FOREX WORLD TREND

Aug. 21 (Bloomberg) -- A.P. Moeller-Maersk A/S, owner of the world’s largest container line, posted a first-half loss as lower global consumption hurt freight volumes and cargo rates and it forecast similar results in the second half.

The net loss was 3.67 billion kroner ($700 million) compared with net income of 11.6 billion kroner a year earlier, the Copenhagen-based company said today in a statement. That was in line with the 3.7 billion-krone median estimated loss of a Bloomberg survey of five analysts. Sales fell 14 percent to 127.4 billion kroner.

“The result for the second half of 2009 is expected to be at the same level as the first half year,” Maersk said. That means the company, Denmark’s largest, may post its first full- year loss in at least six decades.

The container market will decline more than 10 percent this year as consumers rein in spending during the recession, the first year of contraction since the 1970 birth of containerization, according to a June forecast by London-based Drewry Shipping Consultants Ltd. Maersk said today that volumes dropped 7 percent in the first six months of the year.

Maersk rose as much as 1,400 kroner, or 4.2 percent, to 34,400 kroner in Copenhagen trading and was up 3.6 percent as of 9:47 a.m.

“The outlook for the remainder of 2009 is subject to considerable uncertainty, not least due to the development in the global economy,” the shipping company said. “Specific uncertainties relate to the development in container freight rates, transported volumes, the USD exchange rate and oil prices.”

Maersk Line’s Loss

Maersk Line, which operates 470 vessels and owns 1.9 million containers, lost $958 million January to June compared with a profit of $268 million in the same period a year earlier.

Rates fell 30 percent in the period, it said, adding that it expected the trend to reverse, with “modest” rate increases starting in the third quarter. The container division has a global market share of some 15 percent, the unit’s chief executive officer, Eivind Kolding, said in a June 23 interview. Maersk said today the container division maintained its market share.

Maersk’s oil and gas business, the biggest profit contributor in the past three years, recorded a 57 percent drop in first-half net income to 2.8 billion kroner as oil prices fell.
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After more than five years, writer-director Quentin Tarantino returns to full-length features today with the World War II adventure drama "Inglourious Basterds." The deliberately misspelled title refers to a team of Jewish soldiers — led by a Kentucky fried colonel (Brad Pitt) with a rope burn around his neck — on a "Nazi hunting" mission in 1944 France. Their paths cross with a young movie theater owner (Melanie Laurent) who has her own plans to bring down the Third Reich and, especially, a vicious Nazi colonel (Christoph Waltz).
Like "Reservoir Dogs" (1992), "Pulp Fiction" (1994), "Jackie Brown" (1997) and the two "Kill Bill" films (2003, 2004), "Basterds" is marked by Tarantino's own brand of tension: specifically, set pieces in which characters sit and talk for long stretches as the threat of violence looms. But the real-world setting allows the 46-year-old filmmaker to fill his movie with juicy ideas while playing with the facts of World War II — a combo that could put the fast-talking, pop-culture-riffing Tarantino in the cross hairs once again.
Some people think you simply make movies about other movies, not about real life. Does "Basterds" make that charge obsolete?
I would say it does, yeah. I've always had that criticism thrown at me, and when I did "Kill Bill" it just sort of gave it validity. Even though that movie took place in a heightened "movie-movie" universe — I mean, the martial arts revenge movie is definitely not taken from real life! But people who've labeled me with that got more and more entrenched.
Yet where I'm coming from in "Basterds" is, basically, there is a section in the third act where history goes one way and my movie goes another. My characters change the course of the war. That didn't happen, of course, because my characters didn't exist. But if they had existed, everything that happens is quite plausible.
When "Kill Bill" was released, you said every kid over 12 should have an adult bring them to it . . .
. . . And since then I haven't met a kid over 8 who hasn't seen "Kill Bill"!
What if those kids see "Basterds," and they aren't history buffs like you are, and come out thinking that's how it happened?
For two seconds they'll think that, until they bring it up to their parents, and then that'll start a conversation, and maybe even a creative thought in the kid's mind, like, "Wait a minute — if that didn't happen, why did Quentin say it did?" And maybe that even starts a conversation with himself about storytelling.

Read more: http://www.nydailynews.com/entertainment/movies/2009/08/21/2009-08-21_in_inglourious_basterds_quentin_tarantino_makes_history_his_way.html#ixzz0Oo9cZiWm
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LOS ANGELES — Police in the United States and Canada hunted Friday for a television reality show contestant charged with the murder of a model whose mutilated body was found inside a suitcase in a dumpster.
Ryan Alexander Jenkins, 32, was charged with the murder Thursday after days of being a "person of interest" in the gruesome case of 28-year-old Jasmine Fiore's killing.
Jenkins, a Canadian who recently vied with 16 other contestants on the TV show "Megan Wants a Millionaire," is now "the subject of an international manhunt," said Tom Monson, police chief in Buena Park, a suburb of Los Angeles.
Police believe he may have already crossed the Canadian border from a remote area in northwestern Washington state.
Officials said it was Jenkins himself who reported Fiore missing on Saturday, the day the suitcase was found by a man searching the garbage dumpster for recyclable bottles. He has not been seen since.
Police said Fiore appeared to have been strangled and revealed at a press conference Thursday that her teeth and nails had been yanked out, presumably in a hurried attempt to conceal her identity.
According to court documents, prosecutors are recommending Jenkins be held on a 10-million-dollar bail if and when he is arrested.
Fiore and Jenkins had married in Las Vegas earlier this year, after his stint on the VH1 reality show, but according to media reports the marriage was annulled a short time later.
On the TV show, Jenkins, an investment banker, was one of several men vetted by a woman searching for love and fortune.
In the casting process for "Megan Wants a Millionaire," broadcaster VH1 said it was looking for single men with a net worth of at least one million dollars, and said would-be bride Megan Hauserman "would make the perfect arm candy for any man who can afford her."
VH1 said it was no longer airing the show in light of the investigation.
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Aug. 19 (Bloomberg) -- Emerging-market stocks, bonds and currencies fell on concern economic growth in China will falter as banks rein in lending.

The Shanghai Composite Index retreated as much as 5.1 percent, extending its drop from a 2009 high to more than 20 percent, the common definition of a bear market. India’s Bombay Stock Exchange Sensitive Index lost 1.5 percent, while Russia’s Micex Index slipped 1.3 percent.

