Samsung sees record-high 4Q profit

SEOUL, South Korea (AP) — Samsung Electronics Co., the world's largest technology company by revenue, expects record earnings for the fourth quarter of 2012 as shoppers continued to snap up its smartphones and tablets.
The company said Tuesday its operating profit for the October-December quarter would be about 8.8 trillion won ($8.3 billion), up 89 percent from a year earlier and higher than expectations. It will release its full quarterly result including net profit at the end of this month.
The maker of Galaxy smartphones and tablets said fourth quarter revenue likely rose 18 percent from a year earlier to 56 trillion won.
Analysts said nearly 70 percent of the operating income for the quarter was likely generated by Samsung's mobile division that makes and sells smartphones and tablets.
Samsung's mobile business, which recently overtook Apple in smartphone sales and Nokia in mobile handsets, has driven Samsung's earnings growth in recent quarters. Samsung's quarterly operating profit has risen steadily since the final quarter of 2011, while rival mobile-phone makers such as Nokia, Research In Motion and HTC have experienced falling market share and profits.
Samsung shipped at least 60 million smartphones in the last quarter of 2012, according to analysts' estimates, about 10 percent growth from the previous quarter.
The launch in September of the Galaxy Note II, a giant smartphone with a 5.5-inch screen and a digital pen, helped Samsung retain its market dominance during the Christmas holiday season despite competition from Apple's iPhone 5, analysts said. Samsung's flagship Android device, the Galaxy S III, also sold strongly.
Jin Sung-hye, an analyst at KTB Securities, estimated Samsung shipped 15 million S III smartphones and 7 million of the Note II during the final three months of 2012. The surprise popularity of the Note II device prompted other handset makers to increase the screen size of their smartphones as consumers embrace a wider mobile-phone screen to watch videos.
Market watchers speculate that Samsung will introduce a new Galaxy S smartphone, likely to be named the Galaxy S IV, before the end of April. Samsung usually rolls out the latest iteration of its Android-based flagship smartphone before the end of the second quarter, taking advantage of the time when rivals are months away from introducing new smartphone models.
With the early rollouts of the new Galaxy S model and an update to the Note series later in the year, analysts predict Samsung will sell at least 300 million smartphones in 2013, widening its lead over Apple. Samsung's smartphone shipments likely surpassed 200 million for the first time in 2012.
The company plans to act more aggressively to increase its share of the tablet PC market this year, which is still dominated by Apple's iPad, its executives said in an October conference call. The release of mini tablets that are between the size of smartphones and standard tablets also opens up a new growth area for Samsung.
While the mobile phone division has replaced Samsung's semiconductor business as the biggest profit generator, robust demand for smartphones around the world is benefiting Samsung's semiconductor operation as well. The company is the world's largest supplier of TVs and memory chips.
Analysts said Samsung's semiconductor division fared better in the last quarter than the quarter before as higher Samsung phone sales and launches of new mobile products by its customers lifted demand for Samsung's mobile processors.
In the first quarter of this year, market watchers said the strengthening of the South Korean currency against the U.S. dollar and the Japanese yen could hurt Samsung's component businesses, which is facing seasonally weak demand for TVs and display panels. But others predict Samsung will ship more smartphones than the previous quarter, which could outweigh lower TV and panel sales.
The South Korean company has been in global legal battles with Apple, one of its biggest clients, for nearly two years. Last month, Samsung dropped its bid to seek a sales ban against Apple's mobile products in Europe, saying it would like to protect consumer choice. Samsung, which is under investigations by the European Commission over its practice of licensing key mobile patents, is maintaining its lawsuits against the iPhone maker in other countries.
Shares of Samsung Electronics fell 1.3 percent in Seoul after earnings release. Samsung's shares, which gained 11 percent in the fourth quarter, hit a record high level earlier this month.
If Samsung's fourth quarter results are in line with Tuesday's guidance, the company will report 29 trillion won ($27.3 billion) operating profit on revenue of 201.1 trillion won ($189 billion) for 2012.

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World stocks down ahead of US corporate earnings

BANGKOK (AP) — World stock markets headed lower Tuesday as investors turned cautious before U.S. earnings season kicks off this week.
Investors will get a feel for corporate America's outlook as earnings reports start coming. Aluminum producer Alcoa Inc. will unofficially launch the reporting season for the fourth quarter of 2012 on Tuesday after U.S. markets close.
Events during the quarter such as Superstorm Sandy, the presidential election, and worries about the narrowly avoided "fiscal cliff" could lead to some unexpected results.
European shares were lower ahead of the release of November unemployment data for the region.
"The contrast with Friday's improving US employment data is likely to be quite stark," said Michael Hewson, senior market analyst at CMC Markets UK.
Britain's FTSE 100 fell 0.1 percent to 6,060.15. Germany's DAX shed 0.3 percent to 7,709.13. France's CAC-40 lost 0.1 percent to 3,699.55. Wall Street appeared headed for losses. Dow Jones industrial futures fell 0.2 percent to 13,285 and S&P 500 futures lost 0.3 percent to 1,452.10.
Japan's Nikkei 225 index tumbled 0.9 percent to 10,508.06 as the yen crept upward against the U.S. dollar. The rebound in the yen led some investors to sell export shares that had surged as the currency weakened in recent weeks. Toyota Motor Corp. fell 2 percent while Mazda Motor Corp. plunged 5 percent. Nintendo Co. shed 3.1 percent.
Hong Kong's Hang Seng fell 0.9 percent to 23,111.19. South Korea's Kospi lost 0.7 percent to 1,997.94. Benchmarks in Singapore, Taiwan and Thailand fell, while Malaysia and the Philippines rose. Mainland Chinese shares were mixed.
Australia's S&P/ASX 200 shed 0.6 percent to 4,690.20. That came as the government announced the country's trade deficit widened in November and a report by the Australian Industry Group and the Housing Industry Association showed the country's construction industry slowing for the 31st consecutive month.
"Investors are taking a wait-and-see attitude," said Evan Lucas, strategist at IG Markets in Melbourne, adding that many investors went for profits ahead of the release Wednesday of weekly jobless claims in the U.S. and the European Central Bank's rate-setting meeting Thursday.
"A lot of eyes are watching what will happen in Europe and America over the next couple of days," he said. Another closely watched development will be the Bank of England's monthly announcement on its key interest rate, due Thursday.
Major indexes surged last week after U.S. lawmakers passed a bill to avoid a combination of government spending cuts and tax increases that have come to be known as the fiscal cliff. The deal, however, remains incomplete. Politicians will face another deadline in two months to agree on more spending cuts.
"The looming budget battle in the US has also prompted some hesitancy to buy risk assets," said analysts at Credit Agricole CIB in Hong Kong.
Among individual stocks, Agile Property Holdings Ltd. fell 6.5 percent after the Hong Kong developer said police charged its chairman with two counts of indecent assault. The company said the charges would not affect its business operations.
Benchmark crude for February delivery was down 13 cents to $93.06 per barrel in electronic trading on the New York Mercantile Exchange. The contract rose 10 cents to close at $93.19 a barrel on the Nymex on Monday.
In currencies, the euro fell to $1.3105 from $1.3112 in New York late Monday. The dollar fell to 87.42 yen from 87.84 yen.

