Business News: Oprah Winfrey's Cable Gamble

Business News: Oprah Winfrey's Cable Gamble

Oprah Winfrey's Cable Gamble

Posted: 09 Dec 2010 02:00 PM PST

A Reckoning Ahead for the U.S. Mail

Posted: 09 Dec 2010 02:00 PM PST

Trade Rebound Launches Bigger Boats

Posted: 09 Dec 2010 02:00 PM PST

Dollar Weakens as Fed Meets; Cotton Advances, Stocks Fluctuate

Posted: 14 Dec 2010 04:49 AM PST

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By Andrew Rummer

Dec. 14 (Bloomberg) -- The dollar depreciated to a three- week low against the euro on speculation the Federal Reserve may buy more bonds to bolster the economy, while stocks and U.S. futures were little changed. Cotton gained as Spanish and Belgian bonds dropped.

The dollar weakened to $1.3460 per euro at 12:18 p.m. in London, from $1.3391 yesterday. Taiwan’s dollar touched a 13- year high versus the U.S. currency. The extra yield investors demand to hold Spanish 10-year bonds instead of benchmark German debt widened to a two-week high after yields increased at a bill auction. Cotton jumped 3.4 percent. Futures on the Standard & Poor’s 500 Index fluctuated between gains and losses of less than 0.2 percent and the Stoxx Europe 600 Index fell 0.2 percent following a six-day gain.

Fed policy makers meeting today may signal a willingness to boost debt purchases beyond the $600 billion already announced to spur job growth. Federal Reserve Chairman Ben S. Bernanke told CBS Corp.’s “60 Minutes” on Dec. 5 that the recovery may not be self-sustaining and more bond buying is “certainly possible.” The European Central Bank increased its bond purchases to 2.67 billion euros ($3.6 billion) last week, the highest in 23 weeks.

The dollar is down because of “the expectation for the Fed to reiterate its enthusiasm for future quantitative easing measures,” said Neil Jones, head of European hedge fund sales at Mizuho Corporate Bank Ltd. “The surprise to the forex market would be if the Fed goes quiet on further QE measures ahead.”

Taiwan Dollar

The dollar depreciated as much as 0.8 percent against the euro, touching the weakest level since Nov. 23. It slipped 0.5 percent to 83.02 yen. Taiwan’s dollar strengthened as much as 2.3 percent against the U.S. currency, reaching its highest level since October 1997. The yield on 10-year U.S. Treasuries climbed two basis points to 3.29 percent.

The Fed has kept its target rate for overnight loans between banks at a record-low range of zero to 0.25 percent since December 2008. Moody’s Investors Service Inc. yesterday said President Barack Obama’s agreement to extend tax cuts raises the chance of a negative outlook for the U.S.’s Aaa credit rating.

“The announcement from Moody’s is certainly taking some of the confidence out of the recent dollar rally,” said Lee Hardman, a currency strategist at Bank of Tokyo-Mitsubihsi UFJ Ltd. in London. “It heightened concern of any potential negative spillover impact on the dollar from the unsustainably elevated fiscal position.”

Spanish Bonds

The yield on the 10-year Spanish bond rose eight basis points to 5.57 percent after the nation raised less than its 3 billion-euro maximum target at a sale of 12-month and 18-month bills, and yields increased. The difference in yield, or spread, to benchmark German bunds increased nine basis points to 257 basis points, the most since Dec. 1.

Belgian government bonds fell, pushing the yield on the 10- year securities six basis points higher to 4.05 percent, after S&P cut the outlook on the nation’s AA+ credit rating to negative from stable because the country’s political stalemate makes it vulnerable to rising borrowing costs. Italian 10-year yields climbed two basis points to 4.61 percent as Prime Minister Silvio Berlusconi survived a vote of no-confidence in his government, winning votes in the Senate and lower house.

