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Calls mount for Ohio attorney general to resign

Reuters: [2008-05-06 23:55:00]

CHICAGO, May 6 (Reuters) - Ohio Attorney General Marc Dann, who has been investigating companies involved with subprime mortgages, was under mounting pressure on Tuesday to resign or face possible impeachment in the wake of a sexual harassment probe in the attorney general's office.

Dann released an e-mail on Monday that he sent to his staff saying he intended to stay in office. On Friday, he announced the firing or resignation of three staffers in his office and said he had had a relationship with another staff member.

On Tuesday, the Democrat minority in the House was looking into procedural issues for impeachment, according to Phil Saken, communications director for House Democrats. He said it has been 188 years since Ohio tried to impeach a state official.

"The information we have leads to the conclusion it would be extremely difficult if not impossible for him to continue on as attorney general," Saken said.

Calls for Dann's resignation have come from fellow Democrats, such as Gov. Ted Strickland and State Treasurer Richard Cordray, as well as Republicans, including the heads of the Ohio House and Senate.

In January, Dann filed a lawsuit on behalf of a state pension fund against Freddie Mac <FRE.N>, accusing the mortgage finance company of securities fraud for failing to disclose risks from its subprime mortgage-related investments.

Dann's office has also sent civil investigative subpoenas to a number of subprime mortgage companies as part of a probe of possible anti-trust and civil rights law violations, and violations of Ohio's consumer sales practices. His office has declined to name the companies.

Ohio has been hit hard by the subprime-mortgage crisis, ranking eighth among states in foreclosure rates in the first quarter of 2008, according to RealtyTrac. (Reporting by Karen Pierog; Editing by Toni Reinhold) ((karen.pierog@thomsonreuters.com; +1-312-408-8647; Reuters Messaging: karen.pierog.reuters.com@reuters.net)) Keywords: OHIO ATTORNEYGENERAL/IMPEACHMENT

US STOCKS-Wall St climbs with Fannie and oil; Disney up late

Reuters: [2008-05-06 23:53:00]

(Updates close with volume and advance/decline figures)

By Ellis Mnyandu

NEW YORK, May 6 (Reuters) - U.S. stocks rose on Tuesday as Fannie Mae's <FNM.N> reassuring comments about the credit and housing markets buoyed financial shares, while record crude oil prices lifted shares of energy companies.

Speculation that Microsoft Corp <MSFT.O> could resume takeover talks with Yahoo Inc <YHOO.O> fed a rebound in technology shares. Yahoo gained 5.5 percent, while Microsoft rose 2.1 percent, leading the S&P 500's advance.

After an early retreat, the session turned positive when top executives of Fannie Mae, the largest U.S. home finance company, said the worst of the credit market turmoil erupting from the real estate slowdown may have passed. That mitigated earlier concern about its huge quarterly loss, and propelled a broad rally in financial stocks.

Fannie Mae climbed almost 9 percent, and smaller rival Freddie Mac <FRE.N> gained 7.1 percent.

Oil struck above $122 a barrel for the first time, carrying energy shares higher with it and outweighing a retreat in sectors sensitive to high fuel costs, such as airlines and retailers.

"When I came to work today, we thought Fannie Mae's stock will be trading south of $25, but somehow the investing public got news that they had a pretty positive conference call," said Angel Mata, managing director of listed equity trading at Stifel Nicolaus Capital Markets in Baltimore, Maryland.

"There's a lot of people that are eyeing the financials right now, so if you're going to play the financials, Fannie Mae and Freddie Mac have to be among them."

The Dow Jones industrial average <.DJI> finished up 51.29 points, or 0.40 percent, at 13,020.83. The Standard & Poor's 500 Index <.SPX> ended up 10.77 points, or 0.77 percent, at 1,418.26. The Nasdaq Composite Index <.IXIC> closed up 19.19 points, or 0.78 percent, at 2,483.31.

Immediately after the closing bell, there was more encouraging news that could help stocks extend their advance. Walt Disney Co <DIS.N> posted a stronger-than-expected quarterly profit, sending its shares up more than 3 percent in after-hours trade from their close at $33.73 on the New York Stock Exchange.

Disney, one of the world's largest media companies and owner of the ABC television network, ESPN all-sports cable TV network and Disney theme parks in Florida and southern California, is seen as a bellwether of consumer spending.

