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US markets gain on supportive economic reports

05 Oct 2012 Evaluate

The US markets climbed higher on Thursday, after weekly data offered a positive read on the US labor market, a day before the September employment report. The market mood was also optimistic after the release of minutes from the last Federal Open Market Committee meeting, which had central-bank policy makers saying they could manage the risk associated with its third round of monetary easing. Consumer confidence in the US climbed for a sixth straight week, the longest such stretch since early 2006, as Americans grew more secure about their finances. Also, Factory orders came in better than expected, falling 5.2% in August versus estimates calling for a 5.9% drop. However, the number of applicants for unemployment benefits bounced higher last week, underscoring the slow pace of job creation in the United States. Initial jobless claims climbed to a seasonally adjusted 367,000 in the seven days ended September 29, compared to an upwardly 363,000 in the prior week, the Labor Department stated.

In Europe, the European Central Bank left its benchmark interest rate unchanged at a record low at 0.75% for the third consecutive month. The central bank also kept its deposit rate at zero and the marginal lending facility rate at 1.5%. The Bank of England maintained the size of quantitative easing at £375 billion and the record low interest rate unchanged at 0.5%, as expected. The current rate is the lowest since the central bank was established in 1694. Portugal announced its fresh austerity measures to rein its budget deficit for 2013 that includes lifting income taxes. Finance Minister Vitor Gaspar stated that the tax measures included an additional 4% surcharge on annual income next year. Another measure announced by the government is cutting the number of income tax brackets to five from eight. Separately, the European Banking Authority disclosed that the EU-wide recapitalization exercise led to an increase of banks’ capital positions of more than €200 billion. The EBA stated that 27 banks with an initial shortfall that submitted capital plans have strengthened their capital position by €116 billion.

The Dow Jones Industrial Average gained 80.75 points, or 0.60 percent, to close at 13,575.40, the S&P 500 finished up by 10.41 points, or 0.72 percent at 1461.40, while the Nasdaq ended higher by 14.23 points, or 0.45 percent to settle at 3149.46.

Indian ADRs closed mostly in green on Thursday, ICICI Bank was up by 1.44%, Dr. Reddy’s Lab was up 1.29%, HDFC Bank was up 0.95% and Tata Motors was up by 0.40%. On the other hand, MTNL was down by 0.03%.

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