Swaps Decline

The Markit iTraxx Financial Index of credit-default swaps insuring the junior debt of 25 banks and insurers fell 8.5 basis points to 317.5, according to JPMorgan Chase & Co. The gauge climbed this week to the highest level since April 2009 on speculation bondholders will have to share in the cost of bank bailouts.

Cotton increased 5 cents, the maximum allowed by ICE Futures U.S. in New York, to $1.4597 a pound while copper fell 0.2 percent to $9,208.50 a metric ton in London after earlier reaching a record on speculation demand will increase in China, the largest buyer of both commodities. Orange-juice futures yesterday jumped to a three-year high on forecasts for cold in Florida, the world’s largest citrus producer after Brazil. Trading opens at 1 p.m. London time.

Futures on the S&P 500 expiring in March rose 0.1 percent before a report that may show U.S. retail sales advanced 0.6 percent in November after climbing 1.2 percent in October, according to the median estimate of economists in a Bloomberg survey. HCP Inc. may be active after the company, the biggest U.S. health-care real estate investment trust by market value, agreed to pay $6.1 billion for 338 nursing homes from HCR ManorCare Inc.

European Stocks

Three stocks fell for every two that gained in Europe’s Stoxx 600 even after the ZEW Center for European Economic Research in Mannheim said its index of German investor and analyst expectations increased to 4.3 in December from 1.8 last month, exceeding economists’ forecasts. Outokumpu Oyj sank 6.1 percent after the Finnish stainless-steel maker said fourth- quarter operating profit will be “clearly negative.”

The MSCI Emerging Markets Index rose for a second day, climbing 0.7 percent. Shipbuilders led the advance after South Korea’s Hyundai Heavy Industries Co., the world’s largest producer, and STX Offshore & Shipbuilding Co. announced orders worth about $1.6 billion.

--With assistance from Paul Dobson, Michael Patterson, Claudia Carpenter, Anchalee Worrachate, and Abigail Moses in London and Shiyin Chen in Singapore. Editors: Guy Collins, Mark Gilbert

To contact the reporter on this story: Andrew Rummer in London at arummer@bloombert.met

To contact the editor responsible for this story: David Merritt at dmerritt1@bloomberg.net.

Berlusconi Wins Senate Vote, Setting Up Lower House Showdown

Posted: 14 Dec 2010 04:27 AM PST

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By Lorenzo Totaro

Dec. 14 (Bloomberg) -- Italian Prime Minister Silvio Berlusconi won a confidence vote in the Senate, setting up a showdown over his political fate in the lower house as the threat of violent protests forced authorities to block access to central Rome.

Berlusconi triumphed in the upper house, where he has a majority, by 162 to 135, Senate Speaker Renato Schifani said. The survival of the government will be decided by the lower house, where final results may come by 2 p.m.

The 74-year-old premier may survive a loss in the lower house and emerge as prime minister of a reconstituted coalition. The opposition is too splintered and there are no possible challengers among the 74-year-old media tycoon’s allies, according to Richard Bellamy, a political-science professor at University College London.

“He survived many times and I doubt that, even if he loses in the lower house, that will be his end,” Bellamy said in a telephone interview. “The challenge is whether there is a credible coalition opposition, as Berlusconi has always benefited from the inability of the center left to win.”

The fall of his government wouldn’t necessarily lead to elections. President Giorgio Napolitano would first consult the parties to see if another government may be formed with or without Berlusconi as its head, before calling for a vote. Even with his popularity at record low levels, polls indicate that Berlusconi’s coalition might win re-election.

Vote estimates indicate the thinnest possible margins. Newspaper La Repubblica estimated the Chamber of Deputies, the 630-seat lower house, bringing down Berlusconi by 313 to 312. Corriere della Sera reckons the incumbent winning by 313 to 312.

Loss Predicted

Berlusconi will probably lose the ballot by two votes, prompting as many as 60 of his lawmakers to defect and try to form a new government without him, predicted Luca Barbareschi, a former ally of the prime minister.

