US & World Daily Markets Financial Briefing 15-12-2006

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Stocks soaring again
 
NEW YORK - Stock prices are surging higher in Friday's early going. The Dow Jones Industrial Average is up 45 points. The Nasdaq Composite Index is ahead 15 points and the Standard and Poor's 500 Stock Index is up four points.
   
Investors are welcoming tamer-than-expected consumer inflation, which gives the Federal Reserve less reason to make a move on interest rates. A Santa Claus rally continues to push the Dow to new record highs, following following Thursday's big surge that saw the highest close ever for the Blue Chip index.

Stocks in focus

Truck and bus maker Navistar International Corp. on Friday said restatement of its 2005 financial results will go beyond the extension deadline granted by the New York Stock Exchange.
   
As a result, the company also said it plans to contest its removal from the exchange, currently scheduled for Wednesday. In July the exchange granted Navistar until Feb. 1 to complete the filing.
   
Navistar did not offer a new timetable for the filing. It said the filing of its 2006 results would follow restatement of the 2005 results. The company is restating financial results back to 2002, due to accounting problems it uncovered in April. Items that must be restated include accounting for external funding of product development programs, timing of amounts collectible, warranties and shifting balances and expense amounts.

In morning trading, Navistar shares lost $2.49, or 7.3 percent, to $31.66.
   
Discount Web retailer Overstock.com Inc. said Friday it is raising $40 mln through a private sale of common shares to institutional investors.
   
Under the agreement, Overstock will issue 2.7 mln common shares $14.63 each. W.R. Hambrecht served as the placement agent for the offering. Proceeds are expected to be used for general corporate purposes and for working capital requirements.
   
Shares of Overstock were trading up 46 cents, or nearly 3 percent, at $16.42 in morning trading on the Nasdaq.

The chief operating officer of Illumina Inc., which makes gene-variation testing equipment, sold 15,000 shares of common stock under a prearranged trading plan, according to a Securities and Exchange Commission filing Thursday.
   
In a Form 4 filed with the SEC, John R. Stuelpnagel reported he sold the shares Tuesday for $40.44 apiece. The stock sale was conducted under a prearranged 10b5-1 trading plan which allows a company insider to set up a program in advance for such transactions and proceed with them even if he or she comes into possession of material non-public information.
   
Insiders file Form 4s with the SEC to report transactions in their companies' shares. Open market purchases and sales must be reported within two business

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Dollar off lows as firm US TICS data helps offset weak CPI numbers
 
LONDON - The dollar came off lows as strong US portfolio flows figures helped to offset weak US inflation data this afternoon.
   
Key inflation figures showed both US headline and core CPI inflation were unchanged in November, against expectations for a 0.2 pct rise in both.
   
The benign figures will re-ignite speculation that the Federal Reserve could cut interest rates early next year.
   
The dollar pared some of its earlier losses, however, following strong US portfolio flows and industrial output data.
   
Data released by the US Treasury showed portfolio capital flows to the US rose to 82.3 bln usd in October from 70.2 bln in September, more than sufficient to cover the trade deficit of 59 bln usd over the same month.
   
Meanwhile, US industrial output figures also came in above expectations, showing a rise of 0.2 pct in November against forecasts for an unchanged reading, though the figures for October was revised down.
   
Thomson IFR Markets analyst Jamie Coleman said although the TICS data helped arrest the dollar's decline, the market is "more focused on CPI and on increasing odds the Fed will ease next year", though he noted that the market may be "over-reacting".
   
"It looks like the market is over-reacting a bit as the Fed retains a tightening bias, and will likely be on hold for months as core inflation remains well above their 2 pct target at 2.6 pct on the core year over year," he said.
   
The euro rose to a high of 1.3188 usd after the inflation data and the pound to 1.9665 from levels of 1.3105 and 1.9564 respectively just before the data were released, though both have come down off their highs since the stronger ICS data.

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The European Markets at 13.00 GMT

London - Leading shares remained firmer at midday, helped by strength in BAE Systems and Prudential and fresh gains across mining stocks, while hopes of further advances on Wall Street also lifted the FTSE 100 to near six-year highs.
   
By 12.10 pm, the FTSE 100 index was 23.9 points higher at 6,251.9, just below a six-year high, while the broader indices were also firmer, with the FTSE 250 and Small Cap indices both hitting fresh highs.
   
Frankfurt - German shares were higher in midday trade with the DAX-30 index continuing its climb to five-year record levels helped by positive closes on Wall Street and the Nikkei index, but slowing slightly as DOW futures point to a lower opening in trade across the Atlantic. At 1.06 pm, the DAX 30 index was up 19.09 points or 0.28 pct at 6,571.67, after moving between a low of 6,556.73 and a high of 6,587.27 this session.

Paris - Shares remained higher midday, buoyed by Wall Street's overnight gains and expectations that stocks in New York will open with further rises later today. At 12.30 pm, the CAC-40 index was up 12.78 points or 0.23 pct at 5,522.36, on strong volume of 3.1 mln eur.
 
Amsterdam - Shares were up midday as higher US futures pointed to a positive Wall Street open, following yesterday's record high close. At 12.15 pm, the AEX rose 0.34 pct or 1.68 point to 495.64, after opening at 495.18 and reaching a high of 497.40.

