Euro, Stocks, Commodities Fall on Debt Contagion Concern

Nov. 22 (Bloomberg) — The euro snapped a three-day rally versus the dollar, stocks and commodities slid and Treasuries rose as Ireland’s financial bailout failed to assuage concern Europe’s debt crisis may spread. Banks led U.S. shares lower as federal agents searched hedge funds in an insider-trading probe.

The euro slid 0.4 percent to $1.3623 at 4 p.m. in New York and depreciated versus 14 of 16 major counterparts. The Standard & Poor’s 500 Index fell 0.2 percent to 1,197.84 and the S&P GSCI Index of commodities declined 0.3 percent. The costs to protect Irish and Portuguese debt from default surged, while the 10-year U.S. Treasury yield decreased seven basis points to 2.80 percent before a sale of $99 billion of notes this week.

Financial companies led European and U.S. equities lower as Ireland became the second euro member to seek a rescue from the European Union and the International Monetary Fund, a move that may prevent a run on its lenders while threatening its credit rating and government coalition. The Federal Bureau of Investigation raided at least three U.S. hedge funds.

“Deleveraging is sort of like a terrier,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $105 billion. “It keeps annoying you. We’ve addressed Ireland’s problems, but nobody knows who’s next.”

The euro lost 1.1 percent versus the South Korean won and at least 0.5 percent versus the currencies of Taiwan, Switzerland and Japan. The dollar strengthened against 10 of 16 major peers.

Financials Lead Declines

Financial companies slumped 1.4 percent for the biggest decline among 10 industries in the S&P 500. JPMorgan Chase & Co. and Goldman Sachs Group Inc. dropped at least 2.3 percent. Losses were limited as Amazon.com Inc. led a rally in retailers before the start of the holiday shopping season, while Hewlett Packard Co. climbed 1.8 percent before reporting earnings after the close of trading.

Two Connecticut-based hedge funds, Level Global Investors LP and Diamondback Capital Management LLC, were searched by the FBI today, agency spokesman Richard Kolko said. Agents also executed a search warrant at Loch Capital Management of Boston, according to a person familiar with the probe who declined to be identified because the matter isn’t public. The raids stemmed from a series of insider trading investigations directed by the office of Manhattan U.S. Attorney Preet Bharara, according to a person familiar with the probes.

Insider Trading Probe

The Wall Street Journal reported that the Securities and Exchange Commission and other officials are nearing the end of an investigation into an insider-trading network involving hedge funds, mutual-fund traders and investment bankers. The report late Nov. 19 cited unidentified people familiar with the situation. One of the focuses is whether Goldman Sachs bankers divulged information about health-care acquisitions and other deals, the newspaper said.

The benchmark indexes for U.S. and European stock options snapped three-day losing streaks as investors boosted buying of protection on equities. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 2.6 percent to 18.51 in New York. The index measures the cost of using options as insurance against declines in the S&P 500. The VStoxx Index, which gauges the cost of protecting against a drop in the Euro Stoxx 50 Index, climbed 6 percent.

“This FBI probe seems to be gaining some legs,” said Dan Deming, a VIX options trader at Stutland Equities LLC on the floor of the CBOE. “The banking sector is feeling some heat across the board as the feds seem to be stepping up their game a little bit. It’s definitely having an impact.”

Bank Losses

U.S. banks could lose more than $100 billion as investors fight to recoup losses from soured mortgages, Barron’s reported over the weekend. The Financial Times reported that the top 35 U.S. banks will be short between $100 billion and $150 billion after new international capital requirements are imposed.

The Stoxx Europe 600 Index slipped 0.7 percent, erasing gains of as much as 0.8 percent. Irish banks led declines on concern that a bailout will dilute existing investor stakes. Bank of Ireland tumbled 19 percent, while Irish Life & Permanent Plc sank 27 percent. Porsche SE led auto stocks higher, climbing 4.9 percent, after Bank of America Merrill Lynch recommended buying the shares, saying the German sports-car maker probably won’t merge with Volkswagen AG. The MSCI Asia Pacific Index rallied 0.6 percent.

The MSCI Emerging Markets Index climbed 0.1 percent as the Bombay Stock Exchange’s Sensitive Index jumped 1.9 percent, its biggest advance since Nov. 4, with Infosys Technologies Ltd., the country’s second-largest software exporter, rising 2.7 percent. Brazil’s Bovespa slid 1.8 percent.

Debt Concerns

The Irish rescue package that Goldman Sachs estimates may total 95 billion euros ($130 billion) failed to damp speculation that Portugal and Spain would follow Ireland in tapping the fund set up by the EU and IMF after the Greece rescue.

Credit-default swaps tied to Irish government bonds rose 20.3 basis points to 527.4, according to CMA, a data provider. Moody’s Investors Service said it may lower Ireland’s credit rating by more than it previously anticipated as the aid plan threatens to boost the country’s debt.

Default swaps on Portugal jumped 40.7 basis points to 457.5 and Greece was 37.4 basis points higher at 1,006.8, according to CMA. The Markit iTraxx Crossover Index of swaps on 50 mostly junk-rated European companies climbed 6.5 basis points to 463.3, Markit Group Ltd. prices show.

The yield on the Irish 10-year bond slipped 4 basis points to 8.31 percent. The European Central Bank bought Irish government bonds today, according to three people with knowledge of the transactions. A spokeswoman for the ECB in Frankfurt declined to comment.

