#Stocks to watch:* Focus Point, Maybank, SunCity, UMW

KUALA LUMPUR: The local market may trade in a tight range this coming week, starting Monday, Aug 23, with some downside due to concerns from a cautious Wall Street but this could be offset by the firm Malaysian corporate earnings including MALAYAN BANKING BHD [].

On Wall Street, US stocks slipped on Friday, Aug 20 and the S&P 500 and Dow fell for a second straight week on persistent concerns the recovery has tapered off. Even so, major indexes came off Friday's lows as some investors homed in on positive outlooks in the tech sector and used this week's M&A news as an excuse for late-day buying, according to Reuters.

The Dow Jones industrial average slipped 57.59 points, or 0.56 percent, to 10,213.62. The Standard & Poor's 500 Index was off 3.94 points, or 0.37 percent, to 1,071.69. The Nasdaq Composite Index added 0.81 points, or 0.04 percent, to 2,179.76.

At Bursa Malaysia, investors would also want to see whether there could be extended follow-through buying interest and push the FBM KLCI past the crucial 1,400 level. However, the weaker broader market late last week could see the 30-stock index giving up some gains.

Stocks to watch on Monday are Focus Point Holdings Bhd, Malayan Banking Bhd, SUNWAY CITY BHD [] and UMW HOLDINGS BHD [].

After an 11th hour pullout, Focus Point Holdings Bhd will finally be listed on the local exchange on Monday. To recap, Focus Point had deferred the listing following allegations made against the company that contact lenses prescribed and/or dispensed by personnel were not qualified to do so.

The listing exercise involved the public issue of 41.2 million new shares and offer for sale of up to 15.8 million existing shares at 20 sen each at an offer price of 39 sen.

The listing was derailed due to the emergence of a complaint made to the regulators on July 23 claiming, among other things, that contact lenses were prescribed or dispensed by personnel who were not qualified to do so.

Maybank reported net profit of RM912.47 million in the fourth quarter ended June 30, 2010 versus net loss of RM1.118 billion a year ago when it was affected by the RM1.97 billion impairment charge on its investment in Bank Internasional Indonesia (BII) and MCB Bank.

Revenue dipped to RM4.73 billion versus RM4.85 billion. Earnings per share were 12.89 sen versus loss per share of 17.62 sen. Its pre-tax profit was RM1.36 billion versus a pre-tax loss of RM821.67 million. Maybank proposed a final dividend of 44 sen per share.

In Sunway City, the property developer posted net profit of RM71.66 million in its second quarter ended June 30, 2010 (2Q2010) on the back of a revenue of RM262.29 million.

The strong financial performance was underpinned by the group's core businesses being the property development and property investment segments.'' It declared an interim dividend of 31 sen per share.

UMW reported RM211.69 million in net profit for the second quarter ended June 30, 2010 (2Q10). Earnings jumped 166.6% from RM79.43 million a year ago due to higher sales of Toyota and Perodua vehicles and favourable model mix.

The improved performance was driven by the equipment and manufacturing & engineering segments coupled with favourable foreign exchange rates, accounted for the significant improvement in profit for the current quarter.

UMW declared an interim single-tier dividend of 20% or 10 sen per share for the year ending Dec 31, 2010 ' totaling net dividend payable of about RM114.5 million ' to be paid on Oct 7.

BHP, Intel, RSA shatter usual August M&A lull

NEW YORK: Global mergers and acquisitions (M&A) have hit nearly $200 billion so far in August, $77 billion shy of the record set in 1999 for what is typically one of the quietest months of the year, Thomson Reuters data showed on Friday, Aug 20.

The $197.6 billion of deals appears to vindicate analysts and bankers who have spent months predicting an upturn in M&A, as cash-rich corporates regain confidence, the economic backdrop improves, and banks are increasingly ready to lend.

This week has also seen the highest value of announced deals since November -- when Warren Buffett's Berkshire Hathaway Inc (BRKa.N)(BRKb.N) agreed to buy rail company Burlington Northern Santa Fe Corp, in the billionaire investor's biggest-ever takeover.

This month's deals include:

BHP Billiton's (BLT.L)(BHP.AX) $39 billion hostile offer for Potash Corporation of Saskatchewan Inc (POT.TO), the world's largest fertilizer firm.

Intel Corp's (INTC.O) $7.7 billion offer to buy antivirus software company McAfee Inc (MFE.N), the chipmaker's biggest-ever deal.

And RSA Insurance Group PLC's (RSA.L) 5 billion pound offer to buy rival Aviva's non-life units, which Aviva has rejected. - Reuters

BofA, ex-CEO Lewis deny Cuomo fraud charges

NEW YORK: Bank of America Corp and former Chief Executive Kenneth Lewis denied civil fraud charges brought by New York's attorney general over the bank's takeover of Merrill Lynch & Co amid the 2008 financial crisis.

In court papers filed on Wednesday, Lewis said the state's prosecutor Andrew Cuomo had no basis in his lawsuit to allege a conspiracy to mislead the public and shareholders about Merrill's deteriorating finances and Bank of America's desire for government assistance.

"Some have looked to assign blame for every aspect of the financial crisis, even where there is no evidence of misconduct," Lewis said.

He said "this case is a product of that dynamic," and Cuomo's version of events is "inconsistent, selectively presented, and often nonsensical."

Lewis and former Chief Financial Officer Joseph Price, who is also a defendant, urged dismissal of the lawsuit, filed with the New York State Supreme Court in Manhattan.

Bank of America filed its own papers saying Cuomo had failed to state a claim warranting relief.

The denials had been expected and in response, the prosecutor's spokesman, Richard Bamberger, said the Attorney General's office "stands by the allegations set forth in its Complaint" and the defendant's filings "do nothing to change this office's view of the case."

The takeover of Merrill was a signature event in the 2008 financial crisis. It was announced on September 15, the same day Lehman Brothers Holdings Inc went bankrupt.

Lewis was initially praised for saving Merrill from possible failure, but later he faced a storm of criticism over the alleged failure to make a timely disclosure of Merrill's soaring losses, even as Merrill was paying out $3.6 billion of bonuses.

The merger closed on January 1, 2009. A year later, Lewis ended his 40-year career at Bank of America, whose shares remain roughly 60 percent below where they traded before the deal was announced. Many other bank shares also suffered steep declines.

MARTIN ACT

Invoking the Martin Act, a powerful state law used to combat securities fraud, Cuomo accused the defendants of intentionally failing to disclose massive losses at Merrill ahead of a December 5, 2008, shareholder vote on the merger.

He also alleged that the defendants later misled the federal government in arguing that a "surprise" increase in Merrill's losses allowed the bank to back out of the merger unless it received massive taxpayer help.

While Merrill lost $15.8 billion in the fourth quarter of 2008, Cuomo said just $1.4 billion of losses surfaced between the shareholder vote and Bank of America's urgent plea to Washington for help.

In its filing, Charlotte, North Carolina-based Bank of America said it "acted at all times in good faith and without any fraudulent intent."

Price said he acted "in what he justifiably believed to be the best interests of the bank and its shareholders, and in compliance with every rule of law and fair play."

Merrill's results in recent quarters have helped Bank of America offset elevated consumer credit losses. Lewis called the takeover "an unmitigated financial and strategic success."

Cuomo sued on February 4, 2010, the same day Bank of America reached a $150 million accord with the U.S. Securities and Exchange Commission settling charges that the bank failed to disclose Merrill losses and bonuses.

Brian Moynihan succeeded Lewis as Bank of America CEO on Jan 1, 2010. Price now oversees consumer and small business banking at the bank.

Cuomo, a Democrat, is the front-runner in the race to become New York's next governor. The election is in November.

In afternoon trading, Bank of America shares were down 19 cents or 1.5 percent at $12.83 on the New York Stock Exchange.

The case is Cuomo v. Bank of America Corp et al, New York State Supreme Court, New York County, No. 450115/2010. - Reuters

S&P, Dow fall for second week on recovery woes

NEW YORK: U.S. stocks slipped on Friday, Aug 20 and the S&P 500 and Dow fell for a second straight week on persistent concerns the recovery has tapered off.

Even so, major indexes came off Friday's lows as some investors homed in on positive outlooks in the tech sector and used this week's M&A news as an excuse for late-day buying.

"Earnings season came in pretty strong; M&A activity was very encouraging this week and that's usually a bullish sign," said Ryan Detrick, senior technical strategist at Schaeffer's Investment Research in Cincinnati, Ohio.

"The flip side is the economic data this week has been very, very poor. No one's making a big bet either way, it's just short-term moves."

The Nasdaq fared better than the other indexes to end a hair higher after positive forecasts from Marvell TECHNOLOGY [] Group Ltd and Intuit Inc drove their shares up.

The Dow Jones industrial average slipped 57.59 points, or 0.56 percent, to 10,213.62. The Standard & Poor's 500 Index was off 3.94 points, or 0.37 percent, to 1,071.69. The Nasdaq Composite Index added 0.81 points, or 0.04 percent, to 2,179.76.

For the week, the S&P 500 was down 0.7 percent, the Dow slipped 0.9 percent, while the Nasdaq gained 0.3 percent. It was the second week of declines for the S&P and the Dow.

Technical support held around the 1,070 level after the S&P 500 fell below that before recovering. The level, which represents last week's low, held as support on Thursday as well.

Investors did not embrace all tech shares. Hewlett-Packard Co was among the biggest drags on the Dow after several brokerages cut their price targets on the computer maker's shares due to concern about demand for tech products. HP fell 2.2 percent at $39.85.

Thursday's gloomy jobs and regional manufacturing data remained in the forefront as investors debated how much the recovery could slow, while overall options action reflected cautious investor sentiment.

With August options expiring on Friday, options investors are bracing for a quiet market next week.

The CBOE Volatility index, Wall Street's fear gauge, was expected to stay below 25, suggesting a relatively calm market. The index closed down 3.6 percent.

Natural resource stocks such as Chevron Corp and Freeport McMoRan Copper & Gold Inc came under pressure as U.S. crude oil fell more than 1 percent and copper futures stumbled.

Chevron dipped 1 percent to $75.05, while Freeport McMoRan was off 1 percent to $71.37.

On the upside, chipmaker Marvell gained 8.4 percent to $16.16, while software maker Intuit jumped 15 percent to $44.60.

Volume was tepid through the week and about 6.93 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq on Friday. This was well below last year's estimated daily average of 9.65 billion. - Reuters

Dubai's Asia roadshow may signal future debt issue

DUBAI: Dubai will launch a late August roadshow for fixed-income investors in Asia, a government statement said, a move analysts say hints the emirate may issue bonds later this year as it restructures $23.5 billion in debt.

