Der Doomsday Bären-Thread

Jan. 30 (Bloomberg) -- Confidence among U.S. consumers approached a five-year high in January as an expanding labor market and rising wages gave Americans more money to spend.

The Conference Board's index rose to 110.3, the highest since May 2002, from a revised 110 the prior month, the New York-based group said today. The proportion of consumers who said jobs are plentiful was the biggest since August 2001.

Increasing optimism is reflected in stronger consumer spending, just as lower fuel costs ease inflationary pressures. The combination helps explain why Federal Reserve policy makers, meeting today and tomorrow, have little reason to raise or lower interest rates in coming months.

More people are planning to buy cars and homes in the next six months, the survey showed. The proportion who intend to buy a car rose to 6.2 percent from 5.4 percent, and the percentage of those expecting to buy a home rose to 3.3, the highest since August, from 2.9.

Employers added 167,000 jobs in December, more than economists forecast, and the unemployment rate stayed at 4.5 percent, close to a five-year low. Workers' average hourly earnings rose 0.5 percent, the most in eight months.

A Labor Department report on Feb. 2 will probably show that employers added 150,000 positions this month and the unemployment rate remained unchanged, according to Bloomberg surveys of economists.

Rising wages are helping Americans overcome a housing slump that has caused home prices to stagnate after a five-year boom. The slump has made it harder for consumers to tap the equity in their homes to finance spending on appliances, furniture and renovations.

Consumer spending is fueling a rebound in economic growth. A Commerce Department report tomorrow will probably show the economy grew at a 3 percent annual rate in the fourth quarter of last year, according to the median forecast in a Bloomberg News survey of economists, compared with growth of 2 percent in the prior quarter.

Declining fuel prices are leaving Americans more to spend on other goods. The price of a gallon of gasoline fell to $2.23 on Jan. 15, from $2.29 a month earlier.

The Conference Board surveys 5,000 households, usually by the middle of each month. Gasoline prices have since fallen further, to $2.15 on Jan. 25, according to the American Automobile Association.

Consumers are also getting a lift from rising stock prices, which add to their wealth. The Standard & Poor's 500 Index has averaged 1423.12 this month, up from 1416.42 in December. The index has risen 11 percent in the past year.

By William Bi and Zhang Shidong

Jan. 31 (Bloomberg) -- China's stocks tumbled the most in at least 21 months after lawmaker Cheng Siwei said the country's shares are overvalued, fueling speculation the government will step up efforts to keep funds from flowing into the market. China Vanke Co. and China Merchants Bank Co. led the decline.

``There is already a bubble here,'' said Zhang Ling, who oversees about $1.1 billion at ICBC Credit Suisse Asset Management Co. in Beijing. ``Concern is mounting that the government will intervene to pop the bubble.''

The Shanghai and Shenzhen 300 Index, which tracks yuan- denominated A shares listed on China's two exchanges, plunged 166.55, or 6.5 percent, to 2385.33 at the close, cutting this month's gain to 17 percent. That's the biggest one-day drop since the measure was introduced in April 2005.

Today's decline was the steepest among markets included in global benchmarks. The Morgan Stanley Capital International Asia-Pacific Index was down 0.5 percent at 3:40 p.m. in Shanghai.

The Shanghai and Shenzhen 300 has more than doubled in the past year and is valued at 36 times earnings, the highest among 13 Asia-Pacific benchmarks tracked by Bloomberg. MSCI's regional index has gained 8 percent and is valued at 19 times.

Only 30 percent of companies listed on the Shanghai Stock Exchange ``are good to invest in by Western standards,'' and investors in the remaining 70 percent will probably lose money, Cheng, vice chairman of the National People's Congress, said yesterday at a conference in Dubai.

The Financial Times, which sponsored the conference, quoted Cheng as saying China's stock market showed signs of a ``bubble.''

``Every investor thinks they can win,'' the paper quoted him as saying. ``But many will end up losing.''

The Shanghai Composite Index, which tracks the bigger of China's stock exchanges, slid 4.9 percent today to 2786.33, falling by the most since June 7. The Shenzhen Composite Index, which covers the smaller one, declined 5.8 percent to 655.53.

``Gradual corrections from irrational levels are better than a sudden burst,'' said Leo Gao, who helps manage the equivalent of $2.3 billion with APS Asset Management Ltd. in Shanghai. ``The government is right to tighten the regulations without intervening in the market.''

Policy makers have also been trying to curb overall lending. The People's Bank of China, the central bank, ordered banks to boost reserves four times in the past year to reduce money available for investment. Banks now must set aside 9.5 percent of deposits after a half-percentage-point increase on Jan. 5.

Huaxia Bank Co., partly owned by Deutsche Bank AG, and Tsingtao Brewery Co., China's largest beermaker, both fell by the maximum daily limit of 10 percent today. The shares closed at 10.24 yuan and 17.37 yuan respectively.

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