Argentine stocks rise on oil prices; peso firms

Reuters: [2008-05-16 23:52:00]

BUENOS AIRES, May 16 (Reuters) - Argentine stocks rose on Friday as rising global crude oil prices lifted energy-related shares, while bonds and the peso rose.

The benchmark MerVal index <.MERV> ended 0.7 percent higher at 2,137.01 points, finishing the week with a 1.07 percent gain.

"The MerVal got a lift from oil-related shares thanks to the rise in crude prices," said Guido Macchi, a trader at Julio Macchi brokerage.

Shares in index heavyweight and steelmaker Tenaris <TENA.BA> -- the world's leading producer of seamless steel tubes for the energy industry -- rose 2.05 percent to 96.95 pesos.

The local listing of Brazilian state-run energy Petrobras <APBR.BA> gained 2.05 percent to 115.5 pesos.

U.S. crude oil climbed to record peaks near $128 on Friday partially driven by news Goldman Sachs, the most active investment bank in energy markets, predicted oil prices will average $141 a barrel in the second half this year due to thin inventories.

Banking shares that had fallen on the MerVal in recent days continued to sag due to a continued farmers strike in Argentina that has fueled political uncertainty in recent weeks.

"Banking shares are reflecting they are the most affected by the tensions between the government and farmers, and until there is an agreement it will be difficult to clear away the uncertainty surrounding banks in the eyes of investors," Macchi said.

Farmers went on strike last week protesting a tax hike on grains exports, and extended the strike on Thursday.

The strike has caused market jitters in recent weeks, forcing the central bank to intervene heavily to prevent the peso currency from weakening amid increased dollar-buying by ordinary Argentines.

Volume on the broad market was relatively strong at $45.9 million. Among active shares, 32 rose, 32 declined and 21 were unchanged.

On the debt market <AR/BONOS>, bonds traded locally closed 0.5 percent higher on average as investors sought to take advantage of recent losses, also fueled by the farmers strike.

The central bank continued to sell dollars aggressively on the foreign exchange market, helping the peso to strengthen, traders said

In informal trade between foreign exchange houses, as measured by Reuters, the peso <ARSB=> closed at 3.235/3.2375 per dollar.

In formal interbank trade <ARS=RASL>, where the central bank intervenes to stabilize the currency, the peso gained 0.48 percent to 3.145/3.1475 per dollar. (Reporting by Walter Bianchi, Writing by Kevin Gray; Editing by Diane Craft) ((buenosaires.newsroom@reuters.com; +54 11 4510-2505; Reuters Messaging: kevin.gray.reuters.com@reuters.net))

Keywords: MARKETS ARGENTINA/

DIARY - United States - to June 13, 2008

Reuters: [2008-05-16 23:30:00]

    DIARY - UNITED STATES - to June 13, 2008 
   *ALL TIMES EST/GMT 
 
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    WASHINGTON - Eurasia Center and Eurasian Business Coalition 
hold 2008 U.S.-Russia Forum, 0900/1300 
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Indicators for April, 1000/1400 
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Wall St Week Ahead: Record oil may hold stocks hostage

Reuters: [2008-05-16 23:29:00]

By Kristina Cooke

NEW YORK, May 16 (Reuters) -U.S. stocks will face major obstacles to extending their gains next week if the price of oil continues to break records, as fears about inflation and the discretionary spending power of the embattled American consumer are forced into the spotlight.

The gyrating price of oil has been a significant factor in the price of stocks in the past week. Oil rose to a record $127.82 a barrel on Friday, after Goldman Sachs, the most active investment bank in energy markets, forecast a continued spike in prices through the end of the year, due to thin supply.

"The idea that oil could rise a lot further before it reaches a tipping point is really slipping into investors' psyche," said Bucky Hellwig, senior vice president at Morgan Asset Management, in Birmingham, Alabama.

Earnings from a handful of major retailers, including Target <TGT.N>, could shed more light on how much the rising costs of fuel and food and deteriorating home prices are affecting consumer spending. Investors also will be keeping a keen eye on inflation data.

"If oil prices continue to move up, with Memorial Day coming up, I think traders and investors will be very cautious," said Subodh Kumar, chief investment strategist at Subodh Kumar & Associates in Toronto.

The Memorial Day holiday in the United States typically marks the start of the summer driving season.

For the week, the Dow Jones industrial average gained 1.9 percent, while the Standard & Poor's 500 Index <.SPX> advanced 2.7 percent and the Nasdaq Composite Index <.IXIC> climbed 3.4 percent.

At the close on Friday, the S&P 500 was within 3 percent of being in the black for the year, while the Dow needs to gain about 2.2 percent and the Nasdaq about 4.8 percent.

THE FED'S DILEMMA

With the economy still on shaky ground, investors will pour over minutes from the Fed's last policy-setting meeting, due to be released on Wednesday, to glean clues on the outlook for interest rates. Policy-makers face a dilemma as they seek to balance their concern about rising inflation pressures against a wish to stimulate the flagging economy by continuing to cut interest rates.

