December 6th, 2010 01:36:21 GMT

MNI Survey: Japan Oct Machine Orders -0.2% M/M But On Track

by

— See Separate Table For Details Of Individual Forecasts

TOKYO (MNI) – Japan’s core private-sector machinery orders are
likely to show a seasonally adjusted 0.2% fall on month in October,
improving from the 10.3% drop in September, according to the median
forecast of economists surveyed by Market News International.

Despite the expected fall for the second straight month, economists
say core machinery orders, seen as a leading indicator for capital
investment, remains on a gradual recovery trend.

The Cabinet Office will release October machinery orders data at
0850 JST on Wednesday, Dec.8 (2350 GMT Tuesday).

“(Core machinery orders) remain on a gradual increasing trend,”
said Yoshiki Shinke, senior Economist at Dai-Ichi Life Research
Institute.

Some data released recently suggest that orders in October will
show a better performance than the sharp drop in September. In
particular, domestic machine tool orders rose 61.1 on year in October,
accelerating from +38.7% in September, the Japan Machine Tool Builders’
Association reported Nov. 24.

According to the Cabinet Office’s outlook, October-December core
machinery orders will fall 9.8% on quarter, reversing the solid
9.6% gain in Q3, and ending the streak of four consecutive q/q
increases.

But if October orders show only a slight m/m drop, as forecast in
the MNI survey, core orders are expected to post a smaller fall in Q4.

The Cabinet Office has said even if core orders showed -3.0% m/m
every month in Q4, the decline would be -9.8% q/q in October-December.
If core orders were flat in each of the three months, they would only
show a decline of -4.1% q/q.

Last month, the Cabinet Office repeated its longer-term assessment,
saying, “Machinery orders are picking up,” despite the 10.3% drop in
September.

Some economists are concerned that capital investment planned in
this fiscal year might be pushed back until fiscal 2011 in light of the
strong yen, slowing export growth and sluggish domestic consumption.

However, Takumi Tsunoda, senior economist at Shinkin Central Bank,
said corporate demand to upgrade production capacity is likely to
support capital investment, especially as firms held back on capital
investment in 2009.

The recent recovery in corporate profits are seen as a key factor
supporting both machinery orders and capital investment.

The quarterly survey by the Ministry of Finance showed that the
combined current profits before extraordinary items of non-financial
firms at the parent level rose 54.1% from a year earlier in Q3, posting
the fourth straight y/y rise, but slowing from the 83.4% gain in Q2.

skodama@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4838 **

[TOPICS: M$J$$$,M$A$$$,MAJDS$,MT$$$$]

December 6th, 2010 01:36:20 GMT

JAPAN PRESS: ECB’s Noyer Shrugs Off Credit Contagion Risk

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TOKYO (MNI) – European Central Bank governing council member
Christian Noyer defended the E85 billion financial rescue aid by the
European Union and the International Monetary Fund for the debt-laden
Ireland, expressing confidence in containing any risk of contagion of
sovereign problems in the region, the Nikkei reported Monday.

“With the powerful program, Irish banks will regain trust and
unease among their depositors and clients will ease,” Noyer was quoted
as saying in an interview with the Nikkei.

“The case of Ireland is very unique and there is no other country
in the region that is suffering from similar difficulties,” he said.

Noyer said that the ECB introduced an unorthodox program to buy
sovereign debt issued by member countries in a bid to help resolve the
malfunction of credit markets in the region, adding that the ECB will
maintain this program “at least until the end of the January-March
quarter of 2011,” according to the business daily.

Noyer, who is also the Banque de France governor, ruled out the
risk of a double-dip recession in the euro-zone economy.

“The recovery may lose traction due partly to waning effects of
fiscal stimulus. Still I have a reasonably bright outlook for the
region, given signs of a pickup in domestic demand in some countries
including Germany,” Noyer said.

On foreign exchange issues, Noyer said the euro is still
over-bought in terms of effective exchange rates while that the single
currency is still holding above the debut level of $1.17 seen in January
1999.

