GLOBAL MARKETS-World stocks at 4-month highs despite rising oil

Reuters: [2008-05-19 22:20:00]

(Adds close of U.S. markets)

* World stocks at four-month high, lifted by energy stocks

* Crude oil prices zig-zag, close above $127 a barrel

* Emerging market stocks at new high, wipe out 2008 losses

By Herbert Lash

NEW YORK, May 19 (Reuters) - Stocks rose to four-month highs around the world on Monday as crude oil trading near record highs boosted energy shares, but U.S. technology shares turned negative after a chip maker said the record oil prices are likely to hurt consumer spending.

Oil closed at a record above $127 a barrel after OPEC's president insisted the producer group would not increase output at its next meeting in September.

Crude's relentless rise bolstered energy-related stocks in Asia, Europe and the United States. Exxon Mobil, the largest publicly traded oil company, led a key U.S. stock index higher.

Emerging market equities hit a high for the year, wiping out their 2008 losses in a new bout of investor confidence.

An economic forecasting gauge that showed the U.S. economy, while weak, has so far managed to avoid recession helped the dollar rebound from a two-and-a-half-week low against the euro. The Conference Board's Leading Economic Indicators index showed a slight April gain of 0.1 percent.

"There's a realization that we haven't seen, at least to date, a significant economic impact from the high oil prices and there is a general comfort level with the economic data," said Michael James, senior trader at regional investment bank Wedbush Morgan in Los Angeles.

The Dow Jones industrial average <.DJI> rose 41.36 points, or 0.32 percent, at 13,028.16. The Standard & Poor's 500 Index <.SPX> added 1.28 points, or 0.09 percent, at 1,426.63. The Nasdaq Composite Index <.IXIC> fell 12.76 points, or 0.50 percent, at 2,516.09.

With energy prices heading higher recently and the economy still growing, investors looked for companies that can do well in an inflationary environment.

Shares of big manufacturers, including Caterpillar Inc <CAT.N>, also rose, and Exxon was the biggest contributor to the Standard & Poor's 500 Index's upturn.

Technology shares, however, fell after the chief executive of semiconductor maker SanDisk Corp. <SNDK.O> warned on consumer spending levels. CEO Eli Harari told Reuters on the sidelines of a conference in Boston that "with the oil prices hitting $127 a barrel, discretionary spending is going to be affected."

Shares of SanDisk slumped 7.5 percent, while top chip maker Intel Corp <INTC.O> fell 0.5 percent, and No. 2 maker Advanced Micro Devices <AMD.N> lost 2.2 percent.

In Europe energy stocks were among the top weighted gainers. Total <TOTF.PA> rose 3.1 percent and Royal Dutch Shell <RDSa.AS> added 3.2 percent. Among miners, Vedanta <VED.L> added 8.5 percent and Anglo American <AAL.L> gained 4 percent.

The FTSEurofirst 300 <.FTEU3> index of top European shares closed 0.96 percent higher at 1,378.29, its fourth positive day in a row and highest close since Jan. 16. Gains in mining and oil shares led the UK's FTSE 100 index <.FTSE> up 1.2 percent.

Markus Steinbeis, head of European equities at Pioneer Investments in Munich, said oil and mining stocks are "one way of protecting your portfolio from a higher inflation."

Steinbeis added: "Many market participants are preparing for rising inflation. They are looking for companies with strong pricing power, which can easily pass on higher prices."

The equity markets were buoyed early by comments from officials in the euro zone's two largest economies -- Germany and France -- that were optimistic.

France is on track to meet a target of between 1.7 percent and 2 percent economic expansion in 2008, said Economy Minister Christine Lagarde. Germany surprised analysts and grew 1.5 percent from January to March, its strongest quarterly expansion since 1996.

Crude oil in New York settled higher at a record close above $127 a barrel in volatile trade before Tuesday's expiration of futures contracts for June.

Near the close, prices fell more than a dollar and then bounced nearly the same, buffeted by pre-expiry selling and a rebounding dollar, as was the case for most of the session.

"Market is still in bull mode technically, leading to additional upside follow-through," said Tom Bentz, an analyst at BNP Paribas Commodity Futures Inc, commenting on the early strength above $127.

Crude <CLM8> for June delivery settled up 76 cents at $127.05 a barrel, after trading from $125.28 to $127.77, just shy of Friday's record high of $127.82.

In London, July Brent crude <LCON8> ended up 7 cents at $125.06 a barrel. Brent crude hit a record $126.34 on Friday.

