Talk of India, China dominates Wharton summit

India and China were the main topics of interest at The Wharton Economic Summit held last month by the University of Pennsylvania's The Wharton School in Philadelphia.

Several panelists across all sessions highlighted the underlying importance of the two Asian nations and the value they hold for companies to do business. Senior economists and top-level managers stressed the need for companies to look at China and India and their booming potential.

Their message was succinct — multinationals cannot encompass the concept of globalization without having set foot either in India or China.

In a lunch session, Wharton professor of finance Jeremy Siegel took this a step further in discussing some of his findings from closely monitoring China and India. According to his research, China and India will jump to the first and third positions, respectively, in terms of consumption of goods by 2050. The United States will be sandwiched between the two and he pointed out that companies should not view this Asian explosion as a threat, but should consider it an opportunity to target a population of almost 2 billion and the vast potential it holds.

Following Siegel's thoughts, panel sessions focusing on outsourcing and emerging markets drew some of the largest crowds of the summit.

In the session on emerging markets, Manuel Montero, the chief executive officer of SAFTPAY, a non-credit card company that offers a payment system allowing bank customers worldwide to make e-commerce transactions, said that 86 percent of the world population is part of emerging markets.

"Even though 86 percent of the world population comes from these emerging markets, they constitute only 23 percent of the world economies," Montero said. "So, it's very difficult to find the perfect partner country. You have to select the country and have to understand the culture and how the country functions. You have to make sure that you have a commitment and also a strong, close and continuous management."

Montero focused predominantly on the Latin American markets while Rohit Aggerwal, co-founder and managing director of RAS Capital Management, focused on India.

He laid out several favorable facts that would entice potential entrepreneurs to do business in India. A 13-year veteran of handling foreign investments in India, he said that the greatest asset of India was its human capital.

"The greatest asset that has India going is its population," Aggerwal said. "Fifty percent of the population is under 25 and that represents a large, potential workforce entering employment."
He attributed India's sudden spurt of growth to a favorable economic climate in the last 10 years.

"Between 1998 and 2007, cable subscribers have gone from 25 million to 85 million," Aggerwal said. "Cell phone users have gone from a million to 120 million. There has been a huge explosion in consumer service.

"The interest rate has come down from 40 percent to 10 percent," he said. "Inflation has fairly come under control. There is a strong flow of foreign investment and that has resulted in an increase in mergers and acquisitions."

Finally, Shiv Khemka, vice chairman of the Sun Group, summed it up when talking about choosing the perfect partner to do business with in emerging markets.

"You have to choose the right partner," Khemka, who spoke about the benefits of Russia, said. "Get the best human capital and have a long-term view in these emerging markets. These are the keys to succeed in these regions."

Rajat Gupta, senior partner at McKinsey & Co., was the keynote speaker of The Wharton Economic Summit. Panels throughout the two-day summit, held on April 12 and April 13 at the Pennsylvania Convention Center, covered a number of business topics, including the future of technology, "Wall Street meets Hollywood," sports business, real estate and security.

The summit also featured a focus on ethical issues confounding business organizations and on equity markets.

China's Q1 GDP: Too hot for comfort

Is there such a thing as too much of a good thing, well if the reaction to China's latest GDP figures is anything to go by, it surely is. But there are major fears of the dragon over heating.The bustle on China's streets reflects the boom in its economy with its people spending more, but it might be growing too fast and that's the fear of the government.

China's GDP in the first quarter of this year grew faster than expected at 11.1 per cent supported by consumption growth at 3.3 per cent against its Central Bank's target of 3 per cent.The county's trade surplus doubled to $46 billion taking the foreign currency reserves to all time highs.

Meanwhile inflation also touched is at two-year highs.

Worried central bank

While the Dragon is racing too fast beating all the expectations for its own good Central Bank is worried. And when China comes out of a binge the entire world gets a hangover.

With fears of overheating engulfing China's markets that government might clamp down by raising the interest rates China's market indices tanked nearly 5 per cent creating global fears.

Hong Kong's Hang Seng and Singapore's Strait Times lost 2.3, 3.2 per cent while Jakarta closed down by 2.1 per cent.

Markets are afraid that raising interest rates could threaten China's weak banking system or by letting the Yuan appreciate would hurt export growth.But everyone around the world is hoping that the dragon's landing is a soft one and not a thud that shakes all other markets.

