Bulls ready to charge into a wall of worry (Reuters)

NEW YORK (Reuters) – A bounce could be in the cards for stocks next week as bulls defend a key technical level and managers buy the quarter's winners to prop up their books.

But gains coming from healthcare, staples or other defensive sectors that have outperformed the market in the last several months would only support the notion that the U.S. stock market needs to complete its correction phase and panic selling must occur before a more sustained comeback develops.

"We want to see more fear," said Ari Wald, equity strategist at Brown Brothers Harriman in New York.

But be careful what you wish for.

The sources of the recent decline, including Greece's slow march toward a default on its debt, weak U.S. economic data and the creeping deadline to lift the U.S. debt ceiling, are far from being resolved.

HOLDING THE 200-DAY SHOWS THE WAY

Despite a drop that dragged the S&P 500 as much as 8.2 percent below its three-year high hit in early May, the index held above its 200-day moving average -- a major line in the sand as the bulls and bears battle for control of the market.

The slide had been telegraphed for weeks and the market's by-the-book performance -- pulling back to a widely followed level -- seems too well choreographed for some analysts.

"The fact that we went to the 200-day ... seems just a little too perfect," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in San Francisco.

He said the timing of the move was supportive, as the market creates a technical base before resuming its upward move on the back of strong earnings.

"You might get an attempt at a shakeout move," Pado said. "But sometimes the majority is right."

Even if they are right, they don't seem too convinced. So far this quarter -- on track to be the first in the red for the S&P 500 in the last year -- daily volume on the New York Stock Exchange, NYSE Amex and Nasdaq has averaged 7.22 billion shares.

That is down from the 7.94 billion shares traded daily during the first quarter, when the S&P 500 gained 5.4 percent. Commitment to the market has waned. The frantic selling, the flushing down of day traders seems absent so far in this corrective phase.

Despite holding above that level, the market has not cleared the danger zone of dipping under its 200-day average. The curve has a steep slope, as the S&P 500 took roughly two years to notch a 100 percent advance from its March 2009 lows.

The 200-day moving average now stands at 1,263.47, less than 0.4 percent below the S&P 500's close on Friday.

"Every time you test a resistance or support level, you make it weaker," said Nicholas Colas, chief market strategist of the ConvergEx Group in New York. "It's almost like a piece of metal. Every time you hit it, it grows more fragile and that's why people are really worried the third or fourth time."

After three straight days of declines, the S&P 500 fell 0.24 percent for the week and finished at 1,268.45 -- its seventh decline in the last eight weeks.

The Dow industrials (.DJI) lost 0.58 percent for the week, closing on Friday at 11,934.58, while the Nasdaq Composite (.IXIC) rose 1.39 percent for the week to end at 2,652.89.

The next two weeks, before quarterly earnings season starts in earnest, could be marked by wild swings like the ones seen recently. On Thursday, after a market-friendly headline out of Greece, the S&P 500 posted its strongest comeback in almost a year, on days when the benchmark has fallen more than 1 percent.

From its session low on Thursday, the S&P 500 climbed more than 20 points into the close. The Dow's swing covered 233.79 points from its intraday low to session high on Thursday.

But buying interest waned on Friday. Aside from doubts about the passage in Athens' Parliament of higher taxes and service cuts, weak Italian banks also are scaring investors.

The Federal Reserve on Wednesday gave a bleak outlook on the economy, lowering its forecasts for GDP growth for both 2011 and 2012. And Fed Chairman Ben Bernanke found it hard to explain the sources of a so-called economic "soft patch" that seems to have become pervasive.

SUMMER STORM OF DATA

Besides the weekly jobless claims numbers, housing and manufacturing data will attract the most attention next week.

The S&P Case-Shiller April home prices index on Tuesday and the National Association of Realtors pending home sales for May on Wednesday could confirm the housing market's double dip.

Factory activity grew in May at its slowest pace since September 2009, according to the Institute for Supply Management, and Friday's ISM number for June is expected to drop to 51.9, indicating an even slower rate of growth.

