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

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Wall Street mixed in cautious trade

NEW YORK - Wall Street was narrowly mixed Thursday, pausing after its
recent gains and before Friday's release of key employment figures used to gauge the overall economy.
   
Investors traded cautiously since the stock market is closed on Friday for the Easter holiday. The pullback followed three straight days of gains.
   
There was little reaction to a Labor Department report that first-time claims for unemployment benefits rose to their highest weekly level since March 3. Instead, Wall Street remained focused on the government's March jobs report -- released on a day where there is no trading, which sets up Monday as a possibly critical day for stocks.
   
The Dow Jones industrial average fell 20.73, or 0.17 percent, to 12,509.32.
   
Broader stock indicators were mixed. The Standard & Poor's 500 index was down 1.37, or 0.10 percent, at 1,438.00, and the Nasdaq composite index rose 0.14, or 0.01 percent, to 2,458.83.
   
Bonds showed little movement, with the yield on the benchmark 10-year Treasury note unchanged at 4.65 percent from late Wednesday. The dollar was mixed against other major currencies, while gold prices rose.
   
Oil prices, which have risen during the past week because of tensions in the Middle East, advanced again. Investors are now focused on energy inventories and demand -- and sent a barrel of light sweet crude increased 14 cents to $64.52 in premarket trading on the New York Mercantile Exchange.
   
In corporate news, Micron Technology Inc. pressured technology stocks after the flash memory maker posted disappointing second-quarter results late Wednesday. The company swung to a loss as costs swelled and prices weakened. Shares fell 12 cents to $11.95.
   
Beer and wine maker Constellation Brands Inc. rose 63 cents, or 3 percent, to $21.45 after it reported fourth-quarter profit grew 26 percent. Strong wine sales helped the company offset a decline in imported beer, and competition in the British market.
   
Shareholders of Harrah's Entertainment Inc. are to vote in Las Vegas on a buyout proposal from Texas Pacific Group and Apollo Management. The firms want to take the casino operator private. The stock dipped 11 cents to $84.65.
   
The Russell 2000 index of smaller companies was down 0.11, or 0.01 percent, at 810.68.
   
In afternoon trading, Britain's FTSE 100 was up 0.33 percent, Germany's DAX index rose 0.22 percent, and France's CAC-40 dropped 0.01 percent.

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Pound rebounds following dip after BoE rate decision

LONDON - The pound rebounded after an early dip in the wake of the Bank of England's decision to keep interest rates on hold.
   
Though the decision by the rate-setting Monetary Policy Committee to keep its key repo rate at the near six-year high of 5.25 pct, a large part of the market was on red alert for the possibility of a hike following January's surprise quarter point increase.
   
The pound fell to a low of 1.9671 usd when the decision was announced but soon recovered much of its losses as the market now expects a quarter point rate hike in May.
   
Daragh Maher, senior forex strategist at Calyon said the dip was simply a "knee-jerk" reaction. "With no statement to hint otherwise, the market will be quick to assume that the BoE has merely delayed the inevitable and the likelihood is that the market will look to buy sterling afresh on these dips.
   
"We expect the Bank will hike rates by 25 basis points at its May meeting, though the minutes of today's get-together will be closely watched in this regard," he said.
   
The pound came under pressure earlier this morning after data showed UK manufacturing output suffered its biggest fall in March since October 2005.         Official figures showed manufacturing output, which accounts for 14.7 pct of the UK economy, fell by 0.6 pct in February from the previous month, confounding analysts' expectations for a modest 0.3 pct rise.
   
Elsewhere the euro was slightly higher, supported by better-than-expected German industrial data. German industrial output rose a seasonally adjusted 0.9 pct in February from January, analysts had forecast a 1.0 pct decline.
       
The ECB is expected to raise interest rates by a further quarter point to 4.00 pct in the coming months, widely expected to be in June.
   
The dollar meanwhile was stable, with the market waiting for further direction from tomorrow's US Labour market report. 
   
Non-farm payrolls are expected to show a 140,000 rise in March compared to 97,000 in February while unemployment is expected to show a small monthly rise to 4.6 pct in March from 4.5 pct.
   
The only data out today are the weekly jobless claim figures, which are seen rebounding to 315,000 in the latest week after having fallen to 308,000 in the prior week.
   
