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 3-Polar bears listed as US threatened species

Reuters: [2008-05-14 23:45:00]

(Adds U.S. Chamber of Commerce comment, paragraphs 15-16)

By Deborah Zabarenko, Environment Correspondent

WASHINGTON, May 14 (Reuters) - Polar bears were listed on Wednesday as threatened under the U.S. Endangered Species Act because their sea ice habitat is melting away.

However, this new protection does not aim to reduce climate change -- which environmentalists see as the cause of the bears' disappearing habitat -- or Arctic drilling for the fossil fuels that spur the climate-warming greenhouse effect.

In announcing the government's decision one day ahead of a court-ordered deadline, Interior Secretary Dirk Kempthorne acknowledged that human-caused greenhouse gas emissions contribute to the global warming that is damaging the polar bears' habitat.

However, he stressed that the threatened status could not properly be used to regulate greenhouse emissions.

"While the legal standards under the Endangered Species Act compel me to list the polar bear as threatened, I want to make clear that this listing will not stop global climate change or prevent any sea ice from melting," he said at a briefing.

"Any real solution requires action by all major economies for it to be effective," Kempthorne said. He also noted he was taking administrative and regulatory action to ensure this decision is not "abused to make global warming policies."

The proper forum for combating climate change is among the world's major economies, Kempthorne said. The Bush administration has convened the world's worst greenhouse polluting nations in a series of international meetings.

Polar bears live only in the Arctic and depend on sea ice as a platform for hunting seals. The U.S. Geological Survey said two-thirds of the world's polar bears -- some 16,000 -- could be gone by 2050 if predictions about melting sea ice hold true.

This is the first time climate change has been a factor in proposing a threatened status for any U.S. species, and was spurred on by environmentalists who claimed a limited victory in Kempthorne's announcement.

"MAJOR STEP FORWARD" WITH "LOOPHOLES"

"Protecting the polar bear under the Endangered Species Act is a major step forward, but the Bush administration has proposed using loopholes in the law to allow the greatest threat to the polar bear -- global warming pollution -- to continue unabated," Andrew Wetzler of the Natural Resources Defense Council said in a statement.

John Kostyack of the National Wildlife Federation, while gratified at the listing, saw little practical effect given the limits of Kempthorne's regulations.

"By denying a direct link between the sources of global warming pollution and the loss of the polar bears' sea ice habitat, and by denying that the polar bear will be protected from oil and gas development, they're willing to sit by and let the polar bear go extinct," Kostyack said by telephone.

The Endangered Species Act requires that decisions to protect wildlife be based solely on science, not on economic factors.

Kempthorne said his administrative rule aims at defining the scope of the decision, and at "limiting the unintended harm to the society and the economy of the United States."

Bill Kovacs of the U.S. Chamber of Commerce praised the decision and its accompanying regulations, calling is a "common sense balancing" between environmental and business concerns.

Without the limiting regulations, Kovacs said, all carbon-emitters in the contiguous United States would have to go through a consultation process, which he said would have literally shut down federal activity overnight.

Wednesday's decision was one day ahead of a court-ordered deadline. The U.S. government was initially supposed to decide in January but postponed its decision, citing the volume of scientific data to be considered.

In February, the Interior Department sold oil and gas rights across some 29.7 million acres (12.02 million hectares) of the Chukchi Sea off the Alaskan coast -- including prime polar bear habitat -- for a record $2.66 billion.

Canada, home to two-thirds of the world's polar bears, will not for now follow the U.S. lead in listing the animals as threatened, Environment Minister John Baird indicated.

The government of Nunavut, a territory that is home to most of Canada's Inuit people and which manages or co-manages some 15,000 polar bears, expressed disappointment in the U.S. decision.

"It is unfortunate the (U.S. government) has decided to disregard facts collected by those who have the greatest contact and longest history with polar bears," Nunavut Premier Paul Okalik said in a statement. "The truth is that polar bear populations are at near record levels."

