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While you were sleeping: Stocks rise, Google gags

Thursday 14th January 2010

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Global stocks were mostly higher on renewed optimism about the outlook for the world economy and corporate earnings.

And for the second time this week, China was in the news in a negative way. Earlier this week it moved to rein in lending by increasing the reserve requirements at the country's banks. Overnight Google threatened to quit China after persistent hacking attacks.
Shortly after midday, the Dow Jones Industrial Average rose 0.49% and the Standard & Poor’s 500 gained 0.44%. The Nasdaq Composite was up 0.63%

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street’s ‘fear gauge’ fell 1.75% to 17.93.

Among the advancers were Kraft Foods, Merck & Co and Wyndham Worldwide. Google fell.

China's policy of filtering and restricting access to web sites has been a frequent source of tension with the U.S. and tech companies, such as Google and Yahoo. Google's said late Tuesday that it might withdraw from China after what it said were attacks on human rights activists using its Gmail service and on dozens of companies.

The attacks targeted 34 companies, most of them from Silicon Valley, California, the New York Times reported, citing unidentified people familiar with Google’s investigation.

In Europe overnight, the Dow Jones Stoxx 600 edged 0.3% higher to 257.10. Germany’s DAX rose 0.4%. The FTSE 100 fell 0.3% and France's CAC 40 slid 0.1%.

Infineon and ASML both rose after being upgraded by Goldman Sachs. SIG and UCB also advanced.

Societe Generale, France’s second-biggest bank, dropped 3.4% after saying it had 1.4 billion euros of writedowns and provisions on risky assets. Deutsche Bank and National Bank of Greece fell. Bank stocks were the worst performers in the Stoxx 600 overnight.

While shares have traded relatively flat so far this year, investor optimism remained high.

Investors forecast gains in each of the nine countries represented in the Bloomberg Professional Confidence Survey for the first time since the data began in 2007. The sentiment measure for the S&P 500 climbed 35% to 54.37. That’s only the second time the reading exceeded 50, signalling participants anticipate a rally in the next six months, Bloomberg said.

The Dollar Index, which measures the greenback against a basket of six major currencies, fell 0.16% to 76.83.

In late-morning trading in New York, the euro was up 0.1% to US$1.4505 after rising to US$1.4582, its highest since December 16. Traders told Reuters that demand from Asian sovereign entities helped support the single European currency as well as bullish technical indicators.

The U.S. dollar rose 0.4% to 91.35 yen. The euro was up 0.5% to 132.49 yen. The Australian dollar rebounded 0.7% to 84.22 yen after its biggest daily drop in about eight weeks on Tuesday. It also rose 0.2% to US$0.9216.

U.S. Treasuries fell ahead of a 10-year bond auction. The Treasury is selling US$84 billion of debt this week.

Ten-year note yields rose four basis points to 3.75% at 11:42am in New York, according to BGCantor Market data. The yield fell as much as 11 basis points yesterday to 3.71%, the lowest level since December 23.

The so-called long bond may gain after yields on the securities failed to remain above so-called resistance at 4.73%, Bloomberg reported, citing a Citigroup report. Yields may fall to as little as 4.57%, Citigroup analysts led by Tom Fitzpatrick in New York wrote to clients this week.

Futures contracts on the CME Group show a 78% chance the central bank will increase the target rate by at least a quarter-percentage point by November, Bloomberg also said. 

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, rose 0.035% to 284.62.

Oil dropped after the U.S. Energy Information Administration said it expected U.S. crude inventories to rise.

U.S. crude for February fell US$1.42 to US$79.37. It dropped as low as US$78.37. Brent crude for February, which expires on Thursday, shed US$1.42 to US$77.88.

Spot gold was bid at US$1124.00 a troy ounce. U.S. gold futures for February delivery on the COMEX division of the New York Mercantile Exchange eased US$5.1 to US$1124.30. Gold hit a record US$1226.10 on December 3.

Silver was bid at US$18.33 an ounce against US$18.24. Among other precious metals, platinum was at $1,559.50 an ounce against US$1568.50, while palladium was at US$417.50 against US$421.50.

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