New applications for unemployment insurance on Thursday are expected to land above 400,000 for a 12th straight week, according to economists polled by Reuters.

Personal income and consumption, out Monday, are expected to tick higher in May. Consumer confidence, out Tuesday from the Conference Board, is forecast at a June reading of 60.5, just a touch lower than May's 60.8, a Reuters poll showed. Despite a recent string of weak data in May, a sharp drop in crude oil prices is expected to buoy consumer confidence.

(Reporting by Rodrigo Campos; Additional reporting by Edward Krudy; Editing by Jan Paschal)

View the original article here

Exclusive: Maple confident of regulatory nod on TMX bid (Reuters)

TORONTO (Reuters) – An all-Canadian consortium expects its $3.8 billion bid for the Toronto Stock Exchange's parent to win regulatory approval even though the group would also absorb TSX's main competitor, a source close to the proposal said on Wednesday.

As part of its TMX Group (X.TO) takeover proposal, Maple Group Acquisition Corp would swallow Alpha Group, operator of the No. 1 alternative trading system, as well as CDS, a clearinghouse for stock trades.

"We're confident we would be able to affect a transaction," said the source, who insisted that the group had no intention of dropping Alpha from the proposal even though critics say it could lead regulators to veto the deal.

The source also said Maple had no plans to sweeten its C$48-a-share offer or alter any other terms of its bid.

Maple officially launched the hostile bid on Monday, about two weeks before a June 30 shareholder vote on a friendly, $3.5 billion offer for TMX from the London Stock Exchange Group (LSE.L).

"I can say that all of the Maple investors are committed to the idea of creating a vertically integrated exchange and clearing business and therefore being able to combine CDS and Alpha with TMX is critically important to the vision that is being established," the source said.

Maple - comprising 13 Canadian banks, pension funds and financial services firms - would control some 80 percent of Canadian stock trading by volume if its plan succeeds, raising monopoly concerns that require a regulatory review.

Maple sees a decision by Canada's Competition Bureau by September or October, the source said.

Even with after folding Alpha into a new TMX, Canadian markets would still have alternative trading venues.

The source said other TSX competitors such CHI-X and Pure Trading were viable options, and that others were likely to enter the Canadian market.

"If I just deal with CHI-X and Pure Trading, those two ATSs have the bandwidth and capability to absorb all of the Alpha volume if all of a sudden the traders decide for whatever reason that they don't like it (Alpha) being part of TMX," the source said.

"That's why we don't believe that competition is an issue at the end of the day," the source said, adding that Maple would likely operate Alpha as a separate brand.

A poll on Wednesday showed shareholders warming to the bid after Maple's 13 members outlined details of the offer in a circular this week and addressed valuation concerns surrounding Alpha and CDS.

Representatives of the group are meeting with institutional investors in Canada this week before moving on to the United States, where 40 percent of the stock is held.

Maple aims to draw their attention to what it says are benefits of a vertically integrated institution -- a one stop shop for equities, bonds, energy products and derivatives in exchange-traded and over-the-counter markets. Germany's Deutsche Boerse (DB1Gn.DE) and others have already had success with that model.

($1=$0.98 Canadian)

(Reporting by Solarina Ho and Pav Jordan; editing by Frank McGurty)

View the original article here

Nasdaq briefly turns lower (Reuters)

NEW YORK (Reuters) – The Nasdaq briefly turned lower and the Dow and S&P 500 pared gains on Monday, with energy and materials shares leading losses on the S&P.

The Dow Jones industrial average (.DJI) gained 20.97 points, or 0.18 percent, to 11,972.88. The Standard & Poor's 500 Index (.SPX) gained 1.53 points, or 0.12 percent, to 1,272.51. The Nasdaq Composite Index (.IXIC) gained 0.22 points, or 0.01 percent, to 2,643.95.

(Reporting by Caroline Valetkevitch)

View the original article here

Maple Group goes hostile for TMX (Reuters)

TORONTO (Reuters) – The banks and pension funds with a C$3.7 billion hostile offer for the Toronto Stock Exchange touted their offer directly to shareholders on Monday, denying that it would curb competition and urging shareholders to vote for the made-in-Canada solution.

