1:00PM NY, 5:00 PM Frankfurt European markets closed higher, led by oil and telecoms stocks.

European stock markets were volatile during Thursday trading session, but closed higher, led by phone and oil companies. Telecommunications companies, such as Telefonica, gained on positive comments from JP Morgan Chase & Co about the earnings outlook for the industry. Energy stocks posted considerable strength, as oil prices climbed to a record high. Across the region, France advanced 0.5%, followed by the U.K., up 0.4% and Germany, rising 0.2%.

Among notable European gainers, Spanish Telefonica rose 2.3%, Swiss chocolate maker Nestle gained 1.8% and snuff-maker Swedish Match climbed 2.3%.

In Frankfurt Deutsche Telekom added 1.1%, offsetting losses from microchip maker Infineon Technologies and Lufthansa. Semiconductor Infineon dropped 1.8% after U.S. Texas Instruments narrowed its financial targets. Airline carrier Lufthansa sank 3.5%, following a downgrade at Morgan Stanley. Among other notable gainers, tire maker Continental gained 1.5%, while Merck rose 2.2% after Credit Suisse Group raised it projection for the drugmaker.

In Paris the advance was paced by Bouygues, Valeo and Clarins. Bouygues rose 4.2% on speculations that Orascom Telecom Holding SAE is interested in acquiring Bouygues Telecom. Valeo jumped 4.3% after Merrill Lynch & Co. confirmed its ‘’buy’’ rating on the stock. Clarins surged 8.3% on deal speculations. Shares of JC Decaux rose 4.7% on strong profit.

The upward move was limited by ArcelorMittal which dipped 1.2%, as the euro and crude-oil hit fresh all-time highs Air France lost 3.4% on broker downgrade.

In London telecoms stocks led advancers, with Vodafone, the world''s biggest mobile-phone company, rising 1.9%. Irish low-cost airline Ryanair Holdings rose 1.3%after Deutsche Bank lifted its stock to buy from hold.


11:30AM U.S. market averages reversed to gains on rate-cut optimism.

U.S. market averages recovered from earlier weakness although crude oil inventories dropped more than expected and the U.S. dollar hit a record low against the euro. Stocks were also given a boost by continuous optimism that the Fed will cut interest rates at its next monetary policy meeting on Sept. 18th.

The price of oil surged after the petroleum report, reaching a record intraday high of $79.29 a barrel. Airline stocks moved sharply lower on the news, while oil and natural gas stocks posted solid advance. Dow member Exxon Mobil (XOM: chart) advanced nearly 1%. In the metals sector, Aluminum Corp. of China (ACH: chart) dropped 10% after Alcoa (AA: chart) said it sold a stake in the company for HK$15.3 billion ($2.0 billion).

The tech-heavy Nasdaq was pressured by weakness among technology stocks, led by Texas Instruments (TXN: chart), as the world''s biggest cell-phone chipmaker fell 1% after tightening its Q3 financial targets. Following the news, cell phone maker Nokia (NOK: chart) slipped 2.7%.

At the same time, medical device maker Cardica Inc. (CRDC: chart) soared 22% after getting a key European approval for one of its devices. Drug maker Merck & Co. Inc. (MRK: chart) weighed on the Dow with a decline of 1.3%. Amgen (AMGN: chart) provided support to the bioteck sector, moving up 4.2% on broker upgrade.

On the economic news front, Mortgage Bankers Association survey showed that mortgage application volume rose 5.5%, refinance volume jumped 6%, and the purchase index increased 5.2%.

The Dow Jones industrial average rose 29.84, or 0.22%, to 13,338.23 after soaring 180 points on Tuesday. The Standard & Poor''s 500 index futures rose 5.01, or 0.34% to 1,476.50, and the Nasdaq composite index rose 12.31, or 0.47%, to 2,609.78. Bond prices slipped. The yield on the 10-year Treasury note, which moves opposite its price, rose to 4.40% from 4.37% late Tuesday.

U.S. oil inventories dropped.

Wednesday morning, the Energy Information Administration released its report on U.S. oil inventories in the week ended September 7, showing that crude oil inventories fell much more than analysts had been expecting. The report showed that crude oil inventories fell by 7.1 million barrels to 322.6 million barrels, although they remain above the upper end of the average range for this time of year. Analysts had been expecting a much more modest decrease of about 2.5 million barrels. The EIA, the statistical arm of the Energy Department, noted that crude oil imports averaged over 9.6 million barrels per day last week, down 674,000 barrels per day from the previous week.

Additionally, the report showed that gasoline inventories fell by 700,000 barrels and are well below the lower end of the average range. The drop in gasoline stockpiles came roughly in line with analyst estimates. On the other hand, the EIA said that inventories of distillate fuels, which include heating oil and diesel, increased by 1.8 million barrels, roughly in line with analyst estimates. Distillate fuel inventories are in the upper half of the average range for this time of year. The report also showed that the refineries operated at 90.5 percent of their operable capacity last week, down sharply from 92.1 percent in the previous week. Analysts had expected a much more modest decrease to a 92.0 percent capacity utilization rate.


09:45AM Wall Street opened lower on profit-taking and TI trimmed sales forecast.