Stock Market Update - Friday, October 29, 2010 Cautious Choppy Trend

Stock Market Update
Friday, October 29, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: 
(OCT. 29, 4:00 PM EDT)
Dow Jones 11,118.49 +4.54

S&P 500    1,183.26 -0.52
Nasdaq     2,507.41 +0.04


Dow Jones CLOSING Averages: DJIA 11,118.49 UP 4.54  30 INDUS     11,118.49 UP    4.54 OR    0.04%
  20 TRANSP     4,754.29 UP   20.11 OR    0.42%
  15 UTILS        404.86 UP    0.88 OR    0.22%
  65 STOCKS     3,863.64 UP    7.24 OR    0.19%

Stock Trading Activity (4:00 p.m. EDT)

Market        Advancing       Declining
NYSE        547,904,157     437,266,854
AMEX          8,958,804       4,329,232
NASDAQ    1,169,540,942     849,912,695

US DOLLAR FUTURES INDEX DXY: OCT. 29, 4:00 PM EDT: 77.18  0.13 (0.17%)  

US COMMODITY PRICES: (OCT. 29, 4:05 PM EDT)
Crude Oil     81.37     - 0.07%
Natural Gas     4.05     + 0.20%
Gasoline     2.10     - 0.45%
Heating Oil     2.22     - 1.04%
Gold     1358.40     + 1.04%
Silver     24.72     + 3.09%
Copper     3.73     - 1.32%

SECTOR SUMMARY: (4 p.m. EDT)
Basic Materials +0.54%
Capital Goods     +0.19%
Conglomerates     -0.44%
Cons. Cyclical     +0.01%
Cons. Non-Cyclical +0.83%
Energy     +0.29%
Financial     -0.06%
Healthcare     -0.32%
Services     +0.22%
Technology     -0.15%
Transportation     +0.35%
Utilities     +0.23%

SOFT US TRADING - LAST TRADING DAY

U.S. stocks moved between positive and negative territory Friday on low volume.

Stocks wavered with the dollar and after a mixed batch of economic and earnings news Friday, and as investors continued to weigh the potential effect of the election and the next steps from the Federal Reserve.

Friday, third-quarter economic growth came in just short of expectations while investors remained skittish about next week's Federal Reserve meeting and midterm elections.

In early trading, the Dow Jones Industrial Average edged up 6 points, or 0.1%, to 11120, in recent trading. Microsoft led the measure's gains, up 1.1%. The software giant's fiscal first-quarter profit climbed 51%, benefiting from a continued strong response to the Windows 7 operating system and Office 2010, with each business seeing year-over-year revenue growth.

Slower-than-expected U.S. economic growth and fresh buying from a new exchange-traded fund helped buoy oil and gold prices Friday.

Commodities edged higher as the dollar declined after the GDP report. Traders were disappointed by third quarter U.S. economic growth. The gross domestic product rose at an annual rate of 2.0%, better than the 1.7% reported for the second quarter, Commerce Department data show.

As the market opened, the dollar weakened slightly, with the U.S. Dollar Index, which tracks the U.S. currency against a basket of six others, off 0.1%. Meanwhile, Treasurys edged higher, pushing the yield on the 10-year note down to 2.63%. Crude-oil futures fell while gold futures advanced.

The U.S. Commerce Department said Friday that GDP in the U.S. rose 2% in the third quarter. That was roughly in line with expectations from economists who expected GDP growth of 2.1% for the world's largest oil consumer.

Consumer Sentiment Dips - Lowest in 11 Months
U.S. consumer sentiment worsened more than expected in October, hitting its weakest level since November 2009, with concern about the economy high leading into next week's election, a survey showed on Friday.

Gallup Poll Sees Fear of Layoffs
Employees' anxiety and fears of layoffs have been aggravated by the stormy economic climate of the past two and a half years. Those fears can be worsened in work environments where low trust, poor communication, or unclear expectations prevail.

http://gmj.gallup.com/content/144044/Exacerbating-Fear-Layoffs.aspx

Consumers Issue a Cautious 
Christmas Spending Forecast
After two anemic holiday retail seasons, U.S. consumers remain budget-conscious in estimating how much money they will lay out on Christmas gifts this year. The average of $715 they predict they will spend is similar to their $740 estimate of last October, although off sharply from $909 in October 2007.
http://www.gallup.com/poll/143987/Consumers-Issue-Cautious-Christmas-Spending-Forecast.aspx


OIL FUTURES:
US Crude Oil: $ 81.75 per barrel Nymex Crude Closes 73c Lower At $81.45/Bbl

Crude Oil Slips As Dollar Gains Ground

Crude futures slipped on Friday as the dollar gained ground, but a report on third-quarter gross domestic product that was roughly in line with expectations kept prices from straying too far south.