The retreat in developing-nation bonds sent yields over U.S. Treasuries higher by 11 basis points to 3.87 percentage points, according to JPMorgan Chase & Co.’s EMBI+ Index. Hungary’s forint led declines in east Europe currencies against the euro and the dollar.

The MSCI Emerging Markets Index, a benchmark for equities in 22 countries, sank 1.1 percent to 816.36 as of 9:11 a.m. in New York. More than $1.3 trillion pledged by the U.S. and Chinese governments has pushed the Shanghai index’s price-to- earnings ratio to 30, almost double the ratio of 18 for the Standard & Poor’s 500 Index and 17 for the MSCI gauge.

“China can be a leading indicator,” Benjamin Pedley, managing director of LGT Investment Management Ltd., said in an interview with Bloomberg Television. “It may be a case of history repeating.”

The Shanghai gauge has foreshadowed moves in global equities the past two years. It peaked on Oct. 16, 2007, two weeks before the MSCI All-Country World Index. The Shanghai index fell 72 percent from its 2007 high and bottomed out on Nov. 4, 2008, four months before the MSCI index. The Chinese measure reached its 2009 high on Aug. 4, seven trading days before the global index.

Lending Concern

Stocks in China, the world’s third-largest economy, have slumped this month as a plunge in new bank loans in July and concern the government will seek to damp property speculation eroded investor confidence. Earnings for Chinese companies that reported since July 8 trailed analysts’ estimates by 12 percent on average, Bloomberg data show.

The Shanghai Composite closed 4.3 percent lower today as Maanshan Iron & Steel Co. tumbled 7.5 percent. The company posted a half-year loss for the second consecutive period as the global recession curbed demand from homebuilders and automakers.

Investors should buy emerging-market stocks amid declines this month because valuations aren’t expensive even after their gains this year, Credit Suisse analysts Sakthi Siva and Kin Nang Chik said in a report.

Societe Generale SA recommended this week buying emerging- market stocks and selling equities in developed nations short because developing nations will have faster economic growth and their shares are cheaper.
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A U.S. judge has upheld a patent for Merck & Co.'s (MRK) best-selling product, the asthma and allergy medication Singulair, handing Merck a victory in its battle to ward off early generic competition for the drug.

Wednesday's ruling by Judge Garrett Brown in federal court in Trenton, N.J., means that Teva Pharmaceutical Industries Ltd. (TEVA), the Israeli generics manufacturer that challenged the Singulair patent, won't be able to start selling copycat versions in the U.S. until the expiration of patent protection in 2012. Teva could, however, appeal the decision in an effort to sell copies before then.

Merck shares rose 51 cents, or 1.7%, to $31.23 while Teva was up 40 cents at $ 51.19.

Singulair was the ninth-bestselling prescription drug in the world last year, according to drug-data provider IMS Health. For the six months ended June 30, worldwide sales rose 6% to $2.3 billion. U.S. sales - those directly at stake in the Teva patent dispute - rose 6% to $1.5 billion in the first half of 2009.

Many analysts and legal observers thought Merck had the upper hand in the case because Singulair was an innovative approach to treating asthma when it hit the market in 1998.

But at a February trial in Trenton, Teva lawyers argued that the patent for Singulair was invalid because prior research would have taught anyone skilled in the art of drug development how to invent Singulair. Under patent law, so-called "prior art" can be grounds for invalidating a patent's claims. Teva also argued the patent was unenforceable because Merck misled the U.S. Patent and Trademark Office when it applied for the patent.

Merck's lawyers and witnesses disputed these claims, arguing that researchers at the Whitehouse Station, N.J., company took a "tortured path" to developing the tablets, one marked by exhaustive trial and error.

Brown rejected Teva's allegation that the Singulair patent was "obvious," writing in his ruling that the patent is "valid and enforceable," and that Teva's application to market a generic copy infringes the patent. He also issued a permanent injunction barring Teva from selling generic Singulair until the patent expires.

"We think the court appropriately ruled that the U.S. patent for Singulair is valid and enforceable," said Merck spokesman Ron Rogers.

Teva said in a statement it's reviewing the court's decision to determine its next course of action.

Teva had applied for U.S. Food and Drug Administration approval of a generic version of Singulair in 2007. Merck responded by filing a patent-infringement lawsuit against Teva in U.S. District Court for the District of New Jersey. Under federal law, that triggered a 30-month stay of FDA approval of Teva's application; the stay is set to expire Saturday.

Rogers said Wednesday's decision also resolves a second lawsuit Merck filed against Teva in January regarding Teva's application to sell an oral granule formulation of the drug - which can be given to children mixed with applesauce. Both parties previously agreed Wednesday's ruling would apply to the second case as well, Rogers said.

Merck had expressed confidence in its case against Teva. In July, Chief Executive Richard Clark said in an interview the company had no contingency plan in the event of a loss, saying "if you feel you have a very strong position, you don't need a contingency plan."

Another threat to Singulair's patent, however, arose in May when the U.S. Patent and Trademark Office ordered a re-examination of its claims, saying new questions had been raised about their "patentability." Article One Partners LLC, an online community that pays members who unearth previously undisclosed evidence related to patent validity, had requested the re-exam, citing information that wasn't brought to the attention of the patent office when it first reviewed Merck's application in the 1990s. The re-exam is pending.
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Aug. 17 (Bloomberg) -- China will ask Vale SA, Rio Tinto Group and BHP Billiton Ltd. for a 35 percent cut in iron ore prices, scaling back demands for a larger reduction after seven months of stalled talks with the world’s biggest producers.

The China Iron & Steel Association agreed on the reduction with Australia’s Fortescue Metals Group Ltd., and will seek the same cut with larger suppliers, Shan Shanghua, the secretary general of the China Iron & Steel Association, said today at a press conference in Beijing.

The pact marks a step back from China’s earlier demand for a 45 percent price cut, and brings it closer to the 33 percent reduction offered by Rio and BHP. The nation’s lenders will arrange $6 billion of financing to help Fortescue, part- owned by China’s Hunan Valin Iron & Steel Group, expand as part of the deal, as the world’s largest iron ore buyer seeks to reduce its reliance on Vale, Rio and BHP.

“Fortescue and China are hoping the miner has the potential to break the duopoly of BHP and Rio” for Australian iron ore, said Zhou Xizeng, a Beijing-based analyst with Citic Securities Co. “The 35 percent deal is symbolically a bigger cut. It signals Fortescue and China have made concessions.”

