Stock Market Update - Monday, October 4, 2010 Cautious Outlook

Stock Market Update
Monday, October  4, 2010

Latest US Economic News Headlines:


USA EQUITY INDEXES: (Oct. 4, 4:00 PM EDT)

Dow Jones	10,751.27	-78.41	(-0.72%)
S&P 500	1,137.03	-9.21	(-0.80%)
Nasdaq	2,344.52	-26.23	(-1.11%)

Dow Jones 10:30 AM Averages: DJIA 10,830.59 UP 0.91
  30 INDUS     10,830.59 UP    0.91 OR    0.01%
  20 TRANSP     4,509.58 UP    0.50 OR    0.01%
  15 UTILS        401.38 UP    1.01 OR    0.25%
  65 STOCKS     3,745.71 UP    1.99 OR    0.05%

US SECTOR SUMMARY:

Basic Materials       -1.36%    
Capital Goods        -1.22%    
Conglomerates       -1.54%    
Cons. Cyclical        -0.25%    
Cons. Non-Cyclical -0.74%    
Energy                   -0.64%    
Financial                -0.78%    
Healthcare             -0.74%    
Services                 -0.30%    
Technology            -1.27%    
Transportation        -0.84%    
Utilities                  -0.21%


US COMMODITY PRICES: (Oct. 4, 4:00 PM EDT)

Crude Oil	81.61	+ 0.17%
Natural Gas	3.73	-
Gasoline	2.10	-
Heating Oil	2.29	-
Gold	1314.96	- 0.33%
Silver	21.98	- 0.59%
Copper	3.66	- 0.71%

US CONSUMER BANKRUPTCIES UP
Consumer Bankruptcy Filings Climb 11%

U.S. consumer bankruptcy filings rose 11% in the first nine months of this year, versus the same period in 2009, the American Bankruptcy Institute said Monday, citing data from the National Bankruptcy Research Center.

Filings totaled 1,165,172 nationwide during the first nine months of 2010, compared to 1,046,449 total consumer filings during the same period a year ago. The bankruptcy filings so far in 2010 represent the highest total since 2005.

Consumer bankruptcies totalled 130,329 in September. That was up 3.3% from August 2010

"We expect that there will be nearly 1.6 million new bankruptcy filings by year end," ABI Executive Director Samuel Gerdano said in a statement.



US Stocks Slump As Investors Retreat And Dollar Edges Up 

U.S. stocks slumped Monday as lukewarm economic data gave investors few reasons to jump into the market ahead of key data and earnings reports later in the week.

The dollar strengthened against both the euro and the yen. The euro was trading recently at $1.3689, down from $1.3784 late Friday in New York.

The dollar is trading higher against the euro Monday in the wake of renewed concern for the European economy. Spanish jobs data showed unemployment continuing to rise, and an excerpt of a book by economist Joseph Stiglitz raised concerns about continued recession in Europe.

The dollar was trading lower versus the Japanese yen.

Currency ETFs: The DB US Dollar Bullish Fund (UUP) is trading up .3% Monday.

The WisdomTree Dreydus Euro Fund (EU) is trading up .4%, while the WisdomTree Dreyfus Japanese Yen Fund (JYF) is trading up .8%.

The Euro Trust (FXE) is trading down nearly .5%, while the Japanese Yen Trust (FXY) trades mostly flat in early trading.


The Dow Jones Industrial Average fell 98 points, or 0.9%, to 10729, giving up gains from earlier in the day. Alcoa, which kicks off third-quarter earnings season on Thursday, was the measure's worst performer, falling 2.7%.

Microsoft also fell, shedding 2.1% after Goldman Sachs cut its stock-investment rating on the company to neutral from buy, saying the tech giant must increase its dividend, develop a "coherent consumer strategy" and boost its cloud computing business. Intel was also weaker, off 2.5%.

The technology-heavy Nasdaq Composite fell 1.4% to 2337. The Standard & Poor's 500-share index shed 1.1% to 1134, led by declines in its materials sector. The S&P 500 fell below 1140 in morning trading, after struggling to break through significant resistance there last week.

Traders said while there is no single catalyst for the market's declines, anxiety over European banks continued to simmer.

M&A deal news grabbed investors' attention again on Monday. French drug maker Sanofi-Aventis announced a hostile, $18.5 billion bid for U.S. biotech group Genzyme. Shares of Genzyme rose 0.5%, while U.S. shares of Sanofi-Aventis fell 1%. Sanofi approached Genzyme during the summer, but its offer was rejected. Sanofi said in a statement on Monday its conversations with shareholders reveal they are "frustrated" with the U.S. group.

Shares of Sara Lee surged 7.9% after rebuffing an unsolicited proposal from Henry Kravis and KKR that could have led to a $12 billion leveraged deal, The New York Post reported Monday, citing a person familiar with the situation.

In U.S. economic data, August factory orders dropped more than expected, but commercial airplanes drove the decline; excluding transportation, all other factory orders rose. Meanwhile, U.S. pending home sales rose in August more than expected.

Demand for Treasuries increased, sending yield on the 10-year note down to 2.48%. Crude-oil prices climbed to nearly $82 a barrel, while gold futures declined.


US Stocks Waver As US Dollar Edges Up and Telecoms Climb
The dollar strengthened against both the euro and the yen. The euro was trading recently at $1.3707, down from $1.3784 late Friday in New York. The U.S. Dollar Index, which tracks the currency against a basket of six others, rose 0.3%.

The Dow Jones Industrial Average recently was down 57 points, or 0.5%, to 10773. Weighing on the Dow, Microsoft fell 2.3% after Goldman Sachs cut its stock-investment rating on the company to neutral from buy, saying the tech giant must increase its dividend, develop a "coherent consumer strategy" and boost its cloud computing business. Intel was also weak, sliding 1.9%.

The technology-heavy Nasdaq Composite fell 1% to 2346. The Standard & Poor's 500-share index shed 0.7% to 1138, as materials weakened, though telecommunications companies climbed. Verizon Communications, one of the parents of Verizon Wireless, gained 0.5% after the wireless company said it will issue refunds over the next two months to 15 million customers it says were incorrectly billed for data services they didn't use after the Federal Communications Commission began looking into the issue 10 months ago. AT&T added 0.3%.

U.S. stocks tallied mild losses Monday after economic data had factory orders down 0.5% and pending home sales rebounding 4.3% in August. US stocks wavered on Monday, as telecommunications companies climbed, but trading was trapped in a narrow range as investors paused ahead of the start of earnings season later in the week.

In early Trading Monday the Dow Jones Industrial Average gained 1 point, or 0.1%, to 10830. Leading the measure, J.P. Morgan Chase rose 1.3%. Bank of America was up 0.9%, while United Technologies rose 1%.

Trading was confined to a narrow band, as investors waited for the start of third-quarter earnings season, which kicks off with Alcoa on Thursday, and Friday's key monthly jobs report.

The Nasdaq Composite edged down 0.3% to 2364. The Standard & Poor's 500-share index slipped 0.1% to 1145. Its materials sector lagged, but telecommunications climbed. Verizon gained 0.6% after saying Verizon Wireless it will issue refunds over the next two months to 15 million customers it says were incorrectly billed for data services they didn't use after the Federal Communications Commission began looking into the issue 10 months ago. AT&T climbed 0.5%.


