Business and Finance

The Toronto stock market racked up a second consecutive triple-digit advance today as crude oil prices hit a six-month high. Traders also took in news of benign Canadian inflation.

New York indexes surrendered early gains and closed lower after the Federal Reserve downgraded its economic forecast.

Toronto's S&P/TSX composite index gained 131.49 points to 10,232.44 following a 338-point surge the previous day, as investors grow increasingly confident the spring rally, now in its third month, still has room to run.

The TSX Venture Exchange moved up 9.15 points on the day to 1,085.64.

In New York, the Dow Jones industrial average, up 117 points during the morning, closed with a loss of 52.81 points at 8,422.04. The Nasdaq composite slipped 6.70 to 1,727.84 while the S&P 500 index was down 4.66 to 903.47.

The Canadian dollar ended the day up 1.21 cents at 87.69 cents US – its highest close since October – after going as high as 88 cents US on U.S.-dollar weakness and commodity-price strength.

Statistics Canada said the annual inflation rate fell to 0.4 per cent last month, the lowest in almost 15 years and down sharply from 1.2 per cent in March. However, the decline is propelled by more moderate energy costs, and economists see no prospect of destructive deflation in overall price levels.

"Canadian inflation is now in full retreat, with a dip into negative headline readings due straight ahead – even with the recent backup in gasoline prices," said BMO Capital Markets economist Doug Porter.

Statistics Canada also said that decline of its leading indicator – a forward-looking gauge of economic activity – slowed from 1.5 per cent in March to 1.1 per cent in April.

The Federal Reserve, meanwhile, projected that the U.S. economy will shrink this year by between 1.3 and two per cent. The previous forecast was for a decline of 0.5 to 1.3 per cent. The Fed added that unemployment may hit 9.6 per cent, scrapping its old forecast of 8.8 per cent after the jobless rate jumped to 8.9 per cent in April, the highest in a quarter-century.

"They're saying the recovery itself may not be as robust as what people are talking about," said Doug Roberts, chief investment strategist at ChannelCapitalResearch.com in New York.

"The big thing that stands out to me is that they're saying that the unemployment rate is going to be above where they initially forecast it."

On the TSX, the energy sector was two per cent higher as the July crude contract on the New York Mercantile Exchange rose $1 business cards.94 to US$62.04 per barrel, the highest since early November. Crude prices got a lift after data showed U.S. inventories fell by a more than expected 2.1 million barrels last week.

Suncor Inc. (TSX: SU) gained $1.18 to $36.26 and EnCana Corp. (TSX: ECA) was up 65 cents to $62.26.

The June bullion contract on the Nymex moved ahead $10.70 to US$937.40 an ounce, taking the Toronto gold sector up almost 4.5 per cent. Barrick Gold Corp. (TSX: ABX) advanced $2.20 to C$41.53.

The spring rally has sent the Toronto energy sector up 39 per cent and the base-metals group soaring 114 per cent since early March, powered by hopes that Asia will lead the world out of its slump.

"China's demand for these products is enormous – they are the largest user of all the base metals, the second-largest user of crude oil," said Bob Tebbutt, vice-president of risk management at Peregrine Financial Group.

"We are an exporter of crude oil, we are exporters of copper, we are exporters of aluminum, all the commodities. So basically what you have is a strong commodity market."

U.S. markets started the session strong on relief over Bank of America Corp.'s ability to raise capital. The bank said late Tuesday that in less than two weeks it had raised US$13.47 billion through the sale of 1.25 billion shares. Its stock gained 25 cents to $11.50.

The TSX financial sector closed off early highs but still ahead 0.5 per cent. Manulife Financial Corp. (TSX: MFC) rose 22 cents to $22.42 and Scotiabank (TSX: BNS) climbed 55 cents to $36.81.

