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While you were sleeping: Mix, shake and stir

While you were sleeping: Mix, shake and stir

(BusinessDesk) December 17 - It’s almost as if investors were hoping the weekend had begun a day early.

Markets were flat to modestly higher, in line with the latest U.S. economic data which showed the labour and housing sectors were improving but remained subdued.

Initial claims fell 3,000 to a seasonally adjusted 420,000, the Labor Department said on Thursday, in line with forecasts. The four-week moving average of claims, considered a better measure of labor market trends, touched a fresh two-year low.

October's housing starts were revised up to a 534,000-unit pace from the previously reported 1-1/2 year low rate of 519,000 units. Analysts polled by Reuters had expected November housing starts to rise to a 550,000-unit rate.

"The data overall was good but comes with still modest hiring and inflation pressures growing," Peter Boockvar, equity strategist at Miller Tabak + Co in New York, told Reuters.

In midday trading, Wall Street was modestly higher.

Disappointing results from FedEx Corp sent the stock lower initially, though it recovered later, gaining 2%, as investors decided to focus on the outlook.

The package-shipping company raised its full-year outlook because of strong holiday volume and an improved take on the economy. It reported quarterly profit and revenue that fell short of expectations.

Apple Inc edged 0.4% higher to US$321.74 after JPMorgan Chase & Co raised its earnings estimates and increased its price estimate to US$420 from US$400. The bank said Apple would have 61% of total tablet computer market sales in 2012.

In Europe, stocks also fluctuated as financial officials began two days of talks on the next step they would take to counter the euro zone’s debt issues.

“The markets are somewhat getting used to the idea of fiscal sustainability and the challenges in Europe,” Larry Hatheway, London-based economist and asset-allocation strategist at UBS AG, told Bloomberg Television.

As European leaders sat down in Brussels, the European Central Bank said it was going to increase its capital base by 5 billion euros to 10.76 billion euros. The decision was interpreted as a way to hedge against losses from buying debt to help bolster the balance sheets of some of the region’s governments.

There needs to be a “comprehensive” plan addressing budget and banking woes in early 2011 to curb the debt crisis, International Monetary Fund Managing Director Dominique Strauss-Kahn said in an interview.

When asked how much leaders would accomplish in Brussels talks this week, the IMF chief responded “not much.”

Moody’s Investors Service said it placed Greece’s Ba1 local and foreign currency government bond ratings on review for possible downgrade.

The review was prompted in part by concerns about Greece’s ability to cut debt to “sustainable levels” and a revenue shortfall this year, Moody’s said. A downgrade of multiple levels was possible, Moody’s said.

Commodity markets eased for another day even with OAO GMK Norilsk Nickel offering US$12 billion to United Co. Rusel to buy back a 25% stake held by the aluminium company. The Russian company said no.

Copper, gold and oil all slid though analysts said all three remain well supported by the slow and steady improvement in the global economy. Thin trading ahead of the holidays though could see prices drift until early in the New Year.

(BusinessDesk)

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