Global Markets

BP PLC (NYSE ADR: BP) Attempts Another Venture Into Russian Oil Industry in $16 Billion Deal

BP PLC (NYSE ADR: BP) on Friday announced it was entering a $16 billion share swap deal with Russian oil industry giant NK Rosneft OAO (PINK: RNFTF). The deal will give BP access to areas of the Russian Arctic that were previously off limits to foreign companies, but it will come at a political cost.

The deal involves BP swapping 5% of its shares, valued at $7.8 billion, for 9.5% of state-controlled Rosneft's shares. The British oil company already owns a 1.3% stake in the Russian business. BP Chief Executive Officer Robert Dudley said the deal is the first cross-shareholding between a Russian state-owned national oil company (NOC) and western oil giant, and called the move "a new template for how business can be done in our industry."

The joint venture will make Rosneft the largest single BP shareholder. Their newly formed joint operating company will be two-thirds owned by Rosneft and one-third owned by BP. It will spend up to $2 billion in an initial phase of testing and well-drilling.

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Hot Stocks: DuPont (NYSE: DD) Shoots for Top Spots in Biofuels and Food Sectors

U.S. manufacturing group E.I. du Pont de Nemours & Co. (NYSE: DD) announced Sunday it would buy Danish food ingredients company Danisco A/S (PINK: DNSOF) for $6.3 billion to broaden its presence in the fast-growing biofuels and food sectors.

DuPont will pay $5.8 billion cash and also assume $500 million in Danisco's debt. The company expects the deal to establish it as a leader in industrial biotechnology and help it successfully address global issues in food production and fossil fuel reduction.

"Danisco has two well-positioned global businesses that strongly complement our current biotechnology capabilities, R&D pipeline, and specialty food ingredients, a combination that offers attractive long-term financial returns," DuPont Chief Executive Officer Ellen Kullman said Sunday in a statement. "This also would create new opportunities across other parts of the DuPont portfolio, including traditional materials science offerings."

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Record High World Food Prices Spark Fears of Looming Global Crisis

World food prices hit a record high in December, jumping above the 2008 food crisis levels and developing into an "alarming" situation, according to a report released yesterday (Wednesday) by the United Nations' Food and Agriculture Organization (FAO).

"We are entering a danger territory," said Abdolreza Abbassian, an economist with the FAO. "It will be foolish to assume this is the peak."

The FAO's Food Price Index, which tracks the prices of 55 food commodities, climbed for the sixth consecutive month to hit 214.7 points in December, its highest reading since the measure was first calculated in 1990. This beat the previous June 2008 record of 213.5 and is a 25% increase from December 2009.

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Commodities, Europe's Winter Storm and NIKE Inc. (NYSE: NKE) Hint to 2011 Market Trends

Stocks rose last week with all the excitement of water turning to ice in the freezer.

I kept hitting the side of my monitor to see if the pixels were stuck — but no, it was just another one of those low-volume, low-drama late-December sessions that we have come to know and love.

The Dow Jones Industrial Average rose 0.12%, the Standard & Poor's 500 Index fell 0.16%, the Nasdaq Composite Index fell 0.08% and the Russell 2000 small caps fell 0.2%. Overseas developed and emerging markets were exactly the same. The liveliest U.S. sector was health care and basic materials, up 0.2%, while financials and industrials lagged, down 0.4%.

Breadth slightly favored decliners over advancers by a 3-2 margin, and the number of new highs was way down at 394 — yet so was the number of new lows, at 34. Gold fell by 0.4%, crude oil jumped out to a new two-year high by 1.1%, to $91.51, and the grains jumped to a new one-year high as well, led by corn.

To see what commodities and other sectors are hinting at for 2011, read on...

Buy, Sell or Hold: Six Reasons Claude Resources Inc. (AMEX: CGR) is a 'Buy'

When I was doing due diligence for my investors, I remember the CEO of an oil and gas company once telling me: "If you want to find oil, it's easier if you drill where oil has already been found."

This rule carries with it a lot of truth about geology. However, it works with gold resources just as much as it does with oil. It's always easier to find gold, where it has already been discovered.

In Canada, the most prolific gold mining district is the Red Lakes District. If you want to find gold, it helps to have ownership in a Red Lake property. It is the heart of high volume gold production in Canada.

