Stock futures flat before data, Geithner testimony

By Ellis Mnyandu
NEW YORK (Reuters) - Stock index futures were little changed on Thursday ahead of figures for weekly jobless claims and other indicators that investors hoped would show the recovery was gaining traction.
A report on weekly jobless claims is due at 8.30 a.m. EDT, while a June gauge of manufacturing in the U.S. Mid-Atlantic region, the Philadelphia Fed business index, is scheduled for release at 10:00 a.m. EDT, along with the May index of leading indicators.
Besides focusing on the data, investors will also look for direction from the testimony of Treasury Secretary Timothy Geithner before two Congressional panels on the Obama administration's proposed financial regulatory reform.
Geithner's testimony before the Senate Banking Committee is due to start at 9:30 a.m. His testimony before the House Financial Services Committee is set for 1 p.m. EDT.
Investors are weighing what would be the implications for banks and other financial institutions from the proposed reforms that U.S. President Barack Obama unveiled on Wednesday
"The issue on the market is how far we come down," said Andre Bakhos president of Princeton Financial Group in Princeton, New Jersey, referring to mounting signs that the rally that started in March has begun to stall. "There's no fresh positive news. We are not going to overlook hiccups in the economic data."
S&P 500 futures fell 0.40 points and were about even with 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 were unchanged, while Nasdaq 100 futures dipped 6.50 points.
(Editing by Padraic Cassidy)

Source: Reuters

Steel industry seeks answers on recovery prospects

By Humeyra Pamuk and Steve James
LONDON/NEW YORK (Reuters) - The tortuous question of when ailing steel demand might recover from the global economic downturn is likely to dominate talks at an industry gathering in New York next week.
High profile speakers for the bi-annual industry gathering including Lakshmi Mittal, chairman and the chief executive of the world's top steelmaker ArcelorMittal, will also seek answers on whether U.S. stimulus will revive consumption.
Steel mills in the United States, one of the world's top producers of the alloy, are working at 45-50 percent capacity usage as demand from key consumers like auto and appliance makers has tumbled due to the global recession.
Falls in the prices of most widely traded steel products, like hot-rolled coil (HRC) and billet, have slowed. Some prices have bounced slightly from their lows in some regions, after a near 70 percent price fall between mid-2008 and January 2009.
Several analysts believe destocking has come to an end and that order entries are beginning to improve, but they warn that recovery will take time as end-user demand remains depressed.
"We believe that destocking has largely run its course, and that service centres are beginning to increase their order activity," analysts at Dahlman Rose & Co. said in a research note, adding they expect capacity utilization to rise to 60 percent in the second half of 2009.
Steel production in North America has dropped by more than 50 percent in the first four months of the year, according to figures from the World Steel Association.
Earlier this week, U.S. steelmaker Nucor said it expected a narrower second-quarter loss thanks to improved order entries in the recent weeks.
"ArcelorMittal's flat-rolled price increase and Nucor's comments of improved order entry ... are further evidence that the sudden tightness we've noticed in recent weeks is spreading," said independent steel analyst Michelle Applebaum in Chicago.
"We believe the 9-month period of inventory destocking has come to an end."
But in terms of the end-user market, analysts still see a recovery as months away and the road quite bumpy.
"Final markets for steel products, like automotive and construction, are severely undermined," Sebastian Castelli at Societe Generale said in a research note.
The world auto industry is suffering massively from the global recession, which forced one of the world's best known automakers General Motors Corp to file for bankruptcy on June 1.
"Global steel markets are more likely to remain weak and prices volatile at depressed levels as the economy recovers or incentive plans start improving steel demand," Castelli said.
Emerging markets will see a quicker recovery, analysts say, particularly China, where production rose 7 percent in May to near record highs seen in June last year, prompting several analysts to raise their production and price forecasts. Continued...
Source: Reuters

