GLOBAL MARKETS: European Stocks Led Up By Techs But Caution Remains

--European stocks up; decent earnings help the main indexes
--ARM leads gains in London; tech sector storms ahead
--Portuguese 10-year government bond yields remain elevated
--Euro-zone unemployment rate digested
By Michele Maatouk & Andrea Tryphonides
Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--European stocks posted strong gains and the euro was higher against the dollar as investors tentatively welcomed the European Union leaders' agreement on a new fiscal pact, to be signed off in March, and a bailout mechanism that will come into force in July, while good earnings also boosted sentiment Tuesday.
However, traders are still wary as Portugal's 10-year government bond yield remained elevated early Tuesday and there was still no agreement between Greece and its private-sector creditors.
Investors are concerned that Portugal may need another bailout or a Greek-style debt-restructuring if it cannot regain access to the capital markets. At 1040 GMT, the Portuguese 10-year government bond yield was at 15.98%, according to Tradeweb.
"One cannot deny that Portugal is now under fire on the financial markets, especially given the recent downgrade of its sovereign debt to junk status by Standard & Poor's," said ING. "The risks are growing that Portugal ultimately could require ESM assistance, possibly to be agreed over the second half of 2012, for likely take-down from 2013. That said this does not mean that Portugal needs a Greek-style PSI deal," said ING.
"Remember that the Greek restructuring brings Greek debt down to 120% of gross domestic product. Portuguese debt is still comfortably below this level, and is likely to remain below in the next coming couple of years even if we discount a deep and persistent recession. So, an elevated second bailout risk, but PSI risk remains low," added ING.
Still, decent earnings, particularly in Europe's technology sector, helped the main stock market indexes higher.
At 1040 GMT, the benchmark Stoxx Europe 600 index was up 0.8% at 254.62. If it holds Tuesday's gains, the index is likely to close the month up by around 4%. London's FTSE 100 was up 0.8% at 5717.86, Frankfurt's DAX was 0.9% higher at 6506.18 and Paris's CAC-40 was 1.2% higher at 3304.14.
At the same time, U.S. stock-index futures pointed to a firmer open on Wall Street, with the Dow Jones Industrial Average front-month futures contract and the S&P 500 futures contract up 0.5% at 12,669.00 and 1315.80, respectively.
In London, ARM Holdings was up 4.6% and leading the blue-chip FTSE 100 index following the company's fourth-quarter results. The results beat market expectations largely due to strong demand for smartphones and tablets and the company said it is on track to meet expectations in the first quarter 2012. The results boosted the Stoxx Europe 600 tech sector, which was up 1.2%.
Also in London, British Sky Broadcasting gained 2.7% following well-received results. BSkyB reported an 8.4% jump in first-half net profit, underpinned by new pay-television and broadband customers. News Corp., which owns Dow Jones & Co. and The Wall Street Journal, holds about a 39% stake in BSkyB.
Elsewhere, steelmaker Thyssenkrupp jumped 1.4% after it came to an agreement to sell its Inoxum stainless steel division to Finland's Outokumpu Oyj. Outokumpu dropped 8.2%.
On the data front, the euro-area unemployment rate for December came in at 10.4%, unchanged from a revised November level and in line with economists' forecasts. ING said the unemployment figures "make for worrying reading," adding, "The only piece of solace is that the pace of increase in unemployment appears to be slowing."
Earlier, most Asian stock markets finished modestly higher Tuesday after the euro zone's move toward a closer fiscal union and positive economic data in Japan.
Japan's Nikkei Stock Average gained 0.1%, Australia's S&P/ASX 200 fell 0.2%, South Korea's Kospi Composite added 0.8%, Hong Kong's Hang Seng Index advanced 1.1%, while China's Shanghai Composite gained 0.3%.
Stronger-than-expected Japanese industrial production data supported the Tokyo market, although the yen's strength continued to hobble exporter stocks.
In foreign exchange markets, hopes that Greek talks on the restructuring of its debt will soon come to some sort of happy conclusion provided broad support for regional risk-sensitive currencies and the euro. There was also some good economic news out of Germany, which helped the euro. Seasonally adjusted unemployment fell in January by 34,000 and the adjusted unemployment rate hit a record low of 6.7%. Experts had expected unemployment to fall by 10,000 in adjusted terms and have an adjusted rate of 6.8% for January.
At 1045 GMT, the single currency was at $1.3186 against the dollar, from $1.3141 late Monday in New York. The dollar was at Y76.34, from Y76.33.
Spot gold was at $1,739.00 per troy ounce, up $10.00 from its New York settlement Monday, bolstered by a stronger euro. March Nymex crude oil futures were up $1.03 at $99.81 per barrel and Brent oil futures were 95 cents higher at $111.70. The March bund contract was down 0.44 at 139.23.
-By Michele Maatouk, Dow Jones Newswires; +44-20-7842-9447; michele.maatouk@dowjones.com

Barack Obama's drone statement: Pakistan calls missile strikes 'unlawful'

ISLAMABAD: Hours after President Barack Obama confirmed that US drones regularly target militants in its tribal belt, Pakistan today said such attacks were "unlawful" and a violation of its sovereignty.



