Most Asian Stocks Rise; Mitsubishi, BHP Gain as Oil Advances

Most Asian stocks rose as the Japanese economy shrank less than economists estimated and oil prices rose to a six-month high. Finance companies declined.

Mitsubishi Corp., a Japanese trading company that gets more than half its profit from commodities, climbed 3.4 percent after Goldman, Sachs & Co. recommended buying the stock. BHP Billiton Ltd., Australia’s biggest oil producer, rose 0.6 percent. Kawasaki Kisen Kaisha Ltd., Japan’s No. 3 shipping line, added 1.8 percent as commodity shipping rates gained for a 13th- straight session.

“Demand for resources looks likely to rebound and investors are willing to buy commodity-related companies on expectations for an earnings recovery,” said Hiroichi Nishi, general manager at Nikko Cordial Securities Co.

The MSCI Asia Pacific Index rose 0.2 percent to 99.53 at 10:07 a.m. in Tokyo, set for its highest close since Oct. 6. Through yesterday, the gauge had surged 41 percent from a more than five-year low on March 9. Stocks on the measure traded at an average 22.4 times estimated profit, compared with 15.6 times for the MSCI World Index.

Japan’s Nikkei 225 Stock Average advanced 0.3 percent to 9,315.78. Gross domestic product contracted an annualized 15.2 percent in the three months ended March 31, the Cabinet Office said today in Tokyo. Economists predicted the economy would shrink 16.1 percent.

Australia’s S&P/ASX 200 Index lost 0.2 percent and South Korea’s Kospi index was little changed.

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Futures on the Standard & Poor’s 500 Index slipped 0.4 percent. The gauge dropped 0.2 percent in New York yesterday as a Commerce Department report showed housing starts sank 13 percent in April, while economists had expected an increase. Financial shares slumped after Moody’s Investors Service said commercial property values have tumbled.

Mitsubishi Corp. jumped 3.4 percent to 1,718 in Tokyo after Goldman upgraded its rating to “buy” from “neutral.” BHP Billiton gained 0.6 percent to A$34.07. Inpex Corp., Japan’s largest oil explorer, gained 1.6 percent to 718,000 yen.

Crude oil futures in New York rose 1.1 percent to $59.65 a barrel yesterday, the highest settlement since Nov. 10.

Kawasaki Kisen Kaisha added 1.8 percent to 393 yen. The Baltic Dry Index, a measure of shipping costs for commodities jumped for a 13th straight session to a level not seen in seven months.

Nike to Cut About 1,750 Jobs, or 5% of Workforce

Shoe and apparel company Nike said Thursday that it will cut about 1,750 jobs worldwide, or 5 percent of its global work force.

About 500 of the jobs lost will be at Nike's world headquarters in Beaverton, Ore. The company did not specify what departments the cuts would be in.

Shares of Nike [NKE 50.95 1.43 (+2.89%) ] were up $1.43 to close at $50.95 Thursday. They were little changed in after-hours trading following the announcement.

Nike had announced in February that it would cut jobs as part of a realignment of its business. In March, it said it was reducing layers of management, among other organizational changes.

Like many companies, Nike has seen demand for its products slow as the global economic meltdown hurt consumer spending. The company plans to complete the reductions in the coming weeks. "Our new structure sharpens our consumer focus globally to drive continued growth while positioning Nike competitively in today's marketplace," Chief Executive Mark Parker said in a statement. "We remain a growth company and we know these changes have created a stronger organization that will enable us to invest in our most significant opportunities."

The company, whose other brands include Converse, Cole Haan and Umbro, remains the industry leader. But Nike saw its profit drop in the most recent quarter, largely on one-time items, and its revenue fell 2 percent as the economic downturn dragged on.

Euro Drops, Government Bonds Climb as Region’s Economy Shrinks

The euro fell and European government bonds rose after the region’s economy shrank the most in 13 years, increasing investor concern the pace of recovery from the first global recession since World War II is flagging.

