Stock Market Update - Tuesday, Nov. 2, 2010 - Mixed Outlook - Minor Gains Expected

Stock Market Update
Tuesday, Nov. 2, 2010

Latest US Economic News Headlines:

USA EQUITY INDEXES: (NOV. 2, 4:05 PM EDT)
Dow Jones 11,188.72 +64.10 (+0.58%)
S&P 500    1,193.57 +9.19  (+0.78%)
Nasdaq     2,533.52 +28.68  (+1.14%) 



Dow Jones 2:30 PM Averages: DJIA 11,204.39 UP 79.77
  30 INDUS     11,204.39 UP   79.77 OR    0.72%
  20 TRANSP     4,814.15 UP   57.23 OR    1.20%
  15 UTILS        407.03 UP    5.28 OR    1.31%
  65 STOCKS     3,897.54 UP   37.43 OR    0.97%

US DOLLAR FUTURES INDEX DXY: NOV. 2, 4:06PM EDT: 76.73   0.57 (0.74%)
US COMMODITY PRICES: (NOV. 2, 4:05 PM EDT)
Crude Oil     83.92     + 1.17%
Natural Gas     3.88     + 0.28%
Gasoline     2.11     -
Heating Oil     2.29     -
Gold     1356.36     + 0.30%
Silver     24.88     + 0.97%
Copper     3.82     + 1.01%

.U.S. Stocks Extend Gains, Dollar Drops Ahead of Midterm Election Outcome
 
Stocks rose Tuesday as investors moved into riskier assets following a steep drop in the dollar, putting the Dow Jones industrial average near its highest point this year.

The Dow Jones industrial average rose more than 70 points in afternoon trading. The Dow has come close to ending above its high this year of 11,205 four times in the past two weeks.

The Dow Jones industrial average is up 64, or 0.6 percent, to 11,189. The S&P 500 is up 9, or 0.8 percent, at 1,194, while the Nasdaq composite is up 29, or 1.1 percent, at 2,534.


Small companies are up significantly. The Russell 2000, the index that tracks smaller companies, rose 2 percent.

Three stocks rose for every one that fell on the New York Stock Exchange, where trading volume came to 913 million shares.


As market participants speculate the Federal Open Market Committee to expand monetary policy further in November, the interest rate decision could trigger a selloff in the U.S. dollar as the central bank is likely to maintain a cautious outlook for the world’s largest economy.

The Federal Open Market Committee is widely expected to keep their benchmark interest rate unchanged at 0.25 percent as the recovery continues to face major hurdles.

The USD/CAD is looking to make another run at parity as the Canadian-dollar continues to find support as risk appetite remains firm ahead of expected Fed stimulus. The Australian dollar rose just above $1.00 as the country's economy and currency benefit from rising commodity prices. Australia raised its core interest rate today. 


At mid-day the Dow Jones Industrial Average gained 84 points, or 0.8% to 11,208. The S&P 500 added 9 points, or 0.8%, to 1193. The U.S. Dollar Index, which tracks the U.S. currency against a basket of others, slid 0.7%. The Nasdaq Composite rose 0.8% to 2524. The Standard & Poor's 500-share index climbed 0.7% to 1192.

At 9:40 AM EDT the Dollar Index slides to new session low of 76.65, hovering near the Jan intraday low and Oct/2010 close low at 76.60/76.56.

U.S.Stocks climb, boosted by a weaker dollar after Australia and India raised their interest rates, while voters head to the polls in elections expected to usher in a wave of Republicans. 


Before the bell, futures on major U.S. indices pointed to a higher opening on Tuesday due to a lower dollar and ahead of mid-term election results and Fed meeting.

Futures on the S&P 500 are up 0.54 percent, futures on the Dow Jones Industrial Average are up 0.40 percent and Nasdaq100 futures are up 0.54 percent.

Before the bell, the Dow Jones Industrial Average (DJIA) is headed for an opening gain of about 70 points, while the S&P 500 Index (SPX) is trading roughly 8.9 points above fair value. Despite a lack of economic news and uncertainty surrounding tomorrow's Federal Open Market Committee meeting.




The central bank's policy-setting committee will begin its two-day meeting on Tuesday. A further round of quantitative easing, dubbed QE II, is widely expected to be announced on Wednesday.

As no major economic data is due to be released on Tuesday investors will likely focus on the mid-term election results and the two-day meeting of the Fed which kicks off today.


