Asian markets rise after US stocks rally (AFP)

HONG KONG (AFP) – Asian markets rose on Monday after better-than-expected US manufacturing data sent Wall Street stocks rallying, while traders' concerns over Greece's sovereign debt have eased.

The euro climbed to its highest point in nearly a month against the dollar in early trade as fears over a possible default by Athens made way for expectations of a rate hike by the European Central Bank (ECB) this week.

However, traders were given a spook in the afternoon when ratings agency Standard & Poor's warned that plans to roll over Greece's debt could amount to a default.

Tokyo jumped 0.98 percent, or 97.02 points, to 9,965.09 and Seoul closed 0.92 percent, or 19.56 points, higher at 2,145.30 while Sydney gained 0.42 percent, or 19.5 points, to 4,610.7.

Hong Kong closed 1.66 percent, or 372.37 points, higher at 22,770.47 and Shanghai surged 1.94 percent, or 53.46 points, to 2,812.82.

Thai shares rose 4.69 percent, or 48.80 points, to 1,090.28 after the opposition Puea Thai party, led by the sister of former prime minister Thaksin Shinawatra, won a huge and decisive election victory on Sunday.

Investors were meanwhile buoyed by Friday's release in the United States of the ISM purchasing managers index for the manufacturing sector for June, which climbed 1.8 percent from May -- much better than economists had forecast.

On Wall Street the Dow rose 1.36 percent, the S&P 500 gained 1.44 percent and the tech-heavy Nasdaq was up 1.53 percent.

The big gains follow extended losses during most of the past month amid concerns that the US economic recovery was losing steam while the Greek debt crisis appeared to threaten another global financial slump.

"Sentiment has not turned immediately bullish, but it seems like the recent US slowdown was a result of temporary factors such as disruptions in Japan's supply chain (after the March 11 quake) and higher gasoline prices," said Cosmo Securities strategist Toshikazu Horiuchi.

The euro shot up to $1.4580 in early Tokyo trade, its highest since June 9, after eurozone finance ministers cleared the way Saturday for Greece to receive urgent funds to avoid imminent bankruptcy.

The single currency eased to $1.4534 in the morning, against $1.4522 in New York late Friday. It also edged down to 117.15 yen from 117.40 yen.

"An optimistic mood had been spreading since the Greek parliament last week passed the vote" for an austerity package vital to Greece receiving additional rescue funds, said Gen Kawabe, dealer at Chuo Mitsui Trust and Banking.

"We never know what could happen in the medium to long term, but concern over a possible Greek default has diminished at least for the near term," Kawabe said.

Also lifting the unit were forecasts that the ECB will raise interest rates by 0.25 percentage points at its policy meeting on Thursday. Traders are also closely watching comments from the bank's officials about the state of the economy for clues as to whether there will be another hike in August.

The dollar edged down to 80.59 yen against 80.81 yen.

Share and forex markets softened their gains after S&P's statement that two financing options put forward to help fund another bailout for Greece "would likely amount to a default under our criteria".

The "debt rollover proposal could result in a selective default for Greece," it said.

In Sydney, Qantas jumped 6.2 percent after engineers cancelled industrial action and Australia's airline safety regulator grounded Tiger Airways Australia flights for a week over safety concerns.

On oil markets, New York's main contract, West Texas Intermediate for August delivery, rose 12 cents to $95.07 a barrel and Brent North Sea crude for August added 18 cents to $111.95.

Gold closed at $1,494.00-$1,495.00 an ounce in Hong Kong, down from $1,500.00-$1,501.00 on Friday.

In other markets:

-- Singapore closed 0.46 percent higher at 3,153.44 points.

Singapore Airlines was 0.14 percent up at Sg$14.22 and Keppel Corp edged 0.72 percent higher to Sg$11.26.

-- Taipei rose 0.40 percent, or 34.90 points, to 8,774.72.

-- Manila jumped 1.61 percent, or 69.93 points, to 4,421.56.

The index finished at a record high on the back of global optimism and an improved domestic outlook.

"Commodity prices are also starting to come down and that means better earnings for Philippine companies," said Ron Rodrigo, research head at DBP-Daiwa Capital Markets, according to Dow Jones Newswires.

Philippine Long Distance Telephone gained 0.7 percent to 2,396 pesos, Metropolitan Bank & Trust added 0.6 percent to 71.50 pesos and San Miguel was up 1.8 percent at 119 pesos.

-- Wellington rose 0.10 percent, or 3.49 points, to 3,478.49.

Fletcher Building fell 0.5 percent to NZ$8.56 and Contact Energy ended flat at NZ$5.40.

-- Kuala Lumpur closed flat, edging down 0.59 points to 1,582.35.

AirAsia fell 4.7 percent to 3.46 ringgit and UEM Land lost 0.7 percent to 2.77 while Kuala Lumpur Kepong added 1.4 percent to 22.52 ringgit.

-- Jakarta rose 0.67 percent, or 26.41 points, to 3,953.50.

Car maker Astra gained 4.5 percent to 68,500 rupiah, Bank Rakyat jumped 3.0 percent to 6,900 rupiah and retailer Mitra Adi Perkasaa rose 2.5 percent to 4,125 rupiah.

-- Indian shares rose 0.28 percent. The benchmark 30-share Sensex index closed up 51.68 points to 18,814.48.

India's top property firm DLF rose 6.01 percent, or 13.25 rupees, to 233.6 while Reliance Infrastructure rose 6.84 percent, or 37.05 rupees, to 578.7.

Shares of Sun TV Networks fell 3.27 percent, or 11.55 rupees, to 341.7, a day after reports said an official of unit Sun Pictures was arrested on charges of cheating and criminal breach of trust.

FTSE gains 0.23% amid takeover talk (AFP)

LONDON (AFP) – London shares edged up on Tuesday as investors awaited the return of Wall Street after a three-day holiday weekend, and tracked the latest takeover talk doing the rounds.

In midday deals, the FTSE 100 index of top shares rose 0.23 percent to 6,031.29 points.

"There is little change to the FTSE 100... With US markets set to re-open this afternoon following yesterday's holiday, most traders are waiting for this before making any major decisions," said analyst Ben Critchely at traders IG Index.

New York's financial markets will reopen for business after closing for the Independence Day on July 4.

The top gainer in London, meanwhile, was British household products and drugs group Reckitt Benckiser.

Reckitt shares leapt by 2.18 percent to 3,565 pence in midday trading on the FTSE 100 index, as investors were gripped by takeover bid speculation, dealers said.

"The UK consumer goods firm has been the subject of bid talk for quite some time, with some press mentioning its bigger rival Proctor & Gamble as a potential suitor," said Giles Watts, head of equities at City Index.

"It remains to be seen as to whether any definitive bid may come from the rumours but certainly investors remain hopeful that the sector may be primed for consolidation."

Elsewhere, markets pored over a key growth indicator which showed that private sector activity in the eurozone was weaker than forecast in June, hitting 20-month low level with recoveries slowing in Germany and France.

The data showed that output fell in Italy and Spain while Ireland continued to record a "very modest" pace of expansion, according to the Purchasing Managers Index (PMI) leading indicator compiled by research firm Markit.

The PMI, a survey of 4,500 companies in service and manufacturing in the 17-nation eurozone, fell to 53.3 points in June from 55.8 in May. A first estimate last month had forecast 53.6 points for June.

Despite the fall, however, the index remains above the 50-point mark indicating growth.

In Asia, Tokyo stocks traded flat earlier on Tuesday, with optimism after recent strong gains tempered by fresh concerns over Greece's debt crisis.

FTSE climbs on US manufacturing data (AFP)

LONDON (AFP) – Stocks in London closed sharply higher again on Friday, buoyed by better-than-expected data from the US on the performance of the manufacturing sector there in June.

The benchmark FTSE 100 index of top shares up 0.74 percent at 5,989.76 points.

The Institute of Supply Management said the US manufacturing sector picked up pace in June hinting at a pick-up in the economy at the end of a slumping second quarter.

The ISM purchasing managers index for the manufacturing sector climbed 1.8 percent in June to a better-than-expected 55.3, from 53.5 in May.

In London, Lloyds Banking Group (LBG) was the most traded stock, seeing 205 million shares changes hands, followed by Vodafone, which saw 121 millions switch owners.

UK-based interdealer broker ICAP -- the second worst performer Thursday -- ended the day as the top blue-chip riser, gaining 5.12 percent -- or 24.2 pence -- to 487.2.

It was followed by Lloyds, yesterday's top climber, which enjoyed another positive performance to add 3.69 percent -- or 1.81 pence -- to end at 50.81.

Gold producer Randgold Resources (RRS) was the biggest faller, dropping 1.52 percent -- or 80 pence -- to 5,175, followed by product-testing firm Intertek, which fell 1.42 percent -- or 28 pence -- to 1,945.

On the currency markets, a pound was worth $1.6071 at 17:10 BST, marginally down from $1.6074 at the same time on Thursday, while the currency was worth 1.1077 euros, up from 1.1060 over the same period.

Markets anticipate Nasdaq/LSE tie-up after TMX flop (Reuters)

LONDON, Jul (Reuters) – The London Stock Exchange (LSE.L) should consider a tie-up with Nasdaq OMX (NDAQ.O) to secure its place as a global competitor, after its failed bid for Canadian group TMX (X.TO) made it vulnerable as a takeover target, investors and market participants said.

Nasdaq has been in the spotlight since the LSE pulled its $3.5 billion bid for Toronto stock exchange operator TMX, leaving the LSE without a partner at a time of frenzied takeover activity among global exchanges.

"The LSE needs to do something, because as the other exchanges get bigger they get smaller, which can only lead to them being swallowed up," said a senior trader at an international broker in London.

A source close to the firms said that Nasdaq -- lead by veteran Robert Greifeld -- has not yet opened talks with the LSE, whose Chief Executive Xavier Rolet only took the helm at the centuries-old exchange in 2009.

But it could come under pressure to do so if shareholders approve Deutsche Boerse's (DB1Gn.DE) $10 billion bid for NYSE Euronext (NYX.N) this Thursday, opening the way for the creation of world's top exchange group.

"The LSE is being marginalized and if Deutsche Boerse/NYSE goes ahead, I wonder how much resistance the LSE will have to a bid," said a managing director at a global investment bank.

Deutsche Boerse needs shareholder approval before it and its merger partner NYSE Euronext can turn their attention to European competition authorities, who are closely watching every move of the rapidly integrating industry.

Nasdaq tried to derail the Boerse/NYSE deal in April by launching a higher counterbid of $11.2 billion for NYSE, prompting a rejection from Nasdaq's hometown rival.

But U.S. regulators shot down the plan in May, fearing the merger would have given the combined group a monopoly.

That left Nasdaq on the sidelines, sparking speculation it might launch what would amount to the third bid for LSE in its history, after a Canadian consortium of banks and funds known as the Maple Group scuppered the LSE's bid for TMX.

Nasdaq became the fifth firm to bid for the LSE in less than a decade in 2006, when it offered 9.50 pounds a share, but the offer was immediately rejected by LSE management.

