US & World Daily Markets Financial Briefing 13-11-2006

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Stocks advance in early trading

NEW YORK - Wall Street rose moderately Monday ahead of a series of reports that should provide further clarity about inflation and the overall economy.
   
Despite the gain, trading was somewhat tentative. The market could get more direction Tuesday, when the Labor Department releases its Producer Price Index and the Commerce Department issues data on retail sales and business inventories. Both should give investors a better reading on the economy, inflation and consumer spending.
   
Tyson Foods Inc. was among the biggest decliners after the world's largest meat processor reported a wider-than-expected loss during the fourth quarter. Novartis AG dropped after the pharmaceutical company reported the Food and Drug Administration extended a review of its new oral diabetes drug.
   
Automakers were in focus on a report that Toyota Motor Corp. plans to capture 15 percent of the world car market by 2010, unseating rival General Motors Corp. Gannett Co. rose on speculation it plans to bid for all or part of rival Tribune Co.
   
In the first hour of trading, the Dow Jones industrial average rose 4.80, or 0.04 percent, to 12,113.23.
   
Broader stock indicators were modestly higher. The Standard & Poor's 500 index was up 1.95, or 0.14 percent, to 1,382.85, and the Nasdaq composite index rose 13.25, or 0.55 percent, at 2,402.97.The Russell 2000 index of smaller companies was up 1.61, or 0.21 percent, to 770.76.
   
Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.61 percent from 4.59 percent late Friday.

Stocks in focus
   
Tyson fell 9 cents to $19.99 after reports its fourth-quarter loss due to charges and losses in the chicken and beef sectors. Novartis shed $1.21, or 2 percent, to $58.15 after it disclosed in a filing with the Securities and Exchange Commission delays with its Galvus drug.
  
A memo leaked to The Wall Street Journal stated that Toyota hopes to gain market share by targeting Russia, India, China and Brazil. However, the stock gave up $1.00 to $120.90. GM rose 12 cents to $34.79.
   
Gannett picked up 66 cents to $59.55 on reports its interested in acquiring Tribune, whose shares rose 42 cents to $32.45.

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Dollar drifts higher as markets brace for heavy data flow

LONDON - The dollar drifted up in a slow start to an economic data laden week which may yet spell trouble for the US currency.
   
But there may well be support for the dollar too, if US rate setters signal that they have not finished hiking interest rates.
   
"We suspect that key retail sales, housing market, and manufacturing sentiment data this week will support perceptions that the US economy is slowing, and price data should continue to paint a benign picture of inflation," said Daniel Katzive at UBS.
   
At the same time, however, US rate setters may take pains to indicate that market expectations of a rate cut in the early part of next year may be misplaced, he added.
   
Concerns about a slowdown in global growth also add to the importance of Japanese GDP data due out tomorrow.
   
Over in the UK, a set of mixed producer price data left the pound little changed. UK PPI data was firmer than expected, but showed the headline annual input and output price inflation at their lowest rate for a couple of years.
   
Stuart Bennett at CALYON said the mixed tone makes it difficult to interpret the figures.
   
"Overall, however, with headline PPI at a two year low, it does bode well for CPI data and hence will support UK interest rate doves," he added.
   
UK CPI data are due tomorrow while the Bank of England projections for growth and inflation are due Wednesday. The central bank hiked its base rate last week, to 5.00 pct from 4.75 pct.
   
The former is predicted to have picked up due to higher university fees and food prices. The latter, meanwhile, is predicted to reveal little change in the outlook for GDP growth but a slightly lower inflation profile.

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London - UK blue chips pared gains but remained higher at midday ahead of an expected flat open on Wall Street, with US stocks lacking direction amid an empty economic data calendar, while a number of London shares enjoyed speculative gains.

At 11.46 am, the FTSE 100 index was 4.6 points firmer at 6,213.0, having earlier hit a midmorning high of 6,239.8, while the broader indices rallied.

Frankfurt - German shares were higher in early afternoon Frankfurt trading, led by Deutsche Telekom after the company's CEO Kai-Uwe Ricke resigned on Sunday, triggering hopes of restructuring. At 1.14pm, the DAX 30 index was up 20.41 points or 0.32 pct at 6,378.18 after having moved between 6,344.10 and 6,397.65 this session.

Paris - Share prices were up somewhat midday, boosted by Alstom's good first half results and some bullish broker notes. At 12.11 pm the CAC-40 index was up 43.09 points or 0.79 pct at 5,490.59.

Milan - Share prices were slightly higher in midday trading, supported by gains among banking sector stocks and with investors also awaiting a raft of domestic earnings reports. At 11.51 am, The Mibtel index rose 0.32 pct to 31,249 and the S&P/Mib was up 0.28 pct at 40,594, while volumes were 2.13 bln eur.

Madrid - Share prices were higher midday, with Sacyr Vallehermoso outpacing the market on fresh M&A talk and ahead of nine-months results due out later. At 12.00 pm, the IBEX-35 index gained 45.0 points to 14,047.9, after trading in a range of 13,987-14,074.

