How the major stock indexes fared on Thursday

(AP) - Major stock indexes ended mixed Thursday on more evidence that the economy is regaining strength at a slow pace. The Dow Jones industrial average rose for an eighth straight day, its longest unbroken climb since August. Reports indicated that inflation remains in check and manufacturing is growing. The government said, however, that first-time claims for unemployment benefits only inched lower.

The Dow rose 45.50, or 0.4 percent, to 10,779.17.

The Standard & Poor's 500 index fell 0.38, or less than 0.1 percent, to 1,165.83.

The Nasdaq rose 2.19, or 0.1 percent, to 2,391.28.

For the week:

The Dow is up 154.48, or 1.5 percent.

The S&P is up 15.84, or 1.4 percent.

The Nasdaq is up 23.62, or 1 percent.

For the year to date:

The Dow is up 351.12, or 3.4 percent.

The S&P is up 50.73, or 4.5 percent.

The Nasdaq is up 122.13, or 5.4 percent.

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Orange juice prices fall as dollar strengthens

DENVER (AP) - Orange juice futures contracts fell to the lowest point in nearly three weeks Thursday as a stronger dollar made them less attractive for traders.

The dollar's rise also diminished demand for many other commodities. Silver, copper and energy prices settled lower while grains were mixed.

Orange juice prices for May delivery fell 4.4 cents to settle at $1.441 a pound, the lowest level since Feb. 26 when the contract closed at $1.436 a pound.

Small markets like orange juice have light trading volume, which can exaggerate price movements.

"Orange juice, by nature, is a pretty thinly traded market. What we're seeing is some pressure as the dollar really strengthens," Telvent DTN analyst John Sanow said. "We did push this market quite a bit higher since January because of the freeze scare."

Orange juice futures hit a two-year high of $1.5115 a pound in January because of concerns a cold snap would damage the citrus crop in Florida. Prices retreated after those fears abated.

Since Friday, the price has fallen about 5 percent after the Agriculture Department forecast a 2 percent increase in Florida orange production.

The agency said growers began harvesting oranges at a quicker pace after January's scare, which moved more fruit to processing plants in January and February.

Commodities and the dollar typically move in opposite directions. A stronger dollar can make commodities, which are priced in dollars, less attractive for overseas buyers.

The dollar gained after Greece said Thursday it may have to turn to the International Monetary Fund if the European Union cannot agree to a bailout plan for the debt-ridden country.

The ICE Futures US dollar index, which measures the dollar against six other currencies, rose 0.5 percent.

Gold for April delivery rose $3.30 to settle at $1,127.25 an ounce as it retained value despite the stronger dollar. May silver fell 10.1 cents to $17.422 an ounce and May copper fell 2.25 cents to $3.3955 a pound.

Grains were mixed. In contracts for May delivery, wheat fell 6.75 cents to close at $4.8925 a bushel while corn rose 2 cents to $3.76 a bushel.

Soybeans rose 0.25 cents to close at $9.5925 a bushel, benefiting in part from a delayed harvest in Brazil and more demand from China, Sanow said.

Benchmark crude for April delivery fell 73 cents to $82.20 a barrel on the New York Mercantile Exchange.

In other Nymex trading, natural gas for April delivery settled down 21.8 cents to $4.085 per 1,000 cubic feet after the Energy Information Administration said natural gas stockpiles diminished less than expected last week. Heating oil fell 2.04 cents to $2.1191 a gallon.

Gasoline fell 0.88 cent to $2.3009 per gallon.

Copyright 2010 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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Market Report -- In Play (CME)

CME Group and Dow Jones & Company launch joint venture of Dow Jones Indexes Business Co announced the launch of the new joint venture company, CME Group Index Services. CME Group has a 90 percent ownership interest and Dow Jones has a 10 percent ownership interest in the new co, which continues to do business as Dow Jones Indexes and includes the Dow Jones Industrial Average as well as approximately 130,000 index properties. Dow Jones & Company will contribute the Dow Jones Indexes business, valued at $675 mln, and CME Group will contribute certain market data services, valued at $607.5 mln, to the joint venture. CME Group Index Services, has issued $612.5 mln in aggregate principal amount of senior notes due 2018, with an annual coupon of 4.4% and an effective rate of 4.6%, which was used to pay a $607.5 mln distribution to Dow Jones. The notes are fully and unconditionally guaranteed by CME Group.

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CME Group and Dow Jones & Company Launch Joint Venture of Dow Jones Indexes Business

CHICAGO, March 19 /PRNewswire-FirstCall/ -- CME Group Inc. (Nasdaq: CME), the world's leading and most diverse derivatives marketplace, and Dow Jones & Company today announced the launch of the new joint venture company, CME Group Index Services LLC. CME Group has a 90 percent ownership interest and Dow Jones has a 10 percent ownership interest in the new company, which continues to do business as Dow Jones Indexes and includes the Dow Jones Industrial Average as well as approximately 130,000 index properties.

"There is an increased demand for index products and services in the marketplace, particularly outside the U.S.," said CME Group Executive Chairman Terry Duffy. "By combining CME Group's resources and expertise in index derivatives trading with Dow Jones' world-class benchmark indices, we will be well positioned to develop and expand our index and market data offerings, fueling growth opportunities across all asset classes."

"We are pleased to announce the completion of our new joint venture with Dow Jones, which will provide us with new growth opportunities across asset classes and around the world," said Craig Donohue, CME Group Chief Executive Officer. "We look forward to building on the strong products and services, as well as client relationships that Dow Jones has developed. Both institutional and retail customers globally rely on Dow Jones' benchmark indexes, particularly the Dow Jones Industrial Average. Together, we expect to create new opportunities for our customers by developing innovative new products and expanding our market data dissemination services to our global network of clients and exchange partners."

Dow Jones & Company will contribute the Dow Jones Indexes business, valued at $675 million, and CME Group will contribute certain market data services, valued at $607.5 million, to the joint venture. CME Group Index Services LLC, has issued $612.5 million in aggregate principal amount of senior notes due 2018, with an annual coupon of 4.4% and an effective rate of 4.6%, which was used to pay a $607.5 million distribution to Dow Jones. The notes are fully and unconditionally guaranteed by CME Group Inc.

About CME Group

CME Group is the leading equity index derivatives marketplace, offering futures and options on key benchmark indexes that cover the spectrum of small-, medium- and large-cap indexes in the U.S., Europe and Asia, including the DJIA as well as the S&P 500, NASDAQ-100, Nikkei 225 Stock Average, MSCI EAFE, FTSE/Xinhua China 25.

As the world's leading and most diverse derivatives marketplace, CME Group (www.cmegroup.com) is where the world comes to manage risk. CME Group exchanges offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. CME Group brings buyers and sellers together through its CME Globex electronic trading platform and its trading facilities in New York and Chicago. CME Group also operates CME Clearing, one of the largest central counterparty clearing services in the world, which provides clearing and settlement services for exchange-traded contracts, as well as for over-the-counter derivatives transactions through CME ClearPort. These products and services ensure that businesses everywhere can substantially mitigate counterparty credit risk in both listed and over-the-counter derivatives markets.

The Globe logo, CME, Chicago Mercantile Exchange, CME Group, Globex, E-mini and CME ClearPort are trademarks of Chicago Mercantile Exchange Inc. CBOT and Chicago Board of Trade are trademarks of the Board of Trade of the City of Chicago. NYMEX and New York Mercantile Exchange are trademarks of New York Mercantile Exchange, Inc. COMEX is a trademark of Commodity Exchange, Inc. All other trademarks are the property of their respective owners. Further information about CME Group (NASDAQ: CME) and its products can be found at www.cmegroup.com.

Statements in this press release that are not historical facts are forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or implied in any forward-looking statements. Among the factors that might affect our performance are: increasing competition by foreign and domestic entities, including increased competition from new entrants into our markets and consolidation of existing entities; our ability to keep pace with rapid technological developments, including our ability to complete the development and implementation of the enhanced functionality required by our customers; our ability to continue introducing competitive new products and services on a timely, cost-effective basis, including through our electronic trading capabilities, and our ability to maintain the competitiveness of our existing products and services; our ability to adjust our fixed costs and expenses if our revenues decline; our ability to generate revenues from our processing services; our ability to maintain existing customers, develop strategic relationships and attract new customers; our ability to expand and offer our products in foreign jurisdictions; changes in domestic and foreign regulations; changes in government policy, including policies relating to common or directed clearing; changes in government policy, including policies related to common or directed clearing and changes as a result of legislation stemming from the recent financial crisis, including the proposed regulatory reform of the over-the-counter derivatives and futures market and any changes in the regulation of our industry with respect to speculative trading in commodity interests and derivative contracts; the costs associated with protecting our intellectual property rights and our ability to operate our business without violating the intellectual property rights of others; our ability to generate revenue from our market data that may be reduced or eliminated by the growth of electronic trading or declines in subscriptions; changes in our rate per contract due to shifts in the mix of the products traded, the trading venue and the mix of customers (whether the customer receives member or non-member fees or participates in one of our various incentive programs) and the impact of our tiered pricing structure; the ability of our financial safeguards package to adequately protect us from the credit risks of clearing members; the ability of our compliance and risk management methods to effectively monitor and manage our risks; changes in price levels and volatility in the derivatives markets and in underlying fixed income, equity, foreign exchange and commodities markets; economic, political and market conditions, including the recent volatility of the capital and credit markets and the impact of current economic conditions on the trading activity of our current and potential customers; our ability to accommodate increases in trading volume and order transaction traffic without failure or degradation of performance of our systems; our ability to execute our growth strategy and maintain our growth effectively; our ability to manage the risks and control the costs associated with our acquisition, investment and alliance strategy; our ability to continue to generate funds and/or manage our indebtedness to allow us to continue to invest in our business; industry and customer consolidation; decreases in trading and clearing activity; the imposition of a transaction tax on futures and options on futures transactions; the unfavorable resolution of material legal proceedings and the seasonality of the futures business. More detailed information about factors that may affect our performance may be found in our filings with the Securities and Exchange Commission, including our most recent periodic reports filed on Form 10-K and Form 10-Q, which are available in the Investor Relations section of the CME Group Web site. We undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.

