US: Oil sector leads stocks higher

[NEW YORK] Big gains in petroleum stocks lifted the US equity market Thursday as investors bet on more large energy mergers following Royal Dutch Shell's takeover of BG Group.

The Dow Jones Industrial Average rose 56.22 points (0.31 per cent) to 17,958.73.

The broad-based S&P 500 gained 9.28 (0.45 per cent) to 2,091.18, while the tech-rich Nasdaq Composite Index advanced 23.74 (0.48 per cent) at 4,974.56.

Companies mentioned as takeover targets were in favour, including Anadarko Petroleum (+3.2 per cent) and Devon Energy (+3.0 per cent). Others that advanced included ConocoPhillips (+3.4 per cent) and Marathon Oil (+2.9 per cent).

The US$70 billion Shell deal has "gotten everyone in the energy patch being discussed as either an acquirer or a seller," said Mace Blicksilver, director of Marblehead Asset Management.

The energy sector was further aided by a rise in oil prices. Oil services companies Halliburton and Schlumberger added 4.1 per cent and 2.7 per cent, respectively.

Money managers are also betting on more consolidation in other sectors, Blicksilver said. Generics company Mylan's US$28.9 billion bid Wednesday for Perrigo has put both companies in play, he added.

Both companies fortified their gains from the prior session, with Perrigo tacking on 1.9 per cent and Mylan adding 2.5 per cent.

Dow member General Electric rose 2.9 per cent on reports it is close to a deal to sell its real estate portfolio to Blackstone Group and Wells Fargo.

Pacific Gas and Electric dropped 1.6 per cent after California regulators fined the utility US$1.6 billion for a pipeline explosion in 2010 that killed eight. Shareholders, not PG&E customers, must pay the fine.

Alcoa fell 3.4 per cent even as earnings rebounded to US$195 million compared with a US$178 million loss in the year-ago period. The metals giant said it was studying whether to shut additional smelters and refineries. Previous closures of older assets have led to large charges.

Social gaming company Zynga slumped 17.9 per cent on news co-founder Mark Pincus would return as top executive, less than two years after being replaced. The move comes on the heels of financial losses the last two years.

Bond prices fell. The yield on the 10-year US Treasury rose to 1.96 per cent from 1.90 per cent Wednesday, while the 30-year advanced to 2.56 per cent from 2.53 per cent. Bond yields and prices move inversely.

AFP