Forex Investment

BUENOS AIRES, Argentina (AP) - Argentine President Nestor Kirchner trumpeted his government’s performance on the economy and human rights during his state-of-the-nation address, and also defended his ties to Venezuelan leftist Hugo Chavez.

Kirchner — the heavy favorite if he chooses to run for re-election in October — told lawmakers on Thursday in his main speech of the year that Argentina’s economy grew 8.5 percent in 2006 as it continues its strong recovery from a 2002 financial collapse.

He noted that Argentina made early and full repayment on some $10.2 billion in debt to the International Monetary Fund last year and, since he took office in May 2003, has maintained annual growth rates of over 8 percent.

Human rights continue to be a priority of his center-left government, which has urged courts to continue prosecuting human rights abuses dating from a 1976-83 military dictatorship, Kirchner said.

Nearly 13,000 people are officially reported as dead or missing from the junta era, and trials and investigations were reopened after the Supreme Court in 2005 annulled a series of 1980s amnesty laws sheltering scores of retired military and police officers from prosecution. Kirchner lobbied personally for that court decision.

“This government isn’t seeking vengeance,” Kirchner said in response to critics who say the investigations have only reopened old wounds from a turbulent chapter in Argentine history. “What it wants is what the majority of Argentines desire: justice, memory and truth.”

Some opponents have accused Kirchner of being too close to Chavez, who is moving Venezuela toward socialism and is an outspoken critic of the United States.

But Kirchner described as harmless joint efforts with Venezuela that include trade and economic accords.

“Nobody here is subordinated to anybody, ideologically speaking,” he said. “We will always be an independent and Latin American nation.”

Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

For more information and to contact AFX: www.afxnews.com and www.afxpress.com

What looked like the Nasdaq’s ninth-straight losing session most of the day turned into a screaming rally.

As buyers rushed into the close, some of the usual rumors were heard on the Street, including one of an imminent interest-rate cut.

The Nasdaq, which was down as much as 1.3% late in the day, turned on a dime and ended the day up 1.4%, according to preliminary numbers. The S&P 500 and NYSE composite gained a like amount, while the Dow rose 1.2%. Volume jumped on both exchanges.

The indexes’ late surge made for some dramatic moves by individual stocks.

BlackBerry maker Research In Motion (), down as much as 5.25 by 2:30 p.m. EST, closed up 2.31 at 98.75. Apple () rose 8.25 to 179.20, after seeing prices as low as 168.30. Google () turned a loss of 9.17 into a gain of 21.02, closing at 652.

Mindray International (), the China-based medical-gear maker, surged from its low of 37 - a loss of 2.52 - to close 0.48 higher at 40. Fertilizer company Terra Nitrogen () had sunk to 123.46 before the late surge pushed it to close at 139.67.

Chipotle Mexican Grill () soared from 108, a loss of nearly 10 points, to close up 0.83 at 118.70.

Solar power star First Solar () pared its loss of 26.48 to just 0.54, closing at 233.50.

Are these reversals a sign that the market is healthy again? Not necessarily.

The indexes’ gains marked Day 1 of an attempted rally. If we see a follow-through move by the major indexes - a large gain in greater volume than the prior session’s - next week, then we’d have something to talk about.

Until then, remember that relief rallies often occur during market corrections, but don’t last long.

3 p.m. EST update: Stocks Recover From Session Lows

By NANCY GONDO

The major market indexes had fallen to intraday lows, but bounced back slightly with a little over an hour to go in Wednesday’s session. As of 2:55 p.m. EST, the S&P 500 was up 0.3%, and the Dow and Nasdaq had each gained 0.2%. The NYSE composite was flat.

Volume was tracking sharply higher.

Strayer Education () found support above its 200-day moving average and recouped 16.21, or 10%, to 172.31 in more than twice its usual action. The education provider has stepped up profit growth the past four quarters.

But most leaders continued breaking, or falling further below their long-term trend lines.

Intuitive Surgical () sank 14.82, or 5%, to 256.91 in heavy trade. The stock has now lost 21% in five straight sessions. Wachovia cut the robotic surgical system maker to market perform from outperform, citing lower hospital spending on such gear.

Fushi International () plunged 1.95 to 18.60, slicing its 50-day line for the first time in over two months. The copper-clad-wire maker is now 32% off its Dec. 27 high.

