Archive for December, 2010

Oil hovers near $87 in Asia on economic hopes

Thursday, December 2nd, 2010 | Finance News

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KUALA LUMPUR, Malaysia – Oil prices hovered near $87 a barrel Thursday in Asia after a sharp rally the day before that was powered by strong economic data from the U.S. and China.

Benchmark oil for January delivery was down 3 cents to $86.72 a barrel at late afternoon Kuala Lumpur time in electronic trading on the New York Mercantile Exchange. The contract surged $2.64 percent, or 3.1 percent, to settle at $86.75 on Wednesday.

Improved manufacturing activity in the U.S. and China, job gains among small U.S. businesses and higher U.S. work force productivity revived confidence in the global economic recovery, giving a lift to oil.

"We are maintaining a bullish trading posture in anticipation of a further crude price advance to the $90 area. But, at the same time, additional price advances could prove erratic and one more dip toward the $85 area could be forthcoming before this market is ready to make another run," Ritterbusch and Associates said in a report.

Oil has been trading between $81 and a two-year high of just above $88 a barrel in the past month.

Goldman Sachs predicted prices could breach the $100 level next year amid strong growth in demand. It said world oil demand, which expanded at a higher-than-expected 2.4 million barrels a day this year, was likely to be sustained at over 2 million barrels a day over the next two years.

Some analysts warned that economic risks, especially the European debt crisis and the possibility of further credit tightening in China, cast a shadow over such bullishness.

In other Nymex trading in January contracts, gasoline was little changed at $2.30 a gallon and heating oil fell less than 1 cent to $2.40 a gallon. Natural gas gained 3 cents to $4.30 per 1,000 cubic feet.

In London, Brent crude rose 18 cents to $89.06 a barrel on the ICE Futures exchange.

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Multinationals ‘receiving millions’ in EU subsidies

Thursday, December 2nd, 2010 | Finance News

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LONDON (AFP) – Multinational giants including Coca-Cola, IBM and McDonalds are receiving European Union subsidies in an attempt to prevent them leaving the economic zone, the Financial Times said Thursday.

EU structural funds are intended to even out disparities in wealth across the area by targeting small and medium businesses in poorer member nations.

However, global corporations are also eligible to the pool of money and are taking advantage of the EU's desire to retain its competitive edge, according to the FT and Bureau of Investigative Journalism's study.

"There is a global contest," EU commissioner Johannes Hahn told the paper. "If we don't participate in this contest all the production sites will go out of Europe, so we have to find ways to keep them."

The paper found that IBM was granted 20 million euros for a project in Poland, Fiat applied for a 25 million euro grant and McDonalds received 60,000 euros to train Swedish staff.

Poland received 67 billion euros of structural funds, which the paper claimed was used to attract blue-chip companies.

"EU money is very correctly spent in Poland and has very positive effects," Polish deputy minister of regional development Waldemar Slugocki told the paper.

"It allows a business to build up long-term competitive advantage, which helps make the Polish and European economy more innovative," he added.

The study also found that millions of euros in EU funds were given to businesses who were moving factories from rich to poorer countries, despite rules forbidding the use of grants to help companies search for cheaper labour.

Companies including British tea-maker Twinings and mobile phone giant Nokia took advantage of grey areas in the method of allocating structural funds to help subsidise their moves to countries with cheaper labour, the FT claimed.

The paper said the companies were "at the very least receiving EU subsidies to help with the establishment of new factories, the extension of existing ones and the training of workers in their new homes."

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Foreclosures made up 25 pct of US home sales in 3Q

Wednesday, December 1st, 2010 | Finance News

LOS ANGELES – The worst summer for home sales in decades also put a chill on foreclosure sales, even as the average discounts on the distressed properties got bigger compared with other types of homes.

Foreclosure sales plunged 25 percent in the July-September quarter versus the April-June period and tumbled 31 percent from the third quarter last year, foreclosure listing firm RealtyTrac Inc. said Thursday.

Sales of non-foreclosed properties fell 29 percent sequentially and nearly 31 percent from the third quarter last year, the firm said.

The decline in sales of bank-owned properties and other homes in some stage of foreclosure is in line with an overall housing market slowdown that took hold after federal homebuyer tax credits expired in April.

The fallout over foreclosure processing errors that prompted some lenders to temporarily halt sales of bank-owned homes wasn't a significant factor in the sharp third-quarter drop in foreclosure sales, said Daren Blomquist, a RealtyTrac spokesman.

"We could expect probably in the fourth quarter to see that percentage of foreclosure sales dip because buyers are a bit skittish about purchasing foreclosure properties, given the questions surrounding the foreclosure process," Blomquist said.

Already, the firm has seen a decline in foreclosure activity in November, which suggests a holdover effect from the foreclosure documents mess. That could mean fewer home sales in the final months of the year — already a traditionally slow period.

In all, 188,748 U.S. homes in some stage of foreclosure were sold in the July-September period, accounting for a quarter of all U.S. residential property sales, RealtyTrac said.

The firm used data from sales deeds filed with county recorder offices. The transactions include sales of newly built homes and previously occupied properties. Foreclosure sales include homes sold by banks and short sales — when the homeowner and the bank agree to sell the property for less than what is owned on the mortgage.

As a share of overall home sales, foreclosure sales rose slightly from the second quarter. They peaked at 37 percent of all sales in the first quarter of 2009, but have ranged between 25 percent and 30 percent this year, Blomquist said.

One key driver is the quantity of foreclosed properties on the market.

In 2005, as the housing boom roared, foreclosure sales accounted for just 1 percent of all sales.

This year, even before the foreclosure documents snag erupted, the foreclosure process began to slow as lenders stepped up attempts to modify loans. Lenders also appear to be managing their stock of repossessed homes, not wanting to flood the market with too many properties.

That's led to a sharp drop in the inventory of available bank-owned homes in some markets, such as Las Vegas and hard-hit foreclosure markets in the neighboring Southern California counties of San Bernardino and Riverside.

Cynthia Gomez, broker-owner of Century 21 Town & Country in Ontario, Calif., said her agents are seeing fewer listings from lenders. Foreclosure sales make up 80 percent of Gomez's business.

"The inventory became a little more limited because banks were either holding back or not giving as many assignments as we were getting in the past," she said.

Many of those who did snap up a foreclosed home in the third quarter likely got it at a hefty discount.

The average sales price of foreclosure properties in the quarter was $169,523, or 32 percent below the average sales price of non-distressed properties, RealtyTrac said.

That's the highest discount relative to non-foreclosed properties in five years, the firm said.

That average sales price gap has been trending higher over the past four quarters. Historically, it has ranged between 15 percent and 30 percent, according to RealtyTrac's records, which go back to the first quarter of 2005.

Weaker demand following the end of the homebuyer tax credits has given buyers more leverage to negotiate better deals with banks and other distressed sellers.

Buyers also are competing with fewer buyers, though foreclosed properties in some markets, such as Las Vegas, still get multiple offers that can end up bumping up the sales price.

Nevada, Arizona and California had the highest percentage of foreclosure sales in the quarter.

Nevada led the nation with foreclosure sales accounting for nearly 54 percent of all home sales, RealtyTrac said. That was down from nearly 56 percent in the second quarter and 62 percent a year earlier.

Several other states had foreclosure sales that accounted for at least one-quarter of all home sales: Florida, Massachusetts, Michigan, Georgia, Oregon, Idaho and Illinois.

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