Lundin Mining Corp., a Canadian copper and zinc producer, said it’s considering a C$4.8 billion ($4.9 billion) unsolicited cash-and-stock takeover bid from Equinox Minerals Ltd., which trumps an earlier offer from Inmet Mining Corp.
Lundin’s board is evaluating today’s C$8.10-a-share offer with its advisers and will make a recommendation to its shareholders “as soon as possible,” the Toronto-based company said in a statement. Inmet agreed Jan. 12 to acquire Lundin in a friendly all-stock deal currently worth C$3.6 billion. Lundin rose the most in more than two years in Toronto trading.
Buying Lundin would give Perth, Australia-based Equinox zinc, copper and lead mines in Sweden and Ireland, as well as a stake in a copper and cobalt venture in the Democratic Republic of Congo. A lack of new projects is forcing miners to expand through acquisitions. Equinox, operator of Zambia’s Lumwana mine, bought the biggest Saudi copper deposit this year.
Equinox’s bid is 14 percent more than Lundin’s average share price over 20 days. That compares with an average 27 percent premium among base-metals deals globally announced in the past 12 months, according to data compiled by Bloomberg.
“There is no substitute for cash,” Peter Arden, a mining analyst at Ord Minnett Ltd., said by telephone from Melbourne. “Equinox is a good company but it’s high-risk and not everyone would want to have Zambian copper as their underlying asset. A bit of cash is very smart.”
Shares Gain
Lundin rose C$1.25 to C$7.70 at 12:16 p.m. on the Toronto Stock Exchange. The shares earlier climbed 22 percent to $7.87, the biggest intraday gain since November 2008. Equinox fell 48 cents, or 7.7 percent, to C$5.79. Toronto-based Inmet dropped 79 cents, or 1.2 percent, to C$66.51.
Lorito Holdings Srl and Zebra Holdings & Investments, Lundin’s largest shareholders according to Bloomberg data, couldn’t be reached for comment. Both companies are owned by a Lundin family trust, according to the website of Lundin Petroleum AB, in which Lorito holds a 24 percent stake.
Inmet agreed to pay 0.0954 of a share for every Lundin share, which would give it about 53 percent of a new company to be called Symterra Corp. Equinox is offering to pay 9.5 times earnings before interest, tax, depreciation and amortization, according to Bloomberg data. That compares with Inmet’s bid, which prices Lundin at 8.3 times.
Equinox said it will offer C$8.10 in cash or 1.2903 shares and 1 cent for every Lundin share, prorated based on a maximum cash consideration of C$2.4 billion.
Superior Proposal
“This offer is clearly superior to the nil-premium merger proposed between Lundin and Inmet,” Craig Williams, Equinox’s chief executive officer, said in a statement.
Equinox will finance the cash component of its offer through a $3.2 billion bridging loan arranged through Goldman Sachs Group Inc. and Credit Suisse Group AG, Equinox said in a statement. Goldman Sachs is also lead financial adviser to Equinox.
There have been $24 billion of mining mergers and acquisitions so far this quarter, set for the best start to the year since 2008. Metal prices in London have almost doubled in the past two years as the global economy emerged from a recession.
“Anything that’s got a market capitalization of A$5 billion ($5.1 billion) or less, with good-quality mine life, in the right strategic place, then there’s every chance you’re going to see further consolidation,” Chris Weston, an institutional dealer at IG Markets in Melbourne, said by phone.
Copper Prices
The average copper price will climb 22 percent this year, Standard Bank Plc said last month. A combination of Equinox and Lundin would create a global top 10 copper producer, based on 2011 production forecasts, Equinox said in a presentation.
Equinox, with a market value of C$4.9 billion, completed the purchase of Citadel Resource Group Ltd. last month for A$970.5 million, its first acquisition in six years. Citadel owns the $305 million Jabal Sayid copper and gold project in Saudi Arabia. Equinox’s $841 million Lumwana project is Zambia’s biggest foreign investment.
Lumwana produced 109,413 metric tons of copper in 2009 and was forecast to yield 135,000 tons in 2010, Equinox said on its website. Lundin last year produced 93,450 tons of copper. Copper output at the Tenke Fungurume project in Congo, in which Lundin owns a 25 percent stake, is forecast to rise to 130,000 tons this year.
“The two key assets are the 24 percent interest in Tenke Fungurume, which is a world-class operation, and the Neves-Corvo mine in Portugal,” Equinox’s Williams said in a phone interview. Tenke “is a very significant mine,” he said.
Boost Earnings
Equinox is targeting production from the combined company of about 500,000 tons a year by 2016, it said in the statement. The deal would boost earnings and cash flow immediately and the company sees no need to sell shares to refinance the bridging loan, it said in the presentation. Equinox’s production will almost double on the acquisition, based on 2013 output forecasts, it said.
2/28/2011
Stocks Rise as Buffett Eyes M&A; Oil, Treasuries Fluctuate
extending a third monthly gain for U.S. benchmark indexes, as billionaire investor Warren Buffett said he’s looking to make acquisitions and reports signaled a strengthening American economy. The Dollar Index declined while Treasuries and oil fluctuated.
The S&P 500 added 0.2 percent at 1:05 p.m. in New York, paring an advance of as much as 0.7 percent. The Stoxx Europe 600 Index climbed 0.8 percent. The Dollar Index slipped 0.4 percent, while the yield on the 10-year Treasury rose less than one basis point to 3.42 percent. Oman shares sank the most in 25 months as political unrest spread to the Sultanate. Dubai’s index slid to the lowest level since 2004.
The S&P 500 rebounded after last week’s 1.7 percent drop after Buffett told shareholders his “trigger finger is itchy” for deals, spurring speculation that an upswing in takeovers will accelerate. Blackstone Group LP agreed to buy Centro Properties Group’s U.S. shopping centers for $9.4 billion, two people familiar with the matter said, while Ventas Inc. plans to buy Nationwide Health Properties Inc. for about $5.7 billion in the biggest ever takeover of a health-care real-estate investment trusts.
“It’s a constructive environment,” said Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $741 billion. “Whenever Warren Buffett’s talking about putting money to work, that’s going to have a positive impact on people’s views and on the market.”
Consumer Spending
Buffett isn’t the only investor with an itchy trigger finger. Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion through this date last year, according to data compiled by Bloomberg.
Class B shares of Buffett’s Berkshire Hathaway Inc. climbed 2.4 percent as the company also reported a 43 percent gain in quarterly profit to the highest since 2007 on derivative gains and earnings from the acquisition of Burlington Northern Santa Fe, the railroad purchased last year.
“Our elephant gun has been reloaded, and my trigger finger is itchy,” Buffett said of the outlook for deals in his annual letter to shareholders on Feb. 26. The company’s cash holdings rose to $38.2 billion at year-end, the highest in three years, compared with $34.5 billion as of Sept. 30.
