#Stocks to watch:* EONCap, Coastal Contracts, Hap Seng, Fitters, MMHE

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KUALA LUMPUR: Stocks on Bursa Malaysia could continue to see lacklustre trade in the week ahead, starting Monday, May 9 in the absence of strong fresh positive external news to spur buying interest.

The FBM KLCI had fallen the past week to below the key 1,530 level while volume has been declining due to the lack of strong institutional leads.

However, on the macro economic front, the strong March exports could help underpin sentiment. Exports reached a new high of RM64.06 billion in March 2011, up 7.8% from March 2010 while on a month-on-month basis, exports in March 2011 increased by 23.7%.

On Wall Street, an unexpectedly strong report on U.S. payrolls helped equities bounce back on Friday from four days of losses, tempering worries that stocks could suffer the sharp declines seen this week in commodities.

The Dow Jones industrial average gained 54.64 points, or 0.43 percent, to 12,638.81. The Standard & Poor's 500 added 5.10 points, or 0.38 percent, to 1,340.20. The Nasdaq Composite rose 12.84 points, or 0.46 percent, to 2,827.56.

For the week the Dow lost 1.3 percent, the S&P fell 1.7 percent and the Nasdaq Composite dropped 1.6 percent.

At Bursa, some stocks which could see trading interest include EON CAPITAL BHD [], COASTAL CONTRACTS BHD [], HAP SENG CONSOLIDATED BHD [], FITTERS DIVERSIFIED BHD [] and Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE).

EON Capital will distribute the RM312 million, or 44.9 sen per share, which it will receive as special dividend from its unit EON Bank Bhd to all its entitled shareholders.

The dividend was proposed by EONCap on April 29 and agreed by HONG LEONG BANK BHD [] as a last-minute extra condition to the latter's acquisition of EONCap's assets and liabilities for RM5.06 billion.

Coastal Contracts proposed a corporate exercise involving a bonus issue and free warrants to its shareholders and also to purchase up to 10% of its paid-up capital.

It said on Friday, May 6 said it proposed a one-for-three bonus issue and one free warrant for every eight shares held after the proposed bonus issue.

Hap Seng Consolidated posted a strong set of earnings in the first quarter ended March 31, 2011, with net profit surging 108% to RM82.17 million in the first quarter ended March 31, 2011 from RM39.48 million a year ago.

Revenue rose 28% to RM751.34 million from RM587.18 million while earnings per share doubled to 14.58 sen from 7.01 sen.

Meanwhile, Fitters Diversified Bhd does not expect to be suspended on Tuesday after it submitted its outstanding annual audited financial statements for financial year ended Dec 31,2010 to Bursa Malaysia Securities Bhd on Friday, May 6.

'There will be no suspension of trading in the above company's securities on May 10,' it said.

Fitters Diversified was due to submit the statements to Bursa Securities for public release on or before April 30. However, due to the delay, it had initially faced suspension on May 10.

Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) posted pre-tax profit of RM114.08 million in the four quarter ended March 31, 2011, down 35.7% from RM177.45 million a year ago.

The decrease was mainly due to lower revenue in engineering and CONSTRUCTION [] and marine repair and conversion segments.

However, its net profit was up 11.7% at RM128.64 million compared with RM115.15 million a year ago. There was a tax writeback of RM14.43 million compared with tax paid of RM60.03 million a year ago.

Its revenue fell 41.9% to RM923.29 million from RM1.59 billion a year ago. Earnings per share were 8.0 sen versus 8.6 sen.

US STOCKS-Jobs report helps Wall St salvage sour week

NEW YORK: An unexpectedly strong report on U.S. payrolls helped equities bounce back on Friday, May 6 from four days of losses, tempering worries that stocks could suffer the sharp declines seen this week in commodities.

Stocks held strong gains for most of the session but ended the week down more than 1 percent. Speculation that Greece might leave the euro zone late on Friday caused stocks to trim gains and gave investors something to worry about as the strength of the market's rally comes into question.

However, the S&P held above key support levels, indicating the week's retreat could set the stage for further gains in contrast to the tumultuous declines in silver and oil markets.

"The stock market is trying to stand on its own feet," said Nick Kalivas, senior equity index analyst at MF Global in Chicago. "Corporate news has been pretty strong, and stocks look like they're more attractively valued than commodities."

A massive selloff in materials and oil on Thursday forced investors out of high-risk assets. The iShares Silver Trust suffered its worst week of outflows ever after heavy losses in the metal.

Stocks biggest boost came from the strong U.S. April payrolls report, according to Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin. The data showed an increase of 244,000 jobs, the most in 11 months..

But stocks came off highs after German magazine Spiegel carried a report, later denied, that Greece had raised the possibility of leaving the euro zone..

"People's memory of the Greek crisis last year caused liquidation that is spilling over from currency and commodity markets into the stock market," said Kalivas.

The three major stock indexes were up more than 1 percent through most of the session. Despite Friday's gains, the S&P posted its largest weekly percentage drop since mid-March.

The industrial sector of the S&P 500, which could benefit from a slide in commodity prices, was the session's best performer with a 0.77 percent advance.

Fluor Corp, the largest publicly traded U.S. engineering company, was the top percentage gainer on the S&P 500 after it posted a small increase in quarterly profit that beat analysts' estimates. Its shares jumped 7.9 percent to $70.87.

The Dow Jones industrial average gained 54.64 points, or 0.43 percent, to 12,638.81. The Standard & Poor's 500 added 5.10 points, or 0.38 percent, to 1,340.20. The Nasdaq Composite rose 12.84 points, or 0.46 percent, to 2,827.56.

For the week the Dow lost 1.3 percent, the S&P fell 1.7 percent and the Nasdaq Composite dropped 1.6 percent.

The S&P 500 held above important technical levels with the week's low just below 1,330 and Friday's close above 1,340.

"On a weekly basis this 1,330 area is a very good support for stocks," MF Global's Kalivas said.

"If you were to work below that, it would question the breakout we saw last week. We're in a battle zone here and next week is going to decide the fate" of the market, he said.

Still, the CBOE volatility index . rose 1.1 percent to 18.40, its highest closing level since March 28. The gauge rose 24.7 percent this week, its biggest weekly percentage gain in almost a year. A rise in the VIX means investors will pay more for protection against their equities exposure.

Friday marked the one-year anniversary of Wall Street's "flash crash" when nearly $1 billion was wiped off U.S. stocks in a matter of minutes before the market bounced back. The crash diminished many investors' confidence in the market.

On Friday about 8.24 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, below last year's estimated daily average of 8.47 billion but still above the year's daily average so far.

Advancing stocks outnumbered declining ones on the NYSE by a ratio of 2 to 1, while on the Nasdaq, about three stocks rose for every two that fell. - Reuters

JPMorgan in talks with SEC to resolve probe

CHARLOTTE, N.C./WILMINGTON, Del: JPMorgan Chase & Co is in advanced talks with U.S. regulators to resolve a probe into its role in selling subprime mortgage-backed bonds in 2007, a case that highlights a rare misstep by Chief Executive Jamie Dimon.

JPMorgan disclosed in a regulatory filing on Friday, May 6 that it was in talks with the U.S. Securities and Exchange Commission to resolve the probe, which a source familiar with the situation said was about the bank's dealings with hedge fund Magnetar over the creation of collateralized debt obligations (CDOs).

The second-largest U.S. bank by assets, and its chief executive, have avoided much of the mortgage controversy that has dogged competitors such as Goldman Sachs Group Inc, Bank of America Corp and Wells Fargo & Co over the financial crisis.

Mortgage backed securities and CDOs were at the heart of the crisis. Wall Street banks vacuumed up home loans, often subprime mortgages, and repackaged them into bonds and other securities that were sold with top-notch credit ratings.

When the U.S. housing market crashed, the securities plummeted in value, generating enormous losses for investors around the world.

Analysts said a settlement with the SEC is unlikely to lead to long-term reputational damage for JPMorgan or Dimon, who has said all banks should not be put into the same basket when discussing the financial crisis.

"Every major player is going to go through this to some degree," said Matt McCormick, a portfolio manager with Bahl & Gaynor Investment Counsel. "But I don't think the market is that concerned at this point. It appears there's more smoke than there is fire right now."

JPMorgan's shares closed down 0.3 percent at $45.04 on Friday.

JPMorgan's disclosure comes a day after court documents revealed the SEC had subpoenaed Credit Suisse for documents related to home loan securitizations.

The SEC also subpoenaed JPMorgan this week for records related to mortgage securitizations, according to Bloomberg.

The latest subpoenas could indicate a further expansion of the SEC probe into U.S. lenders' mortgage-related dealings.

"The SEC is taking a more active role in following up on things that are happening in private litigation," said Thomas Gorman, a partner at the law firm Dorsey & Whitney LLP.

Gorman said securities regulators' subpoenas may not be part of a new investigation but an expansion of an on-going probe.

MAGNETAR DEAL

JPMorgan previously said it had received "a number of subpoenas and informal requests" from federal and state authorities over CDOs and mortgage-backed securities.

Recent government reports and lawsuits have accused traders and bank executives of knowingly packaging dodgy loans into bonds and other securities, at times even betting against the bonds as they touted them to clients.

The SEC investigation centered around whether JPMorgan adequately disclosed to investors that Magnetar helped to select assets for the CDO deal while betting against parts of it, The Financial Times reported in April.

JPMorgan pulled back from the CDO market in 2005, but re-entered the business and expanded in 2006, according to news website ProPublica. JPMorgan and Magnetar agreed to a deal in early 2007 to create and sell a $1.1 billion CDO, according to ProPublica.

In its disclosure filing on Friday, JPMorgan estimated its maximum possible losses from legal proceedings, in excess of established reserves, at $4.5 billion as of March 31, unchanged from its estimate as of Dec. 31.

Wells Fargo, the nation's largest mortgage lender, said its worst-case litigation costs were rising due to foreclosure-related matters. It said its maximum possible loss from legal proceedings rose $500 million to $1.7 billion in the first quarter because of its exposure to foreclosure-related legal issues. - Reuters

Oil crash pits floor veterans vs computer algos

NEW YORK: A day after oil prices plunged an unprecedented $12 a barrel, a New York trader sat on the steps of the dormant oil futures pit, playing a word game on his tablet computer, Reuters reports on Friday, May 6.

Back to business as usual for floor traders, a vanishing breed in a market now dominated by machines and algorithms, a fact that some of them say worsened one of the most shocking -- and baffling -- trading sessions ever.

