2010/08/13 17:45DJ German IMK Institute Raises 2010 GDP Growth Forecast To 2.5% To 3%
BERLIN -Germany's economy will grow by 2.5% to 3% rather than the 2.0% previously forecast due to the 'sensationally good' second quarter growth figures, German economics research institute IMK said Friday. 'The second-quarter numbers announced by the Statistics Office today are so sensationally good that a stronger growth for the whole year can be expected,' said IMK director Gustav Horn. 'It becomes evident how big a boost the global fiscal stimulus measures gave to [our] economy.' But he warned that there are still 'many risks' to Germany's economy. With most fiscal stimulus set to come to an end this year, it will only then show 'whether Germany is just enjoying a recovery from its deep crisis or whether this is a self-supporting upswing,' Horn said Until earlier this year, the Duesseldorf-based institute used to be a member of the group of institutes compiling bi-annual forecast reports for the government. Earlier Friday, preliminary data released by the Federal Statistics Office showed that gross domestic product grew a real adjusted 2.2% on the quarter in the April-June period, after upward revised growth of 0.5% in the previous quarter. This was much higher than economists' forecasts of a 1.4% quarterly rise. German Economics Minister Rainer Bruederle said earlier Friday that the German economy could grow 'well over 2%' this year, rather than the 1.4% growth forecast in April. A new prediction is due in October.
2010/08/13 17:22=DJ DATA SNAP: Euro-Zone Trade Balance Swings Back To Surplus
LONDON -The euro zone's trade balance swung back into surplus in June from a deficit the previous month, as both exports and imports surged to their strongest level for more than one and half years, official data showed Friday. The European Union's statistics agency Eurostat Friday said the 16 countries that use the euro had a combined surplus in their trade in goods with the rest of the world of EUR2.4 billion, having had a deficit of EUR3.3 billion in May, a figure that was revised from the previous estimate of a EUR3.4 billion deficit. The surplus was stronger than expected, with economists estimating the trade balance to be flat in June, according to a Dow Jones Newswires survey last week. Exports in June were EUR137.9 billion, up 27% from the same month last year, while imports were EUR135.4 billion, a rise of 31% compared with the same month last year. These were the highest figures since October 2008, when exports stood at EUR141.1 billion and imports were at EUR142.1 billion, showing that trade flows are recovering from early 2009, when they seized up in response to the intensification of the financial crisis and the deepening global recession. Eurostat website: www.ec.europa.eu/eurostat
2010/08/13 17:20=DJ DATA SNAP: Euro-Zone Grows At Strongest Rate For Four Years
LONDON -The euro-zone economy grew at the fastest pace in four years in the second quarter, driven by an unexpectedly strong surge in Germany, preliminary data showed Friday. The combined gross domestic product of the 16 countries that use the euro grew 1.0% compared with the first three months of the year, the strongest quarterly expansion since the second quarter of 2006, the European Union's Eurostat statistics agency said. GDP, which measures the total value of goods and services in the economy, was also 1.7% higher than in the second quarter of 2009, the sharpest annual increase since the first three months of 2008. The figures were much stronger than the market consensus estimate of growth of 0.7% on the quarter and 1.4% on the year from a Dow Jones Newswires survey of economists last week. The euro zone grew 0.2% on the quarter and 0.6% on the year in the first quarter. Official figures from the region's biggest economies released earlier had suggested that the euro-zone figures would top expectations. Germany grew 2.2% between April and June, the fastest quarterly rate since reunification in 1990 and far stronger than economists' expectations of a 1.4% expansion. The breakdown of the German GDP numbers 'will only be published in two weeks but recent monthly data indicate that growth was driven by exports and investments, while the drop in private consumption should at least have come to an end,' Carsten Brzeski, an economist at ING NV, said in a note. Rainer Bruederle, Germany's Economy Minister, said in a statement that the new data for the first half of the year 'bring growth of well over 2% in 2010 into the realm of the possible.' So far the government has been forecasting growth of 1.5% for 2010. Official figures from France, also released earlier, showed growth of 0.6% on the quarter between April and June--slightly stronger than the market consensus forecast of 0.4% growth. French Finance Minister Christine Lagarde said she is 'convinced' France will meet its target of 1.4% GDP growth for 2010. Eurostat website: www.ec.europa.eu/eurostat
