#Stocks to watch:* Landmarks, Tenaga, CNI, SilverBird

KUALA LUMPUR: The market may start off on a firm note on Monday, Oct 4, after Wall Street continued to'' advance, underpinned by gains in resource stocks following a pick-up in manufacturing in China.

On Wall Street, the Dow Jones industrial average rose 41.63 points, or 0.39%, to end at 10,829.68 on Friday, Oct 1. The Standard & Poor's 500 Index advanced 5.04 points, or 0.44%, to 1,146.24. The Nasdaq Composite Index edged up 2.13 points, or 0.09%, to close at 2,370.75.

The US Commerce Department said on Friday, personal income rose 0.5% in August while real consumer spending rose 0.2%. Wall Street economists had expected a 0.3% increase in income and a 0.4% gain in spending. Inflation stayed low.

With incomes rising faster than spending, the personal savings rate rose to 5.8% of disposable income from 5.7% in July.

At Bursa Malaysia, stocks to watch include LANDMARKS BHD [], TENAGA NASIONAL BHD [], CNI HOLDINGS BHD [] and SilverBird Group Bhd.

The Edge weekly reports the recent rally in Landmarks's share price has led to speculation about the company's flagship asset on Bintan island in Indonesia.

The increase in investor interest is believed to have sprung from news that the project may be revived soon, said the weekly.

In Tenaga Nasional, its president and chief executive officer, Datuk Seri Che Khalib Mohamad Noh expects the power giant to post better results for the current financial year as the ringgit's appreciation has helped better manage coal cost.

He said the stronger ringgit has helped offset some of the effects of rising coal prices which were quoted in US dollar.

"Coal prices are quite stable now. In terms of ringgit per tonne, the prices remain the same as what they were in 2009," said Che Khalib.

In CNI Holdings Bhd, Fitri Ceria Sdn Bhd ceased to be a substantial shareholder after the disposal of 3.55 million shares on Oct 1. Mohamed Azman Yahya has ceased to be a substantial shareholder via his deemed interest in Fitri Ceria.

In Silverbird Group Bhd, Lembaga Tabung Haji disposed of 584,000 shares on Sept 28 and 29, reducing its stake to 23.84% or 92.18 million shares.

In Handal Resources Bhd, OSK Capital Partners Sdn Bhd emerged as a substantial shareholder with the acquisition of six million shares or 6.66% on Sept 24 in an off-market deal.

In PAN MALAYSIA CAPITAL BHD [], EON Bank Berhad was seen disposing of 9.17 million shares on Sept 24 and 27, reducing its shareholding to 75.86 million shares.

Wall St extends rally as resource stocks climb

NEW YORK: Wall Street extended the rally on Friday, Oct 1, led by gains in resource stocks after data in China showed a pick-up in manufacturing activity.

Gains were tempered by U.S. data suggesting the rate of growth in U.S. factory activity slowed, but the upbeat trend in the market prevailed.

Friday's gains occurred on less-than-stellar volume, but two shares rose for every one that fell on the New York Stock Exchange. Energy and resource shares were helped by data out of China showing a pick-up in its manufacturing sector.

As copper hit a two-year high, gold jumped to another record at $1,322 an ounce and oil climbed above $80 a barrel to a seven-week high, shares of Freeport-McMoRan Copper & Gold Inc rose 4.4 percent to $89.13 and Occidental Petroleum Corp gained 3.2 percent to $80.77.

"The market is going to be very news dependent going in from now, especially after such a strong month. We have had some good news today, especially from China, that prompted a rally in Europe and was carried through the U.S.," said Stephen Massocca, managing director at Webush Morgan in San Francisco.

The Dow Jones industrial average rose 41.63 points, or 0.39 percent, to end at 10,829.68. The Standard & Poor's 500 Index advanced 5.04 points, or 0.44 percent, to 1,146.24. The Nasdaq Composite Index edged up 2.13 points, or 0.09 percent, to close at 2,370.75.

STOCKS DIP FOR THE WEEK

But for the week, the Dow fell 0.3 percent, the S&P 500 slipped 0.2 percent and the Nasdaq dropped 0.4 percent.

The S&P 500 also hit a key resistance level after it climbed as high as 1,150.30 before losing ground. That level is viewed as the top of a recent range after stocks surged during September.

The third quarter was the best in a year as investor concern about a double-dip recession faded on improved data and on expectations the Fed will inject more money into the economy. The S&P 500 gained 10.7 percent in the July-to-September period.

On a more cautious note, options traders also appeared to be pricing in higher volatility for the near-term. The CBOE Volatility Index or VIX, Wall Street's so-called fear gauge, fell 5.1 percent to 22.50. But both the VIX and the CBOE Nasdaq Volatility Index had closed higher for four sessions out of five.

"Concerns about upcoming economic reports and the release of third-quarter earnings appear to have traders worried," said Scott Fullman, director of derivative investment strategy at WJB Capital Group.

"New healthcare regulations go into effect and the upcoming mid-term elections increase the probability for higher volatility."

TECH TAKES A BREAK

TECHNOLOGY [] shares ranked among the laggards as investors locked in some profits the day after indexes wrapped up the best quarter in a year. Amazon.com was among the biggest drags on the Nasdaq, down 2.1 percent at $153.71.

In corporate news, shares of Hewlett-Packard fell 3.1 percent to $40.77 after the company named former SAP Chief Executive Leo Apotheker as its new CEO and president.

Bank of America-Merrill Lynch on Friday downgraded Caterpillar Inc, a maker of heavy equipment, to "neutral" from "buy," saying that after a recent run-up in the shares, it saw limited upside. The Dow component was off 0.6 percent at $78.22.

Market regulators issued a report saying a massive sale of futures contracts by Waddell & Reed exacerbated the market's plunge on May 6, in what has become known as the "flash crash." - Reuters

Huge selloff in agriculture overshadows oil, gold

NEW YORK: Fear of high corn stockpiles and uncertainties in the outlook for sugar and cotton sparked a massive sell-off in agricultural markets on Friday, Oct 1 overshadowing the rally in energy and metals.

U.S. corn futures tumbled the 30-cent trading limit in near record volume to end down 6 percent for the session and 10 percent for the week in an extended reaction to Thursday's government crop report showing hefty inventories of the grain.

Soybeans fell 4 percent on the day and wheat over 3 percent.

Raw sugar closed down half a percent, adding to the previous session's drop of almost 6 percent. Analysts said investors were worried the sweetener's near 50 percent gain during the third quarter had outpaced demand.

The liquidation marked a sharp reversal in trend for agricultural markets, which were among the biggest gainers in commodities during the just-ended quarter.

"I'm sure that the market had outstripped its fundamentals," Keith Brown, a cotton broker in Moultrie, Georgia, said after U.S. cotton futures plunged about 4 percent from 15-year highs. "(Speculators) carried us up ... now, they are feeding upon themselves like piranha trying to get out faster than the next guy."

The 19-commodity Reuters-Jefferies CRB index settled down almost half percent after rising as much earlier in the session, following a 2 percent rally in oil and copper and a new record high in gold. The CRB rose nearly 11 percent in the third quarter, its biggest gain in five quarters, with sugar being the index's star performer.

The about-face in agriculture after the strong third quarter made some grains traders wonder if they were looking at the start of a prolonged lean period for prices. But some, like those in the sugar trade, expected a quick rebound.

"With oil so strong and the dollar weakening further, it would seem sugar will hold rather than continue the collapse, and we would expect the support to hold," said Thomas Kujawa of Sucden Financial Sugar, who predicted the sweetener would hold at above 22.50 cents a lb. New York's key raw sugar contract closed at 23.36 cents per lb.

Corn posted its biggest one-day drop since Jan. 12, when the government released another bearish report on stockpiles of the grain. Chicago's key corn contract for December finished at $4.65-3/4 a bushel, falling the 30 cent that also contributed to its biggest weekly loss since mid-January.

Crude oil's benchmark front-month contract in New York rose almost 2 percent to settle above $81 a barrel, a level not seen since Aug. 10, as a sliding dollar caused investors to hedge in oil and metals.

Gold hit record highs for a sixth successive session, scaling above $1,320 per ounce.

Copper rose 2 percent to scale two-year highs in both London and New York after China's latest manufacturing data showed an important engine of global growth was humming again after sputtering in the second quarter.

Analysts said trading in the week ahead was likely to be influenced by U.S. factory orders and pending home sales data for August, due on Monday, and jobs data for September, scheduled for Friday. - Reuters

Fed officials say stimulus needed if US stays weak

NEW YORK: In the clearest calls yet by Federal Reserve officials to pump more cash into the economy, two Fed policymakers said on Friday, Oct 1 that more action would likely be needed unless the outlook improves.

William Dudley, president of the Federal Reserve Bank of New York, described current conditions of high unemployment and low inflation as "unacceptable" while Chicago Federal Reserve Bank President Charles Evans said more easing was "desirable."

Evans, speaking in Rome, framed the debate over further easing by the U.S. central bank as one of "how much" and "how," rather than whether the Fed should take steps in the first place.

But in a reflection of the fundamental differences that still divide policymakers, Dallas Fed Bank chief Richard Fisher said the debate is not yet over.

Fisher, who has said only a shock to the system should spur further action, weighed in strongly against what he termed "the Fed's showing a little leg of inflationary permissiveness."

After a policy meeting last week, the central bank said it was prepared to do more to boost the recovery and lift inflation if necessary.

It has already cut interest rates to near zero and pumped $1.7 trillion into the financial system through purchases of longer-term Treasury securities and mortgage-related debt.

Many analysts expect the Fed to launch a renewed round of bond buying, or quantitative easing, as soon as its next policy meeting on Nov. 2-3.

Weak manufacturing and inflation data on Friday bolstered those expectations and pushed the dollar down to a six-month low against the euro.

"Further action is likely to be warranted unless the economic outlook evolves in such a way that makes me more confident that we will see better outcomes for both employment and inflation before too long," Dudley told a conference in New York.

He said the costs of the tools the Fed has available to ease policy further "do not appear prohibitive."

As head of the most important regional Fed bank, Dudley has a permanent vote on Fed policy. Evans and Fisher will rotate into voting seats on the Fed's policy committee next year.

Dudley and Evans are seen as among the more dovish Fed officials. Fisher is viewed as among the inflation hawks.