Noyer also noted that the yen is roughly in line with appropriate
levels based on the past trend and effective exchange rates, adding that
“we also need to take note of the relative strength of the Japanese
industry’s competitiveness and deflation.”

tokyo@marketnews.com
** Market News International Tokyo Newsroom: 81-3-5403-4835 **

[TOPICS: M$X$$$,M$J$$$,M$A$$$,M$$EC$]

December 6th, 2010 01:05:50 GMT

Juncker, Tremonti Propose Creating EU Sovereign Bond Issuer

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— Urge EU Leaders To Take Up Proposal This Month

BEIJING (MNI) – The European Union should create a single soverign
bond issuing agency for the entire region to help calm market concerns
over debt among eurozone peripheral states and lower borrowing costs,
Luxembourg Prime Minister Jean-Claude Juncker and Italian Finance
Minister Guilio Tremonti wrote in an opinion piece published in Monday’s
Financial Times.

Given continuing market “stress” related to European sovereign
debt, “Europe must formulate a strong and systemic response to the
crisis, to send a clear message to global markets and European citizens
of our political commitment to economic and monetary union, and the
irreversibility of the euro,” said Juncker, who chairs the Eurogroup of
eurozone finance ministers, and Tremonti.

They urge the creation of “E-bonds,” issued by a new European Debt
Agency (EDA), which would have a mandate to “gradually” issue debt up to
40% of the GDP of the EU and each member state. Over time, they envision
the E-bond market reaching liquidity comparable to that of the U.S.
Treasury market.

To create a “deep and liquid” market in the near term, the EDA
should be charged with issuing debt up to half of the planned new
issuance of each EU member state, and up to 100% for those states whose
access to debt markets is impaired, the ministers propose.

In addition, the EDA should offer a “switch” between E-bonds and
existing national bonds. “The conversion rate would be at par but the
switch would be made through a discount option, where the discount is
likely to be higher the more a bond is undergoing market stress,” they
say.

The EDA would use profits from the conversions to reduce effective
E-bond interest rates, so that “EU taxpayers, and those member states
currently under attack, would not have to foot the bill.”

“Knowing in advance the evolution of such spreads, member states
would have a strong incentive to reduce their deficits. E-bonds would
halt the disruption of sovereign bond markets and stop negative
spillovers across national markets,” they wrote.

In an effort to win over German support for the plan, Juncker and
Tremonti propose that the new E-bond include a clause ensuring that
private bondholders “bear the risk and responsibility for their
investment decisions.” The Germans have championed the idea that private
bond investors must pay their share of any default or restructuring.

Still, Germany remains opposed to creation of an EU soverign bond
market, German weekly magazine Der Spiegel reported Sunday. Given that
rates on E-bonds would reflect perceived risk across the entire EU,
German borrowing costs could rise compared to existing benchmark Bunds.

There are growing concerns among German government officials that
after Greece and Ireland another Eurozone country could run into
financial trouble even before Christmas and that the existing EU rescue
funds won’t be large enough, Der Spiegel said.

Rather than creating an E-bond market, German government officials
are now pondering the possibility that all Eurozone countries could
guarantee the government bonds issued by each member state, the magazine
claimed.

German Finance Minister Wolfgang Schaeuble said Friday that
financial markets are currently not speculating against individual
Eurozone countries but are rather doubting the sustainability of the
European Monetary Union as a whole.

beijing@marketnews.com
** Market News International Beijing Newsroom +86-10 5864 5241**

[TOPICS: M$X$$$,M$$CR$,MGX$$$,M$$FX$,M$G$$$,MT$$$$,M$$FI$]

December 6th, 2010 00:15:18 GMT

UK Data Table: EEF Business Survey Table

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LONDON (MNI) – The following table shows the key data for the
Engineering Employers’ Federation Business survey:

Balance of responses (% up minus % down)

2009 2010
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
Total output -39 -52 -25 -3 8 30 33 33
UK new orders -54 -50 -26 -6 -4 24 20 22
Export new orders -43 -44 -19 -5 3 23 30 26
Total new orders -54 -52 -25 -1 2 34 35 32
Employment -37 -40 -29 -11 -6 9 17 23
Capital expenditure plans -45 -45 -39 -17 -8 0 7 15
Average price of domestic orders -7 -16 -15 -15 -8 5 5 0
Average price of export orders -6 -18 -17 -13 0 2 4 -1
Margins on domestic orders -38 -36 -28 -22 -33 -15 -14 -20
Margins on export orders -16 -21 -22 -9 -14 -10 -9 -10
Levels of cashflow -36 -29 -8 -8 -7 10 7 14

Source: EEF Business Trends Survey

–London newsroom: 4420 7634 1624; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDA$,MABDS$,MT$$$$]

December 6th, 2010 00:15:17 GMT

EEF: UK Manufacturing Orders, Employment, Exports Stay Strong

by

–Exports Get Boost From Strong Demand In BRICs
–But Slight Softening In Optimism Seen Looking Ahead 2011

LONDON (MNI) – The UK manufacturing sector saw continued strong
trading conditions into the fourth quarter of 2010, according to the
latest Engineering Employers’ Federation survey.

