Saturday, September 05, 2009

LONDON: Oil prices fell on Friday after the world s biggest energy consumer the United States reported a rise in its unemployment rate and as traders booked profits before a long US holiday weekend. Ahead of the employment data crude futures had been rising steadily, recovering from falls suffered on Thursday. New York s main contract, light sweet crude for October delivery, dipped five cents to $67.91 a barrel after the US jobs report for August. Brent North Sea crude for October delivery was 23 cents lower at $66.89 a barrel in afternoon London trading. The US unemployment rate jumped to 9.7 per cent in August as 216,000 jobs were lost, the US government said on Friday in a report suggesting steadying labour market conditions. The jobless rate rose three-tenths of a point to the highest level since June 1983, but the data nonetheless showed an easing of the massive pace of job losses in an economy struggling to emerge from recession. Elsewhere, oil traders were gearing up for next week s OPEC ministerial meeting in Vienna to decide on the cartel s crude production levels. Angola, 2009 president of the Organisation of the Petroleum Exporting Countries, has said the cartel should maintain production at existing levels during the September 9 meeting. OPEC has influence over global oil prices because the cartel pumps about 40 per cent of the world s crude. In a mixed trading week, crude futures fell sharply from levels above $70 on Monday and extended losses before stabilising on Wednesday as official data showed US crude stocks had dropped by an expected 400,000 barrels.

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Saturday, September 05, 2009

International gold prices may touch $1,200 an ounce by the end of December, 2009, a top trade official said on Friday. “Investment demands by gold exchange-traded funds and China buying more gold reserves will help achieve this target,” said Suresh Hundia, president of the Bombay Bullion Association on the sidelines of a conference.

Gold steadied below $990 an ounce on Friday, consolidating a potent two-day rally that took the market to within a whisker of $1,000, with inflation concerns and jitters over stock market gains stoking investor interest. Buying of gold exchange-traded funds picked up, with holdings of the largest, New York’s SPDR Gold Trust, posting its biggest one-day percentage rise since March. India is a major importer of gold.

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Wednesday, September 02, 2009

NEW DELHI: India s exports fell for a 10th straight month in July as the country s key Western markets remained in the grip of the global economic downturn. Shipments overseas slid 28.4 percent to 13.6 billion dollars, data released Tuesday by the Commerce Ministry showed, while imports tumbled 37.1 percent to 31.2 billion dollars. The lower import figure mainly reflects lower oil costs due to the slide in crude prices, but it also shows the domestic economy remains sluggish. Exports for the first four months of the financial year to March 2010 were down 34.1 percent from a year earlier at 49.7 billion dollars. The data come days after India announced plans to boost trade with emerging markets in a bid to wean itself off dependence on economically struggling developed nations that buy more than 60 percent of its exports. The government has also announced a slew of steps such as cheaper finance, better infrastructure, tax relief and reduced transaction costs to spur shipments. The country is aiming for export growth of 15 percent over two years to achieve sales of 200 billion dollars by March 2011, up from 168 billion dollars for the year to March 2009.
Commerce Minister Anand Sharma said he would be happy to sustain exports this year at last year s levels but economists say they are likely to contract by 10 percent. The government originally set a target of 200 billion dollars last year but was forced to lower that when the global economic crisis hit. Unlike China, where overseas sales have been a main growth driver, Shipments account for around 15 percent of gross domestic product in India s still relatively inward-looking economy.

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Thursday, August 27, 2009

BRUSSELS (AFP): Europe s economy has not made a firm recovery from the global downturn despite some encouraging signs, EU Commission chief Jose Manuel Barroso said Tuesday. The impact of the financial and economic crisis is still tangible in Europe and we have much still to do, he said at a joint press conference with Lithuanian President Dalia Grybauskaite.Lithuania is suffering the worst recession in the European Union. Several European countries are seeing encouraging signs of recovery but firm recovery is not here yet, he cautioned. While Germany and France have pulled out of recession and have nearly managed to bring the rest of the eurozone with them, analysts say much of the recovery is due to massive government stimulus measures for businesses.Unemployment is also rising as companies struggle to stay viable.

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Thursday, August 2 7, 2009

LONDON: World oil prices briefly struck 75 dollars per barrel on Tuesday for the first time in ten months, as traders reacted to rebounding consumer confidence in key energy consumer the United States.
In late afternoon trade here, New York s main contract, light sweet crude for October delivery, spiked to 75.00 dollars exactly — reaching a level last seen in October 2008 before the global recession. However, the contract later pulled back to 73.45 dollars, down 80 cents from Monday s closing level. And London Brent North Sea oil for October fell 42 cents to 73.95 dollars a barrel. It was very much a knee-jerk reaction, said Hanson Westhouse analyst David Hart, adding that there was a lack of buying interest to maintain prices above the key 75-dollar level. The logical conclusion to draw is that prices are going to go higher, Hart added. US consumer confidence rose more than expected in August after two consecutive months of declines, buoyed by a jump in recovery hopes for the coming months, the Conference Board announced on Tuesday. The business research firm said its consumer confidence index climbed to 54.1 in August from an upwardly revised 47.4 in July.

