GLOBAL MARKETS-U.S. stocks rise with banks; bonds higher
* U.S. stocks rise with financials* China growth data, French rating threat weigh* Government bonds up, dollar, euro near flat
(Updates prices, adds details)By Caroline ValetkevitchNEW YORK, Oct 18 (Reuters) - U.S. stocks rose on Tuesday,
buoyed by a jump in financial shares on results from Bank of
America (BAC.N) and other big banks, bucking a downturn in
other markets that were hit by fears over the global economy.Slower-than-expected Chinese growth and a warning by
Moody’s to France over risks to maintaining its top credit
rating kept investors on edge, boosting safe-haven government
bonds.The Moody’s warning compounded investor jitters after
Germany’s finance minister on Monday warned that it was not
realistic to expect a definitive solution to the euro zone debt
crisis to be reached at a key European Union summit to be held
on Sunday.The U.S. benchmark Standard & Poor’s 500 index .SPX was
up more than 1 percent. Shares of Bank of America, the
second-largest U.S. bank by assets, rose 6.8 percent to $6.44
after the bank reported a quarterly profit. Shares of Goldman
Sachs (GS.N) rose 1.9 percent at $98.73 even after it reported
a wider-than-expected quarterly loss.”There was some genuine panic the banks, the financials,
were going to start reporting earnings that were going to just
undermine any shred of confidence and any kind of sustainable
rebound. And, really, the earnings haven’t done that,” said
Peter Kenny, managing director at Knight Capital in Jersey
City, New Jersey.The Dow Jones industrial average .DJI was up 123.63
points, or 1.08 percent, at 11,520.63. The Standard & Poor’s
500 Index .SPX was up 16.63 points, or 1.38 percent, at
1,217.49. The Nasdaq Composite Index .IXIC was up 22.95
points, or 0.88 percent, at 2,637.87.Robust U.S. profits have driven much of the U.S. stock
market’s gains from the March 2009 lows, but investors have
worried that corporations will be unable to sustain that profit
growth in a sluggish global economic climate.S&P 500 financials earnings are expected to have increased
just 3 percent from a year ago, while S&P 500 earnings as a
whole are expected to have risen 13 percent, according to
Thomson Reuters data.In Europe, however, bank shares fell sharply on Tuesday,
with French banks among the worst hit after Moody’s warned on
the outlook for France’s credit rating.Moody’s cautioned it may slap a negative outlook on
France’s Aaa credit rating in the next three months if costs
from helping to bail out banks and other euro zone members
stretch its budget too thin. For details, see [ID:nN1E79G1VP]The FTSEurofirst 300 index .FTEU3 closed down 0.4 percent
at 962.13 points. Shares of French banks Societe Generale
(SOGN.PA), BNP Paribas (BNPP.PA) and Credit Agricole (CAGR.PA)
all lost between 3.3 percent and 5 percent.The MSCI world equity index .MIWD00000PUS was down 0.2
percent, well off its earlier lows. The world index is still up
roughly 11 percent from a 15-month low earlier this month.
Emerging stocks .MSCIEF lost 1.9 percent.Optimism over the EU summit on Oct. 23 waned after
Germany’s finance minister, Wolfgang Schaeuble, said on Monday
that even though European governments would adopt a five-point
platform to address the crisis, a definitive solution would not
be reached at the Oct. 23 EU summit.[ID:nL5E7LH1GL]”While some people are reconsidering their stance of an
absolute worst-case scenario (on the global economy) and it’s a
stance that we don’t necessarily agree with, for the most part
the market still has a very cautious approach where people are
not willing to go on a limb one way or the other,” said Tom
Porcelli, chief economist at RBC Capital Markets in New York.Still, Germany’s chancellor Angela Merkel expects European
leaders to produce a “work plan” for Greece at the summit,
possibly including a permanent mission of international lenders
to monitor its debts, sources from her party quoted her as
saying on Tuesday.In Asia, China’s economic growth in the third quarter
slowed to its weakest pace since the 2009 second quarter.