‘Life Support’

“The reality is that the structure is in place at the moment to put countries in life support but the missing link still remains the bigger issue of what do you do after that,” Cambiz Alikhani, a portfolio manager at Iveagh Wealth Fund in London, said in an interview. “Until that question is answered we are still in this rolling bailout situation which has been ongoing since 2008.”

Irish Prime Minister Brian Cowen said he will seek national elections early next year after his government passes its 2011 budget, one day after he asked the EU to bail out Ireland’s banking system. Ireland’s Green Party said today it will quit the government after the budget is passed, leaving Cowen without a majority in parliament and raising the prospect of January elections. Irish voters “feel misled” by the government, Green Party leader John Gormley said at a press conference in Dublin.

The yield on the two-year Treasury note slipped 5 basis points to 0.47 percent. The U.S. auctions $35 billion of the debt today, followed by sales of five-year securities tomorrow and seven-year notes in two days.

Commodities Slump

Cotton, copper, gasoline and coffee fell at least 1.4 percent to lead declines in commodities. Crude oil fell 0.3 percent to $81.74 a barrel in New York.

Cotton declined to a four-week low in New York amid speculation that global demand will decline as China, the biggest importer, takes steps to slow growth and as planting expands in India. Cotton for March delivery dropped as much as 4.9 percent to $1.1715 a pound in New York. The fiber fell 8.2 percent last week, the most since February 2009.

The New Zealand dollar dropped against all 16 of its most- traded peers, weakening 0.5 percent to 77.45 U.S. cents. S&P lowered the nation’s credit outlook on its AA+ rating to negative, saying in a statement that “the main risk to the ratings would be a significant weakening in the credit quality of New Zealand’s banking sector.”

To contact the reporter on this story: Rita Nazareth in New York at rnazareth .

To contact the editor responsible for this story: Nick Baker at nbaker7 .

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Euro, Stocks, Commodities Fall on Debt Contagion Concern

Nov. 22 (Bloomberg) — The euro snapped a three-day rally versus the dollar, stocks and commodities slid and Treasuries rose as Ireland’s financial bailout failed to assuage concern Europe’s debt crisis may spread. Banks led U.S. shares lower as federal agents searched hedge funds in an insider-trading probe.

The euro slid 0.4 percent to $1.3623 at 4 p.m. in New York and depreciated versus 14 of 16 major counterparts. The Standard & Poor’s 500 Index fell 0.2 percent to 1,197.84 and the S&P GSCI Index of commodities declined 0.3 percent. The costs to protect Irish and Portuguese debt from default surged, while the 10-year U.S. Treasury yield decreased seven basis points to 2.80 percent before a sale of $99 billion of notes this week.

Financial companies led European and U.S. equities lower as Ireland became the second euro member to seek a rescue from the European Union and the International Monetary Fund, a move that may prevent a run on its lenders while threatening its credit rating and government coalition. The Federal Bureau of Investigation raided at least three U.S. hedge funds.

“Deleveraging is sort of like a terrier,” said James Dunigan, chief investment officer at PNC Wealth Management in Philadelphia, which oversees $105 billion. “It keeps annoying you. We’ve addressed Ireland’s problems, but nobody knows who’s next.”

The euro lost 1.1 percent versus the South Korean won and at least 0.5 percent versus the currencies of Taiwan, Switzerland and Japan. The dollar strengthened against 10 of 16 major peers.

Financials Lead Declines

Financial companies slumped 1.4 percent for the biggest decline among 10 industries in the S&P 500. JPMorgan Chase & Co. and Goldman Sachs Group Inc. dropped at least 2.3 percent. Losses were limited as Amazon.com Inc. led a rally in retailers before the start of the holiday shopping season, while Hewlett Packard Co. climbed 1.8 percent before reporting earnings after the close of trading.

Two Connecticut-based hedge funds, Level Global Investors LP and Diamondback Capital Management LLC, were searched by the FBI today, agency spokesman Richard Kolko said. Agents also executed a search warrant at Loch Capital Management of Boston, according to a person familiar with the probe who declined to be identified because the matter isn’t public. The raids stemmed from a series of insider trading investigations directed by the office of Manhattan U.S. Attorney Preet Bharara, according to a person familiar with the probes.

Insider Trading Probe

The Wall Street Journal reported that the Securities and Exchange Commission and other officials are nearing the end of an investigation into an insider-trading network involving hedge funds, mutual-fund traders and investment bankers. The report late Nov. 19 cited unidentified people familiar with the situation. One of the focuses is whether Goldman Sachs bankers divulged information about health-care acquisitions and other deals, the newspaper said.

The benchmark indexes for U.S. and European stock options snapped three-day losing streaks as investors boosted buying of protection on equities. The VIX, as the Chicago Board Options Exchange Volatility Index is known, rose 2.6 percent to 18.51 in New York. The index measures the cost of using options as insurance against declines in the S&P 500. The VStoxx Index, which gauges the cost of protecting against a drop in the Euro Stoxx 50 Index, climbed 6 percent.

“This FBI probe seems to be gaining some legs,” said Dan Deming, a VIX options trader at Stutland Equities LLC on the floor of the CBOE. “The banking sector is feeling some heat across the board as the feds seem to be stepping up their game a little bit. It’s definitely having an impact.”

Bank Losses

U.S. banks could lose more than $100 billion as investors fight to recoup losses from soured mortgages, Barron’s reported over the weekend. The Financial Times reported that the top 35 U.S. banks will be short between $100 billion and $150 billion after new international capital requirements are imposed.

