Archive for July, 2011

Oil prices slip below $95 on China production data

Friday, July 1st, 2011 | Finance News

BANGKOK – Oil dipped below $95 per barrel Friday after China reported manufacturing rose at the slowest pace in over two years in June, pointing to a possible slowdown in energy demand.

Benchmark crude for August delivery dipped $1.06 to $94.38 per barrel in late Bangkok time on the New York Mercantile Exchange after rising $4.16 per barrel over the previous two days. The contract settled at $95.42 per barrel Thursday.

In London, Brent crude for August delivery was down $1.43 cents to $111.05 a barrel on the ICE Futures exchange.

The China Federation of Logistics and Purchasing said its monthly purchasing managers index fell to 50.9 in June, the slowest pace in 28 months. The report said the trend likely augurs a further slowdown in growth brought on by inflation-fighting curbs on credit.

The price of crude eased back from Thursday, when lawmakers in Greece approved final details of a plan that will bring sweeping financial reform to its beleaguered economy. That eased concerns about a spreading financial crisis in Europe, resulting in a strengthening euro against the dollar. That, in turn, gave oil a boost, since it tends to rise as the dollar falls and makes crude barrels cheaper for investors holding foreign money.

Crude has dropped from near $115 early last month amid concerns about slowing global demand.

The 28-nation International Energy Agency, which includes the U.S., remained worried enough about oil's impact on the global recovery that it pledged last week to release 60 million barrels of crude and refined products onto the market in an effort to prevent another price spike.

Oil plunged after the IEA announcement. The group said it should more than make up for the loss of Libya's 1.5 million barrels of daily exports. The release is only a temporary fix, however, and analysts say world supplies will continue to tighten — pushing prices higher — unless IEA loosens the spigot again.

In other Nymex contracts on Friday, heating oil lost 3.3 cents to $2.9132 per gallon, gasoline fell 2.8 cents to $2.941 per gallon and natural gas fell 5.5 cents to $4.32 per 1,000 cubic feet.

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UBS names ex central banker Weber as future chairman

Friday, July 1st, 2011 | Finance News

ZURICH (Reuters) – Swiss bank UBS (UBS.N)(UBSN.VX) said on Friday it had nominated former Deutsche Bundesbank President Axel Weber to its board and expected him to succeed Kaspar Villiger as chairman of the board in 2013.

Europe's largest wealth manager in terms of assets said its board of directors would nominate Weber to the board at the annual general meeting in May 2012 and, if elected, it expected him to succeed Villiger after his first year in office.

"I think it's positive that they were able to announce it two years in advance. He's a strong candidate who was also in talks to become chairman of the management board at Deutsche Bank (DBKGn.DE), so it's very good news," said Cheuvreux analyst Christian Stark.

"Villiger was always seen as a temporary solution to help UBS get through the crisis and Axel Weber's clearly got more of a connected network into the international banking industry."

Along with Chief Executive Oswald Gruebel, former Swiss Finance Minister Villiger was coaxed out of retirement to help restore market confidence and turn around UBS after the bank suffered the worst annual loss in Swiss corporate history during the financial crisis.

Weber's nomination scotches speculation he could succeed Deutsche Bank's long-time chairman Josef Akermann whose own tenure expires in 2013.

Weber, aged 54, was president of Germany's Central Bank, the Bundesbank, from April 2004 to April 2011 and was a member of the governing council of the European Central Bank.

He was seen as a likely successor to Jean-Claude Trichet as head of the European Central Bank but ruled himself out of the race in February. He was recently appointed economics professor at the University of Chicago Booth School of Business.

Weber taught monetary policy and international economics in Germany before he was chosen for the Bundesbank in 2004.

(Editing by Mike Nesbit)

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Japan business confidence tumbles after disaster

Friday, July 1st, 2011 | Finance News

TOKYO – Business confidence at major Japanese manufacturers tumbled to its lowest level in more than a year, a result of the heavy blow dealt by the March 11 earthquake and tsunami, the central bank said Friday.

But the worst may have passed, and signs point to improvement later this year. With parts shortages easing, factories are steadily restoring capacity.

The Bank of Japan's quarterly "tankan" survey of business sentiment shows that the main index for large manufacturers dropped to minus 9. The result undershot Kyodo News agency's average market forecast of minus 6.

The figure represents the percentage of companies saying business conditions are good minus those saying conditions are unfavorable, with 100 representing the best mood and minus 100 the worst.

It is the survey's lowest level since March 2010 and a marked deterioration from three months ago, when the index stood at plus 6. Much of that survey was conducted before the March 11 disaster hit, so it did not fully reflect the impact of the devastation.

The earthquake and tsunami hit Japan's economy hard, wiping out wide swaths of the northeast coast, damaging factories and creating a nuclear-plant emergency that Japan is still struggling to address.

The mood among big non-manufacturers fell to minus 5 from plus 3.

Smaller enterprises reported lackluster numbers as well. The confidence index for medium-sized manufacturers fell to minus 12 from minus 4. The small manufacturers' index stood at minus 21 from minus 10.

The tankan offered a more encouraging assessment of the future, adding to evidence that the world's No. 3 economy is likely to recover toward the end of the year. The survey forecasts business sentiment among large manufacturers to rise to plus 2 over the next quarter.

"A slew of monthly indicators have already shown that business activities hit bottom as early as April, and will likely continue to improve in the coming months," said Junko Nishioka, chief economist at RBS Securities Japan.

Automakers in particular are predicting a dramatic jump in sentiment to plus 6 from minus 52 in Friday's survey. The car industry is a critical driver of manufacturing, and its fate is closely linked with the health of Japan's exports.

Factory output data released Wednesday confirm an emerging rebound. Led by the transport sector, Japan's industrial production posted the sharpest rise in nearly six decades in May.

Nissan Motor Co. Chief Executive Carlos Ghosn said earlier this week that overall production at his company has mostly recovered and will be back to normal by October.

The tankan, which helps guide monetary policy, showed that large companies overall plan to boost capital spending by 4.2 percent this fiscal year through March 2012.

The Bank of Japan surveyed 10,997 companies nationwide. About 98 percent responded.

The bank's next policy board meeting is scheduled for July 11-12. Separately, the government released economic data on unemployment, consumer prices and household spending that also hinted at improving conditions.

The country's seasonally adjusted unemployment rate fell slightly to 4.5 percent in May, though the figure does not include results from Fukushima, Iwate and Miyagi — the three prefectures worst-hit by the earthquake and tsunami.

Household spending in May fell 1.9 percent from a year earlier, a slower decline than the previous month. Core consumer prices, which excludes fresh food, rose 0.6 percent from last year.

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Follow Tomoko A. Hosaka at http://twitter.com/tomokohosaka

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