Global Weekly Markets Review - 15 December 2007

Good Morning Ladies and Gentlemen,

And indeed, as expected, there were fireworks!

This week started with continued US positivity, was brought to a shuddering halt Midweek when the Fed' 'only' managed a .25% base-point cut and ended the week sharply lower as those credit-crunch concerns came back to bite the markets on the backside.

All told, this week panned out pretty much as expected and next week will see more of the same volatility for sure.

But as I have been saying all along, the sub-prime write-downs were always going to come to the fore and still, even with massive losses reported by banks this week, we are still by no means out of the woods yet.

One positive aspect of this week though was how Asian markets - other than Friday where they were affected by the US Dollar - moved pretty much under their own steam as opposed to mirroring the US.  This is particularly pleasing to see as obviously moves are afoot to distance themselves from the US market as it trundles into an obvious recession.

Europe maintained an element of 'positive-sentiment' also and many brokers/analysts do not see Eueopean Equities as such a bad call for 2008.

So, let's take a closer look at the scores on the doors:

US Markets - Wall Street stocks hit reverse gear this week after interest rate cuts and a central bank plan to help ease banks' funding problems failed to convince investors that the worst effects of the credit squeeze were over.

The spectre of inflation returned after both producer and consumer prices rose more than expected, threatening to limit the ability of the Federal Reserve to continue cutting interest rates to stave off a recession.

Energy and telecoms groups were among the best performers but financials again felt heavy selling pressure amid concerns about earnings as the fourth quarter results season began.

The S&P 500 fell 1.3% to 1,467.95 on Friday and ended the week 2.4% lower. The Dow Jones Industrial Average lost 2.1% this week to close at 13,339.85%, while the Nasdaq Composite declined 2.6% over the week to 2,635.74.

The Russell 2000 small cap index fell 4% to 753.93 on the week, hurt by a rise in volatility. “The mindset of ‘selling into strength' has come back into this market,” Quincy Krosby, chief investment strategist at The Hartford, said.

After two consecutive weeks of gains, the major indices retreated amid widespread dissatisfaction with measures announced by the Federal Reserve and other central banks designed to help ease liquidity bottlenecks in financial markets.

Stocks plunged on Tuesday after the Federal Open Market Committee cut interest rates 25 basis points, less than many investors had hoped. “It made you wonder about their [the Fed's] sophistication and their ability to predict what the market reaction would be,” Ms Krosby said.

Although equities posted a modest recovery the following day on news of a new term auction facility and foreign exchange swap lines, stocks failed to pare most of their losses with inter-bank lending rates remaining stubbornly high.

Investors displeased with the Fed's response were given a further jolt by data that showed a sharp spike in inflationary pressure.

An index of consumer prices rose 0.8% last month, its biggest rise in more than two years. Core consumer prices, which exclude volatile food and energy inputs, rose 0.3%, more than expected. The CPI data came a day after wholesale prices rose the most in 34 years.

The inflation data may restrict the Fed's ability to deliver the rate cuts the market wants and equities fell after the news.

Citigroup had another bad week after Vikram Pandit's appointment as chief executive failed to boost its flagging share price. Citi was forced to take $49bn in structured investment vehicle assets onto its balance sheet and and the shares fell 10.5% to $30.70 over the week.

Lehman Brothers kicked off the fourth-quarter earnings season for the big banks but its shares fell 1.9% to $62.24 on the week, in spite of results that beat Wall Street's estimates.

Goldman Sachs, Morgan Stanley, and Bear Stearns report next week. Analysts expect further writedowns in the sector as the value of credit-related assets declines and loan losses increase.

Bank of America, down 7.1% at $42.16, Wachovia, 9.6% lower at $39.03, and PNC Financial Services, off 10.2% at $64.81, all made negative noises about current quarter performance. Washington Mutual fell 20.4% to $15.15 on the week after it announced a convertible stock offering to shore up its finances.

Investors sought safety in large-cap stocks with strong international sales. AT&T rose 6.9% to $41.14 on the week after the phone company increased its dividend and announced a large share buyback programme.

Honeywell put on 2.5% to $59.98 after the diversified manufacturer's profit guidance pleased traders. 3M guided for double-digit revenue growth next year but the shares slipped 0.3% to $85.93 this week.

Microsoft was a standout technology stock rising 2.3% to $35.31 after an analyst at JPMorgan raised his 2008 profit estimates.

Retail stocks had a poor week in spite of November sales figures that were twice as high as economists had forecast. Office Depot fell 17.3% to $14.44 after warning of a weak fourth quarter. Costco Wholesale fell 4.7% to $68.49 this week. The S&P retail index declined 7.6% to 410.17 amid fears of a poor Christmas shopping period.

The biotechnology sector also had a disappointing week. Biogen Idecfell 21.6% to $58.79 and Celgene lost 12.1% to $50.41. But, BioMarin Pharmaceutical soared 30.2% to $36.44 after it won regulatory approval for a new drug.

European Markets - European shares ended the week up slightly after a choppy day of trading, bouncing back from Thursday's sharp falls prompted by further writedowns from Bank of America.

The FTSEurofirst 300 index closed up 6.55 points, or 0.434%, to end the week at 1516.37.

So let's start this week's European review in Frankfurt where German Shares closed higher, led by Adidas and E.ON, with market sentiment supported by weakness in the Euro as the Dollar rallied on the back of expectations the US Federal Reserve will be more limited in its freedom to cut rates.

The DAX30 finished up 20.05 points or 0.25% at 7,948.36, after trading in the 7,873.27-7,987.29 band.

The MDAX rose 49.05 points or 0.50% to 9,810.40, while the TecDAX was 6.26 points or 0.65% higher at 973.66.

DAX futures fell 38.50 points or 0.48% to 7,957.00, while bund futures lost 0.16 or 0.14% to 113.01.

E.ON was the highest gainer, adding 2.21 Eur or 1.54% to 146.06, followed closely by Adidas, up 0.64 or 1.36% at 47.55.

Utility peer RWE was also on positive territory, advancing 0.67 or 0.71% to 95.36.

Companies which have a high presence on the US market, such as Fresenius Medical Care and Bayerische Motoren Werke, improved, with gains of 0.48 or 1.32% to 36.73 for the former and 0.46 or 1.13% to 41.32 for the latter.

On the downside, Continental led with a loss of 1.94 or 2.16% to 88.06. Morgan Stanley resumed coverage of the stock with an 'underweight' rating and a 97 Eur per share price target. The brokerage said the synergies that the tyre and auto parts specialist expected from its acquisition of VDO have largely been assumed in the price it paid for the unit.

Deutsche Lufthansa was down 0.06 or 0.31% at 19.50 after the airline announced what analyst heralded as a well-priced and strategically important purchase of a stake in JetBlue Airways Corp. Analysts said the airline shares fell most likely due to profit-taking.

Metro lost 1.61 Eur or 2.71% to 57.89, as investors were beginning to speculate that this year's Christmas shopping season might not be as strong as hoped for the retailer.

Ver.di trade union also announced it has asked its members in major retail companies in North Rhine-Westphalia, Germany's most populous state, to stage a strike tomorrow to push demands for a wage increase.

It said employees of Real and Extra hypermarkets as well as the Kaufhof department store chain -- all three owned by Metro AG -- will participate in the strike action.

TUI was down 0.06 or 0.31% at 19.50. Morgan Stanley downgraded its shares to 'underweight' from 'equal weight' at Morgan Stanley. The brokerage said it sees little potential upside to TUI's 19 Eur per share target.

Deutsche Telekom ended unchanged at 19.09 after gaining for much of the day. Credit Suisse raised its target on the telecom's shares to 17.50 Eur from 15.50 while reiterating its outperform rating.

Over on the MDAX, Norddeutsche Affinerie fell 1.90 or 6.49% to 27.39 while Premiere gained 1.11 or 8.05% to 14.90 on takeover rumours.

Among TecDAX stocks, Conergy was the top performer, adding 1.45 or 7.00% to 22.16. IDS Scheer fell 0.48 or 3.20% to 14.50.

To France and Paris now where Share prices ended higher after an erratic session, with banks and cyclical stocks coming off intra-day lows.

The CAC-40 index finished up 14.45 points or 0.26% at 5,605.36.

Among CAC-40 stocks, 24 closed higher and 16 closed lower. On the Matif, December CAC-40 futures were trading at 5,573.5.

On the broader indices, the SBF-80 index closed up 23.02 or 0.36% at 6,418.16, while the SBF-120 ended up 11.02 or 0.27% at 4,061.11.

Over the week, the CAC-40 was down 113.39 points or 1.98% on last Friday's closing level of 5,718.75.

Banks were pushed down by overnight news of Citigroup's decision to incorporate seven structured investment vehicles (SIVs) into its balance sheet, representing 49  billion usd of assets, and then today's US figures showing the consumer price index rose 0.8% in November amid a spike in fuel prices.

Societe Generale led the banks lower, shedding 1.23 Eur or 1.21% to 100.67, with Citigroup's announcement adding to concerns over the French group's own exposure to SIV assets.

At the start of the week, SocGen announced it was to take the assets of its only SIV into its own balance sheet, in return for providing a 4.3  billion usd line of credit to the vehicle.

The big banks pared their losses before the close, with BNP Paribas ending down just 0.09 or 0.12%, while Dexia -- up 0.10 or 0.58% at 17.29 -- and Credit Agricole -- up 0.02 or 0.08% at 23.76% -- broke into positive territory.

Property stocks were also under pressure, with Unibail-Rodamco leading the CAC-40 fallers by closing down 3.60 or 2.37% at 148.40. Outside the CAC, Nexity gave up 0.65 or 1.73% to 36.91, while Kaufman & Broad tumbled 1.52 or 4.51% to 32.20, weighed down by SG Securities' move to downgrade the company to 'sell' from 'buy' and cut its target price to 31 Eur from 58 in line with lower estimates.