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Futures dip ahead of start to US earnings season

NEW YORK (AP) — Stock futures are heading lower as the U.S. kicks off the first earnings season of 2013.
Dow Jones industrial futures are down 10 points to 13,297. The broader S&P futures have given up 1.8 points to 1,454. Nasdaq futures are down 2.25 points to 2,715.50.
Alcoa posts fourth quarter earnings after the markets close Tuesday and analysts that follow the company are looking for a profit of 6 cents per share. That would be a rebound for the aluminum producer, which lost $191 million, or 18 cents per share, in the same quarter last year.
There is early pressure on markets from overseas.
The number of unemployed people in the European Union is now 18.8 million, the most ever. Almost 11 percent of people living in the 17-nation bloc don't have jobs.

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Discover Financial Services 4Q net income rises

LOS ANGELES (AP) — Discover Financial Services on Thursday reported higher earnings for its fiscal fourth quarter, as users of its namesake credit card stepped up purchases and the company wrote off fewer unpaid balances.
Even so, the Riverwoods, Ill.-based company's results fell short of Wall Street expectations, and investors sent its shares down over 3 percent Thursday.
Discover, the nation's sixth-largest credit card issuer, said total loans, credit card loans and Discover card sales volume increased 6 percent in the quarter, which coincided with the tail end of the back-to-school shopping season and the ramp up to the December holidays — key periods when consumers traditionally spend more.
Discover card sales volume increased to $26.5 billion, while credit card loans at the end of the quarter totaled $49.6 billion. Private student loans rose 6 percent, while personal loans climbed 24 percent, the company said.
"Our strong receivables and sales growth results demonstrate the effectiveness of our marketing programs, consumers' preference for cash rewards and our acceptance and awareness initiatives," Chairman and CEO David Nelms said during a conference call with analysts.
While Discover's customers racked up more debt, more of them paid off credit card balances on time. The delinquency rate on credit-card loans over 30 days past due was 1.86 percent, an improvement of 53 basis points from a year earlier. The rate of charge-offs, when the company writes off unpaid credit card balances, dropped to a historic low of 2.29 percent.
"While the continued improvement in credit appears to be nearing an end, we don't believe we are at a point where charge-offs are poised to rise significantly," Nelms said.
Nationwide the rate of credit card payments at least 90 days overdue edged up in the third quarter to 0.75 percent, according to credit reporting agency TransUnion. The rate is coming off historically low levels, however.
Discover has traditionally had one of the lowest rates for default and delinquency in the credit card industry, the result of tighter lending standards and close monitoring of problem accounts.
The company has reported improvement in its customers' default and late-payment rates since the Great Recession, as cardholders moved to pay down debt and boost savings.
Late-payment rates tend to creep higher in the fall, particularly as cardholders spend more money on holiday shopping, travel and other expenses. The company said that seasonal factor led to a slight increase in its credit card loan delinquency rate between the third and fourth quarter.
While Discover's rates for late payments and defaults remain low, the company has been making more loans. As a result, it has been setting aside more funds to cover potential loan losses.
In the September-to-November quarter, Discover increased its provision for loan losses by 6 percent to $338 million, noting that was somewhat offset by a drop in the number of unpaid credit card balances that had to be written off.
Meanwhile Discover's payment-services business, which competes with Visa and MasterCard, saw dollar volume increase 13 percent in the latest quarter.
In a client note Thursday, RBC Capital Markets analyst Jason Arnold said Discover is benefiting from increased acceptance of its cards and favorable credit trends.
"We remain very enthused by Discover's fundamental position and believe the company remains well positioned for loan and (earnings per share) growth," wrote Arnold, who has a $50 price target on the stock.
For the period ended Nov. 30, Discover earned $541 million, or $1.07 per share. That compares with $513 million, or 95 cents per share, a year earlier.
Analysts surveyed by FactSet expected earnings of $1.12 per share.
Revenue climbed 11 percent to $2 billion, after interest expense. Wall Street forecast $1.96 billion.
Also on Thursday, Discover declared a dividend of 14 cents per share. It will be paid on Jan. 17 to shareholders of record on Jan. 3.
Discover shares fell $1.36, or 3.4 percent, to close at $38.41 Thursday. The stock is up 60 percent this year.

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Oracle beats outlook, shrugs off fiscal debate

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.
Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.
Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.
"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."
Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.
The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.
Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.
It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.
"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."
Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.
Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.
OFF A CLIFF
Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.
Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.
"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."
On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.
"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.
The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.
Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.
Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.
Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

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RIM shares fall at the open after earnings

TORONTO (Reuters) - Research In Motion Ltd fell in early trading on Friday following the BlackBerry maker's Thursday earnings announcement, when the company outlined plans to change the way it charges for services.
RIM, pushing to revive its fortunes with the launch of its new BlackBerry 10 devices next month, surprised investors when it said it plans to alter its service revenue model, a move that could put the high-margin business under pressure.
Shares fell 16.0 percent to $11.86 in early trading on the Nasdaq. Toronto-listed shares fell 15.8 percent to C$11.74.