ICSC/GOLDMAN SACHS CHAIN STORE SALES RISE 0.1%
The increase--the second straight--came as the Halloween holiday provided a last-minute lift to sales. It's the first time the index has gained for two consecutive weeks since mid-July, as sales had been volatile in recent months.


U.S. Home Ownership at Decade Low, 19 Million Vacant Homes

The U.S. home ownership rate was unchanged at a 10-year low in the third quarter as banks stepped up property seizures from borrowers who defaulted on mortgages.

The home ownership rate was 66.9 percent, matching the second-quarter level that was the lowest since 1999, the U.S. Census Bureau said in a report today. The homeowner vacancy rate, or the share of properties vacant and for sale, was unchanged at 2.5 percent, according to the report.

Lenders are repossessing properties as borrowers fall behind in mortgage payments after the worst housing crash since the Great Depression. Banks seized a record 288,345 homes in the third quarter, up 22 percent from a year earlier, according to an Oct. 14 report from RealtyTrac Inc. in Irvine, California.

The home ownership rate fell from 67.6 percent in the third quarter of 2009. The rate reached a record high of 69.2 percent in the second and fourth quarters of 2004.

There were 18.8 million vacant homes in the third quarter, including foreclosures, residences for sale and vacation homes, down from 18.9 million in the second quarter, according to today’s Census report from Washington.

19 Million Empty Properties

Foreclosures are included in a part of the Census Bureau report that also includes vacation homes intended for year-round use and homes that are unoccupied because they are under renovation or tied up in legal proceedings. There were 3.6 million such properties empty in the third quarter, down from 3.7 million in the second quarter, the report said. A year earlier, the number was 3.4 million.

Foreclosures could also be counted as vacant homes for sale or rent, or as owner-occupied properties if lenders have not yet evicted previous owners, the federal agency said.

There were 1.9 million empty properties on the market, down from 2 million in the second quarter, according to the report.



EQUITIES:
On the earnings front, Pfizer Inc. reported a 70 percent plunge in third quarter profit, as charges offset a 39 percent growth in revenue. However, on an adjusted basis, the company's profit per share beat analysts' expectations.

Freeport-McMoRan Copper & Gold Inc., ExxonMobil Corp. and Alcoa Inc., all rose more than 1 percent. 

GM TO BE TAX FREE UP TO $50 BILLION
General Motors won't have to pay federal taxes on up to $50 billion in profit under an unusual provision of its government-funded bailout, giving the car maker an added boost as it prepares to return to the stock market..


ADM PROFIT DOWN 30% ON INVENTORY VALUATION

ADM 1Q Profit Down 30% On Inventory Valuation

Archer Daniels Midland Co. (ADM) on Tuesday reported a 30% drop in fiscal first-quarter profit as a drop in inventory valuation and derivative losses masked higher volumes and stronger-than-expected revenue growth.

The U.S. agribusiness group's transport and processing arms had been expected to benefit from a Russian ban on grain exports, but earnings fell 25% at its agricultural services segment, due to the "government actions" and Black Sea drought.

For the quarter ended Sept. 30, ADM reported a profit of $345 million, or 54 cents a share, down from $496 million, or 77 cents a share, a year earlier. Revenue grew 13% to $16.8 billion.

PFIZER PROFIT DOWN 70% ON CHARGES; BOOSTS YEAR VIEW
Drug maker's 3Q profit falls to $866 million, or 11c a share, after more than $2 billion in writedowns and charges related to asbestos litigation. Revenue jumps 39% to $16.17 billion, helped by the Wyeth acquisition. Company raises 2010 EPS view.



BP'S PROFIT PLUNGES TO $1.8B ON SPILL CHARGES
BP posts a 66.5% fall in net profit for 3Q as it took another $7.66 billion of charges related to the Gulf of Mexico oil spill. The charge includes the cost of the spill response, containment, relief well drilling, grants to states, claims paid and federal costs, BP says.

MARATHON OIL PROFIT RISES 69%
Oil producer and refiner's 3Q earnings rise 69% to $696 million, or 98c a share, as Marathon was the latest to benefit from a rebound in North America and stronger refining margins. Results beat analysts' expectations.

