London: Gold prices jumped to two-week highs on Monday as investors sought refuge from financial market uncertainty, the dollar slipped and oil prices held firm near record highs.
Spot gold hit $836.70 a troy ounce, the highest since November 9. Earlier this month it hit a 28-year high of $845.40.
The dollar was within striking distance of record lows against the euro as investors sold on concern about the health of the US economy and expectations of further rate cuts from the US Federal Reserve.
"The dollar is weak and that means there is a general uplift for metals," said Dan Smith, analyst at Standard Chartered.
"It's also a safe-haven in terms of the credit crisis."
Oil rose above $99 a barrel on Monday, closing in on the $100 milestone, despite hopes an Opec meeting next week could signal an output boost.
Iran's Oil Minister Gholamhossein Nozari said at the weekend that some Opec members were advocating an increase in production when they meet on December 5 in Abu Dhabi to debate whether to raise output for a second time this year.
The dollar's decline to a series of record lows versus the euro has spurred buying across commodities, notably oil.
Monday, November 26, 2007
Foreign shoppers hit 'mall of America' as dollar plunges
New York: "So where are the shops?" asks John Bainbridge, who is just off the plane from Yorkshire, England.
After getting directions to Bloomingdale's department store, Bainbridge, his wife, daughter, granddaughter, and two friends are off to buy their Christmas presents - at prices only someone from Europe considers cheap.
This holiday period, some US retailers will find planeloads of foreign tourists taking advantage of the weak - and getting weaker - US dollar. They are arriving with empty suitcases and shopping lists and leaving with Levis, handbags, shoes and computers. Most are arriving for just two or three days or even a single day of mad "bargain" hunting. And for those who don't want to deal with the overseas travel, some e-retailers are redesigning their websites in foreign languages and adding currency translation aids.
"The US is one big discount shopping mall for foreigners," says Scott Krugman, a spokesman for the National Retail Federation in Washington.
It's not just the English, Germans and French cleaning out the shelves. To the north, the Canadians are flexing their Loonies. Out west, there are sightings of Australians armed with a strong currency. And their ability to buy just keeps going up. Last week, the dollar fell to another record low against the euro. And last month, the Federal Reserve reported the dollar hit the lowest level against a basket of major currencies since July 1995.
One of the factors behind the drop: the slowing US economy and concerns that the Federal Reserve will have to drop interest rates again in December.
But if the economy is hitting the brakes, there was no sign of it on the day after Thanksgiving, better known as Black Friday, since that used to be the day when many retailers posted a profit for the year.
According to Chicago-based ShopperTrak RCT Corp, which monitors sales at more than 50,000 stores, sales rose 8.3 per cent over last year.
After getting directions to Bloomingdale's department store, Bainbridge, his wife, daughter, granddaughter, and two friends are off to buy their Christmas presents - at prices only someone from Europe considers cheap.
This holiday period, some US retailers will find planeloads of foreign tourists taking advantage of the weak - and getting weaker - US dollar. They are arriving with empty suitcases and shopping lists and leaving with Levis, handbags, shoes and computers. Most are arriving for just two or three days or even a single day of mad "bargain" hunting. And for those who don't want to deal with the overseas travel, some e-retailers are redesigning their websites in foreign languages and adding currency translation aids.
"The US is one big discount shopping mall for foreigners," says Scott Krugman, a spokesman for the National Retail Federation in Washington.
It's not just the English, Germans and French cleaning out the shelves. To the north, the Canadians are flexing their Loonies. Out west, there are sightings of Australians armed with a strong currency. And their ability to buy just keeps going up. Last week, the dollar fell to another record low against the euro. And last month, the Federal Reserve reported the dollar hit the lowest level against a basket of major currencies since July 1995.
One of the factors behind the drop: the slowing US economy and concerns that the Federal Reserve will have to drop interest rates again in December.
But if the economy is hitting the brakes, there was no sign of it on the day after Thanksgiving, better known as Black Friday, since that used to be the day when many retailers posted a profit for the year.
According to Chicago-based ShopperTrak RCT Corp, which monitors sales at more than 50,000 stores, sales rose 8.3 per cent over last year.
Winners and losers as $100 oil approaches
SAN FRANCISCO (MarketWatch) -- As crude-oil prices continue their assault on the century mark, no one needs to tell consumers what it all means. They feel it every time they pull up to a gas pump or order a load of heating oil for that cranky furnace in the basement.
But economists and investors are taking stock of the new numbers, mapping changes in the flow of capital, and adjusting portfolios to capture the gains or at least limit the losses.
Some of those twists and turn lead down obvious paths. Others are more obscure. Here is a smattering of both.
The losers ...
With nationwide gasoline prices are averaging more than $3 for a gallon of regular unleaded, there's not a lot of public sympathy for the plight of Big Oil. But not all oil companies are created equal.
Sifting through the industry's third-quarter scorecards shows nearly all of them saw profits pinched by the rising cost of crude. That's because very few of the big brands produce as much oil as they sell through their service stations. What they don't produce, they have to buy on the global market.
When the price at the pump doesn't rise as fast as the price of the raw material going into the refinery, refining margins shrink. That's been the case almost across the board since the summer, at Exxon Mobil
For refiners such as Valero Energy Corp. with little or no production of their own, the high price of crude is felt even more acutely. This is clear from their share prices. Valero stock is down 15% from its summer peak, and Sunoco is down 16%.
Gasoline prices, meanwhile, are up nearly 10% in just the past month, though they still have a way to go to match the $3.28 all-time high set May 24, according to the AAA's daily gauge.
While refiners hold fuel made from crude bought weeks or months ago, they face gradually stiffer competition from vertically integrated oil companies whose own output partially shields them from volatile crude prices, giving them a slight advantage at the pump.
Rising gas prices also spell trouble for automobile manufacturers, who face falling sales and slowly swelling inventories of unsold trucks and SUVs. Much of this has to do with the crisis in residential building, since contractors aren't buying new trucks, but the combined effect is producing some major concerns in Detroit, especially following GM's big third-quarter loss. And GM's share price has declined nearly 40% in just six weeks. But mileage is a rising concern chipping steadily away at light-truck sales, forcing the industry to fall back on dreaded incentives. Even Toyota is using incentives to lure customers to its big, slow-selling Tundra pickup, which is starting to look like a rare misstep by the Japanese manufacturer.
Airlines are also under the gun from higher crude prices. With fuel costs typically the second-highest cost, after only employees, the airline industry is among the most vulnerable to oil prices. Already several carriers, including United Airlines parent UAL Corp have announced plans to jack up fares to cope with the extra cost.
