14/12/07

The DJIA closed 44.1 points higher at 13518, the S&P500 was 1.8 points higher at 1488.4 and the Nasdaq added 2.65 points to close at 2668.49. All three indexes had posted bigger declines through the early afternoon, but managed to trim some losses near the close.

In economic news, The PPI jumped 3.2 percent in November, due in large part to a spike in energy prices, the government reported. PPI was well above forecasts and followed a rose of 0.1 percent in October. So called core PPI, which excludes food and energy prices, also rose more than expected. A separate report showed a stronger than expected jump in November retail sales and in sales excluding autos. Another report showed a bigger drop in weekly jobless claims than economists were expecting. Meanwhile, business inventories rose 0.1 percent in October, shy of forecasts.

In company news, Lehman Brothers reported a decline in quarterly profit that nonetheless topped estimates. Shares fell 2.5 percent. Other major banks declined too, including Merrill Lynch , Morgan Stanley, JPMorgan Chase and Citigroup.

Washington Mutual fell after Bank of America Securities downgraded it to sell from hold. Fellow mortgage lender Countrywide Financial slipped as well.

JetBlue Airways gained 14 percent on news that German carrier Deutsche Lufthansa will buy a roughly 19 percent stake in the company for $7.27 per share, confirming earlier rumours.

Shares of Biogen Idec fell 23 percent after the company said it had failed to find a buyer and would remain independent.

Biotech Savient Pharmaceuticals jumped 21 percent in active Nasdaq trade after its gout drug candidate showed positive results in a late stage trial.

Another biotech, Rigel Pharmaceuticals also gained on positive study results for a rheumatoid arthritis drug candidate. The company's stock surged 130 percent in afternoon trading.

Treasury prices slipped, raising the yield on the 10 year note to 4.18 percent from 4.09 percent.

In currency trading, the dollar rose versus the euro and was lower against the yen.

US light crude oil for January fell $2.09 to $92.30 a barrel on NYMEX.

COMEX gold for February fell $14.80 to $804 an ounce.

Japanese stocks fell on Friday, dragged lower by banks and property firms after the Bank of Japan's tankan survey showed corporate sentiment generally deteriorating. Index heavyweights such as Fanuc Ltd and Advantest Corp gained as the same survey also showed companies are sticking to their robust capital spending plans, helping buffer losses on the Nikkei.

The tankan headline figure showed sentiment among big manufacturers were at a two year low, reinforcing views that a rise in interest rates will be delayed to the second half of next year. The tankan showed sentiment had deteriorated sharply among property companies. The Nikkei ended the session down 22 points at 15514.5.

Property stocks hit the quarterly tankan's index of real estate companies sentiment for current conditions fell 13 points from September to 37 while the sector's outlook showed a 10 point fall to 27 in March. Property stocks were also hit by data released Thursday by Japan's Real Estate Economic Institute showing the number of new condominiums put up for sale in the Tokyo area slid 43.6 percent in November from a year earlier, as rising prices hurt demand.

Sumitomo Realty & Development Co fell 4.7 percent to Y2965, Mitsubishi Estate fell 4.8 percent to Y2600 and Mitsui Fudosan slipped 4.8 percent to Y2505. Tokyo's real estate index fell 4.5 percent, the worst performing sector.

Banks slid on diminished chances of a rate hike and concerns about the subprime issue after the Federal Reserve's move in concert with other central banks this week failed to reassure investors. Financial industry sources said Wednesday that Mitsubishi UFJ Financial Group, Sumitomo Mitsui Financial Group and Mizuho Financial Group had been approached for contributions of around $5bn each to a subprime support fund.

UK stocks hit a one week low on Thursday, with credit fears still playing on investors minds despite a plan by central banks to provide greater liquidity. The FTSE100 closed 195.6 points lower, marking its biggest one day percentage loss since Aug 16. Midway through the session, the index briefly cut its losses after Lehman Brothers beat forecasts with its quarterly earnings. But the bank remained the worst hit on the day, taking more than 52 points off the index. Northern Rock fell over 13 percent after it said it had taken a £281m hit to profit from its exposure to the credit crisis. The company also brought in a new chief executive, and faced the prospect of being left with only one bidder, being Virgin Group, after investment group Olivant said it had been rebuffed by the bank and threatened to withdraw. HBOS lost 8.2 percent after it said it would take a £180m hit on the value of assets due to the credit crunch, which will also hurt margins.

Rentokil Initial was 22.1 percent lower and touched their lowest level in 12 years after reporting weak retail trading would hit its quarterly profit.

Rexam fell 16.1 percent after the company said the weak dollar would affect its full year results.

Housebuilders also dipped after a survey showed British house prices fell at their fastest rate since May 2005 in the three months to November and surveyors confidence in the outlook was at its lowest since records began in 1998.

Taylor Wimpey lost 9.3 percent, while Barratt Developments fell 6 percent in its last week in the FTSE100 index following the quarterly rejig late yesterday.

Weaker metal prices weighed on miners, BHP Billiton, Rio Tinto, Kazakhymys, Vedanta Resources, Xstrata and Anglo American were all lower.

BG Group was one of the six gainers in the FTSE100, as traders cited continued market talk of a possible bid and a Merrill Lynch price target rise.

GlaxoSmithkline added 0.2 percent as traders and analysts said investors were switching from rival Shire and as Soc Gen reiterated a buy recommendation on the company.