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Copper Falls in London as Dollar Gains on Concern About Greece

By Anna Stablum

March 18 (Bloomberg) -- Copper fell in London as the dollar strengthened on concern that Greece will fail to secure financial assistance from the European Union.

The dollar rose against the euro for a second day, climbing as much as 0.7 percent. Gains by the U.S. currency make dollar- priced commodities more expensive for holders of other monies. Raw materials from oil to wheat declined.

“The impact that the volatility in the euro is having is substantial for all commodity markets,” Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London, said by phone. “They are all moving in lock step with what is happening in Greece and the result in the euro-dollar rate.”

Copper for delivery in three months fell $54, or 0.7 percent, to $7,480 a metric ton at 9:42 a.m. on the London Metal Exchange. Copper for May delivery slid 0.7 percent to $3.394 a pound on the Comex in New York. All of the six main metals traded on the LME dropped, led by zinc.

Concern about Greece’s ability to reduce its budget deficit has caused the euro to slump 4.4 percent against the dollar in 2010. The single European currency weakened today after a Greek official was cited as saying the country had little hope of aid from a European Union summit next week and may seek help from the International Monetary Fund.

China’s Economy

“Where you have a strengthening dollar, because the euro is weakening, that is not good for base-metal prices,” Brown said.

Concern about the possibility of an overheating economy in China, the world’s biggest copper user, also contributed to the drop, according to Brown. LME copper slid to a two-week low of $7,270 a ton on March 15 on concern that interest rates might increase in the Asian nation.

“We are slightly cautious about the situation in China, with inflation being a potential problem,” Brown said. “We don’t think the Chinese authorities are in a position to support growth as strong as they would like.”

Stockpiles of copper in LME-monitored warehouses fell for a 12th day to 524,175 tons, the lowest level since Jan. 18. The streak of declines is the longest since June.

“Generally we think the outlook is a little bit better,” Brown said. Demand traditionally increases in the second quarter, particularly from China, he said.

Zinc, Lead

“We are optimistic on all the base metals,” he said. “We particularly like copper, zinc and lead.”

Zinc for three-month delivery on the LME fell 0.9 percent to $2,327 a ton. Lead dropped 0.4 percent to $2,245 a ton.

Commodities drew $3.98 billion of investment last month, almost 29 times January’s amount, favoring investments linked to indexes over exchange-traded products, Barclays Capital said. Total commodity assets under management, also bolstered by price gains, expanded to $255 billion after dropping $12 billion to $245 billion in January, it said. Inflows in January were $139 million.

Nickel fell 0.2 percent to $22,214 a ton. BHP Billiton Ltd., the world’s biggest mining company, said its Australian Kwinana refinery may not restart for two weeks after shutting down on March 15.

Aluminum for three-month delivery fell 0.2 percent to $2,290 a ton and tin dropped 0.7 percent to $17,620 a ton.

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WORLD FOREX: Euro Slumps On Latest Greek Debt Concerns

By Nicholas Hastings

Of DOW JONES NEWSWIRES

LONDON (Dow Jones)--Fears that Greece's debt problems are still far from being resolved and may yet need to involve the International Monetary Fund sent the euro reeling in Europe Thursday.

The pound, which had been staging a rebound earlier this week, also found itself back under selling pressure.

Greece returned very much to center stage for financial markets after a Greek official said that his country will probably turn to the IMF for aid if more concrete help is not offered by the European Union at a summit meeting next week.

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Stocks headed for lower start

NEW YORK (CNNMoney.com) -- U.S. stocks were poised to open lower Thursday amid renewed fears over Greece's debt crisis and ahead of some key readings on inflation and employment.

Dow Jones industrial average, S&P 500 and Nasdaq 100 futures were down slightly ahead of the opening bell.

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Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins.

Stocks closed higher Wednesday, with all three major indexes ending at an 18-month high, after U.S. and Japanese central banks moved to hold interest rates at historic lows, raising optimism about the economic recovery.

Wednesday's advance was also fueled by the Senate's passage of a $17 billion jobs bill, which President Obama is expected to sign into law Thursday.

Stocks have been moving higher over the last few weeks, with the Dow and S&P 500 rising in 14 of the last 15 sessions and the Nasdaq rising in 13 of the last 15 sessions through Wednesday's close.

But renewed concerns over Greek debt may stall the recent climb. Reports cite an official from the debt-ridden country as saying that Greece may have to turn to the International Monetary Fund for financial help amid doubts it will receive a bailout from the European Union.

"It's natural to see some softness in the market after so many consecutive days of gains," said Mark Luschini, chief investment strategist at Janney Montgomery Scott. "But the economic news has been decent lately so I won't be surprised to see the market drift higher and meander along."

Luschini added that although lingering concerns over Greek debt will continue to pressure equity markets until the IMF or European countries lend support, traders will also be weighing U.S. jobs and inflation data.

Economy: Investors will take in reports on inflation, jobless claims and a regional manufacturing index.

The Consumer Price Index (CPI) is expected to have risen 0.1% in February after climbing 0.2% the month before, according to a consensus of economists surveyed by Briefing.com. The so-called core CPI, which excludes food and energy prices, is expected to have increased 0.1% after falling 0.1% in January.
How high will bond rates go?

The government is also expected to report that the number of Americans filing initial claims for jobless benefits fell last week to 455,000 from 462,000 the week before.

After the market opens, the Conference Board will release its February report on leading economic indicators. The measure is expected to have risen 0.1%, following a 0.3% increase in January.

The Philadelphia Fed index, a regional reading of manufacturing activity, is forecast to have edged up to 18 in March from 17.6 last month.

Companies: FedEx (FDX, Fortune 500) reported a profit of $239 million for the third fiscal quarter, more than double the amount it earned a year earlier. The company beat Wall Street estimates with earnings per share of 76 cents, up from 31 cents a year earlier. Economists polled by Thomson Financial forecast earnings of 72 cents per share.

After the closing bell, smart phone maker Palm (PALM) is due to report. Analysts expect the company to report a loss of 42 cents per share, compared with a loss of 86 cents in the prior year.

World markets: Asian stocks ended mostly lower. Japan's Nikkei index slipped nearly 1%, and the Hang Seng in Hong Kong lost 0.3%.

In Europe, Britain's FTSE 100, France's CAC 40 and Germany's DAX were all modestly lower in early trading.

The dollar and commodities: The dollar gained against the euro and the pound on concerns about Greek debt. The buck was lower versus the yen.

Crude oil for April delivery slipped 47 cents to $82.74 a barrel, and the price of gold for April delivery eased $1.40 an ounce to $1,125.60.

Treasurys: The price of the 10-year note edged up, lowering the yield to 3.64%. Treasury prices and yields move in opposite directions. To top of page

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Commodities Attract $3.98 Billion, Barclays Estimates

March 18 (Bloomberg) -- Investors put $3.98 billion into commodities last month, almost 29 times the amount in January, favoring investments linked to indexes over exchange-traded products, Barclays Capital said.

Total commodity assets under management, which were also bolstered by gains in prices, expanded to $255 billion in February, after dropping $12 billion to $245 billion in January, the bank said. Inflows in January were $139 million.

“Commodity investments have resumed in February, primarily from institutional investors employing commodity indices to gain broad-based exposure, as retail investors still remain jittery,” Barclays said in a report, distributed today.

The S&P GSCI Enhanced Total Return Index of 24 commodities rose 4.8 percent last month, rebounding from a 7.5 percent decline in January. Prices climbed partly on concern that supply will revert to falling short of demand as the global economy expands.

Investments in exchange-traded products shrank $1 billion and those tied to indexes expanded by $4.5 billion, Barclays said. Medium-term notes, or products customized for investors, attracted $494 million.

Energy got $2 billion of the additional investments, agriculture $1.18 billion, industrial metals $481 million and precious metals $251 million. A year earlier, gold exchange- traded products alone attracted $6 billion of investment, Barclays said.

