• Recovery hopes lift European markets

    European stock markets pushed higher Thursday as positive U.S. earnings and a fairly upbeat assessment from the U.S. Federal Reserve helped maintain optimism about the recovery in the world's largest economy.

    In Europe, the FTSE 100 index of leading British shares was up 34.96 points, or 0.7 percent, at 5,311.60 while Germany's DAX rose 22.05 points, or 0.4 percent, to 5,670.39. The CAC-40 in France was 5.98 points, or 0.2 percent, higher at 3,731.19.

    Wall Street, which has been buoyed in recent days by a solid batch of U.S. earnings statements, was poised for a fairly flat opening — Dow futures were up 1 point at 10,297 while the broader Standard & Poor's 500 futures were unchanged at 1,099.60.

    David Jones, chief market strategist at IG Index, said much of the day's trading could hinge on whether the Dow Jones industrial average, which closed 0.4 percent higher Wednesday at 10,309.24 can sustain its break above 10,300.

    "In recent weeks rallies up to here have proved to be short-lived, so a positive finish for U.S. stocks today can only add to the more upbeat outlook amongst investors at the moment," said Jones.

    In the meantime, a solid earnings statement from U.S. technology firm Hewlett-Packard Co. has helped shore up markets in Europe's morning session. HP is considered a bellwether because it is the world's biggest maker of personal computers and printers. And HP's latest results are the first from a major tech company to include the full month of January.

    Earnings reports that beat expectations from Deere & Co., Whole Foods Market Inc., Kraft Foods Inc. and Abercrombie & Fitch over the last two days have stoked hopes that U.S. consumer spending may be rebounding.

    "The theme of global economic recovery continues as technology stalwart HP posted a solid set of earnings last night," said Ben Potter, research analyst at IG Markets.

    Elsewhere, the minutes to the last Fed rate-setting meeting showed that there was a discussion about how the central bank should reel in extraordinary stimulus measures enacted over the last couple of years.

    Thomas Hoenig, the president of the Federal Reserve Bank of Kansas City, disagreed, however. He argued that the recovery in the U.S. was solid enough to drop the commitment to keep interest rates low "for an extended period."

    Elsewhere, fears of a Greek debt default seemed to ease somewhat, although investors remain watchful about any developments.

    Richard Griffths, senior trader at Spreadex, said the volatility in the euro demonstrates "how little confidence there is in this being an end to debt problems across the EU."

    By late-morning London time, the euro was down 0.1 percent at $1.3584, having fallen earlier to $1.3540, its lowest level since last Friday when the single currency was tanking after poor eurozone economic growth figures and a lack of clarity surrounding the EU's response to Greece's debt crisis.

    Investors are also watching for more possible moves by the Chinese government to slow economic growth and avoid asset bubbles. China raised its bank reserves requirement last week in a bid to cool lending, but so far investors brushed off concerns this could dampen regional growth.

    Markets in China and Taiwan were closed for the Lunar New Year holiday.

    Earlier in Asia, South Korea's Kospi stock index dropped 6.24 points, or 0.4 percent, to 1,621.19 while Hong Kong's Hang Seng index fell 111.86, or 0.5 percent, to 20,422.15.

    Singapore stocks slid 1.2 percent while Indonesia skidded 1.1 percent.

    Japan's Nikkei 225 stock average closed up 28.86 points, or 0.3 percent, at 10,335.69 while Malaysia's stock benchmark added 0.1 percent.

    Oil prices fell below $77 a barrel on signs gasoline and distillate demand in the U.S. remain sluggish.

    Benchmark crude oil for March delivery was down 58 cents at $76.75 in electronic trading on the New York Mercantile Exchange. The contract added 32 cents to settle at $77.33 on Wednesday.

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  • Oil above $77 amid improving US economy

    Oil prices extended gains above $77 a barrel Wednesday in Asia after surging the previous day amid expectations a growing U.S. economy will fuel increased crude demand.

    Benchmark crude for March delivery was up 50 cents at $77.51 a barrel at late afternoon Singapore time in electronic trading on the New York Mercantile Exchange. The contract rose $2.88 to settle at $77.01 on Tuesday.

    Oil and stocks were boosted by signs that U.S. consumer spending may be improving. On Tuesday, Kraft Foods Inc. and apparel retailer Abercrombie & Fitch reported earnings that beat expectations, helping to send the Dow Jones industrial average up 1.7 percent.

