Wall St edges lower as indexes pause after rally (Reuters)

NEW YORK (Reuters) – Stocks edged lower on Friday as investors paused after a rally that lifted the S&P 500 index almost 20 percent from near bear market levels where it had sunk earlier this month.

Stock indexes had soared 3 percent in the previous session after a deal on European debt. The S&P index closed above its 200-day moving average for the first time since August, a sign of an improving trend for stocks after five straight months of losses.

Thursday's gains came after European Union leaders struck a long-awaited agreement to help contain Europe's two-year debt crisis.

Concerns that the euro zone debt crisis would spread and erode domestic bank profits have contributed to recent weakness in stocks, with the S&P at one point dipping into bear market territory, defined as a 20 percent decline from a recent peak, in intraday trading on October 4.

The S&P 500 now is up more than 13 percent this month, on pace for its biggest monthly gain since October 1974.

Some investors remained skeptical over the debt deal as many details were still to be worked out before the EU can show its can contain the crippling sovereign debt crisis.

"When you're up about 20 percent in 18 days, and coming off a 3 percent move, you have to catch your breath," said Mike Gibbs, managing director and chief market strategist at Morgan Keegan in Memphis, Tennessee.

The head of Europe's bailout fund played down hopes of a quick deal with China for that country to throw its support behind efforts to resolve the crisis but said he expects Beijing to continue to buy bonds issued by the rescue fund.

"There are still a lot of unanswered questions about the plan and what happens next, so we'll probably be in a trading range for a while, but this is a win for bulls that the market is holding on today," Gibbs said.

The Dow Jones industrial average was down 11.65 points, or 0.10 percent, at 12,196.90. The Standard & Poor's 500 Index was down 4.09 points, or 0.32 percent, at 1,280.50. The Nasdaq Composite Index was down 10.96 points, or 0.40 percent, at 2,727.67.

Hewlett-Packard Co led the Dow higher, rising 2.3 percent to $27.62 a day after it said it was ditching a plan to spin off its personal computers unit, a plan that was expected to have cost billions of dollars in expenses and lost business.

A pair of stronger-than-expected earnings from Dow components also contributed to the blue chip index's modest gains. Merck & Co Inc rose 1.8 percent to $34.93 after its profit and sales beat analyst estimates, and Chevron Corp's profit more than doubled. The stock rose 0.3 percent to $109.

MF Global Holdings Ltd fell 2.8 percent to $1.39, well off earlier lows. Some customers are moving money away from the futures brokerage, rivals, hedge fund officials and analysts said, though the extent of the outflows is unclear.

Economic data on Friday showed U.S. consumer sentiment improved in October for the second month in a row as consumers felt more upbeat about the economy's prospects.

(Editing by Kenneth Barry)

View the original article here

Stocks turn mixed after Thursday's big rally (AP)

View the original article here

Historic rally buoys Israeli social protest movement (Reuters)

JERUSALEM (Reuters) – Organisers of Israel's biggest rally for economic reform said on Sunday they will begin to fold their tents but social change will move on, driven by weeks of protests that brought hundreds of thousands to the streets.

Prime Minister Benjamin Netanyahu, responding to the latest massive demonstrations by a disgruntled middle class in the country's business center, Tel Aviv, and other cities, stuck fast to his pledge to implement change but not at all costs.

"People now know their strength, it is something addictive and it cannot be stopped," Yonatan Levy, one of the leader of Israel's new social movement, said on Israel Radio.

Organisers said more than 450,000 people took part in Saturday's protests, maintaining pressure on Netanyahu's government to lower living costs and promote social equality.

Police put the number of demonstrators at around 300,000. Rallies on that scale in Israel, with a population of 7.7 million, have been held over issues of war and peace.

The grassroots protest movement has swollen since July from a cluster of student tent-squatters into a countrywide mobilization of Israel's middle class.

Netanyahu's governing coalition faces no immediate threat, but the protests have underscored the potential electoral impact of hundreds of thousands of voters rallying under a banner of "social justice."