It then raised its bid to 12.43 pounds a share in its second approach in November 2006, but the offer was again resisted by LSE's bosses before being voted down in early 2007.

LSE shares have risen 22 percent to a year-high of 10.48 pounds since Nasdaq's NYSE bid was knocked back more than six weeks ago. They were trading 1.8 percent higher by 1218 GMT.

"I think it (an approach) is likely. (Greifeld is) an ambitious guy with a track record. I think there is pressure for some cross-border activity, and more pressure than there was," said one large LSE shareholder.

There has been a swathe of exchange deals in the past six months, even if few are still live.

"Exchanges need to consolidate to generate economies of scale and enable them to compete more aggressively," said Andrew Bowley, managing director, head of electronic trading at Nomura.

The LSE and Nasdaq both declined to comment.

(Additional reporting by Tommy Wilkes. Editing by Jane Merriman)

Summary Box: Stocks end best week since '09 (AP)

GOOD SIGNS: A surprising rebound in the Institute of Supply Management's national manufacturing index prolonged a weeklong rally in the stock market. Rising auto sales also helped lift stock indexes.

BIG WEEK: The Dow rose 5.4 percent for the week, its best week in two years.

THE INDEXES: The Dow rose 168.43 points, or 1.4 percent, to close at 12,582.77. The S&P 500 rose 18.94, or 1.4 percent, to 1,339.63. The Nasdaq rose 42.51, or 1.5 percent, to 2,816.03.

US stock futures little changed on dawn of quarter (AP)

By DAVID K. RANDALL, AP Business Writer David K. Randall, Ap Business Writer – 1?hr?2?mins?ago

NEW YORK – U.S. stock futures are little changed ahead of key economic reports coming on the first day of the third quarter.

Investors will receive reports on manufacturing, auto sales, consumer sentiment and construction spending by the time the market closes Friday.

Economists expect that the closely watched ISM report will show that the manufacturing index grew in June but at a slower pace than in the previous month.

No major corporate earnings results are expected.

Ahead of the opening bell, Dow Jones industrial average futures are up 14 points, or 0.1 percent, to 12,359. Standard & Poor's 500 index futures are down less than a point to 1,317. Nasdaq 10 futures are up 1, or 0.1 percent, to 2,326.

Shhh: Shanghai Taking On N.Y. (Investor's Business Daily)

China is quietly chasing deals with Brazil, Russia and other big emerging-market stock exchanges to allow cross-listings, part of its drive to turn Shanghai into a financial center rivaling New York.

The Shanghai Stock Exchange and Brazil's BM&FBovespa, Latin America's top securities exchange, inked a pact in February that many believe will lead to cross-listings. If that happens, Brazilian giants like iron ore exporter Vale (NYSE:VALE - News) could list yuan-denominated shares in Shanghai and access Chinese capital. Chinese firms could list in Brazil.

Gary Kleiman, an emerging-markets analyst, says China is informally discussing similar cross-listing deals with Russia and various Southeast Asian countries.

"You already have major Russian and Brazilian listings (in Hong Kong dollars) on the Hong Kong Stock Exchange," said Kleiman, who runs D.C.-based Kleiman International. "It would make sense to carry some alliances and cross-listings generally into (China's) securities sphere."

Shanghai has reportedly signed technology and information sharing pacts with 40 other bourses that could lead to closer cooperation, including cross-listings.

If Chinese cross-listings spread, companies from Sao Paulo to Russia's St. Petersburg will be allowed to access capital directly from what's expected to be the world's biggest economy in a few years. Chinese firms can tap these developing market listings to penetrate markets outside China and raise cash.

New York over time could get fewer listings of companies from China, Brazil and elsewhere.

Some say Beijing is just catching up with the U.S. and other Western nations in forging ties with top emerging economies.

But some see sinister motives.

On the surface, there's nothing wrong with Chinese cross-listings with emerging countries, says Peter Morici, a former chief economist at the U.S. International Trade Commission.

"But doing that in the context of an undervalued currency makes it part of a new imperialism," said Morici, a business professor at the University of Maryland. "What (China) is trying to do is make the yuan an international currency without subjecting it to float. They are trying to establish a fixed exchange rate system."

Others see exchange tie-ups as a way to expand business relations with nations that can satisfy China's hunger for raw materials.

"China is trying to build financial links with emerging economies to access resources," said Clyde Prestowitz, a Reagan administration trade official and author of "The Betrayal of American Prosperity."

China is merely protecting its developing securities industry amid a global merger wave, Kleiman says. Deutsche Bourse will buy NYSE Euronext (NYSE:NYX - News) for $9.53 billion. The London Stock Exchange's $3.1 billion deal for Toronto's TMX fell apart this week.

He says Beijing also is promoting cross -listings to bolster its leadership among the BRICS nations of Brazil, Russia, India, China and South Africa.

Shanghai lacks an international board for foreign-listed stocks and a mechanism to permit yuan trading in foreign stocks because the currency doesn't float. But an international board will launch by year-end, Chinese media say.

MICEX, Russia's leading stock exchange, already does limited Chinese currency trades, providing a possible mechanism for future China-Russia cross-listings.

The cross-listing idea arose out of BRICS summits, Kleiman says, in which the countries seek to coordinate policies, buy each other's goods and sidestep American dominance. At an April summit in Hainan, China, BRICS nations said they will end mutual payments in dollars. They also will only offer credits to one another in their national currencies .

Analysis - Nationalism casts shadow over Canada after TMX deal (Reuters)

TORONTO (Reuters) – When Canada's big banks and pension funds needed sizzle to combat the steak offered by the London Stock Exchange's bid for the Toronto Stock Exchange, they looked only as far as the Canadian flag.

The iconic red maple leaf -- and sweet syrup from the trees -- conveyed in a word what the Maple Group consortium of big financial firms wanted to tell TMX shareholders: We don't want foreigners controlling our markets, do we?

Whether the appeal to nationalism worked or whether it was just a matter of money may be debated forever. But foes of the proposed tie-up of the LSE and TMX are already billing the death of the friendly transatlantic deal as a triumph of home-grown heroes.

"I think this is Canadians asserting themselves and, in fact, fulfilling the promise of free trade, that we will specialize in certain areas and lead in the world, which we are in financial services," Ontario's Finance Minister Dwight Duncan told reporters.

Duncan, whose Liberal party governs Ontario, Canada's most populous province and home to the Toronto Stock Exchange, has been one of the most vocal opponents of the LSE-TMX deal, citing the proven track record of Canadian banks during the financial crisis.

But economists and analysts worry that patriotism is trumping pragmatism, pointing to another big merger that was squashed last year on concerns about ceding control of Canadian assets: BHP Billiton's bid for Potash Corp.

"We've seen a great deal of nationalism lately, particularly with the Potash deal and the idea that mergers should act in the national interests," said Mike Moffatt, a lecturer at the Richard Ivey School of Business.

"That's going to raise concerns about investing in Canada ... Canada is now seen as riskier than it would otherwise be."

Robert Young, head of Liquidnet Canada noted that exchanges have sparked especially patriotic responses, including Australia's nixing of a Singapore offer for its main equities market.

"What we saw in Australia and what we saw here is ... that nationalism, in one way shape or another, frustrated those deals. We all know there is nationalistic, iconic status attached to exchanges," Young said.

"The perception is, 'Can you really do a deal in Canada?' And that's an unfortunate consequence of the banks deciding to call themselves Maple."

Whether the decision to spurn the LSE is part of a larger trend to bulwark Canadian companies against foreign control is debatable, BHP Billiton aside. In 2006, Brazilian miner Vale bought Inco, Canada's biggest nickel miner. A year later, aluminum producer Alcan was bought by Rio Tinto.

The difference lately may be the global financial crisis and subsequent meltdowns in economies in the United States and Europe. Canada looks robust by comparison.

"The decision not to pursue the merger I think is part of a general retreat from the 'globalization wave' of recent years," said Lakehead University professor Livio Di Matteo said.

"The recession and the sovereign debt crisis are sparking at least a pause if not a retreat from a more integrated world economy and this is its latest manifestation in Canada,"

Renee Colyer, chief executive of capital markets consulting firm Forefactor, said it's a grim development.

"What message did we just give the world?" Colyer asked.

"I just hope ... the Toronto Stock Exchange still has the opportunity for growth and opportunities to form alliances with other exchanges and that those other exchanges aren't going to feel like, 'Well, if we even try to come into Canada, we're going to be challenged by the banks that are the oligopoly that is Canada'."

Still, not everyone believes nationalism had anything to do with TMX shareholders balking at the LSE offer. Some 40 percent of TMX shares are held outside Canada, so many voters would not be swayed by a pitch to patriotism.

"The nationalistic angle might have been a convenient tool. But I really sincerely believe that, based upon the membership of this Maple Group, that these people formulated a bid based purely on economic considerations," said Louis Gagnon, a finance professor at Queen's School of Business.

"When it comes to money, people tend to see dollars before they see flags."

The failed LSE bid clocked in at C$49 a share, including a C$4 dividend. Maple's offer is worth C$50 a share.

($1=$0.97 Canadian)

(Additional reporting by Solarina Ho, Claire Sibonney, Allison Martell and Jonathan Spicer; editing by Janet Guttsman and Rob Wilson)

Wall Street eyes best week in a year (Reuters)

NEW YORK (Reuters) – Stocks were poised to record their best week in nearly a year on Friday as index futures ticked higher and investors looked ahead to key national manufacturing data, with confidence growing that the economic slowdown could be temporary.

Equities have rallied for four straight days, rebounding from a spate of weakness over the last two months. Moves to avert a debt crisis in Europe and surprisingly strong regional business data helped lift some of the gloom on Wall Street.

The ISM's index of national factory activity at 10 a.m. EDT is expected to show the economy slowed in June, slipping to 51.8 from 53.5 in May. But investors will be on the lookout for a positive surprise after Thursday's Chicago PMI index beat forecasts.

"What you are seeing is investors are realizing that the economy is not going to recover as they hoped, but it's not going to be as bad as they fear," said Rick Meckler, president of investment firm LibertyView Capital Management in New York.

"You're starting to settle into a realization that stocks are probably priced somewhere around where they should be, and I think you are going to continue to have this back and fourth movement," said Meckler.

S&P 500 futures added 0.6 point and were above fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures gained 15 points, and Nasdaq 100 futures rose 2 points.

Meckler said volume would likely be low on the last day before a holiday-shortened week, which could increase volatility. Markets are closed on Monday for the U.S. Independence Day holiday.

Investors are looking ahead to second-quarter earnings, which get underway in the second week of July. They will pay close attention to corporate forecasts, given the weakness in the economy.

Other data scheduled for release later in the day include the Reuters/University of Michigan consumer sentiment survey for June at 9:55 a.m. EDT and construction spending at 10 a.m. EDT. Consumer sentiment was seen little changed at 71.9, while construction spending is expected to be flat in May.