Cyclical stocks also figured among falling shares amid nervousness about the wider economic outlook. In the auto sector, Peugeot shed 0.66 or 1.19% to 54.86, Michelin dropped 0.43 or 0.56% to 75.89, and Renault was down 0.55 or 0.56% at 97.94.

On the upside, Ubisoft Entertainment starred after raising its full-year sales and operating profit guidance on the back of strong sales of its Assassin's Creed game. The shares jumped 6.18 or 10.41% to 65.57.

The games developer stressed that Assassin's Creed is the fastest-selling new video game intellectual property in the US ever, and recorded more than 2.5  million units in sell-through sales worldwide in less than four weeks.

Back on the CAC-40, Gaz de France added 0.52 or 1.34% to 39.26 and future merger partner Suez rose 0.91 or 2.01% to 46.12.

GDF today confirmed it is to request a 6.1% rise in gas tariffs as of January 2008. The utility also rose earlier in the week on news that France's state council, the country's highest court of appeal, retroactively cancelled a 2005 law freezing gas prices charged by GDF.

Food and beverage firm Groupe Danone gained 0.76 or 1.31% to 58.67. The group said it has offered to suspend proceedings against Chinese partner Wahaha if the company agrees to negotiations on the "reunification" of the Wahaha brand.

In Belgium Brussels shares closed higher, with pharmaceuticals groups Omega Pharma and UCB leading the gainers.

The Bel 20 closed 44.30 points or 1.09% higher at 4,109.46.

Omega Pharma climbed 1.58 Eur or 3.49% to 46.79, while UCB was 0.96 Eur or 3.09% higher at 32.00, reversing early losses following a surprise trading update.

The group said it is confident it will exceed financial guidance for 2007 but added that revenue for 2008 is expected to fall due to the expiry of the US patent for allergy treatment Zyrtec. It also said Karel Boone will succeed George Jacobs as chairman from April 24, 2008.

Peer Solvay was up 1.91 Eur or 2.02% at 96.36 after its unit Solvay Indupa approved 135  million usd to expand its vinyls production plant in Santo Andre, Brazil.

Speciality materials group Umicore climbed 4.39 Eur or 2.88% to 157.00, while wire and steel cord manufacturer Bekaert closed 1.17 Eur or 1.37% higher at 86.30.

Utility Suez added 0.92 Eur or 2.03% at 46.20, and brewer InBev was up 0.83 Eur or 1.53% at 55.05.

Among the financials, KBC added 1.15 Eur or 1.21% to 96.57, and Dexia inched up 0.05 Eur or 0.29% to 17.27, whilst Fortis fell 0.05 Eur or 0.27% to 18.47. Fortis said Nestle has agreed to sell its Maitre Paul unit to Fortis Private Equity and investment company Clearwood for an undisclosed sum.

Imaging technology company Agfa-Gevaert reversed some of its recent gains, closing down 0.19 Eur or 1.88% at 9.94, the sharpest blue-chip faller.

Outside the Bel 20, Nyrstar inched up 0.04 Eur or 0.26% at 15.58. Deutsche Bank, with a 'buy' rating and 21.28 Eur target price, said that although near-term events have depressed the share price, fundamentals support longer-term value.

Window-frame maker Deceuninck was up 0.35 Eur or 2.26% at 15.85. Its German unit Inoutic/Deceuninck GmbH said it has signed a five-year commercial agreement with France's Atrya Group, but will still continue with restructuring at its Bogen site as planned.

Across in The Netherlands now where Shares in Amsterdam closed higher, defying a generally negative sentiment Wall Street as it was boosted by index heavyweights, while Pharming fell following news on its mainstay product.

The AEX closed 3.38 points or 0.67% higher at 511.28, after trading in a range of 506.33-512.24.

Reed Elsevier led gainers, adding 3.58% to 13.30 Eur, while index heavyweights Royal Dutch Shell and ING aided the AEX's upward movement with high volume trading.

Royal Dutch Shell rose 1.22% to 28.25 Eur and ING added 1.08 pc to 27.06 Eur after news that ING is allowed by regulators to buy Turkey's Oyak Bank.

Vedior rose 3.10% to 17.32 Eur amid news that the staffing group is prepared to meet with shareholder association VEB over the latter's public suspicions of alleged insider trading in Vedior shares on November 30.

Randstad, which is vying to buy Vedior, rose 2.85% to 27.81 Eur.

Consumer electronics groups gained as the Euro currency eased vis-a-vis the US Dollar ahead of the all-important Christmas shopping season.

Philips added 2.58% to 30.19 Eur and TomTom rose 2.45% to 53.15 Eur, with analysts expecting that TomTom may beat its own full-year sales guidance thanks to strong sales in Asia in the fourth quarter.

Heineken added 1.72 pc to 45.54 Eur and ASML rose 1.44% to 23.90 Eur.

Akzo Nobel added 0.46 cpt to 52.90 Eur after news that the EU approved the takeover of ICI.

DSM rose 0.44% to 34.38 Eur rose after the Dutch Supreme Court rejected a commercial's court blocking of DSM's loyalty dividend.

On the downside, ArcelorMittal lost 0.36% to 49.64 Eur while Fortis shed 0.38% to 18.47 Eur amid news that its private equity branch bought the Maitre Paul frozen pastry unit from Nestle, together with Clearwood.

Corporate Express lost 1.28% to 5.41 Eur, SBM Offshore dropped 1.32% to 21.71 and Unibail-Rodamco lost 2.37% to 148.40 Eur as Unibail started its squeeze-out procedure for remaining Rodamco Europe shares.

Among midcap shares, USG People rose 6.74% to 19.96 Eur while BAM added 4.30% to 16.25 Eur. LogicaCMG added 2.45% to 1.67 Eur and Fugro added 1.95% ot 53.34 Eur.

Boskalis rose 1.21% to 40.99 Eur after it said that it won the contract to construct the second Maasvlakte area, together with Van Oord.

Vopak added 0.24% to 38.01 Eur, Corio put on 1.31% to 56.72 Eur, Ordina added 1.98% to 12.40 and Van der Moolen led decliners, shedding 2.95% to 2.96 Eur.

Pharming swooped down, losing 47.37% to 1.40 Eur, after news late yesterday evening that its mainstay product Rhucin failed to get commercial approval from the EU's EMEA agency.

Up into Austria and Vienna now where Shares closed higher, led up by the gains posted by index heavyweight OMV and Strabag SE's sector-related upswing, as well as by Wiener Staedtische's steep rise on vague and widely discounted rumours that its insurance peer Allianz is mulling a bid.

The ATX closed up 1.26% or 55.33 points at 4,448.28. The ATX Prime closed 1.04% or 21.59 points higher at 2,102.73.

Wiener Staedtische led gainers on the ATX by surging 7.39% to 57.70 Eur. Shares in the insurer traded higher on the back of a bullish 'overweight' reiteration by Morgan Stanley and vague market rumours that Allianz might consider a bid for its Austrian peer.

Observers generally dismissed the rumours, pointing out that Wiener Staedtische's shareholder structure would make a takeover practically impossible. In addition, the Austrian company's chief executive said he discounted the takeover rumours.

Shares in OMV ended the day 2.07% higher at 50.80 Eur. Trading in the index heavyweight was buoyed by news the company has signed an exploration cooperation agreement with its Slovak peer NAFTA a.s., as well as by the positive full-year earnings and dividend prospects outlined by its CEO yesterday.

Fellow ATX major Erste Bank rose 1.15% to 47.35 Eur after Lehman Brothers initiated its coverage with an 'overweight' recommendation and target price of 66 Eur. The broker said it preferred Erste Bank to Raiffeisen International -- which Lehman initiated at 'equal-weight' with a 122 Eur target price -- due to its high exposure to retail banking.

Raiffeisen shares closed nominally lower, shedding 0.01% to 105.14 Eur.

Improved investor sentiment following a recent favourable court ruling in Germany helped push BWIN shares up 3.29% to 26.65 Eur, while Strabag SE rose 2.80% to 49.86 Eur as part of the broader upswing among construction sector stocks, and Schoeller-Bleckmann gained 2.91% to 56.58 Eur on bargain-hunting.

Shares in Telekom Austria ended trading 1.22% higher at 19.08 Eur. The head of Austria's state industrial holding OIAG today said he cannot rule out further privatisation of the state's stake in Telekom Austria and Oesterreichische Post, whose shares dropped 2.41% to 23.47 Eur.

News that voestalpine won a major contract to supply up to 200,000 tonnes of heavy plate for the Baltic Sea pipeline lifted the steel conglomerate's shares 1.21% to 47.80 Eur.

A-TEC led blue-chip decliners, slumping 4.96% to 95.03 Eur as the industrial conglomerate participated in the broader retreat among its peers. A-TEC today announced it had subscribed two million new shares, priced at 16 Eur a piece, issued by its majority-owned unit ATB Austria Antriebstechnik.

The negative sector sentiment towards industrials also extended to Andritz, down 0.42% at 40.33 Eur, while extended profit-taking caused Wienerberger shares to shed 1.14% to 39.79 Eur.

On the ATX Prime, shares in Wolford rose 3.00% to 30.18 Eur as the market reacted favourably to the luxury hosiery producer's half-year results, which led Berenberg Bank to reiterate its 'buy' recommendation and target price of 45 Eur.

Neighbours Switzerland saw Zurich's Share prices close mildly firmer after a quiet Friday session, the index giving up earlier intra-day gains amid losses in early Wall Street trade.

The Swiss Market Index closed 17.5 points higher at 8,675.86, and the Swiss Performance Index was up 14.76 points at 7,060.05.

The Euro dropped against the Swiss franc to 1.6643 SFr, while the Dollar was slightly higher at 1.1518 SFr.

Banks outperformed with Julius Baer leading the index, up 1.75 SFr or 1.9% at 96.35, while larger rival Credit Suisse gained 0.30 SFr to 69.95.

Into cooler cliems now and Scandinavia where this week we start in Stockholm whose Swedish Shares closed little changed, off their lows after a feared sell-off on Wall Street in the wake of higher-than-expected US CPI data failed to materialise, and helped tempt some bargain hunters.

