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Saturday, February 28, 2009

Sensex Chart Pattern - Week ending Feb 27

Let us go straight to the current Sensex chart pattern.

Friday's closing level near 8900 is of some significance because it was a one year low on a monthly closing basis. On a daily closing basis, the 52 week low so far has been 8451 on Nov 20, '08; on a weekly closing basis the low has been 8674 on Jan 23, '09; on an intra-day basis, the 52 week low was at 7700 on Oct 27, '08.

What is the significance? Take another look at the pattern of lows: the intra-day low was in Oct '08; the (higher) daily closing low in Nov '08; the (higher) weekly closing low in Jan '09 and the (even higher) monthly closing low in Feb '09 - around a month separating each of those lows.

As time is passing - the Sensex has now spent 4 months in the sideways rectangular chart pattern - new (higher) 52 week lows are being made on longer time frames. This could be a coincidence, but the volume overlay on the Sensex chart pattern says otherwise.

Except for a couple of days in early Jan '09, when the news of the Satyam scam caused a spike, transaction volumes have been gradually petering off. The declining stocks have been outnumbering the advancing stocks. All this points to a gradual waning of investor interest.

Have we seen all the lows in the Sensex, or will there be more new lows? That's a million dollar question. The MACD and RSI indicators are flat and in an 'undecided' zone. The ROC is heading down. The stochastics had threatened to enter oversold region last week but stopped short. May be a couple more days of down move before we see a pull back.

As long as we remain in the sideways consolidation, there isn't much to do except to learn how to be patient! For active investors, small amounts can be invested in Nifty BeES, index funds or balanced funds.

Friday, February 27, 2009

ADVFN World Daily Markets Bulletin - Feb 27, 2009

US Stocks at a Glance

US UPDATE: BEFORE THE BELL
Among the companies whose shares are expected to actively trade in Friday's session are Synta Pharmaceuticals Corp. (SNTA), Autodesk Inc. (ADSK) and Dell Inc. (DELL).

Synta Pharmaceuticals
said late Thursday it was suspending a late-stage trial for its treatment of metastatic melanoma because of safety concerns raised by an independent monitoring group that saw greater number of deaths occurring in the combined treatment of Synta's elesclomol and paclitaxel than in the control arm of paclitaxel alone. The company added that all of its other studies on elesclomol are suspended pending further analysis of the melanoma study.

Autodesk swung to a fiscal fourth-quarter loss on lower sales and margins as well as a goodwill write-down. Shares fell 7.5% to $13 in pre market trading as the design-software maker forecast fiscal first-quarter results below Wall Street's expectations.

Dell's fiscal fourth-quarter net income slumped 48% as shipments fell globally and the economic slowdown continued to hurt information-technology spending. Shares climbed 2.3% to $8.40 in pre market as the company promised to cut $4 billion in costs by the end of fiscal 2011, about $1 billion more than its previous target.

Athenahealth Inc.'s (ATHN) fourth-quarter net income surged on a $16.7 million tax benefit as revenue grew on continued strength in the company's business-services segment. Shares rose 1.8% to $34.77 in post-market trading.

Kohl's Corp.'s (KSS) fiscal fourth-quarter net income dropped 18% as the challenging retail environment hurt the company's bottom line. The department-store chain also offered disappointing outlooks for the first quarter and fiscal year, sending shares down 6.1% in after-hours trading to $32.60 even though the fourth quarter's results topped muted Wall Street expectations.

Watch List

Calpine Corp. (CPN) posted a narrower fourth-quarter loss on higher margins as revenue rose modestly. The loss was slightly worse than expected.

Gap Inc
.'s (GPS) fiscal fourth-quarter net income fell 8.3% on lower sales and margins. The company has struggled with sluggish sales in all its brands amid the recession, but Gap's troubles started before that, when its attempt to appeal to a younger demographic with trendier clothes fell flat.

Endo Pharmaceuticals Holdings Inc.'s (ENDP) fourth-quarter net income soared 48% amid milestone fees paid a year earlier as results solidly topped analysts' expectations.

Leap Wireless International Inc. (LEAP) reported a wider fourth-quarter loss on losses related to new market launches, though the prepaid wireless services company nearly tripled its net customer additions and customer cancellations declined.

Mentor Graphics Corp.'s (MENT) fiscal fourth-quarter net income dropped 9.6% on lower sales and margins. The chip software design maker posted its first quarterly profit in a year.

Novell Inc.'s (NOVL) fiscal first-quarter net income fell 36% on sharply lower interest income as invoicing fell short of expectations. Demand for open-source programs continues to grow, despite weakness for information technology in general as IT organizations and data centers shift their focus to more-complex systems and seek software that can handle them.

Packaging Corp
. of America (PKG) halved its quarterly dividend payment to 15 cents to help boost liquidity amid a recession that could be "deeper and longer than originally anticipated."

Sotheby's (BID) swung to a fourth-quarter loss amid impairment charges and a 52% drop in sales. Meanwhile, the company outlined its cost-cutting plans in response to the downturn in the art market.

Asia News

Japan's Nikkei stock average gained 1.5 percent on Friday, rising on defensive shares such as KDDI Corp with banks getting a brief boost on news of a likely agreement between the U.S. government and Citigroup. The benchmark Nikkei finished the week up 2.1 percent, snapping a two-week losing streak, despite falling to within sight of a 26-year low just below 7,000 early in the week.

But it lost 5.3 percent on the month and has fallen 14.6 percent so far this year on top of the 42 percent it plunged in 2008, its worst postwar performance.

After the close, Sony Corp said company President Ryoji Chubachi would step down and CEO Howard Stringer would double up as president. The move comes about a month after the company warned it would post a record annual operating loss. A person familiar with the Citigroup deal said that under its terms, up to $25 billion in U.S. government-held preferred shares will be converted to common stock and the deal will give the government a stake of 30 to 40 percent.

"There's likely to be a positive impact from the Citigroup news, but it's not really any surprise," said Katsuhiko Kodama, senior strategist at Toyo Securities.

"But there's just one problem after another, and we'll simply have to work through them one by one," he added, noting that auto giant General Motors posted a quarterly loss on Thursday and said its auditors were likely to cast doubt on its viability.

Banks briefly jumped on the news before paring gains in tandem with the Nikkei, which fell from highs in late afternoon trade as U.S. stock futures edged down.

Additional pressure may have come from the yen's rebound from a three-month low against the dollar as speculators pocketed their dollar profits after the greenback's steep run up against the Japanese currency.

The dollar fell 1.2 percent on the day to 97.33 yen before clawing slightly higher.

The Nikkei gained 110.49 points to 7,568.42, while the broader Topix , which earlier this week marked its lowest close since 1983, gained 1.9 percent to 756.71.

HELP FROM DATA
The market received support from data showing Japan's industrial output in January was in line with a median market forecast, even though the 10.0 percent fall from the previous month was the biggest drop on record.

"There was also a little bit of encouragement from the fact that predictions for March output were positive, although that may well turn negative later on," said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Securities.

"There may also be buying on hopes that the government will actually start buying stocks in the market sometime next month. Whether the Nikkei will rise on this is hard to tell, but it does make it hard to sell."

A number of possibilities for government stock buying have been floated this week, including setting up a stock-buying agency as it did in the mid-1960s, while a newspaper reported that Tokyo was considering asking the central bank to buy stock exchange-traded funds (ETFs) to prop up Japanese share prices.

Exporters gained as a result despite the yen's rise, with Canon Inc up 3.7 percent to 2,540 yen and Sony up 2 percent to 1,668 yen. Panasonic Corp rose 1.4 percent to 1,154 yen.

Defensive shares boosted the market from morning, as investors sought sanctuary in issues seen as resilient in the face of economic turmoil.

KDDI rose 4 percent to 517,000 yen, while cosmetics maker Shiseido rose 3.7 percent to 1,447 yen and home products maker Kao Corp rose 2.5 percent to 1,867 yen.

But drugmaker Daiichi Sankyo fell 5.3 percent to 1,591 yen on an investigation into a U.S. Food and Drug Administration decision to remove a scientist from a panel that reviewed a key drug candidate.

Congressional investigators are probing the FDA's decision to remove a scientist from an advisory panel that reviewed Eli Lilly and Co and Daiichi Sankyo's proposed blood thinner prasugrel.
Trade was moderate on the Tokyo exchange's first section, with 1.97 billion shares changing hands, compared with last week's daily average of 1.78 billion.

Advancing stocks outnumbered declining ones by more than 2 to 1.

Forex

Global stocks fell sharply on Friday after the U.S. government said it will take a large stake in Citigroup, sowing more uncertainty over the fate of major banks and sending investors to the safety of bonds, gold and the dollar.

The U.S. dollar rose broadly, gold extended gains and European stocks fell further when the government announced before U.S. markets opened that it would boost its stake in Citigroup to as much as 36 percent.

Investors worried other banks might see similar action as Washington struggles to stabilize U.S. banks. But the Citigroup move, one of the most dramatic efforts to prop up ailing banks, pushed the benchmark S&P 500 to lows last seen April 1997.

The government will swap up to $25 billion of its preferred shares into common stock. Citigroup will stop paying dividends on its preferred and common stock, and promised to shake up its board of directors.

Before 10 a.m. New York time, the Dow Jones industrial average fell 108.40 points, or 1.51 percent, at 7,073.68. The Standard & Poor's 500 Index slid 13.74 points, or 1.83 percent, at 739.09.

he Nasdaq Composite Index declined 5.29 points, or 0.38 percent, at 1,386.18.

The FTSEurofirst 300 index of top European shares was down 2.5 percent at 714.15 points.

The benchmark 10-year U.S. Treasury note rose 12/32 in price to yield 2.95 percent.

The dollar gained against a basket of major currencies, with the U.S. Dollar Index up 0.55 percent at 88.321.

The euro fell 0.70 percent at $1.2641, while against the yen, the dollar was off 0.73 percent at 97.67.

Oil fell more than $2, halting three straight days of gains, but otherwise remaining on course to end the month up 5 percent from January, its first such gain since June.

Oil fell on data that showed the U.S. economy contracted more sharply in the fourth quarter than initially expected, falling at an annual rate of 6.2 percent, the deepest slide since December 1982.