Asian Stocks Rise for a Third Day

Asian stocks rose for a third day, with indexes in South Korea, China and Indonesia set for records.
Samsung Electronics Co. advanced after LG.Philips LCD Co. reported a loss that was smaller than some analyst estimates and as Banc of America Securities LLC said Intel Corp.'s profit will match its forecast. Rio Tinto Group led mining companies higher after copper prices advanced to a seven-month high and U.S.- based Alcoa Inc. posted its most profitable quarter ever.

The Morgan Stanley Capital International Asia-Pacific Index added 0.1 percent to 147.80 as of 12:36 p.m. in Tokyo, set for its highest since Feb. 27. A three-day gain will be the measure's longest rally since a similar period ended March 26.

``The LCD industry has entered a recovery phase and profitability is likely to continue to improve,'' said Kevin Yang, chief investment officer at Paradigm Asset Management Co., which oversees $360 million in assets. ``The worst is over.''

Japan's Nikkei 225 Stock Average dropped 0.2 percent to 17,634.15, while the broader Topix index declined 0.1 percent. Kubota Corp., the country's largest maker of farm equipment, fell on a report that showed Japanese machinery orders slipped more than expected in February.

Benchmarks advanced in Taiwan and Thailand, while indexes in Singapore and Malaysia touched record highs.

U.S. shares rose yesterday, boosted by improved profit outlooks for Intel Corp. and Exxon Mobil Corp. The Dow Jones Industrial Average gained for an eighth day, the longest winning streak since March 2003.

Most Americans Fear Recession in the Next 12 Months, Poll Finds

Most Americans expect a recession within a year and disapprove of President George W. Bush's handling of the economy even though the unemployment rate is at a five-year low, a new Bloomberg/Los Angeles Times poll found.

Six in 10 who were surveyed predicted a recession, similar to the 64 percent who anticipated the economy would contract in a December 2000 poll by the Los Angeles Times three months before the last decline. In the current survey, 71 percent of those earning less than $40,000 said they expect a recession compared with about half for those making more than $100,000.

``We're living on borrowed time,'' said Andrew Herring, 43, a chemical engineering professor at the Colorado School of Mines in Golden, Colorado, who took part in the survey. ``We spend ridiculous amounts of money on the war and now we have issues with the subprime housing market,'' said Herring, a Democrat.

Fifty-seven percent of those surveyed disapproved of Bush's handling of the economy and 38 percent approved, his worst showing in eight months. Nonetheless, 57 percent said the economy is doing well. That was down 11 points from January.

The Department of Labor reported on April 6 that the economy added 180,000 new jobs in March and the unemployment rate fell to 4.4 percent, matching October's five-year low. On the minus side, gasoline prices have risen 29 percent since January and the housing market has cooled.

Sixty-four percent of those polled said their own finances are very or fairly secure compared with 35 percent who described them as shaky.

Nasdaq seeks lenient norms to lure desi cos - ET

The year 2007 could see a fierce battle between two leading stock exchanges in the world — Nasdaq and London Stock Exchange (LSE) — to bring Indian firms in its fold.

Nasdaq has sought approval from Securities Exchange Commission (SEC) for a new trading platform with less-stringent guidelines. The move is intended to listing more companies on the exchange which could give run for its money to Alternative Investment Market (AIM) of LSE, the preferred destination of midcap Indian companies for last two years.

Sources close to the development informed that Nasdaq has launched a new portal in December 2006 which could be evolved as a trading platform with less-stringent norms. Interestingly, 14 Indian companies have so far registered to the portal.

Some of these are Bajaj Hindusthan, Cipla, Central Bank, Gail India, Kotak Mahindra Bank, Reliance Petro, Suzlon Energy, TCS and Tech Mahindra. It may be noted that Nasdaq is operating a portal from 1990. This facility provides regulatory review to ensure eligibility for the clearance and of securities through the DTC (depository trust company).

“Now Nasdaq has sought SEC approval for the portal market system for secondary trading in 144A securities among QIB’s , qualified brokers and dealers,” sources added. The section 144A of SEC allows private placement without SEC registration and US Gaap compliance.

LSE launched AIM around two years back for companies which cannot comply with the stringent guidelines of the main market. In last two years (2005 and 2006) 13 Indian companies got listed on AIM. On the contrary, the number of Indian companies listed on Nasdaq remains the same because of the stringent guidelines.

