US & World Daily Markets Financial Briefing 21-11-2006

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Stocks mixed in early trading

NEW YORK - Stocks were mixed in early trading on Tuesday, with investors debating whether a recent rally still has legs.
   
In the opening minites, the S&P 500 rose .01 of a point to 1,400.51, and the Nasdaq rose 1.93 points to 2, 454.65. The Dow industrials dropped 7.53 points to 12,309.01.
   
A six-session winning streak for the Dow industrials was snapped on Monday, even amid a flurry of merger news. The Dow industrials dropped 26 points, the S&P 500 slipped 0.7 of a point while the Nasdaq Composite rose 6.9 points.
   
Analysts from Standard & Poor's noted the VIX index -- a measure of the implied volatility in the S&P 500 -- fell below 10 on Monday, moving it close to the all-time low of 9.3 in Dec. 2003. Other measures also point to increased appetite for risk.
   
"An increased appetite for risk and a willingness to buy lower quality assets on higher valuations are all classic signals of a maturing bull market," the analysts noted. "However, aggregate valuations remain quite low."
     
Oil futures rose 31 cents to $59.11 a barrel. The dollar was virtually flat against the Japanese yen and the euro. Fed governor Kevin Warsh and Richmond Fed President Jeffrey Lacker are due to speak Tuesday.
   
Stocks in focus

Korean Air said it is buying 25 planes from Boeing that, at list prices, are worth $5.5 billion. Airlines typically pay a discount to list prices when ordering planes.
   
There are still some companies reporting quarterly earnings. Borders, J. Crew Group and Jack in the Box are among some of the larger companies due to report.
   
Medtronic shares may climb after the medical device maker reported a stronger than forecast 11 percent sales rise. German-listed Medtronic shares rose over 6 percent.
   
Weak sales of mobile phones led a widening in NEC Corp.'s first-half loss.
   
In rating news, Banc of America Securities started coverage of American International Group at buy, while Juniper Networks was upgraded to overweight from neutral at J.P. Morgan.

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Major currencies steady in quiet trade ahead of US Thanksgiving holiday

LONDON - Major currencies remained steady across the board on a very quiet day for data and ahead of the US Thanksgiving holiday on Thursday.
   
Investors are also remaining sidelined ahead of the key German Ifo survey on Thursday and some more significant US data next week, including housing data and revised third-quarter GDP figures.
   
Commerzbank currency analyst Gavin Friend said sentiment towards the dollar "should remain subdued" ahead of next week's data, while position-unwinding ahead of the long weekend in the US could prompt the euro to push above the 1.2850 usd level.
   
For the time being, however, a slight recovery for the yen, taking the euro back towards the 151 yen level after surging to a record high of 151.70 yesterday, could limit gains for the European currency against the dollar, he noted.
   
Elsewhere, the pound edged off earlier highs amid quiet trade and as market players awaited tomorrow's release of the minutes to the Nov 9 meeting of the Bank of England's Monetary Policy Committee, when interest rates were raised to 5.00 pct, their highest level in over five years.
   
The UK currency had earlier surged to week highs against the euro and the dollar after a much stronger-than-expected manufacturing survey from the Confederation of British Industry raised hopes that the central bank will deliver another rate hike early next year.
   
In its monthly industrial trends survey, the CBI said the balance of firms reporting a rise in orders improved to - 6 pct in November from - 20 pct in October, far better than analysts' predictions for a much more moderate improvement to - 12.
   
The export order balance meanwhile jumped to its highest level in over a decade, while, most worrying for the Bank of England, the balance of manufacturers expecting to raise prices over the next three months jumped to a 22 month high.

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The European Markets at 13.00 GMT
 
London - UK blue-chips were higher at midday, with firming oil prices couching a rebound, and with pleasing results from Experian and British Land offsetting sharp falls in drug heavyweight AstraZeneca after a broker downgrade. At 11.47 am, the FTSE 100 index was up by 16.9 points at 6, 221.4, off a session high of 6.226.7, while the broader market was mixed.

Frankfurt - German shares were higher in midday trade with Deutsche Boerse giving a fillip to the market on takeover speculation surrounding the company. At 12.43 pm, the DAX 30 index was 20.44 points or 0.32 pct higher at 6, 472.77, having moved between a low of 6, 447.53 and a high of 6, 475.16.

Paris - Shares were up at midday as broker upgrades and positive news for some leading blue chips helped drive sentiment. At 12.31 pm, the CAC-40 index was up 22.53 points or 0.41 pct at 5, 477.35. Volume was 1.2 bln eur.

Milan - Share prices were slightly higher at midday, with Alitalia and BMPS leading the advance on M&A speculation. At 12.21 pm, the Mibtel index rose 0.36 pct to 31, 345 points and the S&P/Mib added 0.34 pct to 40, 858, while volumes were 2.08 bln eur.
   
Amsterdam - Shares in Amsterdam were higher at midday, with investors eyeing higher US futures while Vedior led gainers, buoyed by an improved price target at Morgan Stanley. At 12.11 pm, the AEX was up 0.40 pct or 1.95 points to 493.65, reaching an earlier high of 494.27.
 
