共和党選挙戦で、全米をリードしていた前ニューヨーク市長のジュリアーニ氏は劣勢に立っている。ウォールストリート・NBCニュースの世論調査によると、ジュリアーニ氏とロムニーは20%の得票で同点となり、ハックビー氏の17%をやや上回った。過去十数年を通して、同党での選挙戦は、最も激しいものとなっている。

Giuliani, Romney Are Tied

Giuliani lost hisnational lead in the Republican race. A WSJ/NBC News poll shows Giuliani andRomney tied at 20%, slightly ahead of Huckabee at 17%, creating the party'smost competitive nomination fight in decades.

NEW YORK -- The euro and U.K. pound came underpressure Wednesday following signals from their respective centralbanks that U.S. financial market concerns are weighing more on theirshores.

The European currencies received an additional blowlate in the morning, when Standard & Poor's Ratings Servicesslashed the credit ratings of troubled bond insurers.

The dollar consequently climbed against the euro toalmost a two-month high and rose against the pound to almost athree-month high. The dollar was also stronger against the yen despitea regression of risk appetite. The Dow Jones Industrial Average dropped25 points on the day, but year-end book-squaring also kept mostcurrency trading within narrow ranges.

Late Wednesday in New York, the euro was at $1.4377from $1.4402 late Tuesday, while the dollar was at 113.38 yen from113.45 yen. The euro was at 163.02 yen from 163.39 yen, according toEBS. The U.K. pound was at $1.9971 from $2.0124, and the dollar wasquoted at 1.1556 Swiss francs from 1.1526 Swiss francs late Tuesday.

"The bond insurers news put concerns in the U.S. stockmarket, which created a bit of safe-haven buying," said Robert Fullem,vice president of U.S. corporate currency sales in New York at Bank ofTokyo-Mitsubishi UFJ Ltd.

S&P changed the rating for ACA Financial GuarantyCorp. to junk status from single A. Losing that A rating means thebanks that insured securities with ACA Financial have to take backbillions in losses from the insurer under the terms of the creditprotection they bought from the company. S&P also changed itsoutlook to negative for several other bond insurers.

The dollar benefits in this environment, wheninvestors sell riskier assets, and Wednesday sterling took the brunt ofthe sell-off, said Mr. Fullem.

Sterling was especially hurt by the release of minutesfrom the December Bank of England monetary policy meeting, which showedthat the committee voted unanimously to cut rates to 5.5% from 5.75%.The market had expected a 7-2 vote.

In the euro zone, European Central Bank PresidentJean-Claude Trichet remained relatively hawkish in testimony before theEuropean Parliament's committee for economic and monetary affairsWednesday.

Mr. Trichet warned that euro-zone price stability isfacing upward risks over the medium term, while economic fundamentalsremain sound. He reinforced the bank's message that second-roundeffects -- or the pass-through of high oil and food prices to wages andgeneral consumer prices -- won't be tolerated by the bank. Dismissingcalls for an ECB rate cut, Mr. Trichet also stressed that the ECB can'taddress the source of market tension, but can only try to ensure asmooth functioning of the money market.

The ECB's decision Tuesday to inject a massive 349billion euros of liquidity into the euro-zone money markets alsoinfluenced the euro's modest decline overnight.

The act may have encouraged a sale of euros as bankstook advantage of the cheap money to raise funds and then swap them outof the single currency.

The central bank statements raised expectations for interest rate easing, in particular in the U.K., said Fullem.

The latest Ifo Institute survey from Germany releasedovernight didn't help. It indicated that German business confidencesharply deteriorated in December to its lowest level in almost twoyears.

There is a growing belief, said Mr. Fullem, "that thedollar may in fact be the ultimate safe haven given the fact thatsubprime issues are effecting other parts of the world now."

At least the effects on the U.S. have become "partly disclosed," said Mr. Fullem.

To that end, the dollar was able to gain Wednesdayagainst the yen, described often as a safe haven currency, even thoughthe greenback usually declines against Japan's low-yielding currencyduring times of risk aversion.

Also aiding the buck against the yen are expectationsthat the Bank of Japan will again keep rates steady. Governor ToshihikoFukui will make an announcement early Thursday.

Late in the day, the U.S. Treasury Department releasedits latest semi-annual report to Congress. Once again, it declined todesignate China as a currency manipulator, despite increasing pressureto do so from Congress, but reiterated its complaint that the recentappreciation in the Chinese yuan is "too limited and modest."

"Despite the progress that China has made and thecontinued public commitment to reform, China's exchange rate isundervalued against the U.S. dollar and on a trade-weighted basis, evenin the judgment of many domestic observers," the Treasury said.

The report also cited the value of sovereign wealth funds in stabilizing the market because they tend to be long-term investors.

On Thursday, third quarter gross domestic product will be released at 8.30 a.m. EST, the same time as weekly jobless claims.

By Bob Willis

Dec. 18 (Bloomberg) -- Builders in the U.S. broke ground inNovember on the fewest homes since 1993, reflecting concern loanrestrictions would deepen the slump in sales, economists saidbefore a report today.

Work began on 1.176 million houses at an annual pace, down4.3 percent from October, according to the median estimate of 70economists surveyed by Bloomberg News. Permits, an indicator offuture construction, fell to a 1.15 million rate from 1.17million, the survey said.

Some buyers may be having trouble finding financing after asurge in delinquencies and foreclosures reduced access tosubprime mortgages. A near-record number of properties on themarket and the prospect that prices will keep falling have setthe stage for additional weakening in demand and construction.

