US & World Daily Markets Financial Briefing 08-01-2007

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Dow, Nasdaq fall in early trading

NEW YORK - Wall Street fell in early trading Monday as crude oil prices rose on expectations that wintry weather will finally arrive in the U.S.
   
In the first hour of trading, the Dow Jones industrial average fell 20.02, or 0.16 percent, to 12,377.99.
   
Broader stock indicators were also lower. The Standard & Poor's 500 index was down 2.72, or 0.19 percent, to 1,406.99, and the Nasdaq composite index dropped 5.71, or 0.23 percent, to 2,428.54.

Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.67 percent from 4.65 percent late Friday. The dollar was mixed against other major currencies, while gold prices rose.
   
The Russell 2000 index of smaller companies was down 2.27, or 0.29 percent, at 773.60.

Stocks in focus

PITTSBURG, Texas - Poultry producer Pilgrim's Pride Corp. said Monday it completed the subsequent offering period for its $1.1 billion offer for rival Gold Kist Inc. and about 92 percent of its shares were tendered. Pilgrim's Pride said in a news release that about 47.1 million shares were tendered in the subsequent offering.
   
All Gold Kist shares not tendered into Pilgrim's Pride's initial tender offer or the subsequent offering period will be converted into the right to receive $21 per share. The deal is expected to close this month. Pilgrim's Pride is the largest U.S. poultry producer and the second-largest in Mexico.

NASHVILLE, Tenn. - Caremark Rx Inc. said Monday it has rejected an offer by the prescription benefits manager Express Scripts Inc., saying it is in not in the best interests of its shareholders and that it will continue pursuing a combination with CVS Corp.
   
"The Express Scripts proposal does not constitute, and is not reasonably likely to lead to, a superior proposal," Caremark said in a statement. "The board has unanimously concluded that pursuing discussions with Express Scripts is not in the best financial or strategic interests of Caremark and its shareholders."

Express Scripts shares fell $1, or 1.4 percent, to $68.86 on the Nasdaq Stock Market in early trading Monday. Caremark shores rose 10 cents to $56.35 and CVS stock was up 17 cents to $31.17 on the New York Stock Exchange.
   
SALT LAKE CITY, Utah - Biotech drug developer Myriad Genetics Inc. said Monday it will stop developing a compound for prostate cancer, after it did not significantly treat the disease, but will continue developing it to treat Alzheimer's disease.
   
The company said compound MPC-7869 did not significantly delay the progression of prostate cancer, or slow the rise of a protein that indicates prostate cancer, in a clinical trial compared with a placebo. The clinical trial enrolled 246 patients.
   
However, the trial showed the compound was well-tolerated in an elderly population, allowing the company to concentrate development of MPC-7869 for the treatment of Alzheimer's.
   
The company has more than 1,200 patient-years of safety data on the compound, with patients taking it safely for up to 44 months. Myriad shares fell $1.05, or 3.3 percent, to $30.51 in morning trading on the Nasdaq.

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Euro settles into range against dollar in wake of Friday data

LONDON - The euro settled into a trading range against the dollar, which this morning backed off levels reached after its Friday rally.
   
The dollar made strong gains last week, topped by a rally on Friday after US jobs data came in higher-than-expected for December, showing a 167,000 rise, over twice the amount forecast by analysts.
   
The figure is a key indicator of how well the US economy is doing after 17 rate hikes by the Federal Reserve and as the housing market slows. At its high levels, the jobs data confirmed the Fed wouldn't be cutting rates any time soon, but rather stay on hold for a while longer.
   
"Friday's US labour report makes it unlikely that markets will start speculating about an early Fed rate cut in the near future," said Michael Ramon Klawitter at Dresdner Kleinwort.
   
The euro dipped below 1.30 to the dollar several times after the Friday data, although resistance has kept the euro above it today.
   
However, a dearth of data in both the euro zone and the US risks keeping the market's momentum in favour of the dollar this week.
       
Elsewhere, the UK pound has remained steady ahead of the British Retail Consortium's latest retail sales survey tomorrow and the Bank of England's rate decision Thursday.
   
Although the BoE is widely expected to keep rates unchanged this month, many analysts expect it to raise rates in February after economic data over the past month has surprised to the upside.
   
Like the euro, the pound last week lost plenty of ground against the dollar, falling from 1.960 to about 1.933 today, where its fall flattened out.

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The European markets at 13.00 GMT

London - Leading shares remained higher at midday, with a recovery across the mining and oil sectors helping the FTSE 100 regain its footing after last week's slide, dealers said.

By 12.10 pm, the FTSE 100 index was up 16.6 points at 6,236.7, while the broader indices were mixed. Volume remained well below average, with just 702.5 mln shares changing hands in 162,086 deals.

Frankfurt - German shares were higher in midday trade as SAP and Linde gained on bullish broker comments, while Continental fell amid market concerns over weak tyre sales. At 12.42 pm, the DAX 30 index was up 26.64 points or 0.40 pct at 6,619.73.

