Stock Market Update - Thursday, October 28, 2010 - Choppy Rally Continues

Stock Market Update

Thursday, October 28, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: (OCT. 28, 4:05 PM EDT)

Dow Jones 11,109.71 -16.57 (-0.15%)
S&P 500    1,183.67 +1.22  (+0.10%)
Nasdaq     2,507.37 +4.11  (+0.16%)

Dow Jones 2:00 PM Averages: DJIA 11,094.34 DN 31.94
  30 INDUS     11,094.34 DN   31.94 OR    0.29%
  20 TRANSP     4,716.41 DN   20.78 OR    0.44%
  15 UTILS        402.87 UP    0.03 OR    0.01%
  65 STOCKS     3,846.61 DN   10.81 OR    0.28%

US DOLLAR FUTURES INDEX DXY: OCT. 28, 4:08PM EDT: 77.29   0.86 (1.10%)

US COMMODITY PRICES: (OCT. 28, 4:30 PM EDT)

Crude Oil     81.96     - 0.27%
Natural Gas     3.91     + 0.41%
Gasoline     2.11     - 0.36%
Heating Oil     2.24     -
Gold     1343.60     + 1.38%
Silver     23.99     + 1.83%
Copper     3.78     + 0.29%

U.S. Stocks Extend In Choppy Rally

Another mixed close was set up before the end of the day. Almost like it was planned. I think we can see this pattern repeat itself up until after November 3rd elections are over.

The dollar was up until European markets opened this morning from a higher trend day yesterday. The U.S. dollar continued its slide throughout the day on Thursday as investors media continued to pump out how investors were weighing the impact of a monetary stimulus expected to come next week from the privately owned off-shore U.S. banking cartel called the "Federal Reserve".

Stocks edge lower despite a large made-up drop in the falsified "seasonally adjusted" weekly jobless claims report and the broad decline in the dollar. Investors traded cautiously today and maintained a low volume ahead of the Federal Reserve's efforts to "boost" the economy by putting the American's further in debt to the world banking cartel.

In early trading, the industrials sector led the way down as 3M Co (MMM) fell more than 6 percent after it shaved 6 cents off its full-year profit forecast, until news about how Halliburton used pore quality cement to plug the oil spill.

Halliburton apparently knew weeks before the fatal explosion of the Macondo well, in the Gulf of Mexico, that the cement mixture they planned to use to seal the bottom of the well was unstable according to reports and test data starting on March 8th. Halliburton, a major oil field services company and one of the nation’s largest defense contractors, was once led by former Vice President Dick Cheney. Halliburton's stock dropped like a rock today.

The consumer and industrial manufacturer's third-quarter profit jumped 16% on higher sales at a bulk of its operating divisions. But 3M merely narrowed its 2010 profit target due to the impact of acquisitions made in recent months.

Also weighing on the Dow were Caterpillar, which fell 1.4% and Cisco Systems' 0.6% drop. Exxon Mobil was one of the biggest gainers in the Dow. The oil giant's third-quarter earnings rose a bigger-than-expected 55% as it benefited from stronger commodities prices and refining margins in the first full quarter that included its June acquisition of natural-gas producer XTO Energy. Shares rose 0.7%.

The Standard & Poor's 500-share index fell 0.1% to 1181, as the industrials and materials sectors dropped. The technology-heavy Nasdaq Composite declined 0.3% to 2497.

The Dow Jones industrial average .DJI was off 21.87 points, or 0.20 percent, to 11,104.41. The Standard & Poor's 500 Index .SPX slipped 1.78 points, or 0.15 percent, to 1,180.67. The Nasdaq Composite Index .IXIC lost 8.23 points, or 0.33 percent, to 2,495.03.
   
The US Dollar has come back under pressure in Thursday trade, and we believe a good deal of this latest price action can be attributed to recent actions by the Fed ahead of next week’s highly anticipated FOMC meeting.

The Governments "better-than-expected" report on jobless claims also gave the market some assurance.

A slew of corporate quarterly reports also weighed on the market. Dow Chemical shares fell 1.4% after the chemicals company reported a 25% drop in third-quarter profit because of the impact from divestitures.

US stocks advanced in early trade on Thursday as better-than-expected jobless claims data buoyed sentiment. The S&P 500 Index advanced 4.72 points, or 0.40 percent, to trade at 1,187.17 at 10:05 am EDT. 

A weaker dollar, which makes oil more expensive in other currencies, has been the main driver behind the commodity rally in September and October. The Dow Jones-UBS Commodity Index is up in early morning trading to 146.760 up 0.743.

The ICE Dollar Index, measuring the greenback against a basket of other currencies, was recently at 77.444, from 78.083 earlier. According to the IMF in a statement before the G-20 meeting issued today; the dollar remains on the "strong side" of its fundamental value, while differences in exchange-rate flexibility among emerging economies is stoking international tensions, the International Monetary Fund told Group of 20 financial leaders over the weekend.