--Editors: Simon Casey, Alastair Reed

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Financial ETF doubles in a year

By John Spence

BOSTON (MarketWatch) -- The rally in the Financial Select Sector SPDR Fund /quotes/comstock/13*!xlf/quotes/nls/xlf (XLF 15.92, +0.19, +1.21%) on Wednesday means the exchange-traded fund has more than doubled in value from a year ago. The ETF set a new 52-week high of $15.97 a share on Wednesday. One year ago on March 17, 2009, the fund touched a session low of $7.87, according to data from FactSet Research.

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FOREX-Dollar falls vs most majors; euro off 5-week highs

NEW YORK, March 18 (Reuters) - The dollar fell against higher-yielding currencies such as the Australian dollar while the yen weakened on Wednesday, as the Federal Reserve's and Japan's commitment to low interest rates prompted investors to seek higher returns elsewhere.

The euro fell from five-week highs against the dollar as sentiment remained negative on the single euro-zone currency despite European Union members' pronouncements of support for debt-strapped Greece.

"If you look at the broader picture, we're seeing most major currencies -- sterling, Australian, and New Zealand dollars -- rallying against the U.S. dollar. Clearly, risk appetite is up," said John McCarthy, director of FX trading at ING Capital Markets in New York.

"But the euro is not following the rally in risky assets. It did touch above $1.38, but that's it. That tells me that the market still wants to sell the euro and if we fall below $1.37 again, you'll see selling in the euro gain momentum."

The Fed on Tuesday kept its pledge to keep interest rates low for an "extended period", while the Bank of Japan eased monetary policy, by doubling the funds available to banks for three-month loans at the policy rate.

The moves by the U.S and Japanese central banks generally supported risk assets. U.S. stocks gained and Tokyo's Nikkei share average rose to an eight-week closing high. European shares .FTEU3 followed suit, with the FTSEurofirst 300 .FTEU3 hitting its highest in two months.

Higher oil prices boosted commodity-linked currencies, including the Canadian dollar CAD=D4, which rallied to a 20-month high versus its U.S. counterpart.

Sterling was also one of the day's biggest movers, rising after the number of Britons claiming unemployment benefits in February fell. The pound's strength was mostly felt against the euro, which also weakened against the dollar and Swiss franc.

In midday New York trading, the euro fell 0.2 percent to $1.3745 EUR=, after hitting a five-week high of $1.3817, according to Reuters data. That earlier rally was a carry-over from news on Tuesday that Standard and Poor's removed Greece's ratings from a downgrade review.

The euro also fell to a 17-month low against the Swiss franc at 1.4480 EURCHF= as investors took out option barriers at 1.4500. The pair last traded at 1.4488, down 0.2 percent.

The ICE Futures' dollar index .DXY, which tracks the performance of the greenback versus a basket of six major currencies, was up 0.1 percent on the day at 79.822, after slipping to a six-week low of 79.520 in early European trade.

The dollar was up 0.2 percent at 90.39 yen JPY= against a broadly weaker Japanese currency.

The BoJ's decision to increase the funds available to banks was widely flagged. However, it left the duration of fixed-rate loans unchanged at three months and two of its seven board members dissented.

BoJ Governor Masaaki Shirakawa said the liquidity operation was not aimed at affecting exchange rates. Some in the market speculate Japanese authorities want to stem yen strength.

Sterling GBP=D4 jumped to $1.5382, its strongest against the dollar in nearly three weeks after jobs data. [ID:nONS004866] The pound was last at $1.5287, up 0.3 percent.

Minutes from the Bank of England's policy meeting earlier this month showed board members voted unanimously not to extend quantitative easing, which also boosted the pound.

Against the Canadian dollar, the U.S. unit fell as low as C$1.0097 CAD=D4, its weakest since July 2008, as the Canadian currency extended gains on the back of higher oil prices and a recent batch of strong economic data. (Editing by Jan Pachal)

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FTSE hits 21-month closing high; commodities lead

LONDON, March 17 (Reuters) - Stronger commodity and banking stocks drove Britain's top share index to its highest close in 21 months on Wednesday, as investors welcomed the Federal Reserve's pledge to hold down U.S. interest rates and metals prices rose.

The FTSE 100 .FTSE ended up 24.20 points, or 0.4 percent, at 5,644.63, its highest close since late June 2008, after the Fed held U.S. benchmark rates near zero and maintained its pledge to keep them low for an extended period.

The index, which has jumped 63 percent since hitting a low in March 2009, is forecast to make further gains this year, benefiting from a recovery in the global economy, as its international exposure shields it from the grim domestic economic outlook, a Reuters poll found. [ID:nLDE62E0GO]

"The (Fed) did two things which has helped the markets. One is that it left interest rates on hold ... but the other very positive point is that it's beginning to talk up the economy now," said Mike Lenhoff, chief strategist at Brewin Dolphin.

Miners added the most points to the index against a backdrop of buoyant metals prices as the dollar softened and market sentiment improved after the Fed comments.

Fresnillo (FRES.L), Kazakhmys (KAZ.L) and Vedanta Resources (VED.L) added 1.8 to 3.4 percent. Rio Tinto (RIO.L) climbed 1.8 percent. China's top state-owned nonferrous metals company Chinalco confirmed it is in talks with Rio Tinto about potential joint ventures in Mongolia and Guinea, a Chinese newspaper said on Wednesday. [ID:nBJI002247]

Oils were also in demand, as crude CLc1 rose above $82 a barrel, with BG Group (BG.L), BP (BP.L), Cairn Energy (CNE.L) and Royal Dutch Shell (RDSa.L) up 0.1 to 2.1 percent.

Buyers came in for banks after the Fed's pledge, with Royal Bank of Scotland (RBS.L), Barclays (BARC.L) and Standard Chartered (STAN.L) up 0.6 to 1.9 percent, while HSBC (HSBA.L), which traded ex-dividend on Wednesday, added 1.4 percent.

DEFENSIVES WANE

Some defensive stocks fell as investors' appetite for risk improved. The VIX .VIX, the Chicago Board Options Exchange Volatility Index, hit a 22-month low in a sign investors foresee a calm environment for stocks in coming weeks.

The VDAX-NEW volatility index .V1XI fell 2.4 percent. The lower the index, which is based on sell and buy options on Frankfurt's top-30 stocks <0#.GDAXI>, the higher the market's desire to take risk.

Vodafone (VOD.L) fell 0.9 percent, while consumer goods group Reckitt Benckiser (RB.L) was 0.7 percent lower.

Drugmakers GlaxoSmithKline (GSK.L) and AstraZeneca (AZN.L) fell 1.2 and 0.5 percent respectively, while peer Shire (SHP.L), hurt by a downgrade to "sell" by Citigroup, fell 1.8 percent.

Marks & Spencer (MKS.L) was also impacted by negative broker sentiment, shedding 2.3 percent as JP Morgan cut its rating to "underweight" noting forecast risks and strategic questions.

Security services group G4S (GFS.L) was the biggest FTSE 100 decliner, down 4.9 percent after falls on Tuesday following in-line results, with traders noting talk that top shareholder Skagen Trust was selling 141 million shares, or around 10 percent of the firm. [ID:nLDE62G0FS]

Ex-dividend factors took 6.14 points off the FTSE 100 index with, aside from HSBC, Inmarsat (ISA.L), Standard Life (SL.L), Thomas Cook Group (TCG.L) and WPP Group (WPP.L) all losing their dividend attractions.

Equities showed little reaction to UK employment data, which came in better than expected, but sterling rose to a near three-month high versus the dollar. [ID:nONS004866]

Also boosting the pound were Bank of England minutes showing policymakers voted unanimously to keep monetary policy unchanged this month, with some pointing to an increase in upside inflation risks. [ID:nBOE002280]

"With the prospect of cheap money lying around for longer, investors are happy to hold equities and even increase their exposure to them," said Angus Campbell, head of sales at Capital Spreads.

European shares closed at a 17-month closing high on Wednesday, while in the United States the Dow Jones industrial average .DJI hit a recovery high. [ID:nN17167756] (Editing by Greg Mahlich)

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WORLD FOREX: Dollar Stuck In Narrow Ranges; Pound Up On Data

LONDON (Dow Jones)--Signals from both the U.S. Federal Reserve and the Bank of Japan that the time isn't right to start tightening monetary policy left the dollar a little higher but stuck in narrow trading ranges in Europe Wednesday.

The pound rose sharply after U.K. unemployment fell against market expectations of a slight rise.

See the pound's jump:

http://www.dowjoneswebservices.com/chart/view/3654

The euro, which had been benefiting from hopes that the worst of Greece's debt problems are over, soon met resistance on the upside as investors started to worry about the growth implications for the euro zone.

The U.S. Federal Open Market ...

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Stocks Rally on Fed Pledge, Earnings; Copper Jumps, Yen Weakens

March 17 (Bloomberg) -- Stocks rose, driving the Stoxx Europe 600 Index to a 17-month high, and commodities rallied after the Federal Reserve pledged to keep interest rates at a record low and earnings in Europe beat analysts’ estimates. The yen and the dollar weakened.

