***ECONOMIC DATA***

- (NZ) New Zealand Oct Food Prices M/M: -1.5% v -0.7% prior

- (AU) Australia Nov Westpac Consumer Confidence: -2.5% v 1.7% prior (first negative figure since May); Index: 118.3 v 121.4 prior (3-month low, first decline since May)

- (JP) Japan Sept Machine Orders M/M: 10.5% v 4.1%e biggest increase since Jan 2008); Y/Y: -22.0% v -26.2%e (11-month high)

- (CH) China Oct PPI y/y: -5.8% v -5.2%e (third consecutive increase, 8-month high); Purchasing Price Index: -8.4% v -8.0%e

- (CH) China Oct CPI y/y: -0.5% v -0.4%e (third consecutive increase, 9-month high)

- (CH) China Oct Retail Sales Y/Y: 16.2% v 15.7% (fourth consecutive increase, 9-month high); YTD: 15.3% v 15.2%e

- (CH) China Oct Industrial Production y/y: 16.1% v 15.5%e (6th consecutive monthly increase, biggest growth since March 2008); YTD: 9.4% v 9.5%e

- (CH) China Oct Fixed Assets Inv Urban YTD y/y: 33.1% v 33.5%e

- (CH) China Oct Money Supply M2: 29.4% V 29.5%E; M1: 32.0% v 29.5% prior; M0: 14.1% v 16.0% prior; New Yuan loans: CNY253B v CNY370Be (1-year low)

- (KS) S Korea Sept M2: 10.0% v 10.0% prior; L: 10.3% v 8.9% prior

- (CH) China Oct Trade Balance: $24B v $18.9Be (9-month high); Exports y/y: -13.8% v -13.0%e (10-month high); Imports y/y: -6.4% v -1.0%e

- (KS) S Korea Oct Unemployment Rate: 3.4% v 3.6% prior



***SPEAKERS/PRESS***

- Asian equity markets are trading modestly higher for the third straight session this week, supported by a strong set of October economic data out of China at the start of the Shanghai session. Taiwan's Taiex is leading the charge with a 1% gain, supported by Taiwan Affairs Office in China rejecting the notion of a dispute with the island's free trade plan. Korea's Kospi and S&P/ASX are up about 0.5%, while Nikkei225 is heading into close around unchanged levels, weighed down by strengthening Yen. In China, Shanghai Composite is moderately lower by 0.3% despite the strong industrial growth, as bank lending decline and trade data components reversed the initial post-October data rally. Ahead of the Wednesday US session, front-month S&Ps are up slightly to 1,094, but off session highs around 1,097.

- Chinese October data included multi-month highs across the range of data, with a 19-month high in industrial production, 9-month high in retail sales, and a 9-month high in CPI. October trade balance was also strong on the surface, with a 9-month high of $24B, however that surplus was attributed to falling commodity imports, stroking fears of overcapacity in the sector. Specifically, iron ore and copper imports saw multi-month lows, while crude oil imports saw 3-month highs. China bank lending data was also seen as damaging, registering a 1-year low at CNY253B. Following the release of October metrics, China Stats Bureau said domestic economic recovery strengthened, reiterating commitment to 8% 2009 GDP target as "no problem". Stats Bureau also noted domestic consumption was a larger part of the economy, attributing decline in the inflation metrics to the falling food prices while anticipating return of inflationary pressure on rising commodities. On the downside, policymakers cited strong USD as an obstacle to exporters and ongoing challenges in the employment sector.

- Asia Development Bank President Kuroda was also upbeat on regional conditions, noting signs of V-shaped recovery and supportive fiscal policy, as leaders remain cautious about implementing a stimulus exit strategy. Moreover, ADB noted China was quick and successful in implementing stimulus, but should allow Yuan to be more flexible. On the FX front, ADB said US dollar will remain a key currency, but Euro, Yen and Yuan will become more important in future. Confidence in USD was echoed at the World Bank, where President Zoellick said the greenback's role as reserve currency was "relatively secure". Additionally, Zoellick noted global financial markets are improving, but world economy faces additional risks in 2010. World Bank head was also cautious regarding the fiscal stimulus, suggesting that stimulus should not be rolled back next year, but rather followed through on all of committed funds.