U.S. stocks ended a volatile quarter Thursday with their biggest four-day rally since September as positive economic data and a temporary resolution of Greece's debt crisis indicated further gains in July. Major indexes were on course for their best week since the middle of July 2010.

The S&P 500 (.SPX) climbed above resistance at its 50-day moving average at 1,317, establishing another floor in the market after the index moved above a number of technical resistance levels.

In company news, Apple Inc (AAPL.O) and Research In Motion Ltd (RIM.TO)(RIMM.O) are part of a winning consortium of six companies buying bankrupt Nortel Networks Corp's remaining patent portfolio for $4.5 billion in a hotly contested auction that saw Google Inc (GOOG.O) and Intel Corp (INTC.O) lose out.

Oshkosh Corp (OSK.N) jumped more than 8 percent in extended trade Thursday after Carl Icahn said he wants to meet with the management at the specialty truck maker to discuss enhancing shareholder value. The billionaire investor owned about 9.5 percent of Oshkosh shares as of June 20.

In Europe, the pan-European FTSEurofirst 300 index of top shares (.FTEU3) were nearly flat. The Nikkei (.NK225) share average climbed to a seven-week high, rising 0.5 percent.

(Reporting by Edward Krudy; editing by Jeffrey Benkoe)

Stocks dipped in June, but some think it's a blip (AP)

By DAVID K. RANDALL, AP Business Writer David K. Randall, Ap Business Writer – Thu?Jun?30, 6:33?pm?ET

NEW YORK – Stocks are headed for a correction. No, stocks are rallying. Wait, stocks are down again. Or up — a lot.

For investors, June was one long seesaw ride that began with a deep plunge on the first day of the month. Six days of declines were followed by a week of give and take and then four days of gains. The month ended with strong earnings from a consumer bellwether and signs that a European debt crisis could be averted. That led to a 4-day advance in the three major stock indexes.

The Dow Jones industrial average rose 480 points, or 4 percent, the last four days of the month and the Standard & Poor's 500 index is on track for its best weekly return for since July 2010.

That strong ending didn't make June a winner. Stocks were down about 2 percent for the month, the second straight month that the market finished lower. Only the Dow Jones industrial average eked out a gain, of 0.8 percent, for the quarter.

All three indexes are still up for the year. The Dow is up the most, 7.2 percent. The S&P 500 and Nasdaq are up 5 percent and 4.6 percent respectively. The Dow was down 6.3 percent at this time last year.

Concerns about the strength of the U.S. economy and a possible debt default by Greece spooked investors much of the month. One the first day of June investors were greeted with reports that American manufacturing output had expanded at the slowest pace in 20 months, that auto sales had tumbled in May, and that private companies added the fewest number of employees since September. By June 15, the S&P had lost nearly all of its gains for the year, before dividends.

Market declines mean different things to different people. Rather than retreat further, some investors came to believe that stocks were relatively cheap. Stocks began to reverse course.

The upward climb continued this week when Nike Inc.'s earnings came in much higher than analysts had been expecting. That indicated that higher gas prices haven't stopped consumers from splurging on things like pricey sneakers and sportswear. In the last four days of the month, the S&P rose 4.1 percent.

Even so, the S&P 500 lost 1.8 percent for the month, the Dow finished down 1.2 percent for the month. The Nasdaq composite fell 2.2 percent. For the second quarter, the Dow gained 0.7 percent between April and June. The S&P 500 and Nasdaq, however, lost 0.4 percent and 0.3 percent, respectively.

Most economists, analysts and investors agree that, at the very least, the U.S. economy has struggled through a soft patch. The weakness was brought on by gas prices that hit $4 a gallon, problems getting computer chips and auto parts from Japan and severe weather in the South. These factors weighed on consumer spending and confidence and made recession-weary companies reluctant to hire employees or expand domestically.

Whether the late June rally continues into July depends partly on results from upcoming earnings reports and lingering effects of that soft patch.

Most stock analysts think the economy's troubles are temporary. Few have lowered their estimates over the last month despite a dip in consumer spending and continued high unemployment. One reason: even if U.S. consumers spend less, American companies continue to make a significant portion of their profits overseas. As of 2010, 40 percent of the profits for U.S. companies in the S&P 500 came from overseas.

Alcoa Inc. is the first major U.S. company to report earnings every quarter. Many investors look to those results for indications of how the results of other major corporations might turn out. The aluminum maker, which tends to do well when the global economy is growing, reports its quarterly results on July 11.

Mark Schultz, portfolio manager for the $240 million MTB Mid-Cap Growth fund, believes that the impact of higher gas prices on U.S. corporate profits will be balanced out by growing revenue coming from sales in countries like China and Brazil, where companies are still expanding.

Some market strategists say the stock market is in for another up and down ride in July as earnings reports come out.

"We're worried that the earnings season will capture the soft patch in the second quarter," says Ron Florance, the managing director of investing strategy at Wells Fargo Private Bank. "If analysts haven't factored that into their estimates then we could be set up for disappointments."

Earnings season also gives investors a glimpse of what's to come. When companies report for the quarter, their executives often lay out their expectations for revenue and earnings for the next quarter. Gloomy predictions from key companies like JPMorgan Chase & Co, IBM and Caterpillar could make a second-half stock rally difficult.

On the other hand, if those forecasts are more bullish, that will bolster the belief that effects from the Japanese earthquake and tsunami and high oil prices will be short-lived.

"The misses will probably not be repeatable because they could come from weather and commodity price spikes," says Phil Orlando, the chief market strategist at Federated Investors. "We all know that the third quarter will be better."

Of course, there's one unknown looming: Politics. The federal government will reach its debt limit on Aug. 2. If Republicans and Democrats in Congress can't reach a deal to prevent that from happening, the U.S. could find itself unable to borrow more money to meet all of its financial obligations.

The government would be forced to choose which payments it won't make. Those could include Social Security checks to more than 52 million recipients or military salaries for the 1.4 million currently in the armed forces. Alarming, yes. But skipping bond interest payments could be even worse. A default would lead to a sharp rise in interest rates and possibly trigger a recession.

As of now, many investors are betting that a deal will be reached. But look for big swings in the market if a deal isn't reached by mid-July, says Kevin Shacknofsky, co-manager of the $635 million Alpine Dynamic Dividend fund. "If we don't have signs that there's a deal by (then), you have to start positioning your portfolio for the worst."

How the major stock indexes fared Thursday (AP)

Stocks closing broadly higher after Greece cleared a final hurdle toward receiving its next installment of emergency loans. An unexpected pickup in manufacturing in the Midwest also helped push stock indexes higher. It was the fourth straight day of gains.

The Dow Jones industrial average rose 152.92 points, or 1.3 percent, to close at 12,414.34.

The Standard & Poor's 500 index rose 13.23, or 1 percent, to 1,320.64.

The Nasdaq composite rose 33.03, or 1.2 percent, to 2,773.52.

For the week:

The Dow is up 479.76, or 4 percent.

The S&P is up 52.19, or 4.1 percent.

The Nasdaq is up 120.63, or 4.5 percent.

For the year to date:

The Dow is up 836.83, or 7.2 percent.

The S&P is up 63, or 5 percent.

The Nasdaq is up 120.65 points, or 4.5 percent.

World markets inch up as Greek relief wears off (AP)

LONDON – The euphoria that gripped markets after Greece passed cost-cutting measures to secure more bailout loans wore off Friday as investors focused on another batch of economic figures underlining the slowing global economic recovery.

Figures showed China's manufacturing sector growing at its slowest pace in more than two years in June in a further sign that the world's second largest economy is coming off the boil. Further downbeat news emerged in an equivalent survey in Britain.

The focus later will be on the monthly Institute for Supply Management survey of manufacturing conditions in the U.S. and the markets aren't too optimistic that they will show anything other than a slowdown in the U.S. recovery. The consensus in the markets is that the ISM's main index will drop to 52 in June from the previous month's 53.5, providing another sign of a faltering economy.

"With the small matter of Greece behind us for now investors can return their focus to more routine matters like economic data," said Michael Hewson, market analyst at CMC Markets.

In Europe, France's CAC-40 edged up 0.2 percent to 3,991, while Germany's DAX moved up 0.3 percent to 7,398. The FTSE 100 index of leading British shares rose 0.5 percent to 5,975.

Wall Street appeared headed for a similarly modest open. Dow futures were up 0.2 percent at 12,369, while the broader Standard & Poor's 500 futures was just 0.1 percent higher at 1,317.

Stocks have posted sizeable gains this week as investors first anticipated and then cheered the passage of austerity measures in the Greek Parliament. The planned measures to cut spending and raise taxes by euro28 billion ($40 billion) over the coming five years were required for the European Union and the International Monetary Fund to release the next euro12 billion ($17 billion) installment of bailout loans that are keeping Greece afloat.

Eurozone finance ministers are expected to rubber stamp their share of the next installment on Saturday night with the IMF following suit some time next week — the finance ministers were initially planning to meet up in Brussels on Sunday but in a surprise development have opted to discuss the disbursement by video conference a day earlier.

The funds will see Greece through September, but the country is going to need another rescue in order to service its mountain of debt. A deal on another bailout is in the works, too, though an agreement is not expected imminently.

The euro has also been a big gainer as Greece bought more time. By early afternoon London time, it was up another 0.1 percent at $1.4483.

Earlier in Asia, Japan's Nikkei 225 index rose 0.5 percent to close at 9,868, while South Korea's Kospi index climbing 1.2 percent to 2,126. Markets in Hong Kong were closed for a public holiday.

Mainland Chinese shares were cool to the June manufacturing report, though some investors were apparently relieved to see the economy slowing since that will alleviate concerns over new monetary tightening measures to combat inflation that has dampened market sentiment for months.

The benchmark Shanghai Composite Index saw profit-taking erase earlier gains, edging 0.1 percent lower to 2,759.36, while the Shenzhen Composite Index added 0.5 percent to 1,162.07.

In the oil markets, prices were down with news that growth remains sluggish throughout the global economy. The main New York contract for crude was down 79 cents to $94.63 per barrel.

___

Pamela Sampson in Bangkok contributed to this report.

Federal judge rejects SEC claims on Morgan Keegan (AP)

By GREG BLUESTEIN, The Associated Press Greg Bluestein, The Associated Press – Thu?Jun?30, 7:11?pm?ET

ATLANTA – A federal judge in Georgia rejected claims this week by federal regulators who said investment firm Morgan Keegan & Co. fraudulently sold auction-rate securities to investors, leaving them to hold the bag on $2.2 billion of the debt when the market collapsed in 2008.

U.S. District Judge William Duffey Jr. said in an order Tuesday that the Securities and Exchange Commission didn't introduce evidence that the firm backed a company-wide policy that encouraged brokers to mislead investors. He said in his 31-page ruling that "failure to predict the market does not amount to securities fraud."

The company, owned by Regions Financial Corp., argued that its failure to give customers more strident warning about the risks of investing in the instruments doesn't amount to security fraud. The SEC countered that the company's "stubborn refusal" to require brokers to describe the risks was evidence of misconduct.

