20110705 1008 Global Market Related News.

DJIA chart reading : upside biased with possible pullback correction.

Hang Seng chart reading : side way range bound.

Stocks at 4-1/2 week high as risk back in favour
LONDON, July 4 (Reuters) - World stocks hit a 4-1/2 week high and oil rose as investors grew confident over the prospects for the global economy after Greece avoided an early default on its sovereign debt and on signs China's economy is unlikely to make a hard landing.
"Greece was always going to be a sticking point and this issue of debt rollover and rating agencies views will be something that the market will keep an eye out for," said Jeremy Stretch, head of currency strategy at CIBC World Markets.

Asian Stocks Climb, Led by Raw Material Producers (Source: Bloomberg)
Most Asian stocks advanced, driving the regional benchmark index higher for a sixth day, as raw material producers advanced after metal prices increased and amid optimism Greece will avoid a default. BHP Billiton Ltd. (BHP), the world’s largest mining company, advanced 0.7 percent in Sydney. Rio Tinto Group, the world’s second-largest mining company by sales, climbed 0.4 percent. Japanese shares swung between gains and losses as the country prepared to release its second post-earthquake emergency budget. 77 Bank Ltd., a Japanese lender in the Tohoku region, advanced 2.5 percent after Nomura Holdings Inc. said it was bullish on regional banks.

Emerging-Markets Stock Index Climbs to Two-Month High; Bovespa Advances (Source: Bloomberg)
Emerging-market stocks rose, driving the benchmark index to a two-month high, on speculation China will refrain from boosting interest rates and as Morgan Stanley recommended investors buy more developing-nation equities. The MSCI Emerging Markets Index climbed 1.1 percent to 1,169.49 at 5 p.m. New York time, closing at the highest level since May 4. Brazil’s benchmark Bovespa increased 0.8 percent to gain for a sixth day, the longest winning streak since April, as traders pared bets for higher borrowing costs in Brazil

Republicans May Take ‘Mini’ Debt-Ceiling Deal (Source: Bloomberg)
Republicans might accept a “mini” deal with the Obama administration on raising the debt limit, Senator John Cornyn of Texas, a Republican leader, said yesterday on “Fox News Sunday.” The idea may delay politically difficult decisions if it’s structured to postpone action on a larger package of spending cuts or revenue increases until after the 2012 election cycle, an analyst said. “What we’ve been calling for is to have a down payment that’s as big as possible,” Marc Goldwein, former associate director of President Barack Obama’s debt commission, said yesterday in an interview.

U.S. Home Prices Poised to Climb as Foreclosures Wane, HUD’s Donovan Says (Source: Bloomberg)
Prices for U.S. homes may climb as soon as the third quarter, ending declines as foreclosures decline make more home available for sale, Housing and Urban Development Secretary Shaun Donovan said. “It’s very unlikely that we will see a significant further decline,” Donovan said yesterday on CNN. “The real question is when will we start to see sustainable increases. Some think it will be as early as the end of this summer or this fall.”

U.S. manufacturing rises but consumers remain wary
NEW YORK, July 1 (Reuters) - The pace of growth in U.S. manufacturing picked up for the first time in four months in June, surprising investors and fueling optimism the recent economic slowdown will be temporary.
The picture that emerged from other data released on Friday, however, was less encouraging. Although lower gasoline prices helped temper the gloomy mood among consumers last month, their expectations on the economy remained bleak, according to a survey.

U.S. Stocks Surge Most Since July 2009 on Greece, Manufacturing Report (Source: Bloomberg)
U.S. stocks posted the biggest weekly rally in two years, with the Dow Jones Industrial Average rising 648 points, after Greece took action to avoid a default, Nike Inc. (NKE)’s earnings topped analyst estimates and U.S. manufacturing growth rebounded. Caterpillar Inc. (CAT), United Technologies Corp. (UTX) and 3M Co. (MMM) jumped at least 6.3 percent, pacing gains among companies most- dependent on economic growth. Nike, the world’s largest sporting-goods company, climbed 13 percent. Visa Inc. (V) surged 20 percent, the most in the Standard & Poor’s 500 Index, as the Federal Reserve moved to set a less-severe limit on debit-card swipe fees than previously proposed.

VIX Falls Most in Three Months as Stocks Rally, Concern Over Greece Eases (Source: Bloomberg)
The benchmark index for U.S. stock options decreased the most in three months as stocks rallied amid optimism Greece will contain its debt crisis and a rebound in U.S. manufacturing. Europe’s VStoxx slumped. The VIX, as the Chicago Board Options Exchange Volatility Index is known, fell 25 percent this week to 15.87 as of 4:15 p.m. in New York. Earlier, it dropped to 15.12, the lowest intraday level since May 2. The index measures the cost of using options as insurance against declines in the Standard & Poor’s 500 Index, which climbed 1.4 percent today for its fifth straight advance. August VIX futures fell 4 percent to 18.

China Non-Manufacturing Index Slumps in June, Adding to Slowdown Concerns (Source: Bloomberg)
China’s non-manufacturing industries expanded at the slowest pace in four months in June, sending stocks higher on speculation the government may ease monetary tightening policies aimed at taming inflation. A purchasing managers’ index dropped to 57 from 61.9 in May, the China Federation of Logistics and Purchasing said on its website yesterday. A reading above 50 indicates expansion.

South Korea’s Won Trades Near Three-Year High; Bonds Advance on Inflows (Source: Bloomberg)
South Korea’s won traded near a three-year high on speculation policy makers will favor appreciation to help tame inflation. Government bonds rose after foreigners added to their holdings for a fifth month in June.