“There are those 50, 60 lawmakers from Berlusconi’s party who, once Berlusconi has fallen, will betray him in a second,” Barbareschi, who quit the premier’s People of Liberty party in July to join with rebel lawmakers, said in an interview today.

Students threw bottles and smoke bombs at police outside of Berlusconi’s Rome residence and some manage to get through one of the blockades protecting Palazzo Grazioli. At least one student was injured, news agency Ansa reported.

While a defeat today may weaken Berlusconi by forcing him to bring more parties into his Cabinet, extending his leadership avoids a vacuum that would rattle markets. Berlusconi said yesterday that Italy, the euro region’s most indebted country in nominal terms, needed “continuity” to shield it from financial-market turmoil amid the European debt crisis.

‘Political Risk’

“There isn’t the perception that political risk in the short or medium term is going to harm the public accounts,” Maria Cannata, the Finance Ministry’s director of public debt, said in a Dec. 9 interview. “Clearly, if there is a longer crisis, like we have seen in Belgium, something more than six months or a year, that could impede the government from taking any needed initiatives to support the economy.”

The yield premium investors demand to hold Italian 10-year bonds over similar-maturing German bunds widened 4 basis points to 165 basis points at 1:25 p.m. It more than doubled this year and surged to a euro-era record of 212 basis points on Nov. 30.

Berlusconi’s grip on power has been slipping since July when former ally Gianfranco Fini, the speaker of the Chamber of Deputies, broke ranks with the premier and later formed the Future and Liberty Party.

Appeal to ‘Moderates’

Premier for almost eight of the past 10 years, the billionaire yesterday sought to woo “all the moderates” as debate on the confidence motion began. He said he would yield to calls by Fini’s party and the Union for Center, led by another former ally, to “enlarge the government majority.”

Fini, who criticized Berlusconi for stifling debate in the ruling party, further distanced himself from the premier amid a series of sex-related scandals. In a Dec. 12 interview with state-television Rai, Fini repeated his call for Berlusconi to step down, accusing him of clinging to power to retain immunity from prosecution in pending corruption trials. Fini also said he would consider supporting a new government led by Finance Minister Giulio Tremonti.

“Tremonti is no fool, he won’t accept governing in such a situation,” Berlusconi’s main partner, Northern League leader Umberto Bossi, told reporters in Rome yesterday. “Only those who are as crazy as Berlusconi could do it.”

Meantime, Bossi refused the premier’s proposal to enlarge the government majority.

“With his money, media power, and personal influence, Berlusconi has been able to hold his coalition together,” said Grant Amyot, professor of politics at Queen’s University, Canada and co-author in 2006 of “The End of the Berlusconi Era?”

“As Fini’s split has revealed, that era is already over, but it doesn’t seem that there is anyone who can take over his role on the right,” Amyot said.

--With assistance from Flavia Rotondi and Elliot Gotkine in Rome. Editors: James Hertling, Andrew Atkinson

To contact the reporter on this story: Lorenzo Totaro in Rome at ltotaro@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

Trichet Calls for ‘Maximum’ Flexibility of Aid Fund

Posted: 14 Dec 2010 04:24 AM PST

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By Jana Randow and Christian Vits

(Updates with economist quote in fourth paragraph.)

Dec. 14 (Bloomberg) -- European Central Bank President Jean-Claude Trichet said European governments should consider extending and broadening the region’s bailout fund, stepping up pressure on leaders to fight the fiscal crisis.

“We’re calling for maximum flexibility and maximum capacity, quantitatively and qualitatively,” Trichet told reporters at an event in Frankfurt late yesterday, responding to a question whether the European Financial Stability Facility should be able to buy government bonds.

The ECB is pushing governments to shoulder more of the burden in tackling the fiscal crisis after Ireland was forced last month to seek a bailout, sparking concern that contagion will spread through the euro region. The ECB last week bought the most sovereign debt since June and Spanish bonds today fell for a seventh day as it paid more in a debt sale.