The OMX Stockholm index closed down 0.14% at 355.29, while the OMX Stockholm 30 index closed 0.40% lower at 1,097.68. Turnover was 17.914  billion skr.

Ericsson B supported the index closing up 0.37% at 16.08 skr, off an earlier low of 15.90.

Skanska B closed up 1.01% at 124.75, outperforming the wider index after the company said it will make a capital gain of 550  million skr from the sale of its 50% equity interest in the Ponte de Pedra hydroelectric power plant in Brazil for 1  billion skr.

The purchaser is the French Belgian energy company Suez-Tractebel, which is also acquiring Impregilo's 50-pct interest.

Neighbours Denmark saw Copenhagen Shares close slightly lower after a jump in November US consumer prices raised concerns over future US Federal Reserve rate cuts, with Vestas Wind Systems, DSV, and AP Moeller Maersk all down on the session.

The OMXC20 index closed down 2.41 points at 469.80, and the OMXCB Benchmark index shed 2.33 points to 452.44.

AP Moller Maersk AS closed down 900 DKr at 55,900 skr.

Vestas Wind Systems AS shed 7.00 to close at 507.00. According to RB Boersen news agency, HSBC raised its target price for the wind turbine maker to 675 DKr from 385 DKr.

The US Senate passed a law package on renewable energy, but excluded a proposed aim for 15% of electricity to stem from sustainable sources by 2020, daily Jyllandsposten said, citing the New York Times.

DSV closed down 2.50 DKr at 117.50.

Danisco AS shed 3.00 DKr to close at 367.50, ahead of Monday's second quarter report, while peer enzyme maker Novozymes AS gained 6.00 DKr to 589.00.

Both groups may benefit from the US energy law package, which calls for a significant increase in production of bioethanol and other biofuels, RB Boersen said.

Novo Nordisk B also bucked the market to close up 1.50 DKr at 328.00.

Among other heavily traded shares, Danske Bank closed down 1.50 at 207.75, FL Smidth & Co closed down 1.00 at 527.00, and TrygVesta down 10.00 at 401.00.

Finland saw Helsinki main indices recover from afternoon losses to end little changed as investors scoured for bargains among beaten-down blue chip stocks late on in the session.

The OMX Helsinki 25 index of top stocks ended down 0.09% at 3,033.48, but only after threatening to dip below the 3,000 mark amid worries over accelerating inflation in the US. The OMX Helsinki all-share index finished up 0.06% at 11,615.38.

While volatile, trading was light with volumes at just short of 900  million Eur.

The leaderboard closed mixed, with engineer Outotec, down 1.10% at 37.90 Eur, and Nokian Tyres, 2.39% lower at 24.90 Eur, among the biggest decliners.

Nokia added 0.38% to 26.40 Eur, IT services group TietoEnator rose 2.00% to 15.80 Eur, and papermaker UPM-Kymmene up 0.07% at 14.03 Eur.

UPM said chairman Vesa Vainio, vice-chairman Jorma Ollila, the ex-Nokia CEO, and Francoise Sampermans will not seek re-election to the company's board at the paper producer's AGM next spring.

The board, which is being cut by one member to ten, is proposing the two vacant seats are filled by Kone CEO Matti Alahuhta and Sampo CEO Bjorn Wahlroos.

Kone dipped 0.87% to 48.00 Eur and Sampo eased 0.21% to 19.07 Eur.

In the small cap market, Technopolis dipped 2.83% to 5.50 Eur after publishing sales and EBITDA guidance for 2008. Technopolis owns and operates large office premises in Finland and Russia, leasing space and providing consulting services to high-tech companies.

Glitnir repeated its 'buy' stance on the shares following the announcement, saying it feels the company's portfolio is conservatively valued.

And last but not least in the Nordic arena, we go to Norway where Oslo Shares closed lower, led down by industrials and financials and ending the week with an uninspiring performance, but there were some M&A thrills with Seadrill making a sudden bid for Aker Drilling and Deep Ocean soaring after DOF substantially upped its stake.

The OSEBX Benchmark index eased 0.2% to 481.8, and the OSEAX All Share index slipped 0.2% to 557.

Total turnover was 10.9  billion NKr.

Oil services group Seadrill injected some badly needed drama into an otherwise anaemic day's trading, with a 40.50 NKr cash bid for Aker Drilling, valuing it at 3.77  billion NKr.

Aker Drilling stock spiked higher on the news, closing up 4.9% to 43 NKr. Seadrill stock closed up 0.6% at 126.50 NKr.

analysts said they were underwhelmed by the bid price.

They said it seemed low for the target company and might be a tactical move in order to engineer an exit of Aker Drilling -- after that company's shares on Thursday rose 9.3% to 41 NKr on news Aker Capital bought 4.6  million of the offshore drilling contractor's shares, raising its holding to 44.94%.

Another company in the sector, Prosafe, put on 1.75% to 92.90 NKr after it won a contract worth 166  million usd from BP Norge AS.

The contract is to supply Prosafe's Safe Scandinavia and MSV Regalia accommodation support rigs in the Valhall offshore field in the North Sea.

Aktiv Kapital fell 1.6% to 76.50 NKr after the market seemed to take a dim view of an acquisition of bad debts for an undisclosed sum.

Earlier, Aktiv said it has acquired about 800,000 non-performing customer accounts from Spanish telecom operator Telefonica SA with a face value of 1.6  billion NKr.

Oil services and engineering group Aker Kvaerner managed to defy the bears, putting in 0.3% gain to 149.75 NKr after it announcing winning two contracts from Petrobras worth about 90  million usd.

Aker Kvaerner said the contract was to supply three subsea manifolds for two of the Brazilian oil giant's projects offshore Brazil.

Revus Energy, however, fell 3.2% to 83 NKr after it said it had completed a private placement, raising 437.5  million NKr in new equity.

Revus said it has issued 5,335,000 new shares at a price of 82 NKr a share.

The group said the proceeds from the private placement will be used to provide funding for the purchase by Revus of the entire share capital of Palace Exploration Company (UK) Limited.

Bluechip oil producer and the Norway Bors' biggest share by market capitalisation, StatoilHydro, managed to put on 0.2% to 164.70 NKr.

Crude oil prices, however, weakened in late trade and dealers said the prospects for gains next week were uncertain.

Bank DnB NOR was unchanged at 84.90 NKr while insurer Storebrand was lower by 2.1% to 59.70 NKr.

Aluminium producer Norsk Hydro slipped 0.3% to 74.30 NKr.

Among mixed shipping shares, Golden Ocean sank 2.9% to 33.60 NKr while Jinhui Shipping went 4.4% into the red to 65.75 NKr.

Belships, however, put on 1.2% to 24.40 and Frontline added 2.7% to 265.50 NKr.

Troubled paper producer Norske Skog - which is continuing to wrestle with industry-wide oversupply which is undermining prices - closed 2.6% to 46.25 NKr.

Down to the Med' now and starting this week in Spain where Share prices closed higher after a volatile trading session, with main banks staging a recovery, while Iberdrola was in focus on a vague rumour that E.ON could be eyeing the utility.

The IBEX-35 index ended up 76.5 points at 15,575.70, after trading in a range of 15,429-15,596.

BBVA gained 0.24 Eur to 17.20, off a low of 16.88 and near a high of 17.24, while Santander gained 0.06 to 14.69, off a low of 14.39.

Other blue chips were mixed, with Telefonica down 0.03 at 22.60, while Repsol YPF put on 0.15 to 25.15 after ABN Amro upgraded to 'hold' from 'sell'.

Meanwhile, Iberdrola added 0.02 to 10.63 after a vague rumour the E.ON is eyeing the utility.

Newcomer Iberdrola Renovables rebounded from yesterday's shaky start, climbing 0.35 or 6.8% to 5.50 on heavy volume.

Other renewable issues were also in favour, with Solaria rising 1.40 or 6.83% to 21.90 and Acciona advancing 5.20 or 2.32% to 229.30.

Colonial ended flat at 3.25 as players weighed news that the company has begun preliminary talks to merge with Gecina. Trading was suspended before the open ahead of the announcement.

Also in the M&A spotlight, small cap Corp Dermoestetica gained 0.48 or 5.79% to 8.77, boosted by speculation that private equity group 3i is planning to announce a takeover at 10 Eur per share in the coming days.

Into Portugal now and Lisbon Shares closed sharply higher, outperforming strong European markets, as Galp continued to surge on exploration news in Brazil, while heavyweight stocks EDP and BCP were also sharply higher.

The PSI 20 index closed up 229.64 points or 1.79% at 13,065.17 after trading in a range of 12,911-13,065.21 on a volume of around 285  million Eur.

Stocks opened higher in a bounce from yesterday's sell-off, extending gains to midmorning before moving off highs towards midday.

In the afternoon, stocks rose again and slipped slightly in the last hour, only to recover to close just short of session highs.

Galp surged 0.87 Eur or 5.64% to 16.30, though off a high of 16.75, continuing its recent rally after positive analysts' comments on its oil prospects in Brazil.

On Wednesday, UBS said in a note that two blocks the company is drilling in Brazil are sat on a potential reserve which could be five times as large as the recent Tupi Sul discovery, estimated to hold 5-8  billion barrels of oil equivalent.

EDP climbed 0.08 or 1.77% to 4.60, recovering from yesterday's weakness caused by the disappointing IPO of Iberdrola Renovables.

Banks were strong, with BCP up 0.10 or 3.65% at 2.84, BPI gaining 0.13 or 2.48% to 5.38 and BES adding 0.10 to 15.60.

Cimpor edged up 0.01 to 6.12, but underperformed as analysts said estimates that cement consumption in Spain is set to to decline 6% in 2008 are negative for the company.

Among other gainers, Sonae closed unchanged at 2.00, ahead of today's EGM, which is expected to approve its plan to spin off its Sonae Capital unit.