2010/08/13 17:00*DJ Euro-Zone Jun Trade Surplus EUR2.4B Vs Surplus EUR5.2B Jun 2009
2010/08/13 17:00*DJ Euro-Zone Jun Trade Balance Was Forecast EUR0.0B
2010/08/13 17:00*DJ Euro-Zone May Trade Revised To Deficit EUR3.3B
2010/08/13 16:39=DJ Forex Focus: Sterling Has Uglier Sisters
LONDON -Sterling may be one of the ugly sisters, but it isn't the ugliest. So, while it may now have seen the best of its recent gains against safe haven currencies, such as the dollar and the yen, it will still do better than others, such as the euro. See how the pound has started to come down against the dollar: http://www.dowjoneswebservices.com/chart/view/4417 But how it has held up against the sliding euro: http://www.dowjoneswebservices.com/chart/view/4418 At the moment, there are two reasons to sell the pound. Global risk sentiment has taken a hammering in the wake of the Federal Reserve's decision to lower its U.S. growth outlook and preserve market liquidity for longer. As concern over the global recovery has risen, investors have lost their appetite for risk and headed straight for traditional safe havens. The other reason to bring sterling's rally to an end is this week's downgrade in the Bank of England growth outlook for the U.K., which helped to confirm market fears about the economy. While the country's second quarter growth may have been better than expected, new data showing a downturn in house prices, tighter credit conditions and softer consumer confidence all suggest that the recovery is stalling just as the new coalition government prepares to introduce even more fiscal austerity. With the central bank also lowering its outlook for inflation in the next year or two and with dis-inflationary forces showing signs of growing, there is still the risk that the Bank of England will need to resort to further quantitative easing. The bank's governor, Mervyn King, may have sidestepped a direct question on the possibility of more QE but he did suggest that more could be introduced if that was appropriate. As far as U.K. interest rates are concerned, there is little sign that hikes will be under discussion any time soon. With the U.K. growth downgrade just adding to worries about the global recovery, risk is likely to remain off the table for even longer, providing more reason to look for sterling losses against the safe havens. Nevertheless, there are other currencies against which sterling will remain on top--such as the euro. This week has seen the return of financial market jitters in the euro zone as slower global growth and disappointing euro-zone data, including Thursday's disappointing fall in industrial production, suggest that conditions for debtor nations will remain difficult. Without a quick recovery, the risks of debt default will start to grow again. This has already been reflected in wider yield spreads and a higher cost for credit default swaps. So while economic conditions in the U.K. may appear tough, those in the euro zone appear to still be even tougher, ensuring that the pound should continue to trade at a premium against its euro zone counterpart. Although, the euro is still holding up over GBP0.8200, market analysts are still looking for an early test of support around GBP0.8180. Early Friday in Europe, the euro was getting a lift from news that Germany's second quarter GDP growth was 2.2%, much more than the 1.4% that had been expected and much faster growth than the 0.2% that the country managed in the first quarter. This had lifted hopes that euro zone GDP figures as a whole, due later in the day, will also come in better than forecast and lift some of the market's recent concerns about the higher funding costs being faced by peripheral members such as Greece and Ireland. Otherwise, market sentiment is still dominated largely by a flight to safety as concerns over the global recovery remain high. Thursday's data showing the largest rise in U.S. jobless claims in six months and worries about retail sales and consumer confidence figures due later Friday are likely to continue driving the market. By 0645 GMT, the euro had rebounded a little to GBP 0.8249 from GBP0.8236 late on Thursday in New York, according to EBS. It was also up at $1.2890 from $1.2833. The pound rose to $1.5625 from $1.5581 while the dollar rose to Y86.10 from Y85.90. The euro also rose to Y110.95 from Y110.23.
