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By Bob Willis

 

Nov. 2 (Bloomberg) -- U.S. employers probably eliminated jobs in October for a 10th consecutive month, while manufacturing contracted at the fastest pace since the 2001 recession, economists said before reports this week.

Payrolls shrank by 200,000 workers, according to the median estimate of economists surveyed by Bloomberg News before the Labor Department's report on Nov. 7. The unemployment rate may jump to its highest level in more than five years.

``It should be another lousy report,'' said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York. ``This'll be another nail in the consumer's coffin.''

The loss of almost one million jobs, falling property values, slumping stocks and frozen credit may cause consumers and businesses to keep retrenching. The state of the economy gave Democrat Barack Obama a lift over Republican rival John McCain as Americans, who will elect a new president in two days, perceived the Democrat from Illinois had a better grasp of the issue.

The projected drop in payrolls would be the biggest in five years and follow a decline of 159,000 in September. Factories probably cut 62,000 workers from payrolls, according to the survey median.

The jobless rate last month probably rose to 6.3 percent from 6.1 percent in September, the survey also showed.

``Unemployment is likely to rise sharply over the next several months as repercussions from the credit crisis ripple through the economy,'' said Russell Price, senior economist at H&R Block Financial Advisors in Detroit. ``The economy is the most important issue on the minds of voters.''

Economy, Election

The report will be released three days after Americans choose between Obama and McCain. The faltering economy and imploding financial markets helped push Obama ahead of McCain of Arizona in polling in key battleground states in recent weeks.

On the question of which candidate they trust most on the economy, voters in Florida picked Obama over McCain by a 9-point margin, and in Ohio, the Democrat led by 12 points, according to a Bloomberg/Los Angeles Times poll issued last week.

Manufacturing, which accounts for about 12 percent of the economy, probably shrank for a seventh time in nine months, the Institute for Supply Management's factory index may show tomorrow. The gauge probably fell to 41.5, the lowest level since October 2001, from 43.5 the prior month, according to economists polled. A reading less than 50 signals contraction.

``Downside risks to growth remain,'' the Federal Reserve said last week as it lowered its key rate by a half point to 1 percent. ``Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports.''

Automakers

Automobile and car-parts makers are leading the downturn in manufacturing. ArvinMeritor Inc., a Troy, Michigan-based maker of auto and commercial-truck parts, said last week it's cutting 1,250 jobs.

``Swift and decisive actions are necessary in response to today's global economic conditions,'' Chief Executive Officer Charles ``Chip'' McClure said in a statement.

Service industries, which range from homebuilders to mortgage lenders, retailers and restaurants, and account for almost 90 percent of the economy, also probably contracted in October, economists forecast another report from the Institute for Supply Management will show on Nov. 5.

The group's non-manufacturing index fell to 47.2 last month from 50.2 in September, according to the median of economists' forecasts in a Bloomberg survey.

The economy shrank at a 0.3 percent pace in the third quarter, with consumer spending dropping by 3.1 percent, the biggest decline since 1980, the Commerce Department reported last week. Business investment in equipment and software fell at a 5.5 percent rate. Economists surveyed by Bloomberg forecast the economy will contract at a 0.8 percent rate in the fourth quarter.

 

 

 

 

 

To contact the reporter on this story:

Bob Willis in Washington at bwillis@bloomberg.net

 

 

 

 

 

 

By Candice Zachariahs

 

Oct. 31 (Bloomberg) -- The Australian and New Zealand dollars were set for the biggest monthly declines since the mid- 1980s after concern the global economy will slip into recession prompted investors to dump the nations' higher-yielding assets.

The currencies have plunged against the U.S. dollar and yen this month as interest-rate cuts in the U.S., Europe and Asia failed to halt a global stocks sell-off that wiped out more than $10 trillion of market value. The South Pacific nations' dollars weakened as prices of commodities, which account for more than half of their exports, tumbled.

``Even though we have seen central banks around the world cut interest rates, that's not going to be enough to prevent a global recession,'' said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. ``We will continue to see risk aversion and repatriation-type flows support the yen and the U.S. dollar. The trend for both the Aussie and Kiwi will be lower in coming months.''

The Australian dollar dropped 15 percent this month to 67.38 U.S. cents as of 4:35 p.m. in Sydney, from 79.25 at the end of last month. It also plunged 21 percent to 66.28 yen. The declines were the most since the Aussie was traded freely in December 1983.

