Trader's highlight

Dow Jones - NEW YORK, Feb 21 (Reuters) - U.S. stocks fell for a second straight day on Thursday and the S&P 500 posted its worst two-day loss since November after reports cast doubt over the health of the U.S. and euro-zone economies.

But a late-day rally helped stocks erase some of their losses with most of the pullback concentrated in the technology- heavy Nasdaq. The move suggested investors were still willing to buy on dips even after the sharp losses in the last session.

In Europe, business activity indexes dealt a blow to hopes that the euro zone might emerge from recession soon, showing the downturn across the region's businesses unexpectedly grew worse this month.

"The PMI numbers out of Europe were really a blow to the market," said Jack De Gan, chief investment officer at Harbor Advisory in Portsmouth, New Hampshire. "The market was expecting signs that recovery is still there, but the numbers just highlighted that the euro-zone problem is still persistent."

U.S. initial claims for unemployment benefits rose more than expected last week while the Federal Reserve Bank of Philadelphia said its index of business conditions in the U.S. mid-Atlantic region fell in February to the lowest in eight months. 

The Dow Jones industrial average fell 46.92 points, or 0.34 percent, to 13,880.62 at the close. The Standard & Poor's 500 Index lost 9.53 points, or 0.63 percent, to 1,502.42. The Nasdaq Composite Index  dropped 32.92 points, or 1.04 percent, to close at 3,131.49.

The two-day decline marked the U.S. stock market's first sustained pullback this year. The Standard & Poor's 500 has fallen 1.8 percent over the period and just managed to hold the 1,500 level on Thursday. Still, the index is up 5.3 percent so far this year.

The abrupt reversal in markets, which started on Wednesday after minutes from the Federal Reserve's January meeting suggested stimulus measures may end earlier than thought, looks set to halt a seven-week winning streak for stocks that had lifted the Dow and the S&P 500 close to all-time highs.

Wall Street will soon face another test with the upcoming debate in Washington over the automatic across-the-board spending cuts put in place as part of a larger congressional budget fight. Those cuts, set to kick in on March 1 unless lawmakers agree on an alternative, could depress the economy.

Of the 427 companies in the S&P 500 that have reported results so far, 69.3 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters, according to Thomson Reuters data through Thursday morning.

Fourth-quarter earnings for S&P 500 companies are estimated to have risen 5.9 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

About two stocks fell for everyone that rose on the New York Stock Exchange and Nasdaq. About 7.64 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, well above the 20-day moving average of around 6.6 billion shares.

Brent Crude Oil - NEW YORK, Feb 21 (Reuters) - Brent crude futures fell more than 1 percent on Thursday, pressured by weak economic data and the possibility that the U.S. Federal Reserve might curb its economic stimulus program.

Brent April crude fell $2.07, or 1.79 percent, to settle at $113.53 a barrel, having traded from $113.32 to $115.31.

CBOT Soybean - Soybean futures on the Chicago Board of Trade rose for a fourth straight session, with front months gaining against back months on fresh export demand for dwindling supplies of old-crop U.S. soybeans, traders said.    

* USDA said private exporters reported the sale of 130,450 tonnes of U.S. soybeans to unknown destinations, including 75,450 tonnes for 2012/13 delivery and 55,000 tonnes for 2013/14.

 

·         Trade talk swirled that China has bought up to nine   cargoes of old-crop U.S. soybeans, including some of which were switched to the United States from Brazilian origin.

 

·         Further support stems from concern about grain shipping  delays in Brazil, where two to three times more ships are lined   up to load at the country's two main ports than a year earlier, and a six-hour dock workers strike is set for Friday.

·         Soymeal follows soybeans, gaining against soyoil on  meal/oil spreads on ideas that port congestion and logistics  issues in South America will boost export demand for U.S. soybeans and meal.

·         Trade expects USDA's weekly export sales report on Friday  to show U.S. soybean sales in the latest week at 300,000 to  600,000 tonnes (old and new crop years combined), and soymeal  sales at 100,000 to 200,000 tonnes. 

 

·         CBOT March options expire on Friday and traders are eyeing  open interest in calls at the $15.00 strike, which could act as   a magnet drawing futures prices to that level.

 

·         CBOT March soybeans trading above all key moving averages; traders eyeing psychological resistance at $15.00.

BMD CPO - KUALA LUMPUR, Feb 21 (Reuters) - Malaysian palm oil futures slipped on Thursday, tracking weak U.S. and China vegetable oil markets and as investors booked profits from prices which have gained almost two percent so far this week.

U.S. soy prices slid on Thursday from a selloff in commodities amid speculation that a hedge fund had been forced to liquidate assets, rattling sentiment across major commodity markets and weighing on palm prices.

But major losses in palm oil were prevented by hopes that seasonally slowing output in Malaysia, the world's No.2 producer, will help ease stocks despite sluggish exports.

"At the end of the month exports may be slightly down compared to January, but it will not have much impact because production is slowing by more than ten percent," said a trader with a foreign commodities brokerage in Malaysia.

