s first hydrogen-powered fuel-cell vehicle intended for mass production. In a ceremony at a factory an hour north of Tokyo, the first assembly-line FCX Clarity rolled out to the applause of hundreds of Honda employees wearing white jump suits.

Honda will make just 200 of the futuristic vehicles over the next three years, but said it eventually planned to increase production volumes, especially as hydrogen filling stations became more common. On Monday, Honda announced its first five customers, who included the actress Jamie Lee Curtis.

Honda said even the small initial production run represented progress toward a clean-burning technology that many rejected as too exotic and too expensive to gain wide acceptance.

“Basically, we can mass produce these now,” said Kazuaki Umezu, head of Honda’s Automobile New Model Center, where the FCX Clarity is built. “We are waiting for the infrastructure to catch up.”

Fuel-cell vehicles have been a sort of holy grail of the auto industry, offering the promise of driving without emitting air-polluting exhaust. Fuel cells work by combining hydrogen and oxygen from ordinary air to make electricity, in a process whose only byproducts are water and heat. They have drawn renewed attention in an era of climate change, $140 a barrel oil, and rising competition for dwindling fossil fuels.

“This is a must-have technology for the future of the earth,” said Takeo Fukui, Honda’s president. “Honda will work hard to mainstream fuel-cell cars.”

Fuel cells have an advantage over electric cars, whose batteries take hours to recharge and use electricity, which, in the case of the United States, China and many other countries, is often produced by coal-burning power plants.

Honda says its FCX Clarity can be filled easily at a pump, can drive 280 miles on a tank, almost as far as a gasoline car. It also gets higher fuel efficiency than a gasoline car or hybrid, the equivalent of 74 miles a gallon of gas, according to the company.

But the technology has faced many hurdles, not the least of which has been the prohibitive cost of the fuel cells themselves. Honda says it has found ways to mass produce them, which promises to drive down costs through economies of scale. On Monday, it showed reporters its fuel-cell production line, which resembled a semiconductor factory more than an auto plant with its humming automated machinery and white smocked workers in dust-free rooms.

Mr. Fukui said the cars cost several hundred thousand dollars each to produce, though he said that should drop below $100,000 in less than a decade as production volumes increase. In the meantime, the car company will be effectively subsidizing its customers, who will lease the vehicles for $600 a month. That is not much more than the leasing price of one of Honda’s top Acura line of luxury cars.

At Monday’s ceremony, Mr. Fukui presented an oversize key to the first FCX Clarity customer, a film producer from Los Angeles on hand for the occasion. Honda said it would offer the car in Southern California first because the state has been a leader in building hydrogen filling stations.

Honda said the five had been chosen after the company got a wave of queries from American consumers when it publicized the car last year. On Monday, Honda also announced three dealerships near Los Angeles that will be the first to start leasing FCX Claritys.

Fuel-cell vehicles have been a big gamble for Honda, which has spent the last 16 years and millions of dollars — the company will not say exactly how much — developing them. For a time, the company was criticized for pouring money into unproven technologies while refusing to follow the rest of the industry into large sport utility vehicles and pickup trucks.

Now, with gas prices soaring, Honda is in an enviable position of not being burdened with large inventories of gas-guzzling full-frame trucks that require hefty incentives to sell, or the factories that build them. Analysts have said Honda and the rival Japanese carmaker Toyota have seized a commanding lead in more efficient, green technologies like hybrids as well as fuel cells.

Honda says one big breakthrough was shrinking the size of its fuel cells. In the FCX Clarity, they fit in a box-shaped unit the size of a desktop PC that weighs about 150 pounds, less than half of their size a decade ago.

The FCX Clarity’s fuel-cell unit can generate up to 100 kilowatts of electricity, enough to accelerate the car from zero to 60 miles an hour in less than nine seconds, and give it top speeds of 100 miles an hour, Honda says. Even at high speed, the FCX Clarity, a four-door sedan that looks like a sleeker version of the Accord, drives with the hushed whine of a golf cart.

Honda said a big remaining hurdle to true mass production is the lack of filling stations that sell hydrogen. Even in California, where the state government has led a push to build hydrogen stations, there are still very few public stations, Honda said. That will make it hard to drive the car far from home, limiting its appeal, the company said.

For now, the first batch of customers seem drawn by the car’s novelty as much as anything else. The first owner, the film producer Ron Yerxa, said he did not plan to drive it far, just to work and to eat out — far enough to draw the admiration of passers-by.

“When I drive it to breakfast, people will ask about it,” Mr. Yerxa said. “They’ll want one, too.”

Microsoft Made $8 Billion Offer to Yahoo Before Google Accord

By Amy Thomson

June 14 (Bloomberg) -- Microsoft Corp. made a final proposal to Yahoo! Inc. before the Internet company forged an agreement with rival Google Inc., offering to buy $8 billion of Yahoo shares at $35 each and acquire its search-engine business.

Microsoft, the world's biggest software maker, would have paid $1 billion for the search unit, President Kevin Johnson said yesterday in an e-mail to employees. The discussions were the most recent round of talks that began with an unsolicited bid for the whole company on Jan. 31.

The Microsoft proposal would have challenged Google's dominance in Internet searches by forming a long-term partnership with Yahoo, according to the e-mail. The deal would generate more revenue for three years than what Yahoo gets from its own ad system, Johnson said.

``This partnership would have created a stronger competitor to Google, providing greater choice and innovation for advertisers, publishers and consumers,'' Johnson said.

The company opposes Yahoo's partnership with Google, the largest search engine, because the deal will consolidate more than 90 percent of the market, Johnson said in the e-mail. Yahoo will let Google run ads beside some of its search results.

Microsoft, based in Redmond, Washington, rose 83 cents, or 2.9 percent, to $29.07 yesterday in Nasdaq Stock Market trading. The shares have declined 18 percent this year. Yahoo shares, little changed this year, fell 5 cents to $23.47.

