NEW YORK, Feb 15 (AFP) - US stocks swung higher Tuesday, lifting blue chips to fresh 2005 highs, as investor sentiment got a lift from a better-than-expected retail sales report and a takeover bid for electronics retailer Circuit City.
The Dow Jones Industrial Average rose 46.19 points (0.43 percent) to 10,837.32 and the tech-heavy Nasdaq composite advanced 6.30 points (0.30 percent) to 2,089.21.
The broad-market Standard and Poor's 500 index added 3.98 points (0.33 percent) to 1,210.12.
The gains pushed the Dow blue-chips index and the S and P 500 to their highest closing levels of the year.
The government said US retail sales fell 0.3 percent in January on slower auto sales, but were up 0.6 percent excluding the automobile sector.
The report was better than expected on Wall Street, where analysts were predicting a drop of 0.5 percent and a rise excluding autos of 0.4 percent.
"There is a more optimistic mood about the market," said Michael Metz, chief investment strategist, at Oppenheimer and Co.
"Circuit City was a positive and the indication that (star investor) Warren Buffett has been a buyer again in the stock market has had a positive effect on psychology."
Comcast's stock was in focus on news that financier Warren Buffett's Berkshire Hathaway had doubled its stake in the company to 10 million shares. Buffett is the world's second wealthiest individual and know for his investing acumen.
Analysts said gains were capped by caution ahead of Federal Reserve chairman Alan Greenspan's appearance for his semiannual testimony on the state of the economy to Congress starting Wednesday.
"Going back to 1997, these testimonies have been powerful enough to move the 10-year Treasury note yield an average of nine basis on the day and the Dow by 76 points," said Merrill Lynch economist David Rosenberg.
Analysts expect Greenspan to say the economy remains on a moderate growth trend that will allow the central bank to move toward a normalization of interest rates with gradual rate increases.
"The base-case scenario is that Mr. Greenspan sticks to the recent script of hinting at 25 basis-point tightening moves at the next few meetings," Rosenberg said. "But the key question is where do the risks lie?"
European stock markets posted gains, propelled by corporate news and supported by a strong start on Wall Street.
The London FTSE 100 index climbed 0.34 percent to finish at 5,058.9, the Frankfurt DAX 30 advanced 0.36 percent at 4,402.03 and the Paris CAC 40 rose 0.46 percent to 4,030.45.
The DJ Euro Stoxx 50 index of leading eurozone shares rose 0.36 percent to 3,086.95.
On Wall Street, Circuit City shares soared 2.30 or 16 percent to 16.53 after the troubled consumer electronics retailer said it received a takeover bid from Highfields Capital Management LP with a 19 percent premium.
Elsewhere in retail, Federated Department Stores rose 75 cents to 58.00 after a report it had broken off merger talks with May Department Stores, up 24 cents at 32.10.
Comcast jumped 1.05 to 31.76 on news of the Berkshire Hathaway investment in the cable television giant.
In the telecom arena, Qwest edged up six cents to 4.04 after a steep drop a day earlier as the telecom giant lost out in the bidding for MCI to Verizon Communications.
MCI rose 62 cents to 20.55 and Verizon added seven cents to 36.26.
Bonds were sharply lower. The yield on the 10-year US Treasury bond climbed to 4.098 percent from 4.073 percent Monday while that on the 30-year bond rose to 4.481 percent against 4.448 percent. Bond yields and prices move in opposite directions.
02/15/2005 22:13 GMT - AFP