The euro weakened 1.2 percent against the yen and 0.5 percent versus the dollar at 9:45 a.m. in London, while the yield on the 10-year German bund dropped three basis points. The MSCI World Index of stocks climbed 0.6 percent, trimming its first weekly drop in two months, as Barclays Plc led a rally in financial shares. Futures on the Standard & Poor’s 500 Index advanced 0.2 percent.

“Almost without exception, the markets seem to be suggesting a real danger that we are about to see a six- to eight-week period that is very risk-negative,” Citigroup Inc. currency strategists Tom Fitzpatrick in New York and London- based Shyam Devani wrote in a note to clients.

The euro is having its worst week against the yen in four months as concern grows that the slump in the 16-nation region is deepening and European Central Bank policy makers differ over the measures needed to spark a recovery. ECB Vice President Lucas Papademos said yesterday the rebound may come sooner than previously thought, while Dutch council member Nout Wellink said economists shouldn’t get too optimistic.

Gross domestic product in the 16-member euro region dropped 2.5 percent from the fourth quarter, the European Union’s statistics office in Luxembourg said today. That’s the biggest drop since the euro-area GDP data were first compiled in 1995 and exceeded the 2 percent decline economists forecast in a Bloomberg News survey.

Dollar Advances

The dollar had its biggest gain against the euro in almost two weeks, strengthening to $1.3575, before reports today that may show U.S. industrial production declined in April at the slowest pace in six months and consumer sentiment climbed to the highest level since September.

New Zealand’s dollar fell 1.6 percent versus the yen and 1.1 percent against the dollar after the nation’s statistics office said retail sales declined for a record sixth quarter.

“The New Zealand dollar is an accident waiting to happen,” Greg Gibbs, a currency strategist at Royal Bank of Scotland Group Plc in Sydney, wrote in a report today.

Russia’s ruble strengthened for a 12th week against a basket of currencies, the longest stretch since 2005. The currency, which is managed against the basket to limit swings that hurt exporters, appreciated 0.2 percent to 37.3043, bringing its five-day advance to 0.6 percent.

Emerging Markets

Emerging-market stocks climbed, trimming the first weekly drop in two months, after the U.S. government’s bailout of insurers bolstered confidence in financial companies. The MSCI Emerging Markets Index gained 1.1 percent as Industrial & Commercial Bank of China Ltd., the world’s largest bank by market value, and OAO Sberbank, Russia’s biggest lender, rose.

The Dow Jones Stoxx 600 Index of European shares climbed 0.6 percent, reducing its weekly decline to 3.1 percent. London- based Barclays rose 8.5 percent to 274.5 pence after people with knowledge of the matter said the U.K.’s third-biggest bank is in talks to sell Barclays Global Investors.

Hartford Financial Services Group Inc. rose 10 percent to $16.24 in German trading. The Hartford, Connecticut-based company was among six insurers granted access to U.S. aid as the government moves to shore up an industry battered by investment losses.

Copper fell 0.2 percent to $4,438 a metric ton on the London Metal Exchange, heading for its first weekly drop in three. Crude oil rose 0.2 percent to $58.71 a barrel on the New York Mercantile Exchange, having retreated from a six-month high of $60 a barrel this week.

“This bear market rally will end soon,” said Charles Morris, head of absolute return at HSBC Global Asset Management, which manages $2 billion of assets in London. “I’d stick to high-quality investment: gold and good stocks.”

Microsoft, China's Hangzhou set 'model city' pact

Microsoft Corp. announced a partnership aimed at helping make the eastern Chinese city of Hangzhou a model for innovation and protection of intellectual property, in the company's latest attempt to combat rampant software piracy.

A three-year agreement signed Friday calls for setting up two new centers in Hangzhou to focus on developing the local technology industry. Microsoft will provide curriculum support, technology and training for teachers at Hangzhou Normal University through an institute set up to nurture local innovation.

"Partnering with leading IT companies like Microsoft will greatly boost Hangzhou's innovative capabilities and help us build a model information technology city in China," Cai Qi, Hangzhou's mayor, said in a statement.

