*Technology paces Wall Street stocks
*Financial shares lead European stock markets higher
*Oil drops as the dollar rises yen, Swiss franc
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, May 12 (Reuters) - U.S. stocks surged on Monday,
led by technology shares, fueled by news that Hewlett-Packard
was in talks to buy Electronic Data Services and on optimism
over the U.S. economy, while European shares rose on strength
in the financial sector.
Better-than-expected results reported by HSBC, Europe's
biggest bank, led financial shares higher in Europe, while
financial shares in the United States rose after bond insurer
MBIA said its new business volumes appear to be rising in the
current quarter.
Oil prices fell from another record high above $126 a
barrel, as a dip in crude oil imports into China, the world's
second-biggest consumer, stirred concerns that high prices were
eating into demand.
In the U.S. stock market, shares of Electronic Data Systems
Corp <EDS.N> soared 28 percent to $24.14 on news that
Hewlett-Packard Co <HPQ.N> is close to a deal to buying the
technology outsourcing company. Hewlett-Packard confirmed that
it was in talks with EDS after The Wall Street Journal reported
on its website that HP was close to a deal to buying the
technology outsourcing company for $12 billion to $13 billion.
Such a deal would boost HP's competitiveness against IBM.
On Wall Street, technology shares were also buoyed on hope
that U.S. business spending will hold up during an economic
downturn.
The Dow Jones industrial average <> rose 130.43 points,
or 1.02 percent, at 12,876.31. The Standard & Poor's 500 Index
<.SPX> rose 15.29 points, or 1.10 percent, at 1,403.57. The
Nasdaq Composite Index <> rose 42.97 points, or 1.76
percent, at 2,488.49.
HP shares fell 4.9 percent to $46.74. The New York Stock
Exchange halted trade in both HP and EDS following the report
on talks between the two.
Bond insurer MBIA Inc <MBI.N> reported a quarterly loss but
said new business volume appears to be rising in the current
quarter. MBIA shares rose 4.5 percent to $9.85.
Shares of Research In Motion Ltd <RIM.TO><RIMM.O> jumped
6.9 percent to $141.97 on optimism about its new BlackBerry
Bold smartphone, after earlier hitting a lifetime high of
$143.08.
In Europe shares rose in quiet trade on HSBC's <HSBA.L>
results and on energy stocks, due to high crude oil prices.
The FTSEurofirst 300 <> index of top European shares
closed at 1,346.47 points, up 0.3 percent. Volumes in Europe
were thin due to partial holidays in some countries.
HSBC <HSBA.L>, climbed 1.9 percent. Among energy stocks,
France's Total <TOTF.PA> rose 1.4 percent and British group BP
<BP.L> was up 1.1 percent.
HSBC said its profit in the first quarter rose from a year
ago as growth in Asia helped counter some $5 billion in hits
from bad debts on U.S. home loans and asset write-downs.
HSBC said it was increasingly likely the U.S. economy will
go into recession this year and a recovery in the U.S. housing
market was unlikely until at least 2009. But its comments were
more positive than those from rivals battered by the credit
crunch.
U.S. Treasury debt prices slipped as the stock rally led by
the technology sector depleted demand for safe-haven U.S.
government debt.
"Stocks were strong all day and when Treasuries couldn't
make new highs, people took some profits," said John Spinello,
chief fixed-income technical strategist at Jefferies & Co in
New York. "With the front end of the Treasury market under
pressure. it's difficult to keep the back end supported unless
a huge curve trade is going on and that wasn't happening."
Earlier longer-dated U.S. Treasury prices rose after
Chicago Federal Reserve President Charles Evans said U.S.
consumers were "under a lot of stress," underscoring the
fragile state of the U.S. biggest economy. Bond prices were
helped as investors poured cash from a quarterly refunding into
government debt.
Oil fell as a dip in crude oil imports into No. 2 consumer
China stirred concerns high prices were eating into demand.
U.S. crude <CLc1> settled down $1.73 at $124.23 a barrel,
off an earlier record high of $126.40 a barrel. London Brent
crude <LCOc1> settled $2.49 lower at $122.91 a barrel.
China's April crude oil imports decreased against year-ago
levels, the first monthly year-on-year decline in 18 months,
although analysts said the dip was a one-off adjustment as
refiners ran down stocks after unusually high March purchases.
[]
"This looks like a bit of a correction on a vastly
overbought market," said Mike Zarembski, senior commodities
analyst for optionsXpress. "News that China's imports were down
in April was a factor for some of the money to come off the
table, but the market is still robust."
The dollar rose against the yen and Swiss franc as
investors snapped up riskier assets such as stocks, encouraged
by a dip in oil prices and HSBC's unexpectedly strong results.
The dollar fell against major trading-partner currencies,
with the U.S. Dollar Index <.DXY> down 0.22 percent at 72.957.
But against the yen, the dollar <JPY=> was up 1.03 percent,
while the euro <EUR=> was up 0.34 percent at $1.5534 against
the dollar.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 4/32, with the yield at 3.7918 percent. The 2-year U.S.
Treasury note <US2YT=RR> was down 4/32, with the yield at
2.3048 percent. The 30-year U.S. Treasury bond <US30YT=RR> was
down 2/32, with the yield at 4.5313 percent.
U.S. Treasury debt prices
Gold ended lower, giving up overnight gains due to
retreating crude prices. But a further oil rally may help
bullion defy declines in demand from jewelers and other
physical buyers.
Gold <XAU=> hit a high of $889.10 an ounce before slipping
to $884.60/886.00 an ounce by New York's last quote.
In Asia, shares in Tokyo <> closed 0.6 percent higher
as exporters such as Canon Inc <7751.T> recovered as the yen
retreated, easing a potential squeeze on profits.
Markets were calm after the most devastating earthquake in
three decades jolted China, killing nearly 9,000 people in
western Sichuan province. Shanghai stocks fell about 1 percent
before closing higher, while the yuan <CNY1MNDFOR=> fell in
offshore non-deliverable forwards against the dollar.
Shares across the rest of Asia <.MIAPJ0000PUS> were up 0.5
percent.
(Reporting by Caroline Valetkevitch, John Parry, Lucia
Mutikani and Lewa Pardomuan in London, and Peter Starck in
Frankfurt; Editing by Leslie Adler)
