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Broadgate: Market News 27/6

27 June 2012

Major stock indexes bounced back on Tuesday, but trading was light with the outlook clouded by doubts before yet another summit to tackle the European debt crisis.

U.S. stocks partly recovered from losses of more than 1 percent on Monday, led by housing shares after stronger-than-expected data on home prices.

The consumer discretionary sector was the top gainer on the S&P 500, followed by energy shares, which were boosted by a 2.3 percent jump in Brent crude prices.

Traders remained cautious as Spanish short-term borrowing costs nearly tripled and U.S. consumer confidence fell in June to its lowest level in five months.

“Certainly in the United States stocks are nicely priced, and for a long-term investor it is an attractive entry point, but then what about these macro risks hovering around the market? I think it’s having a dampening effect,” said John De Clue, global market strategist at U.S. Bank’s wealth management group in Minneapolis.

Spanish 10-year bond yields rose after demand at a shorter-term bill sale fell despite significantly higher yields. Hopes faded that the European Union summit later this week would produce game-changing measures to ease the debt crisis.

Madrid has formally asked for funds to bail out its banks in a move some see as a prelude for a full-blown bailout of the euro zone’s fourth-largest economy.

Rupert Murdoch’s News Corp said it was considering splitting into two publicly traded companies, and sources familiar with the matter said publishing would be separated from entertainment. Shares jumped 8.3 percent to $21.76 on volume of 73.1 million shares, making it the day’s most actively traded stock on the Nasdaq.

The Dow Jones industrial average rose 32.01 points, or 0.26 percent, to 12,534.67. The S&P 500 Index gained 6.27 points, or 0.48 percent, to 1,319.99. The Nasdaq Composite gained 17.90 points, or 0.63 percent, to 2,854.06.

About 5.9 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE Amex, below the daily average of 6.82 billion so far this year.

JPMorgan Chase & Co shares rose 1.1 percent to $35.71 after Goldman Sachs added the bank to its conviction buy list. Morgan Stanley, cut to “neutral” by Goldman, added 0.2 percent to $13.51.

The PHLX housing index .HGX jumped 2.6 percent after S&P/Case Shiller data showed home prices in 20 U.S. metropolitan areas gained 0.7 percent on a seasonally adjusted basis, topping economists’ expectations for a 0.4 percent gain.

Facebook shares rose 3.2 percent to $33.10 a day before the underwriters of the online social network’s recent IPO are expected to release research on the company.

Advancing issues beat decliners on the New York Stock exchange by about 9 to 5 while on the Nasdaq almost seven issues rose for every five that fell.

Commodities

Brent crude edged down to just below $93 a barrel on Wednesday, as heightened concerns that European leaders would fail to resolve the region’s crippling debt crisis at a key meet this week offset worries about tighter North Sea supplies.

Brent crude edged down 10 cents to $92.92 by 0235 GMT. U.S. crude was at $79.50, up 14 cents, supported by expectations of a drop in domestic oil stocks.

Gold regained strength on Wednesday, although concerns European leaders would fail to come up with concrete measures to solve the region’s debt crisis could prompt a flight to the safety of the U.S. dollar and dent bullion.

Gold rose $1.16 an ounce to $1,572.94 by 0316 GMT, having hit a low around $1,567 on Tuesday after German Chancellor Angela Merkel sought to bury once and for all the idea of common euro zone bonds to deal with the debt problems.

Currencies

The euro stayed lower against the yen and the dollar as Italy sold 2.99 billion euros of zero coupon bonds due May 2014.

The 17-nation shared currency was 0.7 percent weaker at 98.95 yen as of 10:20 a.m. London time, and fell 0.1 percent to $1.2486.

Italy sold the 2014 bonds at a yield of 4.712 percent, more than the 4.037 percent paid on May 28. The Treasury had set a maximum target of 3 billion euros for the sale.

The information set out herein has been obtained from various public sources and is by way of information only. Broadgate Financial can accept no liability of any sort in relation thereto and readers should obtain their own verification of any statement before making any decision which may have any financial or other impact.

Neither the information nor the opinions herein constitute, or are they to be construed as, an offer or a solicitation of an offer to buy or sell investments.

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