U.S. Treasury debt prices pared losses and rose in thin trade volume after SanDisk's warning about consumer spending hurt technology shares and bond investors reacted accordingly.

The benchmark 10-year U.S. Treasury note <US10YT=RR> rose 6/32 to yield 3.83 percent. The 2-year U.S. Treasury note<US2YT=RR> rose 4/32 to yield 2.40 percent. The 30-year U.S. Treasury bond <US30YT=RR> rose 6/32 to yield 4.57 percent.

The dollar rose against major currencies, with the U.S. Dollar Index <.DXY> up 0.40 percent at 73.057.

The euro <EUR=> fell 0.44 percent at $1.5506, and against the yen, the dollar <JPY=> rose 0.27 percent at 104.31.

U.S. gold ended higher above $900 an ounce after scaling a near-four week peak on the back of inflation fears sparked by record high crude prices.

The June gold contract <GCM8> in New York settled $5.90 higher at $905.80 an ounce, boosted by the metal's inflation hedge appeal as oil settled at record over $127 a barrel.

Gold's close above $900 should lead futures to test the next resistance area of around $925 an ounce, traders said.

MSCI's benchmark emerging market share index <.MSCIEF> rose to a new 2008 high of 1250.99, wiping out all its losses this year.

Asian shares hit a new four-month high as a relentless rise in oil prices bolstered resource shares.

MSCI's measure of Asian stocks outside Japan <.MIAPJ0000PUS> rose 0.4 percent, the sixth consecutive session it has gained. The index earlier hit its highest level since mid-January, but is still down about 5 percent for the year.

Tokyo's Nikkei average <.N225> and shares in Taiwan <.TWII> and Hong Kong <.HSI> gained less than 0.5 percent each. (Reporting by Kristina Cooke, Ellen Freilich and Steven. C. Johnson in New York and Lewa Pardomuan and Jane Merriman in London; Editing by Leslie Adler) ((herb.lash@thomsonreuters.com; +1 646 223 6019; Reuters Messaging: herb.lash.reuters.com@reuters.net)) ((Multimedia versions of Reuters Top News are now available

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GLOBAL MARKETS-World stocks at 4-month high

Reuters: [2008-05-19 19:02:00]

(Recasts with U.S. markets, adds byline; changes dateline; previous LONDON)

* World stocks at four-month high, lifted by energy stocks

* Dollar rises, bonds sag as data suggests no US recession

* Emerging market stocks at new high, wipe out 2008 losses

By Herbert Lash

NEW YORK, May 19 (Reuters) - World stocks rose to four-month highs on Monday and emerging markets erased their once-huge 2008 losses as crude oil and other commodity prices traded near record highs and mining and energy shares rallied.

Oil eased from a fresh high hit on Friday but the relentless rise in crude prices bolstered energy-related stocks in Asia, Europe and the United States, where Exxon Mobil, the largest publicly traded oil company, led a broad stock market index higher.

An economic forecasting gauge that showed the U.S. economy, while weak, has so far managed to avoid recession helped the dollar rebound from a 2-1/2 week low against the euro. The Conference Board's Leading Economic Indicators index showed a slight April gain of 0.1 percent.

Euro zone government bonds fell, extending last week's sharp decline, as persistent worries about inflation and gains in stocks dulled the allure of safe-haven government debt.

U.S. Treasury debt prices erased early gains and fell into the minus column as investors moved into U.S. equity markets, where the Dow rose 1 percent. Growth-sensitive sectors such as transport and technology showed solid gains.

Investors snapped up technology shares on hopes that business spending will hold up, with shares of Oracle Corp <ORCL.O>, the world's second-largest software maker, up 3.7 percent and among the top advancers on the Nasdaq.

Shares of big manufacturers, including Caterpillar Inc <CAT.N>, also headed higher and Exxon contributed the most to the Standard & Poor's 500 Index's upturn.

With energy prices heading higher recently and economy still growing, investors looked for companies that can do well in an inflationary environment.

"Many market participants are preparing for rising inflation. They are looking for companies with strong pricing power, which can easily pass on higher prices," said Markus Steinbeis, head of European equities at Pioneer Investments in Munich. Buying into the oil and mining is "one way of protecting your portfolio from a higher inflation."

In early afternoon trading, the Dow Jones industrial average <.DJI> was up 129.78 points, or 1.00 percent, at 13,116.58. The Standard & Poor's 500 Index <.SPX> was up 12.30 points, or 0.86 percent, at 1,437.65. The Nasdaq Composite Index <.IXIC> was up 16.88 points, or 0.67 percent, at 2,545.73.