"I think there will be a slight drawdown in end-stocks again," the trader added. Inventory levels in January had inched down 1.9 percent from record highs of 2.63 million tonnes.

"For today, the immediate support is 2,500 ringgit and resistance is 2,550 ringgit. There is a bit of profit taking and market correction."

The benchmark May contract  on the Bursa Malaysia Derivatives Exchange slipped 1.1 percent to close at 2,536 ringgit ($814) per tonne. Prices traded in a tight range between 2,513 and 2,543 ringgit.

Total traded volumes stood at 16,996 lots of 25 tonnes each, lower than the typical 25,000 tonnes.

Technicals showed a bullish target at 2,620 ringgit per tonne will only be valid when Malaysian palm oil climbs above a resistance at 2,593 ringgit, said Reuters market analyst Wang Tao.

Palm oil products shipped in the first twenty days of the month showed signs of slowing down from robust exports in earlier weeks, cargo surveyors data showed on Wednesday.

Oil extended the previous session's decline on Thursday to a three-week low on concern the U.S. Federal Reserve might stop its stimulus program sooner than thought and on the prospect of a rise in Saudi Arabian oil output.

In other vegetable oil markets, the U.S. soyoil for May delivery fell 0.4 percent in early Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange closed 1.4 percent lower.

Regional Equities - Feb 21 (Reuters) - Southeast Asian stock markets mostly fell on Wednesday with Indonesia coming off record high close and Thailand retreating from a 19-year high, on worries that the U.S. Federal Reserve could prematurely wind down its bond-buying programme.

The minutes from the Fed's January meeting showed many officials voiced concern over potential costs of more asset purchases, suggesting that the programme, known as QE, may slow before the pick-up in hiring it was intended to deliver.

Indonesia , after hitting a record high of 4,656.13 points in intraday trading, ended tad weaker, falling 0.04 percent to 4,632.04 from the previous day's all-time closing high, led by mining and finance shares.

Jakarta also enjoyed a net foreign inflow of $78.5 million on Thursday.

Thailand  fell 1.2 percent to 1528.74 from a 19-year high, led by 2.3 percent fall in top energy firm PTT PCL .

Singapore  fell 0.64 percent, weighed by a 2.7 percent fall in property developer CapitaLand Ltd after it posted a 45 percent drop in fourth-quarter net profit.

Vietnam , the region's best performer, plummeted as much as 3.7 percent to close at a near four-week low led by banks.

Bucking the trend, the Philippine index  hit a record closing high of 6,667.41 points with a 0.28 percent gain, while Malaysia's edged up marginally with a 0.04 percent gain helped by $17.96 million net foreign buying.

FOREX - NEW YORK, Feb 21 (Reuters) - The euro fell to a six-week low against the dollar and a three-week trough against the yen on Thursday, pressured by disappointing euro zone economic data and by uncertainty ahead of Italy's election at the weekend.

The dollar rose to a 5-1/2-month high against a basket of currencies, a day after minutes from the Federal Reserve's last meeting bolstered expectations the central bank may pull back from its bond-buying program sooner rather than later.

The downturn in the euro zone worsened unexpectedly this month, especially in France. The weak data kept alive chances of an interest rate cut by the European Central Bank in coming months.

"Today's data stands in sharp contrast to the consensus market expectations that the region will see turnaround in growth as soon as Q1 of this year," said Boris Schlossberg Managing Director of FX Strategy at BK Asset Management in New York.

Concerns that a fragmented parliament after Italy's national election could trigger a sell-off in the peripheral euro zone bond market also weighed on the euro.

Nichi Vendola, leader of the Left Ecology Freedom party (SEL) and frontrunner in polls for Italy's election, said the country should seek revisions of European Union budget rules.

That raised fears that Vendola will push a centre-left government too far to the left and prevent a coalition agreement with outgoing Prime Minister Mario Monti, which is seen as the most market-friendly election outcome.

RTRS - Lanworth sees 2013 and 2014 U.S. soy harvest up 15 percent

CHICAGO, Feb 20 (Reuters) - Crop forecaster Lanworth on Wednesday said it expects U.S. soybean production to rise to 3.465 billion bushels in the 2013/14 crop year, based on average yield of 43.1 bushels per acre.

"Rotation practices, lack of increase in expected corn profitability, and likely planting pace indicate that soybeans could capture a greater share of total corn and soybean area than last year and could see stronger planted area gains than corn in 2013," Lanworth said in a report.

It was Lanworth's first U.S. soybean forecast for the 2013/14 crop year. In the 2012/13 crop year, USDA reported U.S. soybean production was 3.015 billion bushels with an average yield of 39.6 bushels and plantings of 77.2 million acres.

Lanworth trimmed its outlook for U.S. corn production to 13.7 billion bushels, down from 13.8 billion bushels in a report issued two weeks ago, due to small changes to Lanworth's corn plantings outlook.

The forecaster also cut its forecast of U.S. wheat production to 1.910 billion bushels from 1.932 billion.

