12:30PM European markets closed mixed.
European markets made a mixed performance at close as higher oil prices contributed to gains by commodities stocks but also pressured the automotive sector. BP added 1.1% amid reports that the company is set to launch a root-and-branch review of its global operations in response to last year''s Texas City refinery blast. Among auto stocks, German truck maker Man lost 5.3%, while Swedish counterpart Scania rose 5.9% after Scania rejected a $12.2 billion offer from Man. DaimlerChrysler dipped 0.8%, extending recent losses. U.S. stocks were steady Monday as investors were looking ahead to Wednesday’s FOMC meeting. London FTSE 100 advanced 0.2%, the French CAC 40 erased earlier losses to close flat at 5,146, while the German DAX 30 fell 0.2%.

Oil prices climbed back to over $64 after BP said that production from its giant Thunder Horse oil platform in the Gulf of Mexico would be delayed to 2008. Light crude October delivery jumped 82 cents to $64.15 a barrel. London Brent October delivery rose 74 cents to trade at $64.07. The U.S. dollar turned mixed versus major currencies. The euro traded at $1.2680, up from $1.2658. The dollar bought 118.03 yen, up from 117.59. The British pound stood at $1.8774, down from $1.8798. European gold rebounded from recent weakness. In London the precious metal traded at $579.50, up from $575.70 per ounce. In Zurich gold traded at $578.90, up from $574.70. Silver closed at $10.53, down from $10.55.


11:30AM Market averages lost direction ahead of Fed’s decision.
Cautious ahead of the Federal Reserve''s decision on interest rates, many investors remained on the sidelines, while stock markets lost direction. Most of the major sectors showed only modest moves. However, the semiconductor sector posted a significant strength, led by Freescale Semiconductor (FSL: chart) which rose 5.6% after the company agreed to be acquired by a private equity consortium for $17.6 billion. Oil service stocks also moved notably higher even though the price of oil turned lower after seeing some early strength. Researchers at Intel (INTC: chart) and the University of California claimed a breakthrough in creating lasers on computer chips, a development that could lead to sharp reductions in the cost of ultra fast data communications. Shares of Intel rose nearly 1%.

Among other movers, Applied Materials (AMAT: chart) gained 2.7% on a buyback program. Shares of Getty Images (GYI: chart) climbed 6% after J.P. Morgan upgraded its rating on the stock to Overweight from Neutral, citing valuation. At the same time, shares of Watson Wyatt (WW: chart) dropped 5.2% after UBS downgraded its rating on the company to Neutral from Buy. In late morning trading, the Dow Jones industrial average rose 0.96, or 0.01%. The Standard & Poor''s 500 index rose 1.71, or 0.13%, and the Nasdaq composite index rose 1.94, or 0.09%. Bonds fell, with the yield on the 10-year Treasury note at 4.83%, up from 4.79% Friday.


10:30AM The Sensex ends above 12,000 level in a steady trading.
The Sensex on BSE advanced 61.71 points, or 0.5%, to close at 12,071.30 – its highest finish, since 17 May 2006. The market-breadth was positive. For 1,287 shares that advanced on BSE, 1,208 declined and 81 shares were unchanged. The turnover on BSE was Rs 2,878 crore, lower than Friday’s Rs 3,456 crore. The turnover on NSE was Rs 6,090.19 crore.

Most Active

Reliance Industries shed 1% to Rs 1129.15 on 13.2 lakh shares traded on BSE. Reliance was the most-active stock on BSE with over Rs 150 crore followed by Zee with Rs 106 crore, Mahindra Gesco with Rs 99 crore, Escorts with Rs 97 crore and L&T with Rs 86 crore.

Indian gas transportation firm Gujarat Gas Company Ltd. announced on Monday it signed a contract to buy 1.65 million cubic metres of gas from a unit of Britian’s BG Group.

Gainers

Large-cap Hindustan Lever surged 3% to Rs 250.95 for the second day in a row on heavy volume of 11.3 lakh shares on BSE. Cigarette maker ITC gained nearly 3%, to Rs 187.75. Cellular services company Reliance Communications advanced 2.6% to Rs 326. Bharti Airtel, though, lost 0.6%, to Rs 443.25.

Cipla gained 2% to Rs 260.15. It obtained tentative U.S. FDA approval for Lamivudine and Zidovudine, both anti-AIDS drugs. Software service exporter, Infosys edged up 0.5% to Rs 1,818 and Wipro gained 0.5% to Rs 512.55. However, TCS lost 0.4% to Rs 999 and Satyam Computer shed 1% to Rs 820.35.

Engineering and construction company L&T advanced almost 2% to Rs 2,689.90. The stock advanced for the second day as investors focused on it ahead of the record date for a bonus issue. Housing finance companies witnessed an intense trading on hopes of continued strong demand for home loans. HDFC advanced 2.9% to Rs 1,370, Dewan Housing Finance gained 20% to Rs 78.90, and GIC Housing Finance jumped10.7% to Rs 45.90. Among these, Dewan Housing Finance spurted on a huge volume of 34.3 lakh shares.

Decliners

Metal stocks fell on expectation of a price cut after a recent steep fall in prices. Hindustan Zinc lost 2.3%, to Rs 580.50, Nalco sank 1.5%, to Rs 200, Sterlite Industries shed 1.2%, to Rs 440.60 and Hindalco lost 0.7%, to Rs 168. Tata Steel dropped over 1% to Rs 498.

Auto shares declined on profit-taking. Tata Motors lost 1.2% to Rs 858 and car maker Maruti Udyog slipped 1% to Rs 939. Tata Motors shed Rs 11 to close at Rs 859.


9:45AM Stocks opened in the negative on interest rate worries.
Stock markets opened in the negative, reversing from recent gains with investors awaiting Wednesday’s FOMC monetary meeting and seeking details of an incident that caused police to close the U.S. Capitol in Washington D.C. The market seemed nervous about whether the Fed will keep the benchmark interest rate at 5.25% as readings of economic growth and inflation remain mixed. In economic news, the Commerce Department reported that the nation''s current account widened in the second quarter to more than $218 billion, the second-highest gap in history. Optimism over gains in overseas markets and a $17.6 billion deal to buy Freescale Semiconductor (FSL: chart) proved insufficient to boost market sentiment. Shares of Freescale jumped 6.4%.

The auto sector moved lower after a news report that General Motors Corp (GM: chart) and Ford Motor (F: chart) had discussed a possible alliance. The Wall Street Journal online reported that the two auto makers have abandoned the possibility after brief discussions. Among other companies in focus, rural telecom services provider Citizens Communications (CZN: chart) lost 0.7% after it announced a cash and stock deal to buy Commonwealth Telephone Enterprises for more than $1.1 billion. Applied Materials (AMAT: chart) rose 2.6% on repurchasing 145 million shares of its common stock for roughly $2.5 billion as part of an accelerated buyback. In the first hour of trading, the Dow Jones industrial average fell 13.21, or 0.11%. The Standard & Poor''s 500 index fell 0.41, or 0.03%, and the Nasdaq composite index fell 0.72, or 0.03%. Bonds fell, with the yield on the 10-year Treasury note at 4.81%, up from 4.79% Friday.