Retailer Jeronimo Martins slipped 0.06 to 5.34, extending yesterday's losses after UBS downgraded its stance on the stock to 'neutral' from 'buy'.

Among telecoms stocks, PTM rose 0.16 or 1.68% to 9.68, extending recent gains, Sonaecom was up 0.01 at 3.75, while PT gained 0.09 to 9.25.

Into Italy now where Milan Share prices closed slightly higher, in thinner trading after a volatile week, led by AEM ahead of its merger with ASM Brescia on the prospect of a higher index weighting.

The Mibtel index was up 0.10% to 29,664 and the S&P/Mib gained 0.13% to 38,870.

Turnover was an estimated 4.359  billion Eur.

And rounding out Europe this week we go to Athens where Greek Shares ended lower, after a choppy session in thin news flow, with the market led lower by profit taking in Hellenic Telecomms (OTE) and Bank of Piraeus.

The ASE general index closed down 0.8% to 5,097.5, and blue chips finished down 0.8% at 2,679.3.

Mid caps fell 1.1% to close at 6,264.3, and small caps closed 0.3% lower at 1,043.9.

Decliners outnumbered advancers, 163 to 79, with 86 unchanged.

UK Market - UK blue chips closed higher Friday but well below the day's peak after a volatile session, with Wall Street staying weak following a jump in US CPI inflation data which raised some concerns over future Fed rate cuts.

At the close, the FTSE 100 index was 32.8 points higher at 6,397.0, off the late afternoon peak of 6,426.2 but having rallied from a low of 6,336.7 hit after the US inflation report was released.

All the broader FTSE indices ended firmer, with the FTSE index up 78.9 points at 10,413.9.

Volume was thin, with 2.057  billion shares changing hands in 683,147 deals.

Northern Rock was the top FTSE 100 riser, up 5.9 pence to 91.9 as the Financial Times reported that private equity group Olivant has been persuaded to stay in the auction for the stricken mortgage bank after gaining reassurance it would be treated on equal footing to a rival bid consortium led by Virgin Group.

Meanwhile Rentokil stormed back from its post-profit warning losses yesterday to take on 3.9 pence at 118.2 as Exane BNP Paribas upgraded its stance to 'outperform' from 'neutral'.

The broker called yesterday's 22% fall in the share price following Rentokil's warning that the pretax profit contribution from City Link will be 10  million stg lower than previously expected an "overreaction".

It was similar stuff for Rexam, up 15 pence at 424 as it too reversed yesterday's losses after it said its in-line numbers' expectations would be hit by higher oil prices and weaker US Dollar.

And Centrica rallied from earlier losses, adding 6-3/4 pence at 371 as brokers felt its latest trading update was much as expected.

The owner of British Gas said its contracts moved back into a loss position in the fourth quarter due to higher gas prices and, at current forward prices, they would be increasingly loss-making in 2008.

The company was expected by analysts to announce retail gas prices for its UK customers in 2008, but Centrica said it was monitoring the situation before making any decision.

But on the downside, weakness in heavyweight mining issues was the main brake on the FTSE 100 index gains, with the sector knocked by falls in commodity prices and a negative review from Goldman Sachs, which cut its stance on the sector in Europe, Middle East and Africa to 'neutral' from 'attractive'.

In the review, the broker also downgraded its rating for Vedanta Resources to 'sell' from 'neutral', and cuts its target prices for Lonmin.

As a result, Vedanta shares lost 30 pence at 2,019, with Lonmin down 73 pence at 3,029.

Elsewhere, copper miner Antofagasta topped the blue chip leaders board, down 31-1/2 pence at 702-1/2, while Anglo American shed 108 pence at 3,072, and Rio Tinto lost 118 pence at 5,176.

Also among the blue chips losers, HBOS shed 8-1/2 pence at 756 after Citigroup cut its rating to 'hold' from 'buy', and lowered its target to 750 pence from 1,050 following yesterday's disappointing trading statement from the bank. Among the midcaps, Close Brothers was the top FTSE 250 riser, up 85 pence to 950-1/2 after the independent UK investment bank, which last month received a 950 pence per share joint takeover approach from rival Cenkos Securities and Icelandic bank Landsbanki, said it has now received an unspecified number of further approaches.

Close Brothers last month rejected the joint Cenkos/Landsbanki approach, which values the group at about 1.4  billion stg, as "wholly inadequate," and has refused to enter discussions with its suitors.

The news excited peer Collins Stewart, up 14 pence at 180-1/2.

Elsewhere, Northern Foods was also a good mid cap riser, up 7-1/2 pence to 91 after the maker of Fox's biscuits and Goodfella's pizza said it will implement a share buyback programme to purchase up to 5% of its shares.

Autonomy Corp was also in demand, up 57 pence to 867 after Citigroup upgraded its stance for the stock to 'buy' from 'hold'.

Elsewhere Mondi added 16 pence at 410 as Citigroup started coverage on the paper group with a 'buy' rating and a 593 pence price target.

And GKN was lifted 9-1/4 pence higher to 294-1/2 as ABN Amro initiated coverage on the company with a 'buy' rating and 350 pence price target.

Among the second line fallers, property group Capital & Regional shed 17-1/4 pence at 470-1/4 after the firm said it estimates the net impact of fee clawback on its full year net asset value per share to be between 30 pence and 50 pence per share.

The company added that the significant downward movement in the value of the Mall and Junction funds was in line with current market sentiment.

Other property mid caps suffered in sympathy, with Brixton losing 9-1/2 pence at 275-1/2, Minerva losing 3-3/4 pence at 127-3/4, and Shaftesbury off 14-1/2 pence at 501-1/2.

Elsewhere Benfield Group lost 13 pence at 272-1/4 as ABN Amro cut its rating on the company to 'hold' from 'buy' and lowered its target price to 280 pence from 325 following the reinsurer's recent profit warning.

The broker said Benfield's announcement on Monday of a 150  million stg share buyback programme over the next two years was not enough to offset the downbeat trading statement.

And a broker downgrade also saw Paragon Group shares shed 12 penny at 131 after UBS cut its rating on the specialist mortgage lender to 'neutral' from 'buy'.

Japan & Asia Pacific - Stock markets across Asia were mostly lower Friday as investors digested the latest headlines on the subprime crisis, including a Moody's downgrade of Citigroup and its plan to take over seven troubled investment funds.

Japanese stocks fell on Friday, dragged down by banks and property firms after the Bank of Japan's tankan survey showed corporate sentiment generally deteriorating.

Index heavyweights such as industrial robot maker Fanuc Ltd and chip-tester maker Advantest Corp gained as the same survey also showed companies are sticking to their robust capital spending plans, helping buffer losses on the tech-heavy Nikkei average.

The tankan headline figure showed sentiment among big manufacturers at a two-year low, reinforcing views that a rise in interest rates will be delayed to the second half of next year.

The tankan showed sentiment had deteriorated sharply among property companies.

The Nikkei ended the session down 0.1% at 15,514.51 after a volatile morning that saw it at one point up by more than one%. The broader TOPIX index lost 1% to 1,501.25.

Trade jumped to 2.8 billion shares, buoyed by moves in connection with settlement of futures and options. Last week's daily average was 2 billion.

Declining shares beat advancers by nearly two to one.

PROPERTY SHARES HIT The quarterly tankan's index of real estate companies' sentiment for current conditions fell 13 points from September to 37 while the sector's outlook showed a 10 point fall to 27 in March.

Property shares were also hit by data released on Thursday by Japan's Real Estate Economic Institute showing the number of new condominiums put up for sale in the Tokyo area slid 43.6% in November from a year earlier, as rising prices hurt demand.

Sumitomo Realty & Development Co Ltd fell 4.7% to 2,965 Yen, Mitsubishi Estate Co fell 4.8% to 2,600 Yen, and Mitsui Fudosan Co slipped 4.8% to 2,505 Yen.

Tokyo's real estate index fell 4.5%, the worst performing sector.

Banks slid on diminished chances of a rate hike and concerns about the subprime issue after the Federal Reserve's move in concert with other central banks this week failed to reassure investors.

Friday's special quotation (SQ) for settling futures and options contracts, which was being closely watched by market players, apparently passed without incident and made little impact on trading.

Mizuho Financial Group fell 29,000 Yen or 4.9% to 561,000. Mitsubishi UFJ Financial Group was down 54 Yen or 4.8% at 1,074, Sumitomo Mitsui Financial Group declined 27,000 Yen or 3.1% to 857,000 and Nomura Holdings was down 45 Yen or 2.3% at 1,874. Sumitomo Trust & Banking Co slipped 28 Yen or 3.4% to 789.

Nippon Oil Corp was down 15 Yen or 1.7% at 876. The Nikkei business daily said a consortium of five Japanese companies, including Nippon Oil, Inpex Holdings Inc and Japan Petroleum Exploration Co, are in negotiations to construct an oil refinery in Libya.

Honda Motor was 70 Yen or 1.8% lower at 3,700. The automaker plans to ramp up motorcycle production at a Brazilian plant by more than 30% by 2009, raising annual output to 2 million units.

The weaker Yen lifted sentiment in exporters. Nikon Corp rose 190 Yen or 5.0% to 4,030 and Advantest was up 70 Yen or 2.2% at 3,280 while videogame maker Nintendo Co rose 700 Yen or 1.1% to 65,400 .

Komatsu Ltd was up 70 Yen or 2.3% at 3,170 after it was reported that the construction machinery maker was planning to build a factory in Russia.

Hong Kong shares closed Friday lower, with the benchmark index falling for the third consecutive day, due to mounting worries over the global credit crisis and fears of another interest rate increase in China later in the day.

The latest subprime revelation also weighed on sentiment after Hong Kong Monetary Authority chief executive Joseph Yam said some local banks may incur losses or post lower profits because of their exposure to subprime mortgages in the US.

The Hang Seng Index closed down 180.81 points or 0.7% at 27,563.64. The Index lost over 4.4% over the week.

On Friday, turnover stayed weak at 111.78 billion Hong Kong Dollars.