Deutsche, Morgan tapped for AIA IPO role: sources

By Michael Flaherty
HONG KONG (Reuters) - Bailed out U.S. insurer American International Group (AIG.N) has chosen Deutsche Bank (DBKGn.DE) and Morgan Stanley (MS.N) as joint global coordinators for the more than $4 billion IPO of its Asian life insurance unit, banking sources said on Thursday.
The choice of Deutsche Bank came as a surprise to rivals who thought the top coordinators would be U.S. banks with strong ties to what was once the world's largest insurer.
The American International Assurance Co (AIA) offering will be the biggest Hong Kong IPO since April 2007 and a fee bonanza for the banks. Coordinators and bookrunners typically earn around 3 percent in fees -- so a $5 billion IPO could produce at least $150 million in fees split between the banks.
More than 30 banks submitted proposals to be global coordinators and bookrunners for the job.
Ninety-year-old, Hong Kong-based AIA, with more than $60 billion in assets under management, provides coverage to about 20 million customers -- close to a third of AIG's total customer base.
Morgan Stanley, which is advising the U.S. Federal Reserve on the AIG bailout, had been expected to be named as a global coordinator.
The bigger surprise is Deutsche Bank, as much of the speculation for the lead role had focused on U.S. banks that had previously worked with AIG and AIA. Citigroup (C.N) and Goldman Sachs (GS.N) advised on the sale of AIA this year, that was ultimately pulled.
Deutsche Bank, though, does have a track record on major Asian IPOs.
It was appointed joint global coordinator of China Life's (601628.SS) $3.48 billion IPO in December 2003, and was among the banks that handled the $19.1 billion IPO of Industrial and Commercial Bank of China (601398.SS) in October 2006.
The sources involved in the AIA process cautioned that the formal structure of the joint coordinators and bookrunners had yet to be made official. Co-managing an IPO is another role, but usually comes without a fee.
The sources were not authorized to speak publicly about the IPO because the final decision on bookrunners had not been made.
The IPO is part of a larger divestiture program by AIG as it looks to repay U.S. taxpayers after a series of bailouts in which the federal government committed about $180 billion to AIG's rescue, including about $85 billion in loans.
The AIA IPO is expected in the first half of 2010 in Hong Kong. AIA and AIG would have separate boards and management teams.
(Reporting by Michael Flaherty; Editing by Jacqueline Wong, Chris Lewis and Ian Geoghegan)

Source: Reuters

Mubadala in GE deal, seeks partnerships

By Helen Massy-Beresford and John Bowker
PARIS (Reuters) - Abu Dhabi state investment agency Mubadala Development said on Wednesday it was interested in partnerships with leading aerospace groups but denied a report it planned to take stakes in major European aerospace companies.
"Partnering with the world's leading aerospace organizations forms an integral part of the long-term strategy we are taking," Aerospace Associate Director Homaid Al Shemmari said at the Paris Air Show on Wednesday.
"Building a global aerospace industry for Abu Dhabi is a key part of the emirate's diversification," he added.
But he denied a news wire report quoting him as saying that Mubadala may consider buying stakes in partners such as EADS (EAD.PA), Finmeccanica (SIFI.MI) and Rolls-Royce (RR.L).
"We are not interested in taking equity stakes in any of our current partners. Our current model is for partnerships and joint ventures with a focus on Abu Dhabi," Al Shemmari told Reuters.
He was speaking after signing a maintenance partnership deal with General Electric (GE.N) unit GE Aviation, the world's largest maker of jet engines, that will see GE supply support and services while Mubadala builds a maintenance network for GEnx engines.
This is the latest in a series of aerospace deals by the Abu Dhabi investment fund as the emirate seeks to boost its economy. Abu Dhabi is part of the United Arab Emirates, the world's third largest oil exporter.
GE and Mubadala did not give any financial details of the deal, which forms part of a broader partnership the two groups agreed last year.
GE Vice Chairman John Rice said the group would not limit the areas where the company would consider future collaboration with Mubadala.
The groups are analysing the market and looking at how revenue will be split between them in the next few months, Mubadala's Al Shemmari said.
Last July, Mubadala forged a deal with Airbus parent EADS to provide parts for wide-body aircraft from a composites plant that Mubadala plans to open from next year.
Ultimately, large aircraft structures will be designed, developed and manufactured in Abu Dhabi.
Mubadala said on Sunday it would start the first phase of the plant later this month and that it would be operational in 2010. Partnerships had been formed with EADS, Airbus, FACC and Alenia Aeronautica, part of Finmeccanica.
At the Farnborough Air Show a year ago, Abu Dhabi national airline Etihad place a $10 billion order for Airbus planes.
Although the industrial deals are not officially linked, the plane purchase was finalized in December in what experts described as a landmark agreement that could see EADS producing part of its next generation of jets in Abu Dhabi.