The IMF report, released Thursday, singled out China as contributing to exchange-rate misalignments by keeping the yuan "substantially undervalued."

 It noted that some other emerging economies, notably South Africa and Latin American countries, had allowed their currencies to appreciate to "levels that are looking increasingly overvalued."

Meanwhile, the value of the yen, euro and pound appear to be in line with medium-term fundamentals, the IMF said.

In an indirect reference to Japan, the fund said recent interventions by "some" advanced economies had contributed to currency tensions.

The market also got a lift from a better-than-expected report on jobless claims from the Labor Department on Thursday. Workers filing new claims for jobless benefits fell by 21,000 to 434,000 for the week ended Oct. 23, bucking economist expectations for a slight increase. The previous week's figures were revised upward from 452,000 to 455,000.


RARE EARTH METALS:

RARE EARTH METALS ETF: REMX OPENS
Rare Earth ETF Begins Trading," at 10:56 a.m. EDT

REMX: $19.55 (-0.96) As of 3:45 pm EDT

Van Eck Global on Thursday launched Market Vectors Rare Earth/Strategic Metals ETF  (REMX) on the NYSE Arca exchange. It is the first U.S.-listed exchange-traded fund that invests in companies "primarily engaged in the producing, refining, and recycling rare earth/strategic metals," the asset manager said in a press release.

Policymakers Panicked as China Rare Earth Ban Extends to the West
By Jason Simpkins, Managing Editor

Money Morning

"China for months has blocked shipments of rare earth metals intended for Japan in retaliation for a regional dispute. Now, China appears to have expanded its rare earth embargo to include Western countries - a move that has U.S. and European authorities scrambling to formulate a backup plan.

Rare earth metals are essential to the production of high-tech devices like computers, display screens, smart bombs, and hybrid-car batteries. And despite their name, rare earth metals aren't particularly rare. However, they are difficult to produce and many rare earth production companies have moved their operations to China to capitalize on cheaper extraction costs and the nation's commitment to growing its alternative energy sector.

China, which has one-third of the world's rare earth deposits, accounted for 97% of global production last year. Of course, the near-total monopoly China wields over the sector wasn't a major concern until just a few months ago when the country cut its production and export quotas."

Link to complete article: http://moneymorning.com/2010/10/28/china-rare-earth-metals/


GROWING CONCERN OVER RARE EARTH METALS

Rare earth metals are scarce minerals that have particular properties, such as being magnetic or shining in low light. This makes them particularly useful in some new technologies, such as solar panels or electric cars or light-weight batteries.

China has said it will not use exports of so-called rare earth minerals as a diplomatic bargaining tool.

The country produces more than 90% of these valuable commodities, which are used to produce electronic items such as mobile phones.

The US and the EU asked Beijing to clarify its policy on mineral exports after China stopped shipping to Japan.

The stoppage followed a spat between China and Japan last month over islands whose ownership is disputed.

A spokesman for China's Ministry of Industry and Information Technology, Zhu Hongren, said: "China will not use rare earths as a bargaining tool. We will have cooperation with other countries in the use of rare earths, because it is a non-renewable energy resource."
But Mr Zhu did not answer a reporter's question about when normal exports of rare earth minerals would resume.

China has about 30% of rare earth mineral deposits, but accounts for about 97% of production.
The US Secretary of State Hillary Clinton has called on China to clarify its policy on rare earth resources.

She said recent Chinese restrictions served as a "wake-up call" for the industrialized world which should drive it to look for other suppliers. Clinton said that the US is committed to getting relations with China 'right'

Clinton was in Honolulu for talks with Japanese Foreign Minister Seiji Maehara--whose country is embroiled in a spat with China over a disputed island chain in the East China Sea--at the start of a tour of the region.


CRUDE OIL: 
US Crude Oil: $82.39

Nymex Crude Sees Small Boost From Weaker Dollar
Thursday was on track to be the lowest-volume day all year for Nymex oil-futures contracts. 
Light, sweet crude for December delivery settled up 24 cents, or 0.3%, at $82.18 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange added 23 cents, or 0.3%, at $83.46 a barrel.


Wednesday's inventory report from the U.S. Department of Energy offered a mixed picture for futures traders. Crude inventories rose sharply, while gasoline stocks and distillates, including heating oil and diesel, declined.


NATURAL GAS:

US Futures Fall After Storage Data

US Natural Gas Futures Settle Up 3.4% At $3.89/MMBtu

Natural gas futures fell Thursday. The government report expected to showed a seventh consecutive above-average weekly build in U.S. gas stockpiles.

Natural gas for December delivery fell 1.2 cents, or 0.3%, to $3.751 a million British thermal units on the New York Mercantile Exchange.

