... Forex - US dollar lower against yen in ... downside support on looming concerns about the Japanese economy ahead of the release Tuesday of the Bank of Japans quarterly Tankan survey of business sentiment. Ten ...
Thursday, March 27, 2008
Forex - US dollar lower against yen in early Asian trade on weak US data UPDATE
Deutsche Bank Says Challenging Economic Conditions May Weigh-down FY08 Profit; Warns Of Write-downs - Update
... profitability target for the year 2008. The German bank is expecting a pre-tax profit of ... the market turbulence and uncertainties in global equity markets. Meanwhile, the bank anticipates that its Private ...
Egyptian editor jailed
... AFP. CAIRO. Outspoken Egyptian editor Ibrahim Eissa was sentenced to six ... worth more than US$350 million from the stock exchange. AFP. ...
Wednesday, March 26, 2008
Demand for dollar hits record at daily auction
... Baghdad, 26 March 2008 (Voices of Iraq) -- Iraqs Stock Exchange (ISX) index decreased by 0.661 % to settle at 37.550 points at the closuring ...
Consumer sentiment hits $US
... since March 2003, when American-led forces invaded Iraq. The Conference Board question asking Americans about ... news out of the States and the stock market." The US dollar ended the Australian session ...
Forex - Euro soars on Trichet comments, strong Ifo; pound sinks on MPC testimony
... 1.9935 down from 2.0080 yen 198.25 down from 200.57 sfr 1.9935 down from 2.0082 Australian dollar usd 0.9214 up from 0.9154 stg 0.4610 up from 0.4557 yen 91.40 down ...
Batelco to Re-instate Dismissed Staff
... Companys shares are listed on the Bahrain Stock Exchange with a total capitalization of approx US$ ... in Jordan, Kuwait, Yemen, Saudi Arabia and Egypt. This release has been issued by Batelco ...
Sainsburys leads on double boost
... and a net equivalent yield of 5.1%. Swiss mining group Xstrata leads the fallers after ... 2,940.00p +3.45% Lonmin (LMI) 3,128.00p +3.40% London Stock Exchange Group (LSE) 1,241.00p +2.39% Vodafone Group (VOD) ...
BIGresearchs Q1 China Survey: Consumer Confidence of Young Chinese Soars as U.S. Consumer Confidence Continues to Sink
... 2008 (MARKET WIRE via COMTEX) -- The China Market continues to thrive with double-digit increases ... cash found in red envelopes from the Chinese New Year, has helped to fuel young ... as only 33.2% say the same. The stock market isnt the only market performing well in ...
Perilya bids $A294 million for miner CBH
... said the new company would have an equity market value of about $A491 million, making it ... said the deal had the support of Japans Toho Zinc Co Ltd, which has a ...
New government will have to live up to promises
... By Farhan Bokhari, Special to Gulf News Pakistans newly elected government, which began its tenure ... on the broad economy. Yesterday, the Karachi stock exchanges representative KSE-100 index rose moderately, leaving the ...
Tuesday, March 25, 2008
JSC Halyk SavingBank - Final Results
... David Cranmer david.cranmer@fd.com +44 (0)20 7269 7217 Moscow: Leonid Solovyev leonid.solovyev@fd.com +7 495 795 06 ... The company news service from the London Stock Exchange END FR SEESAISASESD ...
Russia power producer OGK-1 to be sold Apr 17
... news, business news, technology news, headline news, small business news, news alerts, personal finance, stock market, and mutual funds information available on Reuters.com, video, mobile, and interactive television platforms. Reuters ...
Monday, March 24, 2008
JSE-listed company believes its gensets can offer some short-term relief
Equipment-supply company Barloworld Equipment is seeking to pump more than 500 MW of Caterpillar electric generating equipment into the economy this year to help
Chinas Shanghai Index Sinks 4.5 Percent
Chinese stocks fell sharply Monday as institutional investors sat out the market despite hopes that Ma Ying-jeous election as Taiwans president will bring an economic boost to the region.
Japanese Property, Financial Stocks Rise
Japanese shares rose Friday, buoyed by gains in property developers and financial issues. The Nikkei 225 Stock Average rose 222.13 points, or 1.81 percent, to close at 12,482.57 on the Tokyo Stock Exchange. The index rose following a 2.48 percent advance Wednesday.
Saturday, March 22, 2008
The rate cuts winners and losers
The Feds move means payments for adjustable-rate mortgages and variable-rate credit cards could drop soon. Savers will have it tougher, and home-equity loans will be harder to get.
