US & World Daily Markets Financial Briefing 01-03-2006

U.S. stocks post early gains; Pfizer down on drug study

NEW YORK - U.S. stocks edged higher Wednesday as investors mulled a mixed batch of data, but Pfizer Inc. shares fell after a critical study of its Celebrex painkiller drug.
   
The Dow Jones Industrial Average was up 19 points at 11,012 after falling more than 100 points on Tuesday.
   
The Nasdaq Composite Index rose 8 points at 2,289 while the S&P 500 Index gained 2 points to 1,283.
   
"We're seeing a little bit of cash being put to work but it doesn't look like it's across the board, it's more stock specific," said Mike Viracola, managing director at Adams Harkness. "The path to the least resistance remains up."
   
On the broader market for equities, advancers outpaced decliners by 4 to 3 on the New York Stock Exchange, and by 7 to 6 on the Nasdaq.
   
On the data front, factory activity in the United States accelerated in February, the Institute for Supply Management reported.
   
The ISM index rose to 56.7% in February from 54.8% in January. The increase was larger than expected. The consensus forecast of estimates collected by Marketwatch was for the index to inch higher to 55.8%. Readings above 50
indicate expansion.
   
The latest personal income and spending data offered a mixed picture on the economy.
   
U.S. personal incomes rose 0.7% in January, the biggest increase since July.
   
The rise in wage inflation is somewhat offset by benign consumer inflation data. Although the headline consumer number rose 0.5% in January on higher energy costs, core inflation, which strips out volatile food and energy costs, ticked up just 0.2%, the lowest year-over-year core inflation since March 2004.
   
Real consumer spending, meanwhile, adjusted for inflation, increased 0.4% in January, the weakest since October.
   
Also, outlays on U.S. construction projects increase a lower-than-expected 0.2% in January, the Commerce Department.

Forex

After the strong ISM data, the dollar trimmed its losses against the euro, and extended its gains against the Japanese yen.
   
The euro added 0.1% to $1.1942. Against the Japanese yen, the greenback was
up 0.2% at 116.01.

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Shares in Pfizer Inc. fell 1.3% to $25.85 after a study showing its Celebrex arthritis drug nearly doubles the risk of heart attacks.
   
Intel Corp. weathered some cautious broker comment, up 13 cents at $20.73. J.P. Morgan trimmed its 2006 and 2007 earnings estimates on the chipmaker. The bank said checks show the company is tracking below its revenue outlook of $9.4 billion after losing market share to Advanced Micro Devices Inc. Broker Stifel Nicolaus also cuts its price target on Intel to $30.
   
Sirius Satellite Radio fell 2.7% at $4.97 after CBS Corp. said it is suing Howard Stern for breach of contract.
   
CBS alleges the popular radio host "misappropriated" millions of dollars of CBS Radio airtime by promoting his defection to Sirius Satellite Radio, a move he made in January. On Tuesday, CBS shares fell 37 cents to $24.46.
   
The car sector will be in focus as the nation's Big Three automakers General Motors Corp. , Ford Motor Co. and DaimlerChrysler as well as their Japanese rivals release sales figures for February.
   
Even though the New Year's unseasonably good weather turned bad in February, Wall Street is forecasting that auto sales have risen this month from year-ago levels on the strength of such new products as GM's big-SUV lineup and continued success for the Japanese manufacturers.
   
Shares of FedEx Corp. rose 1.8% to $109.12 after Bear Stearns upgraded the express parcel service company to outperform from peer perform. The broker increasingly believes it can hold its current pricing levels as rival UPS is competing less aggressively on price in the U.S.

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The European Markets at 12.00 GMT

London - UK blue chips were higher at midday, paced by a strong mining sector following healthy results from Xstrata, while talk of an imminent bid for BOC from Linde also lifted sentiment, dealers said.
   
By 11.41 am, the FTSE 100 index was 29.6 points higher at 5,821.1, coming off earlier lows of 5,783.9, with all the broader FTSE indices also higher.

Frankfurt - Shares were higher in midday trade, shrugging off losses on Wall Street overnight as they recovered from yesterday's sharp losses that many market participants said were overdone, with MAN in the vanguard of rising stocks as SocGen initiated coverage with a 'buy' rating, dealers said.
   
At 11.27 am, the DAX 30 index was 38.93 points or 0.67 pct higher at 5,834.97, having moved between 5,796.41-5,837.06 so far this session. The MDAX was at 8,381.04, up 24.00 points or 0.29 pct, while the TecDAX was at 744.68, up 1.25 points or 0.17 pct.

Paris - Share prices were higher at midday, rebounding from yesterday's losses, with Thomson soaring after confirming that it is open to takeover talks.
   
At 12.38 pm the CAC-40 index was 28.17 points or 0.56 pct higher at 5,028.44.
   
Amsterdam- Shares rose in early afternoon trade following US futures, which pointed to a higher Wall Street open, while Wolters Kluwer soared following well-received earnings results.
   
At 12.26 pm, the AEX was up 1.92 points or 0.42 pct to 460.74 after opening at 459.89 and reaching an earlier high of 461.32.