Light, sweet crude for December delivery fell 50 cents, or 0.6%, to $81.68 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange lost 35 cents, or 0.4%, to $82.24.

The drop in crude prices came as the dollar advanced against other currencies, making assets priced in the U.S. currency relatively expensive. The dollar and oil have had an off and on, inverse trading relationship for years, particularly when supply and demand indicators have not clearly steered crude prices.

The ICE Dollar Index, which measures the greenback against a basket of other currencies, rose to 77.347 from 77.179 earlier.Front-month November reformulated gasoline blendstock, or RBOB, fell 0.44 cent, or 0.2%, to $2.1095 a gallon. November heating oil shed 1.27 cents, or 0.6%, to $2.2308a gallon.

NATURAL GAS:

Futures Close Up 3.9% At $4.042/MMBtu

Natural gas futures climbed Friday on speculation that cooler weather in some major gas-heating markets during the coming week will boost demand for the fuel.

Natural gas for December delivery settled up 14.8 cents, or 3.8%, to $4.038 a million British thermal units on the New York Mercantile Exchange. The benchmark contract hasn't settled above $4/MMBtu since Sept. 23.

Strong U.S. gas production this year has bloated U.S. gas inventories, to 3.754 trillion cubic feet last week, the Energy Information Administration said Thursday, just short of the record high of 3.837 set in November 2009.

PRECIOUS METALS:

US Gold: $ 1,357.10

US Silver: $ 24.60

Gold Up On Dollar Weakness - New ETF Debut

The most actively traded contract, for December delivery, was recently up 0.2%, or $2.8, at $1,345.30 per troy ounce on the Comex division of the New York Mercantile Exchange.

Gold prices are also seeing support from a new exchange traded fund. ETFS Precious Metals Basket, which trades under the symbol GLTR, is the latest addition to the market. Launched by ETF Securities last week, the fund lets buyers invest in a basket of gold, silver, platinum and palladium.

THE IMF SOLD 32 TONS

The International Monetary Fund- IMF reported they sold 32.3 metric tons of gold In September.

The International Monetary Fund sold a total of 32.3 metric tons of gold in September, including the sale of 10 metric tons to Bangladesh's central bank.

The 22.3 metric tons that were sold into the market last month--valued at nearly $959 million at Friday's prices--bring the total amount of on-market sales to 129.1 metric tons, a fund spokesman said Friday.

The sales are part of the IMF's plan to offload 403.3 metric tons to create a more stable income model and boost support for low-income countries.

The IMF has been steadily selling in the market since early in the year, coordinating the effort with regularly scheduled sales by European central banks to avoid market disruptions. About 212 metric tons were sold off-market to central banks of India, Mauritius and Sri Lanka in November.

The IMF's sales come as the price of gold has been soaring against a backdrop of low interest rates and a weakening dollar.


2% PERCENT US GDP
US Economy Grows, But Pace Still Slow
US economic growth edged up as expected in the third quarter but not enough to chip away at high unemployment or change perceptions of more monetary easing from the Federal Reserve next week.

The last trading day of October was heading for a soft start before the Commerce Department reported the US economy grew at a 2% clip in the third quarter.

CHICAGO DATA: SLOW ECONOMIC GROWTH, INFLATION UP

U.S. economic activity rises modestly during October, according to a survey of Chicago area purchasing managers. Inflation surge during month, defies a trend of low inflation Fed says is hampering economic recovery. The Chicago PMI in October rose to 60.6 from 60.4.

12 HOME LOAN BANKS POST 3Q GAINS
The 12 regional Federal Home Loan Banks report positive combined 3Q net income of $732M, compared to combined losses of $165M one year ago, when five banks reported losses.

US BONDS:

Total Sales : 597,000
Daily Volume: 119,400
3 Month     0.09%     -0.02 (-18.18%)
6 Month     0.15%     -0.01 (-6.25%)
2 Year     0.34%     -0.02 (-5.56%)
5 Year     1.14%     -0.02 (-1.72%)
10 Year     2.60%     -0.01 (-0.38%)
30 Year     3.99%     -0.01 (-0.25%)

CHEVRON PROFIT DOWN 1.6% AFTER 2009 GAINS
Oil giant's 3Q earnings slip to $3.77 billion, or $1.87 a share, as revenue increases 7.5% to $48.55 billion benefiting from higher commodity prices and stronger refining margins. Shares fall 2%.

EMPLOYMENT COSTS RISE 0.4%
Labor Department says its 3Q employment cost index climbed 0.4%, below the 0.5% rise expected by analysts, as a tight job market continues to hold down compensation increases. Wages and salaries inch up 0.3%, with benefit costs up 0.6%.

