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While you were sleeping: Stocks mixed; USD slides

Tuesday 12th January 2010

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Stocks were mixed ahead of the start of the U.S. corporate earnings season. Alcoa was set to report its results after Wall Street's closing bell.

At midday, the Dow Jones Industrial Average rose 0.13%. The Standard & Poor’s 500 declined 0.03% and the Nasdaq Composite was 0.3% lower.
The Standard & Poor’s 500 Index may rise another 9% this year amid “strong” market breadth and price momentum, according to technical analysts at Bank of America Merrill Lynch.

The measure may reach a range of 1200 to 1250, Mary Ann Bartels and Stephen Suttmeier wrote in a report dated today, Bloomberg News said.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 4.4% to 17.34.

Among the advancers were Alcoa, Chevron and Citigroup. Among the decliners were Proctor & Gamble, Apple, IBM and Walt Disney.

After the close on Monday, aluminum giant Alcoa Inc is expected to post a profit of 6 cents per share, compared to a loss of 28 cents a year ago, marking the start of what is widely tipped to be a stronger earnings season. Intel and JP Morgan are set to report results later in the week.

In Europe overnight, the Dow Jones Stoxx 600 was littled changed, sliding 0.1%.

Among national benchmarks, the U.K. ’s FTSE 100 fell 0.2%, Germany ’s DAX 30 fell 0.1% and France ’s CAC 40 declined 0.2%

Some of the biggest movers included Telefonica SA of Spain, reflecting the decision by Venezuala to devalue its currency. Thales and Renewable Energy also dropped.

Among the European stocks that advanced were Heineken, which overnight agreed to pay US$7.7 billion for the beer unit of Mexico's second-largest brewer. Swiss Life also rallied on the prospect of a takeover bid from Allianz SE.

Greece has asked the IMF to provide technical support as it tries to keep its budget deficit from further eroding its fiscal outlook. An IMF team will arrive in Greece tomorrow to provide a range of advice on pension reform, tax policy and tax administration. Last month, Greece had its sovereign credit rating downgraded amid concerns its budget deficit was widening too fast.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.77% to 76.88.

The U.S. dollar slid 0.9% to US$1.4539 per euro, after declining as much as 1%. The dollar also was 0.9% lower at 91.87 yen, from 92.66. The euro rose 0.2% to 133.66 yen

The dollar's slide as linked to a surge in Chinese exports, which bolstered the outlook for the global economy. Latest data from the Commodity Futures Trading Commission showed speculators cut U.S. dollar long positions - bets the currency will appreciate - in the week to January 5, and traders say that trend is likely to pick up.

U.S. Treasuries were little changed, with the 10-year yield at 3.83%. Yields on U.S. 10-year Treasury notes have risen twice as fast as German debt with a similar maturity since the start of December, according to data compiled by Bloomberg. The bonds had traded almost in tandem since April 2007.

Both oil and gold gained overnight, helped by the outlook for China's economy and the slide in the U.S. dollar.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.09% to 290.52.

Oil gained on expected demand in China and cold winter weather in both Europe and the U.S. The price of U.S. crude for February delivery rose 42 cents to US$83.17 a barrel. London Brent crude gained 27 cents to US$81.64.

Gold rose to a five-week high as the latest jobs report in the U.S., released last Friday, pointed to U.S. interest rates remaining low for longer than some investors had recently bet. Spot gold was bid at US$1113.30 an ounce. U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange rose US$15.50 to US$1154.30 an ounce.

Base metals advanced on the latest import data from China.

Copper futures for March delivery climbed 5.55 cents, or 1.6%, to US$3.456 a pound on the New York Mercantile Exchange’s Comex unit. Prices have gained 3.3% this year.

On the London Metal Exchange, copper for delivery in three months advanced US$147, or 2%, to US$7608 a ton. Aluminum, lead, nickel, tin and zinc also rose.

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