US & World Daily Markets Financial Briefing 04-05-2007

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Stocks Move Higher Following Jobs Report

NEW YORK - Stocks carved out a modest advance Friday after the nation's unemployment rate edged upward as expected in April and investors received a fresh round of takeover news.
   
The Labor Department said the jobless rate rose to 4.5 percent in April as employers added the fewest new jobs in more than two years. The government also said wage growth remained in check, alleviating some of the market's inflation concerns.
   
Beyond economic news and earnings data, which have figured prominently in shaping Wall Street's recent upbeat mood, corporate takeover news buoyed investor sentiment Friday. Published reports said Microsoft has renewed talks to take over Yahoo Inc. Also, Reuters Group PLC said it had received a preliminary takeover offer, and various reports said Thomson Corp., the financial data provider, was a front-runner to buy the company.
   
In midmorning trading, the Dow Jones industrial average rose 24.38, or 0.18 percent, to 13,265.76. The Dow's gain Friday pushed the index into new territory; a new trading high of 13,268.28 topped its earlier high of 13,256.33.
   
The blue chip index has hit 18 record closes since the start of the year and 40 since the beginning of October, its latest coming Thursday, the third in as many sessions. The Dow's move higher in 22 of the last 25 sessions marks the longest streak of advances for the blue chips since 1955.
   
Broader stock indicators also rose Friday. The Standard & Poor's 500 index rose 5.29, or 0.35 percent, to 1,507.68. On Thursday, the S&P 500 moved above the 1,500 level for the first time in nearly seven years. The 1,500 level puts the closing high of 1,527.46 reached in March 24, 2000, within investors' sights. The Nasdaq composite index rose 7.40, or 0.29 percent, to 2,572.86.    

Bonds rose following the jobs data; the yield on the benchmark 10-year Treasury note fell to 4.64 percent from 4.65 percent late Thursday. The Russell 2000 index of smaller companies rose 2.24, or 0.27 percent, to 831.09.
   
Light, sweet crude fell 1 cent to $63.18 per barrel on the New York Mercantile Exchange.
   
The latest acquisition news among media and information companies comes three days after News Corp., run by billionaire Rupert Murdoch, offered to buy Wall Street Journal publisher Dow Jones & Co. for $5 billion.
   
The recent spate of merger and acquisition activity has helped push stocks higher because investors see such deals as bullish for the future of the economy.
   
Friday's merger news sent the targeted companies higher. Yahoo rose $4.98, or 17.7 percent, to $33.15, while Reuters rose $14.56, or 24.7 percent, to $73.48. Thomson advanced 34 cents to $44.05, while investors, who tend to sell shares of companies doing the acquiring, sent Microsoft down 58 cents to $30.39.
   
In addition to takeover news, earnings reports continue to draw attention on Wall Street. Better-than-expected profits have served as a catalyst for pushing stocks to record levels in recent months. On Friday, Eastman Kodak Co. fell $1.47, or 5.7 percent, to $24.50, after the company's narrower first-quarter loss fell short of Wall Street's expectations. The company has been trying to move away from a shrinking film business into digital products.
   
Forest products company Weyerhaeuser Co. jumped $5.58, or 7.1 percent, to $83.73 after reporting it swung to a profit from a loss in the first quarter largely because of a combination of its fine-paper business with another paper maker.
 
  

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Dollar weakens momentarily after below-consensus US payrolls data

LONDON - The dollar weakened momentarily after lower-than-expected US payrolls data for April, which rose by only 88,000 in April compared with the 115,000 analysts had been expecting.
   
The data also included a downward revision of 26,000 for the previous two months, while hourly earning were up only 0.2 pct, instead of the 0.3 pct the market was looking for.
   
The dollar gave ground to the euro, which rose to a high of 1.3592 usd from 1.3564 previously before edging back down again. Similarly the pound rose briefly above the 1.99 usd level before dropping back down.
   
