From Morrison Securities Pty Ltd.

U.S. Stock Markets

U.S. stocks were ahead but off session highs Monday afternoon after a Financial Times report claiming that Standard & Poor's warned six triple A-rated euro-zone members that they may suffer ratings downgrades as a result of the deepening sovereign-debt crisis.

The Dow Jones Industrial Average rose 74 points, or 0.6%, to 12094 in afternoon trading, after triple-digit gains for most of the session. The S&P 500 gained 13, or 1%, to 1257. The Nasdaq Composite added 30, or 1.2%, to 2657. The report said that the U.S. ratings agency is poised to announce later in the day that it is putting Germany, France, the Netherlands, Austria, Finland and Luxembourg on "creditwatch negative," which signals the chance of a downgrade within 90 days.

Stocks roughly halved their session gains in afternoon trading, taking a bite out of what started as another day of strong gains. Investors have shown more confidence lately that European leaders can tackle the sovereign-debt crisis. Earlier, stocks had posted stronger gains after French President Nicolas Sarkozy and German Chancellor Angela Merkel said they had agreed on a new euro-zone fiscal program to combat the debt crisis, and Italy's new prime minister outlined a new austerity plan.


European Stock Markets
European stocks rose Monday, as the German and French leaders reiterated their support for a new European Union treaty that would include tougher fiscal rules for the euro zone.

The Stoxx Europe 600 climbed 0.8% to end at 242.75. Market sentiment was buoyed after German Chancellor Angela Merkel and French President Nicolas Sarkozy said at a joint press conference in Paris that they want a new EU treaty and automatic sanctions against countries which are breaking budget rules.

The two leaders will present their proposals at Friday's summit in Brussels of all 27 EU member states, where investors are hoping to see an agreement to press forward with measures to stem the debt crisis. Bank shares rose sharply in Europe. KBC Group NV rallied nearly 13% in Brussels, Lloyds Banking Group PLC rose 6.3% in London and Banco Espirito Santo SA climbed 4.2% in Lisbon.

Italian stocks posted particularly sharp gains after the government of Prime Minister Mario Monti adopted a package of budgetary and economic-policy measures Sunday aimed at shoring up Italy's finances. In Milan, Banco Popolare SC surged nearly 12%, UniCredit SpA rose 5.4% and Intesa Sanpaolo SpA gained 3.9%, boosting the FTSE MIB index, which advanced 2.9% to 15,926.47.

Shares of aerospace and defense group Finmeccanica SpA rallied 9.8% and those of car maker Fiat SpA rose 6.2%. In London, Michael Page International PLC dropped 5.2% and was the biggest loser on the Stoxx 600. The staffing firm said Monday it now expects 2011 pre-tax profit will be marginally below the bottom end of the current range of analyst forecasts. Germany's DAX 30 index gained 0.4% to 6,106.09, as insurer Allianz SE rose 2.4%.

Commerzbank fell 4.1% after announcing it will repurchase as much as EUR600 million in trust-preferred securities to strengthen its capital structure and increase its core Tier 1 capital ratio. France's CAC-40 index climbed 1.2% to 3,201.28, led higher by banks. BNP Paribas SA rose 4.9% and Societe Generale SA gained 6.6%. The U.K.'s FTSE 100 index rose 0.3% to 5,567.96, led higher by Lloyds and by Royal Bank of Scotland Group PLC, which rose 5.3%.

Asia-Pacific Stock Markets
Asian stock markets ended mostly higher Monday, as investors hoped for progress in curbing Europe's debt crisis in what could be a crucial week for the troubled region. Hong Kong's Hang Seng Index finished 0.7% higher, Japan's Nikkei Stock Average rose 0.6%, and South Korea's Kospi gained 0.4%.

The Shanghai Composite Index bucked the regional trend,losing 1.2%. Banking shares were among the gainers in Japan, with Sumitomo Mitsui Financial Group up 2.2%, Mizuho Financial Group up 2.9% and Nomura Holdings 2.8% higher.

Many Asian exporters also gained ground, with Elpida Memory up 4.1% in Tokyo and Samsung Electronics 1.5% higher in Seoul, while Li & Fung rose 3.3% and Lenovo Group added 2% in Hong Kong. Notable decliners in the region included mainland Chinese airlines, which traded mostly lower after UBS downgraded its 2012-2013 passenger-traffic growth forecasts for the sector, and as China Business News reported a fuel-surcharge hike for some flights.

In Shanghai, China Eastern Airlines fell 3.3%, Air China lost 3.2% and China Southern Airlines dropped 4.5%, with rising oil prices also weighing on the shares. In Hong Kong, however, the carriers fared somewhat better, with China Eastern ending flat, China Southern losing 1.2% and Air China managing a 0.8% gain.

Commodities

Base metals closed mostly higher on the London Metal Exchange Monday, supported by an uptick in macroeconomic confidence after the leaders of Germany and France called for reforms to address the euro zone crisis. Nickel saw the steepest gains Monday, closing 4.3% higher on the day at $18,505/ton.

However, the move was more a reflection of technical factors, according to Standard Bank. Flagship three-month copper was 0.7% higher at the close at $7,939.50 a metric ton.

Crude oil futures prices pared gains by the close of trading Monday after a Financial Times report claiming that Standard & Poor's had warned six triple A-rated euro-zone members that they may suffer ratings downgrades as a result of the deepening sovereign-debt crisis.

Crude had earlier pushed above $102 a barrel, lifted by optimism over a summit this week by European leaders to address the euro-zone's sovereign debt crisis. Light, sweet crude for January delivery settled 3 cents higher at $100.99 a barrel on the New York Mercantile Exchange.

Gold retreated 1% as a plan for euro-zone budget reforms proposed by Germany and France struggled to soothe investor worries about Europe's widespread sovereign debt problems. Gold prices pared earlier losses but remained subdued ahead of a week-long series of Europe-focused meetings. The most actively traded contract, for February delivery, fell $16.80, or 1%, to settle at $1,734.50 a troy ounce on the Comex division of the New York Mercantile Exchange.