9:45AM Stocks opened higher, led by solid gains for airlines.
Stocks opened modestly higher, with investors eyeing an $8 billion acquisition bid in the airline sector and awaiting minutes from the Federal Reserve''s meeting last month. A survey that showed manufacturing in the New York region at a five-month high and gains for tobacco company Altria Group and Web search company Google also generated positive sentiment.

Google (GOOG: chart) rose 1.4%, getting close to $500 after Credit Suisse said it reinstated coverage of the company with an ‘outperform’ rating following the completion of the YouTube acquisition. Also, it raised its price target on Google to $600 from $500. Altra Group (MO: chart) added 1.3% after Goldman Sachs raised its rating on the stock.

In early trading, significant strength emerged in the airline sector after US Airways (LCC: chart) offered to acquire Delta Air Lines for approximately $8 billion in cash and stock. Shares of U.S. Airways climbed 8%. Following the news, AirTran (AAI: chart) and JetBlue (JBLU: chart) surged 19% and 9% respectively, turning in two of the sector''s best performances. The market also benefited from strength in the semiconductor, defense, and internet sectors. At the same time, gold stocks showed weakness due to a decrease by the price of gold.

In the first hour of trading Wednesday, the Dow was up 13.61, or 0.11%, at 12,231.62, moving further into record territory. The S&P was up 1.81, or 0.13%, at 1,395.03, and the Nasdaq composite index was up 6.78, or 0.28%, at 2,437.44. Bonds fell, with the yield on the benchmark 10-year Treasury note rising to 4.61% from 4.57% late Tuesday.


9:30AM Upgrades in Vodafone helped the FTSE 100 to a modest advance.
The FTSE 100 in London was 21 points, or 0.4%, higher at 6,207.6 by mid-day.

Advancers

The mobile phone company Vodafone gained 2.7% as analysts upped their numbers following better than expected results on Tuesday. Deutsche Bank stated that although fundamentals remained difficult, there were further potential upside to consensus estimates from industry consolidation and further cost saving.

Another gainer was Old Mutual adding 2.5% as Bear Stearns forecast strong figures from the South Africa-based life assurer later this month. Among mid-caps, recruitment group Hays gained 4.6% on news of strong like for like fee growth of 15% in the first four months of the financial year. Luminar jumped 8.1% after the nightclub operator said it was in the advanced stages on a plan to divest its entertainment division.

Decliners

Of the decliners, Kingfisher shed 3.5% as UBS and Merrill Lynch both cut the owner of retailer B&Q from buy to neutral after a strong run on the shares. The stock has risen 17% in three months. Lonmin fell 2.5% as investors took profits following a 140% jump in earnings at the platinum miner.

Cadbury Schweppes lost 1.7% as Goldman Sachs cut its stance from neutral to sell, arguing the confectioner was vulnerable to further weakness as the sector experiences a tough trading environment. J Sainsbury, the supermarket chain, shed 0.7% after it reported a 60% rise in first-half underlying profit before tax. The stock had performed strongly in the run up to the figures today.

Other news

Cheaper fuel meant the pace of inflation in the UK last month was slower than forecast, an outcome that caused the City of London to trim expectations for further interest rate rises. CPI was at 2.4%, below the 2.6% forecast.


9:00AM Stock futures pointed to a flat opening ahead of FOMC minutes.
U.S. stock futures indicated a flat start of Wednesday session, awaiting the release of minutes of the last FOMC meeting as well as crude inventories data. S&P 500 futures eased 0.50 of a point at 1,397.20 and Nasdaq 100 futures were 0.75 of a point lower at 1,795.50. Dow industrial futures slipped 7 points to 12,247.

In earnings news, Tyco International Ltd ((TYC0)), high-tech manufacturing and services conglomerate, reported Q4 profit increase on higher sales and a gain from special items. Net income jumped to $1.27 billion, or 62 cents per share, up from $917 million or 44 cents per share last year. Quarterly revenue rose 8% to $10.76 billion from $9.94 billion, exceeding estimate of $10.5 billion. Full-year earnings grew 22% to $3.71 billion, or $1.80 per share, compared with $3.03 billion, or $1.43 per share a year ago.

Airline stocks are seen in the spotlight after U.S. Airways (LCC: chart) made an $8 billion offer for Delta Air Lines in cash and stock for Delta Air Lines. The airlines would operate under Delta''s name. Shares of delta gained 3.5% before market opening, while US Airways rose 5%. Among other airlines rising in electronic trading were American Airlines operator AMR Corp. (AMR: chart), Southwest Airlines (LUV: chart), United Airlines parent UAL Corp. (UAUA: chart), Continental Airlines Inc. (GAL: chart) ant others.

Elsewhere, Dow component Altria Group (MO: chart) rose 1.7% in pre-open trading after Goldman Sachs upgraded the tobacco company to buy from neutral.