Brazil Stocks Gain as Economic Growth Boosts Commodity Outlook

Dec. 9 (Bloomberg) -- Brazilian stocks rebounded, led by commodity producers, on speculation a growing economy will sustain demand for raw materials.

Usinas Siderurgicas de Minas Gerais SA paced gains for steelmakers after Brazil’s gross domestic product unexpectedly jumped 6.8 percent in the third quarter. Petroleo Brasileiro SA rose 3.3 percent after the company said it may be able to produce oil from its pre-salt fields for less than $40 a barrel. Positivo Informatica SA soared the most ever on speculation Dell Inc. and China’s Lenovo Group Ltd. may bid for the company.

The GDP number “reflects what we’ve been hearing from the companies, that, activity has slowed down but it hasn’t slowed down that much and some sectors haven’t slowed on at all,” said ,William Landers who manages $3 billion in Latin American equities at BlackRock Inc. in Plainsboro, New Jersey. “If you talk to the banks, they’re still lending; if you talk to the steel companies, they’re not shutting down completely; if you talk to the retailers, they’re still selling on credit.”

Brazil’s Bovespa Index rose for a third day, gaining 0.6 percent to 38,522.76 at 12:11 p.m. New York time. The index fell as much as 1.3 percent earlier. Mexico’s Bolsa climbed 1.4 percent and Chile’s Ipsa surged 1.8 percent.

Usiminas rose 4 percent to 26.65 reais.

Petrobras jumped 68 centavos to 20.89 reais.

“We’re optimistic that we can produce oil at a cost below $40 a barrel in pilot production in the pre-salt oil fields,” said Theodore M. Helms , investor relations executive manager, said during an investor conference in New York. The so-called pre-salt areas are underwater oil fields beneath a layer of salt.

Positivo rose 53 percent to 9.45 reias. It had gained as much as 126 percent earlier.

Lenovo Chief Executive Officer said today he expects personal-computer companies to consolidate “soon” because of the global slump in stock prices, adding to speculation that Lenovo may be interested in Positivo. Amelio said there is “no news to share on” the possible plans.

“Besides the fact Lenovo’s CEO said he sees more industry consolidation, the shares are really cheap now compared with the company’s prospects,” said , who manages the equivalent of $2.4 billion as head of equities at Unibanco Asset Management.

Gold ends higher, strong physical demand seen

NEW YORK/LONDON (Reuters) - Gold futures ended slightly higher on Tuesday as weaker stock markets bolstered bullion's appeal as an alternative investment.

"The gold market has been moving sideways, waiting for further development in the financial markets. As the stock market shows signs of prosperity, gold buyers will become more aggressive in returning," said George Nickas, commodity broker at FC Stone.

U.S. stocks turned lower sharply after rallying in the previous two sessions, as investors mulled whether recent gains have staying power. .N

Spot gold was at $773.25 at 2:42 p.m. EST, up 0.3 percent from Monday's close of $771.30.

U.S. gold for February delivery settled up $4.90 at $774.20 an ounce on the COMEX division of the New York Mercantile Exchange.

Gold held onto gains in spite of a sharp drop of oil, the other main external driver of gold. U.S. crude futures ended down nearly $2 at $42.07 per barrel.

Falling crude prices can undermine confidence in commodities as an asset class, and dent interest in gold as a hedge against oil-led inflation.

Meanwhile, market talk of a gold sale by the International Monetary Fund failed to dampen sentiment.

In April, the IMF had agreed to put its finances on sounder footing by selling some of its gold and investing in other asset classes such as bonds or equities.

However, approval of the U.S. Congress will be needed before any gold sales could begin.

PHYSICAL DEMAND SEEN SUPPORTIVE

In addition, resilient physical gold demand should boost prices in the near term, analysts said.

Thom Calandra, natural resources analyst and chief columnist for Stockhouse.com, said that high gold leasing rates and the lofty premium of gold coins and bars underscored strong physical buying.

"That demand is not currently reflected in the futures prices and other paper prices," Calandra said.

Among the other precious metals, platinum slipped a touch as investors worried slowing economic activity would hit demand for the metal, which is chiefly used to make catalytic converters.

Decline in Oil Markets Wallops ETFs That Bet on Energy Prices and Stocks

Exchange-traded funds that let investors bet on energy prices and stocks are among the most popular offerings, judging by their considerable trading activity, but some of these ETFs have been slammed by the steep declines in crude-oil prices.

"There simply is very little buying coming into the markets," said MF Global analyst Edward Meir. "With respect to crude, it is anyone's guess where we go from here."

PowerShares DB Crude Oil Double Long ETN, a exchange-traded note, shed more than half its value in the month ended Dec. 4, according to investment researcher Morningstar Inc. In three months ended Dec. 4, it was off more than 80%.

Oil Slick

Other ETFs and ETNs that give leveraged exposure to commodities and related stock sectors have taken similar hits from a correction in energy prices. The casualty list includes PowerShares DB Commodity Double Long ETN, ProShares Ultra Basic Materials and ProShares Ultra Oil & Gas.

While consumers have been benefiting from lower oil prices at the pump in the form of cheaper gasoline, U.S. Gasoline Fund is down more than 60% in the past three months.

Exchange-traded products linked to crude oil also have been caught in the center of the commodity storm, such as iPath S&P GSCI Crude Oil Total Return Index ETN, U.S. Oil Fund, U.S. 12 Month Oil Fund, MacroShares $100 Oil Up, PowerShares DB Crude Oil Long ETN and PowerShares DB Oil Fund.

Individuals have many choices when it comes to investing in the energy sector, and there are even offerings designed to bet against commodities.

Several products track energy stocks, such as the highly traded Oil Service HOLDRS. There also are portfolios designed to short, or bet against, oil and energy-sector stocks so investors can profit from market declines or to hedge other investments, and some of these bearish funds and notes provide leverage.

Check Under the Hood

Exchange-traded products have let individuals easily access commodities and other sectors without opening up a futures account, but investors should make sure to research them thoroughly before jumping in. For example, ETNs have come under pressure recently because they carry credit risk.

Also, some of the funds listed above use the futures markets to get exposure to oil and commodities prices. This is important because the oil markets are in a state known as "contango," in which longer-dated futures are more expensive than the spot price. Heavy contango may, at times, indicate a market perception of oversupply.

The bottom line is that funds that use futures need to continually rollover the contracts to maintain exposure. When markets are in contango, the funds post a loss on such trades.

This has been a source of confusion in recent years with the proliferation of ETFs and ETNs tracking oil and commodities.

Investors also need to be aware that gains on these products that invest in futures or hold physical commodities can be taxed at a higher rate than funds that invest in stocks.

Still, there is evidence that investors have been using the products to trade the volatility in oil markets this year.

Energy Select Sector SPDR Fund, ProShares UltraShort Oil & Gas and Oil Service HOLDRS were among the top 20 U.S.-listed ETFs by daily dollar volume in the third quarter, according to research from Morgan Stanley.

Oil and energy ETFs also had some of the highest levels of short interest relative to overall assets. Highlighting the scope of the action, many oil and energy-related funds can see their entire asset base turn over in a matter of days.