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Oracle beats outlook, shrugs off fiscal debate

BOSTON/SAN FRANCISCO (Reuters) - Technology giant Oracle Corp said software sales growth will stay strong into the new year despite fears that there could be big tax hikes and U.S. government spending cuts that could cause a slump in spending by customers.
Shares of the world's No. 3 software maker rose 1.3 percent after it reported fiscal second-quarter revenue and earnings that surpassed Wall Street forecasts.
Oracle President Safra Catz told investors that businesses were still looking to spend money already allocated to 2012 technology budgets.
"Folks want to close deals," she told analysts on a conference call following the earnings release on Tuesday. There has been "no negative impact on pricing. Pricing remains very good for us."
Oracle said software sales would grow 3 to 13 percent this quarter, which runs through February. It expects fiscal third-quarter hardware products sales to be flat to down 10 percent from a year ago.
The company's software and hardware forecasts were roughly in line with Wall Street expectations, according to FBR Markets analyst Daniel Ives.
Oracle reported that software sales and cloud software subscriptions rose 17 percent from a year earlier to $2.4 billion in its fiscal second quarter ended November 30.
It had forecast that new software sales would climb 5 to 15 percent from a year earlier, when it last reported earnings on September 20.
"I would call it an early Christmas present," Ives said. "It's a positive sign for the overall technology sector."
Investors pay close attention to new software sales because they generate high-margin, long-term maintenance contracts and are an important gauge of the company's future profits.
Oracle posted a second-quarter profit, excluding items, of 64 cents per share, beating the average analyst forecast of 61 cents according to Thomson Reuters I/B/E/S.
Jefferies & Co analyst Ross MacMillan said Oracle's results are encouraging for other makers of business software, many of which end their quarter on December 31.
OFF A CLIFF
Some investors have worried that corporations would postpone spending on technology projects because of uncertainty over the year-end deadline for Congress and U.S. President Barack Obama to reach a compromise to thwart an automatic rise in tax rates and government spending cuts.
Failing to reach a deal, economists say, could lead to another U.S. recession. Catz said Oracle's customers are still spending on software.
"What's going on in Washington - I don't know who it's necessarily influencing today. But I can tell you, our customers have been spending money with us even here in December."
On Tuesday, Oracle forecast earnings per share in the current fiscal third quarter of 64 to 68 cents, excluding items. That was about level with an average forecast for 66 cents.
"It tells you that there's still money being spent by enterprises on software. It's not like the world has ground to a halt," MacMillan said.
The picture was not so bright for Oracle's troubled hardware division, which it acquired with its $5.6 billion purchase of Sun Microsystems in January 2010. The division's revenue has fallen every quarter since it closed that deal.
Hardware systems product sales fell 23 percent from a year earlier to $734 million. Oracle had forecast that hardware sales would drop between 8 and 18 percent.
Chief Executive Larry Ellison told analysts he expected hardware systems revenue to start growing in the fiscal fourth quarter which begins March 1.
Oracle shares rose to $33.30 in extended trade after closing at $32.88 on Nasdaq.

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BofA CEO: Fed wants bank to show consistent earnings

CHARLOTTE, North Carolina (Reuters) - Bank of America Corp needs to show the U.S. Federal Reserve it can produce consistent earnings as part of the annual process to gain permission to return more capital to shareholders, CEO Brian Moynihan said in an interview.
The second-largest U.S. bank is turning a profit in most of its main businesses, but it inherited costly legal problems when it acquired companies during the financial crisis, including subprime mortgage lender Countrywide Financial.
In the third quarter, Bank of America reported only a nominal profit after reaching a $2.4 billion settlement with investors to resolve claims it hid crucial information from shareholders when it bought investment bank Merrill Lynch & Co.
Moynihan declined to comment on whether the bank's capital plan, which is due to the Fed by January 7, will include any proposed share buybacks or increases in dividends. Moynihan suffered a major embarrassment in 2011 when the Fed rejected the bank's request to increase its quarterly dividend, which has been stuck at just one penny per share since the financial crisis.
The Fed has been evaluating capital plans as part of its supervision of bank holding companies and under provisions in the Dodd-Frank financial reform law. It is unclear whether the Fed would approve any request for an increased dividend or share buybacks next year. A Fed spokesperson declined to comment.
"The element that is sort of unique to us is the predictability of the earnings stream," Moynihan said in an interview in his Charlotte, North Carolina, office. "We are working to get through that."
Other banks have demonstrated their ability to earn money more consistently. JPMorgan Chase & Co's quarterly profit, for example, hasn't fallen below $3.7 billion in the past year, even as it has taken losses on disastrous credit derivative trades.
Investors and analysts are hopeful that Bank of America's legal problems will die down soon. Its stock price has more than doubled this year, partly on expectations that the bank will increase its dividend and buy back more stock after the Federal Reserve reviews its capital plans this spring.
Analysts at Atlantic Equities on Tuesday said they expect Bank of America to buy back $4 billion of its own shares in 2013 and $10 billion in 2014, which would be its first buybacks since 2007.
The bank has "made a lot of progress" on legal issues, Moynihan said, but he acknowledged that the company is still working through lawsuits and investor demands to buy back soured mortgages the bank sold off during the housing boom.
In recent weeks, the bank's dispute with insurer MBIA Inc over mortgage-related claims has heated up, with Bank of America filing a new lawsuit last week against the insurer. The legal tussle with MBIA has dragged on, even as Bank of America has worked out settlements with other insurers of mortgage-backed securities issued by Countrywide.
Moynihan said the bank will settle the MBIA dispute if it can reach an agreement that is reasonable for shareholders but otherwise it is ready to litigate the matter.
The bank's shares closed Tuesday at $11.35, up 3.2 percent for the day. The shares are the best performer in the Dow Jones industrial average this year, after falling the most in 2011.
HEALING
In an effort to improve earnings, Moynihan is aiming to cut costs by $8 billion annually by mid-2015 through a program called Project New BAC, including 30,000 layoffs that have been under way since September 2011. Bank of America had noninterest expenses of $76.5 billion in 2011.
In addition, Bank of America expects to eventually reduce costs in its unit that serves delinquent mortgage customers to about $500 million per quarter from about $3.4 billion in the third quarter. If delinquent mortgages continue to fall, that saving should be achieved in 2015, if not sooner, Moynihan said.

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Top UBS shareholder pins rebound hopes on private wealth

LONDON (Reuters) - UBS's wealth management business will help it bounce back from a $1.5 billion rap for rigging interest rates, one of its largest investors said, although fears of costly civil lawsuits could cast a pall over its shares for some time.
Paras Anand, European equities head at Fidelity Worldwide Investment, said legal action sparked by the Libor scandal posed an unpredictable threat to the bank's near-term earnings, even if its core private banking franchise escaped permanent harm.
"The big unknown factor is the civil litigation that could follow on as a result of this...That is one thing at the back of our minds that we have to be cognizant of," Anand said in an interview with Reuters.
"The issue for shareholders is the challenge of pricing that risk in. The potential costs are too unquantifiable and indeed, it's unclear as to whether they will actually manifest or not."
Switzerland's largest bank was hit with the fine on Wednesday after admitting to fraud, paying bribes to brokers and "pervasive" manipulation of global benchmark interest rates by dozens of its staff.
UBS shares were trading 1.3 percent higher at 9:01 a.m. ET, as investors looked forward to the end of a scandal-filled chapter in the bank's history and a renewed focus on managing cash on behalf of rich clients, rather than so-called 'casino' investment banking.
"There's clearly been a backlash against big faceless financial entities but a private bank has big personal relationships with its customers ... These kinds of institutions are surprisingly resilient," Anand said.
"We have seen some awful scandals in businesses much weaker than UBS and they manage to survive," he added.
Fidelity owns around 45 million shares in UBS, equivalent to around 1.2 percent of the bank, and is its fifth largest institutional owner excluding sovereign wealth funds, according to Thomson Reuters data.

