While you were sleeping: AIG repayments, US manufacturing lift Wall St

Friday 21st August 2009

American International Group Inc. shares soared, leading the Standard & Poor’s 500 higher, after the insurer said it expects to repay U.S. government aid.

AIG jumped 21% to US$32.30 after chief executive Robert Benmosche reportedly said it will be able to repay the government, which took 80% of the company last year for US$70 billion and extended a US$60 billion credit line.

Google Inc. rose 3.7% to US$460.41 after Goldman Sachs Group rated the search engine a ‘conviction buy’ on prospects for growth in Europe. Sears Holdings Corp. dropped 12% to US$65.00 after the biggest U.S. department store chain unexpectedly posted a second-quarter loss.

The S&P 500 rose 1.1% to 1007.37 and the Dow Jones Industrial Average climbed 0.8% to 9350.05. The Nasdaq Composite rose 1% to 1989.22.

Helping stocks rally, the Federal Reserve Bank of Philadelphia’s general economic index unexpectedly rose this month, adding to signs the world’s biggest economy may climb out of recession. The index rose to 4.2 in August from minus 7.5 in July.

The Conference Board’s leading economic indicators, which indicate the pace of the economy out six months, rose 0.6% in July.

Labor Department figures showed the number of people collecting unemployment benefits was little changed at 6.24 million. Jobless claims rose to 576,000 last week from a revised 561,000 seven days earlier.

Treasury Secretary Timothy Geithner said the U.S. economy has “a long way to go, but we are starting to see signs of stability, and these signs mark the first steps to recovery.”

Shares rose in Europe as data in the U.S. lifted optimism about global growth. The Dow Jones Stoxx 600 gained 1.4% to 229.65. Among regional benchmarks, the U.K.’s FTSE 100 gained 1.4% to 4756.58, Germany’s DAX 30 gained 1.5% to 5311.06 and France’s CAC 40 rose 1.6% to 3505.32.

The U.K. reported an 8 billion pound budget deficit in July, as the recession eroded tax revenue and more people sought welfare.

The U.S. dollar and the yen weakened as better-than-expected manufacturing data in the Philadelphia area helped stoke investors’ risk appetite.

The euro strengthened to $1.4253from $1.4224 yesterday while the yen slipped to 134.19 per euro from 133.80. The yen was little changed at 94.12 per dollar.

The Dollar Index, which tracks the greenback against a basket of six currencies, slipped 0.1% to 78.37.

Crude oil for September delivery was little changed at US$72.48 a barrel on the New York Mercantile Exchange.

Copper futures for December delivery slipped 0.6% to US$2.754 a pound in New York, after the Labor Department figures showed an increase in jobless claims.

Businesswire.co.nz

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