Cisco Systems Inc's <CSCO.O> shares jumped more than 2 percent after the bell from their Nasdaq close of $26.33 as the network equipment maker also posted a profit that topped estimates.

In the regular session, Fannie Mae shares finished at $30.81, while Freddie Mac shares closed at $27.33. Other financial standouts were insurer American International Group Inc <AIG.N>, which rose 2.1 percent to $48.40, and JPMorgan Chase & Co <JPM.N>, the No. 3 U.S. bank, whose stock added 0.4 percent to $48.20.

The optimism from Fannie Mae's comments also contributed to a rise in the shares of home builders, with the Dow Jones home construction index <.DJUSHB> up 2 percent for the day.

Shares of D.R. Horton Inc <DHI.N>, the largest U.S. home builder, jumped 5.5 percent to $16.85 even as the company posted a quarterly loss of $1.3 billion and halved its dividend. For details, see [ID:nN06454667]

Energy shares rose after U.S. crude oil hit a record above $122 a barrel. A stronger-than-expected profit from independent oil and gas company Anadarko Petroleum Corp <APC.N> also buoyed the energy sector.

Exxon Mobil shares rose 0.6 percent to $90.07, while ConocoPhillips <COP.N> climbed 1.8 percent to $88.74 and Chevron Corp's <CVX.N> shares gained 1.3 percent to $96.87, while Anadarko shares climbed 9.4 percent to $74.53.

Shares of oil services company Schlumberger Ltd <SLB.N> jumped 2 percent to $103.58. The oil index <.OIX> shot up 3.3 percent.

Investment bank Goldman Sachs <GS.N> said in a research note that the price of oil could shoot up to $200 a barrel within the next two years as part of a "super-spike" driven by poor growth in oil supplies.

"Energy prices are going to stay high until -- a) we get some production on line, which there's none that I know of -- or b) until we have a serious recession," said Sasha Kostadinov, portfolio manager at Shaker Investments in Cleveland, Ohio.

Microsoft Corp <MSFT.O> and Yahoo Inc <YHOO.O> were both among the Nasdaq's top five advancers as speculation continued that pressure from Yahoo's shareholders would revive takeover talks. Shares of Microsoft, which abandoned its bid for Yahoo at the weekend, ended at $29.70, while Yahoo closed at $25.72.

But higher energy costs threatened to crimp consumer spending. Wal-Mart Stores Inc <WMT.N>, the world's biggest retailer, was the top drag on the Dow. Wal-Mart's stock fell1.1 percent to $56.35.

On the New York Mercantile Exchange, June crude <CLM8> settled at $121.84 a barrel, up $1.87, or a gain of 1.56 percent for the session. Earlier, NYMEX June crude climbed as high as a record $122.73 a barrel, which eclipsed Monday's intraday record of $120.36.

Compared with a year ago, U.S. crude oil futures prices are up $59.91 a barrel -- or almost 97 percent.

Volume on the New York Stock Exchange was modest, with about 1.23 billion shares changing hands, below last year's estimated daily average of 1.90 billion. On the Nasdaq, about 2.21 billion shares traded, above last year's daily average of 2.17 billion.

Advancers outnumbered decliners on the NYSE by a ratio of almost 2 to 1, while on the Nasdaq, about three stocks rose for every two that fell. (Editing by Jan Paschal) ((Ellis.Mnyandu@thomsonreuters.com; +1 646 223 6085; Reuters Messaging:ellis.mnyandu.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available for: * 3000 Xtra: visit http://topnews.session.rservices.com * BridgeStation: view story .134 For more information on Top News: http://topnews.reuters.com)) Keywords: MARKETS STOCKS

UPDATE 4-High-flying crude gives boost to Toronto stocks

Reuters: [2008-05-06 23:10:00]

(Adds details, quotes)

By Leah Schnurr

TORONTO, May 6 (Reuters) - Oil and gas companies led the way higher for the Toronto Stock Exchange on Tuesday, helping the main index climb nearly 1 percent as crude oil prices notched another record high.

Suncor Energy <SU.TO> was among the biggest gainers, up C$4.62, or 4 percent, at C$121.12 as the price of oil flew up over $122 a barrel on a weaker U.S. dollar and concerns over supply.

The Toronto market's heavily weighted energy sector jumped 3.3 percent. Canadian Natural Resources <CNQ.TO> was up C$4.05, or 4.6 percent, at C$92.00, and Canadian Oil Sands Trust <COS_u.TO> added C$3.68, or 8.3 percent, to C$48.18.