On the waterfront of Manhattan's southern tip, veterans of the New York Mercantile Exchange's (NYMEX) pits recounted how the crash reminded them of the heyday of the trading floor.

"Yesterday was organized chaos down on the floor, it was right back to the old days," said Chris Kenny, crude oil options trader at Lloyd Group. "The size of the move was almost unprecedented and you could see it all there. Greed and fear, that's what this job is all about."

Action in the options pit was still lively, they said, reminding them of the jostling and jousting of days gone by.

Miles away from the emotional rollercoaster that marked Thursday's puzzling rout, the new breed of computer traders counted their profits in anonymous offices across the country.

High-frequency and algorithmic traders, comprising half the oil market, seem to have weathered Thursday's mayhem without breaking a sweat, unlike many of the new breed who took a beating in the stock market "flash crash" exactly a year ago.

"We continued to trade normally and be involved in the market the whole time, no differently than the day before. We didn't change our risk parameters or our model parameters," an oil futures trader at an proprietary algorithmic trading firm told Reuters.

Unlike with the stock market's "flash crash," few old-school traders blamed the algos for the fall, although some did blame them for the end of a way of life that aided both transparency and liquidity in an often opaque market.

"When you get massive electronic long-liquidation like that the price just moves rapidly. It wouldn't have been the same on the floor," said Bob Penny, an individual trader of crude oil and sugar who has been in the business for 31 years. "You didn't get price vacuums there. Funds don't try and finesse it -- when they decide to sell they just hit it."

While conventional wisdom would have suggested buying on the dips in such a seemingly illogical and abrupt decline, computer programs said otherwise as the fall continued.

"If you'd followed conventional wisdom... you would have got killed," said Jeffrey Grossman, President of BRG Brokerage.

Analysts at investment bank Credit Suisse said automated trading probably did play a role in the fall.

"We believe the magnitude of the correction appears in large part to have been exacerbated by algorithmic traders unwinding positioning."

NOSTALGIA

Many oil trading veterans returning to the NYMEX building on Friday swapped war stories of the previous day. Many still work out of booths and offices at the NYMEX, where open-outcry trading has withered due to the rise of electronic trading over the past decade.

The open pit still exists, but only a few thousand lots ever trade there, a fraction of the million-plus that trade almost round-the-clock.

Veteran traders at NYMEX, a unit of CME Group Inc, recalled price swings linked to some of the biggest moments in recent U.S. history, including the 9/11 attack and Hurricane Katrina. The difference this time? Even a day later, most are unable to pinpoint exactly what set off the frenzy.

The bout of panic selling jump-started trading in the oil options pit, which has resisted the migration of volumes to electronic screens. Traders and brokers still stand shoulder to shoulder, communicating complex deals through a series of shouts and hand gestures incomprehensible to outsiders.

Brokers described near chaos in the pit as traders loaded up on $95 and $100 a barrel option contracts to protect against further price falls.

"People were getting their faces ripped off yesterday, everyone was yelling and screaming all day," one crude oil options broker said, who asked not to be named.

NEW GUARD

The way prices move has changed with trading practices. Lightening-fast, algorithmic traders, known as "black box" players, have multiplied in recent years. Many used to trade open-outcry, yet they are viewed as the antithesis of the old-fashioned pit trader.

Manoj Narang, CEO and chief investment strategist of Tradeworx, a hedge fund that also runs a high-frequency unit, called Thursday a "great day" for his fund, which trades commodity-linked Exchange Traded Funds (ETFs) and stocks.

Narang said that unlike Wall Street's "flash crash" last May, automated trading was not behind oil's plunge. Instead, he cited traders who had gone long-commodities and short the dollar, but were caught out when the U.S. currency bounced up.

"It was a very crowded trade," Narang added.

Even as prices plummeted, oil brokers also stood to gain from the huge jump in trading volumes.

On the sun-drenched plaza outside the exchange overlooking the Hudson River, long-term broker Dominick Caglioti was in good spirits.

"It was great for business because there was a lot of action," he said, extinguishing a cigarette before heading back into the exchange.

"It was still quieter than it used to be, but I guess screens don't yell." - Reuters

MMHE posts 4Q pre-tax profit of RM114m, dn 35.7% on-yr

KUALA LUMPUR: The Malaysia Marine and Heavy Engineering Holdings Bhd (MMHE) posted pre-tax profit of RM114.08 million in the four quarter ended March 31, 2011, down 35.7% from RM177.45 million a year ago.

It said on Friday, May 6 the decrease was mainly due to lower revenue in engineering and CONSTRUCTION [] and marine repair and conversion segments.

However, its net profit was up 11.7% at RM128.64 million compared with RM115.15 million a year ago. There was a tax writeback of RM14.43 million compared with tax paid of RM60.03 million a year ago.

It reported revenue of RM923.29 million, down 41.9% compared with RM1.59 billion a year ago. Earnings per share were 8.0 sen versus 8.6 sen.

The board of directors declared a final dividend of 5.0 sen per share for the financial year ended March 31, 2011 amounting to RM80.0 million.

On the prospects, it said the upstream exploration and production activities by the oil and gas companies are expected to remain active and relatively strong.

'Based on MMHE's tenderbook, positive outcome from some tenders are expected,' it said.

MMHE said its engineering and construction segment would continue to benefit from existing level of activities from major projects such as the Gumusut-Kakap FPS, Kinabalu Topside and the Turkmenistan Block 1 Phase 1.

For the financial year ended March 31, 2011, it reported net profit of RM450.47 million, up 58.5% compared with RM284.11 million in the previous financial year ended March 31, 2010.

At the pre-tax level, it was 12.4% higher at RM424.02 million compared with RM377.21 million. Revenue fell 27.9% to RM4.43 billion compared with RM6.147 billion.

#Flash* EON Cap to distribute interim dividend of RM312m to entitled shareholders

KUALA LUMPUR: EON CAPITAL BHD [] will distribute the RM312 million which it will receive as special dividend from its unit EON Bank Bhd to all its entitled shareholders.

The dividend was proposed by EONCap on April 29 and agreed by HONG LEONG BANK BHD [] as a last-minute extra condition to the latter's acquisition of EONCap's assets and liabilities for RM5.06 billion.

EONCap said on Friday, May 6 that Hong Leong Bank's offer had been completed. It said the amount had been fully remitted to EONCap.

It added that following the approval of Bank Negara Malaysia on Thursday, EONCap was also expected to receive the interim dividend from EON Bank in due course.

'It is the intention of the (EON Cap) board to distribute the entire sale consideration and the interim dividend, with any interest thereon and after deducting other obligations that may be incurred or approved by EONCap after May 6, 2011, back to all the entitled shareholders of the company in due course via the proposed special dividend and proposed capital repayment as approved by the company's shareholders at the extraordinary general meeting held on Sept 27, 2010.

EONCap said with the completion of the offer, it would no longer have any business or operations and would be deemed a cash company based on its cash holdings position comprising the sale consideration and the interim dividend.

It also said the board will not be undertaking any plans to regularise the company's financial condition as it does not intend to maintain the listing status after the proposed distribution.

EONCap said the proposed capital repayment is still subject to the confirmation of the High Court of Malaya.

It also said the sale consideration and interim dividend would be placed with financial institutions to earn interest income.

Coastal Contracts proposes 1-for-3 bonus shares issue

KUALA LUMPUR: COASTAL CONTRACTS BHD [] has proposed a corporate exercise involving a bonus issue and free warrants to its shareholders and also to purchase up to 10% of its paid-up capital.

It said on Friday, May 6 said it proposed a one-for-three bonus issue and one free warrant for every eight shares held after the proposed bonus issue.

Based on the issued and paid-up share capital of Coastal of RM72.49 million comprising 362.45 million shares of 20 sen each, the exercise would involve the issuance of 120.817 million bonus shares.

Upon completion of the proposed bonus issue, the paid-up share capital will be RM96.65 million comprising of 483.26 million shares.

The proposed free warrants issue involves the issuance of one warrant for every eight shares held by all the shareholders after the proposed bonus issue.

Fitters submits audited annual financial statements, avoids suspension

KUALA LUMPUR: FITTERS DIVERSIFIED BHD [] submitted its outstanding annual audited financial statements for financial year ended Dec 31,2010 to Bursa Malaysia Securities Bhd on Friday, May 6.

'There will be no suspension of trading in the above company's securities on May 10,' it said.

Fitters Diversified was due to submit the statements to Bursa Securities for public release on or before April 30. However, due to the delay, it had initially faced suspension on May 10.

Hap Seng Consolidated 1Q net profit doubles to RM82m

KUALA LUMPUR: Hap Senng Consolidated Bhd posted a strong set of earnings in the first quarter ended March 31, 2011, with net profit surging 108% to RM82.17 million in the first quarter ended March 31, 2011 from RM39.48 million a year ago.

It announced on Friday, May 6 revenue rose 28% to RM751.34 million from RM587.18 million while earnings per share doubled to 14.58 sen from 7.01 sen.

Managing director Datuk Edward Lee Ming Foo said: 'This is an excellent start for the 2011 financial year with all our business division registering strong revenue growth compared to the same period last year,' he said.

He said the strong first quarter performance was due to the superior execution of its growth plans.

'Capitalising on the strong underlying fundamentals of all our core businesses, we expect the performance of out group for the rest of the year to be consistent with that of the first quarter,' he said.

Hap Seng Consolidated group's revenue improve on the back of increased contributions across all the six business division, especially PLANTATION []s, automotives, fertilisers and credit financing divisions.

The plantations division reported an operating profit of RM78 million in 1Q11, which was a 55% increase from a year ago.

It said the higher operating profit was mainly due to higher average selling prices of crude palm oil (CPO) and palm kernel (PK) but mitigated by lower sales volume of CPO.

Average selling price of CPO and PK realised for the current quarter were RM3,542 and RM2,907 per tonne which were higher than the RM2,476 and RM1,359 per tonne respectively a year ago.

'The lower CPO sales volume for the current quarter under review was generally affected by seasonal cropping pattern and relatively wet weather conditions as well as lower mature area due to higher replanting undertaken during the period,' it said.

Its property segment recorded an operating profit of RM46 million, which was a 238% jump from a year ago, underpinned by higher project sales and disposal of investment PROPERTIES [].

Hap Seng Consolidated said the property division benefited from higher project sales and gain from disposal of two investment properties in Tawau, Sabah during the current quarter and recorded operating profit which was RM32.2 million (236%) higher than a year ago.

