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US: Stocks hit another record; ARM deal lifts London

Tuesday, July 19, 2016 - 06:42
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[NEW YORK] European stocks mostly slipped but Wall Street pushed to fresh records Monday despite continued worries over Turkey after the failed military coup.

London meanwhile was boosted by the £24.3 billion (S$43.5 billion) acquisition of British iPhone chip designer ARM Holdings by Japan's SoftBank.

"The rally seems to want to continue," said Mace Blicksilver, director of Marblehead Asset Management.

"Between the terrorism and the tensions in Turkey, there's a lot of negatives," he said.

"But central banks are pumping liquidity in and, as we've seen from the last few days, that is going into stocks."

The gains in the US indices were modest, but big enough to lift the Dow to its fifth straight record and the S&P 500 to its fifth record in six sessions.

US and European stocks have been on a tear the last three weeks after initially tumbling on the British vote to leave the European Union as global investors gird for a longer period of very low interest rates.

A meeting this week by the European Central Bank is not expected to result in new stimulus measures, but analysts say it could pave the way for more easy-money policies in September.

London's FTSE 100 index earned a 0.4 per cent boost after Japan's mobile giant SoftBank agreed to a cash takeover of iPhone chip designer ARM Holdings.

Analysts said the vast weakening of the pound, in particular against the dollar, since the shock June 23 referendum vote against Eu membership is making British companies attractive targets for foreign groups.

"We can see in this deal the effect of Brexit and the collapse in the pound as British companies become ripe takeover targets," said Neil Wilson, analyst at ETX Capital trading group.

"A lot more British firms could become foreign-owned quite soon," he added.

In The United States, Bank of America led financial stocks higher, jumping 3.3 per cent after reporting earnings that bested expectations and pledging to cut billions in annual expenses.

US tech shares were also strong, with Apple gaining 1.1 per cent, Google parent Alphabet 2.4 per cent, Facebook 2.2 per cent and Twitter 3.2 per cent.

Several leading oil producers retreated on lower oil prices, including BP, down 1.1 per cent, and Chevron and Total, both down 0.9 per cent.

AFP