Crude settled up $1.87 at $121.84 a barrel, easing back from a record $122.73 reached earlier in the day. However, Goldman Sachs forecast oil could hit $200 a barrel within the next two years.

"How high can it go? Who knows," said Andrew Martyn, portfolio manager at Davis-Rea.

The S&P/TSX composite index <.GSPTSE> closed up 139.96 points, or 0.98 percent, at 14,414.30 with half its 10 main sectors higher.

The materials sector, home to resource issues, rallied 1.2 percent, while the base metals mining subindex gained 2.4 percent, pulled up by oil's momentum. Teck Cominco <TCKb.TO> rose C$1.48, or 3.2 percent, to C$48.18.

"The mining sector, the gold sector also got boosted, meaning that the whole commodities game seems to be back for who knows how long," said Ian Nakamoto, director of research at MacDougall, MacDougall & MacTier.

"We keep saying it's a fad, but (the oil price) comes down and starts to move back up," said Nakamoto, noting that ultimately it's underlying supply and demand that will make a price level sustainable.

Methanex <MX.TO> shares jumped C$3.02, or 12.4 percent, to C$27.40 after the methanol supplier upped its quarterly dividend by 11 percent and said it will buy back up to 10 percent of its common stock.

Fertilizer company Potash Corp of Saskatchewan <POT.TO> was up C$3.03, or 1.5 percent, at C$199.39, and competitor Agrium <AGU.TO> rose C$2.52, or 3 percent, to C$86.75.

Sun Life Financial <SLF.TO> weighed on the index after the insurer warned of a difficult year ahead as it reported that credit market troubles and a strong Canadian dollar stung its operating earnings.

Sun Life finished down C$1.76, or 3.6 percent, at C$47.44, while the financial sector overall gave up 0.5 percent.

Also on the downside, BlackBerry maker Research In Motion <RIM.TO> slid C$2.37, or 1.8 percent, to C$132.25.

Market volume was 393 million shares worth C$7.6 billion. Advancers outpaced decliners 890 to 693. The blue chip S&P/TSX 60 index <.TSE60> closed up 8.71 points, or 1.03 percent, at 855.12.

On Wall Street, stocks rallied after U.S. home finance company Fannie Mae <FNM.N> sought to reassure investors over the outlook for the credit and housing markets.

The Dow Jones industrial average <.DJI> rose 51.29 points, or 0.4 percent, to 13,020.83, while the Nasdaq composite index <.IXIC> was up 19.19 points, or 0.78 percent, at 2,483.31. ($1=$1.00 Canadian) (Editing by Rob Wilson) ((leah.schnurr@thomsonreuters.com; +1 416 941 8056; Reuters Messaging: leah.schnurr.reuters.net@reuters.com))

Keywords: MARKETS CANADA STOCKS

Keywords: MARKETS CANADA STOCKS

Mexico peso hurt by credit jitters; stocks gain

Reuters: [2008-05-06 23:04:00]

(Adds quotes, closing prices, details)

MEXICO CITY, May 6 (Reuters) - Mexico's peso weakened on Tuesday amid renewed Wall Street credit jitters, while local stocks gained, led by telecommunications bellwether America Movil.

The peso <MXN=> <MEX01> weakened nearly 0.20 percent at the official central bank close to 10.4995 per dollar while the benchmark IPC stock index <.MXX> gained 0.85 percent to 31,223.42 points.

Fannie Mae, the largest provider of U.S. home financing, reported its third straight quarterly loss and forecast further falls in home prices and continued problems in the mortgage market.

But reassuring comments from Fannie Mae executives about the company's stability helped stocks in New York recover from early losses.

But peso traders in Mexico said the news stirred fears that the worst may not be over for the credit crisis, curbing investor appetite for riskier emerging market assets and serving as a pretext to take profits after the peso's recent gains.

"There is still a worry that the subprime (mortgage) issue is still present and keeps causing damage to the financial sector," said Alejandro Martinez, a fixed-income and currency strategist at HSBC in Mexico City.

Traders also said investors were ruling out the possibility of further interest rate cuts in the United States.

Mexico's peso has gained around 4 percent since the beginning of the year as the spread between the U.S. target interest rate and Mexico's key rate widened to 5.5 percent.

"If you don't have the expectation that the spread could widen further, you don't have that additional attraction," Martinez said.