Less Attractive?

Yahoo turned down the Microsoft offer because it undervalued the search business and the company as a whole, said a person familiar with the talks who asked not to be identified. The agreement would have locked Yahoo into an exclusive deal for 10 years, while only offering higher returns for three, the person said. The Google accord lets Yahoo work with other companies.

Yahoo spokeswoman Diana Wong didn't immediately return a call seeking comment.

Microsoft has said its offer for Yahoo's search business is still on the table and that it's no longer pursuing a full acquisition of the Sunnyvale, California-based company.

Its latest proposal would have added more than $1 billion to Yahoo's operating income, more than doubling it in the first year of operation, Microsoft said. The combination of search platforms also would have reduced engineering and development costs. The plan would transfer $9 billion in total to Yahoo, Johnson said.

Alternative Deal

Microsoft had agreed to discuss an alternative transaction with Yahoo after dropping its bid of $47.5 billion, or $33 a share, on May 3. The company made a $31-a-share offer three months earlier, touting the deal as a way for the No. 2 and No. 3 U.S. search engines to gain ground on Google.

The arrangement with Google will add about $800 million a year to sales, Yahoo said this week. The companies will delay implementing the program, which covers search results in the U.S. and Canada, for up to three and a half months to give the U.S. Justice Department time for review.

The deal may add as much as $450 million in operating cash flow in the first 12 months, Yahoo said. The partnership isn't exclusive, meaning that other companies will be able to sell ads that appear on Yahoo's pages. Yahoo's revenue last year was $6.97 billion.

Billionaire investor Carl Icahn has demanded that Yahoo approach Microsoft about a full acquisition at $34.375 a share. He has nominated candidates to replace Yahoo's board at its annual meeting on Aug. 1. Icahn owned 10 million shares of Yahoo and the option to purchase an additional 49 million as of May 15.

Icahn, 72, has accused Yahoo Chief Executive Officer Jerry Yang and the board of sabotaging Microsoft's acquisition plan after Yahoo adopted an employee-severance plan that would compensate workers displaced by a change in control. The plan would have cost Microsoft an additional $2.4 billion, Icahn said. Yahoo said the price would be no more than $845 million.

Icahn has the backing of BP Capital LLC Chairman T. Boone Pickens and hedge-fund manager John Paulson. He has said he is open to a deal with Google as long as it can be canceled to allow Microsoft to acquire the company.

Yahoo would have to pay as much as $250 million to dissolve the advertising accord.

To contact the reporter on this story: Amy Thomson in New York at athomson6@bloomberg.net

Dow off 206 as oil climbs over $136

Investors flee stocks, spooked by rising oil and gasoline prices, inflation fears and worries about Washington Mutual, Lehman Bros. and other financial companies. Anheuser-Busch gets a $46.3 billion takeover bid. Concern about Steve Jobs' health hits Apple shares.

By Charley Blaine and Elizabeth Strott

Stocks fell sharply today as crude oil jumped over $136 a barrel again -- and briefly topped $138 -- amid concerns about the health of key banks and financial houses.

Crude oil closed at $136.38 a barrel, up 3.9% from Tuesday, after the Energy Department reported a surprising decline in domestic crude supplies. Crude peaked at $138.30, just 24 cents under Friday's record close of $138.54.

The Dow Jones industrials fell 206 points, or 1.7%, to 12,084. The Standard & Poor's 500 Index tumbled 23 points, or 1.7%, to 1,335, and the Nasdaq Composite Index slumped 55 points, or 2.2%, to 2,394.

After the close, shares of Anheuser-Busch (BUD, news, msgs) were up more than 7% to $62.59 after the maker of Budweiser, the best-selling U.S. beer, said it had received an unsolicited takeover bid of $65 a share from InBev, the Belgian-Brazlian brewing company. The offer values Anheuser-Busch at $46.3 billion.

Anheuser said it would make a determination on the offer "in due course." Many observers expect a nasty takeover fight.

The Dow's decline came after a 395-point loss on Friday and was its 15th loss of at least 200 points so far in 2008.

The slump, which has shaved 8% off the Dow since a May 19 intraday peak at 13,137, shows no signs of giving up. Before May 19, the major indexes had regained more than half of their losses from the market peaks last October through March. Those gains have been trimmed substantially.

The S&P 500 rose 14.6% between its March 17 low and May 19 intraday high. That gain has been chopped to 6.3%.

Investors are trying to decide how three forces will ultimately affect the economy and consumers:

• High oil prices. The big run-up this year and, particularly since May, has forced motorists around the world to cut back. It is changing spending habits and may cause more airlines to seek bankruptcy protection.

• The housing crunch. While there are signs of bottoming -- big price cuts have brought out buyers in Florida, the New York area and California -- a bottom nationally isn't apparent.

• The credit crunch. This is the most complex problem facing the economy and the markets. It has already caused the collapse of Bear Stearns. Washington Mutual (WM, news, msgs) and Lehman Bros. (LEH, news, msgs) have been under extreme pressure in the last week. WaMu fell 9.3% to $6.06. Lehman Bros. fell 13.6% o $23.75 after a Merrill Lynch analyst cut his rating on the stock.

Markets will contend with a government report on Thursday on retail sales, and tensions will rise as traders await the Labor Department's consumer price index report, due before Friday's open.

Just a tough day

It was a weak market from the start, and it was made worse when a key market support level -- 1,350 on the S&P 500 -- was breached.

Only three of the 30 Dow stocks were higher, led by ExxonMobil (XOM, news, msgs), up 0.8% to $88.61, and Chevron (CVX, news, msgs), up 0.7% to $99.42. Chemical giant DuPont (DD, news, msgs) was up 0.4% to $45.89.