The Indian companies listed on Nasdaq are Infosys, Rediff and Sify. Besides, there are five companies listed on Nasdaq which has its main business interest in India like Cognizant. Sources pointed out that Nasdaq has over 2,600 QIB’s so the alternative market in the exchange will have an adequate depth.

Asian Market rises..

Asian stocks advanced for the first time in three days, led by Toyota Motor Corp., after the U.S. unemployment rate unexpectedly dropped, easing concern demand will slow in the world's biggest economy.

``The employment data was good news for exporters because it provided evidence that the fundamentals of the U.S. economy are stable,'' said Hideyuki Ookoshi, who oversees $365 million at Chiba-Gin Asset Management Co. in Tokyo.

Doosan Heavy Industries & Construction Co. gained after the value of South Korean developers' overseas contracts jumped 43 percent in the first quarter. Taiwan's Bank of Overseas Chinese climbed after Citigroup Inc. agreed to buy the lender.

The Morgan Stanley Capital International Asia-Pacific Index added 0.3 percent to 146.73 at 10.46 p.m. in Tokyo. Japan's Nikkei 225 Stock Average advanced 1.3 percent. All markets open for trading gained. Hong Kong, Australia, New Zealand and the Philippines are closed for holidays.

Toyota, the world's largest automaker by value, rose 1.4 percent to 7,500 yen. Sony Corp., the maker of the PlayStation 3 game console, jumped 2.3 percent to 6,340 yen. Toyota generated more than a third of its fiscal 2006 revenue in North America while Sony made 70 percent of its sales overseas last year.

U.S. unemployment fell to 4.4 percent last month, the Labor Department said on April 6, matching a five-year low in October. The median estimate of 73 economists surveyed by Bloomberg News was for a 4.6 percent climb, from 4.5 percent. Some 180,000 new jobs were created in March, more than the forecast 130,000 rise.

Taiwan Semiconductor Manufacturing Co., the world's biggest supplier of made-to-order chips, gained 0.3 percent to NT$69.50. Chartered Semiconductor Manufacturing Ltd., the third-largest custom chip maker, climbed 1.4 percent to S$1.46 in Singapore.

Yen Weakens

Japanese stocks also gained after the yen weakened against the dollar and the euro, increasing the value of overseas sales when converted back into yen. Komatsu Ltd., the world's second-largest maker of construction machinery, climbed 2.2 percent to 2,520 yen.

The yen weakened to 119.26 against the dollar in New York on April 6, the lowest since Feb. 26. Japan's currency fell to a record intra-day low of 159.69 versus the euro. The yen recently changed hands at 119.37 per dollar and 159.61 to the euro.

``If the yen continues to trade around its current level that will be positive for companies here,'' said Chiba-Gin Asset Management's Ookoshi.

Asian Market Falls

Asian stocks dropped for the first time in three days, led by BHP Billiton Ltd. as oil prices extended declines after Iran said it will release 15 British sailors and marines.

``The tension between Iran and the U.K. drove crude prices higher and people are speculating further gains in oil will be difficult after this geopolitical risk was removed,'' said Yoshinori Nagano, who helps oversee about $70 billion at Daiwa Asset Management Co. in Tokyo.

Australia's Westfield Group and Foster's Group Ltd. fell after the country's currency climbed to a decade-high against the dollar, reducing the value of U.S. sales. Rinker Group Ltd. rose after a hostile takeover bid from Cemex SA won U.S. regulatory approval.

The Morgan Stanley Capital International Asia-Pacific Index declined 0.4 percent to 146.30 at 12:24 p.m. in Tokyo. Japan's Nikkei 225 Stock Average lost 0.4 percent, as did Australia's S&P/ASX 200 Index, which fell from an all-time high.

All markets open for trading fell, except in China and Singapore, which both climbed to records. Hong Kong, the Philippines and Taiwan are shut for holidays, while Australia closes at 1 p.m. Tokyo time.

Toshiba Corp. and Samsung Electronics Co. paced gains among Asian computer-related shares after a report from Citigroup Investment Research said Microsoft Corp.'s earnings increased last quarter. The report helped U.S. technology stocks pace an advance in the broader market.