In terms of what flows from the refinery, jet fuel is a first cousin to diesel fuel and heating oil. One needs look no further than the biggest consumers of these petroleum products to find more pain. It also means that airlines, truckers, railroads and about 8 million households -- primarily in the Northeast -- will be competing for essentially the same fuel supplies. Crude oil, the raw material, accounts for 60% of the cost of heating oil. Refining, marketing and distribution make up the rest. In addition to the economic and geopolitical factors that hold sway over the oil market,
A severe cold snap in New York, for example, could send already lofty heating-oil prices soaring, prompting warnings from some industry analysts that homeowners should be prepared to fork out nearly twice what they paid last year to stay warm.Higher gasoline and heating-oil prices crimp consumers, while higher diesel- and jet-fuel prices lift the cost of shipping goods to market. Together, these give retailers one more reason to fret over increasingly fragile-looking holiday sales."These are big macroeconomic issues that tend to affect everybody," Michael Niemira, chief economist at the International Council of Shopping Centers, said. "At some point, you have to expect some reaction." But Niemira thinks the tipping point for retailers probably won't be reached until 2008, he said. That's because the average American's income this year has kept ahead of energy costs, with $20 year-on-year nominal growth in income outpacing a $10-to-$15 rise in gasoline expenditures.
"It appears that income is still the silver lining in this otherwise negative picture," he said.
Meanwhile, retailers are protecting profit margins by hiring fewer workers. Federal employment figures show a drop in retail jobs in three of the past five months. Another step they are taking is to run down inventories, which also holds down transportation costs. The growing popularity of gift cards, rather than real merchandise, helps. Gift cards accounted for a whopping 18% of consumer expenditures during last year's holiday shopping season, and that is expected to grow this year.
... and some winners ...
So who comes out ahead when oil crests $100 a barrel?
From an investors' standpoint, the obvious play is to rush into the arms of the alternative-energy companies. Biofuels and crop-yield boosters like Monsanto have already been targeted by Wall Street. When crude first flirted with $100 two weeks ago, Monsanto shares hit an all-time high $99.98, up 84% this year and just shy of its own century mark. They have since backed down. That suggests that anyone joining the stampede into biofuels might be late. But there are plenty of other plays in the alternative-energy game, which is rife with start-ups backed by capital fleeing the subprime-mortgage crisis or other underperforming sectors.
As in the tech boom of the 1990s, however, few of these new companies will emerge winners. So the word from Wall Street is to pick wisely. As crude prices climb, airlines will accelerate purchases of fuel-efficient aircraft, also benefiting parts makers.
The rising tide of petrodollars is also filling the coffers of oil producers. Many of those happen to be state-owned oil companies, which means some of the cash flow will be diverted to the respective militaries assigned to protect these nations and defend their wealth.
That's good for that other international megabusiness: arms makers. Look for lucrative weapons deals landing in the laps of companies like Lockheed Martin whose shares are up 24% in three months, and Raytheon up 17% over the same period. Defense spending in general, even among oil-importing countries, is rarely impacted by commodity prices. Wall Street knows this.
Meanwhile, oil-service companies will continue to hawk their wares and expertise to a world scrambling for crude. Many have already enjoyed a blistering run this year, leading the Philadelphia Oil Service Index on a 42% romp that makes it a star performer in any portfolio.
Further gains will hinge on how long oil prices cling to their new roost. But as long as they do, they will draw big bucks to exploration and production. Major beneficiaries of the trend have included drilling-services giant Schlumberger and offshore rig owners Weatherford International all with far-reaching overseas contracts and all with share prices up at least 48% so far this year.
The focus of the big exploration dollars is deepwater offshore, where the rewards are greatest.
Earlier this month, Brazil's state oil company, Petrobras announced a staggering payoff for its efforts in this arena. Drilling results show its Tupi field could hold up to 8 billion barrels of recoverable crude. If it pans out, that would put Brazil's oil and gas reserves somewhere between those of OPEC members Nigeria and Venezuela.
Brazil's success has a certain historic and ironic ring to it, and could land OPEC once again among the big losers in a world of high-priced crude.
The 1973 Arab oil embargo, which triggered the first global energy crisis, sent oil prices soaring from $3 to $11 a barrel in short order. It also encouraged a host of non-OPEC-member countries to find and develop fields in environmentally hostile corners of the world that never could have turned a profit otherwise.
By the mid-1980s, as oil from these new fields poured into the market, OPEC kingpin Saudi Arabia decided to flood the market to drive down prices and halt any further loss of market share.
But OPEC's share of world oil production has slipped from its 1973 high of 52% to about 41%, weakening the group's ability to outpump rivals. Given already tight supplies and strong global demand, don't look for a sudden flood of OPEC crude on the market any time soon.
But economists and investors are taking stock of the new numbers, mapping changes in the flow of capital, and adjusting portfolios to capture the gains or at least limit the losses.
Some of those twists and turn lead down obvious paths. Others are more obscure. Here is a smattering of both.
The losers ...
With nationwide gasoline prices are averaging more than $3 for a gallon of regular unleaded, there's not a lot of public sympathy for the plight of Big Oil. But not all oil companies are created equal.
Sifting through the industry's third-quarter scorecards shows nearly all of them saw profits pinched by the rising cost of crude. That's because very few of the big brands produce as much oil as they sell through their service stations. What they don't produce, they have to buy on the global market.
When the price at the pump doesn't rise as fast as the price of the raw material going into the refinery, refining margins shrink. That's been the case almost across the board since the summer, at Exxon Mobil
For refiners such as Valero Energy Corp. with little or no production of their own, the high price of crude is felt even more acutely. This is clear from their share prices. Valero stock is down 15% from its summer peak, and Sunoco is down 16%.
Gasoline prices, meanwhile, are up nearly 10% in just the past month, though they still have a way to go to match the $3.28 all-time high set May 24, according to the AAA's daily gauge.
While refiners hold fuel made from crude bought weeks or months ago, they face gradually stiffer competition from vertically integrated oil companies whose own output partially shields them from volatile crude prices, giving them a slight advantage at the pump.
Rising gas prices also spell trouble for automobile manufacturers, who face falling sales and slowly swelling inventories of unsold trucks and SUVs. Much of this has to do with the crisis in residential building, since contractors aren't buying new trucks, but the combined effect is producing some major concerns in Detroit, especially following GM's big third-quarter loss. And GM's share price has declined nearly 40% in just six weeks. But mileage is a rising concern chipping steadily away at light-truck sales, forcing the industry to fall back on dreaded incentives. Even Toyota is using incentives to lure customers to its big, slow-selling Tundra pickup, which is starting to look like a rare misstep by the Japanese manufacturer.
