Telecommunications stocks led U.S. indexes higher Wednesday, as optimism over deal activity added to confidence that jobs data would continue pointing to a strengthening labor market. The Dow Jones Industrial Average gained 89 points, or 0.7%, to 12368, led by AT&T. The company rose 2.4% after Chief Executive Randall Stephenson said he expects some divestitures as his company pursues a $39 billion buyout of T-Mobile USA from Deutsche Telekom. The Standard & Poor's 500-stock index rose 0.8% to 1330.
The Nasdaq Composite gained 0.8% to 2777. The Russell 2000 small-capitalization index was on track to finish at its highest close of the year. In mid-afternoon trading, the Russell was at its highest levels since October 2007, up 1.2% at 839.27.
In other deal news, Valeant Pharmaceuticals made a $5.7 billion bid for biopharmaceutical group Cephalon. Cephalon's stock rose 28%, and Valeant's rose 11%. Investors said the market was also looking ahead with more confidence to Friday's key government jobs report, following encouraging data Wednesday morning. Automatic Data Processing said U.S. private-sector payrolls increased by 201,000 jobs in March, just below the expected 205,000 rise. Half the gains in the ADP report came from small businesses.
European shares ended higher Wednesday, led by gains for the industrial-oriented German market, though peripheral markets had a mixed session due to ongoing worries over sovereign debt. The Stoxx Europe 600 index rose 0.7% to close at 278.55. German car maker Daimler AG rose 3.1% and BMW AG gained 2%. Auto stocks were hit hard in recent sessions as a result of worries that component shortages following Japan's March 11 earthquake could hurt car production. Other strong performers in Frankfurt included industrial conglomerate Siemens AG, up 2.2%, and chemicals giant BASF SE, up 2%.
The gains contributed to a 1.8% advance for the DAX 30 index to 7,057.15. But while most markets were stronger, Ruland said there are clear signs of concern over European sovereign debt and unrest in the Middle East. The sovereign-debt concerns were reflected in an uneven performance from peripheral markets as well as from banks with exposure to weaker European economies. Shares of banking group Societe Generale fell 1.7% in Paris. In Dublin, shares of Bank of Ireland plunged 9.3% ahead of the results of the Irish banks' stress tests Thursday. Trading in pension and mortgage provider Irish Life & Permanent Group was suspended after reports that the government will need to take a large controlling stake.
The Irish ISEQ Overall index rose 0.3% to 2,885.92, however. Portugal's PSI 20 index rose 0.5% to 7,858.97, while the Greek ASE Composite fell 1.3% to 1,558.57. Greek bank stocks succumbed to selling pressure, with Alpha Bank shedding 5.3% and National Bank of Greece losing 2.3%. The U.K.'s FTSE 100 index rose 0.3% to settle at 5,948.30, boosted by mining stocks as metal prices strengthened. Shares of African Barrick Gold PLC rose 1.7%, while Vedanta Resources PLC rallied 3.4%. Among the steepest decliners Wednesday, shares of electronic-goods retailer Dixons Retail PLC tumbled more than 18% in London, following a profit warning.
The French CAC 40 index climbed 0.9% to close at 4,024.44, including a 2.5% rise for Electricite de France SA, as the nuclear-power generator continues to recover from a 12% decline in the aftermath of the Japanese earthquake and tsunami, and the problems at the Fukushima Daiichi nuclear plant.
Japanese stocks soared Wednesday on a weakened yen and news some firms will soon restart production at plants affected by the devastating earthquake and tsunami, while solid results from Hutchison Whampoa Ltd. and other corporations boosted Hong Kong shares. Leading the region's major equity benchmarks, Japan's Nikkei Stock Average climbed 2.6% to 9708.79. Market sentiment remained cautious, however, amid struggles to contain radiation leaks from the damaged Fukushima Daiichi nuclear-power facility. Supported by the yen's fall against the U.S. dollar and the euro, shares of exporters advanced. Honda Motor rose 2.1% and Advantest gained 3.4%. Hitachi jumped 8.7% on news it expected its Chiba Prefecture plant to return to full production some time in April, and operations at a plant in Ibaraki Prefecture, north of Tokyo, to return to full production next week. Nissan Motor climbed 3.8% on news the company will restart some manufacturing at its Iwaki engine plant in Fukushima from mid-April. Tokyo Electric Power, which owns the Fukushima nuclear plant, plunged 17.7% during the session, taking losses so far this month to 78%.
Meanwhile, South Korea's Kospi gained 0.9% to 2091.38; Hong Kong's Hang Seng index rose 1.7% to 23451.43; Taiwan's Taiex advanced 0.6% to 8646.31; and the main index in the Philippines climbed 3% to 4,023.74. India's Sensex rose 0.9% to 19290.18 for a seventh straight session of gains. Singapore's Straits Times index advanced 1.3% to 3095.32, Indonesia's index rose 1.4% to 3640.98 and Thailand's SET tacked on 1.4% to 1050.67. China's Shanghai Composite, among the best performing regional benchmarks so far in 2011, skipped the day's rally, slipping 0.1% to 2955.77. Some real-estate and coal stocks lost ground amid modest trading volumes, to give up some of their strong gains recently. Poly Real Estate Group dropped 2.8% and Gemdale gave up 1.6%, while Yanzhou Coal Mining dropped 1.1%. Shares of Agricultural Bank of China were one exception, rising 0.4% a day after the lender reported a 46% jump in its 2010 net profit, beating estimates and earning Goldman Sachs's rating upgrade to buy from hold.
Base metals closed lower on the London Metal Exchange Wednesday after weaker than expected U.S. data and a lack of buying activity from China, the world's top metals consumer, weighed heavily on the markets. LME three-month copper closed at $9,380 a metric ton, down 2.1% on Tuesday's PM kerb close. Oil inventories rose to a new high at a key U.S. delivery depot, government data showed Wednesday, keeping a lid on crude futures despite continued fighting in Libya.
The U.S. Department of Energy said crude stockpiles last week hit a record 41.9 million barrels in Cushing, Okla., the delivery point for futures traded on the New York Mercantile Exchange. Storage in the area is near capacity, a situation that has weighed on Nymex-traded oil even as Brent crude, Europe's benchmark, is pulled higher by events in the Middle East and North Africa. Light, sweet crude for May delivery settled 52 cents, or 0.5%, lower at $104.27 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange traded 3 cents lower at $115.13 a barrel.
Gold prices settled modestly higher as a weaker dollar ameliorated a mid-morning dip on record-high U.S. crude oil inventories. The most actively traded contract, for June delivery, was recently up 0.5%, or $7.40, at $1,424.90 a troy ounce on the Comex division of the New York Mercantile Exchange. The April-delivery contract was up 0.5%, or $7.60, at $1,423.80 a troy ounce.
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