qing02051981

Asian Stocks Drop on Concern U.S. Subprime Losses Will Spread
2007-11-26 19:45 (New York)


By Chen Shiyin and Patrick Rial
Nov. 27 (Bloomberg) -- Asian stocks fell for the first time
in three days on speculation financial institutions will report
increased losses from U.S. subprime mortgage-related securities.
Mizuho Financial Group Inc. and Macquarie Group Ltd. led
declines after Goldman, Sachs & Co. said HSBC Holdings Plc,
Europe's biggest bank, may have to write down an additional $12
billion for non-performing subprime assets and CNBC said
Citigroup Inc. may shed 45,000 jobs.
In the U.S., the Standard & Poor's 500 Index fell 2.3
percent yesterday, the biggest drop in more than two weeks.
``With the U.S. performing so poorly, it can only mean bad
news for the market here,'' said Terunobu Kinoshita, who helps
manage $785 million at Fund Creation Co. in Tokyo.
The MSCI Asia Pacific Index declined 1.3 percent to 156.49
as of 9:36 a.m. in Tokyo, halting a two-day, 3 percent advance.
Financial shares were the biggest drag among the benchmark's 10
industry groups.
Japan's Nikkei 225 Stock Average slumped 1.9 percent to
14,847.03. Toyota Motor Corp. led a drop by exporters after the
yen strengthened to the highest since June 2005 against the
dollar, reducing the value of companies' overseas sales.
Australia's S&P/ASX 200 Index slipped 1.8 percent, while the
Kospi index dropped 2.5 percent in South Korea.

Mizuho, Macquarie

Mizuho Financial, Japan's second-largest publicly traded
bank, fell 3.5 percent to 532,000 yen, snapping a two-day, 6.6
percent gain. Macquarie, Australia's biggest investment bank,
slid 2.5 percent to A$75.66, after gaining 2.5 percent in the
previous two sessions.
HSBC may have to set aside additional funds for bad debts
because of customer defaults at its U.S. subprime lender
Household International Inc., Goldman said, lowering the
company's Hong Kong-listed stock to ``sell'' from ``neutral.''
London-based HSBC also said yesterday it will bail out its two
structured-investment vehicles by taking on $45 billion of their
assets to avoid a fire sale.
Citigroup, which earlier this month announced at least $8
billion of fourth-quarter writedowns on mortgage investments,
said it is reviewing ways to cut costs and declined to comment on
specifics. Citigroup may cut as many as 45,000 jobs in the next
two months, CNBC reported yesterday, citing unidentified people
within the company.

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qing02051981

Fed Plans to Ease Funding Pressures by Adding Cash (Update4)
2007-11-26 17:03 (New York)


(Adds Libor rate in seventh paragraph and Bernanke speech in
eighth paragraph.)

By Ye Xie and Craig Torres
Nov. 26 (Bloomberg) -- The Federal Reserve will provide
funds for banks to borrow in an attempt to forestall any cash
shortages at the end of the year, its first such operation since
December 2005.
The Fed's New York branch said in a statement that it plans
a series of repurchase agreements, starting with an $8 billion
injection on Nov. 28, extending into next year. The move follows
the European Central Bank's commitment last week to make extra
cash available to ``counter the re-emerging risk of volatility''
in money markets.
``The Fed is pulling out all stops to try to alleviate
funding pressures in the money and financing markets as the
markets lurch into year-end,'' said Chris Rupkey, senior
financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New
York.
Fed officials acted after the average U.S. overnight lending
rate between banks exceeded their target seven of the past eight
days, suggesting a reluctance to lend amid mounting subprime
mortgage losses. In most years, banks face year-end pressures as
they adjust their books to show ample liquidity and at the same
time meet a jump in demand for cash from consumers.
The New York Fed said it planned the steps ``in response to
heightened pressures in money markets for funding through the
year-end.'' Officials will ``provide sufficient reserves to
resist upward pressures'' on the benchmark federal funds rate
around year-end. The Nov. 28 repo will mature on Jan. 10.

