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Rabu, 14 Januari 2009

Worried EU states fly to Moscow, Kiev over gas dispute

MOSCOW/KIEV (Reuters) - Russia and Ukraine face another day of sparring over gas supplies on Wednesday and two European Union states launched fresh diplomacy to end a dispute that has left their economies without Russian gas for one week.

Russia began pumping gas meant for Europe via Ukraine on Tuesday, but the EU said little or no gas was flowing to countries suffering urgent energy shortages.

Russia accused Ukraine of shutting off gas to Europe, but Kiev said there was not enough pressure in the pipeline system.

The crisis has disrupted supplies to some 18 countries at the height of winter, shutting down dozens of factories in southeast Europe.

Two of the worst hit EU states, Bulgaria and Slovakia, sent their prime ministers to Moscow and Kiev in a fresh effort to get gas supplies restored.

Slovakian Prime Minister Robert Fico, who was in Kiev on Wednesday for talks with Ukrainian Prime Minister Yulia Tymoshenko, said the country had 11 days of gas reserves left.

"After 12 days, we will be obliged to resort to measures never seen in our history. May I simply ask how long this will go on?" he told Tymoshenko.

But Tymoshenko said her country could do little to help. "Ukraine does not have sufficient gas. We do not have our own supplies," she told Fico.

Fico is due in Moscow later to meet Russian Prime Minister Vladimir Putin alongside Bulgarian Prime Minister Sergei Stanishev and Moldovan Prime Minister Zinaida Greceanii.

Stanishev is under pressure to secure supplies for his country of 7.6 million people as limited domestic reserves are dwindling and anger among Bulgarians is mounting against his Socialist-led government.

Slovakia, which has a population of 5.4 million and gets almost all its gas from Russia, declared a state of emergency on January 6, under which gas deliveries to large clients were reduced. About 1,000 companies were forced to shut or cut production.

A deal brokered by the EU, which gets a quarter of its gas from Russia, had been intended to get supplies moving on Tuesday, with international monitors in place to ensure that Ukraine was not siphoning off any gas, as Moscow has alleged.

Russian state-controlled gas monopoly Gazprom declared force majeure on gas exports to Europe on Tuesday, meaning circumstances beyond its control prevented it from meeting its obligations to clients.

Gazprom is demanding Kiev hand over $614 million for unpaid gas bills and pay $450 per 1,000 cubic meters of gas in 2009. That is similar to rates paid by EU customers but a big rise on last year's price of $179.5.

Analysts in Kiev say Ukraine, saddled with debt and hard hit by the global slowdown, cannot afford that price.

POOR RELATIONS

The row, which has dented the reputation of both Moscow and Kiev as energy suppliers, also reflects their poor political relations. Moscow is vehemently opposed to moves by Ukraine's pro-Western leadership to join the U.S.-led NATO alliance.

The European Commission said Europe needed the gas urgently and an aide to Commission President Jose Manuel Barroso said on Tuesday that he had expressed disappointment over the low volumes pumped by Russia in a telephone conversation with Putin.

Gazprom's Deputy CEO Alexander Medvedev accused the United States of pulling the strings. "It looks like ... they (Ukraine) are dancing to the music which is being orchestrated not in Kiev but outside the country," he said.

State Department spokesman Sean McCormack rejected the charge as "totally without foundation."

Ukraine's economy -- based on steel and chemical exports -- has been hit hard by the global slowdown and its hryvnia currency has experienced sharp falls.


