US & World Daily Markets Financial Briefing 02-10-2006

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Stocks mixed in early trading

NEW YORK - U.S. stocks were mixed in early trading as the fourth quarter started, with a manufacturing poll's release, a report that Harrah's Entertainment may be bought and a downgrade of Apple Computer possible catalysts to the day's trading.
   
In the first hour of trading, the Dow Jones industrial average rose 8.33, or 0.07 percent, to 11,687.40. Broader stock indicators were mixed. The Standard & Poor's 500 index was up 0.32, or 0.02 percent, at 1,336.17, and the Nasdaq composite index fell 2.17, or 0.10 percent, at 2,256.26.
   
On Friday, U.S. stocks ended lower, with St. Louis Fed president William Poole saying that any decision to start cutting interest rates may come later rather than sooner. For the third quarter, the S&P 500 rose 5.2 percent, the Dow industrials rose 4.7 percent and the Nasdaq Composite advanced 4 percent.
   
Monday sees the release of the Institute of Supply Management's poll on manufacturing for September, which is seen slipping to 53.7 percent from 54.5 percent last month.
   
Crude-oil futures were down 2 cents at $62.89 a barrel.
   
Stocks in Focus

Harrah's Entertainment is in talks to be bought in what could be one of the biggest leveraged buyout deals ever, The Wall Street Journal reported Monday.
   
In Britain, however, shares of online gambling companies dropped after the U.S. Congress surprisingly passed a measure that would outlaw payments from American customers. PartyGaming, the biggest of the online gaming concerns, dropped 59 percent.
   
Wal-Mart Stores is capping wages, using more part-time workers and scheduling more workers on nights and weekends, The New York Times reported Monday, in what the newspaper said was a move to create a cheaper and more flexible workforce.

Investment analysts and store managers say Wal-Mart executives have told them the company wants to transform its work force to 40 percent part-time from 20 percent; Wal-Mart denies this, but say part-timers now make up between 25 percent to 30 percent of workers, the report said.
   
Apple Computer declined 1.9 percent in German trading after Citigroup downgraded shares to hold. The broker told clients it sees little potential for revenue upside versus consensus in the third or fourth quarter of the year.
   
But in more positive news for the tech sector, worldwide sales of semiconductors reached an all-time monthly record of $20.5 billion in August, up 10.5 percent from a year ago and 2.1 percent from July, according to the Semiconductor Industry Association.
   
Elsewhere, two Russian firms are merging and acquiring the alumina assets of a Swiss commodities trader in a bid to challenge U.S.-based Alcoa Inc. as the world's biggest aluminum producer, according to a media report Sunday. The deal for Rusal Ltd. to take over smaller domestic rival Sual Group and acquire the assets of Glencore International AG could be announced as early as Monday, the Journal reported.
   
Johnson & Johnson late Friday said the U.S. Food and Drug Administration gave it an approvable letter for a schizophrenia treatment, paliperidone extended-release tablets. The letter means the FDA wants more information before giving it approval.
   
Delta Air Line late Friday said it chopped its losses in the month of August to $11 million, down from a loss of $158 million a year ago. But that was worse than the $69 million profit it reported in July.

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Dollar steady ahead of US manufacturing survey

LONDON - The dollar was steady ahead of a clutch of US economic data this week, while the yen remained under pressure despite a strong Japanese business survey.
   
Dollar watchers are awaiting a stream of US economic news, ranging from Institute for Supply Management surveys on US manufacturing on Monday and services on Wednesday, while a monthly labour market report was due Friday.

Investors are also awaiting a speech on Wednesday from Fed chairman Ben Bernanke to see if the dollar can be pushed out of its recent trading range.
   
The yen, meanwhile, has remained on the backfoot as the market largely overlooked an upbeat Japanese business sentiment survey.
   
While the Bank of Japan's Tankan report showed that the Japanese economy was healthy, the outlook remained more cautious, leaving uncertainty about when Japanese borrowing costs might rise again from the current level of 0.25 pct.
   
Sentiment among large Japanese manufacturers increased to 24 in September from 21 in June, the report showed, well above the 21 expected by the market.
   
Elsewhere, the euro was solid after a survey into manufacturing in the 12-nation single currency zone remained at elevated levels, further reinforcing expectations that the European Central Bank will raise interest rates both this week and in December.
   
The purchasing managers index for the manufacturing sector was unchanged at 56.6. Analysts polled by AFX News had predicted a modest dip to 56.4 from the original estimate. A reading above 50 denotes growth.
   
Meanwhile, the pound remained higher over the day despite shedding some of the earlier gains in the wake of a strong UK manufacturing survey.
   
The Chartered Institute of Purchasing and Supply said its purchasing managers' index rose to 54.4 in September from 53.0 in August. Analysts polled by AFX News had been anticipating a modest decline to 52.8 from the original 53.1 estimate for August. A reading above 50 denotes growth.
   

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The European Markets at 11.30 GMT

London - UK blue chips were higher midday, but off peaks, as strong gains from the utility sector offset a slump in online gaming stocks, while a strong PMI reading raised the prospect of higher domestic interest rates.
   