New Zealand's dollar slumped 12 percent to 58.78 U.S. cents, the biggest drop since 1984. It also tumbled 19 percent to 57.78 yen.

The currencies declined for the first time in four days today after a report showed that the U.S. economy contracted in the third quarter by the most since 2001, adding to the risk f a global recession. Federal Reserve Bank of San Francisco President Janet Yellen said yesterday that recent data was ``deeply worrisome.''

Cheaper Commodities

Concerns that the global economy will slump dragged commodities prices lower, weighing on the Australian and New Zealand dollars. The Reuters/Jefferies CRB Index of 19 raw materials has plunged 23 percent since Sept. 30, poised for the biggest monthly drop since it was introduced in 1956.

Raw materials account for 60 percent of Australia's exports, while sales of commodities make up 70 percent of New Zealand's overseas shipments.

``We are bearish on the outlook for the global economy, with our economists looking for the harshest global slowdown since the early 1980s,'' wrote a team of strategists led by Sydney-based John Horner at Deutsche Bank AG, in a research note dated Oct. 30. ``This keeps us bearish on dollar-bloc currencies, especially the Australian and Canadian dollars.''

RBA Cuts

The Reserve Bank of Australia bought its own currency in the market for three days from Oct. 24 as it traded near a five- year low against the dollar. The bank intervened to ``provide liquidity rather than defend any particular level,'' Assistant Governor Guy Debelle said in Melbourne today.

``With the de-leveraging that has occurred, there's no one around to say this has overshot'' and take a position to buy the currency, he said.

Traders are betting that the RBA will reduce its benchmark rate by at least 50 basis points to 5.5 percent when it meets on Nov. 4, according to a Credit Suisse index based on overnight swaps trading. The gauge shows a 33 percent chance of a 75- basis-point cut.

Australian government bonds rose. The yield on the 10-year note fell 5 basis points, or 0.05 percentage point, to 5.180 percent, according to data compiled by Bloomberg. The price of the 5.25 percent security due March 2019 advanced 0.386, or A$3.86 per A$1,000 face amount, to 100.549.

New Zealand's two-year swap rate, a fixed payment made to receive floating rates, rose to 6.355 percent today from 6.340 yesterday.

 

To contact the reporter on this story:

Candice Zachariahs in Sydney at czachariahs2@bloomberg.net

 

 

 

 

 

 

By Sandra Hernandez and Dakin Campbell

 

Nov. 1 (Bloomberg) -- Treasury two-year notes had the biggest monthly gain since February after the Federal Reserve cut interest rates twice to spur a contracting economy and stocks tumbled amid a deepening credit crisis.

Two-year securities returned 1.1 percent in October, according to Merrill Lynch & Co.'s Treasury Master Index, for their fifth straight monthly advance. Three-month bills yesterday had the biggest weekly gain since September. This month's decline in U.S. stocks, the steepest in two decades, drove investors to the relative safety of short-term securities, the so-called front end of the Treasury market.

``The economy is still on tenterhooks,'' said Paul Horrmann, a strategist in Jersey City, New Jersey, at ICAP Plc, the world's largest inter-dealer broker. Investors ``will put money into the front end in a more protectionary stance.''

Two-year note yields fell 41 basis points, or 0.41 percentage point, in October to 1.55 percent, according to data compiled by Bloomberg. Rates on three-month bills dropped 41 basis points on the week, the most since the five days ended Sept. 19, to 0.44 percent. Debt yields and prices move in opposite directions.

Yields rose this week as the U.S. sold $64 billion in debt and traders speculated the Treasury will say on Nov. 5 it plans to sell a new maturity to help fund a widening budget deficit. Two-year yields climbed 4 basis points, and five-year yields jumped 22 basis points. Rates on 10-year notes increased 27 basis points.

`Tug of War'

``Everything else being equal, yields will probably be marginally higher in order to digest all the supply,'' said Alex Li, an interest-rate strategist in New York at Credit Suisse Securities USA LLC, one of the 17 primary dealers that trade bonds with the Fed. ``It's going to be a tug of war between the Street setting up for supply and the potentially weak economic data we're going to get.''

Two-year yields will rise to 1.59 percent by year-end, while 10-year rates will fall to 3.70 percent, according to the weighted average of forecasts in two Bloomberg News surveys. The government on Nov. 7 will probably say payrolls fell for a 10th straight month, according to a Bloomberg survey of economists.