Ending Tension

Crude oil in New York yesterday settled 0.4 percent lower at $64.38 a barrel, after sliding as much as 1.7 percent. It recently traded at $64.39, a 5.4 percent decline from $68.09 it reached on March 27, the highest since Sept. 6.

Asian Stocks Advance, Led by Canon, Mitsubishi

Asian stocks gained, led by Canon Inc. and Mitsubishi UFJ Financial Group Inc., as investors bought shares that fell yesterday on concern a U.S. manufacturing report would drive down equities.

``U.S. markets turned out more stable than people feared yesterday and that prompted buying back of large-cap stocks, although it may only last a couple of days,'' said Yoshihisa Okamoto, who helps oversee $1.9 billion in assets at Fuji Investment Management Co. in Tokyo.

U.S. stocks rose even after the Institute for Supply Management said manufacturing growth in the world's largest economy slowed more than forecast in March.

The Morgan Stanley Capital International Asia-Pacific Index climbed 0.8 percent to 144.47 as of 11:04 a.m. in Tokyo. BHP Billiton Ltd. led resources stocks higher after copper climbed to a four-month high and nickel gained.

The Nikkei 225 Stock Average rose 0.8 percent to 17,162.62. Markets elsewhere in the region gained, except for in South Korea which was little changed.

Canon, the world's biggest digital-camera maker, rose 1.1 percent to 6,300 yen, after falling 1.6 percent yesterday. Mitsubishi UFJ, Japan's biggest lender by assets, climbed 1.5 percent to 1.34 million yen. The stock declined 0.8 percent yesterday. Matsushita Electric Industrial Co., the world's biggest consumer electronics maker, advanced 2.8 percent to 2,420 yen, rebounding from a 0.8 percent loss yesterday.

Asian Stocks Advance, Led by Honda and Sony on Tankan Survey - Bloomberg

Asian stocks climbed, led by Honda Motor Co. and Sony Corp., after a survey showing Japan's largest companies may increase capital spending this year stoked optimism about corporate profits.

The Bank of Japan's quarterly Tankan survey of business confidence showed large manufacturers in Asia's biggest economy plan to raise spending on factories and equipment by a bigger- than-forecast 2.9 percent this fiscal year.

``Planned capital spending that exceeded forecasts and business sentiment which was roughly in line with the market consensus eased investors' concern they need to change their strategy,'' said Koji Uchida, who helps manage $61 billion at Mitsubishi UFJ Asset Management Co. in Tokyo.

The Morgan Stanley Capital International Asia-Pacific Index climbed 0.5 percent to 145.36 as of 12:15 p.m. in Tokyo. Japan's Nikkei 225 Stock Average advanced 0.5 percent to 17,377.17, while the broader Topix index added 0.2 percent.

Benchmarks elsewhere in the region rose, except in Australia. Woolworths Ltd. and Westpac Banking Corp. fell as a surge in retail sales and home-building approvals fueled expectations the central bank may raise interest rates this week.

China's CSI 300 Index gained, set for a record close. Steelmakers rose after Baoshan Iron & Steel Co. reported a 77 percent increase in fourth-quarter profit. Automakers such as Hyundai Motor Co. led South Korea's Kospi index higher on speculation a free-trade accord with the U.S., which may be reached today, will boost car exports.

Global economy integrating

Legend has it that this saying originated after the Wall Street Crash of 1929; the U.S. crash sent many European economies into even larger depressions than our own.

But if the recent events of Feb. 27, 2007, told us anything, it's that America isn't the only market capable of spreading an economic cold anymore. The 9% drop in the Chinese market that Tuesday prompted a near 4% drop in the S&P 500; the U.K. FTSE 100 fell 2%, and the Indian BSE slid 4%.

Even smaller global events have had major impacts on the markets. Just three years ago, an uprising in Nigeria sent oil prices over $50 for the first time and roiled the global markets for a few days.

The development toward highly correlated global markets has become a reality in a very short period of time. According to a recent article in The Economist, international markets have revealed a 95% correlation with the S&P 500 -- this figure once sat as low as 40% in the mid-1990s!

In other words, the global markets are dancing in step more than ever before, so while adding international stocks to your portfolio can still lead to big returns, the days of getting a "free lunch" from international diversity may be coming to an end.

Why this is a good thing

The Economist cites various phenomena that are contributing to converging global markets. Among them: reduced controls on capital, a larger number of cross-border listings, and multinational mergers.

