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Jul 9, 2013

Financial Times promises that leased gold shortage means nothing: GATA I THE GATA DISPATCH; July 09, 2013.

Financial Times promises that leased gold shortage means nothing

Gold Borrowing Cost Hits Post-Lehman High
By Jack Farchy
Financial Times, London
Tuesday, July 9, 2013

http://www.ft.com/intl/cms/s/0/bd819998-e8b2-11e2-8e9e-00144feabdc0.html...

The cost of borrowing gold has risen to the highest since the post-Lehman Brothers scramble for supplies, as the bullion market adjusts to a new era in which Western investor demand is less dominant.

The niche gold lending market, largely the preserve of a few big banks and central banks, has been uneventful in recent years as investors have built up large holdings and lent them out on the market, keeping rates depressed.

But as investors have turned sellers in recent months, availability of gold in the lending market has been squeezed, bankers said.

The squeeze has triggered a sharp rise in gold leasing rates -- the implied interest rate for lending gold in the market in exchange for dollars. The one-month gold leasing rate has risen from 0.12 per cent a week ago to 0.3 per cent on Tuesday, the highest since early 2009.

The move reflects the dramatic shift in the gold market over the past few months as investors have liquidated their holdings en masse, triggering a 25 per cent collapse in prices since the start of the year.

"The market spent 10 years getting long," said David Rose, global head of metals trading at HSBC. "Liquidation is going to be around for a while."

Several other factors have contributed to the tightness in the leasing market, traders and analysts said.
Strong buying in Asia has created additional demand for physical gold, with refineries operating at full capacity to meet orders.

"There has been some borrowing interest recently. It's related to the demand for physical," said Joni Teves, precious metals strategist at UBS, noting that the price of physical gold in China remained more than $40 an ounce above benchmark London spot prices.

At the same time, expectations of rising US interest rates as the Federal Reserve tapers its programme of quantitative easing have made banks less willing to lend gold.

Finally, some medium-sized gold miners have started hedging their future production, traders said, a trade which has the same effect on the market as borrowing gold.

The lack of liquidity in the leasing market has pushed gold forward rates, known as "gofo," into negative territory, meaning that gold for future delivery is trading at a discount to physical market prices -- a rare situation that has occurred only a few times in the past 20 years. The last time forwards were negative was in November 2008, when a scramble for physical gold spurred a sharp price rally.

Traders said that investors were alert for the possibility that the current tightness could trigger a squeeze among hedge funds with short positions in gold, potentially driving prices higher. "It has piqued people's interest," said one senior precious metals banker. Gold was trading at $1,248.50 a troy ounce on Tuesday, up 5.8 per cent from a three-year low at the end last month.

Nonetheless, few believe a rally would be long-lived. "Every rally we see is a short-covering rally which quickly evaporates," said Mr Rose of HSBC.

Although leasing rates have rallied sharply in recent days, they remain well below the peaks of previous eras. In 2008 one-month leasing rates rose as high as 2.7 per cent while in 1999 they reached 9.9 per cent, according to London Bullion Market Association data.

* * *

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China trade data disappoint, as exports fall 3.1%: MarketWatch Economic Report; July 09, 2013.



By Michael Kitchen, MarketWatch

Reuters
Workers sleep during a break in front of the World Trade Center in Beijing in this file photograph from 2011. 
 
LOS ANGELES (MarketWatch) — China’s trade performance for June showed drops in both exports and imports, according to reported customs data out Wednesday, disappointing for a second month in a row after May’s results missed estimates by a wide margin. 

China’s exports last month fell 3.1% from a year earlier, swinging from May’s slim 1% gain, and coming in well below a forecast 4% rise from a Reuters survey of economists. 

It marked the first year-on-year drop for exports since January 2012, and according to the Financial Times was the worst performance since October 2009. 

Imports decreased by 0.7% after slipping 0.3% in May, with Reuters having tipped an 8% annual increase for June. 

However, the trade surplus still posted a gain on a monthly basis, widening to $27.13 billion, from May’s $20.4 billion, though falling short of a projected $27.75 billion surplus in a Dow Jones Newswires poll. 


Turning tide on corruption in China
Chinese authorities sentence the nation's former railways minister to a de-facto life sentence in prison for bribery, as China's clampdown on corruption widens. 

While most Chinese government data are subjected to doubts from some economists over their accuracy, the trade numbers attract especially strong criticism. 

In a post on Twitter immediately following the data release, DailyFX.com chief strategist John Kicklighter cited the contrast between the wider surplus and the fact that the loss in exports outpaced those of imports. 

