Global Markets Overview - 23 January 2012

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Stocks reversed earlier losses and looked to extend last week's multi-year highs, as investors monitored corporate earnings and the White House said President Barack Obama won't block a debt-ceiling extension.

The Dow Jones Industrial Average rose 43 points, or 0.3%, to 13693 in midafternoon trading Tuesday, recovering from a morning drop of as much as 27 points.

The benchmark was on track to close at its highest level since Dec. 10, 2007. The Standard & Poor's 500-stock index added three points, or 0.2%, to 1489.

The Nasdaq Composite Index slipped two points, or 0.1%, to 3132, as Google fell 0.3% ahead of fourth-quarter earnings, due after the closing bell. Travelers added 2.8%, the biggest gain among Dow components, after the property-casualty insurer's earnings topped analysts' expectations in the wake of superstorm Sandy. DuPont rose 1.7% after reporting fourth-quarter results that topped analysts' estimates.

Materials shares led gains across eight of the S&P 500's 10 sectors as Freeport-McMoRan Copper & Gold, the world's largest publicly traded copper company, climbed 5.3%.

The miner's fourth-quarter earnings rose 16% amid increased production. The White House said President Barack Obama "wouldn't stand in the way" of a move to extend U.S. borrowing authority until May 19, removing a potential hurdle for lawmakers seeking to extend the debt ceiling.

On the economic front, sales of previously owned homes in the U.S. slipped in December from a month earlier, the National Associations of Realtors reported. Economists in a Dow Jones poll had forecast an increase. Manufacturers in the central Atlantic region said activity is contracting this month, the Federal Reserve Bank of Richmond reported.


European shares generally pulled back Tuesday after the Bank of Japan's policy action left financial markets underwhelmed. The Japanese central bank adopted a target to reach a 2% increase in consumer prices.

Additionally, the bank said it will conduct asset purchases on an open-ended basis, starting in 2014, in a move aimed at bolstering monetary stimulus. Better-than-expected economic news from Germany, however, helped improve the day's tone.

The ZEW indicator for economic sentiment for Europe's largest economy jumped by 24.6 points to 31.5 in January, exceeding expectations for a reading of 9.5.

The benchmark Stoxx 600 index fell fractionally to 287.66. The U.K.'s FTSE 100 index also nudged barely lower, to 6179.17, snapping a three-session streak of gains. Germany's DAX retreated 0.7% to 7696.21, its biggest decline in a week, while France's CAC-40 shed 0.6% to 3741.01.

Deutsche Bank slumped 1.9% amid speculation the firm would issue a profit warning. A representative from the bank declined to comment. In London, SABMiller rose 1.3% following its third-quarter trading update.

While the global brewing and bottling company flagged weak demand in China and slowing growth in global sales volume, it did report improvements in its Latin American and Australian businesses.

Barclays announced after the close that it had put its U.K. investment banking staff on notice for potential job cuts as part of a restructuring effort. Shares ended down 0.5%. Among midcap stocks, online retailer Ocado rose 6.3% after appointing former Marks & Spencer boss Stuart Rose as its nonexecutive chairman.


Asian stock markets ended mixed Tuesday, while the yen strengthened and Japanese stocks fell after the Bank of Japan announced the results of its latest policy meeting.

The dollar weakened against the yen after the Bank of Japan committed itself to a 2% inflation target and an open-ended asset purchasing program, pledging to carry on purchasing financial assets as long it considers it necessary.

Japan's Prime Minister Shinzo Abe came to power last month with plans to end the country's long term deflation problem, which has resulted in downward pressure on the yen in recent months.

Japanese stocks pulled lower as the yen found strength, with the Nikkei ending down 0.4% at 10,709.93. Exporters, such as carmakers, were hurt by the firmer currency.

Honda Motor fell 2.3% and Toyota Motor lost 0.9%. Olympus Corp. climbed 6.6% after the company was removed from the Tokyo Stock Exchange's 'supervisory post' list for possible delisting, where it has been since December 2011 after the company was shaken by an accounting scandal.

The stock is now under 'alert' status on the Tokyo bourse. Also in Tokyo, Kirin Holdings ended up 3.2% after the firm failed to take over Singapore-based Fraser & Neave. There are now expectation that Japanese drinks company could sell its current stake in Fraser & Neave, which could raise Y150 billion.

Chinese stocks were mixed, with Hong Kong's Hang Seng Index up 0.3% at 23658.99 and the Shanghai Composite down 0.6% at 2315.14. Among big movers in Hong Kong, Tianjin-based property developer Sunac China Holdings lost 7.5% after raising $260 million in a share placement, which the company said it would use to pay debt and purchase land. South Korea's Kospi was up 0.5% at 1996.52.

COMMODITIES   Base metals on the London Metal Exchange closed mostly higher Tuesday, after the majority of the group received an early boost from a Japanese stimulus announcement and positive German economic data.

At the close of open-outcry trading, LME three-month copper was 1.0% higher on the previous day's settlement at $8,133 a metric ton. Tin closed substantially lower on the day, down 1.6% at $24,605/ton.

U.S. crude-oil futures rose to their highest settlement in four months Tuesday as the push in stock markets to multi-year highs raises hopes about broader economic growth.

Light, sweet crude oil for February delivery settled 68 cents higher at $96.24 a barrel on the New York Mercantile Exchange. Gold futures inched toward $1,700 after Japan's decision to target a 2% inflation rate sent some investors in search of an inflation safeguard.

The gains were tempered as gold traders also continued to digest news that India, the world's largest gold buyer, raised its import tax on gold. The most actively traded gold contract, for February delivery, rose $6.20, or 0.4%, to settle at $1,693.20 a troy ounce on the Comex division of the New York Mercantile Exchange.

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