Berkshire Q3 profit up 29 percent; operating results miss

By Jonathan Stempel and Luciana Lopez

REUTERS - Warren Buffett's Berkshire Hathaway Inc posted a 29 percent jump in third-quarter profit as it recorded big gains on investments made during the financial crisis, but operating results missed forecasts amid weakness in insurance operations.

Quarterly results included $1.4 billion of gains from investments that Buffett made in October 2008, including in General Electric Co and Goldman Sachs Group Inc warrants, and bonds related to candy maker Mars Inc's purchase of rival Wrigley.

Such investments helped give Buffett a reputation as a lender of last resort.

But investment and derivative gains do not factor into operating results, and while profit rose at Berkshire's Burlington Northern Santa Fe railroad and MidAmerican energy and utility units, insurance underwriting results deteriorated.

Net income rose to $5.05 billion, or $3,074 per Class A share, from $3.92 billion, or $2,373 per share, a year earlier, Berkshire said on Friday.

Operating profit rose just 8 percent to $3.66 billion, or $2,228 per Class A share, from $3.4 billion, or $2,057 per share. Analysts on average expected $2,402 per share, according to Thomson Reuters I/B/E/S.

Michael Yoshikami, president of Destination Wealth Management in Walnut Creek, California, which invests $1.3 billion and owns Berkshire stock, said the company can boost investment results if bond yields rise once the U.S. Federal Reserve pulls back on efforts to prop up the nation's economy.

"The U.S. economy is rather stumbling, and that is positive actually for their infrastructure investments such as railroads," he said. "All things considered, we are fairly pleased with the results."

Book value, Buffett's preferred measure of the Omaha, Nebraska-based company's worth, rose 11 percent this year to $126,766 per Class A share as of September 30, 2013.

INSURANCE WEAKENS

Net insurance underwriting premiums fell 57 percent to $170 million. Results weakened at the Geico auto insurance unit, which paid out a higher percentage of premiums to cover claims than a year earlier, and the General Re reinsurance unit, which had a $400 million underwriting loss from a European hailstorm.

In addition, Berkshire's main reinsurance business sustained a $206 million pre-tax underwriting loss, hurt by lower premiums and currency fluctuations.

Profit rose about 6 percent at Burlington Northern to $989 million, as higher shipments of industrial products, consumer products and coal offset a drop for agricultural products amid lower grain exports and strong global competition.

Results also improved in businesses such as the Forest River recreational vehicle unit. Revenue from jewelry, home furnishings and other retail businesses rose 18 percent.

Bill Smead, chief executive of Smead Capital Management in Seattle, which invests 3 percent of its $700 million of assets in Berkshire, said the 83-year-old Buffett is setting up the company to perform over the long haul.

"He's making a big push into almost everything associated with the idea that we'll build a lot more homes in the next 10 years," Smead said.

Berkshire ended the quarter with $42.08 billion of cash and equivalents, giving Buffett the firepower to make one or more large acquisitions, which he calls "elephants."

The second-richest American wants to keep about $20 billion in cash, in part for possible insurance payouts on storms.

Berkshire bought $1.77 billion worth of stock during the quarter but sold $1.48 billion, and was actually a bigger net purchaser of bonds than stocks.

Buffett has run Berkshire since 1965, favoring businesses with consistent earnings power. Berkshire now has more than 80 businesses, though it remains best known for insurance.

He spent $12.3 billion in June to buy part of ketchup maker H.J. Heinz Co. Berkshire also owns $104.9 billion in equities, including such stocks as Coca-Cola Co , International Business Machines Corp and Wells Fargo & Co .

In Friday trading, Berkshire Class A shares closed up $127.70 at $173,122.50, while its Class B shares rose 19 cents to $115.27. Berkshire released results after U.S. markets closed. Its B shares fell 0.7 percent to $114.51 after hours. (Reporting by Jonathan Stempel, Jennifer Ablan and Luciana Lopez; Editing by James Dalgleish, Leslie Gevirtz, Andrew Hay and Bob Burgdorfer)

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Wall St rises, buoyed by results, manufacturing data

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks rose on Friday, rebounding following two days of losses as solar companies jumped on results and strong data on manufacturing.