While hawks largely captured the debate after a Fed meeting on Aug. 10, officials more inclined toward further easing are now making their voices heard. Boston Fed chief Eric Rosengren told Reuters on Wednesday that further easing would be needed if the outlook didn't improve.

"There appears to be a significant set of FOMC members in favor of further policy stimulus in the near term," Barclays Capital analyst Peter Newland wrote in a note to clients.

NO CONSENSUS YET

The U.S. economy looks to have picked up the pace slightly after expanding at a sluggish 1.7 percent annual rate in the second quarter. Still, growth has been too modest to reduce an unemployment rate economists expect hit 9.7 percent in September.

Fisher and some other Fed officials, however, believe a further relaxation of monetary policy is not needed and may do more harm than good. Philadelphia Fed President Charles Plosser said on Wednesday he would only support more easing if real deflation risks arose.

Taking a more centrist view, the Cleveland Fed's Sandra Pianalto said on Thursday she was still weighing the efficacy of policy tools the Fed has available.

As policymakers diverge, the view to watch will be that of Fed Chairman Ben Bernanke, who has not weighed in on the issue since the Fed's last meeting on Sept. 21.

If the Fed decides to act in November, it is still an open question whether it will take an incremental approach to further asset purchases or announce a big number upfront.

PUSHING ON A STRING

Fisher said he had concerns about the efficacy of further action. He repeated his argument that businesses are holding back on expansion not because money is tight but because of the lack of certainty on tax policy and excessive rule-making.

"Further quantitative easing might be pushing on a string," Fisher told the Vancouver Board of Trade.

Dudley addressed this view directly in his remarks, saying it was too dark. He said he believes the Fed could stimulate demand in two potentially complementary ways: by buying more assets and by offering a more explicit inflation objective.

He said $500 billion of asset purchases would likely have about the same impact as a 0.5 percentage point or 0.75 percentage point cut of the Fed's benchmark federal funds rate, but he cautioned this would depend on how markets perceive the Fed's actions.

"Although the responsiveness of demand to reductions in interest rates is probably lower in a world in which balance sheet constraints are important, the responsiveness is not zero," he said. "I believe that it remains significant." - Reuters

New HP CEO fails to rouse investors, shares slide

SAN FRANCISCO: Hewlett-Packard Co's new CEO failed to impress Wall Street in his first conference call with investors, as doubts persisted as to whether the Silicon Valley outsider has the experience to steer the sprawling company.

HP shares slid 3.4 percent on Friday, Oct 1 after former SAP CEO Leo Apotheker provided few details on his plans to accelerate sales growth, in a performance one analyst called "lackluster."

Apotheker, 57, spent seven months as CEO of German software giant SAP before resigning abruptly amid customer complaints over software support fee increases.

"It would have been almost impossible for the board to hire an outside person and have the stock go down, but that's what they managed to do," Gleacher & Co analyst Brian Marshall said, calling his hiring controversial.

He added that the downside was tempered by the appointment of former Oracle Corp President Ray Lane, a well-known figure in TECHNOLOGY [] circles, as chairman.

Apotheker, an experienced salesman who speaks five languages, emphasized his international experience and did not hint at major changes.

He said HP was healthy and executing well, and praised the management team that includes Todd Bradley and Ann Livermore, two executives that had been in the running for the CEO post.

Analysts say there is also some concern among investors that Bradley, who is well-regarded, might jump ship for another company after being passed over for the top job.

Wedbush Securities analyst Kaushik Roy noted that Apotheker's subdued demeanor on the conference call presented a stark contrast with his bold and confident predecessor, Mark Hurd.

Investors will stay on the sidelines until they get a clearer sense of the new CEO, he said.

"If he had left SAP on a high note, there wouldn't be so much uncertainty," Roy said.

TOUGH ACT TO FOLLOW?

Robert Ryan, HP's lead director, said Apotheker was the only person offered the post. The board ended up with six candidates it felt could have done the job.

"We cast the net very far and very wide. We had lots of candidates," Ryan said on the conference call.

Hurd was popular with Wall Street. His aggressive cost cuts and acquisitions helped revive HP, but Hurd quit in August amid a scandal involving a female contractor.

M. Eric Johnson, director of the Center for Digital Strategies at the Tuck School of Business at Dartmouth, said the Apotheker selection was "way out of left field."

He said Apotheker is known for his sales prowess and considerable intellect, but wondered whether he was a good fit culturally. He said the appointments of Apotheker and Lane should increase the heat in HP's growing rivalry with Oracle. While at SAP, Apotheker and Oracle CEO Larry Ellison had been bitter rivals.

"It certainly is raising the ante; the question for investors is whether this is the right battle to pick. HP has a lot of fish to fry and that's just a small piece," he said.

Ellison, for his part, used the Apotheker hiring to take another swipe at HP's board. In emailed comments to the Wall Street Journal, Ellison said: "HP had several good internal candidates ... but instead they pick a guy who was recently fired because he did such a bad job of running SAP."

He also said: "The HP board needs to resign en masse."

Ellison has been taking shots at HP's board ever since Hurd was forced out. Ellison hired Hurd, his close friend, as president of Oracle after his departure from HP. Relations between the companies have been strained since then.

HP also released details of Apotheker's compensation. The total package, which includes salary, bonus, restricted stock and other benefits, was valued at roughly $85 million over four years by Gleacher's Marshall. That assumes HP shares hit $53 -- a 30 percent gain from Friday.

Hurd took home roughly $98 million in total compensation from HP over his final three years at the company. - Reuters

Bursa shares close firmer

KUALA LUMPUR: Share prices on Bursa Malaysia closed firmer on Friday, Oct 1 with the key index supported by strong buying by institutional funds in selected heavyweights, led by Axiata Group, MMC Corporation and DiGi, dealers said.

However, the overall market traded within a tight range amid mild profit-taking in selected heavyweights and lower liners after recent gains.

The FTSE Bursa Malaysia KUALA LUMPUR COMPOSITE INDEX [] opened higher and stayed in the positive territory throughout the day.

It surged to a high of 1,469.77 but closed off its high at 1,466.32, up'' 2.82 points or 0.19% higher than Thursday.

"The key index has been continuing its upward trend since Wednesday although there was some technical correction in the market as investors cashed in profits from the recent sharp gains," one of the dealers said.

The overnight gains on Wall Street had also boosted the buying appetite locally, the dealer said, adding that regional bourses, including the local market continued to attract strong interest from foreign funds.

At close, the FBM Emas Index gained 26.65 points to 9,838.29, the FBM Top 100 added 22.10 points to 9,618.39 and the FBM Ace Index surged 74.08 points to 3,951.08.

The PLANTATION [] Index advanced 20.18 points to 6,812.68 while the Finance Index fell 5.31 points to 13,348.27 but the INDUSTRIAL INDEX [] dwindled 3.44
points to 2,812.27.

Gainers led losers 422 to 327 while 267 counters were unchanged, 338 untraded and 31 others were suspended.

The market breadth, however was negative with 973.819 million shares, worth RM1.469 billion, were transacted today compared with 1.052 billion shares, worth RM1.718 billion, registered on Thursday. ' Bernama

AKN Technology to be suspended from Oct 11

KUALA LUMPUR: Trading in the securities of AKN TECHNOLOGY [] BHD [] wil be suspended with effect from Monday, Oct 11 after Bursa Malaysia rejected its regularisation plan.

A circular issued by Bursa Malaysia on Friday, Oct 1 said the suspension was pursuant to paragraph 8.14C of the Listing Requirements of Bursa Securities.

Tenaga expects better results with stronger ringgit

KUALA LUMPUR: TENAGA NASIONAL BHD [] (TNB) expects to post better results for the current financial year as the ringgit's appreciation has helped better manage coal cost.

Its president/chief executive officer, Datuk Seri Che Khalib Mohamad Noh, said the stronger ringgit has helped offset some of the effects of rising coal prices which were quoted in US dollar.

"Coal prices are quite stable now. In terms of ringgit per tonne, the prices remain the same as what they were in 2009," he told a media briefing after the launch of the three-month energy-efficiency contest here on Friday, Oct 1.

TNB reported a pre-tax profit of RM1.286 billion for the third quarter ended May 31, 2010 from RM1.240 billion in the same quarter of last year.

Revenue rose by 10.3% to RM7.723 billion from RM7.001 billion previously.'' The higher revenue was mainly due to an increase in the sales of electricity in Peninsular Malaysia, which improved by 12.1%.

For the nine-month period, its pre-tax profit rose to RM3.522 billion from RM1.283 billion in the same period last year.'' Revenue rose to RM22.45 billion from RM21.323 billion respectively.

Che Khalib said TNB, which has been awarded the first block of 1,000-megawatt coal-fired power plant in Manjung, would bid for the second block if invited by the authority.

"The government has not called for the tender yet. It has engaged a consultant to prepare the tender documents," he said.

He said TNB hoped the government would consider tax incentives or tax breaks for installing green TECHNOLOGY [], like solar panels, under Budget 2011.

He said this initiative would reduce the overall installation cost and encourage more people to use renewable energy.

"This is something we would like to see. I think the government will put more initiatives for green energy in the Budget," he said.

Prime Minister Datuk Seri Najib Razak will deliver the Budget 2011 proposals on Oct 15. - Bernama

China PMI strength eases global slowdown worries

BEIJING: Chinese manufacturing picked up steam in September after a mid-year lull, easing concerns of a renewed downturn in global growth, although other leading Asian economies showed some signs of softer business activity.

Manufacturing activity slowed in India in September and contracted in South Korea and Australia, surveys showed. Data on Thursday showed Japanese manufacturing contracted for the first time in 15 months and reports later on Friday are expected to show slowdowns in the United States and Europe.

Still, China dominated.

"The PMIs are a very good gauge of the outlook for industrial production in China, and they tell a beautiful story," said Rob Henderson, head market economist at National Australia Bank in Sydney, on Friday, Oct 1.

"Fears of a substantial downturn have proved unfounded and this should put to rest a lot of the worries about the global outlook."

Indeed, the Asian purchasing managers indexes (PMI) followed signs that activity in the United States had picked up a little in the third quarter, easing worries about a fresh slump in the world's top economy.

New U.S. jobless claims fell last week and manufacturing in the Midwest region grew faster than expected in September.