The five financial components of the Dow -- Bank of America (BAC, news, msgs), JPMorgan Chase (JPM, news, msgs), American International Group (AIG, news, msgs), American Express (AXP, news, msgs) and Citigroup (C, news, msgs) -- were all down 2% to 5%. Citigroup was the loser of the group, down 5.2% to $19.21.

Only 45 S&P 500 stocks were higher. Nine of the 10 sectors of the S&P 500 were lower; the one gainer: energy stocks.

In addition, just three stocks in the Nasdaq-100 Index ($NDX.X) rose. That index was off 45 points, or 2.3%, to 1,928. Apple (AAPL, news, msgs) was the biggest contributor to the Nasdaq-100's loss. Its 2.6% loss to $180.81 knocked about 7 points off the index. The issue: concerns about CEO Steve Jobs' health. Jobs, who previously had cancer, appeared gaunt Monday as he announced the new version of the iPhone; company officials have said he just had a bug.

• Top Stocks blog: Should we care about Steve Jobs' appearance?

An additional issue came when the Semiconductor Industry Association cut its 2008 semiconductor sales growth outlook to 4.3% from 7.7%, citing continued price pressure from strong competition in memory chips, primarily DRAMs. DRAMs are dynamic random access memory chips, the most common kind of memory chips used in personal computers.

The Philadelphia Semiconductor Index fell 2.1% to 387 on the news. Dow component Intel (INTC, news, msgs) fell 3.8% to $21.81.

Meanwhile, the Federal Reserve said that economic activity remained weak in April and May. The Fed's latest Beige Book report, an anecdotal look at business conditions, found that consumer spending was pinched amid high prices for oil and food.

Seven out of 12 regions reported economic activity was softer in the six-week period. The five remaining regions reported they were stable or little changed from the similarly gloomy April survey. The housing market faced continuing pressure, and the cost of energy was seen damping tourism.

With today's close, the Dow is down 8.9% on the year and 14.7% from its October 2007 high. The S&P 500 is down 9.1% and 14.7%. The Nasdaq is off 9.7% and 16.3%.

Energy prices -- New York close

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Crude oil (NYMEX) (per barrel)	$136.38	$131.31	$5.07	7.09%	42.09%
Heating oil (per gallon)	$3.9748	$3.8124	$0.1624	8.40%	50.03%
Natural gas (per million BTU)	$12.6600	$12.4350	$0.2250	8.18%	69.18%
Unleaded gasoline (per gallon)	$3.4658	$3.3193	$0.1465	3.51%	39.14%

Falling oil supplies = higher prices

Crude's big gain today came after it had fallen 5.2% in the prior two sessions.

The Energy Department said that oil inventories fell by 4.6 million barrels last week to 302.2 million. That drop was the fourth weekly inventory decline in a row -- and was far greater than analysts' expectations of a 1.5 million barrel decline.

• Get free, real-time stock quotes on MSN Money

As crude jumped, the national average retail price of gasoline hit a new high of $4.052 a gallon, AAA's daily Fuel Gauge Report showed.

The drop in oil supply was a surprise, trader Mark Solazzo of M. Solazzo Trading told CNBC this morning. "We were expecting more neutral numbers." Crude should hit $142 soon, Solazzo predicted. Analysts from Morgan Stanley and Goldman Sachs have predicted crude would hit $150 a barrel by July 4.

Motorists can expect gasoline prices around $4 gallon through next year, the Energy Department said today, with oil prices staying well above $100 a barrel.

Crude oil prices are likely to average $126 a barrel in 2009, $4 higher than this year, as oil supplies and demand are expected to remain tight, Guy Caruso, head of the department’s Energy Information Administration, told a congressional hearing.

Gasoline prices are likely to peak at $4.15 a gallon in August and won’t go down much after that, the agency projected. Gasoline may average $3.92 a gallon through 2009.

Motorists are starting to change their driving habits as fuel prices rise.

Gasoline demand fell 1.3% over the past four weeks compared with a year ago, the Energy Department said. MasterCard's Gasoline SpendingPulse report Tuesday also showed that demand at the pump fell. It was the seventh such report in a row to show a year-on-year decline in weekly demand.

Stephen Schork of the Schork Report newsletter wrote that the declines reflect changes in vacation plans.

"You have to get yourself to work -- either by car or mass transit -- every day," Schork wrote. "Conversely, you have greater discretion on how you allocate your vacation mileage . . . assuming Americans are going to take vacation this summer."

While crude supplies fell, distillate supplies (such as heating oil and diesel) rose by 2.3 million barrels to 114 million barrels, and gasoline supplies rose by 1 million barrels to 210.1 million barrels. Diesel prices have been soaring because of higher demand in Europe and Asia, especially China. China has said its oil imports jumped 25%, Bloomberg News reported. The catalyst: heavy demand from efforts to recover from the May earthquake in southwest China.

Financial stocks are a big worry

While oil prices were a big problem, financial companies were also weighing on the market as traders speculated that rising inflation may force central banks around the world to raise interest rates.

Washington Mutual and Lehman Bros. pushed financial shares to the lowest level in five years.

Lehman Bros. fell after Merrill Lynch analyst Guy Moszkowski cut his rating on the firm to "neutral" -- a week after telling clients to buy the stock.

The enormity of Lehman's second-quarter loss, he said, indicated the company's profit potential has been reduced, he told clients in a note today.

The bigger question is how long Wall Street's fourth-largest investment bank can remain independent. Many analysts now believe the answer is: "not long." The company is too small and doesn't have any specialties that can help it stay independent, BusinessWeek said today.

In addition, Goldman Sachs (GS, news, msgs) was down 2.9% to $162.40 on speculation the investment bank would report large write-downs when it reports quarterly figures next week, Reuters said.

Meanwhile, Burlington Northern Santa Fe (BNI, news, msgs) led industrial shares lower after UBS said the second-largest U.S. railroad may cut its profit forecast. FedEx (FDX, news, msgs) and United Parcel Service (UPS, news, msgs) slid 4% and 2.8%, respectively, on higher oil prices.