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World shares hit highest since July 2011

 World shares hit their highest level since July 2011 on Wednesday after U.S. markets jumped sharply in response to the deal to prevent a fiscal crunch from sending the giant economy back into recession.
MSCI's global share index rose to 346.57 points shortly after Wall Street opened, a peak not seen since July 8, 2011 after which a resurgence in the euro zone debt crisis sparked a sharp sell-off in global equity markets.
Wednesday's gains come after the MSCI global index added 13.5 percent in 2012 - its best year since 2009.

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'Cliff' deal sends stocks up, but problems lurk

NEW YORK (AP) — The "fiscal cliff" compromise, even with all its chaos, controversy and unresolved questions, was enough to send the stock market shooting higher Wednesday, the first trading day of the new year.
All the major U.S. stock indexes swelled more than 2 percent in early trading and were still up significantly in the afternoon. The Dow Jones industrial average briefly surged to its biggest gain in six months.
The reverie multiplied across the globe, with stocks throughout Europe and Asia leaping higher.
In the U.S., the rally was extraordinarily broad. For every stock that fell on the New York Stock Exchange, roughly 9 rose. Technology and bank stocks rose the most. U.S. government bond prices fell as investors pulled money out of safe-harbor investments. Zipcar soared nearly 50 percent after agreeing to be bought by Avis.
But for all the euphoria, many investors cautioned that it can't last long. The deal that politicians hammered out merely postpones the country's budget reckoning, they said, rather than averting it.
"Washington negotiations remind me of the Beach Boys song, 'We'll have fun, fun, fun 'til her daddy takes the T-Bird away," Jack Ablin, chief investment officer of BMO Private Bank in Chicago, wrote in a note to clients.
"Nothing got solved," added T. Doug Dale, chief investment officer for Security Ballew Wealth Management in Jackson, Miss.
According to them and others, the markets were celebrating Wednesday not because investors love the budget deal that was cobbled together, but because they were grateful there was any deal at all.
"Most people think that no deal would have been worse than a bad deal," said Mark Lehmann, president of JMP Securities in San Francisco. He called the current package "not too Draconian."
The House passed the budget bill late Tuesday night, a contentious exercise because many Republicans had wanted a deal that did more to cut government spending. The Senate had already approved the bill.
The late-night haggling was a product of lawmakers wanting to avert a sweeping set of government spending cuts and tax increases that kicked in Jan. 1 in the absence of a budget deal, a scenario that came to be known on Wall Street and Washington as the fiscal cliff, because of the threat it would pose to the fragile U.S. economic recovery.
The bill passed Tuesday night ended the stalemate for now, but it leaves many questions unanswered.
The deal doesn't include any significant deficit-cutting agreement, meaning the country still doesn't have a long-term plan or even a philosophical agreement for how to rein in spending. Big cuts to defense and domestic programs, which were slated to kick in with the new year, weren't worked out but instead were just delayed for two months. And the U.S. is still bumping up against its borrowing limit, or "debt ceiling."
"There's definitely another drama coming down the road," said Lehmann. "That's the March cliff."
The political bickering that's almost certain to persist could have another unwelcome effect: It could influence the ratings agencies to downgrade their ratings of the U.S. When that happened before, when Standard & Poor's cut its rating on the U.S. government in August 2011, the stock market plunged.
Even so, Wednesday's performance gave no hint of the dark clouds on the horizon.
The Dow briefly surged as much as 273 points in early trading. At mid-afternoon, it was up 219 points, or 1.7 percent, to 13,323.
The Standard & Poor's 500 was up 24, or 1.7 percent, to 1,450. The Nasdaq composite was up 68, or 2.3 percent, to 3,088.
The yield on the 10-year Treasury note rose sharply, to 1.83 percent from 1.75 percent. Prices for oil and metals including gold, copper and platinum, were up.
The gains persisted despite small reminders that there are still serious problems punctuating the world economy, like middling growth for the U.S. economy and the still-unsolved European debt crisis. The government reported that U.S. builders spent less on construction projects in November, the first decline in eight months. And the president of debt-wracked Cyprus said he'd refuse to sell government-owned companies, a provision that the country's bailout deal says it must at least consider.
Among stocks making big moves, Zipcar shot up 48 percent, or $4, to $12.24 after the company said it would sell itself to Avis. Avis rose $1.02 to $20.84, about 5 percent.
Marriott rose more than 4 percent, up $1.69 to $38.96, after SunTrust analysts upgraded the stock to "buy." Headphone maker Skullcandy dropped 13 percent, losing $1.02 to $6.77, after Jefferies analysts downgraded it to "underperform" from "buy."

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Stocks surge after Congress passes budget deal

Stocks roared higher on Wall Street and around the world after Congress passed a last-minute budget deal to avert sweeping tax hikes and government spending cuts.
The Dow Jones industrial jumped 308 points to close at 13,412 Wednesday, the first trading day of the year. That's the biggest gain the Dow has had since December 2011.
The Standard & Poor's 500 index rose 36 points to 1,462. The Nasdaq composite rose almost 93 points to 3,112.
The gains were broad. Ten stocks rose for every one that fell on the New York Stock Exchange.
Technology and bank stocks had the biggest gains.
Car-sharing company Zipcar surged 48 percent after agreeing to be bought by Avis for nearly $500 million.
Volume was heavier than the recent average at 4.1 billion shares.

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S&P says U.S. fiscal deal will not affect credit outlook

The U.S. budget deal won't change Standard & Poor's perspective on the country's credit outlook, the rating agency said Wednesday, but the risk of another recession in the world's biggest economy has eased.
The budget compromise "doesn't affect our view of the country's credit outlook, given that we believe yesterday's agreement does little to place the U.S.'s medium-term public finances on a more sustainable footing," S&P said in a statement.
The hard-fought fiscal measures helped avert the so-called fiscal cliff of potentially devastating tax hikes and spending cuts. But more work remains for policymakers, S&P added.
Given the deal, however, "we've reduced our assessment of the risk of another recession in the next 12 months to 10 percent to 15 percent from 15 percent to 20 percent (with more weight placed on the lower end of the range)," the statement read.