“The Governing Council is clearly quite reluctant to step up its own bond purchases so therefore, they’re implicitly calling on governments to address tensions in bond markets,” said Julian Callow, chief European economist at Barclays Capital in London. “At the end of the day, the ECB is concerned about its long-term credibility.”

Capital Base

Council member Ewald Nowotny said on Dec. 10 that European central banks have been forced to take on “a whole range of extra risk” and may need more capital. Trichet said he has “no particular comment” on the topic. Vice President Vitor Constancio said on Dec. 10 that an increase of the rescue fund and more flexibility would be “helpful.”

EU leaders meeting in Brussels for a summit in two days are divided over the next steps in containing the debt crisis. Germany and France have rejected increasing the bailout fund and dismissed calls by Italy, Belgium and Luxembourg to issue joint euro-region government bonds. Trichet yesterday signaled support for the German and French position.

“In the previous period, the ECB had said that it was not necessarily appropriate to have such type of bonds,” Trichet said. “We were very clear on that. At this stage, there is no new position on the Governing Council of the ECB.”

Governments across the region have embarked on programs to bring deficits back in line with the European Union’s budget rules. The Irish government last week pledged spending cuts worth 6 billion euros in 2011 ranging from child benefits to government salaries to push down the country’s budget shortfall.

Soothe Tensions

“I am sure that the program is suited to bring about a sustainable stabilization of the Irish economy and soothe tensions in financial markets that are associated with the Irish fiscal problems and the reorganization of its banking sector,” Trichet said. “The program will also contribute to restoring confidence and safeguarding financial stability in the euro area as a whole.”

Several euro-area governments are facing “difficult” market conditions, Standard & Poor’s Ratings Services said today. Belgium had the outlook on its credit rating cut to “negative” from “stable” by S&P and Spanish bonds fell as the country paid higher costs to sell more than 2.5 billion euros of securities.

The extra yield that investors demand to hold Spanish 10- year government bonds rose nine basis points to 257 basis points today. It touched a euro-era closing high of 283 points on Nov. 30.

Trichet also said that governments need to do more to toughen fiscal rules and they stopped short of more automatic penalties that the ECB had demanded.

Quantum Leap

“These proposals in our view do not yet represent the quantum leap in economic governance that is needed to be fully commensurate with the monetary union we have created,” Trichet said. Sanctions should be applied in a “quasi-automatic” way and include fines and “possible limitations of voting rights for member states in persistence violation,” he said.

The Frankfurt-based central bank on Dec. 2 delayed its withdrawal of unconventional measures, extending unlimited liquidity supply for the financial sector into the second quarter of 2011. The ECB that day also kept its benchmark interest rate at a record low of 1 percent.

“We consider the two tools we’re utilizing, the standard measures, the interest rates, and the non-standard measures, as being relatively independent,” Trichet said. “We could go up and down with one tool and let the other unchanged and do the same with the other tool.”

Addicted Banks

The ECB is seeking ways to reduce banks’ dependence on emergency-liquidity measures. A “small number of institutions” is “excessively reliant on central bank liquidity,” it said in a report published last week.

“We look at all elements that would permit us to be back at a normal situation, which calls for our own non-standard measures to be progressively phased out” and “for banks to have a normal attitude” towards ECB liquidity, Trichet said. “We try to help the overall move in this direction. Of course we have to take into account reality.”

Trichet said the ECB is “extraordinarily attached” to keeping its monetary policy stance “unchanged” at the moment.

--With assistance from Angela Cullen in Frankfurt. Editor: Simone Meier, Craig Stirling

To contact the reporter on this story: Jana Randow in Frankfurt at jrandow@bloomberg.net.

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

Coal Imports May Increase 78% to China, India: Energy Markets

Posted: 14 Dec 2010 04:06 AM PST

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By Dinakar Sethuraman and Ben Sharples

Dec. 14 (Bloomberg) -- China and India may increase imports of coal by 78 percent to 337 million metric tons next year, further driving up prices from the highest in two years and diverting supplies from Europe to Asia.