The government says the roadshow, its second in the past three months, follows its strategy for updating investors on its economy, "providing regular updates to both existing and prospective fixed income investors around the world".

Like the Europe meeting for fixed-income investors, which was held in June, the Asia roadshow is a non-deal one, indicating no immediate bond issue. But analysts suspect that there may be an issue by the end of the year.

"Not now, but sometime this year they (the Dubai government) will want to issue something," Dmitry Sentchoukov, EM strategist at Commerzbank in London said. "It's not clear in what shape or form that will be."

The planned roadshow, organized by HSBC and Mitsubishi UFJ Financial Group, was scheduled to take place on Aug. 26 in Hong Kong and on Aug. 27 in Singapore, the statement said on Friday, Aug 20.

The Gulf Arab emirate launched a $6.5 billion bond programme last October, made up of $4 billion worth of euro-denominated medium-term notes and a $2.5 billion Islamic loan. It placed almost $2 billion in five-year Islamic bonds in late October.

Dubai, which has no sovereign rating compared to neighbouring emirate Abu Dhabi, the United Arab Emirate's seat of power which is rated at Aa2, may face difficulties should it choose to issue debt this year.

"Dubai is likely to face a headwind when they do this because ... the investor base which can buy such a high yield in sovereign debt is probably limited. So this would limit the amount it can issue," Sentchoukov said.

Dubai's financial troubles shut international debt markets to primary issuers from the region for months, but several firms, notably Saudi ones, have tapped the market this year. Despite the uptick in issuance, pricing remains a worry.

In April, Dubai utility DEWA raised $1 billion in an issue that offered a coupon of 8.5 percent.

The Dubai finance ministry's 2014 Islamic bond was off 0.35 points to a mid-point of 94.6, with a yield of 7.86 percent.

The emirate is grappling with the debt restructuring of its core state-linked firms in the wake of a multi-year boom that abruptly ended in the collapse of its property market.

Last year, Dubai stunned global markets with news it would delay debt payments linked to its flagship conglomerate Dubai World. The firm said in May it had reached a deal in principle to restructure $23.5 billion with core bank creditors. - Reuters

UMW 2Q net profit surges 166.6% to RM211m

KUALA LUMPUR: UMW HOLDINGS BHD [] posted a strong set of earnings, reporting RM211.69 million in net profit for the second quarter ended June 30, 2010 (2Q10).

It said on Friday, Aug 20 that earnings jumped 166.6% from RM79.43 million a year ago due to higher sales of Toyota and Perodua vehicles and favourable model mix.

UMW said improved performance from the equipment and manufacturing & engineering segments coupled with favourable foreign exchange rates, accounted for the significant improvement in profit for the current quarter.

"Our overseas associate, WSP Holdings Ltd, has reported an overall improvement in both domestic and international sales and a lower loss for the second quarter of 2010," it said.

The 2Q revenue rose 27.2% to RM3.28 billion from RM2.58 billion a year ago while earnings per share were 18.74 sen versus 7.24 sen.

UMW declared an interim single-tier dividend of 20% or 10 sen per share for the year ending Dec 31, 2010 ' totaling net dividend payable of about RM114.5 million ' to be paid on Oct 7. The group's net asset per share stood at RM3.62 as at June 30.

For the six months ended June 30, 2010, net profit surged 137% to RM344.55 million from RM145.38 million while revenue grew 28.1% to RM6.31 billion from RM4.93 billion.

The group said strong economic recovery in the first half of 2010 resulted in higher demand for its Toyota vehicles, industrial and heavy equipment as well as automotive parts.''However, it noted that the slow and weak rebound in the oil & gas industry has affected demand for some of its pipes and services.

UMW's share price on Aug 20 rose two sen to close at RM6.43 with 183,400 shares traded.

Affin Holdings sees 24.4% increase in 2Q earnings

KUALA LUMPUR: AFFIN HOLDINGS BHD [] posted net profit of RM111.70 million in the second quarter ended June 30, 2010, up 24.4% from RM89.81 million a year ago, underpinned by an increase in net interest income, other operating income and Islamic banking income totalling RM54.1 million.

It said on Friday, Aug 20,that lower allowance for impairment on loans, advances and financing of RM27.1 million and lower amount transferred to profit equalisation reserve of RM3.4 million also contributed to the increase in profit.

Revenue increased by 9% to RM534.60 million from RM490.60 million previously while earnings per share were 7.48 sen versus 6.01 sen.

No dividend was proposed for the current financial quarter. Its net asset per share stood at RM3.38 as at June 30.

For the six months ended June 30, 2010 (1H10), net profit increased by 36.2% to RM247.03 million from RM181.40 million in the previous corresponding period while revenue rose 6.5% to RM1.05 billion from RM989.58 million.

The group chalked up profit before tax of RM331.63 million in 1H10, up 36.4% from RM243.17 million in the same half last year. The record 1H10 profit before tax was driven by a combination of strong operating income growth (+9.0% YoY) coupled with prudent cost management (+3.8% YoY) as well as lower impairment allowance (-46.1% YoY).

"The improved profitability of the group is evident from the continued decline in cost-to-income ratio, which slid to 46.8% in 1H10 from 49.1% in 1H09," it pointed out.

For 1HFY10, Affin said its gross loan outstanding increased by a strong 9.6%, or an annualized growth rate of 19.2%. Meanwhile, customer deposits also expanded, by an almost equally strong pace of 8.4% in 1HFY10, or an annualized growth rate of 16.8%.

On its prospect, AFFIN chairman Tan Sri Mohd Zabidi Zainuddin said: 'We are pleased by our strong results thus far having delivered exceptional double digit growth for the first six months of the financial year. This is testament to the fact that we have much upside potential given the nimble nature of the group.'

He said the growth of its banking sector was good and had been on an uptrend these past few years, adding that there were plans to expand further and strengthen the bank's position locally and abroad, in light of its proposed acquisition of PT Bank Ina Perdana in Indonesia.

'The growth of the global economy for the second half of the year is likely to moderate due to the uncertainties of the global market conditions and we remain cautiously optimistic of our business moving forward' noted Zabidi.

Affin's share price shed one sen to close at RM3.05 with 415,600 shares traded on Friday, Aug 20.

Suncity post RM71.66 m 2Q net profit, declares 31 sen interim dividend

KUALA LUMPUR: SUNWAY CITY BHD [] (Suncity) posted a net profit of RM71.66 million in its second quarter ended June 30, 2010 (2Q2010) on the back of a revenue of RM262.29 million.

In a filing to Bursa Malaysia on Friday, August 20, Suncity said the results were largely driven by the group's core businesses being the property development and property investment segments.

"The property development project with significant contribution during the quarter was from Sunway SPK while Sunway Pyramid Shopping Mall remains the largest contributor for the property investment segment." said the group.

Suncity posted earnings per share of 15.25 sen for 2Q2010. Its net asset per share stood at RM5.21 as at June 30.

There was no comparison made with the previous corresponding quarter due to the change of financial year end from June 30 to December 31 during the previous 18-month financial period.

Its board of directors declared an interim dividend of 31 sen per ordinary share of RM1 each less tax for the financial year ending Dec 31, 2010 (FY10), which would be paid on a date to be determined.

For the six months ended June 30, 2010, Suncity registered a net profit of RM294.95 million riding on a revenue of RM545.57 million.

On its prospects, Suncity said that on the back of unbilled sales of RM743 million, it expects the property development segment to continue to contribute positively to the group's results this financial year.

"While enjoying lower interest expense resulting from the reduced borrowings as mentioned above, the group also benefits from the share of profits from the Sunway REIT while receiving manager's fees for the management of Sunway REIT," it said, adding that the board viewed the group's performance for FY10 would improve.

Suncity's share price on August 20 added 13 sen to close at RM3.73 with 129,600 shares traded.

JCY posts flat earnings, weak consumer spending weighs

KUALA LUMPUR: JCY International Bhd posted flat earnings in the third quarter ended June 30, 2010 as the hard disk drive (HDD) shipments slowed down following a weak recovery in consumer spending in the US and Europe and the debt crisis in Europe.

It announced on Friday,Aug 20 that net profit was RM55.60 million versus RM55.38 million a year ago. Revenue was marginally higher at RM480.79 million versus RM480.67 million. Earnings per share were 2.72 sen compared with 2.71 sen.

JCY said the turnover of RM480.8 million and pretax profit of RM55.9 million for the third quarter was a decline of 12.5% and 15.2% respectively when compared with the second quarter ended March 31, 2010.

"The strengthening of the ringgit against the US dollar and the reduction in average selling price due to slowdown of the consumers' demand continue to contribute to the decrease in our profit," it said.

JCY said its customers also demanded higher volume of the lower end products which commanded a lower selling prices and contribution for its profits for the quarter ended June 30.

For the nine-month period, net profit rose 48.7% to RM198.94 million compared with RM133.78 million in the previous corresponding period. Revenue increased 24% to RM1.56 billion from RM1.25 billion.

"Our group continues to focus in our core business of supplying quality mechanical components for the HDD industry. The
group has also started supplying our HDD components to our new Korean and Japanese customers for this coming quarter," it said.

The company said barring any unforeseen circumstances, it expected the group's performance to be favourable for the financial year ending Sept 30.

Share prices close mixed, FBM KLCI at 31-month high

KUALA LUMPUR: Share prices on Bursa Malaysia closed mixed on Friday, Aug 20 as investors took profit on strong gains in a recent rally, dealers said.

At 5pm, the FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] (FBM KLCI)touched a fresh high in 31 months at 1,395.02, a 0.17% or 2.46 points increase from on Thursday.

It had opened 2.35 points lower at 1,390.21 this morning.'' ''

A dealer said bearish trends in regional bourses following the weaker close on Wall Street overnight prompted investors to reduce their positions.

However, continuous buying support in finance stocks and heavyweight counters like Maybank, CIMB, Tenaga Nasional and Plus Expressways kept the benchmark index above the 1,390-point level.

Maybank gained six sen to RM8.13, CIMB and Plus Expressways edged up eight sen each to RM7.70 and RM4.06 respectively while Tenaga Nasional increased seven sen to RM8.79.

At close, the Finance Index advanced 52.46 points to 12,648.12, the PLANTATION [] Index increased 13.09 points to 6,536.44 and the INDUSTRIAL INDEX [] was 0.77 of a point higher at 2,685.78.