Switzerland -  Share prices were slightly higher in thin midday trade on bargain hunting after sharp losses over the past three trading sessions, with Novartis a notable decliner on news its diabetes drug Galvus will be delayed by at least three months. At 12.25 am, the Swiss Market Index was 24.54 points higher at 8,760.36, and the Swiss Performance Index up 1847 points at 6,852.65.

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Asian shares close mostly lower, lacking positive leads

HONG KONG - Shares across the Asia-Pacific region closed mostly lower, with markets lacking positive news to encourage buying.
   
Tokyo shares finished lower as pessimism about the economy swept through the market after the release on Friday of weak machinery orders data.
   
The blue-chip Nikkei 225 Stock Average closed 89.94 points or 0.56 pct lower at 16,022.49, off a low of 15,913.86. The broader TOPIX index of all first-section issue closed 12.61 or 0.8 pct lower at 1,568.76, off a low of 1,559.43.
   
The government said Friday that core private-sector machinery orders, which are viewed as a leading indicator of corporate capital spending, fell 7.4 pct in September from August.
   
Australian shares ended down as investors sold resource stocks following a drop in metal prices on Friday. However, banks stocks rose despite the Reserve Bank of Australia maintaining a tightening bias in its latest quarterly statement on monetary policy.
   
The S&P/ASX 200 fell 18.3 points or 0.34 pct to 5,418.47, retreating further from Tuesday's record close of 5,491.6. The benchmark index closed above the day's low of 5,415.5 and below the high of 5,433.2.
   
Hong Kong shares were weaker in afternoon trade on profit-taking, led by property stocks but with losses limited by gains in China-related financial stocks which are being driven by speculation of a yuan appreciation.
   
At 3.23 pm the Hang Seng Index was down 39.63 points or 0.21 pct at 18,851.51.
   
In mainland China, A-shares in Shanghai and Shenzhen closed sharply lower on profit-taking with metal companies and auto makers in particular losing ground. The Shanghai A-share Index lost 20.19 points or 1.02 pct to 1,958.91 and the Shenzhen A-share Index was down 13.07 points or 2.84 pct at 447.34.
   
Seoul shares closed mixed as the won turned sharply lower after the government moved to stabilize the currency, which had surged past the 930/usd level to hit a six-month high.
   
The turbulent forex movements sent shipbuilders and many other exporters into a steep decline while IT stocks enjoyed strong interest on expectations for Microsoft's new operating system.
   
The KOSPI index closed up 0.96 points or 0.07 pct at 1,396.69, after trading between 1,399.98 and 1,386.76.

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Copper falls further below critical 7,000 usd mark

LONDON -  Copper prices were lower, extending Friday's falls below the critical 7,000 usd a tonne level, as the market remained under pressure from rising LME stockpiles and weak imports from top consumer China.
   
At 1.07 pm, LME copper for three-month delivery fell to 6,855.00 usd a tonne against 6,920.00 usd at the close Friday. Other base metals were also lower.
   
Zinc fell to 4,100.00 usd against 4,300.00 usd, aluminium declined to 2,647.00 usd against 2,695.00 usd, while lead crept down to 1,525.00 usd against 1,675.00 usd.
   
Nickel bucked the trend, however, rising to 29,600.00 usd against 29,400.00 usd while tin was unchanged at 9,775.00 usd.
   
The LME said today copper stocks in its warehouses rose by another 3,100
tonnes to total 151,300 tonnes. Stocks have increased by 41,700 tonnes or 38 pct from a recent low of 109,600 tonnes.

Gold edges up on weak dollar, strong physical demand

Gold edged up as the precious metal benefited from a weak US dollar and strong physical demand over the holiday season, and as analysts said the outlook for bullion remains positive.
   
At 11.24 am, spot gold, which earlier touched an intra-day high of 632.40 usd, was quoted at 629.10 usd, up from 627.50 usd in late New York trade on COMEX Friday.
   
Gold touched a 2 month high of 646.50 on Friday on dollar weakness and on speculation China will start buying the metal when it moves to diversify its reserves away from the dollar.
   
Oil climbs edges up on nervousness about further OPEC output cuts

Oil prices edged up above 60 usd, recovering from Friday's sharp losses, as traders remained nervous about the possibility that OPEC will cut production further when it meets again next month.
   
At 10.03 am, December-dated Brent futures contracts were up 30 cents at 60.03 usd a barrel, after falling 1.61 usd to settle at 59.71 usd on Friday. Meanwhile, December-dated US light crude futures were up 15 cents at 59.74 usd.
   
"I think the next focus is the OPEC meeting ... we seem to be getting more talk of further cuts in (OPEC) oil production," said Nas Nijjar, an analyst at CMC markets.
   
He warned, however, that in order for prices to rally, the market would would need to close above 60 usd for a few days running and that in this respect, Friday's weak close does not bode well.
   
"We could maybe see the market test down over the next day or so because of technical trends," he said.
   
Oil prices plunged Friday on profit-taking after strong gains earlier in the week, and as the International Energy Agency (IEA) trimmed its outlook for 2006 global oil demand growth to 1.1 pct from 1.2 pct.
   
However the IEA also forecast a 2.6 pct jump in fourth-quarter global energy demand and said markets will tighten just as the OPEC production cuts start taking effect.

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