Market scales one-week high as Greece default fears ease

Easing of overseas borrowing rules by the government which will help Indian firms tap cheaper cash abroad and easing euro-zone debt worries helped Indian shares scaled one-week closing high. The 50-unit S&P CNX Nifty regained the psychological 5,000 mark. Index heavyweight Reliance Industries (RIL) rose in volatile trade. The barometer index BSE Sensex jumped 166.94 points or 1%, up close to 330 points from the day's low and off about 45 points from the day's high.



From a recent low of 16,467.44 on Tuesday, 13 September 2011, the Sensex has jumped 409.10 points or 2.48% in two trading sessions. Euro-zone debt worries had pulled Indian shares lower before the two-day rebound. From a 5-week closing high of 17,165.54 on Thursday, 8 September 2011, the Sensex had tumbled 698.10 points or 4.06% in three trading sessions to 2-week closing low of 16,467.44 on 13 September 2011. Earlier, the market had staged a strong rebound after a steep setback in August 2011.

Coming back to today's trade, interest rates sensitive realty and banking stocks rose on the eve of RBI's monetary policy review tomorrow, 16 September 2011. IT stocks reversed initial losses on a weak rupee. Capital goods stocks declined. Auto stocks were mixed.

The market opened on a firm note, with sentiment buoyed by assurances from France and Germany that Europe will stand behind Greece as the nation struggles to cut its debt pile. The market soon pared gains. The market came off lows later. Intraday volatility continued as the market trimmed losses after slipping into the red to hit fresh intraday low in morning trade. The market once again trimmed losses after sliding to fresh intraday low in mid-morning trade.

Volatility continued in early afternoon trade as key benchmark indices weakened once again after recouping almost the entire intraday losses. The market trimmed losses in afternoon trade as European shares opened on a firm note. The intraday recovery gathered steam in mid-afternoon trade. The market surged in late trade on news reports that the government has eased rules on borrowing from overseas to help companies tap cheaper cash abroad amid rising credit costs in the local market.

State-run oil exploration major ONGC's about Rs 11000 crore follow-on public offer (FPO) will suck liquidity from secondary equity markets in the near term. As per market talks, the FPO is expected to be launched this month. ONGC filed prospectus with for the FPO with the Securities & Exchange Board of India (Sebi) early this month. The government will sell a 5% stake in ONGC through the offer as a part of its plan to raise Rs 40000 crore through sale of shares in state-run companies in the current financial year through March to fund social-sector programs.

The BSE Sensex jumped 166.94 points or 1% to settle at 16,876.54, its highest closing level since 8 September 2011. The index jumped 212.80 points at the day's high of 16,922.40 in late trade. The index fell 164.03 points at the day's low of 16,545.57 in mid-morning trade.

The S&P CNX Nifty jumped 63.15 points or 1.26% to settle at 5,075.70, its highest closing level since 8 September 2011. The Nifty hit a high of 5,091.45 and a low 4,967.45 in intraday trade.

The BSE Mid-Cap index rose 0.55% and the BSE Small-Cap index gained 0.26%. Both these indices underperformed the Sensex.

BSE clocked turnover of Rs 2553 crore, lower than Rs 2623.14 crore on Wednesday, 14 September 2011.

The market breadth, indicating the overall health of the market, was positive. On BSE, 1,535 shares rose and 1,259 shares fell. A total of 99 shares remained unchanged. The breadth had alternately swung between positive and negative zone for a brief period in morning trade.

Among the 30-share Sensex pack, 20 rose and the rest fell.

Index heavyweight Reliance Industries (RIL) was up 1.19% to Rs 835.15. The stock was volatile. The stock hit a day's high of Rs 838 and a low of Rs 813.55 so far during the day. The company's advance tax payment reportedly rose 67% to about Rs 2000 crore in Q2 September 2011 over Q2 September 2010.