Canaccord Capital Inc. (TSX: CCI) reported a quarterly profit of $3.7 million, reversing a year-ago loss of $35.2 million caused by hits from asset-backed commercial paper. Revenue was down 25 per cent to $107 million but costs fell almost as fast, and Canaccord shares advanced 85 cents to $8.10.

Consumer discretionary stocks were weak as auto parts manufacturer Magna International (TSX: MG.A) fell $1.99 to $36.70 while Canadian Tire (TSX: CTC.A) lost 45 cents to $49.25.

Canwest Global Communications Corp. (TSX: CGS) jumped four cents to 39 cents after the media company said it had lined up $175 million to reshuffle its senior credit arrangements. Canwest, struggling under $4 billion in debt, said it aims to have a definitive agreement with noteholders by July 15.

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The recent introduction of the Electronic Consumer Protection Act, Canada’s long-awaited anti-spam bill, has been greeted with initial all-party support in the House of Commons. The bill just passed second reading, with committee hearings the next step in the legislative process.

Looking ahead, the big fight seems destined to focus on the government’s desire to establish a comprehensive regime with tough penalties that apply to most commercial communications to consumers.

Consumer groups will likely welcome the reforms, while some business and marketing organizations may paint a gloomy picture of the costs associated with the new regulations.

The bill strives to address most Internet-related consumer harms. These include email and text message spam, software programs that are secretly installed on users’ computers (spyware), the use of emails and websites that trick users into thinking they are visiting a trusted site (phishing), as well as the use of computers infected by viruses to send spam (botnets).

If enacted into law, the ECPA would make it illegal to send an electronic commercial message without the prior consent of the recipient. This would create an "opt-in" system, whereby, subject to certain exceptions, marketers would have to obtain consumers’ consent before sending them commercial messages.

Moreover, marketers would be required to meet several form requirements including identifying the sender and providing a mechanism to allow consumers to unsubscribe from receipt of further messages.

In addition to the consent requirements, the ECPA targets the tactics frequently employed by spammers. It would become illegal to harvest email addresses without consent or to alter the transmission information on an electronic message, a rule designed to target phishing practices.

The bill also makes several important amendments to the Competition Act to better ensure that the law captures false or misleading representations. This will grant the Competition Bureau the power to investigate and take action against false headers in emails, false locator information, or the presence of false or misleading content.

Attempts to install computer programs without a user’s express consent are also included within the ECPA quick payday loan. This not only addresses spyware that’s secretly inserted into some emails, but also software companies that attempt to install updates without informing users, or music companies that surreptitiously install anti-copying technologies.

The new provisions will only be effective if enforced and the ECPA features some of the toughest penalties in the world. The CRTC has been given a wide range of investigatory powers, including the power to compel Internet service providers to preserve transmission data. Once it concludes its investigation, the commission can pursue a settlement or bring a notice of violation with penalties that can run as high as $10 million.

The Privacy Commissioner of Canada can also investigate certain complaints and the Competition Bureau can go after misleading representations with penalties up to 14 years in jail (indictment) or $200,000 and a year in jail (summary conviction). For those not content to wait for the CRTC or the Competition Bureau to act, the law also creates a private right of action to facilitate lawsuits against Canadian-based spammers.

The ECPA addresses many of the recommendations of the 2005 National Anti-Spam Task Force, but not everyone will welcome it with open arms.

Some business groups are likely to oppose the shift toward an opt-in system, claiming the new rules will impede commercial opportunities.

Software companies may object to requirements to obtain express consent from users before installing new programs and opponents may try to sow fear within the business community, pointing to the regulatory costs and potential for multimillion-dollar liability.

Yet most of these provisions are standard fare around the world. All parties should recognize that providing reasonable consumer protections does not impede electronic commerce, but rather facilitates it.

Michael Geist holds the Canada Research Chair in Internet and E-commerce Law at the University of Ottawa. He can reached at mgeist@uottawa.ca or online at www.michaelgeist.ca.

