AFX: GLOBAL MARKETS: US Stocks Expected To Rise Sharply
LONDON (Dow Jones)--U.S. stocks are expected to rise sharply at the open Tuesday, tracking firmer prices in European trade.
However, concerns still linger over how long the global recession will last and how long the financial system will be in disarray.
""Whether this early (rise) carries over into trading this afternoon remains to be seen," said David Morrison, a strategist at GFT.
He expects the Dow Jones Industrial Average to jump 88 points higher, or 1.3%, to 6635 and the broad Standard & Poor's 500 index to rise 11.5 points, or 1.7%, at 688.0.
Trading in Europe has kept the major indexes in positive territory. However, gains are seen as tentative given a combination of investor fatigue, a lack of catalysts and general fear in getting too involved in the markets.
At 0930 GMT, the pan-European DJ Stoxx 600 index was up 0.8% at 159.19. London's FTSE 100 index was 0.3% higher at 3553.72, and Frankfurt's DAX index was up 1.3% at 3739.62. Paris's CAC-40 index gained 0.5% at 2532.38.
"Uncertainty is likely to linger until the path to a global recovery is clearer," said UBS strategist Jeffrey Palma. "With markets still floundering due to financial distress, much remains depressingly familiar."
Earlier Tuesday, announcements from European Aeronautic Defence & Space Co., or EADS, and media technology company Thomson S.A. provided some news flow, as the quarterly corporate reporting season began to wind down.
EADS swung back into the black in 2008 but its outlook for 2009 was gloomy and it warned that its troubled A400M military airlifter program is in jeopardy. Its shares fell 1.3% to EUR10.07.
Meanwhile, Thomson reported a sharply deeper net loss for 2008 and said it is still in talks with creditors and investors aimed at shoring up its balance sheet. Its shares slid 12% to EUR0.49.
With global markets having made fresh lows, selling is seen as unlikely to be strong, with investors unsure of just how much more can be taken out of the markets.
In Asia Tuesday, Japan's main Nikkei 225 index closed down 0.4% but remained above the key 7000 level. By contrast, Hong Kong's Hang Seng index was up 2.2%.
In the currency markets, the dollar eased back as its recent gains were consolidated. There was speculation that the main sellers of the dollar were exporters.
The euro strengthened to $1.2718 at 0930GMT, from $1.2612 late in New York Monday. The dollar slipped to Y98.38 from Y98.85 while sterling climbed to $1.3840from $1.3773.
Gilts opened higher Tuesday, reversing Monday's corrective price action as attention turned to supply. The Debt Management Office is offering GBP3.0 billion of the 4.5% 2019 issue for sale Tuesday.
Spot gold fell $7.53from New York's late levels to $914.80 per troy ounce as a number of traders sold the precious metal to cover their losses in other markets.
April Nymex crude oil futures climbed to $47.22 per barrel from $47.07 late Monday in New York, where the price rose by 3.4%. A militant attack on a Nigerian oil pipeline sharpened supply concerns while the market weighed the prospect of another OPEC production cut.
-By Kimberly Vlach, Dow Jones Newswires; +44-20-7842-9352; kimberly.vlach@dowjones.com
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