Madrid - Share prices were slightly lower at midday as investors locked in profits, with Cintra leading the losers and Telecinco bucking the trend after an upbeat ad revenue update. At 12.45 pm, the IBEX-35 index was down 7.0 points at 14, 248.7, after trading in a range of 14, 217-14, 285 on turnover of 1.7 bln eur.

Stockholm - Shares in Stockholm edged higher midday, helped by slightly positive US futures, with banks, miners and SCA underpinning the index, but with trade remaining muted amid a lack of domestic leads. At 12.30 pm, the OMX Stockholm was up 0.14 pct at 357.24 points and the OMX Stockholm 30 up 0.06 pct at 1, 107.21.

Zurich - Share prices were higher in thin midday trade, tracking US futures, with Swatch surging after a buoyant watch exports report. At 12.20 pm, the Swiss Market Index was up 60.33 points at 8, 820.37, and the Swiss Performance Index had gained 43.5 points to 6, 902.34 points.

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Asian shares close mixed as profit taking offsets rebounds

HONG KONG  - Shares across the Asia-Pacific region closed mixed, with rebounds from yesterday's sell-offs giving way to profit-taking.
   
Tokyo shares ended narrowly mixed after investors took profits on gains achieved in morning trade, they said. Investors were also cautious as they awaited the release tomorrow of the government's economic report for this month.
   
The blue-chip Nikkei 225 Stock Average closed 8.20 points or 0.05 pct higher at 15,734.14, off a high of 15,817.73. But the broader TOPIX index of all first-section issues slid 0.99 points or 0.06 pct to settle at 1,532.95, after touching a low of 1,529.12.
   
Fumiyuki Nakanishi, chief strategist at SMBC Friend Securities, said foreign investors are avoiding buying.
   
"Overseas investors were reluctant to purchase Japanese shares on increasing uncertainties over the economy here," Nakanishi said. "Also, sentiment among individual investors who often buy small- to medium-cap stocks was depressed by the behavior of foreign investors."
   
Australian shares finished higher as investors sought bargains following yesterday's large sell-off and a recovery in base metal prices overnight. However, leading miners fell as investors remain concerned about the outlook for the global economy next year and switched into other sectors.
   
The S&P/ASX 200 advanced 35.6 points or 0.67 pct to close at 5,358.0. The benchmark index closed off the day's high of 5,373.2 and above the low of 5,322.7.
   
Hong Kong shares were higher in afternoon trade with bargain-hunting following yesterday's sell-off and sustained interest in mainland China financial stocks. At 3.22 pm the Hang Seng Index was up 33.31 points or 0.18 pct at 18,987.94.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher for their sixth consecutive trading day on continued follow-through buying, with machinery and metal listings gaining ground. The Shanghai A-share Index climbed 21.22 points or 1.0 pct to 2,141.88 and the Shenzhen A-share Index was up 3.68 points or 0.78 pct at 474.81.
   
Seoul shares closed slightly higher in a rebound, with continued selling by foreign investors offset by institutional interest. Trading was mostly directionless as investors remained cautious following Wall Street's mixed performance and awaited better bargain-hunting opportunities.
   
The KOSPI index closed up 3.47 points or 0.25 pct at 1,405.68, off a low of 1,399.97 and a high of 1,406.58.

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Platinum hits new all time record on speculation over launch of ETF

LONDON - Platinum hit a new all-time high of 1,394 usd an ounce in Asia as speculation over the launch of an exchange-traded platinum fund continued to boost the metal. Gold tracked platinum higher but gains were capped in quiet trade.
   
At 11.37 am in London, platinum slipped off its record to trade at 1,342.50 usd an ounce, but remained almost 100 usd above the 1,251.50 usd levels seen in late New York trade yesterday.
   
"Speculation over a possible platinum exchange traded fund (ETF) has been driving up platinum prices to new record levels," said Numis analyst John Meyer.
   
He explained that the "possibility of a platinum ETF could cause significant new physical demand in the short to mid term in order to match the ETF investment with physical metal".
   
Strong platinum prices, which hit an all-time high of 1,336.00 usd an ounce in May this year, have already hit jewellery manufacturers, leading them to substitute with white gold.
   
UBS Investment Bank analyst John Reade said he believes the longer term prospects for platinum have been damaged by the recent price surge as it will accelerate substitution from industrial users and jewellers.
   
He said in the short-term, volatility and illiquidity look set to continue -- with prices heading either higher or lower -- but that when liquidity returns to the market "the price will probably fall".
   
Elsewhere, spot gold, which earlier touched an intra-day high of 625.30 usd on ounce, was quoted at 625.15 usd, up from 622.70 usd in late New York trade yesterday.
   
"Sentiment (in gold) remains mixed this morning despite the movements in platinum," said TheBullionDesk.com analyst James Moore.
   
He added that "the Thanksgiving holiday (in the US) at the end of the week is likely to confine gold to its current range, spending more time trading 614-28 usd".
   
Spot silver was up at 12.92 usd an ounce against 12.78 usd in late New York trade. Moore said the metal might be in for a period of consolidation considering its lack of momentum above 13 usd. Palladium rose to 328.50 usd against 321.00 usd.

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