Nationwide Health Properties rallied 9.4 percent, the most since May 2009, while Ventas slipped 3.7 percent.
Economic Data
Stocks also gained as the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News. Separate government data showed personal incomes climbed 1 percent and inflation remained below the Fed’s long-term forecast.
Federal Reserve Bank of New York President William Dudley said in a speech in New York that the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Fed Bank of St. Louis President James Bullard said in a CNBC interview that oil prices would have to go “substantially higher” to be a concern to U.S. economic and a weaker dollar can help growth temporarily.
The cost of protecting U.S. corporate bonds from default dropped for a third day. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 0.9 basis points to a mid-price of 82.2 basis points, according to index administrator Markit Group Ltd.
European Stocks
About five shares gained for every two that fell in Europe’s Stoxx 600. Syngenta AG jumped 2.6 percent after the Indian government announced tax breaks for investments in fertilizer projects and a rival announced an increase in sales of agricultural chemicals. Siemens AG climbed 3.6 percent after the company was said to be weighing an initial public offering of its Osram lighting business. HSBC Holdings Plc, Europe’s biggest bank, slid 4.7 percent after earnings missed analysts’ estimates.
The dollar depreciated against all but three of its most- traded counterparts, slipping 0.3 percent per euro. Europe’s single currency appreciated 0.5 percent versus the yen and 0.4 percent against the Swiss franc before the European Central Bank meets to discuss interest rates this week.
Krona Jumps
Sweden’s krona jumped 1.4 percent against the dollar to the strongest since August 2008, after central bank Governor Stefan Ingves said in minutes of the Feb. 14 meeting published today that the chances of monetary tightening at every meeting this year have risen and signaled individual interest-rate increases may be bigger than those executed thus far.
The Bloomberg GCC 200 index fell to the lowest level on a closing basis since Sept. 4. Oman’s MSM 30 Index sank 4.9 percent and the Dubai Financial Market General Index slid 3.8 percent
The MSCI Emerging Markets Index advanced 0.7 percent. The Bombay Stock Exchange Sensitive Index climbed 0.7 percent as India’s government pledged to trim its budget shortfall while boosting spending on projects needed to sustain economic growth.
Oil fell as much as 1.2 percent to $96.71 a barrel after earlier climbing as much as 2.1 percent to $99.96 in New York. Chief Executive Officer Khalid Al-Falih said the Saudi Arabian Oil Co. is ready to compensate for any shortfall in crude supply. Most ships picking up Libyan oil cargoes have done so successfully in the past week, said Bob Knight, head of tankers at Clarkson Plc, the world’s largest shipbroker.
Brent crude also fluctuated between gains and losses, recently trading up less than 0.1 percent at $112.18. The average price for U.S. regular gasoline at the pump gained 2.1 cents to $3.354 a gallon on Feb. 26, AAA, the country’s largest motor club, said on its website. The record pump price, reached in July 2008, was $4.114.
Cotton jumped the daily limit of 7 cents, or 3.8 percent, after China, the world’s largest producer and consumer, reported lower production last year. Copper climbed 0.9 percent to $4.4940 a pound in New York.
The S&P 500 added 0.2 percent at 1:05 p.m. in New York, paring an advance of as much as 0.7 percent. The Stoxx Europe 600 Index climbed 0.8 percent. The Dollar Index slipped 0.4 percent, while the yield on the 10-year Treasury rose less than one basis point to 3.42 percent. Oman shares sank the most in 25 months as political unrest spread to the Sultanate. Dubai’s index slid to the lowest level since 2004.
The S&P 500 rebounded after last week’s 1.7 percent drop after Buffett told shareholders his “trigger finger is itchy” for deals, spurring speculation that an upswing in takeovers will accelerate. Blackstone Group LP agreed to buy Centro Properties Group’s U.S. shopping centers for $9.4 billion, two people familiar with the matter said, while Ventas Inc. plans to buy Nationwide Health Properties Inc. for about $5.7 billion in the biggest ever takeover of a health-care real-estate investment trusts.
“It’s a constructive environment,” said Mike Ryan, the New York-based head of wealth management research for the Americas at UBS Financial Services Inc., which oversees about $741 billion. “Whenever Warren Buffett’s talking about putting money to work, that’s going to have a positive impact on people’s views and on the market.”
Consumer Spending
Buffett isn’t the only investor with an itchy trigger finger. Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion through this date last year, according to data compiled by Bloomberg.
Class B shares of Buffett’s Berkshire Hathaway Inc. climbed 2.4 percent as the company also reported a 43 percent gain in quarterly profit to the highest since 2007 on derivative gains and earnings from the acquisition of Burlington Northern Santa Fe, the railroad purchased last year.
“Our elephant gun has been reloaded, and my trigger finger is itchy,” Buffett said of the outlook for deals in his annual letter to shareholders on Feb. 26. The company’s cash holdings rose to $38.2 billion at year-end, the highest in three years, compared with $34.5 billion as of Sept. 30.
Nationwide Health Properties rallied 9.4 percent, the most since May 2009, while Ventas slipped 3.7 percent.
Economic Data
Stocks also gained as the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge, which was projected to fall, exceeded every estimate of economists surveyed by Bloomberg News. Separate government data showed personal incomes climbed 1 percent and inflation remained below the Fed’s long-term forecast.
Federal Reserve Bank of New York President William Dudley said in a speech in New York that the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Fed Bank of St. Louis President James Bullard said in a CNBC interview that oil prices would have to go “substantially higher” to be a concern to U.S. economic and a weaker dollar can help growth temporarily.
The cost of protecting U.S. corporate bonds from default dropped for a third day. The Markit CDX North America Investment Grade Index, which investors use to hedge against losses on corporate debt or to speculate on creditworthiness, declined 0.9 basis points to a mid-price of 82.2 basis points, according to index administrator Markit Group Ltd.
European Stocks
About five shares gained for every two that fell in Europe’s Stoxx 600. Syngenta AG jumped 2.6 percent after the Indian government announced tax breaks for investments in fertilizer projects and a rival announced an increase in sales of agricultural chemicals. Siemens AG climbed 3.6 percent after the company was said to be weighing an initial public offering of its Osram lighting business. HSBC Holdings Plc, Europe’s biggest bank, slid 4.7 percent after earnings missed analysts’ estimates.
The dollar depreciated against all but three of its most- traded counterparts, slipping 0.3 percent per euro. Europe’s single currency appreciated 0.5 percent versus the yen and 0.4 percent against the Swiss franc before the European Central Bank meets to discuss interest rates this week.
Krona Jumps
Sweden’s krona jumped 1.4 percent against the dollar to the strongest since August 2008, after central bank Governor Stefan Ingves said in minutes of the Feb. 14 meeting published today that the chances of monetary tightening at every meeting this year have risen and signaled individual interest-rate increases may be bigger than those executed thus far.