The Stoxx 600 advanced 0.9 percent at 11:31 a.m. in London, while the MSCI Asia Pacific Index climbed 1.6 percent. Futures on the Standard & Poor’s 500 Index rose 0.3 percent. Copper and crude oil increased for a second day. The yen fell against all 16 most-traded counterparts and the dollar declined against 14.

The Fed yesterday signaled the U.S. recovery isn’t strong enough to stoke inflation or justify higher borrowing costs, repeating its intention to hold the benchmark rate for an “extended period,” while the Bank of Japan doubled a lending program aimed at stoking credit growth to $222 billion. In Europe, investor confidence was boosted as earnings from UniCredit SpA and Inditex SA exceeded predictions.

“Steps like these are helping grease the wheels of the recovery,” said Chris Hall, who helps manage about $3.3 billion at Argo Investments in Adelaide, Australia. “It’s clear the Fed is going to keep rates very accommodative to stimulate the growth recovery. Japan’s way is to try and make credit easier to get.”

UniCredit, Inditex

The MSCI World Index of 23 developed nations’ stocks rose 0.6 percent. Rio Tinto Group, the world’s third-largest mining company, led basic-resource producers higher, gaining 2.4 percent in London. UniCredit, Italy’s biggest bank, surged 5.2 percent in Milan. Inditex SA, the world’s largest clothing retailer, jumped 4.5 percent in Madrid. In Asian trading, LG Electronics Inc., the world’s third-largest mobile-phone maker, gained 2.9 percent in Seoul.

The MSCI Emerging Markets Index gained 1.5 percent to a two-month high. Indonesia’s Jakarta Composite Index surged 3.3 percent, the most since July, and South Korea’s Kospi Index climbed 2.1 percent, erasing this year’s losses. Qatar’s DSM 20 Index advanced 3.8 percent to the highest in more than four months after the government said domestic banks will be allowed to trade shares.

The gain in U.S. futures indicated the S&P 500 may extend a 17-month high, before a report forecast to show wholesale prices fell in February. The Labor Department’s report is due at 8:30 a.m. in Washington. The benchmark gauge for U.S. stocks rallied yesterday after the Fed said the labor market is stabilizing, business spending has risen and inflation remains subdued.

Commodities Rally

Copper for delivery in three months surged 1.7 percent to $7,530 a metric ton on the London Metal Exchange, leading gains in industrial metals. Crude oil advanced 0.8 percent to $82.39 a barrel in New York trading, extending yesterday’s 2.4 percent jump.

Goldman Sachs Group Inc. raised its 12-month outlook for returns from commodities to 17.6 percent and said the biggest gains probably will be in crude, copper, corn and platinum.

The yen dropped most against higher-yielding currencies, depreciating 1 percent against the South African rand and 0.7 percent versus the South Korean won. Canada’s dollar rose as much as 0.2 percent compared with its U.S. counterpart, to trade at the strongest level in almost two years.

The pound strengthened as much as 0.8 percent against the dollar after U.K. jobless claims unexpectedly fell in February at the fastest pace since 1997 and minutes of the Bank of England’s March 4 meeting showed policy makers voted unanimously to maintain interest rates at a record low and keep bond purchases on hold.

Greek Bonds Rise

Greek bonds rose after Standard & Poor’s said yesterday it isn’t reviewing the nation’s BBB+ rating for a downgrade as the government pushes ahead with efforts to narrow its budget deficit, the biggest in Europe. The yield on the two-year note dropped 12 basis points to 4.38 percent.

The cost of insuring against losses on European corporate bonds using credit-default swaps fell, with the Markit iTraxx Crossover Index of 50 mostly high-yield borrowers declining 10 basis points to 409, according to JPMorgan Chase & Co. The drop signals an improvement in investor perceptions of credit quality and sent the index close to the lowest level since Jan. 18.

--With assistance from Justin Carrigan, Stuart Wallace, Gavin Serkin and Paul Armstrong in London. Editors: Paul Sillitoe, Mark Gilbert

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Techs Boost Asia, Nikkei Ends at 8-Week High

Asian stock markets climbed to 8-week highs Wednesday, cheered by a rise in U.S. shares to a 17-month high after the Federal Reserve maintained its pledge to keep interest rates low for an extended period.

The Nikkei 225 average
NIKKEI 225 INDEX
JP%3bN225

10846.98 125.2705 +1.17%
Tokyo Stock Exchange
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[JP;N225 10846.98 125.2705 (+1.17%) ] hit at an eight-week closing high after the Bank of Japan eased policy in move seen by many as an attempt to prevent the yen from rising. The benchmark index was also supported by chip shares, which rose on hopes of positive earnings guidance from Intel
INTEL CORP
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22.01 UNCH 0
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[INTC 22.01 --- UNCH (0) ].

The Nikkei climbed 1.2 percent to 10,846.98 points, its highest finish since Jan. 21.

The broader Topix rose 1 percent to 947.43.

Chip-related stocks rose broadly after Intel shares rose 4 percent on Tuesday on speculation that the world's top chipmaker is expected to release positive guidance for the current quarter, and the Philadelphia semiconductor index
PHILADELPHIA SE SEMICONDUCTOR INDEX
.SOXX

359.87 UNCH 0
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[.SOXX 359.87 --- UNCH (0) ] gained 2.7 percent.

Chip equipment maker Tokyo Electron rose 1.3 percent to 5,910 yen and Advantest, which supplies chip testers to chip makers such as Intel, gained 1.4 percent to 2,229 yen.

Elpida Memory, the No.1 Japanese maker of DRAM chips, climbed 1.6 percent to 1,776 yen. The Nikkei business daily said the company is expected to return to the black with an operating profit of almost 20 billion yen ($222 million) for the year ending this month, buoyed by a recovery in DRAM chip prices.

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Nissan Motor rose 2.3 percent to 773 yen after its head, Carlos Ghosn, who is also chief executive of its alliance partner Renault, said he was open to equity exchanges when asked about reports that Renault and Daimler are in talks about an equity tie-up as part of a possible longer-term partnership.

Consumer lender Promise soared 5.1 percent to 815 yen after the Nikkei business daily reported the company will likely raise about 50 billion yen via asset-backed securities.

Aplus advanced 6.4 percent to 99 yen after Shinsei Bank said it would raise its stake in the firm to over 90 percent as it looks to revamp the group's consumer finance business.

KOSPI Climbs 2.1%

Seoul shares finished 2.1 percent higher, led by technology issues and as robust foreign buying fuelled the market's upward momentum.

The Korea Composite Stock Price Index (KOSPI) climbed 34.85 points to end at 1,682.86.

Korea Life made a strong debut, closing its first day of trade at 8,850 won after rising more than 11 percent to a high of 9,130 won during the morning, against an IPO price of 8,200 won. Korea Life was the most heavily traded share on the KOSPI in terms of turnover.

News on Tuesday that South Korea had appointed Organisation for Economic Co-operation and Development envoy Kim Choong-soo as its new central bank chief, reinforcing the view that rates will remain at a record low for some months to come, also positively impacted the market.

Technology issues outperformed, as a 2.7 percent gain in the key U.S. semiconductor index and a positive earnings outlook stoked investor appetites for the sector.

Samsung Electronics, the world's No.1 memory chip maker, jumped 4.3 percent. Hynix Semiconductor, the world's No.2, advanced 2.3 percent and LG Electronics gained 2.8 percent.

The strength of the won currency boosted issues sensitive to forex swings including crude refiners and airlines, for whom a strong domestic currency helps ease the cost of oil imports.

Korean Air Line, South Korea's top air carrier, was up 2.5 percent and SK Energy, the country's top crude refiner, also rose 2.5 percent.

In the banking space, Woori Finance led the way, rising 5.8 percent to 1,5350 won. KB Financial gained 3.9 percent and Shinhan Financial climbed 1.36 percent.

Australian Stocks Rally

Australian stocks rallied 1.2 percent to nearly a two-month high, after the U.S. Federal Reserve's pledge to keep interest rates low encouraged a return to riskier assets and boosted resource firms.

The Fed's promise to keep rates close to zero to support economic recovery pushed Wall Street to 17-month highs and sparked a broad-based rise in commodity prices.

The benchmark S&P/ASX 200
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AU%3bXJO

4853.169 55.92 +1.17%
ASX National
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[AU;XJO 4853.169 55.92 (+1.17%) ] advanced 55.95 points at 4,853.20, its highest close since Jan. 20. The index gained 0.3 percent on Tuesday.

New Zealand's benchmark NZX 50 index ended the day down 6.8 points to 3,200.9.

Market heavweight BHP Billiton gained 1.3 percent to A$43.30 and rival Rio Tinto rose 1.6 percent to A$76.70.

Lihir Gold rose 1.6 percent to A$3.11 while Newcrest Mining rose 1.8 percent to A$34.1 as gold prices rallied on the Fed's statement and took gains for the week to 2.6 percent.

Shares in Corporate Express Australia surged 24 percent to A$5.71 after U.S. office products retailer Staples Inc offered to buy out minority shareholders of Corporate Express for A$390 million, or A$5.60 a share.