The FBM Emas Index gained nine points to 9,407.01 while the FBM70 [] Index eased 1.82 points to 9,317.59 and the FBM ACE Index dropped 12.79 points to 3,837.11.

Losers led gainers 394 to 316 while 327 counters were unchanged, 335 untraded and 35 others suspended. Total volume fell to 834.47 million shares worth RM1.34 billion from Thursday's 983.38 million shares worth RM1.7 billion. Volume leaders, AirAsia and Tatt Giap Group declined two sen each to RM1.71 and 65.5 sen respectively while Carotech was down 1.5 sen to eight sen.

Conglomerate Sime Darby rose one sen to RM7.81, telco Maxis gained three sen to RM5.43 while shipping giant MISC was unchanged at RM8.86.

The Main Market volume declined to 720.21 million shares worth RM1.32 billion from 839.72 million shares worth RM1.67 billion on Thursday.

Warrants dropped to 46.22 million units valued at RM7.01 million versus Thursday's 64.04 million units valued at RM11.55 million.

Turnover on the ACE Market also fell to 65.79 million units worth RM13.02 million from 75.17 million shares worth RM12.8 million previously.

Consumer products accounted for 52.66 million shares traded on the Main Market, industrial products 173.39 million, CONSTRUCTION [] 44.19 million, trade and services 252.09 million, TECHNOLOGY [] 22.78 million, infrastructure 18.97 million, finance 63.1 million, hotels 1.52 million, PROPERTIES [] 68.68 million, plantations 20.1 million, mining 54,700, REITs 2.64 million, and closed/fund 79,800. ' Bernama

#Update* Maybank posts 4Q net profit of RM912.47m

KUALA LUMPUR: MALAYAN BANKING BHD [] staged a turnaround in the fourth quarter ended June 30, 2010 with net profit of RM912.47 million versus net loss of RM1.118 billion a year ago when it was affected by the RM1.97 billion impairment charge on its investment in Bank Internasional Indonesia (BII) and MCB Bank.

The banking group said on Friday, Aug 20 revenue was slightly lower at RM4.73 billion versus RM4.85 billion. Earnings per share were 12.89 sen versus loss per share of 17.62 sen. Its pre-tax profit was RM1.36 billion versus a pre-tax loss of RM821.67 million.

Maybank proposed a final dividend of 44 sen per share. Out of the amount, four sen per share will be paid in cash while the balance of 40 sen per share will be in the electable portion whereby a shareholder may either elect whether to receive it entirely in cash or reinvest in Maybank shares.

For the financial year ended June 30, net profit surged 450% to RM3.818 billion from RM691.87 billion. Pre-tax profit was a record of RM5.37 billion compared to'' pre-tax profit of RM1.67 billion in 2009. Revenue was 5.5% higher at RM18.56 billion compared with RM17.58 billion.

"If compared to the normalised profit last year, pre-tax profit this year totalled RM5.01 billion, a 31.7% increase from RM3.81 billion previously," it said. The results were achieved on the back of higher revenues across all key business segments.

Maybank president and CEO Datuk Seri Abdul Wahid Omar said: "The good set of results is testimony to'' the significant progress we have made in our transformation group-wide. It is indeed a year of achievement as we cross the 'regional milestone' of US$100 billion in total assets and USD1 billion in profit after tax."

He said that for Maybank, whilst it is more than pleased and have overcome the many challenges after the regional acquisitions, "our journey of change is far from over".

Wahid said for this year, the group had reframed its strategic aspirations to humanise financial services from the heart of Asean and reorganised its operations structure to enhance service and product delivery, pioneering new ways of providing financial solutions across the key markets. ''

"The year ahead will be a challenging one and we are confident that the right formula is now in place for us to consistently deliver as Malaysia's regional financial services leader," it said.

Syed Hisham named as new UMW president & group CEO

KUALA LUMPUR: UMW HOLDINGS BHD [] announced the appointment of Datuk Syed Hisham Syed Wazir as its new president & group CEO with effect from Oct 1, 2010, replacing Datuk Abdul Halim Harun, who would be retiring on Sept 30. In a filing to Bursa Malaysia on Friday, Aug 20, the group said Syed Hisham graduated from Plymouth University, England with a BSc in Mechanical Engineering in 1979 and earned his Master of Business Administration from the Ohio State University of USA in 1996.

UMW said Syed Hisham is a Fellow Member of the Institute of Motor Industry, UK, and a member of Beta Gamma Sigma of Ohio University as well as a member of the Ohio University Alumni Society in Malaysia. The company that he had a distinguished career in senior management positions spanning over 27 years.

UMW also said Abdul Halim agreed to remain as advisor to the new president & group CEO until Nov 15, 2010, to ensure a proper familiarisation and handover process.

The group said he served as non-executive director of UMW from 1990 to 2001 and subsequently as president & group CEO. It noted that Abdul Halim had intimated his desire to retire after the expiry of his contract in April 2009 but, at the request of the board, stayed on for a 1 + 1-year term.

"In April 2010, he agreed to continue his service until a suitable candidate is identified," said UMW.

HSBC Bank China maker to provide ringgit liquidity

KUALA LUMPUR: HSBC Bank (China) Co. Ltd has been appointed a market maker to provide ringgit liquidity as mainland China opened its domestic foreign exchange market to trades of the ringgit against the renminbi.

The bank said it was only one of three banks and the only foreign bank market marker for China's sixth currency pair launched on Friday, Aug 20.

HSBC China started trading the new currency pair on China's interbank forex market on Friday. It will also provide ringgit exchange service through its branch network spanning 24 major cities in mainland China, the largest network of any foreign bank.

HSBC China managing director, head of global markets David Liao said: "This is another step to facilitate bilateral trading and investment activities between Mainland China and other Asian markets".

The bank said HSBC China was also one of the most active forex market markers for China's first five currency pairs - renminbi versus US dollar, yen, HK dollar, euro and pound sterling in the China foreign exchange trading system (CFETS).

Tomypak slides on 1H earnings shortfall

KUALA LUMPUR: Tomypak shares were the top loser in later afternoon trade on Friday, Aug 20 after its annualised first half'' (ended June 30, 2010)'' core net profit missed CIMB Research's forecast by 25%.

At 3.41pm, it was down 28 sen to RM3.36 with 757,600 shares done.

CIMB Research said it was retaining its Outperform call on Tomypak despite the earnings shortfall.

It said the company's 1H 2010 core net profit missed its forecast by 25% as the second quarter earnings before interest, taxation, depreciation and amortisation (EBITDA) margin squeeze from higher raw material prices, was worse than expected.

Also below expectations was the interim DPS of 1.4 sen, which took year-to-date dividend per share to 4.9 sen.

"We are cutting our FY10 earnings per share (EPS) and dividend per share (DPS) by 9.6% in view of the poor interims. However, we are keeping our FY11-12 EPS forecasts given the continued strong demand and expected margin recovery from stable raw material costs in 3Q," it said.

CIMB Research said Tomypak remained an Outperform with an unchanged target price of RM4.96, based on a 30% discount to its 12 times target price-to-earnings for Daibochi.

Factors that could catalyse the stock include margin recovery and stronger-than-expected revenue growth in the next few quarters as well as the approved share split and bonus issue.

Give private sector 18-month grace period to get ready for GST, says Guinness Anchor MD

KUALA LUMPUR: The private should be given at least an 18-month grace period from the passing of Goods and Services Tax (GST) Bill to get ready, says Guinness Anchor Bhd managing director Charles Ireland.

The Bill was tabled in Parliament last year. The second reading, however, was postponed to get feedback from the public and stakeholders.

Ireland said the grace period was important to accommodate the change in the system and process and move seamlessly in the implementation of the GST.

"At GAB, although we are 50 per cent ready we will not pursue this further until a definite date is set.

"From a business point of view, I would prefer to allocate resources to other areas of the busines unless the government can confirm the implementation date," he told Bernama in an interview recently.

He said training for the staff was also an issue that should be looked into.

"There is no point training the staff to be GST-ready as they may not be around when the time comes due to various reasons," he said.

On whether the GST would bring fiscal and economic benefits, he said the tax would be an effective and efficient tool to help collection in a progressive manner.

"The structure that requires those with higher spending power to pay more taxes and those not able to, to pay less, will result in a healthy government finance.

"This is essential to facilitate the modernisation of the country as we progress towards 2020," he said.

Australia is one of the reference countries that Malaysia is studying in the development and design of its GST.

In Australia, excise duty on beer and spirits is based on volume, which means the alcohol content of the drink.

Ireland said most academics considered this taxation on alcohol beverages to be world's best practice.

"The Australian government reduced the excise rate on alcohol to ensure that the overall tax burden after the introduction of GST will be stable (when compared to the overall tax burden prior to GST).

"Therefore, price stability is important to maintain economic growth and the stability of the malt liquor market," he said, adding that he hoped the government would maintain the current excise tax structure and rates.

He said the government could look at global best practices in excise tax structure to assist in revenue tax collection to maintain the attractiveness of Malaysia as an international tourist and business destination.

Going forward, he said, to tackle smuggling and counterfeiting of excisable goods, it was vital for the government to introduce border enforcement for shipments coming in and conduct regular retail enforcement.

In 2009, the industry paid RM1.46 billion in taxes. ' Bernama

Hock Seng Lee secures RM47.1m Sarawak road project

KUALA LUMPUR: HOCK SENG LEE BHD [] (HSL) has secured RM47.1 million road project in Tanjung Manis, Mukah Division, Sarawak from the Sarawak Timber Industry Development Corp on Aug 18, 2010.

HSL said on Friday, Aug 20 the project involved earthworks, road, drainage, bridges and associated works for the proposed road starting from Serdeng Junction passing through Bandar Baru Tanjung Manis, Halal Park and Kampung Rajang.

"The route will traverse low-lying coastal terrain thus necessitating extensive reclamation and geotechnical engineering works," said the Sarawak-based infrastructure and marine engineering specialist.

The group said the contract period for the project would be 24 months commencing August 26, 2010 and was expected to contribute positively to the earnings and net assets of the HSL group for the financial years ending 2010 to 2012.

HSL said the road project in Tanjung Manis increased its total value of projects in hand in that town alone to over RM300 million. The latest contract is part of the multimillion ringgit Halal Hub development at Tanjung Manis.

'Winning this bid in open tender shows that we remain highly competitive when it comes to marine engineering works and that we have a strong presence in the developing region of Tanjung Manis in Central Sarawak which is a pivotal part of SCORE (the Sarawak Corridor of Renewable Energy),' said HSL group managing director Datuk Paul Yu Chee Hoe.