The Stoxx Europe 600 Index slipped 0.7 percent, erasing gains of as much as 0.8 percent. Irish banks led declines on concern that a bailout will dilute existing investor stakes. Bank of Ireland tumbled 19 percent, while Irish Life & Permanent Plc sank 27 percent. Porsche SE led auto stocks higher, climbing 4.9 percent, after Bank of America Merrill Lynch recommended buying the shares, saying the German sports-car maker probably won’t merge with Volkswagen AG. The MSCI Asia Pacific Index rallied 0.6 percent.

The MSCI Emerging Markets Index climbed 0.1 percent as the Bombay Stock Exchange’s Sensitive Index jumped 1.9 percent, its biggest advance since Nov. 4, with Infosys Technologies Ltd., the country’s second-largest software exporter, rising 2.7 percent. Brazil’s Bovespa slid 1.8 percent.

Debt Concerns

The Irish rescue package that Goldman Sachs estimates may total 95 billion euros ($130 billion) failed to damp speculation that Portugal and Spain would follow Ireland in tapping the fund set up by the EU and IMF after the Greece rescue.

Credit-default swaps tied to Irish government bonds rose 20.3 basis points to 527.4, according to CMA, a data provider. Moody’s Investors Service said it may lower Ireland’s credit rating by more than it previously anticipated as the aid plan threatens to boost the country’s debt.

Default swaps on Portugal jumped 40.7 basis points to 457.5 and Greece was 37.4 basis points higher at 1,006.8, according to CMA. The Markit iTraxx Crossover Index of swaps on 50 mostly junk-rated European companies climbed 6.5 basis points to 463.3, Markit Group Ltd. prices show.

The yield on the Irish 10-year bond slipped 4 basis points to 8.31 percent. The European Central Bank bought Irish government bonds today, according to three people with knowledge of the transactions. A spokeswoman for the ECB in Frankfurt declined to comment.

‘Life Support’

“The reality is that the structure is in place at the moment to put countries in life support but the missing link still remains the bigger issue of what do you do after that,” Cambiz Alikhani, a portfolio manager at Iveagh Wealth Fund in London, said in an interview. “Until that question is answered we are still in this rolling bailout situation which has been ongoing since 2008.”

Irish Prime Minister Brian Cowen said he will seek national elections early next year after his government passes its 2011 budget, one day after he asked the EU to bail out Ireland’s banking system. Ireland’s Green Party said today it will quit the government after the budget is passed, leaving Cowen without a majority in parliament and raising the prospect of January elections. Irish voters “feel misled” by the government, Green Party leader John Gormley said at a press conference in Dublin.

The yield on the two-year Treasury note slipped 5 basis points to 0.47 percent. The U.S. auctions $35 billion of the debt today, followed by sales of five-year securities tomorrow and seven-year notes in two days.

Commodities Slump

Cotton, copper, gasoline and coffee fell at least 1.4 percent to lead declines in commodities. Crude oil fell 0.3 percent to $81.74 a barrel in New York.

Cotton declined to a four-week low in New York amid speculation that global demand will decline as China, the biggest importer, takes steps to slow growth and as planting expands in India. Cotton for March delivery dropped as much as 4.9 percent to $1.1715 a pound in New York. The fiber fell 8.2 percent last week, the most since February 2009.

The New Zealand dollar dropped against all 16 of its most- traded peers, weakening 0.5 percent to 77.45 U.S. cents. S&P lowered the nation’s credit outlook on its AA+ rating to negative, saying in a statement that “the main risk to the ratings would be a significant weakening in the credit quality of New Zealand’s banking sector.”

To contact the reporter on this story: Rita Nazareth in New York at rnazareth .

To contact the editor responsible for this story: Nick Baker at nbaker7 .

Find out more about Bloomberg for iPad: http://m.bloomberg.com/iphone

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Rousseff Sparks Worst Bond Slump in 13 Months: Brazil Credit

Nov. 12 (Bloomberg) — Brazilian dollar bonds are underperforming emerging-market debt by the biggest margin since October 2009 on speculation President-elect Dilma Rousseff will fail to slow spending growth and curb inflation.

The 1.7 percent loss on Brazilian bonds in the past month is the most since February and compares with an average decline of 0.5 percent for developing-nation debt, according to JPMorgan Chase & Co.’s EMBI+ index. Losses have deepened since Rousseff, 62, won election on Oct. 31, with bonds posting a decline of 1.3 percent over the past two weeks.

Investor concern is mounting about Rousseff’s ability to rein in the budget gap after she said last week that she’ll increase payouts to the poor and may raise the minimum wage more than the 5.5 percent proposed in the government’s 2011 budget bill. Yields on benchmark interest-rate futures soared 23 basis points, or 0.23 percentage point, this month as traders bet spending growth under Rousseff will fuel inflation and prompt the central bank to raise borrowing costs.

“The market is looking for Dilma to come out with a more clear macroeconomic platform,” said Daniel Tenengauzer, head of emerging-markets foreign exchange and rates strategy at Bank of America Corp. in New York. “There’s clearly some degree of concern over the fiscal risk going forward.”

The decline in Brazilian bonds is bigger than the 0.1 percent loss in the past month in U.S. high-yield and investment-grade corporate bonds tracked by Bank of America Merrill Lynch indexes.

Spending Surge

Rousseff, President Luiz Inacio Lula da Silva’s former cabinet chief and handpicked successor, told reporters Nov. 3 that she’s considering raising the monthly minimum wage to more than 700 reais ($406) by 2014 from 510 reais today.

