US & World Daily Markets Financial Briefing 22-11-2006

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Stocks narrowly mixed in early trading

NEW YORK  - U.S. stocks were narrowly mixed Wednesday on the back of Dell Inc.'s upbeat earnings figures, though trading is likely to be muted as some traders leave early for Thanksgiving.
   
In the opening minutes, the Dow Jones industrials lost 4.01 points to 12,371.58, the S&P 500 added .36 points to 1,403.17, and the Nasdaq increased 7.82 points to 2,462.66.
   
U.S. stocks finished Tuesday with narrow gains, with the Dow industrials rising 5 points, the S&P 500 up 2 points and the Nasdaq Composite also up 2 points. Trading was light ahead of the Thanksgiving holiday.
   
The Labor Department reported Wednesday that new applications filed for the work week ending Nov. 18, rose by a seasonally adjusted 12,000 to 321,000.  A final reading of consumer sentiment for November and weekly energy inventory data also will be released.
   
Crude oil futures edged 27 cents lower to $59.90 a barrel after Tuesday's run-up.
   
Stocks in focus

Dell Inc. shares jumped 8.5 percent in early Frankfurt trading after it said its quarterly profit rose nearly 12 percent. Though revenue didn't rise as quickly as analysts had forecast, its rise in earnings suggest the company is making progress in growing margins.
   
The news earned Dell an upgrade to outperform by Bear Stearns.
   
Comcast Corp. late Tuesday said it has bought Walt Disney Co.'s 39.5 percent ownership stake in E Networks for $1.23 billion, and the two companies have landed long-term distribution agreements for 10 ABC-owned television stations and other Disney networks.
   
Brocade also may be on the move as the network equipment provider topped consensus forecasts with quarterly profit and sales.
   
J Crew Group also may get a boost from upping its 2006 earnings outlook.    

Imperial Chemicals Industries rallied in London trading after agreeing to sell its flavor and fragrance-making unit to Switzerland's Givaudan for 1.2 bln pounds.
   
Overseas, shares of Australia's Qantas rallied after the airline said it's received a takeover approach from Texas Pacific and Macquarie Bank. Airlines listed in Europe, including Air France-KLM and British Airways, climbed on the news.

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Euro well-bid, yen off lows while dollar comes under pressure

LONDON - The euro continued to notch good gains, boosted in part by news of a pick up in French consumer spending.
   
French household consumption of manufactured goods in October rose 0.9 pct from September and was up 4.2 pct from October last year. Both figures were above expectations. Economists polled by AFX News anticipated a month-on month rise of 0.8 pct and a year-on-year rise of 4.0 pct.
   
Additionally, the decline in September was revised up to 2.5 pct from 2.7 pct. The figures offset soft third quarter GDP data released yesterday. The French economy showed no change between the second and third quarters.
   
Monetary policy now points to an additional rate hike in the first quarter of 2007 and will continue to provide support for the euro, he added.
   
The yen came off earlier lows even as the Japanese government downgraded its economic outlook for the country.
   
Rumours overnight that Japanese exporters were being called on to buy yen and comments from Luxembourg Finance Minister and Eurogroup spokesman Jean-Claude Juncker this morning saying the yen's recent falls have been too rough all helped temper the Japanese unit's declines.
   
The dollar, meanwhile, was under pressure after a bigger than expected rise in jobless claims. The number of people filing new claims for unemployment insurance in the week ended Nov 18 rose by more than expected to its highest four-week average in three months.
   
Markets will next look to the University of Michigan consumer sentiment index, which is expected to rise slightly to 92.8 from a 92.3 reading earlier in the month.
   
Elsewhere, the pound steadied after weakening a touch following the minutes of the Bank of England's last rate setting deliberations which revealed a split vote in favour of a rate hike earlier this month.
   
Analysts had been expecting just one dissenting vote but were taken by surprise when the minutes showed that deputy governor Rachel Lomax had also voted for no change. External member David Blanchflower cast the other vote against a hike.
   
The meeting, which ended Nov 9, saw a hike by a quarter point to a 5-year high of 5.00 pct, by a majority of seven-to-two. The minutes come on the heels of the central bank's softer outlook for inflation over the coming two years.
      
Separately, the pick-up in commodity prices helped prop up the Australian and Kiwi dollars. The Canadian dollar too was well bid, as the buoyancy of the commodity market helped offset the impact of weak Canadian retail sales data.

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The European Markets at 13.00 GMT
 
London - Leading shares retreated but remained higher at midday before an expected firm start on Wall Street, with ICI soaring on disposal news while miners and airlines also offered support on the back of sector consolidation hopes. At 11.50 am, the FTSE 100 index was up 10.0 points at 6,212.6, albeit below the morning's high of 6,233.1, while the broader indices also remained in positive terrain.

Frankfurt - German shares were higher midday with Deutsche Lufthansa among those well bid on the back of M&A talk in the airline industry.  At 12.40 pm, the DAX30 was up 31.53 points or 0.49 pct at 6491.92.

Paris - Shares were up at midday, testing the 5,500 mark again as positive sentiment outweighed some big losses among three of the CAC-40's leading blue-chips. At 12.08 pm, the CAC-40 index was up 32.52 points or 0.60 pct at 5,491.87. Volume was 1.7 bln eur.