In its formal proposal for the stock market's parent, TMX Group, Maple Group said it was offering C$48 a share in cash for 70 percent of TMX shares, compared with 60 percent in the original proposal nearly a month ago.

That rivals a friendly C$3.5 billion bid from the London Stock Exchange Group, which TMX and LSE heads say different from other proposed Transatlantic exchange tie-ups in that it focuses on growth and building new businesses rather than cost and revenue savings.

Shareholders vote on the LSE-TMX deal on June 30. Maple urged shareholders to vote against that proposal -- Maple's bid dies if TMX shareholders vote for LSE's offer.

"TMX Group shareholders should be aware that Maple's offer can only proceed if the LSE take-over plan does not," Luc Bertrand, Maple's chief spokesman and vice-chairman of Quebec-based National Bank, said in a statement.

The takeover battle over TMX Group is part of a wave of attempts at consolidation sweeping the world's top exchanges. Singapore Exchange (SGX) Ltd's kicked things off last year with a failed attempt to buy Australian market operator ASX Ltd.

Maple comprises four Canadian leading banks, five top pension funds and four new institutional investors.

The C$3.7 billion price is based on C$48 multiplied by the number of fully diluted shares, Maple said. A previous C$3.6 billion value was calculated based on the number of basic shares outstanding.

Unlike LSE shareholders, TMX investors do not get a second vote if there are conditions attached to any regulatory approvals that may come after June 30.

In its circular, Maple said its bid offers cash to shareholders and would maintain TMX's current dividend. It disputed the line from the LSE/TMX partnership that the transatlantic tie-up would enhance liquidity for Canadian capital markets.

LSE's planned takeover must pass muster with the Canadian government, which will decide if it meets the terms of the Investment Canada Act, which says foreign takeovers must carry a "net benefit" to Canada.

"We think we're in quite good shape now," TMX Chief Executive Tom Kloet said on Friday, noting that the company was "in active dialogue" with the government over the deal.

THE MAPLE BOARD

Maple said on Monday it would maintain the current CEO and senior management at the TMX as well as existing commitments regarding TMX's board.

It listed a slate of directors that includes Bertrand as well as political and financial heavy hitters like CIBC senior executive vice-president and vice chairman Jim Prentice, who held key government posts like Minister of Industry until the start of this year.

One issue concerning shareholders has been the valuation of Alpha Group, Canada's main alternative trading platform and the CDS clearinghouse -- entities Maple says will be wrapped into the TMX Group as part of the deal.

Maple gave no price for the entities, but said it would form a special committee to reach a fair value.

Maple's deal would give it control of some 80 percent of Canadian stock trading by volume, making a review by competition authorities all the more important.

The group, whose four banks and one of the pension funds are owners of Alpha, said in its circular that the Alpha and CDSL transactions would benefit Canadian capital markets and not affect the competitive market for equities trading.

It said its own investors would sell their interests in Alpha and CDSL at whatever prices the committee recommends.

Maple Group added Desjardins Financial Group, GMP Capital Inc, Dundee Capital Markets and Manulife Financial to their ranks on Sunday.

Maple's original bank members are the Bank of Nova Scotia, Canadian Imperial Bank of Commerce, National Bank of Canada and Toronto Dominion Bank.

The pension funds are Alberta Investment Management Corp, Caisse de depot et placement du Quebec, Canada Pension Plan Investment Board, Fonds de solidarite des travailleurs du Quebec (FTQ) and Ontario Teachers' Pension Plan Board.

(Additional reporting by Pav Jordan and Euan Rocha; editing by Janet Guttsman)

View the original article here

U.S. stocks rise after recent lows; euro slips (Reuters)

NEW YORK (Reuters) – Wall Street stocks rose on Monday after cheaper prices after six-weeks of losses enticed bargain-hunting investors back into the market, even as the euro fell on nagging worries over Europe's attempts to solve the Greek debt crisis.