Airlines are also under the gun from higher crude prices. With fuel costs typically the second-highest cost, after only employees, the airline industry is among the most vulnerable to oil prices. Already several carriers, including United Airlines parent UAL Corp have announced plans to jack up fares to cope with the extra cost.
In terms of what flows from the refinery, jet fuel is a first cousin to diesel fuel and heating oil. One needs look no further than the biggest consumers of these petroleum products to find more pain. It also means that airlines, truckers, railroads and about 8 million households -- primarily in the Northeast -- will be competing for essentially the same fuel supplies. Crude oil, the raw material, accounts for 60% of the cost of heating oil. Refining, marketing and distribution make up the rest. In addition to the economic and geopolitical factors that hold sway over the oil market,
A severe cold snap in New York, for example, could send already lofty heating-oil prices soaring, prompting warnings from some industry analysts that homeowners should be prepared to fork out nearly twice what they paid last year to stay warm.Higher gasoline and heating-oil prices crimp consumers, while higher diesel- and jet-fuel prices lift the cost of shipping goods to market. Together, these give retailers one more reason to fret over increasingly fragile-looking holiday sales."These are big macroeconomic issues that tend to affect everybody," Michael Niemira, chief economist at the International Council of Shopping Centers, said. "At some point, you have to expect some reaction." But Niemira thinks the tipping point for retailers probably won't be reached until 2008, he said. That's because the average American's income this year has kept ahead of energy costs, with $20 year-on-year nominal growth in income outpacing a $10-to-$15 rise in gasoline expenditures.
"It appears that income is still the silver lining in this otherwise negative picture," he said.
Meanwhile, retailers are protecting profit margins by hiring fewer workers. Federal employment figures show a drop in retail jobs in three of the past five months. Another step they are taking is to run down inventories, which also holds down transportation costs. The growing popularity of gift cards, rather than real merchandise, helps. Gift cards accounted for a whopping 18% of consumer expenditures during last year's holiday shopping season, and that is expected to grow this year.
... and some winners ...
So who comes out ahead when oil crests $100 a barrel?
From an investors' standpoint, the obvious play is to rush into the arms of the alternative-energy companies. Biofuels and crop-yield boosters like Monsanto have already been targeted by Wall Street. When crude first flirted with $100 two weeks ago, Monsanto shares hit an all-time high $99.98, up 84% this year and just shy of its own century mark. They have since backed down. That suggests that anyone joining the stampede into biofuels might be late. But there are plenty of other plays in the alternative-energy game, which is rife with start-ups backed by capital fleeing the subprime-mortgage crisis or other underperforming sectors.
As in the tech boom of the 1990s, however, few of these new companies will emerge winners. So the word from Wall Street is to pick wisely. As crude prices climb, airlines will accelerate purchases of fuel-efficient aircraft, also benefiting parts makers.
The rising tide of petrodollars is also filling the coffers of oil producers. Many of those happen to be state-owned oil companies, which means some of the cash flow will be diverted to the respective militaries assigned to protect these nations and defend their wealth.
That's good for that other international megabusiness: arms makers. Look for lucrative weapons deals landing in the laps of companies like Lockheed Martin whose shares are up 24% in three months, and Raytheon up 17% over the same period. Defense spending in general, even among oil-importing countries, is rarely impacted by commodity prices. Wall Street knows this.
Meanwhile, oil-service companies will continue to hawk their wares and expertise to a world scrambling for crude. Many have already enjoyed a blistering run this year, leading the Philadelphia Oil Service Index on a 42% romp that makes it a star performer in any portfolio.
Further gains will hinge on how long oil prices cling to their new roost. But as long as they do, they will draw big bucks to exploration and production. Major beneficiaries of the trend have included drilling-services giant Schlumberger and offshore rig owners Weatherford International all with far-reaching overseas contracts and all with share prices up at least 48% so far this year.
The focus of the big exploration dollars is deepwater offshore, where the rewards are greatest.
Earlier this month, Brazil's state oil company, Petrobras announced a staggering payoff for its efforts in this arena. Drilling results show its Tupi field could hold up to 8 billion barrels of recoverable crude. If it pans out, that would put Brazil's oil and gas reserves somewhere between those of OPEC members Nigeria and Venezuela.
Brazil's success has a certain historic and ironic ring to it, and could land OPEC once again among the big losers in a world of high-priced crude.
The 1973 Arab oil embargo, which triggered the first global energy crisis, sent oil prices soaring from $3 to $11 a barrel in short order. It also encouraged a host of non-OPEC-member countries to find and develop fields in environmentally hostile corners of the world that never could have turned a profit otherwise.
By the mid-1980s, as oil from these new fields poured into the market, OPEC kingpin Saudi Arabia decided to flood the market to drive down prices and halt any further loss of market share.
But OPEC's share of world oil production has slipped from its 1973 high of 52% to about 41%, weakening the group's ability to outpump rivals. Given already tight supplies and strong global demand, don't look for a sudden flood of OPEC crude on the market any time soon.
Gold futures edge higher on dollar weakness
NEW YORK (MarketWatch) -- Gold futures traded higher Monday, as weakness in the U.S. dollar underpinned demand for the precious metal.
Gold for December delivery gained $1.10 at $825.80 an ounce on the New York Mercantile Exchange. On Friday, gold futures finished with strong gains, rallying $26 to $824.70 an ounce.
Gold is trading higher Monday "as dollar weakness and high oil prices again prove supporting for the precious metals," said James Moore, an analyst at TheBullionDesk.com, in a research note.
"Given the oil/dollar scenario and the likelihood for further credit related fall-out, the outlook for gold still remains bullish, with $850 still the clear target before year-end long liquidation begins to be seen from around mid-December," Moore said.
On the currency markets, the dollar didn't stray far from recent ranges, drifting lower against most major currencies except for Japan's, as fears about the continuing impact of the credit crisis offset positive economic signals. The dollar index, which tracks the performance of the greenback against other major currencies, edged down 0.1% at 74.965.
Crude-oil futures fell 93 cents at $97.25 a barrel on Nymex amid profit-taking. On Friday, crude rallied to a new closing high of $97.45. See Futures Movers.
Also on Nymex, December silver gained 2 cents at $14.76 an ounce, while January platinum dropped $2.60 at $1,477.90 an ounce and December palladium fell $4.50 at $357 an ounce,
December copper rose 1.50 cents at $3.0060 a pound.