“I know that the 3.1% drop in exports and 0.7% drop in imports is ‘year-over-year,’ but the surplus rising from $20.4 [billion] to $27.2 bln ... hmmm,” he wrote, adding: “I buy neither questionably-made Chinese goods nor data.” 

After China posted an April gain in exports sharply higher than estimates, many analysts attributed the performance to poor data-gathering, exporters logging fake orders to help their tax bill, and capital inflows being disguised as exports. 

The following month, China’s foreign exchange regulator announced a crackdown on such false invoicing, and May’s results ended up printing significantly weaker than economists’ estimates.

Markets boo data, but stocks hold gains

Chinese stocks came off their highs after the data but still managed to stay in positive territory, helped by overnight gains on Wall Street, among other factors. 

Hong Kong’s Hang Seng Index HK:HSI +0.43%  was up 0.3% versus a 1.4% rise just ahead of the release, while the Shanghai Composite Index CN:SHCOMP +0.37%  also pared its advance, trading 0.2% higher from a 0.5% gain before the numbers. 

The Australian dollar AUDUSD -0.26%  — often sensitive to economic news from Australia’s key trading partner — dropped to 91.41 U.S. cents from 91.64 U.S. cents pre-data. 

Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles. You can follow him on Twitter at @KitchenNews.

Asian Markets Latest News at the time; July 09, 2013.

Asia

Australian stocks rise as miners jump LOS ANGELES (MarketWatch) -- Australian stocks rose in early action Wednesday, led by mining issues after aluminum producer Alcoa Inc. downplayed concerns about a slowdown in China, Australia's largest trading partner. The S&P/ASX 200 rose 0.9% to 4,923.70 as shares of miners BHP Billiton Ltd. and Rio Tinto Ltd. rose by 1.6% each, and Alumina Ltd. rose 3.4%. Banking stocks were mostly higher, but most retailers dropped as a report showed consumer confidence declined in July. Shares of Westfield Group Australia gave up 0.6%.

 
Japan's Nikkei pulls back from six-week high HONG KONG (MarketWatch) -- Japanese stocks slipped early Wednesday in choppy trade as some technology and automobile firms retreated after a strong recent run. The Nikkei Stock Average declined 0.1% after soaring to a six-week high on Tuesday, while the broader Topix edged up 0.1%. Shares of Trend Micro Inc. fell 1.7%, Renesas Electronics Corp. dropped 0.5% and Nissan Motor Co. also eased 0.5%. Gains for consumer and retail stocks supported the market, with Suntory Beverage & Food Ltd. rising 0.9% and Asahi Group Holdings Ltd. climbing 1.5%. Shares of retailer Aeon Co. jumped 2.7% after it reported a record quarterly operating profit. 

Zacks Most popular July 09, 2013.


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Economics Director Howard Shelanski Departs FTC: FTC Press Release; July 09, 2013.


Pauline Ippolito Named Acting Director of the Bureau of Economics

Federal Trade Commission Chairwoman Edith Ramirez announced today that Howard Shelanski, Director of the Bureau of Economics, is departing the agency today to become the Administrator of the Office of Information and Regulatory affairs in the Office of Management and Budget, a position to which the Senate confirmed him on June 27.

Pauline Ippolito will become Acting Director of the Bureau of Economics.

Shelanski has directed the Bureau of Economics since July 2012, on leave from Georgetown University where he is Professor of Law.  He previously served as the bureau’s Deputy Director for Antitrust from 2009-2011. During his years of service at the Commission, Shelanski has been instrumental in the agency’s enforcement and policy missions on both the competition and consumer protection sides of the FTC’s docket.

Before joining the FTC in 2009, Shelanski had been on the faculty at the University of California at Berkeley since 1997, with breaks from teaching to serve as Chief Economist of the Federal Communications Commission from 1999 to 2000 and as a Senior Economist for the President's Council of Economic Advisers at the White House from 1998 to 1999.

Ippolito, a nationally recognized scholar, has held a variety of management and staff positions while serving the FTC with distinction for 30 years. She received the Presidential Rank Award of Distinguished Executive, the highest award available to a government executive, for her contributions to improving consumer protection policy for the nation. Ippolito holds a doctorate from Northwestern University.            
MEDIA CONTACT:
Jay Mayfield Office of Public Affairs 202-326-2181
More news from the FTC >>

CNBC Latest Stories - Evening Brief; July 09, 2013.

LATEST STORIES

U.S. stocks rise; S&P 500 nears record: Wall Street at Close Report by MarketWatch; July 09, 2013.

By Kate Gibson, MarketWatch 
 

NEW YORK (MarketWatch)U.S. stocks climbed on Tuesday, pushing the S&P 500 to within 1% of its all-time closing high, as Wall Street embraced an improving economy and higher interest rates. 

