MELBOURNE (Reuters) -
Foster's Group Ltd (FGL.AX),
Australia's largest brewer, posted a 9.4 percent decline in
second-half profit on Tuesday, pressured by disappointing sales
from its Californian wine business.

Foster's cut its profit outlook in June as it began a
review of the underperforming wine business, the world's second
largest with brands such as Beringer, Rosemount and Penfolds.

The review could lead to the sale of some brands or
vineyards or a separate stock market listing, but analysts say
the entire business, worth up to A$5 billion, is unlikely to
find a single buyer because of an oversupply of wine assets on
the market.

Rival Constellation Brands (STZ.N) recently wrote down the
value of its Australian wine assets and put some brands up for
sale.

Foster's second-half net profit before one-offs including
writedowns on the wine business fell to A$319.7 million ($276
million) from A$353 million a year ago, based on Reuters
calculations from full-year figures provided by the company.

That was slightly above forecasts of A$310.9 million
excluding wine writedowns, according to a Reuters Estimates
survey of nine analysts.

Foster's said net sales of wine in the Americas fell 8.9
percent in constant currency terms, hit by a slowdown in
consumer spending and a change in distributor inventories.

It gave no update on progress of its wine review, saying it
will report by the end of 2008.

Full-year net profit before one-off items slipped to
A$713.2 million from A$716.1 million a year ago, above analyst
forecasts of A$704.4 million.

Beer sales in Australasia, where Foster's competes in a
duopoly with Lion Nathan Ltd (LNN.AX), have seen a continued
drift away from its core Victoria Bitter brand and a trend
towards premium brands such as Pure Blonde.

In the full year, Australasian sales of beer rose 5.8
percent.

Foster's is also conducting a search for a new chief
executive, after Trevor O'Hoy stepped down when the company
announced the wine review and writedowns of A$730 million in
June.

Foster's shares have fallen 18 percent this year, compared
with a 20 percent decline in the broader market (.AXJO).

($1=A$1.16)

(Reporting by Victoria Thieberger; Editing by Jonathan
Standing)

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NEW YORK (Reuters) -
U.S. stocks fell sharply on Monday as
credit concerns hounded financial stocks while global growth
worries hurt big technology and industrial companies.

The three major indexes fell about 2 percent each, wiping
out gains booked on Friday, though traders said thin,
end-of-summer conditions may have exaggerated the moves.

Stocks started the day under selling pressure, led by
financials, after regulators late on Friday closed Columbian
Bank and Trust, the ninth U.S. bank to fail amid a weakening
economy and falling home prices.

American International Group Inc (AIG.N), the world's
biggest insurer, was among the top drags on the Dow, with its
shares falling to a 13-year low. Credit Suisse cut the
company's share price target and forecast a huge loss for the
insurer.

Shares of Lehman Brothers (LEH.N) fell 6.3 percent after a
top South Korean regulator voiced concern about state-run Korea
Development Bank's interest in acquiring a global bank.

Lehman had surged on Friday after KDB said it was
considering the U.S investment bank among an array of
acquisition options.

"You've got more of the concerns we've seen about credit
and the financials. Lehman's down because of the speculation
that the bid is not happening, and there's a negative report on
AIG," said Bobby Harrington, head of block trading at UBS in
Stamford, Connecticut.

The Dow Jones industrial average (.DJI) was down 241.73
points, or 2.08 percent, at 11,386.33. The Standard & Poor's
500 Index (.SPX) was down 25.28 points, or 1.96 percent, at
1,266.92. The Nasdaq Composite Index (.IXIC) was down 49.12
points, or 2.03 percent, at 2,365.59.

Adding to the gloom, the International Monetary Fund
trimmed its global growth forecasts for 2008 and 2009 in a note
prepared for a meeting of the Group of 20 nations, a G20
finance official told Reuters.

And Britain reported that its economy ground to a halt in
the second quarter, the lowest reading since 1992.

AIG's shares fell 5.5 percent to $18.77, after falling as
low as $18.64. Late on Friday, Fitch Ratings said it may cut
AIG's credit ratings.

Lehman shares fell 6.3 percent to $13.50 after soaring on
Friday. An index of S&P financial companies (.GSPF) lost about
3.1 percent.

Industrial conglomerates were among the biggest decliners
on the S&P 500. Heavy equipment maker Caterpillar Inc (CAT.N),
which has a large overseas exposure, fell 2.4 percent to

$68.56.

Technology shares also fell amid concerns about the global
economy. Apple Inc (AAPL.O), whose shares fell 2.4 percent to
$172.55, was the top pull on the Nasdaq. Ninety-seven of the
Nasdaq 100's stocks were in the red on the day.

