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Overnight Briefing

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The dollar hit one year high

Fri, Sep 12 2008, 06:14 GMT
by Jyske Bank Team

Jyske Bank

• Oil price close to USD 100 per barrel

• Lehman in sale talks as survival questioned

• Japan 2nd quarter GDP revised down

Today’s main events:

• EUR Euro zone Industrial Production

• USD Producer Price Index & Retail Sales

• USD University of Michigan Confidence

American Time Zone:

U.S. stocks advanced

U.S. stocks advanced as a drop in oil prices spurred a rally in refiners and transportation companies, overpowering an earlier tumble prompted by concern Lehman Brothers Holdings Inc. will collapse. The Standard & Poor's 500 Index rebounded from a 1.7 % retreat as Sunoco Inc. climbed 12 % after the profit margin on fuel refining increased the most in six months. CSX Corp., the thirdlargest U.S. railroad, advanced 11 % and led the S&P500 Transportation Index to its biggest gain in five weeks as crude declined and the carrier raised its 2008 earnings forecast on a “positive outlook”' for the industry. Financial shares rebounded from a 4 % plunge as Lehman entered into talks with potential buyers.

The dollar hit one year high

The dollar rose to a one-year high against the euro on signs global growth is slowing, and the yen strengthened on speculation investors will sell higher-yielding assets funded by loans in Japan.
The yen appreciated to the highest level against the euro since August 2006 as concern Lehman Brothers Holdings Inc. will collapse encouraged investors to pare carry trades.

Oil close to USD 100

Crude oil fell to a low of USD 100.18 and gasoline advanced as Hurricane Ike headed across the Gulf of Mexico for refineries along the Texas coast.

Far East Time Zone:

Lehman in sale talks as survival questioned

Lehman Brothers Holdings Inc was forced into talks about a possible sale after the Wall Street investment bank's shares plunged more than 40 % on Thursday, raising questions about its survival.

Lehman and U.S. officials were in intensive discussions about a number of options, including a complete sale, sources with direct knowledge of the talks said. One of the sources said the firm was resisting government intervention.

The Treasury and Federal Reserve were engaged in the talks, which could be completed as soon as this weekend, a second source said.

The U.S. government is hoping to avoid spending money on a bailout, another person familiar with the situation told Reuters.

Bank of America Corp or Barclays could be suitors, according to various reports. Bank of America, Barclays and Lehman declined to comment.

Japan 2nd quarter GDP revised down

Japan's economy shrank a bit more than initially estimated in the second quarter, underscoring concerns it is slipping into a recession in the face of sluggish exports and slowing capital spending.

The world's second-largest economy logged its first contraction in a year in April-June as it struggles with high raw material costs, and analysts see only a modest rebound, if any, in the third quarter.

The economy contracted 0.7 % in April-June, slightly more than the initial estimate of a 0.6 % decrease but by a smaller margin than economists' median forecast for a 0.8 % fall, revised government data showed on Friday.

That translated into an annualised drop of 3.0 %.

Financial markets did not react much to the revised GDP data, which did little to alter dominant market views that the Bank of Japan will keep interest rates steady at 0.5 % until late next year.

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Published on  Fri, Sep 12 2008, 06:19 GMT