SEC spokesman John Nester in Washington said late Thursday, "We are considering whether to appeal the court's decision."

Duffey's ruling comes two years after the SEC said in a lawsuit that Morgan Keegan misled thousands of investors about the risks associated with auction-rate securities. The complaint said Morgan Keegan told investors the securities were safe, liquid investments and failed to tell them they were becoming harder to sell by February 2008.

A host of big investment banks, including Wall Street's biggest names, have reached similar settlements with the SEC and state regulators in recent years over auction-rate securities. The regulators accused the banks of misleading customers into believing that the risky securities were safe, cash-like investments.

Tens of thousands of the banks' customers bought the auction-rate securities before the $330 billion market for them froze in February 2008.

Under the settlements, the banks agreed to buy back a total of tens of billions of the securities.

The auction-rate securities market involves investors buying and selling instruments that resemble corporate debt, except the interest rates are reset at regular auctions, some as often as once a week. A number of companies invested in the securities because they could treat their holdings almost like cash.

Tens of thousands of investors nationwide — including cities and towns, charities and small businesses — were left holding damaged securities that couldn't be readily sold for cash once the market collapsed.

In a separate case, Morgan Keegan agreed last week to pay $200 million to settle civil fraud charges that it overstated the value of mortgage investments just as the housing market was collapsing in 2007 and lured buyers of its funds with false sales materials.

Regions Financial Corp. also announced last week that it hired investment bank Goldman Sachs & Co. to explore "potential strategic alternatives" for Morgan Keegan. The alternatives could include a sale of the firm or divisions of it.

In a settlement announced Wednesday with the SEC and state regulators, Florida-based investment firm Raymond James Financial Inc. agreed to buy back at least $280 million in auction-rate securities from investors.

___

Associated Press writer Marcy Gordon in Washington contributed to this report.

Summary Box: Stocks extend rally on Greek vote (AP)

GREECE: Stocks rose after Greek lawmakers passed a cost-cutting bill that had to be approved before international lenders would release $17 billion in rescue funds.

CHICAGO SUPRISE: A trade group reported that manufacturing in the Chicago region sped up unexpectedly in June. Analysts had forecast a decline. The report helped the stock market reach its fourth straight day of gains.

THE INDEXES: The Dow rose 152.92 points, or 1.2 percent, to close at 12,414.34. The S&P 500 rose 13.23, or 1 percent, to 1,320.64. The Nasdaq rose 33.03, or 1.2 percent, to 2,773.52.

Toyota aiming for parent-only operating profit: Nikkei (Reuters)

(Reuters) – Toyota Motor Corp (7203.T) will continue to slash costs in a bid to swing back to an operating profit on a parent-only basis, The Nikkei business daily reported.

Toyota is trying to compete with South Korean and Chinese cars by reducing procurement costs by up to 30 percent, Chief Financial Officer Satoshi Ozawa told Nikkei in an interview.

The company also expects to launch a new line of cars in 2013, Ozawa told the daily. "We'll also hike per-car sales prices. If we shift offshore, we can't come back," the Nikkei quoted Ozawa as saying.

To achieve its target of earning 1 trillion yen ($12.38 billion)in operating profit, Toyota needs to break even on a parent-only operating basis, the daily reported.

Last fiscal, Toyota posted a parent-only operating loss of 480.9 billion yen, according to the Nikkei.

Ozawa told the daily that Toyota would be able to create a break-even structure next fiscal year.

(Reporting by Kartick Jagtap in Bangalore; Editing by Prem Udayabhanu)

European equity gains capped by manufacturing woes (AFP)

LONDON (AFP) – European shares rose on Friday, but gains were capped by a stream of downbeat manufacturing data in Britain, China and the eurozone, ahead of the latest reading from the United States.

Sentiment was supported by Greek lawmakers' agreement in a second vote to the implementation of austerity measures aimed at avoiding a default that could have sparked another global financial crisis.

In midday deals, London's FTSE 100 index of top shares added 0.43 percent to 5,971.26 points and in Paris the CAC 40 index advanced 0.07 percent to 3,985.07.

Frankfurt's DAX 30 gained 0.08 percent to 7,282.08 points and the Stoxx 50 index of leading eurozone companies won 0.14 percent to 2,852.64.

Growth in private sector manufacturing across the eurozone hit a one-and-a-half-year low in June, hit by the impact of budget cuts and weaker exports, according to data from London-based research group Markit.

The manufacturing purchasing managers' index (PMI) for the 16 countries that share the euro dived to an 18-month low at 52.0 in June, from 54.6 in May. While the reading was lower than expected, any score above 50.0 indicates growth.

Separately, Markit also revealed that Britain's manufacturing sector barely expanded in June, when the PMI dropped to 51.3 compared with 52.0 in May.

"It is notable that the further slowdown in UK manufacturing activity in June was replicated across Europe and also in several other countries," said IHS Global Insight economist Howard Archer in London.

"This indicates that the global manufacturing rebound from the sharp drop in output suffered during the 2008-2009 recession is now running out of breath.

"This may well be influenced by inventory rebuilding having now largely run its course as well as slowing demand."

Adding to the gloom, German manufacturing slowed to its weakest expansion rate for 17 months, and France slowed to a 22-month low. Italy, Ireland, Spain and Greece all contracted.

"Over the past two months, (eurozone) output growth has weakened to the greatest extent since late-2008," said Markit chief economist Chris Williamson in a statement.

"This reflects a combination of lacklustre domestic demand in many countries, especially the austerity hit periphery, as well as a near-stagnation of export sales."

Later on Friday, traders will focus on US manufacturing data after stronger-than-expected production figures in the Chicago region on Thursday.

Asian stock markets traded mixed on Friday, weighed by data showing that growth in manufacturing activity almost stalled in China last month.

Tokyo gained 0.53 percent, Seoul closed 1.19 percent higher, while Shanghai fell 0.10 percent and Sydney ended 0.36 percent lower. Hong Kong and Bangkok were closed for public holidays.

Growth in China's manufacturing activity almost stalled in June, with the official PMI falling for the third straight month to 50.9 in June from 52.0 in May, official data showed.

Separately, the HSBC China Manufacturing PMI fell to an 11-month low 50.1 in June from 51.6 in May.

Asian investors were given a strong cue after a rally on Wall Street, where the Dow jumped 1.25 percent, its fourth straight gain, on the back of the Chicago production data.

- Dow Jones Newswires contributed to this report -

US stocks rally on Greek vote, US data (AFP)

NEW YORK (AFP) – US stocks rallied Thursday, rising for the fourth day in a row after Greek lawmakers voted to implement a vital austerity plan and data showed business activity was up in the US industrial heartland.

The Dow Jones Industrial Average was up 148.83 points (1.21 percent) to stand at 12,410.25 in closing trade.

The broader S&P 500 rose 12.84 points (0.98 percent) to 1,320.25, while the tech-heavy Nasdaq Composite climbed 32.75 points (1.20 percent) to 2,773.24.

The gains came after the Greek parliament passed a bill needed to stave off a destabilizing default and the Institute for Supply Management said its index tracking economic activity in the Chicago region had jumped in June, beating forecasts.

TMX mum on hostile Maple bid, focuses on growth (Reuters)

TORONTO (Reuters) – Still stinging from calling off its marriage to the London Stock Exchange, TMX Group, operator of the Toronto Stock Exchange, wasn't ready on Thursday to start talking about a tie-up with the Canadian suitor that has made a hostile bid to take it over.

"We've been very committed to a deal with the LSE group and we've not been flirting elsewhere so to speak," TMX Chief Executive Tom Kloet said.

He said his company was focusing on growth after scrapping the C$3.6 billion deal with the LSE on Wednesday.

"We're not in any of those discussions right now, but the reality is that one never knows what will happen," Kloet told journalists after the TMX annual shareholder meeting.

The TMX/LSE deal collapsed as the two sides realized a day before the shareholder vote that they would not get the two-thirds majority needed to consummate their plan to build a transatlantic powerhouse in energy and resource equities.

"Make no mistake ... we will absolutely continue to grow internationally," Kloet told shareholders at the TMX annual general meeting, at which the vote on LSE-TMX proposal was to be held.

The collapse of the LSE bid opens the door to a hostile C$3.8 billion offer from the Canadian bank-led Maple Group consortium. Kloet said TMX will talk to Maple Group after taking time to consider its options, but that there were no talks scheduled.

"I don't think it would be appropriate for us to say publicly at this point, before we started the process, when we will, or whether we will, make a formal recommendation," Kloet said. "We will engage with Maple after we take some time to think about the road in front of us."

Few believe the TMX can afford to stand still as global exchanges race to expand their product bases and broaden their geographic reach, or risk being swallowed up by rivals or lose ground to new market entrants.

In London, the canceled deal fueled speculation that the LSE may now present an attractive takeover target. The Wall Street Journal said U.S. group Nasdaq OMX was in the preliminary stages of studying a move for the LSE Group, citing a source familiar with the matter.

LSE shares rose sharply in London, finishing up more than 10 percent at 1,061 pence. TMX shares edged down 0.68 percent on Thursday afternoon in Toronto to C$43.90.

The Maple Group, a consortium of 13 Canadian banks, pension funds and financial services firms, said it hoped to "now engage in a positive dialogue with the TMX Group board".

Insufficient support for LSE's bid will not necessarily translate to a win for Maple, which still needs to allay antitrust fears and address concerns about the amount of debt it would take on to finance the takeover.

Brenda Mallouk, a TMX shareholder who attended the company's AGM on Thursday, said she was not enthused by the Maple offer. She said she would rather see TMX remain a stand-alone entity.

Shareholders have until August 8 to tender their shares to the Maple bid.

(Reporting by Euan Rocha and Solarina Ho, writing by Pav Jordan; editing by Janet Guttsman and Peter Galloway)

London, Toronto stock exchanges nix merger (AFP)

OTTAWA (AFP) – A plan to merge the London Stock Exchange and the Toronto Stock Exchange was scrapped Wednesday, the two announced in a statement.

The deal was not expected to win the support of two thirds of LSE and TMX shareholders required for approval at a Thursday meeting, they said.

CA-CANADA Summary (Reuters)

LSE, TMX abort their merger, leaving both in play

TORONTO/LONDON (Reuters) – The London Stock Exchange's C$3.6 billion ($3.7 billion) plan to buy its Toronto counterpart collapsed on Wednesday in the face of a competing bid led by Canadian banks, leaving the UK exchange itself vulnerable to takeover. The failure, which follows Singapore Exchange Ltd.'s scuttled bid for Australia's ASX Ltd, is the latest sign of nationalist pride frustrating cross-border deals for highly symbolic capital markets.

Ontario government spending plans optimistic: auditor

TORONTO (Reuters) - Ontario's latest spending forecasts are optimistic and aggressive, the province's auditor general said on Tuesday, which may make it difficult for the government to meet its fiscal targets. The auditor's report comes just three months ahead of an October election. The governing Liberals are trailing the main opposition Progressive Conservatives in recent polls.

