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RPT-POLL-Japan growth likely slowed to 0.6 pct in Jan-March
Reuters: [2008-05-15 00:00:00]
(Repeats Friday story)
*What: Japan's January-March gross domestic product data
*When: 8:50 a.m., May 16 (2350 GMT, May 15)
*Growth forecast at 0.6 percent Q/Q vs 0.9 percent Q/Q in October-December
TOKYO, May 9 (Reuters) - Japanese economic growth likely slowed to 0.6 percent in the first quarter, a Reuters poll found on Friday, and analysts said the second quarter might bring a further slide in growth as a U.S. slowdown hits exports.
A weaker first-quarter expansion, at an annualised rate of 2.5 percent, would be due to a fall in capital spending, although relatively firm consumption and exports helped to keep the world's second-largest economy running above its potential.
"We will be able to confirm with the January-March data that economic activity remained firm at least until the first quarter, although the downside risk is high for the April-June quarter," said Yoshiki Shinke, a senior economist at Dai-Ichi Life Research Institute.
In January-March, corporate capital spending will likely log its first fall in three quarters, although housing investment is expected to have recovered somewhat from a slump caused by changes in building codes, which led to congestion in construction approvals last year.
"Capital investment in the manufacturing sector is likely to show a large decline in light of growing uncertainty in the outlook for the U.S. and European economies as well as falling profitability due to surging raw material costs," said Hideki Matsumura, senior economist at Japan Research Institute.
The relatively strong growth expected for Japan in the first quarter contrasts with that forecast for the United States, which has been suffering the fallout of the subprime mortgage debacle since last year.
The U.S. economy grew at an annual rate of 0.6 percent in the first quarter. Although that matched the preceding quarter and topped a forecast of 0.2 percent, many analysts say fears of a recession remain.
Shinke said Japan's exports have been stronger than expected as robust shipments of goods to emerging economies made up for lacklustre demand in the United States.
Although Japan's trade surplus in March marked the smallest year-on-year increase in three years partly due to a sharp rise in import bills as oil prices surged, exports in the financial year that ended on March 31 rose 9.9 percent, marking the sixth straight year of growth.
External demand is predicted to have boosted first-quarter growth by 0.5 percentage point, the Reuters poll of 36 analysts found.
The median forecast in the poll for GDP growth was unchanged from a smaller survey of 17 economists conducted last week. [ID:nT26424]
The analysts forecast private consumption, which accounts for more than half of economic activity, grew 0.6 percent in January-March, picking up from 0.2 percent in October-December and matching the biggest growth since the first quarter of 2007.
Many analysts said, however, that private consumption may be inflated as the data is not adjusted to account for the extra day in February in leap years.
Japan's economy grew a robust 0.9 percent, or an annualised 3.5 percent, in the October-December quarter, helped by firm exports and corporate capital investment.
Following are forecasts in percentages for preliminary GDP data for January-March, including the headline growth rate in price-adjusted real terms, private consumption and other components.
