US & World Daily Markets Financial Briefing 30-03-2006

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U.S. stocks edge higher; Nokia outlook lifts telecom

NEW YORK - U.S. stocks rose in early trading Thursday as end-of-quarter buying propelled the Nasdaq Composite to a fresh five-year high, with the telecom sector a leading gainer after Nokia Corp. raised its forecast for global handset sales.
   
The Nasdaq was up 8 points at 2,346. The Dow Jones Industrial Average was up 3.5 points at 11,218 while the S&P 500 Index rose 2 points to 1,305.
   
"The bias for today and tomorrow should still be to the upside because of the end of the quarter when you get portfolio adjustments," said Barry Hyman, equity market strategist at Ehrenkrantz King Nussbaum. "
   
"Technology, with the Nasdaq breaking out yesterday, should continue to do better, although I don't expect a day like yesterday."
   
Nokia handset forecast lifts telecom
   
Nokia Corp. rallied 5.5% to $21.33 after the world's largest maker of mobile phones, raised its forecast for worldwide handset sales. The company said it now sees growth of 15% or more in 2006, up from a previous view of 10% or more growth.
   
Motorola Inc. , the world's second-leading mobile phone maker, saw its stock add 1.5% in pre-market dealings. RF Micro Devices , which makes components for Nokia phones, was up 3.1% while shares of Ericcson , a Swedish maker of mobile telecom equipment, tacked on 2%.
   
Other stock standouts
   
Google Inc. shares fell 1.2% at $390 after the Internet search company said it was making more shares available to the marketplace in an effort to absorb the demand from index funds following the company's inclusion into the S&P 500.
   
General Motors Corp. was off 12 cents at $22.03. The troubled car maker is discussing the sale of its stake in Isuzu Motors that is worth about $323 million.
   
The Wall Street Journal, meanwhile, reported that it has moved closer to selling a 51% stake in its GMAC financing arm after agreeing the broad structure of a deal with investors led by Cerberus Capital Management.
   
Best Buy Co. shares were unchanged at $54.52 after the consumer electronics retailer offered up a full-year profit outlook ahead of current Wall Street expectations.
   
Its upbeat forecast comes in the wake of quarterly results that saw the company's revenue beat analyst estimates on strong sales of flat-panel televisions, MP3 players and gift-card redemptions.
   
Elsewhere, The Nasdaq Stock Market Thursday pulled its $4.2 billion bid for the London Stock Exchange after failing to win the recommendation of the U.K bourse. The stock was off 13 cents at $41.72.

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Dollar lower on euro zone rate-hike prospects

NEW YORK - The dollar traded lower against the euro and the yen early Thursday after economic data out of the euro zone fueled hopes that the European Central Bank will be more aggressive in hiking rates that previously thought.
   
But the U.S. currency pared some losses after a U.S. government report showed slightly higher inflationary pressure in the fourth-quarter.
   
The fourth-quarter GDP report "further underscores that this was a one-off quarter weakness and we are anticipating a very strong rebound in the first quarter," said Michael Woolfolk, senior currency strategist at the Bank of New York.
   
Meanwhile, the inflation data showed "a material revision upward" of inflation pressures in the U.S. economy.
   
In early New York trading, the dollar was at 117.59 yen, down 0.1%. The euro was trading at $1.2087, up 0.5%. The dollar changed hands at 1.303 Swiss francs, down 0.5%. The British pound rose 0.3% to $1.7404.
   
Sentiment towards the euro improved recently following several robust economic reports from Germany. "The ECB will be far more comfortable raising interest rates in the next meeting [April]," Woolfolk said.
   
Higher inflation
   
The dollar strengthened slightly after a Commerce Department report showed core consumer inflation increased at a 2.4% annual pace in the quarter, higher than the 2% target of the Fed, and up from 2.1% estimated a month ago.
   
The Fed said it was concerned about inflationary pressures and the GDP report ratified some of those fears.
   
U.S. real gross domestic product grew at a 1.7% annualized rate in the quarter, compared with the earlier estimate of 1.6% and an original estimate of 1.1%, the Commerce Department reported Thursday. It was the final estimate of quarterly growth.
   
The revision was as expected by economists surveyed by MarketWatch. The economy grew 4.1% in the third quarter.
   
Separately, first-time claims for state unemployment benefits fell by 10,000 to 302,000 in the week ending March 25, the Labor Department.
   
Diversification "a significant impact"
   
The U.S. currency was also bid lower on concerns that Middle Eastern governments may shift reserves away from the American currency.
   
The United Arab Emirates central bank governor overnight reiterated comments that the country was looking to raise the euro's weighting in its reserves to 10% of its total from 2%.
   
"Although the potential shift in reserves by the UAE does not represent a huge amount on its own, if this becomes a trend throughout the region it will have a significant impact on currency markets," said currency analysts from BNP Paribas.
   
Euro pressured by job data
   
The euro was off highs of the day, however, after the seasonally adjusted unemployment rate in Germany unexpectedly rose to 11.4% in March from 11.3%.
   
Markets had been looking for a flat reading.
   
The euro got a lift on Tuesday after data showed German business-sentiment in March unexpectedly climbed to a 15-year high and money supply in the euro zone rose 8% in February.

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The European Markets at 12.00 BST

London - Leading shares remained in demand at midday, with Kazakhmys leading the mining sector higher and ongoing bid talk continuing to underpin heavyweight banks, dealers said.
   
At 12.15 pm, the FTSE 100 was 35.6 points higher at 5994.9, while the broader markets were also in demand.