Equities have been pressured since Wednesday, when a Federal Reserve statement raised concerns about when the central bank would begin to scale back its stimulus program, which has contributed to the S&P 500's advance of 23 percent this year. Some investors interpreted comments in the statement as suggesting the Fed would begin tapering stimulus earlier than expected.

The rally has taken the Dow and S&P repeatedly to record highs, leading some analysts to call for a pullback, especially in the wake of some signs of slowing growth, like weak economic data and an earnings season marked by tepid revenue.

"I'm not comfortable with the market at all-time highs, especially with earnings being mediocre, but the manufacturing report was better than expected, and where else can you go with the Fed putting so much liquidity into the system?" said Mark Grant, managing director at Southwest Securities in Fort Lauderdale.

The U.S. manufacturing sector expanded at its fastest pace in 2-1/2 years last month, a rate that was stronger than expected, according to the Institute for Supply Management's survey, which followed the similarly strong Chicago Purchasing Manager's Index on Thursday.

Chevron Corp was the latest company to disappoint on results as its third-quarter revenue came in below expectations. That sent shares of the Dow component down 2 percent to $117.55.

The Dow Jones industrial average was up 81.91 points, or 0.53 percent, at 15,627.66. The Standard & Poor's 500 Index was up 6.79 points, or 0.39 percent, at 1,763.33. The Nasdaq Composite Index was up 11.75 points, or 0.30 percent, at 3,931.46.

For the week thus far, the Dow is up 0.4 percent, the S&P is up 0.3 percent and the Nasdaq is down 0.2 percent. Both the Dow and S&P are on track for their fourth straight week of gains.

American International Group Inc fell 6.3 percent to $48.41 as the S&P's biggest decliner a day after reporting third-quarter earnings that slightly beat expectations, though analysts had expected better results in the insurer's consumer lines business.

First Solar Inc soared 13 percent to $56.76 after its results beat expectations and the company raised its full-year profit outlook. Among its peers, Yingli Green Energy climbed 5.3 percent to $6.32 and Canadian Solar was up 7.2 percent to $24.62.

With about 71 percent of S&P 500 companies having reported, 68.2 percent have topped Wall Street's expectations, above the long-term average of 63 percent, according to Thomson Reuters data. However, only 53.6 percent have topped revenue forecasts, below the 61 percent average since 2002.

In company news, Ford Motor Co shares rose 0.6 percent to $17.21 after the company reported October sales growth of 14 percent.

Container Store Group Inc shares jumped 93 percent to $34.63 in their trading debut after the company priced its initial public offering at the top end of an increased price range.

(Editing by Bernadette Baum)

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Dhanteras gold demand falls at least 20 percent this year

New Delhi/Chennai/Mumbai, Nov 1 (IANS) Come Dhanteras and Indians are ready to shell out that extra bit to purchase gold on the auspicious day. But demand has fallen by at least 20 percent this time as most people have made the bulk of their purchases earlier in the year when prices were much lower, say market cognoscenti on the occasion of the festival Friday.

"Though people are coming to the shops but overall sales are low. Demand has fallen by 20 percent in Delhi this year during Dhanteras as many people have bought gold during April-May when the price fell considerably to around Rs.25,000 per 10 grams," Rahul Gupta, chief executive officer of PP Jewellers told IANS. Gold currently retails at around Rs.32,000 per 10 grams in Delhi.

Gupta also mentioned that there is supply crunch in the market after the government hiked the duty on gold to 15 percent to curb its import as it was causing an imbalance in the current account deficit.

Dhanteras comes on the 13th day of the dark fortnight in the Kartik month (according to Hindu calender). It is also the day for celebrating wealth as the word 'Dhan' literally means wealth and 'Tera' comes from the date 13th.

Dhanteras holds special significance for the business community due to the customary purchases of precious metals on this day.

Jayantilal Challani, president of Madras Jewellers and Diamond Merchants Association and a partner in Challani Jewellery Mart told IANS: "Sales volume is certainly down atleast by 30 percent as per our information. The footfall in the shops are high but per ticket sales volume is low across the country is what we hear."