He said HSL's other ongoing works in Tanjung Manis include reclamation, earthworks, drainage and infrastructure for a ship building industrial zone in Buan land district as well as related industrial parks and road upgrading works.

'We expect the new contract to contribute positively to group bottom line and further advance our sound progress this year and next,' Yu added.

He said the group has been active in infrastructure and CONSTRUCTION [] projects in Tanjung Manis since 1995 having completed works for a sea port, deep sea fishing port, airport, industrial park and township.

He also said'' projects secured so far in 2010 were worth RM262 million and total value of projects in hand for HSL now stands at RM1.85 billion of which RM1.14 billion was outstanding.

'We enjoy a niche market position in marine engineering and related infrastructure works and therefore the surge in construction activity in Sarawak continues to fuel our dynamic growth,' added Yu.

MRT for KL vital to boost efficiency, attractiveness to investors, says expert

PETALING JAYA: Malaysia should consider putting in place a mass-rapid transit (MRT) system soon in view of the increasing population, rising CONSTRUCTION [] costs and to enhance its competitiveness in attracting foreign investors, said an official of Hong Kong's MTR Corp Ltd.

Its projects director Chew Tai Chong said an integrated transportation system as a backbone is needed to boost time and cost efficiency.

'Among one of the things foreign investors consider is a country's core infrastructure. If their staff are taking too long to commute, it is counter-productive to their business,' he said recently. 'This is part of the reason why Singapore continues to improve its MRT system.'

He also said that proposals served by key players locally could serve as a catalyst to move the project.

'A masterplan would be a step forward for Kuala Lumpur, but those involved need to remember that these plans should be reviewed and improved on a regular basis,' said Chew.

'At present, with three separate railway lines and only 18% public transport utilisation in KL, there are losses arising in terms of time and efficiency (for workers in the city centre) because of traffic congestion.'

He added there was little integration and interconnectivity between the lines and bus systems and that tolerable 'walking time' for commuters to move between lines should be addressed.

On soil conditions in the city which could make drilling at certain depths challenging, Chew said there were always risks but new TECHNOLOGY [] would enable project engineers had methods to mitigate the risks.

'There is a window of opportunity in Malaysia at present (for a MRT system), given a reduction in government subsidies (for petrol), talks of environmental sustainability, and the increasing number of cars on the road,' he said. 'If the project is delayed for too long, it could eventually be beyond the means of construction players to build.'

The proposal for a MRT was mooted in June this year by a joint-venture comprising of MMC Corp Bhd and GAMUDA BHD [].

The project is estimated to cost up to RM36 billion and stands to receive up to RM3.6 billion from an infrastructure allocation under the 10th Malaysia Plan (10MP).

Ringgit, won pause for now but strength intact

SINGAPORE: The South Korean won and Malaysian ringgit fell on Friday, Aug 20 as investors shunned riskier assets after weaker-than-expected U.S. data, but further currency gains are expected in Asia in line with its solid economic recovery.

The dollar hovered near a 15-year trough against the yen as Japanese Finance Minister Yoshihiko Noda said Tokyo is communicating with other Group of Seven countries on currencies amid growing concern the strong yen will further dent Japan's export-reliant economy.

Investors don't expect the Japanese government to intervene unless the yen strengthens much further beyond the 15-year high.

Data on Thursday showed new U.S. jobless claims hit a nine-month high last week, and mid-Atlantic manufacturing shrank in August for the first time in more than a year, adding to worries that the U.S. economy was stalling.

WON

The won shed 0.8 percent to 1,182 per dollar as worries about a slowing U.S. economy, South Korea's No.3 export market, caused investors to shun riskier assets including Seoul shares.

"The mood for the won quickly changed after the weak U.S. data. Exporters are keeping the won in a tight range, but their demand is not that strong," said a local bank dealer.

Barclays Capital raised its outlook on the won, citing strong economic growth and saying foreign exchange authorities are unlikely to aggressively check its gains as inflationary pressures grow.

Barclays raised its six-month target of the won to 1,075 from 1,100, and its 12-month target to 1,050 from 1,075. It maintains a one-month target of 1,150 and a three-month at 1,125.

"Given that monetary tightening will likely come in 'baby steps', we believe rate hikes could be supplemented by more rapid appreciation of the won to ward off imported inflation pressure, one-side appreciation expectations in the exchange rate," it said in a research note.

Authorities have repeatedly checked won gains so far this year.

Sean Callow, strategist at Westpac, expects the won to rise to 1,150 by the end of 2010 and to 1,120 over next 12 months.

"I don't think inflation is a big threat, with growth likely to cool slightly and oil prices weighed by global slowdown. But obviously rates need to rise further," he said.

"In the near term, global risk appetite will probably be sufficiently jittery to prevent steep dollar/won decline -- BOK might not need to do that much."

RINGGIT

The Malaysian ringgit fell tenth of a percent to 3.1370 per dollar, off a 13-year peak of 3.1273 hit the previous day after the central bank's currency liberalisation measures.

Investors expect further ringgit gains due to its increased yield advantage as domestic interest rates climb.


"I think we can expect slow gains in ringgit, hitting 3.12 and 3.10 in one to two months. In between it could test back to 3.17," said a trader in Kuala Lumpur.


The currency last hit 3.10 in mid-October 1997.


The ringgit, the top performing currency in Asia, has gained just over 9 percent against the dollar so far this year,
and 1 percent this week alone.

BAHT

The Thai baht was near its 28-month high at 31.40 per dollar, with Bank of Thailand struggling to check its strength.

"The baht's rally is being sustained by capital inflows and the ringgit's liberalisation since yesterday. It should range 31.45-55 today," said Bangkok-based trader.

"The broad Asian stock consolidation this morning may not necessarily halt the bullish Thai stock market which may see its index testing 900 next week if not today," the trader added.

The baht has gained 1.2 percent in the past week and 5.7 percent this year, the third-best Asian performer after the ringgit and yen.

YUAN
Dollar/yuan NDFs were soft after a slightly firmer yuan fixing , bucking the dollar's broad strength.

"The whole curve moved leftwards slightly on cautious selling amid a weak stock market," said an NDF trader at an Asian bank in Hong Kong.One-year NDFs stood at 6.6810 compared to Thursday's 6.6790 and last Friday's 6.6900, pricing in 12-month yuan appreciation of 1.61 percent.


Spot yuan was at 6.7888 per dollar, up slightly from Thursday's 6.7902. - Reuters

SC approves Public Investment Bank as independent adviser for Southern Steel

KUALA LUMPUR: The Securities Commission has approved the appointment of Public Investment Bank Berhad as the independent adviser for'' SOUTHERN STEEL BHD []'s independent directors regarding the takeover by Signaland Sdn Bhd.

Southern Steel said the SC had given its approval in a letter dated Friday, Aug 20 for Public Investment Bank to'' advise the independent and/or non-interested directors and shareholders.

On Aug 10, Southern Steel announced that the SC had rejected the appointment of HwangDBS Investment Bank Bhd as independent adviser.

Singaland, a special purpose vehicle linked to Tan Sri Quek Leng Chan, had offered RM2.05 a share in its take-over offer of the steel maker.

On July 16, Signaland served notice to acquire all the shares in does not already own in Southern Steel following its acquisition of a 27% stake in the steel manufacturer from NatSteel Holdings Pte Ltd. The acquisition from NatSteel increased Signaland's interest in Southern Steel to 70.25%.

#Update* France's Technip to take up to 9.9% of Malaysia Marine and Heavy Engineering

KUALA LUMPUR: France's Technip Soci''t'' Anonyme will take up a strategic stake in Malaysia Marine and Heavy Engineering Holdings Bhd (MHB) and subscribe for between 8.00% and 9.90% of the enlarged issued and paid-up share capital.

MISC BHD [] said on Friday, Aug 20 that it had signed binding term sheets with Technip and the latter would take up between 128 million shares and up to a maximum of 158.40 million shares upon the proposed listing.

Except for the strategic investor allocation, all other terms of the proposed IPO scheme as set out in the
announcement dated July 23, remains unchanged.

MISC said the sale price would be at a 2% premium to the institutional price of the shares.

"Technip shall not without the prior written agreement of MISC dispose of the shares purchased under the share purchase agreement, for a period of three years from the date of the close of the proposed IPO," it said.

MISC said the agreed principles and plans for the strategic collaboration amongst MISC, Technip and MHB for purposes of capability-building and TECHNOLOGY [] development.

Technip's issued and paid-up share capital is '83,425,950.03 comprising 109.41 million ordinary shares
with a nominal value of '0.7625 each.

Technip is a world leader in project management, engineering and CONSTRUCTION [] for the oil and gas industry, with a comprehensive portfolio of innovative solutions and technologies, and consolidated revenues of '6.5 billion in 2009.

Ogawa returns to black in FY10

KUALA LUMPUR: OGAWA WORLD BHD [] returned to the black in the financial year ended June 30, 2010, with net profit of RM8.29 million compared with net loss of RM12.43 million in FY09, boosted by a recovery in the fourth quarter.

The company said on Friday, Aug 20 that revenue for FY10 increased by 21.3% to RM155.95 million from RM128.55 million in FY09.

"The improved performance (in earnings) is due to higher sales resulting in higher gross margin and lower provisions for doubtful debts," it said. It recommended a final dividend of three sen per share.

For the fourth quarter, net profit rose 88.2% to RM6.12 million from RM3.25 million a year ago. Revenue rose 13.6% to RM47.70 million from RM42 million.

When compared with the third quarter ended March 31, 2010, it said revenue increased 28.7% to RM47.70 million from RM37.06 million. The group registered a 175.5% increase in profit before taxation of RM5.18 million versus RM1.88 million in the third quarter as a result of higher sales and higher gross profit.

"Due to the continuing uncertainties in the global economies, retail market conditions remain difficult. The group will be cautious in managing these challenges as it focuses on executing its medium to long term growth strategies," it said.

KLCI marginally higher, Maybank lifts

KUALA LUMPUR: All key Asian markets were in the red at the midday break on Friday, Aug 20 as investors took money off the table following the weaker close on Wall Street. Investors worried about a deepening slowdown after a batch of weaker U.S. economic data but at Bursa Malaysia, the FBM KLCI managed to eke out marginal gains.

At 12.30pm, the FBM KLCI was up just 0.49 of a point to 1,393.05, aided by gains in Maybank, which is expected to deliver a strong set of earnings after market close.