Alcoa (AA, news, msgs) was the Dow's biggest loser, falling 7.5% to $39.53. The rating on the shares was cut to "neutral" from "overweight" today by JPMorgan Chase -- which also said the company's new chief executive officer, Klaus Kleinfeld, will disappoint investors.

Kleinfeld also said that higher input costs will likely hurt near-term earnings.

"While the market appears to be discounting a sale of Alcoa or at least some sort of spinoff to separate its upstream from its downstream businesses, we believe that both of these assumptions are incorrect," JPMorgan's analyst wrote in a note to clients.

Fertilizer stocks jump

One sector that did do well today was fertilizer companies, thanks in part to some positive comments from Agrium (AGU, news, msgs) and Potash of Saskatchewan (POT, news, msgs).

Agrium this morning lifted its second-quarter forecast to between $2.80 and $3.00 per share, up from a previous prediction of $1.92 to $2.22 per share. The stock jumped 8.5% to $98.96 on the news. The strong global demand for food puts Potash in "the greatest period of growth," company CEO Bill Doyle said to a RBC Capital Markets conference in Toronto. Soaring prices have not hit demand, either, Doyle said, adding that "we're nowhere near peak pricing."

Potash shares rose 1.2% to $223.10.

Fertilizer companies have been booming as corn, wheat and soybeans have hit record highs in recent months. Farmers have been taking advantage of the high prices and planting more crops, which, in turn require more fertilizer.

Inflation the word of the day again

One day after comments from Federal Reserve Chairman Ben Bernanke about inflation risks sent jitters through the markets, another Fed board member had some thoughts about inflation today.

Fed Vice Chairman Donald Kohn said he thinks that the Fed should stick with its current policies on inflation and unemployment because other policies could make things worse.

Kohn spoke this morning at the Boston Fed's annual economic conference, the same conference where Bernanke spoke on Monday. The three-day conference ends today.

• Readers talk: Should the Fed raise rates?

"Fed officials will remain hawkish on inflation risks," said Michiyoshi Kato, senior vice president of currency sales at Mizuho Corporate Bank in Tokyo, to Bloomberg News. "U.S. officials' verbal intervention is too much to ignore."

Bernanke said that the Fed will "strongly resist" any surge in inflationary pressure -- a signal that the Fed is done lowering interest rates. Bernanke's words prompted speculation that the Fed could even raise rates at coming meetings to dampen expectations of inflation. Most economists expect the Fed to keep rates steady at 2% at its meeting later this month.

Mortgage applications rise

Mortgage applications jumped 10.9% in the week ending June 9, compared to the last week in May, the Mortgage Bankers Association reported this morning.

Refinancing applications rose 8.4%, and filings for mortgages to buy homes increased 12.8%. Total applications were still down 16.5% from the same week in 2007.

Rates on 30-year fixed mortgages averaged 6.24% last week, up slightly from 6.17% the previous week. The average rate on 15-year fixed mortgages rose to 5.78% last week from 5.7%.

Last year, the average rate on a 30-year fixed mortgage was 6.61%."Buyers do seem to be responding to the drop in home prices," said Russell Price, senior economist at H&R Block Financial Advisors, to Bloomberg News. The S&P/Case Shiller home price index fell 14% in the first quarter of 2008 from the same quarter a year ago.

However, Price cautioned that "credit availability is much tighter than it was previously, and this will delay the sector's recovery."

Chrysler could cut production

Privately held Chrysler will likely cut production of truck sales because of weak demand, CEO Bob Nardelli said at a conference late Tuesday.

Nardelli also said Cerberus Capital Management, the private-equity firm that bought an 80.1% stake in Chrysler last August, is not "second-guessing" its decision to buy the automaker and that Chrysler will be an independent company three years from now.

• Top Stocks blog: Ford shareholders want out

Auto makers have been slammed by a slowdown in demand for high-profit vehicles like SUVs and trucks. Chrysler's U.S. sales fell 25% in May, compared to last year, and the company's market share dipped by 2 percentage points to 10.6%.

Nardelli said the company is working on building an international presence, with emphasis on opportunities in China, India and Brazil. Chrysler's former corporate parent, German automaker Daimler, had helped the company on the international front. Daimler still owns 19.9 of Chrysler.

Staples' sweetened bid wins over Corporate Express

Staples (SPLS, news, msgs) this morning said it finally won the support of Dutch office-supplies company Corporate Express, after raising its bid to $2.6 billion, or $14.30 per share in cash.

Staples raised its bid three times before Corporate Express agreed to a deal. The first offer came in February.

The deal will help boost Staples' office-supplies division, which is its most profitable business. Shares of Staples were up 5.3% to $24.38 today, tops among S&P 500 stocks.

Short hits from the markets -- 4 p.m.

	Wed.	Tues.	Chg.	Month chg.	YTD chg.
Treasurys
13-week Treasury bill	1.905%	1.970%	-0.065	2.97%	-39.33%
5-year Treasury note yield	3.469%	3.541%	-0.072	1.82%	0.41%
10-year Treasury note yield	4.073%	4.099%	-0.026	0.67%	0.94%
30-year Treasury bond yield	4.702%	4.701%	0.001	-0.11%	5.45%
Currencies
U.S. Dollar Index	73.235	73.740	-0.505	0.39%	-4.51%
British pound in dollars	$1.9639	$1.9646	-0.0008	-0.98%	-1.28%
Dollar in British pounds	£0.5092	£0.5090	0.0002	0.99%	1.29%
Euro in dollars	$1.5569	$1.5564	0.0005	0.06%	6.52%
Dollar in euros	€ 0.6423	€ 0.6425	-0.0002	-0.06%	-6.12%
Dollar in yen	106.81	106.81	0.00	0.40%	-4.51%
Canadian dollar in U.S. dollars	$0.981	$0.981	-$0.0001	-2.60%	-1.22%
U.S. dollar in Canadian dollars	$1.020	$1.019	$0.0009	2.69%	1.24%
Commodities
Gold	$882.90	$871.20	$11.70	-0.50%	5.36%
Copper	$3.5795	$3.5600	$0.02	-0.73%	17.71%
Silver	$16.8550	$16.6350	$0.22	-0.06%	12.97%
Corn	$7.0325	$6.7325	$0.30	17.36%	54.39%
Crude oil (NYMEX) (per barrel)	$136.38	$131.31	$5.07	7.09%	42.09%