It said the credit financing division's operating profit was 50% higher than the preceding year corresponding quarter in tandem with the higher loan portfolio of approximately RM1.2 billion as compared to RM952 million as at the end of the preceding year corresponding quarter.

No respite for KLCI as investors avoid equities

KUALA LUMPUR: The local stock market continued to lose ground, falling for the fifth trading day on Friday, May 6 mirroring the cautious mood of investors in key regional markets also.

It closed down 5.68 points to 1,515.50 ' down 19.8 points or 1.28% from 1,535.30 on April 28. Turnover declined to 855.73 million shares valued at RM1.42 billion. There were 257 gainers, 448 losers and 308 stocks unchanged.

Reuters reported China's main stock index ended down 0.3% on Friday at a more than two-month low, weighed down by energy shares as investors cut positions after a sharp sell-off in commodities.

The benchmark Shanghai Composite Index fell to 2,863.9, following a 0.2% rise on Thursday. The index is down 1.6% for the week.

At Bursa Malaysia, United PLANTATION []s fell the most, down 36 sen to RM17.64, MISC shed 17 sen to RM7.23 while down 16 sen each were PPB, Sime and Petronas Chemicals to RM16.72, RM8.81 and RM6.92 respectively. DiGi lost 16 sen also to RM29.04.

Boilermech lost 13.5 sen to 68.5 sen. It made its debut on Thursday.

F&N rose the most, gaining 30 sen to RM18.70 after its strong set of earnings and dividend while BAT added 22 sen to RM47.60 and Tenaga 13 sen to RM6.12. Favelle Favco added eight sen to RM1.30.

On the commodities front, oil prices fell 5% on Friday, after a 10% crash on Thursday, as fears about global economic recovery pushed investors to further unwind commodities positions.

Reuters reported Brent crude shed just over US$5, recovering to trade at US$107.16, US$3.64 down, at 4.48am in New York.

Brent settled more than US$10 lower on Thursday at US$110.80 a barrel, the second biggest drop on record. At one point it gave up US$12, its biggest fall ever.

U.S. crude futures were US$3.62 lower at US$96.20 a barrel, up from as low as US$95.25 a barrel earlier in the session.

F&N holds on to gains, AmResearch ups FV to RM22.70

KUALA LUMPUR: Fraser & Neave Holdings Bhd (F&N) continued to be among the top gainers on Friday, May 6, underpinned by its strong earnings and dividends.
At 3.39pm, F&N was up 30 sen to RM18.70 with 60,800 shares done, bucking the weaker market.
The FBM KLCI was down 7.36 points to 1,513.82. Turnover was 602.43 million shares valued at RM908.24 million. Losers beat gainers 473 to 203 while 266 counters were unchanged.
The company posted net profit of RM131.98 million in the second quarter ended March 31, 2011 versus RM85.23 million a year ago, boosted by the sale of a college building.
Revenue was RM1 billion compared with RM872.09 million. Earnings per share were 36.80 sen versus 23.90 sen. It declared 35 sen in dividends.
AmResearch reiterate its BUY recommendation on F&N and lifted its fair value from RM17.40/share to RM22.70/share, based on a PE of 18 times CY11F earnings.
'We believe a small premium is justified given F&N's strong earnings profile within the non-discretionary food industry against a backdrop of rising material costs, as underpinned by its market share leadership position and brand equity strength,' it said.
The research house said though its valuation is at the higher-end of the stock's three-year PE band, it is still at a discount to peer Nestle Malaysia Bhd's current PE of 25 times, at parity to the five-year average historical discount.''

RAM Ratings places EON Bank on rating watch, positive outlook

KUALA LUMPUR: RAM Rating Services Bhd has placed EON Bank Bhd's'' A1/P1 long- and short-term financial institution ratings, on Rating Watch, with a positive outlook.

The ratings agency said on Friday, May 6 that it placed the respective A3 and A2 long-term ratings of the bank's innovative Tier-1 capital securities issuance programme (Tier-1 Capital Securities) of up to RM1 billion and subordinated medium-term notes (sub MTN) issuance programme of up to RM2 billion on rating watch, with a positive outlook.

On April 29, EON CAPITAL BHD [] announced it had accepted the offer made by HONG LEONG BANK BHD [] to acquire the assets and liabilities of EON Capital for approximately RM5.1 billion. EON Bank is the core subsidiary of EON Capital.

The Rating Watch is premised on the proposed acquisition of all the assets and liabilities of EON Capital by Hong Leong Bank.

Upon completion of the proposed acquisition, the ratings of EON Bank's debt facilities will be upgraded to reflect Hong Leong Bank's credit as the obligations of the former will be assumed by Hong Leong Bank, while EON Bank's financial institution ratings are likely to be withdrawn.

The financial institution ratings of Hong Leong Bank had been reaffirmed at AA1/P1 with a stable outlook on April 29.

'In the event the proposed takeover fails to materialise, the outlook on EON Bank's financial institution ratings and long-term ratings of its debt papers will be reverted to stable,' it said.

Sentiment still weak, KLCI dn 7 pts

KUALA LUMPUR: Market sentiment remained cautious in the morning session on Friday, May 6 in line with regional bourses while commodity prices of oil and silver managed to recover from their earlier plunge.

At Bursa Malaysia, the broader market was weaker at midday, but off the early low. The FBM KLCI had fallen 7.12 points to 1,514.06. Turnover was 421.96 million shares valued at RM611.60 million. Losers beat gainers 426 to 176.

While key blue chips were down, trading volume was relatively thin, except for Petronas Chemicals which came under profit taking.

PPB was the top loser, down 28 sen to RM16.60. It generates most of its revenue from its subsidiary Singapore-listed Wilmar.

Petronas Dagagan fell 24 sen to RM15.40 and Petronas Chemical 11 sen to RM6.97. DiGi fell 18 sen to RM29.02 and Genting 12 sen to RM11.10.

Boilermech, which staged a strong debut on Thursday, shed 11 sen to 71 sen. Its offer price was 33 sen.

Poultry based DBE was the most active with 22.70 million shares done, ending the morning session unchanged at eight sen.

AirAsia bucked the trend, rising seven sen to RM3.07 as investors remaining optimistic about its outlook despite the high oil prices. MAS rose one sen to RM1.79.

F&N rose 14 sen to RM18.54 after posting a strong set of earnings and declaring a bumper dividend. Other gainers were Bintulu Port, up nine sen to RM6.80 and and Perstima eight sen to RM4.88.

Faber Group 1Q flat at RM14.15m

KUALA LUMPUR: FABER GROUP BHD [] posted net profit of RM14.15 million in the first quarter ended March 31, 2011 compared with RM14.39 million a year ago.

It said on Friday, May 6 that its revenue rose 7.7% to RM198.18 million from RM183.98 million a year ago. Earnings per share were 3.9 sen versus 3.97 sen.

Faber said its integrated facilities management concession recorded higher revenue by RM9.1 million due to higher variation orders, higher bed occupancy rates and additional new facilities at the government hospitals within the group's concession area.

The property division recorded higher revenue by RM19.2 million mainly due to the launch of new projects in second quarter and fourth quarter 2010.

Its integrated facilities management non-concession recorded a negative variance of RM14.0 million mainly due to relatively lower work orders completed in the current quarter versus a year ago.

It also said its pre-tax profit of RM25.6 million was higher by RM1.8 million as compared to RM23.9 million a year ago mainly due to flow through from higher revenue from integrated facilities management concession and property division.

HK, China shares set to end week lower as resources weigh

HONG KONG: Shares in Hong Kong and China continued to lose ground on Friday morning, May 6 as resources counters extended their slide following a plunge in commodities prices, although firmer banks and airlines helped limit losses on the benchmark indexes.

Turnover on the bourses remained light ahead of U.S. payrolls data, expected later on Friday, where a stronger-than-expected number could prompt investors back into risky assets such as emerging market stocks.

Hong Kong's Hang Seng Index was down 0.6 percent at 23,123.14 by the midday trading break, but traders said the index should find support near its 200-day moving average from which it bounced back following the Japan earthquake, currently at 22,895.6.

The China Enterprises Index was flat, supported by gains in transport stocks that were seen as beneficiaries of lower oil prices. Air China Ltd rose 4.3 percent while China Shipping Development Co Ltd bounced 4.6 percent off a two-year low.

Energy and materials issues were the top underperformers for a fourth session after commodities suffered a heavy selloff in the U.S. Commodities prices stabilised on Friday but the near-term outlook remains uncertain.

"What you're seeing is some doubts about growth being amplified by a rush of speculative money rushing for the exits at the same time," said Khiem Do, chairman of the Asia multi-asset team at Barings Asset Management in Hong Kong.

But the rout in commodity prices was not seen as by market players as a reflection on any major shift in expectations of growth, particularly in Asia.

"No way," said Do. "Asia is still on a solid growth path and consumption and infrastructure remain strong themes that we continue to play in our portfolios."

Non-resources-related counters, especially China financials, saw mild gains although volumes were light as Hong Kong markets headed into another holiday-shortened week.

Agricultural Bank of China Ltd rose 1.3 percent while Ping An Insurance (Group) Co of China Ltd was up 1 percent.

Cathay Pacific Airways Ltd topped the gainers list rising 2.7 percent in relatively high volume. Its shares are still down 7.7 percent this year.

''

SHANGHAI EASES

Shares in China were led lower by energy stocks as investors cut positions following a sharp selloff in commodities that saw oil prices drop by as much as 10 percent on Thursday.[ID:nL3E7G601S]

The benchmark Shanghai Composite Index look poised to record its third consecutive weekly loss, down 0.6 percent at 2,857.0 at the midday trading break.

The energy sector underperformed the broader market for a third straight session, with PetroChina Co Ltd poised to be the biggest weight on the benchmark for the third day running, falling 1.9 percent to a four-month low.

"We have now broken a few key resistance levels," said Chen Shaodan, an analyst with China Development Bank Securities, pointing to how China's main stock index looked poised to finish under its 125-day moving average for a third session.

"It was originally motivated by policy concerns, but now falling global commodities prices are aggravating this downside correction."

Losses in energy plays easily outweighed gains in the utilities sector, the only positive on Friday, with the energy sub-index down 2.3 percent, compared with a 0.3 percent gain by the utilities sub-index .