Paris - Share prices were higher at midday, reversing earlier losses as utility stocks and the oil sector rose after last week's sell-off and as Wall Street futures pointed to a positive start to the week's trade in the US. At 12.15 pm the CAC-40 index was up 23.25 or 0.42 pct at 5,540.60. Volume was 1.6 bln eur.

Milan - Share prices were slightly higher at midday, with Fastweb leading gainers on hopes its biggest shareholder, Silvio Scaglia, intends to sell his 25 pct stake in the telecoms group. At 12.20 pm, the Mibtel index was up 0.22 pct at 32,006 points and the S&P/Mib rose 0.25 pct to 41,703, with 280 mln shares changing hands in deals totaling 1.4 bln eur.
   
Madrid - Share prices were higher in midday trade amid rebounding oil prices and little fresh news to sway the market. At 12.15 pm, the IBEX-35 index rose 65.6 points to 14,370.0, after trading in a range of 14,312-14,379, on turnover of 2.5 bln eur.

Stockholm - Shares were little changed in midday trade after losses for engineering and telecom stocks in the wake of Wall Street's weak session on Friday were offset by gains for banks, SAS, and Scania. At 12.55 pm, the OMX Stockholm index was up 0.01 pct at 372.74 and the OMX Stockholm 30 down 0.05 pct at 1,145.65. Turnover was 7.474 bln skr.

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Asian shares close mostly lower on Wall St, China credit tightening

HONG KONG - Shares across the Asia-Pacific region closed mostly lower in response to the fall on Wall Street on Friday, with the Hong Kong market dropping sharply after China's central bank raised the reserve requirement for commercial banks in a further effort to dampen lending, dealers said.
   
The Tokyo market was closed for a holiday.
   
Hong Kong shares closed sharply lower led by mainland banks and real estate firms after the People's Bank of China raised the commercial bank reserve requirement by 0.5 percentage points from Jan 15. Local property firms, however, attracted rotational interest.
   
The Hang Seng Index closed down 181.62 points or 0.90 pct at 20,029.66, off a low of 19,844.31 and high of 20,085.58. The Hang Seng China Enterprises index lost 132.46 points or 1.29 pct at 10,103.0. The property sub-index finished up 337.26 points or 1.39 pct at 24,604.94.
   
In mainland China, A-shares in Shanghai and Shenzhen closed broadly higher on rotational play and a rising yuan, with power generators, auto makers and property developers in favour. Over 60 companies closed up their daily limits of 10 pct in Shanghai and Shenzhen.
   
The Shanghai A-share Index added 69.14 points or 2.49 pct to 2,847.60 and the Shenzhen A-share Index was up 17.84 points or 3.07 pct at 599.49.
   
"The market was boosted by buying interest in laggard stocks such as power generators, with a strong yuan also sending property issues higher," said Xu Ming, an analyst at Shiji Investment.
   
Analysts said the A-share performance of China Life Insurance Co tomorrow could be crucial to the market's present movement. "Many investors are looking forward to the A-share debut of China Life tomorrow. If its starting price is below 30 yuan, then there might be another round of gains in financial stocks," said Wu Dazhong, an analyst at Chinalion Securities.
   
Taipei shares closed lower in line with Wall Street's weakness and concerns over the impact on the market of the government's move to take over financially troubled financial institutions, dealers said.
   
The weighted index closed down 98.86 points or 1.26 pct at 7,736.71, after trading between 7,797.57 and 7,736.11. Investors in local electronics' stocks were unnerved by falls on Friday in New York, dealers said.
      
Australian shares closed lower as investors reacted to the drop on Wall Street on Friday and a continuing downward correction in metal prices due to higher inventories, dealers said.
   
They said major resource stocks dragged the wider market down. The S&P/ASX 200 dropped 70.0 points or 1.26 pct to close at 5,502.0. The broader All Ordinaries index shed 65.3 points or 1.18 pct to close at 5,484.5.
   
Seoul shares closed sharply lower, with heavy selling of large cap IT stocks by foreign investors and program selling dragging the index down past a two-month low, dealers said.
   
Following a weaker Friday close on Wall Street, investors were also cautious ahead of the expiry of options contracts, the Bank of Korea's rate decision and the start of the corporate earnings season, they noted.
   
The KOSPI index closed down 14.95 points or 1.08 pct at 1,370.81, the lowest since Oct 31 when it hit 1,364.55. The low for the day was 1,366.48 and the high was 1,384.65.
   
Large cap IT stocks, builders and brokerages posted steep declines, helping the index to extend its loss for a fourth session.

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NEW YORK - Oil prices fell below $56 a barrel on expectations the unusually warm weather seen so far this winter would curb energy demand. However, there are now forecasts that colder weather is on the way -- and that could increase demand for fuel like heating oil.
   
A barrel of light sweet crude rose $1.31 to $57.62 in trading on the New York Mercantile Exchange. The impact of higher oil prices offset a number of takeover deals announced that originally pushed stock futures higher before the opening bell.
   
General Electric Co. agreed to acquire oil and gas fields equipment supplier Vetco Gray for about $1.9 billion.

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