Today's Financial News Courtesy of the Financial Times

Today's Financial News Courtesy of the Financial Times


Stocks struggle to move past highs
By Telis Demos in London
Copyright The Financial Times Limited 2010
Published: August 3 2010 08:46 | Last updated: August 3 2010 19:52
http://www.ft.com/cms/s/0/1a77c55e-9ecf-11df-931a-00144feabdc0.html


Tuesday 19.30 BST. After a sizzling run for risky assets on Monday, investors are flocking to “haven” bonds and the yen, while stocks and commodities struggle to overcome lingering doubts about the global economic recovery.

The yen is at a new high for the year against the US dollar, below Y86, and nearing a 15-year peak. Yields on short-term US Treasury bonds have reached a fresh record low.

In equities, the US S&P 500 index is down 0.3 per cent and the FTSE Eurofirst 300 index ended flat. The FTSE All-World stock index is up 0.1 per cent, thanks to Asia extending Monday’s rally following faster-than-expected manufacturing activity growth in the US and Europe.

But a fresh tone for the markets was set after Yoshihiko Noda, Japan’s finance minister, said late in the Asian day that “foreign exchange rates are something that should basically be set by the market”.

With that assurance in their pocket, traders swooped in to strengthen their vote against the US dollar in favour of the yen. Forex dealers had previously been worried that Japan could intervene in the market and sell yen to support its critical export sector, which had limited the currency’s gains.

That move was followed by a report in The Wall Street Journal that the US Federal Reserve may be considering using income from mortgage-backed securities to buy Treasuries, in effect putting more cash into the economy.

“It would be a symbolic step towards more easing rather than towards ‘normalisation’ in the Fed’s balance sheet and monetary policy, and possibly a step to precede additional quantitative easing measures,” said Robert Lynch, currency strategist at HSBC.

That only confirmed traders’ growing sense that some kind of easing is on the cards for US policy, following dovish comments from Ben Bernanke, US Federal Reserve chairman, and other Fed officials in the past few weeks. Fed Fund futures are pricing in a higher chance of a rate lowering by this time next year, leading the dollar to tumble against the euro, pound and yen.

While a strong earnings season has helped traders recover much of risky assets’ fall from their high water mark in April, concerns over global economic growth continue to gnaw at sentiment, leaving shares unable to push past three-month highs.

Australia left interest rates on hold, with policymakers noting that easing in the global economy’s growth rate was helping to moderate inflation in the commodity-exporting country. That sent the Aussie dollar lower after its recent run-up to four-month highs.

A batch of US data added further uncertainty to the economic narrative: factory orders fell more than forecast, suggesting that the inventory rebuild cycle that has driven the economy has slowed. And personal consumption – the potential next catalyst, and the one cited by Mr Bernanke – failed to show expected growth in June.

☼ Factors to watch. US non-farm payroll data, to be released on Friday, are likely to set the tone for the rest of the week’s trading. The figures are expected to show 30,000 jobs lost, due to more census-hiring declines, but 110,000 private jobs created, exceeding last month’s 80,000. However, the same factors that have led to volatile and unreliable claims data – summer factory shut-downs and government benefit changes – are adding uncertainty to economists’ forecasts. ☼

• Europe. Ignoring the bullish sign of Banco Santander’s ambitious expansion plans, the European banking sector fell. The UK’s FTSE 100 index was flat, as HSBC reversed its sharp gains from Monday after its stellar earnings results.

Germany’s Dax was up 0.3 per cent. Deutsche Post and BMW, both beating earnings expectations and raising forecasts, as competitors like UPS and Honda have done, were in the top 3 gainers.

Athens – the world’s best-performing market in July – added 1.3 per cent. Talk of potential suitors for troubled state-controlled ATEbank, the only Greek lender to fail the recent EU stress tests, pushed up local bank stocks.

