By Paddy Power Trader

Data from the latest Financial Times House Price Index show that average house prices rose by 0.7% in October and prices are at levels last seen in September 2006, about a year before prices peaked. However, house price rises are expected to slow or even reverse next year, according to mortgage lenders and brokers – as reports of higher property values encourage more sellers into the market, but the availability of home loans fails to keep pace. (FT)

UK

Rightmove House Prices (Nov) M/M -1.6% vs. Prev. 2.8%; Y/Y 1.6% vs. Prev. 0.2%. (BBG)

UK home sellers reduced asking prices in November for the first time in three months as demand for property dwindled before the year-end Christmas holidays, Rightmove Plc said.

UK companies have found it harder to obtain credit since June as banks keep withholding loans, the British Chambers of Commerce said. (BBG)

A survey of companies, most of which have fewer than 50 employees, showed 33% said credit was less accessible, compared with 20% five months ago.

Half of the UK’s employers are planning to freeze wages for the second year in a row, according to an employment trends study by the CBI. (FT)

The survey by the CBI employers’ group and Harvey Nash, said that 47% of organisations, mainly in the private sector, said they would freeze pay at their next review.

US

Treasuries traded choppily on Friday on fairly light volumes. Initially t-notes edged higher after data revealed a wider than expected US trade deficit. This in turn caused Goldman Sachs and other street economists to speculate that US GDP would be revised down to 3%, thus giving prices a further boost. T-notes were also buoyed by Pimco’s Gross comment that a Fed rate hike was unlikely before late 2010, but did come under pressure after the Michigan 5 yr inflation constituent rose to 3.1%. At the pit close t-notes finished up 1 tick at 118.30+. At 0642 GMT USTs were trading unchanged at 118.30+ ahead of today’s advanced retail sales report.

Fed’s Hoenig said that there is still significant weakness to work through in the US economy. (RTRS)

In other news, Fed’s Dudley said the central bank could curtail the risk of future liquidity crises by providing a “backstop” to solvent firms with sufficient collateral. (BBG)

Fed’s Evans sees ‘highly accommodative policy for ‘quite’ some time but is ‘confident’ Fed could shift to ‘more restrictive policy’ when time right. (BBG/RTRS) Evans sees 3% GDP growth over next 18 months core inflation at 1.5% for ‘next few years’, while unemployment likely to rise for 2 quarters. Says Fed mulling how to engineer reserve management tools, committee has different perspectives.

Obama administration ponders Tarp extension (FT)

The Obama administration is leaning towards extending the troubled asset relief programme into next year, retaining part of the $700bn war chest in case of another financial emergency.

Realtors Group says existing home sales to rise 13.6% to 5.7mln in 2010 (RTRS)
Realtors say US 2010 housing starts to grow to 752,000 and existing home sales seen rising to 5.01mln units in 2009, up 2% from 2008. Group sees 2.3-2.4mln first-time US homebuyers in 2009, says tax credit more effective than expected. Says first-time homebuyers accounted for a record 47% of home sales over past year, up from 41% in prior year.

Europe

ECB’s Wellink said that unemployment will continue to rise until 2011 in Western Europe, even as economies recover. (RTRS)

ECB’s Ordonez said that ECB rate increase is off the screen, adding that markets don’t expect change until H2 2010. (FT)

The German government will press ahead with plans to cut income taxes by billions of euros from 2011 even if the economy weakens unexpectedly, according to Finance Minister Schaeuble. (RTRS)

Asia

Japanese government bond futures inched up, eyeing fears the economy will lose traction again after dipping initially on unexpectedly strong third-quarter growth figures. JGBs were trading at 138.91 (+0.03) at 0615 GMT. (RTRS)

Japanese GDP Annualised (Q3 P) Y/Y 4.8% vs. Exp. 2.9% (Prev. 2.3%, Rev. to 2.7%) (BBG)

Japan’s economy grew at the fastest pace in more than two years in the third quarter as stimulus lifted consumer spending and capital spending rose, but analysts say growth will slow as falling wages reduce the lure of subsidies on cars and electronics.

