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With our investment news briefs, Money Morning provides investors with a quick overview of the most important investing news stories from all around the world.
ECB Holds Rates at 1%; Shanghai Soars; Oracle-Sun Deal Faces European Probe; Dainippon Agrees to Buy Sepracor; South Korea 2Q GDP Moves 2.6%; OECD Says Global Recession May Be Over; Vale Restarting Idled Iron Ore Mines; Cerberus: No Withdrawals for 3 Years; Gold Nears $1,000 Mark
- The European Central Bank held interest rates at its record low 1.0% yesterday (Thursday), a clear sign that central bankers have different opinions than the economists who have raised growth and inflation projections, MarketWatch reported. Jean-Claude Trichet, the president of the ECB, said that though economic contraction has ended, he sees a “very gradual recovery.”
- The Shanghai Composite Index closed 4.8% higher yesterday (Thursday), its best showing in three months, on speculation the government will adopt measures to boost equities, Bloomberg News reported. The gain comes four days after the index sank 6.7% on Aug. 31, closing out one of its worst months in decades and sending futures of global indices lower.
- European regulators launched an antitrust probe into U.S. software titan Oracle Corp.’s (NASDAQ: ORCL) $5.6 billion acquisition of Sun Microsystems Inc. (NASDAQ: JAVA) because of market concerns over competition for databases. The European Competition Committee said its investigation is a “routine” matter and must be concluded by Jan 19, MarketWatch reported.
- Japanese drugmaker Dainippon Sumitomo Pharma Co., Ltd. yesterday (Thursday) agreed to buy U.S. drugmaker Sepracor Inc. (NASDAQ: SEPR) for $2.6 billion, making for Japan’s second-biggest acquisition this year. In addition a sales force of 1,200, Dainippon gains Sepracor’s insomnia drug Lunesta and asthma drug Xopenex. "We anticipate our business will shrink if we focus only on Japan, where medical prices are under pressure," Dainippon Sumitomo President Masayo Tada told a news conference. "Even if the U.S. carries out healthcare reform it's not as if the market is going to halve. It will remain the world's biggest drug market."
- South Korea’s economy grew 2.6% in the second quarter, a faster pace than originally estimated driven by consumer spending and investments in business and construction, Bloomberg reported. South Korea’s quarterly growth marks its best performance since the fourth quarter of 2003. “The revision shows private demand is actually picking up, and growth is not just driven by government support,” said Kwon Young Sun, a Hong Kong-based economist at Nomura Holdings, Inc. (NYSE ADR: NMR).
- Organization for Economic Co-operation and Development (OECD) chief economist Jorgen Elmeskov told Reuters the global recession is closing faster than originally thought and may already be over. The OECD’s forecasts a 1.6% economic growth the United States in the third quarter, 0.3% in the Eurozone, and 1.1% in Japan.
- Demand from Japanese and European steelmakers have prompted Brazil’s Vale SA (NYSE ADR: VALE) to restart idled mines. Shipments for the world’s largest iron ore exporter dropped 32% in the second quarter. “We’re restarting mines,” Jose Carlos Martins, Vale’s executive director ferrous, told Bloomberg. “During the crisis we reduced our production as much as 30%. Now we’re bringing things back. It will take time, but this shows our confidence that market conditions are at least reasonable.”
- Cerberus Capital Management LP said it will prohibit new hedge fund investors from withdrawing money for three years. The strategy hopes to stem such outflows that followed its acquisitions of Chrysler and financial services company GMAC Inc., both which resulted in losses, Reuters reported.
- Gold futures for December delivery rose $19.20, or 2% to $997.70, a six-month high, Bloomberg News reported. The dollar gained as well, up 0.10% on the U.S. Dollar Index, a six-currency gauge of the greenback’s strength. “The dollar is going to be the main driver for gold strengthening for the rest of the year,” Standard Chartered PLC metals analyst David Barclay said. Gold has gained 4.6% this month in its biggest three-day rally since March. “Gold looks poised to make a real run at the $1,000 mark,” Miguel Perez-Santalla, a Heraeus Precious Metals Management Inc. sales vice president in New York, said in a note to clients.