And Claude Resources Inc. (AMEX: CGR) is one of the few companies to own one of the historic mines in that district. The Madsen mine is still fully permitted with a mill ready to operate again.

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Spain's Debt Rating Faces Moody's Downgrade, Puts Country on Eurozone Bailout Watch

Moody's Investors Service (NYSE: MCO) yesterday (Wednesday) said it might downgrade Spain's debt rating due to concerns about high borrowing costs, the poor financial state of its banks, and the country's regional debt.

The ratings firm said the country's vulnerability to refinancing needs in 2011 is triggering weak market confidence.

"Spain's substantial funding requirements, not only for the sovereign but also for the regional governments and the banks, make the country susceptible to further episodes of funding stress," said Moody's analyst Kathrin Muehlbronner.

The country currently has an Aa1 rating from Moody's, which was cut from Aaa in September. The news came a day before a planned bond sale of up to 3 billion euros ($4.01 billion), and at a time when Spain needed to bolster investor confidence in its ability to fix its financial woes.

"The news is another negative for Spain, and only makes tomorrow's Spanish bond auctions even more tricky," Niels From, chief analyst at Nordea Bank AB in Copenhagen, told Bloomberg. "Spain is already struggling to convince market participants that the country can put its own house in order itself."

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Chinese IPOs Making Waves in the Market, but Beware of Bubbles

Record fundraising activity in the market for initial public offerings (IPOs) is pushing valuations for Chinese companies to sky-high levels, raising concerns about a possible bubble.

IPOs are likely to raise more than $300 billion for issuers worldwide in 2010, exceeding the previous record of $295 billion in 2007, despite the sluggish economic recovery in Western markets.

In the first 11 months of 2010, IPOs worldwide already raised $255.3 billion in 1,199 deals, according to a "Year-end Global IPO Update" report from Ernst & Young.

And the red-hot Asian markets, led by China, continued to lead the recovery, raising the most capital ever. Asian issuers have raised $164.5 billion so far this year – already surpassing the $98.2 billion raised in the peak fundraising year of 2006 and accounting for 64% of total global IPO value so far in 2010.

That's more than four times the $40 billion in IPOs completed by the second-ranked North American market. Europe was third, raising $32.8 billion, far outdistancing the Middle East and Africa's $5 billion.

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Sinopec Continues China's Latin American Energy Moves With $2.45 Billion Argentina Deal

China's state-run oil and gas giant China Petroleum & Chemical Corp. (Sinopec) (NYSE: SNP) on Friday announced it would buy Occidental Petroleum Corp.'s (NYSE: OXY) Argentine operations for $2.45 billion, a key sector move highlighting the growing trend of China's increased presence in Latin America's valuable energy properties.

The properties produce about 44,000 barrels of oil equivalent a day. Sinopec said in a statement the purchase would "prove significant in cementing economic ties and boosting trade between China and Argentina."

China's continued venture into the Latin American energy industry has led the country to spend more than $15 billion in deals there this year, with more likely to come.

"There is not a single CEO of a major oil company in Latin America, not one, who has not been approached by the Chinese," a M&A banker at a western bank told the Financial Times.

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Cyberwar Threat from WikiLeaks Hackers Overblown

WikiLeaks supporters have unleashed disruptive cyber attacks on a number of Web sites to get revenge on companies disassociating from the controversial non-profit media group and its founder, Julian Assange.

Since Nov. 29 WikiLeaks has released 250,000 confidential documents detailing U.S. diplomatic interactions with other nations, prompting a number of companies to cut ties with the group – though none have claimed government pressure encouraged them to do so.

The release has caused a freedom of information debate, with some supporting the documents' release and others calling it an act of terrorism.

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U.S. & Euro Regulators Move to Curb Commodity Speculators

U.S. and European Union (EU) regulators are vowing to step up scrutiny on the size and volume of commodity market bets as debate continues to rage about whether excessive speculation is driving up prices on energy, metals and agricultural products.

In an unprecedented rush, investors have pushed a total of $121.2 billion into commodities since the beginning of 2009, according to Barclays Capital. Hedge funds, pension funds and mutual funds in the United States have boosted their positions on oil, silver, corn and wheat to record highs in 2010.

In some commodities, the number of futures contracts outstanding now far outpaces the numbers traded in mid-2008, when commodity market prices shattered records. As a result, regulators in the United States and Europe are considering proposals on how to prevent the so-called speculators from manipulating the markets.

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