US & World Daily Markets Financial Briefing 21-04-2006

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U.S. stocks open higher, buoyed by Google, 3M results

NEW YORK - U.S. stocks gained ground in early trading Friday as strong earnings from Google Inc. and 3M and a fresh dip in crude-oil prices help offset a more than $1 billion quarterly loss at Ford Motor Co.
   
The Dow Jones Industrial Average was up 56 points at 11,400 after closing at its best level in six years on Thursday.
   
The Nasdaq Composite Index rose 5 points to 2,368 while the S&P 500 Index added 6 points to 1,317.
   
Stocks in focus
   
Google Inc. soared more than $30, or 7.6% at $446.42 after the world's leading Internet search site posted a 60% profit jump on its surging advertising business. Lehman Bros. lifted its price target on the company to $530 from $450 while Goldman Sachs raised its 2006 earnings estimate in the wake of its strong results.
   
In the face of Google's dominance, eBay Inc. is in talks with Microsoft Corp. and Yahoo Inc. about an alliance with either one, where eBay would increase ad spending with its chosen partner and provide access to the wealth of data it has collected about its consumers, The Wall Street Journal reported, citing people familiar with the talks.
   
It's not clear how much money would be involved or whether stakes would be taken. Though the moves are aimed at taking on Google, the report also stated that Google itself offered an olive branch when it learned of the eBay talks.
   
On the Dow, shares of 3M Co. rose 1.8% to $84.10 after the diversified industrial and consumer-products maker lifted its 2006 profit and sales outlook after posting forecast-beating quarterly results.
   
Fellow blue-chip stock, McDonald's Corp. dipped 27 cents to $34.81. The fast-food giant posted first-quarter earnings in line with analyst expectations.
   
Shares in Ford Motor Co. fell 4.5% to $7.58 after the carmaker posted a loss of more than $1 billion in the midst of a sales decline and a turnaround plan that will cost the company up to 30,000 jobs in the coming years.
   
Fellow automaker General Motors Corp. , which helped propel the Dow higher on Thursday by running up 10% after reporting results, was off 3 cents at $22.61.
   
Shares of Dell Inc. fell 3.4% to $27.28 after Citigroup downgraded the computer maker two notches to sell from buy, on the belief that a weak growth outlook for its U.S. PC business and end market deceleration increases the probability of a "margin reset." Analyst Richard Gardner also cut his stock price target to $28 from $37.

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Dollar weakens on reserve diversification

NEW YORK - The dollar was lower across the board early Friday after the Swedish Central Bank said it had significantly reduced its holdings of dollars in its foreign exchange reserves.
   
The Riksbank said it cut the share of dollar-denominated assets by 17% to 20% and boosted the euro's share by 13% to 50%. It also eliminated the yen's share which had previously been at 8% and increased the Norwegian krone's share by 10%. Sweden's currency reserves stood at around $21 billion at the end of last year.
   
"Reserve diversification by central banks has been a key driver of dollar weakness this year and this news further serves to reinforce the notion that the greenback may be under more structural pressure going forward," said Boris Schlossberg, senior currency strategist at Forex Capital Markets, in a note.
   
The euro was last up 0.3% at $1.2327. Against the Japanese yen, the greenback fell 0.5% to 116.93. The dollar also weakened 0.2% against the British pound with one pound fetching $1.7792. The dollar changed hands at 1.2793 Swiss francs, down 0.05%.
   
The news from Sweden followed comments in the past month by Middle Eastern central banks that they're looking to diversify reserves away from the greenback and raise the euro's weighting. Chinese officials have also repeatedly suggested recently that China should gradually stop buying dollar-denominated bonds.
   
The dollar fell four sessions out of five this week as traders scaled back expectations that the Federal Reserve will continue to hike interest rates aggressively.
   
The greenback accelerated its downward spiral Tuesday after minutes from the latest Federal Reserve monetary-policy meeting suggested the Fed may pause after boosting interest rates to 5% at its next policy meeting May 10.
   
The steady program of incremental rate hikes put in place by the Fed since June 2004 has given the dollar a very attractive rate differential against the euro and yen, which largely helped fuel the dollar's rally in 2005. The Fed funds rate currently stands at 4.75%.
   
With no economic data to guide the price action Friday, investors are looking ahead to next week's readings on U.S. housing, durable goods, consumer sentiment and a first-quarter gross domestic product estimate for further clues on the U.S. economy, analysts said.

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German shares remain higher midafternoon as Wall Street seen opening higher

At 2.20 pm, the DAX 30 index was 32.18 points or 0.53 pct higher at 6,095.46, having moved between 6,069.38 and 6,103.00 so far this session.
   
The MDAX was at 8,788.95, up 37.57 points or 0.43 pct, while the TecDAX was at 736.70, up 4.24 points or 0.58 pct. The DAX futures contract was at 6,119.50, up 18.00 points or 0.30 pct, while bund futures were at 116.02, up 0.23.