In South America, Lanworth reduced its expectations for corn and soybean production in Argentina following extreme dry conditions in January and early February.

The company cut its forecast for Argentine soybean production to 49.6 million tonnes from 51.6 million. It lowered its Argentine corn production estimate to 25.0 million tonnes from 25.1 million.

Lanworth raised its forecast for Brazil corn production to 75.8 million tonnes from 75.6 million and its estimate of Brazil soybean production to 81.0 million tonnes from 80.3 million.

The forecaster's estimates of wheat harvest in Russia and Ukraine were left unchanged, at 49.9 million tonnes and 23.0 million, respectively. Its forecast for Kazakhstan wheat production was lowered to 15.5 million tonnes from 16.5 million.

Lanworth is a brand of Thomson Reuters Commodities Research and Forecasts. A Lanworth spokesman said the reported estimates are the midpoints of confidence ranges and are best understood in the context of Lanworth's full report.

Trader's highlight

Dow Jones - NEW YORK, Feb 20 (Reuters) - U.S. stocks fell the most in three months and a key gauge of market volatility spiked on Wednesday after minutes from the U.S. Federal Reserve's most recent meeting suggested the central bank may slow or stop buying bonds sooner than expected.

The minutes from the Fed's January meeting showed many officials voiced concern last month over potential costs of more asset purchases, suggesting that the program, known as QE, may slow before the pickup in hiring it was intended to deliver.

"What Wall Street wants to hear is an absolute sign that the Fed will continue with QE for the indefinite future. When it says we may end it faster, that just raises the uncertainty, and the market hates that," said Todd Schoenberger, managing partner at LandColt Capital in New York.

Wednesday's slide marked a rare return of nervousness to markets after their solid march higher this year. The CBOE Volatility index or the VIX, a measure of investor fear, jumped 19.3 percent - the biggest daily gain for the VIX since November 2011.

In a sign of broad market weakness, the number of declining stocks outnumbered advancers by a ratio of more than 3 to 1 on both the New York Stock Exchange and the Nasdaq. The volume of traded shares hit its second-highest level this year.

A slide in the commodity sector also weighed on stocks. Spot gold dropped to the lowest level since July, benchmark industrial metal copper fell to a one-month low, and U.S. crude oil futures shed more than $2 a barrel.

On Wall Street, the Dow Jones industrial average  dropped 108.13 points, or 0.77 percent, to 13,927.54 at the close. The Standard & Poor's 500 Index  fell 18.99 points, or 1.24 percent, to 1,511.95. The Nasdaq Composite Index  lost 49.19 points, or 1.53 percent, to end at 3,164.41.

For the benchmark S&P 500, the day's decline was the largest since Nov. 14.

The Fed has used quantitative easing, or QE, since 2008 as it aims to stimulate the economy. The policy, which involves expanding the Fed's balance sheet to buy bonds, has been credited with pushing money into the stock market and it withdrawal is a wild card for markets.

Still, the S&P 500 has jumped about 6 percent so far this year. Many analysts have been expecting the market to ease after the Dow and the S&P 500 came close to all-time highs.

Energy companies' shares were among the weakest, hurt by disappointing results in the sector and a 2 percent drop in crude oil prices. The Energy Select Sector SPDR exchange-traded fund fell 2.1 percent.

Earlier in the day, unconfirmed rumors that a troubled hedge fund was selling assets added some downward pressure to the market. The rumors appeared to be unfounded.

"I heard the chatter about a hedge fund liquidating things today but how big, I don't know. Certainly, it sparks concern," said Michael James, senior trader at Wedbush Morgan in Los Angeles.

"Valuations appear a bit high at these levels, and if I was in a name that had seen a huge run, I'd want to take some chips off the table," said Matt McCormick, money manager at Bahl & Gaynor in Cincinnati.

Brent Crude Oil - NEW YORK, Feb 20 (Reuters) - Brent crude futures fell on Wednesday, joining in a sell-off hitting precious metals and copper, while expectations that Saudi Arabia intends to boost production also applied pressure to oil.

Brent April crude fell $1.92, or 1.63 percent, to settle at $115.60 a barrel, having traded from $115.05 to $117.66.

CBOT Soybean - Soybean futures on the Chicago Board of Trade rose for a third day on firm cash markets and fears that recent export  demand is eroding already tight U.S. soybean supplies, traders said.

* Traders worry that logistical delays will slow the movement of South American soybeans and soy products into the export pipeline, and steer export demand to the United States.

·         CBOT March options expire on Friday, and heavy open interest in CBOT March soybean call options at the $15 strike could act as a magnet for prices.

·         Basis bids for soybeans shipped by barge to the U.S. Gulf Coast were steady to firm early on Wednesday despite scattered farmer selling, with spot values supported by good exporter  demand for near-term supplies, traders said. 

·         Crop forecaster Lanworth cut its forecast for Argentina's  2013 soybean harvest to 49.6 million tonnes, from 51.6 million  previously, and raised its forecast for Brazilian soybean   production to 81.0 million tonnes, from 80.3 million.