US CRUDE OIL FUTURES:
Nymex Crude Settles Down 11c At $81.47/Bbl

Crude Oil is trading at $81.48 per barrel

US Coast Guard: 4 Houston Ship Channel Refineries Can't Receive Crude

Retail gasoline prices rose Monday and oil prices rallied to the highest level in two months, though analysts say weak energy demand likely will push prices lower during the last three months of the year. While gasoline demand perked up in September, it's still not strong enough to keep prices rising during the final three months of the year.

The Energy Information Administration expects retail gas prices to sit at a national average of $2.72 a gallon this year.

Benchmark crude for November delivery added 10 cents at $81.68 a barrel on the New York Mercantile Exchange. Earlier in the day it rose to $82.38, the highest level since Aug. 6. In London, Brent crude gave up 20 cents at $83.55 per barrel on the ICE Futures exchange.

In other Nymex trading, heating oil for November delivery fell less than a penny to $2.2916 a gallon, and gasoline for November delivery rose 1.47 cents to $2.1008 a gallon. Natural gas for November delivery dropped 8.4 cents to $3.713 a gallon.


Iraq Boosts Oil Reserves By 24%
In the first revision to its oil reserves since 2001, Iraq Monday dramatically increased its proven oil reserves by more than 20%, an announcement that sought to reaffirm the strife-ridden country's revival on the international energy scene.

The latest estimates Monday take Iraq's total proven reserves to 143.1 billion barrels of oil, up from a previous 115 billion barrels, Oil Minister Hussein al-Shahristani al-Shahristani told a Baghdad news conference. The reserves report comes as international oil companies proceed with their first significant oilfield operations in decades in the aftermath of wars and United Nations sanctions.

The figures released Monday would mean Iraq has the world's third-largest reserves, bypassing Iran, but placing the country well behind leader Saudi Arabia and number-two Venezuela.

While nobody disputes Iraq's vast potential as a petroleum giant, some energy experts Monday expressed skepticism that Iraq had undertaken sufficient recent exploration to justify Monday's reserves report, which has not been independently reviewed.

Al-Shahristani said Iraq will inform the Organization of Petroleum Exporting Countries on the new proven reserves. A founding member of OPEC, Iraq has not been required to adhere to production quotas since the Iraq-Iran War in the 1980s.

"These aren't random figures, rather they were the results of deep surveys carried out by the ministry's oil reservoir company and international companies which signed contracts with Iraq," al-Shahristani said.

Iraq has signed 12 deals with international oil companies to ramp up output capacity to about 12 million barrels a day from around 2.4 million barrels a day now. The Ministry also plans annual updates of its oil reserves, another measure that communicates greater normalcy in the Iraqi oil universe.

Al-Shahristani said the largest Iraqi oil field was West Qurna, with total proven oil reserves of 43 billion barrels, according to the numbers released Monday. Iraq plans a two-staged development of West Qurna, with the phases led by Exxon Mobil Corp. (XOM) and Lukoil Holdings (LKOH.RS). Rumaila, which is being developed by BP PLC (BP) and China National Petroleum Corp., or CNPC, is the second-largest Iraqi oil field, with total proven reserves of 17.3 billion barrels, the minister said.

Issam al-Chalabi, a former Iraq oil minister, said he is "doubtful" of the figures released Monday by the ministry.

"Iraq hasn't carried out any new seismic surveys and hasn't drilled any new exploration wells for years in order to announce new reserves," he said. The ministry's announcement is an effort by the Iraqi administration to win political support by showing concrete progress on oilfield and economic development, al-Chalabi said.

Richard Quin, lead energy researcher at Wood Mackenzie, agreed that it is "still too early" for international oil companies to have undertaken enough exploration to reassess the fields and offer updated reserves. But Quin said the more recent figures are likely closer to the reality than the 2001 estimate.


US NATURAL GAS:
Futures Settle 1.8% Lower At $3.727/MMBtu

Natural Gas Futures Slide Against Rising Dollar

Natural gas futures fell Monday as forecasts for temperate weather and high supplies pressured prices lower and money managers added to their bets that prices would decline.

Natural gas futures recently fell 5.5 cents, or 1.5%, to $3.742 a million British thermal units on the New York Mercantile Exchange. After holding firm for much of September on hopes for a seasonal uptick in prices, the benchmark futures contract is down about 6% in the last three sessions. Natural gas is trading at the lowest price at this point of the year since 2002.

Natural gas in U.S. storage for the week ended Sept. 24 stood at 3.414 trillion cubic feet, 6.3% above the five-year average, the Energy Information Administration said Thursday. The week's 74 billion cubic feet injection was above both the five-year average increase of 67 bcf and last year's increase of 65 bcf.


PRECIOUS METALS:

Gold  = $1,314.07
Silver = $22.00

Gold Futures Decline On Stronger Dollar
A stronger dollar on Monday pressured Comex gold futures as traders wait on Friday's employment data to give the metal more direction.

 Gold prices on Monday pulled back from record highs amid dollar strength and a reluctance among traders to place bets ahead employment data due later this week.

The most actively traded futures contract, for December delivery, settled down 0.1%, or $1, at $1,316.80 an ounce on the Comex division of the New York Mercantile Exchange. The contract ended Friday at a fresh record high of $1,317.80 an ounce.

The ICE Futures U.S. Dollar Index was trading up 0.4% shortly after the gold settlement.

New York (Dow Jones)--Engelhard Corp's base price for industrial gold bullion was $1316.38 per troy ounce, down $2.76 from previous. It's selling price for gold in fabricated form was $1415.11, down $2.96.

Handy & Harman's base price for gold was $1313.50 per troy ounce, down $2.75. The fabricated form price was $1418.58, down $2.97.

The most actively traded contract, for December delivery, recently traded down 0.2%, or $2.60, at $1,315.20 per troy ounce on the Comex division of the New York Mercantile Exchange.

The contract ended Friday at a fresh all-time settlement high of $1,316.10 per ounce. Gold's historic rally comes amid increasing investor interest in physical gold holdings and growing political and economic uncertainty.

But the rally is seeing some resistance from a stronger dollar on Monday. Dollar-denominated contracts like gold futures tend to fall in price as the dollar rises because they become more expensive for buyers using foreign currencies.

The dollar regained some ground against the euro as new concerns about Ireland's fiscal stability emerged. The euro-zone member is facing around EUR 4.5 billion ($6.2 billion) shortfall for its December budget, according to the Sunday Tribune, an Irish newspaper.

The ICE Futures U.S. Dollar Index was recently up 0.3%.

"With the metals markets so currency driven at the moment prices are all easier this morning," an RBC Capital Markets note to clients said.

Gold traders are not expecting the current lull in gold prices to last as the market eyes Friday's US employment data for cues for a widely-anticipated second monetary stimulus program.

"We're somewhat subdued today because the markets want to find out Friday's employment data and whether it will mean the Fed is any closer to quantitative easing or any type of support for the economy," said Frank Lesh, broker and futures analyst at FuturePath Trading.

A downbeat unemployment report for September, due out Friday, would point to further weakness in the U.S. economy. The Federal Reserve is widely expected to fight economic weakness with a second round of monetary stimulus, despite fears such a program can increase inflation in the future.

The program would likely benefit gold prices as investors seek gold as a hedge against inflation.

The rest of the precious-metals complex also ended lower Monday amid pressure from the stronger dollar.

Silver for December delivery, the most actively traded contract, settled at $22.036 per ounce, down 0.1%, or 2.4 cents, from $22.06 per ounce Friday on the Comex division of the New York Mercantile Exchange.