Source: Reuters

Shire, J&J win key drug data case at top EU court

LUXEMBOURG (Reuters) - Shire and Johnson & Johnson won the backing of Europe's highest court on Thursday in their battle for data exclusivity against a generic rival for Alzheimer's drug Reminyl, the court said.
The decision represents a wider victory for originator drug companies, since a ruling against Shire and J&J could have opened the door to generic versions of other medicines developed in relatively new European Union member states.
It also marks a welcome piece of good news for makers of brand-name drugs at a time when they are being probed by the European Commission for supposedly blocking access to cheap generics.
The European Court of Justice (ECJ) backed the view taken by Britain's Medicines and Healthcare products Regulatory Agency (MHRA) that a product approved in a country before it joined the EU -- and not upgraded since then -- could not be used as a reference for a generic drug application.
The legal argument in the case centered on European law on data exclusivity, which prevents generic manufacturers from relying on clinical data produced by originator drug companies when they apply for approval to sell copies of a medicine.
This gives additional market protection for originator companies, beyond patents, by stopping regulators from accepting applications for generics during the period of exclusivity.
AUSTRIAN DRUG FROM 1963
The challenger in the case, Generics UK, had based its application for a generic version of Reminyl on the old drug Nivalin, which contains the same active ingredient as Reminyl and was approved in Austria in 1963 -- way before the country joined the European bloc.
The MRHA ruled Nivalin could not be used as a reference product and, since Reminyl's 10-year period of regulatory data exclusivity had not yet expired, it did not approve the application.
That decision has now been endorsed by the ECJ.
"A medicinal product, such as Nivalin ... the placing of which on the market in a member state was not authorized in accordance with the applicable Community law, cannot be considered to be a reference medicinal product," the ECJ ruling said.
Shire, Britain's third-largest drugmaker, co-markets Reminyl in Europe with Janssen-Cilag AB, a unit of Johnson & Johnson.
Nivalin's original authorized use was for treating polio, although that was modified in 1995 to include experimental use in treating Alzheimer's disease, the court said.
However, it was "not in dispute" that the original dossier, on the basis of which Nivalin's marketing was authorized, was never updated in line with EU law now prevailing in Austria, it said.
Grant Castle, a partner at law firm Covington & Burling, who led the case for Shire and Janssen-Cilag, said the judgment was important for both originator and generic industries, since generic companies had been looking at newer EU member states as a source of reference products on which to base applications.
"The ECJ firmly rejected this ... this decision is the first pro-innovator ECJ judgment in well over a decade," he said. Alzheimer's is a degenerative condition for which there is no cure. Drugs such as Reminyl can ease symptoms but do not stop the disease.
(Reporting by Jeremy Smith and Ben Hirschler; Editing by Dan Lalor and Simon Jessop)