Japanese finance minister Fujii said that the government may announce details of an extra budget as early as Monday. (Kyodo News)

World Economics

US President Barack Obama said on Monday that Washington was not trying to contain China’s rise but said trade between the two giants needed to be more balanced. (RTRS)

China says Fed policy threatens global recovery (FT)

The US Federal Reserve is fuelling “speculative investments” and endangering global recovery through loose monetary policy, a senior Chinese official warned on Sunday just hours before President Barack Obama arrived in China for his first visit. Liu Mingkang, China’s chief banking regulator, said that the combination of a weak USD and low interest rates had encouraged a “huge carry trade” that was having a “massive impact on global asset prices”.

Iran’s President Ahmadinejad said Iran’s nuclear rights are not negotiable and nuclear cooperation with Iran is beneficial to the West. (ISNA News Agency)

S.Korea keeps military on alert over N. Korean threat. (AFP)

South Korea kept its military on high alert Saturday after North Korea vowed to take “merciless” action following a naval clash four days earlier. “We remain on high alert for possible provocations by the North,” according to a defence ministry spokesman, while adding there had so far been no signs of any unusual movements by the North.

U.S., Russia call for Iran to accept nuclear deal. (LA Times)

Both President Obama and Russian leader Dmitry Medvedev want Iran to relinquish potential nuclear explosive material in return for fuel. A White House official says the two leaders discussed possible sanctions if Iran refuses to comply. After an hour-long meeting here, the two leaders warned they won’t wait much longer for Iran to accept a proposal that would resolve the dispute through diplomatic means

Forex

A stronger CNY is part of the reforms that Beijing needs to implement to increase domestic consumption and help ease global imbalances, the head of the IMF said, adding that USD is to remain the main reserve currency for some time. (RTRS)

China should keep the CNY stable, in part because that is beneficial for a global economic recovery, a Commerce Ministry spokesman said. (RTRS)

Chinese trade official plays down talk of CNY shift (RTRS)

Chinese Vice Commerce Minister Chen Jian on Sunday played down talk of a shift in the central bank’s currency policy as well as mounting expectations of a rise in the CNY’s exchange rate.

Commodities

Oil prices rose USD 1 to over USD 77 a barrel as investors hedged against a weak USD, while improved risk appetite also encouraged traders to invest in oil. WTI crude futures were trading at USD 77.29, up USD 0.94, at 0606 GMT. (RTRS)

OPEC president said that oil price is not too high and USD 80 is a good price, adding that the group must reflect on change of pricing oil away from USD. (RTRS)

Spot Gold hit a record high above USD 1,130 an ounce when massive buying in US Gold futures boosted bullion’s appeal. Investors maintained their appetite for Gold as a hedge against currencies as the USD drifted lower in Asia, extending falls from late last week. (RTRS)

In other news, Central banks will be net buyers of Gold this year as they diversify away from the USD, according to investment fund BlackRock. Also in news, the world’s top Gold mining companies have warned global production of the precious metal is likely to resume a long-term decline in coming years. (FT)

Company News

UK

UK Banks – The financial services bill, to be introduced by the Queen’s speech on Wednesday, will hand fresh responsibility to the FSA to clamp down on bankers pocketing excessive bonuses or even cancel pay packages that encourage too much risk-taking. Also from next year, the chancellor will impose “living wills” on banks to ensure they can be wound down without disrupting the entire financial system forcing taxpayers to step in. (Sunday Times)

Miners – The world’s top Gold mining companies have warned global production of the precious metal is likely to resume a long-term decline in coming years. (FT)

HSBC – Co. agrees sale of 8 Canada to Korea’s National Pension service for GBP 772.5mln in cash. (BBG/RTRS)

GlaxoSmithKline – Co. aims to reduce by two-thirds the amount of waste produced by its production of medicines. (FT)