NEW YORK BUSINESS ACTIVITY GAINS IN OCTOBER

Business activity picks up despite a cutback in the volume of spending by area purchasing managers, according to the Institute for Supply Management-New York, whose business conditions index rises to 64.7 from 58.3 in September..

HONDA MOTOR 2Q PROFIT MORE THAN DOUBLES

Honda Motor says its net profit more than doubled in the fiscal 2Q from a year earlier, as government buying incentives boosted domestic sales while cost-cutting contributed to its bottom line, canceling out the impact of the yen's surge.

INTERPUBLIC PROFIT CLIMBS 88%

Advertising firm's 3Q earnings rise to $45.3 million, or 8c a share, on lower costs and higher revenue. Fitch lifts Interpublic's ratings out of junk territory, saying it has demonstrated ability to deliver competitive organic revenue growth.

CONSTELLATION ENERGY SWINGS TO LOSS
Power company swings to a 3Q loss of $1.41 billion, or $6.99 a share, with adjusted results missing analysts' estimates, after the company books major charges related to its nuclear joint ventures. Shares drop 2%.

CATERPILLAR TO BUILD LOCOMOTIVES IN INDIANA

Caterpillar Inc. (CAT) said Friday it will open a railroad locomotive assembly plant in Muncie, Ind., that is expected to employ up to 650 workers by 2012.

Caterpillar, which acquired locomotive builder Electro-Motive Diesel in August, plans to invest about $50 million to prepare an empty 750,000-square-foot building for locomotive assembly work. The site was formerly occupied by ABB Power T&D Co., which left more than a decade ago. Caterpillar, the world's largest manufacturer of construction machinery, also will build a locomotive test track at the 75-acre plant site in east-central Indiana. Initial production at the plant is expected to start in late 2011.

The Muncie plant will position the Peoria, Ill., company to sell locomotives to publicly-funded passenger rail agencies that require their rail equipment to be built in the U.S. Final assembly of Electro-Motive's locomotives now takes place in Canada through power train components for the locomotives are built at a plant in suburban Chicago that also serves as Electro-Motive's headquarters.

Electro-Motive, which was owned for decades by General Motors Corp., is a distant second in the North American market for freight locomotives behind General Electric Co (GE). The two companies are the only locomotive manufacturers serving the freight market.

The Muncie plant will be developed under Caterpillar's Progress Rail subsidiary. The Indiana Economic Development Corp. has offered Progress up to $3.5 million in performance-based tax credits and up to $1 million for job training grants. Delaware County, Ind., officials also will consider a request for about $22.5 million worth of tax abatements and tax increment financing.

The Muncie project is the latest in a series of new plants in the U.S. and abroad announced by Caterpillar the past year. The company is rearranging its global manufacturing to accommodate surging demand for construction machinery in developing countries such as Brazil and China. New U.S. plants are under way in Texas, Arkansas and North Carolina.

The Muncie plant will be largest project tackled by Alabama-based Progress Rail since being acquired by Caterpillar in 2006. Progress specializes in repairing and rebuilding rail cars and locomotives. Caterpillar executives have become increasingly interested in leveraging the company's experience with building large diesel engines into an expanded presence in the global railroad industry.

Caterpillar also is interested in applying the diesel-electric propulsion system used in locomotives to bulldozers, excavators, mining trucks and other construction equipment. Diesel engines in locomotives generate electricity for motors that provide the turning power for locomotives' wheels. The combination enables train locomotives to generate tremendous pulling power at low speeds without the use of a transmission.

Caterpillar's stock fell 10 cents to $78.50 in after-hours trading.
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BEFORE THE BELL:

US Stocks Ease into Open

U.S. stock index futures eased on Friday, with a key reading due on economic growth and caution prompting profit-taking after a strong month. 

S&P 500 futures SPc1 slipped 4.7 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 DJc1 fell 30 points, and Nasdaq 100 futures NDc1 gave up 6.75 points. 

Stocks have traded sideways this week with investors wary of taking significant bets ahead of next week's elections and a likely announcement of more stimulus from the U.S. Federal Reserve.

The gross domestic product report, due at 8:30 a.m. EDT (1230 GMT), will add to the debate over the size and timing of expected further quantitative easing from the Fed.

The GDP is forecast to expand at a 2 percent annual rate, compared with 1.7 percent in the second quarter, according to a Reuters survey of economists. 

The US Dollar steadied overnight heading into the data Friday.  Reports are due at 8:30 a.m. EDT (1230 GMT). The dollar index .DXY added 0.3 percent. The dollar and stocks have developed an inverse relationship of late, though that has weakened somewhat this week.

Mild Increase in Economic Growth Expected in Q3
U.S. economic growth likely edged up in the third quarter but not enough to chip away at high unemployment or change perceptions of more monetary easing from the Federal Reserve next week. The advance (first) estimate of Q3 Gross Domestic Product growth numbers are due at 1230 GMT.

