Friday, February 11, 2011

GLOBAL MARKETS-Stocks flat, dollar up, Mubarak sticks around

NEW YORK: Wall Street stocks ended flat after a late buying surge as Egyptian President Hosni Mubarak said he would relinquish powers but not step down, while upbeat weekly U.S. jobless claims data boosted the U.S. dollar, according to Reuters on Thursday, Feb 10.

The greenback gained after the U.S. Labor Department reported an unexpected drop in initial claims for unemployment benefits to the lowest level in 2-1/2 years.

Weak results from computer networking giant Cisco Systems Inc helped end an eight-day win streak for the Dow industrials. Disappointing results for Swiss bank Credit Suisse and Diageo, the world's largest spirits maker, weighed on European shares.

Oil prices rose in anticipation of Mubarak stepping aside and extended those gains in post-settlement trade.

Gold recovered lost ground as the immediate reaction to Mubarak's announcement alleviated some investor anxiety, although the political upheaval appears far from over as Egypt's streets erupted in rage when he did not resign after two weeks of deadly protests.

The Van Eck Market Vectors exchange-traded fund ended up 0.45 percent, cutting gains late when it appeared that Mubarak was not stepping down. Previously, the fund had risen as much as 5.8 percent.

Mubarak said he is delegating powers to newly appointed Vice President and trusted former intelligence chief, Omar Suleiman.

"Egypt stopped us from dropping lower, but the low volume means that people are skeptical of the climb we've had," Michael Nasto, senior trader at U.S. Global Investors Inc in San Antonio, Texas, said of the stock markets' movement.

By the close of trade the Dow Jones industrial average fell 10.60 points, or 0.09 percent, to 12,229.29. The Standard & Poor's 500 Index climbed 0.99 point, or 0.07 percent, to 1,321.87. The Nasdaq Composite Index edged up 1.38 points, or 0.05 percent, to 2,790.45.

Cisco's stock fell 14.16 percent to $18.92 a day after warning about dwindling public spending and weaker margins. In Europe, Credit Suisse missed profit expectations because of debt charges, and Diageo missed expectations with a 9 percent rise in half-year earnings.

While earnings from Cisco disappointed, benchmark indexes are still hovering near 2-1/2 year highs on generally positive corporate news and economic data.

The latest reading of U.S. earnings, for instance, showed that of the companies listed on the Standard & Poor's 500 index, 72 percent of those reporting have beaten analysts' mean quarterly estimates, according to Thomson Reuters data.

MSCI's all-country world index fell 0.53 percent, pressured in particular by emerging markets. The EM sub-index lost 1.89 percent.

Europe's FTSEurofirst 300 closed off 0.18 percent, a third consecutive down day, although it pared its losses on then-speculative news reports of a potential exit of Mubarak.

Japan's Nikkei index closed down 0.1 percent.

Heading into Friday's trading activity in Tokyo, March Nikkei stock futures pointed to a weaker open, with contracts traded in Chicago down 20 points to 10,655.


The dollar's rise accelerated after the U.S. weekly jobless claims report showed a drop in the latest week to a seasonally adjusted 383,000, the lowest since July 2008.

While the data underpinned the greenback's gains, investors remain worried about Europe's lack of progress in tackling a sovereign debt crisis which undermined the euro.

"Higher yields have benefited the dollar, while Portuguese 10-year bond yields are uncomfortably above 7 percent, which is reminding investors that the stress in the euro zone periphery has not disappeared," said Win Thin, global head of emerging markets strategy at Brown Brothers Harriman in New York.

The euro, which hit a 12-week high above $1.38 this month, struggled as investors drove Portuguese bond yields to their highest since the currency was introduced in 1999.

Portugal is considered at risk of becoming the next euro zone country to need a bailout. The European Central Bank stepped in to buy Portuguese bonds to help stabilize the fragile market.

The euro fell 0.93 percent to $1.3602. The dollar rose 1.17 percent against the Swiss franc to 0.9686 francs and rose 0.93 percent against the yen to 83.15.

U.S. Treasury debt prices fell, renewing their recent sell-off, as traders sold older issues to make room for $16 billion in 30-year bonds in this week's quarterly refunding.

On the New York Mercantile Exchange, March crude was up 85 cents to $87.56 a barrel, after settling up only 2 cents, or 0.02 percent, at $86.73 a barrel.

Spot gold dropped 0.2 percent to $1,360.05 an ounce. - Reuters

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