Japanese Stocks Rise for Third Day as Greece Vote Eases Default Concerns

Japanese stocks rose for a third day after Greece passed austerity measures needed to secure aid from the European Union, easing concern the country will suffer a default that destabilizes the banking system.
Canon Inc., which counts Europe as its largest market, advanced 0.5 percent. Mitsubishi UFJ Financial Group Inc., Japan’s biggest bank by market value, climbed 2.1 percent after Deutsche Bank AG. recommended the stock. Inpex Corp., Japan’s largest energy exploration company, gained 0.3 percent after crude prices increased.
The Nikkei 225 Stock Average rose 0.3 percent to 9,827.60 as of 9:07 a.m. in Tokyo. The broader Topix index gained 0.4 percent to 847.71.
“There will still be a lot of twists and turns, but Greece has been able to avoid a worst-case scenario,” said Mitsushige Akino, who oversees about $600 million in Tokyo at Ichiyoshi Investment Management Co. “That makes it easier for investors to take on risk.”
The Topix index lost 9.3 percent through yesterday since March 10, the day before a magnitude-9 earthquake and tsunami devastated Japan’s northeast coast, triggering the worst nuclear accident in 25 years and leaving more than 23,000 people dead or missing.www.bloomberg.com

GE Pursues $3 Billion of Brazil Deals as Petrobras Demand Rises

General Electric Co. (GE), which spent more than $4.1 billion on acquisitions since October to build its oil and gas unit, is bidding for about $3 billion of Brazil energy contracts over three years as the industry expands.

GE is competing for work that includes supplying Petroleo Brasileiro SA (PETR4) with equipment for its floating production vessels, Fernando Martins, a vice president for GE’s oil and gas division in Latin America, said yesterday in a telephone interview from Rio de Janeiro. The company is also talking with Petrobras on supplying subsea wellhead systems, he said.

“We have equipment and services from the subsea well up to the refinery,” he said. “This is a terrific opportunity.”

GE, based in Fairfield, Connecticut, earlier this week won three contracts worth $350 million in Brazil, including deals to provide subsea logistics services to Petrobras and drilling systems for Royal Dutch Shell Plc. Brazil, home to the biggest oil discovery in the Americas in the past three decades, is seeking to more than double its oil output by 2020.

GE plans to hire 500 workers for its Brazilian oil and gas business before year-end, an increase of about 42 percent, Martins said. The company is also setting up plans to retain its employees as the “very fast” expansion increases competition for human resources in the country, he said.

Employee Retention

“Sometimes more importantly than hiring new people is making sure that you retain your own employees,” Martins said, adding that the unit had a turnover rate of less than 3 percent of its workforce in the past year.

GE Oil & Gas has more than 20,000 employees in 100 countries. In 2010, the division provided $7.6 billion of the parent company’s $150.2 billion in total sales.

GE’s acquisitions since October have included John Wood Group Plc’s well-support division, parts of Dresser Inc. and Wellstream Holdings Plc, an oil services provider focused on Brazil.

GE rose 6 cents, or 0.3 percent, to $18.30 at 2:22 p.m. in New York Stock Exchange composite trading. The stock has gained about 16 percent in the past year. www.bloomberg.com

France Backs Compensation for Food Producers as E. Coli Crisis Hits Demand

France, the European Union’s largest agricultural grower, is backing a plan to compensate farmers in the 27-nation bloc after the deadliest outbreak of E. coli ever recorded decimated demand.

As much as 80 percent of vegetable supplies are being destroyed in some areas because there is no market for them, Copa-Cogeca, a farm lobby group based in Brussels, said in a report today. “Unprecedented” losses are running into millions of euros a day, and “paralyzed” trade is extending into the fruit market, it said.

EU agriculture ministers are meeting in Luxembourg today to discuss their response to the outbreak, which has killed 23 people and sickened 2,429. They are also contending with an international trade crisis afterRussia banned imports June 2 and Prime Minister Vladimir Putin said he won’t “poison people” to meet international trade rules.

“It is fair to try to define the way of compensating the loss of the producers,” French Agriculture Minister Bruno Le Maire said in an interview in London today, adding that its scale had yet to be decided. “There has been a great failure, and we have to take that into account and try to improve our safety system so that it will never happen again.”