The economy likely expanded at a greater rate last quarter as Americans loosened a tight grip on their wallets. But the expected pickup in growth wasn't strong enough to make a noticeable dent in high unemployment.

MERCK PROFIT FALLS 90%

Merck & Co Inc (MRK) reported quarterly sales that missed estimates and took an almost $1 billion charge related to a government probe. Merck is trimming expenses and adding products to replace revenue from drugs facing competition from generic manufacturers.

The drug maker sets aside $950 million to pay for an expected resolution of a U.S. probe of its former pain drug Vioxx, which contributed to a 90% drop in 3Q profit to $341.6 million, or 11c a share. Revenue jumps 84% to $11.12 billion after Schering-Plough buy. 

MICROSOFT PROFITS JUMP

Microsoft Corp (MSFT) profits gained 50%, shares moved up 3.1 percent to $27.10 in pre-market trade after its profit beat expectations on higher sales of its flagship software.

____________________________________________________________

Canadian Market:

Toronto Stocks Higher

Toronto stocks ended on a positive note Friday, posting triple-digit gains, with the materials, health care and consumer staples groups notable standouts.

Bullion finished up US$15.10 to US$1,357.60 an ounce in New York, helping lift gold issues higher. Strong earnings this week from the likes of Barrick Gold and Goldcorp also helped propel momentum in commodity stocks, overshadowing tepid U.S. earnings data and any concerns about next week's U.S. Federal Reserve meeting and midterm elections.

The S&P/TSX Composite Index rose 112.15 points, or 0.89%, to 12676.24. Advances led declines 1004 to 618. Trading volume was 484.60 million shares, down from Thursday's total of 473.90 million shares.

The S&P/TSX 60 Index closed up 6.58, or 0.91%, to 728.09 points.

The market was slightly higher early Friday led by materials, with Potash Corp. of Saskatchewan and Research In Motion spearheading broad based, but modest, gains.

At Noon the S&P/TSX Composite Index was up 66.56 points, or 0.52%, at 12629.65. Advances led declines 740 to 595. Trading volume was 193.40 million shares. The S&P/TSX 60 Index was up 4.11 points, or 0.57%, at 725.62.

The Canadian dollar also ended modestly higher Friday after gaining on broadly based U.S. dollar weakness in early trading and then surrendering most of its gains.

The U.S. dollar was at C$1.0199 at 3:27 p.m. EDT (1927 GMT), from C$1.0215 at 8:00 a.m. EDT (1200 GMT) and C$1.0210 late Thursday.

Exchange rates at 3:27 p.m. EDT (1927 GMT), 8:00 a.m. EDT (1200 GMT), and late Thursday.

            USD/CAD   1.0199  1.0215  1.0210
            EUR/CAD   1.4177  1.4161  1.4228
            CAD/JPY    78.90   79.06   79.40

Potash climbed after analysts raised their targets on the stock in the wake of its strong third-quarter earnings report. RIM was up after news that its BlackBerry messenger service will continue to run in India.  


GDP 0.3%
Canada Aug GDP Rebounds 0.3% On Oil & Gas,Trade, Manufacturing
Canada's gross domestic product rebounded 0.3% in August as output bounced back in several sectors, including oil and gas extraction, wholesale trade, manufacturing and finance, insurance and real estate, Statistics Canada said Friday.

The gain in GDP, the sum total of goods and services produced in the country, was in line with market expectations and came after a 0.1% decline in July, which wasn't revised. That drop was the first in 11 months. The bounce-back in August lifted the year-on-year rate to 4.1%

Oil and gas extraction rebounded 1.5% in August with gains in both natural gas and oil production, StatsCan said. These were partly offset by declines in metal ore mining and support activities for mining and oil and gas extraction. Activity in the broad mining and oil and gas extraction rose 0.5%.

Wholesale trade rose 1.1% after three consecutive declines with gains in all major sectors except food, beverage and tobacco, and personal and household goods. The biggest increases were in machinery and equipment and petroleum products. Retail trade edged up 0.1% 

Output in the manufacturing sector bounced back 0.5% with gains in 13 of the 21 major groups. Manufacturers of non-durable goods boosted production by 0.8%. Output in factories producing durable goods rose a milder 0.2%.

Activity in the finance and insurance sector rose 0.6% as personal and business loans, residential mortgages and mutual fund sales increased. The home resale market picked up after three consecutive declines, translating into a 5.8% increase in the output of real estate agents and brokers. Output in the broad finance, insurance and real estate sector rebounded 0.6%.

Construction activity rose 0.4% with gains in all major components, including residential and non-residential builds and engineering and repair works.

Accommodation and food services rebounded 0.7%.

Utilities output declined 0.8% as demand for electricity dropped. Forestry and logging shrank 4%, the second straight decline. Output in the public sector was flat.