The November contract expired Wednesday at $3.292/MMBtu after being pressured lower for weeks by abundant supply and tepid demand amid mild autumn weather. The December contract trades at a higher price than the expired November contract, but it is still at its lowest level for this time of year since 2001. Some market participants have been reluctant to bet that prices will fall much below their current level with winter's heating needs approaching

PRECIOUS METALS:
US Gold: $ 1,345
US Silver: $ 23.95

Comex gold futures rallied 1% in Thursday morning trade, supported by a weaker dollar and renewed concerns about inflation.

The most actively traded contract, for December delivery, was recently up 1%, or $13.70, at $1,336.30 per troy ounce on the Comex division of the New York Mercantile Exchange.

.Gold ETF Growth Slows In 3Q
Buying in gold-backed exchange-traded funds moderated in the third quarter but tonnage in the investments still hit a record as gold prices surpassed $1,300 for the first time, an industry body said Thursday.

JP Morgan, and HSBC Being Sued For 'Manipulating' Silver Futures Prices

Two separate lawsuits filed in federal court in Manhattan Wednesday allege that banks J.P. Morgan Chase & Co. (JPM) and HSBC Holdings Inc. (HBC) manipulate the price of silver futures by "amassing enormous short positions."

TREASURYS:

The Treasury's auction of $29 billion of seven-year notes on Thursday afternoon brought a lower yield than expected.

Early market demand for Treasurys rose, pushing the yield on the 10-year note down to 2.67%. $29 billion 7-yr Treasury note auction has solid demand.

A recent rise in yields and talk of aggressive quantitative easing by the Federal Reserve drew buyers to U.S. Treasuries on Thursday and bolstered demand in an auction of seven-year Treasury notes.

The move higher in price comes ahead of next week's expected U.S. Federal Reserve announcement on the scope of a program to buy more assets to help support the economy.
Doubts about the size of the Fed's next asset purchases encouraged some price-cutting this week, pushing yields high enough to draw buyers back into the market. 


US BONDS:
3 Month     0.11%     0.00 (0.00%)
6 Month     0.16%     0.00 (0.00%)
2 Year     0.37%     -0.02 (-5.13%)
5 Year     1.19%     -0.08 (-6.30%)
10 Year     2.64%     -0.06 (-2.22%)
30 Year     4.03%     -0.04 (-0.98%)



KANSAS MANUFACTURING INDEX DIPS
Manufacturing activity in the Federal Reserve Bank of Kansas City's district continues to expand in October but at a slower rate than in September, as its manufacturing production index slows to 10 from 14 in September.

CREDIT UNION DEBT NOTES FOR SALE
NCUA Guaranteed Notes In Market

$2.82 Billion Of NCUA Guaranteed Notes Now In Market

The National Credit Union Administration is back in the market, this time with $2.82 billion of guaranteed securities backed by commercial mortgages.

This will be the second time the agency, which regulates credit unions and is also known as the NCUA, taps the securitization market to rid itself of $50 billion in tainted assets it acquired as a result of its takeover of five corporate credit unions. These wholesale credit unions are the bankers for retail credit unions, and they became saddled with mortgage-backed securities that carried non-perfoming loans.

The NCUA, with the help of Barclays Capital, has created a securitization trust through which it will offload these securities to investors after wrapping them with a government guarantee.

Earlier this year, Barclays helped the Federal Deposit Insurance Corp. with a similar undertaking. In the first such sale, the NCUA sold $3.85 billion of residential mortgage securities to strong investor demand.

This issue has three triple-A rated classes, with the first class sized at $438 million with a four-year term. The issue, with Barclays as the sole bookrunner, is expected to price early next week. Settlement is on Nov. 10.

For investors in commercial mortgage bonds, it has been a week of plenty after months of light supply. Earlier this week, marketing of nearly $4.66 billion of commercial mortgage securities started, and all of them are expected to price next week.

For additional NCUA news and information, visit: http://www.ncua.gov/

WILLIAMS SWINGS TO STEEP 3Q LOSS
Williams posts a 3Q loss of $1.26 billion, or $2.16 a share, on significant charges that total $1.68 billion, related to a write-off and some properties, primarily in the Barnett Shale. Profit excluding charges falls 1.2%. Shares off 1%.

BEFORE THE BELL:

U.S. Stock Futures Extend Rally as Jobless Claims Decline

The Dow Jones Industrial Average (DJIA) is headed for an opening gain of about 40 points, while the S&P 500 Index (SPX) is trading roughly 6.9 points above fair value. US stock futures extended earnings-related gains after the Labor Department reported that weekly jobless numbers.

Futures on major U.S. stock indices extended their gains on Thursday after the Department of Labor reported that weekly jobless claims fell sharply last week.


434,000 MORE AMERICAN'S WITHOUT A JOB
Jobless Claims Lowest level in three months

A government report showed on Thursday that Initial claims for state unemployment benefits dropped 21,000 to a seasonally adjusted 434,000, the lowest since the week ended July 10, the Labor Department said, and the second straight drop.

