M&A's provide some relief for Dow, Nasdaq
New York: A series of multibillion-dollar acquisitions allowed Wall Street to post a modest advance on Monday. The mood, however, was one of caution with investors awaiting the Federal Reserve's decision on interest rates later in the week.

The technology-heavy Nasdaq composite index climbed 12.20, or 0.6 percent, to 2,133.67. Intel, Apple Computer, Yahoo, Gilead Sciences and Applied Materials advanced. Google, Cisco Systems, Hewlett-Packard, Oracle and eBay declined.

The Dow Jones industrial average rose 56.19, or 0.5 percent, to 11,045.28. The Standard Poor's 500 index was up 6.06, or 0.5 percent, at 1,250.56.

Investors were cheered by news from mining company Phelps Dodge that it will pay $40 billion in cash and stock for rivals Inco and Falconbridge, while steel maker Arcelor agreed to a $33 billion bid from Mittal Steel. Dow listed Johnson Johnson also agreed to buy fellow Dow component Pfizer's consumer products unit for $16.6 billion.

Merger-and-acquisition activity is indicative of economic health, for major companies would not go for major deals if they expect a decline in the economy. Bond prices were little-changed after last week's sell-off, with the yield on the 10-year Treasury note rising to 5.24 percent from 5.23 percent late Friday. The dollar fell against most major currencies, while gold prices were little changed.

Oil priced moved higher on concerns about a shipping glitch in the Gulf of Mexico. A barrel of light crude settled at $71.80, up 93 cents, on the New York Mercantile Exchange.
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U.S. economy: New home sales in U.S. show unexpected rise in May
Washington: Sales of new homes in the U.S. for the month of May have risen to the highest level this year as buyers went for deals in a market teeming with unsold homes.

Purchases increased 4.6 per cent to an annual rate of 1.234 million from 1.180 million in April, the US commerce department has said. The gain in sales confirms the Federal Reserve's forecast that the slowdown in housing won't be abrupt.

Purchases were forecast to slow to a 1.145 million pace in May from an originally reported 1.198 million rate in April, according to the median estimate in a Bloomberg News survey of 53 economists. Estimates ranged from an annual rate of 1.02 million units to 1.21 million units.

New home sales, which are recorded when a contract is signed and account for 15 percent of the total, are considered by economists a leading indicator of the housing market.

Home construction rebounded in May from a 13-month low, rising 5 percent, as builders worked on backlogged orders and used incentives such as free car leases to win new business. Building permits, a sign of future construction, declined for the fourth straight month.

Rising borrowing costs are putting off buyers. Mortgage rates will likely move even higher as the Fed extends its cycle of interest-rate increases.
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Rosneft to seek premium for its LSE float
London: Rosneft unveiled a premium price for its share sale on the London stock market yesterday, which would value Russia's state-owned oil group at up to $80bn.

A 500-page outline prospectus from Rosneft admitted that potential investors faced at least four serious cases of litigation and arbitration as well as political risks from policy shifts or other "instability" in Russia.

Rosneft gave a commitment to place its equity at between $5.85 and $7.85 per share, giving it a total value of between $60bn and $80bn. The valuation would be more than that of the country's biggest oil group, Lukoil.

The high valuation may be a result of significant interest from Asian investors, reportedly Chinese banks and Indian oil companies, such as Oil and Natural Gas Corporation (ONGC). Between 13% and 19% of the Rosneft stock is to be sold off and ONGC confirmed last night it was keen to buy, but no final decision had been taken.

The deal has been divided into two with an offering of old shares in Rosneft's parent company, Rosneftegaz, and a second part offering 400m new shares in global depository receipts.

The British financial regulator, the Financial Services Authority, has not yet given its approval to any official or final prospectus being published by Rosneft.
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Bank of International Settlement board expands
New Delhi: The Bank for International Settlements has announced the election of three additional central bank governors as members of its board of directors. They are Guillermo Ortiz, governor of the Bank of Mexico; Jean-Claude Trichet, president of the European Central Bank; and Zhou Xiaochuan, governor of the People's Bank of China. The term of office of each elected director is for an initial period of three years, which may be renewed. This enlargement of the Bank for International Settlements board is the first since 1994 and takes effect on July 1, 2006.
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