Australian Employers Unexpectedly Cut Workers in May (Update2)

June 12 (Bloomberg) -- Australia unexpectedly lost jobs in May, ending a record 18 months of gains and sending the nation's currency lower on speculation the central bank may not raise interest rates again.

Companies cut 19,700 workers after adding a revised 37,500 in April, the statistics bureau said in Sydney today. The median estimate of 22 economists surveyed by Bloomberg News was for a 13,500 gain. The jobless rate held at 4.3 percent.

The biggest decline in employment since September 2005 is the strongest signal yet that the Reserve Bank's two rate increases this year may be enough to cool the economy's 17-year expansion and damp inflation. Australian employers are mirroring job cuts in the U.S. and U.K. as oil prices surge to a record and global growth slows.

``The Reserve Bank is firmly on hold for the remainder of the year,'' said Helen Kevans, an economist at JPMorgan Chase & Co. in Sydney. ``Businesses have put off or ceased their hiring for the time being. We'll have to wait and see whether this is a sign of more to come.''

The number of full-time positions declined 10,400 in May and part-time jobs dropped 9,300, today's report showed. About half of the nation's 21 million people are employed.

Australia's dollar slumped to 93.82 U.S. cents at 1:03 p.m. in Sydney, the lowest since May 16, from 94.63 cents before the report was released. The yield on the two-year bond shed 9 basis points, or 0.09 percentage points, to 7.01 percent. The benchmark S&P/ASX Index of stocks fell 2.2 percent to 5,348.70.

Airlines, Carmakers

Qantas Airways Ltd., Australia's largest carrier, said this month that it will slash services to Japan, shift other Asian routes to low-cost unit Jetstar and cut jobs in response to surging fuel costs. Crude oil climbed to a record $139.12 a barrel last week.

General Motors Corp.'s Australian unit, Holden, said last week that it will end production of four-cylinder engines at its Melbourne factory, where more than 500 people are employed. The company also cut 600 jobs at its Adelaide factory in March.

``Some loosening in the drum-tight labor market will be welcomed, and should help keep the Reserve Bank sidelined,'' said Su-Lin Ong, a senior economist at RBC Capital Markets in Sydney. Still, given there's a shortage of skilled workers, most ``employers are unlikely to turn around and shed labor after only several months of moderation in activity.''

Mining Boom

China's growing appetite for natural resources has seen companies including Rio Tinto Group expand mines, railways and ports, helping stoke 18 months of job gains through April that generated 456,000 positions in Australia.

The mining boom has driven expansion in Australia's $1 trillion economy, helping it weather the global credit crunch.

Reserve Bank Glenn Stevens and his board raised the benchmark interest rate to a 12-year high of 7.25 percent in March on concern a shortage of skilled labor would drive up wages and stoke inflation, already at the strongest since 1991.

Steven left the rate unchanged last week for a third month.

The chance of another quarter-point rate increase by September fell to 48 percent from 74 percent before the jobs report was released, according to 30-day interbank contracts traded on the Sydney Futures Exchange.

The slump in Australian jobs follows reports that show the U.S. unemployment rate gained the most in more than two decades in May, and the U.K. jobless rate rose to a seven-month high.

`Vengeance'

``Employment data is always the last to turn in an economic slowdown, but when it does turn it usually does so with a vengeance,'' said Clifford Bennett, chief economist at Sonray Capital Markets Ltd. in Sydney. ``The Australian economy is in a precarious state.''

Adding to signs the economy is moderating, consumer confidence slumped to the lowest level in almost 16 years in June, home-loan approvals dropped for a third month in April, and businesses were pessimistic for a fifth consecutive month in May, reports this week showed.

The participation rate, which measures the labor force as a percentage of the population aged over 15, fell to 65.2 percent in May from 65.5 percent in April, the figures showed.

The report ``is a sign that the Reserve Bank is on track, and their tightening is delivering the right amount of pain,'' said Matthew Johnson, an economist at ICAP Australia Ltd. in Sydney. ``A looser labor market cuts wage negotiating power, and thereby reduces the risk that high inflation will become embedded in the wage-price mechanism.''

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

李嘉誠：次按風暴未完

(星島) 05月 23日 星期五 05:30AM

(綜合報道)

(星島日報 報道)長和系主席李嘉誠 認為，香港地皮供應有規律，樓價不會跌，而且在低息及負利率環境下，也有利樓價向好。不過，對股票市場看法則較為審慎，因次按影響未完，港股要審慎。至於大陸股市雖回落許多，但仍較一年前升了很多，故此也要小心。李嘉誠重申，不宜借錢買股票投機。

　　本報財經組

　　恒地主席李兆基 本周一在中華煤氣 股東會後，唱好股市，認為今年八月份恒指可望重上三萬點水平。對於李兆基的意見，李嘉誠以大家都是朋友，而沒有作出評論。

　　李嘉誠認為，目前環球經濟處於一個艱難時間。雖然美國 信貸危機似乎處理了一部分，但次按所帶來的困難，在美國仍然持續，美國地產的情況還未知。油價創下歷史新高，即使再上升亦不足為奇，他相信這對西方國家的影響很大，有可能拖累經濟和股市。