Elsewhere the Australian dollar was firm, having earlier reached a new ten year high against the dollar of 0.8212.

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Top Stories in Europe at 12.05 GMT

Frankfurt - DaimerChrysler AG's CEO Dieter Zetsche is planning to choose a buyer for the company's ailing Chrysler unit by the end of April, reported Handelsblatt, citing industry sources. The company confirmed for the first time yesterday that it is talking with parties who are interested in the loss-making subsidiary.

General Electric Co aims to expand its market position in Germany's energy, medical technology and financial sectors by adding more sales staff, entering into cooperations or making acquisitions, Frankfurter Allgemeine Zeitung reported, citing Central European head Georg Knoth.
 
Knoth said he aims to generate sales growth in Germany, Austria and Switzerland, the regions that he oversees, that is above the company's average of 10 pct, according to the newspaper.

Amadeus shareholders are set to receive a 1.2 bln eur dividend payment, the Financial Times Deutschland reported citing people familiar with the situation. Reports in the Spanish press last month indicated that they would receive a 1.0 bln eur payment.

Zurich - Converium Holding AG has urged shareholders to defer making a decision regarding French rival Scor SA's officially launched takeover offer until they have been advised by the company's board. Converium has so far rejected the offer and stated that it wants to remain independent.

Amsterdam - Royal Ahold NV declined to comment on a newspaper report which said it is preparing an offer for the privately owned Dutch retail chain Hema, which is seen fetching at least 1 bln eur. An Ahold spokesman told AFX News that "my comment is no comment".

Milan - An AT&T executive said the US group is open to consider Italian financial and industrial investors as partners in Telecom Italia SpA. "We are absolutely available to consider the interest of Italian partners, both industrial and financial," AT&T's managing director for corporate development, Rick Moore, said in an interview with the Corriere della Sera.

Helsinki- Nokia has paid Qualcomm 20 mln usd for patent licenses covering the second quarter of 2007, and said the US maker of chips for mobile phones can expect to receive similar payments in the future.
 
In a statement issued as the two groups try to hash out a new technology cross-licensing agreement before April 9, Nokia CFO Rick Simonson said the payment was "fair and reasonable compensation" for certain patents used in Nokia handsets based on Universal Mobile Telecommunication System (UMTS), the 3G mobile phone technology.

London - Vodafone Group said Indian law prevents it from owning 67 pct shareholding in Hutchison Essar, the Financial Times reported, citing a letter it obtained from the group to the Indian finance ministry. In the letter, Vodafone acknowledged it would be breaching the 74 pct ceiling on foreign direct investment if it attempted to take direct ownership of all of the stake in the mobile operator, the paper reported.

UK manufacturers suffered their worst month in over a year in February, official figures showed today. The Office for National Statistics reported that manufacturing output, which accounts for 14.7 pct of the UK economy, fell by 0.6 pct in February from the previous month, in contrast to analysts expectations for a 0.3 pct rise. February's performance was the worst since October 2005, when output fell a monthly 0.7 pct.

John Lewis Partnership, the employee-owned retailer, said week to March 31 sales at its 26 UK department stores rose 7.2 pct to 47.9 mln stg, while sales at its chain of 183 Waitrose supermarkets increased 11.1 pct to 72.6 mln. Total group sales advanced 9.5 pct to 120.71 mln stg.

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Asian shares close mixed, with profit taking after recent highs

HONG KONG - Shares across the Asia-Pacific region closed mixed, with profit taking hitting markets after the strong gains of recent days, dealers said.
   
A number of markets were closed today or winding down for Easter holidays beginning tomorrow. The Hong Kong and Taipei markets were closed today.
   
Tokyo shares closed lower, having succumbed to profit-taking after two days of rallies while investors waited for new incentives. But bargain-hunting prevented further declines.
   
The blue-chip Nikkei 225 Stock Average closed 52.67 points or 0.3 pct lower at 17,491.42, off a low of 17,430.38. The TOPIX index of all first-section issues closed 9.80 points or 0.57 pct lower at 1,720.72, off a low of 1,716.33.
   
Mitsushige Akino, chief fund manager at Ichiyoshi Management, said: "The Nikkei index could have fallen further today, considering the rally of about 300 points yesterday, but the improved market tone supported the downside."
   
He said that the market had also been supported by the stability of the yen and steady prices on Wall Street despite the release overnight of data that gave mixed signals about the US economy.
    