• Asia. Gains were solid, but did not keep pace with Monday’s sharp rises in the US and Europe. Japan’s Nikkei 225 led the way, up 1.3 per cent. Hong Kong’s Hang Seng index was up 0.5 per cent, although shares came off their highs after Peter Wong, HSBC’s Asia-Pacific chief, warned that Hong Kong property values “may form a bubble” if monetary conditions remained loose.

Shanghai shares were down by 1.7 per cent, Australia’s S&P/ASX 200 index was up 0.7 per cent and Korea’s Kospi 200 index was up 0.5 per cent.

• Currencies. The yen jumped shortly after the European open. It is now up 0.8 per cent against the US dollar, at Y85.85. The Japanese unit’s post-crisis low – also a 15-year nadir – is Y84.83.

Though this is partially a dollar move, it seems there is also a general decline in risk appetite, as evidenced by the move to close out carry trades by buying and returning yen. The yen is up 0.5 per cent against the South African rand and 0.5 per cent versus the New Zealand dollar.

The Australian dollar is flat against the US dollar following the Reserve Bank of Australia’s rate pause. The pound is adding to its surge from Monday, up 0.3 per cent to $1.5932 against the greenback. The euro is at a fresh three month peak, up 0.3 per cent to $1.3223.

• Bonds. “Haven” bonds are in strong demand, with the yield on the Japanese 10-year falling 1 basis point to 1.02 per cent, its lowest since the crisis struck. Demand was strong at an auction earlier in the session. German Bunds are also down by 9 basis points to yield 2.60 per cent.

The WSJ report on the Fed’s potential move has sent US bond yields lower. Two-year US Treasury yields are down 2 basis points to 0.53 per cent, a new all-time low. Ten-year US Treasuries are down 5 basis points to 2.91 per cent.

“Peripheral” eurozone debt is also in demand. Greek 2-years are down 9 basis points, with smaller gains for benchmark Spanish and Portuguese government bonds. European banks, however, signalled that they were still risk averse, oversubscribing to the European Central Bank’s latest call for cash deposits to offset its latest purchase of peripheral debts, which supported prices.

• Commodities. Oil is up again after surging more than 3 per cent on Monday, extending further past $81 a barrel. It is up 1.4 per cent to $82.49, its highest since May.

Crude is being supported by a warning from the US that a tropical depression could reach the Gulf of Mexico this week, disrupting production. Overall fundamentals for oil are still shaky, with the most recent reports expecting oversupply in the US and Opec markets, although some strategists suggest that crude may go as high as $83.

Gold is up 0.4 per cent to $1,187. The yellow metal has declined in recent weeks, shrugging off the dollar’s decline, as investors flock to the euro and pound.

Follow the Global Market Overview on Twitter at @telisdemos





Fresh access to credit lifts US car sales
By Bernard Simon in Traverse City, Michigan
Copyright The Financial Times Limited 2010
Published: August 3 2010 18:37 | Last updated: August 3 2010 18:37
http://www.ft.com/cms/s/0/a9b9f260-9f1e-11df-8732-00144feabdc0.html


US new car sales rose to their highest level of the year in July, helped by drivers’ eagerness to replace ageing models and by improved sales to car-rental operators and other fleet owners.

While carmakers generally expect the recovery to continue, some analysts are more cautious.

General Motors reported a 5 per cent growth in sales from July 2009 while Ford grew by 3.1 per cent. Toyota was due to report later on Tuesday.

According to preliminary estimates, total car and light-truck sales climbed to almost 12m units, at an annualised rate, from 11.2m a year earlier and 11.1m in June. The year-on-year comparisons are dampened by the start of the US government’s “cash-for-clunkers” scrappage incentives in late July 2009.

Don Johnson, GM’s vice-president of US sales operations, said that in spite of consumers’ continuing caution, “people who have put off replacing their vehicles are slowly coming back into the market”.

Strong used-car prices have encouraged more trade-ins and credit, especially leasing, has become more widely available.

Some carmakers have also benefited from a sharp increase in fleet sales, typically at lower prices than retail customers. GM’s fleet sales last month were up 48 per cent from the same period a year ago.