`Still Fragile'

Policy makers judged that financial markets were ``still
fragile'' when they met to set interest rates Oct. 30-31,
according to minutes of the session released last week. ``Unusual
pressures in funding markets persisted,'' the Fed said.
The cost of borrowing dollars for three months rose for a
ninth day to 5.05 percent in London today, the British Bankers'
Association said. That's 55 basis points more than the Fed's
benchmark rate, the widest gap since the Fed cut its benchmark
rate for the first time in 4 1/2 years on Sept. 18.
Fed Chairman Ben S. Bernanke will have an opportunity to
comment on market developments when he speaks Nov. 29. The
central bank today expanded the scope of his remarks to include
the national economic outlook. Previously, he was scheduled to
give acceptance remarks for the Charlotte Chamber's Citizen of
the Carolinas Award and speak about the regional economy.

August Collapse

Fed officials in Washington, who confer daily with the New
York Fed's System Open Market Operations desk, have been attuned
to funding shortages since the credit-market collapse in August.
On Aug. 10, the central bank pledged to supply additional
reserves as needed to address funding constraints. The Fed also
reduced the discount rate, the charge for direct loans to banks,
to a half-point spread over the federal funds rate on Aug. 17.
The gap is usually 1 percentage point.
Policy makers also lowered the main rate by 75 basis points
in their past two meetings, to 4.5 percent, in an effort to
cushion the economy from the credit crunch and housing recession.
The discount rate is 5 percent. A basis point is 0.01 percentage
point.
Central bankers next meet to set rates Dec. 11. While Fed
Governor Randall Kroszner and other officials have expressed
skepticism on the need for additional rate cuts, traders are
betting on them.
Fed funds futures contracts show an 84 percent probability
of a quarter-point reduction next month, with a 77 percent chance
of a further rate cut in January.

`Magic Bullet'

``Given the heightened state of credit aversion going on it
looks like the only magic bullet that they have to help the
markets is a rate cut,'' Rupkey said.
Fed officials may be drawing on the playbook developed for
the 1999-2000 millennium year change. At that time, regulators
feared that obsolescent computers would wreak havoc with the
banking system. They developed the Special Liquidity Facility in
mid-1999, which included longer-term repurchase agreements and
the sale of options on repos.
The Fed arranged $5 billion in 28-day repos on Dec. 7, 2005,
and $4 billion through 52-day repos on Nov. 15, 2004. The Fed
didn't arrange such repos in 2006.
``What the Fed's trying to do here is let the market know
that they will provide liquidity around year-end, which is of
particular concern in financial markets right now,'' said Michael
Pond, an interest-rate strategist in New York at Barclays Capital
Inc. ``So anything they can do around that should help alleviate
concerns.''

Repo Agreements

In repos, the Fed buys U.S. Treasury, mortgage-backed and
so-called agency debt from its 21 primary dealers for a set
period, temporarily raising the amount of money available in the
banking system. At maturity, the securities are returned to the
dealers and the cash to the Fed. The Fed conducts short term
repos, ranging from overnight to two weeks, almost every day to
keep the Fed fund close to its target.
Louis Crandall, chief economist at Wrightson ICAP LLC in
Jersey City, New Jersey, said the Fed often does long-term repos
spanning year-end in November and December, and they usually
won't issue a statement to announce the move.
``Formalizing the procedure by announcing it, they intend to
boost confidence in the repo markets,'' said Crandall.
In a separate statement, the New York Fed said it will raise
the limits on the amount of Treasuries that dealers can borrow
from its System Open Market Account. Through the account, dealers
can borrow Treasury notes and bills that are scarce in the repo
market.

Higher Limit

Primary dealers will be able to borrow 25 percent of the
amount available, with a maximum of $750 million per Treasury
security, up from the previous limit of 20 percent with a maximum
of $500 million per issue, according to the Fed's statement.
The Fed said it has also increased the amount available for
borrowing each day to 90 percent of an issue from 65 percent.
Dealers can also borrow securities maturing in six days or
longer. The Fed had previously limited the borrowing only to
issues maturing in at least 13 days.
Demand for government bonds have increased as losses tied to
delinquent mortgages spread through the credit markets. The yield
on the benchmark 10-year Treasury note has declined 0.59
percentage point in the past month and touched 3.79 percent
today, the lowest since March 2004.