David Jones gained 1.2 percent to A$5.13 after its first half result met market expectations and the retailer reaffirmed its guidance. The market also took in stride the company's cautioning that it would need a full retail market recovery to meet the top end of its 2011 guidance.

Shares in grains marketer AWB plunged 11.4 percent to A$0.935 after it cut its forecast for 2010 pretax profit due to the impact of the sale of its financial services unit.

Resources Fuel HK, China

Taiwan stocks rose 1.98 percent to a near eight-week closing high, as gains on Wall Street fuelled buying in technology exporters that are riding on growing demand for new computers and other consumer gadgets.

The TAIEX share index jumped 152.21 points to 7,847.84, its highest level since Jan. 25, with banking stocks and electronics shares up 2.5 percent and 2.1 percent, respectively.

AU Optronics, which supplies LCD panels for computers and flat-screen TVs, jumped 3.6 percent and TSMC gained 1.3 percent.

Financials advanced after Taiwan set rules on cross-strait investments, led by Cathay Financial, which jumped 3.6 percent.

China's key Shanghai Composite Index closed up 1.93 percent, with investors upbeat after the U.S. Federal Reserve pledged to keep interest rates near zero for a prolonged period.

The SHI ended at 3,050.479 points, extending Tuesday's 0.53 percent gain and rebounding from a five-week closing low at the start of this week when the index breached the psychologically important 3,000-point level.

Analysts said the market appeared well-supported below 3,000, although they expected the largely range-bound trade of recent weeks to continue.

Financials gained across the board, with China Merchants Bank up 1.8 percent and ICBC rising 1.2 percent.

Hong Kong shares rose 1.8 percent, snapping a three-day fall, spurred by a rise in U.S. stocks after the Federal Reserve pledged to keep interest rates near zero for an extended period.

The benchmark Hang Seng Index jumped 361.56 points to 21,384.5.

Gold and oil counters gained after prices of the commodities rose. Realgold Mining was up and PetroChina advanced 2.3 percent.

Shares of Alibaba.com fell over 6 percent early Wednesday morning on profit-taking after China's largest e-commerce company posted quarterly earnings in line with expectations.

Southeast Asian shares tracked the region higher with Singapore's Straits Times Index up 0.8 percent to 2,919.3 and the KL Composite higher by 0.2 percent to 1,301.95.
Copyright 2010 Reuters.

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HIGHLIGHTS 3-BOJ Shirakawa says latest step not aimed at forex

TOKYO, March 17 (Reuters) - Bank of Japan Governor Masaaki Shirakawa said on Wednesday the expansion of the bank's fund supply operation was not directly aimed at influencing currency rates.

The central bank chief was speaking after the BOJ decided to ease monetary policy further as expected, doubling the scale of the money supply tool it adopted in December, though it left the duration of fixed-rate loans to banks at three months.

Two of the seven board members dissented, suggesting the board may have had difficulty justifying the move as the economy is recovering.

Following are key quotes from Shirakawa's news conference:

FOREX

"It would not be appropriate for the BOJ to guide monetary policy with the aim of directly affecting currency moves ...

"If the market's understanding of the BOJ's easy policy stance broadens, the latest step may have such effects (of pushing down the yen)."

ECONOMY

"The economy is somewhat overshooting the BOJ's forecasts. The latest step is aimed at ensuring improvements in the economy and prices."

IMPACT OF FUNDING OPERATION

"When we look at what first happened after we introduced the three-month operation in December, it caused term rates to fall, it caused lending rates to fall and it also stopped a deterioration in corporate sentiment, which was reflected in stock prices and the currency market.

"This shows that our easing measures have had some impact and we believe they will continue to do so, and this is behind our decision today.

"Part of the mechanism is that the funding operation can push down longer-term rates, which can then feed into private demand and then into prices."

QUANTITATIVE EASING

"The latest step is not quantitative easing because we do not target financial institutions' deposits at the BOJ. But the BOJ is providing more funds in order not to restrict activities of financial institutions and companies ...

"The latest step is additional monetary easing. We are employing available tools to contribute to improving the economy and overcoming deflation ...

"If the BOJ's easing stance is understood more broadly, it should have positive effects on the economy. But the latest step alone will not clear up the cloud hanging over the Japanese economy."

DEFLATION

"It will take a long time for Japan to overcome deflation. We have to calmly accept that it will take time for improvements in the output gap to feed into prices.

"Still, rising prices in themselves aren't good for this country's citizens, as they could lead to higher input prices and work against the government's finances.

"What we really want is for prices to rise as a result of improvements in the economy. This is why we will be persistent in our accommodative monetary policy."

POLICY DEBATE

"When we take any measure it is vital for us to consider the benefits, the side effects and the amount of time required. Today's decision was difficult, because money market operations could lower the functions of the money market.

"Financial institutions' earnings are also based on certain interest rate expectations, so lowering short-term rates could potentially hurt their earnings.

"But if we help increase fund procurement opportunities in the end, our steps have positive effects overall." (Reporting by Rie Ishiguro and Stanley White; Editing by Michael Watson)

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Dollar Falls as Fed Outlook Boosts Asian Stocks, Commodities

March 17 (Bloomberg) -- The dollar fell against most of its major counterparts before a report forecast to show wholesale prices declined for the first time in five months, backing the Federal Reserve’s pledge to keep interest rates near zero.

The Canadian currency touched its strongest in almost two years versus the greenback as prices for oil, the nation’s largest export, climbed a second day. The yen weakened against the euro as Asian stocks gained and the Bank of Japan doubled the size of its bank-loan program, boosting demand for riskier investments.

“The major central banks look like they will continue to be committed to keeping policy stimulus in place,” said Mitul Kotecha, head of global foreign-exchange strategy for Credit Agricole CIB in Hong Kong. “The dollar is likely to trade with a weaker bias against the major currencies and also emerging- market currencies.”

The greenback fell to $1.3783 per euro as of 2:10 p.m. in Tokyo from $1.3766 in New York yesterday. It reached $1.3796 against the euro on March 12, the lowest level since Feb. 11. The yen declined to 90.58 per dollar from 90.31, after earlier rising to 90.03. Japan’s currency slipped to 124.86 per euro from 124.31, after briefly strengthening to 124.09.

--Editors: Garfield Reynolds, Rocky Swift.

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GETTING PERSONAL: Thomson Reuters Maps Out Stock Indexes

NEW YORK (Dow Jones)--Financial news and data company Thomson Reuters Corp. (TRI) is taking a big step into a wonky area of finance that is gaining more traction with investors: indexing.

The company, which provides financial data terminals and owns the Reuters news service, on Monday launched 7,500 different stock indexes, largely designed to serve as benchmarks for narrowly defined industries in countries across the globe. The company already offers about 800 U.S. and foreign stock indexes, launched in November. In total, it will now track more than 8,000 different areas of the world-wide ...

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Relief over Dodd proposals lifts equities

The FTSE All-Word index rose 0.4 per cent, with traders cautious ahead of interest rate decisions by the US Federal Reserve and the Bank of Japan in the next 24 hours.

No change in the main interest rates are expected, but markets will be keen to see whether the Fed tweaks its promise for rates to stay low for “an extended period” and also if the BoJ will reveal further easing measures. On Wednesday the central bank of Brazil will also deliver its latest rate decision.

In the meantime, traders can continue to assess the impact on the markets of the Dodd financial regulation bill in the US. A late rally in financial stocks on Wall Street overnight suggests their worst fears have not come to pass.
If true, this may remove an obstacle to further equity gains, allowing the S&P 500, which on Monday just eked out another closing high for the cycle, to push beyond the 1,150 level that is proving a bit of a psychological deadweight.

US equity futures currently point to a fractional rise at the start of trade.

● European bourses enjoyed a pop from the open, reflecting Wall Street’s late rally off its lows. The FTSE Eurofirst 300 rose 0.7 per cent and the FTSE 100 in London climbed 0.5 per cent, with banks and industrial metals doing well.

The FTSE Asia-Pacific index rose 0.2 per cent, helped by Shanghai bouncing off a five-week low. The Shanghai Composite index has been going in the opposite direction to other major averages of late on fears Beijing would reduce stimulus measures and clamp down on speculation. The SCI rose 0.5 per cent on Tuesday, while the Hang Seng in Hong Kong slid 0.3 per cent.
The Nikkei 225 in Tokyo fell 0.3 per cent. A slightly stronger yen probably crimped demand for exporters, while a bout of profit-taking may have been in order after the benchmark hit a seven week peak on Monday.

Sydney made ground after positive noises from Rio Tinto about long-term resources demand from China and India helped the sector. However, the S&P/ASX 200 pared gains to close up 0.3 per cent after traders absorbed less upbeat comments on the economy than expected in the minutes from the Reserve Bank of Australia’s March policy meeting.

● The dollar weakened as traders manoeuvred to reflect the likelihood the Fed’s statement later would reiterate its ultra-loose policy. The euro was up 0.3 per cent versus the dollar at $1.3678, with concerns about the eurozone's fiscal position apparently easing.