KELLOGG PROFIT FALLS 6% AMID CEREAL WEAKNESS
Maker of Rice Krispies, Pop-Tarts and Eggo waffles' 3Q profit drops more than expected to $338 million, or 90c a share, again hurt by weakness in some cereal markets and the lingering impact of a June cereal recall. Revenue dips 4% to $3.16 billion.

MASTERCARD PROFIT JUMPS 15% ON HIGHER SPENDING
MasterCard's 3Q profit rises to $518 million, or $3.94 a share, topping Wall Street's expectations, as consumers and businesses spent more with the global economy continuing to improve. Shares up 2%.

MEDCO NET UP 11% AS REVENUE RISES
Medco Health Solutions' 3Q profit rises 11% to $371.5 million, or 85c a share, and adjusted results beat analysts' expectations as revenue increased on higher prescription volume. Shares up 3%.

CRUDE OIL:

US Crude Oil: $ 84.13 per barrel

OIL FUTURES: Nymex Crude Settles 95c Higher At $83.90/Bbl

Crude-Oil Prices Climbed Over $84 a barrel

In early trading, NYMEX December crude futures rose 19 cents to $83.11 a barrel before leaping above $84 a barrel, after settling up $1.52 at $82.95 a day earlier. Oil futures rallied Tuesday for the third straight session, as the dollar weakened following an unexpected interest rate hike in Australia.

U.S. crude futures extended gains, drawing support from comments by OPEC linchpin Saudi Arabia that consumers would tolerate oil prices as high as $90 a barrel. 

December light, sweet crude on the New York Mercantile Exchange rose 77 cents, or 0.9%, to $83.72. Brent crude on the ICE futures exchange in London gained 63 cents, or 0.7%, to $85.25


Gasoline/Petrol:
Front-month December reformulated gasoline blend stock, or RBOB, is up 1.75 cents, or 2.6%, or 0.8% higher at $2.1104  a gallon. December heating oil gained 2.16 cents, or 1%, to $2.2993 a gallon.

NATURAL GAS:

US GAS: Futures Settle Up 3.8 Cents At $3.87/MMBtu

US Natural Gas Futures Rise
 
Natural gas futures rose Tuesday, with cold weather providing a boost but high inventory levels limiting gains. Natural gas for December delivery recently traded 3.9 cents, or 1%, higher at $3.871 a million British thermal units on the New York Mercantile Exchange.

Gas futures have struggled to trade above $4/MMBtu as U.S. inventory levels are widely seen adding to the near-record 3.754 trillion cubic feet reached last week. Storage levels are unlikely to fall to normal levels until gas producers cut drilling operations.

The government's next weekly inventory report is due out on Thursday..

PRECIOUS METALS:

US Gold:$ 1,358
US Silver: $ 24.88

Gold ticked higher above $1,356 an ounce but investors were reluctant to make big bets ahead of the Federal Reserve's policy meeting, which could determine the fate of the dollar. However, Investors continued to buy gold ahead of the monetary-stimulus announcement, but gains were small on account of already historically high prices.

The most actively traded gold contract, for December delivery, rose $6.30, or 0.5%, to settle at $1,356.90 a troy ounce on the Comex division of the New York Mercantile Exchange. .

Gold futures rose slightly as participants did some last minute buying ahead of expected Federal Reserve monetary stimulus.
 
Settlements: (Price Ranges include Floor and Electronic Trading)
London PM Gold Fix: $1,351.00; previous PM $1,354.50
Dec gold $1,356.90, up $6.30; Range $1,350.20-$1,359.90
Dec silver $24.836, up 28.4 cents; Range $24.615-$25.925
Jan platinum $1,719.10, up $7.60; Range $1,709.80-$1,724.60
Dec palladium $645.45, down $3.25; Range $642.50-$656.00

BASE METALS: 

Weaker Dollar Lifts Copper

Comex copper futures forged higher Tuesday morning as investors sold the dollar in favor of commodities ahead of Wednesday's Federal Open Market Committee announcement.

The most actively traded contract, for December delivery, was recently up 1.2%, or 4.6 cents, at $3.8310 per pound on the Comex division of the New York Mercantile Exchange.

Copper inventories at London Metal Exchange approved warehouses fell 625 metric tons on Tuesday, to a total of 366,950 metric tons. Comex copper stocks on Monday afternoon, the most recently available data, were unchanged at 75,100 tons.


TREASURYS:

U.S. Treasurys rallied as investors stocked up on securities in anticipation of another big bond-buying program from the U.S. Federal Reserve.

