Global Markets Overview - 07 January 2013

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By Christine Gaylican | January 7, 2013 9:08 AM EST

U.S. STOCK MARKETS

Stocks ended the first week of the new year with a bang, with the S&P 500 notching a five-year high and the Dow securing its biggest weekly gain since December 2011.

The Dow Jones Industrial Average added 43.85 points, or 0.3%, to 13435.21 after December job growth roughly met economists' estimates and a reading on nonmanufacturing economic activity was surprisingly strong. That capped its biggest weekly point gain--despite a holiday-shortened week--in more than a year, thanks to a 308-point rally Wednesday.

The Standard & Poor's 500-stock index rose 7.10 points, or 0.5%, to 1466.47, for its highest close since December 2007. Financial shares led gains across nine of the index's 10 sectors.

The technology group lagged behind as Apple slumped 2.8% and Microsoft fell 1.9%. The tech-oriented Nasdaq Composite Index rose just 1.09 points, or less than 0.1%, to 3101.66.

The U.S. added 155,000 jobs last month, the Labor Department reported, just shy of the 160,000 new payrolls forecast by economists in a survey. The department revised its reading on November job growth higher.

The unemployment rate was unchanged from November's upwardly revised 7.8%, compared with economists' median projection for 7.7%.

The U.S. nonmanufacturing sector unexpectedly expanded in December, according to data released by the Institute for Supply Management.

U.S. factory orders were roughly flat in November, reflecting lower oil prices.

In corporate news, Eli Lilly gained 3.7% after giving a 2013 earnings forecast that topped analysts' estimates. Avon Products rose 3.2% after Bank of America-Merrill Lynch analysts raised their rating on the stock to "buy" from "neutral."

Radiation and oncology company Accuray tumbled 20% after it said it will shed about 13% of its workforce and indicated fiscal second-quarter revenue would be well below analyst forecasts.

EUROPEAN STOCKS, BONDS

European stock markets extended gains into a fourth day Friday, erasing earlier losses after a U.S. jobs report broadly met expectations and data showed activity in the country's service sector accelerated.

The Stoxx Europe 600 index closed 0.4% higher at 287.83, rising 3.3% on the week. European data indicated the euro zone's downturn eased in December.

The final purchasing managers' index reading rose to a nine-month high of 47.2 from 46.5 in November, but came in below an earlier estimate of 47.3.

Germany's composite PMI rebounded into positive territory at 50.3, while France, Italy and Spain remained in contraction. Among notable movers in Europe, shares of Fresnillo PLC slumped 4% after UBS downgraded its rating on the precious-metals firm to neutral from buy.

Other mining shares also ranked among Friday's biggest decliners, as metals prices dropped across the board. In London, Rio Tinto PLC lost 1.2%, while fellow heavyweight BHP Billiton PLC fell 0.8%.

The FTSE 100 index, however, gained 0.7% to 6,089.84, and closed out the week 2.8% higher. Shares of BP PLC rose 2.7%, extending Thursday's 2.4% advance after Transocean Ltd. agreed to pay a total of $1.4 billion in civil and criminal fines in relation to the disastrous 2010 rig explosion in the Gulf of Mexico.

BP was leasing the Deepwater Horizon drilling rig from Transocean at the time of the disaster. In Paris, shares of steelmaker ArcelorMittal SA gave up 0.8%.

The CAC 40 index rose 0.2% to 3,730.02, supported by a 1.2% rise for heavyweight drug maker Sanofi SA. The Paris benchmark gained 3% on the week.

In Frankfurt, the DAX 30 index climbed 0.3% to 7,776.37 and was up 2.2% on the week. Shares of Bayer AG rose 1.2%, as the drug maker said it got regulatory clearances to complete the takeover of the U.S.-based animal-health business of Teva Pharmaceutical Industries Ltd.

ASIA-PACIFIC STOCK MARKETS, BONDS
 
Japanese stocks Friday jumped to their highest level since March 2011 as the market got its first chance to react to the U.S. budget resolution, while other markets pulled back after the U.S. Federal Open Market Committee minutes suggested that its stimulus efforts could be withdrawn quicker than expected.

After a three-day break, Japan started its first trading day for 2013 on an upbeat note with its largest daily percentage gain in nearly two years.

The Nikkei leaped 2.8% to 10688.11 in response to the compromise made earlier this week in Washington to avoid the fiscal cliff. Japanese stocks were also helped by weakness in the yen, which translated into hefty gains for Japanese exporters.

The automobile sector was at the forefront: Toyota Motor rose 6.4% and Honda Motor was 4% higher. Other exporters enjoying sharp rises included industrial robotics company Fanuc Corp., which advanced 3.9%, and Nikon Corp., which jumped 5.2%.

Stocks in Mainland China were also playing catch-up, coming back online after the holidays, though the market failed to match Japan's strong gains.

The Shanghai Composite did however manage to add to its 16.4% rally last month from the trough it touched in early December. The benchmark index ended the session up 0.4% at 2276.99.

There was also some slightly disappointing Chinese data, a moderation in growth of the country's service sector, with the HSBC China Services Purchasing Managers' Index falling to 51.7 in December, from 52.1 in November, the third consecutive monthly fall.

In Hong Kong, the Hang Seng Index was 0.3% lower at 23331.09. South Korea's Kospi was down 0.4% at 2011.94, pulled down by index heavyweight Samsung Electronics, which fell 1.2% and Kia Motors, which was 1.8% lower.

COMMODITIES

Base metals were lower at the close of London Metal Exchange trading Friday, with some of the complex relinquishing all of the week's gains amid concerns over the longevity of the U.S. Federal Reserve's stimulus program.

At the PM kerb close, flagship three-month copper was down 1.0% on the day at $8.085 a metric ton. Copper Thursday hit a 2.5-month high at $8,256.50/ton, buoyed by an 11th-hour fiscal cliff deal in the U.S.

Zinc ended the session at $2,040/ton, down 2.3% on the day and 0.6% lower on the week.

U.S. crude oil futures ended modestly higher Friday ahead of a major pipeline expansion which analysts said will lead to still-higher prices for the benchmark contract.

Light, sweet crude oil futures for February delivery on the New York Mercantile Exchange settled up 17 cents at $93.09 a barrel and posted a 2.5% rise in the holiday-shortened week.

Gold futures retreated as investors worried that the Federal Reserve may cut short the easy-money policies that helped drive prices of the precious metal to record highs in recent years.

The most actively traded gold contract, for February delivery, settled down $25.70, or 1.5%, at $1,648.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The front-month contract, for January, fell 1.5% to settle at $1,648.10 an ounce. Gold fell 0.4% for the week, the sixth consecutive weekly decline. Compiled from MORRISON SECURITIES PTY. LTD.

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