Milan - Shares were higher at midday, with AEM leading the advance on upbeat broker comments about its prospects in the gas business and Alitalia supported by speculative buying. At 1.00 pm, the Mibtel index rose 0.56 pct to 31,474 points and the S&P/Mib added 0.48 pct to 40,960, while volumes were 2.68 bln eur.

Amsterdam - Shares were broadly higher at midday, with trading volumes low as investors watched US futures, which indicated a higher opening of Wall Street, while SBM Offshore rose on M&A rumours. At 12.06 pm, the AEX was up 0.41 pct or 2.04 points at 493.77, after opening at 493.26 and reaching an earlier high of 494.41.

Madrid - Shares were higher at midday, in line with most of Europe, with BBVA in the limelight after its acquisition of a stake in China's Citic Bank, and Gamesa and Iberia also in demand. At 12.55 pm, the IBEX-35 index put on 86.0 points to 14,314.1, on turnover of 1.57 bln eur.

Stockholm - Shares were sharply higher at midday as telecoms and mining stocks led gains across the board on bargain-hunting after recent falls. At 12.30 pm, the OMX Stockholm index was up 0.73 pct at 360.48 points, and the OMX Stockholm 30 was up 0.79 pct at 1,118.30 points.

Zurich - Share prices continued higher in quiet midday trade, in line with other European markets, with sentiment bolstered by overnight gains on Wall Street and Asia, and falling oil prices. At 12.46 pm, the Swiss Market Index was up 40.75 points at 8,816.33, and the Swiss Performance Index up 30.87 points at 6,900.67.

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Asian stocks close higher on positive signals and bargain hunting

HONG KONG - Shares across the Asia-Pacific region closed higher, with markets fuelled by positive signals and bargain hunting.
   
Tokyo shares closed higher after bargain-hunters snapped up stocks following their recent falls, especially stocks of companies exposed to domestic demand. The blue-chip Nikkei 225 Stock Average closed 180.09 points or 1.14 pct higher at 15,914.23. The broader TOPIX index of all first-section issues closed 19.92 points or 1.3 pct higher at 1,552.87.
      
The Nihon Keizai Shimbun reported over the weekend that the Cabinet Office was expected to downgrade its assessment of the economy for the first time in 23 months amid signs of weakness in consumer spending.
   
Hideo Mizutani, chief strategist at Sieg Securities, said that investors emerged to scoop up shares that had been oversold recently, especially those with domestic demand, such as banks, property developers and retailers.
    
Australian shares finished higher as rising metal prices overnight led to buying of resource stocks which flowed on to the wider market. Investor sentiment was boosted by flag carrier Qantas whose stock jumped after it received a buyout proposal from a consortium led by investment bank Macquarie and private equity firm Texas Pacific Group.
   
The S&P/ASX 200 rose 87.7 points or 1.64 pct at the unofficial close at 5,445.7, approaching the record close of 5,491.6 set on Nov 7. The benchmark index closed off the day's high of 5,448.9 and above the low of 5,373.0.
   
Hong Kong shares were up strongly in afternoon trade led by China Mobile and other mainland-linked stocks as optimism over China's economic growth continued to inspire buying of H shares and red chips. At 3.23 pm the Hang Seng Index had risen 218.82 points or 1.15 pct to 19,227.12.
   
In mainland China, A-shares in Shanghai and Shenzhen closed higher for their seventh consecutive trading day on sustained fund inflows, with financial and power listings snapped up. The Shanghai A-share Index jumped 4.0 points or 0.19 pct to 2,145.88 and the Shenzhen A-share Index was up 5.03 points or 1.06 pct at 479.84.
   
Seoul shares ended sharply higher on heavy program buying, advancing near their historic record high, with sentiment buoyed by a steady Wall Street and a quick and strong rebound by Japanese stocks.
   
The KOSPI index closed up 16.59 points or 1.18 pct 1,422.49, its highest level for the day and for over six months. The historic high was 1,464.70 recorded on May 11. Today's low was 1,405.21.

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Platinum falls further off record highs; gold gains

LONDON - Platinum continued to ease, having reversed course yesterday after hitting an all-time record high of about 1,400 usd on speculation over the launch of an exchange traded fund (ETF) indexed against the metal.
   
Gold steadied as dollar weakness continued to boost sentiment in the metal.
At 12.23 pm in London, platinum slipped down to 1,162.00 usd an ounce, far below the 1,232.50 usd levels seen in late New York trade yesterday.
   
Spot gold, which earlier touched an intra-day high of 629.40 usd on ounce, was quoted at 629.10 usd, up from 627.40 usd in late New York trade yesterday.
   
Platinum soared yesterday, gaining around 150 usd at one point, as traders worried the launch of an ETF backed against the metal would squeeze physical stocks.
   
However, the metal reversed course in New York trade as analysts warned the launch of a platinum backed ETF could damage long-term platinum demand by   accelerating substitution efforts by industrial users and jewellers.
   
Exchange-traded funds buy shares in companies that make up an index. In commodity-backed ETFs, investors gain exposure to commodities without having to trade futures and commit themselves to physical delivery.
   
However, because ETFs match every ounce of metal bought on paper with physical metal stocks, they could squeeze a market like platinum in which there is very little spare metal available.
      
Strong platinum prices, which hit a previous record of 1,336.00 usd an ounce in May this year, have already hit jewellery manufacturers, leading them to substitute with white gold.  
   
Spot silver was up at 12.09 usd an ounce against 13.07 usd in late New York trade, while palladium fell to 326.50 usd against 328.50 usd.

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