The Bloomberg GCC 200 index fell to the lowest level on a closing basis since Sept. 4. Oman’s MSM 30 Index sank 4.9 percent and the Dubai Financial Market General Index slid 3.8 percent
The MSCI Emerging Markets Index advanced 0.7 percent. The Bombay Stock Exchange Sensitive Index climbed 0.7 percent as India’s government pledged to trim its budget shortfall while boosting spending on projects needed to sustain economic growth.
Oil fell as much as 1.2 percent to $96.71 a barrel after earlier climbing as much as 2.1 percent to $99.96 in New York. Chief Executive Officer Khalid Al-Falih said the Saudi Arabian Oil Co. is ready to compensate for any shortfall in crude supply. Most ships picking up Libyan oil cargoes have done so successfully in the past week, said Bob Knight, head of tankers at Clarkson Plc, the world’s largest shipbroker.
Brent crude also fluctuated between gains and losses, recently trading up less than 0.1 percent at $112.18. The average price for U.S. regular gasoline at the pump gained 2.1 cents to $3.354 a gallon on Feb. 26, AAA, the country’s largest motor club, said on its website. The record pump price, reached in July 2008, was $4.114.
Cotton jumped the daily limit of 7 cents, or 3.8 percent, after China, the world’s largest producer and consumer, reported lower production last year. Copper climbed 0.9 percent to $4.4940 a pound in New York.
BofA’s Kaplan Leaves for Appaloosa; Baronoff Named M&A Chief
Bank of America Corp., the biggest U.S. lender by assets, said Steven Baronoff will assume Jeff Kaplan’s duties leading mergers and acquisitions.
Kaplan is leaving to join hedge fund Appaloosa Management LP, the Charlotte, North Carolina-based bank said today in a memo obtained by Bloomberg. Baronoff, chairman of global M&A, has advised on more than $1 trillion of transactions, including Procter & Gamble Co.’s purchase of Gillette, according to the memo from Thomas Montag, president of global banking and markets, and Michael Rubinoff and Purna Saggurti, co-heads of global investment banking.
Baronoff “will continue to serve as our most senior adviser to deal teams and clients globally,” according to the memo. “We thank Jeff for his dedication and leadership and look forward to working with him in the future.”
Kaplan joins Appaloosa, a Bank of America client, as chief operating officer, according to the memo. As M&A chief, he worked on deals including advising Marvel Entertainment Inc., led by Isaac Perlmutter, on its $4 billion sale to Walt Disney Co. in 2009.
John Yiannacopoulos, a Bank of America spokesman, confirmed the contents of the memo. The change was reported earlier by the Wall Street Journal.
Kaplan is leaving to join hedge fund Appaloosa Management LP, the Charlotte, North Carolina-based bank said today in a memo obtained by Bloomberg. Baronoff, chairman of global M&A, has advised on more than $1 trillion of transactions, including Procter & Gamble Co.’s purchase of Gillette, according to the memo from Thomas Montag, president of global banking and markets, and Michael Rubinoff and Purna Saggurti, co-heads of global investment banking.
Baronoff “will continue to serve as our most senior adviser to deal teams and clients globally,” according to the memo. “We thank Jeff for his dedication and leadership and look forward to working with him in the future.”
Kaplan joins Appaloosa, a Bank of America client, as chief operating officer, according to the memo. As M&A chief, he worked on deals including advising Marvel Entertainment Inc., led by Isaac Perlmutter, on its $4 billion sale to Walt Disney Co. in 2009.
John Yiannacopoulos, a Bank of America spokesman, confirmed the contents of the memo. The change was reported earlier by the Wall Street Journal.
U.S. Sends Refugee Aid as Pressure Grows on Qaddafi to Quit
The international community intensified pressure on Libyan leader Muammar Qaddafi to quit, as clashes were reported near the capital and the U.S. and its allies threatened to impose a no-fly zone to prevent his forces from launching air strikes against opposition-held areas.
U.S. Secretary of State Hillary Clinton, after meeting with foreign ministers in Geneva, said the U.S. is responding to the refugee crisis by allocating $10 million for humanitarian assistance and immediately sending aid teams to the Tunisian and Egyptian borders with Libya. The foreign ministers discussed sanctions on Qaddafi’s regime and other measures to “support the Libyan people,” she said.
In the latest clashes, three soldiers from a force loyal to Qaddafi were killed in clashes with protesters in Zawiyah, Al Arabiya reported, citing rebels in the town. It said that Qaddafi’s troops were trying take control of the town, 45 kilometers (28 miles) west of Tripoli and the nearest population center to fall to the rebels. An Associated Press reporter saw a large pro-Qaddafi force massed on the western edge of town with about a dozen armored vehicles and tanks and jeeps mounted with anti-aircraft guns.
The United Nations estimates that more than 1,000 people have died in the uprising and almost 100,000 have fled amid the heaviest fighting in six weeks of unrest that swept parts of North Africa and the Persian Gulf, home of the world’s biggest oil reserves. Armed anti-government forces control much of Libya’s east and have deployed tanks and anti-aircraft weapons to defend Zawiyah, according to the Associated Press.
Shares Tumble
Middle East shares tumbled today, sending Dubai’s stock index to the lowest level in almost seven years, as political unrest in the region spread to the Sultanate of Oman and reignited in Tunisia, prompting investors to trim riskier assets.
“Mercenaries and thugs have been turned loose to attack,” Clinton said in Geneva today at a meeting of the UN Human Rights Council. ‘We will continue to explore all possible options for action -- as we have said, nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.’’
Libyan rebels are organizing in the eastern port of Benghazi, the biggest city they control. On the roads between Benghazi and the Egyptian border, anti-Qaddafi protesters carrying assault rifles and former soldiers in uniform set up tents and searched passing cars for weapons, some of them welcoming passersby with juice and sweets.
‘Qaddafi Out’
There were no major clashes yesterday, though gunfire was heard in Tripoli after nightfall, the AP said. In Zawiyah, hundreds of people chanted “Qaddafi out!,” it said.
“We’ve been reaching out to many different Libyans who are attempting to organize in the east and, as the revolution moves westward, there as well,” Clinton said en route to Geneva, where she met today with officials from the European Union and Russia to discuss the crisis. German Foreign Minister Guido Westerwelle urged a 60-day freeze on oil payments to Libya and said the imposition of a no-fly zone over the country is under discussion today.
Crude oil for April delivery declined 48 cents, or 0.5 percent, to $97.40 a barrel at 9:21 a.m. on the New York Mercantile Exchange as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude.
Regional Unrest
Futures reached $103.41 a barrel on Feb. 24, the highest intraday level since Sept. 29, 2008. Prices rose 14 percent last week, the most in two years.