Will Higher Commodity Prices Help the Australian Dollar?

It seems logical to assume that increased demand in the US for commodities would be good for the Aussie but that may not actually turn out to be correct. The AUD/USD has popped up a little today as a result of the shift in investor sentiment but long term moves still look biased to the downside. Increased demand for commodities may seem good for the Australian dollar but will it really last? The Australian economy is more sensitive to Asia than it is to North America. This article will explain why.

Although the AUD is a commodity currency they export much more to China, Japan and even Korea than to the U.S. Economic improvements in Asia are likely to be needed for much improvement in the AUD over the long term.

With a new economic crisis brewing in China, demand is not likely to pick up in the near term. Additionally, from a technical perspective. the AUD/USD is still within its channeling range and a bounce back down from resistance would not be a surprise.

In today's video, I will walk through the variables at play including the technical pattern appearing on the AUD/USD itself. In previous articles, I have discussed the correlation that the Australian dollar has with specific commodities like gold.

European stocks rise sharply, led by commodities

FRANKFURT, Dec 8 (Reuters) - European shares soared 6.7 percent on Monday, led by commodities and banks, on optimism that government stimulus packages will help soften the impact of a recession.

The pan-European FTSEurofirst 300 .FTEU3 index unofficially closed up 53.32 points higher at 847.26, having extended gains after U.S. stock markets opened higher.

U.S. president-elect Barack Obama said on Saturday that his plan to create at least 2.5 million new jobs included the largest infrastructure investment since the 1950s and a huge effort to reduce U.S. government energy use.

Wall Street rallied on hopes for the plan, and major U.S. indexes were up between 3.6 and 3.7 percent as the European market closed.

Commodity stocks led the rally in Europe, tracking metal and crude prices, which rose sharply. The DJ Stoxx basic resources index was up 13.4 percent, with Anglo American (AAL.L: Quote, Profile, Research, Stock Buzz), Vedanta Resources (VED.L: Quote, Profile, Research, Stock Buzz) and BHP Billiton (BLT.L: Quote, Profile, Research, Stock Buzz) rising between 13.2 and 15.6 percent.

Heavily-weighted banks also advanced. Barclays (BARC.L: Quote, Profile, Research, Stock Buzz), Lloyds TSB (LLOY.L: Quote, Profile, Research, Stock Buzz), Royal Bank of Scotland (RBS.L: Quote, Profile, Research, Stock Buzz) and UBS (UBSN.VX: Quote, Profile, Research, Stock Buzz) rose between 6.7 and 14.2 percent. (Reporting by Sarah Marsh, editing by Atul Prakash)

Australian, N.Z. Dollars Weaken as Stocks, Confidence Decline

Dec. 9 (Bloomberg) -- The Australian dollar fell from close to a three-week high as local stocks declined and an industry report showed business confidence was at a record low. New Zealand’s dollar also fell.

Australia’s currency pared yesterday’s gains before a government report this week that may show unemployment rose to a one-year high in November, adding to signs that the economy may slip into its first recession since 1991.

“There’s a view that some of the gains we’ve seen will be hard to sustain for stock markets,” said Tony Morriss, a senior currency strategist at Australia & New Zealand Banking Group in Sydney. “You’d expect the Aussie, or the risk-sensitive currencies, to run into resistance at higher levels.”

Australia’s currency fell 1.4 percent to 65.50 U.S. cents as of 4:47 p.m. in Sydney from late in Asia yesterday, when it touched 66.91 cents, the highest level since Nov. 14. The currency declined 2.2 percent to 60.59 yen. The currency may weaken towards 65 U.S. cents before the employment data is released, said Morriss.

New Zealand’s dollar fell 0.8 percent to 53.85 U.S. cents, from 54.28 yesterday. It was weaker at 49.83 yen from 50.61 yen.

The Australian dollar declined as National Australia Bank Ltd. said its sentiment index for November fell one point to minus 30, the lowest level since the series began in 1989. The survey of more than 560 companies was conducted between Nov. 23 and Nov. 30.

Jobless Rate

The number of people employed in Australia may have fallen 15,000 in November, after gaining 34,300 the previous month, according to a Bloomberg News survey of economists before the statistics bureau’s Dec. 11 report. The unemployment rate may have climbed to 4.4 percent, the highest level since November 2007, from 4.3 percent, a separate Bloomberg survey showed.

The New Zealand dollar gained earlier as Governor-General Anand Satyanand announced NZ$4.4 billion ($2.4 billion) of income tax cuts and said it would spend more on road and school construction.

Government plans “that are going to build infrastructure and so need commodities have improved underlying sentiment toward these countries,” said Tony Allen, head of currency trading at ANZ National Bank Ltd. in Wellington.

The UBS Bloomberg Constant Maturity Commodity index of 26 raw materials gained, ending six days of losses. Gold and crude oil, Australia’s third and fourth most valuable raw-material exports advanced. Raw materials account for 60 percent of Australia’s exports and 70 percent of New Zealand’s.

Australian government bonds were little changed with the 10- year yield at 4.31 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 fell 0.140, or A$1.40 per A$1,000 face amount, at 107.692.

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.78 percent from 4.75 yesterday.

FEATURE-Commodity traders grow weary of market swings

CHICAGO (Reuters) - From his desk alongside the Chicago Mercantile Exchange (nyse: CME - news - people ) trading floor, Jim Brooks is seeing more ill tempered cattle and hog traders nowadays as they cope with fast moving markets that has lost many of them money.
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"Tempers are a little shorter and emotions are more frantic. You definitely feel that," said Brooks, who oversees floor operations for R.J. O'Brien Futures. "This market is starting to take a toll on some people."

That toll has been caused by the whipsaw action in commodities, which had traders struggling to get on board when commodity prices shot higher this summer and later rushing to get out when prices tumbled.

Many lost money and others are still losing more. This has led to traders getting out or scaling down their trading practices. The larger players, primarily investment funds, may not be coming back.

"We drove a lot of people out of the market because they could not afford to play," Paul Haugens, vice president of the Chicago brokerage Newedge USA, said of this year's surge in Chicago Board of Trade grains market. "Now we are not getting them back. They are beat up."

This exodus has been evident in the sharp decline in the open interest, a measure of traders using the markets, on the exchanges across the board since the summer.
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Open interest is down 33 percent in CBOT grain markets and in CME live cattle and down 35 percent in CME hogs.

Open interest in crude oil is down 22 percent from May, while gold is down 42 percent and copper is down 31 percent in that time, according to Commodity Futures Trading Commission.

"I think the bulk of the open interest decline has been related to the exit of the index funds and hedge funds from the market," said Rich Feltes, senior vice president at MF Global.

COMMODITIES HEYDAY MAY BE OVER

A few months ago, commodities of all types were the darlings of these wealthy investment funds, which poured cash into crude oil, cattle, corn, copper, and others.

"They were like drunken sailors, they could not stand to have the money in their pockets," Gary Lark, a 30-year veteran of the Chicago Mercantile Exchange livestock markets, said of the rush to buy.