Australian shares closed lower as investors took profits from yesterday's record levels, balancing portfolios ahead of the long Easter weekend which will see markets closed tomorrow and Monday.
   
Caution came ahead of the key US non-farm payrolls data due out tomorrow when US markets are open and investors there can react to the data well before Australian markets reopen. The S&P/ASX 200 closed down 20.1 points or 0.33 pct at 6,077.1, falling from yesterday's record close of 6,097.2.
   
Over the trading week the benchmark index gained 82.1 points or 1.37 pct. Dealers said profit taking in leading resource stocks led the wider market down after yesterday's solid gains from the miners.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on continued fund inflows with financial plays and property developers snapped up. The Shanghai A-share Index was up 28.85 points or 0.83 pct to 3,488.36 and the Shenzhen A-share Index was up 13.02 points or 1.44 pct at 916.10, a fresh record.
   
Seoul shares closed slightly lower on profit taking, but not before investors briefly pushed the main index to a new all-time intraday high on the back of continued offshore interest in IT stocks.
   
Wall Street's overnight advance gave the market an initial lift, but it then lost impetus as investors decided to cash out and move to the sidelines following weak consumer confidence data and ahead of the corporate earnings season.
   
The KOSPI index closed down 1.37 points or 0.09 pct at 1,482.04, after trading between 1,478.45 and a new intraday record of 1,485.77.

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Gold hovers near five-week high, market players see further gains ahead

LONDON - Gold was up on the day, hovering near a five-week high, as market players saw the metal holding firmly above the key 670 usd resistance level it broke through yesterday.
   
"The return of fund interest to the market has finally allowed gold to clear the 668-670 usd resistance area and should now look to propel the metal back towards the highs of February (689 usd) and potentially beyond," said TheBullionDesk.com analyst James Moore.
   
At 10.13 am, spot gold was quoted up at 673.05 usd per ounce, against 672.00 usd seen in late New York trades yesterday.
   
Gold rallied to 675.70 usd yesterday, its highest since March 1, after it broke through the key 670 usd resistance level it had been struggling to surpass for two weeks running.
   
In other precious metals, silver was steady at 13.57 usd against 13.56 usd, platinum was up at 1,249 usd against 1,245 usd while palladium was up at 353 usd against 350 usd.

Nickel hits all-time high of 50,000 usd as inventories fall 6 pct

LONDON - Nickel hit a new all-time intraday high for the second day in a row, reaching the psychologically significant 50,000 usd level, as inventories slid by a further 312 tonnes to 6 pct to 5,124 tonnes.
   
Prices have since eased to trade slightly lower, although they remain elevated, analysts said. "The market has had this level in its sights for a while, and the LME stocks have provided it with an excuse to hit 50,000 usd," said Basemetals.com analyst Martin Hayes.
   
The metal, a key component in the manufacture of stainless steel, has doubled in price since a year ago as supply remains limited.
   
The threat of strike action at the Voisey's Bay nickel mine in northern Labrador, plus reports of a dip in production from Australia's Minara Resources, have raised fears of a further drop in stocks, buoying prices.
   
At 11.31 am nickel for three-month delivery stood at 49,350 usd, against 49,450 usd at the close yesterday.
   
Lead, which hit an all-time intraday high yesterday of 2,012 usd, also briefly pushed higher to 2,105 usd per tonne before easing slightly to trade at 1,995 usd.
  
Prices have been buoyed by a strike at the La Oroya mine and smelter run by the US' Doe Run in Peru, which has entered its third day, analysts said.
   
The metal also continues to benefit from the closure of Ivernia Inc's Magellan mine in Australia, which is responsible for 3 pct of the world's lead supply, pending the outcome of an investigation into lead poisoning at the Esperence port.
   
Among other metals, copper eased slightly after yesterday's strong gains as a recent period of short covering came to an end and as investors digested weaker-than-expected US data yesterday, analysts said.
   
However, prices remain high as institutional funds continue to buy and amid
supply fears linked to the ongoing Doe Run strike. Copper stood at 7,380 usd, against 7,395 usd at close yesterday.
   
Meanwhile, aluminium was trading at 2,830 usd, against 2,865 yesterday, and
zinc was at 3,410 usd, down from 3,465. Tin was at 14,200 usd against 14,125.

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