Turnover was 411.38 million shares valued at RM611.08 million. The broader market was weaker with decliners outpacing advancers 359 to 225 while 298 stocks were unchanged.

''

Hong Kong -0.7% 20,924.13 Shanghai Composite Index''
-1.28%''
2,653.52 Nikkei 225
-1.78% 9,195.60 Kospi''
- 0.68% 1,767.47 Singapore Straits Times Index -0.60% 2,929.01

At Bursa Malaysia, Maybank was up eight sen to RM8.15. F&N rose 28 sen to RM14.50, Paramount 11 sen to RM4.37, Amway and IJM Land nine sen each to RM8 and RM2.46 while Batu Kawan gained eight sen to RM11.90.

Among the penny stocks, Vitrox jumped 12 sen to RM1 and SEB advanced 10.5 sen to 79.5 sen with 9.29 million shares.

The major decliners were Petronas Dagangan, down 29 sen to RM.28, Genting 17 sen to RM8.60, Petronas Gas 14 sen lower at RM10.24.'' Telekom fell two sen to RM3.55 in active trade.

Dollar near 15-year low vs yen as risk shunned

TOKYO: The dollar steadied against the yen on Friday, Aug 20, but stayed within reach of a 15-year trough hit last week, after weaker US data prompted investors to sell higher-yielding currencies and stocks on risk aversion.

Data showed on Thursday that new US jobless claims marked a nine-month high last week, and Mid-Atlantic manufacturing shrank in August for the first time in more than a year, deepening worries about the US economic recovery.

Assets with less risk such as government bonds, the yen and the Swiss franc benefited from concerns about the world's biggest economy.

Against the Japanese currency, the greenback fell on Thursday towards a 15-year low of ''84.72 (RM3.12), while two-year US Treasury yields hit an all-time low.

The dollar/yen rate has a high correlation with US and Japanese government bond yield spreads, which are now narrowing.

But the dollar has managed to rise above the psychologically key 85.00 yen level thanks to caution among traders about possible intervention by Japanese authorities.

"Safe-haven demand dominates financial markets once again," said Tsutomu Soma, senior manager of the foreign securities department at Okasan Securities.

"Everyone thinks the dollar will extend losses against the yen. But fears of intervention and caution about additional monetary easing steps in Japan are making players hesitate to aggressively sell the dollar for now."

The dollar fell as low as ''85.19 in early Asian trade before climbing back to ''85.47, up 0.1 percent from late US trade.

Against the Swiss franc, the dollar edged up 0.1% to CHF1.0323 (RM3.14), having dropped to a seven-month low of CHF1.0257 on Thursday.

The dollar index, gauge of its performance against a basket of six major currencies, inched up 0.1% to 82.532.

The euro was down 0.1% at US$1.2807 (RM4.02) after falling as low as US$1.2772 on trading platform EBS on Thursday. Support comes in at the 100-day moving average around US$1.2770.

Against the yen, the single European currency hit a seven-week low of ''109.02 on EBS, but found support at the psychologically important ''109.00 level. A fall below ''109.00 would open the way for a slide towards an 8'' year low of ''107.30 reached in late June, traders said. The euro was flat at ''109.48.

There is market talk of large stop loss orders below the ''108.80 area for the pair, while bids are seen sitting mostly around ''108.95/96, traders said.

The Bank of Japan (BoJ) may consider easing monetary policy next month and is lining up its options, but is in no mood to act in the near term.

But there has been persistent speculation that the yen's strength may nudge it to act before its September rate review, or even before a meeting between Prime Minister Naoto Kan and BoJ governor Masaaki Shirakawa expected next week.

Traders said investors speculate the BoJ will tweak its new fund supply operation introduced last December or buy more Japanese government bonds.

"The yen is highly unlikely to reverse its upward trend if the BoJ only announces an extension of its new operation," said a trader at a big Japanese bank. "Many people doubt the step's effectiveness in helping the economy."

Even if any new policy measures boost major currencies against the yen, Japanese exporters who have been unable to sell enough dollars and euros due to the yen's recent strength will use any bounce in those currencies as an opportunity to repatriate their overseas profits, traders say.

The Australian dollar was softer a day before Australia's general election on Saturday as concerns about a slowdown in the United States dented appetite for higher-yielding currencies and other types of assets with more risks. The Aussie dipped 0.1% to US$0.8915. ' Reuters

SDE Land redeems final tranche of RM401m debt notes

KUALA LUMPUR: RAM Rating Service has received confirmation that SDE Land Sdn Bhd (SDE Land) redeemed the final tranche of its RM401 million debt notes amounting to Aug 19.

RAM Ratings said on Friday, Aug 20 following the redemption, the commercial papers/medium-term notes programme has been cancelled.

"As such, RAM Ratings no longer has any rating obligation on the CP/MTN Programme and the AAA/P1 ratings no longer apply," it said.

RAM Ratings reaffirms ratings of Midas Plantations Islamic debt notes

KUALA LUMPUR: RAM Rating Services has reaffirmed the ratings of the Islamic securities issued by Midas PLANTATION [] Sdn Bhd.

The ratings agency said on Friday, Aug 20 it had reaffirmed the respective AAA, AA2 and P1(s)/AAA(s) ratings of the Class A and Class B Sukuk Ijarah and Sukuk Ijarah commercial paper/medium-term notes.

Concurrently, the rating of the Midas's Class C Sukuk Ijarah was upgraded from A2 to AA3.

"All the long-term ratings have a stable outlook, reflecting our expectation that the lessees (the operators of the transaction's assets) will be able to meet their scheduled lease payments and, in turn, the payment obligations under the Islamic Securities throughout their remaining tenures," it said.

RAM Ratings said the ratings of the RM50 million Sukuk Ijarah CP/MTN programme reflected the enhancement in the form of a Sukuk put option, granted by OCBC Bank (Malaysia) Bhd to the sukuk holders.

RAM Ratings upgraded OCBC's financial institution ratings, from AA1/P1 to AAA/P1, on Nov 5, 2009; the long-term rating has a stable outlook.

Midas was incorporated as the financing vehicle for an Islamic sale-and-leaseback transaction backed by 2 oil-palm plantations and 1 palm-oil mill.

The Lessees - RH Plantation Sdn Bhd (RH Plantation) and Timrest Sdn Bhd (Timrest) - had sold their beneficial interests in the assets to Midas which, in turn, had leased the assets back to the respective lessees. The financial obligations under the Islamic Securities are met via the semi-annual lease payments received from the lessees.

Dialog dips in late morning, analysts mixed on outlook

KUALA LUMPUR: DIALOG GROUP BHD [] dipped in late morning trade on Friday, Aug 20, in line with the weaker broader market after the weak close on Wall Street while analysts were mixed on its outlook.

At 10.51am, Dialog was down one sen to RM1.09 with about one million shares done.

AmResearch reaffirmed its BUY rating on Dialog Group with an unchanged fair value of RM1.40/share based on its sum-of-parts valuation.

"We continue to like Dialog for its solid financials where tank business to underpin strong recurring income," it said.

AmResearch said Dialog's 4QFY10 net profit came in at RM29 million, thus taking its full year earnings to RM116 million.

"This is largely in-line with street's estimates and ours. Dialog announced a final dividend of 1.8 sen/share taking this year's DPS to 3.1sen/share - at current price, a decent yield of 3%," it said.

AmResearch said it expected earnings to grow by 11% to 24% for FY11F to FY12F - to be driven full contribution of Tanjung Langsat's terminals.

"We introduce FY12F earnings at RM179 million, assuming 20%-25% growth in turnover for plant maintenance, catalyst handling, specialised products," it said.

However, CIMB Research was downbeat on Dialog which maintained its Underperform on the company and a target price of 95 sen.
"While we continue to like Dialog's defensive earnings and prudent management, it remains the priciest stock in our oil & gas universe," it said.

CIMB Research said it continued to rate it an Underperform, with the potential downside triggers being a slowdown in engineering, procurement, CONSTRUCTION [] and commissioning (EPCC) order book replenishment, and delay in the Pengerang project.

"Investors should take profit and switch to our top oil & gas pick SapuraCrest Petroleum," it said.

Asian stocks slip, safety sought after weak US data

SYDNEY: Asian stocks fell on Friday, Aug 20 and the yen threatened to hit 15-year highs in the wake of disappointing U.S. data that heightened worries about slackening growth in the world's largest economy.

Investors looking for reasons to be cautious found backing in data that showed U.S. jobless claims at a nine-month high and the first contraction in a year in a volatile U.S. regional manufacturing index.

That revived fears that the United States may be sliding back into recession, or a "double dip", and tipped investors' favour once more towards less risky havens such as gold, yen, and U.S. and Japanese government bonds.

"On the face of it, these are two very good reasons to be cautious on the recovery and no doubt double dippers will be dancing," said Adam Carr, an analyst at ICAP in Sydney, though he argued that the market gloom was overdone.

Stock investors put safety first, however.

Japan's Nikkei fell 1.2 percent as the yen gained on the dollar after the poor U.S. data, though expectations that the government or central bank may soon ease monetary policy further kept the slide in stocks in check. The MSCI stock index outside Japan shed 0.9 percent, with Australian and New Zealand stocks leading the way down.

For the week, however, the index was on track for a modest rise of 0.3 percent, but far from recouping last week's 2.9 percent drop as concerns about faltering global growth intensified.

In Sydney, the benchmark stock index lost 1 percent, dragged down by declines in heavyweight miners BHP Billiton and Rio Tinto amid talk that their planned $116-billion iron-ore joint venture was failing.

BHP was further weighed by its head-turning $39 billion hostile bid for Canada's fertiliser producer Potash Corp, which could be the world's biggest corporate takeover this year. BHP shares fell 1.4 percent as investors feared it would have to raise its bid, while Rio slid 2.6 percent.

With stocks under pressure, U.S. and Japanese government bonds benefitted.

U.S. two-year yields were down near a record low of 0.476 percent, and 10-year yields stayed near a 17-month trough of 2.557 percent.

Japanese government bonds jumped, in part on talk the Bank of Japan (BoJ) may further loosen policy to weaken the strong yen, which is threatening export growth, the lone bright spot in the country's economy.

Fears of BoJ intervention kept the yen from testing a 15-year low of 84.72 hit last week, though it fell as far as 84.89 yen in offshore trade.

"Everyone thinks the dollar will extend losses against the yen. But fears of intervention and caution about additional monetary easing steps in Japan are making players hesitate to aggressively sell the dollar for now," said Tsutomu Soma, senior manager in the foreign securities arm at Okasan Securities.