    Oil prices have also been buoyed by low U.S. interest rates, as investors turn to commodities for trading profits.

    "As long as short term interest rates remain near zero, a large amount of institutional capital will continue to look for a home and the energy complex remains as a compelling investment," Galena, Illinois-based Ritterbusch and Associates said in a report.

    In other Nymex trading in March contracts, heating oil was up 1 cent at $2.01 a gallon, and gasoline rose 1.1 cent to $1.999 a gallon. Natural gas gained 6 cents to $5.37 per 1,000 cubic feet.

    In London, Brent crude was up 40 cents at $76.08 on the ICE futures exchange.

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  • World markets higher on earnings, growth

    World stocks rose Wednesday on upbeat corporate earnings reports and as worries about Greece's debt crisis eased.

    Kraft Foods Inc. and apparel retailer Abercrombie & Fitch reported earnings that beat expectations on Tuesday, while drugmaker Merck & Co. and UK banking giant Barclays also reported soaring profits. France's BNP Paribas, the eurozone's largest bank, posted its fourth straight quarterly profit on Wednesday.

    That helped drive Britain's FTSE 100 benchmark index up 0.7 percent to 5,278.14 and Germany's DAX 0.8 percent higher to 5,637.88. France's CAC-40 rose 1.2 percent to 3,714.15.

    Asian indexes also rose, although markets in China and Taiwan were closed for the Lunar New Year holiday, while Wall Street was expected to edge up on the open. Dow industrials futures were up 28 points at 10,269.00 and Standard & poor's 500 futures were up 5 points at 1,098.20.

    Financial stocks were in demand, with BNP Paribas leading the charge with a 2.8 percent gain after its earnings statement. Italy's Unicredit Spa was up 2.9 percent and Lloyds Banking Group was up 3.0 percent.

    Signs of growth in the U.S., the world's largest economy, also helped sentiment, driving Wall Street higher overnight after a manufacturing index rose. Eyes will turn to other U.S. data, including housing starts, jobless claims and inflation, as well as minutes from the Federal Reserve's latest policy meeting.

    The minutes will be scrutinized for signs that the central bank is getting to ready to undo its stimulus measures and eventually raise interest rates.

    Looming over markets, however, remained Greece's debt crisis and the danger of contagion to other vulnerable countries in the region. Those fears eased somewhat Wednesday, helping the euro stabilize.

    After promising support but providing no details of a bailout, the EU gave Greece a month to show results in its austerity plan to cut budget spending. It also wants details by Friday on its use of swaps to manage the size of its debt in past years.

    "It will be interesting to see how dominant the Greece story remains now that the deadlines have been pushed to 16 March for a timeframe of action," said Daragh Maher, analyst at Calyon.

    "This could see the story fade from radar screens and allow some of the 'Greece discount' to disappear from the euro as the market obsession moves onwards temporarily at least," he said.

    Earlier in Asia, Japan's Nikkei 225 stock average jumped 272.58 points, or 2.7 percent, at 10,306.83 and Hong Kong's Hang Seng index climbed 265.32, or 1.3 percent, to 20,534.01.

    South Korea's Kospi gained 26.38, or 1.7 percent, to 1,627.43 while Singapore added 1.3 percent and India 1.3 percent. Australia's benchmark advanced 2.1 percent.

    In the U.S. on Tuesday, the Dow rose 169.67, or 1.7 percent, to 10,268.81. The Standard & Poor's 500 index rose 19.36, or 1.8 percent, to 1,094.87, while the Nasdaq composite index rose 30.66, or 1.4 percent, to 2,214.19.

    Oil prices extended gains above $77 a barrel amid expectations a growing U.S. economy will fuel increased crude demand.

    Benchmark crude for March delivery was up 28 cents at $77.29 in electronic trading on the New York Mercantile Exchange. The contract rose $2.88 to settle at $77.01 on Tuesday.

    The dollar rose to 90.57 yen from 90.14 yen and the euro fell to $1.3743 from $1.3764 after rallying Tuesday.

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  • Simon Properties offers General Growth $10 billion buyout

    Mall owner Simon Property Group said Tuesday that it made a $10 billion offer to acquire its ailing rival, General Growth Properties.

    The real estate company said its bid totals $7 billion to creditors and about $3 billion to General Growth shareholders. Simon also said its offer might be amended so shareholders could receive Simon stock instead of cash.

