RTRS- U.S. corn and soy ratings slip 2 pts, worst since 1988

CHICAGO, July 30 (Reuters) - Corn and soybean conditions in the U.S. Midwest deteriorated further last week as the most expansive drought in more than 50 years ate away at crop prospects in major producing states including Iowa and Illinois, government data on Monday showed.

The U.S. Department of Agriculture rated 24 percent of the U.S. corn crop in good-to-excellent condition as of Sunday and 29 percent of the soybean crop in good-to-excellent shape, both down 2 percentage points from the previous week.

The ratings for each were the worst since the comparable week in 1988, another year of severe drought in the nation's crop-growing mid-section.

Crops improved marginally in Ohio and Indiana where condition ratings were already among the poorest in the country and in smaller-producing states such as Wisconsin and Michigan, but those improvements were overshadowed by eroding ratings in the top producing states in the central and western Midwest.

Concerns that the most expansive U.S. drought since 1956 was intensifying in areas that had not been as severely impacted earlier in the season propelled U.S. corn and soybean prices to all-time highs this month.

Much of the U.S. corn crop was largely beyond repair, but soybeans were moving into their critical flowering and pod-setting phase of development when heat and moisture stress can be devastating to yields.

In Iowa, Illinois, Nebraska and Minnesota, the top 4 corn and soybean producing states, corn crop ratings fell by 2 to 5 points and soybean ratings dropped 3 to 4 points.

A Reuters poll of 10 analysts had expected a 3 percentage point drop in the corn rating and a 2 point drop in soybeans.

The U.S. corn crop was rated 41 percentage points below the five-year average and 5 points above the 19 percent good-to-excellent rating in the comparable week during the drought of 1988.

The soybean rating was 34 points below the five-year average and 10 points above the same week in 1988.

Analysts and crop experts also said further declines in condition ratings could be expected next week as weather remained stressful to each crop.

Dry and hot weather in the U.S. Midwest for the next week or two will further erode crop conditions, trimming this year's corn and soybean production, an agricultural meteorologist forecast on Monday.

"It looks like a continued trend of below-average precipitation in the Midwest for the next week to 10 days," said John Dee, meteorologist for Global Weather Monitoring.

Temperatures this week will warm into the upper 80s to low 90s degrees Fahrenheit (30-35 degrees Celsius), with only a few light showers in the east on Monday and some rainfall later in the week, he said.

"There are no widespread soaking rains in sight. Thursday and Friday there could be scattered showers, and by the weekend from 0.30 to 0.80 inch (0.8-2 cm) with coverage of about 75 to 80 percent," Dee said.

"There won't be as much stress as recently, but crops will continue to deteriorate," Dee said.

Analysts have rapidly been lowering their outlooks for this year's corn and soybean crops, boosting the price of each to record highs.

RTRS- Brazil forward soy sales climb, physical biz stalls-Celeres

SAO PAULO, July 30 (Reuters) - Strong Brazilian soybeans prices were driving aggressive forward sales of next crop, but volatile markets have paralyzed sales in physical, old-crop beans, local grains analysts Celeres said on Monday.

Brazilian soybean producers are selling the 2012/13 crop earlier than ever before with 41 percent of next season's output already sold, two months before planting starts. That is up from the 39 percent last week. Celeres said 10 percent of the then-new crop was sold by the week of July 27, 2011.

Record high soybean prices due to drought in the United States, the world's largest producer, and the weak real against the dollar have induced local growers to lock in forward sales of the current and future crops at record volumes, Celeres said.

The current crop that ended harvest in May is well advanced historically in sales. Producers sold 97 percent of the 65 million tonnes crop by last week, up from 79 percent last year at this time, but unchanged from the week before.

Celeres said the sharp decline in futures prices over the past week, after rains returned to parts of the U.S. grain belt, chilled the sale by local producers of their few remaining old crop beans.

Conditions appear almost perfect for the soy belt to reclaim territory lost to corn and cotton in past years, while extending its reach into untapped pasture land. (nL1E8GVIL2)

Celeres said that returns on corn versus soybeans in important grain states were not as attractive as in 2011 and the early part of this year, which would induce farmers to sow as much soy as possible this planting season starting in September.

The analysts estimate potential returns from a bag of soy were almost three times those of corn for the coming crop. The bumper winter corn harvest would keep local prices contained for the coming weeks and favor planting of soy during the main summer crop season.

Brazil is the world's second-biggest soybean producer after the United States.

RTRS- Midday US weather updates drier than before

CHICAGO, July 30 (Reuters) - Midday weather updates indicated even drier weather than earlier forecasts in the U.S. Midwest for the next week or two which will increase stress on corn and soybean crops that already have been slashed due to the worst drought in over 50 years, an agricultural meteorologist said on Monday.

"It doesn't look good for crops at all, now it's a matter of just how bad it's going to get," said Andy Karst, meteorologist for World Weather Inc.

Karst said the updated forecast showed less rain late this week and early next week for South Dakota and southwest Minnesota than earlier expected.

And, "for next week there is less rain for Nebraska and northwest Iowa. The midday's showed some showers for the eastern Corn Belt on Aug. 7-8, but that is pretty suspect," he said.

"It looks like a continued trend of below-average precipitation in the Midwest for the next week to 10 days," said John Dee, meteorologist for Global Weather Monitoring.

Temperatures this week will warm into the upper 80s to low 90s degrees Fahrenheit, with only a few light showers in the east on Monday and some rainfall later in the week, he said.

"There are no widespread soaking rains in sight. Thursday and Friday there could be scattered showers, and by the weekend from 0.30 to 0.80 inch with coverage of about 75 to 80 percent," Dee said. "There won't be as much stress as recently, but crops will continue to deteriorate."

Recent rains brought some relief from drought in the northern and eastern Midwest, but overall crops will continue to suffer, especially in the central and southern Corn Belt.

A lessened U.S. harvest was raising worries about the ability of the world's largest food exporter to meet the needs of food processors, livestock producers and ethanol makers. The lack of rain was also drying up waterways and slowing river shipments of commodities to export ports on the Gulf of Mexico.

Corn and soybean conditions have been on a rapid skid this summer, falling to their worst conditions since the last U.S. drought of 1988. Crop specialists expect the U.S. Department of Agriculture to report another drop in conditions in its weekly crop report released later on Monday.

Commodity Weather Group (CWG) on Monday said recent rains had scaled down the driest areas to about 40 percent of the Midwest soybeans for much of this week.

But "the return of drier conditions to the central and southwestern belt will allow concerns to quickly return to at least half of the belt," CWG said.

Chicago Board of Trade (CBOT) corn futures were up more than 20 cents per bushel, or nearly 3 percent, and soybeans up 35 cents, or 2 percent, on Monday as investors bought on fears of a crop shortfall in the U.S. this year.

RTRS- Malaysia boosts tax free palm quota to maintain exports-sources

July 30 (Reuters) - Malaysia will increase shipping quotas for tax free crude palm oil by up to 2 million tonnes this year to help planters cope with an expected increase in output, sources said on Monday as the world's No.2 supplier struggles to maintain export momentum.