Analysts polled by Reuters had forecast claims edging up to 453,000 from the previously reported 452,000. The government revised the prior week's figure up to 455,000.

A Labor Department official said there was nothing unusual in the state data. The economy's painfully slow recovery from the worst recession since the Great Depression has left the labor market subdued and the unemployment rate at 9.6 percent.

US Stock Futures Tick Up as Dollar Eases

Stocks rose modestly on Thursday as the dollar slipped with investors continuing to adjust expectations of further monetary stimulus, while data on the labor market was due later in the morning.

The dollar slipped on Thursday, relinquishing some of its gains from earlier this week as a short-covering rally ran out of steam and U.S. Treasury yields fell after a spike the previous day.

Traders said dollar selling against the euro and other currencies by reserve managers was also helping to push the U.S. currency down. The euro held above a one-week low around $1.3730 hit on Wednesday,

The dollar is holding above a 15-year low of 80.41 yen hit earlier this week, but investors remain vigilant for any yen-weakening intervention after authorities entered the market last month.

By 1130 GMT, the euro EUR had risen 0.6 percent on the day to $1.3849, helped by steady buying by Asian central banks. This helped to push the dollar .DXY 0.62 percent lower versus a currency basket.

Against the yen, the dollar JPY fell 0.6 percent to 81.26. The Japanese currency showed little reaction to a Bank of Japan decision to keep interest rates virtually at zero while holding off from new policy initiatives..

U.S. INITIAL JOBLESS CLAIMS FELL FROM A REVISED 455K TO 434K IN WEEK ENDED OCT 23. 455K WAS EXPECTED.

At 8:30 a.m. EDT, the Department of Labor reported that initial jobless claims decreased by 21,000 to 434,000 for the week ended Oct. 23 from the previous week's revised figure of 455,000, while economists’ expected 450,000. The 4-week moving average of initial claims declined 5,500 to 453,250 from the previous week's revised average of 458,750.

3M PROFIT UP 16% ON BROAD SALES GROWTH

Company posts a 16% jump in 3Q net to $1.11 billion, or $1.53 a share, on solid growth in sales and income across most of its business groups, helped by strong demand in emerging markets and for new products. Shares down 4%.

DOW CHEMICAL NET DOWN 25% ON DIVESTITURES
Chemicals company earns $597 million, or 45c a share, on divestiture impacts, while results from continuing operations top analysts' expectations as sales improved across the board. Shares rise 2%.

EXXON PROFIT CLIMBS 55% ON HIGHER PRICES

Exxon Mobil Profit Rises as Worldwide Growth in Energy Demand Lifts Prices
Exxon Mobil Corp., the world's largest company, posted its third consecutive profit increase as rising worldwide. The oil giant earns $7.35 billion, or $1.44 a share, in 3Q helped by stronger commodities prices and refining margins in the first full quarter that includes its June acquisition of XTO Energy. Revenue climbs 16% to $95.3 billion. Shares up 1%.

KODAK LOSS NARROWS ON MARGINS, LOWER CHARGES
Eastman Kodak's 3Q loss narrows to $43 million, or 16c a share, from a loss of $111 million, or 41c a share, last year, on fewer charges and much higher margins. Revenue is off by 1.3% at $1.76 billion. Shares jump 8%. 

MOTOROLA PROFIT SOARS BOOSTED BY SMARTPHONES
Motorola Profit Rises as Smartphone Launches Ramp Up
Motorola Inc.'s third-quarter profit soared as it sped the release of new smartphones using Google Inc.'s Android software. Telecommunication giant's 3Q profit rises to $109 million, or 5c a share, as it speeds release of new smartphones using Google's Android software. Revenue rises 13% to $4.89 billion. Shares are up 7%.

Goodyear posts loss as rubber costs jump
Goodyear Tire and Rubber Co (GT.N) reported a quarterly loss on Thursday, under pressure from a sharp increase in raw materials costs and charges for a debt refinancing.

_____________________________________________________________________
Canadian Market:

Toronto Stocks Mixed

Toronto Stocks Mixed At Midday; Barrick Up, Potash DownThe stock market was mixed at midday with gains in the materials group offsetting modest losses across other sectors.

The materials group was bolstered by strong earnings reports from Barrick early Thursday and Goldcorp late Wednesday.

At 11:45 a.m. EDT (1545 GMT), the S&P/TSX Composite Index was down 31.33 points, or 0.26%, at 12535.92. However, advances led declines 724 to 607. Trading volume was 216.60 million shares. The S&P/TSX 60 Index was down 3.38 points, or 0.47%, at 719.83.