·         Lanworth said it expects U.S. 2013/14 soybean production    to rise to 3.465 billion bushels with an average yield of 43.1  bushels per acre, up from the 2012/13 crop of 3.015 billion  bushels with an average yield of 39.6. 

 

·         Grains and soy withstood weakness in equities, gold and  oil after minutes of the Federal Reserve's meeting last month  showed it may stop or slow its bond-buying program sooner than  expected.

 

·         Ag markets also shook off rumors that a troubled hedge  fund was selling assets. 

BMD FCPO - KUALA LUMPUR, Feb 20 (Reuters) - Malaysian palm oil futures edged down in choppy trade on Wednesday, as dismal export data offset optimism that demand could get a boost if dry Latin American weather dents supply of rival soyoil.

U.S. soybeans hit a 12-day high on Wednesday as the oilseed drew more support from concerns that dry weather in Argentina would cut the upcoming harvest.

Traders fear that a boost in palm oil demand may not be strong enough to reduce a 2.58 million tonne stockpile in Malaysia, with exports in the first 20 days of February inching up just 0.6 percent from a month ago.

Another cargo surveyor, Societe Generale de Surveillance, reported a slight 0.3 percent drop in palm oil exports for the same period.

Malaysia's plan to raise its crude palm oil export tax for March to 4.5 percent from February's zero percent, making the grade more expensive for overseas buyers, also weighed on prices.

"There is uncertainty over the demand in March because of the export tax on crude palm oil, while end-stocks are still hovering above 2.5 million tonnes," said a trader with a local commodities brokerage in Kuala Lumpur.

The benchmark May contract on the Bursa Malaysia Derivatives Exchange inched down 0.2 percent to close at 2,561 ringgit ($827) per tonne. Prices traded in a range between 2,546-2,584 ringgit.

Total traded volumes stood at 30,525 lots of 25 tonnes each, higher than the usual 25,000 tonnes.

Palm oil inventories in Malaysia, the world's No.2 producer, eased 1.9 percent in January from record highs of 2.63 million tonnes, the first decline in stocks since June.

Although overall output is expected to rise again this year, analysts say appetite could gain as well.

Hamburg-based oilseeds analysts Oil World said on Tuesday it expects Malaysia's 2012/2013 output to increase to 19.7 million tonnes, adding that growing consumption could help ease global stocks.

Brent crude dropped toward $117 a barrel on Wednesday on the prospect of more Saudi supply while investors look ahead to economic and inventory data from the United States for clues on demand in the world's largest oil consumer.

In other vegetable oil markets, the U.S. soyoil for May delivery edged up 0.2 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange rose 0.7 percent.

Regional Equities - Feb 20 (Reuters) - Southeast Asian stock markets mostly gained on Wednesday, with the Philippines and Indonesian stock markets hitting a record high, while Thailand ended at a 19-year peak as an improving global economic outlook helped boost investor appetite for risky assets.

The Philippine index , which saw a net foreign inflow of $7.5 million, hit a fresh all-time high of 6,690.00 points, before ending 0.42 percent up at 6,648.57, surpassing its previous record close of 6,632.56 on Tuesday.

Indonesia  gained 0.7 percent to hit a new record high close of 4,634.45 with a foreign inflow of $28.1 million, led by property shares, Reuters data showed.

Bangkok's SET index  jumped 0.95 percent to 1,546.64, to hit a 19-year closing high after the Thai central bank expectedly maintained its policy interest rate and said the economy could grow more than forecast this year.

Singapore ended 0.4 percent firmer at 3,308.89, while Vietnam, the region's smallest bourse and the best performer this year, gained 0.8 percent at 494.83.

Bucking the trend, Malaysia ended 0.1 percent weaker at 1613.33 with a net foreign outflow of $6.93 million, the stock market data showed.

FOREX - NEW YORK, Feb 20 (Reuters) - The dollar jumped to a four-week high against the euro and rose versus the yen on Wednesday after minutes from the Federal Reserve's last meeting suggested policymakers may have to slow or stop buying assets before seeing the pick-up in hiring.

The Australian, Canadian and New Zealand dollars fell as weakness in stocks and commodities prompted investors to dump riskier assets. Sterling tumbled on speculation of further monetary easing by the Bank of England.

Policymakers are increasingly worried about the costs and risks of their quantitative-easing program, the Fed minutes showed, fueling expectations the central bank may scale back its stimulus program sooner rather than later.

"The dollar has been generally firm all day and the (Fed) minutes have been seized as a handy reason to extend those gains," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

The U.S. currency had been rising even before the Fed minutes as weakness in equities and commodities and speculation of a hedge fund selling assets spurred investors to seek safe havens.

RTRS - Oil World cuts Argentine 2013 soybean crop forecast, ups Brazil

HAMBURG, Feb 19 (Reuters) - German oilseeds analyst Oil World on Tuesday cut its forecast of the 2013 soybean harvest in Argentina by 2 million tonnes because of dry weather, but has raised its forecast of Brazil's soybean crop by 0.5 million tonnes.