The move will lift Malaysia's total duty free CPO export quota to 5 million tonnes this year and comes after top importer India this month raised base import prices of refined palm oil, encouraging more crude palm oil shipments.

Both Malaysia and India are trying to retain market share after top palm oil producer Indonesia slashed in September export taxes of refined palm oil, used as a cooking oil, to boost its own processing industry.

"We are doing this on a case-by-case basis for local firms since production is starting to rise in the second half of this year and exports are a bit slow," said one government official who declined to be named due to the sensitivity of the issue.

"It is a stock management effort. This is in an interim response to Indonesia at the moment. We are still formulating a comprehensive response," the source added.

Malaysia says Jakarta's export tax cut has eaten into its own refined palm oil shipments and hurt its processors. India shares these concerns, especially as it has spent billions to build up its edible oil manufacturing sector.

Benchmark Malaysian palm oil prices rose 1.6 percent on Monday, driven partly by concerns of the U.S drought crimping soyoil supplies and also news of the higher quotas from Malaysia, traders said.

EXPORT QUOTAS

The five million tonnes set aside for export account for 27 percent of Malaysia's 2012 output of 18.4 million tonnes, potentially lifting local delivered prices of crude palm oil and narrowing their discount to the Indonesian export grade.

The tax free export quota, initially designed to help large planters such as Sime Darby SIME.KL and IOI Corp IOIB.KL ship out cheap feedstock for their overseas refineries, appears to have turned into a stock management tool for the government.

Production has risen consistently since March this year and it expected to go as high as 1.9 million tonnes in September, the Malaysian Palm Oil Board estimates, which is well within the peak yield season for oil palms.

On the other hand, exports have fallen 18.6 percent in July 1-25 to below 990,000 tonnes compared to a month ago due to a lull in Asian demand, data from cargo surveyors show, which has stirred concerns about oversupply.

"The extra allocation of 2 million tonnes will benefit the planters more than the refiners," said a trader with a local refinery. "I am sure that this will be subject to abuse."

Many traders have criticised the quota system for its lack of transparency, saying licence holders offer tax free crude palm oil to domestic refiners, allegations planters deny.

Refiners also complain that the export quota create an artificial supply squeeze, raising feedstock prices and lowering margins further.

Some traders say the extra export quota will help support palm oil prices in what is likely to be an election year. Many voters are also small oil palm farmers.

"Exports have been slowing and so have the earnings, so the government is using the quota to keep revenue flowing for the planters," said a trader with a palm oil firm that holds a licence for export quotas.

RTRS- U.S. drought, El Nino to support Malaysia palm oil prices in 2012

SINGAPORE/KUALA LUMPUR, July 30 (Reuters) - Average palm oil prices in Malaysia may hold their ground at 3,200-ringgit this year, a Reuters poll showed, supported by a squeeze in supplies of edible oil from the drought-hit U.S. Midwest and the brewing El Nino weather pattern.

The median forecast of 30 analysts who cover the palm oil sector came in at 3,200 ringgit ($1,016) per tonne for the whole of 2012, just 1.2 percent lower than an average of 3,240 ringgit in the first half of the year.

The prediction also beat the 3,000 ringgit touted for the entire year in January, signaling that analysts are counting on demand shifting to palm oil from soyoil, which is now trading at a more than a $200 per tonne premium due to tight supplies.

"Declining palm oil stocks and a spillover of bullish sentiment from the U.S. drought-driven rally are likely to continue supporting palm oil prices around 3,000 ringgit," said Pawan Kumar, a Rabobank analyst in Singapore, who pegged average 2012 palm oil prices at 3,128 ringgit.

"But a slowdown in exports combined with a seasonal upswing in palm oil production will likely push stocks higher, capping the price gain."

Malaysian palm oil stocks hit a 14-month low in June, fanning fears of tighter global supplies at a time when the drought in the United Sates was intensifying. Prices hit 3,628 ringgit in April, the highest level seen so far this year.

FESTERING CRISIS

Estimates for 2012 prices ranged between 2,900 and 3,938 ringgit, with analysts divided on the impact the festering euro zone debt crisis and slowing global growth would have on food demand in India and China, the world's top edible oil buyers.

Phillip Futures commodity analyst Ker Chung Yang said India's high inflation and the weak rupee could hurt appetite, though he thought demand from China would remain supportive.

"We expect demand from China to continue to underpin prices, especially given the current huge discount between soybean oil and palm oil," the Singapore-based analyst said.

Other analysts surveyed said that demand growth from Asia's biggest buyers could lift average palm oil prices above the 3,200-ringgit level.

"Demand from emerging economies in Asia like China, India and Indonesia should still grow year-on-year on the back of population growth and higher crude palm oil consumption per capita," sa i d Alan Lim Seong Chun, an analyst at Malaysia's Kenanga Investment Bank.

RISING ODDS

Respondents, surveyed over two weeks, mostly said prices could get further support from tree stress caused by the onset of the El Nino weather phenomenon, which typically brings dry weather to Southeast Asia and could crimp yields.

Add that to the ongoing drought in the U.S. and there is a case for a price rally, said CIMB Investment analyst Ivy Ng.

"The drought has resulted in a 5 percent cut in U.S. soybean production forecasts, which is good news for the crude palm oil price," Kuala Lumpur-based Ng said in a July 17 note to clients.

"We are more positive on second-half prospects given the rising odds of an El Nino."

Analysts pegged average palm oil prices lower at 3,080 ringgit for 2013, saying the euro zone debt crisis was still likely to be a factor broadly weighing on food and industry demand for the tropical oil.

"We believe the greatest downside risk for our price forecast is biodiesel consumption," said Ben Santoso, DBS analyst in Singapore.

Only 10 percent of palm oil consumption is channeled into the energy sector, however, according to Hamburg-based oilseeds analyst Oil World. That means palm oil could benefit from filling in demand gaps left by other vegetable oils in the case of a crude oil price surge.

"Palm oil is at a real crossroads with few catalysts to the upside unless crude oil prices shoot up or weather is bad - though the latter seems to be priced in," said Chris De Lavigne, vice president of Industrial Practices at Frost & Sullivan.

"At this stage with so much volatility, 2013 can only be guesswork."

Trader's highlight

DJI- NEW YORK, July 30 (Reuters) - U.S. stocks finished mostly flat on Monday as investors paused following the best two-day run this year, with central bank meetings and a full load of U.S. economic data looming.

Traders have bet that the Federal Reserve and the European Central Bank will suggest further action to stimulate their economies is on the way when each meets later this week.

The sectors least sensitive to economic growth - telecoms, consumer staples and utilities - posted healthy gains, suggesting a cautious move to defensive plays.

Blue chips like Wal-Mart Stores WMT.N and AT&T T.N hit new 52-week highs. Wal-Mart rose 0.6 percent to end at $74.98 after hitting $75.24 earlier. AT&T added 0.8 percent to close at $37.43 after hitting $37.69.

Last week, a strong statement from ECB President Mario Draghi drove the Dow above 13,000 for the first time since early May, and gave the S&P 500 its biggest two-day rally since December.