In just the past few months alone, some of the world's biggest stock exchanges have announced agreements or mergers to integrate trading systems. NYSE Group (NYSE: NYX) recently merged with European market, Euronext. The European Union's internal market commissioner, Charlie McCreevy, said that the NYSE/Euronext union marks the beginning of stock market mergers and "at some point we will see moves toward a common pool of liquidity."

Furthermore, many companies are listed in multiple global markets in order to gain access to foreign capital. Just as some foreign companies appear on U.S. exchanges like China Life Insurance (NYSE: LFC) and Brazil's Companhia Vale do Rio Doce (NYSE: RIO), U.S. companies such as NVIDIA (Nasdaq: NVDA) and Amgen (Nasdaq: AMGN) are listed on the Frankfurt and London exchanges.

Finally, a few major international mergers have taken place in the past five years, including Alcatel-Lucent (NYSE: ALU) and Arcelor Mittal (NYSE: MT). The effects of such unions increase global market correlation because the newly formed companies are known in multiple countries and generate revenues in multiple markets.

You can still profit

These signs seem to point toward one global stock market, where an investor can trade any stock from anywhere in the world at any time. Even though the "free lunch" benefits of international diversification dwindles as this becomes a reality, the growth potential of international stocks remains promising, particularly in emerging markets such as Taiwan and South Africa.

The secret is finding these companies early in their growth stages. Early investors in Chinese wireless community NetEase.com, for instance, have seen their shares appreciate 10,000% since March 2002. The thing is, NetEase's rise wasn't a miracle -- it showed the signs of a strong, promising company in 2002. With a founder/CEO with significant ownership at the helm, a strong balance sheet, and a wide market opportunity, NetEase was well positioned for growth, and indeed, it has done just that.

Need some help finding a few good international stocks? Fool senior analyst Bill Mann and the Motley Fool Global Gains team are a great resource -- they take the time to explain the intricacies of the global markets and teach you what to look for and what to avoid.

Asian Market Rise on Japanese Economy Reports

Asian stocks rose, led by Mizuho Financial Group Inc., after industrial production and household spending reports in Japan boosted confidence in the growth outlook for the region's biggest economy.
``There's a sense of recovery there and that's providing support to the market,'' said Hideyuki Ookoshi, who oversees $365 million at Chiba-Gin Asset Management Co. in Tokyo. ``If production recovers, the Japanese economy could take off from its current plateau around mid-year.''

The Morgan Stanley Capital International Asia-Pacific Index climbed 0.3 percent to 144.90 as of 1:33 p.m. in Tokyo. The benchmark has gained 3.3 percent this year, set for its third straight quarterly advance.

Japan's Nikkei 225 Stock Average rose 0.2 percent to 17,284.22, while the broader Topix index added 0.4 percent. Markets advanced, apart from in Hong Kong, China and New Zealand. South Korea, Taiwan and Singapore were little changed.

Inpex Holdings Inc. led energy stocks higher after crude oil prices rose for a ninth day. Australia's Fairfax Media Ltd. gained on speculation of industry mergers after ownership restrictions are removed next week. Samsung Electronics Co. fell after Citigroup Inc. cut its estimate for the company's earnings.

U.S. stocks climbed yesterday a government report showed the world's biggest economy grew at a faster pace last quarter than some economists expected.

Oil-enriched Arab Investors Turning Away from U..S Dollar & U.S. Investments

Investors from the oil rich Gulf Arab nations are “eager” to diversify away from the U.S. currency. Reuters reports movement to the Euro and Asia “to invest windfall oil revenue, eager to ride the rise of China and India.” On Monday, Reuters reported that the Dubai International Financial Centre Authority said “More Gulf economies will move away from a dollar currency peg and shift foreign exchange reserves away from dollar to other currencies.”

The articles indicate concern over security and the potential of further attacks in the U.S. They also report that the International Monetary Fund “argued ‘extraordinarily aggressively’ for a correction in exchange rates, above all so as to reduce the massive U.S. current account deficit.” The Chinese yuan and currency of Gulf oil states “should all appreciate” according to the report of the World Economic Outlook due to be published in April. And, the European Central Bank will “not require further interest rate increase.”