However, Jeff Schuster, director of global forecasting at JD Power, a consultancy, cautioned that retail sales slowed in the final two weeks of the months. “The benefit of the fiscal stimulus has faded, which has led to slower economic growth and a decline in consumer confidence,” Mr Schuster said.

A senior executive at one big parts maker said that while consumer demand may not rise much in coming months, North American production could be sustained by rising inventories, which are unusually low at present.

GM’s July sales included a 25 per cent advance for its four remaining brands, Buick, Cadillac, Chevrolet and GMC. GM has sold or closed four brands since it emerged from bankruptcy protection a year ago.

GM was buoyed by its Buick and Cadillac brands, the sales of which more than doubled from a year ago. Buick, which has benefited from new models aimed at broadening the brand’s appeal to younger buyers, posted its best retail performance since September 2007.

“We’re selling more models at higher prices with lower incentives,” Mr Johnson said. GM added that its share of the luxury car market had improved markedly over the past year.

Among other carmakers, Volkswagen reported a 16 per cent increase in July sales. Jaguar sales almost doubled, driven mostly by the new XJ sedan which arrived in dealerships in the spring.






Faltering US recovery trips dollar
By Jack Farchy in London and Alan Beattie in Washington
Copyright The Financial Times Limited 2010
Published: August 3 2010 18:31 | Last updated: August 3 2010 19:49
http://www.ft.com/cms/s/0/61e4fafe-9f21-11df-8732-00144feabdc0.html


The dollar has fallen to multi-month lows against the world’s major currencies as investors bet that evidence of a faltering US recovery will lead to further monetary easing by the Federal Reserve.

Currency traders said expectations of looser US monetary policy raised the prospect of a return of the so-called dollar “carry trade”, in which investors take advantage of low US interest rates to invest in higher-yielding currencies.

The yen approached its highest in 15 years against the dollar, trading at Y85.66, while the euro rose to $1.3261, a three-month high. Sterling hit a fresh six-month high of $1.5968.

“The carry trade could become very fashionable again,” said Martin Wiedmann, global head of foreign exchange sales at Credit Suisse.

A return of the carry trade would put further downward pressure on the dollar, which has fallen more than 2 per cent in just a week against an international basket of currencies including the yen, euro and sterling to its lowest level since mid-April. At the same time, yields on two-year US Treasuries fell to a new record low of 0.5341 per cent.

Traders said the markets were pricing in a move to ease monetary policy further at the Fed’s rate-setting meeting next Tuesday.

The falls in the dollar and Treasury yields have contrasted with a strong rally in share prices, powered by robust corporate earnings, that has carried stocks in Europe and on Wall Street to their highest levels for two to three months.

“Bonds and currency investors have been reacting appropriately to the impending US economic slowdown and deflation scare. Equity markets are, as usual, asleep at the wheel,” said Albert Edwards, global strategist at Société Générale.

Ben Bernanke, Fed chairman, said on Monday there remained a “considerable way to go” before the US economy made a full recovery.

A debate has intensified on the Fed’s open market committee about whether the central bank should reinvest the money from maturing mortgage bonds, using the cash to buy Treasury bonds or new mortgage bonds.

The Fed put mortgage bonds on its balance sheet as an emergency measure to pump liquidity into the banking system at the height of the financial crisis.

Maintaining the size of the balance sheet, rather than allowing it to shrink would, signal concern about weakening economic growth.

Widely watched labour market figures to be published on Friday are likely to play a big part in the Fed’s decision. Weak US economic data have raised fears of deflation in the world’s largest economy have raised fears of deflation in the world’s largest economy.

Analysts said the perception of a struggling US economy as others, particularly in Asia, recovered more strongly was likely to stimulate a growing dollar carry trade.

“Despite large volumes of central bank dollar buying, regional currencies are still strengthening, so strong is the inflow of capital to emerging Asia,” said Dariusz Kowalczyk, a strategist at Crédit Agricole in Hong Kong. “The carry trade is on and risk appetite is on.”

