RTRS-UPDATE 1-Morgan Stanley closes CBOT soy long recommendation

CHICAGO, March 29 (Reuters) - Morgan Stanley is ending its recommendation to hold a long position in Chicago Board of Trade November soybean futures due to concerns that an upcoming U.S. Agriculture Department report could send a bearish shock to the market, the investment bank said on Thursday.

"The response to a bearish surprise tomorrow could be much larger than to a bullish one," analyst Hussein Allidina said in a note to clients.

Large speculators recently built a record long position in CBOT soybeans, according to Commodity Futures Trading Commission data, showing that the market is primed for a sell-off if the government report on planting and supplies comes in higher than expected, the note said.

The managed money's large net position also indicates little upside potential in the event of a bullish report.

Morgan Stanley initiated the long recommendation in November 2010, when the November soybean contract was trading at $11.31 a bushel. November soybeans were down 9-1/2 cents a bushel at $13.11 in Thursday afternoon trading.

November soybeans have risen nearly 9 percent so far this year as the market has attempted to buy acres from corn

USDA will release its prospective plantings and quarterly grain stocks report on Friday morning at 7:30 a.m. CDT (12340 GMT).

Trader's Highlight

DJI- NEW YORK, March 29 (Reuters) - U.S. equities pared most losses in a late-day surge on Thursday, driven by investors snapping up big-cap names and the notion that concerns about the jobs picture, which helped spur the buying of safe-haven government debt, were overblown.

New U.S. claims for jobless benefits fell only slightly last week, according to the Labor Department, missing forecasts for a greater decline, while the prior week's number was revised up.

Some investors said the data undercut optimism about U.S. job growth, and Federal Reserve Chairman Ben Bernanke said again that the U.S. economy's recovery was relatively weak.

The Dow Jones industrial average <.DJI> closed up 19.61 points, or 0.15 percent, at 13,145.82. The Standard & Poor's 500 Index <.SPX> fell 2.26 points, or 0.16 percent, at 1,403.28. The Nasdaq Composite Index <.IXIC> slid 9.60 points, or 0.31 percent, to 3,095.36.

NYMEX- NEW YORK, March 29 (Reuters) - U.S. crude futures fell on Thursday for the second straight session as increasing talk from consumer nations about a possible strategic oil reserves release and rising crude oil stockpiles in the United States prompted end-of-quarter selling.

France believes there is a good chance of a U.S.-Europe accord on the release of strategic oil reserves, Prime Minister Francois Fillon said on Thursday.

He was commenting in an interview on France Inter state radio and Fillon's remarks came after French ministers revealed on Wednesday that Paris was in talks with the United States and Britain on a possible release of strategic oil stock.

The increased chatter about reserves releases comes as the West tightens sanctions on Iran in an effort to curb Tehran's nuclear enrichment program and as many consuming countries scramble to find alternatives to Iranian crude oil.

On the New York Mercantile Exchange, May crude fell $2.63, or 2.5 percent, to settle at $102.78 a barrel, having traded from $102.13 to $105.70.

CBOT SOYBEANS- Chicago Board of Trade soybean futures fell 1 percent, as positioning ahead of the release on Friday of U.S. Agriculture Department's March plantings and quarterly stocks reports dominated trading.

Traders noted a wave of long liquidation as investors sought to close out positions ahead of the report.

FCPO- SINGAPORE, March 29 (Reuters) - Malaysian palm oil futures slipped for a second day on Thursday, as traders booked more profit from a rally this week, although losses were curbed by soybean supply fears in South America and firm export outlook for palm oil.

Palm oil could not breach the psychological 3,500 ringgit level this week, especially when market players were cautious ahead of the U.S. Department of Agriculture's quarterly inventory report and planting forecast due on Friday.

"We see that palm oil prices have come to a one-year high, so it's not surprising that some profit-taking activities start to kick in, especially now as we are at the end of the month, some book squaring is going to happen," said Ker Chung Yang, an
analyst at Phillip Futures in Singapore.

"There could be some positioning ahead of this coming Friday's reports. Although the market is speculating that there could be more planted acres for corn, the reports could turn out to be a surprise and soybean prices could subsequently be
weighed on that."

Benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange closed down 0.5 percent at 3,456 ringgit ($1,127) per tonne. This week the market went as high as 3,497 ringgit, a level unseen since March 10 2011.

Traded volumes were thin at 20,280 lots of 25 tonnes each, compared to the usual 25,000 lots.

REGIONAL EQUITY- March 29 (Reuters) - Southeast Asian stock markets ended slightly firmer on Thursday in moderate volume as investors cautiously bought risky assets amid growing concerns over slowing economic growth in China and the United States.

In Singapore, big caps drove down the market, with a loss of 1.4 percent in United Overseas Bank and a fall of 1.2 percent in casino operator Genting Singapore .