Lula increased spending 27 percent in the first nine months of this year, helping push inflation above the central bank’s 4.5 percent annual target. Consumer prices increased 5.2 percent in the 12 months through October, the fastest pace since May, after rising 4.7 percent through September. The 0.75 percent monthly inflation rate exceeded the 0.67 percent median estimate in a Bloomberg survey of 41 economists.

The budget deficit widened to the equivalent of 3.4 percent of gross domestic product in August, the biggest in five months, before narrowing to 2.4 percent of GDP in September, when the government reaped a revenue windfall from its sale of oil reserves to state-run Petroleo Brasileiro SA.

Rousseff said Nov. 3 that governors were moving to create new sources of funding for health care. The president-elect said she is willing to discuss the issue. The majority of Brazil’s governors support the reintroduction of the tax, O Estado de S.Paulo newspaper said on Nov. 5, citing their own survey.

‘Deterioration’

While Rousseff has pledged to continue Lula’s policies, “the status quo means fiscal deterioration and there’s disappointment that there isn’t a change,” said Vitali Meschoulam, a strategist at Morgan Stanley in New York.

E-mails and phone calls seeking comment from Rousseff’s press department after business hours weren’t returned.

The October inflation report and jump in U.S. Treasury yields to a six-month high are causing the underperformance in Brazilian bonds, according to PineBridge Investments, which has about $78 billion under management.

The “inflation figures came in above market expectations and that has brought some uncertainty to the market,” said Andressa Tezine, the London-based vice president of emerging- market fixed-income at PineBridge Investments. “It’s just down in the short term because of the transition of government.”

Inflation Outlook

Brazilian inflation will quicken to 5.31 percent by year- end, the highest rate since April 2009, according to a central bank survey of economists released Nov. 8. A week earlier, the median forecast was 5.29 percent.

Rousseff named Antonio Palocci, who as finance minister helped cut the inflation rate to 5.3 percent in 2006 from a high of 17.2 percent in 2003, to lead her transition team.

The extra yield investors demand to hold Brazilian dollar bonds instead of U.S. Treasuries fell 3 basis points to 172 at 6:22 a.m. New York time, according to JPMorgan Chase & Co. The U.S. bond market was closed yesterday for the Veterans’ Day holiday.

The cost of protecting Brazilian debt against non-payment for five years with credit-default swaps was unchanged at 101, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

The real fell 0.4 percent to 1.7227 per dollar.

‘Too Easy’

Yields on interest-rate futures due in January 2012 were unchanged at 11.57 percent, signaling traders expect the central bank will raise the benchmark rate to about 12.5 percent by then, according to data compiled by Bloomberg.

Policy makers boosted the benchmark rate to 10.75 percent from a record low of 8.75 percent in April to cool the fastest expansion in Latin America’s biggest economy in two decades.

The central bank forecasts the economy will grow 7.3 percent this year after shrinking 0.2 percent in 2009.

“The fiscal policy is too easy for an economy that is growing at this pace,” said Claudia Calich, who helps manage $1.5 billion in emerging-market debt at Invesco Advisers Inc. in New York. “They should be reducing spending.”

To contact the reporters on this story: Tal Barak Harif in New York at tbarak

To contact the editor responsible for this story: David Papadopoulos at papadopoulos

Find out more about Bloomberg for iPad: http://m.bloomberg.com/iphone

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Rousseff Sparks Worst Bond Slump in 13 Months: Brazil Credit

Nov. 12 (Bloomberg) — Brazilian dollar bonds are underperforming emerging-market debt by the biggest margin since October 2009 on speculation President-elect Dilma Rousseff will fail to slow spending growth and curb inflation.

The 1.7 percent loss on Brazilian bonds in the past month is the most since February and compares with an average decline of 0.5 percent for developing-nation debt, according to JPMorgan Chase & Co.’s EMBI+ index. Losses have deepened since Rousseff, 62, won election on Oct. 31, with bonds posting a decline of 1.3 percent over the past two weeks.

Investor concern is mounting about Rousseff’s ability to rein in the budget gap after she said last week that she’ll increase payouts to the poor and may raise the minimum wage more than the 5.5 percent proposed in the government’s 2011 budget bill. Yields on benchmark interest-rate futures soared 23 basis points, or 0.23 percentage point, this month as traders bet spending growth under Rousseff will fuel inflation and prompt the central bank to raise borrowing costs.

“The market is looking for Dilma to come out with a more clear macroeconomic platform,” said Daniel Tenengauzer, head of emerging-markets foreign exchange and rates strategy at Bank of America Corp. in New York. “There’s clearly some degree of concern over the fiscal risk going forward.”

The decline in Brazilian bonds is bigger than the 0.1 percent loss in the past month in U.S. high-yield and investment-grade corporate bonds tracked by Bank of America Merrill Lynch indexes.

Spending Surge

Rousseff, President Luiz Inacio Lula da Silva’s former cabinet chief and handpicked successor, told reporters Nov. 3 that she’s considering raising the monthly minimum wage to more than 700 reais ($406) by 2014 from 510 reais today.

Lula increased spending 27 percent in the first nine months of this year, helping push inflation above the central bank’s 4.5 percent annual target. Consumer prices increased 5.2 percent in the 12 months through October, the fastest pace since May, after rising 4.7 percent through September. The 0.75 percent monthly inflation rate exceeded the 0.67 percent median estimate in a Bloomberg survey of 41 economists.

