4:00PM Merger news and drop in oil lifted averages by 1%.

-Yields on 10-year bond closed at 4.81% and 30-year bond closed at 4.95%.
-Crude oil fell $1.90 to $70.61 per barrel.
-Gold dropped $6.90 to $618 per ounce. Silver dropped 34 cents but copper gained 1 cent.

-Major Asian Markets declined led by 1.1% decline in Tokyo, loss of 1.25% Taiwan and 1% in Thailand.

-European Markets closed higher led by 0.7% rise in France and Germany and 0.6% gain in Spain. Norway dropped 0.6% and South Africa gained 0.8%. UK market was closed.

-Latin American Markets were led by 1% rise in Brazil and Mexico and 0.4% decline in Argentina. Chile gained 0.5%.

A drop in oil price and merger news helped market averages to lift as much as 1% in the late afternoon trading. Weather forecast that the Tropical Storm Ernesto is likely to change its direction and miss strategic oil and gas producing locations in the Gulf of Mexico led a sharp sell-off in the oil prices. Oil dropped near 3% to close at $70.61 per barrel.

Kinder Morgan (KMI: chart) agreed to be taken private by a management led buyout of $15 billion and transfer of $7 billion in debt. The stock gained 2%. Giant Industries (GI: chart) jumped 14% after it agreed to be bought by Western Refining (WNR: chart) for $1.2 billion.

Wal-Mart (WMT: chart) gained 1.25% on the news that August same-store sales gained 2.7%. Target (TGT: chart) rose 2% and Home Depot gained 0.9% on the news. Chico’s (CHS: chart), apparel retailer, gained 4 cent to $17.85 on trading volume of 4.3 million shares.

12:30PM European markets finished in the positive.
European markets finished higher Monday with light trading volume. U.S. stocks provided some support, with lower oil prices contributing to the advance. Among the few stocks showing strong trading volumes were Banca Intesa and Sanpaolo IMI after the two agreed over the weekend to a merger. Banca Intesa''s shares closed down 1.6% and Sanpaolo IMI declined 1.7%. In other corporate news, Unilever shares climbed 0.9% after it unveiled plans to sell its European frozen-food business. The German DAX 30 finished higher by 0.8%, while the French CAC 40 ended up 0.7%. The U.K. market was closed for a holiday.

Oil prices dropped over $2 after Hurricane Ernesto was downgraded to a tropical storm. Light crude October delivery fell $2.26 to $70.25 a barrel. Gasoline lost 10 cents to $1.79 a gallon. Natural gas dropped 71 cents to $6.44 per 1,000 cubic feet. London Brent October delivery slipped 99 cents to $71.73. The dollar weakened versus major currencies. The euro traded at $1.2798, up from $1.2758. The dollar bought 117.13 yen, down from 117.24. The British pound stood at $1.8979, up from $1.8868. European gold prices dropped. In Zurich gold traded at $614.48, down from $622.15. Currency and metals markets were closed in the U.K. for a holiday.


11:30AM Strength in the tech sector offset weakness in the energy sector.
In a light trading morning session stocks kept above the flat line as strength in the tech sector overshadowed weakness in the energy sector due to a sharp decline by crude oil prices. The market welcomed a $2-drop in crude after Hurricane Ernesto was downgraded to a tropical storm. The price decrease contributed to significant strength among airline and other transportation stocks, easing concerns about higher fuel costs. At the same time shares of oil companies declined, with Exxon Mobil Corp. (XOM: chart) falling 41 cents to $70.02, and British Petroleum (BP: chart) down 23 cents to $68.08.

Intel Corp. (INTC: chart) advanced 1.1% following a brokerage upgrade to outperform from market perform. A partnership between eBay Inc. (EBAY: chart) and Google Inc. (GOOG: chart)) also provided support, sending Ebay shares up 2.6% and Google''s up 1%. Housing, computer hardware, and retail stocks also posted strong gains. In late morning trading, the Dow Jones industrial average rose 56.59, or 0.50%. The Standard & Poor''s 500 index rose 5.74, or 0.44%, and the Nasdaq composite index added 15.49, or 0.72%. Bonds were mostly flat, with the yield on the benchmark 10-year Treasury note at 4.80% from Friday''s five-month low of 4.79%.


10:30AM Sensex index continues to advance.
The Sensex on BSE gained 47.32 points, or 0.41%, to close at 11,619.52, above the psychologically important 11,600 mark. The turnover on BSE was Rs 1,897 crore, showing lackluster trading, and much lower than Friday’s turnover of Rs 3,197 crore. The market-breadth was positive on BSE as 1,418 shares advanced, 1,047 declined and 68 stocks remained unchanged. From the Sensex stocks 20 advanced while 10 declined.

Matrix Laboratories Ltd. Rose 7.5% but closed up a fraction on the news that the U.S. based Mylan Laboratories Inc. has agreed to buy 71.5% of the pharmaceutical company making it the largest foreign investment in the sector. Tech Mahindra IPO closed at Rs 552.80 up 51.5% from the offer price.

Larsen & Toubro led the advancers, climbing 2.81%, to Rs 2,417.90 on receiving the board''s approval for an issue of 1:1 bonus shares. The engineering and construction large-cap has set September 29, 2006 as the record date for awarding the bonus. Also, its consortium bagged an order worth around $ 150 million from Saudi Formaldehyde Chemical Company.

Hindalco also advanced, up 2.35% to Rs 176.70, StateBank of India rose 1.81% to Rs 920.10 and Ranbaxy added 2.02% to Rs 396.80. Reliance Industries gained in late afternoon trade on strong demand. It climbed 1%, to Rs 1,121.25. It traded in the range of Rs 1,124.50 as its high and Rs 1,108.10 as its low.

Cement shares rallied. Renewed buying pulled ACC up 0.65% to Rs 914.55, Saurashtra Cement gained 5% to Rs 68.35, Shree Cement advanced 2.50% to Rs 964, Prism Cement added 1.70% to Rs 36.40, Mangalam Cement gained 3.60% to Rs 171, Andhra Cement spurted 5% to Rs 35.35 and India Cement was up 3.50% to Rs 202.20.

Small-cap and mid-cap stocks also advanced. Kilburn Engineering surged 4.87%, to Rs 35.55 after securing a contract worth $ 315,000 from Columbian Chemicals, Canada, for the supply of drum dryers. Aurobindo Pharma gained 1.05%, to Rs 638 on receiving the South African medical body''''s approval for its betalactam facility. And Sintex Industries edged up 2.08% to Rs 174, after the company said that it will spend Rs 410 crore to expand the textiles and plastics capacity.