　　內地股市仍高企

　　內地股市去年創下新高，上海 綜合指數創下六一二四點高位，但A股指數其後由高位回落了五成，最低跌至二九九○點，四月底才回穩，昨日報三四八五點，市盈率仍然高達二十七倍。

　　李嘉誠認為，目前看待內地股市仍然要好小心，因為目前的指數，即使是比較七至八個月前為低，但比較一年前的指數，則仍然是高。

　　他認為，無論是有錢，抑或是無錢的投資者，也不要借錢投機。如果無借錢買股票，即使股價下跌，仍然可以持有，等待他日股價回升。

　　香港地產市場由於土地供應不多，也有規律，能夠站得住腳，有些地區更會趨好。李嘉誠形容，今年利息依然比較低，而在美國經濟差的時候，要加息並不容 易。香港因為供應的問題，樓價不會跌，而以傳統經濟角度而言，負利率有利樓市，相信樓市今年會好。至於升幅有多少，他則未有作出估計。

　　低調富豪地皮細

　　長實 副主席李澤鉅 指出，公司剛推出豪宅半山壹號銷售，由於市場供應量不多，試推的小部分特色單位已經售罄。一般單位將於今日陸續開售，市場反應非常好，他認為本港樓市仍存在購買力。

　　低調富豪余彭年為響應四川 賑災，將推出五幅九龍塘地皮拍賣。至於長實集團是否有興趣競投，李嘉誠認為，該些地皮面積相對較細。

　　他未有正面回應是否會參與競投，僅指長實有專人負責土地儲備。

　　無意沾手航空業

　　至於長實借貸予前甘泉航空 主席李卓民一事，是否有興趣沾手航空業，李澤鉅則回應，純屬公司借予個別人士的貸款，並無對航空業務有特別偏好，私人亦無投資於航空業。

　　市場昨日傳出李嘉誠次子兼電盈主席李澤楷 有興趣經營航空公司，李嘉誠以私人問題而不回應。

　　

Asian Stock Rise, Led by Toyota, Consumer Electronics Makers

By Chua Kong Ho and Chen Shiyin

June 11 (Bloomberg) -- Asian stocks advanced for the first time in three days on speculation a stronger dollar will boost profits for exporters of cars and consumer electronics.
Toyota Motor Corp., Japan's largest vehicle maker, gained the most in a week. Fuji Heavy Industries Ltd. surged after Morgan Stanley raised its rating, citing benefits from the weaker yen. China Merchants Bank Co. led Chinese shares lower for a second day after the central bank ordered lenders to set aside more reserves and a report today showed producer-price inflation accelerated.
The MSCI Asia Pacific Index added 0.1 percent to 143.68 at 1:23 p.m. in Tokyo, after earlier falling as much as 0.6 percent. The benchmark lost 4.6 percent in the previous two days.
Japan's Nikkei 225 Stock Average climbed 0.8 percent to 14,131.62. All other Asian equity markets advanced, apart from New Zealand, the Philippines and China. The CSI 300 Index tumbled as much as 3.4 percent, extending yesterday's 8.1 percent slump.
Most U.S. stocks fell for a third day yesterday, led by raw- materials and energy producers. Energy and metal prices dropped after Federal Reserve Chairman Ben S. Bernanke said economic risks have faded, spurring bets that interest rates will rise and bolster the dollar.
Toyota Motor Corp., which gets about half of its profit from North America, rose 1.7 percent to 5,510 yen. CLSA Ltd. raised the carmaker's operating profit forecast by 13 percent, saying that the falling yen will lift earnings.
Canon, Nintendo
Canon Inc., the world's biggest maker of digital cameras, gained 2.1 percent to 5,450 yen. Nintendo Co., maker of the Wii game console, advanced 1.3 percent to 56,600 yen.
The yen dropped to as low as 107.46 versus the dollar today, after slumping 2.3 percent in the previous two days to a level not seen since Feb. 26. A weaker yen increases the value of Japanese exporters' dollar-denominated sales when converted into local currency.
Fuji Heavy, the maker of Subaru cars, rallied 9.6 percent to 585 yen. Morgan Stanley raised its rating on the shares to ``equalweight'' from ``underweight,'' because of better-than- expected sales on new models.
Elpida Memory Inc. gained 1.2 percent to 4,080 yen. Mizuho Financial Group Inc. raised its rating on Japan's largest maker of computer memory chips to ``strong buy'' from ``buy,'' citing a recovery in prices for computer chips known as dynamic random access memory, or DRAM.
Hon Hai Precision Industry Co., the world's largest contract electronics manufacturer, gained 2 percent to NT$176.50. Sales in May rose 21 percent to NT$103 billion ($3.4 billion)
China's Slump
Losses in China today sent the CSI 300 Index to its lowest since April 2007. Yesterday's rout was the most since February 2007 after the People's Bank of China ordered banks to set aside record reserves to curb credit growth and inflation.
China Merchants, the nation's biggest dual-currency credit- card issuer, dropped 4.1 percent to 24.27 yuan. Shanghai Pudong Development Bank Co., part owned by Citigroup Inc., lost 4 percent to 24.72 yuan.
China's producer-price inflation accelerated in May to the fastest pace in more than three years, the statistics bureau reported today. Factory-gate prices rose 8.2 percent from a year earlier, after gaining 8.1 percent in April.
To contact the reporter for this story: Chua Kong Ho in Shanghai at kchua6@bloomberg.net; Ian C. Sayson in Manila at isayson@bloomberg

Crude Oil Rises as Citigroup, Merrill Lynch Increase Forecasts

June 10 (Bloomberg) -- Crude oil rose more than $1 a barrel as Merrill Lynch & Co. and Citigroup Inc. increased their price forecasts amid concern that supply from outside OPEC isn't climbing as fast as expected.