"There is no domestic reason for the slide in energy stocks in the last few days. It doesn't make sense given high local demand," said Huatai Securities analyst Chen Huiqin. "They should rebound in the near term after this bout of falling oil and commodities prices ebbs." - Reuters

UOB Q1 net pft down 13 pct on costs, low rates; outlook buoyant

SINGAPORE:'' Singapore's United Overseas Bank , Southeast Asia's third-largest lender, posted a 13 percent fall in first quarter net profit on Friday, May 6, hurt by rising costs, low interest rate margins and an absence of one-off gains.

UOB earned S$612 million ($493.2 million) in the three months ended March, down from S$700 million in the year-earlier period. Its results were below the average estimate of S$625 million of six analysts polled by Reuters.

The bank's net interest margin -- the difference between the interest rate the bank charges and what it pays depositors -- was 1.90 percentage points compared with 1.91 in the fourth quarter and 2.25 a year ago.

"Whilst the global economy continues to grapple with various shocks, our core markets remain buoyant, reflecting the strong regional economic fundamentals and rising affluence in Asia," CEO Wee Ee Cheong said in a statement.

The bank said loans growth gained further traction with a 7 percent quarter-on-quarter increase and a 19 percent growth year-on-year.

Singapore banks have seen strong loans growth over the past year but this has not translated into higher earnings due to interest rates hovering near all-time lows.

According to data from the Monetary Authority of Singapore, the three-month interbank bank has been hovering around 0.44 percent since October last year, down from 0.69 percent at the start of January 2010.

UOB shares have risen around 4.2 percent so far this year, beating the broader market's 3 percent fall. ($1 = 1.241 Singapore Dollars) - Reuters

Malaysia's March exports reach new high of RM64b

KUALA LUMPUR: Malaysia's exports reached a new high of RM64.06 billion in March 2011, up 7.8% from March 2010, said Minister of International Trade and Industry, Datuk Seri Mustapa Mohamed.

He said on Friday, May 6 that on a month-on-month basis, exports in March 2011 increased by 23.7%.

'The increase in exports in March 2011 of RM4.64 billion from a year ago was largely contributed by higher exports of electrical and electronic (E&E) products, refined petroleum products, palm oil, crude rubber as well as chemicals and chemical products,' he said.

During the first quarter of 2011, total exports increased 3.5% to RM170.67 billion compared with the fourth quarter of last year.

Mustapa said March 2011 imports rose by 12.1% to RM50.53 billion, resulting in a total trade of RM114.59 billion, up 9.6% from a year ago.

'A trade surplus of RM13.52 billion was registered, making it the 161th consecutive month of trade surplus since November 1997,' he said.

On a month-on-month basis, exports in March 2011 increased by 23.7%. Imports rose by 28.9% and total trade expanded by 25.9%.

He said in the January-March quarter of 2011, total exports increased 3.5% to RM170.67 billion compared with the fourth quarter of last year. Imports contracted 3.4% to RM134.59 billion and total trade increased by 0.4% to RM305.26 billion.

Compared with the first quarter of 2010, exports and imports in the first quarter of 2011 were higher by 7.5% and 12.4% respectively, while total trade increased by 9.6%.

Petronas Chemical falls in active trade to below RM7

KUALA LUMPUR: Shares of Petronas Chemicals Bhd fell below RM7 in very active trade as profit taking picked up in line with the weaker broader market on Friday, May 6.

At 11.04am, it was down 12 sen to RM6.96 with 11.67 million shares done.

The FBM KLCI fell 7.55 points to 1,513.63. Turnover was 307.90 million shares done valued at RM417.11 million. Losers beat gainers 376 to 128 while 264 stocks were unchanged.

JP Morgan Research, in a recent report, has an Overweight rating on Petronas Chemicals at RM7.80.

'We see Petronas Chemicals, the largest SE Asia petrochem producer by volume and revenue, as an unique opportunity to invest in a low-cost gas-based petrochemical producer in Asia that has a diverse product portfolio including fertilisers,' it said.

JP Morgan Research said the company benefited from the high oil price environment as most of its raw material costs are not linked to crude but product prices are.

'This ultimately should benefit Petronas Chemicals as most of their production is based on natural gas, which is currently significantly cheaper than crude, mainly due to the discovery of vast amount of shale gas in the US which was deemed too expensive to recover previously,' it said.

CIMB Research has Buy on Media Chinese at RM1.17

KUALA LUMPUR: CIMB Equities Research has a Buy on Media Chinese International at RM1.17, at which it is'' trading at a FY12 price-to-earnings of 12.2 times and price-to-book value of 1.6 times.

The research house said on Friday, May 6 that Media Chinese is consolidating in a triangle pattern. A breakout would lift prices towards its previous swing high of RM1.24 again. Thereafter, the RM1.30 level will be its next target.

'Technical landscape is improving, reinforcing our short term positive stance on the stock. MACD histogram bars are falling at a slower pace while RSI has also hooked upward.

'Traders may accumulate on pullbacks. However, always place a stop at below the RM1.12 level, its recent swing low. A break below RM1.09 would negate all the positive momentum,' it said.

OSK Research maintains Buy on New Hoong Fatt, FV RM2.85

KUALA LUMPUR: OSK Research said New Hoong Fatt's'' 1QFY11 earnings were slightly weak, accounting for 20% of its full year forecast due to seasonality given the shorter number of working days.

It said on Friday, May 6 that margins were crimped by higher raw material cost but was somewhat cushioned by the higher income contribution from the sale of steel scrap at higher prices.

'While the gradual ban of imported used parts will commence with key critical items which New Hoong Fatt (NHF) does not have exposure to, we remain positive over the longer term as eventually the ban would also include body parts.

'We maintain our earnings forecast as we expect stronger quarters ahead. Our BUY call is maintained as with our FV of RM2.85, premised on 6x FY11 EPS. No dividend was announced,' it said.

OSK Research maintains Underweight on tech sector

KUALA LUMPUR: OSK Research is maintaining its Underweight on the TECHNOLOGY [] sector.

It said on Froday, May 6 prospective earnings disappointments in 1HCY11 on potential component shortages in the semiconductor supply chain, slowing industry growth and the continued uptrend of RM against USD reaffirmed its UNDERWEIGHT call.

'The triple whammy impact would likely unveil itself in the upcoming 1QCY11 quarterly earnings announcement and be dragged on into 2QCY11, plagued further by inventory normalization woes.

'We believe HDD component manufacturers and semiconductor packaging players would likely continue to suffer in 2QCY11, lacking any early indication of sustainable improvement thus far,' it said.

KLCI falls in early trade, Genting weighs again

KUALA LUMPUR: Blue chips fell again in early trade on Friday, May 6, in line with the general weakness in regional markets, weaker overnight close on Wall Street.

Investors were watching on the sidelines, awaiting for the local funds to take the lead in the market also after Bank Negara Malaysia raised the overnight policy rate and statutory reserve requirement. Banks were expected to gain.

Reuters reported Japan's Nikkei average fell on Friday after Wall Street was hit by a massive sell-off in commodities as a surge in weekly claims for jobless benefits intensified worries over a faltering economic recovery

The benchmark Nikkei was down 1.7% at 9,832.58. The broader Topix shed 1.3% to 854.74.

At Bursa Malaysia, the FBM KLCI was down 2.65 points to 1,518.53. Turnover was 32.16 million shares valued at RM31.35 million. There were 43 gainers, 91 losers and 104 stocks unchanged.

Genting fell again, down 10 sen to RM11.12 while IJM shed eight sen to RM6.10, Petronas Chemicals eight sen lower at RM7 while RHB Cap shed seven sen to RM8.72 and Sime six sen to RM8.91.

Blue chips skid, KLCI down 11 pts

KUALA LUMPUR: Selling picked up following the weaker regional markets in early trade on Friday, May 6, sending the 30-stock FBM KLCI down more than 11 points.

At 9.21am, the KLCI was down 11.83 points to 1,509.35. Turnover was 86.49 million shares valued at RM115.26 million. Losers overwhelmed gainers 262 to 42.

BAT fell the most, down 52 sen to RM46.86, PetDag 32 sen to RM15.30, DiGi 20'' sen to RM29, PetChem 16 sen to RM6.92 and Genting 14 sen to RM11.08.

Among PLANTATION []s, KLK lost 34 sen to RM20.62 and FarEast 10 sen to RM7.10.

CIMB Research keeps Daibochi TP at RM3.92, Outperform

KUALA LUMPUR: CIMB Equities Research said despite that Daibochi's 1Q11 results coming in at only 75% of its forecast, when annualised, the earnings met its and market expectations as earnings in the remaining quarters should be stronger.

It said on Friday, May 6 that also within expectations was the interim tax-exempt DPS of 3.0 sen. We maintain our EPS and DPS forecasts.

'Our target price is also unchanged at RM3.92, based on 10.2x CY12 P/E, a 30% discount to our 14.5x target market P/E. We maintain our OUTPERFORM recommendation,' it said.

CIMB Research said factors that could spark a re-rating include i) further margin recovery over the next few quarters, ii) major contracts secured from major non-F&B companies and, iii) attractive gross dividend yield of 8-9%. Daibochi remains its top pick in the packaging sector.

CIMB Research maintains Outperform on Tomypak, lowers TP to RM1.53

KUALA LUMPUR: CIMB Equities Research said'' Tomypak's annualised 1Q11 net profit was only 48% of its forecast, clearly below expectations as the company absorbed some cost increases, probably to avoid a volume backlash.

It said on Friday, May 6 that however, the 1.4 sen interim DPS was within expectations.

'We are slashing our FY11 EPS by 23% to reflect the margin squeeze while cutting FY12-13 by 2-7% as margins should recover by then.

'Our FY11 DPS forecast is cut by only 13% as we revise our payout ratio from 25% to 30%.

'We now value Tomypak at 6x CY12 P/E, a 40% discount to our 10.1x CY12 target P/E for Daibochi instead of 30%. Although our target price drops from RM1.80 to RM1.53, the stock remains OUTPERFORM as it offers a CY12 P/E of only 4x and 7-10% dividend yields. The main potential catalyst is a sharp fall in raw material prices.'

CIMB Research has Sell on IOI Corp, RM5.28

KUALA LUMPUR: CIMB Equities Research has a Sell on IOI Corp at RM5.28, at which it is'' trading at a FY12 price-to-earnings of 14.7 times and price-to-book value of 3.1 times.

The research house said on Friday, May 6 that IOI Corp's share price, after falling below the wedge support, prices have been moving sideways. Although the bulls tried to make a comeback, sellers at the key moving averages proved a tad too strong.