No dollar figure was announced for the plan. Spending will be above the roughly $1 billion the company pledged in November to spend on research and development in China over the following three years.

The deal came after Hangzhou pledged to improve its enforcement of anti-piracy laws and promote the use of legitimate, non-pirated software by individuals, government offices and companies based in the city, which is west of Shanghai.

Software, movie and music makers, among many industries, say they lose billions of dollars each year to counterfeited and pirated products.

The deal calls for the two sides to set up a working team from both sides that will hold regular meetings to assess progress in that area, Alec Cooper, general manager of Microsoft Greater China's "Genuine Software Initiative," told reporters in a conference call.

"There is some degree of piracy in virtually every country around the world. We said, here's what we think are the best practices and here's what we think will work in China, and make it a more positive approach," Cooper said.

He said the partnership will focus on educating local people and businesses on the importance of fighting piracy of software and other intellectual property to their own economic future.

"We think it's an approach that addresses the root of the problem," he said.

Raising consumer awareness was the motivation behind Microsoft's Windows Genuine Advantage program, which turns the wallpaper of computers using pirated Windows software black and notifies users, urging them to get a legitimate copy.

That effort continues, Cooper said, despite complaints from some Chinese computer users.

Software piracy is still rampant despite individual countries' attempts at cracking down. Research commissioned by the Business Software Alliance, an industry trade group, found that 82 percent of the software used in China in 2007 was not legitimately purchased, more than double the worldwide piracy rate of 38 percent.

But Hangzhou, one of China's wealthiest cities, is seeking to build up its technology industries as it shifts away from textile making and other traditional manufacturing.

"They understand that to get the best companies in the world to be located in Hangzhou ... companies need to feel comfortable about their intellectual property," Cooper said, adding that Microsoft may seek such arrangements with other cities in the future.

Wal-Mart reports flat 1st-quarter profit

With plenty going wrong in the global economy, Wal-Mart Stores Inc. is seeing indications that it will hang onto customers it has picked up during the recession.

The world's largest retailer reported flat earnings for the first quarter on Thursday, hurt on international transactions because of a strong dollar. The year-ago comparison was affected because there was one more day in the quarter last year. Also, with fuel prices coming back to earth, Wal-Mart has lowered prices on some food items.

Wal-Mart Vice Chairman Eduardo Castro-Wright, who runs Wal-Mart's U.S. stores, said that as food prices moderated and consumers found their dollars going farther, some sales have crossed into discretionary items. And new customers who have switched to Wal-Mart because of the economic climate are doing some of that buying.

Singapore’s Temasek Sells Stake in Bank of America

Temasek Holdings Pte, a Singapore state-owned investment company that bought stakes in Merrill Lynch & Co. and Barclays Plc amid the global financial crisis, sold its stake in Bank of America Corp.

Temasek received shares in Bank of America after the biggest U.S. bank by assets bought Merrill Lynch this year. The investment company had paid about $5.9 billion for a 14 percent stake in Merrill Lynch since December 2007, which was converted into Bank of America stock following the completion of the acquisition.

“We have divested our shares in Bank of America,” Temasek said in an e-mailed response to Bloomberg News queries. The company declined to say how much it sold the stake for or when the sale was conducted.

Temasek had 31 percent wiped from the value of its global portfolio in the eight months through November amid the slump in financial markets. The company had sold assets including power generators and Singapore Food Industries Ltd. over the past year while increasing its investments in companies such as CapitaLand Ltd. and DBS Group Holdings Ltd. through rights offers.

A Form 13F filing to the U.S. Securities and Exchange Commission indicates that Temasek no longer held shares in Bank of America or Merrill Lynch as of March 31.

Bank of America rose 2.7 percent to $11.31 in New York trading yesterday. The shares have tumbled 69 percent in the past year, outpacing the 36 percent decline in the Standard & Poor’s 500 Index.

Temasek will cut its holdings in the Organization for Economic Cooperation and Development countries to 20 percent as it expands in Asia and emerging markets from Latin America to Africa, Chief Executive Officer Ho Ching said according to a speech posted on Temasek’s Web site yesterday.