That heyday appears to be over.

"I don't think they are going to be coming back for a while," Feltes said of the funds, "I think they have been stung by the betrayal of the trading adage that commodities trade inversely proportional to equities."

This crash in commodities has sent smaller traders moving to the sidelines as well.

"I think everybody is totally shell-shocked," said Lark. "Everybody got run over by the bus going east. They got up only to be run over by the bus going west."

HOG TRADERS STILL CAUGHT

For instance in the CME's hog market, traders are still long the June 2009 hog contract, said Wilson Cipolla, a long-time hog trader with ADM Investor Services.

These traders bought on ideas the high feed grain prices early this year would have producers feeding fewer hogs thus driving up hog prices.

However, corn prices came crashing down a few months later amid forecasts for a bumper U.S. crop. Hog prices came down as well, stranding these traders with money-losing positions.

"There were an awful lot of sharp guys who bought June hogs figuring prices would go higher," said Cipolla. "It is a blood bath, they can't get out."

The June hogs peaked in July at 100.25 cents per lb, but on Monday was at 79.375, a 21 percent decline.

Similar tales can be found in the cattle pit, at the nearby Chicago grain markets, in Winnipeg where canola and barley are traded and in New York, where crude oil, gold, and other commodities trade.

"We have had just a massive meltdown here. Everybody got on the same side of the boat. Everybody was long and wrong," said Keith Ferley, a Winnipeg commodity broker for Union Securities. "I think we are at the point now where participants have moved to the sidelines in disbelief."

In New York, crude oil topped $140 a barrel in July as funds and speculators poured bought on the belief that demand by China and India would reduce supplies. However, souring economies worldwide and an aversion to $4 per gallon gas by U.S. motorists slashed demand, and crude came tumbling down to about $40.

"Given the rate at which we are selling off at, we shudder to think where crude oil prices will be when the boys from OPEC get together in 12 days' time ... an eternity in our view," MF Global analyst Edward Meir said last week when oil dropped 25 percent, its deepest weekly rout in 18 years.

The Organization of the Petroleum Exporting Countries is meeting in Algeria on Dec. 17. (Additional reporting by Barani Krishnan; Editing by Marguerita Choy)

Asian Stocks Gain for Third Day, Led by Commodities, Cosco

Dec. 9 (Bloomberg) -- Asian stocks rose for a third day, led by commodity producers and shipping lines, on expectations stimulus plans from the U.S. to India will buoy the global economy and prevent earnings from tumbling.

BHP Billiton Ltd. rose 4.5 percent in Sydney, while China Cosco Holdings Co., the largest operator of iron-ore and coal ships, surged 12 percent in Hong Kong. Singapore and Indonesian stock markets jumped more than 4 percent after being shut yesterday, when plans by U.S. President-elect Barack Obama to boost growth led the MSCI World Index to a 5.5 percent advance. Gains were limited as Japan’s economy contracted more than estimated predicted and China’s exports shrank.

“Investors are anticipating the positive impact of the various stimulus plans,” said Mark Tan, who helps oversee $3 billion in Asian equities at UOB Asset Management in Singapore. “This remains a bear market rally. Once poor economic data comes out and companies cut earnings, we could see markets falling.”

The MSCI Asia Pacific Index added 0.8 percent to 83.78 as of 3:54 p.m. in Tokyo. About 10 stocks gained for every seven that fell. The gauge, up 11 percent from its Nov. 20 low, retreated 47 percent this year and is set for the worst annual performance in its 20-year history. Companies in the index are valued at an average 12 times estimated profit, about a quarter below the level at the start of 2008.

Japan’s Nikkei 225 Stock Average rose 0.8 percent to 8,395.87. Nomura Holdings Inc. led gains after people familiar with the situation said it will cut jobs in Asia. Sony Corp. climbed 3.9 percent before saying after the close it will reduce headcount by 8,000 and lower investment in electronics.

Avert Collapse

Decreased spending by businesses led Japan to revise its estimate of third-quarter growth to a 1.8 percent contraction, more than the 0.4 percent reported last month.

“We need to implement policies to prevent the economy from falling apart,” Economic and Fiscal Policy Minister Kaoru Yosano told reporters in Tokyo today. Prime Minister Taro Aso instructed his Cabinet to find ways to support workers who are losing their jobs.

Governments are stepping up measures to ward off the worst financial crisis since the Great Depression. Obama pledged to enact the biggest government spending program since the 1950s, while India cut interest rates and announced a $4 billion stimulus package. Hong Kong will provide $12.9 billion of loan guarantees to help businesses, Donald Tsang, the city’s chief executive, said late yesterday.

China’s CSI 300 Index fell 2.6 percent, led by Shanghai Mechanical & Electrical Industry Co., after an adviser to the country’s central bank said exports dropped last month and industrial-production growth cooled. India is closed for a holiday today.

U.S. Futures

Futures on the Standard & Poor’s 500 Index lost 0.6 percent. The gauge climbed 3.8 percent yesterday, extending its advance from an 11-year low last month to 21 percent.

Copper futures in New York added 9.1 percent, the most since Oct. 29, while crude oil surged 7.1 percent to $43.71 a barrel, breaking a six-day losing streak. Oil has dropped 70 percent from a record $147.27 on July 11.

BHP rose 4.5 percent to A$28.45. Mitsubishi Corp., Japan’s biggest trading house, gained 2.6 percent to 1,121 yen. Mitsui & Co., the second biggest, added 2.7 percent to 758 yen.

Mining and material companies are the worst performers this year among 10 industry groups on the MSCI Asia Pacific Index as the deepening global recession diminished demand for commodities.

China Cosco surged 12 percent to HK$6.01. MISC Bhd., owner of the world’s biggest fleet of liquefied natural gas vessels, rose 2.4 percent to 8.55 ringgit. Nippon Yusen K.K. jumped 6 percent to 496 yen after saying it will reduce its fleet expansion plan as slowing growth decreases shipping demand.

Rates Gain

The Baltic Dry Index, a measure of shipping costs for commodities, climbed 1.2 percent yesterday from a 22-year low, the gauge’s first advance in 14 days.

Nomura gained 13 percent to 715 yen. Japan’s biggest brokerage plans to eliminate more than 100 positions in Asia and is stepping up job cuts in Japan, two people familiar with the situation told Bloomberg News.

Commonwealth Bank of Australia fell 8.5 percent to A$30, leading declines among the nation’s lenders, after Westpac Banking Corp. said it may raise A$2.5 billion ($1.7 billion) through a share sale. Shares of Westpac, the country’s second- largest bank, are suspended from trading today.

Commonwealth Bank has the lowest Tier 1 capital among Australia’s biggest banks, raising speculation it may need to sell more shares, according to Angus Gluskie, who oversees $265 million at White Funds Management Pty in Sydney.

Fund Raising

The world’s biggest financial companies have raised almost $890 billion since the global credit crisis began last year, squeezing debt markets and slowing economies. That’s forcing lenders to bolster capital on expectations that bad loans and investment losses will rise further.