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Germany could send a negotiation team to the United States at the end of the week to discuss solutions for General Motors unit Opel, Economy Minister Karl-Theodor zu Guttenberg said on Monday.

Guttenberg has said Germany is discussing plans with U.S. partners about a trustee arrangement if GM were to file for bankruptcy before a deal had been reached on a partner for Opel. The trustee idea has met some resistance in the United States.

“(I’m) optimistic in principle,” Guttenberg told reporters in Munich, referring to talks on the trustee idea.

The German government has made finding offers by investors a precondition for a trustee arrangement and has given interested parties until Wednesday to submit their offers for the carmaker.

Sources have told Reuters that Italian carmaker Fiat, Austrian-Canadian car parts maker Magna as well as private equity firm RHJ have had access to Opel’s books. However, it was not clear whether U.S. private equity firm Ripplewood’s European arm RHJ would decide to bid as well, the sources said online pay day loans.

Guttenberg said he expected offers from Fiat and Magna, but did not say whether there were other interested parties.

“We have to see what happens on Wednesday,” he said.

Fiat wants a three-way merger with Chrysler CBS.UL and GM’s European operations. Magna is also interested in Opel, probably together with Russian investors.

Guttenberg said on the weekend Opel could go bankrupt if the competing business plans for the carmaker from Fiat and Magna were both unsuitable.

The German government has outlined an idea whereby a trustee could protect Opel assets from GM creditors while a consortium of banks could provide Opel with bridge financing, until another investor takes it over.

(Reporting by Irene Preisinger; Writing by Kerstin Gehmlich; Editing by Jon Loades-Carter)

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More evidence emerged Friday that the recession is easing, with output by the nation’s factories, mines and utilities falling at the slowest pace in six months.

At least one area of the economy is flat, but that’s welcome news. Consumer prices were level in April after a slight dip the prior month.

Inflation usually doesn’t pick up until well after a recovery begins, noted Mark Vitner, senior economist at Wachovia. If the economy rebounds late this year, as many analysts expect, prices likely will be stable until 2011, he said.

Some economists have been concerned about the possibility of deflation. But most say that possibility appears remote because the Federal Reserve has responded with force to combat the downturn.
The Fed said output at factories, mines and utilities fell 0.5 percent last month, after revised declines of 1.7 percent in March and 1 percent in February. Analysts had expected a drop of 0.6 percent last month.

Still, the report showed U.S. industry remains weak. Industrial production has fallen in 15 of the 17 months since the recession began in December 2007 and is down 16 percent since then.

"Overall, yet another report that fits within the picture of an economy contracting more slowly but still far from an actual recovery," Paul Ashworth, senior U.S. economist at Capital Economics, wrote Friday.

A 1.4 percent increase in auto production, which came after huge reductions earlier this year, boosted overall results fast payday loans. But that won’t last as Chrysler and General Motors Corp. are shutting plants in May and June, which could send industrial production lower, economists said.

Also Friday, a Reuters/University of Michigan index of consumer sentiment rose to an eight-month high in May.

Meanwhile, the Labor Department said its consumer price index was flat last month, meeting expectations. The tame inflation performance reflected a second monthly drop in energy costs and a third straight decline in food prices.

Over the last year, consumer prices have fallen 0.7 percent, the largest 12-month decline since a similar drop for the year ending in June 1955.

Falling prices can be good for shoppers. But over the long term, they can erode wages and cause consumers to postpone purchases, leading to steep drops in production. But broad price declines aren’t affecting goods outside food and energy, economists said. Core inflation, which excludes food and energy, rose 0.3 percent last month. It was the biggest jump since July, but about 40 percent of the gain came from a huge rise in tobacco prices, reflecting higher federal taxes.

"Inflation’s not a problem if you don’t smoke," Vitner said.

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The city of St. Louis selection committee picked Heisman Properties LLC to redevelop the historic Municipal Courts Building (to be renamed 1300 Market) in downtown St. Louis.

