18/10/07

FTSE 100	6677.7, +63.4	Dow	13892.5, -20.4
FTSE 250	11538, +171.8	Nasdaq	2792.67, +28.76
FTSE All Share	3429.83, +34.42	S&P 500	1541.25, +2.7
Nikkei	17106.1, +150.8	Hang Seng	29615, +316.3
Oil (Brent)	$84.16	Gold	$760.40
Base Rate	5.75%	10 Yr Gilt	5.054%
£/$	2.0413	Euro/Gbp	0.6979

Markets
Technology stocks boosted the Nasdaq and helped the Dow cut losses at the end of a choppy session on Wall Street Wednesday, in which investors mulled upbeat earnings reports, mixed economic readings and oil prices near record highs. The DJIA closed 20.4 points lower at 13892.5. recovering after having slumped more than 100 points in the early afternoon. The S&P500 closed 2.7 points higher at 1541.25 and the Nasdaq added 28.76 points to close at 2792.67. Record oil prices had weighed on stocks for the last two sessions, but investors seemed to focus for most of Wednesday on upbeat earnings. Stocks had risen through the early afternoon, thanks to Yahoo, Intel, JP Morgan and others. The optimism about the earnings also took the focus away from the mornings mixed economic news, including a rise in consumer prices. But news that Turkey had approved military action in Iraq sent US light crude oil for November delivery to an all time trading high of $89 a barrel, and caused stocks to slide in the afternoon. But the selling pressure eased up near the close as oil prices gave up gains and the Nasdaq bounced back.

In economic news, the Federal Reserve's Beige Book periodic survey of the economy, showed that economic growth continued to expand in September and early October, but at a slower pace than in August. An earlier report showed that housing starts and building permits slipped in September, falling more than economists had been expecting. A separate report showed that consumer prices rose more than expected in September, although core prices, which strip out volatile food and energy costs, rose in line with forecasts.

After the close of trade, eBay reported sales and earnings that beat estimates and said that 2007 profits would top forecasts.

Also after the close, Washington Mutual reported weaker earnings that missed estimates, due partly to problems in the housing sector. The stock fell in after hours trading.

Treasury prices rallied, lowering the yield on the benchmark 10 year note to 4.55 percent from 4.64 percent.

COMEX gold for December delivery rose 50 cents to settle at $762.50 an ounce.

The Nikkei average rose 150.8 points today to close at 17106.1, closing back above 17,000 on gains in high tech shares such as Canon Inc and a rebound in bank shares after several sessions of heavy selling. Earnings hopes lifted shares of trading and shipping firms such as Mitsui and Co, while Elpida Memory advanced 3.5 percent after it said it would shift to production of DRAM chips using only advanced 300mm silicon wafers in March 2008 to lower per chip costs.

UK stocks rose on Thursday, with Scottish and Newcastle jumping after rivals Carlsberg and Heineken said they planned a joint bid for the company. The FTSE100 closed 63.4 points higher at 6677.7. Scottish and Newcastle rose nearly 19 percent after Carlsberg confirmed speculation that it was in discussions with Heineken about launching a bid for the company. Scottish and Newcastle said the possible break up bid from Carlsberg and Heineken was unwelcome and it was confident of its future as an independent company.

Tate and Lyle added 7.6 percent after Panmure Gordon highlighted that the EU was likely to approve the import of four genetically modified crops next week which may help prices of Tate's US corn gluten.

The banking sector also pushed the FTSE100 higher, adding 22 points to the index rise. Alliance and Leicester, HBOS and Barclays climbed between 0.7 and 3.4 percent. But Northern Rock slipped 7.2 percent. Elsewhere in the financial sector, Man Group added 3.1 percent after it said the net asset value of its main AHL fund gained 2.5 percent last week.

Aviva fell 2.2 percent, paring earlier gains, after a long awaited strategy plan, including new cost cutting targets under whelmed investors.

Oil stocks fell on profit taking as crude prices hit a record $89 per barrel. BP and Royal Dutch Shell fell 1.2 and 0.4 percent respectively.

Economics
UK Retail sales (Sept) 09.30bst

The most recent retail surveys have been mixed. The CBI and BoE Agents surveys moderated slightly, while the BRC remained upbeat. HSBC models points to a 4.8 percent annual growth rate, which is equivalent to a 0.4 percent monthly decline. Even though this is lower than consensus, in their view retail sales need to soften further before the BoE begin to consider rate cuts.

UK Public finances (Sept) 09.30 bst

Net borrowing is expected to be roughly £6bn in September, which would take borrowing so far this fiscal year to £25bn, above the £21bn seen at this time last year. Following the PBR last week, the Chancellor now estimates that he will borrow £38bn this tax year.

US Initial jobless claims (week 13 Oct) 13.30 bst

Jobless claims continue to look healthy, falling to 308k last week. They are expected to be 315k this week.

US Leading indicators (Sept) 15.00 bst

Look for leading indicators to rise 0.3 percent, after a 0.6 percent decline in August. Positive contributions should come from lower jobless claims, higher stocks, non defence capital goods orders, and the ISM supplier deliveries index.

US Philadelphia Fed (Oct) 17.00 bst

The Philadelphia Fed Index is expected to fall slightly to 8 in October. This would be roughly consistent with the current ISM manufacturing reading of 52. New orders and shipments could decline in the Philadelphia Fed survey, after respectively rising to 15.1 to 16.9 last month.

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