The regional unrest that ousted Tunisian President Zine El Abidine Ben Ali and Egyptian President Hosni Mubarak reached Oman, where two demonstrators were killed yesterday and several were wounded in clashes with security forces in the city of Sohar, according to hospital and government officials.
Demonstrations in Sohar resumed today, and a hypermarket in the coastal city was set on fire as hundreds gathered to protest and roads were closed. Sultan Qaboos Bin Said, the ruler since 1970, has told the government to create 50,000 jobs and boost allowances for those without full-time work.
Oman, where companies including Royal Dutch Shell Plc and Total SA have a stake in the oil industry, produces about 800,000 barrels a day and lies at the entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.
Oman Impact
Oman’s benchmark MSM30 stock index slumped 4.9 percent, the biggest drop for more than two years. In Dubai the main index fell 3.8 percent to a seven-year low. The Bloomberg GCC 200 index of regional shares fell 1 percent.
In Tunisia, where the regional turmoil began two months ago, protests have flared up again, forcing interim Prime Minister Mohamed Ghannouchi to resign after at least three people were killed. The demonstrators had called for the removal of Ghannouchi because of his links with former ruler Ben Ali, who fled the country on Jan. 14. Interim President Fouad Mebazaa named former foreign minister Beji Caid Essebsi as the new prime minister and appealed for calm.
In Saudi Arabia, the world’s largest oil supplier, activists and academics yesterday called on King Abdullah to increase political rights and move toward a constitutional monarchy. Libya and Saudi Arabia are among the 12 members of the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s oil.
Yemen Protests
Yemeni opposition movements, which have been holding daily protests demanding the ouster of President Ali Abdullah Saleh after more than three decades, today refused an offer by Saleh to form a national unity government, al-Jazeera television said. Thirteen lawmakers quit Yemen’s parliament today to protest violence against demonstrators, as the government said three security officers have been killed in recent days.
International efforts to end Qaddafi’s attacks on the Libyan rebels and force him from power have shifted to Geneva, “It is time for Qaddafi to go -- now, without further violence or delay,” Clinton said today.
The possibility of imposing a no-fly zone over Libya, which would prevent Qaddafi loyalists from carrying out aerial attacks on the opposition, is being debated at today’s meeting in Geneva, Westerwelle said.
The UN Security Council voted 15-0 on Feb. 26 to freeze the foreign assets of Qaddafi and four aides and to bar them from traveling. The resolution also imposes an arms embargo on Libya and calls for an immediate end to violence that it says “may amount to crimes against humanity.”
Qaddafi’s Assets
Qaddafi’s family has no bank accounts abroad, Libya’s state television reported today, citing the leader’s son Saif al-Islam Qaddafi.
Governments throughout the world have rushed to get their nationals out of Libya. China has evacuated about 29,000 people, state news agency Xinhua said today, and Turkey said 18,000 of its citizens have been removed. The U.K. and Germany sent military missions to help with the evacuation.
Qaddafi remained defiant yesterday as he said he would remain in Libya and quash the rebellion. “The people of Libya support me,” he said in a telephone interview with Serbia’s Pink television station, according to a report by Israel’s Haaretz newspaper. “Small groups of rebels are surrounded and will be dealt with.”
Egypt stock trading is set to resume tomorrow after a suspension of more than a month amid a popular revolution that toppled the 30-year-old regime of former President Hosni Mubarak. The measure lost 16 percent the week ended Jan. 27, when it last traded. The Tunisian bourse suspended trading from today until further notice, the bourse said on its website.
U.S. Secretary of State Hillary Clinton, after meeting with foreign ministers in Geneva, said the U.S. is responding to the refugee crisis by allocating $10 million for humanitarian assistance and immediately sending aid teams to the Tunisian and Egyptian borders with Libya. The foreign ministers discussed sanctions on Qaddafi’s regime and other measures to “support the Libyan people,” she said.
In the latest clashes, three soldiers from a force loyal to Qaddafi were killed in clashes with protesters in Zawiyah, Al Arabiya reported, citing rebels in the town. It said that Qaddafi’s troops were trying take control of the town, 45 kilometers (28 miles) west of Tripoli and the nearest population center to fall to the rebels. An Associated Press reporter saw a large pro-Qaddafi force massed on the western edge of town with about a dozen armored vehicles and tanks and jeeps mounted with anti-aircraft guns.
The United Nations estimates that more than 1,000 people have died in the uprising and almost 100,000 have fled amid the heaviest fighting in six weeks of unrest that swept parts of North Africa and the Persian Gulf, home of the world’s biggest oil reserves. Armed anti-government forces control much of Libya’s east and have deployed tanks and anti-aircraft weapons to defend Zawiyah, according to the Associated Press.
Shares Tumble
Middle East shares tumbled today, sending Dubai’s stock index to the lowest level in almost seven years, as political unrest in the region spread to the Sultanate of Oman and reignited in Tunisia, prompting investors to trim riskier assets.
“Mercenaries and thugs have been turned loose to attack,” Clinton said in Geneva today at a meeting of the UN Human Rights Council. ‘We will continue to explore all possible options for action -- as we have said, nothing is off the table so long as the Libyan government continues to threaten and kill Libyan citizens.’’
Libyan rebels are organizing in the eastern port of Benghazi, the biggest city they control. On the roads between Benghazi and the Egyptian border, anti-Qaddafi protesters carrying assault rifles and former soldiers in uniform set up tents and searched passing cars for weapons, some of them welcoming passersby with juice and sweets.
‘Qaddafi Out’
There were no major clashes yesterday, though gunfire was heard in Tripoli after nightfall, the AP said. In Zawiyah, hundreds of people chanted “Qaddafi out!,” it said.
“We’ve been reaching out to many different Libyans who are attempting to organize in the east and, as the revolution moves westward, there as well,” Clinton said en route to Geneva, where she met today with officials from the European Union and Russia to discuss the crisis. German Foreign Minister Guido Westerwelle urged a 60-day freeze on oil payments to Libya and said the imposition of a no-fly zone over the country is under discussion today.
Crude oil for April delivery declined 48 cents, or 0.5 percent, to $97.40 a barrel at 9:21 a.m. on the New York Mercantile Exchange as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude.
Regional Unrest
Futures reached $103.41 a barrel on Feb. 24, the highest intraday level since Sept. 29, 2008. Prices rose 14 percent last week, the most in two years.
The regional unrest that ousted Tunisian President Zine El Abidine Ben Ali and Egyptian President Hosni Mubarak reached Oman, where two demonstrators were killed yesterday and several were wounded in clashes with security forces in the city of Sohar, according to hospital and government officials.
Demonstrations in Sohar resumed today, and a hypermarket in the coastal city was set on fire as hundreds gathered to protest and roads were closed. Sultan Qaboos Bin Said, the ruler since 1970, has told the government to create 50,000 jobs and boost allowances for those without full-time work.
