Vodafone Group advanced 1.7% after Goldman Sachs raised its recommendation on the mobile phone retailer from neutral to buy.

Henderson Group rose 5.4% as the fund manager forecast profits this year to be ahead of market expectations. Forth Ports gained a further 3.4% amid talk of a bid from Bank of Scotland.

Carphone Warehouse rose 6.6% after Merrill Lynch reiterated its buy rating on the mobile phone retailer following a presentation from Charles Dunstone, Carphone chief executive.

Decliners

Woolworths, a sweets-to-DVDs retailer, warned that sales could disappoint in the weeks leading up to Christmas, sending its shares10.2% lower.

There was profit taking in Tesco as the largest supermarket in the UK reported a 5.6% rise in UK like-for-like sales. Tesco shares fell 1.5%, while fellow retailers William Morrison lost 1% and J Sainsbury shed 0.3%.


9:00AM Stocks futures pointed higher on Q3 productivity data.
Stock market futures indicated a slightly higher opening Tuesday, after a revised report on Q3 labor productivity showed that productivity was revised up, but came in below economist estimates. Productivity in the nonfarm business sector rose 0.2% in Q3, down from the expected increase of 0.4%. The report also showed a downward revision to the pace of unit labor cost growth in Q3, which was revised down to 2.3% from 3.8%.
In corporate news, luxury home builder Toll Brothers Inc. (TOL: chart) reported lower quarterly earnings and warned that next year’s net income is likely to drop 62%. Shares of Toll Brothers declined 3.2% to $30.90 before the bell. Shares of Starbucks Corp. (SBUX: chart) rose 2% to $36.48 before the opening bell after UBS raised its rating on the company to ‘buy’ from ‘neutral.’ Standard & Poor''s 500 futures were up 2.20 points, slightly above fair value. Dow Jones industrial average futures were up 23 points, and Nasdaq 100 futures up 4.50 points.

Labor productivity was revised up 0.2% in Q3.
Tuesday morning, the Department of Labor released its revised report on labor productivity in the third quarter, showing that productivity was revised up compared to its previous reading. Despite the upward revision, productivity growth came in below economist estimates. The report showed that productivity growth was revised to 0.2 percent in the third quarter compared to the previously reported unchanged reading. Economists had expected a more significant upward revision to 0.5 percent growth. The Labor Department said that output growth in the third quarter was revised up to 2.3 percent from 1.6 percent, while the increase in hours worked was revised up to 2.1 percent from 1.6 percent. The upward revision was also partly due to a faster rate of productivity growth in the manufacturing sector, which was revised up to 6.7 percent from the previous reading of 5.9 percent.

Manufacturing output growth was revised up to 5.1 percent from 4.2 percent, while the 1.6 percent decline in hours was unrevised. At the same time, the report showed a downward revision to the pace of unit labor cost growth in the third quarter, which was revised down to 2.3 percent from 3.8 percent. The Labor Department also said that second quarter unit labor costs were revised significantly lower. The report showed that unit labor costs fell 2.4 percent in the second quarter compared to the previous reading of 5.4 percent growth. While the modest productivity growth in the third quarter may raise some concerns about the strength of the economy, the downward revisions to unit labor costs in the second and third quarters may help to ease recent concerns about the pace of inflation.


8:00AM Toll Brothers posted Q4 profit decline, beating estimates.
Toll Brothers (TOL: chart), luxury home builder, reported Q4 profit slightly above expectations, but also warned that next year''s annual profit is likely to decline up to 62%. However, it raised hopes that there is an upward turn in the housing market.

Toll Brothers said net income in Q4 fell to $174 million or $1.07 a share, from $310 million, or $1.84 a share last year, with revenue falling to $1.81 billion from $2.02 billion. Analysts on average expected earnings of $1.06 a share. In fiscal 2006, it earned $687 million, or $4.17 a share. The home builder attributed the downbeat results to 15 months of a home building slowdown, and over 585 cancellations.

But the company also raised hopes that the trend may change direction, as the Washington D.C. suburbs of Northern Virginia, the first market that Toll Brothers saw slowing growth, seems to have stabilized. Still, the net income in the following year is forecast to fall to between $260 million and $340 million, or $1.58 to $2.08 a share, hurt by estimates of a $60 million pre-tax land-related writedown and by a change in accounting treatment that will shift 22 cents to 29 cents a share in earnings to subsequent years.


7:30AM Asian markets ended mixed Tuesday with Japan lower and HK higher.
Asian markets closed mixed on Tuesday. The Nikkei 225 stock index in Japan shed 0.23% to finish at 16265.76. Oil producers were lower after a slip in crude-oil futures on the NYME overnight. Japan Petroleum Exploration fell 1.1% and Inpex Holdings declined 3.4%.

Sumitomo Mitsui Financial Group declined 2.4% after the banking group announced on Monday that it would issue preferred securities for several hundred billion yen to boost its capital adequacy ratio. Mitsubishi UFJ Financial Group was 1.4% lower and Mizuho Financial Group fell 2.1%. Resona Holdings declined 2% after JP Morgan lowered its rating on the bank to neutral from overweight as higher tax rates lowered the its earnings per share.

Hopes of faster yuan appreciation and gains in telecommunications companies fueled Hong Kong stocks higher. The Hang Seng Index rose 1.3% to 18944.19. The advance was also based on excitement in the telecom sector, with China Netcom Group jumping 8.5%. China Telecom gained 15.6% with investors confirming it is their top pick for the sector, which is likely to undergo profound reforms.

Korea Composite Stock Price Index, or Kospi, fell 0.4% to 1420.59. Automobile and technology stocks declined on the weak dollar, which closed at 924.30 won, down from its last finish at 927.60 won. In Taiwan, the Weighted Price Index of the dropped 0.5% to 7609.9. Australia nudged 0.03% higher, to close at 5,414.2.

The Shanghai Composite Index gained 0.5% to 2173.28, its highest close since July 20, 2001, when it settled at 2179.62. Property developers surged on speculation that a stronger yuan will lift the value of their real-estate holdings. China Vanke advanced 2.4%; Beijing North Star surged by its 10% daily limit and Shanghai Jinqiao Export Processing Zone Development also gained 10%.