Weaker Chinese data fueled concerns about slowing global growth, briefly knocking non-U.S. shares to a 12-week low.

Reduced risk appetite led to an unwinding of positions in oil and precious metals.

"The market has been oversold over the last six weeks, so a short-term rebound on short-covering is not out of the question," said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

The S&P 500 index and other benchmarks opened higher on Monday. The S&P 500 sagged nearly 7 percent on the back of a barrage of soft economic data after closing on April 29 at its highest closing level in nearly three years.

The gains in U.S. and European stocks helped the MSCI world equity index to rise 0.2 percent after hitting its weakest since mid-March.

The world stock benchmark has lost nearly 8 percent since hitting a three-year peak in late April and is very close to erasing all of its 2011 gains.

In Asia, Chinese stocks ended at a 4-1/2 month low, hit by worries about the impact of monetary policy tightening in an economy which is a key driver of world growth.

China's money growth slowed to a 30-month low in May and banks extended fewer new loans than expected, while exports to the United States and EU hit their weakest since late 2009.

An increasingly gloomy economic backdrop and Greece's fiscal predicament have stacked the odds against risk-taking.

Investors are concerned by signs policymakers are struggling to reach an agreement on a second bailout for Athens and that any steps taken to involve private investors will wind up triggering a technical debt default.

The cost of insuring Greek sovereign debt against default rose to an all-time high, while the euro hit a record low against the safe-haven Swiss franc.

Uncertainty over future U.S. monetary policy after the Federal Reserve's $600-billion bond purchase program ends this month also added to investor aversion to taking on riskier assets, especially going into the thinly-traded summer months.

"Equities look like a buy at these sorts of levels on a one to two year view, but I would not read too much into it," said David Coombs, fund manager at Rathbone Brothers, which has 15.2 billion pounds under management.

GREEK DEAL

European leaders are due to complete a new rescue package for Greece at a Brussels summit on June 23-24, but deep divisions remain about how to get the private sector involved, while the deal would not help reduce Greece's massive 340 billion euro debt load.

Five-year credit default swaps on Greek sovereign debt rose 58 basis points on the day to a record high of 1,600 bps, according to data monitor Markit.

"What the euro needs is a resolution to the Greek crisis and the politicians and the central bankers do not appear to be close to finding one," said Kit Juckes, currency strategist at Societe Generale in London. "That uncertainty is weighing on the euro."

The euro fell against the Swiss franc, but gained versus the U.S. dollar on expectations that euro zone interest rates would remain higher than those in the United States.

The euro touched a record low of 1.2004 Swiss francs on the EBS trading platform. The Swiss franc is seen as a global barometer for risk aversion.

The euro was up around 0.2 percent at $1.4375 after central bank buying erased earlier losses.

In the oil market, U.S. crude oil fell 0.76 percent to $98.53 a barrel on a report of more supply from Saudi Arabia. The world's biggest oil exporter will raise output to 10 million barrels per day in July, Saudi newspaper al-Hayat reported on Friday, as Riyadh goes it alone in pumping more outside official OPEC policy.

In gold trading, bullion prices fell to its lowest in about 10 days as the euro eased against the dollar. Spot gold was down 0.3 percent at $1,527.11 an ounce, above a session low of $1,523.44.

(Additional reporting by Rodrigo Campos in New York; Anirban Nag, Neal Armstrong, Sue Thomas, Ikuko Kurahone, Natsuko Waki in London)

View the original article here

CA-CANADA Summary (Reuters)

Maple Group goes hostile for TMX

TORONTO (Reuters) – The banks and pension funds with a C$3.7 billion hostile offer for the Toronto Stock Exchange touted their offer directly to shareholders on Monday, denying that it would curb competition and urging shareholders to vote for the made-in-Canada solution. In its formal proposal for the stock market's parent, TMX Group, Maple Group said it was offering C$48 a share in cash for 70 percent of TMX shares, compared with 60 percent in the original proposal nearly a month ago.