Heisman Properties is working closely with EVS Realty, Friedman Group, Realtors and the city of St. Louis to redevelop the century-old building personal loans for bad credit. Rosemann & Associates P.C. will provide architectural design, and BSI Contractors are providing construction costs.

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Ontario’s minister of finance has a strategy for coping psychologically with the sorry state of his own retirement savings plan.

"I just don’t look," Dwight Duncan confided yesterday to a gathering of pension lawyers, actuaries and administrators.

Duncan, at age 50, is near the middle of the baby-boom generation. He knows full well that he will be in much the same shape as two-thirds of voters.

Anyone who, like him, lacks an employer-guaranteed pension must depend on his or her savings to supplement modest Canada Pension Plan and Old Age Security benefits.

Those savings have been sharply eroded by scary investment losses in the past year. So it will be all the more difficult to match the income in retirement that a traditional pension plan would provide, should the sponsoring company survive the current recession.

Duncan and other members of the provincial parliament have 10 per cent of their pay contributed by the government to a registered retirement savings plan.

But even when he tops that up with 5 per cent of his pay, Duncan is putting aside less than would be contributed for the pension of a high-level civil servant.

A total of 15 per cent of pay is, however, more than most individuals in the private sector are putting aside for retirement, and Duncan says he is concerned about the low level of savings.

So he wants provincial and federal governments to talk about how to encourage Canadians to save more, and what additional incentives could be put in place.

"I think we have to look broadly at pension adequacy," he said, admitting, "I don’t have a proposal."

He is counting on a May 25 meeting of provincial and federal finance ministers to kick off a national dialogue on a situation he expects will dominate political debate over the next decade.

"Our first plan is to start talking about it. The conversation is taking on a life of its own. A lot of people, particularly baby boomers, are aware that retirement is drawing near and are asking themselves, `Have I prepared adequately?’ And we need to have some dialogue that starts with governments talking among themselves car insurance."

Meanwhile, he says most voters would not support his government putting up the $3.5 billion that would be required to backstop the province’s Pension Benefits Guarantee Fund should General Motors of Canada not survive.

Premier Dalton McGuinty has already confirmed his government is not willing to do that. But Duncan told reporters the province has not considered the possibility of a court ruling that Ontario has some legal liability for failing to protect GM pensioners, who could see their benefits cut in half.

"We are focused on keeping GM viable," he said, while insisting that the viability of the company is closely intertwined with relieving the automaker of its heavy obligations for pensions and other post-retirement benefits.

"One of the key issues is legacy costs, and you cannot deal with keeping GM viable without dealing with the pensions," Duncan said in an interview.

The U.S. and Canadian governments have given General Motors Corp. and its Canadian subsidiaries until the end of the month to present a survival plan to qualify for loan guarantees.

"Our view is that to ensure that – and the federal government is dealing with it in the United States as well – we need to deal with the legacy costs and that needs to be dealt with by General Motors, the CAW, Ontario, Canada, the United States, the UAW and General Motors in the United States.

"That needs to be dealt with in the broader package, through the process, whether you call it a surgical bankruptcy or a negotiated resolution to get us to keep the company viable. We have people in Washington working on all of these issues."

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The Canadian stock market struggled for direction before ending slightly lower today, with financial shares weighing heavily. New York posted a modest gain as traders shifted into defensive stocks.

Toronto's S&P/TSX composite index closed down 16.44 points at 10,077.70 after spending much of the day fighting deeper losses. The TSX Venture Exchange ended ahead 15.16 points at 1,078.27.

The Canadian dollar moved up 0.28 of a cent to 86.06 cents US, after Statistics Canada reported the country's merchandise trade surplus increased to $1.1 billion in March from $262 million in February, as imports fell faster than exports.

On Wall Street, the Dow Jones industrial average rose 50.34 points to 8,469.11. The Nasdaq composite index was down 15.32 at 1,715.92 while the S&P 500 index slipped 0.89 to 908.35.