Oman, where companies including Royal Dutch Shell Plc and Total SA have a stake in the oil industry, produces about 800,000 barrels a day and lies at the entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.
Oman Impact
Oman’s benchmark MSM30 stock index slumped 4.9 percent, the biggest drop for more than two years. In Dubai the main index fell 3.8 percent to a seven-year low. The Bloomberg GCC 200 index of regional shares fell 1 percent.
In Tunisia, where the regional turmoil began two months ago, protests have flared up again, forcing interim Prime Minister Mohamed Ghannouchi to resign after at least three people were killed. The demonstrators had called for the removal of Ghannouchi because of his links with former ruler Ben Ali, who fled the country on Jan. 14. Interim President Fouad Mebazaa named former foreign minister Beji Caid Essebsi as the new prime minister and appealed for calm.
In Saudi Arabia, the world’s largest oil supplier, activists and academics yesterday called on King Abdullah to increase political rights and move toward a constitutional monarchy. Libya and Saudi Arabia are among the 12 members of the Organization of Petroleum Exporting Countries, which pumps about 40 percent of the world’s oil.
Yemen Protests
Yemeni opposition movements, which have been holding daily protests demanding the ouster of President Ali Abdullah Saleh after more than three decades, today refused an offer by Saleh to form a national unity government, al-Jazeera television said. Thirteen lawmakers quit Yemen’s parliament today to protest violence against demonstrators, as the government said three security officers have been killed in recent days.
International efforts to end Qaddafi’s attacks on the Libyan rebels and force him from power have shifted to Geneva, “It is time for Qaddafi to go -- now, without further violence or delay,” Clinton said today.
The possibility of imposing a no-fly zone over Libya, which would prevent Qaddafi loyalists from carrying out aerial attacks on the opposition, is being debated at today’s meeting in Geneva, Westerwelle said.
The UN Security Council voted 15-0 on Feb. 26 to freeze the foreign assets of Qaddafi and four aides and to bar them from traveling. The resolution also imposes an arms embargo on Libya and calls for an immediate end to violence that it says “may amount to crimes against humanity.”
Qaddafi’s Assets
Qaddafi’s family has no bank accounts abroad, Libya’s state television reported today, citing the leader’s son Saif al-Islam Qaddafi.
Governments throughout the world have rushed to get their nationals out of Libya. China has evacuated about 29,000 people, state news agency Xinhua said today, and Turkey said 18,000 of its citizens have been removed. The U.K. and Germany sent military missions to help with the evacuation.
Qaddafi remained defiant yesterday as he said he would remain in Libya and quash the rebellion. “The people of Libya support me,” he said in a telephone interview with Serbia’s Pink television station, according to a report by Israel’s Haaretz newspaper. “Small groups of rebels are surrounded and will be dealt with.”
Egypt stock trading is set to resume tomorrow after a suspension of more than a month amid a popular revolution that toppled the 30-year-old regime of former President Hosni Mubarak. The measure lost 16 percent the week ended Jan. 27, when it last traded. The Tunisian bourse suspended trading from today until further notice, the bourse said on its website.
U.S. Stocks Rise Amid Improving Data as Buffett Eyes Takeovers
extending a third straight monthly gain for benchmark indexes, amid improving economic data and as billionaire investor Warren Buffett said he’s looking to make more acquisitions.
Berkshire Hathaway Inc.’s Class B shares rose 2.1 percent as Buffett’s company said profit jumped 43 percent to the highest since 2007. Walgreen Co. climbed 4.1 percent after Morgan Stanley raised its share-price estimate for the largest U.S. drugstore chain. Humana Inc., the biggest provider of U.S.- backed health benefits, jumped 5 percent after raising its profit forecast. Amazon.com Inc. slumped 2.5 percent after UBS AG cut its recommendation for the largest online retailer.
The S&P 500 advanced 0.4 percent to 1,325.34 at 12:52 p.m. in New York, rallying for a second straight day. The gauge is up 3 percent this month. The Dow Jones Industrial Average rallied 77.04 points, or 0.6 percent, to 12,207.49 today.
“Warren Buffett is always out there to buy companies at the right price,” said E. William Stone, who oversees about $105 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “He has enough cash to do what he wants to do. On top of that, the economy continues to recover and earnings will not be affected by the situation in oil prices. We see pressure coming off the oil market. There’s a sense the market can handle Libya covering the supply.”
Middle East Crisis
The S&P 500 had the biggest drop in three months last week as Libya’s anti-government uprising pushed oil prices higher and prompted concern economic growth may falter. Oil was little changed today as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude. Still, crude is trading near a two- year high.
The benchmark gauge for U.S. stocks has risen 5 percent this year through Feb. 25 amid government measures to stimulate the economy and higher-than-estimated corporate earnings. Per- share profit topped estimates at 71 percent of the 460 companies in the S&P 500 that have reported results since Jan. 10, according to data compiled by Bloomberg.
Earlier, futures maintained gains as government data showed personal incomes climbed 1 percent, more than the 0.4 percent median estimate in a Bloomberg News survey of economists, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December. Inflation remained below the Federal Reserve’s long-term forecast.
Business Barometer
Stocks also rose after the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge was projected to fall to 67.5, according to the median estimate of 52 economists surveyed by Bloomberg News.
The dollar fell to its lowest since November against the currencies of six U.S. trade partners on bets Federal Reserve Chairman Ben S. Bernanke will signal to Congress the central bank plans to maintain economic stimulus. Bernanke is scheduled to deliver the Fed’s semiannual report on monetary policy tomorrow to the Senate Banking Committee and is due to testify to the House Financial Services Committee the following day.
Federal Reserve Bank of New York President William Dudley said the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Dudley spoke today in a speech in New York.
Berkshire Hathaway Class B shares added 2.1 percent to $86.66. Fourth-quarter net income advanced to $4.38 billion, or $2,656 a share, from $3.06 billion, or $1,969, a year earlier, Omaha, Nebraska-based Berkshire said on its website.
‘Trigger Finger’
Buffett said his “trigger finger is itchy” for takeovers after cash holdings at his Berkshire Hathaway climbed to $38.2 billion. “Our elephant gun has been reloaded,” Buffett said on Feb. 26 in his annual letter to shareholders.
“It’s another positive influence for confidence,” said Liam Dalton, New York-based president of Axiom Capital Management Inc., which oversees $1.4 billion. “It supports a lot of what we’re dealing with right now -- improving data in the real economy hasn’t reversed. There hasn’t really been any real weakening. A Buffett remark perpetuates that trend.”
Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion announced through this date last year, according to data compiled by Bloomberg.