Amazon.com () also violated its 50-day as it skidded 6.54 to 81.34 in fast turnover. On Tuesday, American Technology Research started covering the online retail giant with a sell rating. Amazon gave up an early advance to close lower that day.

Marine transporters were among the day’s biggest losers, as DryShips () gapped down and fell 7.29 to 60.03 in twice normal volume. It breached its 200-day line for the first time in well over a year.

In the same group, Quintana Maritime () gave up 1.20 to 23.05, also in brisk trade.

1 p.m. Update: Nasdaq Threatens To Lodge 9th Straight Loss

By DONALD H. GOLD

Stocks were following a by-now-familiar pattern: An early attempt at the upside was fizzling.

The Nasdaq, which had climbed 0.9% early in the day, had fallen 0.1% by 12:55 p.m. EST. The Dow and S&P 500 each had whittled away all but 0.1% of their gains. Volume was running higher across the board.

When the market falls into a correction, often the leading groups fall harder than most. Such is the case today in the solar-power family, a group of stocks that had been soaring for months.

First Solar (), a leader in the industry, plummeted 17.80 to 212.70 and sliced through its 10-week moving average. SunPower () fell 8.62 to 106.5. It had lost its 10-week line Monday. JA Solar () fell 6.72 to 65.55, but still stood above its 10-week line. Suntech Power Holdings () slid 8.33 to 66.77. And Trina Solar (), not among the best performers in this group, lost 3.28 to 42.02.

CNH Global (), the Netherlands-based maker of farm gear, fell 3.38 to 58.07 in hand-over-fist dealings. It’s another former leader that has unraveled amid this correction. Today’s loss put the stock squarely below its 10-week moving average, but still above its 40-week line.

Precision Castparts (), another faltering leader, slumped 6.51 to 116.55. This would be the stock’s fourth straight loss, having ceded 18% since its Jan. 3 close. The company makes castings, forgings and fasteners for the aerospace, industrial and auto industries.

Germany-based Siemens () gapped down and plunged 7.25 to 142.85. Volume soared to more than five times its usual pace for this time of day. The loss pushed the stock below its 10-day moving average after many tests of that support line.

Siemens is a diversified company. Its lines include automation goods, power generation systems, medical imaging gear, water treatment, security systems, lighting and trains.

On the upside, managed-health care company Humana () shot up 3.09 to 85.01. That’s the stock’s third-straight gain, bucking the market’s losing streak. Humana reaffirmed its ‘08 earnings outlook of $5.30 to $5.50 a share. Analysts’ consensus estimate is running at $5.43.

11:15 a.m. Update: Stocks Hold Gains On Strong Volume

By ALAN R. ELLIOTT

Indexes wobbled, but held early gains as mixed earnings reports and the eighth-straight week of steep crude oil inventory drawdowns.

The Nasdaq composite had climbed 0.6%, and the NYSE composite was up 0.3% at 10:59 a.m. EST. The Nasdaq’s computer and biotech indexes showed strong gains. The S&P 500 and the Dow had each gained 0.5%. Volume rose was sharply on both sides of the aisle.

European markets dropped as the Bank of England’s Monetary Policy Committee began a two-day meeting. Markets are betting that the MPC leaves interest rates unchanged at 5.5% for now. London’s FTSE 100 was off 1.4% late in the session.

Commodities gains pushed markets in China higher, with Hong Kong’s Hang Seng index rising 1.9%, its best performance in six weeks. Stocks in Tokyo dipped to an 18-month low before closing higher for the second day in a row.

Crude inventories trimmed 6.7 million barrels, far more than the expectations for a 2.5 million-barrel draw. Gasoline stores rose by about 1 million barrels. Distillates, which include heating oil, rose 1.5 million barrels. Oil dipped a scant 17 cents to 96.16 a barrel.

Robbins & Meyers () hopped up 7.63 to 76.13 on monster volume. A maker of equipment for pharmaceuticals production and for oil and gas exploration, it reported fiscal Q1 sales and earnings well above views and raised its Q2 guidance. The stock is near highs after repeated visits to its 50-day moving average.

Capella Education () rose 3.74 to 66.14 on very heavy volume. The online educator is in its third week below its 10-week moving average, and stands 12% below its Nov. 8 high.

