Furor for metals equities likely soon, CBSMarketWatch''s Calandra writes

By Adam Entous
a href=http://biz.yahoo.com/rf/031014/bush_currencies_apec_4.hthttp://biz.yahoo...

WASHINGTON, Oct. 14 (Reuters) -- President George W.
Bush said on Tuesday that he would use his trip to Asia
to press China and Japan to stop trying to weaken their
currencies, which American manufacturers say are hurting
their exports.

Bush, in an interview with Asian journalists, made clear his
preference for less intervention by Japanese authorities to
weaken the yen against the dollar, saying: quot;Markets ought
to be determining respective currencies.quot;

But, at the same time, he restated the U.S. policy of
wanting a strong dollar -- a policy many investors see as
hollow given the administration's tolerance of the dollar's
slide, most recently to three-year lows against the yen.

quot;I'll remind them (Chinese and Japanese leaders) that
this nation has a strong dollar policy, and we expect the
markets to reflect the true value of currency,quot; Bush said.

White House national security adviser Condoleezza Rice
rebuffed suggestions that the president was sending
conflicting messages by stating his support for a strong
dollar policy while prodding Japan and China to implement
policies that would effectively reduce the value of the U.S.
currency.

quot;The president believes that the market ought to set these
rates, and the president is adhering to a strong dollar
policy which has been U.S. policy for a very long time,quot;
Rice said.

The administration has come under mounting pressure to
take action against China.

U.S. manufacturers -- a critical base of support for Bush
in the run-up to next year's presidential election -- and
members of Congress have accused Beijing of flouting
U.S. and international trade laws with its pegged currency.

Senate Minority Leader Tom Daschle, a South Dakota
Democrat, urged the administration to start an investigation
of China's actions under the World Trade Organization
(WTO).

quot;We are losing hundreds of thousands, in fact, now
millions of manufacturing jobs, many of them going to
China, as a direct result of this currency manipulation,quot;
Daschle said.

Rice said Bush would urge the Chinese to quot;adhere
completely to their WTO obligations, and to be certain
that ... they are really, practically following the letter and
the spirit of what they've signed on to.quot;

A small group of lawmakers said they would propose
legislation to repeal China's trade privileges in the
United States.

Some of Bush's economic advisers have been wary of
pushing Beijing too hard, warning that a sudden
revaluation of the yuan currency could trigger a banking
crisis.

Federal Reserve Governor Ben Bernanke said it would be
dangerous for China to move to a floating yuan, and
warned the currency could actually weaken if that were
to take place.

Bush departs on Thursday for Japan to meet Prime
Minister Junichiro Koizumi, then travels to Bangkok for
the Oct. 20-21 annual summit of the Asia Pacific
Economic Cooperation (APEC) forum, where he will
meet with Chinese President Hu Jintao.

China has rebuffed calls from U.S. Treasury Secretary
John Snow to allow the yuan to trade more freely, and
other Bush administration officials played down prospects
for a breakthrough when Bush meets with Hu.

Congressional aides said Bush was wary of antagonizing
China while it is serving as the key broker in nuclear talks
with North Korea.

The Treasury plans to delay until Oct. 30 a report to
Congress on whether major trading partners have unfairly
manipulated their currencies to gain a trade advantage.
Lobbyists said they expected China to be singled out.

quot;Countries need to be mindful that we expect there to be
fair trade,quot; Bush said, citing the U.S. trade imbalance.
The United States' trade deficit with China hit a monthly
record of $11.7 billion in August.

Manufacturers believe Beijing's currency policy makes it
tough for them to compete with Chinese rivals, who can
offer their goods in the United States at lower prices. U.S.
manufacturers have shed about 2.7 million jobs over three
years and largely blame China for their competitive woes.

quot;The president believes that if the playing field is level and
if we are engaged in free and fair trade, Americans can
compete anywhere,quot; Rice said.

By seizing on the currency issue, Bush hopes to score
political points in rust-belt states like Michigan, Ohio,
and Pennsylvania.

quot;We'll talk about currency with the Chinese and with my
friend Prime Minister Koizumi,quot; Bush said.

quot;The way that currencies ought to be valued is based
upon economic activity, a fiscal policy, monetary policy
of their respective governments, the potential for growth,
the potential for long-term viability of the economies. That's
how our respective currencies ought to be valued,quot; he added.

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