BP PLC will be able to start work on jointly developing RIL's oil and gas blocks in India only after a revised production-sharing contract is drafted and signed by the stakeholders, the upstream regulator said on Thursday, 15 September 2011. "The amendment to the production-sharing contract is yet to be signed. BP will come in only when the amendment is signed," S.K. Srivastava, Director at the Directorate General of Hydrocarbons, told reporters on the sidelines of an industry conference. In the production-sharing contract, the explorers agree with the government to bear risks, production and development costs in return for a share of production.

Srivastava said that RIL is yet to approach the regulator with a new draft of the contract. RIL on 30 August 2011 closed a deal with BP to sell a 30% stake in its 21 oil and gas exploration blocks in India to the UK-based explorer.

RIL had, last week, denied inflating costs on its D6 gas field in the Krishna-Godavari (KG) basin. RIL made the clarification after CAG said in its final report submitted to the parliament on Thursday, 8 September 2011, that RIL initially estimated capital expenditure of D-1 and D-3 gas discovery at $2.4 billion, which it later revised to $8.8 billion.

Consumer durables stocks edged higher. Videocon Industries, Blue Star, Gitanjali Gems and Titan Industries gained by between 0.23% to 2.89%.

Interest rate sensitive auto stocks mostly rose ahead of RBI's monetary policy review tomorrow, 16 September 2011. India's largest truck maker by sales Tata Motors jumped 6.04% to Rs 151.10 on bargain hunting. The stock had hit a 52-week low of Rs 137.65 in intraday trade on Tuesday, 13 September 2011. The company's advance tax payment reportedly remained unchanged at Rs 90 crore in Q2 September 2011 over Q2 September 2010. The company last week said that its group Chief Executive Office and Managing Director Carl-Peter Forster had resigned on Friday 9 September 2011 with immediate effect.

Forster's resignation, according to a Tata Motors' statement, was due to unavoidable personal circumstances. Forster, who earlier headed General Motors Co.'s Europe operations, joined Tata Motors in February 2010. His mandate at Tata Motors included managing its global operations, including Jaguar Land Rover (JLR), which was acquired in June 2008.

"I deeply regret that my personal circumstances make it difficult for me to continue to perform the challenging duties of managing the thriving global activities of the Tata Motors group with its main activities in India and the UK and increasingly in additional overseas markets," Forster said in a statement. Forster will, however, continue to be on the board as a non-executive member. Prakash Telang, Managing Director India Operations and Ralf Speth, Chief Executive Officer, Jaguar Land Rover, will represent their respective operations on the board.

Mahindra & Mahindra rose 1.34% after company announced during market hours today that the board of directors of the company has approved divestment of up to 8.09% stake in its subsidiary Mahindra Holidays & Resorts India (MHRIL) in one or more tranches at the best available price through a recognised stock exchange by June 2013 to enable increase of MHRIL's public shareholding and free float in the stock market. M&M currently holds 83.09% of the equity of MHRIL. Shares of MHRIL jumped 4.97%. M&M's advance tax payment rose 6.25% to Rs 170 crore in Q2 September 2011 over Q2 September 2010.

India's largest car maker by sales Maruti Suzuki India fell 0.94%. The ongoing labour unrest at Maruti Suzuki's Manesar facility has reportedly spread to three companies of Suzuki Motors in India on Wednesday, with more than 4,000 workers going on a flash strike in support of their colleagues at the country's largest car maker. The protests stalled production at engine units of Suzuki Powertrain India and Suzuki Castings in Manesar and two-wheeler unit of Suzuki Motorcycle India in Gurgaon from Wednesday afternoon, report said.

The workers have asked Maruti management to end the 16-day standoff with Manesar workers, who have so far refused to sign a good conduct bond that the management has set as a prerequisite for entering the factory premises. The company's decision to sack five more workers in Manesar on Tuesday on disciplinary grounds and hiring of 100 staff to replace the existing workforce has led to resentment among workers, reports suggest.

