Global Scene

Asia shares rebound on US retail

Asian stocks surged 3 per cent on Monday, rebounding from four straight weeks of losses on hopes for strong US retail sales, while a report China is looking to buy Tokyo stocks supported the Nikkei and the yen.

Crude oil rose to near a record high within striking distance of $100 a barrel, buoyed by a persistently weak dollar and forecasts of colder US weather, while strong equity markets weighed on safe-haven government bonds. Gold hit a two-week peak.

Hopes for a stronger start to the US holiday season boosted Wall Street on Friday, with the positive mood flowing to Asia.

At 0430 GMT, Tokyo's Nikkei average had climbed 2.8 per cent, while MSCI's measure of other Asia Pacific stocks put on 3.6 per cent, recovering from last week's 4.7 per cent drop - its fourth-straight weekly decline.

Last Friday, also known as Black Friday, marked the first official day of the shopping season in the United States, where more than 147 million shoppers flocked to stores over the Thanksgiving holiday. Most, however, went to discount stores and spending was down, according to a survey.

"Higher sales on Black Friday confirmed US consumer spending is relatively resilient, helping South Korean shares, which fell more than other Asian markets, outperform," said Jason Hwang, a strategist at Woori Investment and Securities.

Black Friday once maked the day many retailers turned a profit, or went into the black, for the year.

South Korea's KOSPI jumped 4.4 per cent, while Hong Kong shares added 4 per cent. The MSCI index, while still up 32 per cent this year, has fallen more than 10 per cent from the Nov. 1 peak, on growing worries that a deep US housing slump and credit losses suffered by major US banks could hurt the region's top export destination.

Investors bought major exporters on hopes that US consumers will remain resilient, sending Canon Inc up 3.5 per cent and Sony Corp 5 per cent higher.

Major miners were on the rebound after the recent sell-off, with BHP Billiton climbing 5.3 per cent and take-over target Rio Tinto up 8.2 percent.

Both benefited from a report in a Chinese newspaper that China's sovereign wealth fund was considering bidding with the country's major steel producers to offer about $200 billion for Rio. The fund, China Investment Corp, denied the report.

A separate report in Japan's Nikkei newspaper said the $200 billion fund was expected to invest some of its assets in Japanese stocks, lending support to beaten down Tokyo stocks and lifting the yen more than one per cent.

The yen erased earlier losses on the report, with the dollar sliding to 108.33 yen from near 108.70 yen. The dollar hit a 2-1/2-year low of 107.55 yen on Friday. The euro fell to 160.45 yen from a session peak of 161.45 yen.

The dollar remained under pressure but had clawed off its record low versus the euro. Investors remain on edge about more fallout from the credit crunch as year-end approaches and potentially forces investors to dump assets or scramble for cash to get their books in order as banks and funds grapple with the market strains.

"There's definitely a lot of negative articles around about the subprime issue, so it's hard to say the dollar is out of the woods at this stage," said Rick Lloyd, head of G10 currency trading at ABN AMRO in Singapore.

Firmer stocks weighed on government bonds, with US 10-year Treasury yields falling 10/32 in price to yield 4.046 per cent.

Treasuries have rallied sharply this month, pushing the 10-year yield more than 50 basis points lower on the view that further weakness in the US housing market would sting the economy, prompting the Federal Reserve to keep lowering interest rates.

Japanese government bond futures fell more than half a point on the stock rally, with December 10-year futures down 0.64 point to 136.66, pulling away from a 22-month high of 137.53 struck on Thursday.

Reuters

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Top China coal miner to buy Indonesia's hydrocarbon plant

China Shenhua En- ergy shares rose more than five per cent on Monday after a newspaper reported China's top coal producer was considering a $4 billion bid for control of Indonesia's No. two producer of the hydrocarbon.

But top executives at the Indonesian firm denied that it had any contact with Shenhua, which has declared regional acquisition ambitions to meet soaring demand for China's main source of energy.