 Website: http://www.statcan.gc.ca.

Toronto Indexes, Volume; 4:05 PM EDT Composite Up 112.15

 S&P/TSX Composite   12676.24  up  112.15  or 0.9%
 S&P/TSX 60 Index      728.09  up    6.58  or 0.9%
 Financials            179.41  up    1.44  or 0.8%
 Materials             407.75  up    5.21  or 1.3%
 Energy                287.95  up    2.11  or 0.7%
 Industrials           107.53  up    1.25  or 1.2%
 IT                     29.41  up    0.25  or 0.9%

Volume          Friday       Thursday
3-4:15            139.9M      94.4M
9:30-4:15       484.6M     473.8M


____________________________________________________________

South American Markets:

BRAZIL:

Brazil Stocks Close Higher

Brazilian share prices closed higher Friday ahead of Sunday's presidential runoff election in which government-backed candidate Dilma Rousseff is expected to win handily.

Brazil's benchmark Ibovespa stocks index closed 0.5% higher at 70673 points. Volume was moderate at 7.31 billion Brazilian reals ($4.3 billion).

Rousseff is the candidate of the ruling Workers' Party and is warmly supported by incumbent Brazilian President Luiz Inacio Lula da Silva.

Although nominally left-leaning, the Workers' Party in power over the last eight years has been surprisingly business-friendly. In fact, President Lula is leaving the country in excellent economic condition, with growth forecast at 7% or better and unemployment sinking to historic lows.

Rousseff is expected to continue Lula's broadly orthodox policies and may even pump up the economy more with an ambitious infrastructure program. Social Democratic challenger Jose Serra, on the other hand, has failed to make his economic policy plans clear, leaving Rousseff as the favorite among investors.

Polls this week all gave Rousseff a commanding lead of 10 to 12 percentage points going into the Sunday runoff election.

The Brazilian market on Friday shrugged off worries about the slow pace of the global economic recovery.  Investors tended to sell off shares of companies hurt by Friday's lower world commodities prices.

Blue Chips Mixed At The Close

State oil company Petrobras (PBR, PETR4.BR) fell 1.6% to close at BRL25.85 on declining world oil prices.

Mining major Vale SA (VALE, VALE5.BR) saw its shares fall 0.3% to close at BRL47.75. Vale fell because of declining global metals prices Friday.

Telecom leader Tele Norte Leste Participacoes SA (TNE, TNLP4.BR), or Oi, retreated 1.2% to close at BRL26.05.

Steel maker Usiminas (USIM5.BR, USNZY) rose by a robust 1.3% to BRL26.05. Steel rival Cia Siderurgica Nacional (SID, CSNA3.BR), or CSN, was less fortunate, falling 0.4% to BRL28.25. Thursday night, CSN reported a 37% decline in third-quarter net profits from last year to BRL720 million.

Aircraft manufacturer Empresa Brasileira de Aeronautica (ERJ, EMBR3.BR), or Embraer, advanced by a strong 2.2% to BRL12.11. Thursday night, the company reported third quarter profits of BRL1.82 billion. Although lower than year-ago profits, the company's performance was better than expected by analysts.

Minas Gerais utility Cemig (CMIG4.BR) retreated 0.4% to BRL29.94.

Real estate developer Gafisa (GFSA3.BR) advanced 2.1% to BRL14.10.



MEXICO:
Mexico's IPC Stock Index Closes At Record-High 35,568 Points

Mexico's benchmark IPC stock index closed at a new record high Friday as a reported acceleration in U.S. economic growth during the third quarter was seen boding well for the local economy.

The IPC, which comprises Mexico's 35 most-traded issues, rose 0.5%, or 191.5 points, to end the session at 35568.22. Volume was heavy, at 229.2 million shares worth a total value of 7.98 billion pesos ($646.4 million).

"It was quite volatile because it's the end of the month," a trader at the local Santander brokerage said. "But the market is holding up above the 35000-point level, consolidating."

The US GDP report confirmed that Mexico's biggest customer and trade partner continues climbing out of last year's severe recession. A sharp economic slowdown in the U.S. is considered one of the main risks to Mexico's growth in coming quarters.

Local shares were somewhat mixed, with wireless provider and IPC heavyweight America Movil (AMX) L shares falling 0.1% to MXN35.40 and cement giant Cemex (CX) CPO shares tumbling 1.5% to MXN10.82.

On the other hand, retail and beverage conglomerate Femsa (FMX) UBD shares soared 4.1% to MXN67.98, retailer Chedruai (CHDRAUI.MX) B shares jumped 5.1% to MXN39.95, and copper miner Grupo Mexico (GMEXICO.MX) B shares rose 0.4% to MXN40.61.