At 13.39 pm BST, the euro was trading at 1.3567 usd. The pound was at 1.9887 compared with 1.9870 before the data were released, while against the yen the dollar was at 120.12 compared with 120.25 previously.

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The European Markets at Midday

Madrid - At 12.01 pm, the IBEX-35 index put on 168.2 points to 14,563.8, after trading in a range of 14,426-14,566, on turnover of 2.369 bln eur. SCH gained 0.28 eur or 2.12 pct to 13.48, near a high of 13.5 on volume of 68.8 mln shares, while BBVA was 0.23 higher at 17.95.
   
Other banks were firm amid vague takeover speculation after Expansion reported a consortium of Andalusian private investors is in talks to invest 15 bln eur to acquire a Spanish bank. Bankinter was up 0.65 at 64.1, Popular put on 0.29 or 2.04 pct to 14.54 and Banesto added 0.07 to 17.68.
   
Athens - At 1.00 pm, the ASE general index and blue chip index both had both risen 0.5 pct to 4,793.8 and 2,547.6 respectively. Mid caps were just 0.2 pct higher at 6,038.5 while small caps were unchanged at 944.2. Titan Cement gained 0.7 pct to 42.8 on its first quarter results released yesterday. Net profit was above expectations on strong domestic and South Eastern Europe operations.
   
Zurich - At 12.45 pm, the Swiss Market Index was up 48.59 points at 9,441.64, while the Swiss Performance Index rose 37.19 points to 7,632.13. UBS was 1.00 sfr or 1.3 pct higher at 77.50, recovering some of yesterday's heavy losses after disappointing first quarter results. Rival Credit Suisse was still on a downward trend, however, and was 0.35 sfr lower at 93.75, while smaller rival Julius Baer dropped 0.85 sfr or 1 pct to 84.10
   
The SMI's heavyweight pharma stocks were among this morning's top gainers, with Roche, up 4.50 sfr or 2 pct at 233.20, after receiving EU approval for the use of Herceptin in combination with an aromatase inhibitor for the treatment of breast cancer yesterday. Rival Novartis also rose, up 0.80 sfr or 1.1 pct at 71.20. Meanwhile, fellow heavyweight Nestle was among the sharpest fallers, down 3.35 sfr at 483.25.
   
Frankfurt - At 12.44 pm, the DAX was 23.78 points or 0.32 pct higher at 7,500.47, after trading between 7,460.02 and 7,505.40 earlier today. The MDAX gained 60.71 points or 0.57 pct to 10,763.57, while the TecDAX added 4.63 points or 0.53 pct to 873.42. DAX futures gained 21.00 or 0.28 pct to 7,534.00, while bund futures gained 0.12 or 0.11 pct to 113.62.
      
BMW led blue chips higher, gaining 1.43 eur or 3.08 pct to 47.86, after the automaker received two positive broker notes this morning. DaimlerChrysler followed BMW higher, gaining 1.47 eur or 2.47 pct to 60.94 as it benefited from a generally positive view on automotive shares at present. Infineon added 0.16 eur or 1.43 pct to 11.37 after four straight trading days of losses.
   
Bucking the trend, Altana lost 27.15 eur or 58.31 pct at 19.41 as the fastest faller on the DAX after it shares traded without the right to dividend payments today.

Amsterdam - At 12.46, the AEX was up 2.74 points or 0.51 pct at 538.82 after opening at 536.86 and trading in a range of 536.45-539.11. Reed Elsevier led gainers, rising 3.94 pct at 14.24 eur, while peer Wolters Kluwer added 3.63 pct at 23.66. Unilever also outperformed, climbing 1.61 pct at 23.40 after the food stock was upgraded to 'buy' from 'hold' at both Citigroup and Rabo Securities following yesterday's first-quarter earnings.
   
Fellow food stock Numico advanced 0.78 pct at 38.85, KPN increased by 2.18 pct to 12.65, Rodamco Europe swelled 1.51 pct at 110.54 and Arcelor Mittal gained 1.10 pct at 40.26.
   