The budget deficit widened to the equivalent of 3.4 percent of gross domestic product in August, the biggest in five months, before narrowing to 2.4 percent of GDP in September, when the government reaped a revenue windfall from its sale of oil reserves to state-run Petroleo Brasileiro SA.

Rousseff said Nov. 3 that governors were moving to create new sources of funding for health care. The president-elect said she is willing to discuss the issue. The majority of Brazil’s governors support the reintroduction of the tax, O Estado de S.Paulo newspaper said on Nov. 5, citing their own survey.

‘Deterioration’

While Rousseff has pledged to continue Lula’s policies, “the status quo means fiscal deterioration and there’s disappointment that there isn’t a change,” said Vitali Meschoulam, a strategist at Morgan Stanley in New York.

E-mails and phone calls seeking comment from Rousseff’s press department after business hours weren’t returned.

The October inflation report and jump in U.S. Treasury yields to a six-month high are causing the underperformance in Brazilian bonds, according to PineBridge Investments, which has about $78 billion under management.

The “inflation figures came in above market expectations and that has brought some uncertainty to the market,” said Andressa Tezine, the London-based vice president of emerging- market fixed-income at PineBridge Investments. “It’s just down in the short term because of the transition of government.”

Inflation Outlook

Brazilian inflation will quicken to 5.31 percent by year- end, the highest rate since April 2009, according to a central bank survey of economists released Nov. 8. A week earlier, the median forecast was 5.29 percent.

Rousseff named Antonio Palocci, who as finance minister helped cut the inflation rate to 5.3 percent in 2006 from a high of 17.2 percent in 2003, to lead her transition team.

The extra yield investors demand to hold Brazilian dollar bonds instead of U.S. Treasuries fell 3 basis points to 172 at 6:22 a.m. New York time, according to JPMorgan Chase & Co. The U.S. bond market was closed yesterday for the Veterans’ Day holiday.

The cost of protecting Brazilian debt against non-payment for five years with credit-default swaps was unchanged at 101, according to data compiled by CMA DataVision. Credit-default swaps pay the buyer face value in exchange for the underlying securities or the cash equivalent should a government or company fail to adhere to its debt agreements.

The real fell 0.4 percent to 1.7227 per dollar.

‘Too Easy’

Yields on interest-rate futures due in January 2012 were unchanged at 11.57 percent, signaling traders expect the central bank will raise the benchmark rate to about 12.5 percent by then, according to data compiled by Bloomberg.

Policy makers boosted the benchmark rate to 10.75 percent from a record low of 8.75 percent in April to cool the fastest expansion in Latin America’s biggest economy in two decades.

The central bank forecasts the economy will grow 7.3 percent this year after shrinking 0.2 percent in 2009.

“The fiscal policy is too easy for an economy that is growing at this pace,” said Claudia Calich, who helps manage $1.5 billion in emerging-market debt at Invesco Advisers Inc. in New York. “They should be reducing spending.”

To contact the reporters on this story: Tal Barak Harif in New York at tbarak

To contact the editor responsible for this story: David Papadopoulos at papadopoulos

Find out more about Bloomberg for iPad: http://m.bloomberg.com/iphone

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Oil, Gold, Cotton Surge as Dollar Weakens; Stocks Fluctuate

Nov. 9 (Bloomberg) — Oil climbed to a two-year high, while gold and cotton rose to records, as a weakening dollar boosted prices of commodities. U.S. stocks fluctuated after the Standard & Poor’s 500 Index slipped yesterday from its highest level since September 2008.

Crude futures increased 0.5 percent to $87.45 at 10:17 a.m. in New York, while gold traded above $1,420 an ounce and cotton touched an all-time high. Gauges of commodities rose to two-year highs. The Dollar Index slipped 0.2 percent to 76.840, halting a two-day advance. The S&P 500 climbed 0.3 percent to 1,226.25 after losing 0.1 percent earlier. The yen gained as China planned tighter capital controls.

The Thomson Reuters/Jefferies CRB Index of commodities has rallied for 11 straight weeks, its longest streak since 1977, after Federal Reserve Chairman Ben S. Bernanke indicated in August he was prepared to pump more cash into the economy. The central bank last week confirmed those plans, announcing a program to buy $600 billion in Treasuries in a tactic known as quantitative easing.

Cotton helped lead gains in commodities today, rising the exchange limit to a record before a U.S. Department of Agriculture report that economists in a Bloomberg News survey expect to show a decline in global inventories.

Arabica coffee futures advanced to a 13-year high, raw sugar rose to the highest price since 1981, gold climbed to a record $1,422.35 an ounce and copper jumped as much as 2.5 percent. Oil rose 0.4 percent to $87.37 a barrel.

Wholesale Inventories

The S&P 500 recovered from its lows of the day after inventories at U.S. wholesalers climbed twice as much as forecast in September as suppliers stocked up ahead of the holiday sales season. Producers of raw materials and energy advanced at least 0.4 percent for two of the top three gains among 10 groups in the S&P 500, while financial companies slipped 0.4 percent and were the biggest drag on the index.

Priceline.com Inc. climbed 9 percent as its fourth-quarter forecast topped estimates, reflecting stronger demand for hotel bookings and international flights. Atlas Energy Inc. rallied 34 percent after saying it agreed to be acquired by Chevron Corp. in a transaction valuing the company at $4.3 billion including debt. Atlas shareholders will get $43.34 a share, a 37 percent premium to yesterday’s closing price.