Fortescue, Australia’s third-largest ore exporter, rose 2.9 percent to A$4.58 in Sydney. Rio dropped 4.8 percent and BHP Billiton fell 3 percent. Baoshan Iron & Steel Co., the listed unit of China’s largest mill, fell 7.6 percent in Shanghai.

Rio Rejects

“We do not see this pricing agreement as relevant to our pricing for fiscal 2009,” Gervase Greene, a spokesman for London-based Rio Tinto said from Perth. Samantha Evans, spokeswoman for Melbourne-based BHP, declined to comment.

Fortescue will sell 20 million tons of iron ore in the six months ending Dec. 31, and China will give it priority to negotiate 2010 prices, the Perth-based company said. China bought 444 million tons of ore last year from suppliers.

“The FMG agreement won’t end the long talks between China and the largest suppliers,” said Hu Kai, a Shanghai-based analyst with Umetal Research Institute. “Fortescue is too small to be representative in setting benchmark prices.”

Fortescue has been seeking funding as a cash squeeze and lower iron ore prices forced it to put expansions on hold. The company may need between $3 billion and $4 billion to proceed with plans to almost double output, Hunan Valin, its second- largest shareholder, said in May. Fortescue has been in talks with China Investment Corp., the nation’s sovereign wealth fund.

Peng Min, a spokeswoman for Valin, decline to comment.

One Price

Baosteel Group Corp., China’s largest steelmaker, and other mills will pay 94 U.S. cents a dry metric ton unit for fine iron ore, the association’s Shang said. That’s equal to $55.50 a metric ton, Fortescue said in a statement. Rio is charging 97 cents a dry metric ton unit, or about $61 a ton, for its fines.

“China will apply this price in talks with BHP, Vale and Rio,” Shan told reporters. “The agreement is an important step for establishing a China model of only having one price in China, whether it’s for small, large, private or state-owned mills.”

The Fortescue agreement could save China’s mills $30 million in costs, said Umetal’s Hu.

Talks between China and producers have lasted longer than any time in the past 40 years. The steel association last month accused suppliers of encouraging “speculative actions” in pricing and imports after volumes surged to a record.

China last week formally arrested four Rio executives, including Australian Stern Hu, head of the company’s iron ore business in China. The executives are accused of stealing commercial secrets from its steel industry.

Largest Importer

“It is hard to be fair to China if another country, with only 10 million to 20 million tons of imports, decide prices for China, which imports 500 million tons a year,” Liu Zhenjiang, vice chairman of the China Iron & Steel Association, said today on the association’s Web site.

China overtook Japan as the world’s largest buyer of iron ore in 2003. China, the biggest steelmaker, accounted for 52 percent of globally iron ore traded last year, according to Morgan Stanley. That could increase to 65 percent this year, the brokerage said July 2.

The State Council, China’s cabinet, has issued a statement backing the plan to have one iron ore price within China, the steel association’s Liu said today.

“This is a mechanism which really allows China to consolidate its own pricing mechanism, to reach for the same kind of stability that other countries have always enjoyed,” Fortescue’s Chief Executive Officer Andrew Forrest said today on a conference call.

Price talks for next year will start in December and China hasn’t decided if the negotiations would be for annual or semi- annual contracts, the steel association’s Shan said.

China’s steel production jumped 13 percent to a record 50.7 million tons in July, according to the National Bureau of Statistics on Aug. 11. Rising demand from steelmakers also pushed iron ore imports to a record 58.1 million tons last month.
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Aug. 17 (Bloomberg) -- Swedbank AB, the Baltic region’s biggest bank, announced a second rights offer in less than a year as it seeks 15 billion kronor ($2.1 billion) to shore up reserves and help it exit the Swedish state’s bank support plan.

Swedbank fell as much as 9.5 percent in Stockholm trading. About 46.6 percent of the sale will be taken up by shareholders, including Folksam Group, 48 independent savings banks and state- owned pension funds AP2 and AP4, Stockholm-based Swedbank said today. The rest is guaranteed by Bank of America Corp. and Credit Suisse Group AG, which are underwriting the sale.

Swedbank, which raised 12.4 billion kronor from shareholders last year, has had to rely on Swedish government guarantees when it borrows from other banks. The company faces soaring loan losses and provisions in Latvia, Lithuania and Estonia, which are in the steepest recessions in the European Union, and reported a net loss in the first and second quarters.

“With this strengthening of the capital base we want to, once and for all, remove the perception that Swedbank is, or could become, a burden on Swedish taxpayers,” Chief Executive Officer Michael Wolf said. “If the bank continues to be the sole participant among peers in the state-guarantee, there is a high risk of that becoming a restriction for the bank.”

Swedbank posted its biggest intraday drop since June 3, and was down 2.5 kronor, or 3.8 percent, to 63.50 kronor at 10:30 a.m. in Stockholm. The stock has gained 43 percent in 2009.

Independent Financing

The share sale will accelerate Swedbank’s return to independent financing, Wolf told a telephone conference.

“This helps remove the uncertainty that has been surrounding the stock about their Tier 1 ratio and capital requirement,” Magnus Oppenstam, head of equities at HQ Bank AB, said in a telephone interview from Stockholm today. “We think this will definitely help Swedbank compared to the other banks valuation-wise. We think this is the right move.”

SEK AB, which helps fund Swedish companies’ exports and which owns 3.3 percent of Swedbank’s shares, said the share sale was “positive and will strengthen Swedbank.” The government- owned agency said it would take part in the issue, although it doesn’t regard itself as a long-term owner of the shares.

Estonia, Latvia and Lithuania are reeling after a property bubble burst, cheap credit evaporated and ebbing demand in foreign markets undermined exports. The three countries, which had the European Union’s fastest-growing economies from 2004 to 2006, now have the steepest declines of all developing regions, the World Bank said on June 22.

Soaring Defaults

Swedbank reported on July 17 its second consecutive quarterly net loss as bad loans in Estonia, Latvia, Lithuania and Ukraine soared. The loss of 2.01 billion kronor in the second quarter compared with net income of 3.6 billion kronor a year earlier. Loan losses in the period soared to 6.67 billion kronor from 423 million kronor a year earlier. In the first quarter, Swedbank had a net loss of 3.36 billion kronor.

Through the rights offer, Swedbank will increase its core Tier 1 capital ratio, a measure of financial strength, to 12.1 percent from 9.8 percent at the end of June.