Oil World now forecasts Argentina will harvest 50.0 million tonnes of soybeans in early 2013, down from 52.0 million tonnes it forecast in January and 53.0 million tonnes forecast in December but still up from the 39.9 million tonnes Argentina harvested in early 2012.

Hamburg-based Oil World also said it has raised its forecast of Brazil's 2013 crop to 82.0 million tonnes from 81.5 million tonnes forecast in January and up from 66.4 million tonnes Brazil harvested in early 2012 because of more favourable weather.

“It has been critically dry in the past four to six weeks on at least 40 to 50 percent of the Argentine soybean area, depleting soil moisture and creating crop stress,” Oil World said.

“There is the risk of additional downward revisions unless the required rainfall arrives in the next one to three weeks.”

Global soybean consumers are intensely watching South American crop developments as big Argentine and Brazilian harvests are needed in early 2013 to relieve the tight global soybean market, where the U.S. is carrying the main burden of meeting world export demand.

Soybean prices hit record highs in September 2012 as drought hit the U.S. crop after poor Argentine and Brazilian harvests. Prices later fell back as the U.S. harvest turned out better than feared and big South American crops in early 2013 may relieve world supplies.

Argentina is the world's third-largest soybean exporter after the United States and Brazil. The U.S. 

Department of Agriculture on Feb. 8 forecast Argentina's 2013 soybean crop at 53.0 million tonnes. The Buenos Aires Grains Exchange forecasts 50 million tonnes.

Argentina’s farm ministry on Friday said recent rain was insufficient to help soybean crops and more rain is needed.

Brazil’s soybean harvest has started and Argentina’s will begin in late March or early April, Oil World said.

Early Brazilian exports were delayed because of lower-than-expected early harvested volumes and road transport delays after rain, it said.

“It is now likely however, that Brazilian exports will start increasing in the second half of February and gain momentum in March and April,” Oil World said.

RTRS - Oil World raises forecast of 2012 and 2013 global palm oil output

HAMBURG, Feb 19 (Reuters) - Global palm oil production is likely to be higher than expected in the 2012/13 season, but global stocks may still fall because of high consumption, Hamburg-based oilseeds analysts Oil World said on Tuesday.

“World production of palm oil exceeded expectations so far this season, making us raise our production estimate to a new high of 55.3 million tonnes in Oct. 2012/Sept. 2013, 0.3 million tonnes above our previous estimate and 3.4 million tonnes above last season,” Oil World said.

Output in top producer Indonesia in 2012/13 will reach 27.4 million tonnes, up 1.5 million tonnes on the season, Oil World estimates.

Malaysian 2012/13 palm oil output will rise to 19.7 million tonnes, also up 1.5 million tonnes on the previous season, it said.

Global palm oil supplies will remain ample at least in Jan./June 2013 also partly owing to record world stocks in January of 10.5 million tonnes, up by 1.8 million tonnes on January 2012, it said. Stocks are important for global palm oil price development.

Low palm oil prices compared to rival soyoil means global palm oil consumption may exceed production by about 1.4 to 1.5 million tonnes in Jan./Mar. 2013, reducing palm oil stocks despite the higher-than-expected production, Oil World said.

World palm oil stocks may fall to around 9.0 million tonnes in end March 2013, it said.

“This is likely to result in a narrowing of the still unusually large price discount of palm oil relative to soyoil,” it said.

Trader's highlight

DJI - NEW YORK, Feb 19 (Reuters) - U.S. stocks rose on Tuesday as this year's ongoing surge in merger activity suggested investors were still finding value in the market even as indexes closed in on all-time highs.

Office Depot Inc surged 9.4 percent to $5.02 after a person familiar with the matter said the No. 2 U.S. office supply retailer was in advanced talks to merge with smaller rival OfficeMax Inc , which jumped more than 20 percent.

Deal activity has helped equities resist a pullback as investors use dips in stocks as buying opportunities. The S&P is up about 7 percent so far in 2013 and has climbed for the past seven weeks in its longest weekly winning streak since January 2011, though most of the weekly gains have been slim.

The Dow industrials closed 0.9 percent away from their record high while S&P 500 was 2.2 percent off its peak.

"Deals are good for the market," said Frank Lesh, a futures analyst and broker at FuturePath Trading LLC in Chicago. "The fact that they're being done is a positive."

More than $158 billion in deals has been announced so far in 2013, more than double the activity in the same period last year and accounting for 57 percent of global deal volumes, according to Thomson Reuters Deals Intelligence.

The Dow Jones industrial average gained 53.91 points, or 0.39 percent, to 14,035.67. The Standard & Poor's 500 Index  gained 11.15 points, or 0.73 percent, to 1,530.94. The Nasdaq Composite Index gained 21.56 points, or 0.68 percent, to 3,213.59.

"Equity investors have to be encouraged by M&A since, if the number crunchers are offering large premiums, that shows how much value is still in the market," said Mike Gibbs, co-head of the equity advisory group at Raymond James in Memphis, Tennessee.

