Global Markets Overview - 20 November 2012

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The Dow Jones Industrial Average staged a triple-digit advance Monday, as investors rooted for signs of a compromise in Washington on the impending fiscal cliff. The Dow industrials climbed 160 points, or 1.3%, to 12748 in afternoon trading. Friday, it had risen 46 points to snap a four-session losing streak, although the blue-chip benchmark has lost ground for four consecutive weeks.

All but one of the Dow's components traded higher Monday. Hewlett-Packard, up 3.4%, and Bank of America, up 3.2%, led the way. Only Intel, off 0.4%, declined among Dow components.

The chip maker said its longtime chief executive, Paul Otellini, will step down in May. The Standard & Poor's 500-stock index gained 20 points, or 1.5%, to 1380, with the materials and technology sectors rising more than 2% each.

The Nasdaq Composite Index jumped 47 points, or 1.6%, to 2899. Apple swung 5.4% higher, the stock's biggest one-day gain in six months, trying to claw out of bear-market territory characterized by a drop of more than 20% from a recent peak.

Investors said the market remains tethered to news reports about potential progress on resolving the combination of tax increases and spending cuts set to go into effect at the end of the year. In U.S. economic news, sales of previously owned homes rose last month, beating expectations.

Separately, the National Association of Home Builders said Monday its home builders' confidence index rose to its highest level in 6 1/2 years. The strong readings from the housing market gave a boost to industry stocks. Quanex Building Products, which sells products such as windows and doors, rose 5.4%. Fortune Brands Home & Security, which makes products such as cabinets and faucets, added 3.1%.

EUROPEAN STOCKS, BONDS   European stock markets rose sharply Monday, as investors welcomed signs of progress in U.S. debt negotiations after top politicians appeared optimistic over prospects for a deal to avert the so-called fiscal cliff.

The Stoxx Europe 600 index jumped 2.2% to close at 268.58, marking the best daily performance since Sept. 6 when European Central Bank President Mario Draghi unveiled details of an unlimited bond-buying program.

Among notable movers in the index, shares of Nokia Corp. surged 9% on reports that supplies of the Lumia 920, the handset maker's flagship smartphone, have sold out in Germany.

Shares of Barclays PLC jumped 6.6%, as Goldman Sachs lifted its rating on the U.K. bank to buy from neutral. However, Fugro NV shares tanked 14% after the firm said late Friday that Arnold Steenbakker will step down as chairman of the board of management due to a difference of opinion.

Outside the main benchmark index, shares of SAS AB soared 23%, after most of the Scandinavian airline's employees accepted its major cost-savings plan.

Greece remained in the spotlight as the Eurogroup of euro-zone finance ministers prepared to meet for the second time in two weeks to discuss the release of a long-delayed tranche of bailout money and future debt sustainability.

Investors also looked to the U.S., where signs indicated policy makers might be getting closer to an agreement to avoid hundreds of billions in automatic spending cuts and tax hikes slated to take effect Jan. 1, referred to as the fiscal cliff.

Risk-sensitive sectors such as banking and resource shares ranked among the major gainers in Europe. In Germany, shares of Commerzbank AG rallied 5.2%, while Deutsche Bank AG added 4.7%.

The DAX 30 index closed 2.5% higher at 7,123.84. And among French banks, shares of Credit Agricole SA jumped 5.2%, while Societe Generale SA rose 5.5%.

The CAC 40 index rallied 2.9% to 3,439.58. Banks were also on the rise in the U.K., with shares of HSBC Holdings PLC gaining 3.8%, as the bank said it is in talks to sell its stake in China's second-largest insurance firm. Shares of oil major BP PLC added 3.6%.

The Sunday Times reported that BP is planning to spend as much as 3.7 billion pounds ($5.9 billion) to buy back its own stock to revive its share price; a company representative declined to comment.

Also higher, Royal Dutch Shell PLC shares picked up 1.8%, tracking oil prices gains in New York. The FTSE 100 index gained 2.4% to 5,737.66.

ASIA-PACIFIC STOCKS, BONDS Asian markets gained Monday, with stocks climbing on hopes for a resolution to the U.S. fiscal cliff, while sustained weakness in the yen helped the Japanese market hit a two-month high.

Stocks across the region advanced in early trading, as market sentiment improved on the back of positive comments by lawmakers in the U.S. about talks relating to the fiscal cliff. Sustained weakness in the yen continued to bolster Japanese stocks, with the Nikkei Stock Average rising 1.4% to 9153.20, after touching 9183.46 earlier, its highest level since Sept. 20.

Exporters led the gains: industrial robotics company Fanuc Corp. advanced 3.2% and Toyota Motor was 1.4% higher. Japan Tobacco jumped 6.5% after the Japanese government said late Friday that it would postpone its planned sale of part of a stake in the company due to the market and political situations.

In Hong Kong, the Hang Seng Index was 0.5% higher at 21262.06, though Ping An Insurance (Group) dropped 1.9% after HSBC said it was in discussions over the possible sale of its stake in the Chinese insurer.

Food company Tingyi dropped 1.5% after releasing third-quarter results. Kunlun Energy, an oil and gas company majority-owned by PetroChina, added 3.1% in Hong Kong after becoming the fiftieth member of the Hang Seng Index. In China, the Shanghai Composite Index added just 0.1% to 2016.98.

The next data point for China is preliminary manufacturing data for November, which is scheduled for Thursday. South Korea's Kospi Composite gained 0.9% to 1878.10.

COMMODITIES   Base metals closed higher on the London Metal Exchange Monday, boosted by optimism that U.S. lawmakers may be closer to addressing the looming "fiscal cliff" as well the release of better-than-expected U.S. home sales data.

At the close, LME three-month copper was up 2.6% at $7,804 a metric ton. Nickel gained the most, ending the session 3.2% higher at $16,475/ton. Crude-oil futures rallied Monday, as Middle East tensions stirred supply concerns and as traders weighed signs of progress in Washington toward a potential deal to avert the so-called fiscal cliff.

Light, sweet crude for December delivery settled $2.36 higher at $89.28 a barrel on the New York Mercantile Exchange. Gold prices settled at their highest level in a month as investors cheered signs that U.S. lawmakers would reach a deal on averting a combination of tax increases and spending cuts set to go into effect at the end of the year.

The most actively traded contract, for December delivery, rose $19.70, or 1.2%, to settle at $1,734.40 a troy ounce on the Comex division of the New York Mercantile Exchange, the highest settlement price since Sept. 18.

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