Inflation hits 8-year high, pressures Bank of Canada

OTTAWA (Reuters) - Canadian inflation rose to its highest level in more than eight years in May, boosting the Canadian dollar and raising the prospect the central bank will raise interest rates sooner than previously expected. Annual inflation hit 3.7 percent, well above expectations and far above the Bank of Canada's 2.0 percent target, according to Statistics Canada data on Wednesday.

Government may fund Wheat Board's move to open market

WINNIPEG, Manitoba (Reuters) - The government would consider giving the Canadian Wheat Board short-term capital to help it adjust to an open market once Ottawa removes its grain monopoly, Agriculture Minister Gerry Ritz said on Wednesday. Ritz, speaking to reporters in Winnipeg, said funding would depend on the board presenting a suitable business plan.

Canada privatizes nuclear unit; sells to SNC

TORONTO/VANCOUVER (Reuters) - The Canadian government is selling the nuclear reactor division of AECL to SNC-Lavalin Group, ending the flood of money it has pumped into the loss-making unit over the past six decades. In a long-awaited announcement, the two parties said on Wednesday SNC-Lavalin will pay state-owned Atomic Energy of Canada (AECL) C$15 million ($15.4 million) plus royalties for the unit, which designs and builds nuclear reactors for generating electricity.

Analysis - Nationalism casts shadow over Canada after TMX deal

TORONTO (Reuters) - When Canada's big banks and pension funds needed sizzle to combat the steak offered by the London Stock Exchange's bid for the Toronto Stock Exchange, they looked only as far as the Canadian flag. The iconic red maple leaf -- and sweet syrup from the trees -- conveyed in a word what the Maple Group consortium of big financial firms wanted to tell TMX shareholders: We don't want foreigners controlling our markets, do we?

Home-resale price index jumps in April

TORONTO (Reuters) - Canadian home resale prices rose in April from March, marking the biggest of five straight month-on-month increases and gaining right across the country, a report on Wednesday said. The Teranet-National Bank Composite House Price Index, which measures price changes for repeat sales of single-family homes in six metropolitan areas, showed overall prices were up 1.1 percent in April from March.

BCE pays $10.2 million to settle with watchdog

TORONTO (Reuters) - Canada's Competition Bureau said on Tuesday that BCE Inc's Bell Canada unit had agreed to pay C$10 million ($10.2 million) and to stop making what the watchdog called "misleading representations" about its prices. Bell, which sells telephone, television and Internet services, said it "fundamentally disagrees" with the bureau's position on its advertising but paid the penalty, the maximum allowed, to resolve the issue.

Canada set to sell AECL unit to SNC-Lavalin: report

TORONTO (Reuters) - The Canadian government is set to announce the sale of Atomic Energy of Canada Ltd to SNC-Lavalin Group Inc, the Globe and Mail newspaper said on Tuesday. SNC-Lavalin, Canada's biggest engineering and construction firm, was the sole bidder for AECL's commercial nuclear power division and had said it was still interested in the deal despite losing its bidding partner in May.

NDP concerned by LSE-TMX bid

OTTAWA (Reuters) - New Democratic Party has concerns about the London Stock Exchange's takeover offer for TMX, operator of the Toronto Stock Exchange, the party said on Tuesday. The left-leaning NDP said it would "outline concerns" about the deal on Wednesday morning, a day ahead of a TMX shareholder vote on the LSE offer.

How the major stock indexes fared Wednesday (AP)

Stocks closed higher for the third day in a row Wednesday after Greece cleared a hurdle toward getting more emergency loans. Financial stocks rose after Bank of America reached a settlement with investors over failed mortgage securities.

Greek lawmakers passed an austerity bill that brought the country closer to getting a financial backstop it needs to avoid defaulting on its debt. A default by Greece would shock global markets and freeze lending to other heavily indebted European countries.

The Dow Jones industrial average rose 72.73 points, or 0.6 percent, to close at 12,261.42.

The Standard & Poor's 500 index rose 10.74, or 0.8 percent, to 1,307.41.

The Nasdaq composite rose 11.18, or 0.4 percent, to 2,740.49.

For the week:

The Dow is up 326.84, or 2.7 percent.

The S&P is up 38.96, or 3.1 percent.

The Nasdaq is up 87.60, or 3.3 percent.

For the year to date:

The Dow is up 683.91, or 5.9 percent.

The S&P is up 49.77, or 4.0 percent.

The Nasdaq is up 87.62 points, or 3.3 percent.

European stocks surge on Greek austerity vote (AFP)

LONDON (AFP) – European stock markets extended strong gains on Thursday following Greece's approval of austerity measures needed to unlock critical bailout funding and stave off a debt default.

London's benchmark FTSE 100 index of top shares jumped 1.53 percent to 5,945.71 points, while in Frankfurt the DAX gained 1.13 percent to 7,376.24 points and in Paris the CAC 40 climbed 1.48 percent to 3,982.21 points.

"The recent rise in European markets has continued today as markets end the month, quarter and first half of 2011 on a positive note, with oil and banking sectors leading the gainers as fears about an imminent Greek default get pushed out beyond the release of the next tranche of bailout funds," said CMC Markets analyst Michael Hewson.

The Greek parliament approved Thursday measures to implement 28.4 billion euros ($41 billion) in unpopular budget cuts and tax hikes despite street protests that turned violent this week.

The EU quickly said in response that Greece had now met conditions for the release of the next installment of 12 billion euros of bailout funds under under its 110-billion-euro EU-IMF bailout package agreed last year.

Athens faced the prospect of default in July if the bailout funds had been held back.

The Greek vote will also allow talks to proceed on a second bailout package expected to total a similar amount to ensure Athens has sufficient funding for the next three years.

News that German banks will take part in a second Greek debt rescue package also helped improve market sentiment, as did moves by Portugal and Italy to further tighten their budgetary belts.

Brussels ended the day up 0.97 percent, Amsterdam rose 1.3 percent, Milan climbed 1.62 percent, Madrid jumped 2.13 percent and Lisbon soared 3.03 percent.

London was also supported by news that Lloyds bank will axe 15,000 more jobs and that the London Stock Exchange is once more a likely takeover target.

Lloyds, which is 41-percent state-owned after a massive bailout, said it will axe 15,000 jobs in a drastic cost-cutting plan that will halve its international base and save ￡1.5 billion (1.66 billion euros, $2.4 billion) per year by 2014.

In response, LBG rocketed to the top of the FTSE 100 index, gaining 9.73 percent to 49 pence as investors welcomed news of the measures.

Off the FTSE 100, the London Stock Exchange saw its share price jump 10.98 percent to 1,061 pence, one day after The LSE and Toronto's bourse scrapped plans to merge after failing to win support from two-thirds of their shareholders.

"Shares in the London Stock Exchange rallied .. as investors speculated that the firm may become bid prey to Nasdaq OMX, having seen its multi-billion bid for Canada's TMX fall by the wayside," said analyst Giles Watts at City Index.

Nasdaq failed to take over LSE in in 2006 and 2007.

"Investors are now speculating that the firm's failure to secure a deal with the Canadian Exchange operator at a time of huge competition and subsequent consolidation within the sector makes it vulnerable," Watts added.

Wall Street also rallied on the Greek vote, with the Dow Jones Industrial average gaining 1.18 percent to stand at 12,406.05 points at 1600 GMT.

The broader S&P 500 rose 0.94 percent to 1,319.74 points, while the tech-heavy Nasdaq Composite climbed 1.19 percent to 2,773.21 points.

Asian stock markets closed higher on Thursday after Greek lawmakers gave preliminary approval on Wednesday to the key package of spending cuts and tax hikes aimed at helping Athens avoid a catastrophic default.

Hong Kong gained 1.53 percent, Tokyo added 0.19 percent, Shanghai was up 1.23 percent and Sydney rose 1.73 percent.

LSE, TMX abort their merger, leaving both in play (Reuters)

TORONTO/LONDON (Reuters) – The London Stock Exchange's C$3.6 billion ($3.7 billion) plan to buy its Toronto counterpart collapsed on Wednesday in the face of a competing bid led by Canadian banks, leaving the UK exchange itself vulnerable to takeover.

The failure, which follows Singapore Exchange Ltd.'s scuttled bid for Australia's ASX Ltd, is the latest sign of nationalist pride frustrating cross-border deals for highly symbolic capital markets.

The failed bid from LSE opens the door to a hostile C$3.8 billion offer for TMX Group, operator of the Toronto Stock Exchange, from the Maple Group consortium. The consortium bid is a made-in-Canada alternative to a takeover that would have put a big domestic asset in foreign hands.

"This is a group of Canadians, businesses that came together and have asserted themselves," said Dwight Duncan, the province of Ontario's finance minister and an early opponent of the LSE deal.

In having to retreat from Canada, the LSE also draws attention to itself as a takeover target as exchanges consolidate to try to grow and broaden geographic reach, and to fight off rivals and new market entrants.

Nasdaq OMX Group, smarting from its own failure in the United States to buy New York Stock Exchange parent NYSE Euronext, could be a contender for an alternative transatlantic combination with the LSE.

"While the failed deal probably puts an end to TMX's M&A ambitions, other exchange operators will likely continue to look for partners. This reinforces my belief that we should expect more mergers, not less," said Ed Ditmire, New York-based analyst for Macquarie Securities.

Nasdaq and LSE shares rose in late trade on Wednesday, indicating that speculation about a tie-up could be brewing.

"It would not surprise me to see Nasdaq and LSE talking," said Jamie Selway, New York-based market structure expert and managing director of strategy at Investment Technology Group.

The TMX deal's collapse is a black eye for LSE Chief Executive Xavier Rolet, who banked his reputation on sealing the deal.

Rolet was to have led a LSE-TMX exchange group, which would have been a heavyweight global player and No. 1 in listing energy and mining companies.

But the support he got from TMX's management and board wasn't enough to overcome opposition from within Canada's tight-knit banking sector.

Four of the country's biggest banks were the lead players in the bid from Maple, a consortium that also included pension funds and financial services firms. Canada's other two big banks were advisers to the LSE proposal.

NOT ENOUGH VOTES

In brief statements issued one day before a shareholder vote, the two exchanges said they realized from an early tally of proxy votes that TMX shareholders would not give them the two-thirds majority needed to approve their friendly deal.

TMX Group said it would now review opportunities, including the Maple offer.

"LSE and TMX were both in positions where they weren't quite big enough or diverse and fast-growing enough to control their own destiny," said Justin Schack, managing director of market structure analysis at New York-based agency brokerage Rosenblatt Securities.

"They did the best deal that they probably could. Now that that's not going to happen TMX has Maple to deal with, while LSE is out on its own again, and there aren't many partners out there where they could be the acquirer rather than the target."

Maple has offered C$3.8 billion for TMX, mostly in cash.

LSE's mostly stock offer was worth about C$49 a share.

It would have needed a green light from a government that last year vetoed a big international takeover as not being in Canada's best interests.