To contact the reporter on this story: Niklas Magnusson in Stockholm at nmagnusson1@bloomberg.net
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LONDON (Dow Jones)--U.K. recruiter Michael Page International PLC (MPI.LN) Monday said that weak economic confidence continued to hurt its business, resulting in a 49% decline in first-half pretax profit, amid expectations of yet another tough quarter ahead.

The company said that market conditions remain weak with a seasonally challenging quarter ahead, as people go away on holiday and don't move jobs, both in Continental Europe, which was later into the downturn, and in the U.K.

Collins Stewart analyst Julian Cater said he interprets the update as saying the third quarter will be loss-making.

Recruitment companies have been ...
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BERLIN — Volkswagen's triumphant bid to take over luxury German carmaker Porsche marks the end of a bitter family power struggle and the start of a drive to become the world's top auto manufacturer.
"VW and Porsche are entering a new era -- the company has the means to become number one," pipping Japan's Toyota by 2018, chief executive Martin Winterkorn said Friday at company headquarters in Wolfsburg, northern Germany.
Volkswagen, already Europe's biggest automaker, and Porsche, maker of the legendary 911 sports car, agreed to a tie-up late Thursday after nearly four years of brinkmanship and infighting.
The full acquisition, which will also entail the Gulf state of Qatar taking a stake in Porsche and which VW estimates will produce three billion euros (four billion dollars) in synergies, should be complete by 2011.
It closes an ugly chapter in the history of Germany's illustrious auto sector that began in late 2005, when two of the industry's biggest names crossed swords in a duel for control of the empire.
In the beginning, it was Porsche that sought to buy VW in a bid to drive down the average carbon dioxide emissions of its fleet before new European anti-pollution legislation comes into effect in 2012.
VW's efficient Polo and Skoda models were to offset Porsche's greenhouse-gas-spewing muscle cars.
Porsche, which already uses VW assembly lines, also aimed to protect its powerful but insular partner against potential foreign investors.
The Stuttgart-based manufacturer tried to acquire 75 percent of the shares in VW but the attempt backfired in May against the backdrop of the financial crisis, which hit the auto market hard and produced a crippling credit crunch.
Porsche, with just 12,000 employees compared to VW's 360,000 staff, ended up nine billion euros in debt as it built up a controlling stake in VW.
That burden ultimately weakened its own position and the red ink will continue to hurt the company in this fiscal year.
Meanwhile powerful trade union IG Metall and the works council at Volkswagen fought the takeover by Porsche tooth-and-nail.
Hard-charging Porsche chief executive Wendelin Wiedeking inflamed tempers when he said he would go after the "sacred cows" at Volkswagen, where labour has a strong say in the company's management.
Wiedeking's bold attempt to take over the much bigger VW also made an enemy of Ferdinand Piech, the fearsome 72-year-old chairman of VW's supervisory board and a scion of the Porsche clan who holds a major stake in the company.
Piech emerged top dog from a nasty months-long scrap with Wiedeking and Piech's cousin Wolfgang Porsche, another major Porsche shareholder who had backed the VW takeover bid.
Wiedeking was forced to resign, and Porsche is now to become just one brand in VW's sprawling stable which also includes Audi, Bentley, Bugatti, Lamborghini, Seat, Scania, and Skoda.
Analysts warned that although the giant company would likely benefit from synergies in the long-run, it could pose a few immediate problems for VW as the economic crisis rages on.
"One problem I see is that too much of the liquidity that Volkswagen still has will be spent on the deal," an automobile industry expert at the University of Applied Science Bergisch-Gladbach, Stefan Bratzel, told the daily Berliner Zeitung.
He said VW needed the cash in the next two years for pressing concerns.
"In that time, VW will have quite a few expenses that we do not know about now. In addition, the group needs to invest heavily in future technology," he said.
Nevertheless, he added, "VW has a strategic size that is extremely important in global competition. That is why I see the future of the company very optimistically."
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New Delhi, Aug 16 (PTI) Evading taxes would be tougher as the new Direct Taxes Code proposes to take away the powers from any tax authority to waive penalty, even as it reduces the amount of such fine to twice the tax liability against thrice at present.

"Every person who willfully under-reports his tax-base shall be liable to a penalty not less than and up to twice, the amount of tax payable in respect of the amount of tax base so under-reported," the draft code said.

Currently, the penalty is up to thrice the value of the tax liability.

However, the code proposes to impose penalty on those who "willfully under-report tax base".

Willful under-reporting would include not filing of tax returns by due date and reporting less taxable income in the returns than the actual.
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WASHINGTON, Aug 16 (Reuters) - Afghanistan's presidential election amid a U.S. troop buildup and surging Taliban violence brings pressure on Washington to show results in a war the president has made the centerpiece of his foreign policy.

The Aug. 20 presidential vote comes after the deployment of some 30,000 extra U.S. troops that has raised the level of American forces to 62,000. Combat deaths are rising and polls show a softening of public backing for the eight-year war.

President Barack Obama, by following up on his campaign vow to wind down the unpopular Iraq war and shift resources to the older campaign in Afghanistan, has drawn fresh public attention back to that country -- increasing pressure to show progress.

"We all feel the impatience and pressure of the American public and the Congress, which legitimately wants to see progress," Said Richard Holbrooke, U.S. special envoy for Afghanistan and Pakistan.

Asked to define success in that campaign, he said: "In the simplest sense ... we'll know it when we see it."

"They (the Obama administrations) haven't fully developed exactly how they are going to demonstrate to the American people and Congress that they're using the money and resources effectively to achieve progress," said Brian Katulis of the Center for American Progress, a liberal Washington think tank.

Impatience is rising, polls are starting to indicate.

In the first major survey after a record 44 U.S. troops were killed in Afghanistan in July, a CNN/Opinion Research Corp poll showed popular support for the war at an historic low, with 54 percent opposed to the war and 41 percent in favor.

NO TERRIBLE OUTCOME?

Other polls have shown a similar slide in support for the war in Afghanistan this year, which had consistently enjoyed greater support than the Iraq war.

"Americans have sort of soured on the 'good war' concept as Afghanistan doesn't seem to be getting any better," said Nick Mills of Boston University's journalism department.

In a reminder of the threat, the Taliban on Saturday claimed responsibility for a suicide car bomb that killed seven people outside the headquarters of the NATO-led international force, in the heart of Kabul's most secure district.