RBS – The part nationalised bank is under attack after unions and MP’s slam a GBP 630mln loan to Kraft, claiming that the bank is not acting in the best interests of the UK economy. Also, in a separate development unnamed city bankers have claimed that RBS is buying loans held by foreign banks in order to meet government lending targets. (Observer)

Lloyds Banking Group – Co. is thought to be prepared to sell new shares to investors at a cut price of GBP 0.50 per share in order to ensure its UK record GBP 13.5bln Rights Issue does not flop. In other news co. has been forced to swallow a GBP 600mln debt-for-equity swap at Admiral Taverns, the pub group, in the latest fallout from the bank’s HBOS merger. The deal, which could come this week, may be in the form of a pre pack administration. (Sunday Express/Sunday Times)

Xstrata – Co.’s Chief Executive Mick Davis’s sale of shares in the Co. reportedly prompted talk of a possible reverse takeover by Glencore. (Daily Telegraph)

Cadbury – Co. Chairman has described Kraft’s offer for the confectionery firm as “in contempt of the market’s expressed view’ because it is so far below analysts’ valuations. (Telegraph) In other news, Co.’s union demanded more details about Kraft Foods Inc’s plans for the UK confectioner should its GBP 9.8bln bid be successful. Unite wrote to Kraft CEO asking for guarantees that no sites will be closed and no compulsory redundancies will be initiated for five years after the proposed takeover.  (Times)

British Land/Land Securities – The first quarterly increase in property values since June 2007 is expected to boost British Land’s net asset value by up to GBP 0.04 over the three-month period. Land Securities, which does not report quarterly, is likely to show a slight decrease in the value of its portfolio over the six-month period. However the company is expected to report that the value of its portfolio is on the increase. (Telegraph) In other news, both companies are expected to say that property values began to rise in the Q3, confirming that a recovery in the market is feeding through to the books of the large real estate investment trusts. (FT)

Pearson – Co. is preparing to rejoin the battle for Santillana, the USD 1.4bln Latin American textbook publisher. (Sunday Times)

Rolls Royce – Co. has landed a USD 1.5bln contract with Air China to supply engines to 20 of its Airbus aircraft. Separately, co. has won a USD 480mln deal to provide Ethiopian Airlines with engines for its new Airbus A350 planes. (Sunday Times)

British Airways – Co. is to open talks with the Civil Aviation Authority (CAA) over the creation of a standalone group that will own the majority of the shares in the airline. The purpose is to preserve BA’s traffic rights. (Sunday Times) The paper also notes that one large obstacle remains in its merger with Iberia after the Spanish airline retained the rights to walk away if BA is unable to conclude an agreement with the trustees of its retirement schemes on how to fix the group’s pension deficit.
- S&P may cut co.’s ‘BB’ long-term corporate credit, senior unsecured debt ratings, put on negative creditwatch. (BBG/RTRS)
- The labour union representing co.’s cabin crew sent out ballot papers today to poll members at the carrier on support for taking industrial action in a dispute over working conditions. (BBG)
- Co. and Iberia plan to announce a solution to the co.’s GBP 2.7bln pension fund shortfall by March. (BBG)

Sainsbury – A recent survey by TNS Worldpanel suggests that Co. is losing customers to its rivals. (Times)

Reed Elsevier – Co.’s new CEO is to launch a review of the business that could lead to asset sales. It is understood the review could last for at least six months. (Independent)

Rexam – CEO Leslie Van de Walle is to leave the co. at the start of January after almost three years in the job and will be replaced by Graham Chipchase, current director of its plastic packaging division. (FT)

Shire - After the FDA warned that Genzyme rare disease drugs may be contaminated co. may benefit as it makes a competing product to Genzyme’s Cerezyme. In other news, FDA warns co. about misleading promotion for Fosrenol chewable tablets, co.’s brochure omits risk information and overstates efficacy of Fosrenol. (BBG/RTRS)

