LONDON (ShareCast) - After opening lower on fears that the Fed may hold rates steady this week the market picked up sharply after dismal US home sales data revived hopes of a rate cut.

Sales of single-family homes in December fell 4.7% to an annualised 604,000, from a downwards revised 634,000 in November. Observers had been expecting December sales to be at around the 640,000 level on an annualised basis.

The Dow-Jones Industrial Average rose 176 points to 12,383 and the S&P Composite climbed 23 to 1,353. The NASDAQ Composite rose 23 points to 2,349.

The prospect of another rate cut revived housebuilders Lennar, Centex and Pulte Homes.

Coal producers were wanted after the price of the fuel rose to a record high in Asia, as flooding in Australia and snow storms in China limited production. Peabody Energy and Consolidated Energy both burned brighter on the news.

Hedge funds Firebrand Partners and Harbinger Capital Partners, which between them own just under 5% of the common stock of The New York Times, nominated several directors to the board and requested a meeting with the management. The hedge funds are seeking to persuade the newspaper group to dispose of non-core interests and invest more heavily in digital media companies. The share price of The New York Times shot up on the news.

A bite was taken out of McDonald’s share price, as the burger-chain revealed flat like-for-like sales at its established restaurants. Observers had been expecting a rise.

Rival burger chain Wendy’s has troubles of its own. The management has been performing an extensive review of the business and is considering putting itself up for sale, but the process has taken longer to complete because of the recent market turbulence. The market expressed its impatience by marking the shares lower.

Shares in Tennessee-based bank First Horizon National climbed after the bank said it would cease national home builder and commercial real estate lending through its First Horizon Construction Lending offices, as part of its strategy to reduce its national property portfolio.

Power-tool maker Black & Decker’s share price was shaved after it forecast Q1 profit of $1.10 a share, compared with consensus forecasts of $1.46, as the slowdown in the US economy begins to affect the company’s prospects.

Countrywide Financial, the distressed mortgage lender that is being purchased by Bank of America, was in retreat ahead of results this week. This morning its chairman and chief executive, Angelo Mozilo, volunteered to forfeit $37.5m in pay and benefits due to him when the merger goes through.

Department store group Sears recovered from a weak start to close higher after jettisoning its chief executive and president, Aylwin Lewis. The company recently reported disappointing Christmas sales that could lead to a halving of fourth quarter profits.

Verizon Communications, the telecoms giant, disappointed the market by missing its sales target. Telephone customers defecting to cable rivals caused fourth quarter sales to come in below market estimates of $24bn at $23.8bn. Net income rose 3.9% to $1.07bn, representing 37 cents a share, compared to $1.03bn (35 cents a share) in the fourth quarter of 2006.

Alliance Data Systems slumped by a third on news that a private equity buy-out may fall through. Leveraged buyout firm Blackstone said bank regulators had placed “unprecedented and unacceptable financial and operational requirements” on the deal.

The possible collapse of the Alliance Data deal appeared to have a knock-on effect on the proposed private equity buy-out of broadcaster Clear Channel. Speculation was rife that financing for the $19.5bn deal was proving hard to come by.

Upmarket charge card company American Express closed the regular trading session higher in a buoyant financials sector. However, the company reported a 9.9% slide in fourth quarter net earnings after the session ended. Net earnings dipped to $831m, or 71 cents a share. The results were broadly in line with marker expectations.

Flat-panel screen maker Corning was firmer after it announced a 16% gain in fourth quarter revenue on the back of strong consumer demand for liquid crystal displays (LCD). The company raised its profits guidance for Q1.

Controversial oil field services company Halliburton reported a 4.9% hike in fourth-quarter earnings on the back of increased demand for its services outside of North America.

• News Channel