China's official PMI rose to 53.8 in September from 51.7 in August, well above a median forecast of 52. The data pushed LME copper to a two-year high, lifted the Australian dollar and gave Asian stocks a boost.

India's manufacturing sector expanded for the 18th straight month, but the pace slowed to a 10-month low.

Indian manufacturing had stayed strong earlier this year as Chinese activity had slowed.

"The manufacturing sector shows signs of cooling after a red-hot pace earlier in the year," said Frederic Neumann, co-head of Asian Economics Research at HSBC.

"Capacity constraints may be partly responsible for this, in addition to the fading fiscal stimulus."

In Australia, among the few developed economies to avoid a recession after the global financial crisis, a strong local currency and soft domestic demand led to the first contraction in manufacturing activity in 2010, a survey showed.

PMIs use indicators such as new orders, employment, exports and order backlogs, to gauge the strength of manufacturing, and are considered a leading indicator of broader economic activity.

A reading above 50 indicates expansion, and below that a contraction. Further, a reading above 50 that is higher than the previous month indicates a quickening pace of activity, while a 50-plus reading lower than the previous month shows a slowdown.

Q2 GDP TWEAKED

The ISM index, measuring U.S. manufacturing activity and due to be released later on Friday, is expected to ease to 54.5 in September from 56.3 in August, underscoring the tepid nature of the U.S, recovery.

On Thursday, the U.S. government nudged its second-quarter growth estimate up to a 1.7 percent annualised pace from 1.6 percent after growth in consumer spending for April to June was revised up to the fastest pace in three years.

Though analysts think U.S. economic activity may have picked up in the September quarter, it remains far from robust and the Federal Reserve is expected to start a fresh round of monetary easing as soon as November.

"We can stop talking about a double dip, but we are going to grow much more slowly than most people's memory of a recovery will cause them to expect," said Jerry Webman, chief economist at OppenheimerFunds in New York.

In Europe, debt woes dominated after Ireland said it faced a worst-case bailout bill of more than 50 billion euros ($68 billion) for its distressed banks and Spain lost its AAA credit rating. - Reuters

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#Flash* Primus is 'major reason' for Tiong family's bid to exit EONCap

KUALA LUMPUR: EON CAPITAL BHD [] director Datuk Seri Tiong Ik King testified the "major reason" prompting his family to want to sell their stake in EON Capital Bhd (EON Cap) was their "concerns" about the conduct of EONCap's major shareholder, Primus Pacific Partners Ltd.

Tiong was testifying on Friday, Oct 1 as a witness in an ongoing hearing of the suit brought by Primus Pacific's Malaysian unit, Primus (M) Sdn Bhd. Primus holds 20.2% of EONCap

Primus had sued certain EONCap shareholders and directors for some RM1.12 billion in damages should HONG LEONG BANK BHD [] (HLBB) succeed in purchasing EONCap's assets and liabilities for RM5.06 billion cash.

Questioned by one of the respondent's counsel S. Suhendran, Tiong said his family's decision to exit EONCap "has a lot to do with Primus".

"I view Primus as a dangerous investor and banker because they have a reckless attitude towards Bafia (Banking and Financial Institutions Act 1987), disregard of banking regulations in Malaysia," Tiong told the court.

Tiong said that he had raised his concerns during board meetings "at some point". However, he could not remember when.

It was revealed that the Tiong family had invested about RM254 million for their 16.6% equity stake or 112.72 million shares in EONCap in the early 1990s.

This translates to a cost per share of about RM2.25 a piece while HLBB's RM5.06 billion revised cash offer works out to RM7.55 per EONCap share.

During cross-examination by another respondent's counsel Tan Sri Cecil Abraham, Tiong said EONCap's previous board had consider the views of international financial advisers Goldman Sachs, in relation before the board's majority had rejected HLBB's initial offer of RM4.92 billion on Feb 2.

On Monday, Sept 27 EONCap's shareholders at an extraordinary general meeting voted in favour of selling EONCap's banking assets and liabilities to HLBB for RM5.06 billion, subject to the final decision of the court in the ongoing case.

Tiong added that before deciding to table HLBB's offer to shareholders, EONCap's new board had considered updated advice of its advisers including Goldman Sachs, Credit Suisse, Messrs Adnan Sundra & Low and Pricewaterhouse Coopers.

Earlier, when Primus' leading counsel Datuk Loh Siew Cheang resumed questioning, Tiong disagreed that he had "completely" focused on exiting EONCap but said he devoted "only part of [his] thinking" on how to monetise his family's stake in the company.

Tiong also disagreed with Loh's suggestion that HLBB's offer was "an extraordinary opportunity", preferring to describe it merely as an "opportunity" albeit one that was not an "every day event".

Tiong also disagreed with Loh's suggestion that over RM540 million in potential gains had "vanished" when EONCap's previous management declined HLBB's initial offer price of RM4.92 billion.

"I think the bank shares value is still there. I was not entirely worried. It did not vanish," Tiong said.

Tiong was also asked by his counsel, Gopal Sreenevasan, to clarify Tiong's allegation, made in an affidavit, that EONCap's previous management had "concentrated on creating obstables" in plans to table HLBB's offer to EONCap shareholders.

On Wednesday, Loh had referred Tiong to minutes of EONCap's board meetings on Jan 22 and Jan 25 to clarify Tiong's allegation.

Quoting parts of his affidavit, Tiong said on Friday that Primus had already decided it was not interested in HLBB's proposal as it "did not realise the group's underlying value".

"Even before Goldman Sachs presented their views, they (Primus) already put up the intentions and this is a big obstacle for us," Tiong said.

Tiong also said another "obstacle" was that EONCap's board spent too long deliberating on Goldman Sach's opinion on HLBB's offer.

Hearing of the keenly-watched case is scheduled to resume on Oct 20. The court had earlier fixed three days for hearing but Judicial Commissioner Varghese George Varughese also set additional dates after meeting lawyers in chambers at the close of proceedings today.

The next witness scheduled to appear is EONCap substantial shareholder Rin Kei Mei.

Glove makers advance after CIMB Research maintains overweight on sector

KUALA LUMPUR: Rubber glove makers on Bursa Malaysia advanced in the afternoon session on Friday, Oct 1 after CIMB Research maintained its overweight'' on the sector and said that despite considerable headwinds encountered by the sector this year, demand for rubber gloves continued to grow at a healthy clip.

At 3.15pm, Supermax was up 15 sen to RM3.94, Hartalega gained 14 sen to RM4.84, Latexx rose 13 sen to RM2.57, Top Glove, Kossan and Adventa gained 10 sen each to RM5.23, RM3.07 and RM2.50, respectively, while Rubberex added three sen to 87 sen.

CIMB Research in a report on Friday said with continued technological advancement of glove products and facilities, Malaysian rubber glove manufacturers would maintain its leadership in the global market.

In light of the positive long term prospects of the industry, the research house maintained its overweight call. All the glove stocks under its coverage remain as Outperforms, said CIMB Research.

'Potential re-rating catalysts include the continuing uptick in demand from the healthcare industry, ongoing capacity expansion and strong earnings growth.

'The recent sharp pullback in share prices has made the sector even more attractive with undemanding average P/Es of 7-8 times. Supermax and Latexx remain our top picks,' it said.

#Flash* UEM Group quashes talk of MMC Corp's RM15.6b bid

KUALA LUMPUR: UEM Group Bhd is unaware of any proposals by parties interested in acquiring its assets, said group managing director and chief executive officer Datuk Izzaddin Idris.

Speaking to reporters after UEM's Hari Raya open house here on Friday, Oct 1, he said if there was such a proposal it would have to go through UEM's shareholders.

He was responding to questions raised over rumours that MMC Corp Bhd had put in a RM15.6 billion bid to acquire UEM.

UEM Group is a unit owned by government investment arm Khazanah Nasional Bhd.

"We are trying to grow our businesses," he said. "Khazanah has not given any indication (to us) that it has received any proposals."

With regard to the sale of Time Engineering's 27.1% stake in TIME DOTCOM BHD [], he said "a few parties" had expressed interest, but that UEM was keen on growing the business before disposing its stake.

He declined to comment further on the matter.

Sunrise in pact with Time dotcom to provide fastest broadband connectivity

KUALA LUMPUR: Eleven PROPERTIES [] developed by SUNRISE BHD [] and managed by its subsidiary SCM Property Services Sdn Bhd are enjoying the nation's first 100% fibre-to-the-home connection by Time Fibre Broadband.

This is expected to be extended to all Sunrise's other properties, including mixed-use development Solaris Dutamas, by year-end.

Sunrise had on Friday, Oct 1 entered into a partnership with TIME DOTCOM BHD [] to provide free and fastest broadband connectivity at the Sun Fun Zone Community in Mont' Kiara.

"Through working with Sunrise, we are able to deliver the first fibre network to the home broadband service in Malaysia," said Time Fibre Broadband's head of product, Joey Phang.

Residents can enjoy the service either at the Sunrise Fun Zone on a complimentary basis or in the comfort of their home upon subscription, he said.

The service is priced at RM149 for 2Mbps, RM199 for 5Mbps and RM329 for 10Mbps.

Deployment of the fibre-to-the-home broadband service made Sunrise the first developer in Malaysia to secure the fastest broadband connection for its residential and commercial development.

"By providing a reliable and superior broadband service, we are able to enhance the community centre's superb facilities and add on to the many exclusive privileges currently enjoyed by our residents," said Sunrise's assistant general manager of branding and communication development, Anne Tong.

In conjunction with the event, the company launched its "Sunrise's Win an iPad" web contest on its community portal Life@Sunrise Mont'Kiara.

The contest is open to all. More details at www.montkiara.com.my'' -'' Bernama

Ireland buys itself more time but clock is ticking

DUBLIN: Publication of Ireland's "colossal" bill for bailing out its banks has removed a major uncertainty for markets, but the problem of how to tackle the underlying deficit remains the real monster in the room, according to a Reuters analysis report on Thursday, Sept 30.

Finance Minister Brian Lenihan has bought Ireland some time to get its fiscal house in order by cancelling bond auctions for the rest of this year, but that will be just a stay of execution unless he can come up with a credible four-year plan in November to get the budget back under control by 2014.

"Ireland is still very much on probation," said Ciaran O'Hagan, bond strategist at Societe Generale in Paris.