Greater Voting Rights
A share of Berkshire Hathaway changed hands on the Nasdaq Stock Market for $189,999 before the official open of U.S. exchanges at 7:21 a.m., 49 percent above the Feb. 25 close. The company’s Class A stock, which carries greater voting rights, closed at $127,550 on Feb. 25. There were no additional trades before the shares opened at 9:30 a.m. for $129,000, according to Bloomberg data.
Alexandra Honeysett, a Nasdaq spokeswoman, declined to comment. NYSE Euronext’s Jill Archibald also declined to comment.
Walgreen added 4.1 percent to $43.68. Morgan Stanley boosted its share-price estimate for the drugstore chain to $50 from $44, while raising its second-quarter profit forecast citing stronger-than-estimated sales stemming from flu trends. Morgan Stanley also expects Walgreen stock to rise over the next 30 days.
Humana rose 5 percent to $65.72. The biggest provider of U.S.-backed health benefits boosted its full-year per-share profit forecast to $5.95 to $6.15. The shares were raised to “buy” from “hold” at Stifel Nicolaus.
Nationwide Health Soars
Nationwide Health Properties Inc. jumped 9.9 percent, the most in the Russell 1000 Index, to $42.81. Ventas Inc., the second-biggest U.S. health-care real estate investment trust by market value, agreed to buy Nationwide Health for about $5.7 billion. Ventas slid 3.1 percent to $55.42.
Amazon fell 2.5 percent to $172.90. UBS downgraded the stock to “neutral” from “buy”, citing potential margin pressures because of a more prolonged investment period and free subscription streaming. UBS also reduced its 12-month share- price estimate to $180 a share from $195.
Barclays Plc forecast the S&P 500 will advance to 1,450 in 2011, up from a previous prediction of 1,420. Barry Knapp, the New York-based chief equity strategist for the firm, lifted his 2011 profit estimate for the benchmark gauge to $93 from $91, citing better-than-estimated fourth-quarter earnings and increased confidence in the financial sector.
“We are more optimistic than we have been at this time in each of the last two years,” Knapp wrote in a report dated Feb. 25. “Our base case is for a favorable first half, resulting in a more upbeat full-year outlook for 2011.”
The firm also raised its recommendation for industrial companies to “overweight” and health-care and financial stocks to “marketweight,” while lowering its rating of consumer discretionary companies to “marketweight.”
Berkshire Hathaway Inc.’s Class B shares rose 2.1 percent as Buffett’s company said profit jumped 43 percent to the highest since 2007. Walgreen Co. climbed 4.1 percent after Morgan Stanley raised its share-price estimate for the largest U.S. drugstore chain. Humana Inc., the biggest provider of U.S.- backed health benefits, jumped 5 percent after raising its profit forecast. Amazon.com Inc. slumped 2.5 percent after UBS AG cut its recommendation for the largest online retailer.
The S&P 500 advanced 0.4 percent to 1,325.34 at 12:52 p.m. in New York, rallying for a second straight day. The gauge is up 3 percent this month. The Dow Jones Industrial Average rallied 77.04 points, or 0.6 percent, to 12,207.49 today.
“Warren Buffett is always out there to buy companies at the right price,” said E. William Stone, who oversees about $105 billion as chief investment strategist at PNC Wealth Management in Philadelphia. “He has enough cash to do what he wants to do. On top of that, the economy continues to recover and earnings will not be affected by the situation in oil prices. We see pressure coming off the oil market. There’s a sense the market can handle Libya covering the supply.”
Middle East Crisis
The S&P 500 had the biggest drop in three months last week as Libya’s anti-government uprising pushed oil prices higher and prompted concern economic growth may falter. Oil was little changed today as Saudi Arabia offered to make up for supplies lost because of unrest in Libya and on reports the North African country is exporting crude. Still, crude is trading near a two- year high.
The benchmark gauge for U.S. stocks has risen 5 percent this year through Feb. 25 amid government measures to stimulate the economy and higher-than-estimated corporate earnings. Per- share profit topped estimates at 71 percent of the 460 companies in the S&P 500 that have reported results since Jan. 10, according to data compiled by Bloomberg.
Earlier, futures maintained gains as government data showed personal incomes climbed 1 percent, more than the 0.4 percent median estimate in a Bloomberg News survey of economists, reflecting the tax-cut compromise reached by President Barack Obama and Congressional Republicans in December. Inflation remained below the Federal Reserve’s long-term forecast.
Business Barometer
Stocks also rose after the Institute for Supply Management- Chicago Inc. said today its business barometer rose to 71.2 this month, the highest level since July 1988, from 68.8 in January. Figures greater than 50 signal expansion. The gauge was projected to fall to 67.5, according to the median estimate of 52 economists surveyed by Bloomberg News.
The dollar fell to its lowest since November against the currencies of six U.S. trade partners on bets Federal Reserve Chairman Ben S. Bernanke will signal to Congress the central bank plans to maintain economic stimulus. Bernanke is scheduled to deliver the Fed’s semiannual report on monetary policy tomorrow to the Senate Banking Committee and is due to testify to the House Financial Services Committee the following day.
Federal Reserve Bank of New York President William Dudley said the “considerably brighter” economic outlook isn’t yet reason for the central bank to withdraw its record monetary stimulus. Dudley spoke today in a speech in New York.
Berkshire Hathaway Class B shares added 2.1 percent to $86.66. Fourth-quarter net income advanced to $4.38 billion, or $2,656 a share, from $3.06 billion, or $1,969, a year earlier, Omaha, Nebraska-based Berkshire said on its website.
‘Trigger Finger’
Buffett said his “trigger finger is itchy” for takeovers after cash holdings at his Berkshire Hathaway climbed to $38.2 billion. “Our elephant gun has been reloaded,” Buffett said on Feb. 26 in his annual letter to shareholders.
“It’s another positive influence for confidence,” said Liam Dalton, New York-based president of Axiom Capital Management Inc., which oversees $1.4 billion. “It supports a lot of what we’re dealing with right now -- improving data in the real economy hasn’t reversed. There hasn’t really been any real weakening. A Buffett remark perpetuates that trend.”
Announced takeovers of U.S. companies have totaled $161.9 billion so far in 2011, 66 percent more than the $97.4 billion announced through this date last year, according to data compiled by Bloomberg.
Greater Voting Rights
A share of Berkshire Hathaway changed hands on the Nasdaq Stock Market for $189,999 before the official open of U.S. exchanges at 7:21 a.m., 49 percent above the Feb. 25 close. The company’s Class A stock, which carries greater voting rights, closed at $127,550 on Feb. 25. There were no additional trades before the shares opened at 9:30 a.m. for $129,000, according to Bloomberg data.
Alexandra Honeysett, a Nasdaq spokeswoman, declined to comment. NYSE Euronext’s Jill Archibald also declined to comment.