Wednesday, March 12, 2008
Wachovia says housing downturn nowhere near over
(Reuters) - Wachovia Corp (WB.N: Quote, Profile, Research), which offers adjustable-rate mortgages that let borrowers decide how much to pay each month, believes the U.S. housing downturn is far from over, Chief Risk Officer Don Truslow said.
"It feels like we have a ways to go," Truslow said on a Deutsche Bank Securities Inc conference call. Referring to the nine innings of a baseball game, Truslow said he was "unsure" whether the downturn was in the third, fourth or fifth inning, but "we haven't reached the seventh-inning stretch."
Charlotte, North Carolina-based Wachovia, the fourth-largest U.S. bank, on February 28 said it expected first-half loan losses to exceed 0.75 percent of loans on an annualized basis in 2008, higher than it had forecast two weeks earlier.
Liberty CEO says he was point man in IAC talks
(Reuters) - Liberty Media Chief Executive Greg Maffei said on Wednesday that he was the point man in talks with IAC/InterActiveCorp over disengaging the two companies despite a long-standing relationship between Liberty Chairman John Malone and IAC CEO Barry Diller.
"John Malone considered Barry Diller a friend" after a business partnership of nearly 12 years, Maffei told a Delaware court, where IAC and controlling shareholder Liberty are battling over a proposal to spin off four of IAC's businesses.
"While (Malone) was not entirely happy and increasingly unhappy with the performance at IAC ... because of the friendship, I don't think (he) was willing to tackle some of the issues," Maffei said. "I have been in effect the point person. I don't believe it's a personal matter."
Liberty's board put him in that role despite concerns of a potential conflict between Maffei and Diller. The two had clashed over IAC's purchase of online travel site Expedia several years before.
IAC and Liberty sued each other in January after Diller proposed a spinoff plan that would dilute Liberty's majority voting control over the businesses as separate entities.
The plan followed more than a year of inconclusive talks on a possible swap that would give IAC's HSN shopping network to Liberty in return for Liberty's stake in IAC.
Diller, a former television and film executive, built IAC with Malone's backing over more than a decade. While Liberty owns about 30 percent of IAC shares, it holds 62 percent voting control through a second class of super-voting stock.
Societe Generale Says Another Employee Held by Police
(Bloomberg) -- Societe Generale SA, the French bank stung by a record trading loss of 4.9 billion euros ($7.6 billion), said a second employee has been taken into police custody as part of the investigation into unauthorized trades.
The headquarters of France's second-biggest bank in La Defense, just outside Paris, were searched by police today, who took some documents, Societe Generale spokeswoman Laura Schalk said in an interview.
The latest development deepens a probe that began after the bank said in January that 31-year-old trader Jerome Kerviel amassed 50 billion euros in trades backed by fake hedges and false documents. Unwinding his bets resulted in the biggest trading loss in banking history and forced Societe Generale to replenish depleted capital.
``It's normal for the investigation to widen, and we will see where this brings us, given that many people said Kerviel could not have acted alone,'' said Arnaud Scarpaci, who helps manage about $235 million at Agilis Gestion SA in Paris. ``At an image level, it's not the best for the company.''
Societe Generale failed to follow up on 75 warnings on bets by Kerviel, independent board members concluded in a report last month. While the board has twice turned down Chairman Daniel Bouton's offer to resign, the document highlighted the shortcomings of Societe Generale's management supervision that allowed Kerviel to forge documents and emails undetected for more than two years.
Unidentified Broker
The Societe Generale employee taken into custody today is the second broker to be questioned in the Kerviel case. Moussa Bakir, a 32-year-old broker at Newedge, was questioned and released last month. Kerviel passed trades through Societe Generale's Fimat unit, which merged in January with Credit Agricole SA's futures brokerage to form Newedge.
The police are questioning the second broker, Isabelle Montagne, a spokeswoman for Paris prosecutors, said today in a telephone interview. She declined to name the broker. She said the broker was taken into custody mid-morning and would be held for 24 hours. The detention could be extended to up to 48 hours.
Kerviel, who admitted to exceeding his trading limits and faking documents to show his bets were covered by hedges, has been interrogated six times since he was incarcerated on Feb. 8. He has been charged with hacking into the bank's computers, falsifying documents and breach of trust.
The latest development comes just two days before a hearing at the Paris appeals court to consider his release.
U.S. Stocks Rise, Led by Industrials, on Caterpillar Forecast
(Bloomberg) -- U.S. stocks gained for a second day, extending the market's biggest rally in five years, after forecasts from Caterpillar Inc. and Bear Stearns Cos. spurred speculation that profits will rebound this year.