At 11.55 am, the FTSE 100 was up 12.6 points at 5,973.2, but below its high of 5,985.5, while the broader indices were mixed.

Frankfurt - Share prices were largely flat midday as MAN issues topped the DAX 30 index after reportedly settling its dispute with VW over its bid for Swedish truck maker Scania, while other automakers dropped into the red with BMW shares leading decliners. At 1.26 pm, the DAX 30 was up 2.47 points or 0.04 pct at 6,007.09, the MDAX up 7.30 eur or 0.09 pct 8,554.11.

Paris - Share prices were higher in midday trading, extending last week's run of gains as investors await US construction spending data this afternoon, which should shed light on the pace of the housing market slowdown. At 12.12 pm, the CAC-40 index was up 8.27 points or 0.2 pct at 5,258.28, on volume of 1.2 bln eur.

Amsterdam - Amsterdam shares turned slightly lower in midday trade as the index's heavyweight oils went off their highs. At 12.50 pm, the AEX was off 0.15 point or 0.02 pct to 483.47, after opening at 484.92 and trading in a range of 483.09-485.83.

Madrid - Share prices were lower midday on profit taking after last week's stellar gains, as investors took a cautious stance on the first day of trade in the fourth quarter, with Metrovacesa, Repsol YPF and Gas Natural outperforming. At 1.15 pm, the IBEX-35 index lost 19.0 points to 12,915.3, after trading in a range of 12,907-12,981, on turnover of 2.8 bln eur.

Milan - Share prices were flat at midday with losses in motorway companies weighing on the overall market. At 11.44 am, the Mibtel index was unchanged at 29,415 points and the S&P/Mib gained 0.03 pct at 38,488.
   
Stockholm - Shares remained in slightly positive territory in midday trade, little changed from morning levels, with oil firms performing strongly in the wake of firmer prices. At 12.05 pm, the OMX Stockholm index was up 0.33 pct at 335.54 points, while the OMX Stockholm 30 index was up 0.38 pct at 1,043.34.

Helsinki - Helsinki shares were slightly lower in midday trade, led by the main tech stocks, with Perlos extending Friday's slide. At 1.15 pm, the OMX Helsinki 25 was 0.35 pct lower at 2,585.49 and the OMX Helsinki was down 0.63 pct to 8,800.66 on 230 mln eur turnover.

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Asian shares close mostly higher; Tokyo boosted by Tankan, weak yen

HONG KONG - Share prices across the Asia-Pacific region closed mostly higher, with markets in Japan boosted by a stronger than expected Tankan survey of business sentiment and a weaker yen.
   
Australian stocks took a lead from the Japanese market's gains though trading volumes were light due to a public holiday in Sydney.
   
Meanwhile, markets in Hong Kong and China were closed due to the National Day holiday.
   
Japanese stocks got a lift after Bank of Japan's September Tankan survey showed that the headline diffusion index for large manufacturers jumped to plus 24 from plus 21 in June, its highest level since September 2004, and well ahead of the market consensus estimate of 21.
   
The Nikkei 225 Stock Average closed up 126.71 points or 0.79 pct at 16,254.29. The TOPIX index of all first-section issues was up 14.39 points or 0.89 pct at 1,625.12.
   
Ryuta Otsuka, a strategist at Toyo Securities said the market took relief from the outcome of the Tankan survey, which showed not only that current business sentiment is bullish but suggests that the upbeat view will continue in the December quarter. 
 
In Australia, Shares closed higher in thin trade, supported by gains in Tokyo. The S&P/ASX 200 closed up 24.7 points or 0.48 pct at 5,178.8 while the All Ordinaries Index gained 25.7 points to settle at 5,138.7.
   
Dealers said overall trading volumes were extremely light -- at 555.4 mln shares worth 1.58 bln aud -- with the major financial center, Sydney, closed for a public holiday.
   
Bell Potter private client advisor Stuart Smith said the better-than-expected Tankan report lent support to BHP Billiton and Rio Tinto though the two stocks were already recovering anyway after being sold down heavily last month on concerns about a slowdown in global growth.
    
Taiwan stocks, meanwhile, closed higher led by the financial sector after Standard Chartered Bank announced a plan to acquire Hsinchu International Bank at a big premium over its current market price.
   
Tourism-related stocks also contributed to the day's gains on expectations of an influx of more mainland Chinese visitors to Taiwan, with sentiment further buoyed by the government's unexpected decision to declare an extended holiday from Oct 6 through 10. The weighted index closed up 77.90 points or 1.13 pct at 6,960.95 on turnover of 76.08 bln twd.
   
In other markets, South Korean stocks closed higher though the upside was capped due to the upcoming Chuseok holidays. The KOSPI index closed up 2.81 points or 0.20 pct at 1,374.22.
   
Singapore shares were also higher on institutional interest in property and banking stocks. In afternoon trading, the Straits Times Index was up 16.53 points at 2,585.39.
   
Among the few fallers in the region, the Philippine market ended lower on profit-taking in selected stocks led by PLDT, with sentiment weighed down by concerns over the economic impact of the damage inflicted by Typhoon Xangsane last week.

Asian Bourse Round-Up

For a full list of closing figures, click here

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