Trader's highlight

DJI - NEW YORK, March 26 (Reuters) - U.S. stocks rallied on Tuesday, with the Dow climbing more than 100 points to another record close and the S&P 500 coming within striking distance of its all-time closing high, as strong data on home prices and manufacturing fed optimism about the economy.

The Dow Jones industrial average initially surpassed its 2007 record closing high on March 5. Since then, the Dow has reached a series of subsequent nominal record highs.

In Tuesday's session, the S&P 500 made yet another attempt at a record, but failed to break above the all-time closing high for the second day this week.

At Tuesday's close, the S&P 500 was only 1.38 points below its lifetime closing high. On Monday, the benchmark index traded just a quarter point below its record closing high, which stands at 1,565.15 set on Oct. 9, 2007, and then retreated as investors sold some equities to cash in on gains in the wake of the news out of Europe.

Data showed U.S. single-family home prices rose in January at the fastest pace in more than six years, while long-lasting U.S. manufactured goods, also known as durable goods orders, shot up in February.

"I think the batch of data was enough to convince investors that the U.S. economy is on the right track," said Andrew Wilkinson, chief economic strategist at Miller Tabak & Co, in New York.

"At this point, it's hard to argue that anything will derail the U.S. economy, and that is boosting investors' confidence as they continue to load up on equities."

Still, investors may look for reasons to take profits, with the S&P 500 up nearly 10 percent so far this year. The rally has lifted the benchmark index near its all-time closing high, which it nearly reached on Monday.

The Dow Jones industrial average rose 111.90 points, or 0.77 percent, to end at 14,559.65, a record closing high. The Standard & Poor's 500 Index gained 12.08 points, or 0.78 percent, to finish at 1,563.77. The Nasdaq Composite Index advanced 17.18 points, or 0.53 percent, to close at 3,252.48.

"If there's a run on deposits, there may be a selloff (in U.S. stocks), but that could pose an excellent entry point to get into the market and take advantage of this rally," said Todd Schoenberger, managing partner at LandColt Capital, in New York.

But investors remained concerned about the negative implications of a financial rescue plan for Cyprus. They worried that it would serve as a template for other euro-zone economies requiring bailouts.

Banks in Cyprus will remain closed until Thursday and will then be subject to capital controls to prevent a run on deposits. President Nicos Anastasiades said late on Monday that a 10-billion-euro ($13 billion) rescue plan approved over the weekend was "painful" but essential to avoid economic meltdown. 

Oils - NEW YORK, March 26 (Reuters) - Brent crude rallied late on Tuesday to settle up more than $1 above $109 a barrel, after U.S. crude had surged to a five-week high above $96 a barrel, lifted by stronger manufacturing and housing data in the United States.

Brent's premium to U.S. crude  narrowed to as little as $12.52 a barrel at one point, the smallest in eight months. Brent's late rally moved the spread back to around $13 a barrel.

The spread has narrowed sharply from $23.45 in February. An improving U.S. economy and increased pipeline flows from the Midwest has supported the U.S. benchmark oil contract. Meanwhile, Brent's price has been pressured by increased supplies from the North Sea and concerns about Europe's economy, with Cypriot banks closed until Thursday.

Trading in Brent crude was choppy until the final hour of the session, when prices started to rally, eventually settling up $1.19 at $109.36 a barrel.

Brent has slid from above $119 a barrel in early February, but analysts and traders said market uncertainty may be abating.

U.S. crude settled up $1.53 at $96.34 a barrel, its highest closing price since Feb. 19.

"Brent had been limited by the concerns about Cyprus, but those seemed to give way to allow Brent to move up on the same supportive economic data from the United States," said Phil Flynn, analyst at Price Futures Group in Chicago.

U.S. IMPORTS LESS CRUDE

Surging U.S. crude production over the past two years has widened Brent's premium, as stockpiles have swollen around the U.S. contract's land-locked delivery point in Cushing, Oklahoma.

But increased pipeline capacity is now starting to move more oil from the Midwest to coastal refineries. Producers are also shipping more crude to premium-priced markets via rail cars.

"The erosion (of the U.S. crude premium) is because U.S. shale production is decreasing imports of light sweet crude grades," said Seth Kleinman, head of energy research at Citigroup.

Kleinman said Brent-U.S. crude spread could narrow to $10 per barrel but was unlikely to shrink much further because of the increased cost of moving U.S. oil supplies while the inland infrastructure is still improving.

Data from industry group the American Petroleum Institute late on Tuesday showed U.S. crude oil stocks rose 3.7 million barrels last week, much higher than forecast in a Reuters survey of analysts. Inventories of gasoline and diesel also both fell more than expected.

CBOT Soybean - Soybean futures on the Chicago Board of Trade rose on firm cash markets, technical buying and positioning ahead of key U.S. government stocks and acreage reports due out Thursday, traders said.