The overall cautious tone supported gold at 1-1/2-month highs and kept oil under pressure near six-week lows. - Reuters

OSK Research maintains Neutral on Telekom

KUALA LUMPUR:'' OSK Research maintains its NEUTRAL recommendation on Telekom Malaysia on lingering concerns over the erosion of its traditional voice business (45% of revenue) and its premium valuations against the KLCI/local peers.

The research house said on Friday, Aug 20 that TM will announce its 2QFY10 results on Monday, to be followed by a conference call.

'We expect EBITDA margin to come under pressure from (i) higher HSBB related opex; and (ii) increased marketing spending. TM slugged it out to defend its ADSL broadband business, drive take-up of its bundled voice packages and introduced the new HSBB (Unifi) service in 2Q10,' it said.

OSK Research said TM will recognise the full quarter opex relating to its high speed broadband service (launched late March) in 2Q10. As a result, we expect its core EBITDA to slide q-o-q/y-o-y in 2Q10.

The group posted flat EBITDA of RM731m in 1Q10 due to start-up costs for Unifi while revenue fell 7% q-o-q (+1% y-o-y) following the lumpy project sales recognition in 4Q09.

'We expect 2Q10 revenue to show a slight recovery as the strong ADSL net-add momentum extended into 2Q10, albeit partially offset by the dilution in overall voice revenue as TM offered free local calls on its new bundled voice packages,' it said.

Market takes a breather

KUALA LUMPUR: The local stock market took a breather in early trade on Friday, Aug 20, as investors locked in gains after the FBM KLCI hit 1,392.56, the highest since February 2008, on Thursday.

At 9.15am, the KLCI was down 1.9 points to 1,390.66. Turnover was 52.18 million shares valued at RM44.41 million. Losers beat advancers 131 to 66 while 108 stocks unchanged.

Hwang DBS Vickers Research said 'pulling the trigger to take profit ahead is the overnight drop on Wall Street'. Key US barometers fell between 1.4% and 1.7% at the closing bell following a rise in jobless claims and poor manufacturing data.

Among the decliners were Petronas Gas, down 22 sen to RM10.16 with only 300 shares done, Genting lost 13 sen to RM8.64 while PLUS and AMMB fell six sen each to RM3.92 and RM5.52.

Telekom lost five sen to RM3.52. OSK Research maintains its neutral recommendation on lingering concerns over the erosion of its traditional voice business (45% of revenue) and its premium valuations against the KLCI/local peers.

Kenanga Research ups PLUS target price to RM5.08

KUALA LUMPUR: Kenanga Investment Research is maintaining its Buy on PLUS EXPRESSWAYS BHD [] with a higher target price at RM5.08 from RM4.63, previously.

'No change to our forecast and 4% traffic growth assumptions for FY10. We upgraded our target price as we roll over our valuation to FY11. Our TP is based on 20% discount to our DCF valuation with WACC at 7.8%,' it said.

Kenanga Research said on Friday, Aug 20 that PLUS's 1H10 core net profit of RM623 million came in within its expectations and consensus.

The toll collection increased by 12% which in line with the traffic growth by 10%.Its newly acquired TERAS and PLUS Helicopter''contributing RM2 million while the overseas projects in India at about RM8 million to the topline.

'The core net profit grew by 11% despite of increase in interest expenses due to issuance of its Islamic securities last year. Interim dividend of 7.5 sen per share declared which is 1 sen higher than the previous year. Overall performance is well within expectation,' it said.

BHP-Rio iron ore faces regulatory defeat

SYDNEY: Global miners BHP Billiton and Rio Tinto expect their US$116 billion (RM364.24 billion) iron ore joint venture will fail to gain regulatory approval, the Sydney Morning Herald reported on Friday, Aug 20.

The question mark over the tie-up which would generate US$5 billion in cost savings annually for BHP Billiton comes as the mining giant launches a US$39 billion hostile bid for Potash Corp.

Rio Tinto and BHP Billiton officials in Australia on Friday declined to comment on a media report which quoted mining executives saying competition regulators in various jurisdictions had rejected the two miners' arguments that the venture would not have price-setting power.

"It's dead and the coffin's being lowered into the ground. It's a matter of finding a face-saving way out in the coming months," the Sydney Morning Herald newspaper quoted one senior mining executive as saying. The executive was involved in talks with regulators, it reported.

BHP shares were down 1.4% at A$37.78 (RM105.62) by 0028 GMT in Sydney, while Rio Tinto stock lost 2.1% to A$71.68. The broader market fell 1.1%.

Rio Tinto chief executive Tom Albanese is speaking at a mining industry event in Shanghai on Friday morning.

The newspaper said the regulatory mood had turned against the joint venture after the world's top three iron-ore miners ' Rio, BHP Billiton and Brazil's Vale ' imposed quarterly iron ore pricing on their reluctant Asian customers this year.

Rio Tinto and BHP Billiton want to combine their iron ore operations in western Australia, estimating they will share in US$10 billion in cost savings. They had hoped to gain regulatory approval by the end of this year.

But the venture, unveiled last December, is awaiting approval from regulators in Australia, Europe, China and elsewhere, and sceptical regulators, especially in Europe, have indicated their reservations by issuing a barrage of queries, the paper said.

BHP Billiton this week launched a US$39 billion hostile bid for Potash Corp, the biggest takeover deal this year, and some suggest the deal could take BHP's resources away from pushing the iron ore joint venture. ' Reuters

GM taps another ex-Hyundai exec to market Chevy

DETROIT: General Motors Co's (GM) US marketing chief Joel Ewanick tapped a former Hyundai Motor Co colleague on Thursday, Aug 19 to be lead marketing executive for Chevrolet, adding to the team responsible for promoting GM's brands with American consumers.

Chris Perry, 50, replaces Jim Campbell, 46, who will be vice present for GM performance vehicles and motor sports.

Joel Ewanick, who took over GM's US marketing reins in May, is widely credited with some of the marketing strategies that helped South Korean automaker Hyundai increase 2009 sales while overall US vehicle sales declined.

Perry was at Hyundai for the past decade, where he worked closely with Ewanick, and took Ewanick's place when he left that company.

"I have worked with Chris in the past and know he will use his unique ability to ... reconnect consumers to the Chevrolet brand," Ewanick said.

Chevrolet accounts for about 72% of GM's US sales.

GM hired Ewanick with a mandate to enliven what was seen as a faded image for the GM brands that were left after the company's government-sponsored 2009 bankruptcy -- Chevrolet, Buick, Cadillac and GMC. GM had reshuffled its marketing executive team three times before hiring Ewanick.

Ewanick shepherds marketing on the home turf of a company trying to shed its "Government Motors" tag and sell cars in a market severely weakened by recession.

Two weeks after joining GM, Ewanick switched Chevy's advertising account to Omnicom Group's Goody, Silverstein and Partners, from the US offices of Publicis Groupe SA.

In April, GM dropped Campbell-Ewald, which had handled the Chevy account for 91 years, dating back almost to Chevrolet's beginnings in 1911.

Campbell-Ewald created some of the most memorable advertising campaigns in US auto history for Chevrolet, including the "Baseball, hot dogs, apple pie and Chevrolet" ads of the 1970s and "See the USA in your Chevrolet" in the 1950s.

Image is vital as GM prepares for an initial public offering (IPO) expected later this year and for sales in a market where consumers are still shell-shocked by high unemployment and a depressed housing market.

The company filed initial plans for its IPO with the US Securities and Exchange Commission on Wednesday. The IPO will return some of the US$43 billion (RM135.02 billion) in taxpayer money that the US Treasury has tied up in 60.8% of GM.

Hyundai has not named a replacement for Perry, who resigned on Thursday, Hyundai spokesman Chris Hosford said. ' Reuters

#Stocks to watch:* Tech stocks, Maybank, HL Bank, Dialog

KUALA LUMPUR: The market may take a breather on Friday, Aug 20 after the run-up in recent days, pushing the FBM KLCI near the psychologically important 1,400 level.

Weighing on investors' sentiment would be the weak overnight close on Wall Street, but the bright spot would be the TECHNOLOGY [] sector following positive data from the North America-based manufacturers of semiconductor equipment and also from giants, Dell and HP.

Intel's US$7.7 billion acquisition for security software maker McAfee Inc would also spur interest in the tech industry.

The acquisition of McAfee is Intel's largest-ever acquisition to bolster the appeal of its chips as it tries to expand from PCs into the burgeoning market for Web-connected gadgets.

On Wall Street,'' the Dow Jones industrial average was down 144.33 points, or 1.39 percent, at 10,271.21. The benchmark Standard & Poor's 500 Index was down 18.53 points, or 1.69 percent, at 1,075.63. The Nasdaq Composite Index was down 36.75 points, or 1.66 percent, at 2,178.95.

Reuters reported investors fled for the safety of U.S. Treasuries and gold, sending the yield on the 30-year Treasury bond to its lowest level since April 2009 and driving gold to a seven-week high in New York.

\New U.S. claims for first-time jobless benefits scaled a nine-month high last week, while the Federal Reserve Bank of Philadelphia reported an unexpected contraction in manufacturing in the Mid-Atlantic region.

At Bursa Malaysia, the FBM KLCI closed higher on Thursday as it hit a new 31-month high, boosted by gains in finance stocks. The 30-stock index closed at 1,392.56.

Stocks to watch on Friday include MPI and Unisem and related semiconductor companies like Eng Teknologi after the positive outlook for the sector.

Other stocks which could be in focus are MALAYAN BANKING BHD [], ahead of oits earnings aftwr market close, HONG LEONG BANK BHD [], PLUS EXPRESSWAYS BHD [], YTL Corporation'' Bhd, MISC BHD [] and DIALOG GROUP BHD []

Hong Leong Bank's ''net profit for the fourth quarter ended June 30,2010 rose 51% to RM301.1 million from RM199.36 million a year ago, due mainly to domestic operations and profit from Chengdu Bank.

Revenue for the quarter rose to RM517.8 million from RM493.61 million last year, while earnings per share were 20.77 sen.

Hong Leong Bank proposed a final gross dividend of 15 sen per share.

PLUS' net profit for2Q ended June 30, 2010 rose to RM319.56 million from RM281.39 million a year ago, due mainly to higher toll collection.

PLUS declared an interim single tier dividend of 7.5 sen per share for the financial year ending Dec 31, 2010

YTL Corp net profit for 4Q ended June 30, 2010 surged to RM118.25 million from RM47.32 million on the back of a 30.4% jump in revenue to RM4.62 billion.