The rebound in confidence was stronger than the 47.9 reading that most analysts had expected. The index had hit an eight-month peak of 54.8 in May. The August data had a great deal of impact and was probably responsible for the whole move higher, Hart added. Consumer confidence is very closely tied to the US economy — 70 percent of the economy is driven by consumer spending and if the consumer is feeling better then that bodes well for the economy, which is good for energy demand. Crude futures had already powered to 10-month peaks on Monday amid growing hopes for global economic recovery and China s strong oil data. Markets also found a springboard from US Federal Reserve chief Ben Bernanke s positive comments on Friday about the outlook for recovery from global recession. Fed Chairman Ben Bernanke, who was reappointed to a second four-year term on Tuesday, had said last week that prospects for growth appear good despite financial market strains. European Central Bank boss Trichet also predicted last week that the world s economic free fall was over. Oil prices have slumped since striking record highs above 147 dollars in July 2008 as a vicious global recession slashed energy demand. They have since clawed back ground on recovery hopes. The market also got a major boost on Monday from data out of China — the world s second-biggest energy consuming nation after the United States. Chinese demand for oil increased for the fourth consecutive month in July, said analysts at JBC Energy in Vienna. Year-on-year, oil consumption — excluding stock changes — was up by some 3.5 percent, they noted. Traders will switch their focus on Wednesday to the weekly oil inventories report from the US government s Department of Energy.

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Wednesday, August 26, 2009

BEIJING: China continues to face significant challenges to its economic recovery, including weak demand for its exports, the head of the main planning agency was cited as saying on Tuesday. The comments by Zhang Ping, head of the National Development and Reform Commission, largely echoed those of Premier Wen Jiabao a day earlier, who said the government would maintain its relatively loose policy stance because the economic recovery was not on solid footing.

"The serious fall in external demand is a pronounced problem for China's economy, and our country is still facing great pressure in the employment situation," Zhang told a session of the standing committee of parliament, according to state radio. Presenting a report on the economy's performance, he said domestic demand was still not strong enough a driver of growth, and that housing prices in some cities had risen by too much.

Zhang added the global economy would take a long time to recover from recession, and that improvement over the long run would involve many ups and downs along the way. The government would make efforts to increase domestic demand and stabilise exports, he said, without elaborating.

(Reuters)

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Wednesday, August 26, 2009

BERLIN: Germany exited recession in the second quarter despite a massive drop in inventories and restocking by firms could spur the economy to faster growth. Federal Statistics Office data confirmed on Tuesday that gross domestic product (GDP) grew by 0.3 percent in April-June period, as net trade and private consumption offset the reduction in firms' inventories.

The data ended four straight quarters of contraction, and could offer support for Chancellor Angela Merkel's ruling coalition as a federal election approaches on September 27. Having overcome its deepest slump since World War Two, analysts believe the German economy should rally as companies ramp up production and rebuild their depleted stocks.

"The big decline in inventories suggests that these need to be built up again and that production will get a boost," said Juergen Michels, an economist at Citigroup in London. "The recovery has a relatively solid foundation." Government stimulus measures, such as a subsidy for scrapping old cars in exchange for newer, more environmentally friendly models, were seen by many as a key driver of growth in the April-June period.

"Despite today's positive numbers, the German economy is still on a drip, getting infusions from policymakers," said Carsten Brzeski, an analyst at ING Financial Markets. "The coming weeks and months look good but some doubts remain whether the economy can already stand on its own feet." The figures showed that adjusted for working days, German GDP contracted by 5.9 percent on the year in the second quarter, confirming preliminary estimates from August 13.

In the first quarter, it shrank by 6.7 percent. Many analysts believe job losses in Germany will accelerate in the autumn as the effects of government support for the labour market - notably incentives for firms to put workers on shortened hours rather than fire them - wear off.

In a breakdown of the data, the Office said net trade added 1.6 percentage points to GDP as a sharp drop in imports outpaced a decline in exports. Private consumption added 0.4 points and a liquidation in inventories subtracted 1.9 points. Since Germany reunified in 1990, inventories had only once hit GDP harder, an Office spokesman said.

Then, in the last quarter of 2006, the blip was caused by statistical factors, and did not properly reflect the state of the economy at the time, he added. Latest indicators, such as the Ifo institute's gauge of business sentiment, have risen, suggesting the recovery is gaining strength.