`Crucial' Market

Raising borrowing limits will help ``alleviate shortage of
securities that have developed recently,'' Tony Crescenzi, chief
bond market strategist at Miller Tabak & Co. in New York, wrote
in a research note. ``The action will in turn help maintain
functionality in the $4 trillion market for repurchase
agreements, a market crucial toward the financing of Wall
Street's fixed-income inventory.''
The New York Fed cut the minimum fee dealers pay to borrow
Treasuries from the central bank to a record low of 0.5 percent
on Aug. 21, from 1 percent.
In its daily open-market operation, the Fed added $10.25
billion through overnight repos today, when $6.3 billion in repos
was due to mature. Wrightson had expected the Fed to add as much
as $15 billion.
Repos help maintain enough money in the system to keep
overnight interest rates close to the central bank's target.
The overnight rate traded at 4.625 percent today, above the
Fed's 4.5 percent target rate.

--With reporting by Scott Lanman in Washington. Editors: Chris
Anstey, Daniel Moss

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qing02051981

Asian stocks battered after Wall Street's plunge

SINGAPORE: Asian shares were sharply lower in early trade Tuesday, with Hong Kong's Hang Seng Index tumbling 3.30 percent in opening trade as a sell-off on Wall Street dampened regional market sentiment.

Singapore's Straits Times Index fell 2.1 percent in opening trade to 3,347.09 points, dragged down by DBS Group's 2.6 percent fall and a 2.1 percent decline in United Overseas Bank. The Singapore Exchange slipped 4.6 percent.

In Japan, Tokyo's benchmark Nikkei tumbled 2.12 percent or 320.34 points to 14,814.87 by the lunch break. The broader Topix index of all first-section shares fell 31.21 points or 2.13 percent to 1,435.82.

Exporters and banks such as Mizuho Financial Group were battered by heavy selling after the yen strengthened and Wall Street tumbled 1.83 percent as investors voiced fears that the housing slump and credit crunch could derail US economic growth.

Also taking the lead from US stocks were the Australian shares.

At 2330GMT, Australia's benchmark S&P/ASX 200 was down 117.5 points or 1.8 percent at 6,353.9 while the broader All Ordinaries index fell 111.8 points or 1.7 percent to 6,421.4.

"The market is getting belted around a bit today -- when you get a lead from the US like we did the market had only one way to go," said Michael Heffernan, a private client advisor at Austock.

Leading stocks including banks and BHP Billiton were under selling pressure following solid gains on Monday.

In South Korea, Seoul's KOSPI fell 47.21 points to 1808.12.

Overnight, the Dow Jones Industrial Average plunged 237.44 points as economists said the US consumer is being squeezed by falling house prices, tighter credit and spiking energy costs despite robust retail sales over the Thanksgiving holiday weekend. - CNA/ir

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qing02051981

Hong Kong Stocks Drop; HSBC Holdings, Bank of China Decline
2007-11-26 21:54 (New York)


By Hanny Wan
Nov. 27 (Bloomberg) -- Hong Kong stocks fell, led by HSBC
Holdings Plc after the lender said it will bail out its two
structured investment vehicles by taking on $45 billion of their
assets to avoid a fire sale.
Bank of China Ltd. was headed for its lowest close in two
months after Singapore's state-owned Temasek Holdings Pte. sought
as much as HK$4.46 billion ($573 million) to sell part of its
stake in the lender, and after Goldman, Sachs & Co. cut its
rating on the stock to ``neutral'' from ``buy.''
Sun Hung Kai Properties Ltd. declined after it began trading
without the right for new investors to receive a final dividend.
The Hang Seng Index lost 891.33, or 3.2 percent, to
26,735.29 as of 10:27 a.m. local time. The Hang Seng China
Enterprises Index, which tracks 43 so-called H shares of Chinese
companies listed in Hong Kong, fell 3.3 percent to 15,994.13.
HSBC, Europe's biggest bank, slid HK$3.70, or 2.8 percent,
to HK$129.80. Investors in Cullinan Finance Ltd. and Asscher
Finance Ltd. will be allowed to exchange their holdings in the
SIVs for debt issued by a new company backed by loans from HSBC,
the bank said yesterday.
HSBC may also have to set aside a further $12 billion for
bad debts because of customer defaults at its U.S. subprime
lender Household International Inc., analysts led by Roy Ramos at
Goldman wrote in a note dated Nov. 24. Goldman lowered its rating
on HSBC to ``sell'' from ``neutral.''