Talk of another rate hike in China also weighed on the day's trade. A rate hike by the PoBC has been the subject of speculation for some time now and 'even though Shanghai seems to have discounted it, sentiment in Hong Kong was still affected,' Gorges said. Chinese banks led the index lower as higher interest rates may discourage borrowing and cut into their earnings. Chinese banks will put aside more funds as reserves on deposits starting December 25, which is expected to wipe out 400 million RMB in liquidity and restrict their capacity to invest and earn more. HSBC Holding closed Friday 40 cents higher at 133.60 Dollars on the announcement of its acquisition of Taiwan's The Chinese Bank Co Ltd after the Hong Kong unit of the London-based bank Won the Taiwan government's auction.

China's biggest bank, Industrial and Commercial Bank of China, fell 20 Hong Kong cents or 3.4% to 5.72 Dollars. China Construction Bank declined 17 cents or 2.4% to 6.80 Dollars.

Shares in Bank of China and subsidiary BOC Hong Kong fell on account of their exposure to subprime-linked investments, although the Chinese bank has been working on reducing its investment in the troubled asset. At the end of September, Bank of China's subprime-related investments stood at 7.95 billion US Dollars, down from 9.6 billion Dollars at the end of June.

Bank of China was down 7 cents or 1.8% at 3.90 Dollars while BOC Hong Kong fell 15 cents or 0.7% to 21.55 Dollars.

Investors exited banks with reported exposure to the problem, including the unlisted unit of Citic International Financial Holdings, Citic Ka Wah Bank and Fubon Bank (Hong Kong) Ltd.

Shares in CIFH fell 34 cents or 6.6% to 4.83 Dollars and Fubon dropped 30 cents or 8% to 4.46 Dollars.

While shares in the bigger city-based lenders -- including Hang Seng Bank, down 2.8 Dollars or 1.8% at 152.90 and BOC Hong Kong, down 15 cents or 0.7% at 21.455 -- were not significantly affected, smaller banks tumbled as investor sentiment turned cautious.

Dah Sing Banking Group was down 1.42 Dollars or 7.4% at 17.86 Dollars, while Chong Hong Bank lost 68 cents or 3.6% at 18.30 Dollars.

China Eastern Airlines ended a volatile session up 20 cents or 3.1% at 6.73, swinging between 6.90 Dollars and 6.31 Dollars as investors bought shares following a sharp correction in the previous two sessions.

China Eastern president Li Fenghua said yesterday that the proposed strategic partnership with Singapore Airlines and Singapore state-linked investment company Temasek is the 'only and ultimate option' for furthering its restructuring effort. Li's statement quashed hopes for a successful counterbid from the Air China-Cathay Pacific team.

Property counters were higher after Hong Kong banks this week cut their prime lending rates a quarterpercentage point following a similar rate cut by the HKMA, the city's de facto central bank.

Sun Hung Kai Properties, the city's largest developer, was up 1.1 Dollars at 159.30 Dollars and Sino Land up 30 cents or 1.2% at 26.25 Dollars.

Li Ka-Shing's power to roads conglomerate Cheung Kong Infrastructure Holdings gained 90 cents or 3.1% at 30 Dollars after it successfully completed its acquisition of Canadian TransAlta Power Co and bought a 4.9% stake in a UK company with regulated water and waste water businesses.

China A-shares closed higher after a late rebound in consumer stocks and financials, with the key index back above 5,000 points.

The benchmark Shanghai Composite Index closed up 49.87 points or 1.01% at 5,007.91. It ended the week down 1.65%.

Turnover fell to 81.63  billion RMB from 105.09 in the previous session.

The Shanghai Composite Index hit a low of 4,860 points in the morning, extending a 2.7% plunge Thursday, which was the biggest one-daypercentage loss since Nov 22, amid fears the central bank will raise interest rates as soon as today, after the market close.

China's inflation rate accelerated to its highest level in 11 years in November. The central bank is expected to raise its benchmark one-year lending rate by at least 27 basis points before the year ends, after increasing it five times this year to 7.29%.

Consumer stocks resumed their gains after yesterday's correction, with many analysts considering the ssector to be a good play against inflation, in light of efforts to encourage consumption.

Wuliangye Yibin Co Ltd surged 3.81 RMB or nearly 10% to 42.06, and Luzhoulaojiao Co Ltd gained 5.60 RMB to 71.85

Kweichow Moutai Co Ltd rose 15.51 RMB to 216.00.

China Life Insurance Co Ltd rose 1.93 RMB to 58.82, and China Merchants Bank Co Ltd added 1.18 RMB to 38.59.

Industrial and Commercial Bank of China (ICBC) fell 0.11 RMB to 7.99, well off lows. It resumed trading today after a suspension yesterday due to a shareholder meeting.

At the meeting, its shareholders approved a proposal to take a 20% stake in Standard Bank Group Ltd, the largest bank in Africa by assets, for 42.31  billion HK$.

Industrial Bank Co Ltd added 0.88 RMB to 50.75, after plummeting 13% over the past three sessions. China Merchants China Direct Investments Ltd said it plans to sell its 1.68% stake in Shanghai-listed Industrial Bank to raise at least 2.35  billion RMB.

PetroChina Co Ltd, the country's largest oil producer, edged up 0.02 RMB at 30.55, after briefly falling below 30 RMB in the morning.

Airlines remained weak on profit-taking with China Eastern Airlines Corp Ltd down 0.35 RMB at 18.82. The carrier's president Li Fenghua said late yesterday that the proposed strategic partnership with Singapore Airlines and Temasek is the 'only and ultimate option' to further its restructuring.

China Southern Airlines Co Ltd tumbled 1.14 RMB to 25.69.

China Petroleum & Chemical Corp (Sinopec) fell 0.03 RMB to 22.04, after the official Shanghai Securities News said the company is not likely to obtain government subsidies this year.

The Shanghai A-share Index rose 52.26 points or 1.00% to 5,254.71 and the Shenzhen A-share Index was up 31.44 points or 2.30% at 1,398.17.

The FTSE/Xinhua China A 50 Index was up 290.03 points at 19,528.43 and the FTSE/Xinhua China A 200 Index was up 243.91 points at 14,120.47.

China B-shares closed higher with investors encouraged by a late rally in the A-share market, leading to bargain-hunting in consumer and property stocks.

The Shanghai B-share Index rose 4.37 points or 1.24% to 355.96 on turnover of 549.71  million usd and the Shenzhen B-share Index rose 5.41 points or 0.79% at 687.39 on turnover of 3773.31  million HK$.

In Shanghai, Jiangsu Xincheng Real Estate Co Ltd rose 0.088 usd or 4.31% to 2.131.

Shanghai Friendship Group Inc Co added 0.071 usd at 1.999.

In Shenzhen, Anhui Gujing Distillery Co Ltd surged 0.50 HK$ or 5% to 10.38.

China International Marine Containers (Group) Co Ltd advanced 0.41 HK$ to 13.84.

The FTSE/Xinhua China B 35 Index was up 112.99 points at 11,625.97.

In Taiwan Share prices closed lower on margin calls although late bargain-hunting pushed the index above 8,000 points again on a day of heavy trade.

The weighted index closed down 69.87 points or 0.85% at 8,118.08, off a low of 7,922.66 and a high of 8,202.94, on turnover of 151.72  billion NT$.

For the week, the index lost 604.30 points, or 6.93%.

Decliners outnumbered advancers 1,650 to 423, with 379 stocks unchanged.

Five stocks closed limit-up, while 70 were limit-down.

The construction sector was down 2.81%, paper shed 2.39%, transport fell 1.98%, electronics gave up 1.41%, and financials lost 0.60%.

The food sector was up 3.08% and cement rose 0.96%.

The Taiwan Dollar ended the morning session at 32.415/Dollar, compared with the previous close of 32.360.

Uni-President Enterprises closed limit-up 2.45 NT$ or 7% at 37.85 after its unit Uni-President China Holdings Ltd raised 2.12  billion hkd via its global initial public offering.

President Chain Store rallied 2.60 NT$ or 3.13% to 85.80 after its board of directors approved investing 17.85  million yuan in an 'Afternoon Tea' franchise being planned for China.

Yageo slipped 0.05 NT$ to 10.95, failing to respond to news that it has formed a strategic partnership with Future Electronics.

China Steel lost 0.20 NT$ to 41.50 after the steelmaker denied a local report on a plan to merge with its Dragon Steel Corp unit.

Taiwan Semiconductor Manufacturing Co (TSMC) fell 0.90 NT$ to 59.80 despite recent share repurchase moves.

TSMC peer United Microelectronics advanced 0.20 NT$ to 19.15.

Among other stocks in focus, Hon Hai Precision Industry Co shed 4.50 NT$ or 2.48% to 177.00; MediaTek lost 11.00 NT$ or 2.86% to 374.00; Asustek Computer fell 2.40 NT$ or 2.47% to 94.80; and Cathay Real Estate dropped 0.20 NT$ to 14.90.

South Korean shares closed sharply lower on Friday, reversing an earlier rebound as Asian markets were battered by deepening concerns about global credit markets following Moody's downgrade of Citigroup Inc.

Retail investors also bought a net 322.1 billion Won of shares.

Trade volume fell to 298.5 million shares valued at 5.2 trillion Won, compared with 328 million shares worth 7.1 trillion Won on Thursday.

Decliners led advancers by 406 to 392, with 84 titles flat.

The March KOSPI 200 futures index dropped 1.45 points to 240.00 and the underlying KOSPI 200 spot index dipped 3.71 points to 241.50.

Foreign investors were net sellers of shares worth 478.7 billion Won while institutions were net buyers of 112.1 billion Won worth of shares and retail investors were net buyers of shares worth 324.6 billion Won.

Samsung Electronics fell 9,000 Won or 1.5% to 581,000 Won and Hynix skidded 450 Won or 1.7% to 25,550 Won, both on growing concerns that their memory chip businesses would report downbeat fourth-quarter earnings due to a sharp decline in chip prices.