Platinum for January delivery, the most actively traded contract, settled at $1,672.10 per ounce, down 0.6%, or $1.00, from $1,682.10 per ounce Friday on the New York Mercantile Exchange.

Palladium for December delivery, the most actively traded contract, settled at $561.30 per ounce, down 2.4%, or $13.60, from $574.90 per ounce Friday on the New York Mercantile Exchange.

Settlements (ranges include open-outcry and electronic trading):
London PM Gold Fix: $1,313.50; previous PM $1,316.25
Spot gold at 2.02 p.m. ET: $1,316.20, down $2.55; Range: $1312.55-$1,320.00
Dec gold $1,316.80, down $1.00; Range $1,313.40-$1,321.30
Dec silver $22.036, down 2.4 cents; Range $21.90-$22.235
Jan platinum $1,672.10, down $1.00; Range $1,668.00-$1,686.00
Dec palladium $561.30, down $13.60; Range $561.00-$574.90



FACTORY ORDERS DOWN
U.S. factory orders dropped more than expected in August, marking the third decline in the last four months. 

U.S. manufactured goods orders decreased by 0.5% to $408.94 billion, the Commerce Department said Monday. Commercial airplanes drove the decline; excluding transportation, all other factory orders rose.

The report had positive data. A barometer of business capital spending increased; non-defense capital goods orders excluding airplanes rose by 5.1%.

Economists surveyed by Dow Jones Newswires had expected overall factory orders would decrease by 0.4% in August. July orders rose 0.5%, revised from a previously reported 0.1% increase.

Signs of slowing in the U.S. manufacturing sector have been surfacing. The Institute for Supply Management's latest monthly gauge for the industry slowed in September, to 54.4 from 56.3 in August. Even though index remains above 50, which signals growth in the manufacturing sector, Capital Economics analyst Paul Ashworth said "the manufacturing recovery has clearly lost a lot of momentum since the spring."

Factory orders are either durable or non-durable. Durables are designed to last at least three years - things such as cars. The Commerce report Monday said durables dropped by 1.5%, revised from a previously reported 1.3% decrease. Non-durables rose by 0.3%.

Capital goods orders fell 0.1%. Non-defense capital goods orders rose 0.1%.

Defense-related capital goods dropped by 1.8%. Excluding defense, all other factory orders decreased 0.5%.  Among industries, orders rose for electrical equipment, machinery, and computers. Demand fell for primary metals. Transportation equipment fell 10.2% as orders for cars and commercial airplanes dropped. Orders for manufactured goods excluding transportation rose 0.9%. This was the first increase in the last five months.

Manufacturers' inventories were up by 0.1% in August, after increasing 0.9% in July.  Shipments declined 0.6%. Unfilled orders, a sign of future demand, were flat.

The Commerce Department's factory orders report can be found at:
http://www.census.gov/manufacturing/m3/prel/pdf/s-i-o.pdf




EXISTING HOME SALES SEE MODEST RISE

Pending US Sales of Existing Homes Increase 4.3%

The number of contracts to purchase previously owned homes in the U.S. increased for a second month, a sign the housing market is beginning to stabilize.

The National Association of Realtors’ index of pending home resales rose 4.3 percent in August, more than forecast, after a revised 4.5 percent gain the prior month that was less than initially estimated. Compared with the same month a year ago, pending sales were down 18.4 percent.

Home sales have steadied after plunging in the months following the expiration of a housing tax credit. Unemployment projected to stay above 9 percent through 2011 may depress demand in coming months even as record-low mortgage rates and lower prices make homes more affordable.

Conditions in the housing market are “stable, they’re starting to improve, but we clearly have got a long way to go,” Aaron Smith, a senior economist at Moody’s Analytics in West Chester, Pennsylvania, said before the report. “The outlook for housing depends importantly on the labor market.”

Analysts forecast pending home sales would increase 2.5 percent, according to the median of 39 projections in a Bloomberg News survey. Estimates ranged from a drop of 2 percent to an increase of 5.6 percent.

US Stocks Open Lower; DJIA Off 14 As Tech, Materials Slip
US stocks edged lower on Monday as investors took a cautious stance before a slew of economic reports that could impact Federal Reserve moves ahead.

U.S. stocks were lower Monday as the dollar climbed and the euro weakened after new reports on Ireland's fiscal problems and comments from a prominent economist reignited concerns about global growth.

The dollar strengthened against both the euro and the yen. The euro was trading recently at $1.3703, down from $1.3784 late Friday in New York. The U.S. Dollar Index, which tracks the currency against a basket of six others, rose 0.3%.

Demand for Treasuries increased, sending the yield on the 10-year note down to 2.50%. Crude-oil prices climbed to nearly $82 a barrel, while gold futures declined.

The Dow Jones Industrial Average slipped 12 points, or 0.1%, to 10817 on Monday, after snapping a four-week winning streak on Friday.

Investors traded tentatively ahead of the start of third-quarter earnings season, which kicks off with Alcoa on Thursday and Friday's key monthly jobs report.

The Nasdaq Composite shed 0.3% to 2363. The Standard & Poor's 500-share index fell 0.2% to 1144.



BEFORE THE BELL

US Dollar Moves Up - Stock Futures Down
The dollar edged up before the market open, but remained close to an eight-month low against a basket of major currencies (^DXY - News), with expectations increasing the Fed will resort to a second round of bond purchases before the year is over to support the U.S. economy.

The dollar surged against the yen in a short-covering rally as the Japanese currency retreated against other currencies as investors unwound some long yen positions ahead of the BOJ meeting.

US stock index futures pointed to an early retreat for Wall Street on Monday, with investors cautious ahead of possible earnings warnings and monthly jobs data late in the week.


THE WEEK AHEAD
US STOCK HOLDERS BRACE FOR ROCKY OCTOBER
Investors will be looking to a slew of reports on employment this week

October ushers in a flood of corporate quarterly earning reports which are bound to sway the markets. For the coming week, biotech firm Monsanto, Food and drinks giant PepsiCo and aluminum manufacturer Alcoa are planned to file their earning reports.

Monday: The National Association of Realtors' pending home sales index, a measure of sales contracts for existing homes, is due before the start of trading and is expected to have risen 1% in August after rising 5.2% in July.

Monday morning expect reports from on August pending home sales, Aug Manufacturers' Shipments, Inventories, Orders.Factory orders are due from the Commerce Department. Orders are expected to have fallen 0.4% in August after rising 0.1% in July.

Tuesday: The Institute for Supply Management's services sector index for September is due in the morning and is expected to have edged up to 51.8 from 51.5 in August. Any number above 50 indicates growth in the sector.

Wednesday: In addition to reports on employment from ADP and Challenger, the U.S. government's weekly crude oil inventories report is due in the morning. Costco is scheduled to release its third-quarter results before the opening bell. Analysts are expecting the company to post earnings of 95 cents a share. Also a report from the Mortgage Bankers Association on the number of applications for mortgages is also on tap.

Payroll services firm ADP is expected to report that employers in the private sector added 18,000 workers to their payrolls in September after cutting 10,000 in the previous month.

Thursday: In addition to the Department of Labor's report on jobless claims, the August consumer credit report from the government is due in the afternoon. Major retailers will report September same-stores sales Thursday. Analysts polled by Thomson Reuters expect the industry to report a 2% increase from a year ago.

