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While you were sleeping: Equities rise on optimism

Friday 16th April 2010

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Equities in Europe and the US advanced amid optimism about the outlook for the global economy as the latest economic reports in China and the US bolstered the view that the two countries were firmly on growth trajectories.

In addition, investors were buoyed by US corporate profits with United Parcel Service Inc being the latest big company to forecast higher earnings ahead.

In late trading, the Dow Jones Industrial Average was up 0.2%, the Standard & Poor’s 500 Index added 0.17% and the Nasdaq Composite rose 0.47%.

Among the active stocks were UPS, FedEx Corp, Intel Corp, Caterpillar Inc and General Electric Co.

Google Inc rose 1.4% ahead of the release of its results when the market closes. Options investors expect the Internet search giant's shares to move higher after the results, Reuters said.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 2.3% to 15.83.

Wall Street also got a boost from a Federal Reserve report released at the start of the day which showed factory output accelerated to 0.9% in March, compared with a 0.2% rise in February.

Also retail sales in the US increased at their fastest pace in four months in March.

“There’s plenty of fuel out there that could propel stocks higher,” Hank Smith, chief investment officer of Haverford Trust Co in Radnor, Pennsylvania told Bloomberg News. “Corporate earnings continue to accelerate. That’s adding confidence about the economic recovery.”

Merger activity in the air industry appears to be taking off. Bloomberg reported that Continental Airlines Inc has begun talks with United Airlines parent UAL Corp, which already is negotiating a merger with US Airways Group Inc.

The Dow Jones STOXX 600 slid for a third day, by 0.7% to 270.44.

The UK’s FTSE 100 rose 0.5%, Germany’s DAX gained 0.21%, while France’s CAC ended 0.2% higher.

Among the most actives were Roche, EFG Eurobank Ergasias SA, Syngenta AG as well as Sulzer AG and Dana Petroleum Plc.

Even shares in Greece rose, with the local market gaining 2.1%, as it appeared the government was a step closer to asking for financial help from the EU and the IMF. A meeting among the three groups is set for Athens next week.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.39% to 80.50.

Greece’s lingering woes again hit at the single European currency. The euro was on track for its biggest one-day fall against the U.S. dollar in three weeks, down 0.78% at US$1.3545. The yen appreciated 0.8% to 126.29 per euro in late New York trading.

Against the yen, the dollar was up 0.12% at 93.09.

“The booming economy in China underscores the need for officials to act to slow growth,” Omer Esiner, a senior foreign-exchange analyst in Washington at Travelex Global Business Payments, a currency-exchange network, told Bloomberg. “That leaves commodity currencies at risk.”

The Kiwi slid against the yen. The Aussie dipped against the greenback.

The benchmark 10-year US Treasury note was up 7/32 in price to yield 3.84%.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, slid 0.08% to 279.75.

Both oil and copper eased from recent highs amid concerns China would move to ease its rapid growth, while gold edged higher on Greece’s debt woes.

Front-month US crude for May delivery was down 26 cents at US$85.58 a barrel at 1717 GMT, after ending 2% higher the previous day.

Copper for May delivery declined 1.35 cents to US$3.5970 per lb by 1424 GMT on the New York Mercantile Exchange's COMEX division.

Spot gold was bid at $1,159.15 an ounce at 1514 GMT, against $1,153.90 late in New York on Wednesday. US gold futures for June delivery on the COMEX division of the New York Mercantile Exchange rose 50 cents to $1,160.10.

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