Share Sale

Bank of China, the nation's third-largest lender, lost 30
cents, or 7.1 percent, to HK$3.94, set for its lowest close since
Sept. 19. Asia Financial Holdings Pte, a unit of Temasek, is
offering international institutions 1.08 billion existing shares
in Bank of China at HK$4.09 to HK$4.12, according to an e-mail to
investors yesterday.
Goldman lowered its rating on Bank of China because of
factors including the lender's ``potential loss and negative
stock sentiment due to its subprime exposure,'' analysts at the
brokerage including Ning Ma said in a report today.
Sun Hung Kai, Hong Kong's No. 1 property developer by market
value, slipped HK$6, or 4.1 percent, to HK$139.40. Investors who
buy the stock from today will not qualify for a HK$1.60 final
dividend.

--Editor: Mark McCord

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qing02051981

Yen Trades Near Two-Year High Versus Dollar on Credit Concerns
2007-11-26 20:47 (New York)


By Kosuke Goto and Ron Harui
Nov. 27 (Bloomberg) -- The yen traded near a two-year high
versus the dollar as global stocks fell, spurring investors to
sell higher-yielding assets bought with Japanese loans.
The yen was near the strongest in 2 1/2 months versus the
Australian and New Zealand dollars, favorites of so-called carry
trades, as Japanese stocks tumbled after Goldman Sachs Group Inc.
said HSBC Holdings Plc faces $12 billion in additional
writedowns related to subprime mortgage defaults. A report from
the Conference Board today will probably show the lowest U.S.
consumer confidence in two years.
``With sinking stocks causing risk aversion, the yen has
been appreciating,'' said Michiyoshi Kato, a senior vice
president of currency sales in Tokyo at Mizuho Corporate Bank
Ltd., a unit of Japan's second-largest publicly traded lender by
assets. ``The markets are sensitive to credit insecurity.''
The yen traded at 107.49 per dollar at 10:07 a.m. in Tokyo
from 107.41 late in New York yesterday, when it reached 107.23,
the strongest since June 2005. Japan's currency may advance to
106.80 per dollar today, Kato forecast. The yen traded at 159.75
per euro from 159.72 yesterday. The dollar was at $1.4864 per
euro after reaching $1.4967 on Nov. 23, the weakest since the
combined European currency was established.
Japan's currency was at 93.73 against the Australian dollar
from 93.44 in New York yesterday, when it touched 93.01, the
strongest since Sept. 10. It was at 80.85 per New Zealand dollar
from 80.63 yesterday, when it reached 80.32, the highest since
Sept. 12. Japan's Nikkei 225 Stock Average fell 2.1 percent.

Lower Japanese Stocks

Speculators are the most bullish on the yen in three years.
As of Nov. 20, traders and hedge funds held 30,401 more futures
contracts betting on an advance in the yen than contracts
wagering on a drop, figures from the Washington-based Commodity
Futures Trading Commission showed yesterday. The amount of so-
called net longs rose from 20,796 a week earlier and was the
biggest wager on a yen increase since December 2004.
The ``data represent the current yen-bullish and dollar-
bearish trend,'' said Ayako Sera, market strategist of global
markets at Sumitomo Trust & Banking Co. in Tokyo, Japan's fifth-
largest publicly traded lender by assets. The yen may rise to as
high as 105 by the end of March, Sera said.
Implied volatility for one-month dollar-yen options was
14.39 percent, up from about 9 percent at the start of November.
Traders quote implied volatility, a measure of expected currency
moves, as part of pricing options.
``With the stock and currency markets very volatile by
going this way and that, the yen carry trade doesn't work,''
said Mitsuru Sahara, senior currency sales manager at Bank of
Tokyo-Mitsubishi UFJ Ltd., a unit of Japan's biggest publicly
traded lender by assets. He sees the yen rising to 106.80 today.

