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While you were sleeping: Equities held in check

Tuesday 9th February 2010

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Global equities continue to be held back by concerns over the deficit outlooks for Greece, Portugal and Spain.

In early afternoon trading, the Dow Jones Industrial Average had fallen 0.04%, the Standard & Poor’s 500 Index was 0.3% higher and the Nasdaq Composite had risen 0.42%.

The Chicago Board Options Exchange Volatility Index, or VIX fell 1.99% to 25.59.

Among the advancing stocks were Home Depot, Walt Disney and Exxon Mobil, which were given the thumbs up by analysts., Hasbro and CVS Caremark also were higher.

As for Europe, the Dow Jones Stoxx 600 ended up 0.7% at 239.04. The FTSE 100 gained 0.62%, Germany’s DAX rose 0.93% and France’s CAC 40 advanced 1.22%.

According to Bloomberg data, the Soxx 600’s 14-day RSI fell below 30, a sign that the underlying security is oversold and may gain. Still confidence among European investors fell to minus 8.2 this month from minus 3.7 in January, the Sentix research institute said today.

“Resolution of the challenges facing Greece, Portugal and Spain is likely to take time and as a result risk premiums will remain elevated,” according to a UBS report. The brokerage reduced its global equity allocation to “neutral” from “a small overweight.”

While the euro-zone's deficit issues were discussed at a weekend meeting in Canada by the finance ministers of the Group of Seven, no specific plans emerged on how investors' concerns would be addressed.

Among European equities, SABMiller and Nestle advanced as did Xstrata after it said it would start paying dividends again. On the downside were National Bank of Greece, Aker Solutions, Metso and SAP.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 1.28% to 261.85.
Oil rebounded on news of more winter storms in the eastern US Crude oil for March delivery rose US73 cents, or 1%, to US$71.92 a barrel at 11:58 a.m. on the New York Mercantile Exchange. Futures have gained 79% in the past year.

It was also a better start to the week for gold, mainly because the greenback slid. Gold futures for April delivery rose US$15.90, or 1.5%, to US$1,068.70 an ounce on the New York Mercantile Exchange’s Comex unit. Gold for immediate delivery in London rose 0.2% to US$1,068.63.

From a technical perspective, resistance near the US$1,050 level held on Friday, preventing a move down toward the 200-day moving average near US$1,020 an ounce, Reuters reported. A breach of this area would lead to a sharper sell-off, analysts said.

The recent slump in commodities prices represented a “buying opportunity,” Hussein Allidina, head of commodity research at Morgan Stanley, said at a sugar conference in Dubai today, according to Bloomberg.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 033% to 80.18.

In midday trading, the euro was up 0.3% on the day at US$1.3696, not far from a level of US$1.3585 hit on trading platform EBS on Friday, its lowest since May. The currency had earlier hit a session peak of US$1.3714, according to Reuters data.

The euro has dropped almost 10% since November.

US Commodity Futures Trading Commission data showed investors increased bets on further dollar gains in the latest week. Dollar net long positions were at their highest in 11 months. The net short euro position rose to a record high, according to Barclays Capital and Scotia Capital data.

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