JAN-MAR GDP ANNUALISED CONSUMPTION HOUSING ---------------------------------------------------------------- Mitsubishi UFJ Sec 0.2 0.8 0.4 -0.1 UBS 0.4 1.6 0.3 0.0 Norinchukin Research 0.5 1.9 0.3 1.5 Daiwa SMBC 0.5 1.9 0.5 -3.8 Merrill Lynch 0.5 2.0 0.3 5.0 Japan Research 0.5 2.1 0.3 2.2 Mitsui Sumitomo AM 0.5 2.1 0.6 3.0 Deutsche Securities 0.5 2.1 0.5 5.6 Calyon 0.5 2.1 0.3 0.8 Mitsubishi UFJ Bank 0.5 2.1 0.7 2.2 JP Morgan 0.5 2.2 0.5 2.4 Mitsubishi Research 0.6 2.3 0.5 -0.9 Goldman Sachs 0.6 2.3 0.6 4.6 Barclays Capital 0.6 2.4 0.6 5.0 Daiwa SB Investments 0.6 2.5 0.6 -0.8 BNP Paribas 0.6 2.5 0.8 8.4 Mizuho Securities 0.6 2.5 n/a n/a
Lehman Brothers 0.6 2.5 2.4 14.8 BNP Paribas 0.6 2.5 0.8 8.4 Mitsubishi Securities 0.6 2.6 0.6 2.8 HSBC Securities 0.6 2.6 0.5 3.0 RBS 0.7 2.6 0.7 1.8 Daiwa Research 0.7 2.8 0.6 1.7 Credit Suisse 0.7 2.8 0.5 2.0 Nomura Securities 0.7 2.8 0.3 6.0 Nikko Citigroup 0.7 2.8 0.5 4.8 Informa Global Markets 0.7 2.9 0.6 5.0 ABN Amro 0.7 2.9 0.5 0.5 Dai-ichi Life Research 0.8 3.1 0.6 3.4 Shinkin Central Bank 0.8 3.1 0.5 4.6 Meiji-Yasuda 0.8 3.1 0.4 5.8 Morgan Stanley 0.8 3.2 0.6 3.9 Mizuho Research 0.8 3.3 0.7 6.4 Mitsubishi UFJ Research 0.8 3.4 0.6 0.8 NLI Research 0.9 3.8 0.6 4.4 Shinko Research 0.9 3.8 0.6 4.5 ---------------------------------------------------------------- Median 0.6 2.5 0.6 3.0 High 0.9 3.8 2.4 14.8 Low 0.2 0.8 0.3 -3.8
CAPEX EXTERNAL DEMAND* DEFLATOR --------------------------------------------------------------- Mitsubishi UFJ Sec -0.8 0.2 -1.4 UBS -0.9 0.4 -1.5 Norinchukin Research -0.8 0.5 -1.2 Daiwa SMBC -0.5 0.4 -1.5 Merrill Lynch -2.5 0.5 -2.1 Japan Research -2.2 0.7 -2.0 Mitsui Sumitomo AM -1.3 0.3 -1.2 Deutsche Securities 0.2 0.3 -0.7 Calyon 0.1 0.3 -1.2 Mitsubishi UFJ Bank -0.5 0.3 -1.4 JP Morgan -1.8 0.4 -0.5 Mitsubishi Research -1.0 0.4 -1.6 Goldman Sachs -0.8 0.4 -1.2 Barclays Capital -1.6 0.4 -0.5 Daiwa SB Investments -1.4 0.6 -1.7 BNP Paribas -2.1 0.5 -1.4 Mizuho Securities n/a n/a n/a Lehman Brothers -3.9 2.0 -1.6 BNP Paribas -2.1 0.5 -1.4 Mitsubishi UFJ Sec -1.4 0.5 -1.4 HSBC Securities -0.8 0.5 -1.4 RBS -1.5 0.4 -1.4 Daiwa Research -0.2 0.5 -1.5 Credit Suisse 0.0 0.5 -1.4 Nomura Securities -1.4 0.5 -1.2 Nikko Citigroup -1.0 0.4 -1.5 Informa Global Markets -1.1 0.4 -1.5 ABN Amro -1.2 0.5 -1.8 Dai-ichi Life Research -0.7 0.5 -1.5 Shinkin Central Bank -0.2 0.4 -1.4 Meiji-Yasuda -0.7 0.4 -1.6 Morgan Stanley -1.4 0.6 -1.5 Mizuho Research -1.0 0.4 -1.5 UFJ Research -1.5 0.6 -1.7 NLI Research 0.3 0.5 -1.6 Shinko Research -0.6 0.6 -1.5 --------------------------------------------------------------- Median -1.0 0.5 -1.5 High 0.3 2.0 -0.5 Low -3.9 0.2 -2.1
*percentage point of contribution to the overall growth rate. (Reporting by Shigeo Kodama, Akiko Takeda and Yuzo Saeki; Editing by Hugh Lawson) ((yuzo.saeki@thomsonreuters.com; +81 3 6441-1831; Reuters Messaging: yuzo.saeki.reuters.com@reuters.net)) Keywords: JAPAN ECONOMY/GDP POLL
UPDATE 1-Mexico group warns tortilla prices to jump
Reuters: [2008-05-14 23:28:00]
(Adds second tortilla group, tortilla shop quote)
By Jason Lange and Luis Rojas Mena
MEXICO CITY, May 14 (Reuters) - The price of tortillas, a political hot button in Mexico where the corn pancakes are eaten more readily than bread, is expected to jump about 18 percent by June on rising costs for fuel and corn, a major industry group said on Wednesday.
Average tortilla prices should rise to 10 pesos ($0.95) per kilo in June from 8.5 pesos per kilo now, Rafael Ortega, who heads the National Chamber for the Tortilla and Dough Industry, told Reuters. Ortega's organization groups together about 40 percent of the country's tortilla producers.