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Wall Street starts new year with a bang after "cliff" deal

Stocks kicked off the new year with their best day in over a year on Wednesday, sparked by relief over a last-minute deal in Washington to avert the "fiscal cliff" of tax hikes and spending cuts that threatened to derail the economy's growth.
In 2013's first trading session, the S&P 500 achieved its biggest one-day gain since December 20, 2011, pushing the benchmark index to its highest close since September 14.
Concerns over Washington's ability to sidestep the cliff had driven the S&P 500 down for five straight sessions, before signs that a resolution was near sent the benchmark index higher on the final trading session of 2012.
The CBOE Volatility Index or the VIX <.vix>, Wall Street's favorite gauge of investor anxiety, dropped 18.5 percent to 14.68 at the close. The VIX has fallen 35.4 percent over the past two sessions, the biggest 2-day percentage drop in the history of the index.
The Dow Jones industrial average <.dji> jumped 308.41 points, or 2.35 percent, to 13,412.55 at the close. The Standard & Poor's 500 Index <.spx> gained 36.23 points, or 2.54 percent, to finish at 1,462.42. The Nasdaq Composite Index <.ixic> climbed 92.75 points, or 3.07 percent, to end at 3,112.26.
U.S. markets were closed on Tuesday for New Year's Day.
Market breadth reflected the strong rally, with 10 stocks rising for every one that fell on the New York Stock Exchange. All 10 of the S&P 500 industry sector indexes gained at least 1 percent. The S&P financial index <.gspf> shot up 2.9 percent.
The S&P Information Technology index <.gspt> gained 3.2 percent, including Hewlett-Packard , which climbed 5.4 percent to $15.02. HP's gain followed a miserable 2012 when the stock fell nearly 45 percent as one of the S&P 500's worst performers for 2012.
On Tuesday, Congress passed a bill to prevent huge tax hikes and delay spending cuts that would have pushed the world's largest economy off a "fiscal cliff" and possibly into recession.
The vote avoided steep income-tax increases for a majority of Americans, but failed to resolve a major showdown over cutting the budget deficit, leaving investors and businesses with only limited clarity about the outlook for the economy. Spending cuts of $109 billion in military and domestic programs were temporarily delayed, and another fight over raising the U.S. debt limit also looms.
"We got through the fiscal cliff. The next big thing, and probably more contentious thing, is negotiating the debt ceiling and possibly entitlement reform in early 2013," said Jim Russell, senior equity strategist for U.S. Bank Wealth Management in Cincinnati.
Hard choices about budget cuts and the critical need to raise the debt ceiling will confront Congress about the same time in two months "so the fur will be flying," Russell said.
U.S. stocks ended 2012 with the S&P 500 up 13.4 percent for the year, as investors largely shrugged off worries about the fiscal cliff. For the year, the Dow gained 7.3 percent and the Nasdaq jumped 15.9 percent.
Bank shares rose following news that U.S. regulators are close to securing another multibillion-dollar settlement with the largest banks to resolve allegations that they unlawfully cut corners when foreclosing on delinquent borrowers.
Bank of America Corp rose 3.7 percent to $12.03 and Citigroup Inc gained 4.3 percent to $41.25. The KBW bank index <.bkx> rose 3.2 percent.
Shares of Zipcar Inc surged 47.8 percent to $12.18 after Avis Budget Group Inc said it would buy Zipcar for about $500 million in cash to compete with larger rivals Hertz and Enterprise Holdings Inc. Avis advanced 4.8 percent to $20.77.
Shares of Apple rose 3.2 percent to $549.03, helping to lift the S&P information technology index <.gspt> up 3.2 percent following a report that the most valuable tech company has started testing a new iPhone and a new version of its iOS software.
Economic data from the Institute for Supply Management showed U.S. manufacturing ended 2012 on an upswing despite fears about the fiscal cliff, but the Commerce Department reported that construction spending fell in November for the first time in eight months.
Volume was heavy, with about 7.8 billion shares traded on the New York Stock Exchange, the NYSE MKT and the Nasdaq, well above the 2012 daily average of 6.42 billion.

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Wall Street ends sour week with fifth straight decline