"With all that news later in the week and after the big run, I think there's probably a little bit of hesitation to run ahead of these numbers," said Janna Sampson, co-chief investment officer at OakBrook Investments in Lisle, Illinois.

The Fed begins a two-day meeting on Tuesday while the ECB will meet on Thursday. The U.S. economic calendar is heavy this week, including Friday's payrolls report for July.

The Nasdaq Composite underperformed the other major indexes, weighed down by a 5.9 percent drop in shares of Citrix Systems CTXS.O and a 1 percent fall in Intel INTC.O.

The Dow Jones industrial average .DJI dipped 2.65 points, or 0.02 percent, to 13,073.01 at the close. The Standard & Poor's 500 Index .SPX edged down just 0.67 of a point, or 0.05 percent, to 1,385.30. The Nasdaq Composite Index .IXIC fell 12.25 points, or 0.41 percent, to end at 2,945.84.

About 5.5 billion shares changed hands on the New York Stock Exchange, the Nasdaq and the Amex - 18.5 percent below the year-to-date daily average of 6.75 billion shares through last Friday.

On the NYSE, decliners slightly outnumbered advancers by 1,520 to 1,460. On the Nasdaq, 1,586 issues fell while 883 shares rose.

NYMEX- NEW YORK, July 30 (Reuters) - U.S. crude oil futures fell for the first time in five sessions on Monday on concerns that stimulus expected from the United States and Europe may fail to lift their slowing economies, overshadowing signs of lower OPEC output.

 

CBOT SOYBEAN- Soybean futures on the Chicago Board of Trade rose nearly 3 percent and set a one-week high on concerns that dry U.S. crop weather over the next two weeks would further stress the crop, traders said.

* Soymeal and soyoil also ended higher, with soymeal gaining against soyoil on meal/oil spreads.

• Midday weather updates indicated even drier weather than earlier forecasts in the U.S. Midwest for the next week or two, which will increase stress on corn and soybean crops that already have been slashed due to the worst drought in over 50 years. (nL2E8IU551)

• Analysts surveyed by Reuters expected USDA in its weekly crop report on Monday to show U.S. soybean condition ratings down 2 percentage points, at 29 percent good to excellent. (nL2E8IU493)

• Trade expecting no first-day deliveries against CBOT August soybean and soymeal futures on Tuesday, but soyoil deliveries were seen at 1,000 to 2,000 contracts. (nL2E8IU8ZA)

• Brazilian soybean producers are selling the 2012/13 crop earlier than ever before, with 41 percent of next season's output already sold, two months before planting starts - analyst Celeres. (nL2E8IU6MO)

• USDA reported export inspections of U.S. soybeans in the latest week at 15.498 million bushels, within a range of trade estimates for 12 million to 17 million.

• Average palm oil prices in Malaysia may hold their ground at 3,200-ringgit this year, a Reuters poll showed, supported by a squeeze in supplies of edible oil from the drought-hit U.S. Midwest and the brewing El Nino weather pattern. (nT9E8GG03S)

FCPO- SINGAPORE, July 30 (Reuters) - Malaysian crude palm oil edged to a one-week high on Monday, tracking gains in broader financial markets on expectations the Federal Reserve and European Central Bank (ECB) will announce new measures to encourage growth, boosting commodity demand.

Persistent drought in the U.S. Midwest that threatened soy crop yields also supported prices, with traders expecting a crop downgrade in the weekly progress report by the U.S. Department of Agriculture (USDA), due later on Monday. GRA/

Tighter soy crop supply leading to less soybean oil could shift vegetable oil demand to the cheaper palm oil.

"Euro zone worries have eased a little and rain that was anticipated in the U.S. did not match expectations," said a Singapore-based trader with a foreign commodities house. "But we will have to wait and see tonight's USDA crop progress report for price direction."

The benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange closed 2.7 percent higher at 3,005 ringgit ($954) per tonne. Prices earlier touched 3,007 ringgit, the highest level since July 23.

Traded volume stood at 24,699 lots of 25 tonnes each, a tad lower than the usual 25,000 lots.

Technicals turned bullish as palm oil broke a resistance at 2,987 ringgit and could trigger a gain to 3,021 ringgit, Reuters market analyst Wang Tao said. (nL4E8IU0VZ)

Investors are hoping Fed and ECB policy meetings this week will produce stimulus measures, especially after ECB President Mario Draghi pledged he would do whatever it takes to safeguard the euro. MKTS/GLOB

On the local front, market players will be looking out for Malaysia's July palm oil export data after earlier numbers showed signs of slowing demand.

Malaysia will increase shipping quotas for tax free crude palm oil by up to 2 million tonnes this year to help planters cope with higher output in the next few months, government sources said, as the world's No.2 supplier struggles to maintain its export momentum.

REGIONAL EQUITY-BANGKOK, July 30 (Reuters) - Southeast Asian stock indexes closed higher on Monday, with Singapore, Indonesia and the Philippines rising to their highest close in more than one week as investors hunted for bargains in large caps and financial shares in a reporting season.

Singapore's Straits Times Index .FTSTI rose 1.14 percent, with casino operator Genting Singapore Pcl GENS.SI surging 7.4 percent, rebounding after a combined loss of 13.8 percent so far in the month to Friday. (nL4E8IU1J6)

Jakarta's Composite Index .JKSE edged up 0.37 percent, building on a 2.3 percent gain in the past three sessions while the Philippine index .PSI gained 1.1 percent after Friday's 1.3 percent rise.

Among the bright spots in the region, Bank Mandiri BMRI.JK, Indonesia's biggest lender, jumped 2.6 percent before it reported after market close that its second-quarter net profit rose 48 percent from a year ago.

RTRS- Malaysia to boost tax free palm oil quota by 2 mln T -govt sources

July 30 (Reuters) - Malaysia will increase shipping quotas for tax free crude palm oil by up to 2 million tonnes this year to help planters cope with higher output in the next few months, government sources said, as the world's No.2 supplier struggles to maintain its export momentum.

"We are doing this on a case-by-case basis for local firms since production is starting to rise in the second half of this year and exports are a bit slow," said one government official who declined to be named due to the sensitivity of the issue.

"It is a stock management effort. This is in an interim response to Indonesia at the moment. We are still formulating a comprehensive response," the source added.

The move will lift Malaysia's total duty free CPO export quota to 5 million tonnes this year and comes after top importer India this month raised base import prices of refined palm oil in a move that encourages more crude palm oil shipments.

Both Malaysia and India are responding to last year's move by top palm oil producer Indonesia to slash export taxes of refined palm oil -- used as a cooking oil -- and spur its own processing industry.

Malaysia says Jakarta's export tax cut has eaten into its own refined palm oil shipments and hurts its processors -- a concern similar to that voiced by India, which has spent billions to build the factories of its edible oil manufacturing sector.

Trader's Highlight

DJI- NEW YORK, July 27 (Reuters) - U.S. stocks surged on Friday, driving the S&P 500 to its highest level since May 4 as hopes increased that the Federal Reserve and the European Central Bank may provide further stimulus.

