Business Blog Posts

Wall Street was lifted on Monday by modest gains in the S&P 500 and the Nasdaq, but the lowest volumes so far this year indicated an equities rally may be peaking after rising 13 percent since December.

Retail sales figures for January, due at 8:30 a.m. EST, may provide further direction for equities. Economists polled by Reuters expected a 0.6 percent rise in retail sales, matching December results.

Peter Cardillo, chief market economist at Avalon Partners in New York, said he expected retail sales to confirm a picture of a steadily improving economy that has helped drive equities recently.

"I don't expect the market to collapse and I don't expect the market to gain much strength today, but I do believe we could tack on another positive session," he said.

S&P 500 futures fell 1.1 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures dropped 6 points, and Nasdaq 100 futures were off 1.5 points.

Other data due later Tuesday included import and export prices as well as the New York Fed's manufacturing index for February.

China reported 4.9 percent inflation, below forecasts, but price pressures excluding food were at their strongest level in at least a decade and could force the central bank to keep tightening monetary policy. Gold and copper prices gained, supported by a weaker dollar.

In company news, Deutsche Boerse (DB1Gn.DE) and NYSE Euronext (NYX.N) were expected to announce a deal to create the world's largest exchange operator, putting aside thorny political issues. NYSE Euronext shares were halted, pending news.

Host Hotels & Resorts Inc (HST.N), the owner of over a hundred high-end hotels operated by such brand owners as Marriott International Inc (MAR.N), Starwood Hotels & Resorts Worldwide Inc (HOT.N) reported a higher quarterly revenue. Marriott's shares gained 4.9 percent to $43 in premarket trading.

U.S. Steel Corp (X.N) rose 2.7 percent to $61.95 premarket after Goldman Sachs raised its rating on the stock to "buy" from "neutral," saying the company was well placed to gain from rising steel prices and demand.

(Editing by Jeffrey Benkoe)

Shares on Wall Street were lifted on Monday by modest gains on the S&P .SPX and the Nasdaq .IXIC, though low volumes indicated the equity rally may be reaching a peak.

Major economic data, including retail sales figures for January, will likely provide further direction for equities during the session.

Economists polled by Reuters expected retail sales to have risen by 0.6 percent in January, matching December's rise.

Other data due included import and export prices as well as the New York Fed's manufacturing index for February, both set for 1330 GMT.

In company news, Deutsche Boerse (DB1Gn.DE) and NYSE Euronext (NYX.N) were expected to announce a deal to create the world's largest exchange operator, putting to one side the thorny political issues that pose a challenge to its successful completion.

General Motors (GM.N) will add over 20 new and upgraded models in China, its CEO said, as the U.S. automaker looks to use its leading position in the world's biggest car market to reclaim the No.1 carmaker spot from Toyota Motor Corp.

Biotechnology company Genzyme Corp (GENZ.O) and French drugmaker Sanofi-Aventis SA (SASY.PA), which is seeking to acquire it, are still haggling over price.

Major companies to report quarterly earnings include Dell (DELL.O), with analysts predicting the technology group to show earnings per share of 37 cents, up from 28 cents a year ago.

On the economic front, China reported 4.9 percent inflation, matching figures widely cited by traders in financial markets on Monday.

The pan-European FTSEurofirst 300 .FTEU3 index of top shares edged up in early trade, as upbeat earnings companies including British lender Barclays (BARC.L) and French food group Danone (DANO.PA) helped underpin investor confidence.

(Reporting by Harpreet Bhal; Editing by Dan Lalor)

Highlighting how political concerns are weighing on a wave of consolidation sweeping the industry, Singapore Exchange tweaked its $7.9 billion bid for rival ASX to allow more Australian directors onto a combined board as it seeks to win the support of Australian lawmakers wary of ceding control of the local exchange.

Nationalism is one of the biggest hurdles to the industry mergers as exchanges are often seen as symbols of national pride and important to attracting business and capital. The deals, including a bid by the London Stock Exchange to take over Toronto Stock Exchange operator TMX Group, face intense scrutiny from regulators and politicians around the world.

A number of key details in the Deutsche Boerse and NYSE Euronext merger have been hammered out, sources said. A definitive agreement is expected to be announced on Tuesday, one source said.

But several difficult issues have yet to be addressed, which is likely to add to concerns being raised on both sides of the Atlantic.

Politics is also seen as the driver behind the revised SGX plan that gives an equal number of board seats to Australians and Singaporeans in the combined entity compared to less than half for the ASX under the earlier offer.

The bourses said in a joint statement on Tuesday there would also be three "international" directors although they would initially come from the SGX board. The size of the board has been whittled down from 15 to 13.

"All the resistance to the deal has been political. The steps taken today should address some of those political issues," said Mark Nathan, portfolio manager at Arnhem Investments. "It clearly carves out and maintains some sovereignty within Australia, and there should be a lot less resistance to the deal in its new form."