According to Reuters there has also been “a marked shift . . . in the types of investments.” The Gulf investors are now investing more in “real estate, infrastructure, telecoms, and banking” rather than “stocks and bonds” after learning the lessons of investing in speculative stocks. This will become seen as a “reverse globalization” where Gulf oil states purchase developed institutions.

Thus, as the U.S. economy falls further into debt, due to the cost of the war and the rising cost of oil, the Middle East and Asia will become wealthier. And, as the dollar depreciates the U.S. consumer will feel the loss of wealth of the United States.

Japanese Stock Fall on Bernanke's Inflation Concern

Japanese stocks dropped after Federal Reserve Chairman Ben S. Bernanke said inflation remains his main concern, even in the face of evidence the U.S. economy is slowing.

Toyota Motor Corp. led declines by exporters after the yen strengthened against the dollar, cutting the value of their overseas sales.

``The Japanese market has to be conscious of the implications of Bernanke's comments,'' said Juichi Wako, a strategist at Nomura Securities Co. in Tokyo. ``The recent tendency toward a stronger yen makes it hard to buy the exporters.''

Inflation A Risk

``Our policy is still oriented towards control of inflation, which we consider to be at this time to be the greater risk,'' the Fed's Bernanke told the Joint Economic Committee of Congress in Washington yesterday.

Those comments came a week after the central bank dropped a reference to possible ``additional firming'' of monetary policy in a statement accompanying its latest interest rate decision. That cheered investors who believed the path was being paved for rate cuts.

Few Big E's from Daily Reckoning

Today, we wonder - briefly - about the big things…the big trends. Let's recall our Big E's and see if we're still on track.

Energy - Our guess is that energy is generally becoming more expensive. Not that we have any inside information about it. We're just putting two and two together. The modern world runs on oil, and every year that passes brings more of the modern world and less of the ancient fossil fuel that powers it. Absent of some breakthrough in energy production…or some major break in the trend towards economic development worldwide…expect to pay more for juice.

Experimental Money - Money makes the world go round…but what makes money go round? In theory, it has to be limited in supply so that it mirrors the supplies of goods and services that it is used to buy. Historically, gold was used to insure that the supply of 'money' did not outstrip the supplies of goods and services. But since 1971, gold has been out of the system. People only have their faith that the people who control paper will control it well. Yet, history also shows that they never do. The temptation to create too much 'money' has always been irresistible…which leads to a trend; paper money loses its value. Since the quantity of "money" is now increasing so rapidly, we expect this trend to accelerate. This is not to say there couldn't be a period of deflation…in which currency actually gains value, for a time. But a deflationary period would probably only increase pressure on the financial authorities to increase the supply of currency. We would be surprised to see this experimental system survive for another 20 years.

Exodus - Economic power is shifting from West to East. Just look at the Forbes list of billionaires…just read the papers…just look at where your cars and gadgets were made. Most of the economies of Asia are growing two to three times faster than those of the United States.

Japanese Market Update - 3/27/2007

Japanese energy-related stocks rose, led by Inpex Holdings Inc., after crude oil jumped to a six- month high in New York.

Limiting gains, exporters including Sony Corp. and Honda Motor Co. fell after U.S. consumer confidence declined and home prices slipped.

Benchmarks swung between gains and losses. The Nikkei 225 Stock Average was little changed at 17,359.55 as of 9:33 a.m. in Tokyo. It earlier slipped by as much as 0.2 percent and rose by as much as 0.2 percent. The broader Topix index added 1.33, or 0.1 percent, to 1725.19, reversing a loss of as much as 0.2 percent.

Inpex, Japan's largest oil explorer, climbed 25,000 yen, or 2.6 percent, to 972,000. Japan Petroleum Exploration Co., the country's second biggest, advanced 170 yen, or 2.1 percent, to 8,400. Nippon Oil Corp., Japan's No. 1 petroleum refiner, rose 14 yen, or 1.5 percent, to 959.

The Topix Mining Index, which includes Inpex, jumped 2.5 percent, the biggest percentage gain of the 33 industry groups in the broad measure.

Crude oil in New York surged in electronic trading on speculation supplies will be disrupted because of tension in the Persian Gulf after Iran seized British servicemen and the United Nations imposed new sanctions on the country.

Oil traded at $64.12 a barrel late yesterday in New York, up $1.19 from the day's settlement price of $62.93. That was the highest level since Sept. 11, 2006. Five trades were done between $68 and $68.09 a barrel just before 5 p.m., for the highest intraday price since September.