U.S. light sweet crude oil fell $2.27 to $42.95 a barrel,

Commodities

Gold eased a touch as the dollar held onto gains against the yen on Thursday and investors took profit from an 11-month high hit last week.

The market has become more volatile after prices rose above the key $1,000 level last week, and though factors encouraging risk aversion remain, investors are choosing to cash in on the high prices now rather than chase them higher.

The gold market took its cue from the dollar's strength as it hit a three-month high against the yen. Market sentiment had improved somewhat after comments earlier in the week by Federal Reserve Chairman Ben Bernanke and U.S. President Obama, traders said.

Spot gold was trading at $945.60 an ounce as of 0620 GMT, down 0.7 percent from the notional close of $952.10 on Wednesday. Gold fell 4 percent over the previous three sessions.

"The dollar is firmer after Bernanke and Obama's comments eased some concerns about the economic outlook, helping some risk appetite to leave from the gold market," said a dealer at a European securities firm in Tokyo.

The yen tumbled also on concerns about Japan's economic outlook.

Gold typically moves in the opposite direction to the U.S. dollar, and is often bought as an alternative asset.

However, the two have moved in line in recent weeks as both have benefited from a flight to safety among investors. Gold gains when risk aversion is high as it is seen as a safe store of value for investors.

Traders said although light buying had aided prices, given talk of the global recession, some people may opt to sell gold to secure cash, causing the market to lack the momentum to push beyond $1,000 in the near term.

"Gold prices are still high. Some people may be capitalising on high prices," said Beh Hsia Wah, a dealer at United Overseas Bank in Singapore.

"Gold is seen as a safe haven, and overall the market is still bullish. But it's very hard to predict market direction because it's driven by psychological buying and selling," she said.

Stock Market News, Financial News - Feb 27, 2009

ANALYSIS - Insurers, drug makers take hit under Obama plan

By Susan Heavey

WASHINGTON (Reuters) - U.S. President Barack Obama's 2010 budget proposal takes direct aim at drug makers and health insurers to help fund an overhaul of the U.S. healthcare system.

His plan, outlined Thursday, calls for lowering Medicare payments to private insurers, allowing consumers to buy cheaper medicines from overseas and preventing drug companies from making deals that block generic competition.

Shares of U.S. health insurers suffered, with Humana Inc down 19 percent, Aetna Inc off 11 percent, Cigna Corp down 7 percent, UnitedHealth Group Inc off 12 percent and WellPoint Inc down 9 percent in afternoon trading.  (More ... )

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GLOBAL MARKETS - Asian shares flat in end to tough month

By Rafael Nam

HONG KONG (Reuters) - Asian shares were flat on Friday, ending the month with losses on continued investor concern over the world economy and the financial system, while safety bids such as dollar buying erased some of their recent gains.

The advances in stock markets at the start of the year unraveled further in February as the MSCI index of Asian shares outside Japan headed for a 5 percent monthly fall, having hit at one point their lowest since the five-year lows in late November.

Risk aversion in February was reflected in the surge of the dollar, which is on track to its biggest monthly gain against the yen since 1995, and a rally in gold that took it past the $1,000 an ounce barrier to approach a March 2008 record.  (More ... )

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ASEAN sends mixed signals on trade, rights

By Nopporn Wong-Anan

HUA HIN, Thailand (Reuters) - Southeast Asian foreign and trade ministers met in Thailand on Friday to start on the road to turning the 41-year old ASEAN grouping into an EU-style common market by 2015 and keeping their economies on a growth trajectory.

But leaders of the Association of South East Asian Nations sent mixed signals about free trade in the midst of the worst global financial crisis in decades as they gathered for an annual summit at Thailand's royal seaside resort of Hua Hin.  (More ... )

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Suzlon: U.S. wind growth slowing in '09

By Matt Daily

NEW YORK (Reuters) - Sales of new U.S. wind power generation in 2009 will probably be half the record 2008 level as the financial crisis paralyzed cash flows to new wind farms, the head of wind turbine maker Suzlon Energy Ltd's U.S. operations said on Thursday.

That contraction will reduce revenues for Suzlon in the world's largest wind power market from the nearly $1 billion the company posted in 2008, Andris Cukurs, chief executive of the Suzlon U.S. operations, said in an interview.

Development of new wind farms has slowed sharply in recent months as banks suffering from the global credit crisis shut off the flow of money for new projects.  (More ... )

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Indian exports to contract through March quarter

By Manoj Kumar and Rajesh Kumar Singh

NEW DELHI (Reuters) - India's exports in January contracted a sharp 16 percent and are expected to fall for the next two months, a senior official said, as a deepening global slump slashes away at demand for its goods and services.

Exports, which make up close a fifth of Asia's third-largest economy, will have fallen for four months in a row if the estimates of the Director General of Foreign Trade, R.S. Gujral, prove to be correct, after years of speedy growth.  (More ... )

Thursday, February 26, 2009

ADVFN World Daily Markets Bulletin - Feb 26, 2009

US Stocks at a Glance

US Stocks Rise Despite Dismal Economic Data; Banks Lead

U.S. stocks rose, turning higher after a late rally fizzled Wednesday, despite a pair of dismal economic reports. Banks remained front and center for traders.

The Dow Jones Industrial Average was higher by around 55 points in recent trading at 7,326. The S&P 500 gained 0.9%, boosted by a 4.8% surge in its financial sector. The Nasdaq Composite Index was down 0.2%.

Financial stocks were again dominating traders attention amid a stream of developments at major lenders around the globe.

European financial stocks rose amid a leadership change at UBS and results at Royal Bank of Scotland Group that weren't as bad as feared. UBS soared 12% after naming ex-Credit Suisse chief Oswald Grübel as CEO, succeeding Marcel Rohner, who is leaving the bank unexpectedly. RBS, now at the brink of being nationalized by the U.K. after agreeing to a massive infusion of new capital and government insurance on more than $400 billion in assets, surged 17%.

Among U.S. banks, J.P. Morgan Chase shares climbed 7.9% ahead of its annual shareholder meeting. The bank said Thursday it will eliminate about 12,000 jobs as it integrates the operations of Washington Mutual. Bank of America rose 9.3% on reports that it is looking to sell First Republic Bank, a private bank it inherited in the Merrill Lynch deal. Citigroup jumped 4.7%.

American International Group shares surged in early trading on a report in the Financial Times that it is in talks on a government rescue plan that would split the sprawling insurer into at least three government-controlled units. According to the FT, the plan would swap the government's 80% stake in the company for large stakes in the divisions.

Elsewhere, General Motors fell 11% after the embattled auto maker said it lost $9.6 billion in the fourth quarter and burned through $6.2 billion in cash as it sought government help to avoid running out of funds.

New U.S. claims for state unemployment benefits unexpectedly jumped last week to a 26-year high of 667,000, while total claims cracked the 5 million mark for the first time, the Labor Department reported. Durable-goods orders meanwhile dropped 5.2% in January and were down 26.4% in annual terms. A gauge of business spending in the report declined 5.4%.

Crude-oil futures built on Wednesday's rise, climbing to nearly $44 a barrel. Gold futures fell about $25 an ounce. The dollar rose against the Japanese yen and fell against the euro. Treasurys were lower.

Asian markets ended mostly lower Thursday. The Shanghai Composite index tumbled 3.9% to 2,121.25 and the Nikkei 225 ended little changed in Tokyo. In Europe, the FTSE 100 was up 1.9% and the German DAX 30 gained 2.5%.

Treasurys

Treasurys Down With Auction, Deficit In Focus

Treasurys prices declined Thursday, sending yields higher for a fourth consecutive session, as the government got ready to sell $22 billion in 7-year notes, the last of three record-sized note auctions this week and the first for this maturity since 1993.

Growing government-debt issuance is in sharp focus as President Barack Obama releases his first budget amid plans to also attempt to come to grips with a yawning federal deficit.

Short-term U.S. debt pared their declines, however, as a pair of economic reports indicated an even weaker-than-expected labor market and as well as declining orders for manufactured goods.

Ten-year note yields rose 5 basis points, or 0.05%, to stand at 2.98%. Yields earlier had topped 3% for the first time since Feb. 9.

Two-year note yields were little changed at 1.08%. Bond prices move inversely to their yields.

On the data front, first-time applications for state unemployment benefits rose 36,000 last week, reaching a seasonally adjusted 667,000, the highest since October 1982. And for the week ended Feb. 14, the number of people collecting benefits climbed to a record 5.11 million, the Labor Department reported.

Separately, orders for durable goods fell a more-than-predicted 5.2% in January, the Commerce Department said. Orders had never fallen six months in a row since the data collection began in 1992.

Economists expect a report at 10 a.m. Eastern time to show the pace of new-home sales declined to 320,000 in January.

The weak data aren't helping bonds, and any rise in equities has pressured fixed-income though weaker stocks have not helped recently, said strategists at RBS Greenwich Capital.

"It's possible that the market has reached the point where there is more supply than demand all other things being equal," they wrote in an email.

Europe Shares

European Shares Advance; RBS Shares Surge

European shares advanced on Thursday, with lender Royal Bank of Scotland soaring as it unveiled the terms under which it will participate in the U.K. government's asset protection scheme at the same time as posting a record annual loss.

The pan-European Dow Jones Stoxx 600 index rose 0.4% to 173.07, with banks at the forefront of those gains. Regionally, the U.K. FTSE 100 index climbed 0.5% to 3,869.80, the German DAX 30 index advanced 0.3% to 3,856.80 and the French CAC-40 index rose 0.1% to 2,700.43.

U.S. stock futures were higher, after shares closed with losses on Wednesday. Asian shares were mixed. "Volatility is the name of the game in the current market. There's uncertainty and we're trading on any news out there," noted Peter Dixon, strategist at Commerzbank.

On Thursday, Royal Bank of Scotland shares surged 23.8% to 29 pence a share, with the gains paring losses made since the start of the year to 43%. Twelve months ago, the bank's shares were trading over 330p.

The lender recorded the biggest-ever U.K. annual corporate loss in 2008 -- 24.1 billion pounds ($34.2 billion) -- although this was still smaller than the 28 billion pound loss the bank had warned it could report.