“There is a problem in rolling over financing so banks and companies have no recourse but to raise money through a more expensive form of capital,” said Prasad Patkar, who helps manage $800 million at Platypus Asset Management in Sydney.

T&D Holdings Inc. slumped 5.5 percent to 3,280 yen after the president of Japan’s biggest publicly traded life insurer said it may raise capital at its units in the fiscal second half as falling markets erode the value of stockholdings.

Sompo Japan Insurance Inc., the second-biggest listed property insurer by revenue, fell 5.7 percent to 510 yen after Macquarie Group Ltd. slashed its rating on the stock to “underperform,” citing potential for a writedown of credit instruments.

Shanghai Mechanical, the listed unit of China’s biggest manufacturer of power equipment, dropped 6.9 percent to 8.51 yuan.

“Things are not so good,” Fan Gang, the central bank adviser, said at a forum in Beijing. “November figures will come out soon, industrial growth will be something around 5 percent and export growth will be negative.”

Industrial-output growth of 5 percent would be the weakest since Bloomberg data began in 1999.

Olam Gains After U.S. Stimulus Plan Revives Commodity Prices

Dec. 9 (Bloomberg) -- Olam International Ltd. led gains among commodity suppliers in Singapore trading on investors’ optimism that government efforts to revive economic growth will create jobs, boost demand and sustain raw-material prices.

Olam rose as much as 14 percent to S$1.19, the biggest gain since Dec. 4. The stock, which traded at S$1.19 at 10:46 a.m. local time, extended last week’s advances, which followed a plan to repurchase convertible bonds and reduce borrowings.

U.S. President-elect Barack Obama said Dec. 7 his economic recovery strategy will focus on making the biggest investment in the nation’s infrastructure. The Reuters/Jefferies CRB Index of 19 raw materials advanced 5.2 percent yesterday, the biggest gain since Nov. 24.

“People have been too pessimistic about everything,” said Masahiko Ejiri, who helps manage the equivalent of $26 billion at Mizuho Asset Management Co. in Tokyo. “Demand for commodities will not be as bad as people thought.”

Noble Group Ltd., the Hong Kong-based commodity supplier, gained as much as 9.3 percent to 99.5 Singapore cents. Golden Agri-Resources Ltd., a unit of Indonesia’s largest oil-palm grower, rose as much as 7.3 percent to 22 Singapore cents, and traded at that level at 10:38 a.m.

Trading in commodities

Need a break from stocks, mutual funds, FDs and bonds as investment options? Then why not look at commodities? Well, commodity trading is not new to India. After the 30-year ban was lifted in 2005, futures trading in commodities has caught on. Of the 25 commodities exchanges in India, Multi Commodities exchange (MCX), National Commodity and Derivatives Exchange (NCDEX), and National Multi-Commodity Exchange (NMCE) are the most popular ones.

Commodity futures and the relevant exchanges are regulated by the Centre under the Forward Contracts (Regulation) Act and the Forward Contract Regulation Rules. Forward Market Commission (FMC), regulates the futures market in commodities.

Products can be broadly classified into energy products (crude oil and natural gas) precious metals (gold, silver and platinum), base metals (aluminium, copper and zinc) and agro-based products (wheat, channa, cotton, coffee, sugar and rubber). While NMCE caters to agro-based commodities, MCX and NCDEX offer a bigger trading base.

First in India

Of the three exchanges, the first state-of-the-art demutualised multi-commodity exchange to be incorporated is NMCE. It was promoted by commodity-relevant public institutions — Central Warehousing Corporation, National Agricultural Cooperative Marketing Federation of India, Gujarat Agro-Industries Corporation, Gujarat State Agricultural Marketing Board, National Institute of Agricultural Marketing, Neptune Overseas and Punjab National Bank (PNB).

Promoters of NCEX

Headquartered in Mumbai, NCDEX is a public limited company which commenced its operations in December 2003. This is the only commodity exchange promoted by national-level institutions. Its promoter are ICICI Bank, Life Insurance Corporation of India (LIC), National Bank for Agriculture and Rural Development (NABARD) and National Stock Exchange of India Ltd (NSE). Other shareholders include Canara Bank, CRISIL, Goldman Sachs, Intercontinental Exchange (ICE), Indian Farmers Fertiliser Cooperative Limited and PNB.

MCX features

MCX (also in Mumbai) is an independent and demutualised exchange with a permanent recognition from the Government of India. Its key shareholders are Financial Technologies (India), State Bank of India and its associates, NABARD, NSE, SBI Life Insurance, Bank of India, Bank of Baroda, Union Bank of India, Corporation Bank, Canara Bank, HDFC Bank, Bennett Coleman & Company, Fid Fund (Mauritius) Ltd — an affiliate of Fidelity International — ICICI Trusteeship Service, IL&FS Trust Company, Kotak group, Citibank and Merrill Lynch

MCX started offering trade in November 2003 and has built strategic alliances with Bombay Bullion Association and Bombay Metal Exchange. Today, MCX features among the world’s top three bullion exchanges and top four energy exchanges.

Recently, Indiabulls Financial Services and the state-owned trader, Minerals and Mines Trading Corporation (MMTC), backed by steel baron, Lakshmi Mittal, have received approval for their proposal to set up a commodity exchange in Gurgaon.

November Job Losses Send Commodity Prices Down

The price of oil closed at $40.81 a barrel on the New York Mercantile Exchange, following a report from the U.S. Labor Department that monthly job losses in November were the largest since 1974. Some 533,000 jobs were lost in the U.S. in November, driving the unemployment rate to 6.7 percent, the highest in 15 years. Crude oil lost 6.55 percent, closing Friday at the lowest settlement price since December 10, 2004, when oil closed at $40.71. The declining oil prices may help boost retail sales, making it cheaper to go shopping as well as free some dollars in consumers’ wallets. Prices at the pumps average $1.773 a gallon, according to AAA. Prices of gold, sliver and platinum continued their descent, closing Friday at sharply lower levels. Gold for delivery in February fell $13.30 to $752.20 per once. Silver for delivery in March closed at $9.43/once and platinum for delivery in January ended the week at $787.20/once, losing $11.60. Other commodities, such as corn, suffered even sharper drops. Corn for delivery in March shed $24.75 to $309.25 and soybeans lost $27.50 closing at $783.50.

BGE natural gas price rises slightly

The “commodity” gas price for Baltimore Gas & Electric’s 600,000 household natural gas customers popped up a bit for December, rising from 96 cents per therm last month to $1.05 per therm. The federal Energy Information Administration blames unseasonably cold weather in much of the country for increased demand and higher prices.

But BGE’s price is still far below its level of a few months ago and below offers from independent suppliers. BGE Home, a lesser-regulated company owned by BGE parent Constellation Energy, has been trying to sell households on a fixed price gas contract of $1.599 for the winter.

The commodity cost is based on the wholesale market and doesn’t include delivery and other stuff. The wholesale price for natural gas has plunged by half since the summer. That’s not as much as the decline in oil and gasoline, but it’s still a huge break for consumers.

