World Market Overview
U.S. stocks rose Thursday, following generally upbeat economic data and as global bellwether FedEx delivered an optimistic full year forecast. The Dow Jones Industrial Average rose 37 points, or 0.3%, to 11495. Alcoa led the blue chips higher, adding 3.1%, and Bank of America rose 1.3% as it began settlement discussions with some of its largest mortgage investors.
The technology-oriented Nasdaq Composite added 0.6% to 2632. The Standard & Poor's 500-stock index gained 0.5% to 1241, led by industrial and consumer discretionary stocks, industrial and financial companies. All 10 of the S&P 500's sectors traded in positive territory.
Boosting industrials, FedEx rose 1.9%, after the international package shipper raised its full year forecast and said it is more optimistic about the global economy. FedEx said it had record volume in overseas business during its fiscal second quarter, which was weighed down by a variety of labor and legal charges. On the domestic economic front, Thursday's data generally painted a more optimistic picture of the economic recovery. Mid-Atlantic manufacturers saw activity surge in December.
The Federal Reserve Bank of Philadelphia reported its index of general business activity registered its best monthly reading since April 2005. Still, the employment index showed hiring slowed and inflationary pressures broadened. Meanwhile, housing starts rose less vigorously than predicted, and building permits, a gauge of future construction, decreased. But in an encouraging sign for the labor market, initial claims for unemployment benefits fell more than expected even as the previous week's figures were revised slightly upward.
A handful of energy stocks lagged after the U.S. Justice Department late Wednesday filed a civil oil spill lawsuit against Transocean, which owned and operated the Deepwater Horizon oil rig, Anadarko Petroleum and oil giant BP. Transocean shares fell 4%, while Anadarko sank 1.3% and U.S.-listed shares of BP edged up 0.1%.
European markets
Most European stock markets eked out small gains Thursday as political leaders headed to Brussels for a summit on the region's sovereign debt crisis, while shares of BP PLC dropped after the U.S. government filed a lawsuit against the company. The Stoxx Europe 600 index closed up 0.4% at 277.59.
Among Europe's core markets, the French CAC 40 gained 0.2% to 3,885.36 and the German DAX 30 inched 0.1% higher to 7,024.40. The U.K. FTSE 100 index closed virtually unchanged at 5,881.72. EU leaders will meet over the next two days to discuss their response to the sovereign debt crisis, including creating a permanent crisis resolution mechanism and potentially increasing the current bailout fund. In Madrid, the IBEX 35 index slipped 0.1% to 10,002.1, with Banco Santander SA down 0.5% and BBVA SA falling 0.7%.
The losses came as Spain sold EUR2.4 billion of bonds in its final debt auction of the year, though the interest rate the government must pay rose sharply. Moody's Investors Service warned Wednesday it may downgrade Spain's credit rating. Portugal's PSI 20 index fell 0.7% and Italy's FTSE MIB index declined 0.5%.
In London shares of oil giant BP PLC fell 1.4% after the U.S. government filed a civil lawsuit against the firm and eight other companies alleging that negligence and lax safety procedures led to the Gulf of Mexico oil spill earlier this year. Shares in Transocean Ltd., which was also named in the suit, slumped 3.7% on the Swiss market.
Asian markets
Asian stock markets ended mostly lower Thursday as renewed concerns over euro-zone sovereign debt hurt sentiment. Chinese stocks slipped on worries about further policy tightening by Beijing, but Mumbai stocks rose thanks to measures taken by the Reserve Bank of India to improve liquidity.
Japan's Nikkei Stock Average was flat, South Korea's Kospi Composite fell 0.4%, the Shanghai Composite Index was down 0.5%, Hong Kong's Hang Seng Index lost 1.3% and Taiwan's main index rose 0.3%. Sentiment was subdued in some markets after Moody's Investors Service said Wednesday that it may downgrade its ratings on Spanish government debt. In China, stocks continued to reflect persistent concerns about further tightening measures from Beijing.
Financial, metal and automobile stocks were hit, with Ping An Insurance down 2.9%, SAIC Motor off 2.7% and Jiangxi Copper down 2.5% in Shanghai. In Hong Kong, Ping An dropped 4.5% and Jiangxi was down 3.3%, while Dongfeng Motor Group was down 2.2%. In Tokyo, stocks were choppy as gains in some exporters on the yen's weakness against the dollar were partly offset by renewed concerns about euro-zone debt. Exporters were mixed, with Sony off 0.8% and Toyota Motor down 0.2%, while Honda Motor rose 1.3% and Canon gained 1.2%.
Base metals
Base metals closed mostly lower on the London Metal Exchange Thursday as the U.S. dollar firmed and stock markets fluctuated, with investor sentiment decidedly cautious amid ongoing fears over the European sovereign debt situation. A two day summit of European Union heads of state in Brussels kept trading across the financial markets generally subdued as investors waited to see if leaders announce new moves to tackle debt problems in the euro zone's troubled economies.
Renewed concerns over further monetary tightening in China, the world's top consumer of base metals, added to the downward pressure on the markets, as did soft U.S. housing data. While new figures showed housing starts rose 3.9% in November, building permits, a gauge of future construction, decreased 4.0%.
The figures from the Commerce Department also showed that, compared with November 2009, new home construction is down 5.8%. The LME's three-month copper contract often takes cues from new housing data, as the metal is used widely in construction. Nickel and tin were the only metals to end the day higher, with three month tin closing up a solid 1.2%, at $26,100 a metric ton, supported by ongoing supply fears.
Oil futures retreated Thursday, as investors pulled back a day after the U.S. government reported a large drop in crude stockpiles. Light, sweet crude for January delivery settled 92 cents lower at $87.70 a barrel on the New York Mercantile Exchange.
Comex gold futures fell as traders booked profits, keeping in mind the year end and a new proposal to curb speculation in the commodity markets. The most actively traded contract, for February delivery, settled down 1.1%, or $15.20, at $1,371 a troy ounce on the Comex division of the New York Mercantile Exchange.
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