(Reuters)

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Saturday July 11, 2009

LONDON: European stock exchanges wilted on Friday, dragged down by a disappointing report on US consumer confidence and a fall in oil prices. The London FTSE 100 index shed 0.76 percent to close at 4,127.17 while in Paris the CAC 40 fell 1.41 percent to finish at 2,983.1. The Frankfurt Dax slipped 1.16 percent to 4,576.31. Elsewhere in Europe there were declines of 1.27 percent on the Swiss Market Index, 1.04 percent in Madrid, 1.58 percent in Amsterdam and 0.23 percent in Brussels. US stocks sputtered in early trade Friday with investors fretting over fears that recovery from the global recession remains distant. The blue-chip Dow Jones Industrial Average had fallen 1.08 percent to 8,094.90 by mid-day while the tech-heavy Nasdaq was down 0.56 percent at 1,742.82. Ahead of the opening, the government said the US trade deficit narrowed sharply in May to its lowest level in nearly a decade, led by a plunge in imported oil. The deficit fell nearly 10 percent in May to a seasonally adjusted 26.0 billion dollars, the lowest level since November 1999. The news appeared moderately positive for the US economy but also reflected weakness in overall global trade. Patrick O'Hare at Briefing.com said that "the impetus for the weak tone this morning was the weak finish yesterday, along with a report that China's exports declined for the eighth straight month." He said this "is diluting some of the hope that China's domestic red shoots will germinate the green shoots of a global recovery." The economic outlook "has most folks confused," said Al Goldman at Wells Fargo Advisors. "We believe the data suggests that the end of the recession is near that's the good news for investors. However, the data also appears to indicate, as we have been saying for a month, that a strong economy is not just around the corner." In Europe market analysts said sentiment was also depressed by the University of Michigan US consumer confidence index, which plunged to 64.6 points this month from 70.8 in June, a far sharper fall than had been expected. In London weaker commodity prices sent mining issues lower. Rio Tinto lost 3.33 percent to finish at 1,901.50 pence while Xstrata gave up 2.10 percent and closed at 597 pence. With crude prices sliding, oil-related stocks came under selling pressure in Paris. Total fell 1.68 percent to 35.98 euros, Technip lost 6.35 percent to close at 32.76 euros and CGG Veritas shed 4.39 percent to end the week at 10.87. Telecom equipment maker Alcatel-Lucent gave up 3.49 percent to close at 1.49 euros after announcing a new plan to cut 1,000 jobs in France by next year. In Frankfurt, Lufthansa gave up 1.66 percent to reach 8.58 euros on news that its bid for Austrian Airlines had stalled after the EU's anti-trust watchdog ruled that the German flag carrier had failed to address competition concerns raised by the acquisition. Energy giant EON fell 1.63 percent to 22.88 euros. One of the day's leading gainers, steel maker Salzgitter, added 1.23 percent to reach 59.37 euros after Citigroup raised its recommendation on the share. Asian dealers remained cautious Friday, with markets finishing the week mixed and looking for clues to an economic recovery ahead of the second-quarter earnings season. Toyko edged 0.04 percent lower, the eighth consecutive trading day of losses for the Nikkei, while Hong Kong lost 0.46 percent and Shanghai 0.29 percent. However, there were gains in Sydney, which added 0.82 percent, as Taipei dipped 0.32 percent. (AFP)

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Saturday July 11, 2009

NEW YORK: Oil closed below the psychological barrier of 60 dollars a barrel in New York Friday as the market focused on weak demand and risks of deflation amid a steep global downturn. New York's main contract, light sweet crude for delivery in August settled at 59.89 dollars a barrel, shedding 52 cents from its Thursday close. In intraday trade the futures contract sank to 58.72 dollars, the lowest level since May 18 and nearly 15 dollars below last week's peaks. In London, Brent North Sea crude for August delivery dropped 58 cents to close at 60.52 dollars a barrel. The plunge in oil prices came almost exactly one year after the two contracts struck all-time highs above 147 dollars on July 11, 2008. Analysts said the bears were set to dominate the market for an extended period as the global economy grapples with the worst recession in decades, with no clear sign of recovery in view despite unprecedented efforts by governments to jumpstart growth. "Sixty is not so nifty today as slowing demand fears now possess the energy complex," said Phil Flynn of PFG Best Research. "The oil market reflects the darkening outlook for economic growth." Mike Fitzpatrick of MF Global said that market participants "sharpened their focus on the still struggling global economy" where hopes for a swift recovery were diminishing rapidly. "There have been few, if any, signs of sustainable economic growth," he said. "What can be quantified, though, are growing joblessness and rising savings rate, which suggests that consumers, who have led past recoveries, are still in a state of shock." The International Energy Agency, in a report Friday, forecast demand would be effectively unchanged this year before rebounding by 1.7 percent in 2010. The IEA report highlighted "the uncertainty swirling around the oil market for 2009, 2010 and beyond." Flynn said that deflation fears had again trumped inflation fears in the market. "Unless there is a major change in the economic outlook or some immediate stimulus, the bears will again rule" into the end of this year, he added. Possible regulatory changes in the United States also were weighing on the market, analysts said. Barclays Capital analysts said in a client note that the market was under pressure from "a significant increase in both regulatory risk and in the price volatility related to what in the worst case could prove to be an extended period of regulatory uncertainty." (AFP)

