Daily world financial and forex news

World Daily Markets Bulletin

Daily world financial news from Thomson Financial News

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US Stocks at a Glance

US STOCKS-Bargain hunting, GE, autos ignite Wall St

NEW YORK - U.S. stocks rose on Tuesday as investors snapped up beaten-down shares after Monday's steep sell-off and news that General Electric would maintain its dividend helped buoy sentiment.

GE shares climbed more than 9 percent, making the stock one of the standout Dow constituents.

A rebound in energy shares, including Chevron, up nearly 4 percent, also underpinned the market, along with buying into defensive stocks, including shares of pharmaceutical company Merck, up more than 5 percent.

Optimism about a government rescue for the U.S. auto industry added to the positive tone, with General Motors up 6 percent and Ford rising 10 percent.

Monday's slide broke the S&P 500's 5-day streak of gains and put the market just a whisker away from retesting 11-year lows.

"People are looking at GE and saying, hey, well the dividend yield is pretty good and they are sticking with their earnings estimates, although it's at the lower end," said Cummins Catherwood, managing director at Boenning & Scattergood in West Conshohocken, Pennsylvania.

The Dow Jones industrial average rose 178.01 points, or 2.18 percent, to 8,327.10. The Standard & Poor's 500 Index gained 21.40 points, or 2.62 percent, to 837.61. The Nasdaq Composite Index .IXIC shot up 30.06 points, or 2.15 percent, to 1,428.13.

GE shares climbed to $16.95 on the New York Stock Exchange after the company reiterated its plan to maintain a dividend payout in 2009 even as it works to restructure its embattled finance arm, GE Capital.



Forex

FOREX-Shaky stocks support yen, interest rates in focus

LONDON - The yen rallied to a five-week high versus the dollar on Tuesday as volatile stock markets reflected continued risk aversion, while investors anticipated dramatic interest rate cuts later in the week.

An unexpectedly bold 100 basis point cut from the Reserve Bank of Australia kept the Australian dollar under pressure, while raising speculation that other central banks may follow suit with aggressive easing to revive flagging economies.

A steep slide in the yuan to the bottom of its trading band against the dollar supported the U.S. currency as it raised speculation that China may be shifting its forex policy to allow the yuan to depreciate to stimulate the economy.

The dollar has found support in recent months from deleveraging as investors cut exposure to riskier assets and repatriated returns into the U.S. unit.

Analysts said expected rate cuts this week would further benefit the dollar as they would shrink the yield advantage of currencies such as the euro and sterling.

"The dollar is supported generally because we're seeing a move towards a convergence of global rates with low U.S. and Japanese rates," said Chris Turner, head of currency strategy at ING in London.

"That makes the dollar less unattractive (from a yield perspective) in a way," he said, noting the possibility of aggressive rates cuts in the UK, euro zone, Sweden and New Zealand this week.

The dollar fell as low as 92.64 yen according to Reuters data, before recovering to 93.14 yen by 1130 GMT, little changed on the day.

China's yuan closed at the bottom of its daily trading band against the dollar, which analysts said left open the door to a slow yuan depreciation, triggering a surge in yuan/dollar volatility.

The low-yielding Japanese currency pushed higher on an early tumble in European shares, which had prompted investors to unwind more carry trades, in which the yen is used to fund purchases of assets in higher-yielding currencies.

This had initially put yen crosses under selling pressure, but a claw back in shares to trade 0.4 percent higher on the day later helped to cut yen gains.

The euro was steady at 117.65 yen, while the Australian and New Zealand dollars climbed roughly 1.0 percent each. The euro steadied versus the dollar to $1.2650, but sterling fell 0.6 percent $1.4792. The UK currency stayed weak across the board, pushing sterling/yen as low as 137.14 yen, its weakest level since mid-1995.

A Reuters poll shows that a majority of economists expect the Bank of England to slash rates by 100 basis points on Thursday, a month after chopping them by 150 basis points to 3.0 percent.

Also on Thursday, the European Central Bank is seen cutting rates by at least 50 basis points from 3.25 percent and possibly more. Market participants expect the Reserve Bank of New Zealand to cut rates by 100 basis points or more from 6.5 percent.