Additional reporting by Robert Cookson in Hong Kong








China seeks to widen gold market
By Leslie Hook in Beijing
Copyright The Financial Times Limited 2010
Published: August 3 2010 19:27 | Last updated: August 3 2010 19:27
http://www.ft.com/cms/s/0/49c6bbac-9f2a-11df-8732-00144feabdc0.html


China has moved to liberalise its gold market further, increasing the number of banks allowed to trade bullion internationally and announcing measures that will encourage development of gold-linked investment products.

The move by Beijing’s central bank comes as the country’s investors pour record amounts of money into gold, in a trend that is becoming a significant factor on global prices.

Last year, Chinese investors bought 73 tonnes of bullion, up from 18 tonnes in 2007. The new policies were likely to increase liquidity in the domestic gold market and spur the development of gold financial products, analysts said.

China is the world’s largest gold producer and the second-largest consumer, after India, but its domestic market remains constrained by limited investment products.

“This is a positive sign for the gold market,” said James Steel, precious metals strategist at HSBC in New York.

“The Chinese statement reaffirms the vigour of the emerging markets’ demand for retail physical bullion.”

Gold prices rose in London, partly on the back of China’s announcement, but also on signs of robust buying from India’s jewellery sector.

Spot bullion traded at $1,190 a troy ounce, up from a three-month low of less than $1,160 an ounce last week.

GFMS, the London-based precious metals consultancy, said recently that Chinese investors, who are building wealth at an unprecedented rate, were diversifying their assets into gold to “protect themselves against inflation”.

The People’s Bank of China said “the need to perfect foreign exchange policies in the gold market is clear.”

It called for better financing services for bullion, opening the door for Chinese banks to hedge their gold risk overseas.

The central bank also hinted at changes in taxes on bullion. But it failed to endorse gold as an investment and to suggest it planned to increase the size of its bullion reserves, one of the world’s largest.

The new gold guidelines are part of the gradual internationalisation of the Chinese banking system. Restrictions on some renminbi-denominated investment products in Hong Kong have been lifted recently, and renminbi cross-border settlement programmes have been expanded this year.

Additional reporting by Javier Blas in London







Oil surges amid maintenance in North Sea
By Javier Blas and Jack Farchy
Copyright The Financial Times Limited 2010
Published: August 3 2010 11:42 | Last updated: August 3 2010 20:57
http://www.ft.com/cms/s/0/1d1b76c6-9ee7-11df-931a-00144feabdc0.html


Oil prices surged to a three-month high above $82 a barrel on Tuesday as European benchmark Brent oil moved higher lifted by lower production in the North Sea fields due to maintenance.

Oil companies such as Nexen have delayed supply of some cargoes of physical Brent blend crude as many of the North Sea’s 50 or so fields undergo planned seasonal maintenance and production in others stops due to unplanned outages, analysts said.

The disruptions in the physical Brent market have filtered into oil derivatives markets, driving up the cost of spot contracts compared with forward contracts. The outages have also inflated the cost of Brent oil compared to other benchmarks, such as West Texas Intermediate, analysts said.

In late afternoon trading in London, ICE September Brent jumped $1.30 to $82.12 a barrel. The following contract, for delivery in October, rose $1.13 to $82.17 a barrel. The price difference between the first- and the second-front contract is at one of its lowest levels in two years.

In New York, Nymex September West Texas Intermediate rose 70 cents to $82.04.

The supply disruption has combined with a reawakening of risk appetite among global investors to buoy crude.

Amrita Sen, commodities analyst at Barclays Capital in London, said: “The long wait for oil prices to break past $80 has finally come to fruition, as sentiment aligns with fundamentals.

“One of the greatest ironies last quarter was that the dip in prices that came about on the basis of heightened demand fears was at the point when the actual demand data had finally started to perform strongly and consistently.”