Wall Street's strong start to the year was fueled by better-than-expected corporate earnings, as well as a compromise in Washington that temporarily averted automatic spending cuts and tax hikes that are predicted to damage the economy.

The compromise on across-the-board spending cuts postponed the matter until March 1, at which point the cuts take effect. Ahead of the debate over the cuts, known as sequestration, further gains for stocks may be difficult to come by.

Some investors say the debate could be the catalyst for a long anticipated sell-off after the market's recent strong run.

Carter Worth, a technical analyst at Oppenheimer, pointed to the "especially complacent action of the past six weeks," noting that, as of Friday, stocks have gone 33 sessions without a dip of more than 1.5 percent.

"We would be selling aggressively into the market's current strength," he said in a research note.

Economic data showed the NAHB/Wells Fargo Housing Market index unexpectedly edged down to 46 in February from 47 in the prior month as builders faced higher material costs.

According to the Thomson Reuters data through Monday morning, of the 391 companies in the S&P 500 that have reported results, 70.1 percent have exceeded analysts' expectations, compared with a 62 percent average since 1994 and 65 percent over the past four quarters.

Fourth-quarter earnings for S&P 500 companies have risen 5.6 percent, according to the data, above a 1.9 percent forecast at the start of the earnings season.

About two stocks rose for everyone that fell on the New York Stock Exchange and Nasdaq. About 6.48 billion shares changed hands on the New York Stock Exchange, the Nasdaq and NYSE MKT, in line with the daily average so far this year.

NYMEX - PERTH, Feb 19 (Reuters) - U.S. crude futures slipped in early Asian trading on Tuesday, after a day of light trading due to the U.S. President's Day holiday.

FUNDAMENTALS

• U.S. crude for March delivery  dropped 26 cents to $95.60 a barrel by 0119 GMT.

• Brent crude rose 10 cents to $117.48 a barrel.

• A bearish target of $116.28 per barrel remains unchanged for Brent as a correction from the Feb. 8 high of $119.17 will continue. U.S. oil is expected to drop to $94.24 per barrel, as indicated by its wave pattern, according to a Reuters technical analysis.

• U.S. manufacturing got off to a weak start this year as motor vehicle output tumbled in January, but a rebound in factory activity in New York state this month suggested any setback would be temporary. 

* A sharp cut in Saudi Arabia's crude output and exports may support crude prices going forward.

* Major powers plan to offer an easing of sanctions on trading gold and other precious metals with Iran in return for steps to shut down Iran's newly expanded Fordow uranium enrichment plant, Western officials told Reuters.

* Brazil's state-led Petroleo Brasileiro SA  was forced to shut down operations for nearly a day at its PPM-1 offshore oil platform in the Pampo Field after an oil leak.

CBOT Soybean-  Soybean futures on the Chicago Board of Trade surged 3 percent, rising to a one-week high as weekend rains in Argentina fell short of expectations and China bought old-crop U.S. soybeans, traders said.

 

·         USDA said private exporters reported sales of 120,000  tonnes of U.S. soybeans to China for 2012/13 delivery, raising  concerns that the world's top soy buyer could seek more from  scarce U.S. "old crop" stocks. 

 

·         Adding to fears that port problems in Brazil will steer soy export demand to the United States, Brazilian dock workers  refused for a second day to let nonunion workers unload a   Chinese ship at Santos Port. 

 

·         Rains forecast to bring relief to wilting Argentine soy and corn crops over the weekend were lighter than expected,raising the prospect of lower yields in the 2012/13 harvest, a weather specialist said on Monday.

·         Oilseeds analyst Oil World cut its forecast of Argentina's 2013 soybean harvest to 50 million tonnes, from 52 million last month, due to dry weather. Oil World also raised its forecast of Brazil's crop to 82.0 million tonnes, from 81.5 million tonnes last month. 

·         Brazil's soybean harvest was 19 percent complete by Friday, up from 12 percent a week earlier and above the five-year average of 10 percent, analyst Celeres said.

·         Snow and freezing temperatures in the major rapeseed  growing areas of central China drove domestic rape meal futures to a record high, with traders anticipating damaged crops and a decline in output.   

 

·         USDA reported export inspections of U.S. soybeans in the latest week at 40.384 million bushels, at the low end of trade expectations for 40 million to 45 million bushels.     

FCPO - SINGAPORE, Feb 19 (Reuters) - Malaysian palm oil futures edged higher on Tuesday, tracking gains in soybeans after disappointing rains in Argentina raised the prospect of a smaller crop.

U.S. soybeans rose to a one-week high, resuming trading after the President's Day holiday, as rain that had been expected to bring relief to wilting Argentine soybean crops over the weekend proved to be lighter than expected.

A smaller soybean crop for crushing into soybean oil may shift more demand to competing palm oil that trades at a steep discount of almost $300 per tonne.

"There was news of much less rain received than expected in Argentina this week, and Chinese players are also positive after coming back from the Lunar New Year break," said a Singapore-based trader with a regional commodities house.

