US & World Daily Markets Financial Briefing 03-10-2006

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Stocks narrowly mixed in early trading

NEW YORK - Stocks were narrowly mixed early Tuesday as Wall Street remained jittery about the state of the economy amid concerns it has cooled too quickly.
   
Investors who have received mixed economic data in recent weeks are looking for further signs about the health of the economy, whether in the form of economic numbers or earnings forecasts. Though automakers' troubles have been well-documented, investors will likely still be eager to hear from them Tuesday, when they release their sales figures for September.
   
Technology stocks, which have not fared as well as blue chips in recent months, were likely to come under pressure again Tuesday in part because of a profit warning from Marvell Technology Group Ltd.
   
In the first hour of trading, the Dow Jones industrial average was up 1.60, or 0.01 percent, at 11,671.95.
   
Broader stock indicators were down. The Standard & Poor's 500 index was down 1.29, or 0.10 percent, at 1,333.03, and the Nasdaq composite index fell 6.53, or 0.29 percent, to 2,231.07.

Crude-oil futures declined further in electronic trading, slipping 73 cents at $60.30 a barrel.

Stocks in focus
   
Marvell, the chip maker, lowered its third-quarter sales forecast, saying demand from some of its important hard-disk drive customers is slowing. The company also said it plans to restate financial results to account for discrepancies in its stock-option grants.
   
Quest Diagnostics Inc., which provides diagnostic testing services, was likely to be in focus as it lost a nationwide contract with health insurer UnitedHealthcare Inc. The existing agreement expires at the end of the year.
   
Skyworks Solutions may rally after cutting its workforce by 10 percent as part of a plan to save $70 million in annual costs.
   
Pier 1 Imports, the struggling retailer, suspended its 10-cents-a-share dividend payment.
   
Nintendo lifted its earnings forecast on sales of video game hardware and software and a strong outlook for its forthcoming Wii console. Rival Sony finished lower in Tokyo after a broker downgrade.   

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Yen falls on news North Korea to conduct nuclear test

LONDON - The yen pushed lower after news that North Korea said it is to conduct a nuclear test, erasing earlier gains following speculation of possible official intervention to stem the euro's gains against the Japanese currency.
   
North Korea's official KCNA news agency reported that the country will be compelled to carry out a nuclear weapons test due to the "extreme threat" of nuclear war from the US.
   
Bank of New York currency analyst Simon Derrick said the announcement "served to wipe out" the yen's earlier modest gains in a short space of time.
   
Earlier, the euro had moved as low as 149.57 yen following talk that the European Central Bank is watching the euro's level against the Japanese currency and action could be taken to weaken the euro if necessary, though most in the market consider this unlikely.
   
Elsewhere, the dollar rebounded slightly from earlier lows against the euro which had come after yesterday's key US ISM data on manufacturing activity came in well below expectations.
   
Amid a dearth of economic news, however, and with a public holiday in Germany for reunification day, the euro stayed within a tight range against the US currency.
   
The pound meanwhile rose to six-day highs against the dollar and the euro as news of record high UK corporate profitability in the second quarter helped offset data showing a drop in mortgage equity withdrawal.
   
UK corporate profitability rose to its highest level since records began in 1989, official figures showed this morning.

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The European Markets at 11.30 GMT

London - UK blue-chips remained weaker in midday trade, as consensus-beating results from Tesco and positive news regarding a rights issue in Xstrata were offset by weakness in miners and oil stocks as commodity prices slumped, while Wall Street is seen opening lower.
   
At 11.44 am, the FTSE 100 was down 39.1 points at 5,918.7, off session lows of 5,902.3, and with the broader indices all in the red.

Frankfurt - Share prices were lower midday, in line with most major European exchanges and extending yesterday's losses, as Dow futures pointed to a lower opening on US markets and as trading volume was muted due to today's German reunification holiday and a lack of market moving news.
   
At 11:45 am, the DAX 30 index was 42.57 points or 0.71 pct lower at 5,956.68, having moved between 5,944.57 and 5,988.10 during the session.

Paris - Shares were lower in midday trade, as shares in carmakers fell after broker downgrades and as oil shares sank on crude prices that remained relatively weak. At 11.25 am the the CAC-40 index was down 44.67 or 0.86 pct at 5,198.16.

Amsterdam - Share prices were slightly lower in early afternoon trade in line with other European markets as Wall Street is seen opening lower. At 1.07 pm, the AEX index was down 0.49 pct or 2.38 points at 480.52 after opening at 480.89 and coming off a low of 478.67.

Madrid - Share prices were lower at midsession in line with Europe amid profit-taking after recent strong gains and slow newsflow, with Metrovacesa lower and Endesa outperforming. At 1.09 pm, the IBEX-35 index lost 63.10 points to 12,853.0, after trading in a range of 12,835-12,901, on turnover of 2.0 bln eur.

Milan - Share prices were lower at midday, due to some profit-taking in the wake of losses on US and Asian markets, while Popolare Italiana rose on expectations that the company will merge with another cooperative bank. At 12.15 pm, the Mibtel index fell 0.59 pct to 29,211 points and the S&P/Mib lost 0.55 pct to 38,233.
   
Stockholm - Shares remained in negative territory in midday trade, down a touch from morning levels as profit-taking continued, with with clothing retailer Lindex maintaining its losses in the wake of weaker-than-expected fourth quarter profits, and disappointing news about its German operations.
   
At 12.10 pm, the OMX Stockholm index was down 1.04 pct at 332.18 points, while the OMX Stockholm 30 index was down 1.10 pct at 1,031.93.