Milan - Share prices were higher at midday, underpinned by gains in oil stocks and a strong performance by Fondiaria-SAI, dealers said.
   
At 12.21 pm, the Mibtel was up 0.24 pct at 28,854 points and the S&P/Mib gained 0.15 pct to 37,707.

Madrid - Madrid shares were higher in active midday trade, led by real estate issues after news of further M&A moves in the sector, while Telefonica was higher after robust full-year results and TPI remained firm, dealers said.
   
At 12.14 pm, the IBEX-35 index gained 57.9 points to 11,798.6, after trading in a range of 11,758-11,819, on turnover of 1.077 bln eur.

Zurich - Share prices were higher at midday, tracking other European markets as they recouped some of yesterday's heavy losses and waited for fresh direction from Wall Street. ABB, Kudelski and Holcim were top gainers.
   
At 11.50 am, the SMI was up 52.05 points at 7,944.68 and the SPI was up 34.16 at 6,046.42.

Stockholm - Share prices remained in positive territory in midday trade, marginally extending the morning's gains on continued bargain hunting, dealers said.
   
At 12.50 pm, the OMX Stockholm index was up 0.41 pct at 319.40, while the OMX Stockholm 30 index was up 0.31 pct at 998.09. Turnover was 6.59 bln skr.

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Asian shares close mixed, Tokyo slips on profit taking, mood hurt by Wall St

HONG KONG - Share prices across the Asia-Pacific region ended mixed with Tokyo lower on profit taking, dealers said,
   
Sentiment in Japan was also hurt by Wall Street's overnight decline and concerns about the US economy, they added.
   
Investors locked in profits after a four day market run-up while fresh strength in the yen also weighed on some counters.
   
The Nikkei 225 Stock Average closed down 240.97 points or 1.5 pct at 15,964.46.
   
The broader TOPIX index of all first-section issues lost 24.82 points or 1.5 pct to 1,635.60.
    
"Investors here are worried about the state of the US economy as all of the economic indicators released overnight pointed to a deceleration of that economy," said Hideo Mizutani, a chief strategist at Sieg Securities.
   
Share prices in Australia closed down as investors sold across the market after data released by the Australian Bureau of Statistics showed weaker than expected December quarter gross domestic product growth.
   
Dealers said investor sentiment was already negative ahead of the data's release due to a fall on Wall Street in response to weaker US economic data overnight including home sales and manufacturing data.
   
Dealers said US-focused companies fell after the weaker US data including shopping center owner, Westfield, and construction materials group Rinker.
   
They said investors reduced holdings in leading resources stocks BHP Billiton and Rio Tinto following on from the fall in their London-listed shares.
   
The S&P/ASX 200 dropped 70.7 points or 1.44 pct to close at 4,857.6, widening the gap from a record high of 4,956.7 set on Feb 1.
   
In Hong Kong, share prices finished lower following sharp falls on Wall Street overnight and on the Japanese market today, dealers said.
   
They said institutional buying of blue chips in late morning trade helped the benchmark index narrow early steep falls.
   
The Hang Seng Index closed down 100.39 points at 15,818.09.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on some bargain-hunting interest in metal firms and automakers with the key index at a near one-year high, dealers said.
   
The Shanghai A-share Index added 7.92 points to 1,370.46 on turnover of 11.59 bln yuan and the Shenzhen A-share Index was up 2.25 points at 328.23 on turnover of 6.37 bln yuan.
   
Share prices in Taiwan closed higher as bargain-hunting reversed early declines that were driven by continuing political concerns, dealers said.
   
The market was still worried in early session after Taiwan President Chen Shui-bian scrapped a government body charged with charting policy on eventual reunification with China, they said.
   
But makers of DRAMs and LCD panels, including Nanya Technology, AU Optronics and Chi Mei Optoelectronics later led the technology sector higher, although the
gains were somewhat offset by weakness in TSMC and Hon Hai, they added.
   
The weighted index closed up 51.76 points, or 0.79 pct, at 6,613.39.
   
The market in Seoul was closed for a public holiday.

Asian Bourse Round-Up

For a full list of closing prices, click here

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NEW YORK - Gold futures climbed to a three-week high, extending prior-session gains as the precious metal benefited from its reputation as a safe-haven investment against a backdrop of political and economic uncertainty.
   
The benchmark April contract was last up $1.60 at $565.50 an ounce.
   
On the bond market, long-term Treasury prices fell, sending yields higher. The benchmark 10-year note was down 4/32 at 99 16/32 with its yield at 4.56%.
   
At 10 a.m. Eastern time, the Institute for Supply Management releases its latest snapshot on the health of the nation's manufacturing sector. January construction spending data is also slated for release.
   
Crude-oil futures edged higher ahead of U.S. data expected to show ample domestic supplies of most energy products, although concerns remain about potential disruptions to global supplies.
   
The benchmark April contract was last up 84 cents at $62.25 a barrel.

Precious Metals Summary - London, 1530 GMT

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