Consumer Confidence

In carry trades, speculators get funds in a country with
low borrowing costs and invest in one with higher returns,
earning the spread between the two. The risk is currency
fluctuations erase profits between the two rates.
The Conference Board's gauge of consumer confidence will
decline to 91 for this month, the lowest since October 2005,
from 95.6 in October, according to the median estimate of
economists surveyed by Bloomberg News. A report today from
S&P/Case-Shiller is expected to show house prices in 20 U.S.
metropolitan areas fell 4.9 percent in the 12 months that ended
in September, a separate survey shows.
Traders are betting there's a 100 percent chance the
Federal Reserve will cut its key rate by at least a quarter-
percentage point next month from the current level of 4.5
percent, according to interest-rate futures traded on the
Chicago Board of Trade. Investors saw an 82 percent chance of a
December cut a month ago.

Business Confidence

Europe's single currency may decline for a fifth day
against the yen, its longest losing stretch since July 27,
before a German report today that will probably show business
confidence dropped to the lowest in almost two years in November.
An economic slowdown in the euro area may prompt the European
Central Bank to refrain from raising interest rates.
``The report is likely to act as a drag'' on the 13-nation
region's economic expansion, said Seiichiro Muta, director of
foreign exchange in Tokyo at UBS AG, the world's second-largest
currency trader. ``The euro may weaken.''
The euro traded at $1.4873 from $1.4872 yesterday. It may
fall to $1.4830 and 159.50 yen today, Muta said.
The currency may extend the past month's 2.7 percent
decline against the yen as the Ifo research institute may say at
10 a.m. in Munich that its business climate index slipped to
103.3, the lowest since January 2006, from 103.9 in October,
according to a Bloomberg News survey of economists.

--With reporting by David McIntyre in Sydney and Junko Kikkawa
in Tokyo. Editor: Chris Young, Nate Hosoda

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qing02051981

Citigroup to Sell $7.5 Billion in Equity Units to Abu Dhabi
2007-11-26 21:58 (New York)


By James Temple
Nov. 26 (Bloomberg) -- Citigroup Inc., the largest U.S.
bank, said it agreed to sell $7.5 billion of equity units to the
Abu Dhabi Investment Authority.
The units will convert into common shares, the New York-
based company said today in a press release distributed by
Business Wire. ADIA, the sovereign wealth fund of the government
of Abu Dhabi, has agreed not to own more than 4.9 percent of
Citigroup's common shares, according to the statement.

--Editor: Elizabeth Wollman

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qing02051981

Yen Falls on Citigroup Equity Unit Sales, Mutual Fund Outflows
2007-11-26 22:37 (New York)


By Kosuke Goto and Ron Harui
Nov. 27 (Bloomberg) -- The yen snapped a two-day advance
against the dollar after Citigroup Inc. said it will sell equity
units to the Abu Dhabi Investment Authority and as Japanese
investors resumed buying of overseas assets.
Japan's currency declined versus all 16 of the world's most-
actively traded currencies as mutual funds with the equivalent of
about $6 billion plan to start investing from today, according to
data compiled by Bloomberg. Citigroup, the biggest U.S. bank,
said it agreed to sell $7.5 billion of the units, which will be
converted into common shares, a press release distributed by
Business Wire said.
``News of the Abu Dhabi investment seems to be reviving
investors' appetite for carry trades,'' said Nobuaki Tani, a
client manager in Tokyo at Resona Bank Ltd., a unit of Japan's
fourth-largest publicly traded lender. ``There's also talk that
foreign-currency investment trusts are being set up. The yen is
being sold.''
The Japanese currency declined to 108.25 versus the dollar
at 12:35 p.m. in Tokyo from 107.41 late in New York yesterday,
when it reached 107.23, the strongest since June 2005. It also
fell to 161.06 per euro from 159.72.
The yen may decline to 108.80 against the dollar and 162.00
per euro today, Tani said.

--Editor: Simon Harvey

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qing02051981

SG:Telecom Sector- 2008 likely to be challenging year

The Singapore telco sector is likely to face many issues in 2008. Some are macro and include the S$ appreciation, stock market volatility, nationalistic sentiment against sovereign fund investment and high inflation rates. Others are micro and specific to the domestic market such as Mobile Number Portability (MNP), National Broadband Network (NBN) bidding, greater competition in the Pay-TV and mobile arena, etc. Of these, the key telco event must be the bidding for the right to build and own the proposed NBN. However, in our opinion, we do not see the winning of the NBN to be that important as the financial return is unlikely to be very high. This is likely to be on a competitive bid basis and tariff charges are likely to be tightly regulated. More importantly, the return could possibly not commensurate with the high investments. In the current highly competitive market with many uncertainties, our stock selection criterion is defensiveness in earnings. We prefer telcos with pure Singapore exposure, high earnings visibility and high dividend payout and with a non-aggressive growth strategy. In that context, our preferred telcos for 2008 are StarHub and MobileOne.