It may not feel like one, however, because households weren’t using much gas during the warm months. BGE’s default price is still higher than the 96 cents from December 2007. That’s partly because BGE bought some of its gas a few months ago, when prices were high.

If the economy continues to struggle, as it probably will, natural gas prices could fall even more. That could be offset, however, by an especially cold winter.

Pessimism pervades commodity markets

Mumbai, Dec 7 Commodity markets continue to be battered by steady flow of negative reports on global economic growth prospects. World Bank has lowered 2009 global GDP forecast to one per cent. The latest OECD composite leading indicators for October 2008 signal a deepening slowdown across industrialised and emerging countries.

In response to the ongoing macro-economic deterioration, several central banks slashed interest rates.

A slew of stimulus package announced by various countries including Europe has not been of much avail. Market pessimism over the international economic outlook continued to hang over the base metals and oil markets.

There is a sharp contraction in liquidity. Construction activity has slowed and automotive sales are falling.

These are key sectors to use industrial and base metals. The negative sentiment has also affected the energy market, with crude failing to stabilise above $50 a barrel. Worse, NYMEX light sweet crude (January contract) fell to under $44 barrel, influenced by continuing concerns over weakening oil consumption.

Spot gold has been volatile. Under the present uncertain conditions, gold ought to have spiked like never before. But it has failed to decisively break through even low barriers. Weak oil price and market worries about deflation risks are proving negative for the yellow metal. The sentiment is expected to remain weak for some time.

The pricing environment for commodities could get weaker from the current low levels.

Currency market movements - especially dollar/euro relationship - need to be watched closely. In addition to demand side factors, a strong dollar has pushed commodity prices down.

There is of course one section of investors who begin to perceive value at the current price levels, but are still wary of making sizeable investments. It is important that there is an overall change in sentiment. How long it would take for the various stimulus packages to exert their influence is hard to tell.

Unless the macroeconomic scene shows signs of changing direction towards recovery, commodity prices could continue to be under intense pressure for several months ahead.

Gold

Although there was a rebound in gold physical demand in the third quarter encouraged by consumer-friendly prices, it is unlikely to sustain over the coming weeks. It is also highly likely that the dollar would continue to remain strong relative to the euro during the next few months.

This is sure to cap the upside for the yellow metal. Investor interest too may be waning. Speculative positions in Comex gold have more than halved from the record levels reached earlier this year. On the other hand, physical holding in exchange traded products remain elevated, having set a fresh all-time high in November at 1,142 tonnes.

In other words, as a safe haven asset, investors have chosen to retain their exposure to gold as a physical asset rather than maintain paper exposure, even though inflationary concerns have eased, commented an expert.

With the rupee staying around 50 to a US dollar, gold prices have once again gone out of reach for many consumers. There sure is a demand compression at the present elevated price levels. From the present, the upside seems to be rather limited.

Base metals

Slowing demand and rising inventories are truly hurting the complex. Fears of deeper and prolonged recession around the world impact market sentiment.

All the markets are in surplus. A slew of measures including output cuts have not helped so far. Analysts are cutting their price forecasts for the first and second quarter of 2009.

Extreme caution is required in trading base metals as the downside risk to prices has not disappeared.

Crude

The downtrend in crude has continued during the past week with prices hitting newer lows to trade at their lowest levels since early 2005.

The market has not shown any sign of stabilisation. Steady flow of weak economic data is interpreted as the beginning of deeper and longer recessionary conditions.

Demand side is on top of market concerns. However, supply uncertainties have not gone away.

There is the distinct possibility of OPEC announcing further output cuts, over and above the two million barrels a day since November. Experts are continually downgrading their price outlook for crude. The mood in the market is sombre and extreme caution is recommended.

EMERGING MARKETS WEEK-Weak commodity prices to hurt EM

NEW YORK, Dec 7 (Reuters) - Emerging markets are likely to continue their downward spiral this week, pressured by a slump in commodity prices as demand wanes due to the intensifying U.S. recession.

On Friday, U.S. data showed employers cut 533,000 jobs from payrolls in November, the most in 34 years as the year-old recession hit broad sections of the economy.

Oil, a key commodity exported mostly by emerging economies, dropped more than 6.0 percent in price to a four-year low on Friday as the job losses reflected waning demand in the world's top energy consumer.

Oil prices settled at $40.81 a barrel, the lowest since Dec. 10, 2004, and way down from highs over $147 a barrel reached in July.

"The impact of collapsing demand on commodity prices implies pressure across the entire emerging market universe, including Latin America, Africa and the Middle East, and Russia," Barclays Capital said in a research note.

"With these dynamics now well established, we expect economic data to disappoint across EM over the coming week."

With many developed countries either in recession or heading there, policy-makers are becoming increasingly aggressive and central banks have cut interest rates in the past week.

This week's focus is likely to switch to Latin America, where central bankers will meet in Brazil, Chile and Peru. Analysts expect the banks to keep rates unchanged.

Brazil's benchmark lending rate is currently at 13.75 percent, Chile's is at 8.25 percent and Peru's is at 6.5 percent.

The MSCI Latin American stock index .MILA00000PUS fell 2.63 percent on Friday while sovereign global bonds eased, with the Brazilian global 2040 , considered the emerging market benchmark paper, down 0.438 point in price to bid 117.500.

OIL EXPORTERS EYED

Venezuela and Ecuador will be watched as these two OPEC members watch the price of oil plummet and their coffers dwindle.

Ecuador is most vulnerable as it has seen the value of its sovereign bonds reach default levels after President Rafael Correa delayed a coupon payment of its 2012 global bond.

Correa is using a 30-day grace period on the bond to decide on his next move over loans he considers riddled with irregularities when issued by past governments. Investors hope the government will pay the coupon by Dec. 15.

However, Correa has said he will prioritize social programs for the poor ahead of payments for foreign debt investors.

With Ecuador's 2009 budget based on the assumption of a price of $85 per barrel for benchmark West Texas Intermediate crude oil, the country is likely to experience tough times ahead with oil exports priced $15 lower than WTI and its economy dollarized. (Editing by Dan Grebler)

FOREX-Dollar, yen rise as global gloom deepens with US jobs

* Dollar, yen remain well-bid as recession worries linger

* U.S. payrolls data show steepest fall in 34 years

* Markets fully price another half-point U.S. rate cut

* For up-to-the-minute market news, click on FXNEWS (Updates prices, adds quotes)

By Gertrude Chavez-Dreyfuss

NEW YORK, Dec 5 (Reuters) - The dollar climbed against European currencies while the yen rallied on Friday as economic worries worldwide deepened after a report showing the steepest monthly fall in U.S. jobs since 1974.

The yen had rallied to six-week highs against the dollar immediately following the U.S. non-farm payrolls report, reviving speculation the Bank of Japan, also battling a recession, may intervene in the market to temper the Japanese currency's strength, which has hurt the country's exports.

"Falling equity and commodity prices are adding to risk aversion, thereby benefiting the dollar and yen," said Michael Woolfolk, senior currency strategist at Bank of New York Mellon in New York. "Deteriorating economic fundamentals in the U.S. and overseas are adding to risk aversion, also benefiting the dollar and yen."