Citigroup boosted its 2008 Brent outlook 22 percent to $116.60 a barrel, while Merrill Lynch raised its forecast by 14 percent to $114. The International Energy Agency lowered its estimate for non-OPEC output this year by 300,000 barrels a day to 50.04 million, in its monthly report today.

``Supply trends are growing slower than demand,'' said Adam Sieminski, Deutsche Bank's chief energy economist, in New York. ``Prices are going to continue moving higher until the market becomes convinced that supply and demand will be in better balance by 2010 and beyond.''

Crude oil for July delivery rose $1.90, or 1.4 percent, to $136.25 a barrel at 9:26 a.m. on the New York Mercantile Exchange. Futures, which reached a record $139.12 a barrel on June 6, are more than double the level of a year ago.

Brent crude oil for July settlement rose $2.07, or 1.6 percent, to $135.98 a barrel on London's ICE Futures Europe exchange. Prices climbed to a record $138.12 on June 6.

OAO Gazprom, the world's biggest natural-gas company, expects oil prices to reach $250 a barrel ``in the foreseeable future'' as competition for energy resources increases, Chief Executive Officer Alexei Miller said.

Price Jump

``We are witnesses of a big jump in the price of hydrocarbons,'' Miller told reporters today in Deauville, France.

Saudi Arabian Oil Minister Ali al-Naimi said yesterday that producing and consuming nations should meet ``soon'' to discuss how to deal with the record cost of crude, which ``isn't justified in terms of market fundamentals.'' Saudi Arabia is the world's top oil exporter and the most influential member in the Organization of Petroleum Exporting Countries.

``It's a step in the right direction, and I hope it will end up with some decisions which will lift spare production capacity upwards,'' said Fatih Birol, chief economist at the IEA. ``The main expectations that we have from those discussions is that there is an agreement to have more investment.''

The IEA is a Paris-based organization that advises 27 developed nations on energy policy.

Oil Topping $130 May Slow Global Economy, Japan Warns (update 1)

By Megumi Yamanaka and Yuji Okada

June 8 (Bloomberg) -- Oil prices topping $130 a barrel may slow global economic growth, Japan's trade minister said, urging the world's biggest energy consumers to cut back on demand.

``Assuring energy security is now the top priority of all countries,'' Japan's Trade Minister Akira Amari said today at the opening of a meeting of energy ministers from the Group of Eight industrialized nations, plus China, India and South Korea, in Aomori, northern Japan.

Crude oil climbed more than $10 to $138.54 a barrel in New York on June 6, prompting U.S. Energy Secretary Samuel Bodman yesterday to describe the market as ``shocking.'' Rising oil prices may slow the global economy this year, which the World Bank forecast in January would expand at a more gradual pace of 3.3 percent compared with 2007, citing a poor U.S. outlook.

``U.S. economic growth will probably fall below 1 percent if oil stays at about $140 a barrel,'' Naka Matsuzawa, Chief Strategist at Nomura Securities Co. in Tokyo, said by phone today. ``An economy recession in the U.S. is highly likely to lead to a recession in other developed countries.''

U.S. Fed policy makers in April trimmed their economic growth projections for this year by about 1 percentage point to between 0.3 percent and 1.2 percent.

Advancing oil prices ``will add to the downward pressure on global growth,'' the International Monetary Fund's First Deputy Managing Director John Lipsky said in a Bloomberg interview on the sidelines of the International Economic Forum in St. Petersburg, Russia, yesterday.

Economic Slowdown

China, Japan, India, South Korea and the U.S. expressed ``serious concerns'' about oil prices and called on producers ``to increase investment to keep markets well supplied,'' according to a joint statement issued after energy ministers and officials from the five nations met yesterday.

South Korea's government said today it will provide 10.5 trillion won ($10.1 billion) in tax rebates and subsidies to help consumers and businesses cope with surging energy costs.

Australian Prime Minister Kevin Rudd urged the Organization of Petroleum Exporting Countries, which produces more than 40 percent of the world's oil, to boost supplies.

``Every head of government across the world is dealing with this challenge now and it goes to global oil supply,'' Rudd told Network Ten's Meet the Press program today. ``OPEC needs to open the production lines to a greater extent.''

OPEC has no plans to change output before its scheduled meeting in September, Qatar's Oil Minister Abdullah bin Hamad al-Attiyah said on May 22 in a phone interview from Doha.

Conservation Targets

Top officials from 11 countries are gathering in Aomori today to draft measures to cut oil demand and reduce greenhouse gases blamed for global warming. G-8 environment ministers on May 26 pledged to halve emissions by 2050 and want China and India to step up energy-saving efforts.

``China and India are key,'' Amari said earlier this week. ``Without commitment from those two nations, any strategies will be meaningless.''

The G-8 -- the U.S., Japan, Canada, Germany, France, the U.K., Italy, and Russia -- may try persuading China and India to join the International Partnership for Energy Efficiency Cooperation to be set up this year and agree to numerical targets for conservation. The 11 nations account for about two- thirds of energy consumption and gas emissions.

``China has already set its energy-conservation target, so it's unlikely to resist establishing new targets,'' said Koichi Sasaki, a senior researcher at the Institution of Energy Economics in Tokyo. ``India is more reluctant to introduce numerical aims for conservation. It regards it as too early because its economy is still taking off.''

India and China

India's economy expanded 9 percent in the year ended March 31, the least since 2005. Growth may slow further to about 8.5 percent in the current financial year, Finance Minister Palaniappan Chidambaram said in New Delhi on May 30. China's gross domestic product is expected to rise 10 percent, according to 17 analysts surveyed by Bloomberg.

``Energy and environmental issues are like the head and tail of a coin and we must tackle them as one problem,'' Amari said.