Even N. Anantha Padmanabhan of NAC Jewellers told IANS: "Sales are expected to be good today. But they will be down by 30-40 percent as compared to last year."

Though inflation and high prices of gold restricted the buyers, overall the market recorded between 50-60 percent sales as compared to last year, Ashok Minawala, former chairman of Gems & Jewellery Trade Federation said in Mumbai.

"As always, gold continued to be popular with the people and despite the drop in volume sales as compared to last year, the market is happy," Minawala explained.

Surprisingly, this year middle-end diamonds and diamond jewellery found takers, especially in the Rs.50,000-150,000 range, he added.

Another expert and former chairman of All India Gems & Jewellery Federation Bachharaj Bamalwa said the slight fall in the price of the precious yellow metal in the international markets Thursday had contributed to the positive mood among the buyers.

However, Gora Roy Chowdhury, director of Kolkata's MP Jewellers, felt customers are confused about the gold industry and that is definitely impacting sales by 30-35 percent this Dhanteras.

"The price volatility is definitely impacting the people, coupled with various freebies offered by many jewellers along with gold. People are confused and they often don't understand which product to go for - gold or freebies," Roy Chowdhury told IANS.

He rued the fact that nowadays people do not buy gold with seriousness of owning a jewellery. "They buy it for the sake of buying and are more attracted towards the freebies."

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Wall St edges lower, but Exxon gains on results

By Ryan Vlastelica

NEW YORK (Reuters) - U.S. stocks fell modestly on Thursday, with investors cautious with indexes near record levels as they digested recent comments from the Federal Reserve, though some strong corporate earnings provided a reason to buy.

Optimism about earnings was boosted by Exxon Mobil Corp , one of the largest U.S. companies by market cap, which reported adjusted third-quarter earnings that beat expectations, sending shares 1.1 percent higher to $89.78.

Expedia also advanced following its results, topping the S&P 500 percentage gainers, while Facebook Inc fluctuated between steep gains and losses.

The Fed said Wednesday it had a weaker growth outlook for the U.S. economy, though it held steady with its stimulus program, which has fueled the S&P's 23 percent surge this year. That rally has come amid weaker-than-expected economic data and an earnings season marked by weak revenue.

"Nobody was surprised by the lack of action by the Fed, but there was a lack of clarity that was disappointing," said Rex Macey, who helps oversee $20 billion as chief investment officer at Wilmington Trust in Atlanta, Georgia.

"There is reason for caution at these levels, but nobody seems to be euphoric, so I don't think people need to get too defensive at this point."

The Dow Jones industrial average was down 48.61 points, or 0.31 percent, at 15,570.15. The Standard & Poor's 500 Index was down 4.95 points, or 0.28 percent, at 1,758.36. The Nasdaq Composite Index was down 15.18 points, or 0.39 percent, at 3,915.44.

The Dow has gained 2.9 percent in October, while the S&P has added 5 percent and the Nasdaq is up 3.7 percent.

Data on Thursday showed jobless claims fell slightly less than expected in the latest week, dropping 10,000 to 340,000. The Chicago Purchasing Manager's Index came in at 65.9, far ahead of expectations for a reading of 55.

While investors have been concerned by weak data pointing to slowing economic growth, strong data has also been viewed as a reason to sell, given that the Fed has said it would begin to slow its stimulus when economic growth meets its targets.

Facebook reported strong growth in its mobile advertising business late on Wednesday, though it said it didn't plan to boost the frequency of ads shown to users. Trading was volatile, with shares soaring during the premarket session but then turning sharply negative. They last traded at $48.38, down 1.3 percent.

Expedia jumped 18 percent to $59.98 a day after reporting third-quarter earnings that beat expectations, while Starbucks Corp fell 1.7 percent to $79.44 in the wake of a disappointing outlook.

Of 313 companies in the S&P 500 that reported earnings through Wednesday morning, 68.4 percent topped Wall Street expectations, above the 63 percent beat rate since 1994 and the 66 percent rate for the past four quarters, according to Thomson Reuters data. Only 53.7 percent of companies have topped revenue expectations, well below the 61 percent average since 2002.