2010/08/13 15:56DJ Japan DPJ Lawmakers Urge 'Immediate' Action Vs Yen
TOKYO -A group of Japanese ruling-party lawmakers urged the government and the Bank of Japan Friday to take 'immediate and extensive action' to fight the rising yen, in a fresh indication of growing concern over the currency's strength. In a statement issued on the day, the group of more than a hundred Democratic Party of Japan lawmakers--commonly known as the 'anti-deflation federation'--said the government needs to 'consider undertaking foreign-exchange intervention.' The central bank also ought to implement additional 'large-scale monetary easing immediately.' The group's move demonstrates the somber mood among Japan's public, which is increasingly worried about how the rising yen could hurt the nation's export-led growth. But how seriously the government will listen isn't clear. Many of the group's members are young, little-known lawmakers, and even though Prime Minister Naoto Kan has shown some sympathy toward the federation, he has never acted on its previous proposals such as imposing an inflation target on the BOJ.
2010/08/13 15:43DJ Tokyo Shares End Up As Govt Action To Slow Yen Rise Eyed -2-
TOKYO - Tokyo shares ended marginally higher on Friday, with the Nikkei snapping a five-day losing streak on dip-buying in select blue-chips such as Sony and Panasonic, but skepticism over Japanese government resolve to tackle the strong yen capped gains. The Nikkei 225 Stock Average rose 40.87 points, or 0.4%, to 9253.46 following a 4.6% decline from last Friday through Thursday. The Topix index of all the Tokyo Stock Exchange First Section issues also rose 3.46 points, or 0.4%, to 831.24, with 26 of 33 subindexes closing in positive territory. Trading volume was relatively low at 1.6 billion shares with the seasonal 'Obon' holiday in full swing. Investors also await further cues on the health of the U.S. economy, such as retail sales data for July, following grim signs in the job market. Stocks remained sluggish mostly throughout the morning as investors watched closely for further hints on whether the Japanese government or the Bank of Japan will take steps via additional monetary easing or currency intervention following comments made Thursday by Finance Minister Yoshihiko Noda to 'take appropriate action.' 'There is no way markets will be satisfied with yesterday's developments,' said Hideyuki Ishiguro, strategist at Okasan Securities. 'The most important issue is whether any action is taken at all.' Masayoshi Yano, senior market analyst at Meiwa Securities, projected the Nikkei to trade between 9000 and 9300 next week, adding that the index may rise to 9500 if the central bank takes extra steps to expand liquidity. 'If it turns out that the government is just giving lip service (regarding the strong yen), markets will test critical 9000 support,' he cautioned. Some dip-buying was seen after the Nikkei plunged to a 13-month intraday low on Thursday, making many blue-chip shares look extremely cheap. Sony closed up 1.9% at Y2,613, while TDK rose 1.6% to Y4,695. Panasonic closed up 2.0% at Y1,086 after Goldman Sachs raised its rating to Buy, citing medium-term growth prospects from its integration with Panasonic Electric Works and Sanyo Electric. Other bellwether exporters also closed with losses. Tokyo Electron lost 0.7% at Y4,255 while Honda Motor fell 0.3% to Y2,789 as strong yen worries continued to sour sentiment. Dai-ichi Life Insurance closed down 4.5% to Y103,100 after hitting yet another all-time low, following a JPMorgan downgrade to Neutral. 'Under current market conditions, we think it is very risky to invest in the stock,' wrote analyst Natsumu Tsujino in a report, citing the company's high sensitivity to stock prices and interest rates. Information technology services firm CSK Holdings was one of the heaviest-weighted drags on the Nikkei, closing down 7.3% at Y304 after Deutsche Securities cut its target price by 20% following its grim fiscal first-quarter earnings. September Nikkei 225 futures closed up 80 points, or 0.9%, at 9270 on the Osaka Securities Exchange. For the week, the Nikkei dropped 4.0% and remains down 12% year-to-date.
2010/08/13 15:29=DJ DATA SNAP: French 2Q GDP Flash Estimate +0.6% On Quarter
PARIS -The French economy expanded more than expected in the second quarter of the year, figures from national statistics agency Insee showed Friday. Gross domestic product rose 0.6% in the second quarter from the previous three months, beating market expectations for a 0.4% expansion, according to a Dow Jones Newswires survey of economists. Insee also revised upwards the GDP growth figure for the first quarter to a 0.2% rise on the quarter, from a previous reading of 0.1%. Gross fixed capital formation rose 0.8% in the second quarter, the first expansion since the beginning of 2008, Insee said. Investment by non-financial businesses rose 1.1% on the quarter, Insee said. Consumer spending--traditionally the key driver of the French economy--also recorded a 0.4% rise in the first quarter. Speaking on French radio before the results were officially published, French finance minister Christine Lagarde said she is now convinced France will meet its growth target for 2010 of 1.4%. For 2011, she said the government isn't revising its 2.5% GDP growth forecast Friday, but will look at it again when it sets the budget in the autumn. The government's 2011 forecast is above the majority of economist expectations and has previously been described by Lagarde as 'ambitious' and even 'audacious.'
