(Adds single-digit inflation target dropped, quotes, analyst)
By Kwasi Kpodo
ACCRA, May 19 (Reuters) - The Bank of Ghana raised its prime interest rate by a bigger-than-expected 175 basis points to 16 percent on Monday to try to control inflation driven by rising food and fuel prices, Governor Paul Acquah said.
Acquah said Ghana's 6.3 percent growth target for 2008 was still on track, but business confidence had slackened in the first quarter and another target of nearly halving inflation to 8 percent by the end of the year now appeared unattainable.
"It is not possible, as things look now. We have been outlining our inflation profile for this year and it keeps going up, primarily due to the impact of oil prices on the economy," Acquah told reporters after a Monetary Policy Committee meeting.
"Given that perspective, the 2008 (inflation) forecast cannot in realistic terms stay on target of a single digit," he said.
Record high world crude oil prices and surging global prices for basic food commodities like rice and wheat have forced up inflation rates in many countries, hitting hard many African countries where food is the biggest household expense.
"Inflation and cost-price pressures have increased amid rising and volatile oil prices and a surge in food prices," Acquah said.
Ghana is the world's second biggest cocoa exporter and Africa's second biggest gold producer. Oil reserves discovered last year are not due to start flowing for another 2-3 years.
At its last meeting in March, the committee raised the prime rate by 75 basis points to 14.25 percent. Since then, annual inflation surged to 15.3 percent in April from 13.8 percent the previous month -- the sharpest rise this year.
"Uncertainty about developing inflation has weighed down business and consumer confidence while the general assessment of economic prospects remains strongly positive," Acquah said.
Razia Khan, of Standard Chartered bank in London, said the rate rise was "much more than the market had been anticipating".
She said the rise would lend near-term support to Ghana's cedi currency <GHS=>, which Acquah said had depreciated by 3.2 percent on a trade-weighted basis between January and April.
But in the longer term, Khan said the cedi would continue to come under downwards pressure unless Ghana reduced its dependency on costly crude oil imports, in particular by addressing domestic utility subsidies.
COCOA, GOLD UNDERPIN GROWTH
Acquah said Ghana's economy was nevertheless in good shape.
"I still think we will achieve our target of 6.3 percent GDP growth by the close of year. Our economy is still fairly resilient and robust," he said.
The average price for Ghanaian cocoa bean exports rose to $2,091.80 per tonne at the end of March, up 7.7 percent from the end of December, Acquah said. Total cocoa exports for the first quarter of 2008 rose to $401.5 million, from $382.27 million a year earlier.
Gold export prices rose to an average $916.60 per ounce over the same period, up 17.8 percent on the previous quarter and 42.4 percent year-on-year. Gold exports rose in value to $608.9 million in the first quarter of 2008, up from $395.0 million a year earlier and $486.4 million in the previous quarter.
But those increased revenues were countered by increased prices for crude oil, of which Ghana imports about $2.6 billion a year.
Average weekly prices for benchmark Brent crude oil <LCOc1> were up at $115.28 by the end of April, up 22.5 percent from late December and 70 percent year on year, Acquah said. (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com) (Writing by Alistair Thomson) ((dakar.newsroom@reuters.com; +221 33 864 5076; Reuters Messaging: alistair.thomson.reuters.com@reuters.net))
Keywords: GHANA RATES/
JOHANNESBURG, May 19 (Reuters) - South African stocks surged on Monday, led by construction shares, while the rand held near an 11-week high on rising risk appetite and hopes for inflows from a bid for mobile operator MTN.
The blue-chip Top-40 index <.JTOPI> rose 1.64 percent at 32,209.53 points, while the broader All-Share index <.JALSH> increased 1.5 percent to 33,191.80 points.
"If you look at the stocks that have actually performed today the top two are both construction counters," Tubby Goodwin, a trader at Investec securities said.
"I think people are probably still pinning hopes on the fact that government spending on construction will continue right through to 2010," he said.