'We think there is still room to the downside. MACD is gyrating in negative territory while RSI is also below the 50pts mark.

'Use any rebound towards RM5.51-5.59 to sell into strength. The moving averages would likely keep the bulls at bay for now. A break below RM5.25 would indicate that the next downleg has begun,' it said.

US oil crashes 10% in record rout to below US$100

NEW YORK: Oil collapsed into free-fall on Thursday, May 5 diving as much as 10 percent and sending U.S. crude back under $100 a barrel as investors staged a nearly unprecedented stampede for the exits.

Weak economic data from Europe and the United States fed concerns that have battered commodities all week. German industrial orders fell unexpectedly in March while U.S. weekly jobless claims hit eight-month highs, sparking a fourth day of profit taking in early trade.

But the onslaught of selling went far beyond any single cause. Brent crude plunged more than $12 at one point -- exceeding the sell-off that followed Lehman Brothers' collapse. U.S. crude broke below $100 for the first time since March as technical triggers set off a cascade of sell-stops.

Shell-shocked traders said the decline that has more than halved this year's oil price gains might not be over yet, but few were ready to call an end to the long bull run.

"The longer-term bull cycle is still in place, but this correction may have a life span of several months, as weaker economic data is fueling this correction to a large part," said Sterling Smith, senior analyst for Country Hedging Inc in Minnesota.

World stocks fell and the 19-commodity Reuters-Jefferies CRB index dropped more than 4.9 percent, heading for its biggest weekly decline since December 2008.

Additional pressure came from news OPEC was considering raising formal output limits when it meets in June to convince oil markets it wants to bring prices down and reverse the impact of fuel inflation on economic growth.

Brent crude futures for June settled down $10.39 at $110.80 a barrel, the second biggest drop on record, in the fourth straight day of losses that sent prices breaking below the 50-day moving average. Later it fell as low as $109.02 a barrel in post-settlement trade.

U.S. crude settled down $9.44 at $99.80 a barrel, before hitting $98.25 a barrel in post-settlement trade, marking the second-biggest one day loss in dollar terms on record.

Silver dives for 5th day, biggest loss since 1980

NEW YORK: Silver plunged more than 10 percent on Thursday, May 5 its biggest one-day drop in dollar terms since the Hunt Brothers price squeeze, dragging gold over 3 percent lower as panic selling snowballed across the commodities sector.

Silver has now lost 30 percent this week, well above the conventional criteria of 20 percent for a bear market, since it surged to a record high near $50 an ounce last Thursday. Silver's plunge for a fifth day led the decline in commodities. The Reuters/Jefferies CRB index .CRB was set for its biggest weekly fall since late 2008 and U.S. crude oil fell below $100 a barrel.

Speculators in the silver futures market were forced to liquidate positions after the CME Group (CME.O) raised margins five times in under two weeks, an 84 percent rise in trading costs that has helped provoke a nearly unprecedented sell-off.

Other factors also weighed on the market, including signals that the European Central Bank was unlikely to raise interest rates next month, which triggered the biggest fall in the euro versus the dollar since November.

"It's going to be a long time before silver can find a bottom to turn higher again," said Dennis Gartman, publisher of the Gartman Letter.

"When you have this kind of damage, it will take several weeks or maybe several months for people to be taken out, and for confidence to be rebuilt," said Gartman. "It's not the end of the commodities cycle, not even close."

Spot silver fell as much as 11 percent to a six-week low of $34.58 an ounce, down almost 30 percent so far this week. It was near the day's low at $34.97 by 3:19 p.m. EDT (1919 GMT). The metal is also heading for its biggest weekly loss since at least 1983.

U.S. silver futures volume already topped 200,000 lots, more than three times above its 250-day average and one of the busiest trading days of 2010.

Widespread investor liquidation prompted gold to slide more than 3 percent to $1,461.57 an ounce, its lowest since mid-April.

Spot gold fell 3.2 percent to $1,4671.69 an ounce. COMEX June gold futures settled down $33.90 at $1,481.40, moving in a range from $1,462.50 to $1,522.10.

"This current sell-off is not commodity specific. It's risk reduction across the market due to sluggish U.S. economic news such as the PMI and initial jobless claims," said Hakan Kaya, commodities portfolio manager at Neuberger Berman, which manages more than $3 billion in commodities assets.

"This is just a temporary leveraging process, not the end of the bull cycle," Kaya said.

VOLATILITY RISES BEFORE PAYROLLS

CBOE gold volatility index .GVX, a gauge of bullion investor anxiety, spiked about 6 percent, ahead of Friday's key U.S. non-farm payrolls data, which should offer evidence of the ability of the economy to generate jobs, something which the Federal Reserve has flagged as a key concern.

Silver selling pressure was accelerated by extremely bearish investor sentiment, as global holdings of silver in exchange-traded funds staged their biggest one-day decline this year.

Silver's decline sent the gold/silver ratio, which measures how much silver an ounce of gold can buy, to an eight-week high above 40 from just below 32 last Thursday.

Technicals were again in focus after silver broke below its 50-day moving average, which had held since February, after it breached 20-day MA earlier this week. But prices were still well above the 100- and 200-day averages, after silver rallied as much as 170 percent over the last 12 months.

CitiFX chief technical strategist Tom Fitzpatrick said the only reference available to chart its current path was the dramatic slide off the previous all-time high in 1980, which took it down from $50 down to $30 in pretty much a straight line.

"Was silver a bubble? I think to a large extent it was. It's notoriously volatile. The fundamentals of silver are simply not as good as gold's," said Stephen Briggs, analyst at BNP Paribas.

Investors scrambled out of physical silver, as reflected by the 15.3 million-ounce fall on Thursday in metal holdings in global ETFs, with the world's largest -- the iShares Silver Trust staging the second-biggest one-day fall since its inception in 2006.

Also weighing down on investment sentiment was news Mexican billionaire Carlos Slim's Minera Frisco (MFRISCOA1.MX) mining company increased its short position in the silver market in the first quarter to fund its development program.

Among platinum group metals, platinum fell 3.4 percent to $1,755.74 an ounce and palladium dropped 5.5 percent to $702.72. - Reuters

Commodity bulls stampede for exit

NEW YORK: Commodity markets were beset by a nearly unprecedented onslaught of investor selling on Thursday, May 5 as modest early profit-taking on mounting economic worries snowballed into one of the worst days on record.

In a slide reminiscent of the steep sell-offs in the wake of the 2008 financial crisis, Brent crude oil dived a record $12 a barrel, natural gas dropped over 7 percent and silver, whose earlier losses were a catalyst for the slide, slumped by nearly $5, its biggest one-day dive since 1980.

The 19-commodity Reuters-Jefferies CRB index .CRB wiped out more than two-thirds of its gains so far this year, shedding 5 percent on the day, its fifth biggest fall ever. The intensity of the decline helped the U.S. dollar to its biggest rise since November, but only vaguely weighed on stocks.

Few traders were ready to call the end to a long bull cycle in commodities, particularly given the fact that none of this week's economic indicators had fundamentally altered the outlook. But many said more losses could follow in markets that by many accounts had gone too far, too fast.

"There's a lot of tourists in our markets that have piled in at the wrong level. Now there's liquidation by commodity trading advisors," said Tony Hall, chief investment officer at UK-based hedge fund Duet Commodities.

"Is it possible that it could go lower? Absolutely. I think there are some commodities that have supportive fundamentals and others that don't and have been artificially inflated."

As the day wore on, oil prices took the lead, diving repeatedly through key sell-stop points and making it difficult to attribute the losses to weak U.S. jobless figures or hints that Europe may not raise rates quite as quickly as thought.

Oil traders expressed shock at the relentless nature of the selling. Prices have been under pressure all week but on Thursday the bulls capitulated.

Brent dropped a record $12 a barrel to below $110, while U.S. crude fell below $100 a barrel for the first time since March, likely relieving pressure on President Barack Obama to take action to tame nearly $4 gasoline prices.

"It's a bloodbath out there, just red across the screens," said Sean McGillivray, vice president and fund manager at Great Pacific Wealth Management in Grants Pass, Oregon.

"We're seeing some of the speculative length get pushed out of the market, especially following the jump in unemployment claims and the stronger dollar."

Unrest in North Africa and the Middle East has encouraged investors into oil since the start of this year, with Brent surging to a 2-1/2 year peak of $127 a barrel last month. But with hedge funds placing a record number of bets on higher U.S. crude prices as of last week, many were warning the market was starting to look lop-sided.

Precious metals paced the rout, with silver dropping over 8 percent after another rise in trading margins, shaking more speculators out of the market. The white metal hit an all-time high near $50 an ounce last Thursday but is now on course for its steepest weekly fall in almost 30 years, down 25 percent since Monday. Gold fell 2.6 percent.

DOLLAR - DEAD-CAT BOUNCE?

The U.S. dollar .DXY rose 1.5 percent against a basket of currencies after the European Central Bank signaled it was unlikely to raise rates next month. The dollar hit its lowest level since July 2008 early this week.

A weak dollar and loose U.S. monetary policy have helped boost many commodities priced in the greenback to multi-year peaks in recent months, although on Thursday many traders said it was unwinding in commodities that aided the dollar.

McGillivray at Great Pacific Wealth said he saw the rise in the dollar on Thursday as a "dead-cat bounce" that might reverse if the slowing pace of the economic recovery triggers another round of financial stimulus from the Federal Reserve.

The number of Americans filing for jobless aid rose to an eight-month high last week and productivity growth slowed in the first quarter, clouding the outlook for an economy that is struggling to gain speed.

The potentially bullish impact of a weaker dollar on commodities can be offset by the link to stalling growth in the world's largest economy.

Analysts at Goldman Sachs, who last month said the rally was starting to look overdone, said the impact of higher commodity prices was starting to affect the U.S. economy.

"We've seen the market as vulnerable to a correction, and the sell-off today is consistent with that view," said David Greely, head of energy research at the bank.

"Concerns about the impact of higher prices on the economy and demand for commodities are now feeding through. The (oil) market focus has now definitely shifted from geopolitical concerns to the demand side."

Economists have said the economy can cope with oil prices at current levels. However, the market sell-off has gained momentum on anecdotal evidence and popular perceptions that pump prices around $4 a gallon in the world's biggest oil user have begun to change U.S. driving -- and spending -- habits.

