GLOBAL MARKETS-Shares boosted by M&A activity, German data; Yen climbs

Tue Feb 19, 2013 1:21pm 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 as U.S. stocks were boosted by news of yet another
possible merger that suggested there is still room to the
upside, while a pick-up in German economic sentiment supported
European stocks.
    The S&P 500, hovering near a five-year high, extended
its seven-week winning streak. The benchmark index is already up
7 percent for the year.
    Office Depot Inc, the No. 2 U.S. office supply
retailer, and smaller rival OfficeMax Inc are said to be
in advanced talks to merge.
    The deal would be the latest addition to more than $158
billion in U.S. deals announced thus far in 2013. Last week,
deals were reached for the acquisition of H.J. Heinz Co 
by Berkshire Hathaway and the sale by General Electric
 of its remaining stake in NBCUniversal to Comcast Corp
.  
    In Europe, stocks posted their best finish in three weeks as
stronger-than-expected German sentiment data prompted investors
to return to economically sensitive sectors like autos and
technology after a three-session losing streak. 
    Optimism that the worst of the euro zone debt crisis is over
has helped German investor and analyst sentiment soar to its
highest level in nearly three years this month. 
    In the currency market, the yen climbed after two days of
losses after Japanese Finance Minister Taro Aso said he was not
considering foreign bond purchases. 
    Further boosting the U.S. market, Google shares 
rose more than 1 percent to an all-time high of $804.00.
    Office Depot shares surged 9 percent to $4.99 and OfficeMax
shares jumped 20 percent to $12.92. Shares of larger rival
Staples Inc also shot up 10 percent to $14.19.
 
    "Equity investors have to be encouraged by M&A, since if the
number crunchers are offering large premiums, that shows how
much value is still in the market," said Mike Gibbs, co-head of
the equity advisory group at Raymond James in Memphis,
Tennessee.
    MSCI's world equity index was up 0.7
percent, though markets have been falling for two weeks since a
big run-up in January.
    The Dow Jones industrial average was up 45.69 points,
or 0.33 percent, at 14,027.45. The Standard & Poor's 500 Index
 was up 8.03 points, or 0.53 percent, at 1,527.82. The
Nasdaq Composite Index was up 12.18 points, or 0.38
percent, at 3,204.21. 
    The pan-European FTSEurofirst 300 index 
provisionally closed up 1.1 percent at 1,171.73 - more than
recovering the previous three sessions' losses.
    
    YEN GAINS 
    The yen rose after Japan's 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,
director-general at South Korea's 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 midday New York trading, the dollar fell 0.5
percent to 93.55 yen, well below a peak of 94.22 yen hit on
Monday after Japan escaped direct criticism from its G20 peers
at the weekend. However, it remained above chart support at
93.38 yen, the 200-hour moving average.
    With the dollar having risen about 20 percent since
mid-November, investors have hesitated to re-test last week's
33-month high of 94.47 yen, when it failed to breach a reported
options barrier at 94.50.
    Some strategists said the yen's fall could also slow as
investors become wary of betting on further yen weakness until
there is more clarity on who will become the next Bank of Japan
governor.
    Tokyo has delayed nominating a new governor for its central
bank by a week, fanning talk of friction between the prime
minister and the finance minister on the issue. 
  
    The euro was down 0.2 percent against the yen at 125.21 yen
.
    Against the dollar, the euro recovered by midday to hit the
day's high of $1.3394. It was last at $1.3387, up 0.3
percent in mostly choppy trading. 
    U.S. Treasury debt was little changed. The benchmark 10-year
U.S. Treasury note was 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 38 cents at
$117 per barrel, while U.S. crude for March added 8 cents
to $95.94 a barrel.
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