The chamber's forecast, together with other projections of even sharper increases that have been published in Mexican newspapers, contradicted recent statements from major retailers that tortilla prices will not rise sharply this year.
Food costs are a serious concern for the poor in Mexico, where the minimum wage is around $5 a day. In the past, the government has made deals with retailers and producers to control tortilla costs.
Investors seized on the forecasts as more evidence that the price increases will fuel higher inflation and might lead the central bank to raise interest rates this year.
Yields on Mexican interest rate futures <0#TII:> surged on Wednesday, showing investors had significantly increased bets of a rate hike sometime this year.
The yield on Mexico's benchmark 10-year peso bond <MX10YT=RR> rose 7 basis points to bid 8.10 percent.
Ortega said the average price for a tonne of milled corn has jumped to 3,650 pesos from 3,000 pesos in January.
"It is just supply and demand," Ortega said.
"NO OPTION"
Another industry group said on Wednesday tortilla prices would rise gradually from this week, increasing to 9 pesos ($0.85) from Thursday, and also blaming higher costs for corn.
"Our members have no option, or they raise prices for tortillas or close their businesses," Lorenzo Mejia, the leader of the National Association of Industrial Millers and Tortilla Outlets, told local radio.
In Mexico City, tortilla store staff said they had also heard prices for the staple would be on the rise from June to 9 pesos per kilo, up from 8.5 pesos currently.
"The increase is because everything is on the way up," said Juan Manuel Aguilar, who helps run a tortilla store in a working class neighborhood of the capital, blaming higher dough, fuel and electricity costs.
Global grain prices have surged on higher demand from countries like China, scant harvests in many countries and growing demand for grain from the biofuel industry.
In some parts of the world, soaring prices for basic food staples such as rice have sparked street protests and riots.
($1 = 10.487 pesos) (Additional reporting by Michael O'Boyle; editing by Jim Marshall) ((jason.lange@reuters.com ; 52 55 5282 7153; Reuters Messaging: jason.lange.reuters.com@reuters.net)) Keywords: MEXICO TORTILLA/
Mexico bonds dive on inflation fears; stocks rally
Reuters: [2008-05-14 23:16:00]
(Recasts; adds details, closing prices, byline)
* Bonds prices fall to 4-month low on tortilla hike fears
* Investors bet interest rates will rise
* Stocks rally after U.S. inflation data
By Michael O'Boyle
MEXICO CITY, May 14 (Reuters) - Mexican bond prices fell to a four-month low on Wednesday amid fears that a possible rise in tortilla prices could push the central bank to raise borrowing costs, while stocks rallied after modest U.S. inflation data.
The benchmark IPC stock index <.MXX> closed 1.45 percent higher at 31,336.57 points, after a slower-than-expected increase in U.S. consumer prices was seen taking pressure off the Federal Reserve to raise borrowing costs in the United States, Mexico's top trading partner.
The peso <MXN=> <MEX01> weakened 0.1 percent at the official central bank close to 10.487 per dollar.
Bond traders said reports that prices could soon rise for corn flour tortillas, a national staple, further stoked worries about accelerating inflation that have been weighing on bonds for a month.
Traders and analysts said they still expected the central bank to hold interest rates steady at a monthly monetary policy meeting this Friday.
"At the very least, there could be a message that indicates a rate hike could come at any minute," said Manuel Galvan, a fixed-income strategist at Metanalisis consultancy.
Yields on Mexican interest rate futures <0#TII:> surged on Wednesday, showing investors had significantly increased bets of a rate hike before the end of the year.
The government's benchmark 10-year peso bond <MX10YT=RR> fell 0.459 of a point in price to bid 97.663, pushing its yield up by 7 basis points to 8.10 percent.
U.S. consumer prices rose a smaller-than-expected 0.2 percent in April as energy prices held steady. If lower inflation can allow the Federal Reserve to hold off on raising interest rates, investors expect lower borrowing costs to help shore up U.S. consumer spending and business investment.
"That would benefit the local market with a greater dynamism in the economy (of the United States)," said Carlos Gonzalez, an analyst at IXE brokerage in Mexico City.
Mexico sends around 80 percent of its exports to its northern neighbor.
In currency trading, traders said investors were being cautious in taking new positions ahead of Friday's central bank policy review.
The peso has gained more than 4 percent since the beginning of the year as the U.S. central bank cut interest rates while Mexico has kept rates on hold.
