While you were sleeping: 10 banks to repay TARP funds; oil, copper gain

Wednesday 10th June 2009

Ten US lenders won approval from the US Treasury to repay a total US$68 billion of taxpayer funds, giving them more freedom to set executive pay, hire workers and lend.

The Treasury didn’t name the banks. American Express, Bank of New York Mellon Corp., BB&T Corp., Capital One Financial Corp., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, Northern Trust Corp., State Street Corp. and US Bancorp said they gained approval, Reuters reported.

“These repayments are an encouraging sign of financial repair. But we still have work to do,” said Treasury Secretary Timothy Geithner.

Bank of America and Citigroup didn’t get approval to repay funding from the Troubled Asset Relief Program, or TARP. Wells Fargo also didn’t gain approval.

US lenders are raising more than US$100 billion, helped by a rally in their own shares, more than the US$74.6 billion of additional capital identified by the stress tests as needing to be raised to strengthen their balance sheets.

The total that will be rapid to the government amounts to US$70 billion. Shares held by the government under the Capital Purchase Program have paid US$4.5 billion in dividend payments, according to the Treasury.

Prices of commodities rallied as the US dollar weakened and auto sales rose in China.

Copper futures for July delivery rose 4.7% to US$2.358 a pound on the New York Mercantile Exchange and have jumped 60% this year.

Crude oil had its first gain in three days ahead of an Energy Department report tomorrow that may show refiners are increasing throughput in anticipation of demand in the Northern Hemisphere summer.

Crude oil for July delivery rose 2.8% to US$69.97 a barrel on the New York Mercantile Exchange and have surged 57% this year.

Gold for August delivery slipped 0.2% to US$950.30 an ounce in New York.

The US dollar declined against the euro as optimism the global economic slump is easing, reducing demand for the world’s reserve currency as a haven.

The dollar weakened to $1.4083 per euro from $1.39 yesterday and slipped to 97.37 yen from 98.49 yen. The yen traded at 137.11 per euro from 136.89.

The Dollar Index, which measures the greenback against currencies of major trading partners, fell 1.2% to 79.82.

Inventories at US wholesalers fell for an eighth month in April, according to the Commerce Department. Stockpiles fell a larger-than-expected 1.4% while sales fell 0.4% to a four-year low.

Creditors of Chrysler LLC have asked the US Supreme Court not to rush its review of the sale of assets to Fiat SpA. Supreme Court Justice Ruth Bader Ginsburg this week blocked the sale pending further rulings, giving creditors more room to renew efforts to derail the transaction.

General Motors named former AT&T chief executive Edward Whitacre as chairman of the automaker that is to emerge from its bankruptcy process.

Whitacre will assume the role in the next few months, with interim chairman Kent Kresa continuing in the role until then.

Technology shares led Wall Street higher after chip maker Texas Instruments Inc. forecast higher-than-expected second-quarter profit of 14 cents to 22 cents a share on rising demand for wireless chips.

Texas Instruments rose 6.3% to US$21.02 and Intel Corp. rose 3.1% to US$16.42. Cisco Systems rose 1.1% to US$20.08 and IBM gained 0.6% to US$108.14.

The Nasdaq Composite climbed 1% to 1860.13.

The Standard & Poor’s 500 Index rose 0.4% to 942.43 and the Dow Jones Industrial Average was little changed at 8763.06.

Oil company Chevron Corp. rose 0.9% to US$70.19 and aluminium producer Alco Inc. rose 3.5% to US$11.15 as prices rose for oil and metals.

American Express led gainers on the Dow, climbing 5% to US$26.93 after the Treasury allowed some lenders to repay TARP funds.

In Europe, German retailer Arcandor, which controls travel firm Thomas Cook, filed for insolvency after the government rejected its requests for aid. Its stock plunged 48% as German Chancellor Angela Merkel said the failure was “unavoidable.” The DAX Index slipped 0.1% to 4997.86, led by a 3% decline for Deutsche Bourse and a 1.4% slide for Deutsche Bank.

The UK’s FTSE 100 was little changed at 4404.79 after a survey showed the nation’s housing market may be stabilizing after slumping through 2008.

Those saying home values fell exceeded those seeing gains by 44.1 percentage points in May, according to the Royal Institution of Chartered Surveyors monthly survey, the best result since November 2007. Property sales per agent rose to 11.8 in the three months through May, the highest number since August last year.

The Dow Jones Stoxx 600 Index gained 0.5% to 210.29 as the forecast from Texas Instruments stoked optimism for European tech companies. Mobile phone maker Nokia Oyj gained 3.7%. Car navigation products maker TomTom NV surged 18% after striking a deal with Apple Inc. Infineon Technologies, Europe’s No. 2 chip maker, rose 2.9%.

In the UK, Barclays Plc rose 2.2% as Bloomberg reported that BlackRock Inc. will buy its Barclays Global Investors unit for $12 billion to $13 billion in cash and stock.

BP Plc climbed 0.9% as oil gained.

Air France-KLM Group slipped 5.2% after posting its fifth monthly decline in passenger numbers. European Aeronautic, Defence and Space, which controls Airbus SAS, shed 4.1% after Thai Airways International threatened to cancel an order for A380 aircraft.

Businesswire.co.nz

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