Alliant Techsystems () gapped down and plunged 7.07 to 101.85. The munitions and defense systems maker said it would pay $1.4 billion for two units from Canada’s MacDonald, Dettwiler and Associates. The move would expand its space technology and data processing business. The stock has fallen in nine of the past 10 sessions. Wednesday’s move punched it well below its 200-day moving average.

10:15 a.m. Update: Stocks Rebound In Early Trade

By Vincent Mao

The major indexes opened higher Wednesday, recouping some of the prior session’s losses.

At 9:55 a.m. EST, the Dow and Nasdaq picked up 0.3% each. The S&P 500 rose 0.2% and the NYSE composite 0.1%.

Volume was tracking higher on both exchanges.

Apollo Group () gapped up, vaulting 10.32, or 15%, to 78.43 in fast trading. Late Tuesday, the operator of the University of Phoenix delivered a 28% rise in fiscal Q1 profit, beating views. Sales rose 17%, the fourth straight quarter of accelerating growth.

Mosaic () gapped up, gaining 1.51 to 89.88 in heavy trading. Before the open, the fertilizer maker reported fiscal Q2 earnings of 89 cents a share, up from 15 cents a year earlier and well above views of 73 cents. Results were boosted by a tax benefit and higher phosphate and potash selling prices.

On the downside, Garmin () tumbled 6.77 to 73.42 in brisk trading. Deutsche Bank cut the GPS device maker to hold from buy citing rising competition. Deutsche Bank also cut its price target to 90 from 125.

Research In Motion () lost 1.02 to 95.42. That puts the BlackBerry maker to its lowest level in about three months and further below its 50-day moving average.

9:15 a.m. Update: Indexes Tilt Towards Higher Start

By Vincent Mao

Stock futures pointed to a slightly higher open Wednesday, as equities looked to bounce back from the prior session’s sell-off. Nasdaq futures rose 3 points vs. fair value, S&P 500 futures gained 1 point and Dow futures climbed 20 points.

Goldman Sachs () said the U.S. economy might be falling into a recession. It predicts real gross domestic product could contract by 1% in both the second and third quarters. Goldman expects the Fed to respond by dropping interest rates to 2.5% by the third quarter. Earlier this week, Merrill Lynch said the economy was already in a recession.

No economic reports are on tap for the session. The dollar was higher against the euro and yen.

The weekly energy inventories report is due at 10:30 a.m. EST. Analysts are expecting another big drawdown. February crude eased 23 cents to $96.10 ahead of the report.

Countrywide Financial () gained 7% in pre-market trading. The nation’s largest mortgage lender said December home loans came in at $24 billion, better than forecasts. On Wednesday, the stock plunged 28% on bankruptcy fears.

E-Trade Financial () surged 15% in the pre-open. The battered online brokerage said it sold an additional $3 billion in mortgage-backed securities and municipal bonds in efforts to raise capital. E-Trade is also exiting its institutional trading business due to poor performance.

MBIA () jumped 9% in pre-open trading, reversing earlier losses. In order to raise capital, the bond insurer is cutting its quarterly dividend to 13 cents a share from 34 cents. And it announced a $1 billion note offering.

Morgan Stanley lowered its profit forecasts for MBIA as well as Ambac () and Security Capital ().

Dupont () climbed 3% in the pre-market. The chemical giant guided full-year 2007 earnings at $3.20 a share, a penny above current forecasts. It raised its 2008 outlook to $3.40 to $3.55 a share, up from $3.31 to $3.52 previously. Analysts expected $3.42.

After the bell, Alcoa () will kick off the fourth-quarter earnings season. The aluminum producer is slated to post earnings of 49 cents a share, down 49% from the prior year.

Action Insight | Written by ActionForex.com | Mar 06 07 08:01 GMT |
Forex Daily Technical Report Market Stabilizes as Yen Retreats, Euro Recovers

The forex markets finally stabilized a bit with majors turning sideway. Yen retreats mildly as stock markets rebound. Also, a short term low could be formed in both USD/JPY and EUR/JPY, in particular, after EUR/JPY has drawn some support from trend defining channel support line. EUR/USD also ride on EUR/JPY’s rebound and strengthens in early European session.