The dollar index, a gauge of the buck against a basket of its peers, fell 0.3 per cent to 80.04.

Sterling rose 0.1 per cent against the euro to 90.68p as the market shrugged off a report from the European Commission which drew attention to the need for the UK to tackle its budget deficit

● Pre-Fed torpor also gripped the sovereign debt complex. The yields on 10-year US and German benchmarks were barely changed at 3.7 per cent and 3.16 per cent respectively.

The yield on Greek 10-year notes dipped 4 basis points to 6.21 per cent as investors welcomed another show of solidarity toward Athens from its eurozone partners. The spread with Bunds stood at just above 300 basis points as the Greece suffered another widespread strike.

● Commodities were generally a bit stronger, with industrial benchmark copper up 0.7 per cent to $7,345 per tonne. Oil rose 0.4 per cent to $80.11, after Saudi oil minister Ali al-Naimi said that demand is picking up.

Gold continued to meander within the $1,080- $1,140 range in which it has been trapped for a month, gaining 0.6 per cent to $1,115.

Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.

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FOREX-Dlr slips before Fed meeting, long positions cut

TOKYO, March 16 (Reuters) - The dollar fell against the yen and cut gains versus the euro on Tuesday with some traders trimming dollar long positions ahead of a Federal Reserve policy-setting meeting.

The yen gained broadly after investors found no new reason to sell the currency further after a flurry of media reports that the Bank of Japan is leaning towards easing steps this week, prompting them to trim yen short positions, traders said.

The U.S. Fed's Federal Open Market Committee holds a one-day meeting on Tuesday where it is expected to reiterate its vow to keep interest rates very low for an "extended period", though one member dissented at the last meeting and sought to drop that phase.

Market participants are keen to see if there are any more dissenters this time after recent economic data showed U.S. consumers are buying more and firms seem ready to hire again.

"Those who had stretched dollar buying are now trimming those positions before the Fed outcome. But the dollar's ultimate reaction to the Fed results will be either steady on an unchanged statement or a rise if the remarks suggest an upgrade in outlook," said a senior currency options manager for a Japanese bank.

"There is little scope for dollar weakness surrounding this event," the manager said.

The dollar index =USD .DXY, a gauge of its performance against six major currencies, dropped 0.1 percent to 80.12, with near term resistance seen around 80.85, its March 10 high.

Any change in the Fed's language is likely to provide a boost to the U.S. dollar, but chances of that happening are pretty low, traders say. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For daily forex comment on Reuters Insider, please click on

link.reuters.com/deq93j ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

The euro EUR= rose 0.1 percent from late New York trade on Monday to $1.3690 after having fallen as low as $1.3639 the previous day.

But the single currency's gains against the dollar were limited and it stayed under selling pressure versus the yen due to a lack of progress on a financial aid package for debt-laden Greece. [ID:nLDE62D08S]

The Japanese currency recovered from three-week lows against the dollar and the euro ahead of the outcome of a Bank of Japan meeting on Wednesday, in which it is expected to relax its already ultra-loose policy to fight deflation.

But the BOJ board appears split and any hesitancy to loosen policy could lift the yen, traders say. [ID:nTOE62A08Z]

Solid near term resistance for the yen is seen around 89.60 levels, the high struck on March 9.

The BOJ ends its two-day meeting on Wednesday and is likely to announce more easing measures, like boosting the size or duration of special fund-pumping operations. [ID:nTOE62B065]

The dollar fell 0.5 percent to 90.06 yen, down 0.5 percent.

Against the yen, the euro EURJPY=R fell 0.4 percent to 123.28 yen. Other yen crosses also slipped on investor profit-taking with the Aussie down 0.4 percent to 82.43 yen AUDJPY=R.

The Australian dollar AUD=D4 was steady against the dollar at $0.9152 AUD=D4 after minutes from the Reserve Bank of Australia's latest policy meeting showed it expected to keep hiking rates towards normal levels, though there was nothing on the timing of future moves. [ID:nSYC002314] (Additional reporting by Anirban Nag in Sydney and Kaori Kaneko in Tokyo; Editing by Joseph

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Barry Callebaut and Malaysian Cocoa Board to cooperate on developing superior quality cocoa and chocolate from Malaysia

Barry Callebaut AG / Barry Callebaut and Malaysian Cocoa Board to cooperate on developing superior quality cocoa and chocolate from Malaysia processed and transmitted by Hugin AS. The issuer is solely responsible for the content of this announcement.

* Collaborative research project aiming to improve the quality of cocoa and chocolate in Malaysia comprises:

o Barry Callebaut to provide its "controlled fermentation" technology to produce consistently high quality cocoa beans, increasing the value of Malaysian cocoa beans.

o The Malaysian Cocoa Board to conduct the research in Malaysia, to provide its state-of-the-art facilities and expert staff, and to help select test sites


* Barry Callebaut Malaysia to use controlled fermented "Superior Grade" cocoa beans in innovative cocoa and chocolate products to be sold mainly under the KLK Cocoa and Selbourne brand


During a signing ceremony in Putrajaya, Malaysia, in the presence of The Honorable Tan Sri Bernard Dompok, Minister of Plantation Industries & Commodities, Barry Callebaut Malaysia, subsidiary of the world's leading manufacturer of high-quality cocoa and chocolate products Barry Callebaut AG, and the Malaysian Cocoa Board signed a Memorandum of Understanding on a collaborative research project that is expected to result in higher quality chocolate from superior quality Malaysian cocoa beans. Specifically, the collaboration aims to improve Malaysian cocoa bean quality, focusing on optimizing cocoa taste, enhancing the amount of functional components and altering color. Additionally, the processability of cocoa beans will be enhanced.

The collaborative research projects will apply and assess different microbial starter cultures developed by Barry Callebaut for a "controlled fermentation" process. Fermentation is a process that is necessary for cocoa to develop its characteristic taste and flavor. While bean fermentation normally happens spontaneously in the bush or the cocoa plantation, Barry Callebaut developed a way to "control" and optimize cocoa fermentation. Controlled fermentation with defined micro-organisms provides consistent, predictable and superior cocoa bean quality. This in turn leads to improved flavor characteristics, zero- default cocoa beans, enhanced levels of functional components (e.g. flavanols), and improved processability. With the objective of protecting and developing the cocoa industry in Malaysia, the Malaysian Cocoa Board will engage its expert staff to carry out the research in its state-of-the-art labs in its R&D centers in Malaysia to evaluate the impact of controlled fermentation. The Malaysian Cocoa Board will also assist Barry Callebaut in identifying more sites for field tests in Malaysia.

Selbourne Estate, one of the leading estates in Malaysia, cultivating - among other crops - cocoa plantations in Pahang, will function as one of the test sites for controlled fermentation as well as for the implementation of pragmatic, improved agricultural practices which are expected to lead to improved cocoa tree yields. Selbourne Estate is owned by Kuala Lumpur Kepong BHD, one of the top plantation companies in Malaysia and 40%-partner in Barry Callebaut Malaysia.

More than 20 other sites have been identified for the first phase of implementation. Barry Callebaut intends to ramp up the volumes of controlled fermented 'Superior Grade' beans sourced from Malaysia to 5,000mt within the next 3 years. In its factory located in Port Klang, Barry Callebaut Malaysia will process the beans into premium chocolate and cocoa products and commercialize them in Asia-Pacific under the well-known Selbourne brand and KLK cocoa brands.

Barry Callebaut's CEO Juergen Steinemann said at the signing ceremony: "Due to current growth limitations in cocoa supply from Ivory Coast - the world's largest cocoa producing country - and our growing demand for cocoa, we have a strategic need to diversify our cocoa origins. Malaysia and neighboring countries currently produce about 15% of the annual global cocoa harvest and are logical sourcing alternatives to West Africa for us. On the other hand, many consumers in the traditional chocolate consuming countries of Europe and North America are used to the flavor of West African cocoa. Malaysia is the largest cocoa grinding country in Asia; Malaysian grinders import beans from Africa to make high-flavor cocoa products. Controlled fermentation will allow us to match the taste of

Malaysian cocoa with the taste of West African cocoa. We are very pleased about this important partnership with the renowned Malaysian Cocoa Board and the experienced Selbourne Estate. Controlled fermentation is also an excellent means to support the Malaysian cocoa industry as it enables farmers to increase the value of their cocoa through consistently high quality, which will improve farmer incomes."

Dato' Dr. Azhar Ismail, Director General of the Malaysian Cocoa Board, said at the MoU signing ceremony: "There is serious competition from other commodity crops such as rubber and palm trees to the existing cocoa plantations in Malaysia. We see the partnership with Barry Callebaut as an excellent opportunity to further develop and sustain the cocoa industry in our country. If our cocoa farmers can earn more, they will continue to grow cocoa. This is good for our economy as well as for the biodiversity of our agricultural sector."