“Upward momentum is still vibrant,” added Mike Fitzpatrick, vice-president for energy at brokerage MF Global, who noted that expectations of a draw in crude supplies had supported prices.

Base metals slipped, although they remained close to the highs of the previous session.

Copper for delivery in three months fell 0.8 per cent to $7,414 a tonne on the London Metal Exchange. Aluminium slipped 1.7 per cent to $2,198 a tonne, but tin bucked the trend, gaining 0.5 per cent to $19,875 a tonne. Many analysts believe supply and demand fundamentals for tin look the strongest of all base metals in the coming years.

Leon Westgate, commodities analyst at Standard Bank in London, said: “Asian-based selling activity and weaker equities markets have taken the edge off the base metals, with the complex also seeing a bit of profit-taking emerge.”

Elsewhere, several agricultural commodities fell after recent powerful rallies. Sugar prices were down sharply, with ICE October raw sugar off 4.3 per cent at 18.57 cents a pound. Liffe October raw sugar fell 4.3 per cent to $546.7 a tonne.

“The bull move was thwarted by the bears who have seemingly awoken from hibernation,” said Thomas Kujawa at Sucden Financial, the brokerage.

In coffee, ICE December Arabica dropped 3.5 per cent to $1.672 a pound, while Liffe November robusta was 3.2 per cent lower at $1,735 a tonne.

ICE October cotton rose 0.7 per cent to 84.40 cents a pound, close to its highest in more than two years.










Moscow urged to ban grain exports
By Javier Blas in London and Isabel Gorst in Moscow
Copyright The Financial Times Limited 2010
Published: August 3 2010 19:00 | Last updated: August 3 2010 19:00
http://www.ft.com/cms/s/0/dfa6ba3a-9f27-11df-8732-00144feabdc0.html


Traders at Glencore, the world’s largest commodities trader, have called on Moscow to impose an export ban on grain to allow companies to renegotiate their contracts, in the starkest sign yet of the severity of the crop failure in Russia.

The call highlights international trading houses’ concerns about fulfilling their contracts amid rising prices and scarce supplies due to a drought in Russia.

If Moscow imposes an export ban, as it did briefly during the 2007-208 food crisis, trading houses such as Glencore could declare “force majeure”, a clause that allows them to cancel the deals because of reasons outside their control.

The plea by employees at Glencore’s Russia unit, International Grain Company, came as Moscow moved to prevent panic in the markets, saying its grain exports would be stable.

The Russian agriculture ministry said the country’s grain crop would drop to 70-75m tonnes this year, down from previous estimates of more than 85m tonnes. But it insisted cereals exports would remain stable because of plentiful stocks.

Alexander Belyaev, deputy agriculture minister, said Russia held enough inventory to support exports and cover the nation’s needs. “The country has sufficient resources to ensure that everything is favourable and reliable.”

But Yury Ognev, head of Glencore’s Russian unit, said Moscow’s expectation of a grain crop of 70m-75m tonnes was too high. He offered a forecast of 65m tonnes.

“From our point of view the government has all the reasons to stop all exports from Russia and starting September 1,” he told Reuters in Moscow.

Glencore later distanced itself from the comments. “The views expressed by an employee of one of our field offices with regard to the Russian grain market were his own and do not in any way reflect the views of Glencore,” a spokesperson said.

Wheat prices fell slightly on Tuesday’s from Monday’s two-year high, but trading was frenetic. European milling wheat in Paris dropped nearly 1.7 per cent to €204.25 a tonne, after touching an intraday high of €211 a tonne on Monday.

European wheat prices have surged more than 50 per cent since late June on the back of the worst heatwave and drought in Russia and Ukraine in more than a century. The rally is the strongest in nearly 40 years and the food industry has already warned about rising prices for flour-related products, from bread to biscuits.

The full extent of the damage caused to Russia’s grain crop will not be clear until the end of the month when farmers have gathered the Siberian harvest. Siberian farms usually account for about one fifth of Russian grain production and have been less severely hit this year by drought than European regions of the country.