TMX shares touched a high of C$44.80 after the deal was scrapped before easing back to close at C$44.20. That's well below the Maple offer price of C$50 a share.

Maple wants to wrap Alpha, Canada's biggest alternative trading venue, and the CDS stock-trading clearing system into a post-takeover TMX. That would give it a market share of more than 80 percent and leave it facing antitrust concerns.

"Now we need to see what the Competition Bureau thinks of Maple. We also need to see if shareholders support Maple. I think they will, I don't see how they won't," said Alison Crosthwait, director of global trading strategy at Instinet.

"We're going back to more of a closely held, interested parties controlling the exchange."

Canada's independent Competition Bureau has bared its teeth lately on several fronts, getting a C$10 million payment from BCE Inc's Bell Canada unit for misleading advertising, and seeking to block a joint venture between Air Canada and United Continental.

(Additional reporting by Claire Sibonney, Andrea Hopkins, Euan Rocha, Solarina Ho, Jonathan Spicer, Allison Martell and Trish Nixon; editing by Janet Guttsman and Peter Galloway)

FTSE rallies on Greek expectations (AFP)

LONDON (AFP) – London shares rallied on Wednesday, mirroring gains in most of Asia, on prospects that Greek lawmakers will approve a radical budget action to avert default, while miners gained on rising metals prices.

The benchmark FTSE 100 index of top shares soared 1.15 percent to 5,833.22 points in late morning deals.

"With all eyes on Athens, traders have been riding the recent wave of confidence on the broad-based assumption that the austerity vote will be passed," said analyst Yusuf Heusen at financial spread-betting firm IG Index.

"Quite what this actually means -- when there are clear signs that the population won't buy into the measures required -- remains to be seen, making this rally look awfully fragile.

"With little else on the economic calendar, affairs in Greece really are dominating what is otherwise a relatively quiet market."

In recent days and weeks, investors have been on edge over a potential Greek default that could shatter confidence and send fresh shockwaves across global financial markets.

The Greek parliament is later expected to vote in favour of austerity measures that are demanded by international creditors in exchange for the EU/IMF money that the troubled eurozone member urgently needs to survive a debt crisis.

In London Antofagasta soared 4.14 percent to 1,357 pence, Kazakhyms rallied 3.08 percent to 1,340 pence and Vedanta won 2.48 percent to 2,021 pence, while Arcelor Mittal jumped 3.43 percent to 33.48 euros in Paris.

Engine-maker Rolls-Royce meanwhile added 1.55 percent to 622.5 pence after announcing a $1-billion order from Singapore Airlines.

Wall Street had raced higher on Tuesday, with all three major indices leaping more than one percent on optimism over Greece, while Asian stocks mostly rose on Wednesday.

Tokyo shares also jumped 1.54 percent after figures showed post-quake industrial output had surged to its second highest level on record while exporters were boosted by a weaker yen.

LSE-Toronto stock exchange merger fails (AFP)

OTTAWA (AFP) – The London Stock Exchange and Toronto's bourse scrapped Wednesday plans to merge after admitting they could not get the support of two-thirds of their shareholders.

The move opened the way for the possible takeover of the TMX Group, which operates the Toronto and Montreal stock markets, by a consortium of 13 Canadian banks and pension funds called the Maple Group which had launched a rival $3.8 billion bid to that of the London Stock Exchange.

"A majority of shareholder votes cast by proxy prior to the June 28, 2011 proxy cutoff supported the merger resolution," the LSE and TMX Group said in a statement.

"However, it is clear that the two-thirds threshold required to approve the merger would not have been achieved."

The merger also risked not obtaining the approval of regulatory bodies in Quebec and Ontario provinces, where political leaders were outspoken about their preference for the Maple bid.

The LSE early this year announced plans to take over TMX with a view to creating a global giant rivaling NYSE Euronext and Deutsche Boerse, which are also trying to merge their operations.

In response the Maple Group put together its own bid for TMX Group to block the deal.

Both bids were about $3.8 billion.

TMX Group said it would "continue to pursue its growth objectives" while its board "reviews the company's opportunities, including the offer from Maple Group."

TMX Group has also agreed to pay LSE a $10 million expense fee for the failed bid, and if it accepts Maple's acquisition offer in the next 12 months will pay LSE an additional $29 million.

"We are clearly disappointed," LSE chief executive Xavier Rolet said in a statement.

"We believe the merger would have been a unique opportunity for TMX Group shareholders to be partners in a truly international group, co-located in Toronto and London, focused on growth and opportunity."

"Whilst the merger with TMX Group was an exciting opportunity... we continue to see other significant growth opportunities across our well-positioned capital markets, information services, technology and post trade businesses," Rolet added.

Maple, meanwhile, expressed joy at the outcome.

Speaking on behalf of Maple's investors, Luc Bertrand said: "We are very pleased with the support our offer received from TMX Group shareholders."

With the LSE-TMX deal dead, "we hope we may now engage in a positive dialogue with the TMX Group board," he added, saying the Maple bid "represents the best way forward for TMX Group and the Canadian capital markets."

"Maple will continue to diligently pursue receipt of all necessary regulatory approvals and will continue to engage in a constructive dialogue with stakeholders from across the spectrum," Bertrand said.

Louis Gagnon, a finance professor at Queen's University in Ontario, said "TMX now will probably accept Maple's offer."

"But there is still fear that it will create a monopoly in Canada," he added.

Maple is looking to also buy Alpha Group, another Canadian trading system, as well as the stock clearing and depository service CDS to create a national champion controlling nearly all trading in this country.

There is also concern that the Maple bid is heavily leveraged, as compared to the LSE's offer.

For the LSE, the fear now is that it could be left out of the global exchanges consolidation.

Following the announcement, TMX shares gained nearly two percent to CAN$44.35 (US$45.69) in Toronto.

China's Buffett-backed BYD shares surge on debut (AP)

By ELAINE KURTENBACH, AP Business Writer Elaine Kurtenbach, Ap Business Writer – Thu?Jun?30, 4:53?am?ET

SHANGHAI – Shares in Chinese auto and battery maker BYD Co. jumped 41 percent in their debut on the Shenzhen Stock Exchange on Thursday, despite news that the company's profit fell by 84 percent in the first quarter.

Shenzhen-based BYD's 1.42 billion yuan ($220 million) share offering was aimed at raising cash needed for an expansion mainly focused on an auto research, development and production base.

Its shares gained 7.45 yuan, or 41.4 percent, to 25.45 yuan, performing much better than some other recent lackluster share offerings.

BYD, whose name stands for Build Your Dreams, said the plunge in its first quarter profit was mainly due to weak auto sales. Unaudited results showed net profit in the quarter ended March 31 was 266.7 million yuan ($41.2 million), compared with 1.7 billion yuan a year earlier, it said.

"The performance in the first quarter of 2011 dropped significantly, which was mainly due to a decline in the performance of the automobile business," BYD said in a notice to the Hong Kong Stock Exchange, where its shares already trade. But it also noted weakening sales of rechargeable batteries and cell phone parts.

MidAmerican Energy, a subsidiary of billionaire investor's Warren Buffett's Berkshire Hathaway, owns 9.9 percent of BYD.

The company sold 79 million shares, or a 3.4 percent stake, at 18 yuan each in its offering on the Shenzhen Stock Exchange, the smaller of China's two stock markets.

Local media reports said the company chose to be listed on the small- and medium-size company index to help improve the likely performance of its shares. The company scaled back its original fundraising plans by some 770 million yuan ($119 million), apparently in recognition of relatively weak markets recently.

The Shenzhen Composite Index has lost 9.4 percent in the past three months, as sentiment has been battered by worries over the slowing economy.

BYD's sales of its best-selling F3 conventional sedan have faltered as the once torrid Chinese car market, the world's largest, has cooled in recent months. Efforts to win a wider market for its hybrid electric cars have also made slow progress.

In recent comments to shareholders, Berkshire Hathaway's vice chairman, Charlie Munger, said he was still enthusiastic about BYD, despite its recent troubles, which have delayed its plans to launch car sales in North America.

Munger said BYD's mistake was in trying to double its automotive sales every year for six years in a row. It worked for the first five years, he said.

The company started out making batteries and later shifted to automaking. Recently, it has branched into energy storage systems and bus production.

The strategy reflects an expectation that China will move faster in commercializing use of electric buses than private autos, said a report Thursday in the state-run newspaper Southern Weekend.

Until China develops the infrastructure needed to support wider use of electric vehicles, BYD sees greater promise in sales to government fleets and bus companies, it said.

Summary Box: Stocks rise as Greece nears new loan (AP)

GREECE: Greek lawmakers passed an austerity bill that brought the country closer to getting a financial backstop it needs to avoid defaulting on its debt. The loan buys Greece and other European countries more time to repair their budgets.

BANKS: Financial companies in the S&P 500 rose 2.1 percent after Bank of America reached an $8.5 billion settlement with investors over claims it sold them bad loans.

THE INDEXES: The Dow rose 72.73 points, or 0.6 percent, to close at 12,261.42. The S&P 500 rose 10.74, or 0.8 percent, to 1,307.41. The Nasdaq rose 11.18, or 0.4 percent, to 2,740.49.

Wall Street up as S&P 500 tops 50-day moving average (Reuters)

NEW YORK (Reuters) – Wall Street rose for a fourth consecutive session on Thursday in an end-of-quarter rally that was boosted by a surprisingly strong economic report covering the U.S. Midwest.

The major stock indexes rose 1 percent, including the benchmark S&P 500, which climbed above its 50-day moving average at 1,317 despite analysts' expectations it would meet resistance.

Regional business activity grew more than expected this month, lifted by a jump in new orders, the Institute for Supply Management-Chicago said. That calmed concerns about the economy that have weighed on markets for two months.

"Japan slowly coming back likely resulted in the bounce back in the Chicago PMI. (But) With all the mixed readings around the country, tomorrow's national ISM will reconcile all and will be the most important data point of the week as we shift our focus back to the economy after all the Greek drama this week," said Peter Boockvar, equity strategist at Miller Tabak + Co in New York.

The Dow Jones industrial average (.DJI) was up 139.60 points, or 1.14 percent, at 12,401.02. The Standard & Poor's 500 Index (.SPX) was up 12.60 points, or 0.96 percent, at 1,320.01. The Nasdaq Composite Index (.IXIC) was up 31.47 points, or 1.15 percent, at 2,771.96.

The Greek parliament approved measures on Thursday to implement budget cuts and assets sales. Greece is now eligible for more international financial aid to avoid defaulting on debt. The parliament had backed the overall austerity plan on Wednesday, which lifted the S&P 500 more than 3 percent higher for its best three-day run in three months.

The S&P 500 is down less than 1 percent this quarter, while the Dow is up 0.5 percent and the Nasdaq is off 0.5 percent.

Much of the recent rally is due to end-of-quarter window dressing by fund managers, who typically sell losers and buy winners to make their portfolios look better.