* * *

Barry Callebaut (www.barry-callebaut.com):

With annual sales of about CHF 4.9 billion / EUR 3.2 billion / USD 4.3 billion for fiscal year 2008/09, Zurich-based Barry Callebaut is the world's leading manufacturer of high-quality cocoa and chocolate - from the cocoa bean to the finished product on the store shelf. Barry Callebaut is present in 26 countries, operates about 40 production facilities and employs about 7,500 people. The company serves the entire food industry, from food manufacturers to professional users of chocolate (such as chocolatiers, pastry chefs or bakers), to global retailers. Barry Callebaut is the global leader in cocoa and chocolate. The company is actively engaged in initiatives and projects that contribute to a more sustainable cocoa supply chain.

Barry Callebaut has four factories in Asia-Pacific: in Malaysia, China, Singapore and Japan. Its largest factory as well as its regional head office are located in Malaysia.

Malaysian Cocoa Board (www.koko.gov.my):

The Malaysian Cocoa Board (MCB) is a federal statutory research and development agency under the Ministry of Plantation Industries and Commodities. It was established in 1988 and has been in operation since 1989. The main objective is to develop the cocoa industry in Malaysia to be well integrated and competitive in the global market. Emphasis is given to increasing productivity and efficiency in cocoa bean production and increasing downstream activities.

Kuala Lumpur Kepong BHD (www.klk.com.my):

KLK is amongst the top plantation companies in Malaysia, with a land bank in excess of 217,000 hectares, located in Peninsular Malaysia (70,000 hectares), Sabah (40,000 hectares) and Indonesia (107,000 hectares). Whilst plantation remains KLK's core business, the Group has expanded downstream into resource-based manufacturing, in particular oleochemicals and rubber processing.

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Rio Tinto: China's commodities demand will grow

MELBOURNE, Australia -- China's demand for iron ore, copper, coal and aluminum will increase dramatically during the next 15 years before India takes the lead in its need for those commodities, global miner Rio Tinto Ltd. predicted in its annual report released Tuesday.

Rio Tinto ( RTP - news - people ) chief executive Tom Albanese said the strong demand for iron ore clearly provided the most obvious option for production growth in Australia.
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Albanese was optimistic about long-term growth prospects and said China's demand for iron ore, copper, coal and aluminum was expected to grow exponentially for the next 15 years.

"India is expected to follow, supporting a further potential wave of strong commodity demand," Albanese said.

He said Rio's move toward a joint venture with BHP Billiton ( BBL - news - people ) to combine their massive iron ore operations in Western Australia's Pilbara region was a highlight of 2009.

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The short-term outlook for mining and metals is also improving but will likely remain volatile, the report said.

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Food prices push Indian inflation up to 9.9 pct

MUMBAI, India - India's inflation accelerated faster than expected to 9.9 percent in February, driven by high food prices, adding to pressure on policymakers to continue unwinding stimulus measures, government data showed Monday.

Since October, when the government began reporting monthly — instead of weekly — data, headline inflation has increased nearly seven-fold.

That's been driven by spiraling food prices due to drought and rising rural incomes, but it has begun to spill over into non-food areas as India's economy picks up and global commodities prices rise, putting pressure on margins of manufacturers.

"In my view, the monetary policy is behind the curve as a conscious policy choice in a bid to ensure growth is back and is sustainable. The current inflation was essentially from supply side, but demand side factors could come into play ahead," said Mridul Saggar, chief economist at Mumbai's Kotak Securities.

He calculates that India has the second highest consumer price inflation — 16.2 percent — in the world, after Venezuela's 27 percent. India also runs the most negative real interest rate of the G-20 nations, -13 percent, far more than, for instance, the U.K.'s -3 percent, he said.

That's a problem because it discourages saving and can lead to asset price bubbles in real estate and commodities.

He expects inflation to peak around 11 percent next month, before the new winter crop hits markets and helps lower food prices.

But he said inflation could be around 7 percent by September 2010 — higher than the central bank likes — because wages are rising and manufacturers are passing on higher commodities prices to consumers.

"With inflation being a lot bigger risk than growth, we expect RBI to go ahead with more monetary tightening, raising policy rates by 50-100 bps on April 20," he said.

Food inflation for February was 17.8 percent, up from 17.4 percent in January, the Ministry of Commerce said. Fuel and power inflation was 10.2 percent in February, up from 6.9 in January. Inflation in manufacturing was 7.4 percent, up from 6.6 in January.

The central bank had been expecting inflation to hit 8.5 percent by the end of March.

The Ministry of Commerce also said December inflation was 8.1 percent, not 7.3 percent as earlier estimated.

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(Reuters) - Oil fell below $81 a barrel on Monday, pressured by a strengthening dollar ahead of economic data from the United States, an OPEC meeting

U.S. crude for April delivery fell 63 cents to $80.61 per barrel by 1220 GMT, after settling at $81.24 on Friday. London Brent crude was down 59 cents at $78.80.

The dollar rose broadly on Monday as investors took refuge in its safe-haven status after fears of more liquidity tightening measures by China's central bank pummeled Asian stocks, though analysts said oil demand would continue to grow.

"We've got OPEC looming this week, but China is really the story at the moment, plus whether the Fed can keep its hawkish tone, because we're pretty solid at above $80," said James Hughes, market analyst at CMC Markets in London.

A stronger dollar tends to pressure oil because it makes dollar-denominated commodities more expensive for other currency holders

U.S. INDUSTRIAL DATA

The market will scrutinize U.S. February industrial output data later on for further insight into the health of the world's largest economy, and a statement from the Federal Reserve at the end of its two-day interest rate-setting meeting on Wednesday for evidence the recovery is still on track.

At 1315 GMT, the Federal Reserve releases industrial output and capacity utilization data for February.

Economists expect a 0.1 percent fall in production and capacity usage of 72.6 percent, compared with January's rise of 0.9 percent in production and a capacity usage of 72.6 percent.

U.S. consumer sentiment declined slightly in early March, with Americans less positive about the job outlook, a survey released on Friday showed.

But February retail sales rose unexpectedly, despite heavy snow storms that were thought to have kept shoppers at home and bolstered hopes of a sustainable economic recovery.

The Fed is expected to hold benchmark rates near zero and reiterate its pledge to keep them low for an "extended period" due to lingering weakness in the U.S. jobs market and nagging doubts over the solidity of the economic rebound.

But since U.S. consumers are buying more and companies appear to be on the verge of hiring again, policymakers in the Fed may ponder how long to keep its ultra-low rate pledge.

CHINA MOVES

China's central bank is seen raising bank reserve requirement ratios as early as this week, while some say it may wait a while before raising benchmark deposit and lending rates.

"On China, we do not believe that the early monetary tightening moves are negative for China's GDP and oil demand outlook," said Mike Wittner, global head of oil research at Societe Generale in their quarterly Commodities Review.

On the supply front, the market will also eye the outcome of OPEC's meeting later this week.

The Organization of the Petroleum Exporting Countries, which pumps at least one in every three barrels of oil, meets in Vienna on Wednesday to discuss production policy.

Officials have said they do not expect a change in targets while prices are within their desired range.

OPEC has restricted output since the onset of the financial crisis to support prices. But the group's compliance with its officially targeted cut of 4.2 million barrels per day (bpd) has slipped to just 53 percent as prices have risen.

(Additional reporting by Jennifer Tan in Singapore, editing by Amanda Cooper)

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Pound Bears Bet More Than When George Soros Beat BOE

By Bo Nielsen and Lukanyo Mnyanda

March 15 (Bloomberg) -- Futures traders are more bearish than ever on sterling amid concern that the currency’s worst annual start in 13 years will continue as the U.K.’s budget deficit approaches the Greek shortfall that roiled the euro.

Wagers on the pound weakening against the dollar outnumber futures that profit on a rise by eight times more than when George Soros made $1 billion betting against the currency in 1992, the year Prime Minister John Major’s Conservative government was forced to withdraw from the European Exchange Rate Mechanism. Sterling fell 19 percent that year.

The pound has lost 6.9 percent in 2010 on speculation a budget gap will skewer the currency: Either record borrowing will push debt costs higher and force policy makers to print more money to buy bonds, or lawmakers will cut spending too fast and trigger a new recession. Prime Minister Gordon Brown’s government estimates the deficit will hit 12.6 percent of gross domestic product, almost as high as the 12.7 percent in Greece that drove European leaders to consider a bailout.

“The risk of a U.K. double dip is substantial,” said Hans-Guenter Redeker, London-based head of foreign-exchange strategy at BNP Paribas SA, which predicts an additional 13 percent drop to $1.31 by the end of 2010. “Sterling is increasingly trading like an emerging-market currency with rising bond yields no longer working in favor of the currency.”

Ten-year gilt rates have climbed more than a percentage point in the past year, the fastest increase since mid-2004.

Lower Forecasts

BNP, whose Sept. 8 forecast for this quarter is closest to the mark in a Bloomberg survey, is now the most pessimistic of 36 strategists. After reducing their median prediction 2 percent in January, strategists cut it 3 percent this month, the quickest drop since September. Twenty-two strategists see the pound ending the year below 2009’s $1.6170 close.

Brown said March 10 the economic recovery is “still in its early stages and remains very fragile.” His Labour Party is locked in an election battle that may lead to the first Parliament stalemate in 36 years and reduce the chances of enacting his five-year plan to cut the shortfall to 4.4 percent of GDP, which Fitch Ratings already has called “too slow.”