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djchris

Is there a need to post that much news? I would think that it's abit exaggerating to post so much.

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: Asia Solution Kenetics
Visit us at:
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.

Our Non-Profit Initiatives

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Personal Links

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qing02051981

U.S. Stocks Rebound, Led by Banks; Citigroup, Intel Shares Rise
2007-11-27 18:00 (New York)


By Elizabeth Stanton
Nov. 27 (Bloomberg) -- U.S. stocks climbed after Citigroup
Inc. received a $7.5 billion cash infusion and JPMorgan said
Intel Corp. will benefit from ``robust'' computer demand.
Citigroup's advance helped stocks rebound from losses
yesterday that brought the decline from October to 10 percent,
the first so-called ``correction'' in four years. Intel led
semiconductor makers to their biggest gain in two weeks. Altria
Group Inc., the world's largest tobacco maker, increased after
Goldman Sachs Group Inc. advised buying companies whose profits
aren't tied to the economy.
The Standard & Poor's 500 Index added 21.01, or 1.5 percent,
to 1,428.23. The Dow Jones Industrial Average rose 215, or 1.7
percent, to 12,958.44. The Nasdaq Composite Index rallied 39.81,
or 1.6 percent, to 2,580.8.
About five shares rose for every two that fell on the New
York Stock Exchange.
``We like larger-cap stocks, we like consumer staples, we
like health-care and technology because we think that the
earnings profile will withstand some of the downturn in the
economy,'' said Kevin Caron, market strategist at Stifel Nicolaus
& Co. in Florham Park, New Jersey, which has client assets of
more than $50 billion.
The S&P 500 and Dow average dropped the most in two weeks
yesterday, leaving both indexes more than 10 percent below their
October all-time highs. The S&P 500 also briefly erased its gain
for the year today on growing concern that mortgage losses will
reduce bank lending and curtail economic growth.

Citigroup Gains

Citigroup, which had slumped 47 percent this year, advanced
after the largest U.S. bank said it will sell a stake of as much
as 4.9 percent to the Abu Dhabi Investment Authority. Bank of
America Corp. and JPMorgan Chase & Co., the biggest U.S. banks
after Citigroup, also gained.
``They're probably getting a very good value,'' said Scott
Black, who oversees $1.6 billion as president of Delphi
Management Inc. in Boston. ``There's a lack of confidence out
there, but I don't think the economy's headed into recession.''
Citigroup climbed 56 cents to $30.32. Bank of America gained
$1.06 to $42.94, while JPMorgan rose $1.89 to $42.35.
Intel, the biggest semiconductor maker, led technology
companies in the S&P 500 to a 1.5 percent gain after JPMorgan
boosted its earnings estimates. Intel added 74 cents to $25.11.
The company will continue to benefit from ``a robust PC
market and its superior product offerings in the microprocessor
market,'' analyst Christopher Danely wrote in a note to clients.

Altria Climbs

Altria rose the most since August, climbing $1.91, or 2.7
percent, to $73.35. Goldman recommended shares of the world's
largest tobacco company because it will benefit from ``solid
growth'' as the U.S. economy slows and ``a likely share buyback
announcement in February 2008.''
Following Citigroup's announcement, a gauge of financial
stocks rose 2.6 percent for the biggest gain among 10 industry
groups in the S&P 500. They rebounded from a 4.1 percent loss
yesterday. Bear Stearns Cos., the manager of two hedge funds that
collapsed in July, climbed $4.39 to $95.43. JPMorgan Chase & Co.,
the third-largest U.S. bank by assets, advanced $1.89 to $42.35.
Online brokerage E*Trade Financial Corp. surged 6.7 percent
to $4.91 after the chief financial officer of TD Ameritrade
Holding Corp., which is under pressure from shareholders to buy
it, said his company won't ``shy away from'' mergers and
acquisitions as it seeks to increase the amount of client assets
it controls. TD Ameritrade gained 20 cents to $18.32.