Violence has surged recently, with the Taliban stronger than at any time since they were driven from power eight years ago. The militant group has mounted bold attacks on provincial government buildings and vowed to disrupt the election.

Thursday's election pits incumbent Hamid Karzai against 35 challengers. Two recent polls have Karzai with a comfortable lead over his nearest challenger, Abdullah Abdullah, but not enough to avoid a second round run-off.

Brookings Institution foreign policy analyst Michael O'Hanlon said that whoever wins, "there's not going to be a terrible outcome" because Washington could work with any of the top candidates.

But he added that because of endemic corruption, narcotics, poverty and violence, the election offered not a fresh start for Afghanistan, but a "modest boost in the right direction."

ONE-YEAR WINDOW?

Holbrooke said Washington will look to Kabul once the election is settled "to reinvigorate, or invigorate if it's a different president, the leadership" in fighting corruption and drugs and boosting agriculture and rule of law.

"What they're hoping for at the very least is increased legitimacy for Afghan leaders at the presidential level and then in the provinces," said Katulis.

Analysts say that despite dipping polls, Obama has so far held onto the support and patience of the U.S. public and Congress, but this may not last.

"If there's really bad headlines coming out of the elections, there could be pressure on the Obama administration to change course," said Mills.

"We need to be in a position to be able to show progress -- within a year," U.S. Defense Secretary Robert Gates told a news conference.

A measure of progress, he said, would be "a situation, as we have seen in Iraq over the past two-and-a-half years, where more and more of the security responsibility will flow from the international security forces to Afghan security forces."

Analysts also give Obama a year to show progress. Mid-term Congressional elections in November 2010 will give U.S. voters a chance to voice weariness with the war.

"I think President Obama would have at least the grudging tolerance of the American people through 2010," said O'Hanlon.

"If we haven't seen progress in the course of next year, however, I think all bets are off." (Additional reporting by Deborah Lutterbeck)
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My recent excellent trading week was followed by a less than stellar week. Basically, I was caught by surprise when the US markets, and hence the US dollar, started to make a comeback. I've been cutting my teeth in the forex market for over a year now, but this entire period has been associated with a weakening US dollar. The market mechanics seem to be changing around -- so I'm finding it more difficult to trade. Currencies aren't bouncing off their bollinger boundaries anymore and instead are trading flat for extended periods of time.

The latest US consumer price figures have calmed fears that the $787bn economic stimulus plan passed by congress earlier in the year would cause severe inflation.

The US's labour department said its consumer price index (CPI) remained level in July as declines in food and energy prices offset increases in other areas.

Consumer prices have now fallen 2.1 per cent from July 2008 – the biggest drop since 1950.

"The overriding message in the report is that inflation is not a problem at this point," Briefing.com analysts said in a note to clients.

Inflation was rising a year ago amid an increase in food and energy prices, but the collapse of several high-profile banks and the worldwide economic recession has stifled demand, leading to lower prices.
Industrial output rises

Core CPI, which excludes food and energy prices, rose 0.1 per cent in July, slowing from a 0.2 per cent rise in June, the department said.

Core CPI was up 1.5 per cent from July 2008, compared with a 1.7 per cent annualised rise in June, the data showed.

The labour department made no revision to a 0.7 per cent leap in the CPI for June, which had been the sharpest increase since July 2008.

That rise, which was due to an increase in fuel prices, had come after three months of virtually flat inflation.

July also saw the first increase in US industrial output for the first time in nine months, a report by the Federal Reserve, the US central bank, said on Friday.

Industrial output increased by 0.5 per cent over the previous month, the report said, against market expectations for only a 0.3 per cent rise.

Apart from a rise in industrial output in October 2008 – which came after a severe hurricane – July's increase marked the first monthly gain in output since December 2007, when the current recession started.
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WASHINGTON — Real estate lender Colonial BancGroup Inc. has been shut down by federal officials in the biggest U.S. bank failure this year.
The Federal Deposit Insurance Corp., which was appointed receiver of the Montgomery, Ala.-based Colonial and its about $25 billion in assets, said the failed bank's 346 branches in Alabama, Florida, Georgia, Nevada and Texas will reopen at the normal times starting on Saturday as offices of Winston-Salem, N.C.-based BB&T.
The FDIC has approved the sale of Colonial's $20 billion in deposits and about $22 billion of its assets to BB&T Corp.
Regulators also closed four other banks: Community Bank of Arizona, based in Phoenix; Union Bank, based in Gilbert, Ariz.; Community Bank of Nevada, based in Las Vegas; and Dwelling House Savings and Loan Association, located in Pittsburgh.
The closures boosted to 77 the number of federally insured banks that have failed in 2009.
The agency established a temporary government bank for Community Bank of Nevada to give depositors about 30 days to open accounts at other financial institutions. The failed bank had assets of $1.52 billion and deposits of $1.38 billion as of June 30.
Community Bank of Arizona had assets of $158.5 million and deposits of $143.8 million as of June 30, while Union Bank had assets of $124 million and deposits of $112 million as of June 12. The FDIC said that MidFirst Bank, based in Oklahoma City, has agreed to assume all the deposits and $125.5 million of the assets of Community Bank of Arizona, as well as about $24 million of the deposits and $11 million of the assets of Union Bank. The FDIC will retain the rest for eventual sale.
Dwelling House had $13.4 million in assets and $13.8 million in deposits as of March 31. PNC Bank, part of Pittsburgh-based PNC Financial Services Group Inc., has agreed to assume all of Dwelling House's deposits and about $3 million of its assets; the FDIC will retain the rest for eventual sale.
The failure of Colonial is expected to cost the deposit insurance fund an estimated $2.8 billion and that of Community Bank of Nevada, $781.5 million; Union Bank, $61 million; Community Bank of Arizona, $25.5 million; and Dwelling House, $6.8 million.
The 77 bank failures nationwide this year compare with 25 last year and three in 2007.
As the economy has soured — with unemployment rising, home prices tumbling and loan defaults soaring — bank failures have cascaded and sapped billions out of the deposit insurance fund. It now stands at its lowest level since 1993, $13 billion as of the first quarter.
While losses on home mortgages may be leveling off, delinquencies on commercial real estate loans remain a hot spot of potential trouble, FDIC officials say. If the recession deepens, defaults on the high-risk loans could spike. Many regional banks hold large numbers of them.
The number of banks on the FDIC's list of problem institutions leaped to 305 in the first quarter — the highest number since 1994 during the savings and loan crisis — from 252 in the fourth quarter. The FDIC expects U.S. bank failures to cost the insurance fund around $70 billion through 2013.
The May closing of struggling Florida thrift BankUnited FSB is expected to cost the insurance fund $4.9 billion, the second-largest hit since the financial crisis began. The costliest was the July 2008 seizure of big California lender IndyMac Bank, on which the insurance fund is estimated to have lost $10.7 billion.
The largest U.S. bank failure ever also came last year: Seattle-based thrift Washington Mutual Inc. fell in September, with about $307 billion in assets. It was acquired by JPMorgan Chase & Co. for $1.9 billion in a deal brokered by the FDIC.
Copyright © 2009 The Associated Press. All rights reserved.
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Four Rio Tinto executives accused by the Chinese government of bribery and industrial espionage have begun their defence against the charges by hiring high-profile lawyers in Shanghai.

