Wall St Set For Firmer Open, Gains For Nortel Seen

London, September 16: | Updated: Sep 17 2003, 05:30am hrs
US stocks were set edge higher on Tuesday ahead of the US Federal Reserves latest economic assessment, with telecom equipment-maker Nortel Networks likely to be an early gainer.

Nortel shares were up some three per cent in European trade after a French newspaper reported that the Canadian-based firm had won a third-generation mobile equipment supply deal worth up to one billion euros ($1.13 billion) from French mobile company Orange.

A telecoms industry source said that Orange, owned by France Telecom, is poised to announce contracts with Nortel, Alcatel and Nokia for its high-speed, third-generation mobile network. Nortel shares were trading on Instinet at $4.25, up from their Monday New York close of $4.13.

Separately, Nortel announced it had won $139 million in new contracts in China, where it planned to invest $200 million in research and development over the next three years.

US equity index futures pointed to rises of around 0.2 per cent for the major benchmarks. The Federal Open Market Committee will discuss US interest rates, but a further cut in already decades-low borrowing costs is not expected.

However, investors will be tuned for comments on whether the Fed is seeing an improvement in the economy when it releases its results.

Many analysts are confident a US-led recovery is underway and justifies the strong rally in equities seen in recent months, but some concerns remain about the still-weak labour market.

Worries over US employment are over done short-term, said Rupert Thompson, a strategist at E*Trade Securities in London.

Consumer spending is accelerating, not decelerating, and employment is a lagging not leading indicator, he said, adding that he expected the US to drive global equity markets up another 5-10 per cent by year end.

In other corporate news, General Motors Corp has been left as the last holdout among Detroits Big Three automakers in finalising a Union deal after Ford Motor Co joined Chrysler in signing an accord late on Monday.

Lockheed Martin Corp will also be eyed after the No 1 US Defence contractor said it had agreed to buy defence technology company Titan Corp for about $1.8 billion. Titan shares were bid at $17.20 on Instinet, up 1.4 per cent on Mondays close.

AOL Time Warner could also be in focus after the media heavyweight said late on Monday it had struck a deal to sell the majority of its sports franchise to an unnamed investment group.

Details of the sale of the National Basketball Association Atlanta Hawks, the National Hockey League Atlanta Thrashers and operating rights to the Philips Sports arena will be provided at a news conference in Atlanta on Tuesday.

Quarterly earnings reports include S&P 500 Companies General Mills, the maker of Wheaties and Cheerios breakfast cereal, and Kroger Co, the largest US supermarket chain. (Reuters)