Caterpillar, the largest maker of bulldozers, rose the most in three months after saying emerging markets will boost sales. Bear Stearns, the second-biggest underwriter of U.S. mortgage bonds, climbed after Chief Executive Officer Alan Schwartz told CNBC the firm has enough money to weather market fluctuations.
The Standard & Poor's 500 Index increased 2.26 points, or 0.2 percent, to 1,322.91 at 10:44 a.m. in New York. The Dow Jones Industrial Average climbed 49.99, or 0.4 percent, to 12,206.8. The Nasdaq Composite Index added 9.1, or 0.4 percent, to 2,264.86. Four stocks gained for every three that fell on the New York Stock Exchange. Shares in Europe and Asia gained.
Industrial shares contributed the most to the rally after Caterpillar said machinery orders in emerging markets and efforts to improve public works in North America and Europe will boost sales.
Monday, March 10, 2008
McDonald's February Sales Increase 12%, Led by Europe
(Bloomberg) -- McDonald's Corp.'s February sales rose more than analysts estimated as the world's biggest restaurant company lured customers with burgers and chicken sandwiches in Europe and breakfast in China.
The stock rose the most in more than a month in New York trading.
Sales at U.S. outlets open more than 13 months rose 8.3 percent, the Oak Brook, Illinois-based company said today in a statement. Comparable-store sales in Europe advanced 15 percent while gaining 11 percent in the region encompassing Asia, the Middle East and Africa. Last month's extra day for the leap year added 4 percentage points to worldwide same-store sales.
Specialty burger and chicken sandwiches spurred sales in Europe, McDonald's largest region by revenue, while breakfast boosted sales in China and longer hours helped out in Australia. In the U.S., a McSkillet breakfast burrito promotion and dollar- menu advertising lured consumers pinched by declining home values and higher fuel prices.
``McDonald's put up another remarkably strong result in Europe,'' Jason West, an analyst at Deutsche Bank Securities, wrote in a note today. The U.S. results suggest ``McDonald's is not losing share to U.S. competitors as some may have feared.''
McDonald's climbed $1.79, or 3.4 percent, to $54.06 at 10:14 a.m. in New York Stock Exchange composite trading, the biggest increase since Jan. 31. The stock dropped 11 percent this year through last week after rising in each of the past five years.
The median estimate of four analysts in a Bloomberg survey was for an increase of 7.3 percent in same-store U.S. sales.
Oil Rises to Record $107 as Returns Outpace Financial Markets
(Bloomberg) -- Crude oil rose to a record $107 a barrel in New York as investors purchased futures because the returns have outpaced those of financial markets.
Oil in New York has surged 77 percent over the past year as the S&P 500 and Dow averages dropped. Hedge-fund managers and other large speculators increased net-long positions, or bets on higher oil prices, in the week ended March 4, a Commodity Futures Trading Commission report showed.
``We're witnessing an ongoing flow of fund buying, which isn't particularly motivated by the particulars of the petroleum market,'' said Tim Evans, an energy analyst at Citigroup Global Markets Inc. in New York. ``Prices have rallied to such an extent where sellers have backed off. Any time prices go lower the buyers come right back into the market.''
Crude oil for April delivery rose $1.36, or 1.3 percent, to $106.51 a barrel at 10:55 a.m. on the New York Mercantile Exchange. Futures surged to $107 a barrel today, the highest since trading began in 1983.
Blackstone Profit Falls 89% on Credit Market Meltdown
(Bloomberg) -- Blackstone Group LP, manager of the world's largest buyout fund, said fourth-quarter profit plunged 89 percent after a ``meltdown'' in the credit markets and warned that getting loans for takeovers will be hard in 2008.
Profit excluding costs tied to its June initial public offering declined to $88 million, or 8 cents a share, from $808.1 million, or 72 cents, a year earlier, the New York-based company said today in a statement. Blackstone fell as much as 5.2 percent in New York trading as earnings missed analysts' estimates.
``Credit market problems persist and if anything have gotten worse,'' Blackstone President Tony James said on a conference call with reporters today. ``We're looking to 2009 before we see much of an improvement.''
Blackstone, which has lost 55 percent of its market value since the IPO, hasn't completed a takeover of more than $2 billion in five months as credit costs doubled and the LBO market shut down. It's struggling to close the $6.6 billion buyout of Alliance Data Systems Corp., the Dallas-based credit- card processor, announced in May.