 Stocks fell for a fifth straight day on Friday, dropping 1 percent and marking the S&P 500's longest losing streak in three months as the federal government edged closer to the "fiscal cliff" with no solution in sight.
President Barack Obama and top congressional leaders met at the White House to work on a solution for the draconian debt-reduction measures set to take effect beginning next week. Stocks, which have been influenced by little else than the flood of fiscal cliff headlines from Washington in recent days, extended losses going into the close with the Dow Jones industrial average and the S&P 500 each losing 1 percent, after reports that Obama would not offer a new plan to Republicans. The Dow closed below 13,000 for the first time since December 4.
"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, managing partner at Direct Access Partners LLC in New York. "He's going to force the House to come to him with something different. I think that's a surprise. The entire market is disappointed in a lack of leadership in Washington."
In a sign of investor anxiety, the CBOE Volatility Index <.vix>, known as the VIX, jumped 16.69 percent to 22.72, closing at its highest level since June. Wall Street's favorite fear barometer has risen for five straight weeks, surging more than 40 percent over that time.
The Dow Jones industrial average <.dji> dropped 158.20 points, or 1.21 percent, to 12,938.11 at the close. The Standard & Poor's 500 Index <.spx> lost 15.67 points, or 1.11 percent, to 1,402.43. The Nasdaq Composite Index <.ixic> fell 25.59 points, or 0.86 percent, to end at 2,960.31.
For the week, the Dow fell 1.9 percent. The S&P 500 also lost 1.9 percent for the week, marking its worst weekly performance since mid-November. The Nasdaq finished the week down 2 percent. In contrast, the VIX jumped 22 percent for the week.
Pessimism continued after the market closed, with stock futures indicating even steeper losses. S&P 500 futures dropped 26.7 points, or 1.9 percent, eclipsing the decline seen in the regular session.
All 10 S&P 500 sectors fell during Friday's regular trading, with most posting declines of 1 percent, but energy and material shares were among the weakest of the day, with both groups closely tied to the pace of growth.
An S&P energy sector index <.gspe> slid 1.8 percent, with Exxon Mobil down 2 percent at $85.10, and Chevron Corp off 1.9 percent at $106.45. The S&P material sector index <.gspm> fell 1.3 percent, with U.S. Steel Corp down 2.6 percent at $23.03.
Decliners outnumbered advancers by a ratio of slightly more than 2 to 1 on the New York Stock Exchange, while on the Nasdaq, two stocks fell for every one that rose.
"We've been whipsawing around on low volume and rumors that come out on the cliff," said Eric Green, senior portfolio manager at Penn Capital Management in Philadelphia, who helps oversee $7 billion in assets.
With time running short, lawmakers may opt to allow the higher taxes and across-the-board federal spending cuts to go into effect and attempt to pass a retroactive fix soon after the new year. Standard & Poor's said an impasse on the cliff wouldn't affect the sovereign credit rating of the United States.
"We're not as concerned with January 1 as the market seems to be," said Richard Weiss, senior money manager at American Century Investments, in Mountain View, California. "Things will be resolved, just maybe not on a good timetable, and any deal can easily be retroactive."
Trading volume was light throughout the holiday-shortened week, with just 4.46 billion shares changing hands on the New York Stock Exchange, the Nasdaq and NYSE MKT on Friday, below the daily average so far this year of about 6.48 billion shares. On Monday, the U.S. stock market closed early for Christmas Eve, and the market was shut on Tuesday for Christmas. Many senior traders were absent this week for the holidays.
Highlighting Wall Street's sensitivity to developments in Washington, stocks tumbled more than 1 percent on Thursday after Senate Majority Leader Harry Reid warned that a deal was unlikely before the deadline. But late in the day, stocks nearly bounced back when the House said it would hold an unusual Sunday session to work on a fiscal solution.
Positive economic data failed to alter the market's mood.
The National Association of Realtors said contracts to buy previously owned U.S. homes rose in November to their highest level in 2-1/2 years, while a report from the Institute for Supply Management-Chicago showed business activity in the U.S. Midwest expanded in December.
"Economic reports have been very favorable, and once Congress comes to a resolution, the market should resume an upward trend, based on the data," said Weiss, who helps oversee about $125 billion in assets. "All else being equal, we see any further decline as a buying opportunity."
Barnes & Noble Inc rose 4.3 percent to $14.97 after the top U.S. bookstore chain said British publisher Pearson Plc had agreed to make a strategic investment in its Nook Media subsidiary. But Barnes & Noble also said its Nook business will not meet its previous projection for fiscal year 2013.
Shares of magicJack VocalTec Ltd jumped 10.3 percent to $17.95 after the company gave a strong fourth-quarter outlook and named Gerald Vento president and chief executive, effective January 1.
The U.S.-listed shares of Canadian drugmaker Aeterna Zentaris Inc surged 13.8 percent to $2.47 after the company said it had reached an agreement with the U.S. Food and Drug Administration on a special protocol assessment by the FDA for a Phase 3 registration trial in endometrial cancer with AEZS-108 treatment.

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Wall Street Week Ahead: Cliff may be a fear, but debt ceiling much scarier

 Investors fearing a stock market plunge - if the United States tumbles off the "fiscal cliff" next week - may want to relax.
But they should be scared if a few weeks later, Washington fails to reach a deal to increase the nation's debt ceiling because that raises the threat of a default, another credit downgrade and a panic in the financial markets.
Market strategists say that while falling off the cliff for any lengthy period - which would lead to automatic tax hikes and stiff cuts in government spending - would badly hurt both consumer and business confidence, it would take some time for the U.S. economy to slide into recession. In the meantime, there would be plenty of chances for lawmakers to make amends by reversing some of the effects.
That has been reflected in a U.S. stock market that has still not shown signs of melting down. Instead, it has drifted lower and become more volatile.
In some ways, that has let Washington off the hook. In the past, a plunge in stock prices forced the hand of Congress, such as in the middle of the financial crisis in 2008.
"If this thing continues for a bit longer and the result is you get a U.S. debt downgrade ... the risk is not that you lose two-and-a-half percent, the risk is that you lose ten and a half," said Jonathan Golub, chief U.S. equity strategist at UBS Equity Research, in New York.
U.S. Treasury Secretary Tim Geithner said this week that the United States will technically reach its debt limit at the end of the year.
INVESTORS WARY OF JANUARY
The White House has said it will not negotiate the debt ceiling as in 2011, when the fight over what was once a procedural matter preceded the first-ever downgrade of the U.S. credit rating. But it may be forced into such a battle again. A repeat of that war is most worrisome for markets.
Markets posted several days of sharp losses in the period surrounding the debt ceiling fight in 2011. Even after a bill to increase the ceiling passed, stocks plunged in what was seen as a vote of "no confidence" in Washington's ability to function, considering how close lawmakers came to a default.
Credit ratings agency Standard & Poor's lowered the U.S. sovereign rating to double-A-plus, citing Washington's legislative problems as one reason for the downgrade from triple-A status. The benchmark S&P 500 dropped 16 percent in a four-week period ending August 21, 2011.
"I think there will be a tremendous fight between Democrats and Republicans about the debt ceiling," said Jon Najarian, a co-founder of online brokerage TradeMonster.com, in Chicago.
"I think that is the biggest risk to the downside in January for the market and the U.S. economy."
There are some signs in the options market that investors are starting to eye the January period with more wariness. The CBOE Volatility Index, or the VIX, the market's preferred indicator of anxiety, has remained at relatively low levels throughout this process, though on Thursday it edged above 20 for the first time since July.
More notable is the action in VIX futures markets, which shows a sharper increase in expected volatility in January than in later-dated contracts. January VIX futures are up nearly 23 percent in the last seven trading days, compared with a 13 percent increase in March futures and an 8 percent increase in May futures. That's a sign of increasing near-term worry among market participants.
The CBOE Volatility Index closed on Friday at 22.72, gaining nearly 17 percent to end at its highest level since June as details emerged of a meeting on Friday afternoon of President Barack Obama with Senate and House leaders from both parties where the president offered proposals similar to those already rejected by Republicans. Stocks slid in late trading and equity futures continued that slide after cash markets closed.
"I was stunned Obama didn't have another plan, and that's absolutely why we sold off," said Mike Shea, a managing partner and trader at Direct Access Partners LLC, in New York.
Obama offered hope for a last-minute agreement to avoid the fiscal cliff after a meeting with congressional leaders, although he scolded Congress for leaving the problem unresolved until the 11th hour.
"The hour for immediate action is here," he told reporters at a White House briefing. "I'm modestly optimistic that an agreement can be achieved."
The U.S. House of Representatives is set to convene on Sunday and continue working through the New Year's Day holiday. Obama has proposed maintaining current tax rates for all but the highest earners.
Consumers don't appear at all traumatized by the fiscal cliff talks, as yet. Helping to bolster consumer confidence has been a continued recovery in the housing market and growth in the labor market, albeit slow.
The latest take on employment will be out next Friday, when the U.S. Labor Department's non-farm payrolls report is expected to show jobs growth of 145,000 for December, in line with recent growth.
Consumers will see their paychecks affected if lawmakers cannot broker a deal and tax rates rise, but the effect on spending is likely to be gradual.
PLAYING DEFENSE
Options strategists have noted an increase in positions to guard against weakness in defense stocks such as General Dynamics because those stocks would be affected by spending cuts set for that sector. Notably, though, the PHLX Defense Index is less than 1 percent away from an all-time high reached on December 20.
This underscores the view taken by most investors and strategists: One way or another, Washington will come to an agreement to offset some effects of the cliff. The result will not be entirely satisfying, but it will be enough to satisfy investors.
"Expectations are pretty low at this point, and yet the equity market hasn't reacted," said Carmine Grigoli, chief U.S. investment strategist at Mizuho Securities USA, in New York. "You're not going to see the markets react to anything with more than a 5 (percent) to 7 percent correction."
Save for a brief 3.6 percent drop in equity futures late on Thursday evening last week after House Speaker John Boehner had to cancel a scheduled vote on a tax-hike bill due to lack of Republican support, markets have not shown the same kind of volatility as in 2008 or 2011.
A gradual decline remains possible, Golub said, if business and consumer confidence continues to take a hit on the back of fiscal cliff worries. The Conference Board's measure of consumer confidence fell sharply in December, a drop blamed in part on the fiscal issues.
"If Congress came out and said that everything is off the table, yeah, that would be a short-term shock to the market, but that's not likely," said Richard Weiss, a Mountain View, California-based senior money manager at American Century Investments.
"Things will be resolved, just maybe not on a good time table. All else being equal, we see any further decline as a buying opportunity.