Overnight, former Fed chairman Greenspan said that there is a “one-third” probability of a recession in US this year. Fed’s Warsh said that markets are still functioning well even if investors are not willing to hold on to as much as they were several weeks ago and shrugged off recent jump in market volatility. Poole focused his view on price stability in his speech yesterday and opined that the optimal rate of inflation is zero and stated that zero true inflation translates into an annual rate of roughly 1% increase in the CPI.

On the data front, Australian trade balance came in better than expected with deficit shrank to -0.88b AUD. Markets will be looking forward to RBA’s rate decision which will be announced in tomorrow’s Asian session. Swiss GDP came in below expectation and grew 0.5% qoq, 2.2% yoy in Q4. From Eurozone, Q4 GDP revision and Jan retail sales will be featured. From US, Q4 productivity and labor cost revision will be released with Jan factory orders and pending home sales. BoC is expected to keep rates unchanged at 4.25%. EUR/USD

Daily Pivots: (S1) 1.3036; (P) 1.3123; (R1) 1.3176; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Despite extending the fall from 1.3258 to as low as 1.3070, EUR/USD failed to take out mentioned 1.3078 cluster support (50% retracement of 1.2911 to 1.3258 at 1.3085) decisively. Subsequent rebound has pushed EUR/USD above 1.3118 minor resistance, indicating that a low should be formed at 1.3070 and at this point, further recovery should be seen towards 1.3142 cluster resistance (38.2% retracement of 1.3258 to 1.3070 at 1.3142). Break will indicate the correction from 1.3258 has likely completed and should bring stronger rebound towards 1.3210 resistance.

With bearish divergence condition in 4 hours MACD and RSI, a short term top has likely be in place 1.3258 already, after rebound from 1.2865 was limited by 78.6% retracement of 1.3364 to 1.2865 at 1.3257. Focus remains on 1.3078 cluster support (50% retracement of 1.2911 to 1.3258 at 1.3085). Sustained break of 1.3078 will be the first warning that whole rebound from 1.2865 has already completed at 1.3258 and put focus back to 1.2939 support. Meanwhile, strong rebound from 1.3078 cluster support will indicate that the currently fall from 1.3258 could merely be part of sideway consolidation to rise from 1.2939.

In the bigger picture, the corrective fall from 1.3364 has completed with three waves down to 1.2865. With EUR/USD staying within medium term rising channel (lower channel line at 1.2844 now), medium term up trend from 1.1639 is still in progress. Current rally is being treated as resumption of this up trend. Break of 1.3296 resistance will add more credence to this view and should push EUR/USD to a new high above 1.3364.

However, a drop below 1.2939 will dampen this view and indicate rebound from 1.2865 is indeed a correction to the fall from 1.3364 only. That is, such correction from 1.3364 is still in progress and in such case, the rising channel line will be in focus again.

GBP/USD

Daily Pivots: (S1) 1.9106; (P) 1.9277; (R1) 1.9371; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

Cable’s fall from 1.9672 has reached as low as 1.9183, meeting mentioned 1.9237/61 cluster support (23.6% retracement of 1.7047 to 1.9913 at 1.9237) but so far, fails to stays firmly below this level yet. Cable has then turned into sideway consolidation. But still, intraday bias remains on the downside as long as cable stays below 1.9323 minor resistance and further decline is still expected to follow towards 100% projection of 1.9913 to 1.9400 from 1.9672 at 1.9159 first. Touching of 1.9323 minor resistance indicate a low is formed and bring stronger recovery. But a break above 1.9412 support turned resistance is needed to indicate a short term low is formed. Otherwise, further decline is still expected to follow.

In the bigger picture, bearish divergence conditions are being displayed in weekly RSI, daily MACD and RSI already, suggesting that the whole up trend from 1.7047 might have completed before reaching mentioned 2.0106 cluster resistance (1992 high, 100% projection of 17047 to 1.9024 from 1.8090 at 2.0067). Focus is still on 1.9237/61 cluster support. Decisive break of 1.9237/61 cluster support will add much weight to the case that whole medium term up trend from 1.7047 has already completed and much deeper decline should be seen towards next cluster support at 1.8834 (38.2% retracement of 1.7047 to 1.9913 at 1.8818, 161.8% projection of 1.9913 to 1.9400 from 1.9672 at 1.8842) first.

However, strong rebound from 1.9237/61 cluster support or break of 1.9672 resistance will indicate that the corrective fall from 1.9913 is merely correction to the rise from 1.8517 only and cable could make another high above 1.9913 and attempt to meeting 2.0106 cluster resistance before having a medium term reversal.

