RPT-POLL-Japan growth likely slowed to 0.6 pct in Jan-March

Reuters: [2008-05-16 00:00:00]

(Repeats May 9 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

Mexico bonds gain as price worries ebb; stocks up

Reuters: [2008-05-15 23:21:00]

(Recasts, adds details and closing prices)

* Bond prices gain as inflation fears recede

* Tortilla price hike may be tamer than feared

MEXICO CITY, May 15 (Reuters) - Mexican bond prices rose on Thursday, mostly recovering from recent losses as investors worried less about the impact on inflation from a forecast that corn tortilla prices would rise, while stocks rose.

The government's benchmark 10-year peso bond <MX10YT=RR> rose 0.395 of a point in price to bid 98.058, pushing its yield down 6 basis points to 8.04 percent.

The benchmark IPC stock index <.MXX> gained 0.66 percent to 31,542.97 points, while the peso <MXN=> <MEX01> firmed 0.11 percent at the official central bank close to 10.476 per dollar.

Bond investors fear accelerating inflation could push the central bank to raise interest rates this year.

Worries were further stoked after producers of corn flour tortillas on Wednesday said they will soon raise prices for the Mexican staple.

Some media reports said tortilla prices, eaten for almost every Mexican meal, could rise by as much as 40 percent citing a small tortilla-maker group.

The news spooked bond investors, who dumped long-term bonds on Wednesday, pushing the yield on the 10-year bond up 7 basis points. But yields edged down on Thursday as investors questioned how big the increase could be and when it could hit.

"There has been a knee-jerk reaction to these tortilla prices," said Siobhan Morden a local market strategist at ABN AMRO in New York.

Morden added that it seemed likely that the government would be able to structure a new pact with producers to keep tortilla prices down, as it did in early 2007 and renewed several times in the last year.

But many investors were remaining cautious ahead of the central bank's monthly policy review, set for Friday at 9 a.m. (1400 GMT).

While analysts unanimously ruled out any change on Friday in the bank's overnight rate from levels of 7.50 percent, according to a Reuters poll, many are expecting the bank to introduce a tightening bias in tomorrow's statement.

In currency trading, traders said investors were exercising caution ahead of the central bank's monthly review on Friday. IXE brokerage said in a note that the peso could strengthen to around 10.43 per dollar, should the central bank introduce a more hawkish tone to its statement.

In stock trading, shares of miner Grupo Mexico <GMEXICOB.MX>, one of the world's largest copper producers, gained 3.13 percent to 79.20 pesos as copper prices rose nearly 2 percent in New York.

Shares of Cemex <CMXCPO.MX>, the top supplier of cement in the United States, gained 1.64 percent to 30.96 pesos. Its New York traded shares added 2.32 percent to $29.57.

Among losing stocks, America Movil <AMXL.MX>, Latin America's biggest cell phone operator, shed 1.14 percent to 30.41 pesos while its New York traded shares lost 0.43 percent to $58.25. (Reporting by Michael O'Boyle) ((michael.oboyle@reuters.com; +5255-5282-7160; Reuters Messaging: jason.lange.reuters.com@reuters.net)) Keywords: MARKETS MEXICO/

*TOP NEWS* Canada

Reuters: [2008-05-15 23:14:00]

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> CAW reaches deals with GM, Chrysler                 [nN15328011] 
> Auto slump hits Canada factory sales in March       [nN15514480] 
> Air Canada cuts back on its fuel surcharges         [nN15304833] 
> Tougher Canada action needed on polar bears-greens  [nN15370262] 
> Lundin Mining profit rises, stock climbs            [nN15276825] 
> Canadian housing starts seen easing in 2008         [nN15212621]    
> Canadian political deadlock set to drag on          [nN13424304]    
> Watchdog asks BCE to justify Web traffic shaping    [nN15308823] 
> Menu Foods post smaller loss, but sales fall        [nN15300653] 
> FirstService swings to loss in fourth quarter       [nN15200291] 
> Weeping mother urges Taser moratorium in Canada     [nN15311988] 
> Morning-after pill sold over the counter in Canada  [nN15321982] 
    
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Canada dollar closes at parity, bonds rise

Reuters: [2008-05-15 23:11:00]

    * Canadian dollar closes at parity with U.S. dollar 
    * Oil provides background for currency's strength 
    * Bonds higher across the curve in thin trading 
    