The equity markets were buoyed early by comments from officials in the euro zone's two largest economies were optimistic.

Germany is more resilient to external shocks and could build on strong first-quarter growth by taking advantage of firmer domestic demand, the Bundesbank said.

French economic growth could exceed the government target in 2008, even if it slows during the rest of the year, Economy Minister Christine Lagarde said.

France is on track to meet a target of between 1.7 and 2 percent economic expansion in 2008, Lagarde said, while Germany surprised analysts and grew 1.5 percent from January to March, its strongest quarterly expansion since 1996.

Oil fell below session highs after OPEC's president said the producer group would not call an early meeting and was unlikely even at its September gathering to boost supply as the world had enough oil.

U.S. light sweet crude oil <CLc1> fell 45 cents to $125.84 per barrel, off a record of $127.82 set on Friday. Earlier, futures prices hit $127.77 before retreating.

Energy stocks featured prominently among the top weighted gainers in Europe, with Total <TOTF.PA> rising 3.1 percent and Royal Dutch Shell <RDSa.AS> up 3.2 percent.

Emerging market equities hit a new high for the year, wiping out their 2008 losses in a new bout of investor confidence.

MSCI's benchmark emerging market share index <.MSCIEF> rose to a new 2008 high of 1250.99, wiping out all its losses this year.

Asian shares hit a new four-month high as a relentless rise in oil prices bolstered resource shares.

MSCI's measure of Asian stocks outside Japan <.MIAPJ0000PUS> rose 0.4 percent, the sixth consecutive session it has gained. The index earlier hit its highest level since mid-January, but is still down about 5 percent for the year.

Tokyo's Nikkei average <.N225> and shares in Taiwan <.TWII> and Hong Kong <.HSI> gained less than 0.5 percent each. ((Multimedia versions of Reuters Top News are now available

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GLOBAL MARKETS-Emerging market shares at year high, oil climbs

Reuters: [2008-05-19 14:03:00]

(Updates prices with oil rising and emerging market shares at 2008 high)

By Jeremy Gaunt, European Investment Correspondent

LONDON, May 19 (Reuters) - Emerging market equities hit a new high for the year on Monday in a new bout of investor confidence, while oil prices again pushed towards $128 a barrel.

The dollar weakened slightly and euro zone government bonds were mixed. Wall Street looked set for a flat open.

MSCI's benchmark emerging market share index <.MSCIEF> rose to a new 2008 high of 1246.85, some 23 percent above a Jan. 22 low, but still close to 8 percent below its all-time high from last November.

"You can make a strong case that emerging markets are well-placed in any scenario going forward -- many of them are enjoying a commodities boom and many of their companies are ridiculously cheap at current valuations," said Matthias Siller, an investment strategist at Baring Asset Management.

Equities in general have been recovering from sharp losses at the beginning of the year, but the MSCI emerging index is one of the first major benchmarks to recover all losses.

Elsewhere, stocks were generally stronger. European stocks were on a four-day winning streak with the FTSEurofirst 300 <.FTEU3> index of top European shares up 0.1 percent.

"The market is holding onto gains we have seen over the past week," Achim Matzke, European stock indexes analyst at Commerzbank, in Frankfurt.

Earlier, Japan's Nikkei stock average <.N225> rose 0.4 percent to hit a four-month closing high.

The benchmark is now up 22 percent from the year-low hit on March 17, but is still about 6 percent below this year's highest point touched in early January.

It rose 50.13 points to end at 14,269.61, the highest close since Jan. 10. The broader Topix index <.TOPX> added 0.6 percent or 8.38 points to 1,404.25.

OIL STRONGER

Oil, meanwhile, jumped higher after Chakib Khelil, president of the Organization of Petroleum Exporting Countries, said he did not believe OPEC would hike supply at its September meeting.

U.S. light crude for June delivery <CLc1> was up $1.11 at $127.40 a barrel, just shy of the $127.82 record high hit last week.

"The market still has a bullish leaning because of a weak dollar and fuel supply concerns," said Sydney-based David Moore, a commodity analyst at the Commonwealth Bank of Australia.

Rising oil prices, combined with gains in other commodities, have raised concerns about global inflation, adding a new wall of worry to the ones built around the subprime crisis and an ailing U.S. economy.

European Central Bank President Jean Claude Trichet warned earlier in the day that the world was experiencing an "ongoing and very significant market correction" and said policymakers should make price stability their top priority.

