In the U.S.: Stock Futures Rise on European Debt Sales

12 January 2012


News out of Europe continues to dominate proceedings in the U.S. Retail sales figures may boost confidence.

U.S. stock futures advanced, indicating the Standard & Poor’s 500 Index will extend three days of gains, after borrowing costs fell at auctions of Spanish and Italian debt.

Jaguar Mining Inc. (JAG), the target of a takeover bid from China’s Shandong Gold Group Co. in November, jumped 5.1 percent. Chevron (CVX) Corp., the second-largest U.S. oil company, dropped 1.6 percent after saying fourth-quarter profit was “significantly below” that of the previous period.

Futures on the S&P 500 expiring in March climbed 0.6 percent to 1,296.5 at 7:19 a.m. in New York. Dow Jones Industrial Average futures gained 67 points, or 0.5 percent, to 12,455. The S&P 500 has risen 2.8 percent this year on better- than-forecast U.S. economic data and amid optimism that Europe is taking steps to tame the region’s debt crisis.

“Confidence begets confidence,” said Manish Singh, the London-based head of investment at Crossbridge Capital, which has more than $2 billion under management. “A success at the auctions and narrowing yields on both Italian and Spanish debt is a very positive outcome. This should give the market something to hold on to, but the question remains if the yield compression on Italian debt will continue in the future.”

Spain sold 9.98 billion euros ($12.7 billion) of bonds maturing in 2015 and 2016, including a new three-year benchmark security, twice the maximum target of 5 billion euros set for the sale. Italy auctioned 8.5 billion euros of one-year bills at a rate of 2.735 percent, down from 5.952 percent at the last auction of similar-maturity securities on Dec. 12.

A Commerce Department report at 8:30 a.m. in Washington may show that sales at U.S. retailers rose in December as Americans bought discounted holiday items, giving the economy a boost entering 2012. The projected 0.3 percent gain would follow a 0.2 percent advance in November, according to the median forecast of 75 economists surveyed by Bloomberg.

Data from the Labor Department at the same time may show that initial jobless claims rose to 375,000 last week from 372,000 the previous period, according to the median of 45 economists.

The Federal Reserve may embark on as much as $500 billion of quantitative easing in the second half, Bill Gross, who runs the world’s biggest bond fund at Pacific Investment Management Co., said in a televised interview with Bloomberg HT news channel broadcast today.

The Bank of England refrained from adding to emergency stimulus again today as policy makers await new forecasts and the economy showed some resilience heading into 2012. The Monetary Policy Committee maintained its bond-purchase target at 275 billion pounds ($421 billion), as forecast by all but one of 41 economists in a Bloomberg survey.

Jaguar Mining rallied 5.1 percent to $7.18 in Germany after saying “several” parties have entered into confidentiality agreements regarding a possible acquisition or merger.

“These parties have access to due diligence materials and are continuing to conduct their evaluations,” Jaguar said in a statement late yesterday.

CA Inc. (CA), the maker of software for mainframe computers, climbed 4 percent to $21.78 in German trading. Hedge fund Taconic Capital Advisors LP said it acquired a 5.1 percent stake in the company and is in talks with management to boost equity investors’ returns.

EBay Inc. (EBAY), the largest Internet marketplace, added 0.6 percent to $31.71 as CLSA Asia-Pacific Markets Ltd. initiated coverage of the stock with a “buy” rating and a price estimate of $40.

Chevron declined 1.6 percent to $106.02 in pre-market New York trading. The energy company said fourth-quarter profit was “significantly below” third-quarter results after maintenance work at a California refinery and the sale of a U.K. plant curbed fuel output.

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