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Stung Bankia investors look to courts for justice

 Spanish savers and pensioners who have seen their money wiped out by investing in state-rescued lender Bankia are likely to seek redress in court rather than wait for any official inquiry, which looks increasingly unlikely.
About 350,000 stockholders will share the pain of the bank's European bailout, many of them bank clients who were sold the shares through an aggressive marketing campaign for its stock market flotation in 2011.
Shares in the lender, rescued by the state in May in Spain's biggest ever bank bailout, fell to record lows on Friday, tumbling over 40 percent from the start of the week after it emerged losses on bad loans were worse than expected.
"Going to the courts and seeing if a judge can bring us justice is the only path left to us," said Maricarmen Olivares, whose parents lost 600,000 euros ($793,300) they made from selling her father's car workshop by investing in Bankia preference shares.
Neither of the two main political parties want to push for a full investigation into Bankia's demise, which could draw attention to their own role in a debacle that has driven Spain to the brink of an international rescue, commentators say.
"Investigations work when a political party has something to gain over another. In this case, no-one has anything to gain," said Juan Carlos Rodriguez, of consultancy Analistas Socio Politicos.
"I don't see the big parties investigating this because if there have been errors committed, they have been committed by both sides."
The Socialist Party was in power when Bankia was formed in 2010 from an ill-matched combination of seven regional savings banks, a union that concentrated an unsustainable exposure to Spain's collapsed property sector.
Immense political pressure from the then government forced Bankia executives to push ahead with an initial public offering in July 2011 as Spain sought to bring private capital into its banking system and avoid a European bailout.
Then chairman, Rodrigo Rato, a former chief of the International Monetary Fund, had strong links to the centre-right Popular Party (PP) and was finance minister in a previous PP administration.
A small political party, UPyD, forced the High Court in July to open an investigation into whether Rato, ousted when the bank was nationalized in May, and 32 other former board members are guilty of fraud, price-fixing or falsifying accounts.
Investigating magistrate Fernando Andreu has so far not brought charges against anyone and could still drop the case.
"WE WON'T SEE OUR MONEY AGAIN"
Rato appeared in a private session before the judge on December 20 where he denied any blame for what happened.
Rato, who cannot legally speak to the press because he is the subject of a court investigation, has kept a low profile since the bank rescue in May. Protesters gathered outside the court on the day of his declaration wearing masks of his face.
The probe centres around Bankia's stock market listing, the formation of the lender from the seven savings banks and the gaping capital shortfall revealed at the bank after the state takeover in May.
Rato and 23 others including bank executives and cabinet ministers were called to testify before a parliamentary committee in July this year where Rato said he had a clear conscience and had done things properly.
"That was just window-dressing by the PP following the outcry over the Bankia disaster," said a Socialist Party source.
The opposition Socialists called for a full parliamentary investigation in May, but the ruling PP blocked it, the Socialist Party source said. A PP spokeswoman said any investigation of Bankia should be carried out through the courts, not the government.
A government source said any investigative process would not fall to the government, but to the courts.
Bankia, alongside other Spanish banks, sold billions of euros of preference shares and subordinated debt to high street clients, many of whom say they were tricked into parting with their savings and are seeking compensation.
The investigating magistrate is not including the mis-selling of preference shares - hybrid instruments that fall between a share and a bond - in the probe.
Holders of preference shares at Bankia will incur losses of up to 46 percent as part of the European bailout, receiving shares rather than cash in exchange.
"We won't see our money again, that's for sure. They'll give us shares, but shares with no value or credibility in a nationalized bank," said Olivares, who said she had heard nothing from the bank as to how much their losses would be.
The losses each investor will have to take has yet to be decided, a Bankia spokesman said, adding that hybrid debtholders at all rescued banks had to take losses, not just at Bankia.
A source close to the court investigation said there would certainly be scope for a separate wider probe into the mis-selling of preference shares, not just at Bankia, but throughout Spain's savings banks.
Olivares, like many other small savers at Spain's state-rescued banks, claims her parents were sold the preference shares as a kind of high-interest savings account and that the bank staff did not explain the risks attached.
The government is in the process of setting up an arbitration process to compensate Bankia clients who can prove that they were duped into buying preference shares, Economy Minister Luis de Guindos said last week.
But many ordinary Spaniards who lost their life savings through the Bankia rescue say this is not enough and they want answers as to what happened to their money.
"We want justice, at least some kind of recognition that we were swindled," said Raimundo Guillen, a 50-year-old electricity station worker who put 30,000 euros in preference shares with Bankia under the impression they were a form of savings account.
"It's as if they've stolen your wallet - blatantly, with their face uncovered.