Frankfurt - Shares were higher in midday trade after Wall Street rallied overnight as investors there decided the previous day's Fed-inspired sell-off was overdone, with ThyssenKrupp, Siemens and Commerzbank gaining on broker upgrades, dealers said.
   
At 11.57 am, the DAX 30 index was 33.01 points or 0.56 pct higher at 5,947.79, having moved between 5,936.84 and 5,961.24 so far this session.

Paris - Shares were higher midday on yesterday's strong session on Wall Street, while continued merger talk pushed the CAC-40 index back above the 5,200 mark, raising the prospect of a rise beyond 5,300, dealers said.
   
At 12.33 pm, the CAC-40 index was 28.26 points higher at 5,208.51, on volume of 1.66 bln eur. Among CAC-40 shares, 26 were higher and 14 were lower.

Amsterdam - Share prices were slightly higher in quiet early afternoon trade amid a lack of leads, with second-liner ASMI surging on hopes of a split-up, dealers said.
   
At 1.25 pm, the AEX was up 0.96 point or 0.2 pct at 469.90

Milan - Share prices were higher in midday trade, in line with other European markets, led by gains in Popolare di Verona on price target upgrades, and among other banking sector stocks, dealers said.
   
At 1.00 pm, the Mibtel index gained 0.57 pct to 29,292 and the S&P/Mib was up 0.61 pct at 37,930.

Madrid - Share prices were flat in quiet midday trading, with Inditex and Ferrovial extending yesterday's gains and Repsol YPF firm after an upbeat dividend announcement, while Endesa was under pressure, dealers said.
   
At 12.18 pm, the IBEX-35 index was up 1.2 points to 11,818.0, after trading in a range of 11,808-11,878, on turnover of 913 mln eur.

Stockholm - Share prices were slightly higher in midday trade, off morning highs, with the blue chip engineers far outperforming the other sectors on hopes of a strong earnings season, dealers said.
   
At 12.20 pm, the OMX Stockholm index was up 0.53 pct at 340.24, while the OMX Stockholm 30 index was up 0.55 pct at 1,065.80. Turnover was 16.00 bln skr.

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Asian shares close mostly up, Tokyo tops 17,000 on domestic economy hopes

HONG KONG - Share prices across the Asia-Pacific region ended mostly up, with Japan's Nikkei index topping 17,000 for the first time in five and a half years.
   
Tokyo stocks were buoyed by Wall Street's gains overnight with investors shrugging off weak industrial output data and buying shares on hopes the economic recovery will continue, dealers said.
   
The Nikkei 225 Stock Average closed up 106.93 points or 0.6 pct at 17,045.34, after touching a peak of 17,125.64. It was its best finish since Aug 29, 2000 when the index settled at 17,141.75.
   
The broader TOPIX index of all first-section issues gained 15.14 points or 0.9 pct to 1,726.68, off a high of 1,734.66.
   
"Shares got a lift from strong gains in US markets. Investors also appeared to step up their purchases on broadening expectations that a flurry of mutual funds would emerge as buyers into end-March," said Toshihiko Matsuno, senior strategist at SMBC Friend Securities.
   
Toyo Securities strategist Ryuta Otsuka said investors continued to snap up stocks with the current fiscal year ending tomorrow, adding continuing inflowsof funds coming from hedge funds into the high-tech sector propped up local sentiment.
   
In Australia, share prices finished at fresh record highs as investor sentiment continued to follow strong metal prices and add resources stocks to portfolios, dealers said.
   
They said index leading resources BHP Billiton and Rio Tinto were boosted by copper prices reaching all-time highs overnight on speculative demand.
   
Dealers said the nation's leading telco Telstra jumped from recent lows on bargain hunting which also supported the market into record territory.
   
The S&P/ASX 200 rose 24.5 points or 0.48 pct to close at 5,115.0, passing yesterday's record closing high of 5,090.5.
   
Share prices in Hong Kong were trading sharply higher in the afternoon as a rebound on Wall Street and gains in Tokyo helped investors put aside worries over lending rate hikes by local banks, dealers said.
   
They said futures-related activity boosted some blue chips ahead of the expiry of March contracts later today, with bargain-hunting providing additional support.
   
At 3:19 pm, the Hang Seng Index was up 160.38 points or 1.02 pct at 15,905.49.
   
In mainland China, A-shares in Shanghai and Shenzhen closed lower as investors took profits after recent significant rises with airlines and petrochemical companies under pressure, dealers said.
   
The Shanghai A-share Index slid 11.49 points to 1,357.53 on turnover of 13.37 bln yuan and the Shenzhen A-share Index was down 2.89 points at 331.24 on turnover of 8.71 bln yuan.
   
In Seoul, share prices ended higher, rising for a sixth session, with POSCO, Hyundai Motor and banks leading the advance, dealers said.
   
Wall Street's overnight rise and sharp gains in Tokyo shares brought on a firm start here, sustained by strong program buying, amounting to 115.6 bln won.
   
The KOSPI index was up 5.42 points or 0.41 pct at 1,338.14.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Gold futures rallied as the weakness in the U.S. dollar sent investors scurrying for better returns in the metals market. The benchmark April contract was up $11.70 at $585 an ounce, a fresh 25-year high.
   
After the latest reading on fourth-quarter economic growth, long-term Treasury prices fell further, sending yields higher.
   
The benchmark 10-year note was last down 11/32 at 97 12/32, with its yield at 4.83%.
   
Crude-oil futures dipped in early trading even as Iran rejected a United Nations Security Council statement urging the Tehran government to cease uranium enrichment.
   
Crude for May delivery was last down a penny at $66.44 a barrel.

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