Retailers Rise

Retailers in the S&P 500 rose 1.8 percent, led by Staples
Inc. The world's largest office-supplies retailer said quarterly
profit fell less than analysts anticipated on increased
international sales. Staples rose $2.09, or 11 percent, to
$21.85, its biggest gain in five years.
Drugmakers and utilities, whose earnings are less sensitive
to changes in the rate of economic growth, gained after a gauge
of consumer confidence fell more than expected this month and
home prices dropped the most in at least two decades.
Pfizer Inc., the world's biggest drugmaker, advanced 58
cents to $22.88. Entergy Corp., the second-largest U.S. operator
of nuclear power plants, added $1.87 to $116.31.
The Conference Board's confidence index decreased to 87.3,
the lowest since the aftermath of Hurricane Katrina in October
2005, from a revised 95.2 the prior month, the New York-based
group said today. The index averaged 105.9 last year.

Home Prices Fall

U.S. home prices fell 4.5 percent in the three months
through September from the same period a year before, the most
since records began in 1988, according to a report today by
S&P/Case-Shiller. It followed a 3.3 percent drop in the second
quarter.
Yesterday's fall wiped out a rally in the S&P 500 that was
sparked by the Federal Reserve's Aug. 17 discount rate cut, the
first reduction in borrowing costs between scheduled meetings
since 2001.
Stock indexes tumbled from their highs as banks and other
financial firms reported more than $50 billion of mortgage-
related losses and writedowns. The S&P 500 Financials Index has
dropped 20 percent since Oct. 9 and is headed for its biggest
annual loss since 1990.
Abu Dhabi Investment Authority will help Citigroup
``strengthen our capital base,'' Win Bischoff, the bank's acting
chief executive officer, said in a statement late yesterday. Abu
Dhabi, the largest sheikhdom in the U.A.E., would rank as
Citigroup's second-largest shareholder after Los Angeles-based
Capital Group Cos. and ahead of Saudi billionaire Prince Alwaleed
bin Talal.
``Perhaps there is a light at the end of the tunnel,'' said
Malcolm Polley, who oversees $1 billion as president of Stewart
Capital Advisors in Indiana, Pennsylvania. ``Large banks are
finally starting to deal with the problem in an up-front manner,
which brokerages started doing in September and October.''

Last Correction

The S&P 500 last fell 10 percent from a high in the period
ended March 11, 2003. The market's rise from March 2003 to Oct. 9
lasted 1,673 calendar days, the second-longest rally without a
correction since 1929, according to Bespoke Investment Group LLC.
Energy producers were the only industry in the S&P 500 to
decline today, falling 0.5 percent as a group, after crude oil
futures fell $3.28 to $94.42 a barrel, the steepest decline since
Nov. 13. Exxon Mobil Corp., the world's largest publicly traded
oil company, rose 70 cents to $86.38. Chevron Corp., the second-
largest U.S. oil producer, climbed 52 cents to $84.31.
Tesoro Corp. lost $3.04 to $48.65 after billionaire Kirk
Kerkorian's Tracinda Corp. withdrew its $1.4 billion tender offer
for 16 percent of the oil refiner, citing the shareholder-rights
plan it adopted.
The Russell 2000 Index, a benchmark for companies with a
median market value of $580 million, gained 1.1 percent to
743.27. The Dow Jones Wilshire 5000 Index, the broadest measure
of U.S. shares, rose 1.3 percent to 14,399.52. Based on its
advance, the value of stocks increased by $238 billion.

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Oil Falls More Than $3 on Increased Saudi Arabian Production
2007-11-27 16:20 (New York)