The benchmark May contract  on the Bursa Malaysia Derivatives Exchange rose 1.1 percent to close at 2,565 ringgit ($827) per tonne. Prices traded in a range of 2,550 to 2,575 ringgit.

Total traded volumes stood at 33,012 lots of 25 tonnes each, higher than the typical 25,000 tonnes.

Technicals showed Malaysian palm oil is expected to rise to 2,593 ringgit per tonne, as indicated by a rising wedge, said Reuters market analyst Wang Tao.

Traders are awaiting the Malaysian Feb. 1-20 palm export data due on Wednesday, after rising shipments in the first half of the month raised hopes for stocks to ease further.

Malaysia's January palm oil stocks inched down 1.9 percent from a month ago to 2.58 million tonnes, the first drop since last June.

Industry players are also expecting stronger export demand for crude palm oil this month as exporters take advantage of February's zero percent tax before it rises to 4.5 percent in March.

Brent crude edged lower towards $117 per barrel on Tuesday, adding to losses across the previous three sessions, with traders waiting for U.S. data to provide clues to growth in the world's largest oil user, besides weekend elections in Italy.

Other competing vegetable oil markets also gained on Argentine soy crop worries. The most active U.S. soyoil for May delivery gained 1 percent in late Asian trade. The most active September soybean oil contract on the Dalian Commodity Exchange edged up 0.7 percent.

Regional Equities - Feb 19 (Reuters) - The Philippines stock market gained to a record on Tuesday led by property developer Ayala Land Inc  on foreign inflows, while others ended mixed ahead of German economic data, which may provide investors some direction after last week's weaker euro zone data.

The Philippine index , which saw a net foreign inflow of $17.7 million, hit a fresh all-time high of 6,632.56 points, before ending 0.85 percent up at 6,620.72, surpassing its previous record close of 6,582.51 on Monday.

Shares in Ayala Land, the largest property developer in the Philippines, which posted a 27 percent rise in net profit last week, gained 2.9 percent to its record high of 31.8 peso.

Bangkok's SET index rose 0.58 percent to 1,532.07, to hit an 18-year high as domestic institutions bought large cap stocks, but volume was light as investors were cautious ahead of a central bank rate review.

A 1.4 percent gain in Singapore Telecommunications Ltd.. helped boost its overall Straight Times Index  to end 0.2 percent up at 3295.77.

Malaysia  and Indonesia  lost 0.4 percent and 0.2 percent respectively despite foreign inflows. Jakarta saw a net foreign buying of $74.5 million, while Kuala Lumpur witnessed $9.85 million of inflows on Tuesday.

Vietnam , the region's best market this year, ended 0.6 percent weaker at 490.78. 

FOREX - NEW YORK, Feb 19 (Reuters) - The yen rose against the dollar and euro on Tuesday as disagreement between Japanese officials raised doubts over how aggressively Japan will ease its monetary policy.

Indonesia May Keep Palm Export Tax at 9% in March, Group Says

Feb. 19 (Bloomberg) -- Indonesia, the largest palm oil producer, may keep the duty on shipments of the crude variety unchanged at 9 percent in March, double the rate in Malaysia.

The March rate will probably be kept unchanged as the reference price is still about $849 a metric ton, Steaven Halim, an official at the Indonesian Palm Oil Association, said in an e-mailed statement.

The base price for calculating the levy exporters must pay may climb to $777 a ton from $744, he said. “Indonesia is still less competitive against Malaysia,” said Hariyanto Wijaya, an analyst at PT Mandiri Sekuritas in Jakarta.

The position is set to “improve slightly compared with this month because the gap will narrow.” Malaysia, the second-biggest supplier, raised the duty for crude palm exports to 4.5 percent in March from zero in January and February, according to a customs statement posted on the Malaysian Palm Oil Board website on Feb. 15.

Indonesia raised the duty to 9 percent this month from 7.5 percent in January. The Malaysian government said in October it would reduce the export tax from January to drain record stockpiles. Reserves slid 1.9 percent to 2.58 million tons last month from a record 2.63 million tons in December.

Indonesia’s inventories will probably shrink 14 percent to 3 million tons this month, according to estimates compiled by Bloomberg.

Trader's highlight

NYMEX - SINGAPORE, Feb 18 (Reuters) - U.S. crude futures were steady on Monday after falling more than 1 percent in the previous session following an unexpected dip in U.S. industrial production. Trading volumes are likely to be lean with U.S. investors away for a public holiday.

FUNDAMENTALS

• U.S. crude for March delivery was off 12 cents at $95.74 a barrel by 0118 GMT. The contract dropped 1.5 percent on Friday.

• Brent crude edged up 22 cents to $117.88 a barrel, after posting its first weekly loss in five last week.

• U.S. industrial production unexpectedly fell in January, weighed down by weak manufacturing and mining, according to a report on Friday that was another sign of slow economic activity at the start of the year.

• Financial leaders from the world's 20 biggest economies may have promised not to devalue their currencies to help exports, but the pledge will do little to keep exchange rates stable. 