Stern Hu, Rio’s lead iron-ore negotiator and an Australian citizen, has reportedly hired Duan Qihua, or Charles Duan, the founder of China’s first private law firm.

The firm of Duan & Duan specialises in international trade and investment litigation and Mr Duan is well connected within the ruling party as a member of its People’s Political Consultative Process – the forum that debates new laws in China.

The Shanghai Morning Post reported today that the other Rio employees, who are all Chinese citizens, had hired leading criminal lawyers.
China detained the four Rio employees five weeks ago amid escalating tension over the latest round of iron-ore pricing negotiations. The Rio executives were initially accused of stealing state secrets – a diplomatically loaded charge that could have led to the death penalty for the accused.

The allegations were downgraded this week to receiving bribes and stealing commercial secrets but the Rio four still face up to seven years in prison if found guilty.

Iron ore contracts are agreed every year and China has been demanding a 50 per cent price cut in the new deal. Rio and the other miners have been pushing for only a 33 per cent discount to the multi-billion dollar contracts.

There has been uncertainty over what has motivated Chinese authorities to arrest the Rio negotiators. Chinese media reports have claimed that they obtained information from state-owned steel mills that may have strengthened their position in the negotiations.

Rio Tinto has denied any wrongdoing by its employees and has pledged to defend them.
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BRUSSELS (Reuters) - The euro zone is likely to exit from recession in the third quarter thanks to a combination of stronger global demand and government stimulus that boosted its performance above expectations in the second quarter.

The euro zone economy shrank, but only just, by 0.1 percent in the second quarter with Germany and France posting a surprisingly early return to growth, data showed on Thursday.

But high and rising unemployment, falling credit to companies and large excess production capacity, likely to limit corporate investment, are still headwinds the economy of the 16 countries using the euro will have to grapple with.

The faster exit from recession will make the European Central Bank less likely to cut interest rates further and shift the bank's focus towards withdrawing liquidity from the market, with some rate tightening possible in 2010, economists said.

SMALLER OVERALL 2009 CONTRACTION

The European Commission and some economists have forecast the euro zone would only return to quarterly growth at the start of 2010. With a third quarter start looking now likely, economists have revised upwards their GDP forecasts for 2009 and 2010.

Commerzbank raised it GDP forecast to -3.5 percent for 2009 from -3.8 percent and kept its 2010 view unchanged at +1.5 percent. Goldman Sachs also said it would raise forecast
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Rio Tinto has not been presented with any evidence relating to its four executives who are being held by the Chinese authorities on suspicion of corporate espionage, the mining company has said.
Officials in Shanghai arrested one Australian and three Chinese employees of Rio last month, just weeks after a deal unravelled between the Australia company and Chinalco, China's state mining company.
The Chinese authorities yesterday permitted an Australian envoy to visit Stern Hu, Rio's head of iron ore sales, who still does not have access to a lawyer.
"We are still not aware of any evidence that would support their detention," said Sam Walsh, head of Rio's iron ore division, adding that Mr Hu appeared to be in good health. "We continue to be concerned for the health and welfare of our three other employees detained at the same time as Mr Hu."
After the visits, the Australian government asked China to allow the appointment of legal representation for the mining company's employees, who have not yet been charged. Few details have emerged about the nature of the allegations made against the executives.
However, both Beijing and Canberra dismissed comments in a Chinese state-run magazine that Rio had been "winning over and buying off, prying out intelligence and gaining things by deceit".
The article also alleged that Chinese companies have overpaid by $102bn (£62bn) over six years for imports from Rio as a result – charges all strongly denied by the company.
"It is now quite clear, given that the article has been taken off the website, that it was essentially the opinion of the individual writer, and not, if you like, officially sanctioned," said Stephen Smith, the Australian foreign minister.
Tensions between China and Rio have been simmering for several weeks as mining companies remain locked in price discussions with steel mills.
Chinese imports of iron ore rose by 12pc in July, as steel output neared maximum capacity. This demand has weakened the claims of Chinese steel mills that they need iron ore prices to drop by a third.
Experts are also concerned that the steel mills could be storing up huge inventory surpluses that will prove difficult to shift in the recession. Trade between Australia and China was worth $53bn last year.
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(CNN) -- U.S. Secretary of State Hillary Clinton brought an offer of help Tuesday for victims, especially victims of sexual violence, of Africa's longest war, a regional conflict that's dragged on for more than a decade.
Clinton on Monday delivered a blunt message to Prime Minister Adolphe Muzito of the Democratic Republic of Congo when he hosted a dinner in her honor.

"There must be an end to widespread financial corruption and abuses of human rights and women's rights," she said. "There must be an improvement in governance and the respect for the rule of law."

She also called for "changes in the business climate, changes in the rules and regulations that involve contracts and the protection of property" to promote foreign investment.

On Tuesday, she offered help to the country's president, Joseph Kabila.

"I offered and the president accepted my sending of legal and financial and other technical experts to the DRC to provide specific suggestions about how to overcome these very serious obstacles to the potential of this country," Clinton said, according to a pool report from Goma, in the east of the country.

She also announced funding for victims of rape in Congo.
"We want to banish the problems of sexual violence into the dark past where it belongs," she said.

During a meeting with leaders of nongovernmental organizations, Clinton said the United States would provide more than $17 million in new funds "to prevent and respond to gender and sexual violence."