Protest leaders said they will pause demonstrations in the coming weeks until a government-appointed reform committee submits its conclusions. They said a tent city in Jerusalem would be dismantled later on Sunday with others to follow.

A large banner at Saturday's Tel Aviv rally -- held in a square surrounded by some of the city's most upscale shops -- called for the state budget to be breached to boost social welfare.

In remarks to his cabinet the morning afterwards, Netanyahu gave no sign he would yield on his refusal to go beyond the budget framework. He said he had broken new ground by appointing the reform committee, which is due to submit recommendations in two weeks' time.

"I intend to act swiftly in the wake of its findings and to maintain the proper balance between social sensitivity and fiscal responsibility," Netanyahu said.

"This balance preserves the economy, the country, its citizens and social welfare in Israel," he added, saying he wanted to avoid the type of economic troubles currently afflicting a number of European countries.

The right-wing Israeli leader, a champion of free market reforms, has cautioned he would not be able to satisfy all the protesters' demands, ranging from tax cuts, to expansion of free education and bigger government housing budgets.

MAKING ITS MARK

Though the turnout on Saturday was lower than the ambitious one million some had hoped for, commentators said the movement had made its mark on Israel by catapulting the economy onto a political agenda long dominated by security concerns and diplomacy.

Some commentators predicted a gradual shift in the national debate to a more divisive question: whether state subsidies for large ultra-Orthodox Jewish families, religious institutions and settlements in the occupied West Bank should be redirected toward funding better services for the general public.

Protest leaders, who have called for national unity, have largely steered clear of that issue. But Nahum Barnea, a popular political columnist, said anger over those politically-charged allocations helped fuel the demonstrations.

"Young middle-class people saw what has been happening in Israeli society over the past several years, and they are sick of it," Barnea wrote in the Yedioth Ahronoth newspaper.

"They saw ... the flow of money into parasitic sectors, the distorted priorities of preferring building in settlements to fixing what is wrong in society and the rapid enrichment of those close to the seat of power," he said.

Although Israel enjoys a low 5.5 unemployment rate and a growing economy, business cartels and wage disparities have kept many from feeling the benefit. Many protesters come from the middle class that bears a heavy tax burden and sustains the conscript military.

Since it began, the popular movement has upstaged a diplomatic face-off with the Palestinians for U.N. recognition of statehood and has posed the greatest challenge yet to Netanyahu's government, which includes religious and pro-settler parties.

View the original article here

Global stocks at two-week high, rally may stall (Reuters)

LONDON (Reuters) – Global shares edged up to their highest in nearly two weeks on Tuesday, but the rally looked to be running out of steam on the back of concerns over Europe's debt troubles and U.S. growth.

World stock markets, as measured by MSCI, were up 0.17 percent, but European markets were mixed, with Germany's DAX index down half a percent and U.S. futures pointed to a weaker open for Wall Street.

With big-ticket data like U.S. job numbers due later this week, many investors remain uncertain about a recovery in the world's largest economy, leaving risk for a correction in markets still trading at low holiday volumes.

Tepid demand at a bond tender in Italy also did little to quell renewed concerns over the euro zone's debt problems and a banking sector which the IMF has warned should be recapitalized to deal with the fallout of three years of crisis.

"With consumer confidence, the (U.S) ADP jobs report, ISM Manufacturing, jobless claims and nonfarm payrolls report all due in the coming days, there is going to be a lot of nervousness around," said Ben Potter, strategist at IG Markets.

"The market could also be seen as vulnerable given it has rallied ahead of these big economic reports. We think a lot of participants will be employing a 'wait and see' approach as we navigate through the next few days."

The main index of European shares rose 0.8 percent, tracking gains in Asia, but that was largely due to London advancing 2.4 percent as investors caught up with moves elsewhere after a domestic holiday.

Investors are awaiting minutes from the Federal Reserve's last committee meeting later on Tuesday which could offer more clues on divisions among board members over further stimulus measures.

EURO PROBLEMS

While the uncertain recovery in the U.S. dominated trade, euro zone worries remained on investors' radar and were likely to discourage them to betting big on riskier assets.

