Rate Cut Expectation Helping Stocks To Rebound

European stocks advanced for the first time in three days, led by energy companies as crude oil climbed to within 50 cents of a record.

Eni SpA, Europe's fourth-largest oil company, and Total SA led gains. Royal KPN NV jumped after Merrill Lynch Co. recommended investors buy shares of the largest Dutch phone company. Tesco Plc rose after Lehman Brothers Holdings Inc. upgraded shares of the U.K.'s biggest supermarket group.

The Dow Jones Stoxx 600 Index added 0.7 percent to 364.87 at 8:01 a.m. in London. The Stoxx 50 and the Euro Stoxx 50, a measure for the euro region, also increased 0.7 percent.

The dollar traded near a record low against the euro after Fed officials signaled the need for lower interest rates. U.S. Treasuries fell for the first time in three days. The risk of owning European corporate bonds also dropped today, according to traders of credit-default swaps.

Asian shares rose, led by Cnooc Ltd. and Posco, on speculation higher prices for crude oil and steel will boost earnings. U.S. stocks closed little changed yesterday.

Eni climbed 1.3 percent to 25.20 euros. Total, Europe's third-largest oil company, added 1.1 percent to 55.11 euros.

Crude oil advanced after saboteurs blew up pipelines in Mexico, the fourth-largest exporter of oil to the U.S., and as investment funds bought contracts before an OPEC meeting today.

The contract for October delivery rose as much as 1.1 percent to $78.32 a barrel in after-hours electronic trading on the New York Mercantile Exchange, its seventh day of gains.

KPN jumped 3 percent to 11.

Tesco added 1.7 percent to 422.25 pence. Lehman Brothers raised its recommendation on the shares to ``overweight'' from ``equal-weight.''

MAN AG increased 1.5 percent to 100.70 euros. Europe's third-largest truckmaker said demand for its commercial vehicles climbed 38 percent from January through August, and that it plans to move its entire bus production from Germany to Poland, Reuters said, citing Anton Weinmann, head of MAN's commercial-vehicles division.

ArcelorMittal, the world's biggest steelmaker, rose 1.7 percent to 45.90 euros. Chief Executive Officer Lakshmi Mittal said the company plans to increase shipments by more than 20 percent to 131 million metric tons by 2012.

Asian steelmakers rose today. Hyundai Steel Co., South Korea's second-largest producer, raised prices for steel used in construction by 4.2 percent to 4.9 percent from today, Maeil

Business Newspaper reported, citing a company official it didn'tidentify. Dongkuk Steel Mill Co., the third-biggest, will lift prices for the fourth time this year starting Sept. 13, the newspaper said.

Merck KGaA rallied 4.5 percent to 96.38 euros after the German drugmaker that bought Serono SA in January said its Erbitux cancer treatment improved overall survival in patients suffering from lung cancer when combined with chemotherapy.

Cairn Energy Plc added 2.9 percent to 1,838 pence after the U.K. oil explorer returned to profit in the first half of the year because of proceeds from its initial public offering in India.

UPCOMING SESSION

With a lot of turmoil the past couple of weeks, hopeful eyes are seemingly on the Fed hoping once again for a helpful rate cut bailing out the financial markets. However this time it might be different. The economic trouble this time around is not due to a lack of liquidity or credit, quite the opposite actually.

But I guess the Fed will just hike rates again then, and the merry-go-round is complete. With an expected rate cut, companies should benefit as, lending for investments become cheaper, though at the moment a cut might already be priced in, thus be cautious of a potential decision to leave rates unchanged.




Company News:

Blockbuster Inc.: gained 28 cents, or 5.6 percent, to $5.25 in trading yesterday after the official close of U.S. exchanges. The world's largest video-rental chain said Chief Operating Officer Nick Shepherd will leave the company at the end of the month. The position is being eliminated.

Computer Sciences Corp.: The computer-services provider to NASA said accounting errors during the past 10 years will force it to report an additional $200 million in tax expenses. The shares declined 73 cents to $54.61 in regular trading yesterday.

Coventry Health Care Inc.: The medical-insurance provider boosted its 2007 profit forecast by 2 cents a share. Profit will be in the range of $3.95 to $3.99 a share, or $3.99 to $4.03 if a 4-cents-a-share debt refinancing charge is excluded. The shares declined 64 cents to $56.35 in regular trading yesterday.

G-III Apparel Group Ltd.: rose $1.54, or 9 percent, to $18.65 after the official close of U.S. exchanges yesterday. The maker of the Cole Haan and Jones New York apparel brands increased its earnings forecast, predicting profit of 98 cents to $1.03 a share in fiscal 2008. The company had earlier anticipated as much as 95 cents.

Lululemon Athletica Inc.: fell $1.66, or 4.5 percent, to $35 in extended trading yesterday. The Canadian yoga-clothing retailer said it expects to earn 5 cents to 6 cents a share in the third quarter.

Shuffle Master Inc.: fell $1.31, or 8.6 percent, to $14 in extended trading yesterday. The gaming-supply company reported profit of 8 cents a share in the third quarter.

Smart Modular Technologies Inc.: declined 51 cents, or 5.7 percent, to $8.51 in after-hours trading yesterday. The maker of computing memory modules said fourth- quarter profit would be in the range of 21 cents to 23 cents a share.

Take-Two Interactive Software Inc.: rose 65 cents, or 4.1 percent, to $16.40 in extended trading yesterday.

Wal-Mart Stores Inc.: The world's largest retailer said additional expenses from the sale of its money-losing German operations to Metro AG will lower second-quarter profit by $153 million. The shares declined 12 cents to $42.27 in regular trading yesterday.

Western Digital Corp.: rose 59 cents, or 2.6 percent, to $23 in extended trading yesterday. The world's second-largest maker of hard-disk drives boosted its fiscal first-quarter profit and sales forecasts. Earnings excluding some items will be 61 cents to 65 cents a share, compared with an earlier estimate of as much as 47 cents, the company said.

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