Source: Reuters

World Bank sees faster China growth, slower FX reserve rise

By Alan Wheatley, China Economics Editor
BEIJING (Reuters) - Massive policy stimulus should keep China growing at a respectable rate this year and next, but a robust recovery is unlikely given global weakness and soft non-government investment, the World Bank said on Thursday.
In a quarterly update, the bank raised its forecast for gross domestic product growth this year to 7.2 percent, still below Beijing's official target of 8.0 percent but up from the 6.5 percent it projected in March. Growth in 2010 was likely to be just a bit stronger, at 7.7 percent, the report said.
The bank expects China's foreign exchange reserves to grow by $218 billion this year, the smallest increase since 2005, after leaping by $419 billion in 2008 and $462 billion in 2007.
That is largely because the bank is now forecasting a whopping capital account deficit of $170 billion this year, driven by a variety of financial outflows including undisclosed transactions between the central bank and financial institutions and a growing stream of outbound foreign direct investment.
These outflows already totaled $109 billion in the first quarter, limiting the increase in FX reserves in the January-March period to just $8 billion. China's reserves were $1.95 trillion at the end of the first quarter, the world's largest stockpile.
"There seems to have been an intention to let capital flow out of China in these various guises," Louis Kuijs, an economist in the World Bank's Beijing office, told a news conference.
He said such outflows would chime with China's oft-stated desire to diversify the country's foreign assets. Beijing is hunting in particular for energy and commodity investments.
"We may well see in future additional such changes in the composition of capital flows ... given the perception of risks and returns of different types of foreign assets," Kuijs said.
The forecast on reserves brings the World Bank broadly into line with those of private-sector economists. HSBC, for example, expects reserves to grow by $154 billion in 2009.
PLEASE THINK AHEAD
The report welcomed an unfolding surge in government-influenced investment, triggered by a 4 trillion yuan ($585 billion) stimulus package announced in November.
"However, it is unlikely to lead to a rapid, broad-based recovery in China, given the current global environment and the subdued short-term prospects for market-based investment. China's economic growth is unlikely to rebound to a high single-digit pace before the world economy recovers to solid growth," it said.
A boom in bank lending in the first five months of the year would also support growth in coming quarters. While the full-year outcome might not meet the official target, it would be "very respectable" given the global setting, the report said.
"On current projections it is not necessary, and probably not appropriate, to add more traditional fiscal stimulus in 2009," the bank said.
With its budget deficit set to leap to 4.9 percent of GDP this year from 0.4 percent in 2008, the government should instead keep some powder dry in case it is needed next year. Continued...
Source: Reuters

Shire, J&J win data exclusivity case at EU court

LUXEMBOURG (Reuters) - Shire Plc (SHP.L) and Johnson & Johnson (JNJ.N) won the backing of Europe's highest court on Thursday in their battle for data exclusivity against a generic rival for Alzheimer's drug Reminyl, the court said.
The European Court of Justice (ECJ) backed the view taken by Britain's Medicines and Healthcare products Regulatory Agency (MHRA) that a product approved in a country before it joined the European Union -- and not upgraded since then -- should not be used as a reference for a generic product application.
Generics UK based its application for a generic version of Reminyl on the active ingredient Nivalin, authorized in Austria in 1963 -- way before the country joined the European Union, a country group that was then going under a different name.
The MRHA ruled the ingredient could not be used as a reference product and did not approve the application by Generics UK, a British distributor of medical products.
"A medicinal product, such as Nivalin at issue in the main proceedings ... the placing of which on the market in a member state was not authorized in accordance with the applicable Community law, cannot be considered to be a reference medicinal product," the ECJ ruling said.
Shire, Britain's third-largest drugmaker, co-markets Reminyl in Europe with Janssen-Cilag AB, a unit of Johnson & Johnson.
Nivalin's original authorized use was for treating polio, although that was modified in 1995 to include experimental use in treating Alzheimer's disease, the Court said.
But it was "not in dispute" that the original dossier, on the basis of which Nivalin's marketing was authorized, was never updated in line with EU law now prevailing in Austria, it said. Alzheimer's is a degenerative condition for which there is no cure. An estimated 24 million people worldwide suffer from the memory loss and problems with orientation that signal Alzheimer's and other, less common forms of dementia.
Existing drugs, such as Reminyl, can ease symptoms but do not stop the disease.
(Reporting by Jeremy Smith; Editing by Dan Lalor)