An Italian bond auction drew weak demand from investors, although yields fell sharply compared to the previous auction in July, largely due to some 43 billion euros in bond purchases by the European Central Bank since.

Traders said the ECB was buying Italian government bonds in the secondary market on Tuesday, to drive borrowing costs even lower, as it beefs up its attempt to ringfence the euro zone's third-largest economy from the debt crisis.

While the ECB's efforts lent some support to the euro, it is unlikely to lift broader concerns that the risk of contagion could still engulf larger euro zone economies like France.

The premium investors charge to hold Italian bonds over German ones rose to 300 bps, its highest since the ECB stepped in to the market, on Monday.

These concerns have made investors such as U.S. money market funds reduce exposure to European banks and pushed their credit default swap spreads higher.

The Itraxx European senior financials index has pushed beyond the peaks seen during the last crisis, and at 247 basis points the spread is starting to reflect credit ratings that are not in line with their current ones.

"I don't think many people will wholeheartedly buy into the recovery in equities," said Niels Christensen, currency strategist at Nordea in Copenhagen.

"People going long on euro/dollar are very quick to liquidate, and to take profit on those positions, so it will be tough for the euro to rise beyond $1.4570," he said, referring to a high hit in early July.

The euro was down 0.7 percent against the dollar at $1.4412, off a session low of $1.4399 after the Italian bond auction. It also eased against the Swiss franc.

The franc, hit by Switzerland's efforts to weaken it in the past month, traded lower against the dollar, at 0.8195 francs, hovering near a five-week low touched on Monday.

Spot gold stabilized around $1,793 per ounce levels, up 0.3 percent, and after falling by nearly seven percent in about a week. It hit a record $1,911 last week.

U.S. Treasuries rose, unwinding some of the sharp losses seen in the previous session as investors braced for the Federal Reserve meeting minutes for clues on how the policy-setting panel view the economic outlook.

(Additional reporting by Atul Prakash and Naomi Tajitsu in London)

View the original article here

World stocks rally on Fed hopes, dollar down (Reuters)

NEW YORK (Reuters) – World stocks jumped and the dollar fell on Tuesday as dismal U.S. data spurred hopes the Federal Reserve may offer more economic stimulus.

Financial markets have been in turmoil over the past month on concerns the United States may be headed for another recession and as the euro zone's debt crisis has worsened.

World stocks, as measured by the MSCI All-Country World Index, and Wall Street's benchmark Standard & Poor's 500 index are on track for their worst month since 2008, after the collapse of Lehman Brothers.

The MSCI All-Country World Index jumped 1.7 percent, while the S&P 500 gained more than 2 percent. Data from China showing factory sentiment was not as weak as expected helped boost world shares overnight.

In the latest disappointing news on the U.S. economy, factory output in the U.S. central Atlantic region contracted again in August and new home sales fell to a five-month low in July.

Equity investors are taking a "bad news is good news" approach, though, betting that the data may spur more action from the Fed. Stocks staged a rally in the fourth quarter of last year, when the Fed announced a $600 billion bond-buying program.

"People are putting money on the Fed saying something and buying stocks ahead," said King Lip, chief investment officer at Baker Avenue Asset Management in San Francisco.

There is concern, however, that investors are overly optimistic, and many strategists have noted the U.S. economy has improved since a year ago.

Speculation is widespread in financial markets that Fed Chairman Ben Bernanke will use his Friday speech at a central banker conference in Jackson Hole, Wyoming, to signal a new monetary offensive to support a faltering U.S. economy.

Bernanke, however, is most likely to outline gradualist measures, which would disappoint those looking for a big bang approach such as a fresh round of bond buying, known as QE3.

"The market is really geared up for the idea of additional asset purchases to at least be put on the table when Bernanke speaks," said Brian Dolan, chief strategist at Forex.com in Bedminster, New Jersey. "I'm not sure it will play out that way, but that's what the market is betting on now."

The Fed chairman looks set to discuss ways the central bank could tweak the Fed's balance sheet as a means to put further pressure on medium and long-term interest rates and anchor them at low levels. These could be implemented in September and October at coming Fed meetings.

