Mergers Drive U.S. Sentiment; Bond Yields of Spain, Portugal, Greece Rise

Bikram Pandey
13 Jun, 2011
New York City

U.S. stocks closed higher after losing for six weeks in a row and the S&P 500 index rebounded from the three-month low. European leaders haggled as Greek debt rating was cut to the lowest. Portuguese 10-year bond yield soar to a eleven year high. Oil gained and U.S. Treasuries declined a fraction.

[R]4:15 PM New York – U.S. stocks closed higher after losing for six weeks in a row and the S&P 500 index rebounded from the three-month low. European leaders haggled as Greek debt rating was cut to the lowest. Portuguese 10-year bond yield soar to eleven year high. Oil gained and U.S. Treasuries declined a fraction.[/R]

U.S. indexes gained after a string of merger news lifted sentiment but lost most of the gains in the afternoon as the European leaders haggled on terms of Greek bailout. Separately, a rating agency lowered Greek debt rating to the lowest.

The worries of Greek debt also lifted the yields on Portuguese 10-year bonds to 10.72% and Greek debt yield soared to 17%.

In merger news, VF agreed to buy Timberland for $1.8 billion. Wendy''s/Arby''s agreed to sell Arby''s to Roark Capital for $430 million. Honeywell acquired EMS Technologies for $491 million. Transatlantic signed merger agreement with Switzerland based Allied World Assurance Co. Holdings.

The European indexes traded higher after Glencore planned $19.5 billion takeover of Kazakhstan miner ENRC. Prada Hong Kong IPO estimated to raise $2.61 billion. Transatlantic inked deal with Allied World Assurance.

In economic developments, Finland wages and salaries rose in April, Italian industrial production improved in April. Turkey''s current account deficit narrowed, industrial new orders, and turnover increased in April.

The UK indexes closed higher. Horizon agreed to acquire Florida-based APR Energy for $855 million. The Bank of England Chief Economist Spencer Dale noted short and medium-term inflation expectations are more mixed than significantly de-anchored.

Stocks in Japan declined after core machinery orders declined in April surprising many investors and analysts. Utilities are expected to follow Kansai Electric announcement to cut power consumption by 15% in the summer months.

The benchmark index in Mumbai dropped as much as 0.7% on the weakness in international markets. Stocks recovered to erase all the losses at close. Reliance Industries agreed to acquire majority stake in insurance venture controlled by Bharti Enterprises.

Commodities, Bonds and Currencies

The 10-year bond yield increased to 2.99% and 30-year bond eased to 4.20%.

The U.S. dollar increased to $1.44 to a euro and rose against the Japanese yen to 80.20 yen.

Immediate delivery futures of Texas crude oil decreased $2.14 to $97.15 a barrel and futures of natural gas fell 0.12 cents to $4.65 per mbtu and gasoline price fell 1.24 cents to 300.37 cents a gallon.

In metals trading, copper decreased 1.25 cents to $4.06 per pound, gold fell $13.00 to $1,516.20 per ounce and silver eased $1.50 to $34.75.