“The market is voting itself that things are improving, with interest rates going higher without taking the stock market down,” said JJ Kinahan, chief strategist with TD Ameritrade. 

The SaP 500 index SPX +0.72%  added 11.86 points, or 0.7%, to 1,652.32, with materials pacing sector gains. 

Kroger inks deal for Harris Teeter
Kroger agreed to acquire grocery chain Harris Teeter for $2.44 billion, its largest deal in nearly 15 years, as the supermarket owner expands further in the southeastern U.S. Annie Gasparro joins MoneyBeat. 


“From a technical point of view we need to test 1,650 to go higher,” Kinahan added of the level last breached three weeks ago. 

The market can now make a run for the May 21 record close of 1,669.16, he added.
The benchmark indexes ran up to three-week highs as Alcoa Inc. AA -0.13%  started off earnings season, with the aluminum manufacturer the first Dow member to report earnings for the second quarter. 

“Alcoa has become a little like the ceremonial first pitch of a baseball game; we’re waiting for later this week for J.P. Morgan Chase & Co. JPM -0.02%  and Wells Fargo & Co. WFC -0.30%  to really start the game,” said Kinahan of the banking powerhouses slated to report at the end of the week. 

Comments from Alcoa’s CEO playing down worry about the impact of a Chinese slowdown on the company’s bottom line did cheer the market, Kinahan said. 

Extending a winning streak that has benchmark indexes up for a fourth session, the Dow Jones Industrial Average DJIA +0.50%  climbed 75.65 points, or 0.5%, to 15,300.34. 

The Nasdaq Composite COMP +0.56%  rose 19.43 points, or 0.6%, to 3,504.26, lifting it above its May 21 close of 3,502.12, which was its highest finish since the year 2000. 

Among individual stock movers, D.R. Horton Inc. DHI +7.55%   jumped 7.6%, with shares of the home builder possibly benefiting from a report released Tuesday showing the number of foreclosures down sharply from a year ago. 

Shares of FedEx Corp. FDX +0.05%  rallied 4.4% on speculation that hedge fund Pershing Square was considering a position in the global shipping company. Also read: FedEx takes off.
 
Barnes & Noble Inc. BKS +5.38%  rose 5.4% after the bookseller said its CEO had stepped down.
For every stock falling, roughly three gained on the New York Stock Exchange, where nearly 692 million shares traded. 

Composite volume surpassed 3.1 billion. 

On the New York Mercantile Exchange, the price of oil CLQ3 +1.38% rose to a 14-month-high of $103.53 a barrel and gold also grew costlier, with futures GCQ3 +1.14%  up 0.9% to finish at $1,245.90 an ounce. In the last three weeks, gold prices slid 13% in their most protracted decline since April, with the value of the metal down 35% from the record reached in the fall of 2011. 


In a move to increase its presence in the southeastern United States, grocer Kroger Co. KR +2.65%  agreed to acquire Harris Teeter Supermarkets Inc. HTSI +1.53%

On Wednesday, the minutes of the June 18-19 Federal Open Market Committee meeting are slated to be released, and could hold clues as to when the Fed will begin reducing its bond-buying program. See preview
 
“It may be September before we actually get an answer. The back-to-school spending and the housing turnover that happens in the early fall are often a good indication of the economy’s health,” said Kinahan. 

Yields have climbed in recent weeks on thinking the Fed would begin reducing its bond buys later in the year. On Tuesday, Treasury prices edged higher, with the 10-year yield 10_YEAR -0.04%  at 2.634%. 

Small-business optimism last month declined from a one-year high, the National Federation of Independent Business reported on Tuesday.
 
Job openings climbed to 3.83 million in May, little changed from April, the U.S. Labor Department reported Tuesday.
 
Kate Gibson is a reporter for MarketWatch, based in New York.



Stocks Log 4-Day Rally, Nasdaq Posts Best Close Since October 2000: Wall Street at Close Report by CNBC News; July 09, 2013.


Stocks logged their fourth-straight session in positive territory Tuesday, with the S&P 500 about 1 percent below its all-time closing high of 1,669.16 and the Nasdaq posting its best close since October 2000, lifted by a positive start to second-quarter earnings season.

