By Paddy Power Trader

Credit rating agency Moody’s Investors Service said on Wednesday it placed under review for possible downgrade some USD 450bln of banks’ hybrid and subordinated debt, to account differently for the impact of government support for financial institutions and investors.

Steel Companies – Steel production in China, the world’s largest maker and consumer, may outpace demand growth this year, spurring exports in the last two months, the China Iron & Steel Association said. (BBG)

UK

Next Government’s sentence: tax rises, spending cuts and social unrest. (Telegraph)

The next Government will have no choice but to raise taxes alongside spending cuts, and must take a knife to the budget deficit as soon as the election is over, a new report, from right-leaning think tank the Policy Exchange, has warned.

UK banks in worse trouble than others, Experian warns. (Telegraph)

Britain’s banks are in a worse state than those anywhere else in the developed world and show no signs of recovery, according to the world’s largest credit-checking company.

US

T-notes finished lower on Wednesday in choppy trade with much of the attention focused on Fed’s Bullard comments rather than the weaker than anticipated construction data. T-notes popped up to session highs after the wires misquoted Bullard as saying Fed may not raise rates until 2012, but then reversed direction soon after following Bullard’s Q&A comment that the FOMC may act earlier. In late trade, treasuries again tested the lows on touted rate lock unwinds and repositioning ahead of Thursday’s re-funding announcement. At the pit close t-notes finished down 10 ticks at 119.14. At 0650 GMT USTs were trading 119.16+ (up 2+ ticks) in a relatively tight range ahead of the European open.

Fed’s Plosser said that central banks should not respond to wild swings in food and energy prices with monetary policy unless expectations of inflation become unhinged. Plosser further said that US has turned a corner on the economy and is in a recovery, adding that as economy strengthens, will have to look very hard at reversing course on rates. (RTRS)

Treasury’s Geithner sees substantial return to stability in markets, but says credit crunch is not over. (RTRS/BBG)

Geithner also says will take sustained, ongoing effort to mitigate financial pressures, particularly on small businesses and won’t make mistake of removing stimulus too soon.

House’s Cummings urges review of possible changes in Fed governance. (BBG)

Cummings seeks ‘complete and public audit’ of Fed system.

A sector too tough to save. (Heard on the Street, WSJ)

For the first time in the credit crisis, the government may have run into a problem that is too tough to bail out: commercial real estate. Smaller banks weren’t stress-tested in the same way as larger banks, and thus are less likely to have raised enough equity to deal with commercial real estate.

Europe

EUROPEAN

UK banks in worse trouble than others, Experian warns. (Telegraph)

Britain’s banks are in a worse state than those anywhere else in the developed world and show no signs of recovery, according to the world’s largest credit-checking company.

Asia

Japan’s 10-year bond yields were near the lowest level in a month after a sale of 20-year securities drew the highest demand since August. JGBs were trading at 139.25 (-0.05) at 0610 GMT. (RTRS)

Japan’s government, facing sliding tax revenues, may issue JPY 52trl in new bonds in the current fiscal year to March 2010, up 18% from its current estimate. (Mainichi)

World Economics

US President Obama and his South Korean counterpart pressed North Korea to return to dormant nuclear talks. (RTRS)

In related news, UN Panel Says North Korea global arms smuggling evades ban and hides money transactions for nuclear work. (BBG)

Obama said that the US has begun talks with partners about consequences due to Iran’s failure to respond to the deal offer. (RTRS)

In other reports, the Iran’s foreign minister dismissed the possibility of sanctions over Tehran’s rejection of a deal to send enriched Uranium abroad for further processing.

Forex

Australia’s central bank is optimistic that lending to businesses would pick up now that the economy was recovering, RBA’s Assistant Governor Debelle said. (RTRS)

Canada’s finance minister Flaherty says Canadian economy has not recovered, but is recovering. (RTRS)

Flaherty also said to end stimulus spending as planned to balance budget in medium term.

SNB’s Hildebrand says Swiss economy will return to growth in Q4 and that SNB able to absorb liquidity fast if needed. (BBG)

Commodities

US crude futures edged down just below USD 80 a barrel, trading in the middle of recent ranges and taking cues from the USD and weather in the US. WTI crude futures were trading at USD 79.48, down USD 0.10, at 0606 GMT. (RTRS)

Exxon Mobil says global energy demand will rise 30% by 2030 (BBG)

Exxon sees natural gas demand rising faster than oil and expects it will be a favoured fuel for power. Co. sees tripling of LNG demand by 2030.