Ahold led blue-chip decliners, falling 2.43 pct to 9.64. Yesterday, the stock soared on Ahold's US Food Service divestment and talk of a potential merger with Delhaize, but an Amsterdam-based dealer said today that the decline showed that "investors don't want that." Ahold was also downgraded to 'market-perform' from 'outperform' on valuation grounds at Sanford Bernstein.
   
Milan - At 1.00 pm, the Mibtel index rose 0.55 pct to 34,054 and the blue chip S&P/Mib index added 0.57 pct to 43,936. Lottomatica rose 4.67 pct to 31.15 eur, as the lottery group released above-consensus results for the first quarter and raised its full-year forecasts late yesterday, prompting some brokers to raise their targets.
   
Italcementi rose 2.45 pct to 24.67, in a positive cement sector and ahead of Monday's first-quarter results. Buzzi Unicem rose 1.88 pct to 24.37. Mediaset rose 1.55 pct to 8.24 and Mondadori added 1.65 pct to 8.02.Telecom Italia fell 0.23 pct to 2.12.
   
London - At midday, the FTSE 100 index was 57.8 points higher at 6,595.6 having closed yesterday 53.3 firmer at 6,537.8, while the FTSE 250 index was 141.9 points up at 12,188.0. Imperial Tobacco rose 32 to 2,212, as CVC, PAI Partners said they have made a 50 eur per share offer for Spanish tobacco group, Altadis. The Spanish group had previously rebuffed two proposals from the world's fourth biggest cigarette maker, Imperial Tobacco, at 45 and 47 eur per share.
   
BHP Billiton was up 29 at 1,194, Rio Tinto was 103 higher at 3,266, Lonmin edged 121 further at 3,741 and Anglo American was 79 firmer at 2,850.
   

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Asian shares close higher on Wall St record, higher metal prices

HONG KONG - Shares across the Asia-Pacific region closed higher, boosted by a record close on the Dow Jones Industrial Average overnight, higher metal prices and generally positive economic news. The Tokyo and mainland China markets were closed for holidays.
   
Australian shares ended at another record close as investors bought resource stocks following the overnight rise in the London metal markets. Solid gains in leading miners offset caution in other sectors ahead of tonight's US jobs data for the month of April, they noted.
   
The S&P/ASX 200 ended up 59.3 points or 0.95 pct at a record 6,304.9, surpassing yesterday's record finish of 6,245.6. Over the trading week, the key index jumped 153.3 points or 2.49 pct. The All Ordinaries index climbed 59.3 points to settle at an all-time high of 6,296.2, also beating yesterday's record of 6,236.9.
   
Australian flag carrier Qantas ended little changed ahead of today's 7:00 pm deadline for 50 pct acceptances for the Macquarie Bank-led consortium bid for the airline.
   
Hong Kong shares were higher in afternoon trade on Wall Street's further push into record territory.
   
Property stocks drew follow-through interest on hopes that a government land auction on Tuesday will attract strong bids from major developers, while PetroChina surged after confirming that its parent has discovered major oil and gas deposits in the Jidong Nanpu field in northeastern Bohai Bay.
   
At 3.15 pm the Hang Seng Index was up 81.79 points or 0.40 pct at 20,763.37.   

Seoul shares closed higher, with the main index hitting record levels, after institutions cheered another record close on Wall Street following tame inflation data.
   
Dealers noted that initial trading was unsteady due to profit-taking by foreign investors ahead of key events next week including the US Federal Reserve policy meeting as well as the Bank of Korea's interest rate decision, and the expiry of options contracts. Gains were broad, with shipbuilders and brokerages among the favored stocks.
   
The KOSPI index closed up 7.88 points or 0.51 pct at a record 1,567.74. The low for the day was 1,556.62. It ended the week higher with a gain of 25.22 points or 1.6 pct.
      