"At the pace we are going at, the SaP could be challenging the May high at 1,687 by the end of the week," wrote Elliot Spar, market strategist at Stifel Nicolaus. "The bulls will surely be cheerleading for that but those that live in the real world of owning a lot of the market's merchandise that is still under water, will not be in a celebratory mood."
Name Price Change %Change
DJIA Dow Jones Industrial Average 15300.34 75.65 0.50%
SaP 500 SaP 500 Index 1652.31 11.85 0.72%
NASDAQ Nasdaq Composite Index 3504.26 19.43 0.56%

The Dow Jones Industrial Average rallied for its fourth-straight session, led by Cisco and Caterpillar. The blue-chip index is about 100 points from reaching its record close of 15,409.39 and trying for its first four-day win streak since the end of April.

The SaP 500 and the Nasdaq also finished higher. The Russell 2000 index hit another all-time high. The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, slid near 14.

Most key SaP sectors closed higher, lifted by industrials and materials, while telecoms slipped.
 
With markets steadily in the green, the summer swoon we have experienced in previous years is absent. Is 2013 the lucky year? CNBC contributor Gina Sanchez, and John Butters, Fact-Set, weigh in. 
"The good news is that earnings expectations have been ratcheted down over the past few weeks," said Todd Salamone, director of research at Schaeffer's Investment Research. "Lowered expectations are good because that's a lower hurdle to jump over…and a lot depends on the outlook." Dow component Alcoa posted earnings and revenue that topped Wall Street expectations, adding it remains optimistic that global demand for aluminum will grow 7 percent this year. Shares of the aluminum maker initially opened higher, but quickly reversed their gains. Alcoa unofficially marks the start to each earnings season. Meanwhile, Intuitive Surgical tumbled sharply to lead the SaP 500 laggards after the medical devices maker said it expects second-quarter revenue below analysts' expectations. In addition, at least three brokerages slashed their ratings and price targets on the company. Other clinical lab services companies and medical equipment manufacturers were also sharply lower including Quest Diagnostics, Varian Medical Systems and Laboratory Corp. As of Friday, 122 SaP 500 companies had made earnings pre-announcements, and the ratio of negative-to-positive ones was 6.5-to-one, according to Reuters. That is the biggest percent of negative readings since 2001. Some major banks turned lower after U.S. regulators proposed a plan that would force the country's largest financials to hold twice as much equity capital than required by the global Basel III bank capital standards.The eight largest banks would be subject to a leverage ratio of 6 percent. JPMorgan and Wells Fargo are scheduled to report earnings later this week. (Read More: Firms Set to Beat Lowered Bar for Earnings Season) Homebuilders including DR Horton and KBHome were up sharply following news that foreclosures in May were down 27 percent from a year ago. Kroger said it will acquire grocery store chain Harris Teeter for $2.5 billion in cash. Barnes & Noble announced its CEO William Lynch has resigned effective immediately, but did not provide a specific reason for his departure. The company had originally hired him in to improve the struggling Nook business.
IBM declined to lead the Dow laggards after Goldman Sachs cut its rating on the tech giant to "neutral" from "buy." On the economic front, small business optimism slipped in June from its one-year high amid uncertainty over the economic recovery, according to the National Federation of Independent Business. The government auctioned $32 billion in 3-year notes at a high yield of 0.719. The bid-to-cover ratio, an indicator of demand, was 3.35, versus the recent average of 3.50. Meanwhile, the IMF shaved its 2013 global growth forecast to 3.1 percent, citing slowdown in emerging economies and ongoing worries in Europe. It also lowered its outlook for 2014 to 3.8 percent, down from a 4 percent expansion. In Asia, investors largely ignored unexpectedly high consumer inflation numbers from China, despite fears that strong price rises will rule out the prospect of monetary easing by the Chinese central bank. "CPI [consumer price inflation] data is not a market mover. Short-term focus is still on shadow banking. Investors are wondering if China's banking system can sustain a decline in GDP [gross domestic product] growth," said Stephen Sheung, head of investment strategy at SHK Private. Meanwhile, Japan's benchmark index closed just shy of a new six-week high, as the dollar-yen trade breached the 101-yen handle. (Watch Now: Your Japan Trade: Short China-Exposed Firms)
—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter:

Updates on the Indian government's war against gold: GATA I THE GATA DISPATCH; JULY 09, 2013.

Updates on the Indian government's war against gold

3:25p ET Tuesday, July 9, 2013

New obstructions to the gold trade imposed by the government of India have cut officially reported imports by 86 percent, a major Indian gold dealer tells Bull Market Thinking's Tekoa Da Silva today:

http://bullmarketthinking.com/indian-gold-dealer-government-blames-gold-...

But Bullion Bulls Canada's Jeff Nielson notes the resulting surge in gold smuggling in India and says the official data is worthless anyway:

http://bullmarketthinking.com/indian-gold-dealer-government-blames-gold-...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

Looking for the Finest Texas Tea, Roger Conrad: MoneyShow Daily Investors Alert, July 09, 2013.