The Dow Jones industrial average .DJI shot up 187.95 points, or 1.46 percent, to end unofficially at 13,075.88. The Standard & Poor's 500 Index .SPX gained 25.96 points, or 1.91 percent, to finish unofficially at 1,385.98. The Nasdaq Composite Index .IXIC climbed 64.84 points, or 2.24 percent, to close unofficially at 2,958.09.

For the week, the Dow rose 2 percent, the S&P 500 gained 1.7 percent and the Nasdaq advanced 1.1 percent.

NYMEX- NEW YORK, July 27 (Reuters) - U.S. crude futures ended higher for the fourth straight session Friday as data showing a slower U.S. growth rate in the second quarter raised further hopes that the Federal Reserve would adopt more monetary easing policies to bolster the economy.

CBOT SOYBEAN- Chicago Board of Trade soybean futures were higher as the U.S. drought worsens,

leading to cuts in soy conditions and forecasts for lower U.S. soy output this year.

* Informa Economics cut its estimate for 2012 corn yield to 134.0 bushels from the previous 142.5 and trimmed soy yield to 38.5 from the previous 40.0. (Full Story)

Crops in the northern and eastern U.S. Midwest will benefit from showers and cooler temperatures over the next week but heat and drought will continue to punish crops in the southwest, an agricultural meteorologist said on Friday. "There will be additional rain in the eastern Midwest today and showers in the northwest tomorrow and Sunday," said Don Keeney, meteorologist for MDA EarthSat Weather. Malaysian crude palm oil bounced up on Friday from a five-week low hit the previous day after the European Central Bank pledged to protect the euro zone in comments that helped risk assets. August is above all key moving averages. The nine-day RSI is at 61.

 

FCPO- SINGAPORE, July 27 (Reuters) - Malaysian crude palm oil bounced up on Friday from a five-week low hit the previous day after the European Central Bank pledged to protect the euro zone in comments that helped risk assets.

The broader financial markets rose after ECB President Mario Draghi said the bank would do whatever was necessary to protect the euro zone from collapse, raising expectations it will move quickly to tackle sky rocketing borrowing costs in countries such as Spain. (Full Story)

Benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange closed 1.6 percent higher at 2,927 ringgit ($926) per tonne. Prices had touched 2,880 ringgit on Thursday, the lowest level since June 18.

But palm oil still posted a 3.8 percent weekly loss, the worst performance since mid-June, as forecasts for rain in the U.S. Midwest relieved some fears of tightening global oilseed supplies.

Favourable weather for soybeans could lead to a higher supply of soybean oil and draw demand away from palm oil.

"The selling was a bit overdone yesterday, so we see a little bit of recovering today," said a trader with a foreign commodities brokerage in Malaysia. "Optimism over Europe may not last for long as the sovereign debt issue remains unsolved."

Traded volume stood at 32,356 lots of 25 tonnes each, higher than the usual 25,000 lots on short-covering activities ahead of the weekend.

Market players are looking out for palm oil export data for July due next Tuesday for consumption trends after earlier numbers showed signs of slowing demand.

Malaysia's palm oil exports fell 14.3 percent and 18.6 percent over the July 1-25 period, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively. PALM/ITS PALM/SGS

But slowing exports coupled with better production expected in Malaysia this month could boost palm oil stock levels and ease some pressure off tightening global oilseed supplies.

A tighter supply outlook on persistent drought in the U.S. Midwest has pushed soybean oil prices to record highs, fuelling worries of food inflation in top edible oil buyers India and China.

Shares of the world's largest palm oil firm Wilmar International Ltd WLIL.SI fell as much as 6.4 percent to their lowest in more than 3 years on Friday, on market talk that China had asked edible oil suppliers to keep prices stable, traders said. (Full Story)

REGIONAL EQUITY- BANGKOK, July 27 (Reuters) - Southeast Asian stock markets mostly rose on Friday with large caps and banking stocks leading Indonesian and Philippine shares to a one-week closing high.

Jakarta's Composite Index .JKSE closed up 1.98 percent, eking out 0.07 percent gains for the week, while the Philippine index .PSI ended up 1.3 percent, posting a modest 0.17 percent weekly gain.

Thailand's main SET index .SETI edged up 0.4 percent, regaining some lost ground from Thursday's drop of 1.3 percent. Thai stocks fared worst in the region with losses for the week at 2.5 percent, the biggest in ten weeks.

Trader's Highlight

DJI- NEW YORK, July 26 (Reuters) - U.S. stocks rode a wave of hope inspired by comments from European Central Bank President Mario Draghi on Thursday, ignoring mixed corporate results to focus on the strongest signal yet of the ECB's intentions to protect the euro zone.

Europe's debt woes have taken a toll on stocks at times during the past two years and more recently have manifested themselves in lackluster corporate results. The most recent disappointments came from United Technologies and Dow Chemical, which blamed overseas demand for weak results.

Draghi hinted the ECB would target high sovereign bond yields, a measure the ECB has been reluctant to take in the past. Policymakers have made similar statements about saving the euro before, but if these remarks result in decisive action in European bond markets, it could spur a sizable rally in stocks.

"It's certainly a vote of confidence," said Kathy Karlic, chief client officer at Wilmington Trust Investment Advisors in Buffalo, New York, which has $20 billion in assets under management.

"The wall of worry for the euro zone has always been there, but another round of liquidity is very positive." Shares in sectors more sensitive to risks in Europe and economic demand, such as energy-related stocks and industrials, were among the day's best performers, with the S&P 500 energy index up 2.7 percent.

Worries about Europe have also pressured earnings forecasts, with third-quarter S&P 500 earnings now seen falling for a year-over-year decline.

Diversified manufacturer 3M, whose stock rose 2.1 percent to $90.59 after its results beat estimates, helped boost the Dow and was among the brighter spots of the earnings season.

Zynga  shares ended down 37.5 percent at $3.17 after hitting an all-time low, a day after the company slashed its profit outlook after fading enthusiasm for its games on Facebook.

After the closing bell, shares of Facebook tumbled 11 percent to $23.87 after reporting its first quarterly results since Facebook's market debut. During the regular sessions its shares lost 8.5 percent.

Amazon.com shares were down 0.5 percent at $218.88 after the close following the release of its results. The online retailer forecast third-quarter revenue that lagged Wall Street's projections.

During the regular session, shares of Sprint Nextel Corp jumped 20.2 percent to $4.05 after the company posted earnings.

Sales performance this reporting period has lagged earnings. With results in from about half of the S&P 500 companies, 65 percent have beaten analyst earnings estimates but just 41 percent have beaten on revenue, Thomson Reuters data showed.

The Dow Jones industrial average was up 211.88 points, or 1.67 percent, at 12,887.93. The Standard & Poor's 500 Index  was up 22.13 points, or 1.65 percent, at 1,360.02. The Nasdaq Composite Index  was up 39.01 points, or 1.37 percent, at 2,893.25.

Shares of United Technologies ended up 0.4 percent at $72.93 while shares of Dow Chemical dropped 3.6 percent to $29.18.

The S&P 500 ended above the technically important 1,333 level, and a sustained move above that level is seen as bullish. The level marks a convergence of several technical factors, including the index's 50-day moving average, and has served as support for stocks.

