* Moody’s warning on France weighs on Treasuries* Goldman Sachs reports deeper-than-expected lossBy Gertrude Chavez-DreyfussNEW YORK, Oct 18 (Reuters) - U.S. Treasuries climbed in a
choppy session on Tuesday as Moody’s issued a warning on
France’s credit rating and expectations faded for a definitive
solution to the European debt crisis at a summit this week.Benchmark yields fell to their lowest in two weeks, but
have since staged a comeback. Thirty-year yields, meanwhile,
were also under pressure, sliding to their lowest in about a
week.Volume was reportedly dominated by speculative accounts,
traders said, but with real money names supposedly on the bid
in the three- to seven-year maturities.Treasury prices once again tracked movements in the U.S.
stock market, which recovered from an earlier drubbing caused
by a deeper-than-expected loss at U.S. investment bank giant
Goldman Sachs and disappointing guidance at technology
bellwether IBM .”There’s an overall sense of caution,” said Tom Porcelli,
chief economist at RBC Capital Markets in New York.”While some people are reconsidering their stance of an
absolute worst-case scenario (on the global economy) and it’s a
stance that we don’t necessarily agree with, for the most part
the market still has a very cautious approach where people are
not willing to go on a limb one way or the other.”Gains in Treasuries gathered pace after rating agency
Moody’s said it may slap a negative outlook on France’s
triple-A rating in the next three months if the country fails
to make progress on crucial fiscal and economic reforms..Enthusiasm has waned for a meeting of finance ministers and
central bankers of the Group of 20 major economies on Oct. 23
that was initially expected to come up with a comprehensive
solution to Europe’s debt troubles.On Monday, German Finance Minister Wolfgang Schaeuble
poured cold water on any positive view about the summit. he
said European governments will not present an ultimate solution
for the sovereign debt crisis at the weekend meeting.News on Tuesday suggesting German Chancellor Angela Merkel
expects European leaders to produce a “work plan” for Greece at
the EU summit did little to re-ignite hopes for a more positive
outcome at the summit.”It seems that people are not counting on the European
Union summit,” for a solution on the euro zone’s fiscal
problems, said Suvrat Prakash, interest rate strategist at BNP
Paribas in New York.Treasury prices earlier pared gains after a
bigger-than-expected increase in U.S. producer prices for
September, their largest rise in five months, and strong
earnings from Bank of America Corp , the largest U.S.
bank by assets. For more on producer prices, see
{ID:nN1E79H0CB].That dented gains racked up after a steeper-than-expected
loss at U.S. investment bank giant Goldman Sachs. U.S. 30-year
bond prices jumped more than a point after the release of the
bank’s earnings.”The loss at Goldman wasn’t expected to be this steep and
raises a whole bunch of questions on banking issues,” said
David Ader, head of government bond strategy at CRT Capital in
Stamford, Connecticut.”The loss is on asset markdowns. So there is this sort of
price recognition of the uncertainty factor of basically what
do banks own.”The bias in the Treasuries market has therefore remained
positive, despite venturing into negative territory twice in
the New York session, with the appeal of U.S. government bonds
enhanced by a slew of negative news around the world including
weaker-than-forecast gross domestic product growth in China.In midday trading, benchmark 10-year Treasury prices rose 9/32 in price to yield 2.12 percent compared
with 2.18 percent late on Monday. Yields fell as low as 2.08
percent, their lowest since Oct 7.U.S. 30-year bonds were up 13/32, yielding
3.11 percent versus 3.16 percent on Monday.
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* Withdraws full-year outlookOct 17 (Reuters) - STR Holdings Inc cautioned its
third-quarter adjusted earnings could be lower than its prior
outlook, and the solar company withdrew its full-year forecast,
citing lack of clarity on demand during the fourth quarter.It expects third-quarter non-GAAP earnings to be 1 cent to
two cents lower than its outlook of 12 cents to 16 cents a
share.Analysts were expecting 14 cents a share, according to
Thomson Reuters I/B/E/S.STR, which kept its third-quarter revenue view of $51
million to $57 million, said demand for solar modules has not
yet recovered.”Our guidance was based on expectations for increased
demand due to a number of factors including increased demand
generated from the clearing of solar panel inventory, a
restoration of project financing in Europe, decreased module
ASPs and a pull-in effect in advance of feed-in tariff
reductions in Germany,” CFO Barry Morris said in a statement.The company had forecast a full-year profit of $1.05 to
$1.15 a share, on sales of between $261 million and $275
million.STR provides the photovoltaic module industry with solar
encapsulants — thin sheets of ethylene vinyl acetate that are
inserted between solar cells to protect them and provide
electrical insulation.Earlier in the day, solar panel maker Canadian Solar Inc cut its third-quarter gross margin forecast, hurt by
weak average selling prices and lower demand earlier in the
period.STR shares closed 4 percent lower at $8.68 Monday on the
New York Stock Exchange.