India's second largest two wheeler maker by sales Bajaj Auto rose 0.11% to Rs 1,628.60. The stock had hit a record peak of Rs 1694.90 in intraday trade on 6 September 2011. The company's advance tax payment reportedly rose 4.17% to Rs 250 crore in Q2 September 2011 over Q2 September 2010. The company's total sales rose 16% to a record 3.82 lakh units in August 2011 over August 2010. Motorcycle sales jumped 17% to a record 3.38 lakh units in August 2011 over August 2010.

India's largest two-wheeler maker by sales Hero MotoCorp gained 0.05% to Rs 2202.75. The stock had scaled a record high of Rs 2,231.70 in intraday trade on Friday, 9 September 2011. The company's sales rose 19% to 5.03 lakh units in August 2011 over August 2010.

UltraTech Cement rose 3.9% as company's advance tax payment reportedly jumped 71.42% to Rs 120 crore in Q2 September 2011 over Q2 September 2010.

Ambuja Cements gained 2.88%. The company's advance tax payment reportedly rose 5.55% to Rs 95 crore in Q2 September 2011 over Q2 September 2010.

Ambuja Cements on Wednesday said it has acquired 60% equity shares from the existing promoters of Dirk India for Rs 16.51 crore. Dirk India is a company incorporated in Maharashtra and is the first processed fly ash manufacturing and marketing company in India with a capacity of 2,500 tonne per day. During the financial year 2010-11, the company generated sales revenue of Rs 55.40 crore and earned earnings before interest, taxes, depreciation, and amortization of Rs 6.8 crore. Dirk India has a subsidiary company Dirk Pozzocrete (MP) which is also in the same field. With this acquisition, Dirk India and Dirk Pozzocrete (MP) have become subsidiaries of Ambuja Cements.

Cipla rose 0.32%. The company's advance tax payment reportedly rose a muted 7.69% to Rs 70 crore in Q2 September 2011 over Q2 September 2010.

Interest rates sensitive realty stocks rose on the eve of RBI's monetary policy review tomorrow, 16 September 2011. DLF, HDIL, Indiabulls Real Estate and Unitech gained by between 3.07% to 5.08%.

IT stocks reversed initial losses on a weak rupee. A weak rupee boosts revenue of IT companies in rupee terms as the sector derives a lion's share of revenue from exports. The rupee witnessed a steep fall against the dollar recently as euro-zone debt worries triggered global risk aversion. India's largest software services exporter Wipro rose 1.53%.

India's second largest software services exporter Infosys gained 2.23% in volatile trade. The company is reportedly close to acquiring the health care business of Thomson Reuters in a $700-750 million deal. If the deal goes through, it will be the largest acquisition by Infosys. Thomson Reuters' health care business provides data, analytics and performance benchmarking solutions and services to companies, government agencies and health care professionals.

India's largest software services exporter TCS rose 2.26% to Rs 1040.05, off the day's low of Rs 1010.45. The company announced during market hours today that it has signed a multi year contract with Nets, one of largest payment cards, payment solutions and payment exchange information companies in Northern Europe. The contract comprises application, maintenance and development services across Nets' value chain of cards, payments and eSecurity. TCS's advance tax payment reportedly jumped 111.11% to Rs 570 crore in Q2 September 2011 over Q2 September 2010.

Interest rate sensitive banking stocks rose ahead of RBI's monetary policy review tomorrow, 16 September 2011. India's second largest private sector bank by net profit HDFC Bank rose 1.11% to Rs 484.50, off the day's low of Rs 471.80. India's largest private sector bank by net profit ICICI Bank rose 1.06% to Rs 875.85, off the day's low of Rs 851.25. ICICI Bank's advance tax payment reportedly remained unchanged at Rs 600 crore in Q2 September 2011 over Q2 September 2010.

India's largest bank by branch network and net profit State Bank of India (SBI) rose 3.64% to Rs 1898.15 on bargain hunting. The stock had hit a 52-week low of Rs 1,812.90 in intraday trade on Wednesday, 14 September 2011. The government is likely to take a call shortly on infusing capital into SBI. SBI requires Rs 20000 crore to fund its growth plans over the next two financial years.

