MarketWatch.com - Pre-Market Indications

Wednesday, September 8, 2010

Indications: U.S. stock futures rise ahead of Fed's Beige Book

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By Polya Lesova and Kate Gibson, MarketWatch

NEW YORK (MarketWatch) -- U.S. stock futures edged tentatively higher Wednesday ahead of the Federal Reserve's latest report on U.S. economic activity and as Portugal's successful bond auction helped to calm worries about European banks.

Futures on the Dow Jones Industrial Average added 23 points to 10,361 after earlier trading down 25 points.

"Given that the markets are focused so much on fear at the moment, every bit of good news produces a small comeback in risk," said Mads Koefoed, market strategist at Saxo Bank.

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S&P 500 futures gained 2.5 points to 1,094, and Nasdaq 100 futures rose 6.75 points to 1,864.25.

The blue-chip Dow index /quotes/comstock/10w!i:dji/delayed (DJIA 10,409, +68.19, +0.66%) dropped 1% on Tuesday, snapping a four-session winning streak.

The Fed will release its Beige Book at 2 p.m. Eastern time. Consumer credit for July and a speech by Narayana Kocherlakota, president of the Federal Reserve Bank of Minneapolis, are also on the calendar.

European stock markets also turned higher, erasing losses, with the Stoxx Europe 600 index /quotes/comstock/22c!sxxp (ST:SXXP 262.63, +2.87, +1.10%) rising 0.7% in intraday trade.

The Portuguese government sold 661 million euros ($839 million) of 3-year debt and 378 million euros of 10-year bonds. Demand was solid and boosted market sentiment.

"When Portuguese bonds are sold, then it's [the market] simply rallying on everything that can be interpreted as good news," said Koefoed.

The Portuguese auction offset weaker-than-expected German economic data.

Germany's exports dropped in July from the previous month, while industrial production edged up 0.1%, much less than economists expected. See more on Germany's economy.

The Bank of Canada lifted its interest rate to 1%.

BP reports on oil spill

In the energy sector, shares of BP PLC /quotes/comstock/13*!bp/quotes/nls/bp (BP 38.38, +1.19, +3.20%) /quotes/comstock/23s!a:bp. (UK:BP. 412.15, +5.35, +1.32%) gained 3.5% in U.S. premarket trading. In its internal report released Wednesday, the firm said that "a sequence of failures involving a number of different parties" led to the explosion and fire that killed 11 people and caused an environmental disaster in the Gulf of Mexico earlier this year.

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"It is evident that a series of complex events, rather than a single mistake or failure, led to the tragedy," said Tony Hayward, BP's outgoing chief executive. "Multiple parties, including BP, Halliburton and Transocean, were involved."

Shares of Halliburton Co. /quotes/comstock/13*!hal/quotes/nls/hal (HAL 30.18, +0.34, +1.14%) and Transocean Ltd. /quotes/comstock/13*!rig/quotes/nls/rig (RIG 54.00, +0.95, +1.79%) were little changed in premarket trading.

Shares of Talbots Inc. /quotes/comstock/13*!tlb/quotes/nls/tlb (TLB 10.63, -0.48, -4.32%) dropped 9.5% in premarket trade after the clothing retailer reported quarterly results that disappointed investors.

Most Asian stock markets ended lower Wednesday, with Japan's Nikkei Stock Average index losing 2.2%.

U.K. mobile-telecom giant Vodafone Group PLC /quotes/comstock/23s!a:vod (UK:VOD 159.80, -0.10, -0.06%) said it's selling its entire 3.2% stake in China Mobile Ltd. /quotes/comstock/13*!chl/quotes/nls/chl (CHL 49.75, -0.50, -1.00%) in a deal that will generate 4.3 billion pounds ($6.6 billion) before taxes and costs. Read more on Vodafone.

The British pound /quotes/comstock/21o!x:sgbpusd (GBPUSD 1.5511, +0.0154, +1.0028%) gained 0.7% to $1.5447, buoyed by a report showing an unexpected rise in U.K. housing prices in August.

The dollar index /quotes/comstock/11j!i:dxy0 (DXY 82.52, -0.30, -0.36%) , which tracks the performance of the greenback against a basket of other major currencies, was little changed at 82.806.

In the commodity markets, gold for December delivery fell 40 cents to $1,258.9 after surging to a new settlement high Tuesday, fueled by safe-haven demand.

Crude-oil futures slipped 6 cents to $74.03 a barrel in electronic trading on Globex. The American Petroleum Institute will report data on oil supplies this afternoon, a day later than usual because of the Labor Day holiday. Analysts polled by Platts expect declines in oil and gasoline stockpiles.

Polya Lesova is MarketWatch's London bureau chief. Kate Gibson is a reporter for MarketWatch, based in New York.

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