Growth eased to 9.1 percent in the July-September period at an
annual rate, slightly below forecasts of 9.2 percent.U.S. Treasuries edged higher, pushing benchmark yields to
their lowest in two weeks.Benchmark 10-year Treasury prices US10YT=RR rose 9/32 in
price to yield 2.12 percent compared with 2.18 percent late on
Monday. Yields fell as low as 2.08 percent, their lowest since
Oct. 7.U.S. 30-year bond prices briefly trimmed gains after
Federal Reserve Chairman Ben Bernanke said the Fed is open to
the possibility of using monetary policy tools to stabilize the
financial system.Earlier, the French/German 10-year government bond yield
spread FR10YT=TWEB widened to a euro-era record of 101 basis
points. French debt also underperformed that of the
Netherlands, its triple-A rated peer.Brent crude oil prices LCOc1 rose, extending gains along
with U.S. stocks, while the dollar .DXY was up just 0.3
percent against a basket of major currencies. The euro EUR=
was last down 0.06 percent at $1.3740.Apple Inc. is (AAPL.O) due to report results on Tuesday
after the market close. Its shares were up 0.2 percent at
$420.84, reversing earlier losses.
UPDATE 1-Suntech sees U.S. solar market at 2 GW this year
DALLAS Oct 17 (Reuters) - Suntech Power Holdings Co Ltd expects U.S. solar installations to reach about 2
gigawatts this year, a senior executive said on Monday.Most industry projections were for between 1.5 and 1.6 GW
for the U.S. market for this year, compared with less than 900
GW last year.Including Canada, this year’s number could be 2.2 or 2.3
GW, Chief Commercial Officer Andrew Beebe said. That would be
greater than the capacity of two large nuclear reactors.At the same time, the German market in the second half of
the year has been slower to pick up than the company had
expected, Beebe said.”Europe is going through a lot of macro issues in terms of
finance support, and a lot of people are waiting for a lot of
things,” Beebe said in an interview. “Sometimes they are
waiting to see how much lower can panel prices go … other
people are waiting to see when can financing stability sort of
re-enters the world over there.”The erosion of subsidies in Germany and Italy, the world’s
two biggest markets, and rising production of the panels that
turn sunlight into electricity has left the industry awash in a
glut of equipment and driven panel prices down by some 35
percent this year.That is good news for consumers and distributors who buy
the solar modules, but has left manufacturers reeling as their
profit margins shrink and their share prices plummet to
multi-year lows. Suntech’s stock, for instance has sunk 72
percent this year.In the United States, Suntech is supplying modules for
Sempra Energy’s 150 megawatt Mesquite Solar 1 project
in Arizona. It has already delivered 140,000 panels to the
site, or 15 percent of the total, Beebe said.Suntech will recognize revenue from the Mesquite project
over six quarters, Beebe said.
Humanists and atheists drive for wider global political impact
(Swiss Freethinkers party candidate Andreas Kyriacou holds a campaign flyer downtown Zurich, October 10, 2011/Christian Hartmann)
UPDATE 1-Lone Star won’t appeal Korea stock manipulation verdict -source
SEOUL Oct 13 (Reuters) - U.S. fund Lone Star has decided
not to appeal a Korean court verdict against it, said a source
with direct knowledge of the matter, a move that should help the
firm sell its controlling stake in Korea Exchange Bank (KEB)
to Hana Financial Group and effect a long-awaited
exit from Korea.The news drove Hana’s shares up 7 percent in
early trade.The Seoul High Court last week fined LSF-KEB Holdings SCA,
Lone Star’s Belgium-based unit that holds a majority stake in
KEB, 25 billion Korean won ($21.4 million) for manipulating
stock prices of a KEB unit, concluding a case that had held up
its long-delayed $4.1 billion sale of KEB to Hana Financial
GroupThursday was the deadline for Lone Star lodge an appeal.Regulators said earlier they expected Lone Star to be
disqualified as KEB’s top shareholder and that they could order
it to sell down its stake in the bank to 10 percent under
banking law.If it is declared unfit to be KEB’s top shareholder, Lone
Star could complete the deal with Hana to comply with
regulators’ orders.Jed Repko, spokesman for Dallas-based Lone Star Funds,
declined to comment.Hana shares surged 4.7 percent and shares in KEB rose 2.64
percent as of 0018 GMT, versus the broader market’s 1.24
percent gain.Regulators had put off approval of the Hana-Lone Star
transaction due to legal uncertainties but will decide on the
matter after Lone Star’s decision on last week’s verdict.