2010/08/13 15:22DJ JGBs Up As Yen Rise Clouds Econ Outlook, Reinforces Easing View
TOKYO -Medium- to long-term Japanese government bonds ended higher Friday as players remained concerned that yen rises may hurt Japan's export-led growth and speculated that the Bank of Japan may act to curve the currency's strength. "Caution about chasing further upside is increasing, but there is the possibility that price move become more bumpy next week due to the lack of players on summer holidays," said Nobuto Yamazaki, executive fund manager at DLIBJ Asset Management. "Players are careful about risks of corrections amid the thin market." One potential factor that could trigger adjustment selling would be a series of U.S. economic indicators due later in the global day, including U.S. consumer price index and retail sales figures for July. But if the data continue to show signs of weakness in U.S. economy, and if the 10-year U.S. Treasury yield falls to around a key 2.5%, the yield on benchmark 10-year cash JGBs may also start to constantly stay below a 1% mark, Yamazaki said. The 10-year JGB yield was down 2.0 basis points at 0.980%, as of 0600 GMT, while the 10-year U.S. Treasury yield is at 2.744%. "A focus for the next week would be how the government and BOJ might act against the rising yen," said Tetsuya Miura, chief market analyst at Mizuho Securities. "Easing choices that the BOJ could make include increasing the supply of three-month cheap funds or extension of these loans' duration, but it's unclear whether it will help improve pessimistic sentiment," Miura said. The Asahi Shimbun reported Friday that Prime Minister Naoto Kan and BOJ Gov. Masaaki Shirakawa may meet next week to exchange views on the yen's recent appreciation and ways to deal with it. Meanwhile, 20- and 30-year cash JGBs fell due to adjustments after a sharp rally in the previous session. Movements in the superlong sector have recently been volatile, and are expected to maintain that trend, as investors aim at earning short-term profits in the longer end after shorter-maturity yields nearly hit bottom, analysts said.
2010/08/13 14:34=DJ DATA SNAP: German 2Q GDP Grew At Fastest Pace In 20 Years
FRANKFURT -The German economy grew at its fastest pace since reunification in 1990 in the second quarter of the year, thanks to strong contributions from exports and investment, the Federal Statistics Office, Destatis, reported Friday. Destatis said gross domestic product, which measures the total value of goods and services in the economy, grew 2.2% in real, seasonally and calendar-adjusted terms from the previous quarter, and was up a calendar-adjusted 3.7% from a year earlier. That is significantly ahead of a consensus forecast of 1.4% growth on the quarter and 2.6% on the year. Destatis also revised up its estimate for growth the first quarter to 0.5% from the previous three months, and 2.0% in year-on-year terms. Originally it had estimated first-quarter GDP growth at 0.2%. Destatis said exports and investment contributed the most to GDP in the second quarter, but added that state consumption and even private consumption made positive contributions. Website: www.destatis.de
2010/08/13 14:12DJ Forex Options:Dollar/Yen Options Down;Spot Rises To Y86-Levels
TOKYO -Dollar/yen currency options declined slightly in Asia Friday as the underlying exchange rate rose to around the Y86.00 level, reducing demand for hedges against the dollar's declines.Benchmark one-month at-the-money dollar-yen volatilities edged lower to 11.10%/11.80% Friday, from 11.15%/11.85% in New York Thursday. At 0430 GMT, the dollar stood at Y86.05, slightly up from Y85.94 in New York late Thursday. The dollar has traded in a tight range of Y85.84 to Y86.19 in the Asian session so far.Implied volatilities may decline further by 10 percentage points in Asian time if the spot moves continue to be confined to a narrow range, said an options dealer at a major Japanese bank. Volatilities generally decline when the spot stays in a narrow band in part because players' demand eases for the currency's downside hedges or protection against its sharp moves.An options dealer said that although players were interested in selling protection, implied volatilities weren't high enough to let go of options.Market participants remain cautious about any further comments on the yen's appreciation from senior government officials. Options prices may climb back easily if the Japanese authorities step up their effort to limit the yen's climb; while the possibilities remain uncertain for now.Elsewhere, one player bought a four-day dollar-put/yen-call option with a Y86.00 strike price at 10.5%, the dealer said, with the amount of such deals unknown. Dollar-puts makes money for the holder if the U.S. unit declines below the strike price.