PERU:

Peru's Main Stock Indexes End Higher; Sol Weakens

Peru's main stock-market indexes ended higher Friday as a number of blue-chip shares gained ground. The Lima Stock Exchange's broad General index closed up by 1.21%, at 19220.93. The Selective blue-chip index ended stronger by 0.94% at 28031.77, while the key mining subindex gained 1.52%.

Precious-metals miner Compania de Minas Buenaventura SAA (BVN, BUENAVC1.Vl) increased 1.35% to end at $52.50, as the price of gold improved.

Financial holding-company Credicorp Ltd. (BAP) rose 0.81% to end at $125.00. It owns Peru's largest bank, Banco de Credito.

Copper miner Sociedad Minera Cerro Verde SAA (CVERDEC1.VL) increased 2.94% to end at $35.00 as the price of copper improved.

Peruvian miner Volcan Compania Minera SAA (VOLCABC1.VL)  also rose, up by 0.92% to 3.30 soles ($1.18). Increased mineral production and higher prices lifted Volcan's third-quarter net income to $60.6 million, compared with $50.3 million in the same period a year earlier.

The sol ended slightly weaker at PEN2.799 per dollar. In the previous session, the sol closed at PEN2.797 per dollar.

____________________________________________________________
European Markets: 

SLIGHT DECLINE IN EUROPEAN SHARES
The Stoxx Europe 600 index finished 0.02% higher at 265.96 points on the last trading day of the month, barely managing a second-straight win.

The index is down 0.9% for the week and up 3.2% for the month. Investors digested a string of U.S. economic reports. Stocks got a boost from the release of U.S. GDP data that showed a slightly faster pace of growth for the third quarter. 

European shares fell slightly in early trading on Friday with miners weaker on lower metals prices as the overnight dollar rose.

The Euro slipped to a low of 1.3806 during the overnight trade as European policy makers maintained a cautious outlook for the region.

Despite some modest gains in the US Dollar against most major currencies in early Friday trade, the Yen continues to surge, with the market quickly closing in on a very critical level.

At 0825 GMT, the FTSEurofirst 300 index of top European shares was down 0.2 percent at 1,083.24 points, after rising 0.4 percent in the previous session. Britain's FTSE 100, Germany's DAX and France's CAC40 fell between 0.1 and 0.2 percent.  

The index is on course for a gain of more than 2 percent for the month of October.
Metals prices fell, as the dollar strengthened. Miners to fall included Antofagasta (ANTO), Anglo American (AAL), Rio Tinto (RIO) and Xstrata (XTA), down between 1.3 and 2.2 percent.

EU VOWS FOR PERMANENT BAILOUT FUND
European Union leaders agreed on the need for a permanent bailout fund for euro-zone members that face fiscal crisis, a step the bloc's leaders acknowledge would require a complex change to its treaties.

LONDON: 
FTSE 100                     5675.16    -2.73   -0.05%
FTSE 250                    10843.50    -5.33   -0.05%
DJ UK Smaller Companies       913.08    -0.89   -0.10%

On Monday traders will be watching UK personal income and spending data for September at 1230 GMT and US ISM manufacturing data for October at 1400 GMT.

The Bank of England is expected to keep policy on hold yet again at its November meeting with strong third quarter gross domestic product growth putting paid to previous forecasts of a possible extension in its quantitative easing program.

UK Consumer Lending Slows

Mortgage Approvals Down
U.K. net consumer lending rose at a slower rate than expected in September as mortgage lending remained subdued and the more forward-looking mortgage approval data fell for the fifth consecutive month.

Russia's Polymetal Seeks Listing In London
Russia's gold and silver miner OAO Polymetal (PMTL.RS) is preparing to obtain a primary listing on the London Stock Exchange through its new holding company, Polymetal International PLC, Kommersant daily reports Friday, citing sources.

Airlines Say UK Passenger Tax Will Hit Economy
British airlines Friday attacked imminent increases in the U.K.'s air passenger tax of up to 55%, saying they'd pass the costs on to passengers in a move that could hurt the fragile economic recovery and the upswing in the aviation sector.

BA, Iberia Merger Gets Boost As Airlines Turn Profits 
The merger of British Airways PLC (BAY.LN) and Spain's Iberia Lineas Aereas de Espana S.A. (IBLA.MC), set to be completed early next year, got a boost Friday when both airlines reported that they had swung to a profit in the most recent quarter.

Virgin Atlantic Warns 
Tax Hike To Suppress Demand
Long-haul carrier Virgin Atlantic said Friday that an extra GBP450 million will be passed on to customers next year as a result of a hike in Air Passenger Duty, or APD, and added that many passengers still remained unaware of the added burden.
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Asian Pacific Markets:

JAPAN:

Japan Leads Asian Stocks Lower
Asian stocks slipped on Friday, led by Japan, on signs of sluggish consumer electronics demand, while the bruised dollar steadied, with dealers focused on how upcoming economic data would impact views on a Federal Reserve meeting next week.