In recent weeks, Fed officials have been fretting primarily about inflation and have indicated that they would prefer to hold the line on the fed funds rate at the current level of 2 percent.

Rate futures, for now, are taking the Fed at its word, showing a minimal 10 percent chance for another rate cut at the next policy meeting in June, compared with a 90 percent chance that rates will be kept unchanged.

Apart from the Fed minutes, investors will hear from three Federal Reserve Board governors -- Donald Kohn on Tuesday, Kevin Warsh on Wednesday and Randall Kroszner on Thursday. In addition, Federal Reserve Bank of Chicago President Charles Evans will speak at an event on Friday.

Given the recent focus on inflation, the U.S. Producer Price Index will be a key data point on Tuesday. Overall PPI for April is projected to increase 0.4 percent, according to economists polled by Reuters. In March, the headline PPI jumped 1.1 percent.

Core PPI, excluding volatile food and energy prices, is forecast to rise 0.2 percent, the Reuters poll showed. In March, core PPI gained 0.2 percent.

On Wednesday, a government report unexpectedly showed that the Consumer Price Index, another top inflation gauge, grew less than expected in April.

As first-quarter earnings season peters out, companies left to report earnings include Target, Home Depot <HD.N>, Staples <SPLS.O> and Gap <GPS.N>. So far, retailers' earnings have been mixed, depending on how they were able to cope as consumers scaled back their spending.

YAHOO! DRAMA AND HOME SALES, TOO

Any new developments in the Yahoo! <YHOO.O> and Microsoft <MSFT.O> saga could also determine the market's direction next week. Financier Carl Icahn has launched a campaign to replace Yahoo's board with directors who would reopen talks with Microsoft saying Yahoo acted "irrationally" in refusing the software company's $47.5 billion bid.

"More merger and acquisition activity in technology could shift the market to the upside, particularly the Nasdaq," Kumar said.

Existing home sales for April, due on Friday, are expected to slip to an annual rate of 4.85 million units from 4.93 million the previous month, according to economists polled by Reuters.

"Everything ties back into the consumer," Hellwig said. "If there's more deterioration in existing home sales than people expect, it will put more focus on how that affects the consumer, for whom their house is typically their biggest asset."

(Wall St Week Ahead runs weekly. Questions or comments on this column can be e-mailed to: kristina.cooke(at)reuters.com)

(Additional reporting by Caroline Valetkevitch; Editing by Jan Paschal)

((kristina.cooke@thomsonreuters.com; +1 646 223 6154; Reuters Messaging:rm://kristina.cooke.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)) ((For London stock market outlook please click on [.L/O]

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Keywords: COLUMN STOCKS OUTLOOK

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Chile stocks rise on ADR purchases, peso firms

Reuters: [2008-05-16 23:06:00]

SANTIAGO, May 16 (Reuters) - Chilean stock indexes closed higher for a third session on Friday, boosted by electric utility Enersis and dominant bank Santander.

The peso rose for a third day against the dollar even though the central bank continued its daily purchase of greenbacks.

The all-market IGPA index <.IGPA> closed 1.15 percent higher at 13,880.58 points, while the blue-chip IPSA index <.IPSA> advanced 1.55 percent to 2,963.84 points.

Traders said indexes were pushed higher after American Depositary Receipts for regional energy group Enersis and for Banco Santander Chile were recommended on a televised investment show in the United States.

"The push came this morning from abroad. Local trade has been thin," one trader said. "Investors began buying ADR shares in Enersis and Santander, and some other big stocks latched on. There really isn't any local news to speak of."

Of Chile's 40 blue-chip stocks, 21 closed higher, 16 fell and three were unchanged.

Gains were led by Endesa Spain's <ELE.MC> regional utilities, as regional investment arm Enersis <ENE.SN> jumped 4.89 percent and generating subsidiary Endesa Chile <END.SN> rose 3.88 percent. The two issues are weighted at about 15 percent of the IPSA.

Leading bank Santander Chile <STG.SN> surged 5.26 percent to 24 pesos a share.

Other gaining shares included chemical and fertilizer exporter SQM <SQM_pb.SN>, up 4.04 percent, and iron ore exporter CAP <CAP.SN>, with an advance of 3.78 percent.

Traders said next week local investors will continue monitoring foreign and U.S. markets.

The Chilean peso <CHILJ> <CLP=CL> edged 0.15 percent higher to close at 466.20/467.50 per dollar compared with Thursday's close at 466.90/467.20.

The central bank on Friday continued with its daily purchase of $50 million on the currency exchange as part of an $8 billion intervention to curb the strength of the peso against the greenback.

Chilean inflation-adjusted five-year central bank bond yields <CLBCU5Y=RR> ended at 2.89 percent from the prior session's close at 2.99 percent, on stronger demand and expectations for higher inflation, traders said. (Reporting by Lisa Yulkowski; Editing by Leslie Adler)

((lisa.yulkowski@reuters.com; +56-2-370-4290))

Keywords: MARKETS CHILE/