Financial stocks push Wall St to two-year highs

Stocks on Wall Street have hit two-year highs as investors see value in financial sector takeover activity.

In recent deals, Toronto-Dominion Bank announced a $US6.3 billion purchase of Chrysler’s finance arm, while Bank of Montreal is buying a big Midwestern bank in a $US4.1 billion share swap.

US regional banks in particular have been boosted by the activity as investors search for the next potential acquisition targets. Regions Financial jumped 6.7%, First Horizon National leapt 5.4%, SunTrust Banks added 4.9% and Zions Bancorp advanced 4%.

Among the blue chips, Bank of America rose 3.1% and JP Morgan Chase 2.8%, pushing the Dow Jones Industrial Average up 26.33 points, or 0.2%, to 11,559.49 at the close (10am NZ time) . Earlier in the session, the Dow reached a two-year intraday high at 11,566.99.

The Nasdaq Composite was up 0.15% to 2671.48, a three-year closing high. The S&P 500 index was up 0.3% to 1258.84, the highest close since September 8, 2008.

In economic news, GDP rose at a seasonally and inflation-adjusted annual rate of 2.6% in July through September, above the previous estimate of 2.5%.

Demand for used homes increased by 5.6% – smaller than the 6.5% rise economists had predicted – although prices edged up for the first time since August, to $US170,600 in November.

Other markets: Europe, Asia up
Most European stocks extended their winning streak to three sessions, boosted by car firms and chip maker ARM Holdings.

The Stoxx Europe 600 index rose 0.1% to close at 281.45. It is up 11.2% year to date, at its highest since September 2008.

In London, the FTSE 100 index rose 0.5% to 5983.49, supported by a 9.1% rally in ARM Holdings, sparked by media reports that Microsoft will announce a new version of its Windows operating system that runs on ARM technology.

In Paris, the CAC 40 index ended 0.2% lower at 3919.71. In Frankfurt, the DAX 30 index fell 0.1% to 7067.92.

In Asia, Korea's benchmark index ended at a three-year high, helped by gains in auto and shipbuilding stocks.

Resources shares pushed Australia's market to touch a six-week high, but Japanese shares drifted lower after weaker-than-expected exports data.

Shanghai stocks fell as banks were hit by lingering worries about further tightening measures, while the Hong Kong market was supported by shares of refiners after the government allowed them to raise fuel prices.

Korea's Kospi added 0.1% to 2038.11, its highest close since November 7, 2007. Australia's S&P/ASX 200 added 0.1% to 4778.43, Japan's Nikkei Stock Average slipped 0.2% to 10,346.48, China's Shanghai Composite dropped 0.9% to 2877.90 and Hong Kong's Hang Seng Index rose 0.2% to 23,045.19.

Commodities: Oil up, gold down
Crude-oil futures prices settled above $US90 a barrel in New York as declining supplies and an improving economy have pushed prices to their highest level in more than two years.

Supplies in November dropped at their fastest pace since May 2008, when oil prices were well into record territory above $US100 a barrel. Oil futures have rallied 13% since mid-November, putting crude on a track back toward triple digits.

Light, sweet crude for February delivery settled at $US90.48 a barrel, up 66USc, after rising as high as $US90.80 earlier in the session. Brent crude on the ICE futures exchange traded 49USc higher at $93.69 a barrel.

Gold futures were down slightly as China's support for Europe's troubled debt markets tempered haven buying.
The most actively traded contract, for February delivery, was down $US1.40, or 0.1%, at $US1387.40 an ounce in New York. December gold was also down $US1.40 at $US1386.80.

Currencies: Swiss franc up, euro down
The Swiss franc extended this week's rally against the euro, which dropped to an all-time low of 1.2440. The franc also strengthened against the dollar to the highest levels since October when it hit a peak of 0.9463 francs against the US currency.

The franc has gained about 2.5% against the euro this week. Since the start of the year, the franc has surged nearly 20% versus the euro.

Sovereign debt worries continued to weigh on the euro. It fell to as low as 109.20 yen, the weakest level since December 1 against the yen.

The pound was another loser, sliding to a three-month trough of $US1.5357 versus the dollar as a weak economic report raised concern about the health of the British economy.

The euro was at $US1.3099 from $US1.3096 after earlier falling to as low as $US1.3078, near the weakest level in three weeks.

The dollar was at ¥83.54 from ¥83.74, while the euro was at ¥109.43 from ¥109.66. The UK pound was at $US1.5387 from $US1.5462.

Against the Swiss franc, the dollar was at 0.9518 francs from 0.9588. The euro fell to 1.2470 francs from 1.2552 francs.