Archive for September, 2009

TSX closes lower as financial shares fall (Reuters)

Monday, September 21st, 2009 | Finance News

TORONTO (Reuters) –
Toronto's main stock index rallied off a one-week low but still closed lower for a third straight session on Monday as investors avoided commitments ahead of the U.S. Federal Reserve meeting later this week.

The index's heavily weighted financials group led the latest slide as investors opted to avoid big positions, possibly until Wednesday, when the Fed's Federal Open Market Committee (FOMC) is expected to hold interest rates unchanged at near zero percent.

Shares of insurer Manulife Financial, the biggest drag on the index, closed down 1.8 percent to C$22.37, while Toronto-Dominion Bank fell 0.9 percent to C$67.95.

The index's fall was limited as some big energy stocks pushed higher on hopes of higher prices for oil and natural gas down the road.

Canadian Natural Resources rose 2.4 percent to C$73.92, while Imperial Oil ended the session up 2 percent at C$41.34.

The S&P/TSX composite index ended down 21.34 points, or 0.19 percent, at 11,424.61.

Shortly after the session started, the TSX fell 1 percent to 11,329.50, its lowest level since September 14. It subsequently rallied off that low but never entered positive territory.

"There's no conviction but that's quite typical when you have something else as critical as the FOMC news later this week," said Elvis Picardo, analyst and strategist at Global Securities in Vancouver.

"But the bottom line is that the market continues to be tremendously resilient. I think a lot of money is on the sidelines and some of it may have been put to work here."

($1=$1.08 Canadian)

(Reporting by Frank Pingue; editing by Peter Galloway)

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U.S. leading index at 1-1/2-year high, loan defaults up (Reuters)

Monday, September 21st, 2009 | Finance News

WASHINGTON (Reuters) –
A measure of the U.S. economy's prospects scaled a 1-1/2-year high in August but a record rise in home loan defaults cast doubts on the durability of the apparent recovery from recession.

The Conference Board said on Monday its index of leading economic indicators rose 0.6 percent to 102.5, the highest level since January 2008. It had advanced 0.9 percent in July.

It was the fifth straight month that the gauge, which is supposed to forecast economic trends six to nine months ahead, had increased. The gain was a touch below the 0.7 percent rise economists had forecast. The index has risen 4.4 percent during the past six months.

"These data add further evidence to the growing view and our long-held belief that the official end date of the recession is likely to be sometime in the third quarter," said Michelle Girard, an economist at RBS in Greenwich, Connecticut.

However, separate monthly data from credit bureau Equifax Inc (EFX.N) showed a record 7.58 percent of U.S. homeowners with mortgages were at least 30 days late on payments in August, up from 7.32 percent in July.

U.S. financial markets were mute to the data and analysts said investors were awaiting the outcome of the Federal Reserve's two-day policy meeting on Tuesday and Wednesday.

U.S. dollar strength ahead of the Fed meeting weighed on commodity prices and took some shine off stocks on Wall Street (.N), after rallying for much of last week.

The Fed is expected to leave benchmark overnight lending rates unchanged near zero, but the statement accompanying the rate decision will be scrutinized for clues as to when the U.S. central bank will start withdrawing some of the support it is lending to the economy.

UNEMPLOYMENT TO SLOW RECOVERY

While economists agree the United States is starting to emerge from its worst recession since the 1930s -- with a solid rebound seen in the third quarter -- there are concerns that stubbornly high unemployment could undermine the recovery.

The unemployment rate raced to a 26-year high of 9.7 percent last month and is expected to peak just above 10 percent early next year.

A restocking of inventories, which were drawn down to record lows to adjust to sluggish demand, and government programs like incentives for first-time homebuyers and some motor vehicle buyers, are expected to drive growth in the third quarter.

In August, the U.S. economy's prospects were lifted by rising supplier deliveries, stock market prices, building permits and consumer expectations, according to the Conference Board, a private sector research group.

Analysts said separate indexes in the report also offered some encouragement. The coincident economic index was unchanged at 99.8 in August, while the lagging index slipped 0.1 percent to 110.2 -- pushing up the so-called coincident-to-lagging ratio for a fifth straight month.

The coincident-to-lagging ratio, which tends to trough and turn up well before the official ending of recessions, has a good track record of foreshadowing an economic recovery, according to economists.

"This continues to suggest strongly that this recession is over. But whether or not the economy can keep grinding forward and at what speed is still a big question mark," said Jennifer Lee, an economist at BMO Capital Markets in Toronto.

Real money supply, average weekly initial claims for unemployment insurance and manufacturers' new orders for nondefense capital goods were a drag on the main leading index in August. Weekly manufacturing hours and manufacturers' new orders for consumer goods and materials were steady.

"Our view is that it's not a sustainable (recovery) because that's a lot of special factors ... By the end of the year we should see slower momentum," said Brian Bethune, U.S. economist, IHS Global Insight in Waltham, Massachusetts.

(Additional reporting by Nick Zieminski, Editing by Chizu Nomiyama)

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Regions to pay $1M penalty in investment fraud (AP)

Monday, September 21st, 2009 | Finance News

MIAMI – Regions Bank has agreed to pay a $1 million penalty to settle a Securities and Exchange Commission complaint that it played a role in a long-term investment fraud that charged huge hidden fees and sales commissions to thousands of unwitting Latin American investors.

The Birmingham, Ala.-based bank and its predecessor, Union Planters Bank, acted as trustees for a pair of unregistered investment brokers — U.S. Pension Trust Corp. and U.S. College Trust Corp. — that have previously been charged as deceptive by the SEC. Regions allowed its name to be used in marketing materials, helped prepare a promotional video and met with prospective investors and some of the schemes' 2,000 unregistered sales agents.

"Regions Bank provided a false air of legitimacy to this scheme," said Glenn S. Gordon, associate director of the SEC's office in Miami.

Without telling investors, the two investment plans deducted between 18 percent and 85 percent of contributions to pay large sales commissions and enhance the plans' own profits. The SEC claims that $255 million was raised illicitly from about 14,000 investors.

The SEC charged that Regions' did not adequately disclose the fees to investors in its trust agreement papers, which were called "misleading" in court papers.

In a statement, Regions said it cooperated with the SEC investigation and that the investment arrangement "does not represent our current business focus or practices." The statement also said the clients were fully informed of the bank's own fees as part of trust agreements.

The trust arrangement was begun in 2001 by Union Planters, which merged with Regions in 2004.

Regions stopped accepting new clients from the investment plans in January 2008 and halted processing contributions and renewals for existing plans last month. The accounts currently hold about $95 million in mutual fund assets for 11,000 investors, according to the SEC.

The $1 million penalty will go into a fund created to compensate investors harmed by the fraud.

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