The employment data for November underscored the depth of the downturn in the world's largest economy, with news of a surprising fall in German manufacturing orders in October and Canada's sharp job losses last month also heightening the gloom around the world.

As the global economy worsens, analysts said investors will continue to snap up the U.S. dollar and yen as they pare back their their holdings of risky trades financed by both currencies' cheap rates.

The dollar will also benefit from continued repatriation by U.S. fund managers liquidating their overseas investments, spooked by financial and economic concerns.

In midday New York trading, the euro fell 0.9 percent against the dollar to $1.2658. The dollar rose 2.4 percent against the Swiss franc to 1.2234 francs , while sterling fell 0.4 percent to $1.4611 .

RISKS FOR DOLLAR/YEN

The dollar fell as low as 91.60 yen , the lowest since Oct. 24, according to Reuters data. It was last at 92.200, flat on the day.

The greenback had fallen to a 13-year low below 91 yen in October and that could be at risk if market sentiment deteriorates. Should the dollar fall below 90 yen, analysts say, that could raise the BoJ's alarm signals, prompting it to intervene in the market and weaken its currency.

Brazil cenbank to offer $1.5 bln in forex swaps

SAO PAULO, Dec 5 (Reuters) - Brazil's central bank said it will offer up to $1.5 billion in dollar swaps in an auction on Friday as it seeks to add liquidity and reduce volatility in the foreign exchange market.

The bank will offer 30,000 contracts in the auction.

Previously, the bank sold an unspecificied amount of dollars from its international reserves in three separate auctions.

Brazil's currency, the real BRBY, pared losses shortly after the announcement of the swap auction but was still trading more than 3 percent weaker at 2.6 per dollar.

Belarus forex reserves decline to $4.544 bln

MINSK, Dec 5 (Reuters) - Belarus's foreign exchange reserves fell to $4.544 billion as of Dec. 1 from $4.801 billion at the beginning of November, despite receiving a $1 billion loan from Russia, according to central bank data made public on Friday.

Reserves of the ex-Soviet state have been falling steadily since August when authorities began supporting the Belarussian rouble, pressured against the dollar by the global financial crisis.
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Reserves stood at $3.4 billion on Nov. 1, 2007.

'At a time when currency revenues of our enterprises are getting smaller, the central bank must ensure the stability of the national currency,' central bank spokesman Anatoly Drozdov told Reuters.

The Belarussian rouble has slipped to 2,174 to the dollar from 2,111 in September.

Belarus is currently engaged in discussions with the International Monetary Fund on a $2 billion loan authorities describe as a 'safety cushion'. A new mission is due to arrive in the ex-Soviet state later this month.

Brazil central bank sells $314.6 mln in forex swaps

SAO PAULO, Dec 4 (Reuters) - Brazil's central bank sold about $314.6 million in dollar swaps in an auction on Thursday as part of an ongoing effort to add liquidity to the foreign exchange market.

The bank sold 6,320 of 10,000 contracts on offer.

It called the auction after the local foreign exchange market had closed. It normally holds swap auctions during trading hours.

Brazil's currency, the real BRBY, slumped 1.3 percent on Thursday in volatile trade to 2.508 per dollar, its weakest close since May 2, 2005. It was the third straight day that the real has fallen.

REFILE-FOREX-Dollar falls vs euro after ECB cut, jobs data loom

* ECB cuts rates 75 bps, BoE by 100 bps

* Euro rises versus dollar, hits record high versus pound

* Investors await U.S. nonfarm payrolls report Friday

* For up-to-the-minute market news, click on FXNEWS (Recasts, updates prices, adds quotes, changes byline)

By Wanfeng Zhou

NEW YORK, Dec 4 (Reuters) - The U.S. dollar fell against the euro on Thursday as some investors lauded the European Central Bank's bolder-than-expected interest rate cut as a proactive step to stave off a deep recession in the 15-nation region.

The ECB, seen by market participants as being behind the curve in lowering borrowing costs to boost growth, made its biggest ever cut, lowering benchmark interest rate by 75 basis points to 2.5 percent. Most economists had expected a smaller, 50 basis point step this month. For more, see [ID:nL4623589].

The British pound also bounced off session lows against the dollar. Earlier, the Bank of England cut its key rate by 100 basis points to 2 percent, the lowest level since 1951, and said further steps would be required to prevent a credit squeeze tipping the economy into deep recession. See [ID:nL4304319].

"The markets are beginning to reward those currencies whose central banks are taking the appropriate policy steps, which means cutting rates," said Ken Landon, global currency strategist at JPMorgan Chase in New York.

"People are focused on future growth and anything that would help boost growth in the future would be probably good for a currency right now."

In late trading in New York, the euro was up 0.5 percent against the dollar at $1.2771, more than two cents from the session low of 1.2550.

The pound was down 0.8 percent at $1.4651 , having earlier touched a more than 6 year low of $1.4471. The pound hit a record low against the euro at 87.25 pence. .

"The market has given the euro the benefit of the doubt, as the ECB cut about as aggressively as they could have reasonably been expected to," said Michael Woolfolk, senior currency strategist at The Bank of New York Mellon in New York.

"Whereas rate cuts normally undermine a currency, right now we're seeing something of an alleviation of uncertainty about the European economy."

The yen rose sharply, as falling stock prices and persistent worries about a deepening global economic downturn prompted investors to keep unwinding riskier positions.

FOREX-Dollar little changed, traders await US jobs data

* Dollar little changed, market awaits U.S. jobs report

* Euro holds gains after big ECB interest rate cut

* Weak jobs reading may spur risk aversion, boosting dollar

(Changes byline, dateline, adds comment, updates throughout; previous TOKYO)

By Naomi Tajitsu

LONDON, Dec 5 (Reuters) - The dollar was little changed against the euro and the yen on Friday, as investors awaited U.S. jobs data which is expected to show that the U.S. economy is deteriorating further and may need more interest rate cuts.

The euro held slight gains made the previous day, when the European Central Bank delivered its biggest interest rate cut ever, slicing 75 basis points off its key lending rate to 2.75 percent to support its economy in the face of a global recession. Traders awaited U.S. non-farm payrolls for November, which are forecast to show a loss of 340,000 jobs. Such a reading would mark the biggest monthly drop in more than two decades.

Analysts said that speculation was growing that the figure could be even worse, and currencies were likely to take a cue from how equity markets react to the announcement at 1330 GMT.

"Markets are prepared for quite a big negative number," said Ian Stannard, senior foreign exchange strategist at BNP Paribas in London.

A big negative figure would add to the view that the U.S. economy is slowing down sharply, warranting a weaker dollar. But he pointed out that indications that the global recession is deepening could heighten risk aversion and possibly boost the dollar.

"If we do see equity markets coming off sharply and it turns into a global equity markets sell off, then we could well see currencies coming back under pressure against the dollar, so it could actually be a dollar-positive."

At 0841 GMT, the euro was little changed at $1.2760, after inching up to a session high of $1.2795 early in the London session.