For the financial year ended June 30, YTL's net profit rose to RM872.56 million on the back of revenue RM16.41 billion.

The company proposed a first and final gross dividend of ten sen per share.

MISC's net profit for1Q ended June 30,2010 rose to RM427.98 million from RM233.45 million a year ago, due mainly from improved performance in the restructured liner business and increased profitability in heavy engineering business.

Revenue for the quarter, however, was lower at RM3.27 billion from RM3.89 billion a year ago.

On its prospects for the current year, MISC said it continued to see improvements in freight rates which had translated into higher profitability for its shipping segments.

Dialog's net profit for the FY ended June 30, 2010 rose more than 20% to RM116.11 million from RM91.94 million a year ago, while its revenue increased to RM1.14 billion from RM`1.1 billion last year.

The company proposed a final gross dividend of 1.8 sen per share.

Australia and New Zealand Banking Group 3Q profit meets forecast; cautions on outlook

SYDNEY: Australia and New Zealand Banking Group mirrored its bigger rivals by cautioning over slowing margin growth as funding costs rise, after posting a 37 percent jump in quarterly profit that put it on track for record annual earnings.

Australian banks have emerged from the global financial crisis stronger than their peers overseas but face a challenge to grow profits in a climate of weak loan demand and falling fees.

Earlier this month, National Australia Bank and Commonwealth Bank of Australia issued subdued forecasts.

ANZ, Australia's fourth-largest bank, is trying to differentiate itself from peers by focussing on Asia. It expects the fast-growing region to contribute a fifth of its profit by 2012 from 14 percent now.

ANZ said earlier in the week it would start inspecting the books of Korea Exchange Bank <004940.KS> with a view to buying a 57 percent stake in the South Korea's fifth-largest bank, with a market value of about $4 billion.

But that plan faces uncertainty. The Seoul Economic Daily reported mid-week that U.S. private equity firm Lone Star [LS.UL], which is selling a bulk of the stake that ANZ could buy, had decided to not go ahead with the stake sale plan because of weak demand from potential investors.

ANZ did not give any more details on Korea Exchange Bank due diligence in its statement on Friday.

"The global outlook remains 'unusually uncertain'," ANZ chief executive Michael Smith, the former head of HSBC's Asian business, said in the statement on Friday, Aug 20.

"Although Australia and to a lesser extent New Zealand are benefiting from Asia's strong growth, it's clear domestic credit growth will continue to be softer than we saw pre-crisis."

Analysts say the bank has more than A$6 billion in surplus capital and will need to usefully deploy it.

Besides Korea Exchange Bank, Smith has said he expects European and U.S. lenders to put up their Asian assets for sale as they look to free up capital.

ANZ said its tier I capital, a measure of a bank's ability to absorb losses, stood at 10.3 percent, the highest among Australia's top four banks.

PROFITS

ANZ reported its third-quarter underlying profit grew 37 percent to A$1.3 billion ($1.16 billion), meeting expectations on lower bad debts. Provisions were 38 percent lower than the first-half average, it said,

Seven analysts on average expected ANZ to report an underlying profit of A$1.3 billion.

Bank earnings globally have rebounded from lower bad-debt charges but impending regulatory changes on capital and liquidity may bite. Well-capitalised Australian banks are expected to cope with the changes better than others.

ANZ shares have been flat so far this year, although outperforming peers in a period when the benchmark index <.AXJO> has slid 8 percent. - Reuters

Intel to buy McAfee for US$7.7b, making its largest acquisition

SAN FRANCISCO/NEW YORK: Intel Corp will pay $7.7 billion for security software maker McAfee Inc, making its largest-ever acquisition to bolster the appeal of its chips as it tries to expand from PCs into the burgeoning market for Web-connected gadgets.

Analysts say the deal, the latest in a flurry of high-premium acquisitions, could give the world's largest chip maker a leg up as it competes against a growing field of rivals designing TECHNOLOGY [] to power smartphones, tablet PCs and newfangled televisions .

It underscores how security has become a concern in a world of Web-enabled devices. Swallowing McAfee would also give Intel the ability to sell high-profit security software alongside its microprocessors to its traditional PC customers.

Intel shares closed 3.5 percent down on Thursday, Aug 19, while McAfee shares surged 57.1 percent and helped boost the wider security sector. The shares of Symantec Corp, the biggest security company, rose 6.2 percent.

"When we look several years out, almost every device in the home is likely to be connected to the Internet. Intel clearly wants to participate in that market," said Chris Hickey, an analyst with Atlantic Equities. "By being able to differentiate with a security offering, they may well have an edge over the competition."

The agreement is the latest in a stream of technology deals, including Dell Inc's $1.3 billion pact to purchase storage company 3PAR Inc.

Intel's deal adds to an unusually active August for M&A. Deals worth nearly $90 billion have been announced this week alone, making it the busiest week in an August since 2006, according to Thomson Reuters data.

Intel will pay $48 per share in cash -- an eye-popping 60 percent premium to McAfee's closing price on Wednesday. Analysts and executives said the premium was in line with valuations on recent software deals.

A source close to the deal said the acquisition implied an 18-19 times forward price-earnings multiple, compared with a typical valuation in the high 20s to low 30s.

Intel dominates the market for PC microprocessors. But as consumers increasingly use handheld gadgets such as smartphones and Apple Inc's iPad to connect to the Internet, Intel's offerings are at a disadvantage against more power-efficient chips from rivals such as Qualcomm Inc and Texas Instruments Inc.

Analysts say Intel could differentiate its processors by, for instance, designing processors that speed up the security scans typically performed by McAfee software, or creating creating technology that makes gadgets less vulnerable to attacks by hackers.

Intel "decided a combination could be very powerful for bringing enhanced security to consumers," Renee James, who runs Intel's software and services group, said in an interview.

"We have lots of activities going on in growing connected devices ... from connected television to mobile devices," she said. "As we look at the businesses we're in, we see that security is the No. 1 purchase consideration. We believe that we can enhance security with hardware and come up with a better solution."

ACCELERATION

Intel would like "to provide some sort of hardware acceleration for virus scans, or spyware scans. And they want to deliver this type of capability across the board, from handsets and notebooks all the way up to severs across the cloud," said Patrick Wang, an analyst with Wedbush Securities.

For the moment, the biggest advantage in the McAfee deal may be Intel's ability to sell McAfee's software to PC customers. Intel supplies roughly 80 percent of the microprocessors used in PCs.

Experts said the deal should not encounter resistance from antitrust authorities given the different nature of their businesses, but some said Intel's sheer dominance of the microprocessor market could invite scrutiny.

"The government may look at whether there is a vertical relationship that could be exploited. Could Intel tie the hardware and software components together, or otherwise start insisting that its customers, computer manufacturers, also use McAfee?" said Michael Knight, an antitrust attorney at Jones Day and former Federal Trade Commission official.

McAfee, the No. 2 security software maker behind Symantec, reported revenue of $2 billion in 2009 and has been working with Intel on a variety of projects for the last 18 months. McAfee would become a wholly-owned subsidiary.

Intel has made several software acquisitions in the last few years, including the purchase in 2009 of Wind River, a company focused on mobile software.

Some analysts, including Trip Chowdhry of Global Equities Research, questioned the logic of combining a chipmaker with a software security firm.

"This is a very short-sighted acquisition because of two things: McAfee is of an older generation and their focus has been desktop security. That is their bread and butter," Chowdhry said. "Secondly, I think if you think about desktop security, Microsoft's essentially is a better product."

Hewlett-Packard Co and Oracle Corp are also believed to be trawling for deals.

In addition to the Dell-3PAR deal, International Business Machines Corp said last Friday it would buy software company Unica Corp for $480 million. Last month, Tyco Electronics Ltd agreed to buy network equipment maker ADC Telecommunications Inc for $1.25 billion.

Intel was advised by Goldman Sachs Group Inc and Morrison & Foerster LLP, while McAfee's advisers were Morgan Stanley and Wilson Sonsini Goodrich & Rosati.

Intel expects the transaction to close once it gains shareholder approval and regulatory clearance. Executives said they hoped to close the deal by the end of the year.

"Intel has such conviction in security that it believes that, in addition to its ongoing energy efficiency performance and Internet connectivity foundations of computing, security is now a third pillar of computing and, thus, a strategic thrust," wrote Raymond James' Hans Mosesmann. - Reuters

N. American semicon equipment industry posts July book-to-bill ratio of 1.23

KUALA LUMPUR: North America-based manufacturers of semiconductor equipment posted US$1.83 billion in orders in July 2010 (three-month average basis) and a book-to-bill ratio of 1.23.

The Semiconductor Equipment Manufacturers Industry (SEMI) said the three-month average of worldwide bookings in July 2010 was US$1.83 billion.

'The bookings figure is up 5.9% from the final June 2010 level of US$1.73 billion, and is 220.4% above the US$571.8 million in orders posted in July 2009,' it said in its report issued on Thursday, Aug 19.

A book-to-bill of 1.23 means that US$123 worth of orders was received for every US$100 of product billed for the month.

The SEMI said the three-month average of worldwide billings in July 2010 was US$1.49 billion.

The billings figure is up 1.8% from the final June 2010 level of US$1.47 billion, and is 177.6% above the July 2009 billings level of US$538.0 million.

"The July report shows continued momentum in the market for new semiconductor manufacturing equipment," said Stanley T. Myers, president and CEO of SEMI.

"While there are some questions about the semiconductor industry sustaining its strong growth trends in the second half of this year, bookings for new equipment continue to increase and are at the highest levels recorded since January 2001.'

US jobless claims at 9-month high, outlook darker

WASHINGTON: The frail U.S. economy received fresh setbacks as new U.S. jobless claims scaled a nine-month high last week and Mid-Atlantic manufacturing shrank in August for the first time in more than a year.

Other data released on Thursday, Aug 19 including a lackluster gain in a gauge of future activity last month, also implied that expansion had lost momentum after a brisk first quarter, though economists cautioned against interpreting the reports as signs of an impending double-dip recession.

"It is certainly disheartening news about the economy," said David Resler, chief economist at Nomura Securities International in New York.

"It is not persuasive evidence that we have dipped into recession again but it's certainly suggestive of a more serious deterioration than we had factored into our forecasts."

Financial markets were rattled by the data and investors sold stocks in favor of safe-haven government debt.

Initial claims for state unemployment benefits increased 12,000 to a seasonally adjusted 500,000 last week, the highest since mid-November, the Labor Department said, and the third straight week of gains -- a trend last seen in January.