    By John McCrank 
    TORONTO, May 15 (Reuters) - The Canadian dollar closed at 
parity against the U.S. dollar on Thursday as robust energy 
prices helped it recover from early losses after the release of 
weak manufacturing sales data. 
    Domestic bond prices rose across the curve as the weak 
domestic data highlighted the impact the U.S. economic downturn 
is having on Canada. 
    The Canadian currency closed at C$1.0000 to the U.S. 
dollar, up from C$1.0043 to the U.S. dollar, or 99.57 U.S. 
cents, at Wednesday's close. 
    It was the currency's highest close since March 18. 
    "It really does seem like the environment in the background 
is improving for the Canadian dollar in the short term and 
that's partly to do with energy prices... but also developments 
in other economies," said David Watt, senior currency 
strategist at RBC Capital Markets. 
    The price of U.S. crude oil <CLc1>, while off its record 
high of nearly $127 a barrel hit earlier this week, remains 
lofty. Canada is a major oil exporter and its currency is often 
influenced by the commodity. 
    The Canadian dollar was also up against the crosses, such 
as the currencies of New Zealand, the Britain, and the 
euro-zone. 
    Watt said that was due to weaker growth outlooks and the 
potential for interest rate cuts in those places. Meanwhile, in 
the U.S., Canada biggest trading partner, growth is holding up 
better than many people expected. 
    So while the Canadian and U.S. central banks have both made 
deep cuts to their interest rates, they may be ahead of the 
curve compared to other major economies. 
    The Bank of Canada is expected to make at least one more 25 
basis point cut in its key overnight rate to 2.75 percent at 
its next fixed announcement data on June 10. 
    Domestic data helped bolster that view, as Canadian 
manufacturing sales fell 1.6 percent in March after two months 
of gains, hurt by an ongoing slump in the auto industry. 
Analysts were looking for a 0.2 percent rise. 
    
    BONDS RISE 
    Canadian bond prices rose across the curve helped by the 
weaker-than-expected manufacturing data, and light trade ahead 
of the upcoming Victoria Day long weekend. 
    "Basically, traders just spent today squaring up their 
positions since there is an early bond close tomorrow," said 
Sheldon Dong, fixed income strategist at TD Waterhouse Private 
Investment in Toronto. 
    Canada has no more data due this week but a slew of reports 
are slated for release next week, including April inflation 
data on Wednesday and March retail sales figures the following 
day. 
    The two-year bond rose 9 Canadian cents to C$101.92 to 
yield 2.772 percent. The 10-year rose 32 Canadian cents to 
C$103.37 to yield 3.560 percent. 
    The yield spread between the two- and 10-year bonds was 
78.6 basis points, up from 77.7 at the previous close. 
    The 30-year bond climbed 37 Canadian cents to C$116.32 for 
a yield of 4.040 percent. In the United States, the 30-year 
Treasury yielded 4.552 percent. 
    The three-month when-issued T-bill yielded 2.63 percent, 
down from 2.68 percent at the previous close. 
 (Editing by Renato Andrade) 
 ((john.mccrank@thomsonreuters.com; +1 416 941 8083; Reuters 
Messaging: john.mccrank.reuters.com@reuters.net)) 
    
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Keywords: MARKETS CANADA DOLLAR BONDS 
    

Chile stocks rise as bond yields fall, peso firms

Reuters: [2008-05-15 23:10:00]

(Adds quote, details, closing stock figures)

SANTIAGO, May 15 (Reuters) - Chilean stocks closed higher on Thursday as local bond yields eased, while the peso firmed against the dollar after the central bank executed its daily purchase of greenbacks.

The all-market IGPA index <.IGPA> closed 0.20 percent higher at 13,722.60 points, while the blue-chip IPSA index <.IPSA> gained 0.31 percent to 2,918.57 points.

Global markets turned positive on Thursday after crude oil prices dropped more than $2 a barrel, while local stocks were favored by lower bond yields, which had surged nearly 100 basis points in the prior four weeks.

"Local bond yields fell, which makes stocks more attractive," said Alvaro Pereyra, head of research with the BCI brokerage. "Yesterday's news about U.S. inflation was also a help. The outlook is more benign than it was before."

Chilean inflation-adjusted five-year central bank bond yields <CLBCU5Y=RR> closed at 2.99 percent, after surging as high as 3.2 percent on Monday.

Pereyra said oil prices remained high. "It's still at $124," he said. "Oil prices going forward are still a question mark."

Of Chile's 40 blue-chip stocks, 20 closed higher, 13 fell and seven were unchanged. Transport companies got the biggest boost as the oil price rally took a breather.

Leading shipper Vapores <VAP.SN> jumped 2.59 percent to 800 pesos a share, while dominant air carrier LAN <LAN.SN> <LFL.N> rose 1.28 percent to 5,550 pesos.

Other advances included regional retailer Falabella <FAL.SN> with a gain of 0.77 percent, and industrial conglomerate and wood pulp producer Copec <COP.SN>, up 0.81 percent.

Declines by No. 1 bank Santander Chile <STG.SN>, off 1.51 percent, and leading wine exporter Concha y Toro <CHT.SN>, down 3.11 percent, helped offset blue-chip gains.

The Chilean peso <CHILJ> <CLP=CL> edged 0.24 percent higher to close at 466.90/467.20 per dollar compared with Wednesday's close at 468.00/468.30.

The central bank on Thursday continued with its daily purchase of $50 million on the currency exchange as part of an $8 billion intervention to curb the strength of the peso against the greenback. (Reporting by Lisa Yulkowski; Editing by Leslie Adler) ((lisa.yulkowski@reuters.com; +56-2-370-4290)) Keywords: CHILE MARKETS/