Construction group Aveng <AEGJ.J> starred, gaining 5.97 percent to 63.00 rand, and its rival Murray & Roberts <MURJ.J> jumped 5.56 percent at 95.00.
The rand <ZAR=D3> eased slightly, but remained near an 11-week high touched on Friday, supported by hopes of big capital inflows from foreign interest in Africa's biggest mobile operator MTN <MTNJ.J>.
The local currency was trading at 7.4910 against the dollar at 1600 GMT, 0.2 percent weaker than its close in New York on Friday when it hit its strongest level since Feb. 28.
Traders said the market sentiment remains positive with local equities higher, global risk aversion rising and investors watching for more news on bids for MTN.
"A non-eventful day ... (but) sentiment remains strong on the back of MTN and (expectations of) high rates," a Johannesburg-based dealer said.
The rand was hemmed into a 7.46 to 7.52 to the dollar range, with importers and foreign selling capping gains.
Strong inflation and hawkish comments from central bank Governor Tito Mboweni have hardened expectations of more interest rate hikes.
MTN Group <MTNJ.J>, continued its good performance on the bourse, gaining 3.43 percent to 157.22 rand. The mobile operator has attracted interest from India's Bharti-Airtel <BRTI.BO> and the UAE's Etisalat <ETEL.AD>.
Mining bourse heavyweight BHP Billiton <BILJ.J> gained 0.47 percent at 318.57 rand, while rival miner Anglo American <AGLJ.J> climbed 3.76 percent to 537.48 rand.
Shares in Africa's biggest gold producer, AngloGold Ashanti <ANGJ.J> fell 0.17 percent at 295.50 rand and GoldFields <GFIJ.J> rose 2.18 percent at 106.80 rand.
On the losers, shares in Africa's largest private hospital group Netcare <NTCJ.J> fell 3.48 percent to 859 rand. (Reporting by Gordon Bell and Gugulakhe Lourie; editing by David Christian-Edwards) ((gordon.bell@reuters.com; +27 11 775 3151; Reuters Messaging: gordon.bell.reuters.com@reuters.net)) (For full Reuters Africa coverage and to have your say on the top issues, visit: http://africa.reuters.com/ )
Keywords: MARKETS SAFRICA/CLOSE
(Recasts, updates prices)
SYDNEY, May 19 (Reuters) - Gold gained over 1 percent on Monday to more than $910 an ounce, as the dollar slid to a two-and-a-half week low against the euro.
Spot gold <XAU=> cost $909.40/910.40 an ounce at 0856 GMT, from $899.55/900.55 late in New York on Friday.
Strong support above $900 encouraged more investors into bullion, betting on further gains now that the key technical support marker had been solidly breached, dealers said.
"Gold was showing some drive and that could carry over," a dealer said.
It also benefited from a slide in the value of the dollar, which hit a two-and-a-half week low against the euro <EUR=> after weak consumer U.S. confidence numbers on Friday. [USD/]
Gold futures for June delivery <GCM8> on the COMEX division of the New York Mercantile Exchange were also up more than 1 percent to $910.20 an ounce.
Gold is still well short of its all-time high of $1,030 an ounce hit in mid-March, but fell as low as $845 in early May.
Lehman Brothers analyst Edward Morse has warned that speculative buying in oil, gold and other commodities was providing "fertile ground for a potential asset bubble," where prices typically plummet once investors exit.
Spot platinum <XPT=> was at $2,158.00/2,173 an ounce versus $2,126/2,141 in late New York on Friday.
Spot silver <XAG=> edged up to $17.16 an ounce.
Spot palladium <XPD=> was quoted at $448/453 an ounce versus $443/451 on Friday.
(Reporting by James Regan; Editing by Michael Urquhart) ((jim.regan@reuters.com; +61-2 9373-1814; Reuters Messaging: jim.regan@reuters.net)) Keywords: MARKETS PRECIOUS
(Corrects third paragraph to indicate gold last breached $900/oz on May 16, not April 24) (Adds comment, updates prices)
SYDNEY, May 19 (Reuters) - Gold extended its upward price run on Monday, gaining more than half a percent to more than $900 an ounce, defying a rising dollar.