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The death of Ibrahim al-Banna, an Egyptian described by Yemeni officials as high on their wanted list, is a fresh blow to the Islamist group regarded by Washington as the most serious threat to the United States, following the killing of Anwar al-Awlaki last month.But the destruction of France’s Total gas pipeline, which transports gas from the central Maarib province to Belhaf port on the Arabian Sea, was expected to deal a severe blow to the Yemeni economy, already reeling from months of protests demanding President Ali Abdullah Saleh step down.The Yemeni Defense Ministry said six other militants died in the air raids late on Friday on militant hideouts near the town of Azzan in the southern Shabwa province, including the oldest son and a cousin of Awlaki, a U.S.-born cleric.But local residents and officials said they believed it was foreign aircraft, flying at high altitude and smaller than the Soviet-made Yemeni air force planes, that launched at least three strikes on several targets in the area.”There were planes flying high. I could hear the sounds of their engines but I could not make them out,” one witness who declined to be identified told Reuters. “All of a sudden, the area was shaken by successive explosions,” he added.A Yemeni official described al-Banna as a “dangerous” militant and one of the most wanted people internationally.Witnesses said militants were seen removing several bodies and an unknown number of injured people from the scene after the raid early on Saturday.Last month, a U.S. drone killed Awlaki, identified by U.S. intelligence as “chief of external operations” for al Qaeda’s Yemen branch and a Web-savvy propagandist for the Islamist cause, U.S. officials said.Relatives of Awlaki said the cleric’s son and cousin were due to be buried at the site of the attack.Islamist militants linked to al Qaeda trying to establish a foothold in Yemen captured large swathes of southern Abyan province, including the provincial capital Zinjibar, earlier this year.The Yemeni army last month drove the militants out of Zinjibar, which lies east of a strategic shipping strait through which some 3 million barrels of oil pass daily.GAS PIPELINEResidents and officials said the 322-km pipeline, which links gas fields in Maarib, east of Sanaa, to a $4.5 billion Total-led liquefied natural gas (LNG) plant, was blown up soon after the raids.Sources at Total told Reuters that the pipeline was blown up in two places, stopping the gas supplies that feed the Belhaf LNG plant. Witnesses said the flames were visible from several kilometers away.The company evacuated nearly half its foreign staff to neighboring Djibouti, and sent some local and French engineers to start repairing the pipeline.Three South Korean companies also hold stakes in the plant, which opened in 2009 and was the largest industrial project ever carried out in Yemen.Yemen’s only liquefied natural gas producer, Yemen LNG, warned its customers in March of potential supply curtailments and possible force majeure on exports, as violence spread across the nation.Yemen has the capacity to supply up to 6.7 million tonnes of LNG per year. Last year Yemen LNG, the 16th largest seller of the gas, shipped more than half its supplies to Asia, the rest going to the Americas and Europe.The project delivers LNG under long term contracts to GDF Suez (GSZ.PA), Total and Korea Gas Corp (036460.KS).