The Netherlands, the world’s second-largest agricultural exporter after the U.S., said yesterday it is asking for “broad support measures” for vegetable growers, including buying up of produce that can no longer be sold to consumers. The origin of the outbreak is still unknown.

Emergency Fund

A proposal by the Netherlands for an emergency fund is backed by Germany and Spain, farm organization LTO Nederland said in a statement yesterday. State Secretary for Agriculture Henk Bleker will also ask for measures to promote vegetables, the Dutch government said. The proposal has support from nine other member states, LTO said in a statement today.

The proposed fund is gaining support, Bleker said today before the meeting. “I’m not so good in counting, but it’s going well,” he said.

The EU should spend as much as 55 million euros ($80 million) on a three-week media campaign to promote fresh produce, Freshfel Europe, which represents the industry, said today. Sales of cucumbers fell 80 percent to 100 percent in some member states, tomatoes 50 percent to 80 percent and lettuce more than 50 percent, it said in a statement.

Cucumbers slumped to 5 cents a unit from a five-year average of 21 cents, while tomatoes now cost 13 cents a kilogram (2.2 pounds), compared with an average of 60 cents, Copa-Cogeca said. Prices are “well below” production costs, it said.

Spanish fruit and vegetable producers are losing 225 million euros a week because of the outbreak, said Jose Maria Pozancos, director general of trade group FEPEX. The Dutch vegetable industry is losing 80 million euros a week as orders are canceled, LTO said yesterday. www.bloomberg.com

Treasury Yields Approach This Year’s Low Before Report on U.S. Housing

Treasury yields approached the lowest level this year before an industry report that economists said will show confidence among homebuilders is at recession levels.

Yields indicate traders are cutting bets on inflation. The difference between rates on 10-year notes and Treasury Inflation Protected Securities, a gauge of expectations for consumer prices over the life of the debt, narrowed to a 12-week low of 2.32 percentage points on May 13.

“The market has priced in an economic slowdown,” said Takuya Yamamoto, who helps oversee the equivalent of $118.3 billion as a portfolio manager in Tokyo at Diam Co., a unit of Dai-Ichi Life Insurance Co., Japan’s second-biggest life insurer. “Housing will take a long time to recover.”

Ten-year yields declined two basis points to 3.16 percent as of 9:56 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 3.125 percent note maturing in May 2021 rose 1/8, or $1.25 per $1,000 face amount, to 99 23/32. The rate fell to 3.13 percent on May 13, the lowest since December.

The National Association of Home Builders/Wells Fargo sentiment index was 17 this month from 16 in April, according to the median forecast in a Bloomberg News survey of economists before the report today. Numbers lower than 50 signal more respondents view conditions as poor.

Federal Reserve Bank of Atlanta President Dennis Lockhart said it’s too early to consider an exit from record stimulus, a process that’s likely to begin only when the recovery becomes “more clearly sustainable.”

Questions Arising

“Even if they are a bit premature in my view, questions are already arising about the specifics of the Fed’s exit strategy,” Lockhart said yesterday in a speech in Atlanta. A change in the Fed’s public statements “would actually start the process” of tightening, he said.

Lockhart has backed the Federal Open Market Committee’s plans to complete a $600 billion Treasury-securities purchase program by June aimed at boosting the recovery. Fed ChairmanBen S. Bernanke and other policy makers last month reduced their forecasts for U.S. growth this year after the economy slowed in the first quarter, while increasing estimates for inflation excluding food and energy prices. www.bloomberg.com

Dollar Falls to 16-Month Low Versus Euro on Fed Rate Pledge; Kiwi Declines

The dollar fell to a 16-month low against the euro after the Federal Reserve renewed its pledge to keep interest rates near zero to stimulate economic growth.

New Zealand’s dollar dropped for the first time in three days after Reserve Bank Governor Alan Bollard left interest rates at a record low and said the economic outlook “remains very uncertain.” The yen touched the lowest in two weeks against the euro as Asian stocks extended a global rally in shares, damping demand for Japan’s currency as a refuge.

