Crude oil slumps, gold slides back

Crude oil prices dived this week on fresh concerns about the pace of
US economic recovery, while gold slid back under 1 ,000 dollars per
ounce on profit-taking. "It looks like there is a flood of money out
of commodities," said Ellis Eckland, an independent oil trader.
"Investors want to get to the exit as soon as possible; they feel
that the real economy is weak." Elsewhere, traders eyed the Group of
20 nations' two-day summit in Pittsburgh that begins on Thursday.
G20 leaders are promising tough action to police markets and prevent
a repeat of the global financial crisis. OIL: Crude oil prices
slumped on evidence of weak energy demand in key consuming nation
the United States. The market had shed more than three dollars on
Thursday as mixed US economic data and signs of sluggish oil demand
highlighted fears about a tepid recovery from the global recession.
Prices had already fallen almost three dollars on Wednesday in
reaction to a large jump in US crude oil inventories -- a sign that
energy demand remains weak. Worries about the pace of the US economic
recovery intensified after data Thursday showed existing home sales
fell 2.7 percent in August to 5.10 million units, snapping a
winning streak. On Wednesday, a widely-watched Department of Energy
report showed US crude reserves rose 2.8 million barrels in the week
to September 18 , against analysts' expectations of a decline. Stocks
of distillates, which include heating fuel, rose by three million
barrels last week. Distillates are being closely monitored ahead of
the northern hemisphere winter when demand for heating fuel peaks.
Energy demand has plunged after the global economy slipped late last
year into its worst recession since the 1930 s. This sent oil prices
tumbling from historic highs of more than 147 dollars in July 2008
to around 32 dollars in December. Prices have since recovered
somewhat but investors remain concerned over the pace of the upturn.
Oil prices had risen strongly above 70 dollars on Tuesday as the
European single currency struck a one-year high point above 1.48
dollars. But the dollar has since clawed back some ground. Since oil
is traded in the US currency, a weaker dollar makes the commodity
more attractive to holders of stronger units, leading to greater
demand and pushing prices higher. PRECIOUS METALS: Gold prices
retreated as traders cashed in gains from last week's strong rally
which saw the precious metal climb within a whisker of a record high.
Gold sank as low as 985.28 dollars per ounce on Friday, which was
the lowest point for more than two weeks. "The yellow metal started
to tumble, paying a heavy price for (the) decision to book profits,"
said ODL analyst Marius Paun. "A stronger US currency accompanied by a
steep decline in crude prices added to the downside pressure." The
previous week, gold had struck 1 , 024.28 dollars an ounce, which was
the best level since March 2008 when it hit a record 1 , 032.70.
Gold is regarded as a safe bet for investors to guard against
inflation, which is of growing concern following trillions of dollars
in borrowing by governments and radical measures including the
printing of new money. By late Friday on the London Bullion Market,
gold fell to 991.50 dollars an ounce from 1 ,012 dollars a week
earlier. Silver slid to 16.20 dollars an ounce from 17.11 dollars.
BASE METALS: Base metals prices mostly fell amid concerns about
Chinese demand tailing off. Three-month aluminium fell to 1 ,832
dollars a tonne from 1 ,929 dollars. SUGAR: Sugar futures fell after
reaching 28- year highs earlier this month. By Friday on LIFFE, the
price of a tonne of white sugar for delivery in December slid to 577
pounds from 582 pounds a week earlier. On NYBOT, the price of
unrefined sugar for March fell to 21.78 US cents a pound from 23.67
cents. GRAINS AND SOYA: Maize and wheat prices advanced but soya
pulled lower amid unease about frosty weather in key producer United
States. By Friday on the Chicago Board of Trade, maize for delivery
in December rose to 3.38 dollars a bushel from 3.18 dollars a week
earlier. November-dated soyabean meal -- used in animal feed --
decreased to 9.29 dollars from 9. 41 dollars. Wheat for December
rose to 4.72 dollars a bushel from 4.57 dollars. RUBBER: Malaysian
rubber prices dropped due to a quiet market amid the Eid al-Fitr
holiday, dealers said. On Friday, the Malaysian Rubber Board's
benchmark SMR20 fell to 208.30 US cents per kilo, from 209.70
cents last week.

IMF raises global growth forecast

The International Monetary Fund foresees a stronger than anticipated
recovery from the economic crisis, with global growth approaching
three percent in 2010 , world leaders said Friday. The IMF had
estimated in July a global contraction of 1.4 percent in 2009 ,
followed by sluggish growth of 2.5 percent in 2010 , but was more
upbeat as Group of 20 leaders met in the US city of Pittsburgh. "The
IMF estimates that world growth will resume this year and rise by
nearly 3.0 percent by the end of 2010 ," the Group of 20 developed
and emerging economies said in a final statement to conclude a
two-day summit. Leaders of 19 rich and emerging nations plus the
European Union pledged they would work together to help the world
economy reach robust growth.