Shenhua , which raised $8.9 billion via a September Shanghai listing, is pondering buying a controlling stake in unlisted PT Adaro Indonesia controlled by the Soeryadjaya family and 36 per cent-owned by investors including Goldman Sachs and Citigroup , the South China Morning Post said. It cited unidentified sources as saying Shenhua had not been content with merely buying a small slice of the firm via Adaro's $750 million IPO, to be launched in Jakarta in 2008.

Instead, it could either take a controlling stake and scrap the stock sale, or buy out existing shareholders at the time of the IPO, the newspaper said without elaborating. Shenhua's stock hit a session high of HK$43 before steadying at HK$42.85, up 5.28 per cent around midday, near a 5.61 per cent rise on the index for Chinese companies listed in Hong Kong.

Businessman Edwin Soeryadjaya denied there had been any talks with Shenhua on a sale of Adaro.

"No, that's not true. It's wrong," Soeryadjaya told Reuters by telephone.

Adaro marketing manager Alastair Grant, who was cited in the report, earlier told Reuters on Monday he was not aware of any approach by Shenhua to its shareholders. Shenhua executives declined comment.

"Adaro has a diverse shareholding and there may have been some contacts, but there is nothing we have heard of," Grant said in an email in response to queries.

Chinese firms, encouraged by Beijing and flush with cash from years of breakneck growth, are scouring the globe for resources to power the world's fourth largest economy.

A Shenhua source told Reuters in October the company was pondering acquisitions from Australia to Indonesia and Mongolia.

"Indonesia is an ideal location, since it is closer to China," said an analyst with a major European bank, who declined to be named.

Rising freight rates have become a significant portion of cost for coal imports to China, the world's top consumer of coal, where demand for the hydrocarbon has nearly doubled in the past five years.

Adaro has mining operations in four deposits in Indonesia's South Kalimantan province with a total reserve of three billion tonnes of low-sulphur coal, the newspaper said.

Adaro said in August it was on track to churn out 36 million tonnes of coal in 2008. Shenhua Chairman Chen Biting said in October that "we want to carefully and selectively buy foreign assets, focusing on assets that have potential and fit with the company".

Reuters

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Bangladesh frozen food sector faces $58 mln loss

Bangladesh's frozen food industry, the country's second-largest foreign exchange earner, may suffer an estimated loss of up to four billion taka ($58 million) after a cyclone that killed thousands of people, exporters said on Monday.

"As per our assessment, we will incur a loss of 3 to 4 billion taka," Kazi Belayet Hossain, president of Bangladesh Frozen Food Exporters' Association, said.

Category four Cyclone Sidr hit the impoverished country's vast coastline, with winds of 250 kph (155 mph) and a 5-metre high water surge from the Bay of Bengal on Nov. 15, leaving a trail of devastation.

Shrimp farmers usually receive loans from shrimp exporters and are committed to sell their products to the exporters. The farmers will not be able to sell their products to the exporters now as the cyclone washed away nearly 30 percent of the country's shrimp farms.

"We need interest-free bank loans so that we can provide more loans to the farmers," Belayet told Reuters.

"Additionally, the government should offer direct support to the farmers immediately."

Reuters

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China buys ten Airbus planes

China on Monday signed a framework agreement to buy an undisclosed number of aircraft from Airbus.

The Toulouse-based plane maker had been hoping to firm up a contract to sell 150 aircraft in a deal that could have been worth more than $15 billion.

In the event, the only firm order announced on Monday was with China Southern Airlines Co Ltd, which is buying 10 twin-aisle A330 aircraft in a deal worth $1.8 billion at list prices.

The deals were signed as French President Nicolas Sarkozy and Chinese President Hu Jintao watched.

China has also agreed to take a 5 percent risk-sharing stake in the development of the A350. The $10 billion project is Airbus's attempt to catch up with Boeing's (BA.787 Dreamliner in the fast-growing mid-sized jetliner market.

Reuters