"We have more certainties around the banks now but the banks were never the bugbear for investors, it's the deficit."

A worst-case estimate of over 50 billion euros, or nearly a third of economic output, to clean up after the Irish banks and their "Celtic Tiger" era of reckless lending is -- as central bank head Patrick Honohan put it -- "colossal". [ID:nLDE68T04M]

But that cost is a one-off which can be spread over a decade, and around 10 billion euros of it can be sourced from a national pension fund pot of 24 billion euros.

A recurring and far more serious issue is the underlying deficit which, even after deducting the bank burden, is expected to be an eye-watering 12 percent of GDP this year, four times the EU limit and the worst shortfall in the union.

The government says that level of indebtedness means it is raises just 3 euros in taxes for every 5 euros it spends.

The yield on Irish 10-year paper hit a euro lifetime high of nearly 7 percent this week on fears Dublin couldn't afford to bail out its banks and cut its deficit in a fragile domestic economy.

But given the country is fully funded until the middle of 2011 and has cash reserves of 20 billion euros on top of that, the risk of Lenihan having to tap external help from the European Union or the IMF was never a credible threat, at least for this year. [ID:nLDE68Q1YP]

"They (IMF) would laugh in his face, they would tell him 'spend the cash you have at home first of all'," said O'Hagan.

"The ESFS (European System of Financial Supervisors) is meant for countries that have no cash, Ireland has tonnes of cash."

Despite a precipitous climb in its borrowing costs in recent auctions, Ireland's average rate of interest over this year was 4.7 percent and analysts have said the government could have continued issuing small amounts of debt at higher levels next year without pushing its overall average interest rate to an unsustainable level.

BIG HEADACHE

What does risk becoming unsustainable, and fast, is the underlying shortfall.

Irish interest rates eased back a touch after Thursday's announcement but the only hope of them falling significantly is if Lenihan can get a jumpy coalition government to agree to additional spending cuts and tax hikes above 3 billion euros for 2011 and sign off on a harsh four-year plan.

Prime Minister Brian Cowen's parliamentary majority is wafer-thin but political analysts believe three by-elections early next year will be the trigger for an early general election, not the latest austerity measures.

While opposition deputies make political capital out of lambasting the government for Ireland's sorry state they know that with the country's heavy reliance on international investors they would have to administer similar measures if they were in power.

In many ways, the biggest headache for Lenihan is trying to find, after three austerity budgets in two years and economic growth faltering, what to slash.

To prevent strikes and social unrest, the government has agreed a deal with unions not to cut public pay any further and while this may be one of the biggest spending lines, Lenihan will be reluctant to revisit this agreement despite the deterioration in Ireland's finances.

Instead, he will likely focus on cutting social welfare, the health budget and widening the tax base to include low income earners, currently around 50 percent of the labour force, who don't pay income tax.

Lenihan's track record on pushing through fiscal pain is good. Before the banks blew out the numbers, Ireland was lauded for its tough action on the budget.

But a lot has changed since then.

"Markets may be less forgiving in future if the underlying problems turn out to be even worse than the government has now admitted," said Peter Dixon, an economist at Commerzbank. - Reuters

Shahril Mokhtar new group MD for Sykt Prasarana Negara

KUALA LUMPUR: Syarikat Prasarana Negara Bhd (Prasarana) has appointed Shahril Mokhtar as its group managing director effective Oct 1, Friday.

Shahril was previously the Chief Operating Officer of the Land Public Transport Commission.

He also served as Adviser to the Economic Planning Unit of the Prime Minister's Department to establish the commission, particularly in drafting the Land Public Transport Commission Commission Act 2010.

Shahril was also involved in the laboratory for urban public transport improvement under the Government Transformation Plan.

Prasarana, a government linked company, expedites public infrastructure projects approved by the government and also operates, among others, the LRT Ampang and Kelana Jaya lines, KL Monorail system and the RapidKL bus operation in the Klang Valley. - Bernama

KLCI still up amid mild profit taking, MMC in focus

KUALA LUMPUR: The FBM KLCI stayed in positive territory at the mid-day break on Friday, Oct 1 but it was off its morning's best due to profit taking, in line with some of the regional markets.

At Bursa Malaysia, the FBM KLCI was up 0.10% or 1.46 points to 1,464.96. Losers overtook gainers by 331 to 272, while 275 counters traded unchanged. Volume was 438.39 million shares valued at RM575.77 million.

The ringgit strengthened 0.09% to 3.0845 per US dollar; crude palm oil for the third month delivery fell RM11 per tonne to RM2,719.

Gold was up US$1.70 per ounce to US$1,310.05 and crude oil rose 24 cents per barrel to US$80.21.

Nikkei 225 +0.45% 9,411.15 Taiex -0.05% 8,233.84 Kospi -0.08% 1,871.27 Singapore Straits Times Index +0.44% 3,111.23 ''

The Hong Kong and China markets are closed for national holidays.

At Bursa Malaysia, MMC Corp added 12 sen to RM3.12 on investors' expectations it would play a lead role in the mass rail transit (MRT)project for Kuala Lumpur. Credit Suisse upgraded MMC to an Outperform and raised the target price to RM3.80.

Padini was the top gainer, up 44 sen to RM5; United Malacca rose 26 sen to RM10.86, , Boustead was up 11 sen to RM5.02, while CMSB, Mamee and DiGi rose 10 sen each to RM2.87, RM3.57 and RM24.40, respectively.

Penang water operator PBA rose seven sen to RM1 following the decision to raise the rates for trade consumers by 27% with effect from Nov 1.

On Thursday, the Penang Water Supply Corporation Sdn Bhd announced that trade consumers will have to pay 27% more for water. Trade consumers account for 60% of its revenue.

The top loser was DFZ Capital that lost 21 sen to RM3.77, JobStreet fell 16 sen to RM2.20, C.I.Holdings down 13 sen to RM3.65, Asia File and Dutch Lady fell 12 sen each to RM4.50 and RM16.38.

Tan Chong lost 10 sen to RM5.86 while Hong Leong Industries, Unisem and AirAsia fell seven sen each to RM5.15, RM1.91 and RM2.18.

Karambunai was the most actively traded with 23.2 million shares done. The stock fell half a sen to 12 sen.

Other actives included Zelan, Ramunia, UEM Land, SILK Holdings, Tebrau and Johan.

EON Bank CEO says remains committed to building EON Bank Group

KUALA LUMPUR: EON Bank chief executive officer Michael Lor said he remains committed to the banking group.

In a statement released by EON Bank on Friday, Oct 1, he said, 'I remain committed, along with my management team, to building EON Bank Group as 'The Preferred Malaysian Bank'.'

Lor, who is on vacation overseas, was responding to the The Edge Financial Daily's article titled 'K&N Kenanga poaching EON Bank's chief'.

EON Bank categorically stated the article was purely speculative and reinforced that there is no truth to the matter.

FBM KLCI kicks off 4Q on positive note

KUALA LUMPUR: The FBM KLCI kicked off the first day of trading in the final quarter of 2010 on a positive note, in line with the gains at key regional markets.
Asian markets opened higher on Friday, Oct 1 as concerns about the state of the US economy were slightly abated as new US claims for jobless aid fell last week and manufacturing in the Midwest region grew faster than expected in September.

At 10am, the FBM KLCI rose 0.36% or 5.33 points to 1,468.83, lifted by gains including at BAT, DiGi, MMC Corp and Public Bank.
Gainers beat losers by 199 to 172, while 203 counters traded unchanged. Volume was 165.10 million shares valued at RM151.88 million.

The Nikkei 225 rose 0.89% to 9,453.14, the South Korean Kospi added 0.29% to 1,878.19, Singapore's Straits Times Index rose 0.20% to 3,103.91 and Taiwan's Taiex gained 0.10% to 8,246.00. The Hong Kong and China stock markets are closed for national holidays.

At Bursa Malaysia, BAT was the top gainer at mid-morning and rose 50 sen to RM48.98; Padini gained 44 sen to RM5, DiGi was up 32 sen to RM24.62 and United Malacca was up 20 sen to RM10.80.

MMC Corp advanced 20 sen to RM3.20 with 2.95 million shares done after Credit Suisse upgraded the stock to outperform from neutral and raised its target price to RM3.80.

Meanwhile, MPI rose 15 sen to RM6, Mamee added 12 sen to RM3.59, P.I.E. rose 10 sen to RM4.14 and Public Bank gained eight sen to RM12.64.

The top loser was JobStreet that fell 16 sen to RM2.20; Glenealy fell 10 sen to RM4.60, Parkson and LPI Capital lost eight sen each to RM5.74 and RM11.66,

Hong Leong Industries and C.I.Holdings fell seven sen each to RM5.15 and RM3.71, while MAHB and MISC lost five sen each to RM5.70 and RM8.69.
Karambunai was the most actively traded stock with 17.63 million shares done. The stock was unchanged at 12.5 sen.
Other actives included Zelan, SILK Holdings, Transmile, Johan, UEM Land and Timecom.

PM says MRT among large projects, MMC Corp shares up on upgrade

KUALA LUMPUR: Shares of MMC Corp rose in the morning session on Friday, Oct 1 after Credit Suisse upgraded it to an Outperform and raised the target price to RM3.80.

At 11.17am, MMC Corp was up 12 sen to RM3.12 with 4.13 million shares done.

The positive sentiment was also boosted by a wire report that the government would soon announce seven large projects including the mass rail transit (MRT) soon in Kuala Lumpur.

Prime Minister Datuk Seri Najib Razak was quoted saying the government was ready to announce the seven huge projects soon. 'The MRT will be one of our largest projects and it will have a huge impact to the country's economy,' he said.

Meanwhile, Credit Suisse upgraded MMC Corp to an Outperform (from Neutral), as the market had underappreciated two key developments on the stock. They were the South Johor land and the Kuala Lumpur MRT. It viewed MMC as a laggard play on these developments.

OSK Research Neutral on JCY International

KUALA LUMPUR: OSK Research is maintaining its Neutral view on hard disk drive (HDD) manufacturer JCY International.

In a research note issued on Friday, Oct 1, the research house said at the current price, JCY is trading close to the 10 times historical peak PER valuation of Notion and Engtek over the last five years and 11 years respectively.