On Wall Street, the Dow Jones industrial average was up 198.71 points, or 1.83 percent, at 11,053.36. The Standard & Poor's 500 Index was up 23.00 points, or 2.05 percent, at 1,146.82. The Nasdaq Composite Index was up 62.63 points, or 2.67 percent, at 2,408.01.

Gold prices fell 2 percent, sharply retreating from a record of more than $1,900 an ounce in Asia trading, as a broad recovery in equity markets and riskier assets took the steam out of a bullion surge that many saw as overdone.

Spot gold was down 2.4 percent at $1,851.29 an ounce

Stimulus measures like those previously undertaken by the Fed increase the amount of dollars in the system, driving down the currency's value, which helps U.S. exports, and prompting investors to seek higher returns elsewhere.

The dollar edged down 0.3 percent against a basket of currencies.

Bonds, which normally move inversely to stocks, saw some light buying after the weak data on speculation the Fed will act to spur the economy, but the strength in equities appeared to be keeping a lid on their rally.

The benchmark U.S. 10-year note was up 2/32 in price, its yield edging down to 2.106 percent from 2.11 percent late on Monday.

In the oil market, prices bounced in choppy trading, supported early by the manufacturing data from China and Europe. Brent October crude rose 71 cents to $109.07 a barrel.

BANK BORROWING COSTS HIT

Ongoing fears of European banks' exposure to heavily indebted European nations like Greece and Italy are making it more expensive for banks to fund themselves in short-term funding markets.

U.S. bank debt costs are also being pressured in unsecured bond markets. The cost for interbank borrowing -- measured by three-month Libor, or the London interbank offered rate -- rose to 0.31178 percentage point on Tuesday.

European banks are facing higher dollar funding costs as U.S. money fund investors, nervous about exposures to peripheral euro zone countries, reduce the length and amount of loans to banks in the region.

The Thomson Reuters Peripheral Euro Zone Banks Index ended down 1.1 percent at 51.61 and is down 25 percent year-to-date.

(Reporting by Caroline Valetkevitch; Additional reporting by Ashley Lau, Steve Johnson, Frank Tang and Emily Flitter in New York and Jan Harvey in London; Editing by Leslie Adler)

View the original article here

Wall Street drops on French bank worry day after rally (Reuters)

NEW YORK (Reuters) – Stocks fell sharply on Wednesday, wiping out most of the previous session's gains, on fears of tumult in the French banking sector, which has significant exposure to shaky European debt.

U.S. financial stocks led the decline on worries that any French bank problems could spread to them. The KBW bank index slid 6 percent. Large financial institutions' shares sank, including Bank of America Corp, down 7.2 percent at $7.05.

French banks' shares tumbled in Paris trading even after a Societe Generale spokeswoman denied rumors of trouble. Societe General, where U.S. traders have focused their attention, fell 14.7 percent and BNP Paribas dropped 9.5 percent.

"You've already had situations in Greece, Spain has been in there, Portugal, and now if you are talking about France, which because it's a bigger economy, it probably generates more concern on a comparison basis," said Gordon Charlop, managing director of Rosenblatt Securities in New York.

"So there are investors who are a little bit more cautious about European financials and that translates into financials here."

Stocks rallied on Tuesday after the Federal Reserve promised to keep interest rates near zero for at least two more years. The S&P 500 index had its best performance in more than two years.

"Investors are kind of pondering Bernanke's message and are probably looking for something more than they got. They might be selling into the meeting that he is having at Jackson Hole -- that could be part of it, too," Charlop said.

The Fed chairman is due to give his yearly speech at the Jackson Hole, Wyoming, meeting at the end of August.

The Dow Jones industrial average dropped 363.17 points, or 3.23 percent, to 10,876.60. The Standard & Poor's 500 Index lost 36.12 points, or 3.08 percent, to 1,136.41. The Nasdaq Composite Index fell 70.01 points, or 2.82 percent, to 2,412.51.

The CBOE Volatility Index shot up 19.1 percent. Earlier, the VIX had climbed slightly more than 20 percent, representing the third session in the last five that the index has jumped at least 20 percent.