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Hong Kong recasts Western central bank gold for Asia: GATA I THE GATA DISPATCH; JULY 09, 2013.

Bill Kaye: Hong Kong recasts Western central bank gold for Asia

1:41p ET Tuesday, July 9, 2013

Gold leased from Western central banks and carrying their hallmarks is entering Hong Kong for melting, refining, and recasting into gold for the People's Bank of China and other Asian buyers, Hong Kong fund manager William Kaye tells King World News today.

Gold leasing, Kaye says, has made "a farce" out of Western central bank gold reserves. "The gold is gone," he says. "It's been hypothecated and rehypothecated. It's gone. Not only do the Fed and the U.S. Treasury not own 8,000-plus tons, they probably own nothing."

An excerpt from the interview is posted at the King World News blog here:

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2013/7/9_Gam...

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

CMI Spot Prices as of close of trading in New York; July 09, 2013.


Spot Prices as of close of trading in New York
Tuesday, July 09, 2013
Updated 7/09/2013 Today Change Week Ago Month Ago Year Ago
GOLD $1,247.80 +$11.30 $1,244.80 $1,384.25 $1,589.90
SILVER $19.24 +$0.10 $19.43 $21.79 $27.46
PLATINUM $1,371.30 +$6.60 $1,371.10 $1,505.90 $1,448.30
PALLADIUM $701.80 +$1.80 $690.90 $753.10 $585.00
GOLD/SILVER RATIO 64.85

ADVFN III Evening Euro markets Bulletin; July 09, 2013.


ADVFN III Evening Euro Markets Bulletin
Daily world financial news Tuesday, 09 July 2013

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The FTSE 100 put in a decent performance on Tuesday, jumping around one per cent as investors shrugged off gloomy comments from the International Monetary Fund (IMF) and instead focused on progress in Greece and a strong start to US corporate earnings season.

London’s benchmark index finished the day 63 points higher at 6,513, a level not seen since the start of June when markets were beginning to price in the impending withdrawal of quantitative easing in the States.

Mining stocks were leading the risers on the Footsie on Tuesday, boosted by rising metal prices across the board. Results from US aluminium giant Alcoa after the closing bell on Wall Street last night were also helping sentiment today, as the company unofficially kicked off second-quarter earnings season with forecast-beating numbers.

Investors’ concerns over the Eurozone also eased slightly today after finance ministers granted Greece its next instalment of funds from the Troika in exchange for meeting prior conditions. “The discussions between Greece and its creditors have been far smoother in the lead up to [the] agreement than we have become accustomed to, which may be why investors have responded so well to it,” said Market Analyst Craig Erlam from Alpari.

IMF cuts global growth, up UK forecasts
A report by the IMF this afternoon failed to take the shine off stocks today, despite the organisation downgrading its forecasts for global economic growth this year to 3.1%, down from its previous 3.3% estimate in April. 2014 growth predictions have also been cut from 4.0% to 3.8%.

The Fund said the move is as a result of “appreciably weaker domestic demand and slower growth in several key emerging market economies, such as Brazil, China, Russia and the CIS countries, as well as by a more protracted recession in the euro area”.

On a brighter note however, the IMF actually raised its gross domestic product (GDP) forecasts for a small number of economies, including the UK which it expects to grow by 0.9% this year, up from its earlier 0.6% prediction. The 2014 GDP growth forecast was unchanged at 1.5%.

Economists at Barclays Research appear to be more optimistic about the UK economy after yesterday raising their GDP projections to 1.1% this year (0.9% previously) and 2.1% in 2014 (1.8% previously).

FTSE 100: Miners surge, RBS jumps
Heavyweight miners Vedanta Resources, Fresnillo and Anglo American were making impressive gains before the close, as the sector – which fell sharply amidst heightened market volatility in June – recovered after recent losses. Gold prices were up 1.3% at $1,251 an ounce and silver 1.1% higher at $19.25 an ounce, helping to buoy stocks today.

Rio Tinto meanwhile was boosted by the news that its part-owned giant copper-gold mine in Mongolia, Oyu Tolgoi, has started shipping copper concentrate to customers.

Banking group RBS was on the rise after the government effectively ruled out a broad investigation into whether the lender should be broken up into a ‘good’ and ‘bad’ bank. However, Goldman Sachs, which today upgraded the stock from ‘neutral’ to ‘buy’, suggested that a split could actually be good for RBS and address its key challenges: “muted core returns and elevated uncertainty”.

Marks & Spencer was lower after reporting a 0.3% rise in like-for-like sales in the first quarter, as a strong performance in Food continues to be partly offset by weakness in General Merchandise.