Selasa, 13 Januari 2009

Alcoa racks up $1.2 billion loss for quarter

Alcoa said it lost $1.2 billion, or $1.49 a share. In the year-earlier period, the aluminum giant earned $632 million, or 75 cents a share. Sales fell to $5.7 billion, from $7 billion.
Aluminum prices dropped 35% from a year ago, Alcoa (AA:
alcoa inc com
Last: 10.06-0.75-6.94%
4:00pm 01/12/2009
Delayed quote data
Sponsored by:
AA
10.06, -0.75, -6.9%)
said. Weak demand and excess supply has caused aluminum prices to fall 56% from July highs.
For 2009, Alcoa projects global aluminum consumption will slide 2% to 36 million metric tons as China's dramatic consumption rate slows on top of cuts in North America and Europe. Consumption slipped 3% last year, chief executive officer Klaus Kleinfeld said.
He added that inventories at Alcoa customers and distributors were "very low."
Last week, Alcoa laid out a restructuring plan to conserve cash as it waits for aluminum demand to rebound. It plans to cut more than 15,000 jobs, close plants, curb aluminum output and slash capital expenditures by 50%. It also intends to sell four consumer-related business units that lost a combined $105 million in 2008 after taxes.
          Chart of AA
Alcoa shares have lost 68% in value over the past year, making it one of the worst performers among the 30 components that make up the Dow Jones Industrial Average.
With aluminum prices weak and inventories growing, there are concerns Alcoa may have to scale back its annual 68-cent dividend or cut production more.
"It's a real question if they maintain the dividend," said Brian Hicks, portfolio manager at U.S. Global Investors' Global Resources Fund (PSPFX:
US Glbl:Global Res
Last: 5.21-0.27-4.93%
6:06pm 01/12/2009
Delayed quote data
Sponsored by:
PSPFX
5.21, -0.27, -4.9%)
, which does not own Alcoa shares. "Management is desperately trying to keep the dividend."
Investors have been betting big against Alcoa. The short interest in Alcoa shares is at its highest level since 1998 and five times its average level over that 10-year time period. Short sellers are investors who bet a stock will drop over time, rather than gain in value.
Deutsche Bank took a more bearish stance ahead of Monday afternoon's earnings report. The broker cut Alcoa shares to sell, from hold, and shaved its price target to $8 from $10.
In trading Monday, Alcoa shares closed at $10.06, a decline of 7%.

Dollar and yen rise as global equities slide

The dollar index ($DXY:
US Dollar Index Future - Spot Price
Last: 83.61+0.60+0.72%
6:34am 01/13/2009
Delayed quote data
Sponsored by:
$DXY
83.61, +0.60, +0.7%)
, which measures the greenback against a basket of six major counterparts, traded at 83.536, up from 83.105 in late North American trading on Monday.
          Chart of C_EUR
"The greenback will tend to do better in an environment where global growth worries are increasing," said Stephen Gallo, head of market analysis at Schneider Foreign Exchange.
He cited the Federal Reserve's "extremely proactive approach that has jam-packed the global financial system full of dollar liquidity."
Over the longer term, 2009 could prove volatile as markets assess the contrasting approaches taken by central banks in response to the financial crisis, Gallo said.
Asian stock markets sustained a broad-based sell-off Tuesday, and European stocks recently extended losses. Oil and mining firms led the way lower on worries the global slowdown will apply further pressure on commodity prices. See Asia Markets. Read Europe Markets.
          Chart of C_JPY
Weak equities prompted investors to shift away from higher-yielding currencies, with repatriation benefiting the dollar and, in particular, the yen.
Also, a warning Monday from Standard & Poor's that it might downgrade Spain's sovereign credit rating from AAA status continued to cast a shadow over the euro as financial markets await the European Central Bank's meeting Thursday on euro-zone interest rates, strategists said.
Last Friday, S&P did the same for its credit ratings on Greece. It also cut the outlook on Ireland's rating to negative from stable. See full story on S&P's Spain rating.
Skepticism ensnares euro
          Chart of DXY
Currency markets were skeptical of the euro "at the start of 2009, and the credit headlines on the European governments only reinforces this euro-skeptic market attitude," wrote strategists at KBC Bank in Brussels.
Looking out over the longer term, "we continue to have serious doubts on the chances of a protracted dollar rebound," but short-term momentum is increasingly negative for euro/U.S. dollar, they said.
Against this backdrop, the euro slipped to $1.3310 from $1.3373 on Monday. The single currency also fell to 118.55 yen, down from 119.09 yen.
The yen traded little changed against the dollar, with the U.S. unit buying 89.04 yen.
The British pound was under pressure against both the dollar and the euro, with foreign-exchange traders playing off the British Retail Consortium's monthly survey that showed that U.K. retailers endured the worst December in at least 14 years. See full story.
The pound fell to $1.4630, down 1.2%. The euro rose to 90.82 pence, up 0.8% on the day.
Also Tuesday, the New Zealand dollar came under heavy pressure after S&P cut the country's foreign-currency rating outlook to negative from stable.
S&P confirmed New Zealand's foreign-currency rating at AA+ and its local-currency rating at AAA, the two highest ratings, news reports said.
The U.S. dollar rallied 3.9% against the New Zealand currency to trade at NZ$1.8028 in recent action.