Walt Disney Co was among the Dow's worst performers, tumbling 9.6 percent to $31.38 a day after the company's quarterly results failed to reassure investors that the entertainment company could do well in a weak U.S. economy.

Even after Tuesday's snap-back rally, the S&P 500 is down nearly 17 percent since its 2011 closing high set on April 29. Worries about the U.S. economy and high levels of public debt in Europe have sent stocks cascading down sharply over the last two weeks.

(Reporting by Chuck Mikolajczak; Additional reporting by Ashley Lau; Editing by Jan Paschal)

View the original article here

Chavez supporters rally, pray for "comandante" (Reuters)

CARACAS (Reuters) – Venezuelan President Hugo Chavez's supporters rallied and prayed on Sunday for the speedy recovery of a man whose revelation of cancer treatment has rocked the country he has dominated for more than a decade.

In bread shops and bars, streets and homes across the volatile South American OPEC member, there is only one topic of gossip and debate: just how bad is Chavez's health?

On a day usually revolving round Chavez's weekly "Alo Presidente" show -- hours-long TV soliloquies to tell stories, sing songs, nationalize companies or bait foes -- loyalists instead held a Roman Catholic mass and march for their man.

Dozens chanted "We love Chavez!" at a service in the capital's largest slum, Petare. At a downtown square, red-shirted supporters danced, sang, waved flags and held puppets of Chavez aloft in a lively show of support.

"I see you, I hear you, I live through you!" Chavez tweeted in appreciation from Havana where he is receiving treatment after surgery to remove a cancerous tumor.

"He is going to emerge victorious. We all ask God to give him health and strength," said pensioner Irma Santander, 76, sporting the red colors of diehard "Chavistas".

An atypically somber and reflective Chavez shocked Venezuelans when he admitted last week he had cancer.

The 56-year-old socialist is one of the most globally recognizable faces thanks to his flamboyant anti-Americanism and self-styled domestic "revolution."

Only Chavez, his doctors and closest allies know if the malignant cells have spread or been stemmed, with speculation he may have colon cancer and face months of chemotherapy.

ELECTION LOOMS

The implications are immense: Chavez has no obvious successor, and an opposition browbeaten by him since his first election win in 1998 is sensing a chance in next year's vote.

Opposition leaders and supporters are trying to avoid any accusations of exulting in his misfortune.

But they are nevertheless angry he has not named a temporary successor during his nearly month-long stay in Cuba and are quietly excited about the specter of a power change.

"I feel a real dilemma inside. I hate what he's done in Venezuela and I've always opposed him," said housewife Jenny Rodriguez, at a posh hilltop sports club right opposite a slum in a typical example of Venezuela's social divide.

"But I don't wish death or physical suffering on anyone, that would be wrong before God. I'd prefer him to get better -- then lose the election fairly, as he would anyway."

Even if he recovers perfectly, Chavez's health crisis already looks like a game-changer for the nation of 29 million people. It has exposed the lack of replacements, galvanized his opponents and dented his aura of invincibility.

Anxious allies insist their 'comandante' remains an active president and there is no need to temporarily name Vice President Elias Jaua, who is the face of government at home.

The constitution requires a delegation of powers to the vice president if there is an "absence" of 90 days, or 180 if the assembly uses its prerogative to extend that period.

But officials say the clock has not started running because Chavez is still signing decrees and giving instructions to ministers, some on trips to Havana.

Latest images of Chavez -- released by state media in a slightly surreal drip-drip of photos and footage reminiscent of Cuba's handling of former president Fidel Castro's illness -- showed him walking but pale. (http://bit.ly/irxzBm)

There was no detail when Chavez might be home.

"He will come when his doctors say it is time," Jaua told Reuters at preparations to mark the 200th anniversary of Venezuela's independence from Spain, a celebration on Tuesday that Chavez would dearly love to attend.

Chavez's health saga has displaced from the front pages a litany of issues facing his government, from power blackouts and uncontrolled crime to jail riots and housing shortages.

(Additional reporting by Deisy Buitrago and Enrique Andres Pretel; Editing by Jackie Frank)

View the original article here