Earnings were hurt by a decline in fees earned by completing acquisitions and a writedown of its investment in New York-based bond insurer Financial Guaranty Insurance Co. Blackstone invested $2.33 billion of capital in the quarter, down 31 percent from a year earlier.
Net Loss
``Among the risks are that LBO financing conditions continue to worsen and erode Blackstone's ability to earn sufficient private-equity returns,'' Bank of America Corp. analyst Michael Hecht wrote in a March 6 report to investors. Hecht, who is based in New York, cut his fourth-quarter estimate to 11 cents from 25 cents. The average estimate of seven analysts surveyed by Bloomberg was 20 cents a share.
Blackstone fell 55 cents, or 3.7 percent, to $14.03 at 10:17 a.m. in New York Stock Exchange composite trading. It earlier fell to $13.82, the lowest since the IPO.
Blackstone reported a fourth-quarter net loss of $170 million because of compensation costs tied to the IPO. Revenue rose 17 percent to $3.05 billion. The firm agreed to buy GSO Capital Partners LP for as much as $930 million in January to expand investments in distressed debt and leveraged loans.
``Despite the meltdown'' in credit markets, the company sees deal opportunities, especially in Asia, Chairman Stephen Schwarzman said in the statement.
Assets under management jumped 47 percent to $102.4 billion, driven by real estate, which doubled to $26.1 billion. Money-management assets rose 65 percent to $44.5 billion. Private-equity assets gained 7 percent to $31.8 billion.
Blackstone as Proxy
LBO financing evaporated last July as banks and investors pulled out of the market amid the fallout from rising subprime- mortgage delinquencies. The value of deals announced in the second half of 2007 plunged two-thirds from the first six months, according to data compiled by Bloomberg.
``We're a proxy for the credit markets,'' Blackstone President Hamilton James said at the Super Returns private equity conference in Munich on Feb 26.
Still, seven of the eight analysts who rate Blackstone recommend clients buy the stock, including Hecht. The other recommendation is a ``hold.''
Other publicly traded companies that make private-equity investments also have suffered. New York-based Fortress Investment Group LLC has fallen 58 percent in the past year, while 3i Group Plc of London has lost 42 percent.
Thursday, March 6, 2008
Gold's glitter lures buyers
(Reuters) - Gold's near vertical climb to historic highs approaching the key $1,000 mark shows no sign of abating as bullish forces such as a sinking dollar and record high oil are not seen fading anytime soon.
Fears that expensive oil will stoke inflation combined with worries over potential stock market losses and the U.S. on the brink of possible economic recession will propel gold higher still, analysts say.
"Don't be surprised to see gold trade up to $1,100 (an ounce) or even $1,200 before year-end 2008," said Jeffrey Nichols, managing director of American Precious Metals Advisors.
"And, with the right confluence of economic and geopolitical developments, we could see gold spike to $1,500 or even $2,000 in the next few years," he said.
Gold hit a record high of $991.90 an ounce on Thursday and was at $986.90/987.40 at 1144 GMT. It has jumped 20 percent this year, 56 percent in the past 12 months, doubled in about 2 years and surged from a low of around $250 in August 1999.
It was previously fixed at a record high of $850 in January 1980 as high inflation linked to strong oil, Soviet intervention in Afghanistan and the impact of the Iranian revolution prompted investors to heavily buy gold. After adjusting for inflation, the 1980 high was $2,119.30 at 2007 prices.
The market has ridden waves of investor buying, which lifted prices nearly 50 percent in the past six months, ignoring a handful of negative factors, with most players betting on even higher prices this year and next.
Oil Advances to Record $105.97 as Dollar Drops to All-Time Low
(Bloomberg) -- Crude oil rose to a record $105.96 a barrel in New York as the U.S. dollar fell to its lowest ever against the euro.
Gold and copper also advanced to all-time highs as the sinking dollar made commodities priced in the U.S. currency cheaper. Oil closed at a record yesterday after U.S. crude inventories fell for the first time in eight weeks and OPEC refrained from raising production.
``The reason we've gone above $105 is that the market is still focused on the weakness of the dollar,'' Olivier Jakob, managing director of Petromatrix Gmbh in Zug, Switzerland, said. ``It's going to take more signs of demand destruction around the world before oil stops gaining on the dollar.''
Crude oil for April delivery rose as much as $1.45, or 1.4 percent, to a $105.97 a barrel on the New York Mercantile Exchange, the highest since futures began trading in 1983. The contract traded for $105.15 at 1:11 p.m. in London.