Indicators for output remain at record levels for the third quarter
in succession, according to the fourth quarter “Manufacturing Outlook”
survey published today by EEF, the manufacturers’ organisation and BDO
LLP.

The EEF said that the strong performance continues to be broad –
based across all sectors and regions and has been underpinned by the
robust demand in the BRICs.

Manufacturers have also been recruiting and making some new
investments in response to the stronger-than-expected recovery in
production. But the EEF said that there is still “some caution around
making significant investments for long-term growth”.

Of more concern, the EEF notes a “slightly softening in optimism”
especially in the outlook for domestic orders but the EEF forecasts that
engineering and manufacturing will continue to outperform the rest of
the UK economy in 2011.

EEF Chief Economist Lee Hopley said:

“Manufacturers are ending the year on a high and should enter 2011
on a strong footing. The survey has shown record responses on output and
orders for much of this year and, if this continues, we should see
exports and investment delivering better balanced growth across the
economy.

“However, the backdrop to an ongoing recovery through 2011 remains
an uncertain one. A number of risks remain firmly on companies’ radar,
including the potential for the upturn to lose momentum in the UK’s
major markets. But the strong bounce back has also brought challenges,
with some manufacturers’ struggling to get the skills they need and
facing rising costs.”

The latest balances for output and new orders are around record
levels, the EEF said.

–London newsroom: 4420 7634 1624; email: ukeditorial@marketnews.com

[TOPICS: M$B$$$,MABDA$,MABDS$,MT$$$$]

December 6th, 2010 00:05:17 GMT

Bernanke/CBS: More than $600 Bln Q.E. ‘Certainly Possible’ -2

by

By Steven K. Beckner

Asked what degree of confidence he has in his ability to control
inflation, Bernanke replied, “One hundred percent.”

Bernanke, known as a scholar of the Great Depression at Princeton
University before becoming a Fed governor in 2002, painted the direst of
pictures of what would have happened if the Fed had not acted as it has
over the past few years.

“Unemployment would be much, much higher,” he contended. “It might
be something like it was in the Depression. Twenty-five percent.”

“We saw what happened when one or two large financial firms came
close to failure or to failure,” he continued. “Imagine if ten or 12 or
15 firms had– had failed, which is where we almost were in the fall of
2008. It would have brought down the entire global financial system and
it would have had enormous implications, very long-lasting implications
for the global economy, not just the U.S. economy.”

Addressing weak bank lending, Bernanke said “a lot of small
businesses are not seeking credit, because, you know, because their
business is not doing well, because the economy is slow.”

He said other small businesses “are not qualifying for credit,
maybe because the value of their property has gone down. But some also
can’t meet the terms and conditions that banks are setting.”

Bernanke said the Fed wants banks “to take risks, but not excessive
risks. we want to go for a happy medium.”

“And I think banks are back in the business of lending,” he
continued. “But they have not yet come back to the level of confidence
that –or overconfidence –that they had prior to the crisis. we want
to have an appropriate balance.”

In other comments, Bernanke reiterated his desire to see a
long-term plan to reduce the federal deficit while cautioning against
premature fiscal tightening that could hurt the recovery.

Venturing into tax policy, he said he would favor “cleaning up the
tax code.”

“The tax code is very inefficient,” he said. “Both the personal tax
code and the corporate tax code. By closing loopholes and lowering
rates, you could increase the efficiency of the tax code and create more
incentives for people to invest.”

(2 of 2)

** Market News International **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$,M$$BR$]

“Between the peak and the end of last year, we lost eight and a
half million jobs,” Bernanke continued. “We’ve only gotten about a
million of them back so far. And that doesn’t even account (for) the new
people coming into the labor force.”

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