In economic news, the number of Americans filing new claims for jobless benefits fell last week near a four-year low, although the figures have been volatile due to summer factory shutdowns. Durable goods orders for June were better than expected, but a slip in pending home sales underscored the fragility of the economy. 

Volume was 7.44 billion shares on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.74 billion shares.

Advancers beat decliners on the NYSE by about 11 to 4 and on the Nasdaq by about 2 to 1.

NYMEX- NEW YORK,NEW YORK, July 26 (Reuters) - U.S. crude futures rose for a third straight day on Thursday after European Central Bank President Mario Draghi said the ECB was ready to do whatever was necessary within its mandate to avoid a euro zone collapse, and on supportive U.S. jobless claims data.

CBOT SOYBEAN- Chicago Board of Trade soybean futures declined on some improvement in crop weather prospects in the drought-stricken U.S. Midwest and on profit-taking.

* Little change was noted in midday weather updates indicating drought stress on U.S. corn and soybean crops is likely to continue for at least the next couple of weeks, an agricultural meteorologist said on Thursday.

• "There are only minor changes, a little drier in Indiana and Ohio for the next couple of days, a little more rain for Illinois Sunday and Monday," said Andy Karst, meteorologist for World Weather Inc.
• The extended weather outlook for the first week of August indicated a stronger high-pressure ridge over the U.S. Plains but there could "still be some rain," he said. "It looks drier in Iowa, Illinois and Indiana and a little wetter in the north from August 7-10," Karst said.
• The most extensive drought in five decades intensified this week across the U.S. Midwest and Plains states that produce most of the country's corn, soybeans and livestock, a report from climate experts showed on Thursday.
• USDA's weekly export sales report showed net export sales of U.S. soybeans last week at 710,500 tonnes, above estimates for 350,000 to 550,000 tonnes.
• August is above all key moving averages. The nine-day RSI is at 58.

FCPO- SINGAPORE,SINGAPORE, July 26 (Reuters) - Malaysian crude palm oil fell to its lowest in more than five weeks on Thursday, as investors turned more bearish on forecasts for rain in parts of the U.S. Midwest that could bring some relief to the drought-hit soy crop.

A larger supply of soybeans to be crushed into vegetable oil could narrow spreads between soybean oil and palm oil and draw demand away from the tropical oil.

Market players also priced in weaker Malaysian exports for the July 1-25 period after cargo surveyors reported declines from a month ago, reinforcing views that stock levels could climb after falling to a 14-month low in June.

"There is not enough push to go up after some profit bookings yesterday, so the market is down again today," said a Singapore-based trader with a foreign commodities brokerage. "It looks like the trend is still bearish."

Benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange fell 2.3 percent to close at 2,882 ringgit ($909) per tonne. Prices earlier touched 2,880 ringgit, the lowest level since June 18.

Traded volume picked up after the midday break to 27,567 lots of 25 tonnes each, higher than the usual 25,000 lots.

Technicals were bearish, as palm oil is biased to fall to 2,838 ringgit, Reuters market analyst Wang Tao said, based on a wave pattern and retracement analysis.

Malaysia's palm oil exports continued to show weakness from a month ago, falling 14.3 percent and 18.6 percent, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively. 

Slowing exports coupled with better production expected in Malaysia could boost palm oil stock levels, taking some pressure off tightening global oilseed supplies.

Market players are also looking out for a return of the El Nino weather pattern to Southeast Asia as the hot and dry weather could hurt palm oil output from top producers Indonesia and Malaysia, providing upside for palm oil prices.

Oil prices dropped below $104 a barrel on Thursday, squeezed by a stronger dollar as disappointing corporate earnings contributed to a gloomy outlook for demand growth.

Other vegetable oil markets similarly suffered declines on U.S. wet weather forecasts.

REGIONAL EQUITY- BANGKOK, July 26 (Reuters) - Major Southeast Asian stock markets mostly closed lower on Thursday, led down by commodity-related stocks as a gloomy outlook for demand growth and the euro zone's spreading debt crisis hit oil prices.

Thailand's benchmark SET index fell 1.3 percent to 1,172.92. Malaysian shares ended down 0.7 percent to 1,623.91.

The Philippine index posted a modest 0.18 percent loss. Singapore's Straits Times index bucked the trend, advancing 0.5 percent.

Trader's Highlight

DJI- NEW YORK, July 25 (Reuters) - The S&P 500 fell for a fourth day and the Nasdaq dropped on Wednesday after a rare earnings stumble from Apple, while strong results from Boeing and Caterpillar lifted the Dow.

Apple Inc AAPL.O, the most valuable U.S. company by market capitalization, reported sales late on Tuesday that fell short of Wall Street's expectations as the European economy sagged and consumers held off buying iPhones before a new version expected in the autumn.

Shares fell 4.3 percent to $574.97. Without Apple's losses, the S&P would have ended higher.

The price-weighted Dow industrials managed gains thanks to Caterpillar CAT.N and Boeing BA.N. Caterpillar rose 1.4 percent to $82.60 after its quarterly profit easily beat Wall Street's expectations.

The world's largest maker of construction machines also raised its 2012 forecast.

“Expectations have been very low and this is a huge positive for the market,” said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.

Hope that the Federal Reserve will act soon to provide more stimulus to the economy also supported stocks. A report in The Wall Street Journal on Tuesday said Fed officials may be moving closer to taking more steps to aid the flagging economy. (nL2E8IO9QA)

Because of those expectations "bank stocks are performing relatively well," said Thomas Villalta, portfolio manager for Jones Villalta Asset Management in Austin, Texas. The KBW bank index .BKX was up 0.5 percent.

The Dow Jones industrial average .DJI rose 58.73 points, or 0.47 percent, at 12,676.05. The Standard & Poor's 500 Index .SPX was down 0.42 point, or 0.03 percent, at 1,337.89. The Nasdaq Composite Index .IXIC was down 8.75 points, or 0.31 percent, at 2,854.24.

NYMEX- NEW YORK, July 25 (Reuters) - U.S. crude futures rose for a second straight session on Wednesday, shrugging off higher inventories and supported by hopes that the Federal Reserve will provide more economic stimulus coupled with concerns about Middle East turmoil.

U.S. crude oil stocks rose more than expected last week while gasoline and distillate inventories also increased, weekly data from the Energy Information Administration showed.

CBOT SOYBEAN- Chicago Board of Trade soybean futures rose on concerns about shrinking crop

size as the U.S. drought remains intact.

* Rain this week and for the next 10 days will boost crop prospects in the northern and eastern U.S. Midwest, but crops in the rest of the growing region will struggle against extreme heat and drought, an agricultural meteorologist said.

• "There is improvement in the north and east and we expect more showers today and tomorrow in the west central to northwest," said Don Keeney, meteorologist for MDA EarthSat Weather.

• Malaysian crude palm oil rebounded on Wednesday on bargain hunting after prices hit a five-week low earlier in the session, although gains were modest as investors remained worried that the euro zone debt crisis could hurt demand.