US Market Update - 3/27/2007

U.S. stocks posted their steepest drop in two weeks after falling home prices and weaker consumer confidence deepened concern the housing crisis will snuff out economic growth.

All 16 homebuilders in Standard & Poor's indexes fell after Lennar Corp. said it will miss its profit goal and a private report showed home prices decreased for the first time in at least six years. Countrywide Financial Corp., the biggest U.S. mortgage lender, declined the most in the S&P 500 on speculation delinquencies among the riskiest borrowers will rise.

Mounting evidence the U.S. real estate market is deteriorating has sent lenders and companies reliant on consumer spending to the worst performance in the S&P 500 this year. The retreat in home prices follows a government report yesterday showing new-home sales slumped to the lowest in almost seven years.

``To the extent that housing prices go down or housing sales slow, that only exacerbates problems in the subprime sector and could ripple through the economy,'' said John Kattar, who oversees $1.8 billion as chief investment officer at Eastern Investment Advisors in Boston. ``Housing is viewed as key by a lot of investors.''

The S&P 500 slipped 8.89, or 0.6 percent, to 1428.61. The Dow Jones Industrial Average decreased 71.78, or 0.6 percent, to 12,397.29, leaving it with a 2007 loss of 0.5 percent. The Nasdaq Composite Index fell 18.20, or 0.7 percent, to 2437.43. All three benchmarks had their steepest drop since March 13.

Home values dropped 0.2 percent in January from a year earlier, according to the S&P/Case-Shiller index, a measure of home prices in 20 U.S. metropolitan areas. The decrease was the first since the group started the index in January 2001.

Citigroup to reduce workforce by 15000 - Good for India

Citigroup Inc executives are putting the finishing touches to a restructuring plan that is likely to involve around 15,000 job cuts and a charge against earnings of more than $1 billion, according to people familiar with the matter, The Wall Street Journal reported.

The review is being spearheaded by Chief Operating Officer Robert Druskin, who is due to report his recommendations internally by the end of the week, the Journal reported on Monday.

The financial company expects to unveil the plan by the time it reports its first-quarter results on April 16, the day before Citigroup's annual meeting, the Journal said.

While the plan isn't final, Druskin is contemplating a roughly 5 per cent reduction in Citigroup's worldwide workforce of 327,000, according to people familiar with the matter, the Journal said.

A representative from Citigroup said a review of the company's operations is under way, as announced last year. The review is scheduled to be done by April 16, but the representative would not comment on figures involved.

Asian Stocks Drop

Asian stocks dropped from a three- week high. Tokyo Electric Power Co. led Japanese power producers lower on concern about mismanagement in the industry.

``Successive scandals involving power producers have been coming to light,'' said Hideyuki Ookoshi, who oversees $365 million at Chiba-Gin Asset Management Co. in Tokyo. ``There's concern more scandals will emerge, and that's causing the shares to be sold off.''

Woodside Petroleum Ltd. led a measure of energy stocks higher after crude-oil prices climbed for a fifth day.

The Morgan Stanley Capital International Asia-Pacific Index slid 0.2 percent to 145.71 as of 10:49 a.m. in Tokyo, sliding from its highest since Feb. 27. The benchmark rallied 3.3 percent last week, the first weekly gain since a rout that began last month wiped $3.3 trillion from the value of global markets.

Japan's Nikkei 225 Stock Average slipped 0.1 percent to 17,468.47. The broader Topix index dropped 0.4 percent. Markets open for trading elsewhere rose. China's Shanghai and Shenzhen 300 Index climbed 0.4 percent, set for a record high.

Tokyo Electric, Japan's No. 1 power producer, slid 2.1 percent to 4,240 yen. Kansai Electric Power Co., the second largest, fell 2.9 percent to 3,710 yen.

Tokyo Electric said on March 22 an accident that may have occurred at its Fukushima Daiichi plant in 1978 could have caused a nuclear chain reaction. Hokuriku Electric Power Co. was ordered to halt operations at its Shika No. 1 reactor on March 15 after the company said it covered up an accident eight years ago.