CANADA CUTS TIES

Canada Cuts Ties With North Korea

Canada is limiting its engagement with North Korea and cutting off bilateral trade over North Korea's sinking of a South Korean warship earlier this year, the government announced Thursday.

"Canada takes a principled stand against those who recklessly commit acts of aggression in violation of international law," Foreign Minister Lawrence Cannon said.

"The adoption of a controlled engagement policy and the imposition of special economic measures send a clear message to the North Korean government that its aggressive actions will not be tolerated."

The punitive measures include limiting official contact to regional security concerns, human rights and humanitarian situations, inter-Korean relations and consular issues.

All other government-to-government cooperation and communication has stopped, Cannon said.

Ottawa is also drafting additional sanctions against North Korea that would prohibit all imports and exports, new investments by Canadians, transfers of technology, and the provision of financial services to North Korea.

North Korean ships and aircraft will also be prohibited from docking or landing in Canada or passing through Canada.

The mostly symbolic move comes after a multinational investigation, which included three Canadian naval experts, concluded that the 1,200-ton South Korean naval ship Cheonan was sunk by a North Korea torpedo in March.

CANADIAN EQUITY NEWS:
Barrick Gold: Gold Still Well Supported Above $1,300 >ABX
Gammon Announces Discovery Of New Drill Targets At Venus Project >GRS
Maple Leaf Says Teachers' Representatives Resign From Board >MFI.T
BOC Plans Change In Minimum Nominal Bond Purchases At Auctions>G/CNBK

Potash Corp. of Saskatchewan also posted strong third-quarter earnings, but the company's stock retreated on concerns that the Canadian government could block BHP Billiton's hostile takeover proposal. Potash was down C$5.10 to C$146.70 at midday, while Barrick had risen 0.51 to 47.45. Potash said its third-quarter earnings surged by more 60%, as strong demand for potash, phosphate and nitrogen fertilizer products on the back of rising crop prices lent support for the company's view that BHP Billiton PLC's hostile $38.6 billion bid significantly undervalues the company. Even so, Potash shares shed 2.8%.

Toronto Indexes, Volume; Noon EDT Composite Down 42.73

 S&P/TSX Composite   12524.52  off  42.73  or 0.3%
 S&P/TSX 60 Index      719.16  off   4.05  or 0.6%
 Financials            177.56  off   1.35  or 0.8%
 Materials             399.60  up    2.20  or 0.6%
 Energy                285.28  off   1.35  or 0.5%
 Industrials           105.90  off   0.56  or 0.5%
 IT                     28.77  off   0.51  or 1.7%

   Volume        Thursday    Wednesday
   11-12               72.6M        71.8M
   9:30-12            234.9M       231.2M


_____________________________________________________________________
South American Markets: 

BRAZIL:

Brazil's Main Sugar Output Up 24.5%
Brazil's main center-south 2010-11 sugar output reached 28.6 million metric tons as of Oct. 16, the Sugarcane Industries Association, or Unica, said Thursday.

Mills in Brazil--the world's No. 1 sugar producer--produced 24.5% more sugar than the same period a year earlier in the center-south region, the trade association said in a statement. The area accounts for 90% of the country's cane crop.

The region's total ethanol production reached 21.6 billion liters as of Oct. 16, rising 19% from a year earlier. The country is the world's No. 1 producer of sugarcane-based ethanol.

Industrial yields, known as ATRs, are at 142.2 kilograms per ton of cane, increasing 7% from the same period last season due to the long dry spell between May and early September. This means more sugar and ethanol can be extracted from the cane.

Unica said 55.1% of the region's cane was directed toward making ethanol in the period, with the rest being used for sugar. This compared to 56.2% used for ethanol at the same time last year.

Brazil's center-south region also crushed 470.7 million tons of sugarcane as of Oct. 16, up almost 14% from the same period a year earlier. In the first half of October, mills crushed 26 million tons of cane, down 4% from the previous fortnight due to rainfall and lower agricultural quality of the cane, Unica said. 23 mills stopped crushing their cane for the season as of Oct. 16, compared to two mills at the same time a year ago, Unica said.

Brazil's Central Bank Buys U.S. Dollars

The Brazilian Central Bank on Thursday bought dollars at a second daily snap auction for BRL1.7133 to the dollar. Shortly before the auction, the Brazilian real was trading at BRL1.7141 to the dollar. Shortly after the auction, the real was trading again at BRL1.7141. 



MEXICO:

Mexico's Stocks Turn Lower

Mexican stocks were indecisive in early trading Thursday as initial unemployment claims in the U.S. fell to their lowest level since July, while concern continued over the U.S. Federal Reserve's plans for economic stimulus.

The Mexican peso traded stronger and was recently quoted at MXN12.4090 to the U.S. dollar versus Wednesday's close of MXN12.4630. Traders say the currency still has upside as Mexico remains attractive in debt markets.