"The credit crisis is more than a year old and still there
are lots and lots of issues," said Charles Lieberman, chief
investment officer at Advisors Capital Management in Paramus,
New Jersey. "Investor psychology is certainly suffering from
credit crisis fatigue. People are disappointed that the
situation is not visibly improving."

Oil ended up 52 cents at $115.11 a barrel, adding to
concerns about consumer spending and business profits.

U.S. data showing the inventory of homes for sale rose to a
record 4.67 million homes in July while prices dipped also
bruised sentiment.

"Clearly there is no light at the end of the housing tunnel
yet," said Hugh Johnson, chief investment officer of Johnson
Illington Advisors in Albany, New York. "The supply of unsold
homes is still very high, suggesting there's going to be
downward pressure on prices well into 2009."

Among the few gainers on the day were home finance firms
Fannie Mae (FNM.N) and Freddie Mac (FRE.N), which reversed
large losses suffered last week on speculation a possible
government bailout could wipe out shareholders.

Freddie shares rose 17.1 percent to $3.29, helped by solid
demand for its $2 billion bill sale, while shares of Fannie,
the top U.S. home finance provider, rose 3.8 percent to $5.19.

Trading volume was light on the New York Stock Exchange,
with about 847 million shares changing hands, well below last
year's estimated daily average of roughly 1.90 billion, while
on Nasdaq, about 1.42 billion shares traded, also below last
year's daily average of 2.17 billion.

Declining stocks outnumbered advancing ones on the NYSE by
about 3.4 to 1 while on the Nasdaq, decliners beat advancers by
about 3.7 to 1.

(Additional reporting by Deepa Seetharaman and Kristina
Cooke; Editing by Leslie Adler)

Source

NEW YORK (Reuters) -
Two of the biggest U.S. bond investors
said they would get involved in a capital raising by Fannie Mae
(FNM.N) and Freddie Mac (FRE.N) as long as the U.S. Treasury
participates in the new deals.

But Bill Gross, chief investment officer at Pacific
Investment Management Co., and Dan Fuss, vice chairman of
Boston-based Loomis Sayles, disagree on what shape any deal
with Treasury should take, according to separate interviews on
Friday.

Gross would be drawn to a straight preferred stock offering
similar to securities sold by Fannie Mae and Freddie Mac in
raising capital this year and last, while Fuss wants an
offering of convertible debentures.

"We would buy preferred stock subject to significant
Treasury participation and an attractive yield," Gross told
Reuters by email.

Fuss, who helps oversee more than $100 billion in
fixed-income securities at Loomis, has another idea.

Fuss told Reuters the troubled government-sponsored
enterprises should raise $15 billion each in the form of
30-year convertible preferreds to build capital reserves.

The convertibles, which have characteristics of both a bond
and a stock, would include a 5 percent coupon and a pre-set
conversion price of around $6, Fuss said, given that Fannie Mae
shares are now trading at $5.44 and Freddie Mac at $3.37.

"It is a long-term call on the common stock," Fuss said.
"Without such a plan like this, shareholders might get zero.
You want zero or ongoing companies?" said Fuss, who owns Fannie
Mae and Freddie Mac agency debt and preferred securities.

The new 30-year convertible preferreds would be
non-callable for life by Fannie Mae and Freddie Mac, while
holders can convert the preferreds into common stock after
holding them for six years, Fuss added. "Common holders will
face dilution but it would be down the road with this plan,"
Fuss said.

Last week, executives at Freddie Mac were gauging investor
interest from private-equity firms and other investors about
the possibility of buying new common or preferred shares in the
company, the Wall Street Journal reported.

But the Journal article said many investors fear any money
they invest now in Freddie Mac or Fannie Mae will be lost later
if the Treasury bails out the companies through an equity
purchase.

The Treasury's investment in new convertible preferreds
would add confidence that the securities would hold their
value, Fuss said. "These new convertibles look outstandingly
cheap," he added.

But Gross said a convertible preferred or convertible bond
offering has no interest to him.

"The equity is virtually worthless and will continue to
be," Gross said. "If the Treasury buys preferred stock, though,
I would assume that would validate that class of equity during
any liquidation/reprivitization."

Fannie Mae so far has raised more than $14 billion in
capital since November to offset writedowns on mortgages it
owns or guarantees. Freddie Mac has raised $6 billion since
November.

Gross told Reuters last week that he doesn't believe a bail
out by Treasury is imminent. "The election season and the
relatively recent passage of the (Treasury) authorization argue
for delay as long as possible," he said.

That delay, however, will be predicated on the notion that
Fannie Mae and Freddie Mac can continue to sell discount notes
and term debt at "relatively stable spreads," said Gross, who
manages the $130 billion Pimco Total Return fund.

Monday, Freddie Mac easily sold $2 billion of debt,
reassuring investors that it and Fannie Mae, who sold $2
billion of debt last week, can fund operations without a
government takeover.

(Editing by Neil Stempleman)

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