Gold for December delivery gained $1.10 at $825.80 an ounce on the New York Mercantile Exchange. On Friday, gold futures finished with strong gains, rallying $26 to $824.70 an ounce.
Gold is trading higher Monday "as dollar weakness and high oil prices again prove supporting for the precious metals," said James Moore, an analyst at TheBullionDesk.com, in a research note.
"Given the oil/dollar scenario and the likelihood for further credit related fall-out, the outlook for gold still remains bullish, with $850 still the clear target before year-end long liquidation begins to be seen from around mid-December," Moore said.
On the currency markets, the dollar didn't stray far from recent ranges, drifting lower against most major currencies except for Japan's, as fears about the continuing impact of the credit crisis offset positive economic signals. The dollar index, which tracks the performance of the greenback against other major currencies, edged down 0.1% at 74.965.
Crude-oil futures fell 93 cents at $97.25 a barrel on Nymex amid profit-taking. On Friday, crude rallied to a new closing high of $97.45. See Futures Movers.
Also on Nymex, December silver gained 2 cents at $14.76 an ounce, while January platinum dropped $2.60 at $1,477.90 an ounce and December palladium fell $4.50 at $357 an ounce,
December copper rose 1.50 cents at $3.0060 a pound.
Comex Gold Higher On Follow-Though
Comex Gold Higher On Follow-Though
1455 GMT [Dow Jones] - Comex gold and silver are higher, which appears to be in large part due to momentum-based buying after Friday's sharp rise, a trader says. While down from Friday's record high, the euro overall remains strong against the dollar. That had helped Dec gold rise $26.10 Friday, and this morning it's up another $5.40 to $830.10 an ounce. "This is just follow-through," says the trader. "We had sort of a technical breakout last week. It's just continuing." There appears to be both short covering and fresh buying, he adds. Dec silver is 12 cents stronger at $14.855. (ALS)
1455 GMT [Dow Jones] - Comex gold and silver are higher, which appears to be in large part due to momentum-based buying after Friday's sharp rise, a trader says. While down from Friday's record high, the euro overall remains strong against the dollar. That had helped Dec gold rise $26.10 Friday, and this morning it's up another $5.40 to $830.10 an ounce. "This is just follow-through," says the trader. "We had sort of a technical breakout last week. It's just continuing." There appears to be both short covering and fresh buying, he adds. Dec silver is 12 cents stronger at $14.855. (ALS)
Strong Black Friday expected to boost greenback
The Canadian dollar edged higher Monday morning as markets in the United States reopened after the Thanksgiving holiday weekend.
By all signs, Black Friday – the biggest shopping day of the year for U.S. retailers – was a huge success as shoppers spent a record $10.3 billion on retail goods. Kicking off the Christmas shopping season, Black Friday is seen as the barometer for consumer spending for retailers. A huge sales day on Friday gave retailers and hopefully the U.S. economy a much needed shot in the arm.
The U.S. economy continues to face pressure as a result of tightening credit conditions and further slowdowns in the housing market. While many analysts have been warning of a consumer-led U.S. recession, this weekend's sales numbers seem to indicate that if the U.S. economy slips into recession it will have nothing to do with a lack of motivation from consumers to spend.
Strong commodity prices kept the Canadian dollar buoyant today as gold traded close to US$830 per ounce and oil continued to push towards the $100 per-barrel mark.
By 10:15 a.m. on Monday the Canadian dollar was trading at 1.0133 against the U.S. dollar, up from Friday's close of 1.0105 but down from its overnight high of 1.0203.
By all signs, Black Friday – the biggest shopping day of the year for U.S. retailers – was a huge success as shoppers spent a record $10.3 billion on retail goods. Kicking off the Christmas shopping season, Black Friday is seen as the barometer for consumer spending for retailers. A huge sales day on Friday gave retailers and hopefully the U.S. economy a much needed shot in the arm.
The U.S. economy continues to face pressure as a result of tightening credit conditions and further slowdowns in the housing market. While many analysts have been warning of a consumer-led U.S. recession, this weekend's sales numbers seem to indicate that if the U.S. economy slips into recession it will have nothing to do with a lack of motivation from consumers to spend.
Strong commodity prices kept the Canadian dollar buoyant today as gold traded close to US$830 per ounce and oil continued to push towards the $100 per-barrel mark.
By 10:15 a.m. on Monday the Canadian dollar was trading at 1.0133 against the U.S. dollar, up from Friday's close of 1.0105 but down from its overnight high of 1.0203.
Gold rallies to all-time high, Re slips to one month low
MUMBAI: The rupee was pushed to its lowest in more than a month by suspected RBI intervention on Monday, though dollar purchases by oil companies and repatriation of profits by overseas investors also weighed, dealers said.
On the other hand, Gold prices rallied to an all-time high of Rs 10,695 on the bullion market here today on fresh stockists buying on the back of sharp rise in international markets.
The rupee was pushed to its lowest in more than a month by suspected RBI intervention on Monday, though dollar purchases by oil companies and repatriation of profits by overseas investors also weighed, dealers said. The rupee ended at 39.800/805 per dollar, its weakest since October 23, and slipping from Friday's finish of 39.71/72.
It had hit 39.16 earlier this month, its highest since March 1998. "The RBI seems to like getting the last word every day," said a dealer with a foreign bank, referring to the Reserve Bank of India that is widely suspected to have intervened heavily against the rupee in late deals.
Silver shot up on sustained industrial demand.
Buying activity gathered momentum following reports of the gold surging in the international markets for the third day, as rise in the crude oil prices and speculations that the dollar might remain weak, fuelled demand.
Standard gold (99.5 purity) rose further by Rs 145 per ten grams to an all-time closing high of Rs 10,695 from the last weekend's level of Rs 10,550. Previously it was closed at a record high of Rs 10,685 on November 7, 2007.
The pure gold (99.9 purity) also shot up to Rs 10,745 from Rs 10,600 previously.
Silver ready (.999 fineness) rose by Rs 140 per kilo to Rs 19,765 as against Rs 19,625 previously.
The dollar traded near a record low against the euro and crude oil prices in New York rose for a second day to above 98 dollar a barrel.
In the global markets, Hong Kong gold ended sharply higher at $829.20/829.90 per ounce as against $811.10/811.80 per ounce last week and in London, it was also fixed higher in the morning at $836.25 per ounce against $815.25 per ounce previously.
