Dollar Stabilizes but Japan's Still Grabbing the Headlines

The big bank deal brewing in the East looks like the biggest story on an August Friday.
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While Wall Street waits on Tuesday's

Federal Open Market Committee

meeting, Japan continues to grab the headlines.

We're not talking about the dollar/yen relationship. For now, at least, that seems to have stabilized, the greenback lately sitting at around 111.33 yen.

This time it's the news that

Industrial Bank of Japan

,

Dai-Ichi Kangyo Bank

and

Fuji Bank

confirmed plans to form a joint holding company by autumn of 2001, and integrate their operations by spring of 2002. The alliance would create the world's largest banking group in terms of assets, those three banks controlling a whopping $1.3 trillion as of March, well above current leader

Deutsche Bank's

$735 billion. Though it first has to pass muster at Japan's

Fair Trade Commission

, the deal has sparked hope among investors for further consolidation in Japan's badly crowded financial sector.

Back in New York, stocks seem poised for a bit of a snapback from yesterday's selling. At 8 a.m. EDT, the

S&P 500

futures were up 2, about 1.5 points above fair value and indicating a slight hop at the open. The 30-year Treasury was up 5/32 to 101 14/32, its yield falling to 6.021%.

Whether or not the market can hold any early gains it garners is a bit touch and go. "We're hoping for some volume, but there's not reason to expect it ahead of the weekend" and next week's FOMC meeting, said Sam Ginzburg, managing director of equity trading at

Gruntal

.

"But I get the feeling that it might not be the worst thing to be a touch long into the weekend with the right stocks at the right prices," he surmised. Ginzburg admits to being one of a small camp who thinks the Fed might not hike next week, though he sees the market rallying even if rates go up by 25 basis points.

"The problem is that people aren't buying when the blood is in the streets. I'd take that bet

go long going into September."

Also factoring into today's action is the quarterly expiration of stock and index options, which may add some volatility to a thin August market.

In Tokyo, the IBJ alliance helped the

Nikkei

pick up 218.37, or 1.2%, to 18,098.11, the first time it's moved through the key 18,000 level since late July.

In Hong Kong, sentiment spillover from Japan and hopes of progress on China's effort to join the

World Trade Organization

helped the

Hang Seng

gain 163.15, or 1.2%, to 13,566.74. Hong Kong stocks may be benefiting from reports of a fresh influx of foreign funds -- the origin of which are not entirely clear -- to the region.

European markets were higher toward midday amid the improved global sentiment. The London

FTSE

was up 45.1 to 6163.1, while Frankfurt's

Xetra Dax

was 48.67 higher, or 0.9%, to 5235.52. The Paris

CAC

had gained 33.13 to 4442.03.

Friday's Wake-Up Watchlist

By

Brian Louis

Staff Reporter

Mergers, acquisitions and joint ventures

Cooper Cameron

(CAM)

is selling its rotating compressor unit to

Rolls Royce

for $180 million.

Disney

(DIS) - Get Report

has decided to sell its

Fairchild Publications

division, which publishes

Women's Wear Daily

and

W

, for $650 million to

Conde Nast Publications

, the publisher of magazines like

Vogue

,

Vanity Fair

,

Mademoiselle

and

The New Yorker

,

The New York Times

reported.

NBC

, a unit of

General Electric

(GE) - Get Report

, is speaking with

Paxson Communications

(PAX)

about taking a 32% stake in the company,

The Wall Street Journal

reported, citing people familiar with the discussions.

German utilities

Veba

(VEB)

and

Viag

are in talks to merge in a transaction that could be valued at about $15 billion, the

Journal

reported, citing people familiar with the situation.

Earnings/revenue reports and previews

Dun & Bradstreet

(DNB)

yesterday warned it doesn't expect to meet analysts' earnings estimates of 40 to 41 cents a share for the third quarter and $1.73 to $1.75 a share for full year 1999. The company now expects full-year earnings to be between $1.62 and $1.65.

Offerings and stock actions

Morgan Stanley Dean Witter

priced

Agile Software's

(AGIL:Nasdaq) 3 million-share IPO above-range at $21 a share. The estimated range for the IPO had been raised to $18 to $20 from $15 to $17. Agile, based in San Jose, Calif., is a content-management software company.

Goldman Sachs

priced

LookSmart's

(LOOK:Nasdaq) 7.7 million-share IPO midrange at $12 a share. The deal was reduced to 9 million shares from 12 million, and then finally to 7.7 million. LookSmart is an Internet directory company based in San Francisco.

New York Times

(NYT) - Get Report

is pondering an IPO for its Internet unit,

Times Co. Digital

, although a final decision on an IPO hasn't been made yet, the

Journal

reported. Chairman Arthur O. Sulzberger Jr., in a staff memo, also said the company is considering allowing all employees and not just those who work for the Net division to buy stock at the IPO price, the

Journal

article said. The New York Times is a minority shareholder in

TheStreet.com Inc.

(TSCM)

, the publisher of this Web site.

Analyst actions

Warburg Dillon Read

downgraded

Bank United

(BNKU) - Get Report

to buy from strong buy.

Morgan Stanley Dean Witter

downgraded

Dillard's

(DDS) - Get Report

to neutral from outperform. Dillard's posted second-quarter earnings yesterday that fell far short of Wall Street expectations.

Morgan Stanley downgraded

Equifax

(EFX) - Get Report

to outperform from strong buy.

Lehman Brothers

downgraded

Sprint

(FON)

to outperform from buy.

PaineWebber

initiated coverage of

Western Resources

(WR)

with an attractive rating.

Miscellany

The Heard on the Street column in the

Journal

says that some money managers think earnings for airline stocks are likely to stall and the stocks could slump further.