Treasuries gained on Oct. 29 after the Fed reduced its target rate for overnight lending between banks by a half- percentage point to 1 percent, its second reduction in three weeks, and said downside risks to growth remain. Policy makers on Oct. 8 cut the rate in an emergency move coordinated with five other central banks.

Yield Curve

The difference between yields on two- and 10-year notes, known as the yield curve, widened to 2.40 percentage points this week, the most in almost five years, as two-year notes outperformed. Traders favored the shorter maturities amid speculation the Fed will keep cutting interest rates.

San Francisco Fed President Janet Yellen said after a speech in Berkeley, California, on Oct. 30 that the Fed may bring its main lending rate close to zero `because we are concerned about weakness in the economy.''

U.S. gross domestic product contracted by 0.3 percent from July to September, the Commerce Department said Oct. 30. It was the biggest decline since 2001. The Standard & Poor's 500 Index fell 17 percent in October, the biggest decline since its 22 percent drop in 1987. Treasuries of all maturities returned 0.04 percent last month and 4.6 percent on average in 2008, according to a Merrill's indexes.

TED Spread

Money-market rates indicated banks are more willing to lend after governments worldwide pumped capital into the financial system this month.

The London interbank offered rate, or Libor, for three- month dollar loans dropped for a third straight week, to 3.03 percent. The difference between what banks and the U.S. government pay for three-month loans, known as the TED spread, narrowed to 2.59 percentage points. It was 4.64 percentage points Oct. 10.

``The theme for the week has been and will be for the next couple of weeks, the meaningful improvement in Libor,'' said Michael Cloherty, head of U.S. interest rates strategy at Banc of America Securities LLC, another primary dealer. ``We are also starting to get much more attention to upcoming supply and there is attention on the upcoming refunding announcement,'' he said, referring to Treasury auctions.

Debt Sales

The Treasury this month said it will continue enlarging auctions of bills, notes and bonds and will announce any change to its debt offerings, including a possible revival of the three-year note, on Nov. 5. U.S. borrowing needs will almost double this fiscal year to $2 trillion, Goldman Sachs Group Inc. forecast this week.

The government's $34 billion sale of two-year notes on Oct. 28 drew a yield of 1.60 percent, the lowest since March 2004. The U.S. also auctioned $24 billion of five-year notes on Oct. 30 at a yield of 2.825 percent, below the rate drawn in the previous month's sale. A $6 billion auction of five-year Treasury Inflation Protected Securities on Oct. 27 came in at a yield of 3.27 percent, the highest since October 1997, the year TIPS were first sold.

TIPS yields indicate investors are betting consumer prices will fall. Five-year TIPS yielded 0.31 percentage points more than Treasuries of similar maturity this week. TIPS typically yield less than conventional notes because TIPS' principal payments are tied to inflation, and investors expect the inflation payout to make up the difference.

 

To contact the reporters on this story:

Sandra Hernandez in New York at shernandez4@bloomberg.net;

Dakin Campbell in New York at dcampbell27@bloomberg.net.

 

 

 

 

 

 

By Mark Shenk

 

Oct. 31 (Bloomberg) -- Crude oil rose in the last 10 minutes of trading as market participants scrambled to unwind positions on the final day of transactions for the November gasoline and heating-oil contracts.

Prices climbed as traders who sold the November contracts this week, when gasoline dipped to a 21-month low, had to buy the futures back. In a squeeze, a trader goes short by selling oil, hoping the price will decline. The trader must buy back the futures in the last days before the contract expires or be forced to deliver the underlying product.

``There were a lot of traders who were squaring their books and couldn't wait,'' said Steve Bellino, senior vice president of energy risk management at MF Global Ltd. in New York. ``I wouldn't read a lot into it because we've been seeing huge movements on expiration recently.''

Crude oil for December delivery rose $1.85, or 2.8 percent, to settle at $67.81 a barrel at 2:52 p.m. on the New York Mercantile Exchange. Futures dropped as much as $2.84, or 4.3 percent, during today's session. Prices, which have tumbled 54 percent since reaching a record $147.27 on July 11, gained 5.7 percent this week.

The October crude-oil contract rose by a record $16.37 a barrel when it expired on Sept. 22, as traders unwound positions.

``There were people short and in the last few minutes they were forced to pay up,'' said Peter Beutel, president of energy consultant Cameron Hanover Inc. in New Canaan, Connecticut.