Larsen & Toubro fell 1.21%. The company's advance tax payment reportedly rose 16.67% to Rs 350 crore in Q2 September 2011 over Q2 September 2010

HDFC rose 2.61%. The housing finance firm's advance tax payment reportedly rose 9.52% to Rs 460 crore in Q2 September 2011 over Q2 September 2010 .

Tata Steel fell 1.06%. The company's advance tax payment reportedly rose 19.23% to Rs 620 crore in Q2 September 2011 over Q2 September 2010.

Tata Steel after market hours on Wednesday announced a major five-year improvement programme at its IJmuiden steelworks in the Netherlands. The five-year programme with investment of euro 800 million is designed to sustain the plant's potential to be a world-class steelmaker, Tata Steel said in a statement. After the investment, the plant's annual capacity will rise to 7.7 million liquid steel by 2015-16, from current 7.2 million.

The total number of full-time jobs will reduce by 1,000 over the next four years. There will also be investment of staff training and development and enable the plant to meet the demand of the current complex market situation, the company statement said. "The IJmuiden works enjoys the great advantages of an ideal location with its own port for bringing in raw materials and close proximity to the market, excellent lay-out, an ability to be flexible in the use of raw materials, and a high level of technology and craftsmanship," said Dr Karl-Ulrich Köhler, MD & CEO, Tata Steel Europe.

JSW Steel fell 0.65%. The company said during market hours today that a cut in its steel production is expected to continue till the resumption of iron ore supplies from e-auction by 'Monitoring Committee' in terms of a Supreme Court order.

Hindalco Industries fell 0.24%. The company's advance tax payment reportedly rose a muted 7.14% to Rs 150 crore in Q2 September 2011 over Q2 September 2010.

Sterlite Industries, Sail, Hindustan Zinc, Bhushan Steel, and Jindal Steel & Power rose by between 0.57% to 3.5%.

LMEX, a gauge of six metals traded on the London Metal Exchange dropped 1.19% on Wednesday, 14 September 2011.

Print media shares declined on concerns a weak rupee could lift cost of newsprint imports. HT Media, Deccan Chronicle Holdings, Sandesh, D B Corp and Jagran Prakashan fell by between 0.05% to 3.86%

India's largest FMCG firm by sales Hindustan Unilever fell 0.94% to Rs 349.30. The stock had on Wednesday, 14 September 2011, hit a record high Rs 354. The company's advance tax payment reportedly rose 33.33% to Rs 200 crore in Q2 September 2011 over Q2 September 2010 .

Among other FMCG stocks, Nestle India, Dabur India, ITC and United Breweries shed by 0.03% to 2.25%.

Marico tumbled 10.12% after the company warned of below-expected profits in the next couple of quarters. Marico said rising prices of copra (dried kernel of coconut), which accounts for 40% of the total material cost for the group, may increase the company's expenses. Marico said that it will take the company couple of quarters to gauge the trend in the right manner and modify strategies accordingly. "In the recent past, we have taken several increases in retail prices of several of our products. However, the sustained run-up in input costs has, in some cases, still resulted in some shortfall in the coverage of the cost push," Marico said.

Considering the magnitude of the overall absolute price increases taken, the company may leave such shortfall as it is. This would affect operating margins in the short run, Marico added.

Cairn India rose 1.82% after company on Wednesday got shareholders' nod for acceptance of government conditions for transfer of its majority stake in the firm to mining giant Vedanta Resources. The oil and gas exploration company will now seek a no-objection certificate from state-run Oil and Natural Gas Corporation (ONGC), partner in its three producing blocks, including one at Rajasthan's Barmer. The firm will then get a formal nod from the government for the stake sale, as Cairn India saw 97.29% of its shareholders voting for the resolution that sought to accept the government's conditions.

India's largest oil exploration firm by sales ONGC fell 0.19%. The company, early this month, filed prospectus for about Rs 11000-crore follow-on public offer with the Securities and Exchange Board of India.

Oil India fell 0.27% as the stock turned ex-dividend today for dividend of Rs 19.50 per share for the year ended March 2011.