The IPC index of 35 most-traded stocks was down 0.1% at 35249 points. Volume was 32.2 million shares, worth 937 million pesos ($75.5 million).

The L shares of Latin America's largest wireless provider, America Movil (AMX, AMX.MX) were off 0.5% at MXN35.30. The cellular giant, whose stock is the most heavily weighted issue on the IPC, reported after the market close Wednesday that its net profit rose 8.8% in the July-September quarter from a year earlier to MXN23.41 billion pesos ($1.86 billion).

Copper miner and railways operator Grupo Mexico (GMEXICO.MX) B shares were up 0.2% to MXN39.95, and Mexico's largest retailer Wal-Mart de Mexico (WALMEX) V shares were 0.4% higher to MXN33.40.

Global cement and building materials maker Cemex (CX, CEMEX.MX) CPO shares were down 0.5% to MXN10.82.

CHILE:

INDUSTRIAL OUTPUT CLIMBED 3%
The government statistics institute reported that industrial output in September grew 3.0% on the year, below expectations of a 4%-5% increase.


Chilean Peso Closes 1.1% Stronger As Dollar Tumbles Broadly

Chile's peso ended sharply stronger against the dollar Thursday on the tumble the U.S. currency took on international markets.

The peso ended at CLP489.10 to the dollar, versus Wednesday's close of CLP494.50, while trading in a range of CLP488.60 to CLP494.00.

The US Dollar fell sharply and broadly against other major currencies Thursday as positive global economic data encouraged investors to step into higher-yielding currencies.

The peso has been trading at two-year highs this month, reducing export competitiveness and fueling private-sector calls for market intervention.  The Chilean economy is highly dependent on its natural resource exports.

In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended mixed following the release of lower than expected industrial production data.


ARGENTINA:
Argentina is in observance of the three days of national mourning ordered by the government following the death of former President Nestor Kirchner.

Argentina Bonds, Stocks Rise After National Census Holiday

Argentina's bonds and stocks rose Thursday following a market holiday, as local assets played catch-up to gains in U.S.-traded issues. Investors are betting the death of former-President and political strong man Nestor Kirchner could usher in a period of more market friendly economic policies.

The federal government's benchmark peso-denominated 2033 discount bond was up 10.1% in late-morning trading at ARS175.5, yielding 7.64%.

The Global 2017 bond, issued in June as part of the government's debt swap with the holders of defaulted bonds, was 1.2% higher at ARS420, yielding 8.43%.

The Boden 2015, considered a good proxy for measuring the appeal of newly issued government bonds or the government's ability to sell them, closed 1.9% higher at ARS375.50, yielding 8.62%.

Argentina's 2035 peso-denominated GDP warrants were 2.2% higher at ARS12.53, while U.S. dollar-denominated GDP warrants with the same maturity were up 3.1% to ARS51.40.

Kirchner, who was president from May 2003 to December 2007, died of a heart attack at the age of 60 in his home province of Santa Cruz early Wednesday. His wife, Cristina Fernandez, succeeded him in the presidency. Kirchner was thought to play an active role in crafting economic policies in his wife's government that were characterized by heavy state intervention in the economy and hostility toward the private sector.

_____________________________________________________________________
European Markets: 

European stocks rose on Thursday, as well-received earnings reports from oil giant Royal Dutch Shell and pharmaceutical firm Sanofi-Aventis SA encouraged investors.

The Stoxx Europe 600 index gained 0.4% to 265.90, taking monthly gains so far to 2.4%.

Stocks in Europe were bouncing back from losses seen in the prior session, in a see-saw pattern of volatility that has been stalking markets.
 
The euro advanced 0.77 percent to 1.3876 against the dollar and the yen gained 0.74 percent against the greenback.

European bourses pared gains late in the session as U.S. stocks turned lower on a disappointing outlook from 3M Co. and a drop in the industrial sector.

A top performer among regional indexes was the French CAC-40. It rose 0.5% to 3,834,84, led by France Telecom SA, whose earnings report cheered up investors.

The shares rallied 3.1%. Also in France Dassault Systemes SA rose nearly 8%, as the software firm raised its full-year earnings outlook and reported sharp gains in quarterly revenue and profit.

Shares of microchip group STMicroelectronics SA rose 3.1%. Downward pressure came from auto maker Renault SA.

The shares fell 2.6% after Societe Generale cut the firm's rating to hold from buy, saying the European market could weaken in the first half of next year.

Earlier, European markets extend gains after jobs data and are currently trading higher with FTSE 100 up by 52.24 points, DAX30 up by 65.89 points and CAC 40 up by 39.20 points.

By 1130 GMT, the euro EUR had risen 0.6 percent on the day to $1.3849, helped by steady buying by Asian central banks. This helped to push the dollar .DXY 0.62 percent lower versus a currency basket.

