China Factories Losing Pricing Power

Wholesale cost deflation threatens Chinese stocks, gives global regulators room to ease.

Chinese factories are losing pricing power in the worst wholesale-cost deflation since 2009, signaling corporate earnings may deteriorate further and putting a damper on global inflation pressures.

Steelmaker China Oriental Group Co. says falling prices are wiping out profits, while Yunnan Copper Industry Co. cited the declines for a third-quarter loss. The producer-price index fell 3.6 percent in September from a year earlier and may stay negative until the second half of 2013 without large stimulus, according to Mizuho Securities Asia Ltd.

French Confidence

In Europe, France will report October measures of industrial confidence and the production outlook while the U.K. will report mortgage approvals for September.

Monthly Change

Wholesale prices declined 0.1 percent in September from the previous month, compared with a 0.5 percent drop in August, government data showed. Official data showed signs of an economic pickup in September, with factory output and retail sales accelerating.

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