U.S. Treasury debt prices gained on Tuesday in light volume as investors took advantage of a recent rise in yields and covered short positions heading into a two-day Federal Reserve meeting and mid-term congressional elections.


Demand for U.S. Treasurys was mixed in morning trading. The two-year note edged lower, while the 10-year note advanced, pushing its yield down to 2.59%.

US BONDS:

(NOV. 2, 3:45 PM EDT)
3 Month     0.10%     -0.01 (-9.09%)
6 Month     0.14%     0.00 (0.00%)
2 Year     0.34%     0.00 (0.00%)
5 Year     1.15%     +0.01 (0.88%)
10 Year     2.59%     -0.01 (-0.38%)
30 Year     3.93%     -0.04 (-1.01%)


CEO'S DROP IN CONFIDENCE
The CEO confidence index weakened to 86.3 in September from 89.2 a month earlier, according to the Chief Executive Magazine.


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Canadian Market:

Canada's industry minister denied media reports Tuesday that BHP Billiton Ltd.'s (BHP) $39 billion takeover bid for Potash Corp. of Saskatchewan (POT) has been approved by Industry Canada, pending a final decision by Canada's prime minister. The Canadian government will announce on Wednesday whether it has approved a hostile bid by BHP Billiton for Potash Corp, a source close to the bid told Reuters on Tuesday..

TSX Higher 
US Dollar Down Manufacturing data lifts commodity prices

Toronto's main stock index opened higher on Tuesday, backed by commodity prices that firmed ahead of an expected decision by the U.S. Federal Reserve to pump more money into the U.S. economy.

The Toronto stock market was modestly higher Tuesday as commodity prices found lift for a second day in the wake of strong manufacturing data in China and the United States.

The S&P/TSX composite index gained 23.7 points to 12,688.5 with investors cautious ahead of a much-anticipated U.S. Federal Reserve meeting that is expected to result in another round of major economic stimulus and the American midterm elections.

The TSX Venture Exchange climbed 4.31 points to 1,938.39.

The base metals sector advanced about one per cent amid higher copper prices with the December contract on the Nymex ahead five cents to US$3.83 a pound. Equinox Minerals (TSX: EQN.TO) was up 16 cents to $5.83 while Sherritt International (TSX: S.TO) climbed 22 cents to $8.45.

Financials were also positive with TD Bank (TSX: TD.TO) ahead 52 cents to $73.88.

Gold stocks were weak as the December bullion contract in New York rose $4.20 to US$1,354.80 an ounce. But Eldorado Gold (TSX: ELD.TO) gained 11 cents to $17.94.

The weaker U.S. currency also helped push the December crude contract on the New York Mercantile Exchange 81 cents higher to US$83.76 a barrel. The energy sector gained 0.24 per cent and Canadian Natural Resources (TSX: CNQ.TO) climbed 29 cents to $37.46.


The Canadian dollar also gained ground as the U.S. dollar lost strength ahead of Wednesday's Fed announcement, rising 0.68 of a cent to 99.10 cents US.



India's SpiceJet Order 30 Bombardier Q400s for US$900 million
Indian discount airline SpiceJet has agreed to purchase up to 30 Q400s turboprops from Bombardier (TSX:BBD.B) for US$900 million.

Talisman Energy Inc. (TSX: TLM.TO) reported net income in the third quarter of $121 million, a four-fold increase from $30 million a year earlier. For the first nine months of the year, Talisman reports net income of $952 million, up from $548 million in the same period last year. The Calgary-based oil and gas company says the increase is primarily due to increased commodity prices. Talisman shares added 46 cents to $18.90.



Toronto Indexes, Volume; 2 PM EDT Composite Up 25.84

 S&P/TSX Composite   12690.65  up   25.84  or 0.2%
 S&P/TSX 60 Index      728.39  up    1.50  or 0.2%
 Financials            178.65  up    0.07  or 0.0%
 Materials             409.41  up    1.91  or 0.5%
 Energy                291.34  up    2.35  or 0.8%
 Industrials           107.37  off   0.35  or 0.3%
 IT                     29.20  off   0.10  or 0.3%

   Volume          Tuesday    Monday
   1-2                 48.4M     53.6M
   9:30-2             290.3M    315.4M

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South American Markets: 

BRAZIL:

BRAZIL'S ROUSSEFF WINS ELECTION CHARTS PLANS

A day after winning Brazil's presidential election, President Dilma Rousseff began the tricky task of assembling a government to carry out her mandate to continue a policy mix of market-friendly economics and generous social programs.