WRAPUP 1-US Congress poised to approve Bush-era trade deals
* Labor concerns continue to hang over Colombia deal* No new bilateral trade deals in the worksBy Doug PalmerWASHINGTON, Oct 12 (Reuters) - The U.S. Congress was
poised on Wednesday to approve long-delayed trade pacts with
South Korea, Colombia and Panama that are expected to create
U.S. jobs by boosting exports by about $13 billion a year.The House of Representatives and Senate are expected to
back the deals in a series of votes later on Wednesday.Supporters hope the action marks an end to a long U.S.
drought on deals to open trade. Each pact had been stuck at the
White House for at least four years.”We will send a strong signal to the world that America is
back on the trade field,” said Representative Kevin Brady, a
Texas Republican, at a rally with business groups.U.S. farm and manufactured goods exports are expected to
rise under all three agreements as tariffs are phased out. The
agreements also open new markets for U.S. companies in service
sectors such as banking, insurance and express delivery.Critics say the pacts will harm U.S. employment, but the
Obama administration and other proponents think the pacts will
support tens of thousands jobs.The biggest gains are expected from the pact with South
Korea, a longtime ally and a $1 trillion economy in a region
increasingly dominated by China. The agreement will help anchor
the United States in the fast-growing Asia Pacific region so it
can share in its growth, analysts say.The House and Senate action comes just a day before South
Korean President Lee Myung-bak speaks to a joint session of the
U.S. Congress, a visit that has given lawmakers an added
impetus to move the deals.President Barack Obama sent the three agreements to Capital
Hill just nine days ago, four to five years after they were
negotiated. The deals had foundered primarily on Democratic
Party concerns over labor practices abroad and the potential
for increased competition to cost U.S. jobs.OPPORTUNITIES LOSTWhile U.S. farmers and big agricultural exporters are
excited about new sales opportunities for beef, pork, poultry,
corn, wheat, soybeans and other food products in the three
markets, they lament the long delay as a lost opportunity as
other countries nailed down bilateral deals.”We can’t underestimate how much U.S. agriculture has lost
out,” while the current pacts were stalled, said Devry
Boughner, director of international business relations for the
food, agriculture and risk management giant Cargill.”Corn, soybeans and wheat exports from the U.S. have gone
from a 78 percent market share in the Colombian market to 28
percent, owing in part to the fact that Canada got to Colombia
first,” Boughner said.The White House is negotiating a regional trade agreement
known as the Trans-Pacific Partnership pact with eight other
countries in the Asia-Pacific region, but any congressional
action on that deal might be delayed until after the 2012
election even if it is concluded next year.The Obama administration also has been unable to conclude
the Doha round of world trade talks, which will soon enter
their 11th year, and has begun no new bilateral trade
negotiations during its nearly three years in office.KOREA PACT LARGEST SINCE NAFTAThe deal between the United States and South Korea, the
world’s largest and 14th largest economies, respectively, would
be the biggest U.S. trade deal since the North American Free
Trade Agreement, which went into force in January 1994.In a study in 2007, the U.S. International Trade Commission
estimated the pact would lift U.S. imports from Korea by $6.4
billion to $6.9 billion a year, with gains in areas such as
clothing, leather goods, footwear, electronics and cars.A study by the labor-backed Economic Policy Institute
estimates the Korea deal will cost about 159,000 jobs over
seven years; the White House says that it will help create or
maintain more than 70,000 and congressional Republicans
estimate as many as 250,000 new jobs.All three agreements were negotiated and signed during the
administration of former President George W. Bush, who was
unable to win their approval from the Democratic-controlled
Congress before leaving office in 2009.The oldest and most controversial pact, the one with
Colombia, was signed in November 2006 and the other two accords
in mid-2007. Since then, other countries have negotiated scores
of new trade agreements around the world.Two rival deals between the European Union and South Korea
and between Canada and Colombia were negotiated, signed and
implemented during the period when the U.S. trade pacts were
stuck at the White House.A broad coalition of farm, manufactured and services
industry groups have pushed ceaselessly for the agreements, and
found a more favorable environment after the 2010 elections
when Republican regained control of the House.Ted Austell, a vice president at Boeing , said the
aircraft manufacturer expects to benefit both directly and
indirectly from the free trade agreements.”When commerce increases, downstream that turns into
aircraft orders. More movement of people and certainly of goods
opens up more opportunity to sell aircraft,” Austell said.Support for the Colombia pact has been the weakest of the
three because many Democrats believe Colombia needs to do more
to stop killings of trade unionists and prosecute those
responsible.The White House has pledged the agreement with Colombia
will not go into force until Bogota “has successfully
implemented key elements” of an action plan to address the
violence.
