Stronger spending and income put asides fears of economic slow down in the morning trading, however, economists are still revising their estimates of economic growth for the year to less than 2.5%. Worries related to slow down in housing and lack of rebound in capital spending from businesses was cited as prime reasons for lowering estimates.

The report also noted that the measure of inflation index, core inflation, excluding food and energy prices, rose 0.3% in February and for the last twelve months rose at 2.4%, higher than the Fed’s preferred target range of less than 2%.

The report also said the personal savings rate remained unchanged and declined at a rate of 1.2% in February.

[R]9:30AM FTSE 100 trades lower Friday on weak Vodafone and Resolution.[/R]
The UK market was lower on Friday. By mid-morning, the FTSE extended its early losses to move 26.4 points, or 0.4% to 6,298.1.

Advancers

M&A activity provided some respite for the market. Home improvements retailer Kingfisher led the FTSE gainers, 2.5% higher on reports that Goldman Sachs private equity division was mulling a bid for the owner of B&Q. Scottish & Newcastle traded 0.6% higher following the 12% surge in the brewing giant share price on Thursday, due to by bid speculation.

Rentokil Initial advacned 2.5% as an offer from United Technologies Corporation for its Initial Electronic Security Group, is looming, valuing the unit at 595 million pounds. News of KKR and Pessina improved offer for Alliance Boots to 10.40 pound-per-share pushed its shares slightly higher, up 0.3%.

Man Group added 1.6% stronger after the UK-listed hedge fund group said it planned to demerge its US brokerage business and list it in New York.

Decliners

Vodafone Group shed 3.5% after the mobile phone company trading update showed great-than-expected pressure on UK profit margins. Downgrades for earnings from the UK business this year were likely but as these operations only generate about 9% of group earnings, the share price reaction looked overdone.

Resolution lost 5% as it appears possible takeover talks had ended. The insurer announced it continued to assess possible acquisitions and business combinations that would not constitute an offer for the company.

FKI fell 3.4% after the engineering company stated trading in the second half of the year was in-line with expectations but unfavourable exchange rate movements would reduce full-year operating profits.


[R]9:00AM Asian markets mostly advanced Friday with Japan up on inflation data.[/R]
Asian markets ended moslty higher on Friday. In Tokyo, the Nikkei 225 closed 0.1% higher to 17,287.65. Mitsui Fudosan, up 2.4%, led gains among the interest-rate sensitive property stocks as data released Friday showed consumer price index in Japan dropped in February for the first time in 10 months.

Exporter such as Honda Motor also advanced as data showed that the U.S. economy grew faster than thought previously in the final quarter of 2006. Honda rose 1%, while Sony gained 0.2%. Shares of Mitsui Engineering & Shipbuilding added 2.5% higher after reports that the company is likely to report an 89% rise in profit for the current fiscal year.

Hong Kong Hang Seng Index dropped 0.1% to 19,800.93. China Shanghai Composite index also ended down 0.4% to 3183.98. PetroChina advanced, rising 1.8% and tracking the move higher in crude-oil prices tied to Persian Gulf tensions between the U.K. and Iran. CNOOC, the third-largest oil producer by output in China, advanced 0.3%. The oil large-cap reported late Thursday that net profit rose 22% last year.

Australian S&P/ASX 200 gained 0.6% to end at 5995.00, while South Korean Kospi index advanced 0.1% to finish at 1,452.55. Singapore Straits Times Index gained 0.3% to close at 3,231.24. Taiwan Weighted Price Index ended 0.5% higher at 7,884.41. Alinta in Sydney, gained 2.6% as the energy infrastructure company recommended a $6 billion offer from Babcock & Brown and Singapore Power.

[R]8:00AM NY-7:00PM Mumbai Sensex gains on auto, pharma stocks.[/R]
The Sensex on BSE finished 92.44 points, or 0.71%, higher at 13,072.10. The market-breadth was strong as there were two advancers for each decliner. As 1,676 stocks advanced, 864 declined, and 70 stocks remained unchanged. Of the 30 stocks in the Sensex, 23 advanced, while the rest declined. The turnover on BSE was Rs 2,974 crore, lower than Rs 3,692.27 crore on Thursday. On NSE, the turnover was Rs 7,517.79 crore, compared with Rs 10,009.89 crore on Thursday.

Economic news

The wholesale price index in India increased 6.46% in the 12 months to March 17, matching the increase in the previous week, data showed on Friday. The figure was slightly below a forecast of 6.50%.