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* Analysts see sell-off as overdone, await exec commentary* Halliburton reports on Monday, Schlumberger on FridayBy Braden ReddallOct 14 (Reuters) - What oilfield services executives say
next week about clients’ drilling plans will have more of an
impact on whether the sector’s recent rally can be sustained
than the quarterly profit numbers.Global No. 2 player Halliburton Co will kick off
with its third-quarter report on Monday, followed next Friday
by the first set of results from sector leader Schlumberger Ltd since Paal Kibsgaard took over as chief executive.Last quarter’s 29 percent plunge for the Philadelphia oil
service index appears partly justified given the glum
mood at a London oil conference this week.But analysts see that sell-off as an overreaction — the
index has bounced 13 percent higher in October — and cite the
lack of evidence so far of either a drilling slowdown or
weakness in pricing for services.”With the group beat down so hard, as if activity levels
are going to decline substantially, we’re setting up for a
decent short-term rally in some of these names,” Brian Uhlmer
of Global Hunter Securities said, though he noted any rebound
would obviously be derailed by a macroeconomic shock.Oil demand estimates for 2012 have been pared back, but
producers have so far shown no signs they will stop spending on
new projects. After all, Brent crude prices remain a
third higher than a year ago, even with the recent pullback.The rush to develop U.S. shale resources has also only
gained speed in the past year, which is a big driver behind the
anticipated 60 percent growth in third-quarter net profit for
Halliburton, the North American oilfield services leader.RIG COUNT NEAR PEAKThe Baker Hughes U.S. rig count, measuring activity
for more than half the global fleet, is up by 353 in the past
year at 2,023. That happens to be near the quarter-century peak
of 2,031 hit in 2008, before the financial meltdown hammered
oil prices and the active rig count was sliced in half.Analysts caution against reusing the 2008 “playbook” as
another economic slump looms, but various unanswered questions
haunt investors who were burned last time. So comments from
bosses at services companies, who often have valuable insights
to oil producers’ strategy, will be scrutinized for clues.Investors will also keep a close eye on what exploration
and production companies say about 2012 capital expenditure. At
least as far as North America is concerned, the industry is not
yet tipping any dramatic changes.”Despite recent commodity price volatility, discussions
with our customers indicate continued demand across all
segments,” Ken Huseman, the CEO of Texas-based Basic Energy
Services Inc , said in a monthly update this week.”We will monitor customer plans for 2012 before making
additional significant commitments for fleet expansion.”Halliburton has struck an equally sanguine note on pricing
and activity. Yet this has not stopped its shares from dropping
7 percent in the last month, against a 4 percent drop for
Schlumberger, which is far less dependent on North America.Weatherford International Ltd reports
results on Oct. 25 and industry No. 3 Baker Hughes follows a
week later.Analysts at Barclays Capital acknowledged this week that
their estimates for North America-focused services companies
would have to be cut to reflect a weakened oil price outlook.But they see those revisions as more than accounted for by
the market, which is discounting a rig count drop of between 25
percent and 30 percent, and a similar decline in pricing.”This is a scenario that we do not expect to unfold,”
Barclays wrote, predicting a 10 percent fall in the rig count
and a “modest” reduction in pricing in certain product lines.Barclays said on Friday its “flattening to modest decline”
outlook was supported by drilling permit levels in the 30 U.S.
states it monitors, which fell 5 percent in September after an
8 percent increase in August and a 7 percent decrease in July.
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Saab has struggled for months to stave off collapse, seeking new investors and selling off assets so it could pay suppliers and employees and resume production at its plant in Sweden.But it has still not received a vital bridge loan of 70 million euros ($96 million) that was secured by Chinese car firm Youngman, money that is key to its short-term survival.The paper said negotiations were ongoing in the Swedish capital with Youngman, but the court-appointed administrator could decide as early as Tuesday to ask a court to end Saab’s period of protection from creditors.The administrator, Guy Lofalk, could not immediately be reached for comment.Saab spokeswoman Gunilla Gustavs said the car maker still expected to get the bridge loan.”We are still expecting the Youngman loan to come in,” Gustavs said. She had no comment on when the money was expected or how long Saab could last without the cash.Saab won breathing space from creditors in late September, but still needs fresh money to pay wages and suppliers while it restructures.If the restructuring process looks unlikely to succeed, Saab’s creditors, the administrator or Saab itself could ask for creditor protection to be withdrawn, Cecilia Tisell, a judge at the local court told Reuters.She said the court had not received any request of that kind.”No, we have not heard anything like that at all from the Saab companies or Guy Lofalk,” she said.Saab-owner Swedish Automobile’s chief executive Victor Muller declined to comment.Swedish Automobile shares fell 7.2 percent by 1037 GMT.Saab had hoped protection from creditors would allow it to survive until China’s authorities approve a 245 million euro ($336 million) investment by car firms Zhejiang Youngman Lotus Automobile and Pangda (601258.SS).A decision by China’s NDRC could come as early as Friday.The paper also quoted Swedish Debt Office spokesman Daniel Barr, who rejected media reports the government could pay off Saab’s debt to the European Investment Bank and convert the security on the loan to shares in Saab.”No, the Debt Office does not have any such mandate,” he said.($1 = 0.732 Euros)
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