9:00AM Market futures traded flat. The Big Three received a broker upgrade
U.S. stock futures traded near the flat line Friday, with investors digesting broker upgrades of the Big Three automakers and a jump by crude oil prices. Hedge fund operator Fortress Investment Group was also in focus, as the market awaited its first trading day after it priced its initial public offering late Thursday. General Motors (GM: chart) rose 2.6% and Ford Motor (F: chart) climbed 4% after the car makers were upgraded by Deutsche Bank to buy from hold, on hopes for favorable healthcare negotiations. DaimlerChrysler (DCX: chart) was upgraded to buy at Citigroup ahead of its restructuring plan for Chrysler. Fortress Investment Group (FIG: chart) priced its initial public offering at $18.50 per Class A share, the top end of its indicated range. The hedge fund operator is due to kick off trading Friday.

In other broker moves, J.P. Morgan raised its rating of the U.S. semiconductor sector to bullish from cautious on expectations that several leading indicators will begin to improve in the second quarter. Leading chip maker and Dow member Intel (INTC: chart) was up 0.3% in the pre-open. On the corporate news front, Alcatel-Lucent (ALU: chart) said it would cut 12,500 jobs, over 3,000 more than it originally planned. It reported Q4 operating profit decline in line with expectations. The stock was down 0.7% ahead of the open. Among other pre-market highlights, Hasbro (HAS: chart) reported better-than-expected Q4 earnings and revenue and lifted its quarterly cash dividend by 33%. Gateway Inc. (GTW: chart) reported a 9% revenue decline. Quiksilver (ZQK: chart), the sports apparel maker, cut its forecast. S&P 500 futures inched 0.20 of a point higher to 1,454.10 and Nasdaq 100 futures were unchanged at 1,821.75. Dow industrial futures were also unchanged.


8:30AM Laidlaw International agreed to be bought by the U.K.’s First Group for $3.6 B.
Laidlaw International Inc. (LI: chart) agreed to be acquired by the U.K.''s First Group Plc in a deal worth $3.6 billion, including the assumption of around $700 million of debt. First Group said it will pay $35.25 a share for Laidlaw, the biggest school and intercity bus operator in the U.S. The deal represents an 11% premium to Thursday''s closing price.

The U.K. group, which operates bus and rail services across Britain, said the deal will create a more robust business and should result in annual cost savings of around $70 million. But First Group said that Laidlaw''s Greyhound intercity bus service could be sold off after the deal as it may not fit with its own operations. Greyhound has around 11,000 staff and contributed to roughly 40% of the U.S. group''s $3.1 billion revenue in fiscal 2006.

Laidlaw agreed to pay First Group a fee of up to $78 million in certain circumstances if the deal does fails, while First Group would pay a break fee of $43.35 million. Shares in First Group gained 4.5% in London. Laidlaw shares jumped 8.8% in pre-market trading.


7:30AM NY-6:30PM Mumbai Sensex declines Friday on inflationary data.
Sensex in India reached a new intra-day high of 14,724 but quickly lost the momentum and fell to close at 14,724. Weekly measure of wholesale price index fueled the fears of interest rate hike. Stocks in banks, cement and IT sectors fell. Rupee rose. Bajaj Auto soared 17% on news reports of various Bajaj related financial firms to be consolidated. Foreign investors continue to add new funds in the Mumbai market.

Trading Highlights

The 30 share index BSE Sensex lost 114 points to close at 14,538.90. In the early morning trading the index rose to a new intra-day high to 14,724 but quickly lost its upward momentum. The index traded with 466 points volatility and lost ground in the afternoon trading. Of the thirty stocks in the index only seven stocks rose and the rest declined. Market breadth was weak and in trading on BSE 622 stocks gained, 2,043 lost and only 45 stocks were unchanged.

On BSE trading market turnover declined to Rs 4,332 crore from Rs 5,136 crore in Thursday trading. According to preliminary international trading data, foreign institutions invested net of Rs 2,211 crore between February 2nd and 7th of this year.

Reliance Industries, Zee Telefim, Reliance Communication, Larsen & Toubro and State Bank of India were the most active stocks based on market turnover statistics reported by BSE daily report.

Economic News

The rising inflation index spoiled market mood. Annualized wholesale price index at the end of last week was reported at 6.58%. Inflation index in the prior week was reported at 6.11%. Rising food prices, land and housing cost and energy prices have been fueling inflation. At the end of Jan, Reserve Bank of India raised its key lending rate by 25 basis points and left the impression that future rate hikes may be necessary to curb inflation.

Stocks on the Rise

Weak trading across various market caps kept the list of stocks on the rise short.

Zee Telefim surged 5.33% to Rs 361. Oriental Bank gained 2.7% to close at Rs 232.40. CMC Limited, Punjab Llyod and Wyeth Ltd added close to 2%.

Bajaj Auto managed to close higher 1.3% to Rs 3,047 in BSE trading. Market expects that by the end of the fiscal year various subsidiaries will be consolidated under Bajaj Auto Finance. The stock of BAF rose 17% to close at Rs 432. JK Synthetic and NELCO limited surged 11% and 10% respectively.

Of the Sensex stocks, NTPC managed to gain 1.3% to close at Rs 144. Tata Motors continued its rise for the second day and rose 1.2% to close at Rs 906, Wipro advanced 0.8% to Rs 640 and HDFC added 0.7% to Rs 1,820.