Sterling was at $1.5051 today, down 0.1 percent for the past week. The currency slid 0.7 percent against the euro today to 91.13 pence, down 2.8 percent this year. The pound is the only one of 16 most-traded currencies tracked by Bloomberg to weaken over the past six months against the euro.

Bullish Strategists

Strategists remain bullish on the pound even after cutting their forecasts. The median prediction of 35 analysts in Bloomberg’s survey calls for a 4.9 percent gain to $1.59 per pound by Dec. 31, down from a consensus of $1.67 on Jan. 28.

The pound’s drop may already reflect the deficit. At 4.098 percent last week, 10-year gilt yields are up 115 basis points in the past 12 months and were 103 basis points higher than German bund rates on Feb. 23, the biggest gap in more than four years.

Greek yields have risen as much as 139 basis points this year and closed at 6.25 percent last week. Gilt rates have risen no more than 22 basis points since Jan. 1, peaking at 4.23 percent on Feb. 22. British government debt was 55.8 percent of the economy in 2009, less than half of Greece’s 113.4 percent, according to Goldman Sachs Group Inc.

The U.K. isn’t facing a financial crisis in the “foreseeable future,” You-Na Park, an analyst at Commerzbank AG in Frankfurt, wrote in a March 10 note to clients.

Helpful Drop

Erik F. Nielsen, Goldman Sachs’ chief European economist, said the pound’s 8 percent drop versus the dollar and 1.9 percent decline against the euro in six months will propel a recovery in the U.K. economy and help the currency reach $1.73 by August.

“People are very bearish on the U.K., probably more than they should be,” Nielsen said in a March 8 interview in Sydney.

British yields, the highest in the Group of 10, have risen as record debt sales of 225.1 billion pounds ($341 billion) in the fiscal year ending this month prompted investors to sell gilts. Foreigners sold a net 1.49 billion pounds of U.K. bonds in January, the most in nine months, central bank data show.

Higher yields usually shore up currencies by encouraging investments with cash from economies with lower borrowing costs.

“When yields go up in a country watched by the rating agencies, it doesn’t mean that people are more enticed to buy the currency,” said Stephen Jen, a London-based managing director at BlueGold Capital Management LLP. “It means there’s a risk premium being priced in. The U.K. has huge problems that are not being addressed while Greece’s problems have been addressed somewhat.”

‘Completely Over’

Investors bought 5 billion euros ($6.9 billion) of Greece’s debt this month as the government announced spending cuts and tax increases totaling 4.8 billion euros. The crisis is “completely over” and won’t hit other euro countries, former European Commission President Romano Prodi said in a interview on March 10.

Reining in the U.K. deficit may not be enough to save the pound, Mansoor Mohi-uddin, Singapore-based strategist at UBS AG, the world’s second largest currency trader, wrote in a Feb. 24 research note.

“If the next government was to prematurely curb the fiscal deficit after the elections, without the economy reaching a surer footing, the consequences for sterling, financial markets and public confidence would be grave,” Mohi-uddin said. In a worst-case scenario, the currency would fall to parity with the euro and to $1.05, the lowest level since 1985, he said.

More In Sync

Measured against a basket of G-10 currencies proportioned by how correlated they are with each other, the pound has fallen 38 percent since 1974, the worst performer after the New Zealand dollar and Swedish krona, Bloomberg Correlation-Weighted Currency Indexes show. The pound and the euro are more in sync with each of the G-10’s currencies than the others, signaling they have the greatest effect on exchange rates.

Hedge funds and large speculators had 67,549 more bets the pound would decline against the dollar than contracts that profit from a rise as of March 2, data from the Commodity Futures Trading Commission in Washington show. Futures traders haven’t been that bearish since at least January 1986, as far back as CFTC data go.

The so-called net-short position has averaged 60,548 in the five weeks to March 9, compared with about 7,200 in October 1992, when Soros was profiting from the pound’s plunge.

Soros Vs Major

Two years earlier, the U.K. had joined the European Exchange Rate Mechanism, a euro precursor that required members to keep currencies within trading bands. Soros, who now oversees about $25 billion at Soros Fund Management LLC in New York, wagered that the U.K.’s growing deficit and falling dollar would make it impossible for the British to defend the pound with interest-rate increases and sterling purchases.

On Sept. 16, 1992, Prime Minister Major capitulated, allowing the pound to slide almost 24 percent that September, October and November, sterling’s worst three months since at least 1971. Black Wednesday, as the day became known, earned Soros’s Quantum Fund $1 billion on what he later told the Times of London was a bet “worth almost $10 billion.”

Prices for protecting Greek and British debt shows today’s shift in sentiment. Five-year credit-default swaps for Greece cost 2.92 percentage points last week, more than four times what U.K. debt insurance sold for, down from five times on Jan. 28.

U.K. bonds lost 2.8 percent in the year through March 12, even as Bank of England bought 200 billion pounds worth, equivalent to 89 percent of planned sales, indexes compiled by Bank of America Corp.’s Merrill Lynch unit show. Treasuries returned 0.6 percent in the same period.

The pound also is being weighed down by speculation the next government will be too weak to cut the deficit.

Poll Results

Polls show the campaign is tightening in advance of elections that must be held by June. A YouGov Plc survey in The Sun newspaper on March 10 showed the Conservatives with 36 percent support compared with 32 percent for Labour, the latest in a series of poll results giving neither side enough support for a parliamentary majority. The last U.K. election to end that way, in 1974, was followed by a 28 percent slide in the pound over the next two years.

Sterling’s weakness has done little to boost growth by making exports cheaper. U.K. factory production unexpectedly fell in January for the first time since August, a government report on March 9 showed. The trade deficit in the same period swelled to the widest in 17 months. Exports slumped even after sterling declined 30 percent on a trade-weighted basis since June 2007.

Weak Demand

“I’ve been waiting 40 years for an export-led U.K. recovery, and I haven’t seen one yet,” said Robin Marshall, director of fixed income in London at Smith & Williamson Investment Management, which oversees about $20 billion. “A weaker exchange rate isn’t going to be sufficient to drive a recovery when external demand remains weak.”

Policy makers are prepared to do “whatever seems appropriate” to prevent an economic relapse, Bank of England Governor Mervyn King told lawmakers Feb. 23. Adam Posen, a monetary policy committee member, said a day later the BOE may expand a program to buy government bonds with newly printed money if economic growth is weaker than expected.

Richard Howard, a managing director at Dallas-based money manager Hayman Advisors LP, said a drop of 14 percent to $1.30 per pound is possible.

“The U.K. is in a pretty precarious position,” said Howard, whose hedge firm earned $500 million betting on the U.S. subprime mortgage-market collapse. “The substantial currency devaluation hasn’t improved their trade position very much, and quantitative easing hasn’t kept the 10-year yield from creeping up. That is a dangerous sign.”

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WORLD FOREX: Euro Down Vs Dollar, Yen As Asian Equities Weigh

TOKYO (MarketWatch) -- The euro fell against the yen and dollar in Asia Monday as weaker regional share markets prompted Asian hedge funds and other short-term players to sell the risk-sensitive currency to take profits following its rise Friday.

With a monthly meeting of European Union finance ministers later in the day unlikely to yield any specific details of financial aid for fiscally strapped Greece, the single currency may fall further this week, dealers said.

In Tokyo Monday, Japan's benchmark Nikkei 225 Stock Average was down 0.13% in early afternoon trade. China's Shanghai Composite Index was off 1.16%, while bourses in Hong Kong, Taiwan, Singapore and Korea were also lower.

"The weaker stocks have led naturally to some profit taking," said Mitsuru Sahara, senior manager of the foreign exchange sales department at the Bank of Tokyo-Mitsubishi UFJ. Investors may be keen to lock in profits after the euro's rise Friday as they think the unit may trend downward this week if European authorities don't offer detailed financial support to Greece, he said.

Other dealers echoed that view. If Euro-zone finance ministers "again don't deliver any concrete financial aid plans, that will simply be the latest bad news for the euro," said Shuichi Kanehira, a senior vice president in the forex division of Mizuho Corporate Bank.

At 0450 GMT, the common currency was down at $1.3739 from $1.3762 late Friday in New York. Against the yen, the euro stood at Y124.50 compared with Y124.57.

The common currency could fall to $1.3680 and Y124.00 later in the day, said Mizuho Corporate Bank's Kanehira.

Elsewhere, the dollar stood at Y90.61 compared with Y90.50 late Friday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the yen and euro, was at 79.927 compared to 79.818.

The dollar could weaken against its Japanese counterpart this week, dealers said, if the U.S. Federal Open Market Committee Tuesday does not change its intent to keep interest rates low for an "extended period."

"I don't see that the economic data are yet strong enough to suggest that they would do this," said Hideaki Inoue, chief manager of forex and financial products trading at Mitsubishi UFJ Trust and Banking.

The U.S. unit may trade in a Y89.00-Y91.00 range for the week if the FOMC keeps the "extended period" language unchanged, Inoue said.

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