Source: Reuters

Areva in talks for EPR reactor deal in Ohio: source

PARIS (Reuters) - French group Areva (CEPFi.PA) will sign on Thursday an agreement to start exclusive talks with U.S. power group Duke Energy (DUK.N) to build a new generation nuclear reactor in Ohio, said a source close to the situation.
"The companies will enter into exclusive talks for the development of an EPR reactor on the Piketon site," in Ohio, the source told Reuters, confirming a newspaper report by La Tribune.
The source, who asked not to be named, said that the chief executive of Areva, Anne Lauvergeon, would sign an agreement on the Piketon site just before midday, in local time, with executives of Duke Energy, and other partners in the project.
"Areva has 18 months to prepare documents, notably the early site permit, and a combined construction and operating license," the source said, adding that Areva and Duke Energy would partner with Unistar Nuclear Energy, a joint venture between French power group EDF (EDF.PA) and Constellation Energy Group (CEG.N), and uranium enrichment specialist USEC (USU.N).
Duke Energy will organize a bid open to Areva's competitors, as requested by law, but the source said: "What is sure is that Duke will talk to no one else for 18 months."
The source added that if a deal had not been entirely reached by the end of 2010, Areva and Duke Energy may decide to extend their negotiations beyond this date.
Areva is in the process of having its EPR technology certified in the United States before it can go ahead with eight projects, including Piketon, it has there.
The new U.S. administration is hoping to pass a bill that aims to cut emissions of carbon dioxide and other greenhouse gases 20 percent by 2020 and 83 percent by 2050 by promoting the development of energies such as nuclear, wind and solar power and other alternative energy, as well as cleaner coal.
Areva, a state-controlled nuclear reactor supplier, is currently building four EPR reactors in the world, one in Finland, a second in France and two others in China.
(Reporting by Marie Maitre; Editing by Jon Loades-Carter)

Source: Reuters

Asia stocks dip, quarter-end spurs profit-takers

By Eric Burroughs
HONG KONG (Reuters) - Japanese shares fell and other equity markets struggled on Thursday, with some investors booking profits in the last days of the second quarter after big gains scored on signs the global economy is starting to recover.
Asian stocks outside Japan are up nearly 30 percent so far in the April-June quarter and poised for their biggest quarterly gain in 16 years, led by a surge in Hong Kong's Hang Seng .HSI and bank stocks such as heavyweight HSBC (0005.HK).
Analysts remain divided about whether consumer spending in major economies will kick in later this year and help fuel the pick up in growth.
But the renewed confidence among portfolio managers has emboldened them to scoop up shares battered by the crisis last year as hedge funds were forced to dump assets and the global economy skidded into its deepest recession in decades.
A monthly poll from Bank of America-Merrill Lynch showed global fund managers have moved to overweight stocks for the first time since December 2007, during the early stages of the crisis that began nearly two years ago.
The poll also found global growth expectations reaching their highest level in six years.
Japan's Nikkei average .N225 shed 1.8 percent. But for the April-June quarter, the first of Japan's business year, the Nikkei is still up 19 percent, what would be its largest quarterly rise since 1995.
"It seems like a pull-back phase. People who want to take profits are starting to appear," said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments in Tokyo.
The MSCI index of Asia-Pacific shares outside Japan .MIAPJ0000PUS dipped 0.2 percent. A 0.2 percent gain in the Taiwan Weighted index was offset by a 1.6 percent drop in the Hang Seng.
For the quarter, the MSCI index has jumped 29 percent, what would be its biggest quarterly rise since the October-December period in 1993.
"The global economy will continue to heal itself, albeit at a gradual pace. The current sell-off in risky assets is inconsistent with the gradually improving economic fundamentals," said Stephen Jen, managing director of macroeconomics and currencies at BlueGold Capital Management, a London-based hedge fund.
DOLLAR STEADIES
The dollar was little changed and continued to suffer from the rebound in riskier assets and commodity prices that has prompted market players to favor higher-yielding currencies tied to the global economy, such as the Australian dollar.
Doubts about the dollar's status as a reserve currency have also hurt the greenback.
But leaders from the major emerging economies of Brazil, Russia, India, China and South Africa refrained from mentioning the dollar's reserve role in the communique of their inaugural summit this week, even as Russia pushed the issue. Continued...
Source: Reuters