The RBI bought nearly $52 billion in the first nine months of 2007 in a bid to temper the rupee's ascent, and traders said it has been active in October and November.
The local currency bucked a 2.1 per cent rise in local stocks, with some foreign funds selling the local unit to repatriate profits before the end of the year, dealers said.
Foreigners have sold more than $1.2 billion worth of Indian shares so far this month, after buying $4.3 billion in October, trimming their net buying to about $16 billion so far in 2007.
Intermittent dollar purchases by oil companies put further pressure on the local unit, dealers said.
While capital flows into the economy continued, the volumes were not as expected by many participants, who bought the rupee early in the day expecting strong flows on strong Asian cues.
When the market sensed that the rupee was not going to be bolstered by overseas flows, many dealers reversed their bets, helping drive the rupee from its intraday peak of 39.58.
On the other hand, Gold prices rallied to an all-time high of Rs 10,695 on the bullion market here today on fresh stockists buying on the back of sharp rise in international markets.
The rupee was pushed to its lowest in more than a month by suspected RBI intervention on Monday, though dollar purchases by oil companies and repatriation of profits by overseas investors also weighed, dealers said. The rupee ended at 39.800/805 per dollar, its weakest since October 23, and slipping from Friday's finish of 39.71/72.
It had hit 39.16 earlier this month, its highest since March 1998. "The RBI seems to like getting the last word every day," said a dealer with a foreign bank, referring to the Reserve Bank of India that is widely suspected to have intervened heavily against the rupee in late deals.
Silver shot up on sustained industrial demand.
Buying activity gathered momentum following reports of the gold surging in the international markets for the third day, as rise in the crude oil prices and speculations that the dollar might remain weak, fuelled demand.
Standard gold (99.5 purity) rose further by Rs 145 per ten grams to an all-time closing high of Rs 10,695 from the last weekend's level of Rs 10,550. Previously it was closed at a record high of Rs 10,685 on November 7, 2007.
The pure gold (99.9 purity) also shot up to Rs 10,745 from Rs 10,600 previously.
Silver ready (.999 fineness) rose by Rs 140 per kilo to Rs 19,765 as against Rs 19,625 previously.
The dollar traded near a record low against the euro and crude oil prices in New York rose for a second day to above 98 dollar a barrel.
In the global markets, Hong Kong gold ended sharply higher at $829.20/829.90 per ounce as against $811.10/811.80 per ounce last week and in London, it was also fixed higher in the morning at $836.25 per ounce against $815.25 per ounce previously.
The RBI bought nearly $52 billion in the first nine months of 2007 in a bid to temper the rupee's ascent, and traders said it has been active in October and November.
The local currency bucked a 2.1 per cent rise in local stocks, with some foreign funds selling the local unit to repatriate profits before the end of the year, dealers said.
Foreigners have sold more than $1.2 billion worth of Indian shares so far this month, after buying $4.3 billion in October, trimming their net buying to about $16 billion so far in 2007.
Intermittent dollar purchases by oil companies put further pressure on the local unit, dealers said.
While capital flows into the economy continued, the volumes were not as expected by many participants, who bought the rupee early in the day expecting strong flows on strong Asian cues.
When the market sensed that the rupee was not going to be bolstered by overseas flows, many dealers reversed their bets, helping drive the rupee from its intraday peak of 39.58.
UK : Festivities & investors prompt jewellers to stockpile yellow metal
Jewellers have been stocking up on gold ahead of the Indian festival season and investors have also been flocking to the market.
Investors are taking a keen interest in gold due to speculation that the US will not raise interest rates in the aftermath of hurricane Katrina.
Jewellers are buying gold for immediate delivery in expectation of Christmas trade in addition to the busy wedding season in India, the largest consumer of gold jewellery.
Gold is undergoing a surge in popularity: the World Gold Council's recently released figures recorded a 14 per cent increase in global gold demand in the second quarter of 2005. Gold jewellery is also making a comeback on the catwalks after the recent monopoly of platinum.
Gold demand looks set to continue its rise at the onset of the traditionally busy period of gold jewellery sales.
Investors are taking a keen interest in gold due to speculation that the US will not raise interest rates in the aftermath of hurricane Katrina.
Jewellers are buying gold for immediate delivery in expectation of Christmas trade in addition to the busy wedding season in India, the largest consumer of gold jewellery.
Gold is undergoing a surge in popularity: the World Gold Council's recently released figures recorded a 14 per cent increase in global gold demand in the second quarter of 2005. Gold jewellery is also making a comeback on the catwalks after the recent monopoly of platinum.
Gold demand looks set to continue its rise at the onset of the traditionally busy period of gold jewellery sales.
UAE : Jewellery demand strong through Q3, WGC Report
The regional office of the World Gold Council in Dubai has issued its third report on gold demand in the Middle East, Gulf Region and worldwide for the third quarter of 2007.
Figures released by the World Gold Council showed global demand for gold reached a new record (in dollar terms) at $20.7bn, up 30% higher than Q3 of 2006.
The strong growth seen in the first six months of 2007 thus continued in the latest quarter but there was a shift in the pattern.
The figures, compiled independently for WGC by Gold Fields Mineral Services Limited (GFMS), showed that jewellery demand was also strong through the quarter, but was heavily impacted in key markets in September as steep rises in price deterred buyers.
Despite this, jewellery demand rose by 6% in tonnage terms over Q3 2007 and by 16% in dollar terms. Total demand reached 947.2 tons.
Net retail investment, in contrast, was relatively weak, as falling by 1% from year earlier levels, in tonnage terms to 102.7 tonnes and increased by 9% in dollar terms reaching $2.2bn, compared to Q3 2006.
Investment in Gold-Backed Exchange Traded Funds (ETFs), and institutional investors became much more active in Q3, at 138 tonnes, investment in ETFs and similar products were a quarterly record, beating even Q4 2004 (113.4 tonnes) when the largest ETFs was launched in New York.
Total identifiable demand in Q3 2007 was 19% higher than year earlier in tonnage terms; in dollar terms it rose 30% over the same period. Total identifiable investment reached 240.7 tons.
Figures released by the World Gold Council showed global demand for gold reached a new record (in dollar terms) at $20.7bn, up 30% higher than Q3 of 2006.
The strong growth seen in the first six months of 2007 thus continued in the latest quarter but there was a shift in the pattern.
The figures, compiled independently for WGC by Gold Fields Mineral Services Limited (GFMS), showed that jewellery demand was also strong through the quarter, but was heavily impacted in key markets in September as steep rises in price deterred buyers.
