US & World Daily Markets Financial Briefing 09-03-2007

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Wall Street higher on U.S. jobs report

NEW YORK - Wall Street extended its advance Friday after the government's employment report showed signs of continued strength in the job market and eased concerns about an economic slowdown. Bonds fell sharply on reduced expectations the Federal Reserve will need to cut interest rates.
   
The unemployment rate fell to 4.5 percent from 4.6 percent as U.S. employers added 97,000 nonfarm workers in February, the Labor Department said. The employment gain followed a rise in January that was larger than previously estimated.
   
Strength in the job market helped calm investors still rattled after last week's sell-off triggered the biggest weekly loss for U.S. stocks in four years. The much-anticipated jobs report coming in better than expected alleviated fears the economy was slowing faster than expected.
   
In the first hour of trading, the Dow Jones industrial average rose 57.76, or 0.47 percent, to 12,318.46.
   
Broader stock indicators were also higher. The Standard & Poor's 500 index was up 7.83, or 0.56 percent, at 1,409.72, and the Nasdaq composite index advanced 16.64, or 0.70 percent, to 2,404.37.
   
Treasury prices declined sharply as the jobs report made it more unlikely the Fed would cut rates. Though the report was slightly weaker than expected, bond investors had been positioned for an even softer number.
   
The yield on the benchmark 10-year Treasury note shot up to 4.60 percent from 4.51 percent late Thursday.

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Source - AFX News/Associated Press

Dollar edges up after stronger-than-expected US payrolls data

LONDON - The dollar edged higher against major currencies after key data out of the US showed the economy created 97,000 jobs in February.
   
Though analysts had expected a similar reading of around 100,000, the fact that data for January and December were revised up by a total of 55,000 puts the data well above expectations.
   
Moreover, after Wednesday's report from payroll services firm ADP predicted a gain in payrolls of just 57,000, many had begun to revise down their forecasts. Also positive for the dollar meanwhile was news that the unemployment rate unexpectedly dropped to 4.5 pct from 4.6 pct, as well as a smaller-than-expected US trade deficit for January.
   
At 1.39 pm GMT, the euro was trading at 1.3110 against the dollar, down from 1.3157 just prior to the data being released, while the pound dropped to 1.9315 from 1.9328. Against the yen meanwhile the dollar surged above the 118 mark for the first time in eight days from 117.28 previously.
   
"There were good upward revisions in both January and December numbers, which offset the on consensus headline of 97k. US trade also came in narrower than expected, offering another positive for dollar bulls," said Russell Bloom at Thomson IFR Markets.
   
The solid US data will also boost forecasts for global growth and underpin the recent renewed demand for carry trades -- where money is borrowed in countries with low interest rates like Japan to be invested in higher-yielding economies elsewhere --, hence the sharp drop in the yen, analysts said.

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Top Stories in Europe at 11.05 GMT

Munich - Airbus parent EADS NV said Friday that a weaker dollar and major delays at its Airbus unit dragged its 2006 profit down, caused a multimillion dollar quarterly loss and warned that Airbus would "display another substantial loss in 2007."
 
Milan - Telecom Italia SpA said it expects its group sales to rise 1.0-2.0 pct per year in the period 2007-2009 compared to the 3.0-4.0 pct per year growth target provided last year in the group's previous 2006-2008 plan.
 
In its new 2007-2009 business plan, Telecom Italia said it expects EBITDA margins to decline by 2.5 and 2.0 percentage points in 2007 and remain broadly unchanged in the following years.

Frankfurt - DaimlerChrysler AG has no plans to spin off its commercial vehicles division, reported Sueddeutsche Zeitung in an interview with the unit's chief Andreas Renschler. "That is not on our agenda. Why would we separate from such a highly profitable business?" said Renschler.

Twintec AG said it will offer up to 2.275 mln shares for between 10 eur and 11 eur each in an initial public offering to raise funds to expand its product palette as well as enter new fields of business. Of those shares, as many as 1.5 mln are from a capital increase, and 275,000 are part of a greenshoe option.

Volkswagen AG chief executive Martin Winterkorn said the company will make a decision "soon" on further developments regarding a potential three-way tie-up with it Brazilian truck operations MAN AG and Scania AB. "The supervisory board will make a decision soon on how to proceed, and we will then make an announcement," he told reports at an annual results news conference today.

Amsterdam - Telefonica SA said it has asked Merrill Lynch to offer stapled financing to the eventual buyer of Endemol NV as the Spanish group is exploring strategic options for the sale of all or part of its 75 pct stake in the Dutch television company.
 
If Telefonica were to decide to divest its 75 pct stake in Endemol, it said it would solicit from the potential purchaser a public offer for the other 25 pct of the shares outstanding in Endemol.

Royal Philips Electronics NV said it agreed a multi-phased plan with Taiwan Semiconductor Manufacturing Co Ltd (TSMC) to sell its remaining 16.2 pct interest in TSMC, which currently has a market valuation of some 8.5 bln usd. In the near future, Philips plans to sell up to 1.75 bln usd worth of TSMC shares to accommodate identified demand from long-term financial investors in Taiwan.

Zurich - Converium Holding AG maintained that its strategy as a stand-alone business remains a priority and will create better value than the proposed 3.1 bln sfr takeover by French rival Scor SA.

London - Pan-European newspaper publisher Mecom Group PLC said it plans to raise 557 mln stg after expenses by placing 731.07 mln new shares at 78 pence each to fund two acquisitions, pay outstanding loan notes, and to fund investments.
 
