US Market

U.S. stocks staged an afternoon rally Wednesday, led by materials companies, though investors continued to eye several overseas trouble spots warily.

The Dow Jones Industrial Average rose 89 points, or 0.7%, to 12108 in late afternoon trade, led by Alcoa, which rose 3.3%. The gains were kept in check by a 1.5% decline for Bank of America, which said the Federal Reserve didn't allow it to boost its dividend. Wal-Mart Stores also was weak, falling 0.8%, as was DuPont, down 0.4%.

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The Standard & Poor's 500-stock index rose 0.4% to 1299, led by Freeport-McMoRan, which rose 5.3%, and its materials sector, with financial stocks a headwind.

The Nasdaq Composite rose 17 points to 2701. Stocks were broadly lower early in the session after financial stocks sank on the Bank of America dividend news, and session lows followed data showing that February new-home sales in the U.S. hit a record low. But materials stocks led the way higher in moves that investors linked to the view that Japan's reconstruction could be costly, helping companies that produce commodities such as aluminum, steel and copper. Japan's government said that damage from the earthquake and tsunami could be more than double the cost of the 1995 Kobe earthquake.

The Middle East and North Africa continued to deliver worrisome news, helping oil stay above $105 a barrel. Another concern came from Portugal, where a parliamentary vote on austerity measures was set for Wednesday. Among stocks in focus, ConocoPhillips rose 1.9% after unveiling plans to sell an additional $5 billion to $10 billion in noncore assets over the next two years, saying it will use the proceeds to fund its share-buyback and capital-expenditure programs. Adobe Systems fell 3.6%. The firm reported an 85% rise in fiscal first-quarter profit after Tuesday's closing bell, but lowered its second-quarter revenue forecast due to the Japanese earthquake.

European Markets

European markets finished mostly higher Wednesday, led by Spanish clothing retailer Inditex following its strong earnings, though Portuguese and Greek stocks posted losses. The Stoxx Europe 600 index gained 0.5% to end at 273.11 after moving in and out of positive territory several times during the session. Inditex, which owns the Zara clothing chain, rose 6% after reporting strong increases in fourth quarter net profit and sales.

Shares of rival Hennes & Mauritz AB rose 3%. Portugal's PSI 20 index fell 1%, meanwhile, as investors awaited a crucial vote in parliament on an austerity package proposed by the government. Banco BPI fell 3% and Banco Comercial Portugues slipped 2.4%. In Greece, the ASE Composite index fell 1.4%, as banks there also dropped sharply. Shares of Alpha Bank slumped nearly 5% after it late Tuesday reported a steep drop in 2010 profit.

A 3.5% rise in shares of miner Eurasian Natural Resources Corp., after saying its full-year net profit more than doubled from the preceding year, boosted the U.K.'s FTSE 100 index, which gained 0.6% to 5,795.88. Investors in the U.K. also digested the coalition government's budget, which, among other things, raised the supplementary charge on oil and gas production to 32% from 20%.

Following the news, shares of Premier Oil PLC slumped 4%. Retailers were among the biggest decliners in Europe, with J Sainsbury falling 5.4% after the U.K. supermarket operator reported fourth quarter sales below market expectations. In France, the CAC 40 index gained 0.5% to 3,913.73, as construction-materials group Lafarge SA rose 2%, while banking giant Societe Generale SA slipped 0.8%.

Germany's DAX 30 index rose 0.4% to 6,804.45, led by the auto sector. Shares of BMW AG closed up 1.3% after the car maker was upgraded to outperform from market perform at Bernstein Research. Shares of Daimler AG gained 1.9%. Shares of Germany's ProSiebenSat.1 Media AG fell 5.1%.

Asian Markts

After two positive sessions in a row, Japanese shares fell Wednesday as news of radioactive contamination in Tokyo tap water prompted a late selloff, while weak results from China Coal Energy Co. and China Life Insurance pressured Hong Kong stocks.

Many other markets advanced, with Chinese stocks posting solid gains on hopes low share valuations and strong economic growth will boost the market. Property developers led the way. The day's performance was again marked by caution amid worries over the strength of the U.S. economic recovery, rising crude-oil prices, turmoil in the Mideast and North Africa and sovereign-debt issues in the euro zone.

China's Shanghai Composite rose 1% to 2948.48, Taiwan's Taiex added 0.4% to 8545.08 and India's Sensex rose 1.2% to 18206.16. Staging a retreat, South Korea's Kospi slipped 0.1% to 2012.18 and Hong Kong's Hang Seng index fell 0.1% to 22825.40, while Japan's Nikkei Stock Average tumbled 1.7% to 9449.47. Losses in Tokyo steepened after the Tokyo metropolitan government asked families not to let infants drink tap water after finding higher than allowed levels of radioactive iodine.

Shares of Tokyo Electric Power dropped 4.5% after staging a sharp rebound in the previous two sessions amid easing fears over radiation from its earthquake damaged Fukushima Daiichi nuclear-power plant. Shares of Terumo dropped 4.1% after the medical-equipment maker lowered its fiscal year net-profit outlook, citing the impact on production due to the quake and rolling blackouts. Many exporters also lost ground on worries about the quake's impact on earnings.

Toyota Motor Corp. shed 1.2% and Fujitsu. lost 6.6%. In Hong Kong, shares of China Coal plunged 9.1% and China Life dropped 2.1% a day after each reported weaker-than-expected results for 2010. China Coal also had a downgrade by HSBC, to neutral from overweight. Chinese property developers led an advance across sectors, with Poly Real Estate Group adding 3.9% in Shanghai and China Vanke climbing 2.4% in Shenzhen. While the Shanghai-listed shares of China Coal dropped 1.4% after its earnings report, other coal miners gained, with China Shenhua Energy climbing 2% and Yanzhou Coal Mining adding 4.7%.

Base Metals and Oil

Base metals closed higher on the London Metal Exchange Wednesday, shrugging off a modestly firmer dollar as investors focused on the potential for growing demand in the medium term.

Oil futures settled at their highest level in 2 1/2 years Wednesday as air strikes continued against Libya and the U.S. reported a sharp drop in gasoline inventories.

Light, sweet crude for April delivery settled 78 cents, or 0.7%, higher at $105.75 a barrel on the New York Mercantile Exchange, the highest settlement since September 2008. Brent crude on the ICE futures exchange slipped 15 cents, or 0.1%, to $115.55 a barrel.

The front-month Nymex contract got a roughly $1 boost with the expiration of the April contract Tuesday, which settled at $104 a barrel. The most actively traded gold contract, for April delivery gained $10.40, or 0.7%, to settle at a record $1,438 a troy ounce on the Comex division of the New York Mercantile Exchange. Thinly traded March gold also rose $10.40, to $1,437.90, a front month record settlement. Comex March silver added 93.1 cents, or 2.6%, to settle at $37.202 an ounce, the highest finish for a nearby contract since Feb. 13, 1980.

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Supplied by Morrison Securities.