LG Philips LCD tumbled 3,000 Won or 6% to 46,900 Won on fresh concerns that its fourth-quarter earnings may fall short of the market's forecasts in the wake of a fall in panel prices early this month.

POSCO slid 21,000 Won or 3.4% to 589,000 Won as investors worried that higher interest rates in China would hurt steel exports to the country.

Banks came under heavy pressure, tracking their global peers. Kookmin Bank slumped 2,400 Won or 3.4% to 67,700 Won and Shinhan declined 1,600 Won or 3% to 52,600 Won.

Construction stocks rallied for a third day on hopes a new president will ease restrictions on the property market. Hyundai Engineering & Construction jumped 3,500 Won or 4.2% to 87,700 Won and Daewoo Engineering & Construction surged 1,050 Won or 4.1% to 26,450 Won.

Philippine shares resumed their downtrend Friday, sending the benchmark index to its weakest finish in more than two weeks.

The composite index ended down 87.52 points or 2.4% at 3,538.69, its lowest level for the day.

It was the main index's weakest close since 28 November, when it settled at 3,537.00.

This brought the cumulative losses for the week to 206.7 points or 5.5%, reversing last week's gains of 4.7%.

The all-share index fell 45.07 points or 2.0% to 2,176.41.

Decliners overwhelmed advancers 106 to 23, while 40 stocks were unchanged.

A total of 1.8 billion shares valued at 4.2 billion Pesos changed hands.

Market heavyweight Philippine Long Distance Telephone Co fell 45 Pesos or 1.5% to 3,000 Pesos.

Bucking the trend, San Miguel Corp extended its rally for the fourth straight day. The food and beverage conglomerate's A-shares, which are restricted to Filipinos, rose 1.50 Pesos or 2.6% to 60.00 Pesos. Its B-shares, which are open to foreigners, advanced 2.00 Pesos or 3.4% to 60.50 Pesos.

The Philippine central bank will meet on 20 December to decide what to do with interest rates, more than a week after the Federal Reserve again cut rates by 25 basis points to prevent the US economy from slipping into recession.

Indonesian shares closed sharply lower Friday as investors cashed in profits ahead of a shortened trading week next week, with losses in other markets in the region deepening the selling mood.

The market will be closed on Thursday and Friday next week for an Islamic holiday, and again on Monday and Tuesday of the following week for the Christmas break.

Key decliners included Bank Danamon, the country's fifth largest bank, after its controlling owner Temasek Holdings said it prefers to merge the bank with sixth-ranked Bank Internasional Indonesia (BII).

Temasek has not ruled out the option of selling BII, which has boosted BII's share performance recently, but has definitely dropped the option of setting up a holding company for the two banks, which was the scenario most analysts had expected.

Temasek will need to either merge the two banks or exit one of them to comply with an Indonesian central bank regulation disallowing bank owners from controlling more than one bank by the end of 2010.

The composite index closed down 15.67 points or 0.6% at 2,740.06, off an intraday low of 2,719.50 on late buying in select counters.

The main index finished the week down 38.89 points or 1.4% from a week ago, retreating 70.9 points or 2.5% from its all-time high set on Tuesday.

Volume was 2.50 billion shares worth 3.6 trillion Rupiah.

Decliners led advancers 92 to 64, while 75 stocks were unchanged.

The Rupiah was trading at 9,325/9,330 to the Dollar against 9,310/9,315 late Thursday.

The LQ45 index was down 4.67 points at 602.99.

Bank Danamon fell 300 Rupiah or 3.8% to 8,100 Rupiah while BII dropped 5 Rupiah or 1.6% to 300 Rupiah.

Among other decliners, index heavyweight Telkom lost 200 Rupiah or 1.9% to 10,400 Rupiah, Bank Rakyat Indonesia lost 100 Rupiah or 1.3% to 7,800 Rupiah and nickel miner Inco dropped 1,000 or 1.0% to 95,000 Rupiah.

Coal giant Bumi Resources ended flat at 5,900 Rupiah aided by a late rebound, off an intraday low of 5,750 Rupiah, after Citigroup said it was keeping its 'sell' rating on the stock because while its coal operations outlook remains good, the 'stock simply appears too expensive.'

DBS Vickers recommends a 'hold' for Bumi, saying most of the expected Sterling future performance is already priced in.

Bucking the trend, United Tractors rose 150 or 1.4% to 10,700 Rupiah after announcing a 55% rise in its heavy equipment sales in the first 11 months of this year.

Malaysian shares closed lower Friday as investors continued to trim positions ahead of the weekend given rising domestic political tensions and a shaky outlook for the US economy.

The government detained five leaders of Malaysian Indian activist group Hindraf Thursday under a security law after the group held a mass anti-government protest in Kuala Lumpur last month.

The Hindraf rally was held just two weeks after a demonstration was organized by electoral reform campaigners.

Investors appeared cautious toward the recent initative by the Federal Reserve to work with major central banks around the globe to ease the credit crunch for other banks outside the US and also pull the world's largest economy back from the brink of recession.

The Kuala Lumpur Composite Index (KLCI) closed down 7.15 points or 0.5% at 1,403.41, off a low of 1,396.45. For the week, the KLCI was down 30.63 points or 2.1%.

The FTSE Bursa Malaysia 30-large cap index dropped 58.53 points or 0.6% to 9,036.3 and the FTSE Bursa Malaysia second board index was down 7.17 points or 0.1% at 6,678.32.

Decliners beat advancers 453 to 347 with 299 stocks unchanged and 246 counters untraded.

Trading volume was thin at 668.5 million shares, valued at 1.66 billion Ringgit.

Plantation stocks came under pressure from profit-taking following a recent strong run, with Sime Darby, the biggest listed oil palm plantation company, dropping 30 sen or 2.7% to 11.00 Ringgit, while IOI Corp, the second biggest planter in Malaysia, edged down 5 sen or 0.7% to 7.05 Ringgit.

An upbeat assessment by national power company Tenaga Nasional Bhd of its prospects for 2008 helped to lift its shares. The index heavyweight gained 5 sen or 0.5% to 9.40 Ringgit.

Tenaga said Thursday that electricity demand will grow at a faster rate of 6.0-6.5% next year.

State-run Telekom Malaysia gained 10 sen or 0.9% to 11.50 Ringgit while Maybank, the largest commercial bank in the country by assets, lost 10 sen or 0.9% to 11.70 Ringgit.

TA Enterprise, Malaysia's largest retail broking company, added 5 sen or 3.9% to 1.32 Ringgit after the brokerage reported that its third-quarter net profit more than tripled to 71.4 million Ringgit from a year earlier as higher income from the property development segment offset lower brokerage income.

At the close, the Malaysian Ringgit was quoted at 3.3115/3145 against the US Dollar. Three-month interbank rates were quoted at 3.35/58 and the overnight rates were at 3.48/50.

Singapore shares closed lower Friday for the third straight session as investors continued to fret about the worsening global credit crisis, although late buying helped the index to close off the day's low.

The Straits Times Index fell 12.93 points or 0.4% to close at 3,466.38 points, after trading between a low of 3,424.34 and a high of 3,495.06. For the week, the index was down 91.57 points or 2.6%.

Decliners led gainers 519 to 237, with 994 shares unchanged.

There were 2.07 billion shares traded worth 1.9 billion Singapore Dollars.

Banking stocks were mostly lower, with DBS Group down 20 cents at 20.40 Singapore Dollars and United Oversea Bank down 10 cents at 19.70 Dollars. A late buying spree saw Oversea-Chinese Banking Corp rise 10 cents to 8.65 Dollars.

Property heavyweights sagged, with City Developments falling 30 cents to 13.70 Dollars, Keppel Land sliding 15 cents to 7.40 Dollars, and CapitaLand dropping 10 cents to 6.60 Dollars.

Among blue chips, Singapore Exchange fell 50 cents to 13.30 Dollars, Keppel Corp was 30 cents lower at 12.80 Dollars, while Singapore Telecommunications added 4 cents to 3.96 Dollars.

Newly listed Mercator Lines (Singapore) Ltd, a unit of Indian shipping company Mercator Lines Ltd, closed at 60 cents, below its initial public offer price of 76 cents.

But Singapore's KTL Global Ltd, a supplier of rigging equipment to the oil and gas industry, fared better on its debut. The stock closed 33 cents above its listing price of 28 cents.

Thai share prices closed higher Friday as investors took heart from a court ruling allowing the kingdom's energy giant PTT to remain listed on the stock exchange.

Investors chased gains in energy-linked shares, but the stock exchange suspended trading of PTT, the biggest company on the Thai bourse, throughout the day, as requested by the firm.

The Stock Exchange of Thailand (SET) composite index rose 3.31 points 0.40% higher to 836.40, while the blue-chip SET-50 index gained 2.54 points to 614.08.

Gainers led losers 183 to 108, with 139 stocks unchanged on turnover of 1.6 billion shares worth 17.0 billion Baht.

The Thai Baht closed at 33.60-61 to the Dollar, unchanged from Thursday's finish. Against the Euro, the Thai unit was quoted at 48.88-94 from 49.35-45.

Consumer groups had asked the Supreme Administrative Court to revoke the laws that allowed PTT, the biggest company on the Thai bourse, to float its shares in December 2001.

The court said Friday that PTT's listing is legal, sparing the firm from being delisted from the Thai bourse. But the top court ordered the firm to return its pipeline operations to the state.

The stock exchange said it is still unclear when it can resume trading PTT, whose market capitalization is worth 1.01 trillion Baht or about 15% of Thailand's total market capitalisation of 6.4 trillion Baht.

The energy giant's subsidiary PTT Exploration and Production rose 2.00 Baht to 158.00. Thai Oil gained 1.00 to 86.50.

The kingdom's top lender Bangkok Bank was unchanged at 115.00.

Thai Airways International edged up 0.25 to 37.50, but Thailand's biggest mobile phone operator, Advanced Info Service, closed flat at 96.00.