That has widened the spread between the U.S. target interest rate and Mexico's key rate, making peso-denominated assets more attractive to investors.
In stock trading, shares of America Movil <AMXL.MX>, Latin America's biggest cell phone operator, climbed 3.22 percent to 30.76 pesos, while its New York traded stock <AMX.N> gained 2.81 percent to $58.50.
Top retailer Wal-Mart de Mexico <WALMEXV.MX> rose 1.29 percent to 44.89 pesos.
Cemex <CMXCPO.MX>, the largest cement maker in the United States, rose 1.8 percent to 30.46 pesos. Its New York-traded <CX.N> shares added 1.37 percent to $28.90. (Reporting by Michael O'Boyle and Vanessa Padilla; editing by Gary Crosse) ((michael.oboyle@reuters.com; +5255-5282-7160; Reuters Messaging: jason.lange.reuters.com@reuters.net)) Keywords: MARKETS MEXICO/
WRAPUP 1-U.S., China spar before hotly awaited forex report
Reuters: [2008-05-14 23:03:00]
* U.S., China spar over currency policy
* U.S. Treasury set to issue currency report on Thursday
* China likely to be cleared of currency manipulation
By Glenn Somerville
WASHINGTON, May 14 (Reuters) - U.S. and Chinese officials sparred on Wednesday over China's currency practices a day before release of a closely watched U.S. Treasury report likely to renew U.S. lawmakers' anger at Beijing's tactics.
Treasury is set to release a semiannual report on currency policies of key trade partners in late afternoon on Thursday. It is likely to again say China is not deliberately manipulating the renminbi, or yuan, for unfair trade advantage.
But restive U.S. lawmakers, who threatened action when China was cleared in the last report on Dec. 19, are virtually certain to take up the fight by renewing calls to pass laws that would offer sharper tools for forcing Beijing to act.
In Washington's current political season, soaring trade imbalances have also drawn the attention of Democratic presidential contenders Sen. Hillary Clinton and Sen. Barack Obama, both of whom have called for stronger U.S. action to deal with a number of China trade concerns, including currency.
Beijing is acutely aware of the heated atmosphere, and on Wednesday its ambassador to the United States, Zhou Wenzhong, appealed for some understanding of what China has done since July 2005 when it ended a controversial practice of pegging its yuan's value to the U.S. dollar.
"The renminbi has appreciated quite a bit ... it's already 19 percent, almost 19 percent (higher) as compared to back in July 2005," Zhou said. "There is only so much of this we can take, so you need to give us some time."
Zhou was speaking at a day-long symposium organized by the U.S. Chamber of Commerce, where the U.S. Treasury Department's special envoy to China, Alan Holmer, indicated the United States was not about to stop pushing.
Holmer acknowledged the pace of yuan appreciation has sped up since last fall but indicated it was not enough. Beijing has let the currency appreciate largely to try to curb inflation by making imports less expensive rather than out of any wish to slow its exports.
"We urge China's leaders to continue this accelerated pace of appreciation," Holmer said. U.S. business groups claim the yuan is undervalued as much as 40 percent and blame it for the record $256.3-billion trade deficit the United States incurred with China last year as well as for the loss of hundreds of thousands of American factory jobs.
That has been fertile ground for Clinton and Obama as they campaigned in hard-hit industrial states for voter support, and Zhou acknowledged China's unease at the topic.
"Many friends advise don't take this rhetoric too seriously, but of course we hope, we wish this rhetoric would not be made. But of course, what's more important is the policy, so we'll see," Zhou said.
The Treasury in December warned that "substantial undervaluation" of China's currency posed a risk to the world economy and to itself. Holmer said on Wednesday that China's position as one of the world's top trading nations meant it had a responsibility to consider the consequences of its policies.
"China has shown that it can grow fast, but the key issue is whether it can grow differently and sustainably where the quality of the growth is every bit as important as the quantity," Holmer said.
He said that meant it needed to concentrate less on exports and more on encouraging domestic consumption and adopt a more flexible, market-driven currency policy -- themes that will be taken up again in the currency report on Thursday. (Additional reporting by Doug Palmer; Editing by Neil Stempleman) ((glenn.somerville@thomsonreuters.com; +1-202-898-8377; Reuters Messaging: glenn.somerville.reuters.com@reuters.net)) Keywords: USA CHINA/
*TOP NEWS* Canada
Reuters: [2008-05-14 23:02:00]
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