More than three companies rose for every one that fell in the Stoxx Europe 600 Index. Basic resources stocks led the advance, as BHP Billiton Ltd., the biggest mining company, rallied 2.2 percent. Barclays advanced 2.9 percent even after reporting profit declined. Adecco gained 4.4 percent. Swisscom AG jumped 2.4 percent after profit beat estimates.

Yen Climbs

The yen advanced 0.7 percent to 80.63 per dollar, and gained 0.6 percent to 112.34 per euro. The Swiss franc rose against 11 of its 16 most-traded counterparts. The Dollar Index, which tracks the greenback against the currencies of six trading partners, fell for the first time in three days.

China’s State Administration of Foreign Exchange said it will strengthen the auditing of overseas fundraising and force banks to hold more foreign exchange, joining countries from Brazil to Thailand that have sought to curb currency fluctuations. The Shanghai Composite Index fell 0.8 percent.

The yuan appreciated 0.51 percent, the most since a dollar peg was scrapped in July 2005, after the People’s Bank of China raised a reference rate for trading the currency.

Treasuries were little changed, with the yield on the 10- year note up two basis points to 2.57 percent, before the government auctions $24 billion of similar-maturity securities today.

European Debt

The extra yield, or spread, that investors demand to hold Portuguese 10-year bonds instead of similar-maturity benchmark German bunds rose as much as 13 basis points to a record 452 basis points, while Irish bonds slumped for the 11th day, driving the spread with bunds to 552 basis points, also an all- time high, even as European Union Economic and Monetary Affairs Commissioner Olli Rehn said Ireland hasn’t asked for aid.

The cost of insuring against a default on Portuguese and Irish government bonds rose to records based on closing prices. Credit-default swaps insuring Portugal’s debt climbed 3 basis points to 470, while contracts on Ireland increased 3 basis points to 602, according to CMA.

The MSCI Emerging Markets Index added 0.4 percent. Russia’s Micex stock index rose 1.71 percent as commodities and oil advanced. Poland’s WIG20 Index gained 1 percent with shares of the Warsaw Stock Exchange rallying 23 percent on their first day of trading. The Jakarta Composite Index increased 1 percent to close at a record and Dubai’s Financial Market General Index gained 1.3 percent.

To contact the reporters on this story: Michael P. Regan in New York at Mregan12 Stephen Kirkland in London at skirkland

To contact the editor responsible for this story: Nick Baker at nbaker7 .

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Oil, Gold, Cotton Surge as Dollar Weakens; Stocks Fluctuate

Nov. 9 (Bloomberg) — Oil climbed to a two-year high, while gold and cotton rose to records, as a weakening dollar boosted prices of commodities. U.S. stocks fluctuated after the Standard & Poor’s 500 Index slipped yesterday from its highest level since September 2008.

Crude futures increased 0.5 percent to $87.45 at 10:17 a.m. in New York, while gold traded above $1,420 an ounce and cotton touched an all-time high. Gauges of commodities rose to two-year highs. The Dollar Index slipped 0.2 percent to 76.840, halting a two-day advance. The S&P 500 climbed 0.3 percent to 1,226.25 after losing 0.1 percent earlier. The yen gained as China planned tighter capital controls.

The Thomson Reuters/Jefferies CRB Index of commodities has rallied for 11 straight weeks, its longest streak since 1977, after Federal Reserve Chairman Ben S. Bernanke indicated in August he was prepared to pump more cash into the economy. The central bank last week confirmed those plans, announcing a program to buy $600 billion in Treasuries in a tactic known as quantitative easing.

Cotton helped lead gains in commodities today, rising the exchange limit to a record before a U.S. Department of Agriculture report that economists in a Bloomberg News survey expect to show a decline in global inventories.

Arabica coffee futures advanced to a 13-year high, raw sugar rose to the highest price since 1981, gold climbed to a record $1,422.35 an ounce and copper jumped as much as 2.5 percent. Oil rose 0.4 percent to $87.37 a barrel.

Wholesale Inventories

The S&P 500 recovered from its lows of the day after inventories at U.S. wholesalers climbed twice as much as forecast in September as suppliers stocked up ahead of the holiday sales season. Producers of raw materials and energy advanced at least 0.4 percent for two of the top three gains among 10 groups in the S&P 500, while financial companies slipped 0.4 percent and were the biggest drag on the index.

Priceline.com Inc. climbed 9 percent as its fourth-quarter forecast topped estimates, reflecting stronger demand for hotel bookings and international flights. Atlas Energy Inc. rallied 34 percent after saying it agreed to be acquired by Chevron Corp. in a transaction valuing the company at $4.3 billion including debt. Atlas shareholders will get $43.34 a share, a 37 percent premium to yesterday’s closing price.

More than three companies rose for every one that fell in the Stoxx Europe 600 Index. Basic resources stocks led the advance, as BHP Billiton Ltd., the biggest mining company, rallied 2.2 percent. Barclays advanced 2.9 percent even after reporting profit declined. Adecco gained 4.4 percent. Swisscom AG jumped 2.4 percent after profit beat estimates.

Yen Climbs

The yen advanced 0.7 percent to 80.63 per dollar, and gained 0.6 percent to 112.34 per euro. The Swiss franc rose against 11 of its 16 most-traded counterparts. The Dollar Index, which tracks the greenback against the currencies of six trading partners, fell for the first time in three days.

China’s State Administration of Foreign Exchange said it will strengthen the auditing of overseas fundraising and force banks to hold more foreign exchange, joining countries from Brazil to Thailand that have sought to curb currency fluctuations. The Shanghai Composite Index fell 0.8 percent.