Radian Swings To 3Q Profit On $230M 

Derivatives Gain

Radian Group Inc. (RDN) swung to a third-quarter profit on a $230 million derivatives gain, while it also reported lower loss provisions.

Shares were recently up 15% to $8.60, climbing steadily for most of the session, as bottom-line results excluding the gain still topped expectations. The stock is up 18% so far this year, but traded above $60 in mid-2007.

The company, which covers potential lender losses on mortgages to borrowers who can't come up with a 20% down payment, has seen claims skyrocket during the housing crisis. Investors have been waiting for signs the claims are leveling off.

Delinquencies of loans carrying mortgage insurance from Radian have fallen in recent months, suggesting loan woes appear to have reached a peak.

Mortgage insurance claims were $494.2 million, up from $376.5 million a year earlier and from $337.3 million in the second quarter. The company now expects claims paid for all of 2010 to total about $1.7 billion, up from the prior view of $1.5 billion.

Radian posted a third-quarter profit of $112.2 million, or 84 cents a share, compared with a year-earlier loss of $70.5 million, or 86 cents.  The latest results included a $1.12 a share in derivatives gains. Net premiums earned fell 2.6% to $203.9 million.



CHILE:

Chile Stocks Surge Into Record Territory

Chile Stocks End At 5th-Straight Record High
Chile's blue-chip Ipsa index ended at a fifth consecutive record high Tuesday as the market awaits the outcome of the U.S. Federal Reserve's two-day monetary policy meeting.

The Ipsa ended 1.5% higher at 4986.74, while market volume fell to 96.38 billion Chilean pesos ($197.9 million), compared with CLP128.8 billion on Friday. All banks, financial markets, businesses and government offices were closed Monday for a national holiday.

In early morning trading Chile's Ipsa select stock index surged into record high territory midday Tuesday as the US Dollar declined raising copper prices worldwide.  The Ipsa was recently at a fresh intraday high at 4952.19 on healthy investor appetite for emerging-market assets.


Dual-listed gainers included power producer Endesa (EOC, ENDESA.SN), which surged 3% to close at CLP896.83 and flagship carrier LAN Airlines (LFL, LAN.SN), which climbed 1.1% to CLP15,361.00.

Other gainers included fuel and forestry conglomerate Copec (COPEC.SN), which increased 3.4% to CLP9,520.00 and retailer La Polar (LAPOLAR.SN), which rose 2.1% to CLP3,560.70.

Chile's Peso ended stronger against the Dollar Tuesday.
The peso ended at CLP486.90 to the dollar, versus Friday's close of CLP488.90, while trading in a range of CLP486.30 to CLP489.00.

In the bond market, yields on inflation-indexed Chilean central bank bonds, or BCUs, ended with slight variations in thin over-the-counter trading.
 
Early gainers included steel and iron ore maker Cap (CAP.SN), which was increasing 1.5% to CLP23,350.00, and retail holding company Cencosud (CENCOSUD.SN), which was surging 1.3% to CLP3,860.00.

Chile's Peso Closes Stronger

Chile's peso ended stronger against the dollar Tuesday.A stronger euro in relation to the dollar and higher international copper prices contributed to the peso's gains, according to traders. 

The peso ended at CLP486.90 to the dollar, versus Friday's close of CLP488.90, while trading in a range of CLP486.30 to CLP489.00. All financial markets, banks, businesses and government offices were closed Monday for a national holiday.

PERU:

LIGHT INFLATION SEEN

Peru's Inflation Remains Weak Despite Booming Economy

Peru's inflation remains weak despite booming economic growth, and this should allow the Central Reserve Bank of Peru to hold its policy rate steady at 3.0%.

On Monday, a holiday in Peru, the nation's statistics agency said the benchmark consumer price index declined for the second consecutive month.

The CPI fell 0.14% in October to bring the 12-month rise in inflation to 2.10%. That is almost midcenter of the central bank's target range of 1.0% to 3.0%.

Food prices--food and beverages have a 37.8% weighting in the inflation basket--declined 0.68% in October, dragging down the overall indicator.