Nigeria has capacity of 3.7mln BPD of crude oil vs. current output of less than 2mln BPD according to the nation’s oil minister. (RTRS)

Company News

UK

UK Banks – Britain’s banks are in a worse state than those anywhere else in the developed world and show no signs of recovery, according to the world’s largest credit-checking company Experian. (Telegraph)

BP – Co.’s Russian venture TNK-BP, said it may expand its refining business through acquisitions. (BBG)

AstraZeneca – Co. may face as many as 6,000 trials of lawsuits claiming its antipsychotic drug Seroquel causes diabetes after a judge said she will recommend sending the cases back to their home courts. (BBG)

BG Group – Co. says has record productivity from well tests on the Iracema appraisal well in the Tupi area. (RTRS)

Cadbury – A consortium between The Hershey Company and Italy’s privately held Ferrero would face many obstacles in the fight for co., though its presence could force Kraft to flex its financial muscle. Both Hershey and Ferrero operate under family-owned structures that would place severe constraints on the amount of equity they could raise to finance a bid, according to a source close to co. and a source familiar with the situation. (FT)

British Airways – Co. and the managers of its pension fund have until 30 June 2010 to reveal the solution to the UK’s airline’s pension fund deficit. (Cinco Dias)

Reckitt Benckiser Group – Co. close to buying Colgate-Palmolive. Reports say merger to be close, but do not cite any source for information. After the market close yesterday Colgate-Palmolive stated that its policy is not to comment on unusual market activity and has been contacted by the NYSE in accordance with its usual practice (Telegraph/RTRS)

WPP – Co.’s CEO reiterates sees next year’s revenues flat and has seen continuation of ‘less worse’ trend in Oct. Says price competition in media buying is vicious and hopes he has done bulk if not all of necessary cost reductions. Also says he has appetite for mostly small acquisitions in new markets, new media, and consumer insight. (RTRS) In other news, the world’s largest advertising company said business in October was unchanged from September and forecast a return to growth in the Q2 of 2010. (BBG)

Pearson – Co.’s CFO says pretty cautious on 2010 and reiterates not interested in acquiring minority stakes. Also calls report of interest in Santillana a ‘very old story’, says nothing has changed. (RTRS)

Hammerson – Co. emerges as preferred buyer of mall being sold by Lloyds worth GBP 300mln. (FT)

Sabmiller – H1 net profit USD 973mln vs. Exp. USD 1.11bln, H1 Ebitda USD 2.19bln vs. Exp. USD 2.13bln. Sees current trading conditions continued in H2 and says H2 results to benefit from favourable FX movements. (BBG)

Centrica – Co. shares rose yesterday following rumours that it was a bid target, with Gazprom named as the potential bidder. However dealers were quick to play down the link, suggesting instead that the last of a stock over-hang was being cleared. (FT)

Morrisons – Co. says Q3 performance good, Q3 like-for-like sales ex-fuel up 3.4%. (BBG) Co. says comfortable with full-year consensus expectations. (RTRS)

National Grid – Co. pre-tax profit up 16%. Says “very strong first half performance”, interim dividend GBP 0.1365, up 8%. Says “well positioned” to deliver strong performance. (BBG)

OTHER UK COMPANIES

ITV – Co.’s interim CEO Cresswell has no visibility on 2010 and says outlook is tough, also stands by statement that he plans to stand down. (RTRS)

Investec – Co.’s H1 op. profit GBP 350.3mln, net income declined to GBP 178.5mln. Co. says impairments appear to have peaked. (BBG)

US

Equities finished lower due to an unexpected fall in home construction last month which fell to its lowest level for 6 months. The technology sector was the second worst performing sector following gloomy outlooks from Salesforce.com (-3.05%) and Autodesk (-10.4%). The financial sector did outperform following comments from hedge fund billionaire John Paulson who told investors that he believes Bank of America (3.68%) shares will almost double in the next two years. At the closing bell the S&P 500 closed -0.05% at 1109.79, the DJIA closed -0.11% at 10425.70 and the NASDAQ 100 closed -0.58% at 1801.74.

