US & World Daily Markets Financial Briefing 06-03-2007

The world's most trusted name in professional trader education. Click Here

Wall Street rises after gains overseas

NEW YORK - Wall Street shot higher Tuesday as investors were encouraged by a rebound in world markets, and moved to recoup some of the massive losses suffered in last week's sharp pullback.
   
Investors came off the sidelines to send all three major indexes higher in the first hour of trading, moving back into stocks that have languished in five turbulent sessions. The Dow Jones industrials were briefly up more than 100 points before edging back.
   
However, it was unclear if the correction that has swept around the global had run its course. U.S. investors were still contending with fundamental economic issues, including a weaker than expected reading on fourth-quarter productivity and the dollar's continuing weakness against the yen.
   
Moreover, trading has been volatile over the past week, with stocks tending to give back any slim gains they made during the course of a session. The potential for a change of direction might also come from a speech by Federal Reserve Chairman Ben Bernanke during the afternoon session.
   
The Dow rose 85.00, or 0.71 percent, to 12,135.41.
   
Broader stock indicators were higher. The Standard & Poor's 500 index was up 12.65, or 0.92 percent, at 1,386.77, and the Nasdaq composite index, especially hard hit over the past week, rose 29.39, or 1.26 percent, to 2,370.07.
   
Overseas, stock indexes were posting healthy gains after plunging since last Tuesday.

Stocks in focus

Jacobs Engineering Group Inc. said Tuesday it received a contract from Arabian Amines Corp. to engineer, design and manage development of a $150 million ethyleneamines factory in Saudi Arabia.
   
Annual production at the Al-Jubail-based facility should be around 30,000 tons of ethyleneamines -- chemicals used in fuel additives and plastic lubricants, among other applications. Jacobs said its Reading, U.K., and Al-Khobar, Saudi Arabia, offices are handling the work.
 
Jacobs Engineering shares rose 22 cents to $87.73 in morning trading on the New York Stock Exchange.

Health care products maker Perrigo Co. said Tuesday that it is buying nine generic prescription dermatological products and four pipeline products from Glades Pharmaceuticals Inc. for $56 million in cash.
   
The deal also includes consideration for future research and development collaborations. The transaction is expected to close by the end of the month.
   
Glades is a division of privately held Stiefel Laboratories Inc., which specializes in the branded dermatology market.

VantagePoint's market forecasts are nearly 80% accurate.  Take a look at actual  forecasts and see the difference they can make in your trading. Click here to see two recent forecasts now.

Yen rangebound; markets looking for next direction

LONDON - The yen remained within a range against most currencies as investors took a breather after the strong rally over the past week in order to assess where the market is likely to go next.
   
Gains made in equity and commodity markets today allowed a pause in the unwinding of carry trades -- where money is borrowed in countries with low interest rates like Japan to be invested in higher-yielding economies -- thus weighing on the yen.
   
However, "today's stock gains most likely constitute a correction within a correction that appears to have a plentiful supply of fuel," said Neil Mellor at Bank of New York.
   
He cites a weakening US housing market and signals from the Chinese government that it would seek to cool off its economy as two factors which will lead to more carry trade unwinding.
   
"Moreover, from a practical perspective, one major sticking point to the swift revival in risk appetite is the rise in volatility engendered by the recent turmoil, which is anathema to the carry trade," Mellor said.
   
Considering this, "and given the distinct possibility that real money investors may also be dragged into position adjustment, this suggests to us that we are simply witnessing a dead cat bounce," he said.
   
With markets so focused on global risk assessment, the euro was little affected by economic data this morning that confirmed robust fourth quarter economic growth and below-consensus retail sales for January.
   
The European Central Bank is widely expected to raise rates on Thursday, with markets eagerly awaiting the statement for a signal on how much further rates can rise.
   
Elsewhere, the pound moved largely in line with global markets, marking gains against the yen, and to a lesser extent against the euro and dollar as well. This was helped by data this morning showing retail sales rose 3.3 pct in February on a like-for-like basis, above the 2.5 pct the market was expecting.

Trade with RCG fxtrader™, the platform offering instant access to 12 major FX trading pairs with low spreads (2 pips EURUSD, USDJPY) and global news from 3 major sources.  Trade with a registered and regulated company in business for 80 years. Smart money trades here – Get your FREE Trial Today!

Top Stories in Europe at 11.05 GMT

Brussels - Euro zone GDP grew 0.9 pct in the fourth quarter from the third quarter, and was up 3.3 pct year-on-year, EU statistics office Eurostat said. The figures are unchanged from Eurostat's provisional estimate, published on Feb 13.

Paris - France Telecom reiterated its 2007 guidance of 6.8 bln eur of organic cash flow generation as it confirmed full year results that were released earlier in a preliminary form. It plans to maintain its full year dividend for 2007 at the 2006 level of 1.20 eur per share.