ThyssenKrupp was in the vanguard of rising large-caps, adding 0.99 eur or 3.87 pct to 26.60, as Swedish peer SSAB reported much-better-than-expected results for the first quarter.
   
BASF gained 2.16 to 69.71, for technical reasons after the stock broke through the 66 eur resistance level yesterday as better-than-expected results and an upbeat outlook from peer Akzo Nobel boosted sentiment towards the issue.
   
Utilities were a firm feature, with RWE rising 1.12 to 73.93, on the back of a report in the Berliner Zeitung stating that Gazprom is in intensive talks with the German utility giant to enter the western European consumer gas market.

E.ON was up 1.30 at 97.10, as Handelsblatt reported that the German utility and Gazprom will sign a final agreement on their Siberian gas field project on the sidelines of next week's meeting between German Chancellor Angela Merkel and Russian President Vladimir Putin.

Volkswagen added 1.06 to 64.91, after WirtschaftsWoche reported that the auto giant's supervisory board apparently has set a profit target of at least 8 pct return on equity and a target of 6 pct return on sales.
   
Peer DaimlerChrysler slipped 0.20 to 46.15, amid news it has filed for German regulatory approval to take sole control of the MDC Power GmbH car engine
production joint venture it operates together with Mitsubishi Motors, according to a filing with Germany's Federal Cartel Office.
   
BMW was lower too, down 0.40 at 45.00. However, it was Allianz that was the worst performer, sliding 1.24 eur or 0.91 pct to 134.35.

London

For a summary of the FTSE risers and fallers at 14.30 BST, click here

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Asian shares close mixed, Tokyo higher on upbeat earnings sentiment

HONG KONG - Shares across the Asia-Pacific region ended mixed as Tokyo
finished higher, with investors stepping up purchases ahead of the release of what they anticipate will be robust earnings numbers for many firms, dealers said.
   
Leading companies, including Sony, Canon and Honda, will report their full-year and quarter to March earnings next week, kicking off the results season.
   
Optimism over results has been boosted by some strong quarterly earnings figures from some key US companies, including Google Inc, as well as a lower-than-expected loss by struggling auto firm General Motors.
   
The blue-chip Nikkei 225 Stock Average closed the day up 86.43 points or 0.5 pct at 17,403.96. The index was down 0.98 pct for the week.
   
The broader TOPIX index of all first-section issues gained 8.54 points or 0.5 pct to 1,756.40. It was down 0.7 pct for the week.
   
"Share prices gained as investors, including mutual funds here, actively purchased a number of blue-chip companies, such as automakers and technology companies," said Koichi Ogawa, chief fund manager at Daiwa SB Investments.
   
"This is because some upbeat US quarterly results have fanned expectations that Japanese firms's earnings (in the past fiscal year) would also be strong."
   
Share prices in Australia closed down as investors sold resource stocks after the sharp fall in metal prices overnight, dealers said.
   
They said index-leading resources stocks BHP Billiton and Rio Tinto led the market lower and followed the drop in their London-listed shares on Thursday after base metals plunged.
   
Dealers said the market's fall was limited by rises in the banking sector, in addition to an unwillingness to take large profits in the resources sector due to the outlook for earnings ahead.
   
The S&P/ASX 200 lost 26.8 points or 0.51 pct to 5,250.1, retreating from Wednesday's record close of 5,283.9.
   
Shares prices in Hong Kong were trading lower in the afternoon on a technical correction after the market gained more than 630 points over the last four sessions, dealers said.
   
At 3:33 pm, the Hang Seng Index was down 52.55 points or 0.31 pct at 16,891.79.
   
In mainland China, A-shares in Shanghai and Shenzhen finished higher on sharp gains in market heavyweight China Petroleum & Chemical Corp (Sinopec) (SHA 600028; HK 0386; NYSE SNP) on rumors that it will launch share reforms soon, dealers said.
   
The Shanghai A-share Index added 32.55 points to 1,485.93 on turnover of 24.61 bln yuan and the Shenzhen A-share Index was up 1.98 points at 360.85 on turnover of 14.82 bln yuan.
   
Share prices in Seoul ended sharply up at a new record as Samsung shares surged about four pct and SK Telecom gained five pct, with sentiment buoyed by Wall Street's overnight rally and positive results from some US bellweathers, dealers said.
   
The rise followed yesterday's minor correction to recent run-ups, with many banking on additional gains sooner rather than later, they added.
   
The KOSPI index closed up 17.16 points or 1.2 pct at 1,451.31.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Crude-oil futures edged lower in a continued pullback from the record levels struck this week, though worries about Iran and supplies of motor gasoline kept the price above $73 a barrel. Crude for June delivery was down 70 cents at $72.99 a barrel.
   
Gold futures traded higher, rebounding from a prior-session loss of almost $13 an ounce. Thursday's decline prompted concern that a broader correction in metals was in the offing. Gold for June delivery was up $4.20 at $627.30 an ounce.
   
On the bond market, long-term Treasury prices rose, sending yields lower. The benchmark 10-year note was up 3/32 at 95 29/32, with its yield at 5.02%.

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