The government's weekly jobless claims report comes out Thursday, with 455,000 Americans expected to file new claims for unemployment, after 453,000 were filed in the previous week.

Credit is expected to have fallen by $3 billion after slipping $3.6 billion in July. PepsiCo is on tap to report earnings before the start of trading. Analysts expect the company to book earnings of $1.22 a share. After the market close, Alcoa is slated to release its third quarter results, expected to report earnings of 6 cents a share.

Friday: In addition to the big jobs report, the Commerce Department releases the wholesale inventories report in the morning. Inventories are expected to have risen 0.4% in August after jumping 1.3% in July.

Investors will focus on a much-anticipated employment report for September, which analysts are forecasting will show a modest improvement.

The most closely watched reading on employment is due Friday. Employers aren't expected to have added or cut any jobs in September after cutting 54,000 jobs in August. The unemployment rate is expected to have risen to 9.7% from 9.6%.


US AND CHINA CURRENCY CONFLICT
China criticized some U.S. lawmakers Saturday for pressing China to increase the value of its currency.

Last week China warned that a US bill aimed at penalizing it for currency manipulation could "harm relations" between the two economic giants.

A Chinese foreign ministry spokesperson said China was "resolutely opposed" to the bill, which treats undervalued currencies as illegal export subsidies.

Chinese Premier Wen Jiabao, said “Some people in the United States, in particular some in the U.S. Congress, do not know fully about China,” Wen said. “They are politicizing the problems in China-U.S. relations.”

The U.S. trade deficit with China widened to $145 billion in the first seven months of this year, from $123 billion for the same period in 2009.

On Sept. 29, the U.S. House passed legislation prodding China to raise the value of the yuan. Under the bill, U.S. companies would be allowed to petition for duties on imports from China to compensate for the effect of an undervalued yuan.

China is accused by the U.S. of keeping its currency artificially low against other world currencies, particularly the dollar- which makes Chinese goods cheaper on world markets, and non-Chinese goods more expensive within the country.

That argument is hottest in the US, where the House of Representatives has backed legislation that in theory paves the way for trade sanctions on China.

The yuan gained 1.74 percent last month, the biggest monthly advance since a dollar peg was ended in July 2005, according to data compiled by Bloomberg. China’s goal is to have “balance and sustainable trade with other countries,” Wen said. “China does not pursue a trade surplus.”

"Wen said that after China’s 4 trillion-yuan economic stimulus program, controlling inflation is a priority. Inflation “is something that I have been trying very hard to manage appropriately and well,” Wen said. “Corruption and inflation will have an adverse impact on the stability of power in our country.”



Central Bank Actions Color Currency Outlook

By KAREN JOHNSON

The likelihood of further "quantitative easing" in the U.S. has cast a shadow on currency markets that is likely to continue to encumber the dollar in the near term.

But the prospect of further Japanese intervention will also haunt the market, limiting investors' moves in sessions to come as central-bank policy and actions take center stage.

"It's very easy to be negative on each of the four [major currencies] for their own reasons," said Adam Cole, global head of foreign-exchange strategy at RBC Capital Markets in London.

Speculation about more quantitative easing in the U.S. and in the U.K. is stalking currencies there. Quantitative easing involves a central bank purchasing government bonds or other assets to increase the money supply and thereby stimulate the economy.

Meanwhile, the debt crisis in the euro zone hovers not far from memory, tarnishing the common currency's appeal. And the possibility of further Tokyo intervention to curb the yen is hanging over the Japanese currency.
Traders see volatility ahead for the euro, with it moving between $1.3400 and $1.3800. Late Friday afternoon in the U.S., the euro was at $1.3780 from $1.3634 late Thursday. The dollar was at 83.31 yen from 83.48 yen.

Investors will be checking speeches by Federal Reserve officials for policy lines and will weigh events and data in light of how they might affect the prospects for further easing from the Fed.

The policy-setting Federal Open Market Committee last month signaled the possibility of further quantitative easing—which is considered corrosive to the dollar—to prop up the sputtering U.S. economy.

On Friday, the market will dissect key U.S. monthly employment data for clues as to how it will play into the Fed's next move.

To read the entire article, visit The Wall Street Journal:
http://online.wsj.com/article/SB10001424052748704029304575526424275226754.html



Gold-To-Go ATM Vending Machines Coming to America

Ex Oriente Lux AG, the maker of gold ATMs will debut their gold-dispensing machines in two U.S. locations next month; Las Vegas and Florida.

Twenty ATMs have already popped up in hotels, airports and stores in tourist destinations like Abu Dhabi, Munich and Madrid. And 20 more are waiting in the wings.

The two planned U.S. ATMs will open in "a well-known Las Vegas casino" and a Floridian resort city, most likely Boca Raton", according to Thomas Geissler, CEO of Ex Oriente Lux AG. Contracts have been signed for both locations. The starting dates are expected to be in early November.

The Gold-To-Go ATMs, which dispense gold coins and bars weighing up to eight ounces at prices updated every 10 minutes based on the real-time spot price of gold, churn out 20 to 100 gold pieces a day depending on traffic.

After introducing the ATMs in Las Vegas and Florida, Geissler hopes to open ATMs in New York City, followed by Dallas, Los Angeles and Minnesota. "We hope to soon be many other places, including Toronto and Vancouver," he said in an interview with CNN.

To read the entire article, visit:
http://money.cnn.com/2010/10/01/news/companies/gold_atms/index.htm



NASDAQ CHANGE OPTION FUTURES MONDAY 
Nasdaq To Improve Option Pricing

Nasdaq OMX (NDAQ) plans to introduce a new "price improvement" mechanism for options orders sent to its PHLX options exchange beginning Monday.

The electronic process involves holding miniature auctions on customers' options trades, with the aim of producing a better price. All options contracts traded on the PHLX can be entered into the price improvement mechanism, and all exchange participants can join in the bidding process




Canadian Market:

Toronto Stocks Lower At Midday In Broad-Based Decline
The stock market was lower at midday Monday, in a broad-based decline, as eurozone debt worries once again renewed concerns about global economic growth.

At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was down 49.28 points, or 0.4%, at 12313.80. Declines led advances 794 to 520. Trading volume was 172.40 million shares. The S&P/TSX 60 Index was down 2.16 points, or 0.3%, to 711.84.

Toronto Indexes, Volume; 3 PM EDT Composite Down 78.08

 S&P/TSX Composite   12285.00  off  78.08  or 0.6%
 S&P/TSX 60 Index      709.76  off   4.24  or 0.6%
 Financials            175.32  off   0.25  or 0.1%
 Materials             385.97  off   5.39  or 1.4%
 Energy                284.87  off   3.09  or 1.1%
 Industrials           103.65  off   1.01  or 1.0%
 IT                     28.05  off   0.16  or 0.6%

   Volume           Monday     Friday
   2-3                34.9M      54.4M
   9:30-3            292.8M     386.3M



Toronto Most Actives At 1:00 PM EDT
Horizons NYMEX Natural Gas Bull  5,779,063  3.39  off  0.16
Crowflight Minerals              5,411,851  0.06  unchanged
Baja Mining                      3,299,225  1.27  up   0.08
Platmin Ltd.                     3,031,000  0.98  unchanged
Polaris Minerals                 3,023,263  0.95  up   0.10
iShares Cdn S&P/TSX 60           2,938,392 17.85  off  0.10
Western Coal                     2,874,779  6.10  off  0.08
Lundin Mining                    2,816,500  5.10  off  0.12
Parkbridge Lifestyle Communities 2,705,781  7.27  up   1.67
Kinross Gold                     2,652,659 19.12  off  0.14





South American Markets:

MEXICO:

Mexican Stocks Edge Higher Early, Peso Loses GroundMexican shares were up slightly early Monday, led by gains in wireless operator and market benchmark America Movil (AMX). The peso was losing ground against the dollar early Monday, at MXN12.5715 compared with MXN12.5370 at the close Friday.


