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While you were sleeping: Stocks lack lustre

Wednesday 12th May 2010

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Stocks in Europe and the US lacked lustre amid concern a lending plan aimed at ending Europe’s debt crisis wouldn’t be enough.

In late trading, the Dow Jones Industrial Average fell 0.11% and the Standard & Poor’s 500 Index declined 0.14%. The Nasdaq Composite advanced 0.28%, bolstered by Intel Corp and Apple Inc.

Among the most active were Walt Disney Co, Newmont Mining, JPMorgan Chase & Co. and ExxonMobil Corp.

“It's clear that the markets remain very concerned about the fiscal outlook for Europe," Mike Moran, senior currency strategist at Standard Chartered Bank in New York, told Reuters.

Still, the Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’, fell 5.06% to 27.38.

The Stoxx Europe 600 Index fell 0.5% to 252.93. The index soared 7.2% yesterday after the European Union and International Monetary Fund unveiled a 750 billion-euro (US$955 billion) financial assistance package and the European Central Bank said it would purchase government and private debt. The index is 7.1% below this year’s high of April 15.

In the UK, the FTSE 100 fell 0.99% and France’s CAC 40 declined 0.73%. Germany’s DAX rose 0.33% lead by Siemens AG and Daimler AG.

Among the most actives were Banco Santander SA, BHP Billiton and Solarworld AG.

After European markets closed, Gordon Brown resigned as prime minister of Britain and said Conservative leader David Cameron would take over, ending 13 years of rule by the center-left Labour Party.

The Conservatives won most seats in a parliamentary election last week but fell short of a majority. Labour came second and the Liberal Democrats a distant third.

Both the Conservatives and Labour tried to win support from the Liberal Democrats to form the next government during five days of intense negotiations, but it became clear on Tuesday afternoon that Labour had lost and Brown would have to resign.

"I have informed the Queen's private secretary that it's my intention to tender my resignation to the Queen," Brown told reporters outside his Downing Street office.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 3.55% to 84.15.

The euro fell on Tuesday as doubts resurfaced about the outlook for sovereign debt in the euro zone. Investors were reassessing an emergency aid package, announced yesterday.

At midday in New York, the euro traded down 0.8% at US$1.2680. Last week the euro hit a 14-month low of US$1.2510.

Against the yen, the euro declined 1.8% to 117.05, and the US dollar fell 1% to 92.33.

“Concern is creeping in as to whether southern European countries can fulfill their budget requirements," Niels Christensen, currency strategist at Nordea in Copenhagen, told Reuters.

US Treasury notes were little changed after the U.S. sold US$38 billion in three-year debt, drawing higher-than-average demand, and prepared to sell US$40 billion more this week in 10- and 30-year securities.

The bid-to-cover ratio on the three-year notes sold overnight, which gauges demand by comparing total bids with the amount of notes offered, was 3.27, the highest since the November sale. The average was 2.96 at the past 10 sales.

The US Treasury 10-year yield rose 1 basis point to 3.55% in early afternoon trade in NewYork, according to BGCantor Market Data. The 30-year bond yield rose 2 basis points to 4.43%.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, fell 0.09% to 264.96.

US gold futures jumped to a record as economic uncertainties attracted investors to the metal.

Gold for June delivery rose US$18.90 at US$1,219.70 an ounce at 11am EDT.

COMEX traded silver was up 3.4%, at US$19.180 an ounce, as the metal rallied on the coattails of gold.
Platinum for July delivery edged US$2.10 higher to US$1,695.60 an ounce as hopes about economic recovery boosted the demand outlook.

Palladium advanced US$4.55 at US$529.05 an ounce.

US crude for delivery in June fell 27 cents to US$76.53 a barrel at 2.06pm EDT, having seesawed between an early US$75.36 low and a high of US$77.68.

ICE Brent for June crude held on to its gain and was up 52 cents to US$80.64.

US copper futures fell, with Copper for July delivery down 1.7% to US$3.1730 per pound by 10.31am EDT on the New York Mercantile Exchange's COMEX division.

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