• Saudi crude exports fell for the third month running in December, but the fall in shipments was less dramatic than a drop in oil production, official data showed. 

• Syria's opposition coalition is ready to negotiate President Bashar al-Assad's exit with any member of his government who has not participated in his military crackdown on the uprising, coalition members said.

• U.S. manufacturing also got off to a tepid start as motor vehicle output tumbled in January, but a rebound in factory activity in New York state this month suggested any setback would be temporary. 

FCPO - SINGAPORE, Feb 18 (Reuters) - Malaysian palm oil futures gained on Monday, snapping three straight sessions of losses, as investors expect strong export demand seen in the first half of the month to reduce stocks.

Cargo surveyor data showed Malaysian palm oil exports rose as much as 18 percent for Feb. 1-15 from a month ago, raising hopes that stocks may ease from a record high of 2.58 million tonnes hit in January.

"Exports were quite strong for the first 15 days and production may come down again, so the market is supported because of that," said a trader with a foreign commodities brokerage in Kuala Lumpur.

"We may also see higher exports of crude palm oil for this month before the 4.5 percent tax in March," the trader said.

Malaysia, the world's No.2 palm oil producer, said it will set its crude palm oil export tax for March at 4.5 percent, up from February's zero percent.

The benchmark May contract  on the Bursa Malaysia Derivatives Exchange had gained 1.3 percent to 2,539 ringgit ($820) per tonne by the day's close.

Total traded volumes stood at 46,985 lots of 25 tonnes each, almost double the average of 25,000 tonnes.

Technicals show mixed signals for Malaysian palm oil as it is not clear how high the current rebound could go, said Reuters market analyst Wang Tao.

While the higher export tax may hurt Malaysia's crude palm oil export demand, the local processing industry may benefit from a relatively cheaper feedstock, analysts said.

"We are neutral on the news as it will be short-term negative for Malaysia crude palm oil demand but long-term positive for Malaysia processed palm oil demand," Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank, said in a note to clients.

Brent crude rose slightly toward $118 a barrel on Monday, underpinned by expectations of improving global growth despite some weak U.S. data dampening prices at the end of last week. Tensions in the Middle East also lent support.

In competing vegetable oil markets, the most active September soybean oil contract on the Dalian Commodity Exchange inched down 1.2 percent in late Asian trade. Markets in China resumed trading on Monday after a week-long Lunar New Year break.

Regional Equities - BANGKOK, Feb 18 (Reuters) - Southeast Asian stock markets closed mostly higher on Monday, with the Philippines scaling a fresh peak as strong earnings lifted shopping mall developer SM Prime Holdings Inc . Thai index was bolstered by robust fourth-quarter economic numbers.

The Philippine index was up 0.67 percent at 6565.23, surpassing its last week's 6,527.99 record close. Shares in SM Prime, which exceeded its 2012 profit growth target for a second straight year, closed at a record high of 18.88 peso, up 3.2 percent. 

Bangkok's SET index ended up 0.12 percent at 1,523.29.

The market saw selective buying in consumer names such as CP All Pcl  after stronger-than-expected fourth-quarter GDP numbers which also stemmed from better-than-expected gains in private consumption.

Singapore edged up 0.15 percent at 3,288.14, led by a 1.5 percent gain in Olam International Ltd

Indonesia  ended nearly flat at 4,612.05, with coal miner Bumi Resources Tbk  among outperformers.

Vietnamese stocks ended nearly unchanged at 493.95 in low volumes as most traders are yet to return from a holiday.

Malaysian shares bucked the regional trend to fall 0.43 percent with financial shares such as RHB Capital Bhd  falling 1.4 percent.

Local retail investors and domestic institutions sold shares worth a net 23.65 million ringgit ($7.64 million) and 9.91 million ringgit ($3.20 million) respectively, countering foreign net buying on the day, the Malaysian bourse said.

FOREX - LONDON, Feb 18 (Reuters) - The euro dipped against the dollar on Monday as European Central Bank president Mario Draghi said the euro's appreciation added downside risks to inflation and reiterated there were risks to the euro zone economic outlook.

Its drop was limited, however, with traders still inclined to buy the currency on dips, especially against a broadly weaker yen. The Japanese currency resumed broad falls after Japan signalled it would push ahead with aggressive monetary easing, having escaped criticism from G20 countries at the weekend.

But trading volumes were thin, with U.S. markets closed for President's Day.

"Draghi's comments prompted a bit of a dip in the euro but that just provided better levels to buy the currency," said Jeremy Stretch, head of currency strategy at CIBC.

"There is still enough justification to buy the euro on dips, helped in part by the gains in euro/yen after the G20 seemingly gave the green light for countries to continue measures which weaken their currencies."

Speaking before the European Parliament, Draghi said the euro's exchange rate was not a policy target but was important for growth and stability, adding that appreciation of the euro "is a risk".

The euro has been under selling pressure in the wake of data recently revealing a deeper-than-forecast euro zone recession and on concerns about the outcome of an election in Italy at the weekend.