EU DEMANDS NEW RUSSIA AIR PACTS
The European Commission plans to launch legal proceedings against Germany, France, Finland and Austria to force revisions to bilateral aviation treaties with Russia, which EU authorities say violate the bloc's single-market and competition laws.

LONDON:

London Stocks Close Higher

FTSE 100                     5677.89   +31.87   +0.56%

FTSE 250                    10848.83   +21.55   +0.20%

DJ UK Smaller Companies       913.97   +3.83    +0.42%

FTSE 100 closes higher with traders impressed by a recent spate of 3Q earnings and speculating about more positive news.

ARM Holdings, +3.2%, and Inmarsat, +2.7%, help pace the index higher. ARM and other global tech stocks have reported strong earnings in 3Q, and the market sees buying opportunities in Inmarsat..

Vodafone +2.7% after France Telecom beat analysts' forecasts with its 3Q earnings.

On Friday, traders will be watching UK September mortgage approvals at 0830 GMT and, in the euro zone, September unemployment data and October inflation data both due at 0900 GMT.

RBS Hires Goldman, Morgan Stanley On Insurance Disposal
Royal Bank of Scotland Group PLC (RBS) has hired Morgan Stanley (MS) and Goldman Sachs (GS) to advise it on how it will dispose of its insurance arm, a person familiar with the situation said Thursday.

Shell Profits Surge 88% On Higher Output

Royal Dutch Shell PLC (RDSB.LN) Thursday beat analysts' forecasts to post an 88.4% rise in adjusted profit for the third quarter, driven by higher output and greater demand for refined products and chemicals.

Shell will continue to feel the effect of the Gulf of Mexico oil drilling moratorium for two years, with 2011 oil and gas output in the region 40,000 barrels of oil equivalent a day lower than it would have been without the suspension of activity, said Chief Financial Officer Simon Henry Thursday..

AstraZeneca Quarterly Net Profit Hit
AstraZeneca PLC (AZN) Thursday reported a 27% fall in net profit as a strong performance in emerging markets and sales of key drugs like cholesterol product Crestor were undermined by generic competition in the U.S., restructuring costs and hefty legal charges related to product litigation.


Transmission Capital Group Awarded Fourth UK Windfarm Project
Transmission Capital Partners, a consortium comprising International Public Partnerships Limited (INPP.LN), Transmission Capital and Amber Infrastructure, Thursday said it had been awarded a further project to operate transmission cable connections to offshore wind farms.

Rheochem Unit Gets Licenses For 8 UK Offshore Blocks
Rheochem PLC (RHEP.LN) shares rose over 24% early Thursday following news that its exploration and production subsidiary, Zeus Petroleum Ltd., has been offered eight appraisal and exploration blocks in the U.K. 26th Seaward Licensing Round.


FRANCE:

FRENCH PENSION BILL CLEARS BIG HURDLE
The controversial pension-plan overhaul gained final parliamentary approval, but workers still hoped protests would prevent President Sarkozy from signing it into law.


_____________________________________________________________________
Asian Pacific Markets: 

CHINA:

CHINA HAS SUPERCOMPUTER LEAD
A newly built supercomputer in China appears poised to take the world performance lead, another sign of the country's growing technological prowess.

China has claimed the top spot on the list of the world's supercomputers.

The title has gone to China's Tianhe-1A supercomputer that is capable of carrying out more than 2.5 thousand trillion calculations a second.

To reach such high speeds the machine draws on more than 7,000 graphics processors and 14,000 Intel chips.

The claim to be the fastest machine on the planet has been ratified by the Top 500 Organisation which maintains a list of the most powerful machines.

China's Tianhe-1A (Milky Way) has taken over the top spot from America's XT5 Jaguar at the Oak Ridge National Laboratory (ORNL) in Tennessee that can carry out only 1.75 petaflops per second. One petaflop is the equivalent of 1,000 trillion calculations per second.

The news about the machine broke just before the publication of the biennial Top 500 Supercomputer list which ranks the world's most powerful machines.

Prof Jack Dongarra from the University of Tennessee, one of the computer scientists who helps to compile the list, said China's claim was legitimate.

BEIJING - ICBC To Buy 60% Stake In AXA-Minmetals Insurance JV

Industrial & Commercial Bank of China Ltd. (1398.HK) said Thursday it will buy a 60% stake in AXA-Minmetals Assurance Co., an insurance joint venture between AXA SA (AXAHY) and China Minmetals Corp.

JAPAN:

 Japan, China Foreign Ministers To Meet
The foreign ministers of Japan and China will meet Friday on the sidelines of a regional summit, Japan said Thursday, boosting chances their leaders will hold talks to calm a diplomatic row.

The two rivals are embroiled in their worst spat in years, sparked by the Japanese Coast Guard's Sept. 8 arrest of a Chinese fishing trawler captain after two collisions in a disputed region of the East China Sea.