Taipei shares closed at the day's highs on Wall Street's performance, with sentiment also bolstered by heightened hopes for a recovery in the technology industry amid positive corporate guidance.
   
Investors boosted their holdings particularly of information and communication technology companies, which have announced upbeat forecasts, they said.
   
Financial stocks also moved higher, benefiting from a report that parliamentarians from the ruling and opposition parties tentatively agreed to raise the ceiling on insurers' overseas investments to 45 pct of their investment funds from 35 pct currently, they added.
   
The weighted index closed up 139.40 points or 1.76 pct at 8,066.06, on turnover of 113.23 bln twd. It hit a low of 7,990.97. For the week, the benchmark index gained a cumulative 116.64 points or 1.47 pct.
   
Singapore shares extended their gains in afternoon trading, with the Straits Times Index crossing the 3,500 level for the first time as investors continued to pick up stocks, spurred by Wall Street's extended rally overnight and expectations of more robust earnings results ahead.
   
At 3.05 pm, the Straits Times Index (STI) was up 47.17 points or 1.37 pct at 3,497.81, after touching a fresh intraday high of 3,500.20.
   
"Right now, I guess all the earnings are coming in nicely for the first quarter and I think the earnings picture still looks good at the moment. On a short-term basis, people are possibly re-rating the market on the back of the results and the interest rate picture is also trending on the down side," UOB KayHian analyst Yang Sy Jian said.

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Gold rises as dollar falls back on weaker-than-expected US jobs data

LONDON - Gold rose in early afternoon trade as the dollar dipped against the euro on weaker-than-expected US non-farms payroll data.
   
At 1.53 pm, spot gold was quoted at 685.95 usd per ounce, having hit an intraday high of 686.63 usd, against the 681.60 usd level seen in late New York trade yesterday.
   
Among other precious metals, platinum rose in sympathy to 1,302 usd per ounce against 1,299 usd in late New York trade yesterday, while its sister metal palladium pared losses to trade flat at 372 usd. Silver was also flat at 13.40 usd per ounce.

Copper rallied to a fresh high, while nickel and lead set new record peaks, supported by supply-side fears, dwindling stocks and a weaker US dollar. Traders watched developments in Peru, where around 30,000 mining workers have been on strike since Monday demanding higher wages.
   
At 2.36 pm, LME copper for three-month delivery was up at 8,239 usd per tonne against 8,180 usd at the close on Friday. Earlier the red metal touched 8,260 usd, its highest level since June last year. Copper was also supported by another fall in stocks stored in LME-stamped warehouses, which dropped 1,100 tonnes to 150,925 tonnes, said the LME.
   
"Another drop in LME inventories amid supply concerns could see prices gain further traction this afternoon," said Barclays Capital.
   
Nickel rose towards the 51,000 usd level earlier in the session, boosted by expectations of strong demand for stainless steel and by fresh declines in LME stocks, which fell this morning for the fifth successive day, analysts said.  Nickel was up at 50,600 usd from 49,850 yesterday having touched 50,750 usd earlier in the session.
   
Also fuelling prices was news the Esperance port in Western Australia, which suspended shipments of lead earlier this year after an investigation into possible lead poisoning in the area, may be tightening up its shipments of all metals. About 213,000 tonnes of nickel concentrate were shipped through Esperance
last year.
   
The suspension of traffic though Esperance also helped push lead to new all-time highs this morning. The port handles shipments of lead from the Magellan mine, operated by Canada's Ivernia Inc. At full production, the mine supplies about 3 pct of the world's mined lead.
   
Lead, which also benefited from the Peruvian strike, was up at 2,095 usd from 2,075 usd, having earlier struck a record contract high of 2,099 usd.
   
In other metals, zinc firmed to 4,095 usd per tonne from 4,030 usd, while tin dipped to 14,200 usd from 14,425 usd. Aluminium eased to 2,836 usd from 2,848 usd.

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