2010/08/13 14:09DJ German 2Q GDP Up Nearly 2% Vs 1Q - Bild Zeitung
FRANKFURT -The German economy grew by nearly 2% in the second quarter from the first three months of the year, the mass-circulation daily Bild-Zeitung reported Friday, citing government sources.It also said the Federal Statistics Office, Destatis, will make a slight upward revision to its estimate of gross domestic product in the first quarter.GDP, which measures all the goods and services produced in an economy, rose by 0.2% in the first quarter, according to original estimates by Destatis.Destatis is due to report its figures at 0600 GMT Friday.Newspaper website: http://www.bild.de
2010/08/13 11:33=DJ INTERVIEW:Gold To Hit $1,400/Oz Within 2 Years - Aurizon Mines
LONDON -Aurizon Mines Ltd. (ARZ.T) predicted gold prices will rise to $1,400 over the next two years due to economic concerns, after earlier Thursday announcing its operating earnings rose on higher prices for the precious metal. Chief Executive David Hall told Dow Jones Newswires: 'I can see it going to $1,400 [an ounce] over the next 18 months to two years. I don't see any reason why it can't be sustained as there's a lot of financial instability... gold is a good buffer or hedge against that.' The Toronto-listed miner's earnings in the second quarter, excluding one-time items, rose to C$4.4 million, or 3 Canadian cents a share, from a profit of C$3.9 million, or 2 Canadian cents a share, a year earlier. At 1717 GMT Aurizon Mines shares had risen 5.43% to C$5.83. Hall said Aurizon will benefit fully from any prevailing strength in the spot market, as the company's remaining call option contracts will expire in October. 'Every ounce [of gold produced] beyond the third quarter will be sold at spot prices,' he said. Aurizon intends to use a small portion of its cash balance of C$124 million to upgrade its mineral resources at its Casa Berardi and Joanna properties in Quebec. The estimated mineral resources for Joanna's Hosco deposit have increased by 446,000 ounces of gold and now total 1.7 million ounces of gold--a 35% increase on the pre-feasibility study's estimate. Aurizon was also discussing possible joint ventures with other miners to eventually extract rare-earth minerals from its Kipawa Gold Property, Hall said. A C$1.1 million exploration drilling program at the site is expected to be complete by the end of the third quarter. Hall said rare-earths, a collection of 17 chemical elements used in many modern technological devices, are 'a completely different business' than Aurizon's specialty and so the company was just looking to 'retain some sort of residual interest' in any future production.