Due to a lack of historical valuation given that JCY was only listed earlier this year, it is still too early to gauge the valuation range that the market is ascribing to the Malaysia's largest HDD components manufacturer.

'As the valuation of the other HDD component makers have fallen slightly, we are valuing JCY based on 8.0 times FY11 PER, from which we derive a fair value of RM1.15. For now, we think JCY's share price could be supported by the decent 6% FY10 net dividend yield based on a 48% dividend payout.

'However, this is not attractive enough to alter our Neutral view given the potential of more earnings disappointments for the next two quarters,' it said.

Meanwhile, the six-month moratorium on the company's IPO shares ended last month. While JCY's shares have fallen by about 30% from the IPO price, which we believe is mainly due to an unattractive offer price and disappointing results.

#Update* PBA hits RM1 in early trade, higher tariffs by Nov 1

KUALA LUMPUR: Shares of Penang water operator PBA hit RM1 in early trade on Friday, Oct 1, underpinned by a decision to raise the rates for trade consumers by 27% with effect from Nov 1.

At 9.06am, it was up seven sen to RM1 with 519,900 shares done.

The FBM KLCI was up 3.68 points to 1,467.18. Turnover was 24.05 million shares valued at RM20 million. There were 84 gainers, 44 losers and 101 stocks unchanged.

On Thursday, the Penang Water Supply Corporation Sdn Bhd announced that trade consumers will have to pay 27% more for water. Trade consumers who account for 60% of its revenue.

The increase comes on the heels of the announcement made by PBAPP chairman, Chief Minister Lim Guan Eng last week of a water conservation surcharge to be imposed on domestic users using above 35,000 litres per month. The last water tariff review for trade and domestic users was on Jan 1 2001.

The new tariff for trade consumers will increase from 52 sen to 66 sen for the first 1,000 liters for the first 20,000 liters, 70 sen to 89 sen for the next 20,000 liters, from 90 sen to 1.15 for more than 40,000 to 200,000 liters and more than 200,000 liters from RM1 to RM1.27.

Trade consumers using excessive water supply will see an increase from RM1.20 to RM1.52 while shipping trades will see an increase from RM2 to RM2.54.

This increase could see a rerating for the laggard PBA which has been in the doldrums since its listing.

SILK advances on higher earnings

KUALA LUMPUR: SILK Holdings Bhd's share price advanced in early trade on Friday, Oct 1 after it posted a stronger set of earnings for the fourth quarter ended July 31, 2010.

At 9.20am, it was up five sen to 40 sen. It was actively traded with 6.18 million shares done.

The FBM KLCI rose 3.19 points to 1,466.69. Turnover was 62.73 millikon shares done valued at RM58.23 million. There were 138 gainers, 79 losers and 133 stocks unchanged.

SILK's earnings jumped 146% to RM11.55 million for the fourth quarter ended July 31, 2010 from RM4.68 million a year ago, boosted by a one-off RM11.9 million negative goodwill and its highway division.

Revenue rose 32.4% to RM59.61 million from RM45 million. ''SILK said the higher revenue in 4Q10 was due to recognition of contribution from the highway division compared to a year ago when there was only the oil and gas division.

CIMB Research maintains Outperform on SapuraCrest

KUALA LUMPUR: CIMB Research is maintaining its Outperform on SAPURACREST PETROLEUM BHD [] and its top oil & gas pick.

The research house said in its report issued on Thursday, Sept 30 that factors which could catalyse the stock are 1) active order book replenishment, 2) success in new markets, i.e. the Middle East, and 3) a growing fleet of strategic assets.

SapuraCrest posted a 2QFY1/11 net profit of RM53 million, taking the first-half bottomline to a record RM104 million.

CIMB Research said at 49% of its full year forecasts and 48% of consensus estimate, we consider the performance to be broadly in line with expectations. Also not surprising is an interim DPS of 3 sen, which matches last year's payout.

'We maintain our earnings forecasts but raise our target price from RM3.02 to RM3.13 as we roll it over to end-CY12 and apply our revised target market P/E of 13.8x from 15x previously,' it said.

#Stocks to watch:* PBA, Equator, O&G, SILK

KUALA LUMPUR: Key Asian markets are expected to open on a firmer note on Friday, Oct 1 as concerns eased about a double-dip recession in the US but concerns about the European fiscal debt crisis could keep the buying in check.

Reuters reported Wall Street wrapped up its best quarter in a year on Thursday, Sept 30 with the S&P and Nasdaq logging in the biggest monthly gains since April 2009, as data showed the economy isn't in such bad shape.

The Dow Jones industrial average slipped 47.23 points, or 0.44 percent, to 10,788.05. The Standard & Poor's 500 Index declined 3.53 points, or 0.31 percent, to 1,141.20. The Nasdaq Composite Index fell 7.94 points, or 0.33 percent, to 2,368.62.

However, the latest data out of the US showed the economy was not likely to succumb to a double-dip recession.

According to BIMB Securities Research head Rosnani Rasul said the Labor Department reported a drop in initial jobless claim. It dropped by 16,000 to a seasonally adjusted 435k but not good enough to indicate that employers are hiring.

'It needs to drop around 400,000 to 425,000 before the market can be convinced that the biggest economy in the world is on the right track of recovery.

'The investors will now turn to the tomorrow's critical economic releases (personal spending, consumer sentiment, ISM Manufacturing Index) before deciding on their next trading strategy. In the meantime, expect the local market to trade in tight range pattern again. The encouraging performance of Ringgit which reached its 13-year high level may reinforce investors' sentiment,' said Rosnani.

Stocks to watch on Friday include PBA Bhd, EQUATOR LIFE SCIENCE BHD [], oil and gas (O&G) counters and SILK Holdings Bhd.

Penang Water Supply Corporation Sdn Bhd announced on Thursday that trade consumers will have to pay 27% more for water and this comes into effect on Friday. This increase could see a rerating for the laggard PBA which has been in the doldrums since its listing.

The Edge FinancialDaily reports two directors and a major shareholder of Ace Market-listed Equator Life Science Bhd sold large blocks of shares and ceased to be substantial shareholders of the company.

At the same time, its managing director also sold a bulk of his interests in the bioTECHNOLOGY [] company.

O&G-related companies could see some interest after light crude oil rose to a seven-week high near US$80 a barrel on Thursday after lower U.S. jobless claims stoked optimism for economic recovery in the world's top oil consumer and as military and police protests thrust OPEC-member Ecuador into political unrest.

U.S. oil futures settled up $2.11 at $79.97. Oil posted an 11.2% gain in September, the largest monthly jump since May 2009. Oil rose 5.7% during the third quarter, which ends Thursday.

SILK's earnings jumped 146% to RM11.55 million for the fourth quarter ended July 31, 2010 from RM4.68 million a year ago, boosted by a one-off RM11.9 million negative goodwill and its highway division.

Revenue rose 32.4% to RM59.61 million from RM45 million.'' SILK said the higher revenue in 4Q10 was due to recognition of contribution from the highway division compared to a year ago when there was only the oil and gas division.

HLG Research maintains Overweight on banks

KUALA LUMPUR: HLG Research is maintaining its Overweight on banks and the top picks are AMMB, Maybank, RHB Cap, AFG and Affin.

It said on Friday, Oct 1 the August banking statistics showed loan growth in August decelerated slightly to 11.8% (11.9% in July), due to business segment but household segment continued to accelerate.

The statistics released by Bank Negara on Thursday showed the leading indicators had accelerated, driven by the business segment while the household segment maintaining momentum.

Leading indicators (application and approval) accelerated, driven by the business segment while the household segment maintaining it momentum.

HLG Research said the loan-deposit ratio improved due to faster mom deposit growth (1%) versus on-month loan growth (0.8%), ample liquidity to support continued loan growth.

The lending rate improved, providing cushion for competitive pressure on margin. Asset quality also improved with absolute NPL/IL declining for the first time in eight months.

Capital ratios remained robust and with the watered down Basel III, M&A and capital management themes intact.

HLG Research said it was maintaining its 2010 loan growth projection of 10% given economic slowdown in 2H10 and potential selective cap on mortgages.

'Overall trends are positive and supportive of continued loan growth with stable margin (thanks to OPR hikes). Meanwhile, asset quality is expected to remain benign and should also support earnings growth from lower provisions,' it said.

Deterioration in asset quality and temporary pause in noninterest income growth.

Positives ' Best proxy to commencement of new economic cycle, potential M&A excitements and capital management (especially post the watered down Basel III) as well as interesting / compelling individual stories.

Negatives ' Intensifying competitive pressure on margin as well as slowdown in loan growth in tandem with the expected slower economic expansion in 2H10 and potential selective cap on mortgages.

HDSBVR: Market to trade in tight range

KUALA LUMPUR: Hwang DBS Vickers Research said as the final quarter of the year gets started, our Malaysian bourse will likely carry over the trading pattern seen in the last few days ' by oscillating in a tight range.

In its market outlook issued on Friday, Oct1 that most probably, the benchmark FBM KLCI will still be struggling to break past the immediate resistance level of 1,465 for the time being.

Hwang DBS Vickers Research said n the other hand, while a downward bias may prevail due to profit-taking pressures, the bellwether is not expected to fall anywhere near to the first support line of 1,435 at the moment.

'In a sense, the broadly sideways performance is only to be anticipated in the absence of follow-through buying momentum as news flows got thinner following the multi-week run-up,' it said.

The research house said was also a similar case on Wall Street, which saw its key equity indices slipping between 0.3% and 0.4% at the closing bell last night amidst a dearth of new developments.

Euro at 5-month high, stocks slip at quarter end

NEW YORK: Global stocks slipped and the euro hit another five-month high on Thursday, Sept 30 as improving data curbed expectations the Federal Reserve would increase money supply to spur economic growth and lift asset prices.

The euro was on track for its best quarterly gain in eight years as data showed euro zone banks had relied far less on European Central Bank funding than analysts expected.

The euro was up 0.12 percent at $1.3644, but the rally seemed to be running out of steam, analysts said.

U.S. stocks ended lower for a second day as investors took profits from an exceptionally strong September that left the benchmark S&P 500 up 8.8 percent for the month.

The session was volatile, with investors torn between end-of-quarter positioning and stronger-than-expected economic data.