Against a basket of currencies, .DXY, the U.S. currency was flat at 86.632, while hovering around 92.18 yen, roughly 0.2 percent lower on the day.

The dollar and the yen have benefited from risk aversion as an increasingly grim global economic outlook has battered stock markets and other asset classes.

This has prompted investors to dump risky positions including those in what were once high-yielding currencies such as the euro, sterling and the Australian and New Zealand dollars, in favour of the U.S. currency and the low-yielding yen.

Forex - Dollar off day lows but caution prevails ahead of Fed rate verdict

LONDON, Jan. 30, 2008 The dollar was off day lows amid early indications that the key US jobs report Friday may come in stronger than expected although caution ahead of the Fed's rate verdict later this evening kept the currency from rising too far.

According to payroll services firm ADP (NYSE:ADP) , the US economy added a surprisingly large 130,000 private sector jobs in January, suggesting that the official non-farm payroll figure may exceed the 58,000 expected. In December, it stood at 18,000.

'Indeed, following the ADP report, the risks to our own call now lie on the upside - we could easily see a 100,000 plus figure,' said Paul Ashworth at Capital Economics.

The news helped the dollar edge higher, having struggled in the 1.48 region against the euro earlier.

On the other hand, US GDP data which also came out around the same time, was decidedly weak. The first estimate of fourth quarter GDP came in at an annualised 0.6 pct, only half of consensus expectations of 1.2 pct and well down from the final estimate of 4.9 pct in the third quarter.

'The dollar showed a modestly negative reaction to the GDP report, but was overshadowed by the upside surprise in ADP employment,' said Michael Woolfolk at Bank of New York Mellon.

But that aside all eyes are on the Fed's rate verdict due at 7.15 pm GMT today.

Financial markets have priced in a large probability of the Fed delivering a half point reduction to take the Fed fund rate down to 3.00 pct from the current 3.50 pct, although this prospect has been slightly dented since the rally on equity markets this week, after some decent US data.

'When taken in consideration with the upwards surprises to durable goods, consumer confidence and ADP employment, the GDP report argues for a 25 basis point rate cut from the Fed this afternoon,' added Woolfolk at Bank of New York Mellon.

The Fed last week surprised markets by lowering its base rate by 75 basis points to 3.50 pct.

'As is usual, ahead of the Fed meeting, some doubts have started to creep in about exactly what the Fed will deliver,' said Paul Mortimer-Lee, head of market economics at BNP Paribas. (OOTC:BPRBF)

'While markets judge 50 basis points remains the most likely case, a number of commentators have noticed the rally in stocks ... this has led them to conclude that maybe 25 basis points is all the Fed need deliver,' said Mortimer-Lee.

Elsewhere, the pound weakened against the euro after Bank of England data revealed UK housing market activity remains weak, which will add to the pressure on the central bank to cut interest rates next week.

The BoE said mortgage approvals -- a good indicator of future housing demand -- fell to 73,000 in December, their lowest level since records began, down on November's 81,000 and well below expectations for 80,000.

'Today's data adds on to the series of weak UK economic releases of the past few weeks, reinforcing the case for a BoE rate cut next week,' said CIBC World Markets' Childe-Freeman.

Elsewhere in the release, the central bank found that net consumer credit during December was only 0.6 bln stg, down on November's 1.2 bln and the rolling 6-month average, also 1.2 bln.

The pound strengthened against the dollar though, supported not only by expectations that US interest rates will fall further and quicker than in the UK, but by the reappointment of Mervyn King as Bank of England governor, and Andrew Sentance as a Monetary Policy Committee member. Both are considered to be hawkish members of the rate setting MPC.

'Mervyn King's reappointment as Governor of the Bank of England for another five years is possibly a slightly hawkish development for the outlook for interest rates,' said Jonathon Loynes, chief European economist at Capital Economics.

Taiwan cbank to watch forex after Fed cut

TAIPEI: Taiwan’s central bank will watch the island’s foreign exchange market closely, a financial official said on Tuesday, after the Federal Reserve cut its key federal funds rate by 75 basis points in a surprise move.

The Fed’s move came after the Taiwan dollar closed at T$32.439 versus the US dollar, weaker than the previous close of T$32.348. The Taiwan currency had hit a one-week intraday low of T$32.500 earlier in the session after the island’s stocks had joined other regional markets, such as China and India, in falling sharply due to worries over a possible US recession.

Before the Fed’s cut, the Taiwan stock market had plunged 6.5 percent in its biggest daily drop in almost four years. Foreign funds sold T$19.597 billion ($604 million) in Taiwan stocks, the highest amount so far this month after four days of selling. That resulted in fund outflows, pushing the Taiwan dollar lower. reuters

PepsiCo anxious about commodity prices

PepsiCo Inc (PEP.N: Quote, Profile, Research) Chief Executive Indra Nooyi said on Wednesday commodity prices were a concern but the soft drinks and snacks giant would overcome the challenge.

"You just have to look at the prices of wheat and corn. Wheat prices have almost doubled in the last three years and there's no question that there's commodity inflation," she told Reuters at the annual meeting of the World Economic Forum.

"How do we intelligently navigate through this? Through a mix of productivity, pricing and intelligent procurement ... while we are concerned about commodity inflation, we feel pretty comfortable that we will find a way through it."

Energy companies’ exposures increase as commodity prices rise

Energy insurers and their clients have been warned that they could face bigger exposures as a result of sharp increases in commodity prices. In its Energy Market Review, Lloyd’s insurance broker Willis says that “superheated” prices for oil, steel, building material and contractor day rates is creating significantly increasing risks.

The spike in commodity prices has resulted in higher replacement cost valuations and much bigger potential for longer and costlier delays in the event of an accident, heightening business interruption exposures. The potential for more severe losses in the energy industry has therefore been enhanced at a time when many asset values remain unrevised for insurance purposes, Willis warns.

But following another benign hurricane season in the Gulf, energy insurance capacity has continued to grow. Willis expects that capacity for 2008 will grow by 10%-15% as a result of new start-ups entering the market, as well as increased lines being made available by existing energy insurers.

Willis says that energy insurance business is still profitable because rates are still relatively high by historical standards. That means that further rate reductions are a real possibility. For buyers, for the time being at least, energy insurance products are better value for money than at any time since 9/11, the broker says.

Phillip Ellis, chairman of Willis Energy says that although loss levels in the energy insurance sector have been low for two years, the situation could change rapidly. “While some [energy] companies are operating their assets in ways that are far superior to the past, for others the run of good luck is just that. It is very hard for us to accept that this run of low loss activity will continue indefinitely. Ultimately, something will break,” he warned the market.

Willis says that the energy industry is operating “at full tilt” with existing infrastructure being pushed to the limit and project activity at record levels. In addition, energy companies are increasingly investing in more risky, hostile territory, deploying sophisticated untested technology.

The Willis report points out that business interruption is an increasingly critical element in the energy insurance portfolio. A recent incident in the Middle East, which resulted in a physical damage loss of around US$100 million would have resulted in a claim for BI of as much as US$600 million had the exposure been insured. From an insurer’s point of view, they may not be receiving adequate premium for the actual exposure; from the client’s perspective, they are may be underinsured.

