14/02/08

In the afternoon it was reported that News Corp is in talks with Yahoo about combining MySpace and other News Corp owned online properties.. A potential deal would give News Corp a stake in Yahoo and perhaps help the company fend off Microsoft's $44.6bn unsolicited takeover offer.

Applied Materials reported lower quarterly sales and earnings that nonetheless topped forecasts in a report released late Tuesday. The stock gained 8 percent.

Coca Cola reported higher quarterly sales and earnings Wednesday that topped estimates.

Exxon Mobil rose despite news that the Venezuelan president has announced the country is cutting off imports to the company after Exxon won a court order to freeze state owned assets.

The latest Merrill Lynch global fund managers survey, released Wednesday shows that professional asset allocators are more worried about recession than in the previous month. The money managers are also pouring more money into cash than in previous months, and are the wariest they've been about stocks since the aftermath of the 9/11 terrorist attacks.

Treasury prices fell, raising the yield on the 10 year note to 3.69 percent to 3.66 percent.

In currency trading, the dollar gained versus the yen and was little changed versus the euro US light crude for March delivery rose 49 cents to $93.27 a barrel on NYMEX, gyrating after a weaker than expected weekly oil inventories report.

COMEX gold for April delivery fell 90 cents to $910.20 an ounce.

The Nikkei average ended 558.2 points to close at 13626.45. The index rose on news that the country's economy grew more than twice as much as expected in the final quarter of 2007, with strong US retail sales data also providing a boost. A weaker yen lifted Honda Motor Co and other exporters, while chip related shares such as Advantest Corp gained after advances by their US peers.

UK stocks fell on Wednesday led by banks, commodity stocks and Vodafone as investors wary of the lingering credit turmoil cashed in on the previous day's rally. The FTSE100 closed 29.9 points lower at 5880.1, in volatile trade, underperforming the DAX and CAC40, after surging 3.5 percent in the previous session. Fuelling fears over the fallout of the credit crisis. Bradford and Bingley took a £94m write down on its exposure to tarnished assets. The stock fell 23 percent, and soured sentiment towards financial shares in general. Alliance and Leicester fell 7 percent and HBOS lost 1.2 percent, Barclays, RBS, Lloyds TSB and Standard Chartered all fell between 0.1 and 1.3 percent. Northern Rock lost 9 percent. Two suitors competing to rescue the company have been told to improve their offers to beat the alternative of nationalisation, sources familiar with the matter said.

Miners suffered along with the weaker metals prices, with Rio Tinto, BHP Billiton, Vedanta Resources, Anglo American and Lonmin all down between 0.6 and 3.4 percent.

British Energy jumped 9 percent making it the best performer on the FTSE100 as traders said its results were better than expected and it offered higher dividends.

Man Group added 4 percent after it said the NAV of its main AHL fund gained 1 percent last week.

GlaxoSmithkline fell 1.4 percent after going ex-dividend.

The trade deficit in December is expected to narrow to $62.5bn. This should partly reflect price changes, as export prices rose 0.4 percent but import prices were flat due to a small fall in the petroleum import price. Import volumes may drop in categories such as autos and other consumer goods.

US Initial jobless claims (week 9 Feb) 13.30 gmt

Last weeks initial claims dropped to 356k but were higher than expected for the second straight week, with the 4 week average rising up to 335k. Claims are expected to have fallen to 330k this week, although the 4 week average would edge higher to 342,250. Continuing claims for the previous week may rise again, up to 2.83m.

US Bernanke testimony