US markets

U.S. stocks erased most of their early losses Thursday amid reports that Egyptian President Hosni Mubarak will soon resign. The Dow Jones Industrial Average was down 22 points, or 0.2%, at 12218 recently, while the Standard & Poor's 500-stock index was fractionally lower at 1320 and the technology-heavy Nasdaq Composite also was fractionally lower at 2786.

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Traders said that while a regime change in Egypt could give the market a brief boost, a departure by Mubarak wouldn't do much to lessen anxiety about the rising food and commodity prices in emerging markets, said Andrew Brenner, managing director at Guggenheim Capital Markets. When the unrest in Egypt first erupted in late January, worries over the rising tensions there sent U.S. stocks reeling on Jan. 28 to their biggest one day decline in months, prompting the Dow's first weekly drop in more than two months. Crude oil prices surged as investors feared the turmoil could result in a closure of the Suez Canal. But U.S. stocks quickly recovered their losses.

The Dow has now closed higher for eight straight days, its longest winning streak since March. The climb has sent the Dow to its highest level since June 2008. Crude oil prices remain elevated but have come off their highs, as investors have been reassured to see the Suez Canal has remained open. Stocks have been lower all day despite better than expected U.S. jobless claims, as the Dow sagged under the weight of technology bellwether Cisco Systems' disappointing earnings report and weakness in the consumer sector. Cisco slumped 13% as its outlook and margins disappointed investors. An 18% drop in profit and a fourth consecutive quarterly decline in margins were viewed as signs of growing competitive pressures in Cisco's core network switching business, plus more sales of less profitable consumer products. Also weighing on the Dow, UBS analysts cut their investment rating on shares in Wal-Mart as they predicted negative comparable-store sales growth when the retailer reports earnings later this month. Wal-Mart's stock fell 2.1%.

European markets

Renewed worries over the euro zone's sovereign debt problems weighed down European stock markets Thursday, while a 5.8% drop for Credit Suisse Group AG after net profit fell short of forecast highlighted pressure on the banking sector. The Stoxx Europe 600 index ended with a 0.2% decline to 286.78, marking the continental gauge's third straight day of losses. Pressure was tempered as U.S. equities trimmed early losses and news reports said Egyptian President Hosni Mubarak may soon step down.

In Spain, the IBEX 35 index fell 1.3%, with Banco Santander SA down 2.6% and BBVA SA down 2.1%. Portugal's PSI 20 index fell 1.8%, with Banco Espirito Santo SA down 4.4% and Banco Comercial Portugues SA off 3.3%. Those losses came as the premium demanded by investors to hold peripheral euro zone debt over German bonds continued to soar, with the 10 year yield on Portuguese government bonds at one point rising to a euro-era high of more than 7.6%. Bond yields later retreated as the European Central Bank was seen buying Portuguese bonds. Market conditions reflect a delayed reaction to the competitiveness pact floated last Friday by Germany and France during a European Union summit a proposal that didn't go down well with other countries, said Koen De Leus, a strategist at KBC Securities Bolero in Brussels.

The U.K.'s FTSE 100 index ended down 0.5% at 6,020.01. Shares of HSBC Holdings PLC fell 1.1%. Miners were also lower as commodity prices fell, with Antofagasta PLC down 1.8% and Xstrata PLC declining 1.7%. Shares of Diageo PLC fell 4.6% after the spirits giant reported an 18% rise in net profit for the first half but missed analyst forecasts. France's CAC 40 index closed up 0.1% at 4,095.14, with gains limited as banks fell. A standout gainer was Alcatel-Lucent, which surged more than 18% after the company posted a jump in fourth-quarter profit and strong revenue growth, particularly in markets in the Western Hemisphere. Societe Generale SA lost 1.7%, while BNP Paribas SA declined 1.1%. In Germany, the DAX 30 index rose 0.3% to end at 7,340.28. Shares of Deutsche Boerse AG rallied 4.6%, gaining a day after the German exchange and NYSE Euronext Inc. announced they are in advanced talks on a merger.

Asian markets

Asian equity markets ended mostly lower, with inflation concerns weighing on shares around the region. The Nikkei Stock Average edged down 0.1%, while South Korea's Kospi dropped 1.8%, Hong Kong's Hang Seng Index lost 2.0%, and China's Shanghai Composite added 1.6%. Shares of Australia's securities' exchange operator ASX Ltd. jumped 4.7% on hopes the Australian government will approve its proposed merger with Singapore Exchange after the London Stock Exchange agreed to merge with TMX Group and Deutsche Boerse said it's in advanced merger talks with NYSE Euronext. SGX shares ended down 0.1% after trading up as much as 2.3% intraday. In Hong Kong, Hong Kong Exchanges & Clearing was among the worst-performing blue chips, falling 4.9%, with the company saying it hasn't identified any significant alliance opportunities, although it reiterated that it would be open to suitable partnerships should opportunities arise. Inflation expectations weighed on the broader Hong Kong market amid continued concerns about further possible monetary tightening measures in China. Hong Kong-listed mainland developers extended Wednesday's declines, as the latest rate hike will place a heavier burden on mortgage borrowers and boost the interest on developers' debts. China Overseas Land dropped 3.6% after falling 2.1% Wednesday and China Resources Land ended 3.6% lower after declining 3.9% Wednesday. Mainland shares shook off inflation concerns and climbed, with automakers rising on strong sales data and software companies strengthening after the government introduced new policies to boost the industry. Among auto plays, Jiangling Motors and SAIC Motor each surged by the 10% daily limit, while China National Software & Service gained 5.0%.

Base metals

Base metals closed mostly lower on the London Metal Exchange Thursday, weighed down by a stronger dollar and a distinct lack of buying enthusiasm from China. After falling to its lowest price since Feb. 1 in early trade, LME three-month copper recovered some ground later in the day to close in positive territory, at $9,940 a metric ton, up 0.2% on the day. But the conspicuously slow return of Chinese buying after the Lunar New Year is keeping copper below previous record levels, said traders, adding that as long as Chinese interest is tepid, prices should remain capped. Others praised the market's recent correction as a healthy development, particularly for copper, which has seen prices running away from fundamentals in recent weeks.

Oil

Crude futures were little changed Thursday after spiking briefly toward $88 a barrel, as expectations grow that Egyptian President Hosni Mubarak will step down. Light, sweet crude for March delivery settled 2 cents higher at $86.73 a barrel on the New York Mercantile Exchange, after rising as high as $87.90 earlier in the session. Gold finished nearly unchanged as traders balanced renewed concerns about stability in Egypt with the damping influence of a stronger dollar. The thinly traded February delivery contract settled down 0.2%, or $2.90, at $1,361.90 per troy ounce on the Comex division of the New York Mercantile Exchange. The most actively traded contract, for April delivery, settled down 0.2%, or $3, at $1,362.50 per troy ounce.
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