LME copper shed 3.3 percent to $8,820.20 a ton and touched a 2011 low of $8,744,25 a ton. Tin was the biggest loser of the industrial metals, shedding more than 7 percent to $28,500 a ton at one point.

"It's a broad-based, risk-off selling momentum that has gathered pace," Barclays Capital analyst Gayle Berry said.

Cocoa gave up 4.6 percent as investors liquidated long positions and U.S. coffee futures that touched a near record high two days ago fell 2.1 percent.

U.S. grain and soybean futures joined in the rout, but from a distances. Chicago Board of Trade May corn lost 3 percent to $7.05 a bushel and CBOT May soybeans fell 2.3 percent to $13.19-3/4 a bushel. - Reuters

Commodities rout spurs selling on Wall Street

NEW YORK: Wall Street stock indexes fell for a fourth straight day on Thursday, May 5 as a massive sell-off in commodities spilled over into other markets, forcing investors out of higher-risk assets and rattling equities markets before Friday's U.S. payrolls data.

Oil suffered the biggest one-day price drop ever for the Brent futures contract, which settled down 8.6 percent at $110.80 per barrel. That drove oil shares lower, making the energy sector .GSPE the worst performer on the S&P as it fell 2.3 percent.

The CBOE volatility index .VIX jumped above its 50-day average before closing up 6.6 percent at 18.20, its highest closing level since March 28. The move signals investors are willing to pay more for protection for their equities exposure.

Adding to a recent spate of poor economic data, weekly applications for unemployment insurance rose to an eight-month high, setting off alarms a day before the April unemployment report.

"It may very well be the case that the commodity price bubble has burst," said Hugh Johnson, chief investment officer of Hugh Johnson Advisors in Albany.

Silver prices were set for the deepest weekly decline in nearly 30 years. The iShares Silver Trust exchange-traded fund (SLV.P) tumbled 11.9 percent on its highest volume ever, near 295 million shares. Its 50-day volume average stands below 60 million shares.

The Reuters/Jefferies CRB index .CRB that tracks commodity prices fell 4.9 percent and was on track for its biggest weekly fall since late 2008.

The Dow Jones industrial average .DJI dropped 139.41 points, or 1.10 percent, to 12,584.17. The Standard & Poor's 500 Index .SPX fell 12.22 points, or 0.91 percent, to 1,335.10. The Nasdaq Composite Index .IXIC lost 13.51 points, or 0.48 percent, to 2,814.72.

The S&P 500 fell through its 14-day average, but still closed above 1,333 -- a level that could become an important market support, limiting future losses.

About 9.26 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, in a third consecutive trading day with volume above the year's average, indicating investors are selling with conviction.

Declining stocks outnumbered advancing ones by a ratio of about 8-to-5 on both the NYSE and Nasdaq exchanges.

Consumer-related shares also fell but were the best performers as the drop in crude was seen lessening the financial burden on individuals of high gasoline prices.

U.S. retailers earlier warned of rising costs and cautious consumers even as a late Easter boosted sales of clothing and other holiday-related items in April, helping many beat sales expectations.

Ross Stores (ROST.O) gained 6.9 percent to $78.55 after its sales beat forecasts.

An index of airlines .XAL, a sector sensitive to fluctuations in energy costs, advanced 3.2 percent, its largest daily gain in almost two months.

Helping the Nasdaq, Electronic Arts Inc (ERTS.O) closed at its highest level since August 4 2009, up 8.8 percent at $21.68 a day after posting strong earnings. - Reuters

#Stocks to watch:* Banks, F&N, Pos, Daibochi

KUALA LUMPUR: Markets could continue to see cautious trade on Friday, May 6, with focus on banks after Bank Negara Malaysia raised the overnight policy rate (OPR) and statutory reserve requirement (SRR).

On Thursday, blue chips extended their losses for the fifth day as investors stayed on the sidelines in line with key regional markets. Trading volume had declined ahead of expectations of an increase in the OPR and SRR and also lack of fresh positive external news.

After market close, Bank Negara Malaysia raised the OPR by 25 basis points to 3% during its Monetary Policy Committee (MPC) meeting on Thursday. The central bank said the floor and ceiling rates of the corridor for the OPR were correspondingly raised to 2.75% and 3.25% respectively.

Economists said the higher OPR would see banks adjusting the base lending rates which could hurt lending as consumers and businesses turned cautious in anticipation of further hike.

Analysts said timing was ahead of expectation, but overall, the market expected about 50 basis points increase for this year.

'Market neutral, and impact on economy is only moderate (that is, it won't materially slow down consumption and business dealings). Slightly positive for banks in terms of widening net interest margins,' said the research head of a foreign research house.

Stocks which could see trading interest include banks, Fraser & Neave Holdings Bhd, POS MALAYSIA BHD [] and Daibochi Plastic and Packaging Industry Bhd.

Fraser & Neave posted net profit of RM131.98 million in the second quarter ended March 31, 2011 versus RM85.23 million a year ago, boosted by the sale of a college building.

Revenue was RM1 billion compared with RM872.09 million. Earnings per share were 36.80 sen versus 23.90 sen. It declared a special interim single tier dividend of 15 sen per share and an interim single tier dividend of 20 sen per share.

Pos Malaysia has viewed TRICUBES BHD []'s venture to send government notices via email as a threat and it would explore ways how it could participate in the project.

'We know that this will be a significant threat to the physical mail business,' said Pos Malaysia CEO and group managing director Datuk Syed Faiusal Albar. He said that government mail amounted to RM20 million of its annual revenue.

Daibochi posted net profit of RM4.6 million in the first quarter ended March 31, 2011, down 7.4% from RM5 million a year ago as raw material prices rose.

The flexible packaging solutions provider said on Thursday, May 5 that group revenue rose 13.4% in the 1Q to RM67.7 million, from RM59.7 million a year ago.

Daibochi said the group's property segment contributed RM2.6 million in revenue to 1Q11 compared with only RM500,000 a year ago.

Appeal Court dismisses Sykt Kayu Wangi appeal over revamp scheme

KUALA LUMPUR: The Court of Appeal has dismissed SYARIKAT KAYU WANGI BHD []'s appeal over the rejection of restructuring scheme and delisting.

The Securities Commission said on Thursday, May 5 the Court of Appeal had on April 29,'' ruled in favour of the SC and Bursa Malaysia to dismiss with costs Syarikat Kayu Wangi's appeal against the High Court's dismissal of its judicial review application on Sept 14, 2009.

At the Court of Appeal, after considering the submissions of all parties, Court of Appeal judges Datuk Ramly Ali, Datuk Zaharah Ibrahim and High Court Judge Datuk Azhar Mohamed agreed with the SC's and Bursa Malaysia's submission that the courts should be slow to interfere with decisions made by the capital market regulator on listing matters.

'The judges remarked that market stability would suffer if the courts were to unreasonably intervene with decisions of the regulator as this would lead to uncertainty in the market,' the SC said in the statement.

To recap, Syarikat Kayu Wangi had in December 2007 filed a judicial review proceeding at the High Court in Shah Alam, seeking Court orders to quash both the SC's decision to reject the company's restructuring scheme as well as Bursa Malaysia's decision to delist the company from the Second Board of Bursa Malaysia.

The company sought the order on the grounds that the SC and Bursa Malaysia had made their decisions without just cause.

On Sept 14, 2009, Justice Hinshawati Shariff dismissed Syarikat Kayu Wangi's application with costs and rejected Syarikat Kayu Wangi's contention that there had been a breach of natural justice.

Hong Leong Bank completes issuance of RM2.4b debt notes

KUALA LUMPUR: HONG LEONG BANK BHD [] has successfully completed its issuances of debt notes totaling RM2.4 billion.

It said on Thursday, May 5 the debt notes were the Tier 2 subordinated debt of RM1.0 billion and non-innovative Tier 1 stapled securities (NIT-1 Stapled Securities) of RM1.4 billion respectively on May 5.

The sub debt is rated AA2 while the NIT-1 Stapled Securities is rated AA3 by RAM Rating Services Bhd.

Hong Leong Bank said the sub debt had a maturity of 10 years and callable at the end of year five and on each subsequent coupon payment date. It pays a semi annual coupon of 4.35% per annum.

As for the NIT-1 stapled securities, which is perpetual in nature and callable at the end of year five and on each coupon payment date, pays a semi annual coupon of 5.05% per annum.

The call options on both the Sub Debt and the NIT-1 Stapled Securities shall be subject to the approval of Bank Negara Malaysia.

Maybank to make mandatory unconditional cash offer for Kim Eng

KUALA LUMPUR: MALAYAN BANKING BHD [] is going ahead with its plan to undertake a mandatory unconditional cash offer to acquire all the ordinary shares of Kim Eng Holdings Ltd at a price of S$3.10 per share.

Maybank said on Thursday, May 5 the pre-condition to the making of the offer was to satisfy certain key conditions in the sale and purchase agreements with Ronald Anthony Ooi Thean Yat and Yuanta Securities Asia Financial Services Ltd, to acquire 15.4% and 29.2% stakes respectively in Kim Eng.

'The acquisition was conditional upon the satisfaction of the Key Conditions, including, amongst others, obtaining approvals from Bank Negara Malaysia and the Monetary Authority of Singapore. Maybank expects completion of the acquisition to take place next week,' it said.

In addition to the acquisition, Maybank, had via Mayban Investment Bank Holdings, acquired a further 5.6% stake in Kim Eng from the market on Jan 7, 2011 and Jan 10, 2011.

'In view of this, Maybank will be the majority shareholder of Kim Eng with approximately 50.2% of Kim Eng upon completion,' it said.

Fitters: Delay in audited statements due to need for external confirmations

KUALA LUMPUR: FITTERS DIVERSIFIED BHD [] said the reason for failing to issue the annual audited financial statements by April 30, 2011 was that the external auditors were still following up on certain external confirmations.

In a reply to a Bursa Malaysia Securities query on Thursday, May 5 that the external auditors needed more time to audit the presentation and reconciliation of certain disclosure notes to the financial statements.

Fitters said 'the auditors and management are progressing well and are expected to be able to submit the annual audited financial statements by Friday, May 6'.

F&N 2Q net profit at RM131.98m vs RM85.23m year ago

KUALA LUMPUR: Fraser & Neave Holdings Bhd posted net profit of RM131.98 million in the second quarter ended March 31, 2011 versus RM85.23 million a year ago, boosted by the sale of a college building.

It said on Thursday, May 5 that revenue was RM1 billion compared with RM872.09 million. Earnings per share were 36.80 sen versus 23.90 sen.