At around 10:00 a.m. EDT, the IPC index of leading Mexican issues was up 0.2% to 33,869 on volume of 18.9 million shares traded worth 567.4 million pesos ($45.2 million). Around the same time, the Dow Jones Industrial Average was struggling to add 0.1% after economic data had factory orders down 0.5% and pending home sales rebounding 4.3% in August.

Among active Mexican issues, wireless operator America Movil's L shares were 0.4% higher at MXN34.09, cement maker Cemex's (CX) CPOs were dipping 0.9% to MXN10.77 and copper miner Grupo Mexico's B shares were off 0.1% to MXN38.50 after a strong rally in the previous session.



Mexico's IMEF Manufacturing Index Falls To 52.2 In September
The Mexican Institute of Finance Executives said Monday its key manufacturing index fell last month to its lowest level since February as hiring and inventory buildup slowed and product deliveries fell.

The index registered 52.2 points in September, down from August's reading of 53.2, said IMEF, as the institute is known, in a press release.

Readings above 50 indicate expansion, while readings below 50 point to contraction.

Of the index's five components, new orders was the only one that rose from August. Production was virtually stable, while hiring and inventories fell sharply but remained above the 50-point threshold.

Deliveries, which have tended to be the weakest component of IMEF's index this year, fell to 49.1 from 50.3 in August. "The sub-indices of the manufacturing index in September showed mixed behavior," IMEF said, noting that its hiring component posted the biggest drop from August.

"With the information that we have at this moment, manufacturing employment is expected to continue expanding in coming months, though at a slower pace," the institute added.

IMEF's indices behave similarly to indicators produced by the U.S. Institute for Supply Management, as Mexico's manufacturing sector is highly linked to U.S. industrial and consumer demand. IMEF noted that while both groups' indices peaked in April--with the local indicator registering 54.3 points--they continue to suggest expansion in coming months.

IMEF's non-manufacturing index, which measures activity in the services sector, also declined last month, to 52 points from 53.1 in August, representing its lowest level since January.

Mexico's economy is widely expected to grow 4%-5% this year from 2009, implying a moderate slowdown after gross domestic product grew 5.9% in the first half of 2010. IMEF said the "cooling" in its manufacturing index has been congruent with official data on economic activity and industrial production.



Mexico's Consumer Confidence Rises In September
Consumer confidence in Mexico rose sharply in September from a year ago, and was also up from August as the  recovery from last year's recession continued to reflect in gradual improvements in the labor market.

The National Statistics Institute, or Inegi, said Monday that its confidence index rose to 91.6 in September from 81.9 in September of 2009 and from 88.7 in August of this year.

Confidence rose in all categories as consumers were more upbeat about the current economic situation and the outlook for a year from now, while also feeling more able to purchase big-ticket items such as furniture and domestic appliances.

Confidence has been recovering from its all-time low  of 77 in October 2009 as employment levels pick up and inflation has remained below 4%.

During a press conference Sunday, Finance Minister Ernesto Cordero said that from the beginning of the year through the end of September, 721,483 jobs had been created in the formal economy, bringing the number of workers registered for health and other services with the Mexican Social Security Institute to a record 14.6 million.



BRAZIL:

Brazil Stocks Hold Gains, Real Weaker

Brazilian blue-chip shares held on to early session gains Monday, while the real continued to trade weaker as investors reacted to a surprising second round in the country's presidential race.

Brazil's benchmark Ibovespa index traded 0.2% higher at 70,378 points at midday, after briefly dipping into negative territory at the open. The real continued to trade weaker at BRL1.6870 to the dollar.


Brazil's Elections - Round Two, The Runoff Elections and Brazil's Economy
Workers' Party candidate Dilma Rousseff failed to turn away challenger Jose Serra in the first round, snaring 47% of the vote to 33% for Serra. That means the two will face off in a second round Oct. 31.

The two main rivals will battle not only against each other, but also for the favor of Green Party candidate Marina Silva, who won a surprising 19% of the vote. Both Rousseff and Serra will likely seek Silva's support in an effort to win the second round, although PT's Rousseff will have an inherent advantage.

"The Green Party vote is a leftist vote, so I think it will be very difficult for Green Party voters to migrate to Serra," said Julio Hegedus, an economist at Sao Paulo brokerage house Interbolsa.

The second-round election twist may restrict the government and Brazilian Central Bank in efforts to contain the real, which gained nearly 3% against the greenback in September on heavy investment inflows.

Brazil, however, likely faces a long-term battle against currency appreciation no matter what the government and central bank decide to do, Morgan Stanley says.

"Unless the [U.S. Federal Reserve] makes a sharp reversal, we are likely to be in for an extended period of quantitative easing in the U.S. and that is likely to keep pressure on Brazil's currency to strengthen further," the firm said in a research report.

After weakening to BRL4.0 to the dollar at the start of President Luiz Inacio Lula da Silva's eight-year term in January 2003, the currency has embarked on a steady appreciation march.

"Despite all the administrative measures and taxes imposed by the Brazilians during the past eight years, none were so draconian as to reverse the direction in Brazil's currency," Morgan Stanley noted. That trend is likely to continue, the firm added.

Financial markets expect Rousseff, should she win as expected, to continue President Lula's policies -- but there are risks to that outlook, Brown Brothers Harriman strategist Win Thin said.

"Rousseff is viewed with suspicion by the more radical wing of the PT, which is likely to try and exert more influence on her administration," Thin said in a research report.

Campaigning ahead of the second-round run-off will go a long way toward nailing down where Rousseff and Serra stand on possible policy moves, Interbolsa's Hegedus said. For now, however, the international scenario will likely return to dominate local markets.



ECUADOR:

Ecuador Continues State Of Emergency; Police Investigated
Ecuador remained in a state of emergency on Monday, while the government has started investigations to determine responsibility for widespread unrest last Thursday.

Ecuador's national police walked off the job on Thursday to protest planned cuts to their benefits, sparking widespread rioting. The incident escalated when President Rafael Correa confronted protesters in a police barracks, then sought refuge in a hospital before the military engaged in a gunbattle to retrieve him.

In a telephone interview on Monday, Interior Minister Gustavo Jalkh said there would be disciplinary and judicial punishments over the unrest.   He said that the police were working normally across the Andean country. Three police colonels were arrested Friday but were freed Sunday as investigations into their roles continue. The government has withdrawn weapons from several police units and shuffled around various officers. Jalkh said that the government will evaluate whether to lift the state of emergency.


CHILE:

Chile Peso Ends 1.1% Weaker
Chile's peso ended 1.1% weaker against the dollar Monday, coming off a recent 28-month high, after the central bank didn't rule out intervention in the local currency market. The peso ended at CLP486.40 to the dollar compared with Friday's close of CLP481.00.

Chile's economy is highly dependent on exports, especially the agricultural and industrial sectors, and the strength of the peso hurts the competitiveness of those products, exporters are demanding intervention in the currency market.