Economists expect inflation to end the year well within the government's target range, allowing the central bank to hold off increasing its reference interest rate. Between June and September the central bank increased its reference interest rate from 1.5% to 3.0%, while forecasting that inflation will end the year within its target range. 

Peru's gross domestic product is expected to expand by more than 8.0% this year, driven in part by strong domestic demand.



COLOMBIA:

COLOMBIA SALES TO CHINA BOOMING

Colombian Jan-Aug Sales To China Tripled

Colombian exports to China surged in the first eight months of the year, fueled by sales of oil, coal and nickel, the Colombian trade promotion agency said Tuesday.

Colombian sales to China more than tripled in the January-August period from a year earlier, reaching $1.59 billion , Proexport, Colombia's trade promotion agency, said in a statement.

China is now Colombia's second-largest trading partner after the U.S and accounts for 6% of total export income. Exports of crude, fuels and derivatives to China went up 397% to $823.3 million in the first eight months of 2010, Proexport said.

Coal exports to China reached $323.1 million in January through August. Colombia is the world's fifth largest coal exporter with an estimated 7 billion tons of proven reserves, and is just now starting to reach the Asian coal markets.

Cerrejon LLC, Colombia's largest coal miner, is slated to export 5 million tons of coal this year to Asia, which accounts for about 15% of production.

In the first eight months of this year Colombian nickel sales to China grew by 13% from a year earlier to $253.8 million. The Colombian export sector has enjoyed a strong recovery after suffering steep declines last year. In the first eight months of 2010, exports are up 22% to $25.6 billion.


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European Markets: 

The Eurosystem's reserves of gold and gold receivables remained unchanged at EUR334.412 billion in the week ended Oct. 29, the European Central Bank said Tuesday.

The Eurosystem's reserves of net foreign currency increased EUR200 million to EUR177 billion during the period due to customer and portfolio transactions and U.S. dollar liquidity-providing transactions.

The ECB said cash in circulation increased EUR3.8 billion to EUR815 billion, while total assets rose by EUR17.716 million to EUR1.896 trillion. The Eurosystem consists of the Frankfurt-based ECB and the 16 euro-zone national central banks.

ECB website: www.ecb.int


Early morning trading in Europe shows a higher move in most reporting counties. 

European shares turned higher on Tuesday with the decline of the dollar. Oil majors were supported by upbeat underlying results from BP (BP.L) and BG Group (BG.L), though caution ahead of a U.S. Federal Reserve policy decision capped further gains.

Output growth in the euro zone's manufacturing sector picked for the first time in three months in October, with Spain and Ireland returning to expansion but Greece still mired in recession, a final survey by Markit shows.




European stock markets are currently trading higher with FTSE 100 up by 70.33 points, DAX30 up by 58.21 points and CAC 40 up by 36.26 points.

By 0819 GMT, the pan-European FTSEurofirst 300 .FTEU3 index of top shares was up 0.1 percent at 1,088.50 points, after opening in negative territory. British Pound Weighed By Growth Concerns. The U.S. Dollar is at a crossroads ahead of FOMC.seen at 1.404 but apparently hit stops as the pair eases back to the 1.403 area, dollar remains defensive ahead of FOMC decision.

LONDON:

London Stocks Maintain Gains After US Open

FTSE 100                     5765.11   +70.49   +1.24%
FTSE 250                    10901.39   +26.11   +0.24%
DJ UK Smaller Companies       909.80    +1.89   +0.21%

1347 GMT FTSE 100 maintaining gains after US equity markets climb. In London, the oil and mining stocks are jostling for the top spots with Kazakhmys +3.7%, Tullow Oil +3.6%, Antofagasta +3.3%. 

On the downside, Serco is yet again the biggest decliner, -3.8% after asking for tax rebates from suppliers. There are no economic data of note during the afternoon session. Inevitably, investors are eagerly waiting for the outcome of the two-day FOMC meeting, which begins Tuesday.

TOP STORIES:

Royal Mail Profits Fall

Royal Mail Group, which consists of a letters delivery business, a network of Post Offices, and an express parcel deliveries service, said operating profit fell to GBP52 million in the period from GBP184 million a year ago, as mail volumes continued to decline and it faced increased competition from rival operators and email.