The session didn't provide many answers for observers who have been predicting a pullback in the rally which has pushed the main TSX index up 34 per cent since early March.

"It's clear that the economic picture has improved slightly, so there's some justifiable basis for a rally," said Meny Grauman of CIBC World Markets, noting that it's hard to read a trend into today's flat session following Monday's 144-point slide on the TSX.

"Maybe the market had shown too much enthusiasm based on very little new information, so this type of move is definitely not surprising from a fundamental point of view."

The Toronto financial sector lost 1.6 per cent, as Royal Bank (TSX: RY) declined 86 cents to $43.29.

Gold stocks led gains, up 4.7 per cent, as the June bullion contract rose $10.40 to US$923.90 an ounce on the New York Mercantile Exchange.

The TSX energy sector slipped 0.4 per cent, although the near-month Nymex crude oil contract closed 35 cents higher at US$58.85 a barrel after briefly topping $60 as data showed China imported nearly 14 per cent more oil in April than a year earlier.

For stock market traders, "it's a time for reflecting – and it is so often the time when you do get a lull in the market, as we go into the summer season," observed Michael Smedley of Morgan Meighen & Associates direct faxless payday loans.

"We can't ignore that the market has rallied tremendously already. It would be reasonable to see profits removed from stocks."

In Canadian earnings news, home renovation retailer Rona (TSX: RON) said bad weather and the recession knocked it to a first-quarter loss of $2.5 million as sales sagged 7.2 per cent. Rona shares were hammered down seven per cent to $13.60.

George Weston Ltd. (TSX: WN), Canada's largest baked-goods maker and parent company of Loblaw, said profits rose to $863 million from $131 million a year ago, thanks to a gain from selling its U.S. fresh baked goods business. Weston shares moved up $2.47 to $65.99.

Groupe Aeroplan Inc. (TSX: AER) descended seven per cent after first-quarter earnings of $23.2 million, down sharply from $42.1 million a year earlier. The company's stock was down 64 cents to $8.21.

Vector Aerospace Corp. (TSX: RNO) soared seven per cent to $4.49 after a record net profit of $9.2 million for the quarter, more than double its earnings last year.

Power Financial Corp. (TSX: PWF) expects more writedowns from credit losses despite signs that the worst of the economic recession is over. Net income fell to $195 million from $586 million a year earlier, and its shares closed down 10 cents to $24.93.

U.S. investors have shifted into defensive corners of the market, driving up shares of drugmakers like Pfizer Inc. and drink maker Coca-Cola Inc., which tend to hold up better in economic downturns.

Shares of General Motors Corp. (NYSE: GM) tumbled to their lowest level since 1933 as investors fear bankruptcy ahead of a June 1 restructuring deadline. GM stock was briefly down to US$1.09, and closed at US$1.15, down 20 per cent on the day.

Nissan Motor Co., Japan's No. 3 automaker, reported an annual net loss of 233.7 billion yen (C$2.81 billion), its first yearly loss in a decade, but said it expects the red ink to lessen in the current year.

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China’s new lending cooled in April, easing concern that banks are taking on too much risk in a credit boom after the government dropped restrictions on loans in November. Money supply rose by a record.

Lending was 591.8 billion yuan ($86.7 billion), the central bank said in a statement on its Web site today. The number is about a third of the record 1.89 trillion yuan in March. M2, the broadest measure of money supply, rose 26 percent from a year earlier.

Consumer prices fell 1.5 percent in April from a year earlier, the statistics bureau said today, making it easier for the government to maintain the “moderately loose” monetary policy that saw restrictions on banks’ loan volumes scrapped in November. China is yet to establish a stable economic recovery, with lending concentrated on government projects while small businesses lack cash, the central bank said last week.