Air Canada customer agents serve strike notice

VANCOUVER (Reuters) - The union representing customer service and ticket sales agents at Air Canada Inc on Friday gave the airline 72 hours notice of a strike after negotiators failed to agree on a new labor contract. The Canadian Auto Workers (CAW) union, which represents 3,800 employees at airports and call centers across Canada, said its members will walk off the job at 11:59 pm EDT on Monday unless an agreement can be reached before then.

Manitoba to fight changes to Canadian Wheat Board

WINNIPEG, Manitoba (Reuters) - The province of Manitoba will lead a campaign to stop the federal government from stripping the Canadian Wheat Board of its monopoly on the Western Canadian grain trade, the provincial government said on Monday. Canada's Conservative government plans to introduce legislation this autumn to end the Wheat Board's marketing monopoly on wheat, durum and barley by August 2012.

RIM investor seeks change; PlayBook going global

TORONTO (Reuters) - An investor in Research In Motion wants a shareholder vote on whether the company's two leaders can retain shared roles as chairmen of the board and chief executives, in the latest headwind to hit the BlackBerry maker ahead of next week's results. The call to limit the roles held by co-founder Mike Lazaridis and Jim Balsillie adds to RIM's woes as it struggles to present itself as a legitimate third option in a smartphone race increasingly dominated by tech giants Apple and Google.

Button wins rain-delayed Canadian thriller

MONTREAL (Reuters) - Jenson Button celebrated his greatest victory on Sunday after overtaking Red Bull's Formula One world champion Sebastian Vettel on the last lap of a rain-delayed Canadian Grand Prix thriller. Vettel, who skidded wide under relentless pressure just a few corners from the finish, recovered from his error to take second place ahead of Australian team mate Mark Webber.

Canada Post strike highlights mail's fading role

VANCOUVER (Reuters) - A rolling postal strike, followed by deep service cuts, has highlighted the fading role of Canada's mail service in the age of the Internet, with neither side likely to end up ahead. On one side of the dispute are postal workers who are looking for higher wages and more job security -- saying the company is ignoring their ideas to modernize as consumers increasingly pay bills online and use e-mail for letters.

Jobless rate falls, diverges from U.S. path

OTTAWA (Reuters) - The unemployment rate in Canada fell to the lowest level since January 2009 in May as the number of jobs increased by 22,300, an island of healthy data in a sea of recent figures showing tepid North American economic growth. Statistics Canada reported on Friday that the jobless rate dropped from 7.6 percent in April to 7.4 percent in May, a number last seen when Canada was falling into recession at the start of 2009.

GM recalls 50,500 Cadillac SRXs in North America

DETROIT (Reuters) - General Motors Co is recalling 50,500 Cadillac SRX luxury crossover vehicles because the performance of the front passenger airbag differs from the owner's manual. The recall, announced by GM on Friday, affects 47,401 vehicles in the United States and the rest in Canada and Mexico from the 2011 model year. The U.S. automaker said it knew of no crashes, injuries or complaints related to the issue.

Accident kills 2 at Vale's Sudbury mine

TORONTO (Reuters) - Two workers died after they were hit by waste debris being removed from Brazilian miner Vale's Stobie underground copper-nickel mine in Sudbury, Ontario, officials said on Thursday. The employees were working in a shaft about 1,000 metres below the surface on Wednesday evening when the accident occurred, and were dead when rescuers reached the scene, the company said.

Watchdog raps Canada for hiding G8 spending plans

OTTAWA (Reuters) - Canada's government misled legislators about funding an international summit in 2010, pumping millions of dollars into the electoral district of the cabinet minister now responsible for spending cuts, the federal auditor said on Thursday. In the latest in a series of often damning reports about spending practices of successive governments, the auditor general's office took aim at the ruling Conservatives over their handling of the Group of Eight summit in Huntsville, Ontario.

View the original article here

Wall Street slips for a sixth day on growth concerns (Reuters)

NEW YORK (Reuters) – Stocks extended losses for the sixth straight day on Wednesday as investors worried that a slowing economy could deepen the market's retreat.