Many asset markets have hardly moved this week, but the modest price action belies the tense jostling for positioning ahead of a storm of events and economic data next week that could cause volatility to spike and determine investors' tolerance of risk, including potential new bond purchases by the Fed.

U.S. gross domestic data for the third quarter is due later in the day, though it will probably be viewed as an indicator of just how much QE2, a new Fed money-printing program, will be -- a question that has consumed traders and investors for the past two months.

GDP growth is expected to come in at 2 percent on an annualized basis, a Reuters poll showed."While such acceleration of growth would make QE2 seem less urgent on the surface, core PCE price data will be more important, and if it shows a slowdown, the market will likely increase expectations of the amount of Treasuries the Fed will buy," Dariusz Kowalczyk, senior strategist with Credit Agricole CIB in Hong Kong, said in a note.

Japan's Nikkei share average .N225 fell 1.8 percent to a 1-month low as the yen strengthened broadly and equity futures were sold aggressively.

Electronics makers were under fire after Sharp Corp (6753.T), whose shares were down 5.6 percent, cut its full-year earnings forecast on reduced demand for flat-screen televisions.

A drop in demand for consumer electronics also stung Samsung Electronics Co , which saw its stock fall 1.8 percent after the world's top producer of TVs and flat screens said a supply glut will weigh on memory chip prices and LCD prices will keep falling in coming months.

The MSCI index of Asia Pacific stocks outside Japan slipped 0.3 percent, though remained in a narrow range carved out this month.

A common reason cited by electronics exporters for their grim outlooks is domestic currency appreciation, a subject that will dominate a Group of 20 leaders meeting next month.

The dollar fell 0.4 percent against the yen, the result mostly of spillover from Japanese currency strength against other currencies.

The euro slipped 0.2 percent to $1.3901 after a 1.2 percent jump overnight. The euro had trouble breaking above a technical obstacle around $1.3950, leading some traders to take profits.

The dollar index, a measure of the its performance against a basket of six other major currencies, was up 0.2 percent on the day and basically flat on the week.

The index is down 6.3 percent since September, when expectations grew the Fed would embark on a path to quantitative easing, basically printing money to buy assets and flood the financial system with cash.

Commodities prices, which have been moving tightly in the opposite direction of the dollar for the past few months, were generally under pressure as the dollar held its ground on a broad basis.

Gold was down 0.2 percent to $1,340.50 on ounce, having now slid 2 percent since hitting a record high two weeks ago. Oil futures were down 0.3 percent to $81.91 a barrel, still up $10 since September.


US JAPAN MEETING PLANNED
Japanese Prime Minister Kan and U.S. President Obama to meet November 13th Kyodo reports

Yen Rises as Reports Showing Region's Recovery Slowing

The yen rose against all its major counterparts as Asian stocks dropped amid signs the global economic recovery is slowing, boosting demand for safer assets.

Japan’s currency headed for a fourth weekly gain versus the euro after reports showed South Korea’s industrial production slid and Japanese consumer prices fell. Australia’s dollar fell as data on private-sector credit damped expectations the central bank will raise interest rates next week. Malaysia’s ringgit headed for its first monthly decline since May on speculation policy makers there will act to prevent the currency from gaining too fast.

“Growth in some economies may be tapering off,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd., Japan’s largest currency broker.

“Equities are also sliding. Risk aversion seems to be prevailing. The yen and the dollar may be bought.”

The yen advanced to 111.99 per euro as of 12:43 p.m. in Tokyo from 112.87 in New York yesterday, after climbing to 111.91, the strongest since Oct. 20. It has risen 1.4 percent versus the euro this week. Japan’s currency climbed to 80.57 per dollar from 81.03, set for a 3.7 percent gain this month and a 15 percent advance this year.

The greenback rose 0.2 percent to $1.3900 per euro, poised for a second weekly gain. The Australian dollar declined 0.2 percent to 97.67 U.S. cents, paring its second monthly advance.

SOUTH KOREA:

Samsung Electronics Co. said it earned a record KRW4.46 trillion ($3.98 billion) in the third quarter, a 17% jump from a year earlier as solid gains in profits for chips and cellphones outweighed a stumble in TVs. 
 

However, the company's executives were pessimistic about the outlook for the current quarter, citing concerns about pricing pressure in its TV-related businesses and oversupply in the memory chip market.

Third-quarter profit surpassed the company's previous quarterly record, set in this year's second quarter, of KRW4.28 trillion, and analysts expectations for around KRW4.30 trillion. In the third quarter last year, Samsung reported a net profit of KRW3.81 trillion. 

For the first three quarters of the year, Samsung has already earned more money--KRW12.73 trillion--than any previous year in its history. 