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Friday July 10, 2009

LONDON: The dollar and yen both fell on Thursday as investors recovered their appetite for risk and other major currencies recouped some of their losses the day before. Sterling got a boost from a decision by the Bank of England to keep its main interest rate unchanged and hold steady its asset purchase facility despite market expectations that the programme would be expanded. In late London trade, the European single currency rose to 1.4034 dollars from 1.3885 dollars in New York late on Wednesday. The dollar fell to 92.77 yen from 92.86 yen late Wednesday. Mounting uncertainty about prospects for a global economic recovery has in recent days supported the yen, which is seen as a safe haven during times of market turmoil, dealers said. "The huge out performance of the yen during the last week is a clear and screaming sign of risk aversion," said Societe Generale analyst Patrick Bennett. Investor sentiment soured after Group of Eight leaders meeting Wednesday in the Italian town of L'Aquila warned that the World economy was still in danger. In a communique, the G8 nations said there remained "significant risks" for economic and financial stability. During the meeting, China's state councillor Dai Bingguo Thu told leaders that the international currency regime should become more diversified, a Chinese official told reporters. This added to pressure against the dollar, which is the world's biggest reserve currency. Any diversification would reduce demand for the US unit. In other news of interest to the foreign exchange market, leaders are to pledge to abstain from competitive currency devaluations in a joint statement to Thursday. Investors also absorbed news that new claims for US unemployment benefits fell 8.4 percent last week to a six-month low, suggesting some improvement in the troubled job market. The Labour Department said that initial claims for unemployment insurance benefits fell to a seasonally adjusted 565,000 in the week ended July 4. In Britain, the Bank of England surprisingly decided against pumping billions of extra pounds into money markets to boost lending on Thursday, as it kept its key interest rate at a record-low 0.5 percent. While the rate decision was widely expected, many economists believed the BoE's Monetary Policy Committee would announce plans to create an extra 25 billion pounds (28.9 billion euros, 40.4 billion dollars) under its quantitative easing (QE) scheme. "The Bank's decision not to inject further money into its quantitative easing programme has caught the market off guard and the relief has helped return short-term confidence in sterling," said Mark O'Sullivan at Currencies Direct. Under QE a process which amounts to creating new money the British central bank buys government bonds from commercial banks in the hope that the institutions will lend once again to businesses and individuals. In London trade Thursday, the euro was changing hands at 1.4034 dollars against 1.3885 dollars late on Wednesday, 129.50 yen (128.96), 0.8608 pounds (0.8642) and 1.5127 Swiss francs (1.5132). The dollar stood at 92.77 yen (92.86) and 1.0835 Swiss francs (1.0895). The pound was at 1.6217 dollars (1.6063). On the London Bullion Market, the price of gold fell to 911.75 dollars an ounce from 918 dollars an ounce late on Wednesday. (AFP)

