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Wall St set to open up; oil's rise eyed

23/06/2008 - 14:17

By Ellis Mnyandu

NEW YORK (Reuters) - U.S. stocks headed for a higher open on Monday as investors looked set to snap up beaten-down shares after Friday's sell-off, encouraged by news of a $4.4 billion takeover in the agricultural sector.

The rebound, however, could run into some headwinds as oil prices inch higher despite Saudi Arabia's pledge to pump more oil. A recommendation by Goldman Sachs to sell financials and consumer discretionary stocks could also temper the positive sentiment.

Even so news that Bunge Ltd , the U.S. fertilizer producer and oilseed processor, has agreed to buy Corn Products International Inc for $4.4 billion in stock stirred optimism about share valuations.

Bunge, whose stock jumped more than 2 percent to $125.45 before the bell, also raised its 2008 profit forecast. Corn Products shares rose 26 percent to $54.33.

"We've gotten an oversold market in the short-run if you look at what has come off the indexes in the time frame of a week," said Arthur Hogan, chief market analyst at Jefferies & Co in Boston. "So the natural reaction this morning is to get a bit of a bounce. The M&A news is a positive backdrop in a very uncertain market."

S&P 500 futures rose 7.20 points, and were above fair value, a mathematical formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract.

Dow Jones industrial average futures rose 57 points, and Nasdaq 100 futures were up 8.25 points.

Reflecting the damage to the financial sector, Citigroup Inc plans to cut thousands of trading and investment banking jobs this week, a person familiar with the situation said on Monday. The cuts are part of previously reported plans to slash about 10 percent of Citi's investment bank division.

U.S. front-month crude rose 36 cents to $135.94 a barrel even though top exporter Saudi Arabia pledged to increase output in July and keep increasing if necessary. With tensions escalating between Iran and Israel, the Saudi promise was not enough to calm supply concerns, analysts said.

The Dow closed below 12,000 in Friday's sell-off for the first time since mid-March as investors feared more trouble in the financial sector and the impact of record oil prices on the economy. The weekly losses were Wall Street's biggest in nearly a month.

(Editing by Kenneth Barry)


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