U.S. Stocks Have Biggest Weekly Gain in Four Years; Banks Rise

U.S. stocks surged this week, giving the Standard & Poor's 500 Index its biggest weekly gain since the war in Iraq began in March 2003, after the Federal Reserve indicated it's no longer biased toward higher interest rates.

Morgan Stanley, Goldman Sachs Groups Inc. and Citigroup Inc. led financial shares in the S&P 500 to the biggest gain since October 2004 on prospects the Fed will lower borrowing costs, spurring loan demand and bolstering profits. The week's advance helped the market recover more than four-fifths of its losses from the biggest rout in four years.

``The economy is likely to slow, but it's unlikely to go into recession, and the Fed is likely to ease at some point in 2007,'' said Jason Trennert, chief investment strategist at Strategas Research Partners LLC in New York. ``It's great for stocks. It's precisely what you want.''

Announced U.S. acquisitions totaled $41.9 billion this week, including deals for Affiliated Computer Services Inc., Triad Hospitals Inc. and ServiceMaster Co. Energy shares jumped the most since April 2006 as oil climbed above $62 a barrel.

The S&P 500 gained 3.5 percent to 1436.11. The Dow Jones Industrial Average added 3.1 percent to 12,481.01, while the Nasdaq Composite Index rose 3.2 percent to 2448.93.

`On Our Side'

U.S. stocks erased $902 billion in market value from Feb. 27 to March 5, according to Bloomberg data. With this week's gain, shares have reclaimed more than 80 percent of that loss.

The Fed kept the benchmark U.S. interest rate at 5.25 percent and unexpectedly abandoned its tilt toward higher borrowing costs. The Federal Open Market Committee's statement dropped a reference to ``additional firming,'' giving central bankers more flexibility on the direction of interest rates.

Futures contracts give 78 percent odds that the Fed will cut rates to 4.75 percent by the end of the year.

``We've been waiting for the Fed to be on our side,'' said Michael Mullaney, who manages $10 billion at Fiduciary Trust Co. in Boston. ``The Fed's next move is probably going to be a cut, and probably sometime no later than August.''

Financial shares in the S&P 500 gained 3.9 percent this week. Lower interest rates boost the value of bonds owned by banks, brokers and insurers, and increase demand for mortgages and loans.

U.S. stocks surged this week, giving the Standard & Poor's 500 Index its biggest weekly gain since the war in Iraq began in March 2003, after the Federal Reserve indicated it's no longer biased toward higher interest rates.

Morgan Stanley, Goldman Sachs Groups Inc. and Citigroup Inc. led financial shares in the S&P 500 to the biggest gain since October 2004 on prospects the Fed will lower borrowing costs, spurring loan demand and bolstering profits. The week's advance helped the market recover more than four-fifths of its losses from the biggest rout in four years.

``The economy is likely to slow, but it's unlikely to go into recession, and the Fed is likely to ease at some point in 2007,'' said Jason Trennert, chief investment strategist at Strategas Research Partners LLC in New York. ``It's great for stocks. It's precisely what you want.''

Announced U.S. acquisitions totaled $41.9 billion this week, including deals for Affiliated Computer Services Inc., Triad Hospitals Inc. and ServiceMaster Co. Energy shares jumped the most since April 2006 as oil climbed above $62 a barrel.

The S&P 500 gained 3.5 percent to 1436.11. The Dow Jones Industrial Average added 3.1 percent to 12,481.01, while the Nasdaq Composite Index rose 3.2 percent to 2448.93.

`On Our Side'

U.S. stocks erased $902 billion in market value from Feb. 27 to March 5, according to Bloomberg data. With this week's gain, shares have reclaimed more than 80 percent of that loss.

The Fed kept the benchmark U.S. interest rate at 5.25 percent and unexpectedly abandoned its tilt toward higher borrowing costs. The Federal Open Market Committee's statement dropped a reference to ``additional firming,'' giving central bankers more flexibility on the direction of interest rates.

Futures contracts give 78 percent odds that the Fed will cut rates to 4.75 percent by the end of the year.

``We've been waiting for the Fed to be on our side,'' said Michael Mullaney, who manages $10 billion at Fiduciary Trust Co. in Boston. ``The Fed's next move is probably going to be a cut, and probably sometime no later than August.''

Financial shares in the S&P 500 gained 3.9 percent this week. Lower interest rates boost the value of bonds owned by banks, brokers and insurers, and increase demand for mortgages and loans.