There is no change to the value of the SGX offer and ASX shareholders will still hold about 36 percent of the company under the new proposal.

WHO NEXT?

Similar political and regulatory hurdles may threaten the Deutsche Boerse-NYSE Euronext tie-up.

"The biggest question mark in general is obviously the European political and regulatory landscape coming out of this," one source said.

The Frankfurt- and New York-based companies were center stage in the merger frenzy that erupted last week and heated up on Monday as Brazil's BM&FBovespa said it was eyeing its own prospects and as traders buzzed that CME Group could jump into the fray.

Fox Business Network reported that CME Group, currently the world's top derivatives exchange group, may make a hostile bid for NYSE Euronext, citing bankers.

A spokesman for Chicago-based CME declined to comment. CME officials have been guiding investors away from expectations that the company would do a merger deal.

The dollar was slightly weaker against a basket of major currencies .DXY, while the euro hovered near three-week lows as concern about euro zone debt rose up again.

World stocks as measured by MSCI .MIWD00000PUS were up 0.2 percent, not far from last week's 30-month highs. Japan's Nikkei .N225 logged a 10-month closing high and Europe's FTSEurofirst 300 was up a quarter of a percent.

A raft of data -- including euro zone fourth-quarter GDP, German business sentiment and UK inflation -- lay ahead during the session.

China's inflation was lower than expected at 4.9 percent in the year to January.

Although price pressures continued to build and will force the central bank to stick to its course of gradual monetary tightening, the report took the edge off concern about firmer action.

"The data probably slightly eased expectations of immediate tightening, although in the overall scheme of things, this doesn't change the fact that China is still in a tightening phase," said Etsuko Yamashita, chief economist at SMBC.

Inflation pressures, particularly in emerging markets, have been part of the motivation this year for investors to move into developed stock markets.

A number of those countries are also having problems, however, particularly Britain. U.S. consumer price data, meanwhile, will be reported on Thursday.

In Europe, the French and German economies expanded by less than expected in the fourth quarter, data showed on Tuesday, suggesting the euro zone may not have accelerated out of a third-quarter slowdown.

EURO PERIPHERY

The euro steadied, supported by Asian demand, but was held back by skepticism that European leaders would come up with a quick and effective solution to tackle the euro zone's debt and banking problems.

It hovered near a three-week low hit a day earlier when reports about ailing lender WestLB triggered another outbreak of worries on euro zone debt and banking problems.

Peripheral euro zone yield spreads have been widening in the past week on uncertainty over a rescue package for the region, and there was some disappointment after a meeting of European finance ministers on Monday.

"Initial optimism at the beginning of the year over a comprehensive bailout package in the euro zone is now starting to fade away," said Lee Hardman, currency strategist at BTM UFJ.

Highlighting how political concerns are weighing on a wave of consolidation sweeping the industry, Singapore Exchange tweaked its $7.9 billion bid for rival ASX to allow more Australian directors onto a combined board as it seeks to win the support of Australian lawmakers wary of ceding control of the local exchange.

Nationalism is one of the biggest hurdles to the industry mergers as exchanges are often seen as symbols of national pride and important to attracting business and capital. The deals, including a bid by the London Stock Exchange to take over Toronto Stock Exchange operator TMX Group, face intense scrutiny from regulators and politicians around the world.

A number of key details in the Deutsche Boerse and NYSE Euronext merger have been hammered out, sources said. A definitive agreement is expected to be announced on Tuesday, one source said.

But several difficult issues have yet to be addressed, which is likely to add to concerns being raised on both sides of the Atlantic.

Politics is also seen as the driver behind the revised SGX plan that gives an equal number of board seats to Australians and Singaporeans in the combined entity compared to less than half for the ASX under the earlier offer.

The bourses said in a joint statement on Tuesday there would also be three "international" directors although they would initially come from the SGX board. The size of the board has been whittled down from 15 to 13.

"All the resistance to the deal has been political. The steps taken today should address some of those political issues," said Mark Nathan, portfolio manager at Arnhem Investments. "It clearly carves out and maintains some sovereignty within Australia, and there should be a lot less resistance to the deal in its new form."

There is no change to the value of the SGX offer and ASX shareholders will still hold about 36 percent of the company under the new proposal.

WHO NEXT?

Similar political and regulatory hurdles may threaten the Deutsche Boerse-NYSE Euronext tie-up.

"The biggest question mark in general is obviously the European political and regulatory landscape coming out of this," one source said.

The Frankfurt- and New York-based companies were center stage in the merger frenzy that erupted last week and heated up on Monday as Brazil's BM&FBovespa said it was eyeing its own prospects and as traders buzzed that CME Group could jump into the fray.

Fox Business Network reported that CME Group, currently the world's top derivatives exchange group, may make a hostile bid for NYSE Euronext, citing bankers.

A spokesman for Chicago-based CME declined to comment. CME officials have been guiding investors away from expectations that the company would do a merger deal.