Sweden's central bank said on Monday it would hold its next policy-setting meeting this Wednesday, nearly two weeks ahead of schedule, prompting speculation of a deep rate cut. Markets expect Swedish rates to be cut as much as a full percentage point. The outcome of the meeting will be announced on Dec. 4.

The Bank of Japan held an emergency policy meeting on Tuesday and announced the central bank will accept a wider range of corporate debt as collateral in money market operations to help ease a squeeze in credit markets.

The BOJ held interest rates steady at 0.3 percent as expected at the meeting. Rates and economic weakness were overarching themes in the market following official confirmation on the state of the U.S. economy late on Monday, when the National Bureau of Economic Research's business cycle dating committee said the economy slipped into recession in December 2007.

U.S. Federal Reserve Chairman Ben Bernanke said the economy remained under considerable strain, and that the central bank had alternative tools it could employ as interest rates approach zero. Traders said U.S. stocks had extended losses on reports that Goldman Sachs is likely to report net losses of as much as $2 billion for its latest quarter.


Across Europe, Britain's FTSE rose 0.8 percent, Germany's DAX gained 2 percent and France's CAC was up 0.8 percent.

"The volumes are still fairly low. There is a rumour doing the round that (U.S. Treasury Secretary Henry) Paulson has secured another $150 billion for the banks, but nothing concrete there," said Manoj Ladwa, senior trader at ETX.

The European Central Bank slashed rates by 50 basis points in both October and November to the current level of 3.25 percent, saying inflation pressures were falling.

The market consensus is that the bank will cut rates again by 50 basis points on Thursday to 2.75 percent, but many economists argue a reduction of 75 to 100 basis points would be better. Markets have priced in a 75 basis point cut
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Several banks turned positive late morning, despite growth worries and a report in the Wall Street Journal that said Goldman Sachs was likely to report a net loss of as much as $2 billion for the fourth quarter. Banco Santander rose 2.3 percent; Commerzbank rose 9.1 percent. But HSBC was the top-weighted loser, falling 1.2 percent, while Barclays was down 2.9 percent and BNP Paribas fell 1.7 percent.

"Equities will have a rough ride at the start of December, and this will continue until we see a ray of hope on the macro side," said Franz Wenzel, strategist at AXA Investment Managers in Paris.


HONG KONG - Asian stocks fell sharply Tuesday, as investors fretted about the likelihood the global economy is headed for a deflationary bust, with central banks in Australia and Japan unveiling new policy measures to combat the credit crunch.

Japan's Nikkei benchmark dived below the 8,000 level as automakers and other exporters were hurt by the U.S. dollar's decline to the lower-93-yen level.

Selling in Japanese equities accelerated as the Bank of Japan's policy board emerged from an emergency meeting Tuesday to announce it would accept a broader range of collateral against the provision of liquidity. The move included loosened standards for the acceptance of corporate bonds. The BoJ held its overnight call rate at 0.3%.

"Financial conditions in Japan have become less accommodative on the whole, as the financial positions of small firms have deteriorated and an increasing number of large firms have faced a worsening in funding conditions," the BoJ said in a statement.

The central bank also said it would provide unlimited funds collateralized by corporate debt at interest rates equal to its base rate. Woodside Petroleum led declines within the commodity sector, following a near-double-digit percentage decline in crude-oil prices overnight.

The U.S. dollar eased to 93.21 yen late afternoon in Tokyo in the wake of the BoJ decision. The greenback fell 2.6% against its Japanese counterpart to close at 93.05 yen in New York Monday.

"It's been a depressing morning," said Ben Collett, head of hedge-fund sales trading for Daiwa Securities SMBC in Hong Kong, ahead of the Bank of Japan announcement. "In my opinion we've clearly seen the top of the range that we are set to trade for the rest of this month; the hope is that we've also seen the bottom of that range."

The Reserve Bank of Australia slashed its main interest rate to 4.25% from 5.25% Tuesday, bringing monetary policy to its lowest level since December 2001.