Brent crude for April settlement rose as much as $1.31, or 1.3 percent, to match the $102.95 a barrel record previously set on March 3. The contract was at $102 on London's ICE Futures Europe exchange at 1:14 p.m. local time.
The euro climbed to $1.5347, the highest level since the single currency's debut in 1999, on speculation the European Central Bank will hold its key interest rate at a more than six- year high as the Federal Reserve keeps cutting its benchmark rate.
``If you think the dollar will weaken then you may choose to sell the dollar and go long commodities,'' said Harry Tchilinguirian, senior analyst at BNP Paribas SA in London. ``Robust fundamental outlooks, as in the case for oil, present potential to strongly offset the decline in the nominal value of the dollar.''
Ambac to Sell Half the Company, Bet May Not Pay Off
(Bloomberg) -- Ambac Financial Group Inc., the bond insurer seeking capital to salvage its AAA credit rating, will sell half the company in a bet some investors say won't pay off.
Ambac said yesterday it plans to issue $1 billion of common stock, more than doubling the number of shares outstanding. The New York-based company will also offer $500 million of units that convert to shares in 2011.
Investors had anticipated Ambac would be bailed out by banks, which would backstop a capital raising of as much as $3 billion, enough to overcome record losses on subprime-mortgage debt. Instead, the company announced it would raise half that amount in a transaction that would dilute existing shareholders, sending Ambac down 19 percent in New York Stock Exchange trading.
``The new offering is highly diluting to existing shareholders,'' Jim Ryan, an insurance analyst at Morningstar Inc. said in an interview with Bloomberg Television. ``The market was looking for a backstop, to say the least.''
The sale of common stock, managed by Credit Suisse Group, Citigroup Inc., Bank of America Corp. and UBS AG, is scheduled for tonight, according to data compiled by Bloomberg.
Ambac fell 26 cents to $8.44 in early New York Stock Exchange composite trading. The shares have tumbled 90 percent in the past year, reducing the company's market value to $884 million.
Abandoned Plan
By proposing a sale of common shares, Ambac is reverting to a plan it abandoned in mid-January. The company announced a $1 billion sale Jan. 16, sparking a 70 percent plunge in its stock, and canceled the offering Jan. 18.
Ambac cut its dividend to 1 cent from 21 cents a share and said it will suspend writing guarantees on debt, including mortgage-backed bonds. The combined plans will probably bolster capital enough for an AAA rating, Moody's and S&P said yesterday.
Stock investors were ``expecting something different in terms of some type of a more orchestrated event that looked less like a conventional offering of common stock and more like a carefully crafted infusion from business partners,'' said Colin Glinsman, who oversees about $25 billion as chief investment officer at Oppenheimer Capital in New York.
Credit-default swaps tied to Ambac's AAA rated insurance unit rose 38 basis points to 513 basis points from 475 basis points before the announcement, according to CMA Datavision in London. A basis point on a credit-default swap contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.
CDO Losses
Credit-default swaps are financial instruments based on bonds and loans that are used to speculate on a company's ability to repay debt. They pay the buyer face value in exchange for the underlying securities or the cash equivalent should a borrower fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.
Ambac, its larger competitor MBIA Inc., and the rest of the industry stumbled after expanding beyond municipal insurance to guarantees on collateralized debt obligations that have since tumbled in value. Bond insurers with AAA ratings have guaranteed $2.4 trillion of debt.
The loss of Ambac's top rating would cast doubt on $556 billion of municipal and asset-backed securities insured by the company, forcing some investors to sell the debt and others to reduce their holdings.
Ambac, which pioneered municipal bond insurance in 1971, and the rest of the industry are reeling from their expansion into CDOs, which package pools of securities then split them into pieces with different ratings.
Tuesday, March 4, 2008
Bernanke Urges Banks to Forgive Portion of Mortgages
(Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke, battling the worst housing recession in a quarter century, urged lenders to forgive portions of mortgages for more borrowers whose home values have declined.
``Efforts by both government and private-sector entities to reduce unnecessary foreclosures are helping, but more can, and should, be done,'' Bernanke said in a speech in Orlando, Florida today. ``Principal reductions that restore some equity for the homeowner may be a relatively more effective means of avoiding delinquency and foreclosure.''
Bernanke's call goes beyond the stance of the Bush administration and previous Fed comments. By comparison, the central bank's Feb. 27 report to Congress called for lenders to ``pursue prudent loan workouts'' through means such as modifying mortgage terms and deferring payments.