Gasoline for November delivery declined 2.57 cents, or 1.8 percent, to settle at $1.4413 a gallon in New York. The November contract climbed as much as 6.3 cents, or 4.3 percent, in the last five minutes of floor trading. Heating oil rose 2.22 cents, or 1.1 percent, to settle at $2.0063.

Record Decline

Oil fell 33 percent in October, a record monthly decline, on signs that the economic slowdown in the U.S. and Europe will spread to emerging markets, curbing fuel consumption. The previous record price decline occurred in February 1986, when crude oil slipped 30 percent to $13.26 a barrel. Oil trading in New York began on March 30, 1983

Rate cuts this week by the three biggest oil users, the U.S., China and Japan, failed to inspire confidence that a recession can be avoided.

``There was no news, we just had a rush of late buying because of the product expiration,'' said Tom Bentz, senior energy analyst at BNP Paribas in New York. ``The underlying story hasn't changed.''

Brent crude oil for December settlement rose $1.61, or 2.5 percent, to settle at $65.32 a barrel on London's ICE Futures Europe exchange.

 

To contact the reporter on this story:

Mark Shenk in New York at mshenk1@bloomberg.net.

 

 

By Ye Xie and Daniel Kruger

 

Nov. 1 (Bloomberg) -- The dollar and the yen rose the most against the euro in October since the 15-nation currency's 1999 debut as the global economic slump led investors to seek safety.

The euro weakened this week as European Central Bank President Jean-Claude Trichet said policy makers may lower borrowing costs for a second time in a month to support Europe's economy. Japan's currency gained the most versus the dollar in a decade as the Federal Reserve lowered its target lending rate to a level matching a half-century low.

``I am still inclined to look for lower levels in the euro- dollar as deleveraging continues and all currency investors seek safe havens,'' said Adam Boyton, a senior currency strategist in New York at Deutsche Bank AG, the world's largest currency trader, in an interview on Bloomberg Television.

The dollar appreciated 10.7 percent to $1.2726 versus the euro yesterday from $1.4092 on Sept. 30. The yen climbed 19 percent to 125.3 per euro from 149.56. Japan's currency appreciated 7.7 percent to 98.46 per dollar from 106.11, the biggest advance since 1998, when hedge fund Long-Term Capital Management LP collapsed.

Japan's currency increased 27.9 percent to 65.74 per Australian dollar and 24 percent to 57.36 versus New Zealand's currency on bets the global slump will encourage investors to unwind carry trades, in which they get funds in a country with low borrowing costs and buy assets where returns are higher. The Standard & Poor's 500 Index slumped 17 percent in October.

The Bank of Japan lowered its lending target yesterday to 0.3 percent from 0.5 percent. The key rates are 6 percent in Australia and 6.5 percent in New Zealand.

Japan's Investors

Japanese individual investors purchased 632 billion yen ($6.38 billion) this week, the fourth consecutive week of net buying, wrote Junya Tanase, a currency strategist at JPMorgan Chase & Co. in Tokyo, in a research note this week. The outstanding bets on a decline in the yen dropped to 1.1 trillion yen, the smallest since October 2006, according to the report.

``I like the yen,'' said Chirag Gandhi, a portfolio manager of a $2.5 billion global fixed-income fund for the state of Wisconsin in Madison. ``The unwinding of structural carry trades and lower interest-rate spreads between Japan and other countries are supporting the yen.''

Volatility implied by dollar-yen options expiring in one month, a measure of expectations for future currency moves, rose to 31.70 percent yesterday from 17.81 percent at the end of September. The index reached 41.79 percent on Oct. 24, the highest level since Bloomberg began compiling the data in December 1995. Higher volatility can discourage carry trades by making profits harder to predict.

Honda Lowers Forecast

The strength in the yen has eroded Japanese exporters' overseas income. Honda Motor Co., Japan's second-largest automaker, cut its operating profit forecast for the year ended in March 2009 by 13 percent to 550 billion yen ($5.6 billion) this week. Japan's Economic and Fiscal Policy Minister Kaoru Yosano said in Tokyo this week that abrupt increases in currency volatility are ``undesirable.''

The Bank of Japan's interest-rate reduction may serve as an effective way of weakening the yen without intervening in the currency market, according to RBS Greenwich Capital Markets Inc.