Retail goods company PPR said it has agreed to sell its Kadeos unit, which specialises in gift vouchers and cards, to Accor for 210 mln eur. The move followed an offer from Accor. The transaction is expected to close in mid-March.

French finance minister Thierry Breton said he would like EADS to launch a capital increase in which the state, a 15 pct shareholder, would participate. He made the comment on France Inter radio.

Amsterdam - ABN Amro Holding NV's ABN Amro Capital and Allianz Capital Partners said they agreed to each acquire 50 pct of publishing and security identification group Sdu from the Dutch State for 415 mln eur. The companies noted that the acquisition by Sdu of Wolters Kluwer's 25.9 pct minority stake in Sdu Publishing, which was also announced this morning, forms part of the buyout.

Geneva - DaimlerChrysler AG Chairman Dieter Zetsche said Tuesday he is confident that the plan to re-energize Chrysler will work, but reiterated that all options for the unprofitable U.S. division were still on the table. "I am sure that we will see a rebound," he told reporters on the sidelines of the 77th annual Geneva Motor Show.

Milan - Fiat SpA CEO Sergio Marchionne said the car maker has suspended a bond issue announced last month but is ready to re-propose the operation when the financial markets are "rational" again."We haven't stopped the bond issue, but we have suspended it," Marchionne said at the Geneva motor show.

Frankfurt - Porsche AG's chief executive Wendelin Wiedeking said he sees the company's operating profits for the first half of the year exceeding those for the same period in 2005. "I am very optimistic for the second half of the year," said Wiedeking at the Geneva motor show.

Fraport AG said full year EBIT rose to 330.4 mln eur, up from 306.6 mln in 2005 but below the consensus of 360.1 mln, and proposed to increase its dividend to 1.15 eur/shr from 0.90 last year, equally below expectations of 1.20-1.25 eur.
 
The owner and operator of Frankfurt airport presented a cautious outlook for the full year 2007, with group net profit likely to be lower than 2006, which benefited from positive one-offs.

Vienna - Telekom Austria said it will increase full year dividends after operating profit for 2006 grew 24.6 pct pct to 772.4 mln eur in 2006 thanks to growth in its broadband business and international operations. The company will propose a 36.4 pct increase in 2006 dividend to 0.75 eur a share at its shareholder meeting on May 23.

Stockholm - Alfa Laval AB said it has signed an agreement to acquire air heat exchanger firm Helpman BV, for an undisclosed sum. Helpman is a leading company in the European market for air heat exchangers used in the logistical chain for food, ie, refrigeration and temperature control, according to Alfa Laval.

London - Xstrata PLC, the world's fifth-largest mining company, posted a 112 pct increase in EBIT for 2006 helped by higher commodity prices and three acquisitions.
 
The company raised its cost savings estimate from the acquisition of Falconbridge Ltd, which it successfully completed at the year end, to 545 mln usd a year from its last guidance of about 170 mln usd. It estimates operational cost savings of about 265 mln usd a year and a further 280 mln usd of annual pretax savings from the inclusion of former Falconbridge assets from 2007.

The Bank of England's rate hikes in November and January have yet to have an impact on consumer spending in the UK, a leading retailing lobby group said today. In its monthly survey of high street spending, the British Retail Consortium said like-for-like sales, which exclude new stores and office space, were up 3.3 pct in February on the previous year, when sales rose only 0.6 pct.

Key officials of BP PLC, led by retiring chief executive John Browne, pocketed lower pay in 2006 following the series of mishaps suffered by the UK oil giant's major US business. BP halved the bonuses for executives, offsetting the 5-10 pct rise in base salaries it granted for the year.

Inflation picked up in September in Europe as both areas show fragile economic growth. Just as in the U.S., rising energy prices are to blame. Read free, daily market reports available only at CMS Forex and open your free demo trading account today. Click here

Asian shares close higher as markets rebound on bargain hunting

HONG KONG - Shares across the Asia-Pacific region closed higher as bargain hunters emerged and markets rebounded from yesterday's slide.
   
Tokyo shares ended higher on bargain hunting and the fall in the yen against the US dollar, although worries over the outlook for the US economy persisted, capping the market's advance.
  
The Nikkei 225 Stock Average finished up 202.25 points or 1.22 pct at 16,844.50, off the day's high of 16,882.92. The TOPIX index of all first-section issues advanced 29.83 points or 1.79 pct to settle at 1,692.54, off a high of 1,694.36.
   
"Investors bought back shares after yesterday's steep fall and following a pause in the yen's climb, after the unwinding of yen carry trades appears to have run its course," said Kazuhiro Takahashi, equity general manager at Daiwa Securities SMBC. A recovery in other East Asian stock markets also provided some relief to investors, he added.
   