·         Port congestion in Brazil added support to nearby soybean  contracts, slowing the movement of a projected record-large Brazilian soy harvest into export channels.

 

·         Soybeans gained against corn on inter-market spreads.

 

·         Buying picked up as the benchmark May soybean contract broke through its 50, 200 and 20-day moving averages.

·         Domestic soy processors firmed their basis bids for  soybeans in some locations due to slow farmer selling. But some  crusher discounted offers for soymeal as demand slowed.

 

·         Global equity markets and other commodities such as crude  oil rose after more data pointed to an improving U.S. economy   and helped offset any fallout from the Cyprus  bailout.

 

·         Ahead of USDA's March 28 planting intentions and quarterly  stocks reports, the average estimate for March 1 soybean stocks  among analysts surveyed by Reuters was 935 million bushels, a  nine-year low, down from 1.374 billion bushels a year earlier.

 

·         Trade expects USDA to project record-large U.S. soybean  plantings for 2013. The average analyst estimate was for 78.394   million acres, which would surpass the 2009 record of 77.451  million. 

 

·         Agroconsult raised its estimate of Brazil's soybean  harvest to 84.4 million tonnes, from 84.2 million earlier this  month. 

 

·         But German analyst Oil World cut its forecast of Brazil's  soy crop to 81.3 million tonnes, from 82.0 million last month.

 

·         Oil World cut its forecast of Argentina's 2013 soybean harvest to 48.5 million tonnes, from 50.0 million previously, citing poor weather. 

BMD CPO - SINGAPORE, March 26 (Reuters) - Malaysian palm oil futures edged lower on Tuesday in rangebound trading amid concerns over lower export demand, while worries about the potential impact of a Cyprus bailout scheme also dented investor appetite for riskier assets.

Cyprus's deal with international lenders to shut down the country's second largest bank in return for 10 billion euros in rescue funds removed the immediate risk of a financial meltdown, but it also stoked fears of similar tough conditions for future bank rescues in the euro zone.

Palm oil came under more pressure as Malaysian exports fell by 7.5 percent for March 1 to 25 compared to a month ago due to a slowdown in crude palm oil shipments.

"The market is stuck and it's looking for further direction. We are looking at 2,400 ringgit for support," said a trader with a local commodities brokerage in Malaysia.

By market close, the benchmark June contract on the Bursa Malaysia Derivatives Exchange had lost 0.8 percent to 2,442 ringgit ($788) per tonne. Prices traded in a tight range from 2,426 to 2,452 ringgit.

Total traded volume stood at 22,264 lots of 25 tonnes each, thinner than the usual 25,000 lots as most investors were waiting for further trading cues.

Market players are counting on seasonally slower production in Malaysia, the world's second-largest palm producer, to bring stocks down this month.

Inventory level stood at 2.44 million tonnes in February with leading analyst Dorab Mistry forecasting a drop below 2 million tonnes in June.

Traders are also looking out for export data for the full month to see if demand is strong enough to offset imports and production. A surprise drop in shipments for the first 25 days of March due to lower exports to major buyers Europe and India may continue to weigh on the market.

In other markets, Brent fell slightly, remaining within its range of the past two weeks, as the effect of the Cyprus bailout faded and traders saw little direction for the market.

In vegetable oil markets, U.S. soyoil for May delivery lost 0.2 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange closed 0.4 percent lower.

Regional Equities - BANGKOK, March 26 (Reuters) - Thai stocks rose for a second day on Tuesday as investors bought telecom stocks on strong growth prospects while Indonesian shares climbed to their two-week high amid expectations the parliament would approve a new central bank governor.

Stocks in Singapore ,Malaysia and the Philippines ended higher while Asia was steady amid worries Cyprus's bailout could be a template applicable to larger states that might get into difficulty. 

Bangkok's SET index gained 1.3 percent to 1,544.03, further recovering from last week's 7.5 percent loss, led by a 4 percent gain in telecoms shares such as Total Access Communication and Advanced Info Service.

CIMB analyst Teerawut Kanniphakul said a launch of 3G service by telecom operators this year was fundamentally positive for the sector.

"Telecoms stocks are among good defensive plays in the event of high market volatility. The sector has a growth story with high dividend payouts," he said.

Jakarta's Composite Index  finished up 0.9 percent at 4,842.52, hitting a two week intraday high of 4861.76 at one point as market investors expected Finance Minister Agus Martowardojo to win parliament's approval to become the next head of the central bank.

"I think parliament will approve Agus Marto as the Central Bank Governor. The market should be positive, and at this point the market has already reflected the outcome," said Jakarta-based John Teja, director of Ciptadana Securities.

The Indonesian rupiah turned slightly higher on inflows to the country’s stocks and bond markets, traders said.