China may buy 233 million tons more of the fuel than it exports next year, up from net imports of 143 million in 2010, Citigroup Inc. said in a Nov. 29 report. India faces a shortfall of 104 million tons in the 12 months ending March 2012, mjunction Services Ltd., a Kolkata-based commodity trader, said in a note on Dec. 6, citing Coal Minister Sriprakash Jaiswal.

Asia’s two fastest-growing major economies are burning more of the fuel as economic expansion raises demand for electricity. The International Monetary Fund forecasts that China’s gross domestic product will next year expand 9.6 percent and India 8.4 percent. China added about 51 gigawatts of coal-fired capacity last year, more than half the total capacity of the U.K., according to data from Daiwa Capital Markets and the U.S. Energy Department.

“All the indications are for increased demand in 2011,” Andrew Harrington, an analyst at Patersons Securities Ltd. in Sydney, said in a Dec. 9 interview. “China has become much more important especially because of the expectations that they will be unable to meet their own needs from domestic supply.”

China’s appetite for the commodity sent benchmark domestic prices at the port of Qinhuangdao to a two-year high of $129 a ton for the week ended Nov. 26, according to data from IHS McCloskey, a Petersfield, U.K.-based researcher.

Power-station fuel at the Australian port of Newcastle, the world’s biggest coal-export harbor, and South Africa’s Richards Bay climbed to the highest since October 2008, according to data compiled by IHS McCloskey on Bloomberg.

Supply ‘Constrained’

China will need 2 billion tons of coal over the next 10 years to fuel the country’s industrial development, the China Securities Journal reported today, citing Dai Yande, deputy head of China’s Energy Research Institute.

“The thermal-coal market will remain tight as strong demand from emerging markets, particularly China and India, drives record levels of imports,” said Daniel Brebner and Xiao Fu, London-based analysts at Deutsche Bank AG. “Supply is anticipated to be constrained in key producing regions such as China, Indonesia and Australia.”

Prices at Australia’s Newcastle port, a benchmark for Asia, rose to $114.50 a ton in the week ended Dec. 10, according to IHS McCloskey.

Export prices at Richards Bay Coal Terminal gained $2.89 to an average $110 a ton in the week to Dec. 10, IHS McCloskey data showed. Benchmark European coal derivatives closed at $113 a ton yesterday, the highest closing price this year. Coal for delivery to Amsterdam, Rotterdam or Antwerp with settlement next year fell $1.50 to $111.50 a ton as of 11:52 a.m. London time.

Indonesia Prices

The Indonesian government raised the reference price for sales in December by 8.3 percent from a month earlier, the steepest gain since it was introduced in February, the energy ministry said Dec. 8. The price benchmark for the fuel with a gross energy value of 6,322 kilocalories a kilogram increased to $103.41 a ton this month, according to the Directorate General of Coal and Minerals.

Coal use in Asia climbed 6.4 percent last year, more than a 0.8 percent increase in oil consumption, according to BP Plc.

Prices have also surged because of supply disruptions from heavy rain and flooding at mines in Indonesia, Colombia and Australia, while South Africa’s export growth has been crimped by a lack of rail capacity.

Xstrata Plc, the world’s largest exporter of thermal coal, has declared force majeure on some Australian shipments on Dec. 7 because of flooding of mines. PT Bumi Resources, Indonesia’s largest coal producer, revised down its coal output target by 6 percent this year as heavy rains hampered mining, Director Dileep Srivastava said Nov. 11.

South Africa’s Share

Such disruptions have prompted South Africa and Colombia to divert supplies from traditional markets in Europe to higher- paying Asia.