"But investors kept their eyes fixed on the condition of the US economy, especially after recent weak data, including the latest manufacturing ISM survey and the upcoming (February) employment data later this week," Takahashi said.
   
Australian shares closed sharply higher as investor sentiment rebounded on bargain hunting. Sentiment was helped by gains in other Asian equity markets today while further gains will depend on the direction of US shares and commodity prices. The S&P/ASX 200 closed up 118.2 points or 2.09 pct at the day's high of 5,771.8, regaining some of the loss from the record close of 6,044.0 set on Feb 26.
   
Hong Kong shares were sharply higher in afternoon trade, rebounding after yesterday's 4 pct drop as investors took note of mostly firmer regional markets including Tokyo and Shanghai. At 3.25 pm the Hang Seng Index had recovered 377.02 points or 2.02 pct to 19,041.90.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on bargain hunting with financial issues and steel makers gaining ground.
   
The Shanghai A-share Index was up 57.84 points or 1.98 pct to 2,984.44 and the Shenzhen A-share Index was up 5.52 points or 0.73 pct at 762.91.
   
Seoul shares finished sharply higher in a technical rebound, clawing back about a third of the past four days' plunge to reclaim the 1,400-point level. Exporters led the rally on hopes that their global competitiveness will improve on the won's turning weaker against the yen and the US dollar.
   
The KOSPI index closed up 26.78 points or 1.95 pct at 1,402.93, off a low of 1,382.70 and a high of 1,403.75. "The market rebounded from a very steep correction after hitting a new record high and today's sharp rebound implies that investor sentiment is quickly stabilizing," Daewoo Securities analyst Kim Seong-Ju said.

Follow the futures and FX markets with our trading experts and read their analysis.  Click here to sign up now!

Base metals rise as slowdown fears fade, Gold recovers

LONDON - All metals rose as fears of a global economic slowdown faded and lower stocks helped boost sentiment. Base metals across the board joined the commodity rally, and edged up after London shares climbed higher in early deals this morning.
   
"On the assumption that the worst of the risk aversion is behind us we would expect base metals to maintain the recovery as supply/demand fundamentals remain tight," said UBS analyst Robin Bhar.
   
Rumours last week that the Chinese authorities are set to take steps to control the booming economy have sent jitters though markets worldwide. Slower Chinese growth could ease demand for base metals, especially copper, which is essential for the country's fast-growing manufacturing sector.
   
Furthermore, investors had shied away from high risk assets, such as metals, amid the global equity sell-off.
   
However, metals were up today as falling inventories lifted prices and recovering stock markets prompted "consumer bargain hunting" which helped to "rally prices further during the session," added Bhar.
   
Copper stocks stored in LME warehouses were down 1,125 tonnes though, at 206,050 tonnes, said a daily LME report. At 12.52 pm, LME copper for three-month delivery was up at 6,000 usd a tonne against 5,890 usd at yesterday's close.
   
Nickel stocks rose by 120 tonnes to 3,810 tonnes but stocks of the metals are still at dangerously low levels, with total inventories equivalent to less than one day's global consumption.
   
Looking ahead, analysts added the second quarter is seasonably busier and demand for metals is widely expected to pick up, forcing prices higher. Nickel was up at 40,150 usd from 39,300 usd at yesterday's close.
   
In other metals lead was up at 1,880 usd a tonne against 1,815 usd at the close yesterday, zinc rose to 3,340 usd against 3,250 usd, aluminium was up at 2,725 usd against 2,768 usd while tin rose to 13,400 usd against 13,100 usd.

Gold recovered from a six-day losing streak that sent the metal to six-week lows in Asia earlier, as traders took comfort from signs of a modest recovery in global equity markets.
   
At 11.57 am, spot gold was quoted at 645.40 usd an ounce, up from the 637.50 usd level seen in late New York trades yesterday. Earlier in Asia, the precious metal fell to a six-week low 632.30 usd.
   
"Some gold recovery was in evidence into the close (yesterday) and has been aided further this morning by a modest upturn in the Nikkei," said Standard Bank analysts in a note.
   
Gold has declined sharply in recent weeks, in line with a fall in global equity markets that was sparked by last Tuesday's 9 pct plunge in Chinese stocks -- the largest one-day decline in a decade.
   
Silver was up at 12.91 usd an ounce against 12.67 usd in late New York trades Friday, platinum was up at 1,186 usd an ounce against 1,171 usd while palladium was up at 340 usd against 338 usd.

Click here to receive ADVFN's NEW Weekly Forex Currency Review on US Dollar, Euro, Japanese Yen, British Pound, Swiss Franc, Australian Dollar, Canadian Dollar, Indian Rupee and the Hong Kong Dollar.