Despite this, jewellery demand rose by 6% in tonnage terms over Q3 2007 and by 16% in dollar terms. Total demand reached 947.2 tons.
Net retail investment, in contrast, was relatively weak, as falling by 1% from year earlier levels, in tonnage terms to 102.7 tonnes and increased by 9% in dollar terms reaching $2.2bn, compared to Q3 2006.
Investment in Gold-Backed Exchange Traded Funds (ETFs), and institutional investors became much more active in Q3, at 138 tonnes, investment in ETFs and similar products were a quarterly record, beating even Q4 2004 (113.4 tonnes) when the largest ETFs was launched in New York.
Total identifiable demand in Q3 2007 was 19% higher than year earlier in tonnage terms; in dollar terms it rose 30% over the same period. Total identifiable investment reached 240.7 tons.
Metals still have shiny future, say analysts
London - The mining sector's value, while hit by fears of a global economic slowdown, has a bright future thanks to strong Chinese demand for metals and the difficulty of unearthing resources in Africa, say analysts.
"It is not as rosy as 12 months ago, but we remain bullish on the mining sector," RBC Capital Markets analyst Des Kilalea said last week at the Mines and Money conference in London.
Delegates from the mining and banking industries attending the event agreed that the so-called "supercycle" begun in 2002, which had seen the price of copper soar fivefold in five years, was far from over.
One major reason for this is strong demand for metals from China and other nations with roaring economies, such as India, Brazil and Russia. Kilalea said: "We still believe in the Chinese growth story."
Amid unprecedented demand for metals, including aluminium, gold and nickel from emerging economies, the world's largest mining company, BHP Billiton, is seeking to buy its biggest rival, Rio Tinto.
BHP Billiton has hinted at launching a hostile takeover bid after Rio Tinto turned down an offer worth $153 billion (R1 trillion) earlier this month.
Meanwhile, the mining sector must overcome fears of a slowdown due to US economic growth, which will likely dent demand for metals and other commodities.
"Investors have less capital to play with and are more cautious about where that capital is now employed," said Judith Mosely, the head of mining analysis at Societe Generale.
The US Federal Reserve last week slashed its outlook for next year's growth, owing to rising oil prices and the housing crisis, which has caused a global credit squeeze.
Some analysts have, however, brushed aside fears of slower US economic growth.
Michael Lynch-Bell, a mining expert at Ernst & Young, said at the conference: "The credit crunch is a short-term phenomenon."
Analysts may paint a positive picture for the sector's demand outlook, but prospects appear less healthy regarding output, which in turn is supportive for prices.
Giant mines exploited in the 1960s are reaching their production peak and the rate at which new mines are discovered is slowing.
Meanwhile, the operation of new mines is often difficult because of the high costs involved, technological obstacles and geopolitical tensions in the countries where the metals are found.
"It is not as rosy as 12 months ago, but we remain bullish on the mining sector," RBC Capital Markets analyst Des Kilalea said last week at the Mines and Money conference in London.
Delegates from the mining and banking industries attending the event agreed that the so-called "supercycle" begun in 2002, which had seen the price of copper soar fivefold in five years, was far from over.
One major reason for this is strong demand for metals from China and other nations with roaring economies, such as India, Brazil and Russia. Kilalea said: "We still believe in the Chinese growth story."
Amid unprecedented demand for metals, including aluminium, gold and nickel from emerging economies, the world's largest mining company, BHP Billiton, is seeking to buy its biggest rival, Rio Tinto.
BHP Billiton has hinted at launching a hostile takeover bid after Rio Tinto turned down an offer worth $153 billion (R1 trillion) earlier this month.
Meanwhile, the mining sector must overcome fears of a slowdown due to US economic growth, which will likely dent demand for metals and other commodities.
"Investors have less capital to play with and are more cautious about where that capital is now employed," said Judith Mosely, the head of mining analysis at Societe Generale.
The US Federal Reserve last week slashed its outlook for next year's growth, owing to rising oil prices and the housing crisis, which has caused a global credit squeeze.
Some analysts have, however, brushed aside fears of slower US economic growth.
Michael Lynch-Bell, a mining expert at Ernst & Young, said at the conference: "The credit crunch is a short-term phenomenon."
Analysts may paint a positive picture for the sector's demand outlook, but prospects appear less healthy regarding output, which in turn is supportive for prices.
Giant mines exploited in the 1960s are reaching their production peak and the rate at which new mines are discovered is slowing.
Meanwhile, the operation of new mines is often difficult because of the high costs involved, technological obstacles and geopolitical tensions in the countries where the metals are found.
U.K. Pound Gains Against Dollar on Interest-Rate Differential
Nov. 26 (Bloomberg) -- The pound rose against the dollar on speculation widening credit-market losses will force the Federal Reserve to cut interest rates again by year-end, while the Bank of England stays on hold.
The U.K.'s currency rebounded from near a week-low as HSBC Holdings Plc said it will bail out two structured investment vehicles by taking on $45 billion of assets to avoid a fire sale of bond holdings. Goldman Sachs Group Inc. said Europe's second- biggest bank by assets now faces $12 billion in additional writedowns for U.S. subprime-mortgage defaults.
``The U.S. is the epicenter of the sub-prime crisis, and sterling will hold its own against the dollar,'' said Neil Jones, head of European hedge-fund sales in London at Mizuho Capital Markets. ``We could see further pound strength.''
The pound rose to $2.0687 by 5:29 p.m. in London, from $2.068 on Nov. 23, and was at 71.82 pence per euro, from 71.94 pence. The U.K. currency could strengthen to $2.10 by year end, said Jones.
The Organization for Economic Cooperation and Development on Nov. 22 estimated losses from U.S. subprime foreclosures as high as $300 billion. That's on top of the more than $60 billion the world's biggest banks, brokers and insurers have announced they will write down.
U.K. 10-year government bonds erased earlier declines. The yield on the benchmark 10-year bond was little changed at 4.56 percent.
Credit-Default Swaps
The pound was also supported as an improvement in European corporate bond risk prompted investors to resume so-called carry trades, lured by the highest interest rates among the Group of Seven nations.
The risk of European companies defaulting on their debt fell, further eroding the allure for holding government bonds, which are perceived to be more secure.
Contracts on the Markit iTraxx Crossover Series 8 Index of 50 European companies with mainly high-risk, high-yield credit ratings fell 9 basis points to 366 basis points, according to Deutsche Bank AG. The benchmark for the cost of protecting bonds against default falls when perceptions of credit quality improve.
