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Pre Market Briefing, Including US existing home sales declined more-than-expected in February

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UK Market Snapshot

UK markets finished higher yesterday, led by gains in financial, telecom and engineering sector stocks, as fears of a nuclear meltdown in Japan subsided, and after M&A activity boosted investor confidence. Engineering firms, Weir Group and Rolls Royce gained 4.5% and 3.5%, respectively, after brokers upgraded their rating on both the stocks. Vodafone and BT Group rallied 3.6% and 2.4%, respectively, after AT&T Inc agreed to buy T-Mobile USA from Deutsche Telekom for $39 billion. Financial sector stocks, Legal & General Group, Barclays, Aviva, RSA Insurance and Standard Chartered climbed between 1.8% and 3.2%. Regus surged 16.0%, after the company reported higher-than-anticipated full-year earnings. The FTSE 100 advanced 1.2% to close at 5,786.1, while the FTSE 250 edged up 1.5% to settle at 11,511.2.

US Market Snapshot

US markets closed higher yesterday, on easing concerns over nuclear fallout in Japan. Oil sector stocks, ConocoPhillips, Exxon Mobil and Chevron rallied 2.9%, 2.5% and 2.3%, respectively, after crude oil prices rose. AT&T climbed 1.1%, after the company announced its plans to buy T-Mobile USA from Deutsche Telekom for about $39 billion. AIG surged 6.0%, despite reporting a preliminary first quarter pre-tax insurance loss of $1.0 billion for its property casualty insurance unit Chartis. Tiffany & Co surged 5.1%, after the company reported a rise in full-year revenue. Anadarko Petroleum jumped 3.5%, after the company announced a deal with a subsidiary of Korea National Oil Corp to sell one-third stake of Anadarko's interest in the company's Maverick Basin assets located in southwest Texas for $1.55 billion. The DJIA edged up 1.5% to settle at 12,036.5, while the NASDAQ advanced 1.8% to close at 2,692.1. The S&P 500 gained 1.5% to settle at 1,298.4.

Europe Market Snapshot

Other European markets finished higher yesterday, with telecom sector stocks recording gains, as M&A activity bolstered investor confidence. Deutsche Telekom surged 11.3%, after AT&T Inc agreed to buy T-Mobile USA from the company for $39 billion. France Telecom climbed 3.5%. Banks, Societe Generale, Credit Agricole, Natixis, BNP Paribas and Deutsche Bank climbed between 1.9% and 3.6%, as the risk appetite amongst investors improved. Man Se jumped 3.6%, after the company posted fourth-quarter net income of €342 million, as opposed to a loss last year. The FTSEurofirst 300 index gained 1.8% to close at 1,107.9. Among other European markets, the German DAX Xetra 30 edged up 2.3% to close at 6,816.1, while the French CAC-40 advanced 2.5% to settle at 3,904.5.

Asia Market Snapshot


Markets in Asia are trading higher this morning amid hopes that the nuclear crisis in Japan will be contained. In Japan, Tokyo Electric Power is trading 16.8% higher. JX Holdings is trading 10.7% higher, after the company’s refining unit, JX Nippon Oil & Energy Corp, resumed operations. Steelmakers, JFE Holdings and Nippon Steel are trading 9.5% and 7.9% higher, respectively, on speculation that companies would benefit from a surge in rebuilding activities. In Hong Kong, Cnooc is trading 2.1% higher, in line with a rise in crude oil prices. In South Korea, Samsung Heavy Industries is trading 3.2% higher, on news that it is in talks with a Hong Kong client for an $800 million order. Hyundai Heavy Industries is trading 3.1% higher. The Nikkei 225 index is trading 3.9% higher, at 9,570.4. Hang Seng index is trading 0.2% up, at 22,737.9, while the Kospi index is trading 0.6% higher, at 2,014.8.

Commodity, Currency and Fixed Income Snapshots

Crude Oil


At 0446GMT today, Brent crude oil one month futures contract slid marginally 0.05% or $0.06, to trade at $114.90 per barrel. Yesterday, the contract rose 0.90% or $1.03, to settle at $114.96 per barrel, as growing unrest in the Middle East raised concerns about potential disruption of oil supply from the region.

Gold


At 0446GMT today, gold futures contract rose 0.20% or $2.80, to trade at $1,429.20 per ounce. Yesterday, the contract climbed 0.73% or $10.30, to close at $1,426.40 per ounce, as investors continued to favour the yellow metal as a safe-haven asset amid worsening political situation in Libya and on fears over a probable nuclear meltdown in Japan.

Currency

At 0446GMT today, the EUR strengthened against the USD, gaining a marginal 0.06%, to trade at $1.4222. Yesterday, the EUR gained 0.23% versus the USD, to close at $1.4213, after European Central Bank (ECB) President, Jean-Claude Trichet announced that the ECB is likely to raise interest rates as soon as in April 2011 to combat rising inflation in the Euro-region countries.

At 0446GMT today, the GBP weakened against the USD, losing a marginal 0.01%, to trade at $1.6305. Yesterday, the GBP rose against the USD, advancing 0.45%, to close at $1.6306, after National Association of Realtors (NAR) reported that the existing home sales in the US fell 9.6% to an annual rate of 4.88 million in February, following an upwardly revised 5.40 million recorded in January. Additionally, Federal Reserve Bank of Chicago reported that its headline national activity index fell to a reading of -0.04 in February, following a revised reading of -0.01 posted in January.

Fixed Income

In the US, long term treasury prices fell yesterday, pushing the yields on 30-year bonds higher, after the US Treasury Department stated that it would commence selling its portfolio of mortgage-backed securities bought during the financial crisis in 2008 and on easing concerns over Japan’s nuclear crisis as the nation made progress in stabilising its damaged nuclear reactors. Yields on 10-year notes increased 6 basis points to 3.34%, while yields on 2-year notes increased 6 basis points to 0.67%. Meanwhile, 30-year bond yields increased 2 basis points to 4.45%.

Key Economic News

*Swiss M3 money supply growth accelerated in February*


On an annual basis, M3 money supply in Switzerland grew 7.7% in February, following a growth rate of 6.8% recorded in January.

*Rate increase likely, says ECB’s Trichet*

European Central Bank President (ECB), Jean-Claude Trichet reiterated that inflation in the Euro-zone is ‘on the rise’ and the risks to prices are on the upside. He further reaffirmed that the ECB is likely to increase interest rates as soon as April 2011, saying he has “nothing to add” to the ECB's policy statement on 3 March 2011, when the central bank cautioned that “strong vigilance” was needed on inflation.

*US existing home sales declined more-than-expected in February*

National Association of Realtors (NAR) reported that the existing home sales in the US fell 9.6% to an annual rate of 4.88 million in February, following an upwardly revised 5.40 million recorded in January. Market had expected sales to drop to 5.15 million in February, compared to an annual rate of
5.36 million originally reported for the previous month.

*Chicago Fed index dropped in February*

Federal Reserve Bank of Chicago reported that its headline national activity index fell to a reading of -0.04 in February, following a revised reading of
-0.01 posted in January.

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