U.S. AVERAGES

The morning lift of averages quickly turned negative on the rise in oil price. Oil price advanced to $64 per barrel before trading lower. The fear of terrorist attack in Saudi Arabia and closure of the U.S. Embassy in Riyadh has oil traders worried.

In an otherwise quite day of summer market witnessed four merger deals news.

Kerr McGee agreed to sell its stake in North Sea oil to Dutch A P Moeller-Maersk and U.K. utility Centrica for $3.5 billion. The shares of Kerr McGee gained 4%.

Whirlpool has raised its offer price by $2 per share for Maytag for a total price of $2.6 billion. Yahoo is reported to be in talks with Alibab.com and acquire 35% stake at close to $1 billion. E*Trade is to acquire Harris Direct for $700 million in a fast consolidating on-line brokerage industry. Quest Diagnostics is to buy LabOne and enter risk assessment business for life insurance industry.

Home builder stocks are trading lower on the worries of rise in inflation and interest rate this week. The shares of Lennar, St. Joe, KB Homes, Toll Brothers and other are trading lower by 2% or more.

Nortel reported 2Q earnings of one cent after adjusting for restructuring and other one time charges on revenue of $2.86 billion dollar. The stock jumped 12%.

Recently listed IPO Baidu.com shares traded 12% higher adding to the 353% jump on Friday. The investors’ enthusiasm took the shares close to a high reached on Friday.

South African 100,000 miners strike for a pay increase of 10% or more. The mines of South Africa produce 15% of world’s gold and generate more than 7% of its GDP. Price of gold and shares of South African mines fell.

Oil trades at peak as several factors kept traders worried on the oil supply for the rest of the year.

ENERGY, METALS AND CURRENCIES MARKETS

The factors contributing to the today’s rise are include closure of the U.S. Embassy and Consulate in Saudi Arabia, resumption of Uranium enrichment processing by Iran, renewed attack by a minority rebel group in the remote province of India, and a minor fire at Sunoco’ refinery in Philadelphia.

Oil futures reached a new high of almost $64 a barrel in New York after U.S. shut embassy in Saudi Arabia on an unspecified threat. Light sweet crude for September delivery gained $1.63 at the close in New York to $63.94 a barrel. London Brent gained $1.31 to $62.38.

Gold traded lower together with the declining dollar. In London gold closed at $435.65 per troy ounce, down from $437.40. In Hong Kong the precious metal fell $1 to $437.05. Silver closed at $7.06 per ounce, down from $7.13.

The U.S. dollar lost ground against its chief counterparts. In mid-day New York trading the euro stood at $1.2359, up from $1.2340. The greenback changed hands at 111.84 yen; the sterling pound was quoted at $1.7858.

INTERNATIONAL MARKET NEWS

Asian-Pacific markets closed mixed with the Nikkei down 1% in morning trading ahead of parliamentary vote on privatization of Japan’s postal system, but as the reform proposal was rejected, the index rebounded and ended up 0.11%. Among the gainers in the regional markets, Australia’s All Ordinaries climbed 0.7%, China’s Shanghai Composite rose 0.9%. Averages in Taiwan and South Korea declined 1% and 0.3% respectively. The dollar was recently trading at 111.91 yen.

European stocks closed higher, boosted by soaring crude-oil prices and telecom equipment maker deal talk involving Nokia and Marconi. The German DAX 30 climbed 0.22%, the French CAC 40 added 0.44%, and the U.K.’s FTSE 100 rose 0.6%.

EARNINGS NEWS

Lamar Advertising, outdoor advertising company, announced that its 2Q net profit was up to 18 cents a share, from 7 cents a share in the year-ago period on revenue growth.

Conns, home-appliances retailer, announced that its 2Q same-store sales increased 12.1% with total sales for the period soaring to 21% on better performance in staffing levels, training and execution on the sales floor.