2010/08/13 11:31=DJ FOCUS: Euro-Zone Debt Crisis Comes Back To Haunt Euro
LONDON -The euro-zone debt crisis is back on the agenda in the foreign-exchange markets as the euro takes a beating against the dollar and other major currencies, weighed down by strains in the region's bond markets and banks.The 16-country currency has fallen heavily against the dollar, sterling, yen and Swiss franc in the past two days, after sentiment towards the region suddenly soured.Strains in euro-area government bonds and in the region's banks had melted into the background as fears of a fresh round of recession in the U.S. emerged as the market's key driving force. Now, though, those stresses are bubbling up once more, and the market's respite from this issue looks set to fizzle out.'Fresh sovereign worries in the euro area highlight that the region's troubles simply haven't gone away,' said Melinda Burgess, a currencies analyst at the Royal Bank of Scotland in London.The euro has had a rough ride so far this year, falling to a four-year low against the dollar in June, with concerns over the euro-zone generating jittery trading conditions. Some market watchers even expected a break-up in the currency as politicians faced disagreements over how and whether to offer financial support to the bloc's weaker members.A support package set up in May eventually led to easier funding conditions for those struggling euro members, particularly Greece and Spain, and stress tests on Europe's banks in late July also soothed frayed nerves. In reaction, the euro shot higher against the dollar, Swiss franc and other currencies despite some bursts of negative news, such as a ratings downgrade to Irish government debt.However, skeptics have long suspected this wouldn't last. This week, the sliding euro and a renewed rise in the cost of insuring some euro-area government bonds against default show that these concerns have returned.'There are clearly issues to be resolved as far as the euro zone's debt problems are concerned,' said Neil Mellor, a currencies analyst at The Bank of New York Mellon in London.Now, instead of ignoring negative news, as they did several weeks ago, traders have proven themselves willing to sell the euro on any negative shock. In particular, reports that the Irish government may pump EUR10 billion more funds into Anglo Irish Bank Corp. PLC (AGIBY) added to the pressure on the single currency Wednesday.Debt markets are experiencing fresh strains too. Peripheral euro-zone sovereigns have been hardest hit, with Ireland in focus over worries about the cost of bailing out its banking sector, while spreads on Greece credit default swaps--a form of insurance against default--widened more than 30 basis points Thursday to 795 basis points after Greek gross domestic product fell by 1.5% in the second quarter compared with the first. That means it now costs $795,000 a year to insure $10 million in five-year Greek government bonds against default.At 1240 GMT, the euro was trading at its weakest level of the month against several other currencies, at $1.2813 against the dollar, CHF1.3497 against the Swiss franc, Y109.50 against the yen and GBP0.8220 against sterling, according to trading system EBS.
2010/08/13 09:24DJ Japan Kan, BOJ Gov May Meet To Discuss Yen Next Week - Report
TOKYO -Japan's Prime Minister Naoto Kan and Bank of Japan Gov. Masaaki Shirakawa may meet next week to exchange views on the yen's recent appreciation and ways to deal with it, the Asahi Shimbun reported in its Friday morning edition.The top-level meeting would follow the U.S. dollar's drop Wednesday to a 15-year low of Y84.72, stoking concern that a strong domestic currency may take more steam out of the nation's already-decelerating export-led growth.
2010/08/13 08:44DJ BOJ Minutes: Need To Closely Examine Economic Impact Of Yen Rise
TOKYO -Bank of Japan board members were already concerned about the steep rise in the yen at their July policy meeting, according to minutes released Friday, adding to market speculation that the bank may further ease its monetary policy to curb the currency's strength.'With regard to the recent appreciation of the yen and the fall in Japanese stock prices, some members said that the effect on Japan's economic activity should be examined closely,' the minutes for the BOJ's July 14-15 meeting showed.The dollar fell Wednesday to a 15-year low of Y84.72, stoking concern that a strong domestic currency may take more steam out of Japan's already-decelerating export-led growth.
2010/08/13 06:33DJ US Small-Cap Stocks Fall For Third Straight Day; Worries Mount-2-
NEW YORK -U.S. small-capitalization stocks fell for a third-straight session as disappointing jobs data combined with a warning from a technology bellwether prompted traders to pull away from this riskier corner of the market.Small-caps, considered riskier investments than their larger counterparts because of their more-volatile trading and smaller cash positions, dropped after jobless claims unexpectedly rose, adding to a slew of recent economic data pointing to continued weakness in the overall economy.Cicso Systems, a Dow component, also added to the broader worries after the technology giant reported worse-than-expected quarterly revenue and projected a weak sales outlook. The routing and networking-equipment maker is seen as a proxy for corporate spending, which could have broader impact on small companies.The Russell 2000 index of small-capitalization stocks fell 3.41 points, or 0.55%, to 616.98. The measure has dropped 42.54 points, or 6.45%, in the past three days, marking its biggest three-day drop since early June.The Standard & Poor's SmallCap 600 index dropped 1.35, or 0.41%, to 330.81.Both indexes erased their year-to-date gains on Wednesday and added to the losses Thursday. The Russell 2000 is now down 1.34% year-to-date, while the S&P 600 has dropped 0.55% since Jan. 1.'It seems like once we got through the earnings summer rally, we've quickly come back to reality, as there are some serious infrastructure issues regarding the economy,' said Randy Bateman, chief investment officer at Huntington Funds.He pointed to the surging trade deficit as well as rising jobless claims as evidence of renewed worries about the economic recovery. 'The fact that all these numbers are starting to pop up is obviously making the Fed nervous,' Bateman said. 'And if the Fed's nervous, then I think investors are saying we may be going into a double dip.'Technology stocks were the S&P 600's biggest decliners Thursday following Cisco's warning. Ciena, a Linthicum, Md., communications networking equipment company, dropped 57 cents, or 4.4%, to 12.39, after Auriga cut its stock-investment rating on the company to hold from buy. The firm said macro risks will make execution difficult for Ciena, especially as it works to integrate recent acquisitions. Videogame publisher Take-Two Interactive Software also dropped 68 cents, or 7.4%, to 8.51.Energy stocks slid, led by World Fuel Services, a maker of marine, aviation and land-based fuel products, which fell 1.04, or 3.9%, to 25.90. Oil and natural-gas company Penn Virginia dropped 57 cents, or 3.6%, to 15.28.