The company said it will buy a 75 pct stake of Berliner Verlag Deutsche Zeitungsholding GmbH and its units from Veronis Suhler Stevenson and its affiliates for about 163 mln eur.

UK manufacturing output unexpectedly dropped in January though the wider measure of industrial production rose slightly as the Buzzard oil field came on stream, official figures showed.
 
The Office for National Statistics reported that manufacturing output, which accounts for 14.7 pct of the UK economy, fell by 0.2 pct in January from the previous month, below expectations for a 0.2 pct rise.

Stockholm  - Three of the world's top spirits makers -- Pernod Ricard SA, Bacardi Ltd and Diageo PLC -- have told the Swedish government they are interested in buying the state-owned liquor group that makes Absolut vodka, a spokeswoman said Thursday.

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Source - AFX News/Associated Press

Asian shares close mixed; buoyed by Wall St, cautious ahead of payrolls data

HONG KONG - Shares across the Asia-Pacific region closed mixed, with markets boosted by a rise on Wall Street overnight but also cautious ahead of the release today of US non-farm payrolls data.
   
Tokyo shares finished higher after investors cheered data showing a rebound in capital spending by companies in January, with a weaker yen benefiting stocks of exporters.
   
Wall Street's extended recovery overnight also encouraged buying, although the market's gains were capped as players opted to wait for the release of the payrolls data.
   
Market watchers expect the benchmark Nikkei 225 Stock Average move between 16,600 points and 17,500 points next week, with investors likely to continue to exercise caution after last week's turmoil in markets around the world.
   
The blue-chip Nikkei closed 73.73 points or 0.43 pct higher at 17,164.04, off a high of 17,246.21. Over the week, the index fell by 0.31 pct. The TOPIX index of all first-section issues rose 9.35 points or 0.54 pct to settle at 1,730.31, off a high of 1,737.17. Over the week, the index gained 0.51 pct.
   
Share prices are likely to be affected a series of economic indicators next week, including the revised figures for Japanese GDP in the fourth quarter of last year and the US producer price and consumer price indices for last month.
   
Australian shares closed slightly higher as investors remained cautious ahead of the key payrolls report for February due later tonight in the US. Resource stocks were mostly in positive territory after the recent rise in commodity prices, while banking stocks were sold on profit taking and switching to the resource sector.
   
The S&P/ASX 200 gained 7.9 points or just 0.14 pct at 5,830.2, with the key index regaining 44.2 points or 0.76 pct over the trading week after the previous week's 4.14 pct plunge.
   
Hong Kong shares were steady in afternoon trade as investors awaited the US employment data. At 3.05 pm the Hang Seng Index was up 38.47 points or 0.20 pct at 19,213.64.
   
In mainland China, A-shares in Shanghai and Shenzhen closed mixed after weak morning trading with banks and steelmakers in demand from institutions. The Shanghai A-share Index was up 10.77 points or 0.35 pct to 3,087.02 while the Shenzhen A-share Index was down 2.88 points or 0.36 pct at 793.65 on turnover of 46.27 bln yuan.
   
Seoul shares closed slightly lower on program selling, retreating from an earlier run-up led by exporters on easing concerns over the US economy and improved exchange rate conditions.
   
Samsung Electronics jumped more than two pct on hopes for a better business environment and profitability, with an overnight rally by US chip stocks providing a boost.
   
The KOSPI index closed down 0.31 points or 0.02 pct at 1,423.58, off a low of 1,415.71 and a high of 1,434.7. The index gained 9.11 points this week.

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Copper falls off earlier lows after strong US payrolls data

LONDON - Copper prices were off earlier lows after strong US payroll data allayed worries over the health of the US economy.
   
The Labor Department said the US economy added 97,000 jobs in February.      Though analysts had initially expected a similar reading of 100,000, many had begun to revise down their forecasts after a report from payroll services ADP, which called for a gain in payrolls of just 57,000.
   
"The payrolls data was in line with estimates and I think most people were expecting a weaker number so the fact that it came in in-line has been mildly constructive," said Man Financial analyst Ed Meir.
   
The Labor Department also revised up its payrolls number for January and February by a total of 55,000, putting the data well above market expectations and further allaying fears over US economic growth.
   
At 2.12 pm, LME copper for 3 month delivery was at 6,205 usd a tonne. In midday trade earlier, copper was at 6,165 usd a tonne. Most other metals also improved following the data release.
   
Nickel was at 42,650 usd a tonne against 42,375 usd in mid-day trade, aluminium was at 2,737 usd against 2,725 usd, tin was at 13,600 usd against 13,700 usd, zinc was at 3,325 usd against 3,309 usd while lead was at 1,810 usd against 1,800 usd.
   
The base metals were still down on the day, however, as traders had earlier locked in profits ahead of the weekend following a good run in the metals markets in recent days.
   
Copper was also under pressure earlier from a strong increase in Shanghai stock levels.
   
The Shanghai Futures Exchange said warehouse stocks climbed to 46,913 tonnes on March 2, from 40,886 tonnes. The increase pushed stocks to their highest points since July 6 last year.
   
Copper gained ground yesterday as confidence returned to the markets amid a tentative recovery in global equity markets, which were battered last week after the Chinese stock market posted its biggest one-day fall in a decade.

At 12.43 pm, spot gold was quoted at 653.30 usd an ounce, up from the 651.40
usd level seen in late New York trade yesterday.

Silver was flat 13.00 usd, platinum was down at 1,198 usd against 1,212 usd and palladium was down at 347 usd against 353 usd.

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