RBS also announced a sweeping restructure that will move 240 billion pounds of assets into a non-core division and said it intends to raise a further 13 billion pounds ($18.4 billion) of capital from the U.K. Treasury as part of a deal to participate in the U.K.'s asset protection scheme.

"The terms of the scheme look favorable for equity holders," noted Robert Sage, analyst at Macquarie Securities.

Lloyds Banking Group, which is also expected to participate in the scheme and reports Friday, rose 27%, while Barclays, which is considered a possible candidate for the scheme, climbed 9.1%.

HSBC Holdings, up 5.8%, reports earnings on Monday. Also in the sector, UBS (UBS) shares climbed 10.9% in Swiss trading. The firm announced that ex-Credit Suisse chief Oswald Gruebel will take over as its chief executive.

"We view the announcement of Gruebel as CEO positively," said analysts at Merrill Lynch. "At Credit Suisse, Gruebel was a vocal advocate of the integrated business model. He repeatedly stated his belief that significant synergies exist between investment banking and private banking...We expect a similar integrated business model at UBS," they said.

Apart from banks, insurers were also helping sentiment on Thursday, with Germany's Allianz (AZ) chalking up a 9.4% gain.

The insurer swung to a worse-than-forecast fourth-quarter loss of 3.1 billion euros ($3.9 billion). Much of the losses were racked up at Dresdner Bank, now part of Commerzbank, as discontinued losses made up 2.92 billion euros of the red ink.

"Allianz reported FY 2008e figures, at first glance broadly in line with our expectations operationally but with a higher than expected deconsolidation effect from the Dresdner sale," noted analysts at Equinet.

Elsewhere in the sector, Munich Re shares climbed 6.9%, Zurich Financial Services advanced 5.8% and Legal & General shares surged 14.3%.

Other companies reporting earnings included Spanish gas and oil firm Repsol . Shares jumped 1.9% after fourth-quarter adjusted operating profit excluding inventories of 1.05 billion euros beat analyst forecasts.

Also in Spain, telecommunications giant Telefonica climbed 5% after it posted an 89% increase in fourth-quarter profit to 2 billion euros ($2.54 billion).

"The defensive nature of the telecom sector has been further highlighted by Telefonica's report today. We reiterate our buy rating on Vodafone (VOD) and it remains our top pick in the telecom sector," noted analysts at Dolmen Securities.

Vodafone Group shares climbed 3% in London. On the downside, shares of Dragon Oil dropped 19% in Dublin as the company said it's started an investigation into certain possible irregularities identified in its procurement procedures.

World Forex

Dollar Down On Rebound In Risk Appetite

The dollar is down in another volatile trading session against the euro and sterling as risk appetite experiences a bounce with buoyant global equities Thursday morning.

U.S. stock futures are up in a rebound from day earlier losses and following gains in Europe, despite deteriorating economic data. Investors are more positive after U.S. officials provided more clarity on bank rescue plans.

Federal Reserve Chairman Ben Bernanke repeatedly said in testimony to Congress Tuesday and Wednesday that authorities prefer not to nationalize banks, although they may need to take substantial shares in institutions if necessary.

Also lifting sentiment is a U.K. government scheme to protect banks against further losses from so-called toxic assets, which U.K. Chancellor of the Exchequer Alistair Darling said Thursday provides "certainty" that banks will keep lending. Royal Bank of Scotland Group announced its intention to participate Thursday, in conjunction with an additional GBP13 billion capital raising.

However, currency analysts warn that gains in the euro and sterling versus the dollar are narrow and subject to reversal inside the range established throughout this week, as more news may unfold on the banking system and ahead of U.S. President Barack Obama's budget review.

Strategists at BNP Paribas have adopted a new short-term strategy to sell rebounds in the euro.

Thursday morning in New York, the euro was at $1.2787 from $1.2733 late Wednesday, and the dollar was at Y97.83 from Y97.55, according to EBS. The euro was at Y125.08 from Y124.22. The U.K. pound was at $1.4338 from $1.4222, and the dollar was at CHF1.1602 from CHF1.1701.

Disappointing U.S. data released Thursday morning did little to change the direction of currencies. Durable goods orders in January plunged and new claims for state unemployment benefits unexpectedly jumped last week to a 26-year high.

Overnight, the European Central Bank reported broad money supply growth in the euro zone cooled sharply in January and was below economists' forecasts, while lending to the private sector also eased. The annual growth rate of M3 broad money supply declined to 5.9% from 7.5% in December, compared to forecasts of 6.9% growth.

Other data showed business and consumer confidence in the 16 countries that use the euro weakened to a record low in February as new orders dried up and concerns about job losses mounted.

Meanwhile, February U.K. house prices fell more than expected, also to a record low in annual terms.

Canada Morning

The Canadian dollar is significantly higher Thursday morning as renewed appetite for risk is reflected in stronger stocks and commodities.

A broadly weaker U.S. dollar also help underpin gains in the Canadian currency, said Matthew Strauss, senior currency strategist at RBC Capital Markets.

The U.S. dollar had dropped to the C$1.2410 area in morning trading but bounced briefly to the C$1.2450 area after the weak U.S. data sent a tremor of risk aversion through the markets.

It quickly relinquished its gains and slipped back towards the C$1.2400 area, which some analysts see as providing technical support for the U.S. dollar.

The U.S. dollar was at C$1.2410 Thursday morningfrom C$1.2548 late Wednesday.

Commodities

LME Metals Extend Equity Inspired Short-covering

Base metals on the London Metal Exchange held recent gains and some traded higher Thursday in Europe helped by a rally in equities which contributed to boosting sentiment in the metals, traders and analysts said.

"The slightly better tone in equity markets is helping base metal prices to form a base," said Citi metals analyst David Thurtell.

At 1037 GMT LME copper was trading at $3,470 a metric ton, up 2.1% from Wednesday's kerb close. LME aluminum was trading at $1,351/ton, up 0.7%; LME nickel was at $10,300/ton, up 2.5%; LME zinc was at $1,152.50/ton, up 0.8%; LME lead was at $1,035/ton, up 0.5% and LME tin was at $10,775/ton, up 0.3%.

Traders said with the markets calmer for the moment, investors are taking the opportunity to book some profits in the precious metals, such as gold and silver, and cover short positions in the base metals.

LME copper could next target the 100-day moving average of $3,620/ton, said Citi's Thurtell. However, he said in the past few months $3,550/ton proved to be strong resistance.

Traders and analysts said rising canceled warrants, particularly for zinc and copper, could be a sign of some interest in physical metal or pre-positioning on the hopes China's State Reserve Board will want to it for their stockpiling plans.

Leon Westgate, an analyst at Standard Bank, said reports show China's SRB bought 100,000 tons of zinc and could buy more.

However, economic data out later in the day in Europe and the U.S. and overnight in Japan could keep trading activity "choppy," said BaseMetals Will Adams.

"There is still a lot of uncertainty about, but at the same time if a more meaningful short-covering rallies get underway then some sharp moves could be seen," Adams said.

Crude Firms; Slimming Supply Spurs Buying

Crude oil futures rose Thursday in London as the gradual erosion of oil supplies spurred buying interest. "I think we're finally seeing the onshore impact of the OPEC cuts," said Mike Wittner, head of global oil market research at Societe Generale in London. "That's becoming clear and that's quite constructive."

At 1239 GMT, the front-month April Brent contract on London's ICE futures exchange was up $0.51 at $44.80 a barrel.

The front-month April contract on the New York Mercantile Exchange was trading $0.84 higher at $43.34 a barrel.

The ICE's gasoil contract for March delivery was up $15 at $391.75 a metric ton, while Nymex gasoline for March delivery was up 213 points at 118.80 cents a gallon.

The market's attention zeroed in on supply as it tried to gauge the impact of the Organization of Petroleum Exporting Countries' latest oil production cuts.

Thursday, the United Arab Emirates became the first OPEC member to announce supply allocations for April, with state-owned Abu Dhabi National Oil Co. slashing its shipments between 10-15% in accordance with OPEC cuts.

Slimmer OPEC exports could tighten up global inventories and relieve the heavy pressure on oil prices witnessed in recent months.

"The trend of rising stocks in the U.S. is starting to peak and reverse...we believe that the peaks of stock buildings in Europe have also been reached and we wouldn't be surprised if some of the crude oil stocks that have been hidden in some emerging economies are also starting to be gradually reduced," said Olivier Jakob, managing director of Petromatrix, a consultancy based in Switzerland.

Despite increasing evidence of OPEC cuts, oil market fundamentals weren't yet balanced, said Tony Machacek, a broker at Bache Commodities in London.

"Stocks are still reasonably plentiful, particularly for crude (and) we've had some pretty consistent builds over the last few weeks," he said. "On the face of it, the last couple of days have been quite positive for prices... (but there is) skepticism as to whether this is a new trend developing."

The crisis in the global economy - and its negative implications for oil demand - still loom over the market. "Oil prices are now very much in the grip of the overall economic picture," he said.

Despite Thursday's gains, prices remained within their recent range and it may be too soon to predict a sustained rally, Wittner said.

Crude was also helped by firmer equity markets, which have recently been a strong indicator of sentiment in broader financial markets.

"All attention will be back on the equity markets and the important macro releases at the end of the week, with a good chance for consolidation near recent levels," said Andrey Kryuchenkov, vice president of commodities research at VTB Capital in London, noting that the market was anticipating key macroeconomic data releases like the U.S. fourth quarter gross domestic product Friday, and the ISM surveys in early March.

"Risk sentiment and demand concerns are prevalent on the energy markets, so the upside continues to be limited," Kryuchenkov said.

Stock Market News, Financial News - Feb 26, 2009

RIL restates accounts, profits down Rs 1,177 cr

By ENS Economic Bureau

Reliance Industries, India's most valued company, said its profit for seven quarters ended December 31, 2008, would have been lower by Rs 1,147 crores if it had followed the Accounting Standard 11 (AS11) as prescribed by the guidelines on 'effects of changes in foreign exchange rates' notified in the Companies Rules (accounting standards), 2006.