``It fits with their desire to limit yen strength,'' wrote Alan Ruskin, the Greenwich, Connecticut-based head of international currency strategy in North America at RBS, in a research note.

Global Rate Cuts

Central banks in the U.S., Norway, China, Taiwan, Hong Kong and countries in the Middle East lowered borrowing costs this week as policy makers raced to avert a global recession. The Fed reduced the target lending rate by a half-percentage point to 1 percent on Oct. 29, the lowest since June 2004 and matching the level during the Eisenhower administration in the late 1950s.

Currencies of developing countries tumbled in October on concern the global economic slump will sap demand for emerging- market assets.

South Africa's rand dropped 15.3 percent to 9.78 per dollar, the biggest decline since 1985. Mexico's peso lost 14.7 percent to 12.8259 per dollar, the most since 1994, when Mexico abandoned its peg to the dollar and devalued the currency. Russia's ruble weakened 5.2 percent to 27.07, the largest drop since 1999, one year after it defaulted on $40 billion of sovereign debt.

The euro weakened after ECB's Trichet said in a speech in Madrid on Oct. 27 that it's ``possible'' for the bank to cut its main refinancing rate at a policy meeting on Nov. 6. The ECB lowered the rate by a half-percentage point to 3.75 percent on Oct. 8 in a coordinated interest-rate reduction by global central banks.

Weaker Pound

Sterling dropped 9.7 percent to $1.6076 in October, the biggest decline since investor George Soros drove the currency out of Europe's system of linked exchange rates in 1992. The economy shrank 0.5 percent in the third quarter, the first contraction in 16 years, a government report showed last week.

The Bank of England will lower its main rate by a half- percentage point to 4 percent when it announces its decision on Nov. 6, according to the median forecast of 30 economists surveyed by Bloomberg News.

 

To contact the reporters on this story:

Ye Xie in New York at yxie6@bloomberg.net;

Daniel Kruger in New York at dkruger1@bloomberg.net

 

 

By Chanyaporn Chanjaroen and Grant Smith

 

Oct. 31 (Bloomberg) -- Commodities had the biggest monthly drop since at least 1956 on concern that a slump in global economic growth will sap demand for raw materials.

In October, the Reuters/Jefferies CRB Index of 19 raw materials plunged 22 percent. Crude oil plummeted by a third, the most ever. Copper fell a record 36 percent, and gold dropped the most in 26 years.

``October is at last ending, the worst month in commodity history,'' said Eugen Weinberg, an analyst at Commerzbank AG in Frankfurt. ``Investors are expecting lower growth for the longer term, and that is putting prices under pressure.''

The world's central banks are cutting borrowing costs as the financial crisis that started with the U.S. housing slump threatens to tip the global economy into recession. UBS AG cut its forecast for global growth next year to 1.3 percent, from 2.2 percent, prompting a reduction of as much as 48 percent in its 2009 forecasts for commodities such as copper.

The CRB index closed today at 268.39, down from 345.50 on Sept. 30. Crude-oil futures for December delivery closed at $67.81 a barrel on the New York Mercantile Exchange, down from $100.64 at the end of September.

``The outlook for demand remains weak while we wait for economic rescue measures to feed their way through the system,'' said Christopher Bellew, a senior broker at Bache Commodities Ltd. in London. ``Even in emerging markets, the growth is likely to be lower than was previously expected.''

Borrowing Costs

The U.S. government on Oct. 29 lowered its benchmark lending rate by a half-percentage point to 1 percent in an attempt to reverse the economy's freefall. European Central Bank President Jean-Claude Trichet said it's ``a possibility'' that the institution's governing council would again cut rates at its next meeting.

``It is not a certainty, it is a possibility,'' Trichet said on Oct. 27. ``If we do so, and I repeat if, it would be because we would have judged that a further alleviation of inflation risks and further improvement of inflation expectations fully justified the move.''

Gross domestic product contracted in the third quarter at the fastest annual pace since 2001, the U.S. Commerce Department said yesterday. The U.S. is the world's biggest energy consumer.

The weak economy has weighing on the election prospects of President George W. Bush's Republican party. With four days until Election Day, national polls show Barack Obama, the Democratic presidential candidate, leading Republican John McCain by an average of 6 percentage points.

Copper Tumbles

On the London Metal Exchange, copper for delivery in three months fell $101, or 2.4 percent, to $4,099 a metric ton today. The implied volatility of the metal climbed to 91 percent this week, the highest since at least 2004.