It declared a special interim single tier dividend of 15 sen per share and an interim single tier dividend of 20 sen per share.

'Group revenue for the quarter was 16% ahead of the corresponding quarter last year on continued strong sales momentum of soft drinks division and sale of the college building under the Fraser Business Park (FBP) development project,' it said.

F&N said its soft drinks division's revenue increased by 19% compared with last year on account of successful festive promotions and incremental sales from new teas, juice product variants and Redbull energy drinks.

As for the dairies division, revenue was flat. Improved sales in Thailand and Indochina were offset by lower volume in Malaysia as the market adjusted to the price increase implemented in January 2011 to pass on cost increase caused by the selective removal of sugar subsidies.

The sale of the college building contributed revenue of RM60 million to the group.

'Group operating profit increased 58% over the previous year mainly attributed to better performance in soft drinks division and the realisation of profit from the remaining PROPERTIES [] in FBP via the divestment of Brampton,' it said.

#Flash* BNM ups OPR by 50bps to 3%

KUALA LUMPUR: Bank Negara Malaysia raised the Overnight Policy Rate (OPR) by 25 basis points to 3%.

The central bank said on Thursday, May 5 the decision was made at the Monetary Policy Committee (MPC) meeting.

The floor and ceiling rates of the corridor for the OPR are correspondingly raised to 2.75% and 3.25% respectively.

#Flash* BNM raises SRR by 100bps to 3%

KUALA LUMPUR: Bank Negara Malaysia is raising the Statutory Reserve Requirement (SRR) Ratio from 2% to 3%, effective from May 16.

'The decision to raise the SRR is undertaken as a pre-emptive measure to manage the significant build-up of liquidity, which may result in financial imbalances and create risks to financial stability,' it said on Thursday, May 5.

Carrefour French boss goes, shelves property IPO

PARIS: Carrefour, Europe's No.1 retailer, said on Thursday, May 5the head of its core French business was leaving and it was shelving a contentious property listing, fuelling talk of boardroom splits and worries over its turnaround plan.

The group said James McCann was leaving only 15 months after being appointed because its performance in France was not good enough, raising concerns over its mew Carrefour Planet hypermarkets -- the lynchpin of its turnaround plan.

One person familiar with the matter also said the former Tesco manager was uncomfortable with plans to spin off assets, which have been championed by key shareholders Colony Capital and Groupe Arnault but opposed by others.

"Neither of these developments is positive in our view and once again brings into question management's strategy and ability to 'flawlessly execute' its turnaround plan," Espirito Santo analysts said in a research note.

At 0820 GMT GMT, Carrefour shares were down 1.8 percent at 31.05 euros, off an earlier low of 30.8 euros and valuing the group at 22 billion euros. The stock has lagged the STOXX Europe 600 retail index by 13 percent over the past year.

"McCann's departure will raise further questions over the potential for the "Planet" concept and the "En Avant" turnaround programme to be successful and this is key to our long term investment case," JP Morgan Cazenove analysts said.

Carrefour, the world's second-biggest retailer by sales behind U.S. group Wal-Mart, said Chief Executive Lars Olofsson would take over the operational management of its French business pending the appointment of a successor and it would press ahead with plans to spin off discount chain Dia.

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MAKING PLANS

Carrefour launched its "En Avant" turnaround plan in 2009 with a goal of making 4.5 billion euros of savings and in September said it would invest 1.5 billion euros in revamping its main western European hypermarket business.

After initial enthusiasm for the plans, investors' confidence was shaken by two profit warnings late last year.

Earlier this year, the group came up with a plan to float all of discount chain Dia and 25 percent of Carrefour Property to deliver 4 billion euros ($5.6 billion) in special dividends and mollify key shareholders Colony and Arnault.

However, the property spin-off in particular sparked opposition from a range of parties including activist shareholder Knight Vinke, European shareholder rights group Deminor, French minority shareholder association APPAC, French labour unions and founding family shareholder Defforey.

The critics said ceding some control of its PROPERTIES [] could weaken Carrefour in an intensely competitive grocery market, and people familiar with the matter said there was some opposition to the plans within the boardroom.

Earlier this year, European boss Vincente Trius defected to Canadian grocer Loblaw and independent board member Jean-Martin Folz left, fuelling talk of divisions.

"The broader question this raises is why they were doing it (the property spin off) in the first place. There's some pretty big worries about corporate governance there," said Bernstein analyst Chris Hogbin.

Carrefour said its property business would press ahead with its 2 billion euro portfolio of projects and would be managed autonomously, as well as given a dedicated corporate governance structure, in preparation for a listing in the future.

The group, with over 15,000 stores in 34 countries, repeated its goal to grow sales and operating income this year. - Reuters

Investments worth RM69.2m approved for M&E projects In Jan-March

KUALA LUMPUR: The machinery and equipment (M&E) industry had 12 manufacturing projects approved with investments amounting to RM69.2 million during January-March.

Deputy International Trade and Industry Minister Datuk Jacob Dungau Sagan said on Thursday, May 5 that of the total, RM14.2 million were from foreign investors while RM55 million from local players.

"This reflects the continued confidence by foreign investors over the long-term potential growth of the industry," he said when opening the MTA Malaysia 2011 and Metaltech Malaysia 2011 exhibitions here.

During the same period, he said exports of M&E products rose 8.2 per cent to RM3.4 billion.

Heating and cooling equipment and parts were the major export components of M&E products which accounted for 26 per cent of total exports or RM890 million.

Jacob said the M&E industry was a cross-cutting link sector for high TECHNOLOGY [] industries, thus the emphasis for growth was on high value added and high technology M&E to provide support and services for the sectors identified under the National Key Economic Activities (NKEAs).

"This intends to shift our reliance from semi-skilled and low cost labour to one that hinges on advanced manufacturing, high technology and a modern services sector and also employing highly skilled talent," he added.

Among the 12 NKEAs, the M&E industry is involved in the oil and gas and energy, aerospace, electrical and electronics, and ICT industries. - Reuters

Glencore IPO fully covered on first day

LONDON: Swiss commodity trader Glencore's planned $11 billion listing was fully covered on the first day as investors rushed to take part in the mega-float, two sources close to the deal said on Thursday, May 5.

Investors have placed orders for all the shares on offer, including a 10 percent overallotment option, the sources said, adding it was too soon to give guidance on where in the indicated 480-580 pence range the shares would be priced.

That range, announced on Wednesday, values the company at 36.5 billion pounds ($60 billion) at the mid-point, below the price some analysts have valued Glencore at.

Demand for Glencore shares will also have been boosted by the fact it will likely be fast-tracked into the blue-chip FTSE 100 index at the end of its first day of trading.

"The books are covered on the full deal size, including the greenshoe," said one of the sources. "Given the amount of interest we have seen in the transaction, we thought we would be covered pretty early but I think it just reflects ... that the price range was the right price range."

The listing, in which Glencore is looking to raise around $7.9 billion from new shares and $2.1 billion from existing shares, will boost its firepower for deals amid a boom in commodity prices. But it will also push it into the public eye after 37 years as a discreet private company.

Before the start of bookbuilding on Wednesday, Glencore struck agreements with cornerstone investors who will buy around 31 percent of the total offer, one of the largest cornerstone books to date.

The largest investor, Abu Dhabi's IPIC Aabar, which has already committed $850 million to the listing, also plans to invest an additional $150 million in the offering.

Citigroup, Credit Suisse and Morgan Stanley are the joint global coordinators for the offer, joined by another 20 banks in lower ranking syndicate roles.

Glencore was not available for comment. - Reuters

Pos Malaysia views Tricubes email plan as threat

KUALA LUMPUR: POS MALAYSIA BHD [] views TRICUBES BHD []'s venture to send government notices via email as a threat.

Pos Malaysia said on Thursday, May 5 it will engage with Performance Management & Delivery Unit and Malaysian Administrative Modernisation and Management Planning Unit (MAMPU) to understand the myemail project.

Pos Malaysia said it would explore ways how it could participate in the project.

'We know that this will be a significant threat to the physical mail business,' said Pos Malaysia CEO and group managing director Datuk Syed Faiusal Albar.

He said that government mail amounted to RM20 million of its annual revenue.

Tricubes was appointed by MAMPU to implement the 1Malaysia Email project.

RAM Ratings assigns AA1, P1 ratings to Star Publications proposed debt notes

KUALA LUMPUR: RAM Rating Services Bhd has assigned respective final long- and short-term ratings of AA1 and P1 to Star Publications (Malaysia) Bhd's proposed up to RM750 million debt notes.

It said on Thursday, May 5 the AA1 rating was for the RM750 million Medium-Term Notes Programme (2011/2026) and P1 for the proposed up to RM750 million Commercial Papers Programme (2011/2018). Both facilities have a combined limit of RM750 million in nominal value.

RAM Ratings reaffirmed the AA1/P1 ratings of STAR's RM350 million Commercial Papers/Medium-Term Notes Programme (2005/2012) on 21 April 2011. Both long-term ratings have a stable outlook.

The ratings reflect STAR's dominant market position and robust financial profile. The Group's flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases.

STAR's balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load. At the same time, STAR retained its net-cash position.

Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the Group's funds from operations debt cover (FFODC) catapulted from 0.70 times to over 2 times.

On the other hand, STAR's future investments may pose new risks to the Group. In the near term, it may invest some RM60 million in new media assets, i.e. television (TV) channels, radio stations, online media and event organising.

The Group is expected to incur losses for some of these investments during their respective gestation periods given that they are fairly new businesses.

In addition, STAR lacks experience in the TV segment, which is viewed to be more competitive than its mainstay newspaper business.

The ratings also remain constrained by the Group's susceptibility to economic cycles, its vulnerability to newsprint price volatility and the increasing prominence of other media platforms.

While print advertising expenditure (adex) has expanded, TV and radio adex has been rising more rapidly. Circulation and readership of English-language newspapers have also been declining, consistent with the trend witnessed in more developed nations, albeit at a slower pace.

Nonetheless, we opine that print will remain relevant in the eyes of Malaysian advertisers, at least in the medium term.

'Even factoring in additional borrowings for its investments, capital expenditure for the possible development of the STAR media hub in Shah Alam and working capital, we expect the Group to continue exhibiting conservative gearing levels and sturdy debt-coverage ratios.