“There were concerns about rising non-performing loans; those concerns will have eased,” said Ben Simpfendorfer, an economist at Royal Bank of Scotland in Hong Kong. “If bank-loan growth continues to drop from here that would be a worry, but I don’t expect that.”

The Shanghai Composite Index closed 1.8 percent lower. The yuan was little changed at 6.8223 against the dollar as of 3:25 p.m. in Shanghai.

Investment, Exports

New yuan loans rose about 26 percent from a year earlier, according to the central bank’s statement. In comparison, lending surged six times in March.

Other data this week may show investment growth accelerated and a decline in exports moderated, strengthening a fledgling recovery in the world’s third-biggest economy. China is battling a global recession that dragged economic growth to 6.1 percent in the first quarter, the slowest pace in almost a decade, according to official data.

Urban fixed-asset investment grew 29.1 percent in the four months through April from a year earlier, according to the median estimate of 16 economists surveyed by Bloomberg News. That compares with a 28.6 percent gain in the first three months.

Exports may have dropped 15.3 percent last month, the smallest decline in four months. The government will release trade and investment figures tomorrow.

Gaining Speed

“The economy has gained speed heading into the current quarter,” said Wang Qian, an economist with JPMorgan Chase & Co online cash advance. in Hong Kong. “We expect it to strengthen further as policy stimulus kicks in more powerfully and the external environment gradually improves.”

That view contrasts with interest-rate swaps showing traders paring expectations for the speed of the recovery.

China’s consumer prices fell for a third month on lower costs for food and commodities. Producer prices plunged 6.6 percent, the most since Bloomberg data began in 1999. While lower prices may encourage consumer spending, the central bank is also on guard against entrenched deflation, where people delay purchases in the hope of better deals in the future.

“Downward pressure on consumer prices still exists,” Su Ning, a deputy governor of the People’s Bank of China, said in Shanghai today.

The stimulus package announced in November is taking effect and the economy is recovering, Su said.

Manufacturing Expands

Chinese manufacturing expanded in April for the first time in nine months, according to the CLSA China Purchasing Managers’ Index. A government-backed index also showed an expansion.

General Motors Corp., the biggest overseas automaker in China, said its sales in the country rose 50 percent last month to a record. Overall vehicle sales climbed 25 percent to a record 1.15 million units.

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, increased its lending by 636.4 billion yuan in the first quarter, an amount greater than Vietnam’s annual gross domestic product.

Lenders face “severe” challenges in managing their risks, the banking regulator said last month.

“The size of lending in the first quarter was quite astonishing,” said Wang Tao, an economist at UBS AG in Beijing. “It takes time to digest that much money.”

Besides the risk of bad loans, the credit boom may inflate asset prices and increase the likelihood of inflation making a comeback. The Shanghai Composite Index has climbed about 42 percent this year.

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The Canadian dollar bulked up by more than 1 1/2 American cents today to a six-month high, lifted by brightening economic hopes supported by better-than-expected job data.

The currency jumped to 86.91 cents US late in the afternoon, a gain of 1.62 cents from Thursday’s close.

This was up from below 77 cents in the dark days of early March.

And it was the loonie’s highest level since it spiked up by more than two cents on Nov. 4 as Americans elected Barack Obama president – a gain the Canadian currency quickly surrendered as it resumed a decline from almost 97 cents last September and from parity a year ago.

Today’s upward move came after Statistics Canada reported the economy added 35,900 jobs last month – confounding economist expectations that losses would continue for a sixth month, likely by 50,000.

A sharp early rise in the currency prompted Statistics Canada to investigate whether its data may have leaked before being officially released at 7 a.m. ET. The loonie spiked by almost three-quarters of a cent in thin trading during the hour before the release, and a spokesman said the agency was examining its procedures.

The currency was further bolstered by hopeful signs in Canada’s main export market, as the United States shed 539,000 jobs, the fewest in six months and far smaller than market expectations of 620,000 job cuts.