Natural-gas company EnCana Corp. and Canadian Natural Resources Ltd. helped push Canadian stocks down 17 percent in the month, the most in a decade. Goldcorp Inc. plunged 8.1 percent today, leading mining shares lower.

Gold futures for December delivery fell $20.30, or 2.7 percent, to $718.20 an ounce on the Comex division of the Nymex. This month, the price dropped 18 percent, the most since March 1980.

The dollar jumped 7.8 percent this month against a basket of six major currencies. The gain was the biggest since October 1992.

``The dollar is definitely driving the gold market lower,'' said Robert Martin, chief executive officer of Dubai-based GTL Trading Ltd., which trades gold and currencies for 4,000 clients.

Goldenport Holdings Plc, a U.K-listed shipowner, fell by a record amount in London trading after saying trade in commodity shipping has ``virtually halted.''

Wheat had the biggest monthly drop in 22 years on speculation the economic slump will cut demand. Corn and soybeans declined for the fourth month in a row.

 

To contact the reporter on this story:

Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net;

Grant Smith in London at gsmith52@bloomberg.net

 

 

By Jamie McGee and Adriana Brasileiro

 

Oct. 31 (Bloomberg) -- Brazil's real posted its third consecutive monthly decline, the longest stretch of losses in six years, on speculation the global economic slowdown will reduce demand for emerging-market products and assets.

Commodities, which account for two-thirds of Brazil's exports, had their worst month since at least 1956 on concern that a slump in global economic growth will sap demand for raw materials. Brazil's Bovespa index of stocks plunged 25 percent in October.

``All the countries that were growing and were to some extent based on commodities will face a significant slowdown next year,'' said Pedro Tuesta, an economist in New York at research firm 4Cast Inc. in New York. ``That puts more pressure on the current account and therefore on the currencies.''

The real dropped 2.5 percent to 2.1590 per dollar today, from 2.1050 yesterday. The currency dropped 12 percent in October. The last time the real fell three straight months was in 2002.

The Federal Reserve agreed this week to provide $30 billion each to the central banks of Brazil, Mexico, South Korea and Singapore, expanding its effort to revive global bank lending. The International Monetary Fund approved an emergency loan program that almost doubles borrowing limits for developing countries and waives demands for economic austerity measures.

``The Fed acknowledged Brazil is systemically important for the whole system,'' said Bartosz Pawlowski, a strategist in London at TD Securities Ltd. ``Such an assurance should help the real. As of yet, it's not enough to completely reverse the situation.'' The real will not appreciate beyond 2 against the dollar until 2009, he said.

Currency Swaps

Banco Central do Brasil has announced measures to unlock credit markets, such as imposing a limit of 30 percent on the amount of time-deposit reserves banks can use to buy government bonds. The move is aimed at boosting purchases of loan portfolios from faltering lenders. The government also freed more funds for farm lending.

The central bank has also offered currency swaps daily to add liquidity to the local currency market and bought reais through repurchase agreements. The bank placed 8,950 currency swap contracts of 57,500 offered at two auctions today to help shore up the real.

Brazilian stocks fell today after banks and retailers missed analysts' profit estimates and commodity producers dropped. The Bovespa index dropped 0.7 percent, deepening its monthly decline.

Emerging Market Risk

``Most investors are not yet ready to recommit to emerging- market risk,'' wrote Nick Chamie, global head of emerging- markets research in Toronto at RBC Capital Markets, in a research note today.

The Reuters/Jefferies CRB Index of 19 raw materials has plunged 22 percent this month, the steepest decline in at least a half-century. Brazil is the world's biggest exporter of beef, orange juice, sugar and coffee.

The cost of borrowing dollars for three months in London fell today, capping the first monthly decline since May, after central banks provided cash and cut interest rates to unlock the supply of credit.

``The recent falling of global money markets will reduce pressure on some emerging-market currencies, especially Brazil, which has strong fundamentals,'' Pawlowski said.

The yield on Brazil's zero-coupon bond due in January 2010 rose 9 basis points, or 0.09 percentage point, to 15.71 percent, according to Banco Votorantim. The yield on Brazil's overnight futures contract for January 2009 delivery fell 7 basis points to 13.76 percent.

 

To contact the reporters on this story:

 Jamie McGee in New York at jmcgee8@bloomberg.net;

Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net