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Friday July 10, 2009

NEW YORK: US stocks edged higher on Thursday as investors bought beaten-down technology and commodity shares, while a positive broker comment on Goldman Sachs boosted the financial sector. Trading was choppy in light volumes for most of the day as investors remained cautious ahead of more corporate earnings reports in the coming weeks. Alcoa Inc set a positive tone when it kicked off the earnings season with a smaller-than-expected loss after the bell on Wednesday. The Dow industrials closed just above break-even as shares of healthcare and consumer staples companies weighed. Merck & Co Inc fell 3.7 percent to $27.01 on speculation its Zetia cholesterol drug fared poorly in a clinical trial comparing it to a drug from Abbott Laboratories. Merck was the biggest weight on the Dow. Sentiment remained cautious ahead of the release of more US corporate earnings, said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia. "Investors are still in more of a wait-and-see mode," he said. "I still think we're in this grinding phase, this choppiness, because I don't know that we're going to get a whole lot out of earnings." The Dow Jones industrial average gained 4.76 points, or 0.06 percent, to 8,183.17. The Standard & Poor's 500 Index added 3.12 points, or 0.35 percent, to 882.68. The Nasdaq Composite Index rose 5.38 points, or 0.31 percent, to 1,752.55. A Treasury bond auction of 30-year debt showed signs of strength, providing some cheer for investors concerned about the growing mountain of US government debt. Shares rose to session highs not long after the auction. "A lot of people went short in anticipation of a poor auction and then had to cover when the auction actually went better than everyone thought," said Jack Ablin, chief investment officer at Harris Bank in Chicago. He referred to the strategy of short-selling, which involves selling borrowed shares in the hopes of buying them back when prices fall. Goldman rose 3.4 percent to $143.21 after Bank of America Securities-Merrill Lynch upgraded its rating to "buy" and raised its earnings estimates, saying the firm's earnings power and book value were increasing rapidly again. The S&P financial sector led the S&P 500 with a gain of 1.4 percent. Energy shares rose, with the S&P energy index up 1.1 percent as crude oil futures edged up. Oil giant Chevron Corp, which is expected to report interim quarterly results later on Thursday, was up 0.5 percent to $63.08. Within the tech sector, KLA Tencor Corp shot up 4.9 percent to $26.36 after Barclays upgraded the chipmaker to "overweight." The PHLX semiconductor index gained 2.8 percent. The number of US workers filing new claims for jobless benefits fell to the lowest level since January, but the seasonally adjusted data was distorted by an unusual pattern of layoffs in the automotive industry. (Reuters)

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Friday, July 10, 2009

SINGAPORE: Oil traded below 61 dollars in Asian trade Friday, surrendering overnight gains amid persistent worries over the weak global economy, analysts said. New York's main contract, light sweet crude for August delivery was 33 cents lower at 60.08 dollars a barrel Brent North Sea crude for August delivery eased 30 cents to 60.80 dollars. New York crude tumbled below the 60-dollar mark in intra-day trade Thursday, the first time since May 26. The contract has lost more than 13 dollars from its highs last month. "When we take a step back, the correction doesn't surprise us," said Gavin Wendt, a Sydney-based mining and resources analyst with Fat Prophets research consultancy. Crude prices rose above 73 dollars early last month, up more than 60 percent since the start of the year, fuelled partly by a weak US dollar and overly upbeat hopes of a recovery in the global economy, analysts said. "The demand-supply situation doesn't justify that sort of a rapid rise over such a short period of time," said Wendt. "It left itself vulnerable to some degree of correction especially when the demand situation hasn't justified that sort of price rise." A weekly energy reserves report released Wednesday by the US Department of Energy is also weighing down on crude prices as gasoline stocks rose by a bigger-than-expected 1.9 million barrels in the week to July 3. The US is the world's biggest oil consumer and the gasoline data is closely monitored at this time of the year because consumption typically picks up when Americans take to the roads for their summer holidays. US oil product stockpiles have ballooned in recent weeks because of weak demand amid a severe recession, and overall oil demand over the past four weeks was down 5.9 percent from the same period in 2008. "With crude oil and petroleum product inventories at very high levels, we think any near-term upside to oil prices will be limited," Francisco Blanch said in a Bank of America Securities-Merrill Lynch research report. (AFP)