By Mark Shenk
Nov. 27 (Bloomberg) -- Crude oil fell more than $3 a barrel
in New York after Saudi Arabia's oil minister, Ali al-Naimi, said
the country increased production to the highest this year.
Saudi Arabia, the biggest producer in the Organization of
Petroleum Exporting Countries, is pumping 9 million barrels a
day, al-Naimi said in Singapore today, the most in more than a
year. Prices also fell on speculation that slower economic growth
in the U.S. and Europe will cut fuel consumption.
``The combination of a slowing economy and signs of
increased OPEC output is putting pressure on prices,'' said Peter
Beutel, president of energy consultant Cameron Hanover Inc. in
New Canaan, Connecticut. ``A lot of traders thought we would
breach $100 on Wednesday, Friday and again yesterday and it
didn't happen. We are now seeing a lot of them exit the market.''
Crude oil for January delivery fell $3.28, or 3.4 percent,
to settle at $94.42 a barrel at 2:47 p.m. on the New York
Mercantile Exchange. It was the biggest decline since Nov. 13.
Oil hasn't fallen below $90 since Oct. 31. Futures reached $99.29
on Nov. 21, the highest price since trading began in 1983. Prices
are up 57 percent from a year ago.
New York crude-oil futures, which have averaged $70.48 a
barrel this year, are heading for a record annual average price.
Oil will average $71.05 in the fourth quarter and $69.50 next
year, according to the median of 25 price forecasts gathered by
Bloomberg News.
``The bigger issue as far as the oil market is concerned is
the economy, as opposed to supplies,'' said Bill O'Grady,
director of fundamental futures research at A.G. Edwards & Sons
in St. Louis. ``OPEC said they were going to increase production
in November, so it shouldn't be a surprise.''

OPEC Production

OPEC agreed at a Sept. 11 meeting in Vienna that the 10
members of the group with production targets, all except Angola
and Iraq, would increase output by 500,000 barrels a day to
27.253 million barrels starting Nov. 1. Members will discuss
production for the first quarter of 2008 at a meeting in Abu
Dhabi on Dec. 5.
The producer group is discussing a 750,000-barrel-a-day
increase in production because of concerns about the effect of
oil prices on the U.S. economy, Dow Jones Newswires reported,
citing an OPEC delegate it didn't identify.
There is ``a lot of concern'' about a possible U.S.
recession with oil prices at current levels, Dow reported the
delegate as saying.
OPEC will probably increase output 1.1 percent to 31.6
million barrels a day this month, according to preliminary
estimates by PetroLogistics Ltd.

January Options

Bets that January crude oil will fall below $85 a barrel
were the most actively traded options contracts on the Nymex
today. The put contracts, which represent the right to sell oil
at that price, rose 13 cents to 35 cents, or $350 per contract,
according to data compiled by Bloomberg as of 3:26 p.m. New York
time. One options contract is for 1,000 barrels of oil.
``The equity markets are signaling that crude-oil prices
should fall,'' said John Kilduff, vice president of risk
management at MF Global Ltd. in New York. ``The stock market is
in full-blown correction mode. The rally in oil was in large part
based on a robust economic outlook.'' U.S. Stock Market
The S&P 500 and Dow average dropped the most in two weeks
yesterday, leaving both indexes more than 10 percent below their
October all-time highs. Stock indexes have tumbled as banks and
other financial firms reported more than $50 billion of mortgage-
related losses and writedowns.
Both indexes are up more than 1 percent in trading today.

Recession Risk

U.S. consumer confidence fell more than forecast in November
as Americans struggled with surging fuel costs and falling home
prices. The Conference Board's confidence index decreased to
87.3, the lowest since the aftermath of Hurricane Katrina in
October 2005, from a revised 95.2 the prior month, the New York-
based group said today. The index averaged 105.9 last year.
Goldman Sachs Group Inc. said the U.S. Federal Reserve will
slash its benchmark rate to 3 percent by the middle of next year
to head off a recession. The risk of the economy contracting for
two straight quarters has risen to between 40 percent and 45
percent, Goldman said. The U.S. consumes a quarter of the world's
oil output.
``The oil market is due for a correction,'' said James
Ritterbusch, president of Ritterbusch & Associates, in Galena,
Illinois. ``Tomorrow's DOE numbers are key. If we don't get a
decline of a couple million barrels, we could work down to $90.''
Crude-oil stockpiles fell 1 million barrels in the week
ended Nov. 23, according to the median of responses by 17
analysts surveyed by Bloomberg News before the release of an
Energy Department report tomorrow.
Brent crude oil for January settlement declined $2.80, or
2.9 percent, to close at $92.52 a barrel on the London-based ICE
Futures Europe exchange. Brent reached $96.65 a barrel yesterday,
the highest since trading began in 1988.

--With reporting by Margot Habiby in Dallas, Alexander
Kwiatkowski in London and Nesa Subrahmaniyan and Yuji Okada in
Singapore. Editor: Joseph Link, Bill Banker

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