• August was above all key moving averages. The nine-day RSI stood at 63.

FCPO- SINGAPORE, July 25 (Reuters) - Malaysian crude palm oil rebounded on Wednesday on bargain hunting after prices hit a five-week low earlier in the session, although gains were modest as investors remained worried that the euro zone debt crisis could hurt demand.

The euro zone's private sector shrank for a sixth month in July as manufacturing output nosedived, notably in Germany and France, adding to the likelihood that the bloc will slump back into recession, business surveys showed on Tuesday.

Market players also priced in weaker Malaysian exports for the July 1-25 period after cargo surveyor Intertek Testing Services reported a 14 percent monthly drop.

"The market recovered today as it was a little bit oversold. Exports were down 14 percent but that has already been factored in considering the market dropped close to 200 ringgit in the last few days," said a trader with a foreign commodities brokerage in Malaysia.

The benchmark October palm oil futures FCPOc3 on the Bursa Malaysia Derivatives Exchange edged up 0.9 percent to close at 2,951 ringgit ($930) per tonne. Prices earlier dropped to 2,898 ringgit, the lowest since June 18.

Traded volume stood at 45,813 lots of 25 tonnes each, higher than the usual 25,000 lots.

REGIONAL EQUITY- BANGKOK, July 25 (Reuters) - Most Southeast Asian stock indexes posted small gains on Wednesday, with the newly listed IHH Healthcare Bhd IHHH.KL leading Malaysia higher.

Malaysia's main index .KLSE edged up 0.15 percent, regaining some lost ground from a drop of 0.8 percent in the past four sessions, with IHH, Asia's largest hospital operator, jumping as much as 14 percent in its trading debut in Kuala Lumpur.

Trader's Highlight

DJI- NEW YORK, NEW YORK, July 24 (Reuters) - Wall Street stocks fell on Tuesday, hit by signs the euro zone crisis is worsening and evidence that Europe's slowdown is hurting U.S. companies, including bellwether UPS.

The decline was the third straight for the S&P 500 index, which tested its 50-day moving average, a technical support level which could trigger more selling if convincingly broken.

Stocks got a lift late in the session after the Wall Street Journal said Federal Reserve officials were moving closer to taking new steps to spur activity and hiring. Fed officials recently have spelled out what measures they might take, including Chairman Ben Bernanke in a speech last week.

After the market's close, S&P 500 and Nasdaq futures fell on disappointing results from Apple, which reported quarterly revenue below analysts' expectations. Apple's shares fell 4.8 percent to $572.12 in extended-hours trading. 

During the regular session, United Parcel Service, seen by many as a proxy for economic activity, fell 4.6 percent to $74.34 after reporting quarterly results that missed forecasts and cut its 2012 outlook, citing uncertain global economic conditions. UPS helped pull the Dow Jones Transportation average down 1.2 percent.

"We are going through an adjustment period where there has been a lot of talk about Europe facing a recession in 2012. Now we are actually seeing it in the earnings and the market is reacting to that," said Gail Dudack, chief investment strategist at Dudack Research Group in New York.

The struggles of the U.S. and euro zone economies intensified in July, surveys showed on Tuesday. Europe's private sector looked set for a prolonged slump as the surveys showed the downturn that began in the euro zone's small economies has since become entrenched in Germany and France.

Concerns about the euro zone grew after Spain was forced to pay the second highest yield on short-term debt since the launch of the euro and European Union officials said Greece had little hope of meeting the terms of its bailout. 

AT&T Inc lost 2.1 percent to $34.63 after the company reduced its outlook for business services this year. The S&P telecom index dropped 1.8 percent. 

Whirlpool Corp slumped 7.5 percent to $62.25 after the world's largest appliance maker missed Wall Street's expectations for quarterly earnings and sales, hurt by weak demand in Europe and a stronger dollar.

The Dow Jones industrial average was down 104.14 points, or 0.82 percent, at 12,617.32. The Standard & Poor's 500 Index was down 12.21 points, or 0.90 percent, at 1,338.31. The Nasdaq Composite Index was down 27.16 points, or 0.94 percent, at 2,862.99.

The Fed says it is still considering a third bout of quantitative easing, or QE3, and some analysts expect recent weakness in the U.S. economy could prompt policymakers to launch such a program as early as September. 

"Given the events going on around the world, I think the odds are increasing the Fed will take action at one of the next two meetings," said Michael Sheldon, chief market strategist, RDM Financial, Westport, Connecticut.

Of the 145 companies in the S&P 500 that have reported earnings for the quarter, 66.9 percent have beaten analysts' expectations, Thomson Reuters data showed. Over the past four quarters, 68 percent have beaten estimates.

Cisco Systems Inc fell 5.9 percent to $15.12 after VMWare Inc said it would acquire privately held Nicira Inc, a move seen as a threat to Cisco's core switching and routing business.

In another sign of the economic malaise from Europe, Texas Instruments Inc warned that its third-quarter revenue would be weaker as customers show caution due to global uncertainties. The shares lost 0.9 percent to $26.57. 

Spanish five-year government bond yields rose above 10-year yields for the first time since June 2001 as investors fretted about the possibility that Madrid may need a full-blown sovereign bailout. The 10-year note last traded at around 7.6 percent.

Volume was about 6.71 billion shares on the New York Stock Exchange, the Nasdaq and Amex, compared with the year-to-date daily average of 6.74 billion shares.

Decliners beat advancers on the NYSE by about 22 to 7. On the Nasdaq, decliners beat advancers about 17 to 7.

NYMEX- NEW YORK, TOKYO, July 24 (Reuters) - U.S. crude futures extended declines into a third day on Tuesday from a 4 percent fall the day before, as concerns that Spain might need a bailout raised anxiety about the euro zone debt crisis and its impact on global oil demand.

CBOT SOYBEAN, Chicago Board of Trade soybean futures fell sharply  on forecasts for crop-friendly rains in portions of the U.S. Midwest crop belt.

* Rainfall in the northern U.S. Midwest over the next 10 days will provide some relief for the drought-stricken corn and soybean crops, an agricultural meteorologist said on Tuesday.

• "It's a wetter forecast than we saw earlier. There's a better chance of rain from Minnesota, into Michigan and into the eastern Ohio River Valley," said Jason Nicholls, meteorologist for AccuWeather.
• A Reuters poll of 11 analysts on Tuesday indicated a U.S. soybean yield at 38.6 bushels per acre and soybean production at 2.9 billion bushels.
• The August contract was above all key moving averages. The nine-day RSI was at 57.

FCPO- SINGAPORE, SINGAPORE, July 24 (Reuters) - Malaysian crude palm oil futures dropped to the lowest level in five weeks on Tuesday, extending losses from the previous day as forecasts for rain in the U.S. Midwest improved the production outlook for soybeans.

An improved production outlook for soybeans could see a higher supply of competing soybean oil, narrowing its premium to palm oil and attracting some demand away from the tropical oil.

A gloomy global economic outlook also weighed on palm oil and other commodity markets, with a surge in Spain's borrowing costs raising concern that the country could seek a costly bailout.