Investors cheered oil group Shell's announcement that Downstream Director Ben van Beurden has been appointed as CEO, succeeding Peter Voser who steps down after 29 years with the company.

FTSE 250: AVEVA and Ferrexpo impress with updates
Engineering software solutions provider Aveva was a high riser today after saying it had seen a good start to the year in both engineering & design systems and enterprise solutions divisions with steady growth in EMEA and Asia Pacific.

Miners were also performing well with Ferrexpo the standout performer after a second-quarter production update. The iron ore producer said that group pellet output was up 11.4% year-on-year in the first half, helped by the ramp up of production from the new Ferrexpo Yeristovo Mining open pit.

Mining peers Hochschild Mining, Polymetal, African Barrick Gold and Lonmin were also in demand, with the latter benefitting from an upgrade by Westhouse Securities from 'sell' to 'neutral'.

Bucking the trend Centamin which slipped into the red despite saying it achieved record gold production at its Sukari Gold Mine in Egypt in the three months to end of June. The company however kept its full-year guidance unchanged, warning of reduced throughput from commissioning activities in the fourth quarter.




UK Event Calendar
FTSE 100 - RisersVedanta Resources (VED) 1,094.00p +8.53%
Royal Bank of Scotland Group (RBS) 304.40p +5.40%
Aberdeen Asset Management (ADN) 399.60p +3.55%
Schroders (SDR) 2,408.00p +3.53%
Fresnillo (FRES) 951.00p +3.26%
GKN (GKN) 332.40p +3.04%
Anglo American (AAL) 1,282.00p +2.97%
Hammerson (HMSO) 534.50p +2.89%
Weir Group (WEIR) 2,162.00p +2.76%
Wood Group (John) (WG.) 878.50p +2.75%

FTSE 100 - FallersITV (ITV) 150.20p -1.70%
Eurasian Natural Resources Corp. (ENRC) 210.40p -1.68%
Marks & Spencer Group (MKS) 453.20p -1.41%
easyJet (EZJ) 1,335.00p -1.40%
Capita (CPI) 1,023.00p -1.35%
Lloyds Banking Group (LLOY) 66.35p -1.12%
WPP (WPP) 1,171.00p -0.68%
Whitbread (WTB) 3,154.00p -0.54%
William Hill (WMH) 464.00p -0.51%
Reed Elsevier (REL) 788.00p -0.44%

FTSE 250 - RisersAveva Group (AVV) 2,578.00p +13.67%
Ferrexpo (FXPO) 155.60p +12.18%
Kier Group (KIE) 1,351.00p +8.08%
Henderson Group (HGG) 173.10p +7.52%
Polymetal International (POLY) 506.00p +6.66%
Fisher (James) & Sons (FSJ) 1,079.00p +5.78%
Menzies(John) (MNZS) 746.00p +5.07%
Computacenter (CCC) 528.00p +4.24%
Ocado Group (OCDO) 324.20p +4.21%
Carillion (CLLN) 273.50p +3.83%

FTSE 250 - FallersCentamin (DI) (CEY) 36.76p -4.17%
Evraz (EVR) 95.55p -3.58%
Telecity Group (TCY) 989.00p -3.42%
Dixons Retail (DXNS) 42.25p -2.65%
Howden Joinery Group (HWDN) 266.60p -2.59%
888 Holdings (888) 158.30p -1.98%
Barr (A.G.) (BAG) 522.50p -1.69%
Direct Line Insurance Group (DLG) 225.30p -1.66%
Taylor Wimpey (TW.) 104.60p -1.60%
Spirent Communications (SPT) 124.00p -1.20%




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- Alcoa starts upbeat US earnings season
- UK industrial and manufacturing figures miss forecasts
- Greece receives bailout funds
- Egypt and Portugal governments signal progress

FTSE 100: 0.71%%
Dax 30: 0.54%
Cac-40: 0.35%
FTSE Mibtel 30:- 0.26%
Ibex 35: -0.18%
Stoxx 600: 0.28%

European stocks were mixed as investor optimism was lifted by a solid start to the US earnings season and as UK industrial and manufacturing production figures missed forecasts.

Alcoa was the first company under the Dow Jones Industrial Average benchmark to report quarterly results on Monday evenings, kicking off the US earnings season.

The largest aluminium producer’s profits and sales exceeded estimates.

The news followed a robust jobs report in the nation and added weight to the view that the US Federal Reserve would start to scale back its monetary easing programme later this year.

In contrast, data from the Office of National Statistics on Tuesday revealed British industrial production was unchanged in May while manufacturing contracted at its fastest pace since January, tempering signs that the economy is picking up speed.