    The offer amounts to $9 per share for the Chicago real estate company, which filed for Chapter 11 bankruptcy protection last year. Parts of its plan to restructure $10.25 billion in debt related to 103 properties were approved in December.

    Simon submitted its offer to the nation's second-largest mall owner Feb. 8. But it made the offer public Tuesday, claiming it had not yet received a "substantive response" from executives.

    A spokesman for General Growth, which owns or manages more than 200 U.S. malls, had no immediate comment on the deal.

    Simon, the nation's largest mall owner, is based in Indianapolis and owns more than 380 properties.

    Its shares rose 23 cents in premarket trading to $72.23.

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  • Schering-Plough purchase hikes Merck sales, profit

    Drugmaker Merck & Co. on Tuesday posted huge jumps in revenue and profit for the fourth quarter, mainly due to its purchase of longtime partner Schering-Plough Corp., but announced plans for a new round of restructuring.

    Merck reported net income of $6.49 billion, up from $1.64 billion a year earlier. Along with the addition of a few billion dollars in sales from Schering-Plough products, the big gain was due to $7.8 billion worth of merger-related accounting items.

    Merck said its new restructuring program is expected to bring annual savings of $2.6 billion to $3 billion in 2012 — the bulk of its previously announced plan to produce $3.5 billion in synergies by 2012, one of the goals of the merger. The combined company had about 100,000 employees as of Dec. 31 and expects companywide cuts to reduce that by about 15 percent. Another 2,500 jobs now vacant will also be eliminated.

    Sales jumped to $10.09 billion from $6.03 billion in the fourth quarter of 2008, fueled by the addition of Schering-Plough products such as allergy medicine Nasonex and higher sales for Merck vaccines and some of its top-selling drugs. Those included asthma and allergy pill Singulair and blood pressure pills Cozaar and Hyzaar.

    The Whitehouse Station, N.J., company reported earnings per share of $2.35, or 79 cents excluding all the one-time items. Analysts surveyed by Thomson Reuters were expecting earnings per share of 79 cents, which Merck matched, and slightly lower revenue of $9.7 billion.

    The items included a $7.5 billion accounting adjustment from gaining a controlling interest in its partnership with Schering-Plough and a $3.2 billion gain for selling its part of an animal health business to get regulators' approval for the acquisition.

    The one-time costs and gains, which also included Merck's ongoing job cuts and other restructuring, amounted to after-tax charges of $4.32 billion, or $1.56 per share.

    The report is the first since Merck bought Schering-Plough in November for $41.1 billion, making the combined operation the world's second-biggest pharmaceutical company, behind Pfizer Inc.

    "The new Merck is off to an excellent start," Chief Executive Richard T. Clark said in a statement. "We're building momentum in our business while making great progress on integration."

    Clark said the company's expanded product portfolio now includes 10 brands with annual sales of more than $1 billion. He noted Merck now is launching a number of new products in major markets around the world and plans more later this year.

    For the full year, Merck reported net income of $12.9 billion, or $5.65 per share. That was up 65 percent from $7.81 billion, or $3.63 per share. Revenue climbed 15 percent to $27.43 billion from $23.85 billion.

    In premarket trading, Merck shares changed hands at $37.80, up 88 cents, or 2.4 percent, from Friday's close.

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  • White House defends year-old stimulus

    President Barack Obama, defending his economic stimulus plan on its first anniversary, is dispatching his Cabinet across the country to try to calm an anxious public as Democrats head into potentially devastating midterm elections.

    A weeklong push to highlight the stimulus program's first year was starting with a Tuesday trip by Vice President Joe Biden to hard-hit Saginaw, Mich., to tour a small business, a jobs training program and a solar factory that all received Recovery Act dollars.

    Obama's fellow Democrats planned to tout programs putting people back to work under the $787 billion spending bill. Health and Human Services Secretary Kathleen Sebelius was touring a medical center in Atlanta on Tuesday; Homeland Security Secretary Janet Napolitano was promoting stimulus projects in Virginia and Texas the same day.

    In all, senior administration officials are scheduled to visit 35 communities before Friday to counter Republican claims the massive deficit-spending program has failed. Obama plans to surround himself at the White House on Wednesday with people who have jobs because of the stimulus plan, then travel to Colorado and Nevada.