Clinton took a small U.N. plane on the 1,000-mile trip from Kinshasa to Goma, the scene of intense fighting over the past several years.

The smaller aircraft was necessary because the U.S. plane for her seven-nation Africa trip is too big for the local landing strip, Clinton told reporters earlier.

The secretary is due to visit U.N. peacekeepers in Goma later Tuesday.

The Congo conflict has resulted in an estimated 5 million deaths from fighting and collateral problems such as disease and starvation, according to an International Rescue Committee survey conducted more than a year ago.

In addition, tens of thousands of women have been raped in the ongoing regional strife stoked by competition for mineral riches.

"I will be pressing very hard for not just assistance to help those who are being abused and mistreated, in particular the women who are turned into weapons of war through the rape they experience, but also looking for ways to try to end this conflict," Clinton said.

She opened her Africa trip in Nairobi, Kenya, then went to South Africa and Angola. After Congo, the secretary of state will travel to Nigeria, Liberia and Cape Verde.

The Obama administration is using Clinton's tour to promote development and good governance and underscore the president's commitment to Africa
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WASHINGTON (Reuters) - The U.S. unemployment rate fell in July for the first time in 15 months as employers cut far fewer jobs than expected, giving the clearest indication yet that the economy was turning around from a deep recession.

U.S. employers shed 247,000 jobs in July, the Labour Department said on Friday, the least in any month since last August, taking the unemployment rate down to 9.4 percent from June's 9.5 percent.

"It suggests the recession will be ending before the end of the year. There isn't any part of the economy that hasn't shown some slowing in deterioration," said Joe Davis, chief economist at investment company Vanguard in Valley Forge, Pennsylvania.

Recent data ranging from home sales to manufacturing have pointed to an economy starting to dig itself out of one of the worst recessions since the Great Depression of the 1930s.

President Barack Obama, who has seen his standing in public opinion polls slip as Americans fret about the weak economy and high unemployment, said July's jobs report showed the worst "may be behind us." But he cautioned there would be no true recovery as long as the economy continued to shed jobs.

U.S. stocks rallied on the data as investors took the view that the recession was ending. The Dow Jones industrial average ended up 1.2 percent at 9,370.07. The dollar surged, while government bond prices tumbled.

Analysts had expected nonfarm payrolls to fall by 320,000 in July and the jobless rate to hit 9.6 percent. The forecast was made earlier this week before other jobs data, including weekly jobless claims, prompted some analysts to lower their predictions for job losses.

The government revised data for May and June to show 43,000 fewer jobs were lost than previously reported.

"Overall, we view it as a clear signal that the economy was emerging from the recession in July," said Dean Maki, a senior economist at Barclays Capital in New York.

The easing in the unemployment rate could have been the result of the labour force shrinking by 422,000 in July, far more than the 155,000 decline in June, suggesting some jobless workers may have given up looking for work.

In the United States, for the purpose of calculating the unemployment rate, the labour force is defined as those with a job plus those out of a job but actively looking for work.

The White House said it still expected the unemployment rate to hit 10 percent this year.

Still, the relatively small decline in July payrolls was a relief to investors after months of heavy losses.

Slowing job losses also could mean less pressure for a second government economic stimulus as a $787 billion (471 billion pound) package approved this year slowly works its way through the economy.

MOSTLY GOOD NEWS

While employers cut fewer jobs than forecast, unemployment remains stubbornly high, meaning households have less income to spend and little borrowing capacity. This could set the economy for an anaemic recovery, analysts said.

Federal Reserve data on Friday showed consumer borrowing sank $10.3 billion in June after dropping $5.4 billion in May.

Since the start of the recession in December 2007, the U.S. economy has shed 6.7 million jobs, the Labour Department said, adding that 14.5 million people were unemployed in July. In that month, a record of about 5.0 million Americans had been without a job for more than six months.

However, in a sign that the labour market deterioration was slowing, a gauge of labour market slack that measures both the unemployed, people working part-time for economic reasons, and those only marginally attached to the labour force, fell to 16.3 percent in July from a record high 16.5 percent in June.

Job losses in July were spread across all sectors, but the pace of firings slowed markedly from previous months.

Manufacturing employment fell by 52,000 after shrinking by 131,000 in June. This was the first time since September that manufacturing job losses were less than 100,000 and was likely due to the reopening of General Motors and Chrysler assembly plants after the two automakers emerged from bankruptcy.

Payrolls in construction industries slipped 76,000 after falling 86,000 in June, probably reflecting spending on infrastructure projects from the stimulus package and a modest pickup in ground breaking for new homes.

In the services sector, 119,000 workers were laid off, and goods-producing industries lost 128,000 positions.

Education and health services continued to add jobs though, with payrolls increasing 17,000 in July after rising 37,000 in June. Government employment increased 7,000 after slipping 48,000 in June. Leisure and hospitality added 9,000 jobs.

"The pace of decline is slowing, consistent with the view that output has hit bottom and growth is now resuming," said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Massachusetts. "Today's report brought the light at the end of the tunnel a bit closer."

The average work week, considered a good leading indicator of an economic upturn, inched up to 33.1 hours in July from 33.0 in June. The average work week in the manufacturing sector rose to 39.8 hours from 39.5 in June, the department said.

Average hourly earnings rose three cents to $18.56.
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THE International Monetary Fund has backed the Federal Government's response to the global economic crisis - even giving an apparent green light to go further into debt.
It is also warning central banks to be sure the global downturn is over before thinking about raising official interest rates.

In its annual Article IV consultation with Australia, the IMF said the government's stimulus measures were boosting activity and there was still further room to move if the apparent pick-up went backward.

"The authorities' timely and significant macro-policy response cushioned the domestic impact of the global financial crisis," the IMF said.

"Staff commended the quick implementation of fiscal stimulus and noted that the shift into deficit was justified in current circumstances."

A drop in company tax receipts, particularly from the mining sector, as well as the government's economic stimulus measures are expected to push the budget into $58 billion deficit this financial year.

The IMF sees room for further stimulus, if needed.

"Staff and authorities agreed that, given the low level of public debt, there is scope for further fiscal stimulus, if the outlook for growth weakens," it said.
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MUMBAI -- Reliance Industries Ltd. overstated its capital expenditure for the development of the Krishna Godavari gas fields, also known as the KG-D6 basin, a senior Reliance Power Ltd. executive said Wednesday.