(Editing by Bernadette Baum)

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Results of state-run banks fuel sector recovery hopes

By Swati Pandey

MUMBAI (Reuters) - India's second-biggest state lender Bank of Baroda Ltd posted a quarterly profit that topped analysts' expectations, sending its shares higher and stoking speculation that the bad loans weighing on big government banks may be easing.

Fourth-ranked Bank of India Ltd, while reporting earnings that missed estimates slightly, said its non-performing assets fell at the end of the September quarter from a year earlier. Its shares rose the most in six years.

State banks, with their high exposure to the power and infrastructure sectors, have been particularly hit by the country's economic slowdown. They are also typically more willing to ease repayment terms for struggling debtors.

Analysts say the better-than-expected earnings suggest that debt restructuring is bearing fruit and the banks' recovery efforts are gaining traction.

"The worst is behind us," Bank of Baroda Chairman S.S. Mundra told reporters after the results on Thursday. "The September quarter was the last of this bad cycle."

Bank of Baroda posted a 10.2 percent fall in July-September net profit to 11.68 billion rupees. Analysts, on average, had expected profit of 9.5 billion rupees, according to Starmine data.

The bank's non-performing assets rose to 1.86 percent of its total assets at the end of September from 0.82 percent a year earlier.

But Mundra said growth in non-performing loans will slow in the second half, helping to send the bank's shares up by more than 10 percent, their biggest gain in more than three years.

Over $20 billion of bad loans were weighing on the country's top 10 state banks as of March 31, according to Reuters calculations based on data from individual banks.

"Asset quality pressures will not increase. We will be able to maintain these levels or reduce," said Vijaylakshmi Iyer, chairwoman of Bank of India.

Bank of India said its September-quarter net profit more than doubled to 6.22 billion rupees. That compares with analyst expectations of 6.76 billion rupees.

Its non-performing assets fell to 1.85 percent of its total assets at the end of September from 2.04 percent a year earlier.

Shares in Bank of India rose more than 20 percent, their largest one-day gain since October 2007. At 0908 GMT, the benchmark index was down 0.1 percent.

The largest state lender, State Bank of India (SBI), which accounts for about a quarter of all loans and deposits, will report earnings on November 13. Punjab National Bank, the third-biggest, reports on November 8.

Punjab shares rose 8.9 percent and SBI was up 4.4 percent.

The fortunes of state banks have contrasted with those of private-sector peers ICICI Bank Ltd, HDFC Bank Ltd and Axis Bank Ltd. The banks each reported more than 20 percent profit growth after keeping their focus on consumer loans.

ICICI, India's biggest private-sector bank by assets, said a wider branch network and strong dealership connections will help the bank grow in the consumer segment.

GRAPHIC - India public vs private banks: http://link.reuters.com/tyw34v

NON-PERFORMING LOANS

Mid-sized state lenders are not faring as well as their bigger cousins.

Union Bank of India reported a 62 percent fall in quarterly profit as provisions nearly doubled and non-performing assets rose to 2.16 percent.

Indian Overseas Bank and Oriental Bank of Commerce Ltd each posted about a 16 percent decline in profit on a steep rise in non-performing loans.

Bank of Maharashtra Ltd reported a 72 percent decline in net profit while non-performing loans nearly doubled.

Non-performing loans as a percentage of total loans reached the highest in more than five years in June, at 4.3 percent. This has forced banks to set aside more money to cover them, reducing profits.

"The bigger banks are showing lower deterioration compared to mid-sized PSU banks," said Manish Ostwal, sector analyst at KR Choksey Shares & Securities. "They operate on stronger margins and can absorb the pressure in the short term. They also have a better ability to raise money in overseas markets."

(Additional reporting and writing by Prashant Mehra; Editing by Ryan Woo)

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Gold drops over 1 pct on book squaring, dollar rise

By Frank Tang and Clara Denina

NEW YORK/LONDON (Reuters) - Gold and other precious metals fell on Thursday, pressured as commodity funds sold to square books at the end of October, and as investors kept selling after the Federal Reserve's latest policy outlook offered few surprises.