BP faces $20bn in penalties for oil leak
By Sylvia Pfeifer and Michael Peel
Copyright The Financial Times Limited 2010
Published: August 3 2010 21:19 | Last updated: August 3 2010 21:19
http://www.ft.com/cms/s/0/7540dc6c-9f3a-11df-8732-00144feabdc0.html


BP faces penalties of more than $20bn (£12.5bn) for the Gulf of Mexico oil spill under the US Clean Water Act if the UK group is found liable for gross negligence, according to the latest estimates of the leak’s size.

The new estimates of the spill’s impact came as BP started its “static kill” plan to plug the well earlier than had been expected because of positive results from tests.

US government scientists estimate that 4.9m barrels of oil have gushed from the Macondo well since it ruptured on April 20, killing 11 workers. The new estimates, which confirm the leak as the largest accident of its kind, will be a part of the calculation for any potential BP fines under the act, an official at the Department of Energy said last night.

Fines range from $1,100 a barrel spilt to as high as $4,300 per barrel, if gross negligence is proved. BP could therefore face a total fine of $21bn. If the company is able to argue that the 800,000 barrels it managed to contain should be excluded, that figure drops to $17.6bn.

Jane Barrett, director of the Environmental Law Clinic at the University of Maryland School of Law, said that while penalties in a case of this magnitude would normally be the subject of a settlement there was a wide range of large potential fines the authorities could try to impose on the companies involved.

She said: “Given the political and economic ramifications of this spill, the loss of life and extensive damage to the Gulf ecosystem, the government is going to seek the highest fine possible.”

BP has insisted it can rebut the charge of gross negligence.

The company said last week that it had made a $32.2bn provision in its second-quarter results for the costs of cleaning up the spill and compensation, although it warned that this might not cover all the costs it faced.

BP’s calculation for penalties under the act was based on its belief that it had not been grossly negligent.

On Tuesday it said it saw “no reason to change the provision” in light of the new spill estimates.

Government scientists said that the estimates were accurate to within 10 per cent. At its peak the well was spewing out 62,000 barrels of oil a day and dropped to 53,000 a day by the end. Before the announcement, federal teams had estimated the spill in a range from 35,000 to 60,000 barrels a day – against initial estimates of 1,000 barrels a day.

The new estimates came as BP announced that it had agreed to sell its Colombian assets to a consortium of Canada’s Talisman Energy and Colombia’s state-run Ecopetrol for $1.9bn.

BP shares closed up 0.62 per cent or 2.55p at 415.65p.





Gulf executives fear BlackBerry ban
By Robin Wigglesworth and Andrew England in Abu Dhabi
Copyright The Financial Times Limited 2010
Published: August 3 2010 19:06 | Last updated: August 3 2010 19:06
http://www.ft.com/cms/s/0/be04d61e-9f27-11df-8732-00144feabdc0.html


The United Arab Emirates’ threat to block BlackBerry services has left businesses in the Gulf’s commercial hub baffled and frustrated as they tries to come to terms with the implications for their local operations.

Etisalat and Du, the UAE’s two state-controlled telecoms operators, have sought to reassure subscribers by sending text messages to BlackBerry users and taking out full-page adverts in local newspapers, pledging to come up with substitutes for the popular smartphone, such as free iPhone, Nokia or Samsung devices.

However, it has been questioned whether this would be an adequate solution if the ban is enforced on October 11. Aside from users’ familiarity with the smartphone, the BlackBerry is embedded in the technology infrastructure of many multinational and regional companies.

“Our executives are highly dependent on mobile communications to manage our operations across the region. To suggest we revert to life without the BlackBerry is akin to asking us to drop e-mails altogether, in favour of postal communications,” said the head of a regional private equity firm.

The UAE says BlackBerry has been operating outside its legal framework, an issue that has not been resolved despite three years of negotiations with Research In Motion, the handset’s maker. The UAE regulator said the ban would be in place until an acceptable solution could be developed and applied.