"Prices are reflecting macroeconomic risk aversion, but technically palm prices are terribly oversold," said a trader with a local commodities brokerage in Malaysia. "Prices have again became attractive and exports should soon show signs of recovery. Consumers will soon bargain-hunt as prices are relatively cheap."

The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange lost 2.1 percent to close at 2,926 ringgit ($921) per tonne after trading as low as 2,904 ringgit, the lowest since June 18.

Traded volume stood at 38,763 lots of 25 tonnes each, much higher than the usual 25,000 lots as investors rushed to liquidate their positions.

Weather updates on Monday forecast some rains for soybean crops in the U.S. Midwest this week, helping to offset a weekly crop condition report from the U.S. Department of Agriculture that downgraded soy crop ratings. 

Investor sentiment also weakened as the euro was not far from a two-year low against the dollar, undermined by Moody's change in its ratings outlook to negative for Aaa-rated Germany, the Netherlands and Luxembourg amid Europe's ongoing debt crisis.

Palm oil traders will be looking out for Malaysia's palm oil export data for the July 1-25 period, due to be released on Wednesday, after shipments fell 23 percent over the first 20 days of July from a month earlier.

The market is also watching for signs of El Nino returning to Southeast Asia as the hot and dry weather could hurt palm oil output for top producers Indonesia and Malaysia.

In other markets, crude oil rose above $103 per barrel on Tuesday after China's economy showed signs of improvement, but gains were checked by further evidence of damage to Europe's economy.

Declines in other vegetable oil markets underlined similar investor concerns over wetter weather in the U.S. and the euro zone debt crisis.

By 1004 GMT, the most active U.S. soyoil for December delivery was down 2.3 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 2.7 percent lower.

REGIONAL EQUITY- BANGKOK, July 24 (Reuters) - Stocks in Singapore, Thailand and the Philippines posted small gains in light trading on Tuesday, led higher by banking shares, but the broader sentiment remained weak as gloomy German factory data overshadowed signs of an improvement in China.

Singapore's Straits Times Index finished up 0.53 percent, regaining early lost ground. The Thai SET index and the Philippine index rebounded from an earlier drop to end up 0.21 percent and 0.4 percent, respectively.

Other markets in the region ended lower, with Malaysian shares down 0.2 percent at their lowest close since July 16. Indonesia's slid 0.4 percent to its lowest close since July 13. Vietnam stocks dropped 1.5 percent to a one-week low. 

Trader's Highlight

DJI- NEW YORK, NEW YORK, July 23 (Reuters) - U.S. stocks fell for a second straight session on Monday, as Spain appeared closer to needing a national bailout and poor corporate results weighed on the market.

Still, stocks ended well off the day's lows, rebounding from their initial plunge. Stocks appeared to stabilize as the S&P 500 approached its 50-day moving average of 1,332.98, a technical support level that could trigger more losses if convincingly broken.

Overall, three stocks fell for every one that rose on the New York Stock Exchange on Monday, a signal that the afternoon rebound was concentrated among larger-cap shares. On the Nasdaq, about four stocks fell for every one that rose.

"The sell-off this morning was overdone, and obviously, the market felt that way, too," said Eric Green, senior portfolio manager and director of research at Penn Capital Management in Philadelphia, which oversees $6.5 billion.

"Nothing incrementally negative came out, but obviously, we're still worried about the situation there."

The Spanish region of Murcia looked set to follow Valencia in tapping a government program to keep its finances afloat. Local media reported half a dozen regions were ready to follow suit. 

Valencia's move contributed to a 1 percent drop in the S&P 500 on Friday. The benchmark index had appeared on track to exceed those losses on Monday, falling as much as 1.8 percent before recovering some of those losses.

The International Monetary Fund dismissed a weekend news report in German weekly Der Spiegel that it may refuse to continue supporting Greece as it prepares for talks with the new Greek government on its international bailout. 

After the closing bell, Texas Instruments Inc shares dropped 1.4 percent to $26.44 in extended trading following the company's results. Texas Instruments reported a drop in its second-quarter profit and sales.

With 23 percent of S&P 500 companies having reported results, 67.5 percent have posted earnings above expectations, although many analysts have cut their forecasts in recent weeks, allowing for easier beats. Over the past four quarters, 68 percent of companies beat estimates.

The high-profile earnings disappointments have taken a toll on third-quarter estimates. Third-quarter S&P 500 earnings growth is now expected to come in at 0.9 percent, down from 3.1 percent at the beginning of the month.

The Dow Jones industrial average fell 101.11 points, or 0.79 percent, to close at 12,721.46. The Standard & Poor's 500 Index declined 12.14 points, or 0.89 percent, to 1,350.52. The Nasdaq Composite Index shed 35.15 points, or 1.20 percent, to close at 2,890.15.

At its session low, the Dow was down as much as 239.16 points, or 1.9 percent, at 12,583.41. The S&P 500 fell as low as 1,337.56, down 25.1 points, or 1.8 percent, at its session low. The Nasdaq had touched a session low at 2,852.88, down 72.42 points, or 2.5 percent from Friday's close.

Energy shares slumped as fears of a global slowdown prompted investors to sell oil as U.S. crude fell 3.8 percent. Chevron Corp dropped 1.1 percent to $107.95. The NYSE Arca oil index lost 1.7 percent.

The CBOE Volatility Index jumped 14.4 percent to 18.62 at the close. According to the VIX Open Interest Put-to-Call ratio, VIX options traders are holding only 50 puts for every 100 calls outstanding on the VIX. The last time this ratio hit this level was early August of 2011, just before a huge volatility spike that lasted nearly four months, he said.

The euro slid to a two-year low against the dollar and a near 12-year trough against the yen, pressured by fears that Spain may eventually need a full sovereign bailout.

The yield on the Spanish 10-year bond was last at 7.496 percent, well over what analysts consider a sustainable level.

Volume was light, with about 6.13 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, below last year's daily average of 7.84 billion.

NYMEX- NEW YORK, NEW YORK, July 23 (Reuters) - The euro fell to a two-year low against the U.S. dollar and a nearly 12-year trough against the yen on Monday on fears Spain was closer to needing a full-scale bailout that the euro zone cannot afford.

Ten-year Spanish bond yields jumped as high as 7.596 percent, the highest since the euro was created in 1999. That saw the euro drop for a fourth straight day against the dollar to hit a low of $1.2067, the weakest since June 2010.

Traders and analysts say the euro looks poised to take out the key $1.20 threshold. A break beneath that could see the currency head towards its June 2010 low of $1.1875, which marked the weakest since March 2006.

"With the 10-year yield above 7 percent and quickly approaching 8 percent, we're at that moment where it starts to look a lot more real than it was even just a few weeks ago," said John Doyle, foreign-exchange strategist at Tempus Consulting in Washington, referring to a full-scale sovereign bailout for Spain.

The euro extended declines against the dollar in late Monday trading after Moody's Investors Service changed its ratings outlook to negative for Aaa-rated Germany, the Netherlands and Luxembourg, citing uncertainty about the euro zone's ongoing debt crisis. 