State-run oil marketing firms (PSU OMCs) rose on reports they may raise petrol prices by as much as Rs 3 per litre as the rupee touched two-year low against the dollar on Wednesday, 14 September 2011. Weak rupee has increased the cost of importing crude oil for PSU OMCs. BPCL and HPCL and rose by between 1.61% to 3.05%. Indian Oil Corporation fell 1.25%

Meanwhile, oil Secretary G C Chaturvedi on Wednesday said that though the government wants to decontrol diesel price, it will not do so till inflation comes down and confidence in the sustainability of higher economic growth returns. The government had freed petrol prices from state control in June 2010, but still controls prices of diesel and cooking fuels to help tame inflation.

Cals Refineries clocked highest volume of 2.88 crore shares on BSE. Sybly Industries (1.4 crore shares), Pipavav Defence (63.10 lakh shares), GTL (52.78 lakh shares) and Shree Ashtavinayak Cine Vision (51.40 lakh shares) were the other volume toppers in that order.

State Bank of India clocked highest turnover of Rs 172.07 crore on BSE. BGR Energy Systems (74.55 crore), Everonn Education (67.12 crore), JSW Steel (Rs 62.47 crore) and RIL (Rs 62.45 crore) were the other turnover toppers in that order.

Economic Affairs Secretary R. Gopalan today, 15 September 2011, said that the government has raised the limit of overseas borrowing for companies to $750 million from $500 million. Indian companies can also now raise loans up to $1 billion in Chinese yuan, Mr. Gopalan added. The relaxation of overseas borrowing rules will help Indian companies tap cheaper cash abroad amid rising credit costs in the local market. US and European countries have near-zero interest rates in a bid to support weak economic growth.

A recent India investor survey report prepared by J P Morgan Asset Management-ValueNotes expects benchmark Sensex to trade between 20,000 and 22,000 by end of this year. According to the report, the investment sentiment is affected by concerns such as recession, frequent hikes in interest rates and volatility in the domestic investment environment. Despite witnessing a 4.2-point decline from the last quarter, the 'Retail Investor Confidence Index' ranks the highest at 137.5 points. Retail investors' activity in mutual funds has improved 11% since the last quarter, the survey said. The survey was carried out from 22 July to 4 August 2011.

The survey also shows that investors are becoming cautious as preserving capital emerges as a popular investment strategy among retail investors (40%). However, 40% of investors, in comparison to 57% in March 2011, are expected to turn "somewhat aggressive" about their investment strategy over the coming six months.

An indicator of risk appetite from global financial major Bank of America Merrill Lynch has fallen to levels last seen in March 2009, according to a global fund manager survey from the firm. However, fund managers remain overweight on emerging markets, according to an emerging market fund manager survey from Bank of America Merrill Lynch also issued on Tuesday, 13 September 2011.

The proportion of fund managers who are bullish on emerging markets has risen from 27% last month to 30% now, said the report authored by Michael Hartnett, Kate Moore and Brian Leung. However, if the banking crisis in Europe spirals out of control, emerging market equities will be vulnerable to further sell-offs, the survey report said. Global fund managers have reduced the level of their underweight positions on India, according to the survey.

Finance Minister Pranab Mukherjee on Tuesday, 13 September 2011, said central banks in emerging economies have been forced to raise interest rates repeatedly as they battle high inflation, exposing them to volatile capital flows. "An issue of immediate concern for emerging economies is managing large capital flows," he said. "Large and volatile capital flows to emerging markets can be destabilizing as they lead to high exchange rate volatility and in some cases make it incumbent to maintain high levels of foreign exchange reserves as an insurance against sudden and large-scale flight of international capital."

Given the lackluster initial FII response to the government's sharply raising the ceiling of FII investment in long-term corporate bonds issued by the companies in the infrastructure sector in March 2011, the government on Monday, 12 September 2011, further relaxed the norms on FII investment in such bonds. The Finance Ministry said in a statement that FIIs can now invest in long-term infra bonds, subject a ceiling of $5 billion limit, which have an initial maturity of five years or more at the time of issue and residual maturity of one year at the time of first purchase by FIIs. These investments are subject to a lock-in period of one year. FIIs can trade amongst themselves in these bonds but cannot sell to domestic investors during the lock-in period of one year.