He said an accumulation of oil price rises and food price rises was adding to inflationary pressures, adding "These are demanding times, challenging times."

Others were more bullish. Deutsche Bank <DBKGn.DE> Chief Executive Josef Ackermann said in a newspaper interview over the weekend that the end of the credit crisis is getting closer and the U.S. real estate market should recover in the second half of the year.

DOLLAR STEADY

On currency markets, the dollar was weaker versus the euro following last Friday's slide after a drop in U.S. consumer confidence.

The euro <EUR=> was up slightly at $1.5592.

The dollar was steady at 72.720 against a basket of currencies, but not far off a low since the start of the month of 72.687 set on Friday <.DXY>.

Euro zone government bond prices were mixed. The 10-year yield <EU10YT=RR> was up 2 basis points slightly at 4.194 percent while the 2-year <EU2YT=RR> was flat at 3.995 percent.

((jeremy.gaunt@reuters.com; +44 207 542 1028; Reuters Messaging: jeremy.gaunt.reuters.com@reuters.net;editing by Gerrard Raven))

Keywords: MARKETS GLOBAL

CORRECTED - GLOBAL MARKETS-Equities gain, oil steady above $126

Reuters: [2008-05-19 10:34:00]

(Corrects oil price in headline)

By Jeremy Gaunt, European Investment Correspondent

LONDON, May 19 (Reuters) - Equities began the week on a positive note on Monday, overcoming worries about heady oil prices above $126 a barrel.

The dollar slipped and euro zone government bonds rose slightly.

Oil stayed pricey with U.S. light crude for June delivery <CLc1> steady around $126.30 a barrel, about $1.50 shy of a record high near $128 a barrel hit last week.

"The market still has a bullish leaning because of a weak dollar and fuel supply concerns," said Sydney-based David Moore, a commodity analyst at the Commonwealth Bank of Australia.

Rising oil prices -- combined with gains in other commodities -- have raised concerns about global inflation, adding essentially a new wall of worry to the ones built around the subprime crisis and an ailing U.S. economy.

European Central Bank President Jean Claude Trichet warned earlier in the day that the world was experiencing an "ongoing and very significant market correction" and said policymakers should make price stability their top priority.

He said inflationary pressures were being added to by an accumulation of oil price rises and food price rises, adding: "These are demanding times, challenging times."

Others were more bullish. Deutsche Bank <DBKGn.DE> Chief Executive Josef Ackermann said in a newspaper interview over the weekend that the end of the credit crisis is getting closer and the U.S. real estate market should recover in the second half of the year.

On a global basis <.MIWD00000PUS>, equity markets put in modest gains while MSCI's main emerging market stock index <.MSCIEF> was closing in on its 2007 closing level, meaning it is near recouping all this year's losses.

STOCKS GAIN, DOLLAR SLIPS

European stocks were on a four-day winning streak with the FTSEurofirst 300 <.FTEU3> index of top European shares up 0.2 percent.

"The market is holding on to gains we have seen over the past week," Achim Matzke, European stock indexes analyst at Commerzbank, in Frankfurt.

Earlier, Japan's Nikkei stock average <.N225> rose 0.4 percent to hit a four-month closing high.

The benchmark is now up 22 percent from the year-low hit on March 17, but is still about 6 percent below this year's highest point touched in early January.

It rose 50.13 points to end at 14,269.61, the highest close since Jan. 10. The broader Topix index <.TOPX> added 0.6 percent or 8.38 points to 1,404.25.

On currency markets, the dollar fell to its lowest in two- and-a-half weeks versus the euro following last Friday's slide after a drop in U.S. consumer confidence.

The euro rose to its highest since May 1 at $1.5602 according to Reuters data <EUR=>.

The dollar was steady at 72.725 against a basket of currencies, not far off a low since the start of the month of 72.687 set on Friday <.DXY>.

Euro zone government bond prices rose. The 10-year yield <EU10YT=RR> was down 1 basis point at 4.164 percent while the 2-year was down 2 basis points at 3.971 percent. (Editing by Stephen Nisbet) ((jeremy.gaunt@reuters.com; +44 207 542 1028; Reuters Messaging: jeremy.gaunt.reuters.com@reuters.net))

Keywords: MARKETS GLOBAL

RPT-GLOBAL MARKETS-Asian stocks hit 4-mth high; oil above $126

Reuters: [2008-05-19 08:25:00]

(Repeats to wider subscriber base, with no changes to text) (Updates with latest Asian prices, Europe's stocks pre-opening)

By Rafael Nam

HONG KONG, May 19 (Reuters) - Asian shares hit a new four-month high on Monday as a relentless rise in oil prices bolstered resource shares, but wariness about inflation and doubts about the U.S. economy kept gains in check.