South Africa accounted for about 30 percent of India’s thermal coal imports this year, according to ministry data. Shipments in the first nine months of this year increased 16 percent to 15.2 million tons, while China’s purchases surged to 5.1 million tons until October compared with 1.52 million tons it imported for the entire 2009, according to mjunction Services, which is backed by Tata Steel Ltd. and Steel Authority of India Ltd., and Chinese customs data.

“Robust Chinese coal demand and import growth will continue throughout 2011,” Jeffrey Landsberg, president of New York-based Commodore Research & Consultancy, said Dec. 10 in an e-mailed response to questions. “China still has many decades left to develop. Only a fraction of the population, and really just the eastern part of the nation, has experienced profound growth. The rest of the country needs to develop as well.”

--With reporting by Baizhen Chua in Beijing. Editors: Jane Lee, Clyde Russell.

To contact the reporters on this story: Dinakar Sethuraman in Singapore at dinakar@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Clyde Russell at crussell7@bloomberg.net

ECB Said to Consider Asking for Capital Increase

Posted: 14 Dec 2010 04:03 AM PST

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By Gabi Thesing

(Adds details on capital keys in sixth paragraph.)

Dec. 14 (Bloomberg) -- The European Central Bank may ask members for a capital increase to protect itself from any losses stemming from its government bond purchases, said a euro-area central bank official with knowledge of the talks.

Any new money would come from the 16 national central banks which use the euro and contribute most of the ECB’s 5.8 billion euro ($7.8 billion) capital base, the ECB’s statutes show. The matter may be discussed at the next Governing Council meeting on Dec. 16 and no decision has yet been made, said the official, who spoke on condition of anonymity. Germany would view any ECB request positively, a government official said.

The debate suggests the ECB is concerned its program to buy the bonds of strained governments such as Portugal and Ireland, which now totals 72 billion euros, may end up saddling its balance sheet with losses. Bundesbank President Axel Weber opposed the purchases when they were introduced in May and the risk is that seeking support could raise new questions about the ECB’s independence from politics.

“The link to this potential hike in ECB capital and what’s going on in the markets is certainly the fact that the ECB is buying government bonds which are not AAA-rated and are more risky than bunds,” said Marco Valli, chief euro-region economist for UniCredit SpA in Milan.

An ECB spokeswoman declined to comment. The ECB’s potential capital request was reported by Reuters late yesterday.

Capital Keys

Any increase would be supplied by the national central banks according to their capital subscription keys, according to the ECB website. The formula is calculated using the respective country’s share in the total population and gross domestic product of the European Union.

Germany’s Bundesbank is the largest contributor with 18.9 percent, followed by the French and Italian central banks, with 14.2 percent and 12.5 percent, respectively. The Bank of England and other non-euro members contribute 7 percent of the ECB’s subscribed capital.

According to the ECB’s statutes “the Governing Council, acting by the qualified majority” shall “determine the extent to which and the form in which the capital shall be paid up.”

ECB officials have been putting pressure on the governments to do more to end the region’s sovereign-debt crisis on concern the central bank is shouldering too much of the burden. President Jean-Claude Trichet said late yesterday leaders should consider extending and broadening the region’s bailout fund. Standard & Poor’s today cut the outlook on Belgium’s credit rating to negative from stable.

Austrian central bank Governor Ewald Nowotny raised the issue of capital increases for national central banks last week.

“We are clearly seeing that risks are increasing in the system for European central banks because we are having to take on a whole range of extra risks,” Nowotny said in Vienna on Dec. 10. “So in the whole European system we’ll have to get a better capital base for central banks.”

--With assistance from Tony Czuczka in Berlin, Boris Groendahl in Vienna and Simon Kennedy in London. Editors: John Fraher, Eddie Buckle

To contact the reporter on this story: John Fraher in London at jfraher@bloomberg.net

To contact the editor responsible for this story: John Fraher at jfraher@bloomberg.net

Dollar Drops to Three-Week Low Versus Euro Before Fed Meets

Posted: 14 Dec 2010 04:02 AM PST

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By Lucy Meakin and Yoshiaki Nohara

Dec. 14 (Bloomberg) -- The dollar fell to a three-week low against the euro as Federal Reserve policy makers prepare to discuss interest rates and bond purchases.