STAR's gearing ratio is expected to be kept at around 0.3'0.4 times while its FFODC is envisaged to slip, albeit remain favourable at a minimum of 0.5 times over the next 2 years,' notes Kevin Lim, RAM Ratings' Head of Consumer & Industrial Ratings.

Ingenuity Solutions' leap to improve local healthcare industry

KUALA LUMPUR: INGENUITY SOLUTIONS BHD [] is taking a leap to improve the local healthcare industry with the proposed integrated hospital information system (HIS), interlinking hospitals and clinics and data collection of patients in Malaysia to the ministry.

The company had on Thursday, May 5 signed a collaboration agreement with Advance Healthcare Information Systems Sdn Bhd and Advance Health Care Solutions AG to submit the plan to the Health Ministry.

Ingenuity Solutions CEO Ahmad Ruslan Zahari said: 'Today, we are taking a giant leap towards improving our local healthcare industry with the signing of the proposed interlinking system for all healthcare centres including hospitals and clinics.'

He said the HIS would ensure more systematic data collection system of patients as well as management systems for hospitals and clinics. The system would ensure that all the necessary procedures become more convenient for hospital or clinic staff, as well as to provide more efficient services to the patients.

Here's how the plan would work:

Each patient's complete medical record will be stored in the Integrated HIS and these records will be accessible and updated accordingly by any healthcare facilities that are connected to the system.

With this system in place, all patients need to do is to complete an auto registration during their visit to any healthcare centres, and all their data and records will be automatically entered and recorded into a central system.

Healthcare facilities would be able to share patients' information and avoid the unnecessary repetition of tests, as well as to allow doctors to provide better and quicker judgment or diagnosis on the patient's condition.

One main advantage would be that a doctor will be able to have some patient history including medication sensitivity to base his diagnosis on in the event of an emergency or where the patient was delivered unconscious or in the case of new patients. Another advantage is the prevention of patients collecting dangerous medication/drugs at multiple healthcare centres.

In addition, the data collected would be an excellent resource for national statistics and reports and will help serve as a disease or epidemic outbreak alert system, if there are any patterns of illnesses indicating a suspected endemic.

HK shares stumble to 5-wk low, futures signal more weakness

HONG KONG: Hong Kong shares ended at a five-week low on Thursday, May 5 as persistent weakness in energy counters offset gains by some financials, while index futures signalled further downside before the end of the month.

The Hang Seng Index fell 0.23 percent to 23,261.61, closing below a chart support level. The China Enterprises Index fell 0.46 percent.

On the mainland, the Shanghai Composite Index managed to eke out a gain, closing up 0.22 percent as banks and steel plays rose after the benchmark's 2.3 percent rout on Thursday. Lacklustre volume continued to suggest that most investors remained on the sidelines.

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HIGHLIGHTS:

* PetroChina Co Ltd , down 2.6 percent, and CNOOC Ltd , down 2 percent, led the sector lower for a seventh session as reports that China may introduce an oil and gas resources tax added to fallout from weaker commodities prices. The energy sub-index has lost 9 percent in the past month.

* Tencent Holdings Ltd recovered some of Thursday's loss, rising 0.6 percent, partly on short-covering after Chinese social networking company Renren Inc surged 29 percent on its New York trading debut. Bearish bets on Tencent have built up, with 21 percent of total turnover over the past two days sold short, exchange data showed. [ID:nN04185096]

* It was another strong session for China Resources Power Holdings Co Ltd , which rose 1.03 percent on heavy volume lifting it well into technically overbought territory. It is up 10 percent this week as investors piled in on expectations that acute power shortages in China would result in tariff increases. - Reuters

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THE DAY AHEAD:

Market players will focus on U.S. payrolls data scheduled for Friday, which is expected to show job growth eased in April and add to weak economic data coming out of the U.S.

Japanese markets are set to reopen on Friday after the Golden Week holiday and could come under pressure on a stronger yen and play catch-up to weaker global markets.

High Court affirms illegal fund manager's convictions

KUALA LUMPUR: The Kuala Lumpur High Court affirmed the conviction of businessman Phazaluddin Abu, 49, for acting as a fund manager without a licence through the website www.danafutures.com.

The Securities Commission said on Thursday, May 5 the judge, Datuk Ghazali Cha, affirmed Phazaluddin's conviction under section 15A of the Securities Industry Act 1983 (SIA).

His sentences of four years imprisonment under the SIA, and two years imprisonment for each of the three convictions under the Anti Money Laundering and Anti Terrorism Financing Act 2001 (AMLATFA), were also upheld.

The High Court acknowledged that over 52,000 investors had invested in the unlicensed scam which resulted in a collection of over RM65 million.

A whole unit in the Securities Commission was established to investigate internet based fraudulent schemes such as this including forensic expertise and a lot of public expense was incurred.

In dismissing Phazaluddin's appeal against the Sessions Court's decision, the judge also upheld the convictions under the Anti Money Laundering and Anti Terrorism Financing Act 2001 (AMLATFA) for dealing with the moneys collected via the unlicensed scam.

The High Court maintained the findings that Phazaluddin was the mastermind behind the website and that he had collected the moneys.

The SC said 29 witnesses were called through the three year trial, which resulted in the first conviction in the country for an illegal online investment operation.

Phazaluddin was directed to serve his imprisonment sentence immediately as his request for a stay of execution pending appeal was dismissed. The High Court agreed that deterrent punishment on this type of securities laws breaches was essential.

Market remains cautious at midday

KUALA LUMPUR: Share prices on Bursa Malaysia were mixed at midday on Thursday, May 5 as sentiment remained cautious with investors tracking weaknesses in external markets, dealers said.

The FTSE Bursa Malaysia KLCI (FBM KLCI) lost 3.07 points to 1,525.36 after opening 2.80 points lower at 1,525.63.

Dealers said sentiment stayed bearish in view of overnight losses on Wall Street, weak US economic data and concerns over the slow, global economic growth.

Expectations of further monetary tightening in China to cool inflation has also kept investors sidelined.

However, some bargain hunting, especially among lower liners limited overall losses.

The PLANTATION [] Index lost 16.25 points to 7,575.90, the Finance Index added 6.979 points to 13,983.89 and the INDUSTRIAL INDEX [] slipped 7.44 points to 2,760.57.

The FTSE Bursa Malaysia Emas Index slipped 17.19 points to 10,502.39 and the

FTSE Bursa Malaysia Mid 70 Index gave up 14.779 points to 11,321.74 but the

FTSE Bursa Malaysia Ace Index gained 28.83 points to 4,255.42.

Gainers led losers 306 to 265 while 282 counters were unchanged, 585 untraded and 28 others suspended.

Turnover stood at 447.876 million shares worth RM545.993 million.

Boilermech made an impressive debut on the ACE Market with a 49.5 sen premium over its issue price of 33 sen with 8.087 million shares transacted. As at midday, the counter gained 53 sen to 86 sen.

For active stocks, MAA Holdings rose one sen to RM1.33, Focus Dynamics declined half a sen to 10.5 sen and Hubline eased half a sen to 12 sen.

Among heavyweights, Maybank and EON Capital were unchanged at RM8.66 and RM7.35 respectively, Genting lost four sen to RM11.26, Hong Leong Bank gained eight sen to RM10.38 and Public Bank improved two sen to RM13.08. - Bernama

GLOBAL MARKETS-Silver sparks decline in commodities, stocks fall

HONG KONG: Spot silver prices slid for the fifth straight day on Thursday, May 5 to the lowest in a month, while the euro secured gains against the dollar on Thursday before the European Central Bank meeting where it is expected to reinforce its hawkish outlook.

The precious metal's 20 percent slide from a record high near $50 an ounce hit last Thursday rippled into other markets such as crude oil and the Australian dollar , encouraging investors to take profits after a recent rally.

But some scattered short-covering by traders before the ECB meeting pulled some markets off lows with the Aussie advancing versus the yen and silver from the day's lows.

The pull-back in commodities this week pushed Asian shares outside Japan down for the third consecutive day, moving further away from a three-year high tested last week, even as commodities trading giant Glencore readied for a blockbuster IPO in London and Hong Kong.

Japanese markets are shut for a holiday.

Notwithstanding this week's softness in global equities, partially fuelled by some soft U.S. economic data, markets have been broadly steady after posting big gains last quarter.

"This is more of a consolidation phase and we are likely to see low double-digit returns this year after a recent nice run up," said Binay Chandgothia, portfolio manager at Principal Global Investors in Hong Kong. The firm manages more than $200 billion in assets worldwide.

Reflecting that caution in credit markets, spreads on the benchmark iTraxx investment grade index for Asia ex-Japan widened slightly to 106/108 basis points after narrowing sharply in recent weeks.

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COMMODITIES RETREAT

The Reuters-Jefferies CRB index , a global benchmark for commodities, fell nearly 2 percent on Wednesday, hit by the sell-off in silver and declines in coffee, sugar and cocoa. [ID:nWEN2635]

Until this week's retreat, commodities have been the best performing asset class in the first four months of this year, up more than 13 percent.

Copper extended losses briefly on Thursday, with London futures dropping to seven-week lows as concerns grew that Asian economies would probably sacrifice some growth in exchange for keeping inflation under check, reducing demand.

India lifted interest rates by an aggressive half point this week while a Reuters poll of economists marked down 2011 growth forecasts for India and Australia.

HAWKISH ECB

In the currency markets, the euro hovered near a 17-month high against a struggling dollar on Thursday ahead of the ECB meeting, while the dollar index hit its sixth three-year low in the last seven sessions, but managed to rebound from the trough.

The numbers raised worries that Friday's crucial non-farm payrolls report will disappoint and prompted the euro to consolidate its gains near a 17-month high against the dollar as markets braced for more hawkish comments from the ECB.

The ECB is expected to signal its readiness to raise interest rates when it meets on Thursday and may use its 'strong vigilance' code words to signal a rise as soon as June.

It raised euro zone rates by a quarter of a percentage point to 1.25 percent last month, ending almost two years of record-low interest rates and beginning what economists expect to be a run of increases.

"Positioning is light going into the ECB and talk of double-no-touch 1.4750/1.4950 in options market may contain the range. But I expect the ECB to keep the 'strong vigilance' wording," a trader at a U.S. investment bank said.

In contrast, top Federal Reserve officials said on Wednesday U.S. inflation remained well under control, reaffirming the view that the Fed will keep policy ultra loose.

That sent U.S. Treasury yields to their lowest levels since mid-March, with the 10-year yield falling to 3.23 percent, down nearly 40 basis points down in less then a month. - Reuters