Indian shares closed a shade lower in volatile, directionless trade in the absence of strong triggers, but cement and pharmaceutical stocks advanced.

The markets were seen unaffected by data that said domestic inflation rose to a three-month high. India's wholesale price index-based inflation unexpectedly rose to a three-month high of 3.75% for the week ended Dec 1 from 3.1% the previous week on higher prices of fruits, vegetables and oil products, government data showed.

The Bombay Stock Exchange's benchmark Sensex closed 73.56 points or 0.37% lower at 20030.83 while the National Stock Exchange's S&P CNX Nifty closed 0.17% lower at 6047.70 points.

However, stocks of companies with lower market capitalisation continued to advance. The BSE's midcap index gained 96 points or 1.02% to close at 9471.94, while the smallcap index rose 188.17 points 1.57% to 12195.50.

For the week, the Sensex has risen 64.83 points and the Nifty has gained 73.40 points.

ACC Ltd, India's biggest cement producer, gained the most on the blue-chip index today, rising 3.58% to 1102.60 Rupees and Ambuja Cement advanced 1.56% to close at 147.45 Rupees.

Pharmaceutical stock Ranbaxy Laboratories which recently reached a brand name-sharing agreement with Belgian-Dutch financial group Fortis, rose 2.7% to 422.20 Rupees.

Cipla Ltd, which has fallen heavily over the past few months, gained 2.65% to close at 209.15 Rupees.

However, many scrips that had risen recently, were sold as investors took profits.

Telecom major Bharti Airtel continued to slide, closing 3.57% lower at 952.55 Rupees amid ongoing controversy over the spectrum allocation issue, following the Indian telecom regulator's proposed norms that suggest telecom players will have to hike their subscriber bases by up to 15 times to qualify for additional spectrum.

India's second-largest bank ICICI Bank also extended losses, declining 2.87% to 1206.85 Rupees on profit taking. HDFC, which hit a new 52-week high of 3,195 Rupees yesterday, fell 2.51% to close at 3,058 Rupees.

Australian shares finished in negative territory on Friday for the third session in a row, with market heavyweights BHP Billiton and Rio Tinto leading the way after sharp falls in most base metals prices overnight.

The major banks were also weaker after short-term lending rates soared 14 basis points to 7.61% on Friday, increasing interbank borrowing costs and putting pressure on earnings.

Macquarie Equities handled a sizeable sell program, which put pressure on the market.

The S&P/ASX 200 closed down 105.9 points or 1.6% at 6,491.7, after trading between 6,466.7 and 6,595.2. For the week, the benchmark index was down 163 points or 2.4%.

The All Ordinaries finished 105.0 points or 1.6% lower at 6,556.1.

Volume traded was 1.65 billion shares worth 6.40 billion Australian Dollars.

Decliners outnumbered gainers 883 to 401 with 334 stocks unchanged.

The S&P/ASX December futures contract was down 108 points at 6,492.

The yield on the 10-year bond fell 0.0125percentage point to 6.25% while the yield on 90-day bills rose 0.139percentage point to 7.512%.

BHP Billiton fell 1.21 Dollars or 2.8% to 42.05 Dollars and Rio Tinto lost 3.96 Dollars or 2.8% to 137.24 Dollars after copper, aluminium, tin and zinc prices fell more than half a% each on the London Metals Exchange in response to weakness in share markets.

In the gold sector, Newcrest Mining slipped 1.22 Dollars or 3.5% to 33.25 Dollars and Lihir Gold slumped 25 cents or 6.7% to 3.47 Dollars after the gold price fell 14.80 US Dollars or 1.8% to 804 US Dollars overnight.

Caltex, Australia's only listed oil refiner, shed 1.31 Dollars or 6.1% to 20.10 Dollars after it lowered its 2007 profit guidance because of a significant drop in the Australian Dollar since early November and lower production caused by unplanned refinery shutdowns.

Among the major banks, National Australia Bank dropped 73 cents or 1.9% to 38.45 Dollars, Australia & New Zealand Banking Group fell 32 cents or 1.2% to 27.60 Dollars and Westpac gave up 48 cents or 1.6% to 29.00 Dollars.

Commonwealth Bank, which has the largest deposit base of the banks and doesn't have to rely on wholesale funding, rose 12 cents or 0.2% to 60.74 Dollars.

The New Zealand NZSX-50 benchmark index, which this week fell below 4000 for the first time since late August, closed up 7.3 points at 4008.7, on turnover totalling $120.7 million.

Market leader Telecom, which fell 8c Thursday, rose 2c to 438 Friday.

Second-ranked Fletcher Building rose 14c to 1130, having recovered from Wednesday's eight-month low of 1097.

The building materials, retailer and construction stock hit a record high of 1342 in May.

Elsewhere on the top-10, Contact Energy was up 4c at 838 to add to yesterday's 15c gain, Fisher & Paykel Healthcare was down 2c at 328, F&P Appliances rose 4c to 338, Sky City was down 3c at 461, and Sky TV rose 4c to 574.

Auckland Airport closed flat at 280, having earlier hit a high of 295 after the Canada Pension Plan Investment Board formally lodged its partial takeover Friday.

Vector was down a cent at 233, Trustpower fell 5c to 830, NZ Refining lost 30c to 750, Mainfreight fell 15c to 680, and Air New Zealand was down 3c at 184.

Most stocks to rise made only small gains. Port of Tauranga was up a cent at 679, Infratil rose 2c to 290, Guocoleisure was up 2c at 104, Kiwi Income Property Trust gained 2c to 136, and Pumpkin Patch rose 2c to 248.

This week's debutant, Diligent Board Member Services, continued to track down, losing 7c to close on a low of 80c. Founder and chief executive Brian Henry resigned Thursday because of non-disclosure of his and his brother's past.

Among dual-listed stocks, ANZ was down 20c at 3130, Westpac was flat at 3340, Goodman Fielder rose 4c to 215, Lion Nathan was up 10c at 1070, and AMP shed 17c to 1130.

Commodities - Energy and agriculture commodities moved higher during the week, supported by robust demand from emerging countries and tight supplies.

The upwards movement in energy and agriculture came as fresh signs emerged of the inflationary impact of the surge in oil and food prices since the spring.

US inflation climbed in November to 4.3%, the highest level since June 2006, while Eurozone inflation rose to 3.1%, the highest in more than six years.

Nymex January West Texas Intermediate crude oil gained 3.4% on the week to $91.25 a barrel, while ICE January Brent crude oil moved 3.7% higher to $91.94 a barrel.

Oil prices have been trading in a range of between $85 and almost $100 a barrel since mid-October and analysts suggest that the trend will continue in the near-term. Most Wall Street banks are forecasting a higher average price for 2008 than the 2007 average of about $72 a barrel.

The price recovery from last week's lows was helped by a new forecast from the International Energy Agency, the western countries' energy watchdog, of higher than expected oil demand in 2008.

The IEA revised up its estimate of next year's oil demand by 200,000 barrels a day to 2.1m b/d as strong Middle East and Asia consumption will offset the impact of the US economic slowdown and the record prices.

Nymex January RBOB gasoline rose 4.9% to $2.37 a gallon, while Nymex January heating oil jumped 5.3% to $2.63 a gallon.

Robust demand and extremely low stockpiles helped agriculture commodities move higher on the week. In Chicago, CBOT January 2008 soyabean hit a fresh 34-year high of $11.61½ a bushel and posted a weekly increase of 2.7% to $11.5 a bushel.

CBOT December wheat rose 3.7% to $9.36½ a bushel while CBOT December corn rose 4.8% to $4.18 a bushel.

In contrast with agriculture and energy commodities, base metals fell sharply on a weakening US economy and fears that rising inflation would curtail the Federal Reserve's ability to cut interest rates to offset the impact of the bursting of the housing bubble.

On the London Metal Exchange, copper, the base metals bellwether, dropped 5.5% to $6,527 a tonne while aluminium lost 2.7% to $2,414 a tonne. Lead lost 8% to $2,480 a tonne. Nickel fell 3.5% to $26,450 a tonne and tin moved 3.9% down to $16,150 a tonne.

The strengthening of the US Dollar amid expectations that the Federal Reserve may fail to cut rates on higher inflation weighed on precious metals. Gold lost 0.6% on the week to $790.6 an ounce, while silver lost 3.8% to $13.80 an ounce.

Currencies - A volatile week on currency markets ended with the Dollar on the front foot as it climbed to its highest level in more than a month against the Euro and the Yen.

Traders said unwinding of bets against the Dollar ahead of the year end had combined with robust US economic data to boost the greenback.

Figures on Friday showed US consumer price inflation rose more than expected in November, while on Thursday US retail sales came in above forecast.

Analysts said rising inflationary pressures had trimmed expectations of aggressive interest rate cuts from the Federal Reserve.

The retail sales figures came in for close scrutiny since the Fed had mentioned the potential for a slow down in consumer spending in the statement accompanying its decision to cut US interest rates 25 basis points to 4.5% on Tuesday.

The Dollar rose 1.3% to $1.4460 against the Euro over the week, gained 0.4% to $2.0230 against the Pound, climbed 2% to SFr1.1510 against the Swiss franc and 1.3% to Y113.00 against the Yen.

The Yen endured wild swings as it continued to track gyrations in investor risk appetite. It rallied sharply on Tuesday after the Fed made clear that it was concerned about inflationary pressures in the US economy.

Analysts said the Fed's relatively hawkish tone heightened fears that it would not cut interest rates as aggressively as expected, raising fears over the prospects for global growth. This pushed investors away from carry trades, in which the low-yielding Yen is sold to finance the purchase of riskier, higher-yielding assets.

News of a concerted effort by global central banks to ease liquidity problems with a cash injection on Wednesday saw the Yen give back its gains as investor risk appetite staged a comeback.

Analysts said the Bank of Japan's Tankan survey, released Friday, had not helped the Yen's cause as it showed that Japanese business sentiment slipped to a two-year low.