``Recent credit woes have sent housing on anotherdownswing,'' said John Silvia, chief economist at Wachovia Corp.in Charlotte, North Carolina. ``Inventories are still too highacross the country. There are more declines to come.''

Economists' forecasts ranged from annual rates of 1.09million to 1.25 million. The Commerce Department figures are dueat 8:30 a.m. in Washington.

A report yesterday added to evidence that housing is farfrom recovering as 2007 comes to a close. The NationalAssociation of Home Builders/Wells Fargo confidence index heldat a record low 19 for a third month in December.

October Sales

Sales of previously owned homes fell in October to theirlowest since record-keeping began in 1999, while new-homepurchases held near 11-year lows, according to reports lastmonth. Builders had 8.5 months' supply of unsold new homes instock, compared with an average 6.4 months in 2006.

Toll Brothers Inc., the largest U.S. luxury-home builder,Dec. 6 reported its first quarterly loss in 21 years and saidthe housing slump is the worst the company has seen in decades.

``Broader concerns about the nation's economy havemagnified worries about potential price declines in the housingmarket,'' Chief Executive Officer Robert Toll said during aconference call earlier this month.

Declines in home construction have reduced growth since thestart of 2006 and detracted 1 percentage point in the thirdquarter. Homebuilding will drop another 25 percent to a troughof less than a 1 million annual pace by the third quarter of2008, according to a forecast by economists at Lehman BrothersHoldings Inc.

No Immediate Recovery

``The momentum in the housing market still is downward,''said David Seiders, chief economist at the National Associationof Home Builders, at a Dec. 3 conference. ``Housing starts,given the inventory overhang, probably won't turn up until maybethe third quarter of next year.''

The housing recession has worsened since subprime mortgageturmoil in August led to a worldwide credit shortage. In thethird quarter, new foreclosures hit an all-time high, theMortgage Bankers Association said in a report Dec. 6, signalingmore homes will be piling up on the market.

Moving to contain the damage, President George W. Bush thismonth announced a plan to freeze rates for five years on somevariable-rate mortgages and provide assistance to as many as 1.2million homeowners. The proposal wasn't universally embraced.

``At best, it may stop some of the hemorrhaging of thehousing market, but it doesn't necessarily turn things around,''said Nicolas Retsinas, director of Harvard University's JointCenter for Housing Studies in Cambridge, Massachusetts, in aninterview this month. ``The fundamental problem with housing isoversupply.''

Extent of Decline

Housing starts in October were 46 percent below theirJanuary 2006 peak, while new home sales were down 48 percentfrom July 2005. Sales and construction are likely to continuefalling as long as inventories stay near record levels andprices tumble, economists said.

Home prices in the U.S. fell 4.5 percent in the thirdquarter from a year earlier, the most in at least two decades,according to the S&P/Case-Shiller home price index. LehmanBrothers is forecasting prices will drop at least 15 percentfrom peak to trough.

Falling values leave Americans feeling less wealthy andless likely to spend or borrow against home equity. Economistsat Morgan Stanley and Merrill Lynch & Co. in New York are amongthose predicting the U.S. will tip into recession next year.

Dec. 18 (Bloomberg) -- The cost of borrowing euros fell themost ever as the European Central Bank injected an unprecedented$500 billion into the banking system to ease gridlock in thecredit market.

The amount banks charge each other for two-week loans ineuros dropped a record 50 basis points to 4.45 percent, afterclimbing 83 basis points in the past two weeks, the EuropeanBanking Federation said today. That's 45 basis points more thanthe ECB's benchmark interest rate.

The decline is the first sign attempts by policy makers torevive interbank lending are succeeding. Central banks, led bythe Federal Reserve, are seeking to restore confidence to moneymarkets after the collapse of the U.S. subprime-mortgage market.The ECB loaned 348.6 billion euros ($501.5 billion) for twoweeks at a marginal rate of 4.21 percent today.

``These are strong-arm tactics intended to show the marketthat they're seriously committed to breaking the deadlock,''said Marc Ostwald, a fixed-income strategist at Insinger DeBeaufort SA in London. ``The ECB is helping to bankroll banksout of a problem that they themselves created.''

The ECB said bids at today's auction were received from 390banks and ranged from 4 percent to 4.45 percent. The centralbank first offered extra cash on Aug. 9, when it lent anunprecedented 95 billion euros in emergency funding. Banksborrowed 2.435 billion euros ($3.5 billion) at 5 percentyesterday, the most since Sept. 26, the ECB also said today.

The three-month euro borrowing rate fell 7 basis points to4.88 percent, down from near a seven-year high, the EBF said.

Fed Cash Auction

The Fed held the first of four cash auctions yesterday,offering $20 billion in one-month loans. The results will beannounced tomorrow. The Bank of England held the first of twospecial operations today, offering 10 billion pounds ($20billion) of three-month money after receiving 10.9 billionpounds of orders.

Central banks in the U.S., U.K., Canada, Switzerland andthe euro region are responding to more than $70 billion offinancial institution losses on securities linked to U.S.subprime mortgages.

Goldman Sachs Group Inc. estimated in a report a month agolosses related to record home foreclosures may be as high as$400 billion for financial companies. If accurate, banks,brokerages and hedge funds would need to cut lending by $2trillion, triggering a ``substantial recession,'' the firm said.

U.S. corporate defaults probably will quadruple next yearafter the number of companies that lost their investment-gradecredit ratings rose at the fastest pace since 2003, according toMoody's Investors Service.

The Euribor rate is based on a 360-day counting method forthe year. The EBF represents the interests of 4,500 banks in 24member states of the European Union and in Iceland, Norway andSwitzerland.

To contact the reporter on this story:Gavin Finch in London at gfinch@bloomberg.net