New U.S. claims for jobless benefits fell last week, a sign of an improving labor market, while Midwest business activity grew more than expected in September. Also, U.S. second-quarter growth was revised a touch higher on firmer consumer spending.

U.S. stocks temporarily rose, but the S&P 500 has been unable to close above 1,150.

"If (future) data and earnings confirm that we are finally out of fears of a double-dip (recession), October may be the month for the S&P to break above trading range and reach the highs that we saw in April," said John Canally, an economist and investment strategist at LPL Financial in Boston.

A poll by Reuters showed leading investors around the world increased equity holdings to their highest level in three months in September and reduced bonds and cash holdings as confidence about the global economy grew.

It was the best month for the S&P 500 and Nasdaq since April 2009, and for the Dow since July 2009.

The Dow Jones industrial average closed down 47.23 points, or 0.44 percent, at 10,788.05. The Standard & Poor's 500 Index fell 3.53 points, or 0.31 percent, at 1,141.20. The Nasdaq Composite Index shed 7.94 points, or 0.33 percent, at 2,368.62.

The December futures contract that trades in Chicago for the Nikkei 225 was flat at 9,450.

Oil rose to a seven-week high of nearly $80 a barrel on the U.S. data, while gold eased but not before hitting yet another record high as investors sought an alternative to a weak dollar and future protection against potential inflation risks.

U.S. oil futures settled up $2.11 at $79.97 a barrel. Oil posted an 11.2 percent gain in September, the largest monthly jump since May 2009.

European benchmark Brent crude futures rose $1.59 to $82.36 a barrel in late trade.

Gold hit its 11th record high in 13 trading sessions and posted a 5 percent gain for the month. Spot gold scaled a record of $1,315.80 an ounce and then eased to $1,306.75

U.S. Treasuries ended modestly lower in choppy trading. The day's decline ended a mediocre third quarter for U.S. government debt.

Benchmark 10-year notes were down 3/32 in price to yield 2.51 percent.

The dollar index fell to an eight-month low, under pressure from investors shunning the U.S. currency, but later gained strength.

The dollar was higher against a basket of major currencies, with the U.S. Dollar Index almost break-even at 78.713.

Against the Japanese yen, the dollar was down 0.24 percent at 83.48.

The Australian dollar climbed to a two-year high against the U.S. dollar as investors bet that the Reserve Bank of Australia will raise the benchmark interest rate next week.

Asian stocks outside Japan fell 0.3 percent but were set for their best quarter in a year as investors poured money into regional markets on robust Chinese-driven growth.

The MSCI index of Asia Pacific stocks outside Japan has gained more than 17 percent this quarter.

Japan's Nikkei ended 2 percent lower but still posted its best monthly performance in six. On a quarterly basis the Nikkei is flat, sharply lagging other major markets. (

Caterpillar to raise prices

NEW YORK: Caterpillar Inc, the world's largest maker of CONSTRUCTION [] and mining equipment, will raise its product prices worldwide as much as 2 percent next year.

The company said on Thursday, Sept 30 that the price increase will take effect in January.

"Caterpillar has talked about the potential for seeing some higher costs in the raw material side," Morningstar analyst Adam Fleck said by phone.

"Steel prices would be the primary focus ... and as they start seeing higher costs, they are able to typically pass it to the customer," he said.

Caterpillar also said that it will raise the prices of some products in some regions by 2 to 6 percent.

In a statement filed with the U.S. Securities and Exchange Commission, the company said those increases are "emissions-related."

The emissions increases would be for some products in the United States and the European Union where the emissions requirements take effect in January, a Caterpillar spokesman said in an email.

In 2011, the U.S. Environmental Protection Agency will release environmental regulations for most of the off-highway machines used in construction, agriculture and industry.

The "Tier 4" rules are intended to cut nitrogen oxide emissions by 50 percent and particulate emissions by 90 percent in 2011, with tougher standards phased in three years later.

Caterpillar said in December it had made "significant investments" to meet the new Tier 4 regulations and said that those investments would continue throughout 2010.

Caterpillar shares closed down 1.6 percent at $78.68 on the New York Stock Exchange. - Reuters

Wall St slips, but logs best quarter in a year

NEW YORK: Wall Street wrapped up its best quarter in a year on Thursday, Sept 30 with the S&P and Nasdaq logging in the biggest monthly gains since April 2009, as data showed the economy isn't in such bad shape.

Defying September's track record as the worst month for stocks, the S&P 500 was up 8.8 percent. In the third quarter, the index gained 10.7 percent, which was the best in a year.

The session was volatile, split between investors positioning for the end of the quarter and those buying on encouraging data. After up and down moves of nearly 1 percent, equities ended slightly lower.

Still, the S&P 500 seemed to be struggling to break above the 1,145-1,150 trading range.

"Since September was such a strong month, many think October will be the scary one. If (future) data and earnings confirm that we are finally out of fears of a double-dip (recession), October may be the month for the S&P to break above trading range and reach the highs that we saw in April," said John Canally, an economist and investment strategist at LPL Financial in Boston.

A poll by Reuters showed leading investors around the world increased equity holdings to their highest level in three months in September and reduced bonds and cash holdings as confidence about the global economy grew.

The Dow Jones industrial average slipped 47.23 points, or 0.44 percent, to 10,788.05. The Standard & Poor's 500 Index declined 3.53 points, or 0.31 percent, to 1,141.20. The Nasdaq Composite Index fell 7.94 points, or 0.33 percent, to 2,368.62.

After the bell, Hewlett-Packard Co shares fell 3 percent to $40.65 after the company named Leo Apotheker as its new chief executive, tapping a software industry veteran to lead the world's largest TECHNOLOGY [] company.

SOX SLIDES

Semiconductor companies, a growth sector that advanced during the quarter, ranked among the day's losers and weighed on the Nasdaq. The Philadelphia semiconductor index <.SOX> fell 0.7 percent.

In the options market, bearish activity was detected in Micron Technology Inc about a week before its quarterly results, and in Dell Inc, as some investors appear to be taking defensive positions.

"Option plays in both Dell and in Micron Tech today appear to be investors protecting their recent gains in these respective stocks," said Joe Kinahan, TD Ameritrade's chief derivatives strategist.

"The common thread in both of these tech stocks is that investors are nervous after a spectacular September for stocks and are looking for ways to hedge their positions and still enjoy further upside if we continue to rally."

BOEING'S GAIN CURBS DOW'S LOSS

The Dow's biggest advancer was Boeing Co, up 0.9 percent at $66.54 after the aircraft manufacturer said its full-year results would not be hurt by its delaying the first delivery of its 747-8 Freighter, its biggest commercial jet.

American International Group Inc rose 4.4 percent to $39.10 after the insurer and the U.S. government unveiled a plan for the company to repay its $182.3 billion taxpayer bailout.

But Prudential Financial Inc shares fell 4.2 percent to $54.18 after it agreed to buy two Japanese life insurance units from AIG for $4.2 billion.

The market had opened higher after data showed initial jobless claims fell sharply in the latest week, pointing to modest strengthening in the labor market, while the Commerce Department revised higher its final read on second-quarter economic growth, as measured by gross domestic product. That backed up stronger readings for regional business activity indexes in New York City and the U.S. Midwest, seen as early indicators before national surveys on Friday and later next week. - Reuters

HP names SAP ex-chief as its new CEO, shares slide

SAN FRANCISCO: Hewlett-Packard Co named Leo Apotheker, the former head of German software company SAP, as chief executive in a surprise appointment and HP shares dropped 3 percent on Thursday, Sept 30.

The recruitment of the long-time software industry veteran -- who left SAP abruptly after just seven months at the helm amid a wave of customer complaints -- concerned some who worried about his ability to steer a diverse, sprawling $130 billion hardware services company.

Apotheker, a multilingual salesman schooled in economics and internal relations, succeeds Mark Hurd, who was ousted from HP on Aug. 6 for filing inaccurate expense reports related to a female marketing contractor.

The top job at HP offers a unique opportunity to lead a Silicon Valley icon -- but comes freighted with big challenges and high expectations.

Unlike in 2005, when Hurd took over an HP in disarray, Apotheker will take the helm of a well-run company whose investors will not be sated with a another round of cost cuts.

Fort Pitt Capital analyst Kim Caughey expressed doubt about Apotheker moving from a software company to HP, a sprawling company that dominates the PC, server, IT services and printer businesses.

"SAP is a very different sort of company than HP, and that is my biggest concern," Caughey said. "The scope of SAP is very different, as are the customers. What does he know about hardware? That's the question."

But Wedbush Securities analyst Kaushik Roy said, "He can be an agent of change. Investors were focused on 'how do you bring back R&D, how do you bring back innovation?'" (For a Breakingviews analysis of HP's selection of Apotheker, click on:)

HP shares fell 3 percent to $40.80 in extended trading. The shares closed at $42.07 on the New York Stock Exchange.

GOING OUTSIDE

The appointment of an outsider -- the third straight external hire, after Carly Fiorina and Hurd -- surprised some observers who had bet on a promotion from within.

Many analysts had expected Todd Bradley, HP's PC division chief, or Ann Livermore, who heads its enterprise arm, to take on the role.

Apotheker spent more than two decades at SAP. He was named SAP co-chief executive in April 2008, and became its sole leader in July 2009.

His tenure was marked by criticism of SAP's lack of direction, and customers raged when SAP instituted its first maintenance fee increases in a decade. During his term, SAP also made its first-ever major round of job cuts.

"Leo is a very bright guy. He has a bad rap because he got handed the wheel of the Titanic five minutes after it hit the iceberg," said Peter Goldmacher at Cowen and Co.

HP's board also named Ray Lane as non-executive chairman. Lane is managing partner at venture capital firm Kleiner Perkins Caufield & Byers, and previously served as president and chief operating officer at Oracle Corp.

Both appointments are effective Nov. 1, HP said.

They come nearly two months after the controversial Aug. 6 ouster of Hurd, which sent shock waves through Silicon Valley and upset investors who credited him with turning the company around.

Hurd may be a tough act to follow. He transformed the company into a diversified IT powerhouse, the largest TECHNOLOGY [] company in the world on a revenue basis.