USD/CHF

Daily Pivots: (S1) 1.2127; (P) 1.2183; (R1) 1.2261; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/.

As discussed before, a short term low should be formed after USD/CHF’s decline was contained at 1.2108 and rebounded with bullish convergence condition in 4 hours MACD and RSI. At this point, further recovery is still in favor as long as 1.2169 minor support holds and USD/CHF should edge higher to 1.2260 resistance. Break will encourage retest of short term falling trend line (now at 1.2324). However, upside should be limited by this resistance and bring another fall.

On the downside, below 1.2169 will encourage a retest of 1.2108 low but firm break below is needed to confirm recent decline has resumed for 78.6% retracement of 1.1878 to 1.2571 at 1.2211. Otherwise, consolidation may extend further with risk of another recovery before completion.

In the bigger picture, previous break of 1.2374 support should have completed a head and shoulder top formation (with ls: 1.2547, h: 1.2571, rs: 1.2550) and should be an important indication of reversal. Firm break of 1.2268 resistance turned support confirmed that the whole rally from 1.1878 has completed after failing to break through mentioned medium term falling trend line (1.3283 to 1.2760). Also, weekly MACD will still be kept negative with daily MACD staying below signal line. This favors the case that whole down trend from 1.3283 is still in force. In such case, deeper decline should be seen towards 78.6% retracement of 1.1878 to 1.2571 at 1.2211 and then 1.1878 (06 low).

On the upside, even though some lengthier consolidation should follow in case of a rebound to above 1.2260 resistance, sustained break above short term falling trend line (now at 1.2324) is needed to indicate whole fall from 1.2571 has completed. In such case, medium term outlook will turn mixed and USD/CHF could turn into prolonged sideway consolidation in a wider range between 1.21 and 1.25 levels before giving a clear signal on the next move. Otherwise, further fall is still in favor after the consolidation.

USD/JPY

Daily Pivots: (S1) 114.87; (P) 115.80; (R1) 116.46; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

USD/JPY recovers after sharp decline from 121.61 has reached as low as 115.13. Touching of 116.41 minor resistance with 4 hours MACD above signal line and RSI recovered from oversold region, a short term low is likely formed at 115.13. Hence consolidation is expected to continue with risk of further recovery. But still upside of this recovery is expected to be limited by 117.80 cluster resistance (38.2% retracement of 122.17 to 115.13 at 117.82) and bring fall resumption towards 114.41 support.

In the bigger picture, sustained break of mentioned medium term rising channel support (108.99, 114.41, 117.87, lower channel at 116.85 now) confirms that the whole medium term up trend form 108.99 has already completed at 122.17. With the corrective nature of the rise from 108.99, this will swing favors back to the case that such medium term rally is merely part of a large scale consolidation that started at 121.38, with first leg completed at 108.99 and second leg completed at 122.17. The current fall should then represent the third leg of such consolidation and deeper decline should at least be seen to below 114.02/41 support zone (61.8% retracement of 108.99 to 122.17 at 114.02) first. Break will encourage with further medium term weakness to retest 108.99 (06 low).

On the upside, sustained break of 117.80 will indicate the fall from 122.17 could have already completed. In such case, short term outlook will be turned neutral and expect some choppy consolidation to follow. But still, another fall is in favor after finishing such consolidation.

EUR/JPY

Daily Pivots: (S1) 150.01; (P) 152.07; (R1) 153.25; http://www.actionforex.com/forex_analysis_and_forecasts/pivot_points/pivot_points_summary_200603205734/

EUR/JPY’s sharp fall from 159.63 has reached as low as 150.75, touching mentioned 38.2% retracement of 137.16 to 159.63 at 151.05 and lower channel line support (143.60 to 159.63, 137.16, now at 150.89) as expected. Subsequent recovery has pushed EUR/JPY above 152.62 minor resistance, with 4 hours MACD recovered to above signal line and RSI recovered back from oversold region. An intraday should be formed at 150.75 and hence, intraday bias is turned to the upside for further recovery towards 153.60 resistance first. Break of 153.60 will indicate stronger rebound is underway.