The Federal Reserve ended its $600 billion bond-buying program, known as QE2, on Thursday and has not offered any hints of more monetary easing. Markets were volatile in May and June, partly on concerns about QE2's end.

In company news, shares of Ford Motor Co (F.N) shot up 3.6 percent to $13.90 after an analyst projected the U.S. automaker gained market share in June. Shares of rival General Motors Co (GM.N) were up 0.2 percent at $30.35.

EBay Inc (EBAY.O) rose 3.3 percent to $31.89 after both Citigroup and Bank of America-Merrill Lynch upgraded the shares, citing a Federal Reserve ruling that third-party networks like eBay's PayPal will not be regulated like payment networks.

First Solar Inc (FSLR.O) surged 6.6 percent to $137.88 after the solar panel maker won conditional loan guarantees from the U.S. Department of Energy worth $4.5 billion for three of its largest projects.

(Reporting by Angela Moon, Editing by Kenneth Barry)

Analysis - Nationalism casts shadow over Canada after TMX deal (Reuters)

TORONTO (Reuters) – When Canada's big banks and pension funds needed sizzle to combat the steak offered by the London Stock Exchange's bid for the Toronto Stock Exchange, they looked only as far as the Canadian flag.

The iconic red maple leaf -- and sweet syrup from the trees -- conveyed in a word what the Maple Group consortium of big financial firms wanted to tell TMX shareholders: We don't want foreigners controlling our markets, do we?

Whether the appeal to nationalism worked or whether it was just a matter of money may be debated forever. But foes of the proposed tie-up of the LSE and TMX are already billing the death of the friendly transatlantic deal as a triumph of home-grown heroes.

"I think this is Canadians asserting themselves and, in fact, fulfilling the promise of free trade, that we will specialize in certain areas and lead in the world, which we are in financial services," Ontario's Finance Minister Dwight Duncan told reporters.

Duncan, whose Liberal party governs Ontario, Canada's most populous province and home to the Toronto Stock Exchange, has been one of the most vocal opponents of the LSE-TMX deal, citing the proven track record of Canadian banks during the financial crisis.

But economists and analysts worry that patriotism is trumping pragmatism, pointing to another big merger that was squashed last year on concerns about ceding control of Canadian assets: BHP Billiton's bid for Potash Corp.

"We've seen a great deal of nationalism lately, particularly with the Potash deal and the idea that mergers should act in the national interests," said Mike Moffatt, a lecturer at the Richard Ivey School of Business.

"That's going to raise concerns about investing in Canada ... Canada is now seen as riskier than it would otherwise be."

Robert Young, head of Liquidnet Canada noted that exchanges have sparked especially patriotic responses, including Australia's nixing of a Singapore offer for its main equities market.

"What we saw in Australia and what we saw here is ... that nationalism, in one way shape or another, frustrated those deals. We all know there is nationalistic, iconic status attached to exchanges," Young said.

"The perception is, 'Can you really do a deal in Canada?' And that's an unfortunate consequence of the banks deciding to call themselves Maple."

Whether the decision to spurn the LSE is part of a larger trend to bulwark Canadian companies against foreign control is debatable, BHP Billiton aside. In 2006, Brazilian miner Vale bought Inco, Canada's biggest nickel miner. A year later, aluminum producer Alcan was bought by Rio Tinto.

The difference lately may be the global financial crisis and subsequent meltdowns in economies in the United States and Europe. Canada looks robust by comparison.

"The decision not to pursue the merger I think is part of a general retreat from the 'globalization wave' of recent years," said Lakehead University professor Livio Di Matteo said.

"The recession and the sovereign debt crisis are sparking at least a pause if not a retreat from a more integrated world economy and this is its latest manifestation in Canada,"

Renee Colyer, chief executive of capital markets consulting firm Forefactor, said it's a grim development.

"What message did we just give the world?" Colyer asked.

"I just hope ... the Toronto Stock Exchange still has the opportunity for growth and opportunities to form alliances with other exchanges and that those other exchanges aren't going to feel like, 'Well, if we even try to come into Canada, we're going to be challenged by the banks that are the oligopoly that is Canada'."

Still, not everyone believes nationalism had anything to do with TMX shareholders balking at the LSE offer. Some 40 percent of TMX shares are held outside Canada, so many voters would not be swayed by a pitch to patriotism.

"The nationalistic angle might have been a convenient tool. But I really sincerely believe that, based upon the membership of this Maple Group, that these people formulated a bid based purely on economic considerations," said Louis Gagnon, a finance professor at Queen's School of Business.

"When it comes to money, people tend to see dollars before they see flags."

The failed LSE bid clocked in at C$49 a share, including a C$4 dividend. Maple's offer is worth C$50 a share.

($1=$0.97 Canadian)

(Additional reporting by Solarina Ho, Claire Sibonney, Allison Martell and Jonathan Spicer; editing by Janet Guttsman and Rob Wilson)

London Exchange 'disappointed' after merger collapse (AFP)

LONDON (AFP) – The London Stock Exchange is "disappointed" at the collapse Wednesday of a plan to merge with the Toronto Stock Exchange, LSE chief executive Xavier Rolet said in a statement.

The deal to merge the LSE and TMX Group, owner of the Toronto exchange, collapsed as it had not expected to win the support of two thirds of shareholders required for approval at a meeting due Thursday, the pair said in a statement.

"We are clearly disappointed," Rolet said. "We believe the merger would have been a unique opportunity for TMX Group shareholders to be partners in a truly international group, co-located in Toronto and London, focussed on growth and opportunity."

"Whilst the merger with TMX Group was an exciting opportunity... we continue to see other significant growth opportunities across our well-positioned capital markets, information services, technology and post trade businesses," Rolet added.

Stocks rise as Greece clears final bailout hurdle (AP)

NEW YORK – Stocks rose sharply Thursday, putting the market on track for its fourth straight gain, after Greece cleared a final hurdle toward receiving its next installment of emergency loans. A pickup in manufacturing around Chicago also pushed indexes higher.

Greek lawmakers passed a cost-cutting bill that has been working its way through that country's parliament since Tuesday. The bill, which has caused violent protests in Greece, had to be approved before international lenders would release $17 billion in rescue funds that the country needs to avoid defaulting on its debt. A default by Greece would disrupt financial markets and lead banks to freeze lending to other heavily indebted European countries.

Traders were also reassured by encouraging signals on the U.S. economy. A trade group reported that manufacturing in Chicago sped up unexpectedly in June. Analysts had forecast a decline.

Stocks are still below the 2011 highs they reached in late April, when a series of weak economic reports indicated that the U.S. economy was slowing down. Since then investors have been debating whether or not the slowdown would be a short-term blip before the recovery gets back on track.

"We have been in the camp that says it's temporary," said Brad Sorensen, a market analyst at Schwab. The pickup in Chicago manufacturing was the latest proof that the short-term slowdown view is correct, Sorensen said.

The Dow Jones industrial average rose 144 points, or 1.2 percent, to 12,405 in afternoon trading. About half of the gains came after the Greek parliament passed its austerity bill.

The Standard & Poor's 500 index rose 13, or 1 percent, to 1,320. The Nasdaq composite rose 34, or 1.2 percent, to 2,773.

Relief that Greece is buying more time to repair its budget has sent U.S. stocks higher all week. The Dow and S&P 500 are both up 4 percent this week and have risen very day since Monday. Prior to this week, the Dow and S&P had only one week of gains out of the past eight.

European stock indexes also jumped after the Greek vote. Germany's benchmark DAX index rose 1.1 percent. Most of the gains came shortly after the vote. The FTSE 100 index of leading British shares and France's CAC-40 both rose 1.5 percent.

Metals manufacturer Worthington Industries Inc. jumped 9 percent after the company raised its quarterly dividend and said it would buy back up to 10 million shares of its own stock.

Callaway Golf Co. fell 1.1 percent after the company shook up its leadership, announced job cuts and said it expects to have weak results in the second quarter.

Fertilizer maker CF Industries Holdings Inc. fell 4 percent on news that farmers planted more corn in spring, which may weigh on prices and reduce farmers' income.

Major indexes could eke out a small three-month gain as a volatile quarter comes to a close. The Dow is up 0.6 for the three month period ending in June, but the S&P 500 is down 0.5 percent.

Slightly fewer people applied for unemployment benefits last week, but the level of claims is still high at 428,000. New unemployment claims have stayed above 400,000 for 12 straight weeks, a sign that companies aren't hiring at a rate that can sustain job growth. The slowdown in hiring has caused concerns that the U.S. economy will take longer than expected to return to health.

Stocks rally as Greece nears getting bailout funds (AP)

LONDON – Global stocks pushed higher once again on Thursday as Greece looked likely to clear the final hurdle required to get bailout cash needed to avert a potential debt default next month.

After Wednesday's Parliamentary backing for a euro28 billion ($40 billion) austerity bill, Greece's lawmakers are poised to vote in favor of an implementation bill later.

Passage of both is necessary for Greece's international creditors to release the euro12 billion worth of bailout funds from last year's financial rescue. Without the money, Greece would have run out of money by the middle of July. A Greek debt default could have caused havoc in financial markets around the world.

In Europe, the FTSE 100 index of leading British shares was up 0.6 percent at 5,892 while France's CAC-40 rose 0.2 percent to 3,932. Germany's DAX was up modestly at 7,297.

Wall Street was set to open solidly, too — Dow futures were up 0.2 percent at 12,238 while the broader Standard & Poor's 500 futures rose a similar rate to 1,306.

The Greek Parliament's backing of the austerity measures helped solidify sentiment in the markets following weeks of unease. When investors are more inclined to take on risk, they invariably mark shares higher, while currencies like the euro gain at the expense of the dollar or the Swiss franc.

"The successful passage of the vote has provided a much needed shot in the arm to risk sentiment which had deteriorated markedly over the last couple of months," said Lee Hardman, an analyst at the Bank of Tokyo Mitsubishi UFJ.

Hardman said he doesn't expect the positive mood to last as other factors besides Greece, most notably the slowdown in the U.S. economic recovery, continue to weigh on the markets' outlook.

In addition, he said the measures backed by Parliament fail to "materially alter the insolvency of the Greek government."

He's not alone in thinking that — many economists believe Greece will ultimately have to default on its debts at some point in the future as the scale of the debt at euro340 billion is just too big for a country of only 11 million people to service.

For now, investors appeared to be enjoying a respite in their concerns over Greece and the future of the euro currency. By late morning London time, the euro was trading 0.1 percent higher on the day at $1.4476.

Trading was expected to be somewhat more volatile on Thursday as it marks the end of the month and the end of the quarter, when investors often book profits and close off trades.

It's also the last day of the U.S. Federal Reserve's $600 billion monetary stimulus, which many have credited for the outperformance of stock markets over the past year or so. A speech by Fed official James Bullard will be monitored in that context.

Though the U.S. economic recovery is not as buoyant as earlier in the year, the Fed is not expected to sanction another round of stimulus measures, partly because of political constraints in the U.S. and because inflationary pressures appear to be rising.