FIIs can also now invest, subject to a ceiling of $17 billion, in long-term infra bonds which have an initial maturity of five years or more at the time of issue and residual maturity of three years at the time of first purchase by FIIs. These investments are subject to a lock-in period of three years. During the three-year lock-in period, FIIs can trade amongst themselves but cannot sell to domestic investors. The Securities & Exchange Board of India (Sebi) is expected to issue notifications incorporating these changes in the scheme by 15 October 2011.

Sebi had in early August 2011 allowed Qualified Foreign Investors (QFIs) to subscribe to Mutual Fund Debt Schemes which invest in the infrastructure sector subject to a total overall ceiling of $3 billion within the total ceiling of $25 billion.

On the macro front, the recent steep slide in the rupee against the dollar has added to concerns of high inflation as India imports majority of its crude oil requirements. Lower rupee will raise cost of imports which could worsen the current account deficit.

Eleven out of twelve economists polled by Capital Market expect a 25 basis points (bps) hike in repo rate, the key short-term policy interest, from the Reserve Bank of India at its mid-quarter policy review on tomorrow, 16 September 2011. The Reserve Bank of India (RBI) has said that a change in its anti-inflationary monetary stance will be motivated by signs of a sustainable downturn in inflation. The Reserve Bank of India has raised its key policy rate 11 times in the past 18 month to tame high inflation.

The food inflation dipped marginally to 9.47% for the week ended 3 September 2011 year-on-year, coming down from the 9.55% registered in the previous week, according to official data released Thursday. The primary articles index, which has a 20.12% weight in the wholesale price index, rose by 13.04% in the week under review as compared to 13.34% rise in the previous week, according to data released by the commerce and industry ministry. The index for fuel and power rose 13.01% as against 12.55% in the previous week.

Inflation as measured by the wholesale price index (WPI) accelerated to 9.78% in August 2011 from the previous month's provisional reading of 9.22%, data released by the government on Wednesday, 14 September 2011, showed. The inflation reading exceeded market expectations. The government also revised upwards the inflation rate for June 2011 to 9.51% from a provisional 9.44% rise reported earlier.

Planning Commission deputy chairman Montek Singh Ahluwalia on Monday, 12 September 2011, said at a conference that private funding has to make up half of the infrastructure investment of $1 trillion planned for in the five years during 2012-2017. Prime Minister Manmohan Singh said at the conference that to overcome the fund crunch for infrastructure projects, the government has proposed to set up a $11 billion fund to help finance infrastructure projects. "We have also constituted a high-level committee to suggest measures necessary for financing our ambitious program in infrastructure development," Mr. Singh said.

Prolonged rainfall in the latter part of the season has helped ease concerns that this year's monsoon might drop below the long-term average after a brief lull in July, when the country usually receives a third of its monsoon rains. The monsoon was 3% above average till 7 September 2011, as per the latest data from Indian Meteorological Department (IMD). Most parts of the country received average to above-average rainfall this year, but the season was marked by both lulls and periods of intense rainfall in western and eastern regions.

While overall rainfall plays a key part in determining farm output, the timing and distribution of rains are also important to ensure a good crop. The unusual pattern of this year's rains may delay harvesting, affecting the yield from key summer-sown crops such as rice, oilseeds, sugarcane and cotton. Rice acreage as of 2 September 2011 was up 12% from last year at 35.75 million hectares.

A good monsoon season can typically boost rural farm incomes and have an impact on the wider economy through increased spending on consumer goods as well as reduced prices of food items. But food prices may not necessarily fall if delayed and excess rains in some regions affect crop yields.