The greenback dropped against all of its major counterparts on speculation the Fed may signal today it’s open to increasing debt purchases beyond the $600 billion already announced. New Zealand’s dollar reached a 10-year low against Australia’s currency after a report showed retail sales in the smaller nation slid by the most since 1997. Taiwan’s dollar climbed to a 13-year high.

“Expectations aren’t for anything particularly dramatic to come out of the Fed meeting today, but you can’t entirely discount that,” said Simon Derrick, chief currency strategist at Bank of New York Mellon Corp. in London. “As people are looking at trends for 2011 they’re realizing that although there may be plenty of slips on the way to resolving the euro crisis, it will be resolved. Therefore if you’re looking at where the prime issue will be in 2011, it probably will be the U.S.”

The U.S. currency dropped 0.6 percent to $1.3470 per euro as of 11:38 a.m. in London, after sliding 0.8 percent to 1.3499, the weakest since Nov. 23. The dollar declined 0.6 percent to fetch 82.92 yen from 83.39 yen. Japan’s currency was little changed at 111.67 per euro. It also touched the weakest level versus the euro since Nov. 23 today.

The Dollar Index, which tracks the greenback against the currencies of six major U.S. trading partners, extended yesterday’s declines by 0.4 percent. U.S. 10-year Treasury yields rose two basis point to 3.29 percent.

Fed’s QE

The Fed today “may emphasize it will continue the current quantitative easing, citing the unemployment rate and sluggish inflation,” strategists at Barclays Bank Plc, led by Tokyo- based chief currency strategist Masafumi Yamamoto, wrote in a note. “Such a statement is likely to weigh on U.S. mid-, long- term yields and the dollar, especially against the yen.”

Further government bond purchases by the Fed are “certainly possible,” Chairman Ben S. Bernanke said in an interview broadcast on CBS Corp.’s “60 Minutes” on Dec. 5, referring to the bank’s so-called quantitative easing program.

Moody’s Investors Service Inc. yesterday said a U.S. tax- cut package is likely to boost economic growth in the next two years but will “adversely affect” the budget deficit.

Tax Package

Obama’s deal, announced Dec. 6, includes a two-year extension of tax rates in return for extending long-term jobless benefits for 13 months and cutting the payroll tax for $120 billion for a year.

“Unless there are offsetting measures, the package will be credit-negative for the U.S. and increase the likelihood of a negative outlook on the U.S. government’s Aaa rating during the next two years,” Moody’s Senior Credit Officer Steven Hess wrote in a note yesterday.

The euro gained as German investor confidence rose more than forecast for a second month, indicating the recovery in Europe’s largest economy may be broadening.

A ZEW Center for European Economic Research index of German investor and analyst expectations increased to 4.3 this month from 1.8 in November. ZEW’s gauge measuring sentiment in the current situation rose to 82.6 from 81.5, falling short of economist expectations.

‘Flash in the Pan’

The euro’s advance versus the dollar may be a “flash in the pan” because European officials risk failing to fix the region’s debt crisis and the Federal Reserve is unlikely to announce more asset purchases, Commerzbank AG analysts said.

“Those who had banked on additional quantitative-easing measures might be disappointed” at today’s meeting of U.S. policy makers, a team of analysts led by Ulrich Leuchtmann in Frankfurt wrote in a note to clients today.

The dollar has fallen 2.6 percent this year in a measure of the currencies of 10 developed nations, according to Bloomberg Correlation-Weighted Currency Indexes. The euro has dropped 9 percent. The yen is up 10.8 percent.

New Zealand’s retail sales declined 2.5 percent in October, Statistics New Zealand said in Wellington. The drop was the biggest since May 1997.