Following the earnings announcement, the company's shares fell in response to the weaker outlook. The stock was down 2.1% at KRW748,000 around 0354 GMT, compared with the broader market's 1.4% decline.

"Samsung expects oversupply in the memory semiconductor market will lead to reduced pricing, while prices for liquid crystal display panels will continue to decline. The recent appreciation of the Korean won is also expected to put downward pressure on fourth quarter earnings," Robert Yi, Vice President and head of Samsung Electronics' Investor Relations Team said in a statement.

According to the Bank of Korea data, the dollar averaged KRW1,186 in the third quarter of 2010, sharply lower than the KRW1,241 in the same period of last year.

____________________________________________________________
WORLD FOREX CURRENCIES SNAPSHOT:
(FRIDAY, OCT 29, 2010 4:05 PM EDT)
EUR/USD     1.3895     -0.0033 (-0.24%)
USD/JPY     80.4800 -0.5500 (-0.68%)
GBP/USD     1.6018     +0.0079 (0.50%)
CAD/USD     0.9802     +0.0001 (0.01%)
USD/HKD     7.7519     -0.0039 (-0.05%)
USD/CNY     6.6707     -0.0160 (-0.24%)
AUD/USD     0.9792     +0.0007 (0.07%)

WORLD MARKETS SNAPSHOT:
(FRIDAY, OCT 29, 2010 4:05 PM EDT)
Shanghai     2,978.83     -13.74 (-0.46%)
Nikkei 225     9,202.45     -163.58 (-1.75%)
Hang Seng Index     23,096.32     -114.54 (-0.49%)
TSEC     8,287.09     -66.96 (-0.80%)
FTSE 100     5,675.16     -2.73 (-0.05%)
DJ EURO STOXX 50     2,844.99     -0.54 (-0.02%)
CAC 40     3,833.50     -1.34 (-0.03%)
S&P TSX     12,676.24     +112.15 (0.89%)
S&P/ASX 200     4,661.60     -23.30 (-0.50%)
BSE Sensex     20,032.34     +91.30 (0.46%)


____________________________________________________________
FRIDAY'S U.S. ECONOMIC CALENDAR:

8:30 a.m.
3Q Employment Cost Index ECI Qtlry (expected +0.5%), ECI Yearly (previous +1.8%)

8:30 a.m.
3Q Advance estimate GDP (expected +2.1%), Chain-Weighted Price Index (expected +1.8%), Corporate Profits (previous +0.9%), PCE Price index (previous 0%), Purchase Price Index (previous +0.1%), Real Final Sales (previous +0.9%), Core PCE Price index (Ex Food/Energy) (previous +1%)

8:30 a.m.
Oct ISM-NY Report on Business US ISM-NY Business Index (previous 58.3)

9:45 a.m.
Oct ISM-Chicago Business Survey - Chicago PMI Employment Index (previous 53.4), New Orders Index (previous 61.4), Prices Paid Index (previous 55), Purchasing Managers Index (Adjusted) (expected 58), Supplier Deliveries Index (previous 58.4)

9:55 a.m.
Oct Thomson Reuters / University of Michigan Survey of Consumers - final Sentiment Index End month (expected 68.5), Expectations Index End Month (previous 60.9), 12-Month Inflation Forecast (previous 2.2), 5-Year Inflation Forecast (previous 2.7), Value (Current Period) End Month (previous 79.6)

_________________________________________________________
US STOCK MARKET SUMMARY, THURSDAY, OCT. 28, 2010:

Stocks:
Stocks were mixed, with the Dow Jones Industrial Average falling and the Nasdaq rising, as investors overlooked encouraging jobless claims data and acted with trepidation ahead of the Federal Reserve's meeting next week. "This is a situation where a lot of the Fed's firepower has been discounted in the market," Alan Lancz, president of Alan B. Lancz & Associates.

Treasurys:
Treasurys rose as higher yields from the selling earlier this week lured buyers who are confident that the Federal Reserve will announce additional government-debt purchases next week to support a flagging economy. A well-bid $29 billion auction in seven-year notes added to the rally. Demand for the sale was the strongest since the seven-year notes were reintroduced in February 2009.

Forex:
The dollar dropped broadly against its major rivals as positive global economic data encouraged investors to move into higher-yielding currencies. The prospect of imminent Federal Reserve action to prod a recalcitrant U.S. economy also led investors to shun the greenback. Many traders are bracing for a serious shakeout in currencies over the coming days as the U.S. Federal Reserve prepares its most important monetary-policy decision in years.

The timing, scale and scope of any additional monetary easing from the Fed's Nov. decision will be a make-or-break moment for the dollar.Currencies traders are "targeting an early-November risk event," said analysts at Societe Generale in a note to clients.


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