Archive for September, 2009

U.S. home prices up in July for third straight month (Reuters)

Tuesday, September 29th, 2009 | Finance News

NEW YORK (Reuters) –
U.S. home prices in July rose for the third straight month, surpassing forecasts and suggesting that the housing market is stabilizing after a three-year plunge.

The S&P/Case-Shiller composite index of house prices in 20 metropolitan areas rose 1.6 percent in July from June, more than triple the estimate of a 0.5 percent rise found in a Reuters poll. The index rose 1.4 percent the month before, S&P said on Tuesday.

The 10-city index gained 1.7 percent in July after a 1.4 percent rise the previous month.

The data relieved investor concerns about the impact of a weak housing market on the economy and U.S. stocks opened higher. The U.S. dollar strengthened against the yen, while U.S. Treasury bonds added to losses after the stronger-than expected reading.

"The upshot is that the housing market is starting to clear ever so slightly," said Pierre Ellis, senior economist at Decision Economics.

A record stockpile of foreclosed homes have been exerting pressure on home prices overall, but recent home sales reports show an easing up of the massive unsold inventory.

"That sustains hope that housing will get to a stable place which is good news for consumer balance sheets and, ultimately, for the economy," Ellis said.

A first-time buyer credit of $8,000, which ends on November 30, has jump-started housing activity this year but there are concerns about the impact when this incentive disappears.

"These figures continue to support an indication of stabilization in national real estate values, but we do need to be cautious in coming months to assess whether the housing market will weather the expiration of the Federal First-Time Buyer's Tax Credit in November, anticipated higher unemployment rates and a possible increase in foreclosures," David Blitzer, chairman of the index committee at S&P, said in a statement.

The monthly price increases helped the annual rates, with the yearly pace of declines in home prices slowing to a 12.8 percent drop in the 10-city index and 13.3 percent downturn in the 20-city index.

All 20 metro areas showed an improvement in the annual rate of decline in July compared with June. On a monthly basis, only Seattle and Las Vegas showed declines.

Average home prices across the United States are now at levels seen in the autumn of 2003.

Prices have plummeted 33.5 percent for the 10-city index and 32.6 percent for the 20-city index from the peak in the second quarter of 2006, S&P said.

Despite the overall improvement, annual rates for all metro areas and the two composites remain in negative territory, with 14 of the 20 metro areas and both composites in double digits, S&P said.

(Additional reporting by Ellen Freilich)


European stocks drop on profit-taking (AFP)

Tuesday, September 29th, 2009 | Finance News

Europe's main stock markets retreated on Tuesday despite strong gains in Tokyo and overnight on Wall Street.

The FTSE 100 index fell 0.41 percent to 5,144.60 points in midday London trading.

Frankfurt's DAX 30 dropped 0.59 percent to 5,702.71 points and in Paris the CAC 40 slid 0.48 percent to 3,806.61 nearing the half-way mark.

The DJ Euro Stoxx 50 index of top eurozone shares shed 0.44 percent to 2,886.27 points.

"European markets traded negative as investors paused for breath after posting healthy gains yesterday," said City Index market strategist Joshua Raymond.

"There is certainly an element of apprehension as to whether we can push on from these levels and whether yesterday's large gains were justified."

Europe's main stock markets had rallied strongly on Monday, boosted by an election win for a business-friendly coalition in Germany and corporate takeovers in the United States, dealers said.

Xerox Corp. will acquire Affiliated Computer Services for about 6.4 billion dollars, while Abbott Laboratories said it would buy the pharmaceutical unit of Belgium-based Solvay for about 6.6 billion dollars.

The news helped Wall Street shares to roar back after a poor showing last week, as the Dow Jones Industrial Average climbed 1.28 percent to end at 9,789.36 points.

Tokyo's benchmark Nikkei-225 index closed up 0.91 percent to 10,100.20 points on Tuesday, helped by the overnight US rally and easing concerns over the recent strength of the yen, which hurts exporters, traders said.

In Europe on Tuesday, French banking giant BNP Paribas said it would raise 4.3 billion euros (6.3 billion dollars) of new capital to repay state rescue funding starting in October, several months ahead of schedule.

BNP Paribas, the first French bank to re-pay the state, said it no longer needed the support because the landscape for banking and profits had improved. It said that the government would earn a significant return on the deal.

BNP's share price climbed 2.49 percent to 57.98 euros following the announcement.

In London, Compass Group was a rare strong riser amid the profit-taking, winning 2.64 percent to 369 pence. The world's biggest caterer on Tuesday said that it had performed well in the fourth quarter of its 2008/2009 financial year despite the poor economic environment.

The firm forecast that the challenging environment would push revenues even lower in the coming months -- but the global recovery would support higher demand for its services.


UBS to sell Paine Webber but not yet: report (Reuters)

Tuesday, September 29th, 2009 | Finance News

ZURICH (Reuters) –
UBS AG's (UBS.N) (UBSN.VX) U.S. wealth management unit Paine Webber is not a core part of the bank's operations but will not be sold at present, UBS Chief Executive Oswald Gruebel was quoted saying in the FT.

"We've had a lot of inquiries from potential buyers but it wouldn't make sense to sell at current valuations," Gruebel said, according to the report in Tuesday's Financial Times.

Gruebel also told the FT the bank wanted to cut ties with the Swiss government by buying its way out of a "bad bank" deal and aimed to return to health within a year.

The bank previously said it had no plans to buy back toxic assets but could consider such a course of action at some point in future.

UBS bought U.S. brokerage Paine Webber in 2000 for about $10 billion and merged it into UBS Americas, its U.S. wealth management subsidiary, signaling its intention to aggressively expand in the U.S. wealth management segment.

UBS Americas had over $600 billion in assets at the end of 2008, according to the UBS annual report.

However the dual challenges of the financial crisis and a damaging tax fraud probe by the U.S. government, which caused considerable brand damage to UBS, have forced the bank to pare back its U.S. wealth management business.

In April, the world's second largest wealth manager by client assets cut 2,000 U.S. jobs as part of a restructuring plan to cut 8,700 jobs worldwide. Earlier in September, sources close to the situation told Reuters the bank had cut a further 200 positions at the U.S. arm.

The bank has locked horns with Switzerland's financial regulator, FINMA, over its aim to leave the bad bank scheme, under which it pays for protection against big losses on toxic assets, the paper said.

With credit markets recently recovering, the bank believes it could take the assets back onto its balance sheet, but conceded it may not be able to do so until late 2010, the newspaper said.

"It is very expensive," Gruebel said of the bad bank scheme.

Separately UBS said Fiat SpA (FIA.MI) Chief Executive Sergio Marchionne and Royal Dutch Shell Plc (RDSa.L) Chief Executive Peter Voser will not stand for re-election to its board next year.

Marchionne had been mentioned as a possible alternative CEO for UBS in the midst of its troubles earlier this year but the bank turned to former Credit Suisse boss Gruebel.

(Additional reporting by Jan Harvey in London and Emma Thomasson in Zurich; Editing by Dan Lalor and David Holmes)