The oil and gas major's profit would have been lower by Rs 39 crore for the three months ended December 2008, following the practice, and by Rs 1,177 crore for nine months ended December 2008, the company said in a statement to the Bombay Stock Exchange (BSE). This follows a limited review of accounts for the quarter ended December 2008.  (More ... )

[Note: I had cautioned investors about investing in Reliance in a blog post on Jan 4, 2009: "Why rely on Reliance?"]

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Wider deficit to boost costs, capital outflows - Moody's

MUMBAI (Reuters) - India's wider fiscal deficit will boost funding costs and weaken investor confidence, leading to more capital outflows, Moody's Economy.com said on Wednesday, a day after the government unveiled a third stimulus package.

On Tuesday, India slashed factory gate duties and service tax to boost slowing growth, prompting Standard & Poor's to cut its outlook on the country's long-term sovereign credit rating to negative from stable.

"Although the tax cuts will inject much needed support into the economy, they may heighten concerns about the country's already large public debt," Sherman Chan, an economist at the Sydney-based office wrote.  (More ... )

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U.S. FDA says Ranbaxy plant falsified data

By Lisa Richwine

WASHINGTON (Reuters) - A plant owned by generic drugmaker Ranbaxy Laboratories falsified data and test results submitted in approved and pending drug applications, U.S. regulators said on Wednesday.

The Food and Drug Administration said it halted reviews of drug applications from Ranbaxy's Paonta Sahib plant in India.

Agency officials said they had not identified any health risks from Ranbaxy drugs on the market, but were continuing to investigate products associated with the plant. (More ... ) 

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Piramal Healthcare shares up on Sanofi buy report

MUMBAI (Reuters) - Shares in Piramal Healthcare Ltd rose over 15 percent on a newspaper report French drug maker Sanofi-Aventis has emerged as the front-runner to buy a substantial stake in the Indian firm at over 50 percent premium to its current price.

Sanofi-Aventis has completed due diligence and the deal could be closed soon, the Economic Times said, citing unnamed sources.

At 9.57 a.m., shares were up 14.75 percent at 205 rupees.

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Tata Motors and Ashok Leyland to cut prices

By Indian Express Finance

A day after the government announced a 2% cut in excise duty and service tax, leading commercial vehicle makers Tata Motors  and Ashok Leyland said, on Wednesday, the savings will be fully passed on to their customers.

Auto stocks went up in anticipation on Wednesday. The BSE Auto Index jumped 3%, closing at 2,622.38; Tata Motors was up 5.87% at Rs 139.85 and Ashok Leyland up 3.26% at Rs 15.50.

The government decision on Tuesday to extend a 4% Cenvat cut, announced in December, to beyond March 31, 2009, also helped the market sentiment. After the Cenvat cut, commercial vehicles (CVs) attracted a duty of 10%. The latest 2% cut is applicable solely to categories that attracted the 10% excise duty. (More ... )

Wednesday, February 25, 2009

ADVFN World Daily Markets Bulletin - Feb 25, 2009

US Stocks at a Glance

Dow Industrials Fall 50 Points; Nasdaq Down 0.9%

US Stocks Decline In Early Trading  U.S. stocks moved lower after the roller-coaster ride of the last two sessions, with the financial sector leading the way down.

The Dow Jones Industrial Average was down roughly 78 points shortly after the opening bell. The S&P 500 slipped 1.2% amid a 3.2% decline in its financial sector, while the Nasdaq Composite Index declined 1.2%.

Federal Reserve Chairman Ben Bernanke told a Senate panel Tuesday that he doesn't believe that nationalization of major U.S banks is needed. Talk about the potential for a government takeover of Citigroup, Bank of America or other ailing lenders had roiled markets recently, and Bernanke's remarks helped push the Dow industrials up 236 points, erasing nearly all of Monday's losses. Bernanke testifies to House lawmakers on Wednesday.

Regulators are expected to begin putting banks through stress tests Wednesday to determine whether they have adequate capital. Shares of many banks gained in early trading. Citigroup, which is reportedly nearing an agreement to convert the U.S. government's holdings of preferred stock in the bank to common stock, was down about 12%. Bank of America was down about 7.2%. Wells Fargo was down 4.1% and U.S. Bancorp was lower by 6.3%.

Beyond the banks, Ambac Financial Group, the bond insurer, gained about 1% after it posted a narrower quarterly loss and said its financial-guarantee losses and provisions surged. Wynn Resorts shares fell 12% after it reported a $159.6 million loss for the fourth quarter amid a "dramatic deceleration" in gambling revenue.

KBR, the engineering and construction company spun off from Halliburton, rose 1.4% after posting a 24% jump in earnings. Dollar Tree gained 11.2% after the discount retailer reported strong results.

The euro was at $1.2784 from $1.2850 late Tuesday, while the dollar was at ¥96.96 from ¥96.80. Gold futures fell to around $965. Oil futures traded back above $40 a barrel ahead of weekly energy inventories. Treasurys prices were narrowly mixed.

Overseas markets were generally stronger Wednesday after Wall Street's gains on Tuesday. The Nikkei 225 climbed 2.7%, with exporters helped by the recent bout of yen weakness. The FTSE 100 rose about 1% in London and Germany's DAX was up 0.5%, though S&P's downgrade of Ukraine's sovereign debt rating led to renewed worry about a deepening financial crisis in Eastern Europe.

Treasurys Little Changed Ahead Of Auction

Treasurys were mixed Wednesday before the government continues its record-sized auctions of U.S. debt. Yields on 10-year notes, which move in the opposite direction as prices, rose 1 basis point to 2.81%. A basis point is 0.01 percentage point

Two-year note yields declined 2 basis points to 1.01%, again testing whether it can stay above 1%. The securities haven't closed above that level since Feb. 9. The Treasury Department will accept bids until 1 p.m. Eastern time for $32 billion in 5-year notes.

On Tuesday, the government saw decent demand for $40 billion in 2-year securities, though weak interest from a class of investors that includes foreign central banks. On Thursday, the government will sell $22 billion in 7-year notes, the first offering of the maturity since 1993.

Traders are also closely watching how U.S. equity markets react to President Obama's address to Congress late Tuesday. At 10 a.m. Eastern, an economic report is expected to show existing-home sales nudged up in January.

Federal Reserve Chairman Ben Bernanke will again be speaking to Congress. With prepared remarks a repeat of Tuesday's, analysts will be more interested in his answers to questions from lawmakers.

Continued signs of economic weakness in various data combined with "cautionary words from Bernanke have confirmed the underlying bullishness that is the primary offset to the estimated $1.5 trillion of net new Treasury issuance" in fiscal 2009, said strategists at RBS Greenwich Capital.

Europe Shares

European Stocks Advance On Banking Gains

European shares advanced on Wednesday, as remarks from Federal Reserve Chairman Ben Bernanke soothed bank-sector-nationalization worries and investors reacted positively to earnings from Deutsche Boerse and Henkel.

Picking up on a sharp rally for U.S. shares on Tuesday, investors pushed the pan-European Dow Jones Stoxx 600 index up 1.4% to 175.29.

Asia stocks also advanced, while U.S. stock futures were muted after the previous session's strong gains.

On a national regional level in Europe, the German DAX 30 index rose 1.6% to 3,958.76, the French CAC-40 index climbed 1.6% to 2,750.74 and the U.K. FTSE 100 index advanced 1.4% to 3,871.23.

Banks rose sharply on Wall Street on Tuesday after Bernanke played down any notion of nationalizing major U.S. banks.

Improved sentiment towards financials spread to Europe on Wednesday, with HSBC Holdings (HBC) shares up 4.9% in London, BNP Paribas shares up 8.9% in Paris and Santander shares up 4.9% in Madrid.

"Efforts are being taken by U.S., U.K. and other authorities to provide insurance against loans, which they hope will encourage increased lending," noted Darren Winder, head of macro and strategy research at Cazenove.

"The difficulty at the moment is that people generally have relatively little confidence in whether these measures will work," he noted. "There is an air of skepticism around, and that is why we are seeing markets move largish amounts on a daily basis."

"I think it will be some considerable time before we know whether the banking system has been stabilized to the point where lending growth has resumed to the real economy and has resulted in rising levels of economic activity," Winder added.

U.S. President Barack Obama attempted to address worries about the future of the U.S. economy on Tuesday when he said that the U.S. will emerge from the recession "stronger than before."

Shares of German consumer-products group Henkel jumped 11% after it said that fourth-quarter net income more than tripled to 863 million euros from 244 million euros a year earlier, boosted by the sale of its Ecolab operation. Henkel said that it expects difficult market conditions to continue through 2009 but expects to outperform its markets in terms of organic growth.

German stock-exchange operator Deutsche Boerse climbed 5.9% after reporting an 18% drop in fourth-quarter net income to 222.4 million euros ($286.1 million). That still was enough to beat market expectations.

Chocolate maker Cadbury (CBY) climbed 2.7%. Its fiscal-year net income declined to 366 million pounds from 407 million pounds a year earlier but came in ahead of analyst forecasts. Sales rose to 5.4 billion pounds from 4.7 billion pounds.

Rhodia shares climbed 11%. The French chemicals specialist reported a fourth-quarter net loss of 28 million euros, broadly in line with analyst forecasts. A year earlier, it reported a profit of 22 million euros. It also unveiled 150 million euros of cost cutting measures.

Shares of Royal Caribbean Cruises climbed 2.4% in Oslo while Carnival shares rose 7.6% in London after Credit Suisse upgraded both cruise operators to outperform from neutral.

World Forex

Dollar, Yen Recover From Sell Off Vs Euro

The dollar and yen are back to recent ranges versus the euro after a sell-off a day earlier following remarks by the Federal Reserve Chairman to Congress.

Chairman Ben Bernanke downplayed the notion of bank nationalization in the U.S. - a fear that has led to both sinking equities markets and risk appetite - and said it would be the course for only the weakest banks. This helped the euro rise as high as $1.29 overnight and Y125.16, its highest level in more than six weeks.

Bernanke has a second day of testimony Wednesday, beginning at 10 a.m. EST, at the same time as January U.S. existing home sales data will be released.

In short-term trading, currency analysts say the euro could advance back to those highs after breaking through key technical trading levels. In addition, after the dollar advanced versus the yen to its highest level since late November, analysts say it could surpass the session high of Y97.35 to reach Y100.0.