Eurozone private sector lending close to stalling: ECB

Eurozone private sector lending has nearly stalled, the European
Central Bank warned on Friday, posing a threat to what is likely to
be a weak recovery from the 16- nation bloc's first recession.
Growth in loans to the private sector dropped to 0.1 percent in
August from a previous record low of 0.7 percent in July, an ECB
spokesman said. Capital Economics European economist Ben May said
"there are still few signs that the ECB's provision of unlimited
liquidity to banks is boosting broad money and credit growth." The
central bank loaned a record 442.24 billion euros (650 billion
dollars) at 1.0 percent in 1- year funds to commercial banks in June
and is set to make another unlimited 1- year loan at the same rate
next week. Private sector lending, however, could begin to contract
in September despite the cash flood, May said. Eurozone banks have
been criticised by politicians and business leaders for failing to
pass on cheap central bank funds to the wider economy and the ECB has
also pressed the banks to do their part to support a recovery.
Commerzbank economist Michael Schubert noted that the decrease in
lending growth "may be partly due to the substitution of securities
issuance for bank loans" as big companies seek to raise funds
directly on the money markets. May nonetheless said that "given
eurozone firms' heavy reliance on bank lending, this is unlikely to
fully explain the story." With the recession's impact set to show up
increasingly in balance sheets, commercial banks will probably have to
apply still stricter lending criteria, Schubert noted. Battered banks
are also curbing lending because they must get their their own books
in order. Growth of the ECB's wider M3 money supply indicator, which
measures cash, deposits and various other financial items, meanwhile
fell to 2.5 percent in August from 3.0 percent in July, the bank
spokesman said. Lending and money supply data reflect consumer demand
and overall activity in an economy. A falling figure points to lower
demand, which normally means inflation will ease and allow the ECB to
cut interest rates.

LDCs affected unduly Minister tells Group of 77

Foreign Minister Dipu Moni has said that the least developed
countries (LDCs) are being affected unduly and disproportionately due
to the global financial crisis, climate change, food and energy
crisis and unemployment. She said this in a statement on behalf of the
LDCs at the 33 rd Annual Meeting of the Foreign Ministers of the
Group of 77 and China on Friday. The participants discussed issues
of common concern for the group, as a Ministerial Declaration was
adopted in the meeting, according to a message received here
yesterday. The minister attended a number of programmes on the
sidelines of the 64 th session of the UN General Assembly (UNGA). She
attributed the anomalies and lack of proper regulation in the
international financial institutions for such crisis. "International
financial institutions should have a more democratic ambience and
LDCs need to be represented more to ensure their proper
functioning," she said. The minister emphasised a "more responsible
act by the developed countries" to prevent the climate change damages
and assist the developing countries for necessary adaptation
measures. "In order to further resist the aggravation of the
financial crisis and its collateral damages the developed countries
should act more judiciously in trade relations with the LDCs by
reducing the barriers of import," she added. Dipu Moni also attended
a breakfast meeting Friday morning on "Combating Violence against
Girls", which was co-hosted by the Foreign Ministers of USA, Brazil
and the Netherlands.

UCB & SOUTHEAST bank give some respite to BANGLADESHI small entrepreneurs

Two local private commercial banks have cut interest rate up to 1.5
percentage points for term loans to small industry, central bank data
show. These banks are United Commercial Bank (UCB) and Southeast
Bank.Term loan is a lending for a certain period that ranges from six
months to five years. However, two foreign banks -- State Bank of
India and HSBC--- have raised the lending rate up to 2 percentage
points in August from what the July was. Presently, 48 banks,
including the state-run ones, are in operation in the country. The
rates that other 44 banks charge remain unchanged, according to
Economic Trends, a flagship monthly publication of Bangladesh Bank.
The Economic Trend's August issue showed UCB's lending rate for small
industries is 13.25 percent in August, while it was 14.75 percent
the previous month. Southeast Bank slashed the rate by 1.5-
percentage point to 15 percent from 16.5 percent in July. Hong Kong
and Shanghai Banking Corporation, widely known as HSBC Bank, has kept
the rate unchanged at 13 percent in sub-sector category 1. The
rate under sub-category-2 was raised by 2 percentage points to 15.5
percent in August from 13.5 percent in July. "We have cut the
interest rate for loans to small industry to support business growth,"
Shahjahan Bhuiyan, managing director of UCB, told The Daily Star.
Bhuiyan said the UCB has cut the rate in line with the recent deposit
rate cut move by private banks. Mahbub-ur Rahman, head of corporate
affairs of HSBC, however denied any rate hike for small industrial
credit in the last three months. Of the 48 banks, 30 are private,
nine foreign, four state-owned commercial banks and five specialised
banks. Businesses often blame banks for charging higher interest
rate, which small and medium enterprises (SME) deem a burden. Despite
the latest rate cut, small industrial lending rate remains higher
that it is meant for medium and large industries. Even UCB charges 13
percent interest for loans to medium and large industries, whereas
such rate for small industrial credit is 13.25 percent. Southeast
takes only 13 percent interest against its loans to medium and large
industries, while the rate is 15 percent for small ones despite the
latest move. According to BB data, The City Bank charges 16.5 percent
for loans to small industries, while it is 13 percent for large and
medium scale industries. Bangladesh Commerce Bank and BRAC Bank
charge small industries 18 percent and 16. 30 percent lending rates
respectively. Most private banks fix at least 14 percent interest
for such lending. The rates offered by four state banks Sonali,
Janata, Agrani and Rupaliare relatively lower-- between 12 percent
and 12.50 percent. "Parleys on easy loans to small entrepreneurs
took place several times, but it happens rarely," said Nasreen Awal
Mintoo, the past president of Women Entrepreneurs Association of
Bangladesh. She said many small entrepreneurs, especially women, now
feel discouraged to go for bank borrowing fearing that they will not
be able to repay a bigger amount. Mahbub-ur Rahman of HSBC attributed
the higher cost for small industry loans to risk parameters.
"Overhead monitoring cost for such loans is also higher than other
loans," he noted.