- In other regional speakers, India Finance Secretary said the economy was unlikely to grow 8-9% until the export sector recovered, forecasting a 7%+ FY10 budget deficit. In Korea, Fitch said the economy may contract 1.1% in 2009 but expand by 3.9% in 2010, with strong balance sheet and policy response pays off for local economy. Earlier, Bank of Korea said it was in talks with the govt regarding inflation and nothing was decided on the target, rejecting press speculation the BOK would maintain its mid-term inflation target. In Singapore, Finance Minister pledged to stay away from adjusting interest or exchange rates in controlling real-estate boom/bust cycle, instead focusing on rules on credit, land supply, or tax policy if needed. Early in the session, RBNZ stability report noted the current high NZD levels were unsustainable, weighing heavily on economic rebalancing.

*** EQUITIES ***

- In individual equities, Shinsei Bank saw 1H improvement on y/y basis, reporting Net profit ¥8.6B v loss ¥18.5B y/y, Rev ¥109B v ¥102B y/y, but missing with forecast of FY09/10 Net ¥10B v ¥20Be. In other earnings, Chiyoda posted H1 Net loss ¥1.7B v profit ¥6.1B y/y, Op loss ¥2.4B v profit ¥6.9B y/y, Rev ¥164.7B v ¥180Be. The company also cut its guidance for FY to Net ¥2B v ¥2Be, Op Profit ¥1B v ¥1Be, Rev ¥320B v ¥319Be (guided Net ¥5.0B, Op Profit ¥7.5B, Rev ¥320B on 8/5). Elsewhere on the Nikkei, Nippon Steel said it would cut H-beam production by 70% from normal levels as of next month, and Mitsui OSK said it was delaying delivery of two $205M LNG vessels until next year. Elpida was said to partner with Taiwan's Winbond Electronics (2344.TT) in production of DRAM chips with 65nm process. Elsewhere in Taiwan tech, Asustek Computer had reportedly secured a $350M in orders from trade delegation out of China's Jiangsu Province, and Hon Hai Precision was seen posting its second-best monthly sales volume in October on rising global demand for PCs and consumer electronics. In Australia, local press said mining companies had restarted as much as A$16B in projects suspended during the financial crisis.

*** CURRENCIES/FIXED INCOME/COMMODITIES ***

- The greenback traded slightly higher against European majors, as EUR/USD retreated from 1.50 to 1.4970 and USD/CHF rose to 1.0090. Earlier in the day, Treasury Secretary Geithner reiterated US commitment to strong USD policy, while Fed's Lacker said it was unlikely that there will be a day soon when USD is not the global reserve currency. Sterling retraced all of the losses sustained after the Fitch commentary on the UK sovereign rating, trading sideways around 1.6730 against USD for much of the session. In commodity FX, AUD/USD once again backed away from multi-month highs above 0.9330, falling to 0.9280s, and NZD/USD was slightly weaker, falling below 0.74 in the wake of RBNZ quarterly report. Japanese Yen was higher early in the day before returning to session-opening levels of 89.80 and 134.50 against USD and EUR.

- Crude oil prices are lower and trading below $79/bbl. Factors weighing on oil prices include the m/m decline in China's bank lending data and bearish API crude and gasoline inventories data (API PETROLEUM INVENTORIES: CRUDE: +1.22M V +900KE; GASOLINE: 1.4M V -300KE). Spot Gold is higher by more than 0.10% and trading above $1,106/oz. Earlier during the session, both Indian and Shanghai gold traded to fresh record highs. In terms of Chinese demand, the better than expected Oct industrial production data may be supportive to commodities. However, China's Oct imports of various key metals declined on a month over month basis. Oct Chinese iron ore imports declined to 45.5M tons from 65M tons in Sept, while copper imports declined to 263K tons from 399K prior. China's Oct oil imports rose to 19.3M tons from 17.2M in Sept.

- In press news, the Wednesday edition of the Wall Street Journal commented on the demand being seen for gold among central banks. The article said that 2009 could be the first year in the last 18, in which central banks were net buyers of gold. According to the WSJ, the recently disclosed gold purchase by the Indian Central Bank (200 metric tons) was the largest central bank purchase in 30 years. The article says that central banks in China, Russia and Brazil could seek to increase their holdings of gold, as the metal currently makes up a small portion of these central banks' reserves.

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