While the Tankan report saw expectations of a near-term rise in Japanese interest rates recede, David Woo, at Barclays Capital, said in the short term he expected global developments and risk aversion to be more important drivers of the Yen than domestic interest rates.

Over the week, the Yen fell 0.8% to Y228.55 against the Pound and 0.6% to Y87.20 against the higher-yielding New Zealand Dollar.

The Euro eased 0.1% to Y163.35 against the Yen over the week and also fell 0.9% to £0.7147 against the Pound as concerns mounted over the effect of recent liquidity problems in the Eurozone.

Nout Wellink, president of the Dutch Central Bank, said the Eurozone was experiencing a “second wave” of the credit crisis, which was worse than the first, adding it was too early to tell whether the concerted action from global central banks to ease liquidity problems would work.

The low-yielding Swiss franc suffered as the Swiss National Bank left interest rates on hold.

The Swiss franc lost 1.7% to SFr2.3295 against the Pound and dropped 0.7% to SFr1.6648 against the Euro.

Currencies in Norway, South Africa, and Australia declined against the Yen as rising inflation cut the outlook for global growth, pushing investors to pare holdings of higher-yielding assets funded by loans in Japan. A decrease in oil and gold also reduced the appeal of financial assets in these commodities- exporting nations.

South Africa's Rand led declines among the 16 major currencies against the Yen, losing 1%. Norway's Krone and the Australian Dollar fell 0.8% and 0.6%, respectively. Against the Dollar, the Krone weakened 1.9% while the rand dropped 2.1%.

As always, closing out currencies here at home where the Chinese RMB posted its biggest weekly advance in more than a month as Chinese officials signaled they're willing to allow faster appreciation to cool economic growth.

The RMB rose 0.43% this week to 7.3715 per Dollar, compared with 7.3692 Thursday and 7.4030 a week ago, according to the China Foreign Exchange Trade System.

China - The US and China have agreed to accelerate talks on a bilateral investment treaty amid concern in Beijing that the Chinese are being blocked from buying into US companies and assets.

Carlos Gutierrez, the US commerce secretary, said on Thursday after the close of the twice-yearly top-level dialogue between the two countries that the issue had been discussed at length at the meeting outside Beijing.

China's concerns date from the failed 2005 purchase by CNOOC, a state energy company, of Unocal, a US oil and gas company. They have been aggravated of late by the threat of barriers to purchases by its newly established sovereign wealth fund.

A communiqué included, at Beijing's request, a commitment from the US that Chinese banks would be treated like other foreign lenders if they wished “to acquire stakes” in US banks.

China is watching closely how Washington handles Huawei Technology's role in a takeover – led by Bain Capital – of 3Com, a US telecoms equipment maker which supplies security equipment to the US government.

Hank Paulson, the US Treasury secretary, said concessions made by China to liberalise its financial services sector at the meeting were “modest” but headed in the right direction.

China has agreed to lift a moratorium on overseas entry into its increasingly lucrative securities sector but has yet to detail what type of business foreigners will be able to do, beyond underwriting new share issuances.

China has also delayed announcing how much equity foreigners would be allowed to hold in brokerages – currently 33% – saying that regulators would report before the next meeting in June. The US wants the cap lifted to 49%.

China did agree to allow foreign investors in China to list on local stock markets and to issue local currency bonds, a move welcomed by Mr Paulson.

*****************************************************************

Here's some China news that made me smile this week. Beijing turned the tables on the US on Wednesday after years of criticism from Washington of its handling of the Chinese economy, warning of the serious global implications of the weak Dollar, recent US interest rate cuts and the subprime crisis.

Beijing highlighted US economic problems at the opening of a twice-yearly meeting between ministers from both countries,

China has received stringent commentary about what many in the US say is its manipulation of its currency and the advantage it gives local exporters.

Chen Deming, the incoming commerce minister, said the falling Dollar had pushed up the cost of imported resources and been a destabilising factor. “What I'm worrying about is the weakening Dollar and its potential impact on global growth,” he said.

The Commerce Ministry has traditionally lobbied against an appreciation of the renminbi, China's currency, because of its support for exporters.

Mr Chen said he did not oppose a stronger renminbi but felt it should not appreciate “excessively” while Chinese businesses and banks adjusted to a more flexible exchange rate regime.

The RMB has appreciated by about 12% since mid-2005, when its peg to the Dollar was broken. The pace of appreciation has accelerated in recent months and has risen by about 6% so far in 2007.

Zhou Xiaochuan, the governor of the People's Bank of China, was more moderate, saying domestic factors were more important for the management of the economy than the Dollar.

But Mr Zhou said the bank was closely watching the impact of US interest rate cuts and their impact on the world economy.

“For China, what we worry about more is that very accommodative US monetary policy could give rise to a new burst of excess liquidity in global markets,” he said.

“In China, we have already had an excess liquidity problem in the domestic market, which we know is somewhat connected to the global markets.”

The so-called “strategic economic dialogue” was established on the initiative of Hank Paulson, the US Treasury secretary, as a regular bilateral forum.

Mr Paulson did not respond directly to the criticism (how could he?) but said the fact the Chinese economy had grown strongly through the early stages of renminbi reform had made it “easier to make the argument” for a stronger Chinese currency.

“There is now confidence that the [revaluation] has not done anything to harm their economy in any way,” he added.

*****************************************************************

ArcelorMittal on Thursday unveiled a general offer for China Oriental shares as it stepped up efforts to gain a stronger foothold in China's fast-growing steel market.

But the world's biggest steelmaker also abandoned a long-delayed effort to acquire a minority stake in Laiwu Steel, another mainland steel mill.

ArcelorMittal said it planned to make an offer for all the shares it does not already own in Hong Kong-listed China Oriental at HK$6.12 a share, paying a maximum consideration of $770m.

It already owns a 28% stake in the company and has signed an agreement with Han JingRMB, Oriental's chairman and chief executive, to acquire his controlling 45% stake.

“We are not a leader in Asia and this is where our expansion needs to come from,” said Ondra Otradovec, ArcelorMittal vice-president for mergers and acquisitions.

“The progress we have been making in China has perhaps been slower than in other markets...I don't think our ambition stops with China Oriental.”

ArcelorMittal said its attempt to acquire a minority interest in Laiwu Steel will formally end at the end of the month.

Arcelor first said it would pay $900m for a 38% stake in Laiwu nearly two years ago, before its merger with Mittal. The agreement has been extended many times as the parties sought government approval.

“They [Laiwu] have just let us know that they have other priorities and would prefer not to continue with the agreement,” said Dirk Matthys, chief executive of ArcelorMittal China. “We would have preferred to wait, but it is their choice.”

ArcelorMittal is the largest steel company on four continents – North and South America, Europe and Africa.

A foothold in China, which has reinvigorated the global steel market, is critical for the company.

ArcelorMittal's general offer came a week after Hong Kong's Takeovers Panel found that it had been acting in concert with Mr Han, and was therefore obliged to extend an offer to all shareholders.

“Strengthening our position in the fast-growing China market is one of the most important elements in ArcelorMittal's strategy,” Lakshmi Mittal, the company's president and chief executive, said on Thursday.

ArcelorMittal's general offer came a week after Hong Kong's Takeovers Panel found that the group had been acting in concert with Mr Han, and was obliged to extend an offer to all shareholders.

Summary Undoubtedly, we are in for more of the same next week and the remaining two trading weeks before Years' end will see more volatility for certain.

Will the rush to show double-digit positivity at year-end drive markets up?  I don't think so; the spectre of the sub-prime issue looms rather largely over the markets and could, potentially, ruin the Christmas and New Year parties for investors.  Most mainstream markets need to see around 5% growth in the next two weeks to make the 10% or more growth for the year and as they are sat now, I have to say that this looks highly unlikely.

But stranger things have happened this year as we all know and a nod and a wink from the Fed', or a cash injection by some Middle Eastern group of investors could ratchet up the markets and support them through that double-digit mark.

The key next week though I feel, are the three big banks that deliver their fiscal fourth-quarter numbers. Goldman Sachs, Bear Stearns and Morgan Stanley will provide more pieces to the credit puzzle. These will be crucial to global market movements next week.

A busy week is expected for software earnings, led by titan Oracle, which reports Wednesday. Those companies, along with tech services provider Accenture, should give Wall Street a good sense of how corporate spending on technology is tracking in the US Concerns about an information technology spending slowdown have weighed on many tech stocks this quarter.

With further numbers reported next week by Adobe, Fedex, Micron and Best-Buy, we will see a broad set of indicators as to how corporate earnings in different sectors fare.

And how could we forget that in a further effort to ease the credit crunch, the Federal Reserve on Monday will offer $20 billion in 28-day credit through its term auction facility. The following day, the nation's central bank will consider ways to tighten home- lending regulation. Housing starts and building permits data for November will also be released Tuesday.

Consumers' lower economic expectations are likely to be revealed in the Reuters/University of Michigan's preliminary consumer sentiment index for December, released Friday. Personal income and spending data is published the same day.

So all told, a further volatile and choppy week ahead with lots of numbers for investors to digest.

As always, I will keep you posted as/when developments occur but my advice is to watch those three banks closely next week - will any of them have the guts to announce further credit-crunch write-downs? Or will they suddenly pull an investor out of the hat that is going to give them a 10 Billion US Dollar Christmas present?

Could the headlines next week be: "Morgan Stanley announces 11 Billion Dollar credit-crunch write-downs but share prices rose when they announced that the Bank of Sheikh Yor Monee, based in Bahrain, is thinking about buying a few Billion or so coupons in 2017". Stranger things have indeed happened this year!

I wish you all a pleasant weekend.

Market Review Newsletter Compiled By

Adrian Page

Managing Director

Financial Page International

Saturday 15 December 2007

www.fpi.hk or www.fpi.cn

"Money Does Not Perform. People Do!"

If you require further information about our products and services or to speak confidentially with an Advisor, feel free to use the Contact Us section of our website. We do not charge for our services and offer completely impartial advice so you have nothing to lose by dropping us a line and everything potentially to gain.