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Market Update : 
Inflation Worries Drag Global Markets
Author: Staff
Last Update: 4:03 PM EST January 05 2007

December non-farm payroll rose by 167,000, significantly higher than the estimate of 115,000. The rise in payroll numbers worried traders that it may signal rising inflation. Market averages during the day traded mostly lower led by a decline in tech stocks. Motorola cautioned that the latest quarterly earnings may be lower than anticipated. Brazil lost 4% and markets in Europe and Japan closed lower.

[R]4:00PM NY – 10:30PM Frankfurt – 2:30AM Mumbai[/R]
[R]Stronger-than-expected job report fanned the inflation worries. Motorola revised profits lower. Oil closed higher in NY trading.[/R]

-Yield on 10-year U.S. bond closed at and 30-year bond closed at

-Crude oil closed up 72 cents to $56.31 per barrel, natural gas closed up 1.8 cents to $6.18 per mBTU and heating oil closed up 2.6 cents to $1.57 per gallon.

-Gold dropped $19.30 to $606.90 per ounce, silver dropped 55 cents to $12.28 and copper dropped another 5 cents to close at $2.5515 per pound. Weekly price of copper declined the most in ten years.

-Asian Markets closed mostly lower across the region led by a 3% drop in Thailand, 1.5% loss in Japan and 1.3% decline in Taiwan. Hong Kong led the advancers with a gain of nearly 1%, Indonesia rose 0.5% and Singapore added 0.2%.

-European markets closed lower across the region on the worries of Nokia revenue and lower prices of energy. Markets in the U.K., France, Germany and the Netherlands closed more than 1% lower. Spain, Norway and Switzerland lost near or more than 0.3%.

-Latin American Markets closed lower across the region with a sharp loss of 4% in Brazilian market. Brazil index declined on worries of rising interest rates and falling commodities prices. Mexico lost 1.6%, Chile declined 0.5% and Argentina dropped 0.4%.

[R]1:00PM European markets closed down, dragged by Nokia and oil stocks.[/R]
European stocks finished in the red on Friday, pressured by weakness in the energy sector and concerns over mobile-phone maker Nokia''s revenue. Losses on Wall Street also weighed, with U.S. stocks falling on stronger-than-expected payrolls data. Oil companies were notable decliners, dragged down by further retreating oil prices. The French Total slipped 1.3% and the U.K. Royal Dutch Shell fell 2.4% as oil dropped as low as $55 a barrel. Shares of Nokia lost 4.2% in Finland after U.S. rival Motorola cut its sales and earnings forecast. Credit Suisse lowered its rating on Nokia to neutral from outperform. Shares of Ericsson slipped just 0.2%. according to analysts, the semiconductor and mobile-networks segments will also be negatively affected by Motorola''s warning. Outside the sector, Alstom dropped 3.5% in Paris after Citigroup downgraded the company to neutral. The German DAX 30 dropped 1.2%, followed by the French CAC 40 and London FTSE 100, each down 1.1%.

Crude oil prices slipped toward $55 a barrel on mild winter weather and ample supplies. Crude oil February contract fell 27 cents to $55.32 a barrel. London Brent slipped 27 cents to $54.84. The U.S. dollar advanced against its major currency rivals. The euro was quoted at $1.2995, down from $1.3086. The dollar bought 118.79 yen, down from 119.08. The British pound was quoted at $1.9291, down from $1.9443. European gold prices declined. In London, gold traded at $604.20 per troy ounce, down from $627.10. In Zurich, the precious metal traded at $601.95 per ounce, down from $626.65. Silver closed at $12.17, down from $12.74.

[R]11:30AM The Nasdaq dropped 1%, dragged by tech stocks.[/R]
U.S. stock markets extended losses as a surprising surge in job creation and wages undermined investors’ hopes for an interest rate cut in the short term. Weakness in the tech sector also weighed on the market sentiment, sending the Nasdaq more than 1% lower. Motorola (MOT: chart) fell 8% after the cell-phone maker cut its earnings estimates, dragging down technology shares. Among other tech stocks posting losses, Intel Corp. (INTC: chart) fell after a downgrade at Credit Suisse, while Qualcomm Inc. (QCOM: chart) dropped 2.8%. Credit Suisse cut its rating and price target on Broadcom Corp. (BRCM: chart), which was among the top drags on the Nasdaq. The stock fell 4.2%.

Heavy losses by gold stocks also contributed to the downward moves by the major averages. Gold stocks continued to decline as the price of the precious metal moved sharply lower amid some strength shown by the U.S. dollar. Elsewhere, Herbalife Ltd. (HLF: chart) was a notable decliner, falling 20%, as the nutritional supplements company reiterated Q4 profit expectations of 52 cents to 55 cents per share, excluding realignment costs. The company projected sales between $482.7 million and $484.7 million, which is 18% higher than last year''s quarterly sales of $409 million. In late morning trading, the Dow Jones industrial average fell 100.46, or 0.80%, to 12,380.23. The Standard & Poor''s 500 index was down 10.76, or 0.76%, at 1,407.58, and the Nasdaq composite index was down 29.15, or 1.19%, at 2,424.28. Prices plummeted in the Treasury market, with the 30-year bond price dropping more than a full point shortly after the jobs report. The yield on the benchmark 10-year Treasury note rose to 4.68% from 4.61% late Thursday.

[R]10:30AM NY – 9:30PM Mumbai The Sensex ends lower, oil and gas advance.[/R]
The Sensex on BSE finished 11.19 points, or 0.08%, lower at 13,860.52. Volatility was high as the index traded in a range of 208 points. The market-breadth was positive as 1,640 shares advanced, 1007 declined and 53 remained unchanged. Fro every three advancers, there were two decliners. Of the 30 stocks in the Sensex, 18 declined, while the rest advanced. The turnover on BSE was Rs 4,146 crore, lower than Rs 4,532 crore on Thursday. The turnover on NSE was Rs 8,771.98 crore, slightly higher than Rs 8,556.02 crore on Thursday.

Economic news

The wholesale price index advanced 5.48% in the 12 months to December 23, higher than the annual rise of 5.43% in the previous week on a rise in the prices of food and manufactured product. During the same time last year the annual inflation rate was 4.62%.

The Reserve Bank of India has denied foreign institutional investment the status of foreign direct investment obtained through private placement of equity by real estate companies. The move has been taken in order to control the asset bubble in the fast-growing realty sector.

In trade today

New issue Pyramid Saimira was the most-active stock with a turnover of Rs 254.30 crore followed by Sobha Developers and Sesa Goa.



Sources: Data collected by and from company press releases, filings and corporate websites.
Market data: BATS Exchange. Inc.

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