According to interest-rate futures traded on the Chicago Mercantile Exchange, investors see a 96 percent chance the Fed will lower borrowingn costs a quarter percentage point to 4.25 percent at its Dec. 11 meeting, up from 82 percent odds a month ago. The chances of a further cut to 4 percent in January were 86 percent.
The U.K.'s main interest rate is the highest among the Group of Seven nations at 5.75 percent.
The U.K.'s currency rebounded from near a week-low as HSBC Holdings Plc said it will bail out two structured investment vehicles by taking on $45 billion of assets to avoid a fire sale of bond holdings. Goldman Sachs Group Inc. said Europe's second- biggest bank by assets now faces $12 billion in additional writedowns for U.S. subprime-mortgage defaults.
``The U.S. is the epicenter of the sub-prime crisis, and sterling will hold its own against the dollar,'' said Neil Jones, head of European hedge-fund sales in London at Mizuho Capital Markets. ``We could see further pound strength.''
The pound rose to $2.0687 by 5:29 p.m. in London, from $2.068 on Nov. 23, and was at 71.82 pence per euro, from 71.94 pence. The U.K. currency could strengthen to $2.10 by year end, said Jones.
The Organization for Economic Cooperation and Development on Nov. 22 estimated losses from U.S. subprime foreclosures as high as $300 billion. That's on top of the more than $60 billion the world's biggest banks, brokers and insurers have announced they will write down.
U.K. 10-year government bonds erased earlier declines. The yield on the benchmark 10-year bond was little changed at 4.56 percent.
Credit-Default Swaps
The pound was also supported as an improvement in European corporate bond risk prompted investors to resume so-called carry trades, lured by the highest interest rates among the Group of Seven nations.
The risk of European companies defaulting on their debt fell, further eroding the allure for holding government bonds, which are perceived to be more secure.
Contracts on the Markit iTraxx Crossover Series 8 Index of 50 European companies with mainly high-risk, high-yield credit ratings fell 9 basis points to 366 basis points, according to Deutsche Bank AG. The benchmark for the cost of protecting bonds against default falls when perceptions of credit quality improve.
According to interest-rate futures traded on the Chicago Mercantile Exchange, investors see a 96 percent chance the Fed will lower borrowingn costs a quarter percentage point to 4.25 percent at its Dec. 11 meeting, up from 82 percent odds a month ago. The chances of a further cut to 4 percent in January were 86 percent.
The U.K.'s main interest rate is the highest among the Group of Seven nations at 5.75 percent.
Gold, Silver Prices Rise on Demand for Dollar Alternative
Nov. 26 (Bloomberg) -- Gold and silver rose on speculation a weaker dollar will boost demand for the precious metals as alternative investments.
The dollar fell to the lowest ever against a weighted basket of six currencies, including the euro and the pound. Gold is up 30 percent this year, while the euro has gained 13 percent against the dollar, and crude oil has surged 60 percent.
``Gold is staring down at a big green light to take it to all-time highs,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``The expectation that the dollar is going to continue to weaken and crude will break $110 is going to drive demand for gold.''
Gold futures for December delivery rose $4.10, or 0.5 percent, to $828.80 an ounce at 1:04 p.m. on the Comex division of the New York Mercantile Exchange. The price gained 4.8 percent last week and reached a 27-year high of $848 on Nov. 7.
Silver futures for December delivery gained 10.5 cents, or 0.7 percent, to $14.84 an ounce. Before today, the metal climbed 14 percent this year.
The dollar fell on speculation more subprime mortgage losses will lead the Federal Reserve to cut interest rates again this year. The U.S. currency touched $1.4967 on Nov. 23, the lowest ever against the euro.
HSBC Holdings Plc, Europe's largest bank, said it will bail out two structured investment vehicles, taking on $45 billion of assets to avoid a fire sale of bond holdings.
Rate Futures
The Fed lowered the overnight lending rate 0.25 percentage point to 4.5 percent on Oct. 31, the second cut this year. Interest-rate futures show a 98 percent chance the Fed will reduce its benchmark rate to 4.25 percent by Dec. 11, compared with an 82 percent chance a month ago.
``Funds were back in the game, findng it a comforting place to park money, while the dollar's tribulations continue,'' Jon Nadler, an analyst at Kitco Minerals & Metals Inc. in Montreal, said in a report. ``Participants appear to be betting on further Fed easing.''
Still, a drop in oil prices today may limit gold's gains. Oil futures traded as low as $96.50 a barrel after hitting a record $99.29 on Nov. 21.
``A little bit of selling in oil is fueling some selling in gold,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York.
Gold futures reached a record $873 an ounce in January 1980 after oil costs doubled in year, sparking a surge in the inflation rate.
The dollar fell to the lowest ever against a weighted basket of six currencies, including the euro and the pound. Gold is up 30 percent this year, while the euro has gained 13 percent against the dollar, and crude oil has surged 60 percent.
``Gold is staring down at a big green light to take it to all-time highs,'' said Matt Zeman, a metals trader at LaSalle Futures Group in Chicago. ``The expectation that the dollar is going to continue to weaken and crude will break $110 is going to drive demand for gold.''
Gold futures for December delivery rose $4.10, or 0.5 percent, to $828.80 an ounce at 1:04 p.m. on the Comex division of the New York Mercantile Exchange. The price gained 4.8 percent last week and reached a 27-year high of $848 on Nov. 7.
Silver futures for December delivery gained 10.5 cents, or 0.7 percent, to $14.84 an ounce. Before today, the metal climbed 14 percent this year.
The dollar fell on speculation more subprime mortgage losses will lead the Federal Reserve to cut interest rates again this year. The U.S. currency touched $1.4967 on Nov. 23, the lowest ever against the euro.
HSBC Holdings Plc, Europe's largest bank, said it will bail out two structured investment vehicles, taking on $45 billion of assets to avoid a fire sale of bond holdings.
Rate Futures
The Fed lowered the overnight lending rate 0.25 percentage point to 4.5 percent on Oct. 31, the second cut this year. Interest-rate futures show a 98 percent chance the Fed will reduce its benchmark rate to 4.25 percent by Dec. 11, compared with an 82 percent chance a month ago.
``Funds were back in the game, findng it a comforting place to park money, while the dollar's tribulations continue,'' Jon Nadler, an analyst at Kitco Minerals & Metals Inc. in Montreal, said in a report. ``Participants appear to be betting on further Fed easing.''
Still, a drop in oil prices today may limit gold's gains. Oil futures traded as low as $96.50 a barrel after hitting a record $99.29 on Nov. 21.