Helsinki -  Share prices were lower in afternoon trade, led by Nokia, which was tracking its weaker ADR price on Wall Street overnight, while Perlos was recovering from recent lows. At 2.09 pm, the OMX Helsinki 25 was 0.83 pct lower at 2,567.53 and the OMX Helsinki was down 0.99 pct to 8,736.39 on 462 mln eur turnover.

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Asian shares close mixed as weak Wall St lead, US data concerns weigh

HONG KONG - Share prices across the Asia-Pacific region closed mixed as a weak lead from Wall Street and uncertainty over US economic prospects weighed on investors' minds.
        
Amid the mixed signals, Japanese shares closed marginally lower on mild profit-taking following a four-day winning streak. The market managed to end off its lows for the day on buying in cyclical stocks such as machine tool makers and select retailers after  yesterday's surprisingly upbeat Tankan business sentiment survey.
   
The Nikkei 225 index closed down 12.20 points at 16,242.09, after touching a low of 16,148.89. The broader TOPIX index of all first-section issues fell 7.28 points or 0.45 pct to 1,617.84.
   
Toshihiko Matsuno, senior strategist at SMBC Friend Securities, said the market was taking a breather after rising for four consecutive days.
    
But buyers remained on the prowl, dealers said, even pushing up share prices into positive territory at one point, indicating a better outlook for the Japanese economy.
    
In Australia, share prices closed slightly higher as investors were buoyed by expectations that the Reserve Bank of Australia is likely to announce tomorrow morning that official cash rates will remain at 6.00 pct.
    
Investor sentiment also recovered after the earlier selling in resource stocks, which had been prompted by the overnight fall in metal prices, eased.
    
The S&P/ASX 200 closed up 5.5 points at 5,184.3, while the All Ordinaries Index added 2.5 points to close at 5,141.2.
    
In Hong Kong, share prices finished higher as short-covering helped reverse losses posted earlier in the morning following weak offshore leads. However, many investors stayed on the sidelines after yesterday's holiday and due to the week-long holiday on the mainland.
   
Castor Pang, strategist at Sun Hung Kai Financial Group, said the market is likely to have clearer direction after the US releases factory orders data and employment report later this week.
   
The Hang Seng Index closed up 63.48 points at 17,606.53.
   
Meanwhile, Taiwan stocks ended little changed as investors avoided aggressive trading ahead of a long string of local holidays from Friday.
   
Taipei's markets will be closed during  October 6 to 10 for public holidays and will resume trading on October 11. An extra session will be added on Saturday, October 14. Markets in Korea were closed today for a public holiday.
   
The weighted index closed down 4.07 points or 0.06 pct at 6,956.88
   
In other markets, the Philippine and Singapore markets were hit by profit-taking. The Philippine stock exchange's composite index ended down 20.19 points at 2,522.50, while Singapore's Straits Times Index was down 2.66 points at 2,597.40.

Asian Bourse Round-Up

For a full list of closing figures, click here

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Gold falls on renewed selling in oil

LONDON - Gold prices fell for a fourth straight day as the precious metal failed to find support from dollar weakness, buckling instead under the pressure of renewed selling in oil.
   
At 12.21 pm, spot gold, which earlier hit a low of 591.95 usd, was quoted at 593.20 usd, down from 597.80 usd at the time of the COMEX market close in New York yesterday. Other precious metals were also down.
   
Spot silver fell to 11.38 usd against 11.52 usd, platinum dipped to 1,129.50 usd against 1,146.00 usd, while palladium was down at 305.00 usd against 308.00 usd.
   
Gold closed below the key 600 usd mark yesterday as traders shrugged off weakness in the US dollar, setting their sights on oil prices, which dipped below 61 usd.
   
It has continued lower today after a very quiet Asian session. Chinese players are away for a week-long holiday and this, along with a fall in Brent crude below 60 usd, is pressuring gold.
   
"For now it seems resistance around 608-12 usd will keep the yellow metal capped, while further pressure in the oil market could see gold dip back into the previous 573-94 usd trading area," said TheBulllionDesk.com analyst James Moore.
   
Falling oil prices reduce investors' inflation concerns, limiting the appeal of gold as a hedge against oil-induced inflation. However, reduced inflation worries can also weigh on the dollar, thereby benefiting gold.
   
Gold often moves counter to the dollar as it is seen as an alternate investment to the US currency. Also, a strong dollar makes gold expensive for holders of other currencies.
   
The dollar has remained weak today after sharp falls yesterday as a key survey of US manufacturing activity came in well below expectations, renewing concerns about the US economy.
   
Gold has failed to capitalise on dollar weakness, however, as the precious metal's close correlation with the oil market has again provided much the trading direction.

Copper down as oil prices fall; slowing US growth weighs on mkt

Copper prices fell for a second day as the market again came under pressure from declining crude oil prices and lingering concerns over the impact of slowing US economic growth on demand.
   
At 1.51 pm, LME copper for 3-month delivery was down at 7,325.00 usd against 7,520.00 usd at the close yesterday. Other metals were also lower.
   
Aluminium fell to 2,557.00 usd against 2,565.00 usd, tin went down to 8,880.00 usd from 8,925.00 usd and nickel was lower at 28,900.00 usd against 29,250.00 usd.
   
Zinc and lead bucked the trend, however. Zinc edged up to 3,360.00 usd from 3,355.00 while lead was up at 1,390.00 usd against 1,376.00 usd.

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