Malaysia - Equity

The stock market closed lower yesterday as investors took the cue from easier regional markets following the fall on Wall Street last Friday, dealers said.

Dragged by losses in selected blue chips, the FTSE Bursa Malaysia Kuala Lumpur Composite Index (FBM KLCI) ended 5.03 points lower at 1,334.27 after opening 2.06 points easier at 1,337.24.

After a slew of economic data last week, the focus in the coming weeks will be on corporate result announcements.

Among the companies scheduled to release their January to March quarter report cards are Malaysian Airline System and PLUS.

Masterskill Education Group, a provider of education services, will make its debut today with a market capitalisation of RM1.4 billion at a retail offer price of RM3.50. As of 9.10 am it is down 9 sen at RM3.70. Masterskill made its debut at RM3.60 almost 5% lower than its IPO price.

At the close, the Finance Index slipped 22.93 points to 12,088.12, the Industrial Index fell 5.86 points to 2,694.84 and the Plantation Index declined 76.42 points to 6,349.05.

The FBM Emas Index declined 48.05 points to 8,967.69, the FBM70 fell 73.489 points to 8,797.40 and the FBM ACE Index slipped 24.77 points to 3,989.34.

Decliners led advancers 557 to 187 while 194 counters closed unchanged, 439 untraded and 29 others suspended.

Total turnover dropped to 633.06 million shares, valued at RM1.01 billion, from last Friday's close of 682.22 million shares worth RM1.08 billion.

Leading the actives, OilCorp rose 4.5 sen to 8.5 sen, Talam Corp was unchanged at 14 sen, ASIAEP gained half-a-sen to 9 sen and AFFIN-WC declined half-a-sen to 7 sen.

Among heavyweights, Maybank declined 4 sen to RM7.68, CIMB fell 2 sen to RM14.38, Sime Darby lost 1 sen to RM8.24 and Maxis shed 1 sen to RM5.32

About 60.4 million shares or 27.5% of Oilcorp Bhd's paid-up share base changed hands on May 17, which saw its share price surge 4.5 sen to 8.5 sen. Oilcorp was the most actively traded counter on the Bursa Malaysia on May 17, accounting for 9.5% of the 633 million units transacted. Oil and gas outfit Oilcorp submitted its outstanding annual audited accounts for FY ended Dec 31, 2009 last Friday, resulting in a lifting of a trading suspension, which has been in place since May 10 this year. The company suffered a loss after tax of RM461.7 million on the back of RM242.8 million in revenue for the year ended December 2009. Much of Oilcorp's woes stem from its operating costs, which stood at RM420.1 million for the year.
Chip Lam Seng Enterprise Bhd, the major stakeholder in Integrated Rubber Corp Bhd (IRCB)( 2127 ), has sold close to 12 per cent of its shares in the company in the open market. Late last week, Chip Lam Seng informed the stock exchange that it sold 13 million shares in the open market, further slicing its stake in the public listed company. This year alone, Chip Lam Seng have sold some 29.55 million shares in the open market, filings to Bursa Malaysia show. As a result of the sale, Chip Lam Seng's stake in IRCB has been cut to only 28.31 per cent last Friday from 40.37 per cent on January 13 2010 Ipoh-based Chip Lam Seng sale of IRCB shares had increased selling pressure on the stock, with the stock prices falling by as much as 50 per cent from January this year, to close the day at 79.5 sen a share.

M3NERGY Bhd managing director and chief executive officer Datuk Shahrazi Sha'ari is making a conditional takeover of the company at RM1.85 a share through his privately-owned company Adamus Avenue Sdn Bhd.
The RM1.85 offer price is at a premium of 16 sen or 9.47% over the last closing share price of RM1.69 on May 14. It is however, at a discount of RM1.11 (37.50%) from M3nergy's consolidated net tangible assets (NTA) of RM2.96 as at Dec 31, 2009, translating the offer price to 0.63 time price to book. Besides Shahrazi, the other shareholder in Adamus Avenue is his wife Datin Tinawati Nordin. Trading in the shares of M3nergy has been suspended from 2.30pm on May 17. M3nergy's stock has been on an uptrend of late.