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Wednesday July 08, 2009

NEW YORK: US stocks fell to their lowest level in 10 weeks on Tuesday as talk of a second government stimulus plan heightened fears that the economy is not yet on the path to recovery and that the corporate earnings season starting this week will be weak. A member of the Obama administration's economic advisory panel said the United States should plan to possibly provide a second round of stimulus funds to prop up the economy. The comments come as investors question earlier optimism for a quick recovery, which had driven stocks as much as 40 percent higher since early March. "It's clear that over the last three plus weeks that investors are becoming concerned that the recovery in the economy will not come as soon as expected and will not be as strong as expected," said Hugh Johnson, chief investment officer of Johnson Illington Advisors in Albany, New York. "When there's talk about another stimulus plan that adds fuel to that fire, it intensifies the concerns about the timing and strength of the recovery." Cyclical stocks in the materials, energy, and industrial sectors, which had ridden a recent upswing in raw material prices on recovery hopes, led the market down as commodity prices eased. Copper, a barometer of global economic strength, fell nearly 2 percent. Caterpillar Inc, a maker of heavy machinery for construction and mining companies, shed 4.5 percent to $30.29. The Dow Jones industrial average dropped 161.27 points, or 1.94 percent, to 8,163.60. The Standard & Poor's 500 Index fell 17.69 points, or 1.97 percent, to 881.03. The Nasdaq Composite Index lost 41.23 points, or 2.31 percent, to 1,746.17. The S&P 500 closed at its lowest level since May 1 while the Dow industrials closed at their lowest level since April 28. An initial snapshot of the second-quarter performance of natural resource companies will come on Wednesday when Alcoa Inc kicks off quarterly earnings season. The aluminium producer, a Dow component, is expected to post a third consecutive quarterly loss. S&P 500 corporate earnings are expected by analysts to have declined about 36 percent from a year ago, according to data compiled by Thomson Reuters. That would be roughly the same as the decline seen in the first quarter. Doubts about the strength of an economic recovery and subsequent demand for oil have sent crude prices tumbling in the last week. New York crude fell 1.8 percent on Tuesday and is down about 14 percent from the intraday peak hit on June 30. Its slide has pressured energy stocks. Oil services company Schlumberger Ltd fell 4.4 percent to $49.20 while blue chip Exxon Mobil Corp lost 2.3 percent to $66.56. The S&P energy sector index lost 2.5 percent. Non-cyclical areas of the market, which have been stronger in recent weeks as investors sought out companies better positioned to weather a weak economy, initially withstood the sell-off on Tuesday. But by the end of the day even the defensive sectors fell victim to selling. Health care, a classic defensive sector, traded in positive territory for most of the day but by the close the S&P healthcare index fell 0.3 percent -- still outperforming the wider market. Drug maker Pfizer Inc, one of the few Dow stocks to finish in positive territory, edged up 0.1 percent to $14.59. A rally in the broad S&P 500 index that had boosted it about 40 percent from 12-year lows hit in early March has wilted in the last month as investors sought stronger evidence that economic conditions were improving. Trading was below average on the New York Stock Exchange, with about 1.11 billion shares changing hands, under last year's estimated daily average of 1.49 billion, while on Nasdaq, about 2.04 billion shares traded, below last year's daily average of 2.28 billion. Declining stocks outnumbered advancing ones on the NYSE by 4 to 1 while decliners beat advancers on the Nasdaq by about 10 to 3. (Reuters)

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Wednesday, July 08, 2009

SINGAPORE: Oil remained under 63 dollars a barrel in Asian trade Wednesday amid rising concerns that a recovery from the worldwide recession was unlikely to happen soon.

In morning trade New York's main contract, light sweet crude for August delivery, was down 63 cents to 62.30 dollars a barrel, extending sharp falls in US trade overnight.

Brent North Sea crude for delivery in August eased 58 cents to 62.65.

New York crude has lost more than 11 dollars and Brent over 10 dollars since June 30 when prices for both contracts rose to more than 73 dollars a barrel, their highest levels this year.

"Oil continues to trade along with the financial markets," said Victor Shum, an analyst with energy consultancy Purvin and Gertz in Singapore.

"Weeks ago, both stock markets and oil markets traded hand in hand going up. Now, stock markets are tumbling and oil is also tumbling, and that's because of renewed concerns that the recovery from the global recession is likely to be slow."

Doubts over a global economic bounce were rekindled following the June unemployment report in the United States, which showed a bigger-than-expected number of jobs losses.

On Tuesday, Laura Tyson, a member of US President Barack Obama's Economic Advisory Panel, said the United States may need a second stimulus package to put the world's biggest economy firmly on the path to recovery.

Investors are also being cautious as companies around the world start reporting their June quarter earnings, which could give an indication on the health of the global economy and its prospects for the rest of the year, Shum said.

"For oil futures, the fundamentals have been weak all along so the pullback is consistent with the weak fundamentals," he said, referring to demand lagging a glut in oil supplies.

Shum said that with appetite for risky assets in check, investors are going for relatively safer investments such as the US dollar, pushing the US currency higher.

A stronger dollar makes dollar-priced oil more expensive for holders of weaker currencies, a situation that dampens demand for the commodity and leads to lower prices.

Prices are likely to fall below 60 dollars in the near term, Shum said.


(AFP)

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Saturday July 04, 2009

SYDNEY: Australian vehicles sales surged in June to their third highest volume ever while activity in the service sector boasted the first expansion in 15 months, evidence that policy stimulus was fuelling consumer demand. The upbeat industry reports only added to expectations the Reserve Bank of Australia (RBA) would keep rates steady at a record low of 3.0 percent at its July policy meeting next week.

"The data is consistent with a broadening recovery and, if anything, suggests the momentum is actually accelerating," said Brian Redican, a senior economist at Macquarie. "It shows rates are low enough to fuel demand and takes pressure off the RBA to do much more," he added. The central bank has cut interest rates by 425 basis points since September in an effort to cushion the economy from the worst of the global fallout.

The Labour government has done its part with over A$52 billion ($41 billion) of hand-outs and infrastructure pledges. Included in the stimulus was an extended tax break for small businesses to buy new vehicles, and that looked to have had the desired effect.