Wednesday morning in New York, the euro was at $1.2810 from $1.2850 late Tuesday, while the dollar was at Y96.68 from Y96.80, according to EBS. The euro was at Y123.86 from Y124.38. The U.K. pound was at $1.4399 from $1.4485, and the dollar was at CHF1.1610 from CHF1.1603 Tuesday.

While the European currencies rallied with U.S. stocks Tuesday, underlying economic fears are keeping the euro and U.K. pound confined.

Data released overnight confirmed economic contraction in Germany and the U.K.

Europe's largest economy experienced its worst quarter in the three months to Dec. 31 since Germany reunified in 1990. Germany's fourth-quarter gross domestic product contracted by 2.1% in adjusted terms on the quarter, according to a final reading from the federal statistics office. It was the third quarterly contraction in a row and was mainly due to a significant 2% decline in net exports, the office said. GDP shrank 1.7%, when compared with the fourth quarter of 2007.

Meanwhile, the U.K.'s Office for National Statistics reported that fourth-quarter gross domestic product contracted 1.5% from the third quarter and fell 1.9% from the year earlier period.

The cost of insuring Germany's debt hit a new high of 93 basis points Tuesday. The costs have been hitting highs in weaker euro-zone nations as well.

This, combined with doubts over the feasibility of stronger euro-zone nations being able to help struggling ones, led Chris Turner, head of foreign exchange strategy at ING Financial Markets in London, to call for the euro versus dollar to tread lower.

Elsewhere, Standard & Poor's Ratings Services lowered its long- and short-term foreign currency sovereign credit ratings on Ukraine Wednesday to 'CCC+/C' from 'B/B', and its local currency ratings to 'B-/C' from 'B+/B'. The outlook is negative.

Canada Morning
After gaining substantial ground on Tuesday, the Canadian dollar has lost direction and remains mired in recent trading ranges so far Wednesday.

"I'd say that it's a little bit directionless. People are on both sides of the fence," said C.J Gavsie, director of corporate and institutional foreign exchange sales at Bank of Montreal in Toronto.

The U.S. dollar has been trading in a broad range between the mid C$1.2400s and the mid C$1.2500s, although a break lower seems likely at some point, he said.

General U.S. dollar strength enabled the greenback to advance against the Canadian unit in early North American trading before it receded modestly, he said.

Gavsie said commodities are not providing much direction for the Canadian dollar, with the currency wobbling despite gains in crude oil futures. Wednesday morning, the U.S. dollar was at C$1.2457 from C$1.2408 late Tuesday.

Metals

Spot Gold Down On Profit-taking, Eyes Equities

Spot gold traded to a six-day low Wednesday in European hours due to continued profit-taking, with equities in Asia and Europe rising following gains in the U.S. overnight on remarks from Federal Reserve Chairman Ben Bernanke.

Bernanke tried to assuage market fears that he doesn't believe more major banks are on the brink of collapse and need to be nationalized. And his comments about the rate of inflation - that it's likely to be lower than normal given the decline in commodity prices and spare productive capacity in the economy - were also not supportive of gold prices, said HSBC analyst James Steel.

At 1027 GMT spot gold was trading at $952.60 a troy ounce, down 1% from Tuesday's close. Spot silver was at $13.68/oz, down 0.6%. Spot platinum was at $1,034/oz, down 0.3%. Spot palladium was at $196/oz, down 1%.

"Gold is in a correction and consolidation mode," said Afshin Nabavi, head of trading and physical sales at MKS Finance. Along with higher equities, inflows into exchange traded funds stalled in recent days. That allowed investors to take some profits, but dips will be bought, Nabavi said.

Gold needs to hold above support at $950/oz to prevent further declines, Nabavi said. If U.S. stocks resume declining then he expects gold prices to resume rising.

Prices will recover in the coming days, said Standard Bank analyst Walter de Wet. A rise in risk appetite and higher equities is weighing on precious metals right now, he said, but data continues to show risks to the real economy which will keep investors interested in gold.

Spot platinum is trading along with gold prices and as long as important support at $1,000 a troy ounce holds then the metal will continue to get trading direction cues from gold, MKS' Nabavi said.

Stock Market News, Financial News - Feb 25, 2009

Indian Toners and Developers founder to receive 'Hall of Fame' award

By ANI

Mumbai, Feb 24 (ANI/Business Wire India): Sushil Jain, chairman and managing director of Indian Toners and Developers Limited (ITDL) will receive a Recharger Magazine Hall of Fame award at ReIndia Expo on March 5 at the Bombay Exhibition Centre in Mumbai.

Recharger's inaugural Hall of Fame was held last August at Recharger's World Expo in Las Vegas.

Eight industry members, including Jain, were inducted into the Hall of Fame, which recognizes those industry members who have built their businesses into industry powerhouses, which then create a positive image of the industry through leadership and/or example. (More ...)

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Global economy grim but Fed reassures markets

By Burton Frierson and Ross Finley

NEW YORK/LONDON (Reuters) - The global economy extended its grim run on Tuesday, but Wall Street rallied back from 12-year lows on Federal Reserve Chairman Ben Bernanke's assurances that he preferred to support banks without nationalizing them.

German business confidence hit its lowest level since reunification, while U.S. house prices posted a record plunge and consumer confidence in the world's largest economy slumped to its lowest ever.

"Confidence is deeply, deeply mired in recessionary territory, resulting in big declines in real consumer spending," said Steven Wood, chief economist at Insight Economics in Danville, California.

As U.S. President Barack Obama prepared to explain his plan for getting out of the current rut, Bernanke told senators that major U.S. banks had significant franchise value, which would be lost of they were owned by the government.

On Wall Street, shares ended 4 percent higher, based on the broad S&P 500 index. On Monday it posted its lowest close in 12 years. (More ...)

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S&P lowers India's rating outlook to negative

By ENS Economic Bureau

With India's fiscal position taking a turn for the worse, global rating firm Standard & Poor's on Tuesday lowered the outlook on the long-term sovereign credit rating on India to negative from stable. At the same time, Standard & Poor's affirmed its 'BBB-' long-term and 'A-3' short-term sovereign credit ratings on India.

"The outlook revision reflects our view that India's fiscal position has deteriorated to a level that is unsustainable in the medium term. We expect general government deficit, including off-budget measures such as oil and fertilizer bonds, to increase to 11.4 per cent in the fiscal year ending March 31, 2009, from 5.7 per cent in the previous fiscal year," S&P said.

"The government has implemented various policies that increase stress on its fiscal position ahead of the general election, which is expected to be held in May 2009," said Standard & Poor's credit analyst Takahira Ogawa. "These policies include debt relief for farmers and a pay hike for government employees - first time in 11 years." (More ...)

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Excise duty drops from 16% to 8% in one year

By ENS Economic Bureau

With almost 80 per cent of industrial output falling under the 10 per cent excise duty slab, the 2-per cent Cenvat cut announced by the government today would translate into good enough price cuts in consumer durables and non-durables. Bikes and commercial vehicles will cost less and so will IT hardware and a host of consumer durables and non-durables.

According to Vivek Mishra, Partner, Tax, Ernst & Young, almost 80-90 per cent of goods are in the 10 per cent slab. "The 4 per cent and 8 per cent excise slabs account for only a few goods," he said. The finance minister has kept the excise rates unchanged for goods that attract the 4 per cent and 8 per cent rates, respectively.

To get a sense of the relief India Inc has received in the last 12 months, excise duty have been halved from 16 per cent to 8 per cent now between just two budgets, translating into a massive relief for the industry. Many sectors including two-wheelers, automotive components and tyres, other consumer durables and textiles, etc. fall under this slab. One can look forward to price cuts in these businesses. Small cars are unaffected since the excise duty applicable has been retained at 8 per cent. (More ...)

Tuesday, February 24, 2009

ADVFN World Daily Markets Bulletin - Feb 24, 2009

US Stocks at a Glance

Bargain hunters lift Wall Street after slide

NEW YORK - U.S. stocks rose on Tuesday as investors snapped up shares in beaten-down sectors, including financials, a day after Wall Street skidded to a 12-year low.

The benchmark S&P 500 index held a slight edge above its November bear market low, as JP Morgan, up 3 percent, and Citigroup, up almost 5 percent, led a rebound in financial shares.

Shares of Home Depots, up 6 percent, were a top boost to the Dow after the leading home improvement chain's quarterly operating profit topped analysts estimates.

The Dow Jones industrial average rose 73.83 points, or 1.04 percent, to 7,188.61. The Standard & Poor's 500 Index added 10.32 points, or 1.39 percent, to 753.65. The Nasdaq Composite Index climbed 23.53 points, or 1.70 percent, to 1,411.25.

JP Morgan climbed to $20.49 after Citigroup raised its first-quarter profit view on the bank. After the bell on Monday JPMorgan announced an 87 percent cut in its dividend to conserve capital and said it has been "solidly profitable" this quarter.

Bank of America rose 3.6 percent to $4.05, while Citigroup shares added 6.5 percent to $2.28. The KBW Banks index was up almost 2 percent, rebounding from multiyear lows.

Forex

Euro Pares Gains; Dollar At 13-Week High vs. Yen
Trading remains volatile Tuesday morning, following through on Monday's session, with the euro paring back overnight gains versus the dollar ahead of testimony from Federal Reserve Chairman Ben Bernanke.

U.S. stock futures are higher on some expected bargain hunting after Monday's slide. This helped to support flows into the euro from the safe-haven dollar, but those flows appear to be weakening into the morning.

Meanwhile, the dollar is up against the yen, recently hitting a fresh 13-week high Tuesday morning. It breached the Y96.0 mark, rising to Y96.02, its highest level since Nov. 25, and continues to trade near that level.

The dollar versus yen pair has mostly broken its traditional relationship with equities markets - when stocks gained, so did the dollar.

Now, the yen has started to weaken amid improving conditions in credit markets, said Benedikt Germanier, a currency strategist at UBS in Stamford, Conn., explaining the reemergence of this traditional movement Tuesday.

"Looking ahead, risks remain that investors will look to exit yen longs with improving conditions in global credit," Germanier added.