Moody's Investors Services affirmed its Baa3 rating for India's foreign currency government debt and its Ba1 rating for local currency debt in an annual credit analysis released last week. The ratings firm assigned a positive outlook to India's rupee-denominated bonds, saying it will consider a unified Baa3 rating for all bonds if India improves its fiscal position and its commitment to strengthening the domestic market. The outlook for foreign-currency debt is stable.

The report was upbeat about India's ability to weather a global economic downturn. "While it is not immune to an international growth slowdown, the strength of domestic demand and the diversity of the economy provides a buffer against a deceleration in globally exposed sectors," the report said. It noted that India's foreign currency reserves equal four times its foreign debt obligations.

A debt-to-GDP ratio of 71% is cause for concern, as interest on this debt eats up 25% of India's revenues annually. However, "Moody's expects that continued GDP growth and incremental fiscal consolidation efforts will continue to lower the government debt/GDP ratio," the report said.

India's merchandise exports grew 44.2% in August 2011 from a year earlier, totaling $24.3 billion, sharply slowing from the previous month's pace, Commerce Secretary Rahul Khullar said last week. Imports in the just-ended month rose 41.8% from a year earlier to $38.4 billion, which widened the trade deficit to $14.1 billion from $11.1 billion in July.

European stocks surged on Thursday, 15 September 2011, as European political leaders insisted that Greece will remain in the euro zone, though shares in UBS AG dropped sharply after the bank said it had uncovered a $2 billion loss from unauthorized trading. Key benchmark indices in UK, France and Germany were up by 1.79% to 2.82%.

On a conference call, Greece's prime minister reportedly said on Wednesday, 14 September 2011, that the country is determined to meet all its obligations and that recent austerity measures will help Athens reach its 2011-2012 fiscal targets.

Adding to the relief for investors, Italian Prime Minister Silvio Berlusconi on Wednesday, 14 September 2011, won a confidence vote on an austerity plan for Italy, the euro zone's third-largest economy.

But the euro-zone debt situation remains highly uncertain, with the focus now turning to a meeting of European Union finance leaders to be held on the weekend, which will also be attended by US Treasury Secretary Timothy Geithner.

The Spanish government on Thursday sold 3.95 billion euros ($5.4 billion) worth of off-the-run, or non-benchmark, bonds due to mature in 2019 and 2020. The Treasury said it sold 1.5 billion euros of Oct. 2020 bonds at a maximum yield of 5.19% versus a yield of 5.22% in a February auction. The sale saw bids exceed supply twice over, compared to a bid-to-cover ratio of 1.54 in February. Spain also sold 1.4 billion euros of April 2020 bonds at a maximum yield of 5.05% versus 4.9% in a June auction. The auction was covered 2.01 times versus 1.9 in June. A sale of 1 billion euros of July 2019 bonds produced a maximum yield of 5% versus 4.07% in April 2009. The sale was covered 2.7 times versus 1.9 in the previous auction.

Most Asian stocks rose on Thursday, 15 September 2011, with sentiment buoyed by assurances from France and Germany that Europe will stand behind Greece as the nation struggles to cut its debt pile. The key benchmark indices in Singapore, Japan, South Korea and Taiwan rose by between 0.71% to 2.17%. However, key benchmark indices in China, Hong Kong and Indonesia were down 0.23% to 0.65%.

Trading in US index futures indicated that the Dow could gain 67 points at the opening bell on Thursday, 15 September 2011. US stocks surged on Wednesday, helped by reports of French and German leaders voicing support to help Greece remain in the euro zone. On the macro front, growth in US retail sales stalled in August while business inventories rose slightly less than expected in July, suggesting caution by firms about demand at the start of the third quarter.

The Federal Open Market Committee (FOMC) is scheduled to undertake a two-day policy review on US interest rates on 20 and 21 September 2011. It remains to be seen if the Federal Reserve announces further measures to revive the US economy. Among the options that the Fed may consider include another round of quantitative easing or QE3, the Operation Twist which is the purchase of long-term verses selling short-term bonds so as to lower long-term yields, and lowering the rate on excess reserves held by banks at the Fed in order to increase the monetary aggregates.