U.S. Stock-Index Futures Advance; Bear Stearns Shares Climb

U.S. stock-index futures advanced after oil prices fell and concerns eased that losses tied to subprime mortgages will hurt banks' earnings.

Bear Stearns Cos. climbed after a Lehman Brothers analyst said the investment bank's bailout of a money-losing hedge fund won't hurt its earnings. Apple Inc., maker of the iPod music player, and Google Inc., the world's most popular Internet search engine, gained after brokerages recommended buying the shares.

The stock market yesterday extended its worst weekly decline since March, led by a tumble in financial shares, on speculation that banks will be saddled with losses from subprime mortgages. Reports today on new home sales and consumer sentiment will help investors determine the extent of the housing slump and its effect on Americans' confidence.

``Investors are focusing on the housing market data today,'' said Juergen Lukasser, who helps manage $20 billion as head of equities at Constantia Privatbank AG in Vienna. ``Weak figures are expected. Everything else would be a relief.''

Standard & Poor's 500 Index futures expiring in September added 3.7 to 1517.3 as of 9:22 a.m. in New York. Dow Jones Industrial Average futures gained 24 to 13,503. Nasdaq-100 Index futures increased 5.5 to 1946.5.

Crude oil fell as much as 0.7 percent to $68.67 a barrel in New York on expectations that rising imports helped U.S. stockpiles increase for a fifth straight week.

Bear Stearns

Bear Stearns, the second-biggest underwriter of mortgage bonds, advanced 81 cents to $139.91. Lehman Brothers analyst Roger Freeman said Bear's offer of $3.2 billion in loans to bail out its High-Grade Structured Credit Fund won't have a ``meaningful impact'' on earnings. Freeman, who rates the shares ``overweight,'' said the stock is ``attractively valued.''

Near the close of trading yesterday, two people with knowledge of the situation said Bear Stearns may put up only $1.6 billion to rescue the fund, which lost money this year due to bad bets on subprime mortgage bonds and collateralized debt obligations.

Separately, Freddie Mac Treasurer Timothy Bitsberger said the subprime mortgages slump is ``severe but contained.'' Problems are ``very well defined'' and largely confined to a small percentage of borrowers in seven states, Bitsberger told Euromoney's investor conference. Freddie Mac is the second- largest U.S. mortgage finance company.

Apple added $1.28 to $123.62. RBC Capital Markets said it was initiating coverage of the stock with a price estimate of $160 based on Apple's forecast of selling 10 million iPhones next year.

Google

Google gained $3.63 to $531.05. Sanford C. Bernstein & Co. rated the stock ``outperform'' in new coverage and set its price estimate at $635.

``We believe that paid search has still plenty of growth and that Google is well placed to capture the upside,'' New York- based analysts including Jeffrey Lindsay wrote in a report.

Huntsman Corp. surged $5.30 to $24.20. Basell Holdings NV agreed to buy the world's biggest maker of epoxy adhesives for $9.6 billion, including debt. Huntsman investors will receive $25.25 a share, 34 percent more than Huntsman's last closing price.

Housing Slump

Home values in 20 U.S. metropolitan declined 2.1 percent in April from the same month a year earlier, the most in at least six years, according to a report today by S&P/Case-Shiller. It was the fourth straight drop in the group's index, which started in 2001. Prices were weakened by a weakened by a record supply of properties for sale.

New home sales probably slowed in May to a 922,000 annual rate, according to the median estimate in a Bloomberg survey, from a 981,000 pace in April. The U.S. Commerce Department report is due at 10 a.m. New York time.

The housing market continues to restrain the economy even as other areas, such as business spending and manufacturing, accelerate. Elevated inventories of unsold homes, reduced demand and stricter loan requirements will probably keep prices low the rest of this year, economists said.

Consumer Confidence

The Conference Board's index of consumer confidence probably declined in June to 105, according to the median estimate in a Bloomberg News survey of economists, from 108 a month earlier. The index averaged 105.9 last year. The report is due at 10 a.m. New York time.

Bank of America Corp., the second-largest U.S. bank by assets, gained 15 cents to $49. ABN Amro Holding NV didn't need permission from shareholders for its $21 billion sale of LaSalle to Bank of America, according to a non-binding recommendation by Advocate General Vino Timmerman to the Dutch Supreme Court posted on its Web site today.

The Supreme Court should allow ABN Amro to sell its LaSalle unit in the U.S., he said, paving the way for Barclays Plc to buy the Dutch bank in the biggest financial-services takeover.

Ventana Medical Systems Inc. jumped $26.57 to $78.31. Roche Holding AG, the world's biggest maker of tumor-fighting drugs, offered $3 billion in cash for Ventana to gain diagnostic tests for cancer. The $75-a-share hostile bid is 45 percent higher than Ventana's last closing price.

Cardinal Health Inc. added 20 cents to $69.76. The second- largest U.S. drug distributor said its fiscal 2007 profit excluding some items will be at the top end of a previous forecast of $3.32 to $3.40 a share.

Lennar Corp. slipped $1.15 to $37.60. The biggest U.S. homebuilder by revenue reported a loss for the fiscal second quarter as the housing slowdown discouraged buyers. Analysts surveyed by Bloomberg News had expected a profit, before some items, of 7 cents a share, the average of 11 estimates.

source:bloomberg.com