“The Fed is being perceived as very dovish, with rates likely to stay low for a long time,” said Michiyoshi Kato, senior vice president of foreign-currency sales in Tokyo at Mizuho Corporate Bank Ltd., a unit of Japan’s second-largest bank by assets. “Everyone is taking on risk, which is leading to selling of the dollar and the yen.”

The dollar dropped to $1.4825 per euro as of 9:38 a.m. in Tokyo from $1.4788 in New Yorkyesterday, after earlier touching $1.4838, the weakest since Dec. 8, 2009. The U.S. currency declined to $1.6676 per pound from $1.6627, after reaching $1.6686, the lowest since Dec. 3, 2009. The yen rose to 81.97 per dollar from 82.16. Japan’s currency was at 121.48 per euro from 121.47, and touched 121.64, the least since April 13.

2 1/2 Year Low

The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, fell to 73.091, the lowest level since July 31, 2008, before trading at 73.143 from 73.324 yesterday.

The MSCI Asia Pacific Index of shares climbed 1 percent today after the Standard & Poor’s 500 Index advanced 0.6 percent yesterday.

Fed Chairman Ben S. Bernanke signaled yesterday in his first press conference after a policy decision that the central bank will maintain its record monetary stimulus.

Fed policy makers kept the target rate for overnight lending between banks at zero to 0.25 percent, as forecast by all of the economists in a Bloomberg News survey. The rate has remained at that level since December 2008.

“The Fed is clearly not thinking about tightening policy anytime soon and, from this perspective, there was nothing in the Fed’s language to arrest the dollar’s recent decline,” Spiros Papadopoulos, a senior economist in Melbourne at National Australia Bank Ltd., wrote in a note today.

The New Zealand dollar fell from a three-year high as Bollard said monetary policy won’t change for some time and called the currency’s recent advance “unwelcome.”

The so-called kiwi slid 0.3 percent to 80.54 U.S. cents after climbing to 81.08 cents yesterday, the strongest since March 19, 2008. www.bloomberg.com

Japan’s Topix Advances a Fourth Day led by Mitsubishi UFJ, Tokyo Electric

Japan’s Topix index rose for a fourth day led by Mitsubishi UFJ Financial Group Inc. (8306)after Credit Suisse Group AG raised the lender’s share price estimate. Tokyo Electric Power Co. gained on a report other utilities may be asked to share the cost of the Fukushima nuclear accident.

Mitsubishi UFJ, Japan’s largest publicly traded bank, advanced 1.9 percent. Tokyo Electric, operator of the Fukushima reactors crippled by last month’s earthquake and tsunami, surged as much 11 percent. Yahoo Japan Corp. (4689), an internet portal partly owned by Softbank Corp. (9984), jumped 4.4 percent after Nomura Holdings Inc. raised its investment rating. Sumco Corp. (3436) gained 1.3 percent after the maker of silicon wafers for semiconductors said output will recover to pre-quake levels by May.

“Companies are reporting they’re restarting production or recovering from the quake and that means we’re getting a better idea of what results will be like,” said Ryuta Otsuka, a strategist at Toyo Securities Co. in Tokyo. “There’s a sense that trade is starting to move again.”

The Nikkei 225 Stock Average rose 0.4 percent to 9,716.73 as of 12:35 p.m. in Tokyo. The broader Topix index gained 0.3 percent to 844.67. Nine stocks rose for every five that fell.

The Topix declined 9.5 percent through April 22 after a magnitude-9 earthquake and tsunami on March 11 devastated Japan’s northeast coast, disabled the Fukushima Dai-Ichi nuclear power plant, and disrupted supply chains at companies from Toyota Motor Corp. (7203) to chipmaker Renesas Electronics Corp. In the same period, the Standard & Poor’s 500 Index rose about 3.3 percent, while the Stoxx Europe 600 Index dropped 0.9 percent.

Mitsubishi UFJ, Tepco

Mitsubishi UFJ advanced 1.9 percent to 382 yen after Credit Suisse raised the lender’s share price estimate to 413 yen from 346 yen, citing improved earnings. Net income at the bank will rise to 742.5 billion yen ($9 billion) in the year ending March 2012, compared with an earlier forecast for 522.4 billion yen, Credit Suisse analyst Shinichi Ina wrote in a report.