Figures from the Australian Federal Chamber of Automotive Industries showed new vehicle sales jumped 11.8 percent in seasonally adjusted terms in June, from May. Vehicle demand is typically strong in June as dealers cut prices to clear stock for the end of the financial year.

Unadjusted sales rose 36.3 percent to 102,847. That was down 3.5 percent on last June's record, but still the third-highest monthly volume ever. It was also a big turnaround from the lows suffered in April, when sales were down 24 percent on the year.

"That's an amazing result," said Macquarie's Redican. "A lot of these sales could also count toward business investment, which has been one of the weakest sectors." The data provided some underlying support for the Australian dollar. High-yield currencies fell following weak US jobs data, but the Australian dollar later inched up even though it remained well below 80 US cents. The strength of car sales fuelled hopes that a pickup in retail demand seen in May extended through to June as well. Government data out earlier this week showed retail sales rose a healthy 1 percent in May, twice the market forecast.

Adding to the optimism was a survey of around 200 companies in the service sector which found a broad-based improvement in everything from financial to property, retail and health.

The Australian Industry Group (AiG)-Commonwealth Bank Performance of Services Index (PSI) leaped 10.3 points in June to 50.2, taking it above the 50 level that marks the threshold between growth and contraction. "Improving conditions in the services sector are consistent with other recent news which suggests that the economy may well side-step a severe recession in 2009, despite the negative headwinds from the global economic meltdown," said John Peters, a senior economist at CBA. The survey's index of sales climbed 16.1 points to 55.2, the highest reading since the start of 2008, while its measure of new orders climbed 16.6 points to 51.5, holding out hope the recovery would prove sustainable.

There was also better news on jobs, with the index of employment rising 2.5 points to 48.5, the highest reading in a year. The service sector is easily the biggest employer in Australia and the improvement might bode well for the official labour report for June that is due next week. Actual job losses have been remarkably subdued so far this year but the unemployment rate has still risen to a five-year high of 5.7 percent, making it a major threat to consumer demand.


(Reuters)

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Saturday July 04, 2009

ISLAMABAD: 'Flexible Credit Line' is a new IMF instrument, created in April 2009, which seeks to provide large and upfront financing to members with very strong fundamentals and policies. According to IMF website, "access to FCL is restricted to those members that meet strict qualification criteria, drawings under it are not tied to policy goals agreed with the country".

Mexico received 47 billion dollars under FCL, to buttress strong economies against fallout from the global crisis. Mexico's major trading partner is the US and its exports have suffered due to the recession in US. This facility is for one year.


(BRecorder)

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Saturday July 4, 2009

ISLAMABAD: The World Bank would provide Pakistan 1.7 billion dollars during current year to help overcome economic recession.

This is Bank's highest ever year-on-year support to the country and is 1.064 billion dollars more than the last year.

The financial support and technical assistance programme is focused on helping Pakistan maintain economic stability, steer the economy back onto a higher growth path and help the government put in place the systems to effectively protect the poor from economic shocks.


(NNI)

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Friday July 03, 2009

WASHINGTON: US employers cut far more jobs than expected last month and the unemployment rate hit a nearly 26-year high of 9.5 percent, underscoring the likelihood of a long and slow recovery from recession. The loss of 467,000 jobs reported by the Labour Department on Thursday was 100,000 more than Wall Street economists had expected and was spread widely across economic sectors.

-- Payrolls fall by surprisingly large 467,000 in June

-- Jobless rate hits 9.5 percent, highest since August 1983

-- Jobless benefit claims fall by 16,000 in latest week

-- May factory orders rise more than expected

The economy has lost 6.5 million nonfarm jobs since the recession began in December 2007 and the unemployment rate has nearly doubled in that time. "It looks like the economy was still losing substantial momentum as the second quarter came to a close. This report is weak across the board," said William Sullivan, chief economist at the JVB Financial Group in Boca Raton, Florida.

The Dow Jones industrial average fell 2.0 percent as investors worried that the data darkened the recovery outlook. A later report of a stronger-than-expected increase in US factory orders for May failed to restore confidence.

Prices for US Treasury debt, normally seen as a safe bet during hard times, rose and the dollar fell against the Japanese yen, considered a haven for investors. Also on Thursday, data showed unemployment in the 16-nation euro zone rose to a 10-year high of 9.5 percent in May.

America's June jobless rate of 9.5 percent was up from 9.4 percent in May and was the highest since a matching rate in August 1983. Analysts had expected it to rise to 9.6 percent. Monthly job losses peaked in January at 741,000 and had decreased each month since then until June, an indication that the pace of the economy's deterioration had been slowing.