The yuan appreciated 0.51 percent, the most since a dollar peg was scrapped in July 2005, after the People’s Bank of China raised a reference rate for trading the currency.

Treasuries were little changed, with the yield on the 10- year note up two basis points to 2.57 percent, before the government auctions $24 billion of similar-maturity securities today.

European Debt

The extra yield, or spread, that investors demand to hold Portuguese 10-year bonds instead of similar-maturity benchmark German bunds rose as much as 13 basis points to a record 452 basis points, while Irish bonds slumped for the 11th day, driving the spread with bunds to 552 basis points, also an all- time high, even as European Union Economic and Monetary Affairs Commissioner Olli Rehn said Ireland hasn’t asked for aid.

The cost of insuring against a default on Portuguese and Irish government bonds rose to records based on closing prices. Credit-default swaps insuring Portugal’s debt climbed 3 basis points to 470, while contracts on Ireland increased 3 basis points to 602, according to CMA.

The MSCI Emerging Markets Index added 0.4 percent. Russia’s Micex stock index rose 1.71 percent as commodities and oil advanced. Poland’s WIG20 Index gained 1 percent with shares of the Warsaw Stock Exchange rallying 23 percent on their first day of trading. The Jakarta Composite Index increased 1 percent to close at a record and Dubai’s Financial Market General Index gained 1.3 percent.

To contact the reporters on this story: Michael P. Regan in New York at Mregan12 Stephen Kirkland in London at skirkland

To contact the editor responsible for this story: Nick Baker at nbaker7 .

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Gap Revives Blue-Box Logo as Customers Pan Redesign

Oct. 12 (Bloomberg) — Gap Inc. abandoned a new logo after consumer criticism and will revert to the blue-square emblem that has been featured in its marketing for more than 20 years.

The clothing retailer released a redesigned logo on its website Oct. 4 and had planned to roll it out in marketing campaigns starting next month. More than a thousand people left comments on Gap’s Facebook page, a majority of them disparaging.

“We’ve learned a lot in this process,” Marka Hansen, the Gap brand president in North America, said yesterday in an e- mailed statement. “We are clear that we did not go about this in the right way. We recognize that we missed the opportunity to engage with the online community. This wasn’t the right project at the right time for crowd sourcing.”

The new logo set the Gap name against a white backdrop, with a blue square in the upper-right corner. Gap, which owns Banana Republic, Old Navy, Piperlime and Athleta, has been updating its clothing lines and stores to appeal to so-called Millennials — consumers in their 20s and early 30s. The logo change was part of that evolution of the brand from “classic, American design, to modern, sexy, cool” Louise Callagy, a spokeswoman for San Francisco-based Gap, said last week.

Two days after the logo release, Gap responded to the outcry on its Facebook page, welcoming design suggestions and calling it a crowd-sourcing project.

‘Different Way’

“We’ve learned just how much energy there is around our brand, and after much thought, we’ve decided to go back to our iconic blue box logo,” Callagy said yesterday in an interview. The change will take place starting today, she said.

Chief Executive Officer Glenn Murphy has focused on the Gap brand since he joined the company three years ago, part of a bid to revive growth. Sales at Gap stores in North America open at least a year have declined six straight months, including a 1 percent drop in September, while Old Navy and Banana Republic have made gains this year. The parent company hasn’t increased annual sales since fiscal 2005.

“There may be a time to evolve our logo, but if and when that time comes, we’ll handle it in a different way,” Hansen said.

Gap rose 44 cents, or 2.4 percent, to $18.71 at 4 p.m. in New York Stock Exchange composite trading. The shares have dropped 11 percent this year.

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn

To contact the editor responsible for this story: Thomas Giles at tgiles5

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Gap Revives Blue-Box Logo as Customers Pan Redesign

Oct. 12 (Bloomberg) — Gap Inc. abandoned a new logo after consumer criticism and will revert to the blue-square emblem that has been featured in its marketing for more than 20 years.

The clothing retailer released a redesigned logo on its website Oct. 4 and had planned to roll it out in marketing campaigns starting next month. More than a thousand people left comments on Gap’s Facebook page, a majority of them disparaging.

“We’ve learned a lot in this process,” Marka Hansen, the Gap brand president in North America, said yesterday in an e- mailed statement. “We are clear that we did not go about this in the right way. We recognize that we missed the opportunity to engage with the online community. This wasn’t the right project at the right time for crowd sourcing.”

The new logo set the Gap name against a white backdrop, with a blue square in the upper-right corner. Gap, which owns Banana Republic, Old Navy, Piperlime and Athleta, has been updating its clothing lines and stores to appeal to so-called Millennials — consumers in their 20s and early 30s. The logo change was part of that evolution of the brand from “classic, American design, to modern, sexy, cool” Louise Callagy, a spokeswoman for San Francisco-based Gap, said last week.

Two days after the logo release, Gap responded to the outcry on its Facebook page, welcoming design suggestions and calling it a crowd-sourcing project.

‘Different Way’

“We’ve learned just how much energy there is around our brand, and after much thought, we’ve decided to go back to our iconic blue box logo,” Callagy said yesterday in an interview. The change will take place starting today, she said.

Chief Executive Officer Glenn Murphy has focused on the Gap brand since he joined the company three years ago, part of a bid to revive growth. Sales at Gap stores in North America open at least a year have declined six straight months, including a 1 percent drop in September, while Old Navy and Banana Republic have made gains this year. The parent company hasn’t increased annual sales since fiscal 2005.