SOUTH KOREA:

Posco: Considering Potential Acquisition Of Norway's Elkem
South Korea's Posco (005490.SE) said Thursday that it is considering a potential acquisition of Norway's Elkem AS as part of efforts to expand its business operations.


SINGAPORE:
Singapore Minister: SGX-ASX Merger Must Be Positive Sum Game
The proposed merger between Singapore Exchange Ltd. (S68.SG) and ASX Ltd. (ASX.AU) must be by mutual consent between shareholders and the respective government regulators of both sides of the transaction, Singapore's Foreign Minister George Yeo said in an interview with Australian media.


AUSTRALIA:
Australia Independent Lawmakers Oppose Sale Of ASX

The political backlash against a proposed A$8.4 billion takeover of Australia's largest stock-market operator by Singapore Exchange Ltd. (S68.SG) continued Thursday, with a number of key independent lawmakers confirming they will attempt to block the bid in Parliament.

_____________________________________________________________________
WORLD FOREX CURRENCIES SNAPSHOT:
(THURSDAY, OCT 28, 2010 1:15 PM EDT)

EUR/USD     1.3928     +0.0156 (1.13%)
USD/JPY     81.0000 -0.7300 (-0.89%)
GBP/USD     1.5943     +0.0169 (1.07%)
CAD/USD     0.9807     +0.0080 (0.82%)
USD/HKD     7.7565     -0.0018 (-0.02%)
USD/CNY     6.6867     +0.0062 (0.09%)
AUD/USD     0.9785     +0.0062 (0.64%)

WORLD MARKETS SNAPSHOT:
(THURSDAY, OCT 28, 2010 1:15 PM EDT)

Shanghai     2,992.58     -4.47 (-0.15%)
Nikkei 225     9,366.03     -21.00 (-0.22%)
Hang Seng Index     23,210.86     +46.28 (0.20%)
TSEC     8,354.05     +63.01 (0.76%)
FTSE 100     5,677.89     +31.87 (0.56%)
DJ EURO STOXX 50     2,845.53     +16.11 (0.57%)
CAC 40     3,834.84     +19.07 (0.50%)
S&P TSX     12,519.09     -48.16 (-0.38%)
S&P/ASX 200     4,684.90     +36.80 (0.79%)
BSE Sensex     19,941.04     -64.33 (-0.32%)

_____________________________________________________________________
MONDAY'S U.S. ECONOMIC CALENDAR:

8:30 a.m.
Oct 23 Unemployment Insurance Weekly Claims Report - Initial Claims Weekly Jobless Claims (expected 455K), Net Change (expected +3K), (prior week) (previous 4441000), (prior week) (previous -9K)

10:00 a.m.
Oct 16 DJ-BTMU Business Barometer (previous -0.1%), (52 wk) (previous +4.2%)

10:30 a.m.
Oct 22 EIA Natural Gas Storage Report Total Working Gas in Storage (previous 3683B), (Net Change) (previous +93B)

11:00 a.m.
Oct Federal Reserve Bank of Kansas City Survey of Tenth District Manufacturing Manufacturing Activity Index (previous 14), (6 Mon) (previous 23)

4:30 p.m.
Oct 18 Money Stock Measures

4:30 p.m.
Oct 27 Foreign Central Bank Holdings Foreign US Debt Holdings (previous 3.28T), US Foreign Agency Holdings (previous 732.95B), Foreign Treasury Holdings (previous 2.55T)

4:30 p.m.
Oct 27 Federal Discount Window Borrowings Primary Credit Borrowings (previous 20M), W/E Daily Avg (previous 32M)

_____________________________________________________________________
US STOCK MARKET SUMMARY, WEDNESDAY, OCT. 27, 2010:

Stocks:
U.S. stocks finished mixed, with a loss for the Dow Jones Industrial Average and a gain for the Nasdaq Composite, as investors recalibrated their expectations for a major bout of easing by the Federal Reserve to stimulate the economy. Energy stocks were among the biggest drags on the stock market, after weekly oil-inventory numbers showed U.S. stockpiles of crude oil rising by 5 million barrels.

Treasurys:
Treasury prices fell broadly as many investors exited bets that the Federal Reserve would buy government bonds on a large scale. The benchmark 10-year note's yield touched 2.720%, the highest level since Sept. 20--a day before the central bank's last monetary policy meeting. At that meeting, the central bank suggested that it was prepared to buy more Treasurys to stimulate the economy, known as quantitative easing.

Forex:
The dollar rose broadly as investors reconsidered their expectations for the size and scope of possible Federal Reserve action to jolt a slowing U.S. economy. After recently hammering the greenback on the idea the Fed would announce a massive dollar-weakening program to stoke growth, investors turned back to the buck on a Wall Street Journal report the Fed over several months will purchase only a few hundred billion dollars worth of Treasurys in so-called quantitative easing, far from the more than $1 trillion some had expected.



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