The letters business returned to an operating loss as letter volumes fell to an average of 68 million items daily, some 16 million fewer items than when volumes peaked five years ago. The daily average is now at the same level as the mid-1990's. The unit's loss was GBP66 million compared with a profit of GBP48 million in the same period last year as revenue dropped to GBP3.07 billion, from GBP3.21 billion.

 
BP Net Profit Plunges To $1.8B
BP PLC (BP) Tuesday posted a 66.5% fall in net profit for the third quarter as it took another $7.66 billion of charges related to the Gulf of Mexico oil spill.

Lloyds Reports Steady 3Q, Says Comfortable With Basel III
Lloyds Banking Group PLC (LYG) said Tuesday that underlying income grew in the third quarter, while costs and impairments continued to fall, setting up the 41%-government owned bank to end the year profitably.

UK October Construction PMI Slips To 51.6, Lowest Since February

The U.K.'s construction sector grew at the weakest pace in eight months in October as government spending cuts undermined confidence in the sector and new orders and output both slowed, a survey showed Tuesday.

Aviva Says Profits To Grow This Year As Sales Rise

U.K. insurer Aviva PLC (AV.LN) Tuesday said it is positioned to deliver strong, profitable growth and "outstanding capital generation" for 2010 after it posted a better-than-expected 6% rebound in new business sales in the first nine months, helped by strong results in the U.K. and Asia. 

ITALY:
Italy October Government Borrowing EUR7.5 Billion

Italy's state-sector borrowing requirements, a key indicator of the budget deficit, totalled nearly EUR7.5 billion in October, down 32% on the year, the economy ministry said Tuesday.

These requirements reached nearly EUR72 billion in the first 10 months of the year against EUR83.45 billion for the same period a year earlier, the ministry said in a statement, citing preliminary data.

The reduction in the amounts required for the two periods was thanks to a cut in public administration spending and the postponement of some payments to November, the ministry added.


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Asian Pacific Markets: 

Asian shares declined in a mixed day but the dollar kept a tenuous grip on overnight gains in Asia on Tuesday ahead of U.S. elections and a Federal Reserve meeting that is expected to ease monetary policy. Japan’s benchmark Nikkei 225 stock index rose 0.1 per cent, while Hong Kong’s Hang Seng index added 0.1 per cent.

CHINA:
Chinese shares edged lower on profit-taking amid worries over possible shifts in monetary policy to counter excess liquidity. The benchmark Shanghai Composite Index closed 0.3 per cent lower.

 
JAPAN:


JAPAN THREATENS INTERVENTION TO CAP YEN
Japanese Finance Minister Yoshihiko Noda calls the yen's recent appreciation "one-sided," and threatens intervention in the foreign-exchange markets to weaken the currency.

The MSCI index of Asia Pacific stocks outside of Japan declined 0.4 percent by 9:41 p.m. ET as material and financial stocks weakened.

Japan's Nikkei share average fell to a seven-week low and the broader-based Topix index hit a 19-month low, under pressure from the yen's strength as it hovers close to a record high against the dollar.

The Nikkei was off 0.1 percent and the Topix was down 0.2 percent. They are down 13 percent and 12 percent so far this year, respectively.

The dollar was last at 80.63 yen and within sight of a record low of 79.75 yen set in 1995. Markets were keeping a wary eye on the currency pair, with the risk of Japanese intervention seen mounting if the dollar slips below 80 yen.

AUSTRALIA:

Australian Dollar Beyond Parity
Australian Dollar Soars as RBA Hikes Rates, Spotlight Turns to FOMC

The Australian Dollar soared as the RBA unexpectedly raised interest rates for the first time in six months. From here, all eyes have turned to the upcoming US Fed policy announcement.

ASX Chief Dismisses Critics Of A$8.4B Takeover By SGX

The head of Australia's stock exchange, ASX Ltd. (ASX.AU), said Tuesday the company will formally apply this month to the government for approval of its 8.4 billion Australian dollar (US$8.3 billion) takeover by Singapore Exchange Ltd. (S68.SG) and dismissed the concern of lawmakers who argue the buyout isn't in the country's national interest.

The Reserve Bank of Australia raises its cash rate target by 25 basis points to 4.75%, an unexpected move that marks its first change in policy in six months. The rate hike lifts the Australian dollar to near parity with the U.S. dollar.

Higher interest rates in foreign economies often strengthen those currencies. 

The ICE Dollar Index, which measures the greenback against a basket of currencies, fell to 76.769 from 77.296 early Tuesday. A weaker dollar makes crude cheaper to buyers using foreign currencies.