The U.S. Federal Reserve cut its target rate last week for the seventh time since September in a bid to prop up the stumbling economy, but it signaled that its may pause with its rate cutting cycle.

Also last week, Mexico's central bank revised upward its inflation outlook, which analysts have interpreted as meaning the bank will keep interest rates on hold for some time.

In debt trading, the government's benchmark 10-year peso bond <MX10YT=RR> rose 0.067 of a point in price to 98.914, pushing its yield down 1 basis points to 7.91 percent.

In stock trading, shares of America Movil <AMXL.MX>, Latin America's biggest cell phone operator and the heaviest weighted stock on the IPC, gained 0.72 percent to 30.89 pesos. Its New York-traded shares <AMX.N> edged up 0.44 percent to $58.87.

"The stock was unfairly punished after its first-quarter earnings report, and people are realizing it is cheap," said Gerardo Roman, head of equity trading at Actinver brokerage in Mexico City.

HSBC on Tuesday cut the price target for America Movil's New York shares to $82 from $91, but kept its rating unchanged at "overweight."

Top retailer Walmex <WALMEXV.MX> added 1.56 percent to 44.22 pesos.

Shares of Cemex <CMXCPO.MX> gained 1.79 percent to 30.73 pesos while its New York traded stock <CX.N> added 4.34 percent to $29.10. (Reporting by Michael O'Boyle; editing by Gary Crosse) ((michael.oboyle@reuters.com; +5255-5282-7160; Reuters Messaging: jason.lange.reuters.com@reuters.net)) Keywords: MARKETS MEXICO/

Emerging debt-Colombia spreads tighten on currency operations

Reuters: [2008-05-06 23:02:00]

By Manuela Badawy

NEW YORK, May 6 (Reuters) - Colombia's yield spreads narrowed sharply on Tuesday after the government announced it will convert up to $20 billion in foreign currency into peso debt, in a plan to lock in the local currency's strength and reduce its exposure to foreign currency debt.

Colombia's government debt yield spreads, the premium that investors demand for holding riskier security than U.S. Treasuries, narrowed 10 basis points to 173 bps on the news, according to JP Morgan's Emerging Markets Bond Index Plus (EMBI+) <11EMJ><.JPMEMBIPLUS>.

Spreads, an important gauge of investors' aversion to risk, tightened to levels last touched in mid-December.

The government said the objective of this series of hedge-type operations "is to take advantage of the current exchange rate." The first in the series will involve $2 billion in multilateral debt. For more information see [nN06477565]

The peso <COP=RR> weakened 1.26 percent against the dollar to 1,777.9 after the announcement. In the last 12 months the peso has gained 15 percent against the U.S. dollar and is at its strongest level in nine years.

Gianfranco Bertozzi, vice president of emerging markets research at Lehman Brothers, said the purpose of the operations is to capture the peso's strength and thus improve its liability profile.

"It would set in motion a dynamic that might weaken the peso, which (the government) would not mind seeing, given the deleterious effect the peso is having on external accounts," Bertozzi said.

Colombia's sovereign bond due to mature in 2033 <COLGLB33=RR> rose 1 percent to bid 151.00 and to yield 6.283 percent.

The plan would also improve the country's profile for a future investment credit rating upgrade by the agencies, analysts said.

"If they want to have a more manageable debt profile denominated in pesos, that could facilitate their arrival at investment grade status," said Enrique Alvarez, head of Latin American debt strategy at IDEAglobal in New York.

Meanwhile, Latin American debt spreads narrowed as U.S. Treasury prices weakened on reassuring comments from Fannie Mae, the largest U.S. provider of home financing, saying that the worst of the credit market turmoil caused by the real estate slump may have passed.

Prices for the 10-year Treasury note <US10YT=RR> fell, as the safe-haven allure diminished, while the yield rose to 3.88 percent on Tuesday.

Morgan Stanley Capital International's emerging markets stock index <.MSCIEF> rose 0.57 percent, while the MSCI Latin American stock index <.MILA00000PUS> rose 0.78 percent. (Editing by Leslie Adler) ((manuela.badawy@reuters.com; +1 646-223-6055; Reuters Messaging: manuela.badawy.reuters.com@reuters.net)) Keywords: MARKETS EMERGINGDEBT/

Next: UPDATE 4-Fannie Mae posts loss, to cut payout, raise capital