A sharp rise in the dollar index also pressured commodities after data showed business activity in the U.S. Midwest surged past expectations in October, countering recent evidence of soft economic growth.

Comex gold options floor trader Jonathan Jossen said many commodity funds close out core positions and make funds available for year-end taxes on Oct 31, the last day of the fiscal year for such funds.

"It's a very benign equity move today, and here gold is down sharply," Jossen said. The S&P 500 equities index was little changed on Thursday.

Spot gold was down 1.4 percent at $1,322.90 an ounce by 1:19 p.m. EDT (1719 GMT). During the session, gold hit a one-week low at $1,318.79.

For the month, gold was down just 0.2 percent, with the decline limited by economic uncertainty over a partial U.S. government shutdown and a crisis to raise the debt ceiling.

U.S. gold futures for December delivery were down $26.30 at $1,323 an ounce.

On Wednesday, gold fell after the Fed did not sound quite as alarmed about the economy after its last policy meeting as some had anticipated. The U.S. central bank kept its $85 billion-a-month stimulus plan intact.

Silver underperformed to fall 3.5 percent at $21.85 an ounce, putting it on track for its biggest one-day loss in more than a month.

CHINA PREMIUMS ERASED

Bullion was also undermined by slow physical buying in Asia, especially China.

Premiums of physical gold bars on the Shanghai Gold Exchange have largely faded due to fears of a cash crunch, dealers said.

Data showed that China in September bought more than 100 tonnes of gold from Hong Kong for a fifth straight as demand for bullion bars and jewellery was strong.

Spot platinum was down 1.8 percent at $1,444 an ounce, while spot palladium fell 1.2 percent to $733.97 an ounce.

Prices at 1:19 p.m. EDT (1719 GMT)

(Additional reporting by Jan Harvey in London; Editing by Jason Neely, James Jukwey and David Gregorio)

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Gold near two-week lows on stronger dollar, U.S. data

SINGAPORE (Reuters) - Gold was trading close its lowest in nearly two weeks on Friday, hurt by sharp losses in the previous session from month-end profit taking, strong U.S. economic data and a higher dollar.

The metal is headed for a 2 percent weekly drop - its first in three weeks - as bullish sentiment from expectations that the Federal Reserve will keep its stimulus dissipated.

FUNDAMENTALS

* Spot gold edged up 0.1 percent to $1,324.62 an ounce by 0026 GMT, after Thursday's 1.4 percent slide.

* The pace of business activity in the U.S. Midwest jumped in October, exceeding expectations and U.S. jobless claims declined last week in welcome news for the nation's battered labour market after the impact of a government shutdown on furloughed federal workers diminished.

* Markets fear an improving economy could prompt the U.S. central bank to cut back bullion-friendly stimulus measures.

* China bought more than 100 tonnes of gold from Hong Kong for a fifth straight month in September as demand for bullion bars and jewellery stayed strong, keeping it on track to overtake India as the world's biggest gold consumer this year.

* Barrick Gold Corp said it would stop development of its Pascua-Lama mine in South America indefinitely, a surprise reversal on a project that has already cost the world's largest gold producer more than $5 billion.

* India's bullion industry is shrinking, squeezed by government rules meant to curb a surge in gold imports, with banks and others opting to redeploy personnel for now but possibly facing big job cuts in coming months.

* The volume of gold transferred between accounts held by bullion clearers fell 16.3 percent in September to an average 18.5 million ounces a day, its lowest since August 2012, the London Bullion Market Association said.

* South Africa's AMCU union declared a wage dispute on Thursday with platinum producer Lonmin . The union also said its members in the gold sector were voting on whether or not to strike over wages and could do so from next week.

MARKET NEWS

* Asian shares edged down and the dollar inched higher in early trade on Friday after upbeat U.S. economic data prompted some investors to price in a less dovish policy outlook for the U.S. Federal Reserve.

(Reporting by A. Ananthalakshmi; Editing by Richard Pullin)

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