Milan - Share prices were higher at midday, with investors focusing on Fiat and Generali. At 12.25 pm, the Mibtel was up 0.35 pct at 31,686 points and the S&P/Mib added 0.40 pct to 41.265. 

Madrid - Share prices were higher, but off earlier highs midday, ahead of the key US November CPI reading later, with Altadis one of the main outperformers amid news of Japan Tobacco's agreed 7.5 bln stg buy of THE UK's Gallaher. At 12.35 pm, the IBEX-35 index put on 11.0 points to 14,362.9.
   
Zurich - Share prices moved off earlier highs with Wall Street seen set for a flat opening and amid high volatility due to today's Eurex expiry. At 1.35 pm the Swiss Market Index was 14.79 points higher at 8,791.43, with the Swiss Performance Index up 9.57 points at 6,908.72 .

Stockholm - Shares were little changed in midday trade as retailing, banking and mining stocks offset weakness in Ericsson after rumours chief executive Carl-Henric Svanberg has been selling shares in the company. At 12.15 pm the OMX Stockholm index was up 0.21 pct at 366.44, and the OMX Stockholm 30 up 0.12 pct at 1,130.32.

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Asian shares close higher on Wall St gains
 
HONG KONG - Shares across the Asia-Pacific region closed higher on Wall Street's rise overnight which saw the Dow Jones index close at a new high.
   
Tokyo shares closed stronger as investors cheered Wall Street and were relieved that the Bank of Japan's latest Tankan corporate business survey showed optimism rising among big and small companies, sending the benchmark index to a fresh seven-month high.
   
Market watchers expect Japanese shares to continue to rise although foreign funds may start to thin out next week ahead of the Christmas holidays. Dealers see the Nikkei index trading between 16,700 and 17,200 points.
   
The Nikkei 225 Stock Average finished up 85.11 points or 0.51 pct at 16,914.31, off a high of 16,959.91. This was its strongest closing level since May 11 when it settled at 16,951.93. The index climbed 3.0 pct over the week.
   
The broader TOPIX index of all first-section issues edged up 5.55 points or 0.34 pct to 1,657.40, off a high of 1,663.14. For the week, the index rose 2.5 pct.
   
Masayoshi Yano, chief strategist at Tokai Tokyo Research Center, said the market was buoyed by the Tankan while the weak yen continued to support exporters. "The Tankan results supported the market view that the Bank of Japan has no need to be in a hurry to raise interest rates within the year," Yano said.
      
Australian shares closed at fresh record highs as investor sentiment rose after the large jump on Wall Street overnight. However, gains were limited in local shares as investors were cautious ahead of tonight's US inflation data and limited economic data next week in Australia.
   
The S&P/ASX 200 rose 2.3 points or 0.04 pct to close at 5,575.4, beating Thursday's record closing high of 5,573.1. The key index closed off an fresh intra day record high of 5,587.4 and above the low of 5,565.2.
   
Hong Kong shares were higher in afternoon following Wall Street's gains. At 3.33 pm the Hang Seng Index was up 105.25 points or 0.56 pct at 19,024.65.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher on strong follow-through interest and a rising yuan with real estate developers and banks snapped up. The Shanghai A-share Index jumped 26.05 points or 1.10 pct to 2,390.42 and the Shenzhen A-share Index was up 9.32 points or 1.74 pct at 544.87.
   
Seoul shares ended slightly higher with investors relieved that the market got past triple witching yesterday, and following a firmer close on Wall Street.
   
Dealers noted that the won's retreat also added to the positive tone. The won finished at 923.20 against the dollar, compared with 920.50 in the previous session.
   
Retailers, steel makers and financial stocks were strong.  The KOSPI index closed up 3.49 points or 0.25 pct at 1,421.87, after moving between 1,412.17 and 1,425.78. It ended the week with a gain of 31.44 points.

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Nickel falls after touching new all time record

LONDON - Nickel declined after touching a new all time high earlier on continued supply concerns, this time at PT Inco's nickel operations in Indonesia, where low rainfall is threatening production targets.
   
At 11.00 am, LME nickel for three-month delivery, which earlier touched an all time record of 34,950.00 usd a tonne, was down at 34,550.00 usd a tonne from 34,800.00 usd at the close yesterday.
   
Nickel surged to a record 34,875.00 usd a tonne yesterday after PT Inco said it may have to cut nickel matte production from Dec 20 because of low reservoir levels at its hydro-electric power plant.
   
Aluminium was assisted yesterday by a large net fall of 5,700 tonnes in LME stocks and by technical buying that occurred amid relatively light volumes, said Standard Bank analyst Mike Skinner.
   
Three month aluminium was trading down at 2,844.50 usd a tonne against 2,865.00 usd at the close yesterday.
       
Elsewhere, LME copper was down at 6,730.00 usd against 6,780.00 usd at the close yesterday.
   
In other metals, LME tin for three-month delivery rose to 11,050.00 usd a tonne from 11,000.00 usd yesterday, lead edged down to 1,672.00 usd against 1,668.00 usd, while zinc dropped to 4,320.00 usd against 4,350.00 usd.

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