Centrica – Co. plans acquisitions in excess of GBP 1bln in North America next year. (The Mail on Sunday)

Lonmin – Co. had “satisfactory” performance in 2009. Says it won’t pay dividend for FY 2009. (BBG)

OTHER UK COMPANIES

Persimmon – Co.’s trading activity levels have continued ahead of last year and the encouraging rate of sales achieved through summer months has been maintained during autumn period. (RTRS)

US

Equities finished the session higher despite plunging into negative territory following the disappointing headline figure from the University of Michigan survey. Investor appetite for risk returned as the USD index moved lower due to positive earnings from the retail sector in the form of JCPenney (+6.12%) and Abercrombie & Fitch (+10.7%) while encouraging earnings from Disney (4.8%) also contributed to the rally. At the closing bell, the S&P 500 finished +0.57% at 1093.48, the DJIA finished +0.72% at 1027.47, and the NASDAQ 100 finished +0.87% at 1788.61.

Exxon Mobil – Shares in co. could rise more than 20% to USD 90 next year if energy prices increase as expected, Barron’s reported on Sunday. (Barron’s)

JP Morgan – The bank is to buy out the remaining 50% of Cazenove for GBP 950mln. (Sunday Times)

Citigroup – Co. said that it is selling its controlling stake in Japan’s leading call centre operator, Bellsystem24, to private equity firm Bain Capital Partners in a deal that values the operation at USD 1.1bln. (AP)

Bank of America – Co. search for a new chief executive has been hurt by federal pay limits that played a major role in the senior vice chairman of PNC Financial Services Group Inc spurning feelers from the company, the Wall Street Journal reported on Saturday.

Google – The Swiss data protection watchdog is taking the co. to the country’s Federal Administrative Court over an alleged failure to protect people’s privacy on its Street View website, two months after the service launched in Switzerland. Also, in an American legal filing made close to midnight on Friday, Google and its publishing allies set out their latest proposals for a plan that will allow the company to distribute millions of books online. (FT/Sunday Times)

Coca – Cola – Co. plans to invest USD 6bln in Brazil by 2014, doubling the amount it poured into the country over the past five years. (O Globo)

FedEx – Co. shares, which have more than doubled since a low in March, may climb further given the delivery company’s growing exposure to overseas markets such as China, Barron’s reported on Sunday. (Barron’s)

Best Buy/Gap – Some retailers such as Best Buy and Gap could report a surprising uptick in profits over the holiday season after cutting costs and trimming inventories to better benefit from the holiday sales boost, Barron’s said on Sunday. Barron’s writes that shares of Best Buy/Gap are undervalued and could rally on improving results. (Barron’s)

Comcast/GE – NBC deal would damage competition says Free Press, who would work to oppose and block deal. (BBG)

Genzyme - FDA warns healthcare professionals over co.’s products, warns over rare disease drugs which may be contaminated. Drugs affected are: Erezyme, Fabrazyme, Myozyme and others. (BBG)

AMD - Co. raised to B- by S&P; outlook stable. (BBG)

GM – Co. will begin paying back USD 6.7bln in US government loans by the end of 2009 and could pay off full amount by 2011, four years ahead of schedule, according to a person familiar with the matter. (AP)

Ford – Co. says US auto sales will be 10.6mln this year however says the US auto market is ’still very fragile.’ Co. says it may gain US market share for first time since 1995. Co.’s analyst Pipas says US auto sales will rise next year, but co. is ‘cautious’ about US market growth. Says Nov. US auto sales up over Oct. and US Nov. industry auto sales ‘won’t take a step back’ into weak Sep. sales level. (BBG/RTRS)

Europe

GERMANY

Deutsche Post- The German mail carrier’s CEO Appel may close some of the country’s 12,000 post offices as he tries to compensate for declining letter business. (Wirtschaftswoche)

ThyssenKrupp – Co. has sold its U.S. scaffolding unit Safway to Odyssey Investment Partners for an undisclosed price. (Handelsblatt)