“There may be a time to evolve our logo, but if and when that time comes, we’ll handle it in a different way,” Hansen said.

Gap rose 44 cents, or 2.4 percent, to $18.71 at 4 p.m. in New York Stock Exchange composite trading. The shares have dropped 11 percent this year.

To contact the reporter on this story: Ryan Flinn in San Francisco at rflinn

To contact the editor responsible for this story: Thomas Giles at tgiles5

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China Trade Surplus Caps Biggest Quarter Since 2008

Oct. 13 (Bloomberg) — China, the world’s biggest exporter, posted a $16.9 billion trade surplus for September, capping the largest quarterly excess since the financial crisis in 2008 as pressure mounts for a stronger yuan.

Exports rose 25.1 percent from a year earlier and imports climbed 24.1 percent, the customs bureau said on its website today. The third-quarter trade gap was $65.6 billion, the most since a $114 billion surplus in the final three months of 2008.

U.S. Treasury Secretary Timothy F. Geithner yesterday suggested that China’s yuan policy is distorting the global currency system by forcing other emerging market countries to intervene. Yuan forwards rose toward a two-year high after the trade data and minutes showing that Federal Reserve policy makers were prepared to ease monetary policy last month, a move that could increase money flows to Asia.

Today’s numbers are “unlikely to do much to reduce international pressure on China to move faster on the currency,” said Brian Jackson, an emerging-markets strategist at Royal Bank of Canada in Hong Kong. “Beijing has plenty of scope to allow appreciation in the months ahead.”

The September surplus compares with the $17.8 billion median estimate of 24 economists surveyed by Bloomberg News. In August, the excess was $20 billion.

Yuan Climbs

The yuan strengthened 0.1 percent to 6.6681 per dollar as of 11:46 a.m. local time in Shanghai and non-deliverable forwards rose 0.2 percent to 6.4496, suggesting appreciation of more than 3 percent in the next year.

European and U.S. officials argue that a stronger Chinese currency would aid the global recovery by stoking demand within the nation and reducing international economic imbalances. China’s gross domestic product expanded 10.3 percent in the second quarter as the nation replaced Japan as the world’s second-biggest economy.

“What’s happening is, as China holds its currency down, their currencies are moving up,” Geithner said in an interview on “Charlie Rose” scheduled to air yesterday on PBS and today on Bloomberg Television, referring to other emerging markets’ exchange rates. Other nations “are having to work very hard to make sure they’re not at an unfair disadvantage with China.”

Chinese officials can point to improvements in the trade balance. Imports rose to a record value of $128.1 billion, limiting the surplus to the smallest in five months.

Still, the trade gap was 31 percent bigger than a year earlier, a comparison with a previously published figure showed.

Narrowing Surplus

“China’s surplus may gradually narrow as the nation’s sustained growth momentum boosts imports and external demand wanes amid a slowdown in developed economies,” said Dariusz Kowalczyk, a Hong Kong-based economist and strategist at Credit Agricole, before today’s release. Kowalczyk said smaller surpluses as a proportion of gross domestic product imply slower gains in the yuan.

“China’s foreign trade is notably better than pre-crisis levels,” the customs bureau said in today’s statement.

September export growth was less than the median estimate in a Bloomberg News survey for a 26 percent gain, and compared with a 34.4 percent jump in August. Bank of America-Merrill Lynch said that a slowdown in year-on-year trade growth was because of a high base for comparison.

Import growth was close to the median forecast for a 25 percent advance following a 35.2 percent increase in August.

U.S. Legislation

The U.S. Senate will consider legislation that would allow duties to be imposed on Chinese imports because of the nation’s failure to allow bigger currency gains, according to Senator Charles Schumer of New York. Companies such as Caterpillar Inc., Wal-Mart Stores Inc. and Citigroup Inc., have warned that the measure may lead to retaliation.

The yuan has gained more than 2 percent since the government in June stopped pegging the currency to the greenback after almost two years.

Debate about competitive devaluations dominated International Monetary Fund meetings last week. Geithner renewed his call for China to let its currency rise and Luxembourg Prime Minister Jean-Claude Juncker, who chairs a panel of euro-area finance ministers, said the yuan is “more than undervalued.”

Chinese central bank Governor Zhou Xiaochuan said his nation needs to avoid the “shock therapy” of excessive yuan appreciation and “very fast” gains probably wouldn’t end global economic imbalances. Appreciation of 20 percent to 40 percent would exacerbate Chinese unemployment and cause social upheaval, according to Premier Wen.

Bull Market

China’s economy has rebounded from the global recession, with the Shanghai Composite Index yesterday entering a so-called bull market, rising 20 percent from a July low. The measure remains down for 2010.

Investors and companies are paying a record premium to obtain yuan in Hong Kong’s offshore market, taking advantage of looser restrictions to stock up on a currency appreciating at the fastest pace in five years.

The yuan in Hong Kong closed yesterday at 6.5400 per dollar, 2 percent more than the 6.6734 spot rate in Shanghai, according to data compiled by Bloomberg.

The world “has to be patient” at the pace of yuan gains, Michael Pettis, a finance professor at Peking University, wrote in a commentary published by Bloomberg News yesterday.

“Ideally, China should spend the next eight to 10 years slowly raising the value of the yuan while boosting wages and interest rates, and limiting credit growth,” Pettis said. “It can’t do any of these things too quickly without undermining growth and causing unemployment to surge.”

To contact the Bloomberg News staff on this story: Li Yanping in Beijing at yli16

To contact the editor responsible for this story: Chris Anstey at canstey

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