The dollar was range-bound after its drop on Friday when it was hit by data showing a plunge in U.S. consumer confidence to a 28-year low, reinforcing concerns over the world's largest economy.

European shares were set to gain for a fourth consecutive session on the back of commodity-related stocks, after hitting four-month highs on Friday. Britain's FTSE 100 <.FTSE> was seen up 15 to 21 points, and the German DAX <.GDAXI> up 26 to 31 points, according to financial bookmakers.

Asian shares have rebounded around 21 percent since hitting the year's low in mid-March, but record oil prices continue to worry, despite the benefit to resource firms, given the prospects of inflation at a time of slowing global economic growth.

"It's basically all just commodities today, with the market ignoring the long-term implications of the high oil prices such as inflation, even though oil is really approaching dangerous levels," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.

The MSCI broad measure of Asian stocks outside Japan <.MIAPJ0000PUS> rose for a sixth consecutive session, and was up 0.6 percent by 0600 GMT. The index hit earlier its highest level since mid-January, but is still down about 5 percent down for the year.

The index breached the key psychological 500-point level on Friday, extending a recovery since mid-March on hopes the worst of the credit crisis has passed and that earnings in Asia will prove more resilient than expected.

Gains in Asian stocks on Monday were driven in large part by resource firms such as Sydney-listed Woodside Petroleum Ltd <WPL.AX> and Japanese trading firm Mitsubishi Corp <8058.T>, though the overall advances were moderate.

Australian shares <.AXJO> rose 0.7 percent. Taiwanese shares <.TWII> gained 1.1 percent to its highest close since November 2007 on hopes for economic improvement after president-elect Ma Ying-jeou takes office on Tuesday. [ID:nTP365035]

Tokyo's Nikkei average <.N225> and shares in Taiwan <.TWII> and Hong Kong <.HSI> gained less than 0.5 percent each.

But shares in South Korea <.KS11> fell 0.2 percent, while Shanghai <.SSEC> lost 0.3 percent.

Several markets in Asia were closed on Monday for public holidays, including in Singapore, India, Thailand and Malaysia.

OIL WORRIES

Concerns over tight fuel supplies led oil prices higher, with U.S. light crude for June delivery <CLc1> up 41 cents at $126.70 a barrel, near the record $127.82 hit on Friday.

Oil prices have risen six-fold since 2002 and doubled since last year as strong demand from China and other developing nations comes amid tightening production capacity.

"The (oil) market still has a bullish leaning because of a weak dollar and fuel supply concerns," said Sydney-based David Moore, a commodity analyst at the Commonwealth Bank of Australia.

Gold also rose, with spot prices <XAU=> up at more than $906 an ounce against $899.55 late in New York on Friday. Prices of bullion in the prior session jumped above $900 to its highest in three weeks, tracking higher oil prices and a weaker dollar.

The dollar inched up 0.1 percent to 104.12 yen <JPY=>, though the weakening trend seen this year remains intact.

The U.S. currency dropped on Friday on data showing the Reuters/University of Michigan index of consumer confidence dropped to 59.5 in May, the lowest since June 1980. [ID:nN16406494]

Concerns abound about how central banks around the world will deal with rising inflation at a time of slowing global economic growth.

The Reuters Tankan, a monthly survey of Japanese manufacturers, came in on Monday at minus 2 for May, marking the first time in five years that leading firms in the world's second-largest economy have turned pessimistic about business conditions. [ID:nT162279]

The survey comes as the Bank of Japan is expected to keep interest rates unchanged at 0.5 percent at its two-day meeting that ends on Tuesday, with its hands tied by lingering uncertainty over the global economy and worries about rising energy costs. [ID:nT305710]

Japanese government bond futures climbed, pulling away from a seven-month low hit last week, as dealers covered short positions. The market remains volatile amid concerns about global interest rates and the pullback of hedge funds and other players.

June 10-year futures <2JGBv1> rose 0.42 point to 135.12. (Editing by Anshuman Daga) ((rafael.nam@reuters.com; +852 2843-6548; Reuters Messaging: rafael.nam.reuters.com@reuters.net))

Keywords: MARKETS GLOBAL