The unemployment rate has continued to rise. Since the recession started in December 2007, US payroll employment has dropped by a total of 6.5 million. The Labour Department revised figures for April and May to show a net 8,000 fewer jobs were lost in those months than previously reported. The May job losses were revised downward to 322,000, while April losses were revised upward to 519,000.

"The only saving grace is that the decline in payrolls may not be as large as we saw at the start of the year," JVB's Sullivan said. A separate report, however, offered some hope that pressure on the labour market was starting to fade.

The Labour Department said first-time claims for state unemployment insurance benefits fell to 614,000 in the week ended June 27 from an upwardly revised 630,000 the prior week. In another hopeful sign, the number of people still on jobless aid rolls after claiming an initial week of aid fell to just over 6.70 million in the week to June 20 from an upwardly revised 6.76 million a week earlier, only the third week this year that "continued claims" had dropped.

Separately, the Commerce Department reported that orders for US manufactured goods in May rose 1.2 percent, their largest increase in nearly a year, beating analysts' median forecast for a 0.8 percent rise.

Non-defence capital goods excluding aircraft, considered a measure of manufacturing activity, rose 4.7 percent in May following a 3.5 percent fall in April. While June's job losses were spread across all sectors, the steepest decline was in services, which fell 244,000 after a 107,000 drop in May. Professional and business services lost 118,000 jobs, while government employment fell 52,000. Manufacturing was one of the few areas to show a smaller drop in June, down 136,000 after a 156,000 fall in May.

(Reuters)

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Friday July 03, 2009

SYDNEY: Australia posted its largest trade deficit in 12 months Thursday, as softening commodity prices and demand hammered export earnings amid the global economic turmoil, dealers said. The trade deficit almost doubled to 556 million dollars (449 million US) in seasonally adjusted terms in May, up from 282 million in April, the Australian Bureau of Statistics (ABS) said.

Exports plunged five percent over the month, partially offset by a four percent fall in imports. It was the steepest fall since July 2008, when Australia reported a seasonally-adjusted deficit of 717 million dollars, and was more than four times the median market expectation of 125 million. Acting Trade Minister Kim Carr said a sharp fall in contract prices for iron ore and coal of between 35 and 60 percent was to blame for the deterioration in trade.

"While it is disappointing to see the value of exports falling, it is an inevitable consequence of the rapid slowdown in the economies of our major trading partners and the large falls in commodity prices that have occurred," Carr said. "The pleasing thing about today's figures is that volumes for our resource exports are holding up well," he added.

But J.P. Morgan chief economist Steven Walters warned that China - Australia's second-largest trading partner - could be stockpiling commodities, one of its most important sources of income.

"It could be the Chinese think that they've got enough of our raw materials and are therefore not importing as much as they were before," Walters told ABC radio. "If that's the case then that is quite a worrying sign," he added. Exports of coal, coke and briquettes slumped 540 million dollars, or 15 percent, in May, while metal ores and minerals was two percent lower, the ABS said.

Booming Chinese demand for raw materials drove years of stellar growth for mining exports in Australia, underpinning an unprecedented period of prosperity for the country. Canberra has launched stimulus measures worth more than 50 billion dollars (32.5 billion US) to combat the global economic crisis, while the central bank has slashed the cash rate by 425 basis points to 3.0 percent since September.

(AFP)

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MANILA: Asia's recession appears to have touched bottom and the region is likely to be the first to climb out of the global economic slowdown, the Asian Development Bank's chief economist said Thursday. However, ADB's Lee Jong-Wha said it would be difficult for the world's most populous region to return to the high-growth scenarios of 2007 and earlier unless the industrialised world also recovers from a deep recession.

Speaking at a news conference in Manila, Lee said that compared to other regions, Asia - outside of Japan - had mostly managed positive growth throughout the crisis, albeit at lower levels.

He added that the ADB was now seeing stronger numbers in terms of "quarter on quarter industrial production," and concluded that "Asia will see recovery faster than the industrialised countries." Expansionary monetary policies implemented by governments around the region loosened credit and lowered interest rates, helping Asians spend more money to keep local economies ticking over, Lee said.

Meanwhile large countries such as China and India "maintained relatively strong and resilient growth which provided demand for regional exports" from Asian neighbours. "Clearly now we are in the transition from recession to recovery. The question is how fast the recovery will happen," Lee said.

"No one can say for sure." The Manila-based bank said it will update on September 22 its flagship Asian Development Outlook forecasts, which predicted earlier this year that developing Asia will see its economic growth fall to 3.4 percent this year compared to 6.3 percent in 2008. Lee stressed that "the recovery is still not that strong" and that Asian governments must not pursue policies that may damage any green shoots, ensuring they review current stimulus policy once rehabilitation holds.


(AFP)

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