2010/08/13 05:46=DJ WORLD FOREX: Dollar Up On Fears For Global Economy, BOJ Talk
NEW YORK -The dollar advanced Thursday as rising fears of a global economic slowdown weighed on the euro and boosted the appeal of the U.S. currency as a safe harbor.The dollar also rose against the yen after Japanese officials ramped up their rhetoric against their currency's recent strength.The greenback's upward move was an extension of its strong gains Wednesday against most major currencies, said Vassili Serebriakov, foreign exchange strategist at Wells Fargo in New York. Wednesday saw the largest single-day rise since December 2008 for the ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies."Concerns about global growth are back in the forefront, and the dollar is enjoying safe-haven demand," Serebriakov said.Late Thursday, the euro was at $1.2833 from $1.2882 late Wednesday, according to EBS via CQG. The dollar was at Y85.90 from Y85.37, while the euro was at Y110.23 from Y109.99. The U.K. pound was at $1.5581 from $1.5683. The dollar was at CHF1.0499 from CHF1.0576. The ICE Dollar Index was at 82.569 from 82.276.To see the dollar's performance against the yen, please see:http://dowjoneswebservices.com/chart/view/4414To see the euro's performance against the dollar, please see:http://dowjoneswebservices.com/chart/view/4416A string of recent soft data out of Europe, the U.S. and Asia sent investors out of most growth- and risk-sensitive assets.Industrial production in the 16 countries that share the euro fell unexpectedly in June following declines in output in France and Germany, according to data from the European Union's Eurostat statistics office.The euro was also hurt by reports the European Central Bank bought short-dated Irish government bonds Wednesday and early Thursday in an attempt to calm market volatility stemming from concerns of the creditworthiness of Irish banks.U.S. weekly jobless claims reported Thursday unexpectedly climbed to their highest level in six months, contributing a bit more to the somber tone in the markets.Finally, the Greek economy contracted sharply in the second quarter as government austerity measures bit deeper into incomes, according to government data released Thursday. The dismal figures reinforced concerns about the negative effects austerity measures will have on the economies of peripheral euro-zone nations.The euro and some other currencies tied to growth, such as the New Zealand dollar, were hit by "the negative news flow," said Andrew Busch, global foreign exchange strategist at BMO Capital Markets in Chicago."Slower economic growth is a reality and this is being priced into the markets this week," he said.The flight to safety has Japanese officials concerned that yen strength will hurt Japan's export-driven economy. Japan's finance minister threatened to act against the rising yen Thursday, while the Bank of Japan governor issued an emergency statement warning against "substantial fluctuations" in exchange rates following the dollar's drop Wednesday to a 15-year low of Y84.72.Reports that the Bank of Japan checked rates in Tokyo hours, which involves asking commercial banks for details of their currency transactions, drove home the message that the Japanese government is not happy with the yen's appreciation. Checking rates is considered a type of verbal intervention, but a step more serious than "jawboning."When the yen is on the verge of appreciating too far too fast, "Japan tries to ratchet up the threat level of intervention," said Sebastien Galy, currency strategist at BNP Paribas in New York. Galy said that while investors are watching Japan's central bank closely, they still believe direct intervention in markets is a long way away.Despite the decline for many growth- and risk-sensitive currencies, Chile's peso ended at a 23-week high against the dollar as optimistic forecasts for the local economy outweighed fears regarding the health of the global economic recovery. Similarly, Brazil's real closed slightly higher against the dollar on expectations of continued firm investment inflows. The Canadian dollar also managed to eke out a gain, staging a modest comeback after a sharp retreat on Wednesday.With the ICE Dollar Index strengthening, Deutsche Bank's PowerShares U.S. Dollar Index Bearish exchange-traded fund was down 0.31% from late Wednesday, while its PowerShares U.S. Dollar Index Bullish was up 0.29%. The two exchange-traded funds are based on Deutsche Bank currency futures indexes, whose composition mirrors that of the ICE's Dollar Index.