The ratings agency said it saw an increased chance that troubled euro zone countries such as Spain and Italy would need more support, the burden of which would fall on the highest-rated states.

Adding to pressure on the euro was a weekend report that the International Monetary Fund may refuse to contribute further funding for Greece. The IMF dismissed the report, saying it was “supporting Greece in overcoming its economic difficulties.”

The European Central bank, the European Commission and the International Monetary Fund -- known as the troika -- will arrive in Athens on Tuesday to push for further cuts needed for the country to qualify for further rescue payments.

The euro last traded at $1.2135, down 0.2 percent. After closing at $1.2156 in New York on Friday, it "gapped" lower to open at $1.2120 in Asia on Monday morning, signifying the market perceived the value of the euro had dropped over the weekend in response to events in the euro zone.

Some $6.46 billion of euros have changed hands on Reuters Dealing through the Monday session.

Against the yen, the euro hit 94.22 yen, a level not seen since late 2000, and last was off 0.3 percent to 95.11.

Weakness in the euro was seen across the board as it also hit a record low versus the Australian dollar, a more than 3-1/2-year low against sterling and a 9-1/2-year low versus the Norwegian crown.

Spain's Economy Minister Luis de Guindos ruled out a full-scale financial rescue on top of the 100 billion euros already earmarked for the country's banks.

Ashraf Laidi, chief global strategist at City Index Ltd. in London, said some economists estimate a second bailout for Spain could amount to as much as 300 billion to 400 billion euros.

FUNDING STRAINS

Tiny Murcia was on course to be the second Spanish region to request help from the central government, and media reported half a dozen local authorities were ready to follow in the footsteps of heavily indebted Valencia, which rattled markets on Friday.

Catalonia, Spain's biggest region by gross domestic product, also has the highest debt. It said this week it had not decided whether to tap the funding mechanism, though it is seen as an increasingly likely candidate.

Axel Merk, portfolio manager of the $500 million Merk Hard Currency Fund in Palo Alto, California, said the market is pricing in the reality that "the Spanish government is now clearly on the hook for the regions’ debt.

"Spain’s central government is expected to bail out its regions – and in return may ask for a bailout itself," he wrote to clients. "As long as debt is merely shuffled around, the euro zone crisis won’t be solved."

Italy may be under similar pressure, with a newspaper quoting unnamed government specialists as saying that 10 Italian cities including Naples and Palermo face problems managing their finances.

The dollar fell to a seven-week low of 77.95 yen, before rebounding to 78.43, little changed on the day.

Japan's vice finance minister for international affairs was reported as saying the country will not exclude any options when responding to excessive currency moves, although traders said the authorities were unlikely to consider intervening while the dollar held above 76 yen.

CBOT SOYBEAN, Chicago Board of Trade soybean futures fell sharply on forecasts for crop-friendly rains in portions of the U.S. Midwest crop belt and on falling

equities markets.

* Midday weather updates still indicate some rain for corn and soybean crops in the northern U.S. Midwest this week and there is a better chance for crop-friendly weather in the extended outlooks, an agricultural meteorologist said on Monday.

• "There will be some rains in the north early this week and the southwest should see some light rain late in the week, which would be the first significant rain since June," said Andy Karst, meteorologist for World Weather Inc.
• Meteorologists said the showers won't be "drought busters" but "it will h elp some crops that aren't already dead," Karst said. Karst also said the midday weather updates indicate a better chance for showers and cooler weather in the Midwest in early August.
• "It looks cooler and wetter in the Midwest Aug. 4-7 and we've added some rain for the eastern Corn Belt for July 30 to Aug. 1st," he said.
• A Reuters poll indicated another decline in soybean condition ratings in the USDA's weekly crop progress report to be released late on Monday.
• Another Reuters poll showed an expected decline of 15 percent from record high prices for soybeans by the end of the year but still at an end-of-year record high of $15.40, up 28.5 percent from the close of 2011.
• Goldman Sachs on Monday pegged U.S. soybean yield per acre at 39.5 bushels and raised its three-month forecast for soybean prices to a record $20 per bushel.
• August was above all key moving averages. The nine-day RSI was at 68.

FCPO- SINGAPORE, SINGAPORE, July 23 (Reuters) - Malaysian crude palm oil futures dropped to the lowest in more than a month on Monday, tracking broader financial market weakness on fresh concern over Spain's ability to avoid a costly bailout that could worsen the euro zone debt crisis.

Risky financial assets including crude oil and grains futures suffered declines as investors liquidated their positions on concern that the debt crisis could stall global growth and damp fuel and food demand.

Half a dozen local governments were ready to follow in the footsteps of Valencia, which on Friday said it would need help from Madrid, Spanish local media reported. 

Relentless heat in the U.S. grain belt continued to destroy soybean crops and tighten soybean oil supply, but analysts said investors took cues from macroeconomic factors instead.

"It's been two weeks that we've been talking about the U.S. weather, so the weather risk has already been factored in unless we hear something new coming from El Nino," said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.

"There's news about Valencia seeking a bailout that has pushed Spanish bond yields to new high and that could weigh on the market."

The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange lost 1.7 percent to close at 2,990 ringgit ($943) per tonne. Prices earlier touched a low at 2,969 ringgit, the lowest since June 22.

Traded volume stood at 27,369 lots of 25 tonnes each, higher than the usual 25,000 lots.

Traders said the weak sentiment was due in part to slow exports and higher production in No.2 producer Malaysia, which could boost palm oil stocks after they fell to a 14-month low in June.

Malaysia's palm oil exports fell 23 percent over the July 1-20 period from a month earlier, said cargo surveyors Intertek Testing Services and Societe Generale de Surveillance. 

Exports to China slowed by more than half for the period on high stockpiles and a slowdown in demand after China's economy showed signs of slowing, said a Singapore-based trader.

But the market is also watching for signs of El Nino returning to Southeast Asia as the hot and dry weather could hurt palm oil output for top producers Indonesia and Malaysia.

In other markets, crude oil prices slipped towards $103 per barrel on Monday as investors sold off riskier assets and fled for the perceived safety of the dollar on fears that Spain will be unable to avoid a costly sovereign bailout. 

Concern over the euro zone debt crisis also weighed on other vegetable oil markets.

By 1005 GMT, the most active U.S. soyoil for December delivery was down 1.7 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had lost 2.2 percent.

REGIONAL EQUITY- BANGKOK, July 23 (Reuters) - Southeast Asian stock indexes closed lower after light volume trading on Monday as investors sold risk assets amid concerns Spain might require a full sovereign bailout, while Thai shares fell nearly two percent on PTTEP's capital raising plan.

The Thai benchmark SET index finished down 1.9 percent, its biggest percentage drop in one day since June 1. Energy explorer PTT Exploration and Production Pcl dropped 4.8 percent to its lowest close in six weeks. 

Other markets also came under selling pressure with Jakarta stocks ending down 1.8 percent at a one-week low and Philippine stocks dropping 1.4 percent to their lowest close in almost a month.

Singapore's Straits Times Index was down 1.1 percent at a one-week low. Malaysian shares and Vietnam's stock index fell 0.4 percent and 0.6 percent, respectively.