GLOBAL MARKETS-M&A deals boost Wall St near record; yen climbs

Tue Feb 19, 2013 4:39pm EST

* M&A deals lift Wall Street shares closer to record high
    * Google shares hit all-time high
    * European shares gain after strong German data
    * Yen rises broadly on doubts over monetary outlook


    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 Index, hovering near a five-year high,
extended its seven-week winning streak. The benchmark index is
already up more than 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 merger talks.
    A deal would be the latest addition to more than $158
billion in U.S. deals announced thus far in 2013. Last week,
Berkshire Hathaway and a partner agreed to acquire H.J.
Heinz Co, and General Electric sold its remaining
stake in NBCUniversal to Comcast Corp. 
 
    "Deals are good for the market," said Frank Lesh, a futures
analyst and broker at FuturePath Trading LLC in Chicago. "The
fact that they're being done is a positive."
    European shares rebounded on Tuesday from three days of
losses, with stronger-than-expected German sentiment data
prompting investors to return to sectors like autos and
technology.
    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. Japanese Finance Minister Taro Aso said he was not
considering foreign bond purchases. 
    Further boosting the U.S. market, Google shares hit
an all-time high of $807.00. The stock closed up 1.8 percent at
$806.85.
    Office Depot rose 9.4 percent to $5.02 and OfficeMax shares
jumped 21 percent to $13.00. Shares of larger rival Staples Inc
 shot up 13 percent to $14.65. 
    MSCI's world equity index rose 0.8 percent,
though markets have been falling for two weeks since a big
run-up in January.
    The Dow Jones industrial average ended up 53.91
points, or 0.39 percent, at 14,035.67. The Standard & Poor's 500
Index  was up 11.15 points, or 0.73 percent, at 1,530.94.
The Nasdaq Composite Index  gained 21.56 points, or 0.68
percent, at 3,213.59. 
    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 against the dollar and euro as disagreement
between Japanese officials raised doubts over how aggressively
Japan will ease its monetary policy.
    Japanese Finance Minister Taro Aso said on Tuesday 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. 
    Expectations Japan will take further stimulative steps to
fight deflation have driven the dollar up 8 percent versus the
yen this year. But the pace of the yen's fall has slowed lately
as investors wait to see if words will translate into action.
    "The comments suggested that there may be growing
differences between the prime minister and the finance minister,
which could threaten the pace of policy easing going forward,"
said Omer Esiner, chief market analyst at Commonwealth Foreign
Exchange in Washington, D.C.
    The dollar fell 0.4 percent to 93.53 yen, well below
a peak of 94.22 yen hit on Monday after Japan escaped direct
criticism from its G20 peers the weekend.
    Choi Hee Nam, director-general of South Korea's finance
ministry, said that while Japan was not singled out at this
weekend's Group of 20 meeting, its monetary and fiscal policies
that have weakened the yen were not endorsed by the group and
did spark controversy, according to Bloomberg News.
 
    The euro was down 0.1 percent at 125.27 yen.
Against the dollar, the euro rose 0.3 percent to $1.3391.
    Europe's shared currency also rose sharply against sterling,
gaining 0.6 percent to 86.78 pence on growing
speculation that the UK could lose its triple-A credit rating.
 
    The dollar index, meanwhile, slipped 0.1 percent to 80.464,
still within striking distance of the 80.727 six-week
high hit on Monday.
    U.S. government debt prices fell on Tuesday as gains in the
stock market reduced the appeal of safer but low-yielding bonds,
though worries over possible federal spending cuts and the
outcome of the upcoming Italian election limited losses.
    On below-average volume, benchmark 10-year Treasury notes
 last traded 7/32 lower in price for a yield of 2.03
percent, up 2.5 basis points from Friday. The 10-year yield has
been bouncing in a 20-basis-point range in the past three weeks.
    Oil prices rose on Tuesday as traders grew bullish amid a
rally in U.S. stock markets, even as U.S. pipeline bottlenecks
and European economic concerns threatened to weigh on oil
markets.
    Brent for April rose 14 cents to $117.52 a barrel,
tracking U.S. futures higher in afternoon trade, after earlier
falling more than 80 cents a barrel on European economic
concerns.
    U.S. crude for March delivery rose 80 cents to settle
at $96.66 a barrel. The March contract expires on Wednesday.
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