``A little bit of selling in oil is fueling some selling in gold,'' said Nick Ruggiero, a trader at Eagle Futures Inc. in New York.
Gold futures reached a record $873 an ounce in January 1980 after oil costs doubled in year, sparking a surge in the inflation rate.
U.S. Stocks Drop on Credit Concern; Citigroup, Lehman Decline
Nov. 26 (Bloomberg) -- U.S. stocks retreated, led by banks and brokerages, after Goldman Sachs Group Inc. said HSBC Holdings Plc faces $12 billion in additional writedowns for subprime defaults.
Citigroup Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. declined on concern losses are deepening in securities tied to home loans. Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, tumbled after UBS AG said higher credit costs will cause earnings growth to slow.
The Standard & Poor's 500 Index dropped 5.27, or 0.4 percent, to 1,435.43 at 12:39 p.m. in New York. The Nasdaq Composite Index lost 6.01, or 0.2 percent, to 2,590.59. The Dow Jones Industrial Average slipped 0.73 to 12,980.115. About seven stocks fell for every five that rose on the New York Stock Exchange.
``Are brokerages and banks strong enough to continue to support growth in our country? This is the thing that's weighing on people's minds,'' said Robert Lutts, who oversees $500 million as president and chief investment officer at Cabot Money Management Inc. in Salem, Massachusetts. ``There's a lot of housecleaning to do and wringing out of problems.''
HSBC, Europe's largest bank, will bail out two structured investment vehicles by taking on $45 billion of assets to avoid a fire sale of bond holdings. Banks are trying to prevent SIVs, companies that borrow short-term to invest in higher-yielding securities, from collapsing and forcing fund managers to sell their $320 billion of assets.
Financials Slump
Bank of America Corp., Citigroup and JPMorgan Chase & Co. are trying to persuade competitors to help finance an $80 billion ``SuperSIV'' fund to bail out the companies.
Citigroup, the biggest U.S. bank by assets, slipped $1.13 to $30.57 and posted the biggest decline in the 30-member Dow average after CNBC said it may cut as many as 45,000 jobs. Citigroup said ``reports on specific numbers are not factual.''
Lehman dropped $1.39 to $59.47. Merrill decreased $1.19 to $52.35.
Fannie Mae and Freddie Mac were cut to ``neutral'' from ``buy'' by analysts at UBS AG, who lowered the price estimate on Fannie Mae to $31 from $88 and Freddie Mac to $28 from $87.
Fannie Mae dropped $2.38 to $29.82. Freddie Mac fell $1.87 to $24.61.
Financial shares in the S&P 500 dropped 1.9 percent as a group and contributed the most to the overall index's decline.
``In general it's a pretty pessimistic market,'' said Bartley Barnett, head of listed trading at Memphis-based Morgan Keegan Inc., which has $120 billion in client assets. ``It seems like there are two sides to every story and everyone's leaning to the negative side right now.''
Apple, Amazon.com
Apple Inc., maker of the iPod, iPhone and Macintosh computers, added $4.06 to $175.60. Goldman Sachs recommended investors buy shares of the company after a ``strong start'' to the so-called Black Friday weekend. ``Apple will have multiple winners once again this holiday season, with Macs a particular standout,'' wrote analysts David Bailey and Laura Conigliaro.
Amazon.com, the world's largest Internet retailer, rose $1.48 to $82.91. EBay, the biggest Internet auctioneer, gained 17 cents to $32.11.
Online retail spending today may surpass $700 million, a single-day record, as customers head online to find bargains.
Citigroup Inc., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. declined on concern losses are deepening in securities tied to home loans. Fannie Mae and Freddie Mac, the largest U.S. mortgage-finance companies, tumbled after UBS AG said higher credit costs will cause earnings growth to slow.
The Standard & Poor's 500 Index dropped 5.27, or 0.4 percent, to 1,435.43 at 12:39 p.m. in New York. The Nasdaq Composite Index lost 6.01, or 0.2 percent, to 2,590.59. The Dow Jones Industrial Average slipped 0.73 to 12,980.115. About seven stocks fell for every five that rose on the New York Stock Exchange.
``Are brokerages and banks strong enough to continue to support growth in our country? This is the thing that's weighing on people's minds,'' said Robert Lutts, who oversees $500 million as president and chief investment officer at Cabot Money Management Inc. in Salem, Massachusetts. ``There's a lot of housecleaning to do and wringing out of problems.''
HSBC, Europe's largest bank, will bail out two structured investment vehicles by taking on $45 billion of assets to avoid a fire sale of bond holdings. Banks are trying to prevent SIVs, companies that borrow short-term to invest in higher-yielding securities, from collapsing and forcing fund managers to sell their $320 billion of assets.
Financials Slump
Bank of America Corp., Citigroup and JPMorgan Chase & Co. are trying to persuade competitors to help finance an $80 billion ``SuperSIV'' fund to bail out the companies.
Citigroup, the biggest U.S. bank by assets, slipped $1.13 to $30.57 and posted the biggest decline in the 30-member Dow average after CNBC said it may cut as many as 45,000 jobs. Citigroup said ``reports on specific numbers are not factual.''
Lehman dropped $1.39 to $59.47. Merrill decreased $1.19 to $52.35.
Fannie Mae and Freddie Mac were cut to ``neutral'' from ``buy'' by analysts at UBS AG, who lowered the price estimate on Fannie Mae to $31 from $88 and Freddie Mac to $28 from $87.
Fannie Mae dropped $2.38 to $29.82. Freddie Mac fell $1.87 to $24.61.
Financial shares in the S&P 500 dropped 1.9 percent as a group and contributed the most to the overall index's decline.
``In general it's a pretty pessimistic market,'' said Bartley Barnett, head of listed trading at Memphis-based Morgan Keegan Inc., which has $120 billion in client assets. ``It seems like there are two sides to every story and everyone's leaning to the negative side right now.''
Apple, Amazon.com
Apple Inc., maker of the iPod, iPhone and Macintosh computers, added $4.06 to $175.60. Goldman Sachs recommended investors buy shares of the company after a ``strong start'' to the so-called Black Friday weekend. ``Apple will have multiple winners once again this holiday season, with Macs a particular standout,'' wrote analysts David Bailey and Laura Conigliaro.
Amazon.com, the world's largest Internet retailer, rose $1.48 to $82.91. EBay, the biggest Internet auctioneer, gained 17 cents to $32.11.
Online retail spending today may surpass $700 million, a single-day record, as customers head online to find bargains.
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