Tuesday morning in New York, the euro was at $1.2739 from $1.2714 late Monday, while the dollar was at Y96.02 from Y94.50, according to EBS. The euro was at Y122.30 from Y120.16. The U.K. pound was at $1.4497 from $1.4480, and the dollar was at CHF1.1627 from CHF1.1678 Monday.

Traders are awaiting Bernanke's testimony in Washington, scheduled to begin at 10 a.m. EST. He may speak about an inflation target for the bank, expectations for the unemployment rate, as well as recent events affecting the future of Citigroup (C) and American International Group Inc. (AIG).

U.S. data out at the same time include the February Richmond Fed Manufacturing Index and the Conference Board Consumer Confidence Index.

Overnight data out of Europe was a disappointment. The Ifo Institute's German business confidence index plunged more than expected to a record low in February, to 82.6 from 83.0 in January, indicating a deepening recession in the euro zone's largest economy. Records began in 1991.

Currency analysts continue to worry about Western Europe's exposure to its eastern neighbors. French President Nicolas Sarkozy Tuesday warned that the global financial crisis would probably worsen as banks in Eastern Europe are hit hard.

"We saw what's happening in East and Central Europe...the situation will probably worsen," Sarkozy told a press conference after meeting Italian Premier Silvio Berlusconi.

Capital is fleeing Eastern Europe, sending currencies sliding and threatening the region with deep declines in output and employment, and a deluge of debt defaults.

Canada Morning
The Canadian dollar is little changed against the U.S. dollar after the slight shift in favor of risk.  A report from TD Securities said the Canadian currency managed to negotiate a very weak set of retail sales data Monday without much damage, but remains generally range bound against its U.S. counterpart.

The U.S. dollar was at C$1.2523 from C$1.2520 late Monday and down from an intraday high at C$1.2536. A report from BMO Capital Markets forecast the U.S. dollar faces a daily trading range of C$1.2425 to C$1.2600, with resistance at C$1.2558.

Europe Shares

European Stocks Down On Financials

With sentiment taking a knock after major U.S. indexes ended at 11-year lows, European shares fell Tuesday as financials and oil producers ranked among the worst performers.

The Dow Jones Stoxx 600 index declined 1.9% to 172.01. However, the pan-European benchmark managed to hold above its 2003 low, when it hit 162.59.

This contrasted with U.S. shares on Monday, where risk aversion and the weight of a global recession drove a broad sell-off that pushed stock indexes to levels not seen in more than a decade.

Regionally, the German DAX 30 index lost 1.6% to 3,873.61, while the French CAC-40 index declined 1% to 2,701.41 and the U.K.'s FTSE 100 index gave up 0.9% to 3,816.91.

There was more gloomy news on the German economy on Tuesday. The Ifo Institute's German business sentiment index fell to 82.6 in February, down from a reading of 83.0 in January, according to news reports.

Doubts over the U.S. government's latest efforts to shore up the wider economy and the U.S. banking sector continued to weigh on oil futures. The contract dropped 4% on Monday and stayed below $39 a barrel on Tuesday.

Shares of oil producers came under pressure in Europe, including Total, down 1.5%, and Eni, down 1%.

Financials remained in the spotlight, with insurance giant American International Group (AIG) in talks with the U.S. government about securing more funds to be able to continue operating after March 2. AIG reportedly has received bids from MetLife Inc. and Axa for its American Life Insurance Co. unit.

Shares of Axa fell another 5.2% in Paris, bringing losses made over the last week to roughly 33%. Other insurers under fire in Europe included Prudential, down 7%, as well as Allianz, down 5.9%.

Banking and insurance group ING fell 17.2% in Amsterdam. Late Monday, it denied reports that it's seeking aid from the U.S. government.

Additionally, KBC dropped 7.7%, retreating following Deutsche Bank downgrading the Brussels-listed bank to sell from hold.

In technology, shares of TomTom fell another 4.7% in Amsterdam. The maker of personal satellite navigation devices reported a fourth-quarter net loss of 989 million euros on lower sales and a TeleAtlas impairment charge, announced further cost cuts and cautioned that under certain conditions it could breach its loan covenants.

TomTom had dropped Monday following results reported by rival Garmin (GRMN).  Also on the move, shares of BMW fell 6.4% in Frankfurt. Morgan Stanley lowered its rating on the luxury automaker to underweight from overweight, citing an "unattractive valuation" forecasting that BMW's balance sheet will deteriorate.

Shares of Daimler also dropped in Frankfurt, down 6%. The world's biggest truck maker, Daimler got downgraded to market perform at Bernstein.

"We already have concerns about Daimler's liquidity, truck business and appetite for restructuring. In addition, we are increasingly concerned that strategic, industrial and political pressures will push Daimler towards a deal with Opel," Bernstein said.

Meanwhile, competitor Volvo reported that truck deliveries fell 51% to 10,232 vehicles in January. Volvo's shares gave up 0.8%. A major loser was Basilea Pharmaceutica , shares of which plunged 35%.

A European Union regulatory committee delayed its decision on whether to approve Zevtera, or ceftobiprole, for the treatment of complicated skin and soft tissue infections, the company said. Basilea also filed an arbitration claim against Johnson & Johnson.

Still, other drug makers were putting in a better performance as investors took a chance to pick up shares in a sector regarded as less sensitive to economic conditions.

Shares of AstraZeneca climbed 1.3% in London, as GlaxoSmithKline added 0.5%. Staying with defensives, Vivendi saw its shares advance 3% in Paris.

Late Monday, the media and telecom conglomerate said that it has been awarded 1.9 billion euros of damages from Elektrim. Additionally, the firm's Maroc Telecom unit produced fiscal-year results that topped J.P. Morgan estimates.

Asia Markets

HK shares drop 2.9 percent in broad-based slump

Hong Kong shares slumped 2.9 percent on Tuesday, scraping a 1-month low amid fresh fears about the financial system and pushing four out of every five stocks into losses.

Bucking the downtrend, Hongkong Electric rose 3.2 percent to HK$48.50 on so-called safe haven buying. Some brokers had expected the main index to stay above 12,700 points on Tuesday, partly propped up by hopes of relief measures in Wednesday's budget speech.

But the expected stimulus steps are unlikely to elicit a strong market response. "Hong Kong is a very open economy, so no matter how much water you pump in it will all leak out," said Winson Fong, who helps oversee $2 billion at SG Asset Management.

The benchmark Hang Seng Index .HSI closed down almost 377 points at 12,798.52, after giving up all the gains made in the previous session, as relief over a reported U.S. government plan to aid Citigroup faded.

"The sell-off seems once again to have been triggered by a financial accident -- this time, the U.S. Treasury Secretary's determined attempt to snatch defeat from the jaws of victory -- and we have not been expecting markets to stabilise in a straight line," HSBC analysts wrote in a report.

Wall Street shares fell to their lowest in nearly 12 years on Monday, while Tokyo's Nikkei index flirted with its lowest level in more than a quarter of a century on questions about whether the U.S. government was doing enough to stabilise the ailing banking sector and credit markets.

Heavyweight HSBC shed another 3 percent to finish at its lowest close since October 1998, on fears its earnings could come in below a market consensus owing to a worse-than-expected performance in the United States and Hong Kong.

"This is a global bank stock sell-off and with Citi trading at $2 there's no way HSBC can stay immune to the selling pressure," said SG's Fong. A rally in the U.S. dollar and fresh jitters over Wall Street banks sent crude oil and gold prices lower, triggering sharp drops in commodity stocks.

Asia's biggest oil & gas producer, PetroChina, fell 3.7 percent to HK$5.71, while Real Gold Mining, which made its debut on Monday, slid 11 percent to HK$5.56. Mainboard turnover slipped to HK$37 billion from Monday's HK$39.6 billion.

The China Enterprises Index of top mainland firms was down 3.3 percent at 7,068.21, with China Life 2826.HK leading the losses. The world's biggest insurer by market value dropped 3.2 percent, tracking a 4.6 percent fall on the Shanghai bourse.

Manulife Financial Corp dropped more than 13 percent, even after the Canadian insurer said it did not intend to raise capital in the absence of a strategic transaction. The stock was at HK$92.70, down 12.1 percent from its dividend-adjusted Monday close of HK$105.477.

Shares in Canada's largest insurer have fallen more than 15 percent since it announced a big quarterly loss on Feb. 12 as market watchers speculated the company will have to raise capital to counter the impact from plummeting global stock markets.

Nam Tai Electronic Products Ltd more than doubled to HK$1.28 after its parent, Nam Tai Electronics Inc, offered to take the firm private at a 163.2 percent premium over the Hong Kong-listed stock's last trading price.

Oil

North Sea Oil Operations Unsustainable At Current Price, Cost - BP

BP PLC's oil and gas production business in the U.K. North Sea is unsustainable at current low oil prices and high costs, a spokeswoman for the company said Tuesday.

The company, which is one of the largest producers of oil and gas in the North Sea, needs to act to make sure it can continue investment in business, she said.

BP has opened talks with key contractors and suppliers about reducing costs. The talks are still at an early stage but BP is looking for a quick response from oil service companies, she said. "It's essential to have these contacts if we want to sustain a successful business in the North Sea ... doing nothing is not an option," she said.

The cost of developing and running oil and gas fields in the North Sea has increased 50% since 2004, but the oil price is now back at 2004 levels, she said. BP wants to see a "significant reduction" in costs, she said, without giving figures.

BP and other companies operating in the North Sea also have an ongoing dialogue with the British government about how it can encourage investment, including tax policy, she said. "It's important the government understands the current North Sea cost challenge," she said.

The spokeswoman wouldn't specify which areas of its operations might see investment cutbacks if costs don't fall. Press reports Monday said BP has frozen the pay of some managers in the U.K. and the spokeswoman said the company has no plans to recruit extra workers into its North Sea operations this year. Graduate and trainees programs will continue, she said.

Most oil firms are pressuring contractors after years of runaway cost inflation. Michel Contie, senior vice president of Northern Europe for another major North Sea oil and gas producer, Total SA (TOT), said last week he wants costs to fall by at least 20%. Small and medium-sized oil companies will struggle to survive if costs don't fall back in line with the oil price within a year, he said.