In the bigger picture, we’re treating the whole year long rise from 130.60 as resumption of the long term up trend with first wave ended at 143.60, subsequent correction ended at 137.167. The third wave up could have ended at 159.63 already after meeting 161.8% projection of 130.60 to 143.60 from 137.16 at 158.19. The current fall from 159.63 should represent the fourth wave correction of the whole rise from 130.60 and should target lower channel line (143.60 to 159.63, 137.16, now at 150.89)

Strong rebound from the channel line will be consistent with this view and should bring another rally to retest 159.63 high before forming the major top. But still, a break above 155.19 cluster resistance (50% retracement of 159.63 to 150.75 at 155.19) is needed to indicate the whole fall from 159.63 has completed first. Meanwhile, sustained break of this channel and 38.2% retracement of 137.16 to 159.63 at 151.05) will dampen this view and suggest that much deeper decline is underway towards 147.71 support first.

Forex News Digest

http:///www.bloomberg.com/apps/news?pid=20601083&sid=asTgvtVwBMeg&refer=currency

http:///www.bloomberg.com/apps/news?pid=20601083&sid=aP7c3yv1JaHE&refer=currency

http:///www.bloomberg.com/apps/news?pid=20601083&sid=a0VP1YeqBvtg&refer=currency

http://c.moreover.com/click/here.pl?r833664416
Tue, 6 Mar 2007 04:03:00 GMT from Bloomberg

http://c.moreover.com/click/here.pl?r833663125
Tue, 6 Mar 2007 04:02:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r833580312
Tue, 6 Mar 2007 02:30:00 GMT from The Australian

http://c.moreover.com/click/here.pl?r833569748
Tue, 6 Mar 2007 02:19:00 GMT from Reuters

http://c.moreover.com/click/here.pl?r833558276
Tue, 6 Mar 2007 02:10:00 GMT from Reuters

http://www.actionforex.com/latest_news/latest_news/forex_news_20060323537/ Economic Indicators Update
GMT Ccy Events Actual Consensus Previous Revised
00:30 AUD Australia Trade balance (aud) Jan -0.88B -1.1 B -1.34 B -1.38B
06:45 CHF Swiss GDP Q/Q Q4

0.5% 0.70% 0.40%
06:45 CHF Swiss GDP Y/Y Q4 2.2% 2.40% 2.40% 2.5%
10:00 EUR Eurozone GDP rev. Q/Q Q4 0.90% 0.90%
10:00 EUR Eurozone GDP rev. Y/Y Q4 3.30% 3.30%
10:00 EUR Eurozone Retail sales M/M Jan -0.40% 0.30%
10:00 EUR Eurozone Retail sales Y/Y Jan 1.30% 2.10%
13:30 USD U.S. Productivity rev. Q4 1.70% 3.00%
13:30 USD U.S. Labour cost rev. Q4 3.20% 1.70%
13:30 CAD Canada Building permits M/M Jan 1.60% -7.80%
14:00 CAD BOC rate decision 4.25% 4.25%
15:00 USD U.S. Factory orders Jan -4.00% 2.40%
15:00 USD U.S. Pending home sales M/M Jan 111.0 K 112.4 K
15:00 USD U.S. Durable goods rev. Jan N/A -7.80%
18:00 USD Fed’s Plosser Speaks
19:00 USD Fed’s Bernanke Speaks
22:30 AUD RBA Rate Decision 6.25% 6.25%

http://www.actionforex.com/general_information/forex_newsletters/forex_newsletter_200507301487/

Bombardier Aerospace said Monday it has settled claims over incidents last year in which landing gear on some ofits turboprop Q400 aircraft collapsed.

The company said the claims with SAS Scandinavian Airlines and Goodrich, the maker of the landing gear, “have come to a mutually satisfactory agreement.”

SAS will get aboutone billion Swedish kronor, or about $160 million Cdn, in compensation. The compensation is reported to be in the form of cash and discounts on aircraft orders.

In September and October of 2007, there were three reported incidents involving landing gear malfunctions on SAS Q400 aircraft.

The airline initially grounded the planes and then pulled them out of its fleet. SAS, the flagship carrier of Sweden, Denmark and Norway, sought more than $70 million in compensation following the incidents.

In conjunction with the settlement, Bombardier said SAS and three of its affiliate airlines Estonian Air, Norway’s Wideroe’s Flyveselskap A/S and Latvia’s airBaltic have signed a firm order to buy 27 regional jets and turboprops and taken options on another 24 aircraft.

