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14.09.2012 06:37

Stocks: Thursday’s review



Asian stocks swung between gains and losses as investors await a U.S. Federal Reserve’s policy announcement and after a Chinese newspaper commentary said massive stimulus measures would be “detrimental” to the nation’s sustainable growth.

Nikkei 225 8,995.15 +35.19 +0.39%

S&P/ASX 200 4,339.4 -21.85 -0.50%

Shanghai Composite 2,125.68 -0.87 -0.04%

James Hardie Industries SE, a building-materials supplier that gets 67 percent of sales from the U.S. rose 1.5 percent.

Bank of Communications Co. slid 1.4 percent in Hong Kong.

Kansai Electric Power Co. and Kyushu Electric Power Co. advanced on a report the utilities are considering a rate increase.

TDK Corp., a battery supplier to Apple Inc., climbed 4.4 percent in Tokyo after the iPhone 5 was unveiled.

European stocks fell from the highest level in 14 months as investors awaited a Federal Reserve decision on further stimulus measures.

European Aeronautic, Defence & Space Co. (EAD) and BAE (BA) Systems Plc slid more than 7 percent as Barclays Plc recommended investors trim their holdings in the companies in the short term, as they plan a merger. Zodiac Aerospace rose 2.1 percent after Societe Generale SA upgraded its rating on the stock.

The Stoxx Europe 600 Index slipped 0.2 percent to 272.42 at the close of trading, paring losses of as much as 0.6 percent. The gauge rose to its highest level since July 2011 yesterday after Germany’s top constitutional court cleared the way for ratification of the euro area’s permanent bailout fund.

EADS slid 10 percent to 25.15 euros. The company said yesterday it has entered talks for a merger with BAE to build an equal to Boeing Co. (BA) that would balance civil and defense operations. Deutsche Bank AG downgraded the stock to hold from buy.

BAE lost 7.3 percent to 337.1 pence. Europe’s biggest arms maker was cut to hold from buy at

Barclays advised investors to trim their exposure to EADS and take profits in BAE because of the potential for near-term challenges in the deal closure process. Barclays kept its overweight recommendation, similar to a buy, on both companies, reflecting long-term prospects.

National benchmark indexes fell in 11 of the 18 western- European (SXXP) markets.

FTSE 100 5,819.92 +37.84 +0.65% CAC 40 3,502.09 -41.70 -1.18% DAX 7,310.32 -33.21 -0.45%   

Next Plc (NXT) slumped 7.2 percent to 3,320 pence after the U.K.’s second-largest clothing retailer said sales in August and early September were “disappointing,” paring growth for the year to date.

Imagination Technologies Group Plc. (IMG) tumbled 7.2 percent to 566 pence after saying first-quarter royalty revenue growth was in line with expectations, while royalty rates decreased slightly because of higher volumes in low-end smartphones.

Numis Securities downgraded its recommendation on the U.K. chip designer for mobile applications to hold from buy, with a price forecast of 590 pence per share.

Debenhams Plc (DEB), the U.K. department-store operator, slid 1.8 percent to 98.25 pence.

Home Retail Group Plc (HOME), an operator of home and general-merchandise retail stores, retreated 4.6 percent to 94.85 pence. A gauge of retailers was among the worst performers of the 19 industry groups on the Stoxx Europe 600 Index.

Vinci SA (DG), Europe’s biggest builder, fell 3.6 percent to 35.46 euros after Bank of America Corp. cut its recommendation on the shares to neutral from buy. A gauge of construction companies made the biggest contribution to the Stoxx 600’s decline today.

Vestas Wind Systems A/S (VWS), the world’s largest wind turbine maker, plunged 13 percent to 34.55 kroner. The company is considering selling shares to existing investors if talks on a strategic cooperation with Mitsubishi Heavy Industries Ltd. fail, two people familiar with the matter said.

Zodiac Aerospace (ZC), which manufactures and sells aeronautical equipment including weapons systems, added 2.1 percent to 79.60 euros after Societe Generale upgraded its recommendation on the shares to hold from sell.

WPP Plc (WPP), the world’s biggest advertising agency, rose 1.3 percent to 848 pence after the shares were raised to hold from underperform at Jefferies Group Inc.

Lonza Group AG (LONN) gained 4.9 percent to 49.32 Swiss francs. The Swiss specialty-chemical maker sold 305 million francs ($324 million) of bonds to refinance a bridge loan used for its acquisition of Arch Chemicals Inc. in October 2011.

Julius Baer Group Ltd. (BAER) advanced 2.9 percent to 33.49 francs. Chief Executive Officer Boris Collardi said he was “confident on the cost-cutting side” at the Asian wealth- management business it bought from Bank of America Corp

Major U.S. stock indexes rose significantly in the course of trading against the decision of the Federal Reserve, and were able to complete the session well above zero.

The U.S. Federal Reserve announced the launch of a major new round of bond purchases, which will be the continuation of a series of non-standard measures taken by the Fed since the financial crisis to support the uncertain economic recovery.

After several months of careful feeding signals Operations Committee on the Federal Open Market on Thursday announced that it would be a month to buy agency mortgage-backed securities to $ 40 billion, and these purchases will not be limited in time. At the request of the committee, it will continue these purchases and acquire additional assets, if the situation in the labor market improves.

"If the labor market prospects will not improve significantly, the Committee will continue to buy mortgage-backed securities agentstkih, make additional purchases of assets and apply other policy tools as necessary until no improvement is achieved," - said in a statement the committee issued on the basis of a two-day meeting .

The Fed also announced the continuation of "Operation Twist", in which it is selling short-term bonds and buying longer-term the proceeds in an attempt to lower long-term rates.

The Fed will buy long-term securities to $ 85 billion a month to the end of this year. To date she bought in the "Operation Twist" long-term bonds to $ 45 billion a month. The Fed will print money to finance the purchase of mortgage bonds, which will increase its balance of 2.8 trillion dollars.

These purchases aimed at lowering long-term interest rates - especially mortgages - and increase the value of assets such as stocks and homes. The Fed hopes that it provided a financial incentive will support the depressed housing market and spur spending and investment.

As a part of all the components of the index DOW surged. More than others in the share price rose Bank of America Corporation (BAC, +4.57%), JPMorgan Chase & Co. (JPM, +3.76%)

All of the major economic sectors are growing. The leader is the basic materials sector (+2.4%) and the financial sector (+2.1%)

At the close:

Dow 13,539.63 +206.28 +1.55%

Nasdaq 3,155.83 +41.52 +1.33%

S & P 500 1,459.99 +23.43 +1.63%

Market Focus

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  • German private sector output growth slowed for the second month running in July
  • ECB's Mersch says as conditions normalise, it is unlikely that uncoventional policies will remain necessary
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