SAP – Co. does not consider itself a takeover candidate. (Welt am Sonntag) In other news, Co. plans to raise licensing fees for thousands of clients who use older versions of its software. (Wirtschaftswoche)

BMW - S&P cuts co.’s long-term corporate credit rating to A- from A, outlook negative. (RTRS)

OTHER GERMAN COMPANIES

Unitymedia – Liberty Global has sealed a EUR 3.5bln deal to buy the Co., Germany second largest cable company. The acquisition is the largest in the European media market since the credit crisis began. (FT)

FRANCE

Vivendi – Co. has agreed to purchase Brazilian telecom GVT at a deal which would value the company at EUR 2.8bln in total. (BBG)

AXA – Co. may improve its joint buy-out offer for its offshoot AXA Asia Pacific Holdings as early as this week. (The Age) In other news, Co. gets USD 1.2bln for Taikang stake from Temasek. (Wansquare)

EADS – Q3 Ebit EUR 201mln vs. Exp. UER 281mln. Says full financial consequences of A400M delay not yet know and is not in position to give 2009 Ebit guidance. Co. aims to reduce any further potential loss on A400M and sees improvement of the economic and market conditions. In other news, Yemenia Airways Airbus order worth USD 700mln at list prices. (BBG) Elsewhere, Ethiopian Airlines has confirmed an order of 12 A350 XWB aircraft from co. at Dubai airshow. The order covers Trent XWB engines for 12 A350 XWB planes that will begin service in 2017. Airbus values the deal at USD 3bln at list prices. This is the first plane order at the Dubai Airshow that began in the Gulf emirate on Sunday. (Boston Globe)

Dexia – Co. plans to restructure its public-finance unit and will rely on issuing more covered Bonds in the future. (WSJ)

Pernod Ricard –Co. said it will give shareholders one free share for every 50 that they hold and the process of awarding the stock will start on Nov. 18. (Les Echos)

PAN-EUROPEAN

EU 25 New car registrations (Oct) M/M 11.2% vs. Prev. 6.3% (BBG)

European new passenger car sales down 5% in first 10 months.

Spanish Banks – In an effort to reform the financial sector, a third of Spain’s 45 saving banks should merge with stronger institutions, Spain’s Central Bank governor told the Financial Times. (FT)

Ahold – Co., the owner of the US Stop & Shop grocery chain, said it is ready to use its EUR 2.6bln in cash to make purchases, which analysts say may keep possible buyers of the co. away. (WSJ)

SWISS

Novartis – Switzerland has approved co.’s Celtura H1N1 swine flu vaccine as its rolls out its national vaccination programme. (BBG)

UBS – Switzerland’s financial regulator FINMA has received no request from co. to buy back toxic assets transferred to the Swiss Central Bank last year, FINMA’s head was quoted. (RTRS)

Credit Suisse – Co. chairman Hans-Ulrich Doerig said most of the financial crisis is over and he expects “low” economic growth in the coming years. (SonntagsZeitung)

Asia

Nikkei rose 0.2% buoyed by retailers and other defensive shares, but weighed by banks and companies including Hitachi Ltd that sank on fundraising concerns. Data showing Japan’s economy expanded at the fastest pace in two years in July-September briefly buoyed shares, but market players said concerns about the future soon trimmed gains. (RTRS)

Toyota – Co. to recall 4mln cars in the US for gas pedals. (BBG)

Sony Corp – Co. chief executive Howard Stringer said co. has seen no sign of a recovery in the consumer electronics market. (RTRS)

Mitsubishi UFJ Financial – Co. plans to boost capital by about JPY 1trl in public offering of common stock. Plans offering of as many as 2.5bln shares; offer price yet to be determined. (RTRS)

Hitachi – Japan’s biggest electronics firm by revenues, plans to raise up to USD 4.5bln by issuing new shares and convertible Bonds to shore up its battered capital base, two sources familiar with the matter said. (RTRS)