The investment company had earlier said the more developed OECD countries will make up about a third of its investment portfolio.

GM Bankruptcy Looms, Congress Faces Pressure

With General Motors planning to end production of Saturns and Pontiacs at its Delaware plant which employs more than 1,000 people, state leaders are scrambling to win new work at the facility or persuade the company to move other operations to the region."This would appear on the surface to leave us in bleak circumstances," said U.S. Sen. Thomas Carper, a Democrat and former governor who helped save the 62-year-old Wilmington plant from closure in the early 1990s.

"We're encouraging them not to close the plant. At some point, GM will need more capacity," Carper said in an interview with Reuters just weeks ahead of a June 1 deadline for GM to show a White House/Treasury task force overseeing industry restructuring that it can be viable without government aid.Failure to satisfy the task force would trigger bankruptcy where GM [GM 1.21 0.06 (+5.22%) ] could try to finalize concessions.

It is seeking givebacks from debtholders and the United Auto Workers and wants to more than halve its network of 6,000 dealers. GM plans to cut 21,000 factory jobs. Lawmakers deferred to the task force as smaller Chrysler spiraled into a bankruptcy court.

But there has been a broader political response to GM over the past week since a second carmaker bankruptcy would compound Detroit's uncertainty and likely radiate economic anxiety beyond the industry's Midwest core.

GM A Bellwether

Autos has one of the heaviest economic multipliers of any U.S. industry. For every job loss in auto assembly, another nine disappear elsewhere, Mark Zandi, chief economist and co-founder of Moody's Economy.com, has told Congress.

GM employs 88,000 factory and salaried workers in the United States. It has also been a bellwether for industries like steel, plastics, warehousing, software, healthcare, trucking and makers of glossy paper for car catalogs.

Michigan State University economist Charles Ballard believes GM's reach is vast enough to affect U.S. GDP "if the whole thing were to implode," which he believes is remote.

Still, the possibility of bankruptcy is rattling Washington, which has extended GM $15.4 billion since January.

The Treasury likely will be on the hook for more GM financing before month's end as well as in any court restructuring. GM's restructuring would wipe out half the current debt to taxpayers.

Lawmakers are under pressure from constituents and interest groups like labor, car dealers, and suppliers to intervene as the Obama administration reviews the GM business plan and prepares the company for a possible bankruptcy filing.

In meetings last week on Capitol Hill, GM Chief Executive Fritz Henderson fielded concerns of lawmakers from the primary auto states of Michigan, Ohio and Indiana.

He also met with officials from Missouri, California, New York, Minnesota, Texas, Georgia, Illinois and Colorado.

Options Discussed

Carper said he suggested to GM North American operations chief Troy Clarke that the company locate research work on batteries and other technologies to the mid-Atlantic.

Creating a business center close to Washington where key funding and other decisions on advanced technology programs will be made in coming years would make sense for Detroit, Carper said, noting that GM, Chrysler and Ford [F 4.96 -0.05 (-1%) ] have lost political clout as they have contracted. Ford is restructuring but has not sought government aid.

Sen. Robert Corker, a Tennessee Republican, discussed with Henderson the fate of the Spring Hill assembly, storage and powertrain operation that employs 3,200 people in his state. "We want those plants to stay open," Corker said in an interview.

"We realize the the company has got to be restructured and tough decisions have to be made." Related businesses are also feeling pressure and gaining attention from Congress.

Last week, Democratic Sen. Charles Schumer pressed GM and bankrupt Delphi Corp to reach a deal for GM to buy back four of the supplier's production plants.

Two of the plants are located in Schumer's home state of New York. "I will continue to do whatever is necessary to see this purchase through," Schumer said.

Suppliers want Congress to authorize new assistance programs and encourage banks to resume lending to the sector once restructuring is completed at GM and Chrysler.

Congress is also considering legislation that would accelerate federal aid to communities facing sharp job losses. Michigan tops the nation in unemployment, with joblessness above 12 percent.