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While you were sleeping: Barclays bolsters optimism

Wednesday 17th February 2010

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A surge in second-half profit at Barclays struck a chord with investors in Europe and the US and propelled shares sharply higher.

In addition, a report showed that manufacturing activity in the US was continuing to recover at a solid pace, suggesting that demand for commodities around the world would strenghthen. Oil, gold and copper all rose.

In late morning trading on Wall Street, the Dow Jones Industrial Average was up 1.12%, the Standard & Poor’s 500 was up 1.23% and the tech-laden Nasdaq Composite was up 0.99%.

The Chicago Board Options Exchange Volatility Index fell 1.54% to 22.38.

Among the advancers were Merck, Schering-Plough, Chevron, Bank of America and Intel.

In corporate news, Simon Property Group made a US$10 billion offer to buy rival General Growth Properties, which is operating under bankruptcy protection.

The Dow Jones Stoxx 600 rose 1% to 244.38. Across Europe, the U.K.’s FTSE 100 advanced 1.38%, France’s CAC 40 Index gained 1.25% and the DAX Index in Germany was up 1.23%.

In London, Barclays rose 6.5%, pacing a rally of financial shares. Lloyds Banking Group, HSBC Holdings and Royal Bank of Scotland all advanced. In Frankfurt, Deutsche Bank and MAN Group led gains.

At the end of two days of meetings euro-zone finance ministers offered little new on how Greece would be helped out of its deficit hole. Greek stocks fell for a third day, bringing the benchmark’s losses for the year to 15%.

“We can help Greece to overcome difficult times provided Greece is willing to help itself with determined actions,” European Union Monetary Affairs Commissioner  Olli Rehn told reporters in Brussels.

At the same time, Greek Finance Minister George Papaconstantinou said the country was “ahead of target” in its efforts to reduce its deficit, and also tried to deflect critics by saying the situation engulfing Greece wasn’t an issue for it alone.

Despite the uncertainty, the euro rallied on bets it had dropped too far in recent weeks. In midday trading in New York, the euro was up 1.1% at US$1.3746.

Against the yen, the euro rose 1.2% to 123.87.

It was the Aussie that posted the best performance overnight though, rising to a 10-year high against the euro at A$1.5241, bolstered by expectations of rising Australian interest rates.

As for the greenback, it rose 0.5% to 90.43 yen.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.72% to 79.80.

According to ANZ National Bank, the Dollar Index may soon reach its highest level in nine months, reflecting the potential of the 200- and 55-day moving averages crossing. The index’s 55-day moving average is 77.808 versus 78.056 for 200 days, Bloomberg reported.

Concerns about renewed U.S. and Iran tension helped push the price of oil higher. U.S. crude for March delivery rose US$1.86 to US$76 by 1451 GMT.

US oil inventory reports will be published a day later than usual this week because of Monday's holiday, Reuters said. The American Petroleum Institute will release statistics collated from industry on Wednesday, followed by government data from the Energy Information Administration on Thursday.

Spot gold was bid at US$1,117.90 an ounce at 11.01 ET. U.S. gold futures for April delivery on the COMEX division of the New York Mercantile Exchange rose US$28.60 to US$1,118.10 an ounce.

Silver was at US$16.06 an ounce versus US$15.52. Platinum was at US$1536.50 an ounce versus US$1512.50 and palladium was at US$427.50 versus US$418.50.

Benchmark copper for March delivery climbed 8.80 cents, or 2.9%, to US$3.1710 per lb by mid morning on the New York Mercantile Exchange's COMEX division.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 2.4% to 274.34.

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