The effect of a suspension would be considerable. Though figures vary, it is generally accepted that there are about 500,000 BlackBerry users in the UAE. Almost half of all such subscriptions in the Gulf state are corporate, according to some analysts’ estimates.

There are almost 700,000 BlackBerry users in Saudi Arabia, which has indicated it will ban BlackBerry’s instant messenger service, about 50,000 in Bahrain, fewer than 200,000 in Kuwait, and fewer than 100,000 in Qatar, according to Simon Simonian, a telecoms analyst at Shuaa Capital in Dubai.

At least one big international bank has been in touch with Etisalat, the UAE’s largest operator, for more information, but was only told that the operator would ensure a “new platform” for businesses would be in place by October.

Bankers still question how that will be done, and what the effect will be for executives who visit the UAE from London or New York, because international BlackBerry roaming services will also be blocked.

“We are a bit dumbfounded ... it’s one thing to ban it in the UAE but what about all the international businessmen coming through?” said one senior banker. “I don’t think anybody knows [what to do] because there’s an assumption that somebody will back off,” he added.

However, Etisalat has already advertised other packages and phones for customers, and Du has assured customers they will not face “any upfront cost” for shifting to a different handset. This may indicate that operators do not expect the dispute to be resolved before the ban comes into effect, Mr Simonian said.

Some analysts have speculated whether the BlackBerry ban could presage moves against other secure networks. Many multinational companies use internal virtual private networks that connect regional offices over secure lines.

“If they want to block BlackBerry today, where will they stop in the future? Will they target internal commercial networks?” said an IT expert. “If they follow through with this, it would send a signal that they don’t enable business, and aren’t open to technology.”






RIM launches new flagship BlackBerry
By Paul Taylor in New York
Copyright The Financial Times Limited 2010
Published: August 3 2010 20:24 | Last updated: August 3 2010 20:24
http://www.ft.com/cms/s/2/466995ac-9f2e-11df-8732-00144feabdc0.html


Research in Motion, the Canadian manufacturer of the BlackBerry family of smartphones, has stepped up the competition with Apple’s iPhone and Google Android-based devices, launching the touch screen-based BlackBerry Torch 9800 and a new version of its operating system.

The new flagship BlackBerry, which will be sold by AT&T for $199 when it goes on sale in the US on August 12, is RIM’s first slider smartphone. It is also the first device to be powered by the new Blackberry 6 operating system, which includes a more powerful and faster web browser.

Among its key features, the BlackBerry Torch comes with a large touch screen that sides up to reveal the familiar BlackBerry thumb-operated mini Qwerty keyboard. Other significant improvements include a new more intuitive ‘home page’ that make it easier to keep track of email and other services.

Mike Lazaridis, RIM’s co-chief executive, described it as “one of the most important product introductions in our history”. Industry analysts said it should help position RIM to compete more effectively against a new generation of advanced smartphones like the iPhone 4 and the latest Android-based handsets such as Motorola’s Droid X and Samsung’s Galaxy series of smartphones.

Analysts and investors have grown concerned over the past year that RIM was falling behind some of its rivals in the smartphone technology race and that this could ultimately begin to affect sales.

“The Torch and OS6 put Research In Motion on firm competitive ground against Apple’s iPhone and the Android devices, with a touch screen on par plus the Blackberry keyboard,” said Charles Golvin, a mobile analyst at Forrester Research.

Mr Golvin said the key question for RIM, however, was whether it can convince developers to prioritise the development of applications for the new operating system platform above the competition.

RIM has a strong appeal for developers because of the size of its installed base – there are over 100m Blackberry users. But Mr Golvin warned: “With a new platform that base is reset to zero so developers will apply different criteria to their decision on prioritising BlackBerry versus the iPhone or Android operating systems.”

The number, range and quality of software “apps” developed for each of the major smartphone operating systems has become a key differentiator between devices. To date, developers have written far more software apps for the iPhone and Android-based handsets than for Blackberry devices.