Oil pauses above $71 as dollar holds steady

SINGAPORE (Reuters) - Oil paused above $71 a barrel on Thursday, as traders weighed a steady dollar against bullish data on Chinese fuel exports and U.S. crude inventories.
The greenback inched up against a basket of major currencies .DXY, paring earlier losses, a day after it fell broadly on a tame rise in U.S. inflation that dampened hopes for a Fed interest rate hike in the near term.
China oil data provided some support for oil prices, with May diesel exports falling to 390,000 tons after hitting a record 510,000 tons in April, as oil firms kept more fuel at home on rising sales and falling stockpiles.
U.S. crude edged up 8 cents to $71.11 a barrel by 0222 GMT, while London Brent crude fell 5 cents to $70.80.
"Oil seems to have found a range between $71 and $73," said Peter McGuire, managing director of Commodity Warrants Australia, adding that oil prices are expected to track dollar movements closely in the near term while within that range.
A weaker dollar makes oil and other commodities cheaper for holders of other currencies, and vice versa.
The bullish Chinese customs data came after the U.S. Energy Information Administration reported a much higher than expected fall in crude inventories in the week to June 12, by 3.9 million barrels.
Gasoline demand in the world's top consumer, which has been battered by the economic crisis, rose over the four-week period ending last week, further lifting oil prices.
Slumping demand sent oil off record above $147 a barrel hit last July, prompting OPEC last year to agree to a series of production cuts to prop up prices.
Prices have since more than doubled from the lows near $32 touched late last year on hopes that the economic crisis may soon find a bottom and fuel demand will start to recover.
Qatari Oil Minister Abdullah al-Attiyah told Reuters price gains in recent months were due to speculators more than fundamentals.
Lending support to oil prices on Wednesday, he said OPEC was unlikely to increase output soon despite concerns from some analysts that higher fuel costs could stall any global economic recovery.
(Reporting by Chua Baizhen; Editing by Clarence Fernandez)

