Monday, July 19, 2010

U.S. Futures, European Stocks Rise on Earnings, Takeovers

July 19 (Bloomberg) -- U.S. index futures and European stocks rallied as Halliburton Co. reported earnings that beat estimates and four companies received $1 billion-plus takeover offers. The forint weakened after Hungary’s deficit-reduction talks with the International Monetary Fund broke down.

Futures on the Standard & Poor’s 500 Index gained 0.4 percent at 7:40 a.m. in New York, after the U.S. benchmark index tumbled 2.9 percent July 16. The Stoxx Europe 600 Index advanced 0.2 percent. The forint weakened 2.3 percent versus the euro and Hungary’s BUX Index declined 2.4 percent. Irish bonds fell after Moody’s Investors Service lowered the nation’s rating one step.

Nokia Siemens Networks said it will pay $1.2 billion for wireless network assets from Motorola Inc., and buyout firm Onex Corp. and the Canada Pension Plan Investment Board are considering a 2.9 billion-pound ($4.4 billion) bid for Tomkins Plc. Halliburton said its profit almost doubled, becoming the 21st of 24 companies in the S&P 500 index to post better-than- estimated earnings, according to data compiled by Bloomberg. International Business Machines Corp. and Texas Instruments Inc. also announce results today.
“After taking a battering for much of Friday’s session, there are signs of stability returning to the U.S. indices ahead of the open,” said Anthony Grech, head of research at IG Index in London. “Earnings season continues and today’s main event for traders is IBM’s latest set of numbers.”

The gain in U.S. futures indicated the S&P 500 may pare some of its July 16 drop, the biggest decline this month. Halliburton rose 2.2 percent in pre-market trading and IBM was little changed at $128.11.

U.S. Housing Market
The National Association of Home Builders Market Index probably fell to 16 this month from 17 in June, according to a survey of economists before the report due at 10 a.m. in Washington. Data due later this week may show housing starts dropped for a second month in June, while existing home sales tumbled 9.9 percent from the previous month, according to surveys of economists.

More than seven stocks advanced for every five that decline in Europe’s Stoxx 600 index. Tomkins Plc surged 32 percent after saying it may get a takeover offer, and International Power Plc jumped the most since 2008 after entering talks to combine some assets with GDF Suez SA. BP Plc dropped 2.9 percent after a person familiar with the matter said talks to sell half the company’s stake Alaska’s Prudhoe Bay oil field to Apache Corp. stalled. The MSCI Asia Pacific Index excluding Japan fell 1 percent, its third straight decline.

IMF Talks End

Credit-default swaps on Hungarian government debt jumped 45.5 basis points to 362, the highest level since June 8, according to data provider CMA. The IMF and European Union declined to endorse Prime Minister Viktor Orban’s plans to control the budget deficit as part of a 20 billion-euro ($25.8 billion) emergency bailout because “a range of issues remain open,” the Washington-based lender said in a July 17 statement. The government must make “tough decisions, notably on spending,” to comply with deficit requirements, the EU said.

Default swaps on Irish government debt jumped 17 basis points to 266, according to CMA, the highest level since June 30. The Markit iTraxx SovX Western Europe Index of default swaps on 15 governments increased 5.5 basis points to 140, the biggest one-day rise in three weeks, CMA data show.

The MSCI Emerging Markets Index declined for a third day, losing 0.5 percent. The South Korean won fell 1 percent against the dollar and India’s rupee lost 0.5 percent, leading Asian currencies lower after a private report last week showed confidence among American consumers dropped to an 11-month low in July, worsening the outlook for regional exports.

U.S. Treasuries
The yield on the 10-year Treasury rose one basis point to 2.94 percent after the yield slid eight basis points at the end of last week. The yield on the two-year German note increased two basis points to 0.80 percent, while the similar-maturity gilt yield also climbed two basis points, to 0.75 percent.

Copper for delivery in three months advanced 0.7 percent to $6,530 a metric ton on the London Metal Exchange, the first increase in three sessions. Tin led gains on the LME, rising 1.4 percent. Crude oil for August delivery dropped 4 cents to $75.97 a barrel on the New York Mercantile Exchange, the fourth consecutive decline.
To contact the reporter on this story: Stephen Kirkland in London at

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