Spot gold <XAU=> cost $905.10 an ounce at 0434 GMT versus $899.55 late in New York on Friday.
Spot gold last traded above $900 on May 16. Prior to that spot last crossed $900 an ounce on April 24 to a peak of $906.30.
The break again above $900, linked to hedge buying against concerns that firmer oil prices will bring higher inflation, may set the stage for further gains in more active European and U.S. bullion trading on Monday, according to dealers.
"Gold was showing some drive and that could carry over," a dealer said.
Gold futures for June delivery <GCM8> on the COMEX division of the New York Mercantile Exchange added $5.90 an ounce to $905.80 an ounce in electronic trading.
A contract close above $900 an ounce could send gold futures to test the next resistance between $920 and $925.
Gold raced to an all-time high of $1,030 an ounce in mid-March, but fell as low as $845 in early May.
Oil was up 69 cents at $126.98 a barrel on Monday, edging closer to last week's record high near $128, stoking inflation concerns, typically a prompt to buy gold.
Oil was underpinned by growing sentiment that the Organisation of the Petroleum Exporting Countries is reluctant to raise output. [ID:nSYD301945]
Lehman Brothers analyst Edward Morse has warned that speculative buying in oil, gold and other commodities was providing "fertile ground for a potential asset bubble," where prices typically plummet once investors exit.
Rather than view the intrinsic value of an asset, speculators in a bubble market instead focus on the resale value of the asset.
Spot platinum <XPT=> was at $2,133.50 an ounce versus $2,126.00 in late New York on Friday.
Spot Silver <XAG=> edged up 16 cents to $17.06 an ounce.
Spot palladium <XPD=> was quoted at $448.00 an ounce versus $443.00 on Friday.
The dollar edged higher against the yen, trimming some losses made late last week when a plunge in U.S. consumer confidence underscored problems facing the U.S economy.
(Reporting by James Regan; Editing by Clarence Fernandez)
((jim.regan@reuters.com; +61-2 9373-1814; Reuters Messaging: jim.regan@reuters.net)) Keywords: MARKETS PRECIOUS
(Corrects third paragraph indicating gold last breached $900/oz on May 16, not April 24)
SYDNEY, May 19 (Reuters) - Gold extended its upward price run on Monday, rising almost a half-percent to just over $900 an ounce, defying a rising dollar.
-- Spot gold <XAU=> cost $903.30 an ounce at 0148 GMT against $899.55 late in New York on Friday.
It last traded above $900 on May 16. Prior to that, spot last crossed $900 an ounce on April 24 to a peak of $906.30.
-- Gold futures for June delivery <GCM8> on the COMEX division of the New York Mercantile Exchange added $5.40 an ounce to $905.30 an ounce in electronic trading.
-- A contract close above $900 an ounce could send gold futures to test the next resistance area between $920 and $925.
-- Oil rose 31 cents to $126.60 a barrel, edging closer to last week's record high near $128, stoking inflation concerns, typically a prompt to buy gold. Oil was underpinned by growing sentiment that the Organisation of the Petroleum Exporting Countries is reluctant to raise output [ID:nSYD301945]
-- Spot platinum <XPT=> was quoted flat at $2,126 an ounce against late New York.
-- Silver <XAG=> edged up 9 cents to $16.99 an ounce.
-- Spot palladium <XPD=> was quoted at $446.50 an ounce versus $443.00 an ounce on Friday.
-- The dollar edged higher against the yen on Monday, trimming some losses made late last week when a plunge in U.S. consumer confidence underscored problems facing the U.S economy. (Reporting by James Regan; Editing by Tomasz Janowski)
((jim.regan@reuters.com; +61-2 9373-1814; Reuters Messaging: jim.regan@reuters.net)) Keywords: MARKETS PRECIOUS
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