"The investment community wanted an outsider to be named CEO," said Gleacher & Co analyst Brian Marshall. "They view HP internally as a little bit dysfunctional in terms of all the issues they had in senior management in the last couple of years." - Reuters

SILK turns around in earnings

KUALA LUMPUR: Silk Holdings Bhd's (SILK) net profit more than doubled to RM11.5 million for 4QFY10 ended July 31 from RM4.69 million a year ago. The profit was boosted by a 'negative goodwill of reverse takeover' of RM11.87 million at the pre-tax level.

Earnings per share shot up to 3.02 sen from 2.6 sen previously. Quarterly revenue came in at RM59.6 million versus RM45 million a year earlier.

The oil and gas (O&G) division contributed RM43.6 million or 73% of the group's revenue while the balance came from the highway division, which is still loss making.

The O&G division posted a pre-tax profit of RM5.78 million, while the highway division incurred a pre-tax loss of RM4.56 million.

In a statement, SILK said its O&G support services division continued to remain market competitive. The division has'' managed to secure two new medium- to long-term charters during FY10.

'The newly acquired O&G support services division made a major contribution to the group's overall financial performance,' said its chairman Datuk Mohd Azlan Hashim.

He said the division's profit helped to nullify the losses in the highway concession.

'The impact that the O&G division has had on overall performance is clear testament to the decision taken by the board of directors and shareholders to acquire AQL Aman Sdn Bhd,' Azlan said in the statement.

For FY10, the company posted a net profit of RM19.25 million, marginally lower than the RM20.8 million in the preceding year.

Revenue was at RM223.9 million versus RM206.7 million previously.

Syed Hisham to helm UMW Holdings

KUALA LUMPUR: Datuk Abdul Halim, who took over the helm of UMW HOLDINGS BHD [] in 2001, retires from his president and CEO posts in the group. ''

Datuk Syed Hisham Syed Wazir will take over the two positions from Halim.

Halim has been with UMW Holdings for 20 years. He has been credited for growing the group's oil & gas business after he held the rein.

Syed Hisham is a 'motor person' judging from his employment records. He is former managing director of EDARAN OTOMOBIL NASIONAL BHD [] and just recently, former COO of Naza Kia Sdn Bhd.

SILK 4Q earnings jump 146pct to RM11.55m

KUALA LUMPUR: SILK Holdings Bhd's earnings jumped 146% to RM11.55 million for the fourth quarter ended July 31, 2010 from RM4.68 million a year ago, boosted by a one-off RM11.9 million negative goodwill and its highway division.

The company said on Thursday, Sept 30 revenue rose 32.4% to RM59.61 million from RM45 million. Net assets per share were 0.37 sen.

SILK said the higher revenue in 4Q10 was due to recognition of contribution from the highway division compared to a year ago when there was only the oil and gas division.

'Profit before taxation increased by 63.6% to RM14.5 million from RM8.9 million as a result of recognition of a one-off negative goodwill of RM11.9 million and after taking into account RM4.6 million losses incurred by the highway concession subsidiary.

'After taking into account tax charge of RM2.1 million, the group recorded 146.4% increase in profit after taxation and minority interest of RM11.6 million from RM4.7 million in the preceding year current quarter,' it said.

For the financial year ended July 31, 2010, net profit was RM19.25 million compared with Rm20.82 million a year ago. Revenue was 223.94 million compared with RM206.67 million.

Note: The negative goodwill arose from a reverse take-over (RTO) arrangement. To recap, the acquisition of AQL Aman Sdn Bhd was completed on Oct 14, 2009. Pursuant to FRS 3 ' Business Combinations, this acquisition was deemed a reverse take-over arrangement.

Due to the application of FRS 3 rules relating to RTO, AQL, the legal subsidiary, became the acquirer of the group for accounting purposes. Accordingly, the consolidated financial statements for the current period and the comparative amounts in the corresponding period of the preceding year have been prepared as a continuation of the financial statements of AQL, but under the name of SILK, the legal parent.)

JAKS Resources seeks funding options, JVs for Vietnam power project

KUALA LUMPUR: JAKS Resources Bhd is exploring various investments and funding options for the Hai Duong thermal power plant project in Vietnam.

It said on Thursday, Sept 30 the options for the two 600MW project would include joint-venture arrangements to undertake the project.

As at the current stage, JAKS said the build-own-transfer contract was being finalised and to be followed by an application of investment licence.

'Upon the issuance of the investment licence and the incorporation of the project company in Vietnam, the build-operate-transfer contract, power purchase agreement, coal supply agreement, land lease agreement and the engineering, procurement and CONSTRUCTION [] contract will be signed,' it said.

Announcing its latest earnings for the third quarter ended July 31, 2010, it said the revenue of RM63.4 million was 25% below the RM84.8 million a year ago.

'The decrease was mainly due to lower recognition of works done for the projects in the construction division and also the lower revenue contributed from the steel related products,' it said.

JAKS said despite the lower revenue, net profit was RM557,000 compared with RM214,000 a year ago mainly due to higher pricing of the steel related products.

When compared with the second quarter ended April 30, revenue of RM63.4 million was 16% higher than RM54.7 million recorded in the preceding quarter.

'The group achieved a profit before tax of RM1.27 million in the quarter under review as compared with a profit before tax of RM894,000 in the preceding quarter. The improvement was mainly due to better steel prices in the steel related products and higher revenue in the current quarter,' it said.

RHB Capital buys out 15.2pct stake of RHB Insurer for RM44.49m

KUALA LUMPUR: RHB CAPITAL BHD [] is buying out a 15.2% stake in RHB Insurance Bhd from Nissay Dowa General Insurance Co. Ltd for RM44.49 million.

RHB Capital said on Thursday, Sept 30 it currently held 79.5% of RHB Insurance and upon completion of the proposed acquisition, it would hold 94.7%.

'The Proposed Acquisition will enable RHB Capital to increase its stake in RHB Insurance and further consolidate the results of RHB Insurance in view of the increase in its shareholding from 79.5% to 94.7% of the issued and paid-up share capital of RHB Insurance,' it said.

Based on the audited financial statements of RHB Insurance for the financial year ended Dec 31, 2009, the net profit and net assets were RM34.72 million and RM158.24 million respectively.

RHB Cap said the RM44.49 million purchase price was based on the audited net assets of RHB Insurance as at Dec 31, 2009 of RM158.24 million, representing a price-to-book ratio of approximately 1.85 times; and precedent transactions involving the acquisition of companies predominantly in general insurance businesses.

RHB Capital would use its own funds to finance the proposed acquisition.

Nissay Dowa was established in April 2001 following the merger between The Dowa Fire and Marine Insurance Co., Ltd. and Nissay General Insurance Co., Ltd.

The Dowa Fire and Marine Insurance Co., Ltd. in turn was formed in 1944 through the consolidation of four insurance companies, the oldest of which was established in 1897 while Nissay General Insurance Co., Ltd. was founded in 1996 as a unit of Nippon Life Insurance Co.

Nissay Dowa is now part of a new insurance group under a newly formed holding company MS & AD Insurance Group Holdings, Inc. which came into effect on April 1, 2010.

KLCI closes marginally higher, up 41 points in Sept

KUALA LUMPUR: Blue chips closed marginally higher on Thursday, Sept 30, supported by gains in Maybank and AMMB while the FBM KLCI is up 41 points in September and up 14.98% year-to-date after a volatile month.

For the day, the KLCI closed 1.72 points up at 1,463.50 but off the day's best on rising worries the European debt crisis will worsen and mixed performance of the key Asian markets.

The broader market turned cautious in the afternoon and at the close, there were 329 gainers, 399 losers and 280 stocks unchanged. Turnover was 1.05 billion units valued at RM1.718 billion.

The Nikkei 225 fell 1.99% to 9,369.35, Hang Seng Index lost 0.09% to 22,358.17 and Singapore's Straits Times Index 0.18% lower at 3,100.43. Shanghai's Composite Index rose 1.72% to 2,655.66.

European stock markets fell at the start on Thursday, pressured by a downgrade for Spanish sovereign debt by Moody's Investors Service to Aa1 from Aaa and news that the capital injection for nationalised Anglo Irish Bank could surpass US$40 billion, while Allied Irish Banks announced capital raising plans.

At Bursa Malaysia, among the top gainers were UBG BHD [], PUTRAJAYA PERDANA BHD [] and Loh & Loh Corp Bhd after they received a notice of mandatory takeover offer from PetroSaudi International Ltd, Seychelles and Sheikh Tarek Essam Ahmad Obaid.

PetroSaudi, via Javace Sdn Bhd, and parties acting in concert had offered RM2.50 per share. This is the latest development since December last year when PetroSaudi made the offer to take UBG private and delist it.

Also up were Putrajaya Perdna and Loh & Loh chich received the notice of mandatory takeover offer from PetroSaudi to acquire the shares at RM4.85 each.

Putrajaya Perdana added 53 sen to RM4.73, Loh & Loh 216 sen higher at RM4.75 and UBG 21 sen up at RM2.46.

Maybank rose nine sen to RM8.80, pushing up the KLCI by 1.54 points while AMMB added eight sen to RM5.93 and Public Bank four sen to RM12.56.

Boustead rose 36 sen to RM4.91, BHIC 23 sen to RM4.49 while and Kulim 20 sen to RM8.59. Proton and MAHB advanced 16 sen to to RM4.96 and RM5.75.

Among glove makers, Hartalega added 23 sen to RM4.70 but Top Glove lost 14 sen to RM5.13 and Supermax 12 sen to RM3.79.

Hai-O was the top loser, down 32 sen to RM2.94 after its net profit fell 57% to RM7.84 million in the first quarter ended July 31, 2010 from RM18.52 million a year ago as the multi-level marketing (MLM) division recorded lower revenue.

#Updated* Ireland faces "horrendous" bank bill, Spain downgraded

DUBLIN:'' Ireland disclosed a mammoth "final" price tag of nearly 40 billion euros ($54.33 billion) on Thursday, Sept 30 for bailing out its distressed banks and said it would have to make more drastic budget savings.

As markets contemplated Dublin's ever growing fiscal hole, ratings agency Moody's cut Spain's AAA top-notch credit rating to Aa1, citing the budget impact of slower economic growth.

The downgrade was widely expected and followed similar moves by Standard's and Poor and Fitch.

Portugal -- the other euro zone nation in the markets' cross hairs -- announced late on Wednesday new austerity measures for 2011 designed to reassure bond markets that have driven its borrowing costs to near record levels.