Crude oil for January delivery fell as much as $1.46 to $47.82 a barrel in electronic trade. The front-month energy contract ended at $48.72 a barrel in Nymex trade Monday, falling 9.4% during the session after the OPEC members ended a weekend meeting in Cairo without reaching a decision on production cuts.

Commodity producers were among the weaker standouts in Sydney, with shares of BHP Billiton and Rio Tinto both declining 8.2%.

Tokyo's Nikkei 225 ended 6.4% lower at 7,863.69. The South Korean Kospi fell 3.4% at 1,023.90, the Australian S&P/ASX 200 was down 4.2% at 3,528.30, and China's Shanghai Composite eased 0.4% to 1,887.13.

Hong Kong's Hang Seng Index fell 4.9% to 13,411.96. Property stocks were under pressure on worries that the HSBC mortgage-rate increase could signal a new trend by local banks to reduce lending and lower risk in an effort to protect against the deepening financial crisis.


Analysts said falling input prices among U.S. factories, as revealed in the latest ISM manufacturing survey, released Monday, were a concern. The prices-paid component of the ISM manufacturing survey fell to 25.5 from 37. "The decline in prices is hideous and makes deflation now a most serious concern for the U.S. economy," wore Uwe Parpart, chief economist, strategist Asia with Cantor Fitzgerald in Hong Kong,

Gainers included Tokyo Gas Co. and other utility stocks as investors sought out defensive sectors. Shares of Tokyo Gas were up 4.1%.

Shares of Nomura were down 9.7% on concerns over a possible dilution of shareholder equity after the brokerage said on Monday it would raise 410 billion ($4.4 billion) in a convertible-bond issue. Among export-related stocks taking a beating, Mazda Motor Corp was down 8.4% and Canon Inc. fell 6.2%



PRECIOUS-Gold extends losses on firmer dollar, falling oil

LONDON - Gold slipped in Europe on Tuesday, extending the previous session's losses, as the dollar firmed against the euro and oil prices sank to a 3-1/2 year low, denting interest in the precious metal as an inflation hedge. In addition, rising risk aversion is prompting a sell-off of equities and commodities, while "safer" assets such as the yen and government bonds are soaring.

Spot gold was quoted at $766.40/768.40 an ounce at 1000 GMT, down from $770.60 an ounce late in New York on Monday.

Gold is being pressured by an upturn in the dollar, which firmed against the euro on Monday after weak euro zone manufacturing data and on expectations for a rate cut from the European Central Bank later this week.

The U.S. currency extended those gains on Tuesday."On Friday there was a break lower in the euro-dollar exchange rate, and that was a sign that gold was about to come off," said Societe Generale senior commodities strategist Jesper Dannesboe."Gold came off on Monday, and euro-dollar is further down now," he said.

Tumbling oil prices are also pressuring the precious metal, which is often bought as a hedge against oil-led inflation.Crude slipped to a 3-1/2 year low under $48 a barrel as signs grew that the world economy is in worse shape than previously feared, and after OPEC opted to defer an output cut.

The price of other hard commodities such as copper and tin were also lower.

Equity markets also fell as risk aversion intensified. World stocks slipped as investors worried about the prospect of a deep global recession, while the yen and government bonds climbed. Investors are awaiting a spate of key data due out later this week, culminating in U.S. non-farm payrolls numbers on Friday, and interest rate decisions from central banks including the ECB, for signs as to the next direction of trade.

"Investors should adopt a cautious strategy today and monitor credit market developments," said Standard Bank analyst Manqoba Madinane. "Increased credit market tension could compromise precious metal investment flows, which could mean yet further price declines," he said.

Elsewhere, imports of gold into India -- the world's largest bullion market -- slipped in November to around 35-40 tonnes from 54 tonnes a year ago, the Bombay Bullion Association said. Among other precious metals, silver rose to $9.34/9.42 an ounce from $9.26. Platinum steadied after falling sharply on Monday in the wake of weak Japanese car sales data, having ended that session down 9 percent.


Spot platinum was little changed at $790/810 an ounce against $790.50 an ounce late in New York on Friday, while its sister metal palladium eased to $167.50/175.50 an ounce from $171.50.