Industry lobby group Oil and Gas U.K. said earlier this month that investment in the North Sea could fall 30%, accelerating production decline in a province that is already well past its peak.

Stock Market News, Financial News - Feb 24, 2009

Wall Street plunges to 1997 levels

Financial Express

Wall Street indexes plunged to their lowest close in nearly 12 years on investor disappointment with the latest plan from Washington to prop up the ailing US banking system.

The Dow Jones Industrial Average sank 250.89 points (3.41 per cent) to 7,114.78, crashing below its November 2008 bear market low and hitting its lowest close since May 1997.

The broad-market Standard and Poor's 500 index shed 26.72 points (3.47 per cent) to 743.33, its lowest finish since April 1997.

The tech-heavy Nasdaq composite slid 53.51 points (3.71 per cent) to 1,387.72, its lowest level since November 2008.

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Hindustan Oil Exp ties up $125 mln term loan from Eni

MUMBAI (Reuters) - Hindustan Oil Exploration Company Ltd said Tuesday it has entered into a loan agreement with Eni Coordination Centre, S.A., Brussels (ECC) for a $125 million term loan.

A loan by way of external commercial borrowing (ECB) will be utilised to part-finance various development activities of the company, it said in a statement.

On Friday, the company had said a consortium of banks had refused to disburse $87 million out of an earlier-negotiated $100 million term loan due to turbulent market conditions and added it is in advanced stages of making alternative arrangements.

At 11:05 a.m., shares in the company rose 2.53 percent to 58.70 rupees in a weak Mumbai market.

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BGR Energy says wins $8.57 mln order from Iraq

MUMBAI (Reuters) - BGR Energy Systems Ltd said it won a contract worth $8.57 million to design, manufacture and supply steel storage tanks from a state-run Iraqi company.

The order for supply of floating and fixed-roof steel storage tanks will be completed in 12 months, it said in a statement on Monday.

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Authorities to crack whip on pharma cos to recover Rs 110 cr

By Soma Das, Indian Express Finance

District collectors will soon start knocking on the doors of the country's top listed pharma companies including, Wyeth Ltd, GlaxoSmithKline Pharmaceuticals and Dr Reddy's Labs for recovery of Rs 110 crore dues payable to National Pharma Pricing Authority (NPPA).

Of this, Wyeth Ltd owes NPPA around Rs 4.4 crore, while GSK Pharma owes Rs 7.5 crore.

The sum has been levied by the drug price regulator for overcharging on the prices of regulated drugs. The NPPA has initiated action against 31 pharma companies through 39 cases in Maharashtra, Andhra Pradesh, Uttar Pradesh, Haryana, Himachal Pradesh, Tamil Nadu, Madhya Pradesh and Gujarat.

An NPPA official said the companies have not only defaulted by selling medicines regulated by it at more than the permitted prices but also failed to act on follow up payment obligations. (More ...)

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NTT DoCoMo twin proposals get nod

Indian Express Finance

The cabinet committee on economic affairs (CCEA) on Monday approved Japanese telecom firm NTT DoCoMo's twin proposal to acquire 27.3% stake in Tata Teleservices Ltd and an open offer for 20.25% equity in Tata Teleservices (Maharashtra) Ltd. NTT DoCoMo will acquire 27.3% stake in TTSL for Rs 12,924 crore and for an open offer in TTML the Japaense firm would shell out Rs 949.07 crore, home minister P Chidambaram said.

The CCEA approval comes after the Foreign Investment Promotion Board (FIPB) had earlier approved the proposal. Subsequently CCEA's approval was needed as is required in cases of investment by foreign companies above Rs 600 crore.

Monday, February 23, 2009

ADVFN World Daily Markets Bulletin - Feb 23, 2009

US Stocks at a Glance

Wall Street rises on news of Citi stake talks

U.S. stocks rose on Monday on reports that Washington could end up with a big stake in Citigroup's  common stock as the surest sign yet that it is ready to avert further paralysis of the financial system.

A report in the Wall Street Journal said the U.S. government may end up holding as much as 40 percent of Citigroup's common stock.

The Dow Jones industrial average rose 57.43 points, or 0.78 percent, to 7,423.10. The Standard & Poor's 500 Index gained 6.81 points, or 0.88 percent, to 776.86. The Nasdaq Composite Index was up 6.24 points, or 0.43 percent, at 1,447.47.

Treasurys Prices Drop Ahead Of Still More Supply

NEW YORK - Treasurys prices were lower early Monday ahead of a session free of major data and another week of hefty supply.

Uncertainty over the fate of U.S. banking giant Citigroup leaves markets in a state of anticipation. The weekend press reported the bank is negotiating for the government to increase its stake in the group up to as much as 40%, converting its preferred shares to common stock. While the markets appear warmed by such speculation, they're still wary of hints of more radical government intervention.

U.S. stock futures were buoyed early Monday by the Citigroup talk, and by reports of a memo to employees from Bank of America chief executive Ken Lewis that there was "no reason" the bank should be considered for nationalization.

Nationalization nevertheless remains a hot topic ahead of Treasury Secretary Timothy Geithner's next presentation on the government's plans to assist the banking sector, expected midweek.

The biggest weight on the Treasurys market for the time being is unchanged from the theme of previous weeks - it's all about supply. Monday brings another sale of bills, and a further $94 billion of short- to medium-term notes in the following days. That includes $40 billion of two-years, $32 billion of fives and $22 billion of new seven-year Treasurys.

"It's the reintroduction of the 7-year that we expect to be the largest risk for this series of auctions," noted RBS Greenwich strategist David Ader. "The additional benchmark will test the recent ease of takedowns," he wrote, adding that there hasn't been a seven-year auction since 1993.

Data Monday consists only of the manufacturing survey for the Dallas Fed district. And the only Fedspeak in business hours is from the Atlanta branch's chief, Dennis Lockhart. He speaks on the economy at 12:40 pm EST.

Around 9:10 a.m. EST (1410 GMT), the two-year note was down 4/32 at 99 24/32 yielding 1%, and the 10-year was 20/32 lower at 99 6/32 for 2.84%.  The five-year was down 15/32 for a 1.90% yield, and the 30-year was 30/32 lower yielding 3.62%.

Forex

Dollar Volatile Vs Euro With Market Uncertain

The dollar is swinging between losses and gains versus the euro Monday morning inside a tight range, taking cues from global equities markets.

Traders are also focused on reports that Citigroup is in talks with federal officials to potentially expand taxpayer ownership of the struggling bank.

Strategists are uncertain how this could affect the foreign exchange market, as it is unclear how a bank nationalization could occur.

Monday morning in New York, the euro was at $1.2822 from $1.2838 late Friday, while the dollar was at Y94.64 from Y93.05, according to EBS. The euro was at Y121.30 from Y119.46. The U.K. pound was at $1.4608 from $1.4452, and the dollar was at CHF1.1631 from CHF1.1526 Friday.

The dollar eked a clearer rebound versus the yen into the New York session after overnight losses.  According to analysts at Barclays Capital, the dollar is overvalued by close to 6% against the yen, an "extreme" level.

"[We] expect dollar versus yen to fall from current levels especially as Japanese exporters are likely to increase hedges, and Japanese investors repatriate assets as they approach fiscal year-end," they said.

Meanwhile, the U.K. pound is up against the dollar after U.K. financial companies performed well on equities markets overnight on news that Royal Bank of Scotland Group PLC (RBS) is planning to place about 25% of assets into a non-core unit to prepare for disposal.

Overnight, the euro had extended last week's rally versus the dollar to nearly a two-week high of $1.2992. European Union Economic and Monetary Affairs Commissioner Joaquin Almunia said earlier that the E.U. is ready to offer support to its weaker economies as the global financial crisis deepens, although none currently need it.

"The financial instrument is there," Almunia said, pointing out that the E.U. has already offered assistance, jointly with the International Monetary Fund, to Hungary and Latvia.

The euro had rallied at the tail end of last week on the possibility of such an arrangement.

However, at a weekend summit, euro zone leaders did not promise such support. Instead, leaders said that the resources of the International Monetary Fund must be doubled. The IMF has currently $250 billion in financial resources and already used some $50 billion to bailout hard-hit countries. It aims to double the level to $500 billion.

The European leaders of the Group of 20 Sunday agreed that all financial markets, products and participants including hedge funds must be regulated, that banks should buffer their resources in good times, and that protectionism will not be part of the solution to the current slowdown. Leaders pledged to revive World Trade Organization negotiations to lower custom rights.

They also addressed the issue of tax havens, stating an intent to "devise sanctions to safeguard ourselves better against dangers emanating from uncooperative jurisdictions, including tax havens."

Analysts say this focus, which zeroes in on Switzerland in particular, could pressure the Swiss franc. Last week, the dollar gained as high as CHF1.1884 on related news.

"Against the dollar, we expect the Swiss franc to slip to the 1.20-1.25 range over the next few months, and we could see losses against other currencies as well," said Steven Barrow, head of G10 strategy at Standard Bank.

Separately, in an interview with Dow Jones, a key member of the European Central Bank governing council said the ECB is studying unconventional policy tools to ease financial strains, but isn't in a rush to introduce them because of more scope to lower interest rates.

Athanasios Orphanides said that compared with the U.S. Federal Reserve and the Bank of England, the ECB still has room to lower interest rates to stimulate activity. "It is important to understand and communicate that the ECB can and will pursue the appropriate action to attain its primary objective, namely price stability in the euro area," Orphanides said in his office at the Cypriot central bank.

"This may necessitate the use of unconventional measures. But with the ECB's policy rate at 2%, we are not yet close to the zero bound of interest rates," he said. "There is still room to maneuver with conventional policy action."

Canada Morning
The Canadian dollar is little changed after recovering from weakness in morning trading Monday after Statistics Canada reported that retail sales declined 5.4% in December, the biggest monthly loss in more than 15 years and significantly weaker than the expected decline.

A major slump in the auto industry led widespread declines across all sectors, Statistics Canada said. The U.S. dollar pushed to a session high at C$1.2536 after the data, according to EBS, before surrendering some of its gains.