Earlier in Asia, Japan's Nikkei 225 rising 0.2 percent to close at 9,816.09, while South Korea's Kospi rose 0.3 percent to 2,100.69 and Hong Kong's Hang Seng ended 1.5 percent higher to 22,398.10.

Mainland Chinese shares rose as investors interpreted the upbeat news from overseas as cause for an improved outlook for the Chinese economy. The Shanghai Composite Index gained 1.2 percent to 2,762.08. The Shenzhen Composite Index gained 1.4 percent to 1,155.89.

In the oil markets, prices dipped modestly after surging the previous on the back of the Greek vote and figures showing stocks in the U.S. had fallen. Benchmark crude for August delivery was 26 cents lower at $94.51 per barrel in electronic trading on the New York Mercantile Exchange.

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Pamela Sampson in Bangkok contributed to this report.

TMX Group kills merger with London Stock Exchange (AP)

TORONTO – The operators of the Toronto and London stock exchanges have killed a $3.8-billion proposed merger, saying the controversial deal could not garner enough shareholder support to go ahead.

TMX Group said Wednesday that a majority of proxy votes sent in ahead of its Thursday annual meeting supported the merger but it was "clear" the proposal could not achieve the required two-thirds support from all shareholders.

TMX Group CEO Tom Kloet said the company will now review a rival hostile bid by Maple Group Acquisition Corp., a group of 13 Canadian banks and pension funds.

"Although we will not join forces with LSE Group, our business is strong and I have enormous confidence in the continued success of our company," Kloet said in a statement.

In a statement, Xavier Rolet, the CEO of the London Stock Exchange Group, said he was "disappointed."

"We believe the merger would have been a unique opportunity for TMX Group shareholders to be partners in a truly international group, co-located in Toronto and London, focused on growth and opportunity," he wrote.

TMX says it will pay a $10.3 million termination fee to the LSE, and a further $29.8 million if the acquisition with Maple goes through within 12 months.

"Maple will continue to diligently pursue receipt of all necessary regulatory approvals and will continue to engage in a constructive dialogue with stakeholders from across the spectrum," Maple spokesman Luc Bertrand said.

The rejection of the merger with the LSE now puts more pressure on the TMX to negotiate a friendly deal with Maple Group, which now has the only bid on the table. The rival bidder's $3.7-billion offer has been repeatedly rejected by the TMX, mainly because it is considered loaded down with too much debt.

Proponents of both the LSE and Maple Group bids have been waging a media and speaking blitz to win support for their positions in recent weeks, the campaign pitting prominent Bay Street players against each other on either side.

Kloet said that the TMX exchange ownership still opposes that bid.

However, now that the LSE deal is dead, two major Canadian banks that had advised on that deal — Royal Bank of Canada and Bank of Montreal — may now be free to join the Maple Group and that could lead to a revised offer with financial conditions more palatable to the TMX.

Some financial players were concerned that Canada's stock exchange would be under foreign control, with the combined group's chief executive based in London. LSE shareholders would have owned 55 percent of the combined company, while TMX Group shareholders would have owned 45 percent.

The LSE merger had received the stamp of approval earlier this week from a group of 11 top Toronto financial players, including former TSX chief executive Rowland Fleming.

The LSE had sweetened its bid in an attempt to lure investors to the all-shares deal, by offering a special dividend of $4.1 per share. The TMX also promised to continue to pay other dividends, replacing an earlier plan that would have seen TMX shareholders take a hit.

The Maple Group then increased its offer to $51 per share up from $49 — on the condition that shareholders of TMX Group reject the merger with the LSE.

SEC proposes conduct rules for swap dealers (Reuters)

By Sarah N. Lynch Sarah N. Lynch – Wed?Jun?29, 1:34?pm?ET

WASHINGTON (Reuters) – Swap dealers would need to disclose more information to customers and provide added protection to clients like pension funds and municipalities under new rules proposed by securities regulators on Wednesday.

The Securities and Exchange Commission proposal aims to deter abusive practices, help swap users manage risk, and to provide more clarity to dealers on what constitutes advice and the limits that advice places on their role.

The swap dealer behavior rules are required by the Dodd-Frank Wall Street overhaul law that split responsibility between the SEC and Commodity Futures Trading Commission for the nearly $600 trillion over-the-counter derivatives market.

A parallel CFTC proposal has been criticized by the swap industry for its definition of "advice," possibly preventing them from serving some clients.

The 200-page-plus SEC proposal would apply to security-based swap traders and dealers such as Goldman Sachs, Morgan Stanley and JPMorgan Chase that deal in products like credit-default swaps and equity derivatives.

The SEC voted 5-0 to issue the proposal and take public comments until the end of August.

Swaps are financial products that allow parties to protect themselves from risky exposures, such as interest-rate fluctuations or a default on a company's bonds.

In dealing with customers broadly, the SEC's proposed rule would require dealers to disclose information about material risks, incentives and conflicts of interest. They would also need to supply information about regulations governing central clearing, communicate fairly, establish a compliance structure and hire a chief compliance officer.

If a dealer makes a recommendation to a customer about a trade, the dealer will also need to ensure the suggestion is suitable for the client, similar to a rule the Financial Industry Regulatory Authority imposes on brokers.

In addition to establishing rules for customer dealings broadly, the SEC's proposal also contains extra requirements for dealers who act as either counterparties or advisers to "special entities," including municipalities, endowments and pension plans, which may be less sophisticated and at greater risk.

SPECIAL ENTITIES

The law requires dealers who advise special entities to act in their clients' best interests. Dealers who act as counterparties to the trades, meanwhile, have to make sure the special entities have an independent representative to act in their best interest.

"The rules we are proposing today would level the playing field in the security-based swap market by bringing needed transparency to this market and by seeking to ensure that customers in these transactions are treated fairly," SEC Chairman Mary Schapiro said.

The SEC estimates that about 1,200 pension funds, endowments and government entities use some type of credit-default swap. The vast majority of these already use advisers to help them make investment decisions on derivative transactions.

How the term "adviser" is defined has become a major source of controversy in the CFTC's plan, which was proposed late last year.

The swaps industry has said the CFTC's plan takes a sweeping view on what constitutes providing "advice" to special entities. Swap dealers fear they could suddenly be dubbed advisers and be required to act in their clients' best interest.

This in turn would effectively preclude them from selling swaps to customers, because it would be impossible to act in their clients' best interest and simultaneously trade with them for their own financial gain.

The SEC's plan aims to tackle that concern by providing more clarity on what constitutes giving advice and allowing dealers to choose between acting as advisers or as trading partners with pension funds and other special entities.

It is not known exactly how many "special entities" may fall under the SEC's plan. Many municipalities use interest-rate derivatives, a product under the CFTC's jurisdiction.

(Reporting by Sarah N. Lynch; Editing by Tim Dobbyn, Dave Zimmerman)

A look at economic developments around the globe (AP)

A look at economic developments and activity in major stock markets around the world Wednesday:

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ATHENS, Greece — Greece approved more austerity measures needed to avert default next month in a vote that calmed markets but triggered a second day of riots that left dozens injured and the capital blanketed with tear gas.

The passage of the bill was a decisive step for the country to get the next batch of bailout loans from international creditors and was met with a huge sigh of relief in markets and by Greece's partners in the eurozone. A Greek default could potentially trigger a banking crisis, particularly in Europe, and turmoil in global markets.

Another bill has to be passed Thursday for the government to secure the money.

The bill to cut spending and raise taxes by 28 billion euros ($40 billion) over five years, and raise 50 billion euros ($71 billion) in privatizations over the same period of time, has provoked widespread outrage, coming after a year of deep cuts that have seen public sector salaries and pensions cut and unemployment rise to above 16 percent.

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LONDON — European stocks and the euro rose after the Greek Parliament passed austerity measures needed to secure the next round of an international bailout and prevent a default.

A no vote could have had disastrous effects on European banks and world markets.

Britain's FTSE 100 closed up 1.5 percent, Germany's DAX rose 1.7 percent and France's CAC-40 ended up 1.9 percent.

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WASHINGTON — The International Monetary Fund urged U.S. lawmakers to raise the nation's borrowing limit. It warned that inaction could lead to a spike in interest rates that would harm the U.S. economy and world financial markets.

The debt limit is the amount the government can borrow to help finance its operations. The United States reached its $14.3 trillion borrowing limit in May. It is at risk of defaulting on its debt if it doesn't raise that limit by Aug. 2. President Barack Obama and Republican lawmakers have been at odds on a plan to raise it.

The IMF also warned in its annual report that rising U.S. budget deficits pose a risk to the economy. But it advocates a long-term strategy for reducing those deficits, not steep immediate cuts or tax increases. Cutting the deficit too quickly could slow the weak U.S. recovery, the fund said.

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BERLIN — Germany's most prominent banker said the country's financial sector is likely to help Greece head off a "meltdown," but highlighted the difficulties of the move.

Chancellor Angela Merkel's center-right coalition has pushed hard for a private-sector contribution amid increasing unwillingness among the public — and particularly in its own parliamentary ranks — to pledge more taxpayer money to rescue Greece.

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TOKYO — Japan's industrial production posted the sharpest rise in nearly six decades in May but was still below pre-quake levels as factories toiled to reverse the sharp downturn triggered by the March 11 disaster.

Japan's Nikkei 225 rose 1.5 percent. Elsewhere in Asia, South Korea's Kospi climbed 1.5 percent and Hong Kong's Hang Seng closed flat.

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PARIS — France named Francois Baroin as new finance minister to replace Christine Lagarde, who takes the top job at the International Monetary Fund next week.

Baroin, who is currently budget minister, inherits the task of working with other European finance ministers to find a solution to the debt crisis afflicting the eurozone.

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LONDON — Thousands of British schools will close and travelers will face long lines at airport immigration this week when three quarters of a million workers go on strike, the first blast in what unions hope will be a summer of discontent against the cost-cutting government's austerity plans.

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MOSCOW — Russia's President Dmitry Medvedev ordered the government to prepare for selling its controlling stakes in some key state companies.

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BERLIN — A poll finds little support among Germans for tax cuts that the government is considering as a booming economy improves public finances.

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LISBON, Portugal — Portugal's budget deficit declined in the first quarter, but it remains far off target despite an unpopular austerity program.

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MINSK, Belarus — Police in Belarus have violently put down a peaceful rally, beating and detaining dozens of people protesting the authoritarian regime of President Alexander Lukashenko.

Public anger has swelled at the government in Belarus, which is suffering its worst financial crisis since the fall of the Soviet Union.

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SEOUL, South Korea — Allegations of multibillion dollar fraud at banks and revelations by South Korea's top business conglomerate of shady dealings are forcing the country to grapple anew with a legacy of deep-seated corruption.

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CAIRO — The Egyptian stock exchange's benchmark index tumbled 2 percent amid fresh clashes between security forces and protesters in central Cairo.

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HANOI, Vietnam — Vietnam's gross domestic product grew at a slower pace in the first half of 2011 compared to the same period a year ago amid high inflation and a trade deficit.