Chile's President Sebastian Pinera said he plans to discuss with the central bank shortly how the monetary authority can better coordinate its monetary and exchange-rate policies with the government's fiscal and macroeconomic policies, in order to reach a competitive exchange rate that helps exporters, in particular the agricultural sector. The central bank, however, is an independent body and has complete autonomy over its decisions.

"This verbal intervention by the central bank governor and President Pinera helped tamp down the peso's rise. But, if the market doesn't see concrete action, there's a good chance the peso will again start to strengthen," said Rodrigo Sarria, currency trader with local investment bank Celfin Capital.

In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended higher as institutional investors sold bonds, triggering stop-loss orders, a local fixed-income trader said.

The yield on five-year BCU bonds ended at 2.76%, up from 2.72% Friday, while the yield on 10-year BCUs closed at 3.08%, up from 2.99% the previous session.

Chile Peso May Continue Firming But Intervention Not Imminent

With the Chilean peso continuing to rise, and currently at a 28-month high against the dollar, exporters and key political players are increasing pressure for market intervention.

The central bank, however, won't likely intervene as the peso, in real terms, is still considerably weaker than it was the last time the central bank intervened, analysts and traders say.

For the year, the peso has gained 5.1% on the dollar, and a much steeper 9.6% since midyear on a rally in global copper prices to two-year highs and broad international dollar weakness.

Also fueling the peso's gains are expectations for Chile's economy to continue to quickly recover from last year's recession and February's devastating earthquake and growing spread between local and U.S. interest rates. Chile's benchmark rate is currently at 2.5% and expected to reach 5% next year.

As Chile's economy is highly dependent on exports, especially the agricultural and industrial sectors, and the strength of the peso cuts into the competitiveness of those products, exporters have stepped up demands for measures to be taken.

Most recently, Chilean agricultural workers threatened general protests if the central bank doesn't intervene in the peso market, while the conservative UDI political party, which is part of the governing coalition, asked the central bank to intervene because of the negative effect the peso's strength is having on agricultural and industrial sectors.

With the peso closing at CLP481.00 Friday, and soon expected to breach the CLP480 barrier, its climb to CLP470 and beyond looks like it's just a matter of time, traders say.

Despite exporters demands for market intervention, traders and analysts alike don't see the central bank signaling its willingness to intervene unless the peso strengthens to CLP460-470. Some analysts even say the range is closer to CLP445-CLP450.


Chile Pinera's Approval Rating Falls
Chilean President Sebastian Pinera's approval rating fell to 53% in September from 56% in August, according to an opinion poll published Monday by conservative polling institute Adimark GfK.

Former President Michelle Bachelet ended her four-year term in early March with a record 84% approval rating.

Adimark called September "a complex month" in terms of public opinion due to a hunger strike by a group of native Mapuche indians, the 33 miners that are still trapped at the San Jose mine and Chile's bicentennial celebrations.


PERU:

Peru's Central Bank Expected To Increase Policy Rate This Week

The Central Reserve Bank of Peru may increase its reference interest rate, now at 3.0%, this Thursday, even as inflation remains tame. Analysts say a consensus has formed pointing to a 50-basis-point increase in the policy rate, although various forecasters expect only a 25-basis-point rise. One forecaster has even opened the door to no change at all.

Inflationary pressures remain moderate. Peru's benchmark consumer price index fell 0.03% in September from the previous month. That brought the 12-month increase through the end of September to 2.37%.

The central bank aims to keep inflation within a range of 1.0% to 3.0%.

"We expect the central bank to hike rates by 50 basis points to 3.5% in line with consensus. We don't rule out a deceleration in the pace of hikes though," BNP Paribas said Monday in a research note.

Goldman Sachs said it expects a 25-basis-point increase in the reference rate on Thursday. Peru's second-largest bank, said that it expects inflationary pressures to remain contained for the rest of the year owing to moderate domestic demand growth, and weak prices for products such as wheat and corn.

"The expected evolution of prices and the recent increases in reserve requirements for commercial banks suggests that the central bank will moderate the rhythm of adjustments in the reference rate from the next monetary policy meeting, implementing a 25 basis point increase," BBVA Banco Continental said.

In September the central bank increased its reference interest rate by 50 basis points to 3.0%, the fifth consecutive monthly increase. The policy rate had hit a historic low of 1.25%.



European Markets: 

Euro Drops From Six-Month High on Concern Banks Lack Capital
London Stocks Close Lower Ahead Of Data

FTSE 100                   5555.97    -36.93   -0.66%
FTSE 250                  10563.81    -28.66   -0.27%
DJ UK Smaller Companies     898.28     -0.42   -0.05%

European stocks edged lower Monday after new reports underlined Ireland's budget woes. Ireland's government must find up to EUR4.5 billion ($6.2 billion) in savings in December's budget, the Sunday Tribune, an Irish newspaper, reported on its website, citing unidentified sources. The Stoxx 600 index fell 0.2% in recent trading.

European stocks edged lower as concerns over sovereign debt resurfaced after new reports underlined Ireland's budget woes. Ireland's government must find up to EUR4.5 billion ($6.2 billion) in savings in December's budget, the Sunday Tribune, an Irish newspaper, reported on its website, citing unidentified sources. The Stoxx 600 index fell 0.2% in recent trading.

M&A deal news grabbed investors' attention again on Monday.

The Euro declined from a six-month high against the dollar as concern Europe's major banks are under capitalized.

Nobel laureate economist Joseph Stiglitz has warned a "wave of austerity" is sweeping across Europe that could trigger a new recession, in comments published in a newspaper on Sunday. He also raised the prospect that speculators may soon target Spain and called the euro a currency experiment "that may now be faltering."

FTSE pressured by weaker energy stocks, miners. European stocks were between half a percent and 1 percent lower in early dealings, with the benchmark FTSEEurofirst 300 (^FTEU3 - News) down 0.75 percent, extending a five-day retreat.


EUROPE WINS RYDER CUP
The first Monday finish in Ryder Cup history produces arguably the most exciting conclusion in 83 years of this biennial dust-up as Europe wins the trophy by a single point, 14 1/2 to 13 1/2 despite an extraordinary fightback by Team USA.


China Pledges Support for Euro
China Promises Support for Euro and Euro Bonds Ahead of EU Summit
China pledged on Sunday to support a stable euro and not reduce its holdings of European government bonds in an effort to deflect criticism of its foreign exchange policy ahead of an EU-China Summit.

Chinese Premier Wen Jiabao says his country will continue to support both the Euro and European government bonds. "I have made clear that China supports a stable euro," he said.He also promised not to cut China's investment in European bonds, despite the recent crisis which has weakened the value of many such bonds.

Mr Wen is now visiting Greece, the worst-hit of the 27-nation European Union. He has promised to buy Greek government bonds the next time they went on sale.

Wen, who next travels to Belgium, Italy and Turkey, said yesterday that China plans to buy Greek bonds once Greece begins tapping international markets for funding again. China will support the country’s shipping industry, as Greece seeks investment to boost growth and emerge from a second year of recession,

Wen said. Ties between China and Greece are “an example of the continuously strengthening relations between China and the European Union,” Wen said.

China has said it needs to diversify its foreign currency holdings and has also bought Spanish government bonds.

Later in the week, the Chinese leader will attend an EU-China, where the subject of the yuan is almost certain to come up.

Mr Wen urged the EU to recognize China as a market economy, something that would make it less vulnerable to anti-dumping charges under World Trade Organization rules.

