7/11/07

FTSE 100	6474.9, +13.5	Dow	13660.9, +117.5
FTSE 250	11334.9, +20.5	Nasdaq	2825.18, +30
FTSE All Share	3332.91, +7.02	S&P 500	1520.25, +18.1
Nikkei	16096.7, -153	Hang Seng	29801.3, +362.6
Oil (Brent)	$90.93	Gold	$839.20
Base Rate	5.75%	10 Yr Gilt	4.90%
£/$	2.0940	Euro/Gbp	0.6985

Markets
US stocks staged a late session rally on Tuesday to close higher, as strong oil and gold prices buoyed a market still grappling with credit market fears. The DJIA closed 117 points higher at 13660.9, after retreating into the red earlier in the session. The S&P500 added 18.1 points to close at 1520.25 , while the Nasdaq closed 30 points higher at 2825.18

Stocks seesawed earlier in the session as investors worried about more bad news from the financial sector, but those fears were surprisingly offset by strength from the metals and energy sectors as oil and gold prices climbed to new heights. Oil prices jumped more than $4 a barrel to a new record trading high of $97.07 a barrel on supply fears and a falling dollar. Light sweet crude for December closed $2.72 higher at $86.70 a barrel on NYMEX. Shares of Exxon Mobil and Chevron both climbed more than 2 percent in late trade while the Amex oil index was 2.7 percent higher. Gold prices continued to trade at levels not seen since 1980, as COMEX gold for December added $13 to $823.80 an ounce. That news lifted the AMEX Gold Bugs Index 4.3 percent higher in afternoon trade.

With no major economic reports expected, investors also kept a close eye on earnings news.

Valero said its quarterly results fell more than 20 percent, hurt by weak refining margins, but still managed to stay ahead of Wall Street forecasts. Agricultural giant Archer Daniels Midland reported better than expected earnings before the opening bell, sending its shares nearly 7 percent higher on NYSE.

IndyMac Bancorp reported a $202.7m loss and said it may eliminate next quarters dividend.

Sun Microsystems reported a profit that matched Wall Street forecasts when it reported results late Monday. But revenue fell a bit short of estimates, sending shares down 9.6 percent on Nasdaq.

In other corporate news, Nasdaq was reportedly in talks to purchase the Philadelphia Stock Exchange for $500m, CNBC reported. Both exchanges declined to comment on the report.

Treasury prices fell, lifting the yield on the 10 year note to 4.37 percent, down from 4.31 percent late Monday.

The dollar retreated to a new record low against the euro and against the yen. The Nikkei average hit a seven week closing low on Wednesday for the third straight day after gains were undermined by a surging yen, prompting selling of exporters such as Canon Inc that led to wider sales. Shares in auto companies also slid, though they had help buoy the marker earlier ahead of Toyota Motor's earnings announcement just after the close. Growing uncertainty on the global economy after a string of bad news from Citigroup was fed by higher oil prices and left Tokyo stocks vulnerable as the yen began to climb. Toyota posed a 2.7 percent rise in quarterly operating profit, with second quarter net profit growing 11.1 percent. It also lifted its full year forecasts after stronger than expected results so far and announced a plan to buyback 15m shares, up to 110bn yen worth, between Nov 9 and 29. Market participants said the results were not bad but warned of potential fallout should the US economy chill and from the stronger yen. The Nikkei closed 153 points lower at 16096.7.

In London the FTSE100 closed higher on Tuesday, ending a three session losing streak as miners and M&S buoyed the market and banks still weighed. The index closed 13.5 points higher at 6474.9 after earlier touching a high of 6512.1 as a strong opening on Wall Street supported.

M&S added 3.3 percent after the company unveiled a forecast beating set of half year results, announced a £1bn share buyback and a major push into China and India. CE Stuart Rose said current trading was satisfactory although the short term economic outlook remained uncertain.

Miners accounted for over 10 points to the index rise as metal prices firmed, with Rio Tinto and Anglo American both gaining 3.3 percent and BHP Billiton adding 4.4 percent.

Also on the upside, oil stocks featured after US crude leapt more than $3 a barrel to a new record high of $97, as weak US dollar and tight fuel stocks prompted buying by investors. BP added 0.2 percent and Tullow Oil gained 3.2 percent after Ghana said it wants the independent oil explorer to begin production at its deepwater discovery by 2009, a year earlier than the company's latest estimates.

Also on the positive side, Reckitt Benckiser added 2 percent after Goldman Sachs added the stock to its"conviction buy" list.

Banks continued to weigh on the index and Bank of England Governor Mervyn King said it would be several more months before banks return to normal after the credit crunch triggered by US subprime mortgage defaults. King told the BBC in an interview that it was evident from the start that Northern Rock would need £30bn of support. RBS lost 1.8 percent, HBOS fell 1.2 percent and Northern Rock fell 3.9 percent.

AB Foods fell 2.4 percent after saying high commodity costs would keep margins under pressure, although the company posted a 10 percent rise in its annual profit. Dresdner cut its rating on the stock to hold.

JD Wetherspoon fell 3.1 percent after it said a smoking ban in pubs was still taking its toll on beer sales and that it remained cautious on the outlook for its financial year.
But Micro Focus International raised its full year revenue growth guidance to around 24 percent from 19 percent, sending its shares up 21 percent.

Economics
US Non-farm Productivity (Q3, prelim) 1330 GMT/0830 EST

Q3 non-farm sector GDP rose 4.3% in the advance estimate. Assuming a 1.1% rise in hours worked, this suggests productivity growth was strong at 3.1%. With compensation per hour expected to rise about 3.9%, analysts think unit labour costs will rise 0.7%.

US Wholesale Inventories (Sep) 1500 GMT/1000 EST

Wholesale inventory growth slowed to +0.1% in August, as inventories were reduced in a number of nondurable categories including paper, drugs and petroleum. Analysts expect an increase of 0.3% in September.

US Consumer Credit (Sep) 2000 GMT/1500 EST

Consumer credit continues to rise at a steady pace. Analysts look for an increase of USD10bn for September, split evenly between revolving and non-revolving credit.

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