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Thursday, May 6, 2010

Indications: U.S. futures turn higher ahead of ECB, data

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By Barbara Kollmeyer, MarketWatch

MADRID (MarketWatch) -- U.S. stock futures were moving higher Thursday ahead of the release jobless claims data and a European Central Bank press conference.

Futures for the Dow Jones Industrial Average rose 25 points to 10,859, while those for the Nasdaq 100 rose 3.5 points to 1,961.75. Futures for the S&P 500 rose 3.8 points to 1,167.70

Deadly riots in Greece and a downgrade for Portugal triggered a heavy case of rattled nerves on U.S. markets Wednesday. The Dow Jones Industrial Average fell 59.94 points, or 0.55%, to 10,866.83, its lowest close since March 31. The Nasdaq Composite and S&P 500 also lost ground.

Analysts at UBS pointed out that chaos can offer a good landscape for value. They suggest buying European companies that have over 40% of sales outside of Europe, and are cheaper than global peers. "Sell U.S. companies that sell to Europe and are more expensive than peers," the analysts said.

TODAY'S INTERNATIONAL MARKET STORIES

Global Dow

• MarketWatch Topics: Greece • Asia Markets | Europe Markets | LatAm Markets • Canadian Markets | Israel Stocks | London • U.S.: Market Snapshot | After Hours

Tools• Latin American/Canadian indexes • European indexes | Asian indexes

More on the Markets • Bond Report | Oil News | Earnings Watch • Currencies | U.S. Economic Calendar

Earnings • BNP Paribas' profit soars 47% • Alcatel-Lucent loss on component shortage • Air China sees tax-saving boost to profit

/conga/story/misc/international.html 75129

Economic data on the calendar includes weekly jobless claims and first-quarter productivity data due at 8:30 a.m. ET. Federal Reserve Chairman Ben Bernanke is due to speak about supervisory assessment, as other Fed members are due to deliver speeches on the economy.

Companies reporting ahead of the bell included Warner Music Group /quotes/comstock/13*!wmg/quotes/nls/wmg (WMG 6.60, -0.33, -4.76%) , which narrowed its second-quarter loss, but also reported lower sales.

Retailers also began reporting same-store sales figures for April. Among those reporting, Limited Brands /quotes/comstock/13*!ltd/quotes/nls/ltd (LTD 26.50, -0.37, -1.38%) said same-store sales rose 4% in the four weeks ending May 1, while Stage Stores /quotes/comstock/13*!ssi/quotes/nls/ssi (SSI 14.62, -0.02, -0.14%) said same-store sales fell 8.3%. Costco Wholesale Corp.'s /quotes/comstock/15*!cost/quotes/nls/cost (COST 60.36, +0.69, +1.15%) same-store sales rose 11%. See preview on wholesale sales

Alcatel Lucent /quotes/comstock/13*!alu/quotes/nls/alu (ALU 3.02, +0.01, +0.33%) may see pressure after the telecom equipment maker reported a wider loss and lower-than-expected revenue. Shares were down nearly 11% in pre open trade. See full story.

But the real focus remains on the turmoil in Europe.

Europe stocks edged higher with battered banks crawling back after a week of selling, but the euro sank to a new 14-month low against the U.S. dollar, on continuing fears that sovereign-debt woes will spread. The euro fell 0.7% to $1.2729. See Europe stocks

The European Central Bank will attract plenty of attention with its meeting in Lisbon, Portugal. Interest rates were kept at 1% and a press conference with ECB President Jean-Claude Trichet will start at 8:30 a.m. Eastern.

Financial markets are pressing officials to take further steps to contain the growing sovereign debt crisis quickly, as the rescue package for Greece has failed to calm the market turmoil. And some have suggested the ECB step in and buy government bonds itself. Moody's on Thursday said there are contagion risks to southern Europe and U.K. banks.

"Whether it does or not, it is becoming clearer by the moment that conventional monetary policy will need to remain extremely loose for a very long time," said Jennifer McKeown, senior European economist at Capital Economics.

"In all, we suspect that the ECB will keep its options open if questioned about government bond purchases later today. And we would not rule out such a move in future - any port in a storm, after all."

U.K. stocks were down slightly of a heavily uncertain general election. There is a strong possibility that the country will see its first hung parliament since 1974 and investors are worried that the country's budget deficit will remain wide. See London stocks

Most Asian stocks and currencies suffered heavy losses on worries about Europe and fears that tightening policies could slow China growth. Japan's Nikkei 225 finished down 3.3% on reopening after a three-day holiday, while China's Shanghai Composite tumbled 4.1% to its lowest finish in more than eight months.

Crude oil futures were trading below $80 a barrel, while gold futures rose by nearly $8 an ounce.

Barbara Kollmeyer is an editor for MarketWatch in Madrid.


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