Australia approves BHP’s $20-$30 billion Olympic Dam mine
The approvals give BHP the green light to nearly quadruple the mine’s copper output to 750,000 tonnes annually to help feed a growing market in Asia, especially China, where copper consumption is forecast to surge 6 percent this year.BHP, expected to make a final decision in mid-2012, now has to weigh up the 150 conditions imposed by the national and South Australia state governments as part of assessing the mine’s feasibility.Once fully expanded, Olympic Dam would be on near-par with the massive copper mines of South America, though it would take years before it came close to matching the output of BHP’s giant Escondida lode in Chile.”It’ll help balance the market and to that extent it’s slightly bearish, but the market’s been looking at this expansion for some time,” said Citigroup analyst David Thurtell.”I’m not sure whether anyone expected the Dam to be knocked back by the government.”The national and South Australia governments are keen for the project to go ahead because of the thousands of jobs it is expected to create.As part of the conditions, BHP has agreed to set aside a chunk of land roughly the size of London as an environmental buffer zone and to monitor the impact of the mine on birds and fish inhabiting hundreds of kilometers surrounding the Olympic Dam mine site.It will also construct a desalination project and pipes to bring seawater to the mine from over 300 kilometers away.”The strict conditions I’ve imposed will help ensure protection of the natural environment, including native species, groundwater and vegetation, for the long term,” Environment Minister Tony Burke said in a statement on Monday.The proposal is also subject to independent reviews by the Australian Radiation Protection and Nuclear Safety Agency, since an expansion would also lift annual uranium production to 19,000 tonnes from around 4,000 tonnes now.FEEDING CHINA’S DEMANDRio Tinto, which is helping develop Mongolia’s giant Oyu Tolgoi copper mine and is partnership with BHP Billiton at Escondida, estimates total global demand for refined copper is expected to rise by more than 40 percent to 27 million tonnes by 2020.BHP Billiton has yet to reveal the cost of the expansion, but analysts rank it as possibly the single biggest on the drawing board of the world’s biggest miner, estimating costs of between $20 billion and $30 billion.The project would require assembling one of the world’s largest fleet of earth movers, with geologists estimating that it would take four or five years just to expose the ore body.The expansion would also extend the life of the mine from about 20 years to more than 100 years.Demand for refined copper in China has been increasing due to rapid development in telecommunications, power, equipment manufacturing, automobiles, construction and consumer goods.Chile is currently the largest producer of mined copper, followed by other major producers such as Peru, the United States and Australia.Thurtell said it may be too early to size up the impact of the Olympic Dam project on the global copper market.”It’s too far away, who knows what will happen to the market by then. Maybe the market might still be in deficit so it’ll only partly fill the gap.”The South Australia state government said it aimed to finalize an agreement on royalties and infrastructure commitments for the expansion by October 20.Monday’s clearances follow a six-year review of the expected impact of the expansion on everything from air quality in neighboring towns to cuttlefish in the Spencer Gulf.The company will need more than 600 licenses and permits to meet these requirements.BHP Billiton will also be allowed to expand its smelter, build an ore concentrator and other plants to process the additional ore and dump waste rock in a 150-meter high pile covering 67 square km (26 square miles).The plan also includes an airport, gas-fired power station, 320-kilometre pipeline and a 105-km rail line.The company has said it would put the project up for board approval in stages, with phase one, digging the open pit, up for sign-off around June 2012 and phase two, including building the concentrator, 18 months to two years later.BHP shares slipped 0.3 percent on Monday, underperforming a 0.9 percent gain in the broader market.