____________________________________________________________
WORLD FOREX CURRENCIES SNAPSHOT:
(TUESDAY, NOV 2, 2010 12:05 PM EDT)
EUR/USD     1.4008     +0.0114 (0.82%)
USD/JPY     80.7700 +0.1500 (0.19%)
GBP/USD     1.6010     -0.0032 (-0.20%)
CAD/USD     0.9902     +0.0042 (0.43%)
USD/HKD     7.7511     -0.0017 (-0.02%)
USD/CNY     6.6776     -0.0116 (-0.17%)
AUD/USD     0.9991     +0.0121 (1.23%)

WORLD MARKETS SNAPSHOT:
(TUESDAY, NOV 2, 2010 12:05 PM EDT)
Shanghai     3,045.43     -8.59 (-0.28%)
Nikkei 225     9,159.98     +5.26 (0.06%)
Hang Seng Index     23,671.42     +18.48 (0.08%)
TSEC     8,344.76     -34.99 (-0.42%)
FTSE 100     5,758.97     +64.35 (1.13%)
DJ EURO STOXX 50     2,857.72     +20.99 (0.74%)
CAC 40     3,863.37     +22.26 (0.58%)
S&P TSX     12,680.58     +15.77 (0.12%)
S&P/ASX 200     4,701.40     +2.90 (0.06%)
BSE Sensex     20,345.69     -9.94 (-0.05%)

____________________________________________________________
TUESDAY'S U.S. ECONOMIC CALENDAR:

7:45 a.m.
Oct 30 ICSC-Goldman SachsChain Store Sales Index - WoW (previous +0.3%), YoY (previous +1.9%)

8:55 a.m.
Oct 30 Johnson Redbook Retail Sales Index MoM % Change (previous +0.3%), 12Mon Chg Pct (previous +2.7%), 52WkChgPct (previous +2.8%)

10:00 a.m.
3Q U.S. Housing Vacancies

11:00 a.m.
Oct Global Manufacturing PMI

4:30 p.m.
Oct 29 API Weekly Statistical Bulletin Crude Stocks (Net Change) (previous +6.43M), Gasoline Stocks (Net Change) (previous -1.81M), Distillate Stocks (Net Change) (previous +0.82M), Refinery Runs (previous 81.6%)

5:00 p.m.
Oct 31 ABC News Consumer Comfort Index (previous -47)

N/A
Federal Election Commission - U.S. mid-term elections

N/A
Federal Reserve Board - U.S. Federal Open Market Committee meeting, day 1.

TIME ADJUSTMENT REMINDER:
Clocks In Europe 'Fell Back' Sunday Oct 31.

European countries turned back their clocks one hour Sunday as they leave daylight saving time. Countries in North America will make the change Nov. 7. 



____________________________________________________________
US STOCK MARKET SUMMARY, TUESDAY, NOV. 2, 2010:

Stocks:

US stocks finished mixed as the rebound in the US Dollar gained ground throught the day. Stocks finished flat after posting significant gains at the open, helped by robust manufacturing numbers from China, the US and the UK. The Securities and Exchange Commission was said to be investigating the J.P. Morgan Chase bank also helped further dissipated the rally. The
financial sector declined into the red after the ProPublica report. They said the SEC is investigating whether J.P. Morgan Chase allowed Magnetar Capital, a hedge fund, to improperly select assets for a $1.1 billion deal backed by subprime mortgages.

U.S. domestic air fares jumped 13% in the second quarter after hitting a record low a year earlier, with the increase being the biggest since at least 1996, according to the Department of Transportation. The report follows airlines reporting sharply improved results for the third quarter, with many of the largest carriers beating expectations.

Treasurys:

Treasury prices weakened slightly Monday following some optimistic economic data and trading calmed ahead of Wednesday's expected Federal Reserve announcement of another large-scale bond buying program. Treasury prices slipped after a report showed the U.S. manufacturing sector expanded at a much faster-than-expected pace last month. Government bond prices had been up early Monday after data that showed U.S incomes fell in September for the first time in over a year.

Forex:

The dollar sharply reversed early losses against the yen and the euro Monday, spurred on by optimistic U.S. manufacturing data. The more-encouraging economic snapshot gave pause to the more-aggressive bets on expected Federal Reserve stimulus in recent weeks.



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