GLOBAL MARKETS-Shares boosted by M&A activity, German data; yen gains

Tue Feb 19, 2013 10:45am EST

* Wall St opens higher on M&A activity; S&P extends
seven-week winning streak
    * Google shares hit all-time high at $804
    * European shares gain after strong German data
    * Yen gains as Japan officials' rift muddles policy view


    By Angela Moon
    NEW YORK, Feb 19 (Reuters) - Global stock markets rose on
Tuesday, with U.S. stocks boosted by merger and acquisition
activity, while a pick-up in German economic sentiment supported
European stocks.
    But Wall Street's gains were capped as the S&P 500 
hovered near a five-year high, extending its seven-week winning
streak. Investors scrambled for new catalysts to push the market
higher with the benchmark index already up 6.6 percent for the
year.
    In Europe, shares chalked up their strongest gains in a week
after losing around 1.5 percent since the end of January.
Following last week's GDP figures showing a weaker-than-expected
 end to 2012 in the euro zone, Germany's ZEW survey of investors
and analysts brightened the mood as it comfortably beat
expectations and hit its highest level since April 2010.
 
    Boosting the U.S. market, Google shares rose more
than 1 percent to an all-time high of $804.00.
    Office Depot Inc, the No. 2 U.S. office supply
retailer, was in advanced talks to merge with smaller rival
OfficeMax Inc and a deal could come as early as this
week, according a person familiar with the matter. Office Depot
shares surged 17 percent to $5.37 and OfficeMax shares jumped
25.5 percent to $13.49. Shares of larger rival Staples Inc
 also shot up 14.3 percent, to $14.81. 
    "M&A is providing an enormous amount of enthusiasm in
pockets and it is really a function of the cost of money, the
cost of borrowing. It is a sign there is a shift going on in the
economy that is very, very positive," said Peter Kenny, managing
director at Knight Capital in Jersey City, New Jersey.
    "At the same time, if you take the M&A activity out of the
picture, you will see that many on the Street are expecting a
pullback."
    MSCI's world equity index was up 0.6
percent, though markets have been falling for two weeks since a
big run-up in January.
    The Dow Jones industrial average was up 43.37 points,
or 0.31 percent, at 14,025.13. The Standard & Poor's 500 Index
 was up 6.36 points, or 0.42 percent, at 1,526.15. The
Nasdaq Composite Index was up 10.97 points, or 0.34
percent, at 3,203.00. 
    The FTSEurofirst 300 rose 1.1 percent, led by a 1.8
gain on Paris' CAC-40 and a 1.5 percent rise for
Frankfurt's DAX.
    In the currency market, the yen climbed after two days of
losses after Japanese Finance Minister Taro Aso said he was not
considering buying foreign bonds as part of efforts to ease
monetary policy, a day after Prime Minister Shinzo Abe said this
was an option.
    That highlighted the open disagreement between the two
Japanese officials, which has somewhat muddled the outlook for
the country's monetary policy and created two-way risk for
dollar/yen trades.
    Markets still expect Japan to ease policy aggressively -- a
negative for the yen -- but the approach is less clear-cut,
which could slow the currency's fall.
    In addition, although Japan was not singled out at this
weekend's Group of 20 meeting for monetary and fiscal measures
that have resulted in yen weakness, Choi Hee Nam, South Korea's
director-general at its finance ministry, said Japan's policies
were not endorsed by the group and did spark controversy,
according to a report from Bloomberg News. 
    "Developments in the past few days highlight the fact that
there are internal rifts on the policy approach and there may be
external constraints on what sort of easing measures Japan's
partners will deem acceptable," said Shaun Osborne, chief
currency strategist at TD Securities in Toronto.
    He added that near-term downside risks loom large for the
dollar against the yen.
    In early New York trading, the dollar fell 0.5
percent to 93.50 yen, well below a peak of 94.22 yen hit on
Monday after Japan escaped direct criticism from its G20 peers
over the weekend. However, it remained above chart support at
93.38 yen, the 200-hour moving average.
    The euro was down 0.5 percent against the yen at 124.81 yen
.
    Against the dollar, the euro was little changed at $1.3349
 after hitting session highs on an upbeat German economic
sentiment survey. 
    U.S. Treasury debt was little changed, with the benchmark
10-year U.S. Treasury note yielding 2.0034 percent. 
    Brent crude oil fell for a third session in a row on signs
of lackluster European growth and easing geopolitical tensions.
    Brent crude for April delivery was down 66 cents at
$116.72 per barrel. U.S. crude for March fell 17 cents
from Friday's close to $95.69.
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