JP Morgan – Co. will today unveil a USD 1bln deal to buy Cazenove, the UK broker with which it has a joint venture for the past five years. (FT)

Pfizer – US FDA panel says co.’s Prevnar 13 Pneumococcal vaccine effective for infants and toddlers. (RTRS)

Boeing – Co. may lose a USD 7.5bln jet fighter sale to Brazil unless the US Senate lifts a four-month delay in confirming President Barack Obama’s nominee for ambassador to Latin America’s biggest country, a former top US diplomat to the region said. (BBG)

Colgate-Palmolive – Co. is close to being bought by Reckitt Benckiser Group, reports say merger to be close, but do not cite any source for information. After the market close co. stated that its policy is not to comment on unusual market activity and has been contacted by the NYSE in accordance with its usual practice. (Telegraph/RTRS)

Anadarko Petroleum – Reports say that co. said it would be interested in buying Devon Energy’s operating stake in Brazil’s offshore Itaipu prospect. (theflyonthewall.com)

Devon Energy – Co.’s president says unlikely to make acquisitions following sale of its international and US Gulf of Mexico assets. (Sources)

Dell/Nvidia – Cos, Sony and Matrox were sued by patent owner FuzzySharp Technologies for misusing inventions that sharpen computer images used in engineering video games. (BBG)

DirectTV Group – Co. names former Pepsi executive White as next CEO. (BBG)

Aetna – Co. says reduction of approx. 625 positions, or 1.75%. (RTRS)

Grainger – Co. sees FY 2009 sales down 9-10%. Co. also sees FY 2010 Share USD 5.30-5.80 vs. Exp. USD 5.76 and sees FY 2010 Share USD 5.10-5.20 vs. Exp. USD 5.19. (RTRS)

E Trade Financial – Ameritrade’s CEO says interested in a deal involving co. under the right circumstances. (RTRS)

OTHER US COMPANIES

Blackstone – Co. to acquire Birds Eye Foods for USD 1.3bln. (WSJ)

Europe

GERMANY

Bayer – Britain’s health watchdog has blocked a critical liver cancer drug, saying it is too expensive for the state of health service, leaving co. vowing to appeal the decision. (RTRS)

Allianz – Co. will make majority takeovers as part of its alternative investment strategy. (Handelsblatt)

Volkswagen – Co. directors may approve Porsche takeover contract by tomorrow. (Handelsblatt) In other news, Co. may disappear from Germany’s DAX index as Qatar exercises options on the carmaker’s common and preferred stock and HeidelbergerCement AG’s share sale boosted its chances for a place in the benchmark gauge, according to analysts at Unicredit and DZ Bank. (BBG)

OTHER GERMAN COMPANIES

Infineon – Q4 net income EUR 14mln vs. Exp. EUR 16mln, Q4 sales EUR 855mln vs. Exp. EUR 840mln. (BBG)

FRANCE

Total – Co. in talks with a local partner to buy oil refining assets in China. (RTRS) In other news, European refining capacity rate to remain low in H1 2010. (S&P)

France Telecom – Co. CFO says dividend will likely not increase in 2010, but may increase in 2011 if economy improves. Also of note, co. will not enter South African or Nigerian markets however could buy struggling operator in Africa or new licence. Co. also says not many targets attractive for co. in Europe. (RTRS)

Vivendi – Co. is seeking a bigger portion in cash from partner General Electric for its 20% stake in NBC Universal. (BBG)

Danone – Co. confirms 2009 guidance and sees annual free cash flow at EUR 2bln by 2012. Co. sees like-for-like annual sales growth of at least 5% in medium term and confirms like-for-like H2 2009 sales close to +4%. (RTRS)

Air France-KLM – Q2 loss EUR 147mln vs. Exp. loss EUR 102mln (Prev. EUR 27mln), Q2 Revenue EUR 5.6bln vs. Prev. EUR 6.9bln. Co. sees EUR 500mln ebit improvement by 2011-12 and says cargo activity remains ‘very difficult.’ In other news, co. is planning to cut 1700 jobs in 2010 and will ask workers to take voluntary redundancy next year, having already said it would cut 3000 jobs in the year to 31 March 2010. (BBG/RTRS/S&P)

PAN-EUROPEAN

Telecom Italia – Co.’s CEO says no decision on dividend but 2008 payout will be sustained. Also says sale of Sparkle unit not postponed but will sell sparkle at right price. In other news, co. said to discuss Argentina unit sale Dec. 2. (RTRS)

OTHER PAN-EUROPEAN COMPANIES

Ahold – According to co.’s CEO, co. could acquire companies outside the food retailing industry. (Sources)

SWISS

Roche/Novartis – Co.s asthma drug Xolair should not be approved for children aged 6 to 11 years, a US advisory panel decided. (BBG)

UBS – Moody’s downgrades co.’s senior debt to AA3 from AA2, outlook negative. It is worth noting that Moody’s earlier this week confirmed a new rating system would take into account a wider range of factors and said it would announce which hybrids are to be put on for review. (BBG/RTRS)

Asia

Nikkei fell 1.3% to a four-month closing low, with the nation’s biggest bank Mitsubishi UFJ Financial Group sliding after announcing a massive fundraising. MUFG fell 3.7% after saying it would raise USD 11bln to meet stricter capital rules. (RTRS)