(Reporting by Deborah Zabarenko in Washington, David Ljunggren and Louise Egan in Ottawa, editing by David Alexander and Sandra Maler)

(For more Reuters information on the environment, see http://blogs.reuters.com/environment/) ((deborah.zabarenko@thomson reuters.com;+1 202 898 8388; Reuters Messaging:deborah.zabarenko.reuters.com@reuters.net)) Keywords: POLARBEAR/

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/

UPDATE 3-Toronto stocks give up early gains to end flat

Reuters: [2008-05-14 23:04:00]

(Adds details, quotes)

*Index trims gains to close little changed

*Soft resource shares offset stronger in financials

*Royal Bank of Canada rises after says will take writedown

By Leah Schnurr

TORONTO, May 14 (Reuters) - The Toronto Stock Exchange's main index gave up nearly all its gains on Wednesday, as weak resources undermined a rally by financial issues after Royal Bank of Canada <RY.TO> said it would take a smaller second-quarter writedown than had been expected.

Miners were among the companies that led the retreat, including Inmet Mining <IMN.TO>, as the start date of its Las Cruces copper project was put in doubt after Spain's water authority suspended a water permit. Inmet gave up C$9.49, or 12.3 percent, at C$67.50.

The financial sector pushed higher, with shares of Royal up C$1.23, or 2.5 percent, at C$49.85 after Canada's largest bank said it will see a pretax writedown of C$855 million amid liquidity pressures on its assets.

"There's so many rumors floating around on what (banks') exposures are," said Sal Masionis, stockbroker at Brant Securities. "So obviously it's quite nice to have a rally."

The S&P/TSX composite index <.GSPTSE> closed up 9.61 points, or 0.07 percent, at 14,626.31 with half of the 10 main sectors higher.

The banking group, which has been battered by global losses and writedowns stemming from the credit crunch and deteriorating U.S. housing market, rose 1 percent.

The sector had earlier helped the benchmark jump to a record high of 14,737.18, surpassing the 14,695.75 mark that was reached on Monday.

Canadian Imperial Bank of Commerce <CM.TO> added 76 Canadian cents, or 1 percent, to C$74.01, and Toronto-Dominion Bank <TD.TO> rose 57 Canadian cents, or 0.9 percent, to C$67.57.

Gold producers fell 1.7 percent, while the price of bullion slid slightly. Agnico-Eagle Mines <AEM.TO> was down C$1.50, or 2.3 percent, at C$63.91, while the broader materials sector was off 0.9 percent.

"I would suggest on an intermediate trend, it looks like gold wants to rally," said Andrew Martyn, portfolio manager at Davis-Rea.

"So I think from an entry point of view, gold is looking extremely good, and you've got some quality stocks that have traded off here."

The small health care sector was down 1.1 percent, while Cardiome Pharma <COM.TO> lost 37 Canadian cents, or 3.8 percent, to C$9.30.

The industrials sector put on 1.3 percent, helped by a gain in plane and train maker Bombardier <BBDb.TO>, which was up 20 Canadian cents, or 3.1 percent, at C$6.67.

Economic data out of the United States had helped set an upbeat tone earlier in the day after consumer prices rose less than expected last month, which calmed fears of inflation.

Market volume was 405 million shares worth C$7.5 billion. Decliners outpaced advancers 817 to 776. The blue chip S&P/TSX 60 index <.TSE60> eked out a gain of 0.82 point, or 0.09 percent, at 871.59.

In New York, stocks were heartened by the tame inflation data, as well as stronger than expected results from retailers Macy's <M.N> and mortgage company Freddie Mac <FRE.N>.

The Dow Jones industrial average <.DJI> closed up 66.20 points, or 0.52 percent, at 12,898.38, while the Nasdaq composite index <.IXIC> inched up 1.58 points, or 0.06 percent, at 2,496.70. ($1=$1.00 Canadian) (Editing by Rob Wilson) ((leah.schnurr@thomsonreuters.com; +1 416 941 8056; Reuters Messaging: leah.schnurr.reuters.net@reuters.com))

Keywords: MARKETS CANADA STOCKS

. Keywords: MARKETS CANADA STOCKS