Financial markets had expected claims to slip to 476,000.

Separately, the Philadelphia Federal Reserve Bank said its business activity index dropped to minus 7.7, the lowest since July 2009, as new orders and shipments fell and the employment situation deteriorated.

The index was at 5.1 in July and August's fall confounded markets that had expected a rise to 7.0. It also raised the risk of contraction in overall national manufacturing activity, which has been leading the economy's recovery from its most painful recession since the Great Depression of the 1930s.

A reading below zero indicates a shrinking in the region's manufacturing and the index was last negative in July last year when activity was recovering from the 2008-2009 downturn.

SLOWER GROWTH CONTINUES

Stocks on Wall Street tumbled and the broader Standard & Poor's 500 index suffered its lowest close in nearly a month.

U.S. government debt prices rallied, with the yield on the two-year Treasury note falling to a record low. Bond yields move inversely to prices. The U.S. dollar fell to a near 15-year low against the yen but rose against the euro.

The latest data, including a third report showing the Conference Board's index of leading economic indicators rose 0.1 percent in July after dropping 0.3 percent in June, reinforced signs of sluggish third-quarter growth.

The economy's poor health, characterized by a 9.5 percent unemployment rate, has handed President Barack Obama a tough challenge and put at risk the Democratic Party's majorities in the U.S. House of Representatives and Senate in November's congressional elections.

Obama on Thursday cited the weak data as he implored the Senate to pass a stalled bill to help small businesses, which have been hit hard by tight access to credit.

"They need help and if we want this economy to create more jobs more quickly we need to help them," Obama said.

As the soft economic data piles up, some analysts also worry the domestic slowdown that started in the second quarter risks pushing the global economy close to renewed recession.

"If the (U.S.) economy is going down, there's no way the euro zone can withstand the slowdown," said Win Thin, senior currency strategist at Brown Brothers Harriman in New York.

The claims report covered the survey week for the government's closely watched August unemployment report and analysts said it implied payroll losses could exceed July's 131,000 decline.

POOR OUTLOOK

The burdens facing the economy were further underlined by a report from the nonpartisan Congressional Budget Office, which forecast the national budget deficit would hit $1.342 trillion this year, a touch below the $1.368 trillion it forecast in March.

There were other mixed measures of economic activity from major retailers on Thursday, with Sears Holdings Corp reporting a wider-than-expected quarterly loss as consumers curbed spending.

But office products company Staples Inc reported a higher quarterly profit, meeting expectations, and said it expects modest economic recovery during the rest of the year.

Ryan Sweet, a senior economist at Moody's Economy.com in West Chester, Pennsylvania, said the latest rise in jobless claims could "pressure the Federal Reserve to put its contingency plan into motion."

The Fed -- the U.S. central bank, which has kept benchmark interest rates near zero, has said it stands ready to act should the economic picture deteriorate.

Even more disturbing in the claims report, the four-week average of new jobless claims, considered a better measure of underlying labor market trends, rose to its highest since early December.

Claims for unemployment benefits have been stuck at lofty levels for much of this year. Payrolls grew in the first five months, partly due to hiring for the decennial census, but have declined in both June and July.

"There hasn't been any real improvement in the labor market. It seems companies are in a holding pattern when it comes to hiring and that has created a stagnant job market," said Stephen Bronars, senior economist at Welch Consulting in Washington.

"It's not clear what it's going to take to turn the corner."

The economy grew at a 2.4 percent annual rate in the second quarter, much slower than the 3.7 percent pace in the first three months of the year, but recent data suggest the growth rate may be revised down. - Reuters

World stocks, oil fall as data stokes worries

NEW YORK: Fear gripped world markets on Thursday, Aug 19 pummeling stocks and driving the dollar to a near 15-year low against the yen as the latest economic data spurred new worries of a deepening slowdown in the United States that could reverberate around the world.

Investors fled for the safety of U.S. Treasuries and gold, sending the yield on the 30-year Treasury bond to its lowest level since April 2009 and driving gold to a seven-week high in New York.

New U.S. claims for first-time jobless benefits scaled a nine-month high last week, while the Federal Reserve Bank of Philadelphia reported an unexpected contraction in manufacturing in the Mid-Atlantic region.

"The U.S. macroeconomic numbers once again increased doubts regarding the strengths of the U.S. economy in the second half and raised concerns that the economy might be weakening more than previously anticipated," said Tammo Greetfeld, equity strategist at UniCredit in Munich.

"Investors ... will increasingly ask themselves how much scope the U.S. central bank actually does have to successfully counter an economic downturn, if needed."

The president of the St. Louis Federal Reserve Bank, James Bullard, said the U.S. central bank may need to enlarge its bond purchases if the economic recovery slows further.

Initial U.S. unemployment claims unexpectedly rose by 12,000 to 500,000 in the week ended Aug. 14, marking a third straight week of gains, the Labor Department reported.

And the contraction reported by the Philadelphia Fed in its business activity index confounded markets that had been expecting a rise.

"The risk of double-dip has increased," said Jim Baird, chief investment strategist at Plante Moran Financial Advisors in Kalamazoo, Michigan. "Investors are trimming their exposure to risky assets."

The Dow Jones industrial average was down 144.33 points, or 1.39 percent, at 10,271.21. The benchmark Standard & Poor's 500 Index was down 18.53 points, or 1.69 percent, at 1,075.63. The Nasdaq Composite Index was down 36.75 points, or 1.66 percent, at 2,178.95.

The selloff was broad, with five stocks falling for every one rising on the New York Stock Exchange. Sectors most sensitive to growth were hit hardest. Manufacturers 3M, United Technologies, and Boeing were the biggest drags on the Dow.

On the other side of the Atlantic, European shares hit a one-month closing low. The FTSEurofirst 300 index of top European shares fell for a second straight session and ended down 1.5 percent at 1,036.84 points, the lowest close since July 21.

Overall, the MSCI All-Country World equity index fell 1.1 percent after hitting its highest in more than a week earlier in the session.

Latin America stocks were pressured by concerns about slowing growth in the United States, which is Mexico's top trading partner and a major influence on the region.

DOLLAR WEAKENS

The dollar was down 0.1 percent at 85.33 yen, off a session low of 84.89 touched after the Philly Fed factory data, but still off a 15-year low of 84.72 yen hit on trading platform EBS last week.

The dollar also fell more than 1 percent versus the Swiss franc to trade as low as 1.0295, a level last seen Jan. 19, according to Reuters data.

The euro was down 0.29 percent at $1.2818 from a previous session close of $1.2855.

The jobless claims figure "fits in with a gloomier assessment of the U.S. economy, and the yen has gained a bit on it," said Brown Brothers Harriman's Thin. "But people are still questioning whether to sell the dollar on weak U.S. data or buy it on a general move away from risk."

Benefiting from the renewed flight to safety, U.S. Treasuries and gold prices rose.

"The Philly Fed report is concerning because it had been showing the economy was doing okay," said Ira Jersey, interest-rate strategist at Credit Suisse in New York.

"But now it is showing the new orders and employment components are in negative territory. That's bad news for the economy and good news for the Treasuries market."

Long-dated debt led the rally, with the yield on 30-year bond hitting a 16-month low of 3.622 percent and the 10-year note yield posting a 17-month low at 2.557 percent. The two-year yield touched an all-time low of 0.475 percent.

In energy and commodities prices, U.S. light sweet crude oil fell 99 cents, or 1.31 percent, to settle at $74.43 per barrel, and spot gold prices rose $2.30, or 0.19 percent, to $1,230.80. The Reuters/Jefferies CRB Index was down 1.68 points, or 0.62 percent, at 268.22.

Copper prices dropped from a two-week high on the London Metal Exchange to trade at $7,352 a tonne from $7,390 a tonne at the close on Wednesday, while oil dropped below $75 per barrel. - Reuters

Dell, HP profits rise, wave off slowdown fears

SAN FRANCISCO: Dell Inc and Hewlett-Packard Co dismissed worries about weakening tech demand, reporting broad-based strength from corporate customers and only hints of weakness from consumers.

Both faced questions on Thursday, Aug 19 about the strength of the recovery in spending on TECHNOLOGY [], after Cisco Systems Inc CEO John Chambers' warned about "unusual uncertainty" in the global economy.

Analysts said fears persisted about the strength of any recovery in consumer spending, as growth moderates in Europe and China as well as in the United States.

But executives from the two largest U.S. personal computer makers waved off such fears.

"We saw better-than-normal quarterly seasonality, as well as good balanced performance across all of our three regions," said Cathie Lesjak, HP's interim chief executive, on a conference call with the media.

Dell beat Wall Street's profit and revenue estimates, and said it expected a continued pick-up in demand for PCs from corporate customers for the next several quarters. But the company's gross profit margin lagged Wall Street expectations and its shares fell in after-hours trading.

HP -- posting its first quarterly report since the ouster of CEO Mark Hurd -- said earnings rose 6 percent as expected, helped by strength in servers and personal computers.

Storage and server revenue rose 19 percent, while PC revenue rose 17 percent. Lesjak did not point to any particular weakness in the market, other than in consumer notebooks.

"People were spooked after Cisco cited uncertainty and now people are more concerned about how the rest of the year will play out," said Morningstar analyst Michael Holt.

REFRESH CONTINUES

On the corporate side, Dell Chief Financial Officer Brian Gladden said the refresh cycle was proceeding as forecast, adding that he expects component costs to start to come down in the fiscal third and fourth quarters.

Dell said it expected demand for PCs among corporate customers to continue for the "next several" quarters. It said it expects "seasonal improvements" in the third quarter, thanks to sales to the federal government and business customers, with a resulting "pick-up in the low single digits."

"This is a pretty stretched-out cycle and we think it'll continue for several quarters," he said in an interview with Reuters. For the fiscal second quarter, "commercial growth was really the key for us, servers, networking systems, storage, services. That was up about 43 percent."

Apart from questions about the strength of the global tech recovery, HP executives are also likely to field queries on its CEO search, officially launched Wednesday and encompassing both internal and external candidates.

HP, the world's largest technology company by revenue, forced out Hurd on Aug. 6 for expense account irregularities related to a female contractor. Hurd, CEO since 2005, had been credited with reviving the company's fortunes.

HP shares have fallen about 12 percent since Hurd left. The stock closed at $40.76 on the New York Stock Exchange, and dropped to $40.50 after hours.

Shares of Round Rock, Texas-based Dell, which are down roughly 31 percent since April, fell 2.6 percent to $11.73 in extended trading. - Reuters