The value of the firm order for 13 CRJ900 NextGen aircraft and 14 Q400 NextGen turboprops is roughly $883 million US. The value of the orders could increase to approximately $1.75 billion US if all the options are exercised.

Shares of Bombardier slipped two cents to close at $5.28 on the TSX. Post a commentPeople have commented on this story Recommend this story People have recommended this story Story Tools: | | Text Size: | | Story comments (0) Sort: Most recent | First to last

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LONDON: Terminal 5 was supposed to be the saving grace for British Airways and London Heathrow, one of the most congested airports in Europe. Instead, as the glitzy new terminal enters its second week, passengers are bracing for more chaos.

British Airways canceled another 54 flights at the new terminal Monday as it struggled with the computerized baggage-handling system that has already led to at least 15,000 pieces of misdirected baggage. The airline, which has canceled more than 250 flights since the gleaming terminal opened Thursday as its main hub, said Monday that the situation was improving daily and that it hoped to fly at full capacity again soon.

But the disruptions, which are set to last for at least the rest of this week, could not come at a worse time for British Airways, which had enjoyed a turnaround under its chief executive, Willie Walsh, who cut jobs and focused on the more lucrative premium travel business between the United States and Britain.

In addition to higher oil prices and declining consumer confidence that weigh on the entire industry, British Airways is facing increasing competition on the North Atlantic routes - its most important long-haul market - as the “open skies” treaty with the United States took effect Sunday night.

“Its a mess,” Gert Zonneveld, an analyst at Panmure Gordon in London, said. “The reputation damage from Terminal 5 is their biggest headache and theres a real chance that people will book away from British Airways.”

Zonneveld estimated that the disruptions and flight cancellations could cost British Airways more than 25 million, or $50 million.

Analysts at Goldman Sachs cut their recommendation for British Airways shares from “buy” to “sell” on Monday, suggesting that the shares could drop sharply because of weaker consumer demand and “ongoing operational challenges of Heathrow.” They also cited more competition on the North Atlantic.

The stock fell 2.4 percent in London, closing at 234.25, down 575 pence.

British Airways had promised that the glass-walled Terminal 5, designed by the star British architect Richard Rogers, would bring back the joy to air travel that has been lost by the long lines at security checks that followed window-less corridors at some of Heathrows other terminals. But the troubled first days of Terminal 5, which cost 4.3 billion to build, were expected to cost British Airways more than just money.

“The whole point of the exercise was to bring British Airways out of the situation where they had to deal with the least popular airport among business travelers,” Marko Lukovic, an analyst at Frost Sullivan, done.

As of Sunday night, BA also had to deal with new guidelines on air routes as the European Union and the United States abandoned decades-old rules that had restricted competition on routes between the two continents. All U.S. air carriers now have the right to offer flights into Heathrow, while EU airlines are now permitted to fly to any U.S. destination from any EU airport.

Until now, only British Airways, Virgin Atlantic, United and American Airlines had the right serve routes between the United States and Heathrow. But on Sunday, the U.S. carriers Delta Air Lines, Continental Airlines and Northwest Airlines all began flights into Heathrow, while Air France-KLM flew its first nonstop from Heathrow to Los Angeles under a code-sharing deal with Delta, its partner in the Skyteam alliance.

“Without a doubt, there is going to be a dilution of revenues from premium passengers for British Airways because of open skies,” said Peter Morris, chief economist with Ascend, an aviation industry consultancy in London.

He noted that the new entrants to Heathrow will also be under pressure to keep fares low, which will reduce any near-term profit margins on trans-Atlantic routes. Delta, Air France, Continental and the others are going to have to buy their way into this market, he said.

Despite other recent problems at Heathrow, including the terror alerts that disrupted travel in August 2006, Morris noted that, until now, British Airways “seemed to have retained its brand and a high degree of loyalty from business passengers.”

“Now you have a situation when even Sicilian shepherds are aware of whats going on,” Morris said. “I cant see how it cannot start to chip away at the BA brand.”

The long lines of passengers in the Terminal 5 check-in area Thursday brought back exactly the image of an overcrowded and over-stretched airport that the new terminal was supposed to change.

By Monday, a British Airways spokesman said, the lines were clearing and “the atmosphere is calm.”