SPAIN:

Spain Jobless Claims Rise, Point To Weaker Economy In 3Q
Spanish jobless claims continued to rise in September, pointing to a weakening of Spain's fragile economic recovery in the third quarter.

In a statement, the Spanish labor ministry Monday said registered jobless claims rose by 48,102, or 1.2%, to 4 million in September from August. In annual terms, jobless claims were up 8.3%. Adjusted for seasonality, September jobless claims also rose, by 43,198.

September is traditionally a bad month for employment in Spain as the country's large tourism industry sheds jobs at the end of summer.



FRANCE:

Rolling Strikes At Shipping Ports
CGT Union Calls For Rolling Strike In All French Ports


French Held Fresh Pension Protests
French hold a third day of protest against pension reform

Hundreds of thousands of people across France have taken to the streets to demonstrate against President Nicolas Sarkozy's plans to raise the retirement age, according to police figures. More than 200 protests were planned throughout the country.

It is the third day of demonstrations against the proposed reforms, which go before parliament on Tuesday. Trade unions in France are proclaiming a success their day of mobilization against planned reforms of the pension system, says the BBC's Hugh Schofield in Paris.


GREECE:
Greek 2011 Draft Budget Aims To Slash Deficit To 7%
The Greek draft 2011 budget announced Monday by the finance ministry aims to cut the budget deficit to 7% of gross domestic product, ahead of the promised 7.6% target requested by its international lenders.

 That means that the fiscal gap in 2011 will be EUR16.35 billion, down from EUR18.5 billion this year.

In May, the debt-strapped Mediterranean country promised to cut the 2009 budget deficit from 13.6% of GDP in 2009, to 8.1% by end of 2010 in exchange for a EUR110 billion bailout from the International Monetary Fund and the European Union.

The draft projects that the 2010 budget deficit will come in at 7.8% of GDP, better than the 8.1% target under the IMF-EU memorandum.


IRELAND:
Dublin Stocks: ISEQ Ending +0.4% At 2,674; Financials Mixed

IRISH CENTRAL BANK SAYS MORE THAN €3B IN CUTS NEEDED
The Central Bank of Ireland cuts its forecasts for the Irish economy and says that the Irish government will need to cut more than its planned €3 billion in the forthcoming 2011 budget.




Asian Pacific Markets: 
Asian stocks shot to a two-year high on Monday, boosted by interest in emerging markets, while the dollar edged up after last week's sell off though speculation the Federal Reserve will add to money supply was still rife.

Chinese manufacturing activity has held up surprisingly well, keeping investors confident about the region's prospects and pushing up the MSCI index of Asian stocks outside Japan to the highest level since June 2008.

"Continued foreign buying, amid the U.S. dollar's recent weakness and an increasing preference for emerging market stocks, has lifted the market to a new high," said Lee Jin-woo, a market analyst at Mirae Asset Securities in Seoul.

Strong foreign portfolio flows into the region have lifted Asian currencies, putting pressure on regional central banks to step up intervention to limit the inflow of speculative "hot money" and to support their export-oriented economies.

Financial leaders gather for the International Monetary Fund meeting this week and the concept of countries keeping their currencies weak for export-gain is likely to be a hot topic.

JAPAN: 

USGS Reports Quake SW Of Okinawa At Magnitude 6.3 
6.3 earthquake hits southwestern Ryukyu Islands, Japan
http://earthquake.usgs.gov/earthquakes/recenteqsww/Maps/region/Asia.php


Japan's Nikkei closed 0.3 percent lower in choppy trade ahead of a Bank of Japan policy decision on Tuesday.

Japan To Plead Its Case On Islands At ASEM Summit

Prime Minister Naoto Kan will plead Japan's case in its ongoing territorial dispute with China during talks with European and Asian leaders at a two-day summit, a spokesman for Tokyo said Monday.

"One of the priorities of his bilateral meetings will be to explain the issue and Japan's efforts to resolve it," government spokesman Satoru Satoh told a small group of reporters as the 46-nation Asia-Europe Meeting, or ASEM, opened in Brussels.

The premier is to hold bilaterals with Australia, France, Germany and top European Union officials.

Asia's two largest economies have been embroiled in a tense diplomatic standoff since Japan's arrest on Sept. 8 of a Chinese trawler captain near disputed islands in the East China Sea.

"There does not exist any question regarding Japan's territorial sovereignty" over the disputed island chain, called Senkaku by Japan and Diaoyu by China.

"We would like to keep maintaining friendly and cooperative relations," he said. "The China side has reacted by escalating the situation."

Japan says their sovereignty dates back to the late 19th century and that Chinese interest in the isles dates to the development of petroleum resources on the East China Sea continental shelf in the late 1970s.

China this weekend called on Japan to "maintain the full spectrum of relations" between the two nation.

The statement by Ma Zhaoxu, chief spokesman for the ministry of foreign affairs, came after Kan called on China to behave as a "responsible member of the international community."

Ma reiterated China's claim to the islands, saying they "have always been Chinese territory" and repeated Beijing's line that Tokyo's arrest and detention of the fisherman was "absurd" and "illegal."

 

Bank Of Japan May Ease Policy Further

The Bank of Japan is expected to take more monetary easing steps at its two-day policy board meeting starting Monday. The move would come as the central bank's own business sentiment survey reveals deepening concerns about the outlook for the corporate sector and the yen's uptrend shows no signs of abating.


CHINA:

China Will Stimulate More Domestic Demand to Stabilize Economy

China will address “structural problems” and stabilize its economy by increasing domestic demand, Premier Wen Jiabao said.

China's economic growth slowed to an annual rate of 10.3% in the second quarter of the year, from 11.9% in the first quarter. The government is targeting growth of 8% for the year as a whole.

Wen, in an interview with CNN, said he’d argued before the global recession that China’s economic development “lacks balance, coordination and sustainability.” The financial crisis “reinforced my view on this point,” he said on the “Fareed Zakaria GPS” program taped Sept. 23 in New York and broadcast yesterday.

“We can rely on stimulating domestic demand to stabilize and further grow the Chinese economy,” Wen, 64, said. The premier also said he’s concerned China’s stability may be threatened by inflation and corruption and that he remains committed to pressing for changes in China’s political system.

China’s economy has expanded more than 90-fold in the past three decades, fueled by exports to countries such as the U.S. Treasury Secretary Timothy F. Geithner and U.S. lawmakers have urged the country’s leaders to look more to domestic markets for growth. They have also pushed China to allow faster appreciation of its currency, arguing that an undervalued yuan gives Chinese manufacturers an unfair advantage in export markets.

China Real Estate Prices

Wen is trying to cool down the country’s property market as house prices soar and become increasingly unaffordable for China’s middle class. Last month, China’s government added to curbs by tightening down-payment rules for first homes, suspending third-home loans and pledging to quicken a trial of a
property tax.

China’s plan to stimulate the economy with government spending has been a success, ensuring “the continuance of steady and relatively fast economic growth,” Wen said.

Economic growth moderated to 10.3 percent in the second quarter from 11.9 percent in the previous three months. The pace may slow to 8.7 percent in the fourth quarter, according to the median estimate in a Bloomberg News survey of economists.

Still, China’s manufacturing expanded at the fastest pace in four months in September, adding to signs that economic growth is stabilizing.