    Obama's political team believes the bricks-and-mortar projects across the country could help Democrats stave off emboldened Republicans and their attempts to reclaim majorities in Congress. Although voters have soured on the stimulus spending, individual components have fans across party lines.

    The tax cuts Democrats included in their bill have the backing of 70 percent of the public, according to a CNN poll last month. Another 80 percent support the infrastructure investments, such as the water projects Environmental Protection Agency chief Lisa Jackson plans to tout in Columbus, Ohio, on Thursday.

    Even so, 56 percent of the public opposes the broad plan, according to the CNN poll.

    Biden is expected to give Obama a report Wednesday assessing the stimulus' effects.

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  • European markets edge up despite Greek debt fears

    European stock markets won some respite Monday ahead of a meeting of eurozone finance ministers in Brussels, where the Greek debt crisis will inevitably top the agenda. Public holidays in Asia as well as the U.S. have kept volumes low.

    The FTSE 100 index of leading British shares closed up 25.02 points, or 0.5 percent, at 5,167.47 while Germany's DAX rose 10.71 points, or 0.2 percent, at 5,511.10. The CAC-40 in France was 11.27 points, or 0.3 percent, higher at 3,610.34.

    And with Wall Street closed Monday for the Presidents Day holiday, investors held back from launching a new attack on the euro, which remained steady over the day around the $1.36 mark. Last week, at the height of the Greek fiscal concerns, the euro had slid to a nine-month low of $1.3533, way down on December's high above $1.50.

    The main point of interest in the markets continues to be the debt problems afflicting Greece, as finance ministers from the 16 euro countries gather in the wake of last Thursday's meeting of EU leaders. On Tuesday, the finance ministers of the full 27-nation European Union meet.

    Though EU leaders gave Greece some vocal support, no money or guarantee was offered, primarily because Germany was not willing to stump up cash as that could undermine German bonds and put further pressure on the euro.

    Instead, all agreed that Greece's progress in bringing down its budget deficit will be closely monitored and it would not be allowed to threaten the eurozone. Markets interpreted the latter comment as an implicit guarantee that eurozone policymakers will help the country if its own efforts fail.

    An ensuing narrowing in spreads between German and Greek bonds — a sign that the markets think a Greek default is becoming less likely — and a more steady tone to the euro have diminished expectations that anything substantially new will emerge later.

    Frederik Ducrozet, eurozone economist at Credit Agricole, said last Thursday's EU statement was interpreted as a "major commitment" to support Greece to avoid possible contagion risks to other countries like Portugal and Spain.

    Greece's finance minister George Papaconstantinou said Monday that a detailed rescue plan from other eurozone nations would be the best way to soothe market fears that Greece could default on debt payments.

    "My guess is that what will stop markets attacking Greece at the moment is a further more explicit message that makes operational what has been decided last Thursday," he said.

    Dubai is also a growing market concern amid fears that the highly indebted emirate may repay creditors less than the amounts due — it was November's debt postponement from Dubai World, a government investment company with around $59 billion in debts, that stoked the markets' concerns about overborrowed countries.

    Dubai's stock market fell sharply while the cost of insuring against the emirate's debts edged back up.

    "The theme of sovereign debt risk is likely to remain on investors' agenda as fresh rumblings in Dubai make clear," said Neil Mackinnon, global macro strategist at VTB Capital.

    Earlier, much of Asia was closed for the Lunar New Year holiday, including Hong Kong, Shanghai, Singapore and Seoul.

    However, Japanese and Australian markets fell as investors reacted to China's move late Friday to curtail bank lending to cool off strong growth there.

    Better-than-expected Japanese fourth quarter economic growth figures failed to lift Tokyo's benchmark Nikkei 225 index, which slid 78.89 points, or 0.8 percent, to close at 10,013.30. Analysts said that the monetary tightening in China — the second such move in a month — and uncertainty about the economic outlook in coming quarters weighed on sentiment.

    Japan's gross domestic product grew at an annual pace of 4.6 percent in the October-December period, keeping Japan just ahead of China as the world's No. 2 economy. Japan's nominal GDP for the 2009 calendar year came to about $5.1 trillion, ahead of China's $4.9 trillion.

    Australia's benchmark S&P/ASX200 fell 16.6 points, or 0.4 percent, to 4,545.5.

    Wall Street is closed for the Presidents Day holiday.

    Elsewhere, oil prices were flat, with benchmark crude for March delivery down 18 cents to $73.95 a barrel.

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