Ireland's central bank estimated the worst case cost of winding down nationalised Anglo Irish Bank at 34 billion euros and Prime Minister Brian Cowen's battered government said it would have to inject 5.4 billion euros more in taxpayers' money into Irish Nationwide building society.

The euro slipped against the dollar as traders took stock of the impact on a country that was once the EU's fastest-growing economy but will now be shackled by a public debt burden of nearly 99 percent of gross domestic product.

But overall, financial markets reacted calmly, assuaged by the fact that Moody's does not now expect to cut Spain's debt rating further while traders said a bill of up to 35 billion euros for Anglo Irish had been priced in.

The premium investors demand to buy Spanish government bonds rather than euro zone benchmark Bunds actually fell while the Irish/German bond yield spread was unchanged versus Wednesday's settlement close at 466 bps.

A copy of the Spanish budget, obtained by Reuters, showed the government aims to cut its net debt issuance in 2011 to 43.3 billion euros from the 76.2 billion originally planned for 2010.

Economy Minister Elena Salgado will present the full budget for 2011, the bulk of which is already known, at 0940 GMT. On Friday, she announced cuts of 7.9 percent across public spending and cuts of an average 16 percent for government departments.

''

"HORRENDOUS"

Finance Minister Brian Lenihan said the bill for Ireland's banking crisis was "horrendous" but it brought to a close the public's response to the disaster.

He said the state would also probably take a majority stake in Allied Irish Banks, which needs an extra 3 billion euros in capital by the end of the year.

The level of state support for the banking system remained "manageable", he said, even though it will push the 2010 deficit up to an unprecedented 32 percent of gross domestic product -- more than 10 times the European Union's ceiling.

The huge bill for Anglo was well above Dublin's previous official estimate of 25 billion euros but in line with a 35 billion euro worst case scenario by Standard's and Poor.

''

"FINAL RESOLUTION"

Lenihan said the government remained committed to reducing the deficit below the EU limit of 3 percent of GDP by 2014 and would outline a four-year budget plan in early November, something EU officials have pressed for.

"Today's announcements take the Irish banking system closer to a final resolution of its restructuring, which is a prerequisite for sustained economic recovery," Central Bank Governor Patrick Honohan said in statement.

Lenihan said Ireland would have to slice more than the existing target of 3 billion euros off the 2011 budget but declined to say how much more. The additional cost of the bank rescue would be spread out over more than a decade.

Under fierce pressure from investors who fear a possible Greek-style meltdown in the euro zone, fellow struggler Portugal announced fresh austerity measures for 2011 late on Wednesday.

Socialist Prime Minister Jose Socrates, who heads a shaky minority government, said civil service pay would be cut by 5 percent, public sector pensions would be frozen and value added tax would raised to 23 percent from 21 percent.

The Spanish downgrade illustrated the dilemma of peripheral euro zone governments that risk prolonging an economic slowdown by making the deep public spending cuts and tax rises required to reduce swollen budget deficits.

That could create a vicious circle of low growth and depressed revenue, making it harder to pay off public debt.

Trade unions staged strikes and demonstrations against austerity measures in several European Union countries on Wednesday, but analysts said the protests were too small and disparate to make governments change course on deficit cuts.

''

UNLIMITED GUARANTEE

Ireland issued an unlimited guarantee for its banks in 2008 after a housing bubble burst and the global financial crisis threatened to bring down its financial sector.

The dawn announcement was meant to calm markets which drove the risk premium on Irish government bonds to a euro lifetime record of 475 basis points over German bonds on Tuesday.

"I think it's bold because what they are doing is really giving us the bad news upfront. I think the market needs to know and here it is," said Padraig Garvey, rate strategist at ING.

"It's a pretty astonishing deficit number, it's higher than the national debt a few years ago which is an incredible situation to be in," he said.

Lenihan said the Ireland, which is fully funded until June 2011, would cancel planned bond auctions in October and November and only return to the capital markets in 2011. -- Reuters

Europe stocks fall on Spain cut, Irish bank news

MADRID: European stock markets fell at the start on Thursday, Sept 30 pressured by a downgrade for Spanish sovereign debt by Moody's Investors Service to Aa1 from Aaa and news that the capital injection for nationalised Anglo Irish Bank could surpass $40 billion, while Allied Irish Banks announced capital raising plans.

Spanish stocks fell nearly 1% to 10,384.20, while the Stoxx Europe 600 index fell 0.4% to 259.85. The French CAC-40 fell 0.8% to 3,707.96 and Germany's DAX-30 fell 0.6% to 6,211.14.

The FTSE 100 fell 0.5% to 5,542.68. Banks and miners were leading decliners.

Shares of Allied Irish Bank fell 18% in early trading. - MarketWatch

Khazanah Nasional ceases to be DRB-Hicom substantial shareholder

KUALA LUMPUR: Khazanah Nasional Bhd has ceased to be a substantial shareholder of DRB-HICOM BHD [] after it disposed of 1.13 million shares on Sept 23.

A filing with BURSA MALAYSIA BHD [] on Thursday, Sept 30 showed that after the disposal of the shares, the government's investment arm saw its shareholding reduced to 4.97% or 96.15 million shares.

An earlier filing showed it had disposed of 1.9 million shares on Sept 23.

ICBC's outlook in focus as Goldman sells $2.3 bln stake

SHANGHAI/HONG KONG: Goldman Sachs' $2.3 billion stake reduction in ICBC comes amid a shaky outlook for the Chinese lender, whose shares have slumped this year with no immediate signs of a comeback.

Industrial and Commercial Bank of China attempted to build confidence on Thursday, saying the Wall Street titan remained a strategic partner.

The sale comes after a lock-up restriction expired in April and after a roughly 10 percent decline in ICBC's stock this year, underperforming Hong Kong's benchmark Hang Seng Index, which has risen about 2 percent.

Regulatory risks, coupled with ICBC's upcoming rights offering, also underscore the factors behind Goldman's selldown, which is expected to continue in chunks over the next few years, having sold down $2 billion stakes twice in the last 16 months.

Chinese regulators could raise the minimum amount banks must keep in reserve against future losses to 15 percent from 10 percent now and investors fear such a move could prompt another round of fundraising, said Patrick Pong, analyst with Mirae Asset Securities.

"Potentially, there could be some more disposals next year," said Pong of Goldman's ICBC stake. "If you look at the fundamentals of ICBC, there are some issues with the outlook."

Goldman's sale cuts its stake in ICBC to around 3 percent from 3.9 percent. German insurer Allianz Group and U.S. credit card company American Express also have significant stakes in ICBC.

On Thursday, Hong Kong-listed shares of ICBC fell 3 percent to HK$5.79, a three-week low. It was the second-biggest loser on the benchmark Hang Seng Index, which was flat.

The world's largest bank by market capitalisation was the most actively traded stock in Hong Kong, with 530 million shares changing hands at 2.3 times their 30-day average.

"The overhang on the stock will continue. There are some policy risks," said Mirae's Pong, adding, however, that ICBC's valuation looks attractive on a price-to-earnings and price-to-book basis.

STRATEGIC PARTNER

The stake sale -- the second for Goldman after one in June 2009 -- comes ahead of ICBC's upcoming rights offering, in which shares will be sold at a discount and will dilute the holdings of existing shareholders.

The 2.75 billion shares that were being sold as of Wednesday were priced at HK$5.70-HK$5.79 each, a 3-4.5 percent discount, according to a term sheet obtained by Reuters.

The offering was upsized to 3.04 billion shares, which was quickly snapped up at a 3.9 percent discount of HK$5.74 per share, according to another term sheet obtained by Reuters on Thursday.

ICBC said on Thursday there was no change to its strategic partnership with Goldman, which, along with ICBC International Capital, served as a financial adviser to ICBC in the privatisation of its Asia unit in August.

The ICBC investment for Goldman has been hugely profitable. The value of Goldman's stake before the share sale was more than $10 billion, well above the original $2.58 billion the New York investment bank invested in 2006, when the Chinese bank was just coming off a government bailout and was about to go public.

After the sale, Goldman still holds 10.4 billion shares in ICBC.

Early in 2009, Goldman pledged to keep 80 percent of its ICBC stake until April 2010. Under an earlier lockup agreement, Goldman would have been permitted to sell half of its stake in the state-controlled bank in April 2009 and the rest that October.

Moody's cuts last of Spain's triple-A ratings

MADRID: Moody's Investor Service cut Spain's credit to Aa1 from AAA on Thursday, removing the last of its highly valued triple-A ratings but saying it did not expect to cut again soon thanks to efforts at fiscal reform.

The one notch downgrade was widely discounted by the markets, following cuts by Standard and Poor's in April and by Fitch Ratings in May.

Spain is one of the countries being watched most closely by financial markets in Europe's struggle with billowing debt, but investors have so far given it an easier ride than Ireland and Portugal.

Moody's said a key driver for the downgrade was the significant fiscal deterioration that Spain experienced and the challenges the government will face in reducing the budget deficit in an environment of only moderate economic growth.

It said it expected the economy to grow just 1 percent annually on average for years to come. The government should be able to meet its fiscal targets this year and next but further reforms were necessary to cut the deficit beyond 2011.

"A large part of the fiscal consolidation for this year and next is based on tax increases and measures that cannot be continued for many years," Moody's lead analyst for Spain Kathrin Muehlbronner told Reuters in a telephone interview.

"Spain will need more strucutural measures to bring down its deficit," she said.

The rebalancing of Spain's economy away from CONSTRUCTION [] will also take several years.

"Spain's economy adjustment process is ongoing ' household leverage is still high, there's a large overhang of unsold PROPERTIES [] and while exports have picked up nicely they are still dependent on what happens in France and Germany," Muehlbronner said.

"Portugal is rated A1, quite a way below Spain. Ireland is at Aa2 ' I think this shows you what we think about Spain."

The government's determination to reduce its very large fiscal deficit in the near term is an important factor in the decision to limit the downgrade to just one rating notch and to assign a stable outlook, Moody's said.

The premium demanded to hold 10-year Spanish bonds over German bunds eased to 195 basis points from 198 at Wednesday's settlement.

In it's decision, it said it has taken into account the recently-published 2011 draft budget due to be presented to parliament on Thursday. -- Reuters