Walgreen added 4.1 percent to $43.68. Morgan Stanley boosted its share-price estimate for the drugstore chain to $50 from $44, while raising its second-quarter profit forecast citing stronger-than-estimated sales stemming from flu trends. Morgan Stanley also expects Walgreen stock to rise over the next 30 days.
Humana rose 5 percent to $65.72. The biggest provider of U.S.-backed health benefits boosted its full-year per-share profit forecast to $5.95 to $6.15. The shares were raised to “buy” from “hold” at Stifel Nicolaus.
Nationwide Health Soars
Nationwide Health Properties Inc. jumped 9.9 percent, the most in the Russell 1000 Index, to $42.81. Ventas Inc., the second-biggest U.S. health-care real estate investment trust by market value, agreed to buy Nationwide Health for about $5.7 billion. Ventas slid 3.1 percent to $55.42.
Amazon fell 2.5 percent to $172.90. UBS downgraded the stock to “neutral” from “buy”, citing potential margin pressures because of a more prolonged investment period and free subscription streaming. UBS also reduced its 12-month share- price estimate to $180 a share from $195.
Barclays Plc forecast the S&P 500 will advance to 1,450 in 2011, up from a previous prediction of 1,420. Barry Knapp, the New York-based chief equity strategist for the firm, lifted his 2011 profit estimate for the benchmark gauge to $93 from $91, citing better-than-estimated fourth-quarter earnings and increased confidence in the financial sector.
“We are more optimistic than we have been at this time in each of the last two years,” Knapp wrote in a report dated Feb. 25. “Our base case is for a favorable first half, resulting in a more upbeat full-year outlook for 2011.”
The firm also raised its recommendation for industrial companies to “overweight” and health-care and financial stocks to “marketweight,” while lowering its rating of consumer discretionary companies to “marketweight.”
Oman Protests for Jobs, Pay, Representation Enter Third Night
Hundreds of Omani protesters gathered in the city of Sohar for a third night, demanding that the government open talks on their demands for more jobs, higher pay and more representative political institutions.
Khaled Maqbuli, a leader of the protest, called on the demonstrators at a roundabout in the center of Sohar, north of the capital, Muscat, to stay peaceful and avoid confrontation with the army and the police. Two people were killed, several wounded and a supermarket set on fire over the past two days.
“We are peaceful, we have demands, we are not saboteurs,” Maqbuli, 26, said through a loudspeaker. “We want the government to send civilian people to discuss our demands; we have nothing to say to the military.”
Sultan Qaboos Bin Said, the country’s ruler since 1970, “has received the demands of the citizens in all the provinces and is giving them his attention,” state television reported.
Demonstrations against poverty and autocratic rule are spreading through the Arab world. Tunisia was the first to see an Arab leader ousted by popular protests in January, followed this month by Egypt. Libyan leader Muammar Qaddafi has lost control of several cities to the opposition and demonstrations also have taken place in Yemen, Bahrain, Algeria and Jordan.
Stocks Fall
Oman’s MSM30 Index of stocks closed down 4.9 percent, the most since January 2009, at 6,142.42. Oil gained for a second day in New York. Crude for April delivery rose as much as $2.08, or 2.1 percent, to $99.96 a barrel in electronic trading on the New York Mercantile Exchange.
Demonstrators circulated a list of demands today, including that the sultan names a prime minister and gives more power to the consultative council. Qaboos is head of the government.
Omani television said the sultan formed a committee to examine how to expand the power of the 83-member council whose role is to make recommendations to the government. Yesterday, he ordered the government to hire 50,000 Omanis and to pay 150 rials ($390) a month to job seekers.
Among the other demands of the demonstrators were a tripling of salaries, cancellation of private bank debts and the establishment of a government fund to help people marry and build a house.
“How can anybody live on 150 rials a month,” said Nasser Sheibi, a 26 year-old unemployed man. “I want a government official to come here and to tell me how that can be possible.”
Protests in Sohar escalated yesterday after security forces rounded up demonstrators, arresting a total of 48, according to Ammar Hanai, who said he was one of those detained.
Released Detainees
Qaboos later ordered the release of the detainees and the withdrawal of the police from the roundabout where hundreds of demonstrators have gathered since about noon on Feb. 26.
The city’s harbor is operating normally after protesters blocked roads, Jan Meijer, the chief executive officer of the Port of Sohar, said today.
As in Bahrain, the feeling of deprivation of the Omani demonstrators is exacerbated by their proximity to richer oil- producing nations Qatar and United Arab Emirates. The U.S. Central Intelligence Agency estimates that 60 percent of the workforce in Oman was made up of non-citizens in 2007 and that unemployment in 2004 was 15 percent. The Omani government doesn’t publish employment indicators.
Oman, with a population of about 2.7 million Omanis and 600,000 expatriates, produces just over 800,000 barrels of oil a day. The sultanate lies at the strategically important entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.
--With assistance from Vivian Salama in Abu Dhabi and Camilla Hall in Dubai. Editors: Eddie Buckle, Andrew Atkinson.
Khaled Maqbuli, a leader of the protest, called on the demonstrators at a roundabout in the center of Sohar, north of the capital, Muscat, to stay peaceful and avoid confrontation with the army and the police. Two people were killed, several wounded and a supermarket set on fire over the past two days.
“We are peaceful, we have demands, we are not saboteurs,” Maqbuli, 26, said through a loudspeaker. “We want the government to send civilian people to discuss our demands; we have nothing to say to the military.”
Sultan Qaboos Bin Said, the country’s ruler since 1970, “has received the demands of the citizens in all the provinces and is giving them his attention,” state television reported.
Demonstrations against poverty and autocratic rule are spreading through the Arab world. Tunisia was the first to see an Arab leader ousted by popular protests in January, followed this month by Egypt. Libyan leader Muammar Qaddafi has lost control of several cities to the opposition and demonstrations also have taken place in Yemen, Bahrain, Algeria and Jordan.
Stocks Fall
Oman’s MSM30 Index of stocks closed down 4.9 percent, the most since January 2009, at 6,142.42. Oil gained for a second day in New York. Crude for April delivery rose as much as $2.08, or 2.1 percent, to $99.96 a barrel in electronic trading on the New York Mercantile Exchange.
Demonstrators circulated a list of demands today, including that the sultan names a prime minister and gives more power to the consultative council. Qaboos is head of the government.
Omani television said the sultan formed a committee to examine how to expand the power of the 83-member council whose role is to make recommendations to the government. Yesterday, he ordered the government to hire 50,000 Omanis and to pay 150 rials ($390) a month to job seekers.
Among the other demands of the demonstrators were a tripling of salaries, cancellation of private bank debts and the establishment of a government fund to help people marry and build a house.
“How can anybody live on 150 rials a month,” said Nasser Sheibi, a 26 year-old unemployed man. “I want a government official to come here and to tell me how that can be possible.”