“The kiwi fell quite sharply in response to a big fall in retail sales,” said John Kyriakopoulos, head of currency strategy in Sydney at National Australia Bank Ltd., the nation’s largest lender. “What’s been happening is the market has been pushing out the timing for when the Reserve Bank of New Zealand will raise rates again.”

New Zealand’s dollar touched NZ$1.3288 per Aussie dollar today, the weakest since November 2000, before trading at NZ$1.3229.

Taiwan’s dollar gained 0.5 percent to NT$29.900, the strongest level since October 1997. Global funds bought $1.3 billion more local shares than they sold this month through yesterday, boosting net purchases for the year to $7.8 billion.

“Strong foreign inflows and solid economic growth are drivers of the Taiwan dollar’s gain,” said Henry Lin, a Taipei- based foreign-exchange trader at Taiwan Shin Kong Commercial Bank. “The central bank won’t allow such a big rise in the currency. It’ll come in to smooth the moves very soon.”

--With assistance from Paul Dobson in London. Editors: Andrew Reierson, Keith Campbell

To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net.

To contact the editor responsible for this story: Daniel Tilles at dtilles@bloomberg.net.

Hyundai Heavy Jumps After Hapag-Lloyd Boosts Order

Posted: 14 Dec 2010 03:50 AM PST

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By Sookyung Seo

(Updates with closing share price in fifth paragraph.)

Dec. 14 (Bloomberg) -- Hyundai Heavy Industries Co., the world’s largest shipbuilder, jumped the most in more than 11 months in Seoul trading after Hapag-Lloyd AG increased a container-ship order by about $754 million.

The shipping line expanded the capacity of six on-order ships to 13,200 boxes each and ordered four additional vessels of the same size, it said in a statement on its website yesterday. The move boosted the order value to $1.45 billion from 793.9 billion won ($696 million), Hyundai Heavy said today.

STX Offshore & Shipbuilding Co. also rose after the company and an affiliate won a $912 million ship order from another STX Group company. Demand for new vessels has rebounded this year as trade recovers from the global recession and as shipping lines prepare for the completion of work to widen the Panama Canal.

“The order news helped lift shares of shipbuilders today,” said Song Jae Hak, a Seoul-based analyst at Woori Investment & Securities Co. “The recent rise in vessel orders and prices, as well as increasing orders in non-traditional shipyard areas like power plants, have brightened the outlook for shipbuilders next year.”

Hyundai Heavy, based in Ulsan, South Korea, rose 8.9 percent, the most since Jan. 7, to close at 417,000 won. That’s the highest closing since January 2008. The benchmark Kospi index rose 0.6 percent.

STX Offshore jumped 8.3 percent, the most in about a month, to 23,550 won. The company and its Dalian, China shipyard will build 20 vessels to carry wood pulp for STX Pan Ocean Co., the shipbuilder said in an e-mailed statement today.

Daewoo Shipbuilding & Marine Engineering Co., the world’s second-biggest shipyard, surged 6.2 percent to close at 32,650 won, the highest since September 2008.

Hapag-Lloyd will use its 10 vessels, due for delivery from mid-2012 to the end of 2013, on Far East routes, it said in its statement. Work to widen the Panama Canal, which will allow larger vessels to use the waterway, is due to be completed in 2014.

--With assistance from Niklas Magnusson in Stockholm. Editors: Neil Denslow, Dave McCombs

To contact the reporter on this story: Sookyung Seo in Seoul at sseo10@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

Home Market's Misery May Be 'Buy' Sign

Posted: 12 Dec 2010 06:11 PM PST

Facebook Builds a Washington Lobbying Team

Posted: 09 Dec 2010 02:00 PM PST

Seeking the Number That Explains It All

Posted: 09 Dec 2010 02:00 PM PST

The Hidden Hazards of Private Placements

Posted: 09 Dec 2010 02:00 PM PST

Apple's Quiet Pitch to Businesses

Posted: 09 Dec 2010 02:00 PM PST