Wal-Mart Chief Reaps Benefits of Economic Slump, Rising Prices

Wal-Mart Chief Reaps Benefits of Economic Slump, Rising Prices

By Chris Burritt

June 8 (Bloomberg) -- H. Lee Scott, Wal-Mart Stores Inc.'s chief executive officer for the past eight years, is reaping the benefits of demand for his retailer's discounted goods as the economy slumps and prices soar.

Rising gasoline, food and medical costs will drive more customers to Wal-Mart's more than 3,400 U.S. discount stores and supercenters, Scott told 15,000 shareholders and employees gathered at the company's annual meeting in Fayetteville, Arkansas, on June 6. The world's largest retailer is luring customers with $4 prescription drugs and energy-efficient light bulbs.

``I thank God we are positioned like we are this year,'' Scott told analysts after the meeting, where celebrities including country singer Tim McGraw and ``American Idol'' winner David Cook performed. ``If you had this economy at this time last year when we were positioned like we were, I wouldn't be up here.''

Last year Scott turned the Bentonville, Arkansas-based company's focus back to basic clothing after an attempt to attract higher-income customers with more fashionable apparel failed to drum up sales.

For the 59-year-old Scott, who oversaw the loss of $115 billion of stock market value in his first seven years at the helm, rising sales are a sign the company is turning around. This year, Wal-Mart is the biggest gainer on the Dow Jones Industrial Average, gaining 23 percent in New York trading.

A year ago, Scott addressed investors after posting the smallest annual increase in individual-store sales in at least 27 years. This year the annual meeting followed a 3.9 percent increase in May sales at stores open more than a year, higher than the company or analysts had predicted.

`Sleepy'

``He doesn't think, and I don't think either, that if they had had this economic downturn a year ago, they would be in the same situation,'' Patricia Edwards, who helps manage $14.8 billion at Wentworth, Hauser & Violich in Seattle, said in a Bloomberg Television interview. ``They had been a little bit sleepy behind the wheel for a while, and they had to turn things around.''

Wal-Mart said last week that lower prices on groceries, medicines and laptop computers attracted shoppers. Tax rebates also spurred sales as consumers grappled with job losses and the worst U.S. housing market in a quarter century.

Rising costs are ``eating up more and more from our customers' pockets,'' Scott, who took the helm in 2000, told shareholders. ``Wal-Mart is uniquely positioned to succeed, not just in this economy, but in these times.''

Queen Latifah

The meeting was held in the Bud Walton Arena -- named for the late James L. Walton, who co-founded Wal-Mart with his brother Sam in 1962 -- on the University of Arkansas campus near Wal-Mart's Bentonville headquarters. Hip-hop artist and actress Queen Latifah hosted the four-hour session.

Investors pushed Wal-Mart to a four-year high in New York trading last week, nine months after the stock hit the lowest of Scott's tenure. Wal-Mart fell $1.43, or 2.4 percent, to $58.37 on the New York Stock Exchange June 6, mirroring a decline in the broader market after the biggest jump in the unemployment rate since 1986 and oil prices surged $10 a barrel to $138.54 in New York. Wal-Mart has a stock market value of $231.6 billion.

The retailer's fortunes might still falter should the economy begin to recover. Scott's attempt earlier in the decade to push into trendier clothes, such as its George line of cashmere sweaters and blazers, didn't boost revenue even as the economy grew. Same-store sales growth in last year's fourth quarter was 1.4 percent, compared with 6.3 percent during Scott's first quarter as CEO in early 2000.

Trading Up

Customers are ``likely to get snobbier and trade back up,'' Harvard Business School Professor Nancy Koehn said in a Bloomberg Radio interview. ``I don't think those customers are necessarily very long for Wal-Mart.''

Wal-Mart is now focusing on its main customers, families in lower-income brackets with little money to spend on luxuries. In late April, the company started cashing rebate checks for free and cut prices on shampoo, cereal and groceries, targeting Americans who are to receive more than $100 billion in tax rebates through July.

That has paid off by bringing in shoppers. Wal-Mart has cashed $350 million in rebates, and an undetermined amount has been spent in the stores, Chief Financial Officer Thomas Schoewe said last week. The results reflect the changes the company has made in the past year after its earlier missteps.

``I felt like I should lose the support of the board if we didn't turn it around,'' Scott told reporters after the meeting. ``But I wasn't worried that I would.''

US market falls...

Todays market report announce that the US crude oil price has increase to the highest level if compared to the preview month and reach to a new high. Because of oil price increase and the unemployment, US economy are in the recession as the GDP is slow down. Dow Jones Induatrial Average Index, Nasdaq, and S&P index could not stand with the bad economic and was drop dramatically. Dow jones was seriously drop by >3%, about 400 point to make it become a highest day drop since february 2007. Then, nasdaq, and S&P index also cannot be exempted. Since the crude oil price in US increase, thus it is believe to be effect the world's economic, especially for the developing countries.

My trading edge...

Recently, i found my trading edge that can be apply to my trading system. It is tested about 10 days, and it has a winning rate of 100% before. But after yesterday, my position has the 1st lose since i apply my trading edge for testing. I will be testing it for more days to confirm with it. Once i have prove the system can be use, it will introduce it to people who didn't find the way to trade. I hope i can successful develop it. I will do more research on it and do adjustment to make it more reliable. My system might need to be tested for years then only can successful proved. My trading system is majority based on mathematics solving method that is makes sense and sound logic. All right, now i would like to share my point of view with u all.. Yesterday, the dow jones industry has the opposite direction with my trading edge because of the late release of important economic data about the unemployment rate. The unemployment rate is increasing highly and it reach the new high since year 2004, about 5.5 percent. Beside, it is also the highest increment within a month since 1986. So, at 10:00, the data release from the labor department has drop down the dow jones industry index immediately. All US index has been drop dramatically. It is believe more and more trader and investor has a big lose. It is believe will have the bearish direction for the next few days, or even for few month. Thanks.
Notes: All of the point of view and comment is just based on estimation and forecast, no any other messages...