Protests in Sohar escalated yesterday after security forces rounded up demonstrators, arresting a total of 48, according to Ammar Hanai, who said he was one of those detained.
Released Detainees
Qaboos later ordered the release of the detainees and the withdrawal of the police from the roundabout where hundreds of demonstrators have gathered since about noon on Feb. 26.
The city’s harbor is operating normally after protesters blocked roads, Jan Meijer, the chief executive officer of the Port of Sohar, said today.
As in Bahrain, the feeling of deprivation of the Omani demonstrators is exacerbated by their proximity to richer oil- producing nations Qatar and United Arab Emirates. The U.S. Central Intelligence Agency estimates that 60 percent of the workforce in Oman was made up of non-citizens in 2007 and that unemployment in 2004 was 15 percent. The Omani government doesn’t publish employment indicators.
Oman, with a population of about 2.7 million Omanis and 600,000 expatriates, produces just over 800,000 barrels of oil a day. The sultanate lies at the strategically important entrance to the Strait of Hormuz, through which a fifth of the world’s oil passes.
--With assistance from Vivian Salama in Abu Dhabi and Camilla Hall in Dubai. Editors: Eddie Buckle, Andrew Atkinson.
Peru Raises Reserve Requirement to Ease Inflation Pressure
Peru’s central bank increased reserve requirements for a second straight month to ease inflation pressures amid surging demand for credit, goods and services.
Banco Central de Reserva del Peru raised the average reserve rate by 0.25 percentage point of banks’ sol- and dollar- denominated deposits. The increase takes effect March 1, the central bank said in an e-mailed statement yesterday.
Policy makers have raised both the reserve ratio and their benchmark rate twice this year as bank lending feeds a boom in private investment and consumer demand in the $153 billion economy. The central bank is seeking to prevent rising international prices for food and crude oil from contaminating other parts of South America’s sixth-largest economy, bank president Julio Velarde said last week.
“They’re trying to deflate any potential bubble in the credit market and moderate demand-side pressures on inflation,” said Benito Berber, a currency strategist at Nomura Securities Inc, in a phone interview from New York. “The risk is that by the end of the year inflation could have tripled. They’re putting the brakes on right now.”
Higher commodity prices sparked the fastest monthly inflation in more than two years in January and will likely push the annual rate “very close” to 3 percent, Velarde told reporters Feb. 24.
Peru’s sol gained 0.1 percent to 2.7735 per U.S. dollar at 11:39 a.m. in New York, from 2.7765 on Feb. 25.
Consumer Prices
February’s rise in consumer prices is forecast to match January’s 0.39 percent month-on-month increase, according the median estimate of eight analysts surveyed by Bloomberg. The annual inflation rate for February is projected to rise to 2.2 percent, compared with 2.17 percent in January.
Peru’s national statistics agency will issue its monthly inflation report tomorrow.
The increase in the reserve ratio seeks “to keep inflation expectations anchored within the 1 percent to 3 percent target range,” the bank said in yesterday’s statement.
Outstanding bank loans rose 19 percent to 110 billion soles ($39.6 billion) in January from a year earlier, the Andean country’s banking association Asbanc said last week.
Sol Volatility
The central bank extended reserve requirements to include the overseas units of domestic lenders for the first time on Jan. 1 as it seeks to prevent short-term capital inflows from increasing volatility in the sol.
Peruvian banks’ average reserve requirement was 12.1 percent during Feb. 1 to Feb. 22, according to central bank data.
Economic growth accelerated in the fourth quarter as infrastructure projects boosted construction output. Gross domestic product rose 2.2 percent from the third quarter, the government’s statistics agency said today in an e-mailed report.
GDP climbed 9.2 percent in the fourth quarter from the same period a year earlier, taking growth for 2010 to 8.8 percent, the agency said. Analysts forecast a 9.1 percent year-on-year expansion, according to the median estimate of 10 economists in a Bloomberg survey.
“Growth will probably be close to 9 percent in the first quarter, and that’s very high,” said Pedro Tuesta, a Washington-based economist for Latin America at 4Cast Inc, in a phone interview. “The central bank will keep tightening to stay ahead of the curve.”
Banco Central de Reserva del Peru raised the average reserve rate by 0.25 percentage point of banks’ sol- and dollar- denominated deposits. The increase takes effect March 1, the central bank said in an e-mailed statement yesterday.
Policy makers have raised both the reserve ratio and their benchmark rate twice this year as bank lending feeds a boom in private investment and consumer demand in the $153 billion economy. The central bank is seeking to prevent rising international prices for food and crude oil from contaminating other parts of South America’s sixth-largest economy, bank president Julio Velarde said last week.
“They’re trying to deflate any potential bubble in the credit market and moderate demand-side pressures on inflation,” said Benito Berber, a currency strategist at Nomura Securities Inc, in a phone interview from New York. “The risk is that by the end of the year inflation could have tripled. They’re putting the brakes on right now.”
Higher commodity prices sparked the fastest monthly inflation in more than two years in January and will likely push the annual rate “very close” to 3 percent, Velarde told reporters Feb. 24.
Peru’s sol gained 0.1 percent to 2.7735 per U.S. dollar at 11:39 a.m. in New York, from 2.7765 on Feb. 25.
Consumer Prices
February’s rise in consumer prices is forecast to match January’s 0.39 percent month-on-month increase, according the median estimate of eight analysts surveyed by Bloomberg. The annual inflation rate for February is projected to rise to 2.2 percent, compared with 2.17 percent in January.
Peru’s national statistics agency will issue its monthly inflation report tomorrow.
The increase in the reserve ratio seeks “to keep inflation expectations anchored within the 1 percent to 3 percent target range,” the bank said in yesterday’s statement.
Outstanding bank loans rose 19 percent to 110 billion soles ($39.6 billion) in January from a year earlier, the Andean country’s banking association Asbanc said last week.
Sol Volatility
The central bank extended reserve requirements to include the overseas units of domestic lenders for the first time on Jan. 1 as it seeks to prevent short-term capital inflows from increasing volatility in the sol.
Peruvian banks’ average reserve requirement was 12.1 percent during Feb. 1 to Feb. 22, according to central bank data.
Economic growth accelerated in the fourth quarter as infrastructure projects boosted construction output. Gross domestic product rose 2.2 percent from the third quarter, the government’s statistics agency said today in an e-mailed report.
GDP climbed 9.2 percent in the fourth quarter from the same period a year earlier, taking growth for 2010 to 8.8 percent, the agency said. Analysts forecast a 9.1 percent year-on-year expansion, according to the median estimate of 10 economists in a Bloomberg survey.
“Growth will probably be close to 9 percent in the first quarter, and that’s very high,” said Pedro Tuesta, a Washington-based economist for Latin America at 4Cast Inc, in a phone interview. “The central bank will keep tightening to stay ahead of the curve.”
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