Tokyo Electric rose 8.7 percent to 439 yen, the utility’s first gain in eight days, after Nomura said a possible government plan to compensate victims of the Fukushima accident may force other utilities to contribute. The Nikkei said on April 23 the government is in the final stages of drafting a plan to create an organization made up of utilities and other nuclear-related businesses to compensate evacuees and businesses from around the damaged nuclear plant.

Yahoo Japan, Sumco

Yahoo Japan climbed 4 percent to 29,620 yen after Nomura analyst Yuko Maruyama raised her rating on the company to “buy” from “neutral.” Advertising revenue has been stronger than expected after last month’s disaster and profit in the current quarter period will likely rise, Maruyama said.

Softbank, which owns 36 percent of Yahoo Japan, rose 0.7 percent to 3,425 yen.

Sumco advanced 1.3 percent to 1,619 yen. The company said production will recover in May to pre-quake levels.

Toyota also gained 0.3 percent to 3,305 yen after the automaker said it will begin restoring production levels from July in Japan and from August at overseas plants. Output for all models will return to normal as early November, Toyota said.

To contact the reporter on this story: Akiko Ikeda in Tokyo at iakiko@bloomberg.net; Toshiro Hasegawa in Tokyo at thasegawa6@bloomberg.net.

To contact the editor responsible for this story: Nick Gentle at ngentle2@bloomberg.net.

http://www.bloomberg.com/news/2011-04-25/japan-s-topix-advances-a-fourth-day-led-by-mitsubishi-ufj-tepco.html

Swiss Franc Advances Against Euro on Greek Debt Woes, Bailout Opposition

The Swiss franc advanced to the strongest in more than three weeks against the euro on speculation Greece will need to restructure its debt.

Switzerland’s currency strengthened against its shared European counterpart for a sixth day as Greece said it had no plans to restructure debt even as German officials openly discussed the possibility. Finland’s Justice Ministry said support for the True Finns, whose leader Timo Soinisays taxpayers shouldn’t have helped rescue Greece or Ireland, jumped to 19 percent in elections yesterday.

“These unconfirmed rumors that Greece might have to restructure is a major factor for the franc pushing stronger against the euro,” said Gareth Berry, a foreign-exchange strategist at UBS AG in Singapore. “Switzerland’s fiscal situation is immaculate so any sovereign debt issues will cause the franc benefit from fund managers with a European bias who are looking to switch out of the euro.”

The franc appreciated 0.4 percent to 1.2822 per euro as of 1:08 p.m. in London, after touching 1.2815, the strongest since March 24.

“Restructuring is not an option that’s on the table,” Chantal Hughes, a European Union spokeswoman, told reporters in Brussels today. “We don’t think it will be in any way helpful to the euro zone or the European economy at large,” she added.

“There are no discussions at any level” about a restructuring, Hughes said.

‘Not an Issue’

Greek Finance Minister George Papaconstantinou said in an April 16 interview in Washington that “restructuring is not an issue we’re discussing.”

The comments came after Germany’s Finance Minister Wolfgang Schaeuble said last week that “further measures may have to be taken” if Greece fails a June audit while German Deputy Foreign Minister Werner Hoyer told Bloomberg News that restructuring “would not be a disaster.”

Concern that Europe’s debt crisis is worsening comes as results from Finland’s weekend election threatens to disrupt efforts to push through a debt rescue mechanism 11 days after Portugal became the third euro-area nation to seek a bailout. A permanent bailout fund for indebted euro-area nations requires approval from all 17 members of the bloc.

Switzerland’s currency weakened 0.6 percent to 89.78 centimes to the dollar. The dollar gained versus all but two of its major peers.

The possibility that Finland’s election outcome could disrupt the euro-area’s rescue mechanism has caused a “rush to the dollar,” said Peter Rosenstreich, the Geneva-based chief foreign exchange analyst at Swissquote Group Holding SA. “That’s causing a lot of long Swiss franc positions to be unwound.”

Norway’s krone and the Swedish krona also weakened against the dollar, snapping three days of gains. Norway’s currency lost 1.5 percent to 5.4503 per dollar while Sweden’s krona declined 1.2 percent to 6.2595 to the greenback. www.bloomberg.com