The latest evidence of a slowdown came in the Federal Reserve's Beige Book, which gives an anecdotal report on the economy. It reinforced Fed chief Ben Bernanke's bearish assessment on growth delivered late on Tuesday.

The market's mood soured when Bernanke gave no hint that the central bank would offer a third round of stimulus to an economy losing steam. The Beige Book said costlier food and energy prices as well as supply disruptions stemming from Japan's earthquake were taking a toll.

Stocks are still up for the year, but the market's recent slide has taken a big bite out of those gains.

The Dow, which on May 2nd was up 10.6 percent for the year when it hit its 2011 closing high, is now up just 4.1 percent.

The S&P 500, which had climbed as much as 8.2 percent for the year at its 2011 closing high on May 2nd, is now up just 1.7 percent. And the Nasdaq, which on May 2nd was up 8 percent for the year when it set its 2011 closing high, is now up only 0.9 percent.

Stocks have come under pressure recently due to a slew of weak economic data, especially in the labor market.

"Investors are re-pricing the slowdown after Bernanke crystallized it," said Jason L. Ware, senior equity research and trading analyst at Albion Financial Group in Salt Lake City, Utah.

On top of that, "the market was hoping for an indication that there may be another round of stimulus but clearly, that's not what they got."

The Fed's $600 billion second round of stimulus, expected to end this month, has been a catalyst for the stock market's advance.

Many of the day's biggest decliners were U.S.-traded Chinese companies after Interactive Brokers Group (IBKR.O) banned clients from borrowing money to buy some Chinese stocks.

New York-listed shares of Renren Inc (RENN.N) fell 13.6 percent to $10.51 and Baidu (BIDU.O) lost 3.3 percent to $120.67.

Mortgage insurers' shares also fell after MGIC Investment Corp (MTG.N) reported disappointing monthly operating statistics.

Shares of MGIC Investment, the biggest mortgage insurer to Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB), fell 20.2 percent to $5.80.

The Dow Jones industrial average (.DJI) dropped 21.87 points, or 0.18 percent, to 12,048.94. The Standard & Poor's 500 Index (.SPX) lost 5.38 points, or 0.42 percent, to 1,279.56. The Nasdaq Composite Index (.IXIC) fell 26.18 points, or 0.97 percent, to 2,675.38.

"I think 1,250 is a key level (on the S&P) and, if we get there, likely to provide support for the market, barring any further erosion in the underlying economic data," Ware said.

SHARPER SLIDE FORECAST

Credit Suisse's U.S. equity strategist Doug Cliggott said on Wednesday the S&P 500 could fall roughly 10 percent from its current level, partly due to the approaching end of the Federal Reserve's bond-buying program.

"We would think an index between 1,170 and 1,200 would be a realistic estimate of where we might be headed," Cliggott said at the Reuters Investment Outlook Summit in New York.

His comments followed a bearish tone struck on Tuesday by Citigroup strategist Tobias Levkovich. He said major U.S. stock indexes could fall as much as 10 percent from their May highs. A 10 percent fall is typically described as a market correction.

There were also signs of weakness from corporate America. Communications networking equipment provider Ciena Corp (CIEN.O) forecast third-quarter revenue below expectations, driving down its stock and others in the sector.

Ciena tumbled 16.2 percent to $20.29, while JDS Uniphase Corp (JDSU.O) dropped 5.5 percent to $17.40.

Limiting losses, the energy sector rose after talks at the oil cartel OPEC in Vienna broke down without an agreement on a production hike. The S&P 500 energy index (.GSPE) rose 0.4 percent, with Exxon Mobil (XOM.N) up 1 percent at $80.76.

U.S. crude oil futures rose nearly 2 percent to settle above $100 a barrel.

About 7.45 billion shares traded on the New York Stock Exchange, NYSE Amex and Nasdaq, slightly below the daily average of 7.6 billion.

Declining stocks outnumbered advancing ones on the NYSE by 2,217 to 784, while on the Nasdaq, decliners beat advancers by 1,920 to 679.

(Reporting by Angela Moon; Editing by Jan Paschal)

View the original article here