"RIL has a substantial motivation to claim higher capex. Simply put, the more RIL claims to have spent on capital expenditure, the less the government gets of the revenue," said Reliance Power Chief Executive, Jayarama Prasad Chalasani.

A Reliance Industries spokesman declined to comment.

Mr. Chalasani said according to the production-sharing contract to develop the gas fields, RIL will recover its 450 billion rupee ($9.4 billion) capital expenditure through gas sales before the government receives any meaningful revenue share.

He said the potential loss to the government due to the inflated capital expenditure could be more than 300 billion rupees.

Reliance Power Ltd. is controlled by Anil Ambani, who also controls Reliance Natural Resources Ltd., which is locked in a legal battle with Reliance Industries, controlled by his estranged elder brother, Mukesh Ambani.

Their dispute centers on the price of gas from the RIL-operated KG-D6 basin off India's east coast.

RNRL wants to purchase the gas at $2.34 for each million British thermal units, while RIL wants to sell the gas at a state-mandated price of $4.20/mmBtu.

While the first round of their legal battle went to RNRL, with the Bombay High court upholding its stand on buying gas at the lower price, the case has been referred to the country's apex court, which will hear the matter Sept. 1.

A war of words between the government and RNRL over the KG-D6 issue began July 28 when Anil Ambani accused the oil ministry of favoring RIL in the court battle. Since then, oil minister Murli Deora has denied the government is taking sides, adding it is trying to protect its legal right of gas distribution.

Responding to Mr. Deora, Anil Ambani raised the issue of RIL inflating the capital expenditure on KG-D6 and under-producing gas to boost prices.

The upstream regulator, the Directorate General of Hydrocarbons, controlled by the oil ministry, said gas production will increase when more gas is allocated to various industries.

The DGH also said, "experts have validated the costs" of developing the gas fields.

It said capital expenditure has risen as reserves are higher than earlier estimates, which will also lead to increased peak gas output of 80 million standard cubic meters a day, compared with 40 mmscm/d earlier.

Mr. Chalasani said even if the production estimate has doubled to 80 mmscm/d, it is unlikely capital expenditure should almost quadruple to 450 billion rupees from the initial cost estimate of 120 billion rupees.

He said since the DGH has claimed the Comptroller and Auditor General of India has audited RIL's capital expenditure claims, the audit report should be made public.

—Rakesh Sharma in New Delhi contributed to this article.
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NEW YORK — Crude inventories rose last week, though gasoline supplies dropped yet again, the government said Wednesday.
Crude inventories increased by 1.7 million barrels, or 0.5 percent, to 349.5 million barrels, which is 18.4 percent above year-ago levels, the Energy Department's Energy Information Administration said in its weekly report.
Analysts had expected a build of 1.5 million barrels for the week ended July 31, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
Gasoline inventories fell by 200,000 barrels, or 0.1 percent, to 212.9 million barrels. That was less than with analyst expectations and 2.9 percent above year-ago levels.
Demand for gasoline over the four weeks ended July 31 was 0.5 percent higher than a year earlier, averaging 9.2 million barrels a day.
At the same time, U.S. refineries ran at 84.5 percent of total capacity on average, a drop of 0.1 percentage point from the prior week. Analysts expected capacity to slip to 84.1 percent.
Inventories of distillate fuel, which include diesel and heating oil, fell by 1.1 million barrels to 161.5 million barrels for the week ended July 31. Analysts expected distillate stocks to add 1.1 million barrels.
Crude prices fell $1.15 to $70.27 per barrel on the New York Mercantile Exchange.
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MUMBAI -- Profit-taking in most blue chips after the strong recent gains pulled Indian shares lower, snapping a three-session winning streak Tuesday.

The Bombay Stock Exchange's benchmark Sensitive Index ended down 0.6% at 15,830.98 after closing at a 14-month high in the previous session. It traded between a low of 15,699.13 and a high of 16,002.46 in Tuesday's session.

The 30-stock index, which hit the 16,000 level for the first time since June 2 last year, has risen nearly 19% between July 14 and August 3.

"Investors will book profits intermittently, but as we saw today as well, buying at lower levels would support the markets and keep us moving up," said Sunil Pachisia, vice-president, Pratibhuti Viniyog. He expects the Sensex to breach the 16,500 level by next week.

Dow Jones technical analysis expects the Sensex to trade in a 15,400-16,200 range this week.

On the National Stock Exchange, the 50-stock S&P CNX Nifty index lost 30.90 points, or 0.7% to 4,680.50.

Total traded volume on the Bombay Stock Exchange was 66.04 billion rupees ($1.39 billion), compared with Monday's 56.24 billion rupees. Gainers beat decliners 1,482 to 1,240, while 72 stocks were unchanged.

Investors booked profits in Tata Power after its near-30% surge since July 13. The stock ended down 4.4% at 1,298.20 rupees to be the biggest percentage loser on the Sensex.

Among other major losers, Oil & Natural Gas, India's largest oil producer, fell 3.0% to 1,141.05 rupees. Reliance Infrastructure lost 2.8% to 1,188.80 rupees, while Jaiprakash Associates shed 2.3% to 244.75 rupees.

Heavyweight Bharti Airtel lost 2.6% to 400.55 rupees. The telecommunications company Monday extended its exclusive merger talks with South Africa's MTN Group Ltd. until Aug. 31 from July 31 earlier.

Reliance Communications, which Monday gained 5.2% on the back of better-than-expected quarterly profit, also fell 2.6% to 282.50 rupees.

Technology bellwether Infosys Technologies ended down 1.6% at 2,043.65 rupees, while private lender ICICI Bank slid 1.3% to 763.60 rupees.

However, buying emerged in Hindustan Unilever, which closed down 2.3% Monday, helping it jump 3.3% to 294.05 rupees.

Funds continued to take positions in Reliance Industries, the nation's most valued company, on hopes it may score a win in its long-running gas dispute with Reliance Natural Resources. It ended up 1.3% at 2,041.15 rupees.

Tata Motors rose 2.7% to 443 rupees, its highest close in almost 12 months, after the company late Monday said its total sales rose 18% in July from a year earlier to 48,054 vehicles. It hit a new 52-week high of 468.20 rupees intraday.

Also, Hindalco Industries rose for a third session in a row on continued strength in aluminum prices to their highest levels in 10 months on the London Metal Exchange. The stock surged 4.4% - the most on the Sensex - to 112.95 rupees, adding to its 15.2% jump in the past two sessions.
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