2010/08/13 04:48DJ NY Fed: Dollar Gained 3.6% On Trade-Weighted Basis In 2Q
NEW YORK -The U.S. dollar appreciated 3.6% on a trade-weighted basis in the second quarter of 2010 from the previous quarter, the Federal Reserve Bank of New York said Thursday.U.S. monetary authorities did not intervene in currency markets during the period from April through June, the bank said in its quarterly report delivered to Congress about Treasury and Federal Reserve foreign-exchange operations.The dollar gained 10.4% against the euro during the quarter, but depreciated 5.4% against the yen.The report distinguished between the dollar's appreciation against the currencies of most of the world's largest economies at the beginning of the quarter and its depreciation against major currencies at the end of the period.Concerns about fiscal sustainability and growth in some euro-zone countries helped the dollar to appreciate against most major currencies in the first two months of the quarter."In April and May, the dollar appreciated against most G-10 currencies amid a series of credit rating downgrades of peripheral euro-area countries and large upcoming debt maturities for these countries," the report said."These events contributed to a surge in government bond yields and raised concerns about the peripheral euro-area countries' broader fiscal and growth outlooks."Cyclically sensitive currencies also depreciated against the greenback, with the New Zealand and Australian dollars depreciating 6.4% and 8.5%, respectively, in May.In early June, however, the picture changed for the dollar."Market concerns about the relative strength of the U.S. growth outlook led to the dollar's moderate depreciation against major currencies," the report said."A series of weaker-than-expected data releases from the United States began to raise concerns about the sustainability of the U.S. recovery," it said.Meanwhile, central banks outside the U.S., including the Bank of Canada and the Reserve Bank of New Zealand, began tightening monetary policy as their growth outlooks improved, "contributing to a strengthening of their currencies against the dollar."Although the Swiss National Bank did not raise its policy rate in June, the Swiss franc appreciated 7.2% against the dollar over the month.The U.K. pound appreciated 2.8% against the dollar in June, as political risks associated with Britain's June general election abated.The Fed reestablished temporary dollar liquidity swap lines with several other central banks in early May in response to the re-emergence of strains in the offshore U.S. dollar short-term funding markets, the report said. Temporary swap arrangements were re-established with the Bank of England, the European Central Bank, the Swiss National Bank, the Bank of Japan and the Bank of Canada.As of June 30, the ECB had $1.0 billion outstanding, the BoJ had $200 million outstanding, and the BoE, SNB, and Bank of Canada had not utilized their swap lines.From 2007 through 2009, the Federal Open Market Committee authorized temporary reciprocal currency arrangements with 14 foreign central banks. Through the reciprocal currency swaps, the Federal Reserve provided dollars to the foreign central banks, rather than directly to the institutions obtaining funding through these operations.The U.S. monetary authorities invest their foreign currency reserves in a variety of instruments that yield market rates of return and have a high degree of liquidity and credit quality. As of June 30, direct holdings of foreign government securities totaled $23 billion, split evenly between the Federal Reserve System Open Market Account and the U.S. Treasury Exchange Stabilization Fund. Foreign government securities held under repurchase agreements totaled $4.5 billion at the end of the quarter and were also split evenly between the two authorities.The full text of the report can be found at the Web site of the New York Fed:http://www.newyorkfed.org/markets/quar_reports.html.