Looking to the future, Willis predicts that oil and commodity prices are unlikely to fall so far that levels of high investment can’t be sustained, and pressure taken off supply chains.

In the meantime, Ellis urged clients to continue to re-examine their risk exposures and asset valuations, in order to make sure that they remain in a position to be properly indemnified by insurers in the event of more severe losses in the future. He also urged brokers and underwriters to “innovate and improve our offerings to such an extent that our clients’ appetite for them continues to grow.”

Commodity prices extend losses

Commodities extended their losses on Tuesday on fears the US slowdown could spread to emerging markets, while traders took profits to offset losses in others markets.

Crude oil prices fell to a six-week low and agricultural markets fell sharply as traders sold corn, wheat and soyabeans, three of the best performing commodities in 2007, to offset losses elsewhere, analysts said.

Base metals, on the other hand, limited their losses with aluminium and copper prices losing less than 1.5 per cent on the day. But analysts remained concerned that energy and base metals are exposed to further economic slowdown.

Robert Laughlin of MF Global in London said that the immediate risk for commodities was “a liquidation of open positions by some market participants in order to finance positions on other markets.”

Nymex February West Texas Intermediate fell to $87.40 a barrel, a drop of $3.17 from Friday’s close, but about $1.29 below Monday’s last electronic quotes.

The Nymex exchange did not set a settlement price on Monday as the open-outcry trading floor was shut for a public holiday. But electronic trading late Monday had WTI at $88.69 a barrel, meaning the Tuesday loss was of about $1.29 a barrel.

ICE February Brent moved $1.32 down to $86.19 a barrel. Heating oil and petrol prices also lost ground tracking down crude oil prices.

On the London Metal Exchange, copper fell 1.44 per cent to a three-week low of $6,781 a tonne and aluminium moved 0.4 per cent down to $2,402 a tonne.

Peter Fertig, of Dresdner Kleinwor in Frankfurt, said: “Fears of a US recession dragging also the rest of the world into an economic slump had a negative impact on base metals.”

Although analysts said that copper, the base metals bellwether, is the most exposed to a US recession and any spill over to emerging markets, they also point that the red metal’s inventories have fallen recently and demand in China remains healthy.

Gold prices fell initially to a three-week low of $849.50 a troy ounce on heavy profit-taking, partially triggered by the strength of the US dollar against the euro. But it later recovered to trade at $861.25 an ounce, just below Monday’s $864.30 an ounce.

Agricultural commodities fell sharply after strong gains last year and early 2008. In Chicago, CBOT March corn fell by its daily limit of 20 cents to $4.78½ a bushel and CBOT March wheat shed 23½ cents to $9.39 a bushel. CBOT March soyabean lost 41 cents to $12.23 a bushel.

India set to strengthen commodities regulator

India may move to beef up its commodity markets regulator at a cabinet meeting this week with new legislation to make it fully independent and armed with punitive powers, a minister said on Tuesday.

Unlike India's autonomous stock market regulator, the commodities regulator, known as the Forward Market Commission (FMC), is controlled by the Consumer Affairs Ministry and needs to seek government permission for many decisions.

"We are going to bring an ordinance this month to strengthen the Forward Markets Commission. The cabinet meeting is on January 24," Food Processing Minister Subodh Kant Sahai said.

"The main point is that the Forward Market Commission will become autonomous. Today, it is an attached office of the government," FMC Chairman B.C. Khatua told reporters when asked to explain the impact of the new laws, if approved.

"Many people do not know about commodity futures as it is relatively new here. To bolster people's confidence in the trade the regulator must have adequate powers to avoid any manipulation or excessive speculation."

He said strengthening the regulator would likely enable banks and financial institutions to enter commodities bourses and deepen trading.

The changes would also help the introduction of options trading in commodities, the minister said.

"I think the government plans to make the FMC independent like (stocks regulator) SEBI and give more punitive and regulatory powers," Anjani Sinha, managing director and CEO of the National Spot Exchange said.

"With more powers at its disposal, the FMC will be able to curb volatility and punish those who may try to manipulate the trade. It will help bring more transparency."

Biggest fall pull recent IPOs below issue price

Market completely was on free fall today following weak cues across the globe. Sensex crashed nearly 2062 points or 12% in a single day. Nifty slipped by 728 points or 14.6% though both recovered at the end of the session to some extent. Every stock got under selling pressure even newly listed stocks not remained aside from this big heat.

Nearly half stocks, listed in the last one year, are trading below issue price and today’s big fall smashed these stocks very badly.

Porwal Auto, Precision Pipes and Manaksia are down about 32% to its issue price. Brigade Enterprises, a real estate developer, slipped over 26%.

All textile stocks have been getting ruined badly because of rupee appreciation since one year and today’s biggest fall impacted heavily.

Company	Issue Price	Current Price	% Loss
House of Pearl	550	210.95	-61.65
Broadcast	120	48.15	-59.88
Vijayeswari Tex	100	42.55	-57.45
IVR Prime	550	255.35	-53.57
Decolight Ceram	54	27.65	-48.8
Asahi Songwon	90	47.05	-47.72
Jagjanani Text	25	13.1	-47.6
Oriental Trimex	48	26.05	-45.73
Alpa Laboratori	68	38	-44.12
Technocraft Ind	105	61.5	-41.43
Nelcast	219	129.05	-41.07
Raj Television	257	152.85	-40.53
Hilton Metal	70	41.9	-40.14
Empee Distiller	400	246.6	-38.35
KPR Mill	225	141	-37.33
AMD Metplast	75	47.4	-36.8
SMS Pharma	380	250.95	-33.96
Porwal Auto	75	49.75	-33.67
Precision Pipes	150	100.45	-33.03
Lawreshwar Poly	16	10.81	-32.44
Manaksia	160	108.35	-32.28
Rathi Bars	35	24.95	-28.71
Renaissance Jew	150	107	-28.67
Insecticides In	115	82.3	-28.43
Cinemax India	155	112.7	-27.29
Brigade Enterp	390	286.75	-26.47
Transwarranty	52	39	-25
Dhanus Tech	295	223.25	-24.32
Fortis Health	108	84.55	-21.71
Spice Comm	46	36.1	-21.52
Lumax Auto	75	60.45	-19.4
Abhishek Mills	100	80.9	-19.1
Mudra Lifestyle	90	72.95	-18.94
C and C Const	291	239.45	-17.71
Zylog Systems	350	291.55	-16.7
Autoline Ind	225	192.55	-14.42
Firstsource Sol	64	56.7	-11.41
Mindtree Cons	425	378.8	-10.87
Puravankara Pro	400	359.45	-10.14
Asian Granito I	97	88	-9.28
Celestial Labs	60	55.2	-8
Magnum Ventures	30	27.7	-7.67
Roman Tarmat	175	162.2	-7.31
Circuit Systems	35	34.7	-0.86
Kaushalya Infra	60	59.8	-0.33