Source: Reuters

Nasdaq advances with tech, but banks curb Dow, S&P

By Leah Schnurr
NEW YORK (Reuters) - Technology shares buoyed the Nasdaq on Wednesday after positive broker comments on Qualcomm, but financial shares' losses held back the Dow and the S&P 500.
Banks were hurt by a broad debt ratings downgrade from Standard & Poor's and uncertainty over the government's extensive proposals for banking-industry reform. The KBW Bank index fell 3.3 percent.
Qualcomm was among the Nasdaq's leaders, up 3.8 percent at $45.09 after Goldman Sachs added the wireless technology supplier's stock to its "conviction buy" list.
Biotech companies also rose after Celgene Corp said its experimental anti-inflammatory drug was effective in a mid-stage study. Celgene rose 4.2 percent to $44.94.
Analysts said there were no surprises in President Barack Obama's plans to reshape financial regulation but uncertainty remained about the regulations' impact on the financial system and the wider economy.
"The reality is the government is going to create more costs for the financial industry and there's uncertainty in terms of what exactly those costs will be," said Rick Campagna, portfolio manager at Provident Investment Council in Pasadena, California.
"Because of the extra regulation, you probably end up having less leverage available to some financial institutions which, although (it) is a good thing systematically, creates lower return on equity across the board."
The Dow Jones industrial average fell 7.49 points, or 0.09 percent, to 8,497.18. The Standard & Poor's 500 Index was off 1.26 points, or 0.14 percent, at 910.71. The Nasdaq Composite Index gained 11.88 points, or 0.66 percent, to 1,808.06.
On the economic front, the closely watched Consumer Price Index, released before the opening bell, showed inflation is still not a worry.
The S&P 500 briefly fell below its 200-day moving average for the first time since the beginning of June but rallied to close above that level, a crucial technical gauge of market strength.
After rising as much as 40 percent from a 12-year low in early March, the U.S. stock market pulled back slightly in recent days as investors questioned hopes for a "V-shaped" recovery. The S&P 500 is up 34.6 percent from March's closing low.
Healthcare stocks, thought to be a defensive bet against an economic slump, rose as investors reconsidered what an economic recovery could look like. The S&P healthcare index advanced 2.1 percent.
Cisco Systems gave support to tech shares after its influential Chief Executive John Chambers told CNBC television he has seen business level out in the last few months. Cisco added 0.6 percent to $19.20.
But financials kept broader gains in check after more than a dozen U.S. banks were downgraded by Standard & Poor's. Investors also mulled the implications of financial reform proposals that include closing one bank regulator and creating government watchdogs.
Dow component JPMorgan Chase fell 2.3 percent to Continued...
Source: Reuters

Oil rises on stock market, U.S. inventory data

By Matthew Robinson
NEW YORK (Reuters) - Oil rose on Wednesday, supported by government data showing a drop in U.S. crude supplies, gains in the stock market and a weaker dollar.
Further gains came after the oil minister from Qatar said the Organization of the Petroleum Exporting Countries was unlikely to hike output soon.
U.S. crude settled 56 cents higher at $71.03 a barrel, having earlier traded down to $69.00. Brent crude rose 61 cents to settle at $70.85 a barrel.
U.S. crude inventories fell 3.9 million barrels in the week to June 12, according to data released by the U.S. Energy Information Administration, well above analysts expectations.
Gasoline demand in the world's top consumer, which has been battered by the economic crisis, rose over the four-week period ending last week, adding further support for prices.
"Demand is up 1.1 percent against a year ago -- that's almost normal demand growth," said Phil Flynn, analyst for Alaron Trading in Chicago
A steep 3.4-million barrel rise in U.S. gasoline stocks in the midst of the summer driving season earlier dragged crude markets lower.
Support also came as gains in technology and biotech stocks helped push up the U.S. stock market. .N Hopes that the economic crisis may soon find bottom has raised expectations fuel demand could begin to rebound, pushing up crude prices.
"The crude oil market is getting price guidance cooperation from a weak dollar and equities, which has taken off some early losses," said Tom Knight, trader for Truman Arnold in Texarkana, Texas.
The U.S. dollar fell after tame U.S. inflation data dampened speculation the Federal Reserve would raise interest rates any time soon. The weaker dollar makes oil and other commodities cheaper for holders of other currencies.
Slumping demand sent oil off record peaks over $147 a barrel hit last July, prompting OPEC last year to agree to a series of production cuts to prop up prices.
Qatari Oil Minister Abdullah al-Attiyah told Reuters price gains in recent months were due to speculators more than fundamentals. He added that OPEC was unlikely to increase output soon despite concerns from some analysts that higher fuel costs could stall any global economic recovery.
"When you have a major player like Qatar saying we're going to keep production steady, that's supportive of the price and it's also a sign OPEC thinks the economy can handle $70 a barrel oil," said Alaron's Flynn.
U.S. President Barack Obama on Wednesday laid out his vision for reshaping U.S. financial regulation, including imposing regulation on over-the-counter derivatives.
(Reporting by Richard Valdmanis, Matthew Robinson, Gene Ramos and Robert Gibbons in New York; Joe Brock and Alex Lawler in London)

Source: Reuters