Output in the industrial sector was flat compared with April, falling short of forecasts for a 0.2% rise. Manufacturing declined by 0.8% last month, compared to estimates for a 0.3% increase and the second consecutive drop this year.

In Europe, Greece received much-needed €6.8bn in rescue loans Monday after international creditors said the nation was making progress.

The so-called Troika, which includes the European Central Bank, the European Union and the International Monetary Fund, said Greece’s finances were improving.

However, they warned that it is moving too slowly on reforms and the outlook of its economy remains uncertain.

Political turmoil in Egypt and Portugal ease
Fears over political instability in Egypt were soothed by news its interim rulers issued a faster than expected timetable for elections to drag the country out of crisis.

It comes after the military ousted President Mohamed Mursi and named Adli Mansour as Head of State.

The army decreed overnight that a parliamentary vote would be held in about six months.

In Portugal, German Finance Minister Wolfgang Schaeuble said the country has overcome the troubles that threatened to bring down the government after the two coalition parties reached an agreement to avert early elections.

Prime Minister Pedro Passos Coelho said Paulo Portas, the leader of the conservative Democratic and Social Center Party, will become Vice Premier.

He will be responsible for coordinating economic policy and the country’s relationship with Troika.

The agreement was made after Portas said he was quitting as foreign minister in a dispute over budget policy with the premier.

LVMH, Hikma, Elecite, M&S
LVMH edged higher as the maker of luxury goods agreed to buy an 80% stake in Loro Piana.

Hikma Pharmaceuticals climbed as UBS raised its recommendation for the stock to ‘neutral’ from ‘sell’ after the company raised its estimate for revenue growth this year to 17% from its earlier forecast of 13%.

Electricite de France advanced after UBS upgraded its rating of the shares to ‘neutral’ from ‘sell’.

Marks & Spencer edged lower as sales of its clothing division fell 1.6% on a like-for-like basis, compared to analysts' expectations for 1.0% drop.

Other asset classes slide
The euro/dollar dropped by 0.06% to the 1.2862 dollar mark.

Brent crude futures fell $0.196 to $107.220 per barrel on the ICE.




US Market Report
The main US equity gauges are now being called to start the day higher by half a percentage point, on average.

That follows the slightly better than expected quarterly results out overnight from aluminium producer Alcoa – the world’s largest.

The company managed to beat consensus forecasts on the back of the solid performance put in by its engineered products and solutions business, thanks to its strong correlation with the aeronautics industry.

The firm also maintained its estimate that global aluminium demand will rise by 7% this year, led by 11% growth in China.

IBM has been downgraded to neutral from buy at Morgan Stanley.

10 year US Treasury yields are flat at 2.63%. In a strategy note released on Tuesday Credit Suisse writes that it expected to see a continuation in the bear market in Treasuries. More specifically, it says that if the ISM rises to 55, then its bond model suggests a fair-value yield of 3.1% on the US 10-year bond.

Front month West Texas crude futures are now down by 0.50% to the $102.62/barrel mark on the NYMEX.




Broker Tips
Marks & Spencer is on the cusp of turning around its struggling General Merchandise (GM) division, according to Panmure Gordon which has maintained its 'buy' rating and 516p target price for the stock after a first-quarter trading update on Tuesday.

The broker said: "We are positive on MKS for four reasons: 1) strength in the Food division; 2) potential for turnaround in the GM division; 3) a growing, capital-light International business; and 4) a recent commitment to delivering improved returns to shareholders."

Investec has upgraded its rating for publishing and education group Pearson from 'hold' to 'add', raising its target price for the stock from 1,150p to 1,250p.

"We could be somewhat early still and 1H figures in July are unlikely to sparkle, but we move more positive," said analyst Steve Liechti in a research report on Tuesday. He said that the company is well-placed "if/as things pick up with towards 60% of sales in digital/services excluding Penguin".

Share prices of platinum mining peers Lonmin andAquarius Platinum have received a boost afterWesthouse Securities removed its 'sell' ratings on both stocks.

Both stocks have been upgraded from 'sell' to 'neutral' and their target prices have edged higher, to 265p (from 250p) for Lonmin and to 40p (from 35p) for Aquarius. Nevertheless, analysts have cut their forecasts for precious metals prices following recent price weakness, which will impact earnings going forward.

Will Bank Earnings Push Stocks Even Higher?: MoneyShow traders Daily Alert; July 09, 2013.


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Europe stocks rise on Greece aid, Alcoa earnings: European Markets at Close by MarketWatch; July 09, 2013.