The loonie also got support from oil. The near-month crude contract was up $1.92 to US$58.63 a barrel on the New York Mercantile Exchange, continuing an upturn after trolling around the $50 range for more than month.

"Oil prices are being driven higher by optimism over economic recovery and in response to soaring equities and associated weakness in the U.S. dollar," commented British energy consultancy KBC Market Services.

The economic numbers support the so-called "green shoots" thesis that recent data indicate signs of revival with the global economic downturn having hit bottom.

"Even before the employment numbers came out we were certainly seeing that the bias was for a stronger Canadian dollar and a weaker U check cash advance.S. dollar," said Camilla Sutton, currency strategist at Scotia Capital.

"All in all, we’re seeing that growth currencies like Canada are doing very well as commodities are having a good run, and the world is focusing on the potential that global growth comes back."

TD Bank economist Diana Petramala cautioned that "the Canadian economy still has a lot of challenges ahead of it," after what was likely its sharpest first-quarter contraction on record.

"While it is great news that job destruction halted in April, we shouldn’t put too much stock in one month of data," Petramala commented. `During the ’90s recession it was not uncommon to have one or two months of large jumps in employment amidst several months of large-scale job losses."

And Scotia’s Sutton noted that in wrenchingly volatile times, a currency forecast can be outdated before it’s even published.

"As everyone well knows after the last year, anything can change in a heartbeat," she said. "However, this is a reasonable level for Canada to be trading at, and right now the trend does appear that we are moving toward a stronger Canadian dollar."

CIBC World Markets chief economist Avery Shenfeld observed that the loonie’s seven per cent appreciation in the past month “promises to tighten competitive conditions for exporters at a time when Canada’s key customers are still struggling."

Shenfeld added that the currency’s rise "hasn’t been sufficiently offset by improvements in either export prospects or commodity prices," and "we’re betting that the C$ rally will let up on its own, given the drag from the trade balance and a likely stall in oil prices in the weeks ahead."

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Anheuser-Busch InBev INTB.BR reported a better-than-expected rise in first-quarter core profit on Thursday and announced the sale of a Korean brewery, but warned of tougher cost comparisons in the rest of the year.

The world’s largest brewer said earnings before interest, tax, depreciation and amortization (EBITDA) rose a like-for-like 25.9 percent to $2.79 billion, compared with the average $2.56 billion in a Reuters poll of 13 analysts.

The maker of Budweiser, Stella Artois and Beck’s, reporting in U.S. dollars for the first time, said all areas delivered EBITDA margin expansion, led by North America, where it grew to 37.3 percent from 29.9 percent.

North America now accounts for about 40 percent of group revenue after InBev’s $52 billion purchase last year of Anheuser-Busch. EBITDA there grew by a like-for-like 31.7 percent.

However, AB InBev cautioned: “The remaining quarters of the year should not show similar organic EBITDA growth due to more difficult comparisons”

The company said volumes were up 0.9 percent, against expectations of broadly flat and better than competitors.

That compares with a 1 percent volume fall for world number two SABMiller and 6 free credit score.3 percent and 5 percent like-for-like drops for Heineken and Carlsberg, both heavily present in the depressed European market.

AB InBev also announced the planned divestment of Oriental Brewery in Korea to private equity firm Kohlberg Kravis Roberts & Co for $1.8 billion.

The deal, yielding a capital gain of $500 million, would be used to build down some of the $45 billion of debt AB InBev took on to fund its merger.

The company, which has set a target of bringing in merger savings of $2.25 billion over three years, said the first quarter had yielded $295 million.

AB InBev shares have more than doubled since a November low, when debt concerns and a rights issue weighed them down, and now trade at a price to projected 2009 ratio some 25-30 percent above European peers.

For some, this is justified by strong cash flow generation and cost savings. Others argue expected savings are already factored into the share price.

(Reporting by Philip Blenkinsop; Editing by Sharon Lindores)

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