``Delinquencies and foreclosures likely will continue to rise for a while longer,'' Bernanke said in the comments to the Independent Community Bankers of America. ``Supply-demand imbalances in many housing markets suggest that some further declines in house prices are likely.''
Subprime borrowers are about to see their mortgage rates increase more than 1 percentage point, he said. ``Declines in short-term interest rates and initiatives involving rate freezes will reduce the impact somewhat, but interest-rate resets will nevertheless impose stress on many households.''
`Vigorous Response'
In the past, homeowners could refinance, though that option is now ``largely'' gone because sales of bonds backed by subprime mortgages ``have virtually halted,'' Bernanke said. ``This situation calls for a vigorous response.''
Bernanke didn't comment in his speech text on the outlook for the economy or interest rates. Traders expect the Federal Open Market Committee to lower the benchmark rate by 0.75 percentage point by or at the panel's next meeting on March 18, based on futures prices.
Bernanke signaled in congressional testimony last week that the Fed is prepared to lower rates again even amid signs of accelerating inflation.
Yesterday, the Fed and other regulators sent letters to institutions they supervise, encouraging the banks to report on their efforts to modify mortgages at risk of default.
``This will make it easier for regulators, the mortgage industry, lawmakers and homeowners to assess the effectiveness of these efforts,'' Fed Governor Randall Kroszner said in a statement yesterday.
Foreclosures Climb
The number of U.S. homeowners entering foreclosure rose 75 percent in 2007, with more than 1 percent in some stage of foreclosure during the year, according to RealtyTrac Inc. of Irvine, California. For the year, more than 2.2 million default notices, auction notices and bank repossessions were reported on about 1.3 million properties.
``Lenders tell us that they are reluctant to write down principal,'' Bernanke said. ``They say that if they were to write down the principal and house prices were to fall further, they could feel pressured to write down principal again.''
The Fed chairman countered that by reducing the amount of the loan, this ``may increase the expected payoff by reducing the risk of default and foreclosure.''
Bernanke spoke in a state that's among the worst affected by the housing collapse. Miami home prices have dropped 17.5 percent in the past year, the most of 20 large U.S. cities, according to the S&P/Case-Shiller index. Foreclosures in Florida jumped at more than double the nationwide pace, rising 158 percent in the past year, according to RealtyTrac.
Canada Cuts Rate a Half Point, Signals More Is Needed
(Bloomberg) -- The Bank of Canada cut its benchmark interest rate a half point, the first such move since 2001, and signaled it will have to act again to offset a slump in exports to the U.S.
Mark Carney, in his first decision as governor, cut the target rate for overnight loans between commercial banks to 3.5 percent, the lowest since March 2006. Thirteen of 26 economists surveyed by Bloomberg News predicted the move.
``Further monetary stimulus is likely to be required in the near term,'' the central bank said today in a statement from Ottawa. Signs of economic slowdown in Canada are ``materializing and, in some respects, intensifying.''
Tumbling exports to the U.S. will limit 2008 economic growth to a seven-year low of 1.8 percent, the central bank says, and have erased the country's broad trade surplus for the first time since 1999. The bigger rate cut today also helps catch up with moves this year by the U.S. Federal Reserve, and may slow the Canadian dollar's advance that has battered manufacturers.
``There are clear signs that the U.S. economy is likely to experience a deeper and more prolonged slowdown than had been projected,'' which will have ``significant spillover effects on the global economy,'' the Bank of Canada said today.
Canada's decision comes two days before meetings of the Bank of England, and the European Central Bank, where economists predict policy makers will keep rates unchanged.
Further Cuts
``With further rate cuts clearly needed to insure against the downside risks from a rapidly softening U.S. economy, and since monetary policy acts with a lag, we see no reason for the Bank of Canada to wait,'' Jacqui Douglas, economics strategist at TD Securities in Toronto, said before the decision.
The Fed is expected to cut borrowing costs again on March 18. Canada's benchmark is now half a point greater than that of the U.S., narrowing what was the biggest gap since June 2004. That premium has helped keep Canada's currency close to a record high.
The currency rose to a record 90.58 Canadian cents per U.S. dollar on Nov. 7 and has gained 26 percent in three years. Today it weakened 0.3 percent to 99.32 Canadian cents per U.S. dollar at 9:19 a.m. in Toronto.
Canada sends about three-quarters of its exports to the U.S., making the two countries the world's biggest trading partners, and the high dollar makes those goods less competitive. The U.S. economic woes have sapped demand for Canadian lumber and automobiles, two of the five biggest exports.
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