Mineral extractors, banks drive London lower

The U.K. FTSE 100 index (UK:UKX: news , chart , profile ) fell 2.1%, or 91.78 points, to 4,334.41. Other European shares fell and U.S. stock futures were pointing to a lower open on Wall Street. See Europe Markets. See Indications.
"Prices are increasingly factoring in the significant slowdown," noted William Davies, head of European equities at Threadneedle.
Mineral extractors fell sharply in London, with Rio Tinto (RTP:
rio tinto plc sponsored adr
Last: 92.44-7.67-7.66%
4:00pm 01/12/2009
Delayed quote data
Sponsored by:
RTP
92.44, -7.67, -7.7%)
(UK:RIO: news , chart , profile ) shares down 6.2%, Xstrata (UK:XTA: news , chart , profile ) shares down 6% and Lonmin (UK:LMI: news , chart , profile ) shares down 7.3%.
Data out Tuesday showed that China's export growth contracted in December at its fastest pace in almost a decade.
December shipments fell 2.8% to $111.16 billion from a year earlier, its biggest contraction since April 1999 and following a 2.2% narrowing in November, data released by the General Administration of Customs showed Tuesday. See full story.
"Poor Chinese numbers are likely to pressure commodities and possibly equities," Dariusz Kowalczyk, chief investment strategist at SJS Securities, said. See Asia Markets.
Additionally, Rio Tinto announced further production cuts, suspending work on its $229 million underground development at the Northparkes copper and gold mine in New South Wales in Australia due to declining copper prices.
Copper futures fell another 6 cents to $1.43 a pound in Tuesday's electronic trading session, while oil futures fell $1.17 to $36.42 a barrel.
U.S. aluminum giant Alcoa (AA:
alcoa inc com
Last: 10.06-0.75-6.94%
4:00pm 01/12/2009
Delayed quote data
Sponsored by:
AA
10.06, -0.75, -6.9%)
, which detailed production cuts last week, said late Monday that it lost $1.2 billion, or $1.49 a share, in the fourth quarter of 2008. In the year-earlier period, the aluminum giant earned $632 million, or 75 cents a share. Sales fell to $5.7 billion, from $7 billion. See full story.
Banks under pressure
Banks fell, with the sector unable to build on a strong session on Monday. Shares of Royal Bank of Scotland (UK:RBS: news , chart , profile ) (RBS:
royal bk scotland group plc spons adr 20 ord
Last: 16.70+0.54+3.34%
4:00pm 01/12/2009
Delayed quote data
Sponsored by:
RBS
16.70, +0.54, +3.3%)
dropped 7.6%, while Barclays (UK:BARC: news , chart , profile ) shares fell 12.1%..
RBS may face losses of 2.3 billion pounds, or $3.5 billion, on its exposure to the bankrupt Lyondell Chemical stake. It's also going to sell its Bank of China stake, reports said on Tuesday.
"I am still underweight banks and I think that we haven't yet seen the next wave of bad debt problems arising from normal loans to normal people who are losing their jobs and finding it difficult to make mortgage payments and credit card payments," said Andrew Lynch, portfolio manager at Schroder Investment Management.
"From that perspective, I think that banks could continue to struggle for some time just because they face a difficult headwind of more writedowns to come," he added.
Hedge fund manager Man Group (UK:EMG: news , chart , profile ) shares fell 3.2% after it was downgraded to sell from hold by Citigroup, as the broker sees a high risk of profit taking at Man's key AHL fund.
Tesco sales up
However, shares of supermarket group Tesco (UK:TSCO: news , chart , profile ) advanced 2.4% as the company reported a 2.5% rise in U.K. comparable sales in the seven weeks to Jan. 10.
"This growth is against the background of challenging trading conditions in all of our markets caused by the global economic slowdown," the firm said. See full story.
          Chart of UK:TW
Homebuilder Taylor Wimpey (UK:TW: news , chart , profile ) , down 14%, also flagged up difficult market conditions when it updated investors.
"We remain of the view that there will not be a recovery in the U.K. housing market in the short term," it said.
Taylor Wimpey's net private reservations for the second half of 2008 averaged around 137 per week, down from 225 at the same point last year. Average selling prices dropped to 171,000 pounds for 2008, compared to 188,000 pounds in 2007, reflecting ongoing pricing pressure and a higher proportion of affordable completions.
Discussions with debt providers relating to the refinancing of existing debt facilities continue on a constructive basis, the firm added.
Shares of Arriva (UK:ARI: news , chart , profile ) fell 3% after it was cut to conviction sell from buy at Goldman Sachs, with the broker saying the U.K. bus and rail operator is expensive vs. peers, its balance sheet no longer looks strong, a likely rise in pension deficit will also hurt its balance sheet and higher unemployment across Europe will affect its three divisions.
Pub chain J.D. Wetherspoon (UK:JDW: news , chart , profile ) fell 6.3%. It was downgraded to sell from hold by Deutsche Bank, with the broker saying it has the biggest refinancing hurdles to overcome in the pubs sector.
"If it has to hack into the group cost base to help with the refinancing, it may delay any recovery coming out of the recession," the broker said.

By Sarah Turner, MarketWatch