SOUTH KOREA:

South Korea May Win Record $60 Billion in Overseas Plant Orders This Year

South Korean companies expect to win record plant orders overseas this year as growing demand in the Middle East may push contracts for power plants, floating production facilities and refineries to more than $60 billion.

Orders from overseas customers more than doubled from a year earlier to $50.7 billion by the end of the third quarter, South Korea’s Ministry of Knowledge Economy said today in a statement.


AUSTRALIA:

Australia Weighs Next Rate Increase
Australia to weigh the timing of their next rate increase as the property market cools. Australia’s central bank will decide tomorrow whether higher interest rates are needed to avert faster inflation amid signs that past increases are cooling the nation’s property market.



INDIA:

US Dollar Ends Sharply Cheaper against Rupee

The US dollar ended sharply cheaper against the Rupee at Rs 44.47/48 per dollar and the Pound Sterling also finished lower at Rs 70.41/43 per pound at the close of the Interbank Foreign Exchange Market (FOREX) here today.

Interbank Forex and RBI rates:

(In Rupees Per Unit) UNIT INTERBANK RBI REFERENCE US Dollar 44.47/48 US Dollar RS.44.68 Pound Sterling 70.41/43 Euro RS.60.96 Euro 61.02/04 Japanese Yen (100) 53.


Diwali, Bumper Harvest to Lift Indian Farmers.
GOLD investments in India are set to pick up in November as a forecast bumper-crop season puts more money in the hands of Indian farmers.


Sensex Rallies for Fifth Straight Week, Eyes 21,000 Points
Saturday, 2 October 2010

Mumbai, October 02: India's benchmark index rallied for the fifth consecutive week, led by continued inflow of funds from foreign institutional investors on the back of positive cues from global markets and robust economic growth outlook.

The Bombay Stock Exchange's 30-share sensitive index (Sensex) surged nearly two percent or 400 points to 20,445.04 points. This is the fifth consecutive week of gains at the Indian bourse.

The benchmark Sensex rallied 375.92 points or 1.87 percent to close at 20,445.04 Friday, the highest level since Jan 14, 2008. Sensex has gained over 12 percent in the last one month. This is the sharpest rally in the market in five months.

Overseas funds invested Rs.1,825 crore Friday, the first trading day of this month after putting about Rs.23,600 crore in September.

On the first day of October, buying support was across the board as all 13 sectoral indices on the Bombay Stock Exchange (BSE) closed in the positive territory. Realty, metal, consumer durable and IT stocks saw bulk of the buying.

At the National Stock Exchange (NSE), the 50-share S&P CNX Nifty also rallied nearly two percent in the week's trade. The index closed 1.88 percent higher at 6,143.4 points Friday.

Broader markets also ended with gains. The BSE midcap closed 1.6 percent higher and the smallcap index 1.54 percent up. The market breadth was positive with 1,993 scrips advancing, compared to 984 stocks declining and 122 remaining unchanged.

The major gainers Friday on the Sensex were HDFC, up 5.13 percent at Rs.175.35; BHEL, up 4.29 percent at Rs.2,590.10; TCS up 4.08 percent at Rs.960.20; and Hindalco Industries, up 3.81 percent at Rs.204.25.

Read the entire article, The Siasat Daily:
http://www.siasat.com/english/news/sensex-rallies-fifth-straight-week-eyes-21000-points

World Forex Currencies Snapshot: (Monday, Oct.4 9:15AM)

EUR/USD	1.3704	-0.0074 (-0.54%)
USD/JPY	83.2600	-0.1000 (-0.12%)
GBP/USD	1.5833	0.0000 (0.00%)
CAD/USD	0.9790	-0.0022 (-0.23%)
USD/HKD	7.7585	-0.0004 (-0.01%)
USD/CNY	6.6905	+0.0010 (0.01%)
AUD/USD	0.9682	-0.0037 (-0.38%)

World Markets Snapshot:

Shanghai	2,655.66	+44.98 (1.72%)
Nikkei 225	9,381.06	-23.17 (-0.25%)
Hang Seng Index	22,618.66	+260.49 (1.17%)
TSEC	8,246.10	+1.92 (0.02%)
FTSE 100	5,581.83	-11.07 (-0.20%)
DJ EURO STOXX 50	2,710.31	-22.60 (-0.83%)
CAC 40	3,655.69	-36.40 (-0.99%)
S&P TSX	12,363.08	0.00 (0.00%)
S&P/ASX 200	4,625.30	+46.10 (1.01%)
BSE Sensex	20,475.73	+30.69 (0.15%)

Monday's US Economic Calendar:

10:00 a.m. 

National Association of Realtors'Aug Pending Home Sales Index Current (previous 79.4), MoM Pct Change (Current Period) (previous +5.2%), YoY Pct Change (Current Period) (previous -19.1%)

10:00 a.m.
Aug Manufacturers' Shipments, Inventories & Orders (M3) Total Orders (previous +0.1%), Orders, Ex-Defense (previous +0.2%), Orders, Ex-Transportation (previous -1.5%), Durable Goods 1st Est (previous +0.3%), Durable Goods Revised (previous +0.4%)

Conferences:

Among the significant conferences next week are the William Blair & Co. Emerging Growth Stock Conference on Tuesday in New York, Biotechnology Industry Organization Annual BIO Investor Forum on Tuesday and Wednesday in San Francisco, and Deutsche Bank Securities Inc. Leveraged Finance Conference from Tuesday through Thursday in Scottsdale, Ariz.

China To Host UN Climate Conference. Nobel Prize Winners To Be Announced Next Week.

US Market Summary, Friday, Oct. 1, 2010:

Stocks:

U.S. stocks rose modestly as investors digested a plethora of economic reports, yielded conflicting signals. "The fact that we got through a number of data points today without losing steam is a positive sign for the bullish camp," said Roger Volz, director at BGC Financial.


Treasuries:

The 10-year note and the 30-year bond pared their weekly price advance. Longer-dated Treasurys declined for a third straight session as several better-than-forecast reports from China and the U.S.

Overall treasuries rose, pushing two-year note yields to a record low, as investors speculated a stalled economic recovery will spur the Federal Reserve to increase purchases of government debt.

Notes rallied for a third week. New York Fed President William Dudley said before next week’s payrolls report that the central bank will probably need to take action to spur growth and avert deflation.

The benchmark 10-year note yield dropped 9 basis points, or 0.09 percentage point, to 2.51 percent this week, according to BGCantor Market Data. The price of the 2.625 percent security maturing in August 2020 increased 26/32, or $8.13 per $1,000 face amount, to 100 31/32.

The two-year note yield fell 3 basis points to 0.41 percent after touching the record low of 0.4066 percent yesterday. The 30-year bond yield slid 8 basis points to 3.72 percent.

The Treasury auctioned $100 billion in two-, five-, and seven-year notes this week at record low yields. The $36 billion sale of two-year notes on Sept. 27 produced a bid-to-cover ratio of 3.78, reflecting the highest level of demand since August 2007. The government will announce on Oct. 7 the amounts of 3-, 10- and 30-year debt it’s selling this month.

The extra yield investors demand to hold 10-year securities over 2-year debt narrowed 0.08 percentage point this week to 2.09 percentage points as investors speculated the Fed will step up quantitative easing.


Forex:

The dollar fell against all major rivals, with the focus on potential Federal Reserve stimulus diverting attention from encouraging U.S. economic data. A top Federal Reserve official said the central bank is almost certain to have to offer fresh support to ensure that already-tepid economic growth does not further falter.



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