By Sara Sjolin, MarketWatch 
 
LONDON (MarketWatch) European stock markets rose for a second straight day on Tuesday, after euro-zone finance ministers agreed on an aid disbursement for Greece and better-than-expected results from Alcoa Inc. sparked cautious optimism about earnings season.
 
Markets, however, trimmed gains in afternoon action after the International Monetary Fund slashed its global growth forecast. 

The Stoxx Europe 600 index XX:SXXP +0.83%  climbed 0.8% to 294.67, after closing at the highest level in three weeks on Monday. 


Shares of Electricité de France SA FR:EDF +9.41%  jumped 9.3% after UBS lifted the firm to neutral from sell, citing the outlook for higher tariffs and a nuclear-power life extension as positive catalysts.
Shares of Osram Licht AG XE:OSR +19.52%  jumped 17% as HSBC initiated coverage of the firm with an overweight rating. Shares in the former lighting unit of Siemens AG DE:SIE +0.86%  began trading on Monday following a spinoff. 

Neil Wilkinson, senior fund manager at Royal London Asset Management, said two factors supported the move higher in Tuesday’s trade. 

“The U.S. earnings season has kicked off well with the Alcoa earnings and the comments suggested that they expect Chinese growth to be a little stronger than what the market currently thinks,” he said.
He added: “The life support for Greece has been kept on and any difficult decisions that may have to be taken on Greece have been kicked to the other side of the German election.” 

“But I think more broadly, the market started last week to digest the beginning of the end of [quantitative easing] in the U.S. and were buoyed by comments we had from the [European Central Bank] and the [Bank of England] that despite easing in the U.S. coming to an end, we will still have low rates for the foreseeable future in Europe and the U.K,” he said. 

Global stock markets reached multiyear highs in May, boosted by aggressive easing measures from central banks, but were sent lower when U.S. Federal Reserve Chairman Ben Bernanke said improving economic data strengthened the case for a reduction in easing.

Greece relief

On Tuesday, investors welcomed an agreement from euro-zone finance ministers to disburse 3 billion euros ($3.86 billion) in aid to Greece on condition the country meets the goals laid out under the second international bailout. 

“The decision by European politicians to kick the can down the road yet again keeps Greece from immediate insolvency while at the same time minimizing the payments from other European governments, and has been broadly welcomed by markets,” said Rebecca O’Keeffe, head of investment at Interactive Investor, in a note. 


Reuters
Euro-zone finance ministers late Monday agree to disburse €3 billion to Greece in aid.
The Athex Composite index GR:GD -2.34% , however, dropped 2.3% to 838.29. The Athens-based Foundation for Economic & Industrial Research reportedly said in its quarterly report that growth forecasts on the Greek economy should be revised down to as low as negative 5%.

 The Bank of Greece in late May forecast a 4.6% contraction this year.
In the same vein, the International Monetary Fund trimmed its estimate on global growth to 3.1% this year, down from its 3.3% forecast in April. For the 2014, the fund sees global growth of 3.8%, also down 0.2% from the previous estimate. 

More specifically, the IMF slashed its growth projection for Spain in 2014 to 0%, down from an earlier estimate of 0.7% expansion. The IBEX 35 index XX:IBEX +0.01%  traded 0.1% lower at 8,008.10. 

In the U.S., stocks traded higher after earnings from aluminum giant Alcoa AA -0.21%  beat analysts’ estimates and signaled a positive kickoff to the second-quarter earnings season. 

Among country-specific indexes in Europe, the U.K.’s FTSE 100 index UK:UKX +1.11%  climbed 0.9% to 6,510.20 as mining firms tracked most metals prices higher. Shares of Rio Tinto PLC UK:RIO +2.80%   RIO +1.78%   AU:RIO +0.77%  gained 2.3% and Anglo American PLC UK:AAL +3.01%  rose 2.5%. 

The British pound GBPUSD -0.81% , however, dropped to $1.4836 from $1.4950 in late North American trade on Monday, after weaker-than-expected industrial production data stoked expectations of further monetary easing by the Bank of England. 

Germany’s DAX 30 index DX:DAX +1.17%  added 1.2% to 8,067.38. Shares of Siemens AG DE:SIE +0.86%  rose 1% after Deutsche Bank lifted the industrial conglomerate to hold from sell.
France’s CAC 40 index FR:PX1 +0.58%  gained 0.6% to 3,848.40. 

Shares of LVMH Moët Hennessy Louis Vuitton FR:MC +2.14%  gained 2.3% after the luxury-goods firm said late Monday it has agreed to buy a majority stake in Italian cashmere brand Loro Piana.

Sara Sjolin is a MarketWatch reporter based in London. Follow her on Twitter @sarasjolin.