World Market Overview
U.S. stocks notched modest gains Monday as investors sifted through mixed earnings and a weak index of housing sentiment to pin their hopes on strong quarterly reports later this week.
Better than expected earnings from Halliburton helped lift energy stocks, while reports from toy maker Hasbro and Delta Airlines sent their shares falling. But the day's round of earnings did little to budge the market out of its narrow trading range.
Investors said they planned to wait and see if big name companies' reports and results of the European bank stress tests later this week cemented a market movement. International Business Machines reported revenues short of expectations after the bell on Monday and its shares fell.
Johnson & Johnson and Goldman Sachs release reports on Tuesday. The Dow Jones Industrial Average rose 56.53 points, or 0.56%, to 10154, erasing a fraction of its sharp decline last Friday, when the measure plunged 261 points in its biggest drop of the month.
Leading the Dow's gains, Intel rose 57 cents, or 2.7%, to 21.59 on the Nasdaq. Boeing added 1.28, or 2.1%, to 63.18, after saying the market for commercial aircraft is back as it announced an order for 30 of its 777 jets.
However, Bank of America extended its Friday losses after reporting disappointing second quarter revenue, sliding an additional 37 cents, or 2.7%, to 13.61.
The Nasdaq Composite gained 19.18, or 0.88%, to 2198.23. The Standard & Poor's 500 share index added 6.37, or 0.60%, to 1071.25, with all of its sectors in the black.
European Market
European stocks fell Monday, erasing earlier gains after disappointing U.S. housing data knocked sentiment, sparking anew concerns about the pace of recovery in the world's largest economy.
The euro gained against the dollar, while gold fell and oil prices rose slightly. The session began and ended on a sour note.
But while investors seemed happy enough to shrug off Moody's downgrade of Ireland's credit rating and the breakdown of talks between Hungary and the European Union/International Monetary Fund, disappointing data out of the U.S. proved hard to ignore.
Early Monday, ratings agency Moody's Investors Service cut Ireland's credit rating to Aa2 from Aa1, citing a rising debt burden, a weak growth outlook and the high cost of rebuilding a shattered banking system.
Over the weekend, Hungary failed to reach a deal with the IMF and the European Union that would allow it to tap the remainder of its EUR20 billion loan package.
But investors chose instead to concentrate on a burst of M&A activity, which helped to push stocks higher for most of the session.
International Power shares rose over 10% after France's GDF Suez confirmed it is in preliminary talks with the company to merge assets outside of Europe.
The deal would make the French company the majority shareholder in International Power. GDF Suez gained 0.7% on the news.
Also in London, engineering and manufacturing company Tomkins surged nearly 28% following a 325 pence a share bid from Canadian private equity firm Onex Corp. and the Canada Pension Investment Board.
But the upbeat mood unraveled after data showed the National Association of Home Builders housing market index for July fell to 14, versus expectations for a reading of 16.
The pan European Stoxx 600 index closed down 0.8% at 246.18. The U.K.'s FTSE 100 index fell 0.2% to 5148.28, France's CAC-40 index ended down 0.4% at 3486.33 and Germany's DAX fell 0.5% to 6009.11. On Tuesday, investors will look to U.K. public finances and CBI industrial trends.
In major market action: Shares of Royal Philips Electronics fell 3.6% after it reported a surge in second quarter profit to EUR262 million but warned sales growth will slow in the second half of the year. Electrolux dropped 7.8%, after the Swedish electrical appliance maker said its second-quarter sales slipped 0.6%.
Oil giant BP fell 4.7%. The company said Monday that the cost of the response to the oil spill in the Gulf of Mexico to date amounts to approximately $3.95 billion. The U.S. government also is concerned about the sturdiness of the company's temporary well cap.
European aircraft maker Airbus announced more than $9 billion worth of orders for its best selling A320 jets from two leasing companies. Shares of EADS, the parent of Airbus, gained 0.8%. Shares of Nokia ended down 0.07%, while shares of Siemens fell 0.7%.
Nokia Siemens Networks, the telecom equipment venture of Nokia and Siemens, said it's going to buy most of Motorola's wireless network infrastructure assets for $1.2 billion in cash.
Asian Market
Most Asian markets dropped Monday after steep losses on Wall Street Friday prompted selling, though the magnitude of the fall was limited by a strong rebound for Chinese stocks and merger and acquisition news.
Australia's S&P/ASX 200 dropped 1.5%, South Korea's Kospi gave up 0.4%, Taiwan's Taiex slipped 0.2% and Hong Kong's Hang Seng Index shed 0.8%.
Japanese markets were shut for Marine Day. The Shanghai Composite bucked the trend to jump 2.1% as banking, property and consumer stocks rose on hopes that Beijing may not introduce more restrictive policies after several indicators showed last week the economy was cooling.
Poly Real Estate Group shares gained 2.9% and China Merchants Bank added 2.6%, while Bright Dairy & Food rose by the day's 10% limit and Tsingtao Brewery gained 1.8%.
Dealmakers were active around the region. Australian listed Healthscope jumped 10% to $5.94 after U.S. private equity giants Carlyle Group and TPG won a bidding war for the company Monday, sealing the deal with a $6.26 a share offer that valued Healthscope at $2.7 billion.
In Seoul, Honam Petrochemical added 1.6% after the company agreed to buy a 72.6% stake in Titan Chemicals from the Malaysian petrochemical firm's major shareholders for MYR2.35 a share, valuing Titan at $1.29 billion. The offer was pitched at a 27% premium to Titan's last traded price prior to a trade halt Thursday.
On completion of the deal, Honam will be obligated under the Malaysian takeover code to make a mandatory general offer for the remaining shares in Titan. Titan's shares soared 18.9% to MYR2.20 on resumption of trade Monday.
In Hong Kong, Zijin Mining Group shed 3.7% after a Xinhua news agency report over the weekend cited unnamed company figures as saying a new leak was discovered at the company, with about 500 cubic meters of plant waste discharged before it was capped.
The report follows last week's detention of three company executives by Chinese police after an earlier leak at its copper processing plant contaminated a local river.
Elsewhere, India's Sensex fell 0.1%, Singapore's Straits Times Index lost 0.5%, Thailand's SET Index rose 0.3% and Indonesian stocks fell 0.6%. New Zealand's NZX 50 gave up 0.7% and Philippine shares declined 0.5%.
Commodities
Copper and zinc ended higher on the London Metal Exchange Monday, while other metals gave back early gains to end lower in a sluggish session.
Weak figures from U.S. home-builders and a softer tone in most equity markets weighed on the metals. With physical activity having slowed down because of summer holidays, trading interest in Europe and the U.S. was subdued, leaving the metals struggling to find direction.
Inventories declined for all the metals except tin, providing some modest fundamental support to the metals. Crude oil futures settled higher Monday, erasing losses from late last week as U.S. equities markets rose.
Light, sweet crude for August delivery settled 53 cents, or 0.7%, higher at $76.54 a barrel on the New York Mercantile Exchange.
The August contract expires Tuesday, with the more active September contract settling 52 cents higher at $76.90 a barrel. Brent crude on the ICE futures exchange settled 25 cents higher at $76.62 a barrel.
Crude moved higher in line with a rise in equities, which have led oil futures along for most of 2010 as traders try to gauge the pace of the economic recovery.
Gold futures fell Monday to their lowest levels since late May as stability in other markets reduced the demand for an alternative asset.
Gold for August delivery fell $6.30, or 0.5%, to $1,181.90 an ounce on the Comex division of the New York Mercantile Exchange, the lowest price for a most active contract since May 21. Gold prices are down 6% from June's record highs.
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