"Our position on drone strikes is clear and based on principles. Drone attacks are unlawful, counter-productive and hence unacceptable," Foreign Office spokesman Abdul Basit said in a text message sent to PTI.


"We cannot condone the violation of our sovereignty," he said.

Obama confirmed for the first time that US drones had targeted militants in Pakistan's tribal areas during a chat with users of Google+ and YouTube.

He said "a lot of these strikes have been in" Pakistan's Federally Administered Tribal Areas.

"For the most part, they've been very precise precision strikes against al-Qaeda and their affiliates, and we're very careful in terms of how it's been applied," Obama said.

"This is a targeted focused effort at people who are on a list of active terrorists, who are trying to go in and harm Americans, hit American facilities, American bases, and so on... For us to be able to get them in another way would involve probably a lot more intrusive military action than the ones we're already engaging in," he said.

Dhoni the best man to lead India: Akram

Sydney: Under-fire Indian cricket captain Mahendra Singh Dhoni got much-needed support from former Pakistan skipper Wasim Akram who said the "hullabaloo" about his leadership is "ill-timed" as speculated replacement Virender Sehwag is not qualified for the job.
"The entire hullabaloo around MS Dhoni's captaincy is extremely ill-timed. Captain-bashing is a favourite pastime of cricket pundits in the Indian sub-continent and the media just loves it," wrote Akram in his column for a sports website.

"...I believe Dhoni is the best man to lead India and will remain so in the immediate future...In recent times, BCCI's planning has reflected poorly on India's overseas performances. So, it would be unfair to make Dhoni a scapegoat.
"There are two names - Sehwag and Virat Kohli -- doing the rounds as 'next' captains. In my book, none of them qualify for the job," he said.
Akram said while the pressure on Dhoni is understandable after consecutive Test whitewashes on foreign soil but Sehwag was not too impressive either when he got the chance to lead the side in the final Test against Australia.
"Sehwag was very unimpressive when he led the Indian team at Adelaide and Kohli is a kid who has just begun his career.
He can wait for another five years. I had expected better body language from Sehwag and his team during the Adelaide Test, but I was disappointed," he said.
"This 'I give-a-damn' attitude is counter-productive when the chips are down. What did Sehwag do to salvage India's pride at Adelaide? I sometimes see streaks of Shahid Afridi in Sehwag. That dreadful propensity to self-destruct!" he explained.
"Dhoni may not have done enough as skipper, but two bad series does not mean he should be derided and kicked out. Does the BCCI really have an option?"
Akram said he expects a "new" India to take the field in the shorter format starting tomorrow with a Twenty20 against Australia even though bowling remains an area of concern.
"There is still a lot to play for in Australia. With Ravindra Jadeja, Suresh Raina and Praveen Kumar coming in, India are a solid ODI and T20 team. I think India have the right mix to give high-flying Australia a run for their money and we shall see a 'new' India in the first T20," he said.
"India's bowling remains a concern. Ishant Sharma has been the biggest disappointment. He has talked about the 'luck factor'. All that is just a lame excuse. After playing 45 Test matches, Ishant has not learnt to take responsibility," he said.
"When a quick bowler can't make an impact on a Perth or MCG wicket, he never will. First things first, he must first learn to bowl on one side of the wicket."
Akram said Inda need to keep their confidence level up to get the results.
"Self-belief will be crucial going forward in the remainder of the Australian tour. India must not tamper with their batting order. Sehwag and Gautam Gambhir must open the innings because they already have a 'feel' of the conditions," he said.
"The more India back themselves, the better they will play. It's a brand new chapter and India must demonstrate the body language of a world champion. Hope Dhoni shows the way with his young brigade," he added.

Tata Global, Tata Coffee soar on rollout plans with Starbucks

Stocks of Tata Global Beverages traded with strong gains, a day after the company outlined its plans to roll out stores in alliance with global coffee chain Starbucks. The joint venture, in which Tata Global will be a 50 per cent partner, will launch 30-50 outlets this year with an investment of Rs 400 crore ($80 million) to be split equally.

At 1030 hours, stocks of Tata Global traded with 4 per cent gains on the Bombay Stock Exchange. The BSE Sensex traded with 1 per cent gains.

Analysts said the deal can result in re-rating of Tata Global on account of margin expansion. Tata Global trades at 22 times price earnings and benefits of the roll out will accrue to the company.

Star Bucks, which operates in 57 countries and has more than 17,000 stores worldwide, operates at margins of 18 per cent against Tata Global's margins of 9.5 per cent.

Tata Coffee, which will be the sourcing partner for coffee beans in the country, also traded with nearly 1 per cent gains.

However, there might be some correction in prices of Tata Coffee going forward, analysts said. Investors had earlier estimated benefits of store roll out to come to Tata coffee, which will now accrue to its parent Tata Global.

Tata Coffee stocks have surged over 50 per cent since the MOU was signed with Starbucks a year ago.