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Indian stocks third best performers globally

Mumbai, Dec 31 (IANS) After a dismal show a year ago, the Indian stock market emerged as the third best performer globally in 2012, with a return of over 25 percent for a key index on the back of $24 billion foreign fund inflows and robust buying by domestic investors.
The 30-share sensitive index (Sensex) of the Bombay Stock Exchange (BSE) ranked third in terms of returns after the yields of the 50-scrip Thailand Set Index and Germany's 30-share Deutscher Aktien IndeX.
The benchmark Indian index ended the year Monday at 19,426.71 points, 25.70 percent or 3,971.79 points higher than the previous year's close at 15,454.92 points. This is the best performance of the benchmark index since 2009.
The Sensex recorded a high of 19,612.18 points and a low of 15,358.02 points in 2012, data available with the bourse showed.
"Markets gained globally. But Indian market outperformed others because of the reform push that came after September," said Vaibhav Agrawal, vice president, research, Angel Broking.
Agrawal said the government decision to cut subsidies on petroleum products and liberalise overseas investment norms for the sectors like retail, aviation, insurance and banking sent a positive signal to the market.
"Government took some politically difficult decisions. It sent a positive signal to the markets," Agrawal told IANS.
Data with the regulator, the Securities and Exchange Board of India (SEBI), showed that foreign funds pumped in $24 billion into the Indian markets.
In contrast, foreign funds had divested $357.8 billion from Indian equities and invested $8.65 billion in the debt markets in 2011, while in 2010, their investment in these two segments amounted to $29.36 billion and $10.11 billion, respectively.
Among the individual scrips that comprise the 30-share Sensex basket, the best performer in 2012 was Tata Motors, which surged almost 75 percent on the back of strong performance of its luxury car division Jaguar Land Rover.
The country's largest lender ICICI Bank jumped 66 percent, Maruti Suzuki soared 63 percent and engineering and construction firm Larsen & Toubro gained 61 percent in 2012.
The worst performer in this segment was the country's second largest software exporter Infosys, which slumped 16.5 percent. Gail India fell 8 percent, Bharti Airtel declined 7 percent and BHEL lost 4.5 percent in 2012.
"In 2013, we expect good performance of banking, IT, pharma and auto sectors," said Agrawal.
Anis Chakravarty, director, Deloitte Haskins and Sells, said the overall for the stock markets remained positive for 2013.
"RBI has indicated interest rate cuts. Inflation is showing some moderation. Economic growth is likely to improve. So this should have positive impact on the market," said Chakravarty.
The show at the other major bourse, the National Stock Exchange (NSE), was no different, with the broader 50-share S&P CNX Nifty registering a gain of almost 27 percent. The Nifty ended the year at 5,905.10 points.
However, on last day of the year, key indices closed in the red.
The benchmark Sensex closed 0.09 percent down at 19,426.71 points, while the Nifty declined 0.06 percent to close at 5,905.10 points, in a lacklustre session the last day of 2012 on concern over the US "fiscal cliff".

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Stocks open mixed as budget deadline nears

 Stocks are little changed in early trading on Wall Street as a budget deadline approaches with no deal in sight.
The Dow Jones industrial average was down six points at 12,931 shortly after the opening bell Monday.
The Standard & Poor's 500 index was up two points at 1,405 and the Nasdaq composite edged up 10 points to 2,970.
There are just hours to go before a midnight deadline, when sweeping tax increases and government spending cuts will go into effect unless lawmakers agree on a plan to cut the nation's budget deficit.
More than $500 billion in 2013 tax increases would take effect and $109 billion would be slashed from defense and domestic programs.
Senate Majority Leader Harry Reid says negotiations are ongoing.

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Drugs group Lundbeck's shares hit by profit warning

 Shares in Danish drugs firm Lundbeck fell to their lowest level in over 12 years on Wednesday after it cut its profits forecast for the next two years as European sales slow and spending on new products rise to combat generic competition.
The company has already warned that earnings would stall until 2015 due to cheap generic competition for its existing drugs, meaning new products will be vital for future earnings.
But Chief Executive Ulf Wiinberg said on Wednesday that the negative impact on revenue from healthcare reforms in Europe had also been bigger than expected in the last two years and that slowing European sales and generic competition were hurting.
As a result the company said operating profits would fall further than previously forecast in 2014 as it increases investments in its late-stage drugs development pipeline and product launches.
Lundbeck is working to find new drugs to replace lost revenue from products coming off patent protection such as its antidepressant Cipralex, which is sold as Lexapro in the United States and Japan, and Alzheimer's drug Ebixa.
Wiinberg said 2014 would be the company's peak investment year for the new products pipeline, offering it a solid foundation for growth starting in 2015.
"You only get one chance to launch a product and we have to do it well," Wiinberg said at a briefing for investors.
He was commenting after the company warned in a statement that it now expects revenue in 2014 of about 14 billion Danish crowns ($2.5 billion) and an operating profit of between just 0.5 billion and 1 billion crowns.
Analysts have on average been forecasting a profit of over 2.5 billion crowns for 2014 on turnover of over 14.7 billion crowns, according to Thomson Reuters I/B/E/S Estimates.
Two years ago Lundbeck predicted its annual revenues over the period 2012-2014 would exceed 14 billion crowns a year while earnings before interest and tax (EBIT) would exceed 2 billion crowns a year.
Next years' revenue is now forecast to be in the range of 14.1 billion and 14.7 billion crowns to produce an operating profit of 1.6 billion to 2.1 billion crowns, with no change to the company's forecast for 2012.
Analysts' forecasts for this year are for operating profit to drop 41 percent to 1.99 billion crowns on revenue down 8 percent at 14.7 billion crowns, while for 2013 they predict a profit of 2.26 billion crowns on revenue of 14.5 billion crowns.
Lundbeck's shares were trading down 17 percent at 79.90 crowns at 12.44 p.m. British time, dropping below 80 crowns for the first time since April 2000.
"In the short term, earnings are under pressure," Sydbank analyst Soren Hansen said.
Lundbeck said that it expects a dividend payout ratio of about 35 percent of net profits in the 2012-14 period. Last year it paid 3.49 crowns on basic earnings per share of 11.64 crowns, a payout ratio of 30 percent.
Analysts have been predicting a 27-30 percent cut this year to 2.53-2.28 crowns, according to Thomson Reuters StarMine data.
But a number of analysts doubt that revenue from new products will be enough to secure revenue growth in 2015, compensating for lost revenue from Cipralex, Lexapro and Ebixa which together accounted for about 70 percent of group revenue in 2011.
Lundbeck is working on new products such as antidepressant Brintellix in Europe and the United States for launch at the end of next year or start of 2014, as well as alcohol dependency treatment Selincro in Europe in mid 2013.
"It is difficult to see revenue from the smaller products compensating for the large products," said Hansen.

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