Japanese Stocks Are Little Changed After Five-Day Rally; Tepco Climbs (Source: Bloomberg)
Japanese stocks were little changed after a five-day rally that pushed the Nikkei 225 Stock Average to its highest level in two months. Tokyo Electric Power Co. climbed. The Nikkei 225 was little changed at 9,9969.66 as of 9:09 a.m. in Tokyo. The broader Topix rose 0.1 percent to 865.16, with equal numbers of stocks rising and falling.

Euro Trades Near Three-Week High as ECB Seen Tightening Faster Than Fed (Source: Bloomberg)
The euro was 0.3 percent from a three-week high against the dollar on speculation the European Central Bank will continue to lead its U.S. counterpart in monetary tightening. The euro was 0.2 percent from a four-week high against the yen on prospects the ECB will raise interest rates on July 7 even as concerns about debt-stricken Greece linger. Data this week are forecast to show U.S. employers expanded payrolls at a pace that failed to reduce the jobless rate, adding to bets the Federal Reserve will keep interest rates near zero for longer. New Zealand’s dollar climbed to a record after a report showed business confidence in the nation rebounded in the second quarter.

Greek Rescue Effort by Europe May Earn the Country Default Rating From S&P (Source: Bloomberg)
Europe’s effort to pull Greece back from the brink may result in a default rating by Standard & Poor’s, exposing a critical flaw in the drive to press creditors to assume a share of the bailout cost. Standard & Poor’s said today a rollover plan serving as the basis for talks between investors and governments would qualify as a distressed exchange and prompt a “selective default” grade. That may leave the bondholders unwilling to complete the transaction and the European Central Bank unable to accept Greek government debt as collateral, impairing the lifeline it has provided the country’s banks.

Greece Buys Time as Euro Ministers Press Investor Talks to Wrap Up Bailout (Source: Bloomberg)
Europe pulled Greece back from the brink of default, gaining time to hammer out a formula for ending the debt crisis. European finance ministers authorized an 8.7 billion- euro ($12.6 billion) loan payout to Greece by mid-July, basing a second three-year bailout package on talks to corral banks into maintaining their Greek debt holdings. A proposed debt rollover plan for Greece may still put the country in “effective default,” Standard & Poor’s said today.

S&P warning sows new uncertainty on Greek rescue
ATHENS, July 4 (Reuters) - Credit ratings agency Standard & Poor's cast new uncertainty on Monday over euro zone efforts to rescue debt-crippled Greece by warning it would treat a French bank plan for a rollover of privately-held debt as a default.
The threat abruptly ended a relief rally in stock and bond markets after Greece adopted a new, tougher austerity plan last week, prompting euro zone finance ministers to agree on Saturday to throw Athens a 12 billion euro short-term lifeline.

Cameron Presses on With U.K. Budget Cuts as Consumers Suffer, Stores Close (Source: Bloomberg)
Prime Minister David Cameron’s refusal to compromise on the most ambitious fiscal squeeze since World War II is testing Britain’s recovery as consumers lose faith in the economy. As he implements six years of spending cuts -- no postwar British government has managed more than two -- Britons’ confidence is waning and inflation is accelerating. Manufacturing and construction growth slowed in June and data today will probably show services also cooled last month.

Germany Raises Annual Borrowing Targets More Than 10% on Costs of Bailout (Source: Bloomberg)
German Chancellor Angela Merkel’s government raised borrowing targets by more than 10 percent for the three years through 2015 after pledging contributions to a future European bailout fund, its multi-year budget plan shows. Borrowing will amount to 24.9 billion euros ($36.2 billion) in 2013, more than the 22.3 billion euros the Cabinet endorsed on March 16, according to the 2013-2015 budget plan drafted by the Finance Ministry. The government aims to borrow 18.7 billion euros in 2014 and 14.7 billion euros in 2015, up from 15.3 billion euros and 13.3 billion euros, respectively.

Thailand’s Yingluck May Spur Prices, Baht in ‘Double Whammy’ for Exporters (Source: Bloomberg)
Efforts by Thailand’s incoming government to boost growth and lift incomes may accelerate inflation, forcing interest rates higher and increasing business costs even as a strengthening currency threatens exports. The Bank of Thailand is assessing the economic effect of policies that may be implemented by the Pheu Thai party after it won the July 3 election, Director Mathee Supapongse said. Pheu Thai, which is assembling a five-party coalition that would hold 299 seats in the 500-member parliament, campaigned on pledges to raise the minimum wage and guarantee rice prices for farmers.

Yingluck Forms Five-Party Coalition to Widen Mandate After Voting Success (Source: Bloomberg)
Yingluck Shinawatra, set to become Thailand’s first female prime minister, announced the formation of a five-party coalition to broaden the mandate she won in elections and head off concerns that violence might erupt over the fate of her exiled brother, ex-premier Thaksin Shinawatra. Yingluck called for “unity and reconciliation” at a press conference in Bangkok, where she announced the 299-seat coalition. Thaksin, who was ousted in a 2006 coup, earlier told reporters in Dubai that he had no immediate plans to return.

FOREX-Euro off 1-mth high vs dlr on S&P's warning of Greece
LONDON, July 4 (Reuters) - The euro eased from one-month highs against the dollar after Standard & Poor's said a debt rollover plan being considered for Greece may put the country into selective default, although solid support at lower levels is likely to check losses.
The euro had hit a one-month high of $1.4580 earlier on Monday, as near-term worries that Greece may default and contagion risks eased. On Saturday, euro zone finance ministers approved a 12 billion euro loan that Greece needed to avert default, but the country still needs another rescue package expected to total around 110 billion euros.