The U.S. dollar was recently at C$1.2496 from C$1.2492 late Friday. A report from BMO Capital Markets said that the U.S./Canadian dollar pair remains well contained within recent ranges, with the interim risk towards a lower U.S. dollar against its Canadian counterpart.

"Overall, USD/CAD is going to need to take out either the 1.2000 or 1.2750 areas to get participants 'excited'," the BMO report said.

Europe Shares

European Stocks Led Higher By Banking Sector

A turnaround in the banking sector helped Europe stocks bounce off the worst close in nearly six years, after reports that Citigroup wouldn't be fully nationalized and that Royal Bank of Scotland would break itself in half.

The gains also came as European leaders called for doubling the International Monetary Fund's war chest to $500 billion to assist Central and Eastern European nations, as well as for increased regulation of hedge funds and rating agencies.

The pan-European Dow Jones Stoxx 600 climbed 0.5% to 177.85, as the banking sector took back some sharp losses made last week when nationalization fears hit the sector.

U.S. stock futures advanced after a report in the Wall Street Journal that Citigroup was in talks with the U.S. government for an increased stake but that the government would stop short of fully nationalizing the lender.

Closer to home, Royal Bank of Scotland (RBS) jumped 15%.

The lender plans to split in two, slash costs by more than 1 billion pounds ($1.46 billion) and potentially cut up to 20,000 jobs, as nationalized U.K. lender Northern Rock prepares to reverse course and revive its mortgage lending.

And French lender Natixis rose 10.2% on a report of a possible 1.5-billion-euro fund from its soon-to-be-merged parents, Groupe Banque Populaire and Groupe Caisse d'Epargne.

"In our opinion, the current developments show the commitment of countries to support their banks," noted strategists at LBBW.

The German DAX 30 added 0.9% to 4,049.91 and the French CAC 40 rose 0.8% to 2,773.95. The U.K. FTSE 100 traded up 0.2% to 3,895.31, under performing rivals, as oil producers weighed.

Royal Dutch Shell shares fell 1% and BP (BP) shares declined 0.7%. Barclays Capital said that BP and Royal Dutch Shell are its key under weights in the large-cap European oil sector .It started the sector at negative after 30% out performance over the last twelve months.

"Equity markets are pricing an extended downturn for most sectors but not, in our view, for the large-cap oils," the broker said. "Facing the largest-ever fall in oil price, the European integrated oil sector is trading near an all-time high versus the market on 2009 earnings forecasts," it added.

Still, the broker was more positive on Total , up 1.5%, Eni , up 1.4%, and Repsol , up 1.4%., starting these companies at overweight.

It said Eni and Total have more defensive earnings and cash flows and are less expensive than the integrated group. Repsol has higher financial risk but less operational leverage to oil price weakness, the broker noted.

Elsewhere, ING Group (INGA) climbed 3.1%. The firm named a new chief financial officer, HSBC's Patrick Flynn. Italy's Unicredit was another standout, up 7%, after reassuring on 2008 profit trends. Additionally, Swiss Life Holding shares climbed another 8.2%.

UBS upgraded the insurance firm to neutral from sell, noting the firm's improved solvency ratio which it said relieved capital concerns. Citigroup upgraded the stock to buy from hold, saying the statement goes a long way to arguing that it can do without a dilutive capital increase.

Of the losers, French construction firm Saint-Gobain shares extended Friday's losses with an 8.6% drop. Last week, it announced that it intends to raise capital from its shareholders.

Asia Markets

Nikkei down on credit fear but helped by Citi news

Japan's Nikkei average fell 0.5 percent on Monday, pushed lower by credit fears and worries about U.S. bank nationalisation, though a report that the U.S. government may raise its stake in Citigroup pared losses on reassurance the banking giant will be supported. Closer to home, the failure of SFCG, a high-interest lender to smaller companies, underscored worries about tightening credit hitting businesses throughout the Japanese economy and sent shares in rival firms such as Takefuji Corp tumbling.

Falling global demand hit exporters such as Sony Corp, though a sense that some exporters have been oversold bolstered others.

The Wall Street Journal said the U.S. government may end up with as much as 40 percent of Citigroup's common stock, though Citigroup executives are hoping the talks will result in a stake closer to 25 percent.

Market players said the impact of the Citi news, which helped the Nikkei turn briefly positive and also boosted U.S. stock futures, was likely to be limited at best. "Though Wall Street may well start higher today, the fact remains that this step isn't a comprehensive move but only an attempt to deal with one specific case," said Hideyuki Ishiguro, a supervisor in the investment strategy department of Okasan Securities.

"At least they're working to prevent further bank failures, unlike last year."

There was also talk of buying by public pension funds, which Ishiguro said may have been snapping up blue-chip exporters. But other market players said any pension fund buying was likely to be more along the lines of routine portfolio balancing as the end of the business year approaches.

The benchmark Nikkei .N225, which at one point fell as low as 7,209.43, ended down 40.22 points at 7,376.16, its lowest close since Oct. 27. The broader Topix fell 0.6 percent to 735.28, its lowest close since Dec. 28, 1983, hitting a 25-year low for the second day in a row.

Others said the market was running out of steam without fresh trading factors. "The environment's bad and results are bad, there's no reason to push the Nikkei up further," said Mitsushige Akino, chief fund manager at Ichiyoshi Investment Management.

"But the bad news about the U.S. banks isn't new so there's also no real pressure to sell -- unless there's some new event."

Consumer finance firms plunged after SFCG filed for liquidation protection with 338 billion yen ($3.6 billion) in debt on bad real estate-backed loans and tightening credit.

SFCG, which had borrowed heavily from foreign banks including Lehman Brothers, has also been slammed by tighter interest rate regulations in the consumer lender industry, forcing it to repay previous interest that was deemed too high.

Takefuji tumbled 15.9 percent to 393 yen and Aiful Corp plunged 16 percent to 107 yen. Bank shares were off earlier lows, with No.3 bank Sumitomo Mitsui Financial Group even turning positive to gain 1.5 percent, while top lender Mitsubishi UFJ Financial Group pared its losses to 0.5 percent at 427 yen.

Mizuho Financial Group fared worst, falling 1.1 percent to 186 yen after news that the bank, Japan's second-largest, will issue $850 million in preferred securities as it scrambles to replenish capital erased by a sliding stock market and economy.

The securities, which are not convertible to common stock and are aimed at overseas investors, will pay a hefty annual dividend of almost 15 percent. But concern the bank may be paying too much helped send down its shares, under performing a 0.6 percent drop in Tokyo's index of bank stocks.

Sumitomo Metal Mining surged 6.5 percent to 1,090 after the company, Japan's top nickel and second-largest copper producer and an aggressive investor in overseas resources, said it plans to take a stake in at least one copper mine in the year starting in April.

Exporters were mixed, with Canon Inc gaining 2.8 percent to 2,360 yen and Hitachi Ltd up 1.7 percent at 245 yen, while Sony slipped 2.5 percent to 1,549 yen and Panasonic Corp down 2.6 percent to 1,044 yen. Trade was active on the Tokyo exchange's first section, with 2.1 billion shares changing hands, compared with last week's daily average of 1.8 billion. Declining stocks outnumbered advancing ones by 1,003 to 599.

Metals

PRECIOUS METALS - Gold up on risk aversion, profit-taking caps gains

Gold climbed in Europe on Friday as risk aversion fuelled buying, but profit-taking capped the precious metal below the last session's seven-month high.

Spot gold rose to $980.15/981.75 an ounce at 1033 GMT from $973.75 late in New York on Thursday. Earlier that session it struck a high of $985.95, its firmest level since July 15, but failed to maintain its upward momentum. "In the short-term there may be an attempt to lock in some profits," said Saxo Bank senior manager Ole Hansen. "It is not every week you have a commodity rising 6 percent."

He said the deteriorating macroeconomic picture and inflows into exchange-traded funds were currently the main influences on the gold price, now that the metal's traditionally close relationship with the dollar had broken down.

More investment flowed into precious metals-backed ETFs on Thursday, with figures released earlier showing both the largest gold ETF and the biggest silver-backed fund climbing to record levels.

New York's SPDR Gold Trust GLD said its holdings rose nearly 5 tonnes to a record 1,028.98 tonnes on Thursday, while the iShares Silver Trust's silver holdings climbed 18.4 tonnes to an all-time high of 7,892 tonnes.

Investors fear the U.S. stimulus package signed off this week may not be enough to stimulate the economy and shore up the ailing financial system, analysts said.

"Gold investors hear 'trillions and trillions' and 'bailout after bailout' and look at gold as the only asset good for capital preservation," said MF Global analyst Tom Pawlicki in a note. "This should keep gold buoyant in the near-term as investors flock to both futures and ETFs."

Equity markets tumbled on Friday, with world stocks dropping to their weakest since November and eyeing six-year lows. The U.S. Dow index hit a six-year low on Thursday. Falling stocks boost the appeal of safe-haven assets like gold.

The precious metal's usual external drivers, oil and dollar, exerted little influence. Gold traditionally moves in the opposite direction to the U.S. currency, as it can be used as a hedge against dollar weakness, and in line with oil.

The dollar climbed on Friday, along with the yen, as global economic woes, falling equity markets and worries about the prospect of a deepening recession in eastern Europe sparked buying of safer assets.

Meanwhile oil prices, which often pull gold in their wake, weakened as fears over the weakening global economy depressed the demand outlook.

Among other precious metals, spot silver climbed to $14.18/14.24 an ounce from $13.01. Spot platinum edged up to $1,082.50/1,087.50 an ounce from $1,066.50, while spot palladium was little changed at $214/222 an ounce from $213.50.

Anglo American, whose Anglo Platinum unit is the world's largest platinum producer, saw its shares tumble more than 10 percent after it scrapped its final dividend and said it will cut 19,000 jobs.  The company has sliced its 2009 platinum output forecast by 300,000 ounces, chief executive Cynthia Carroll said.

Elsewhere, Standard Bank analyst Walter de Wet noted Swiss import/export data shows a jump in platinum exports in January. "After being a net importer of close to 3,150 kilograms of platinum in December, 8,764 kilograms of the metal left Switzerland in January," he said. "The main destination was Asia."

Switzerland is the hub of physical platinum trade and its trade flows are indicative of demand for the metal, he said.