Xingquan International Sports Holding Ltd, which announced a 46.6% jump in net profit to RM32.7 million for the third quarter (3Q) ended March 31, 2010 from RM22.3 million a year earlier, has attracted four large institutional investors from the US and Europe as its shareholders. Its executive chairman and CEO Wu Qingquan said in a statement on Monday, May 17 that the emergence of these large institutional investors from the US and Europe in the company's recent shareholding list proved that Xingquan's fundamentals are gaining recognition not only in Malaysia but also among significant global fund managers.

TPC Plus Bhd shareholders have been advised to reject the offer by London Biscuits Bhd to acquire the remaining shares in TPC for 30 sen cash per share Independent adviser Inter-Pacific Securities Sdn hd (InterPac) via a circular to shareholders yesterday expressed its view said the offer was not fair and not reasonable after evaluating the terms of the offer The TPC board (except interested directors who are deemed interested in the offer and have abstained from making any recommendation) also concurred with InterPac's recommendation to reject the offer InterPac noted that the offer price was below the appraised value of TPC shares using the discounted cashflow (DCF) valuation methodology. Using the DCF valuation, the range of values for TPC shares is between 46 sen and 51 sen. Hence, the offer price is 35% to 41% below the value range of TPC shares.

RM

The ringgit ended lower against the US dollar yesterday as the forex market remained concerned over the European debt crisis, said a dealer.

At 5pm, the local currency was quoted at 3.2265/2295 to the US dollar compared with Friday's 3.1835/1860 closing.

The ringgit was also weaker against the Singapore dollar at 2.3099/3154 from 2.3079/3160 on Friday and dipped against the Japanese yen to 3.5017/5054 from 3.4457/4511 previously.

The local unit was lower against the British pound at 4.6504/6563 from 4.6424/6477 on Friday but rose against the Euro to 3.9625/9678 from 3.9818/9865 previously.

CPO

Malaysian palm oil futures fell to their lowest close in four months yesterday, as a drop in the crude oil price dragged down other vegetable oil markets as well, traders said.

US crude oil rebounded to above US$70 a barrel yesterday, after hitting its lowest in more than three months, extending a loss of nearly 18 per cent so far in May on concerns over Europe's debts, the weak euro, and swollen US oil inventories.The benchmark August crude palm oil futures on Bursa Malaysia Derivatives Exchange fell 0.9 per cent, or RM22, to RM2,425 a tonne, its lowest since January 26.

Traded volume reached 14,915 lots of 25 tonnes each, more than the midday average of 10,000 lots. Other palm oil contracts fell between 0.81 per cent to 1.15 per cent.

Exports of Malaysian palm oil products for May 1-15 jumped 23.1 per cent to 591,887 tonnes, from 480,966 tonnes shipped between April 1 to 15, cargo surveyor Intertek Testing Services said on Saturday.

Another cargo surveyor Societe Generale de Surveillance said yesterday that exports of Malaysian palm oil products for May 1-15 jumped 23.6 per cent to 620,517 tonnes, in line with the market's expectations.

News

Shipping line MISC Bhd has bought half of VTTI BV, one of the world's largest independent tank terminal operators, for US$735 million (RM2.4 billion). VTTI is a unit of one of the world's largest energy trading companies, the Vitol group. The deal marks a significant milestone in the company's efforts to become the premier world transportation and logistic services provider.The acquisition was a key element in developing MISC's global tank terminal business, in line with its strategy to expand its services across the value chain.

EON Capital Bhd (EONCap) said a board meeting yesterday to consider its independent adviser's opinion on a takeover offer from Hong Leong Bank Bhd had to be adjourned. The meeting was adjourned to a later date pending "further clarification" from Credit Suisse on its assessment, it said in a stock exchange filing late yesterday. It did not state a new date for the board meeting.

Having sold the entire equity interest in its Malaysian operation, warehousing logistics provider Integrated Logistics Bhd (ILB) will now focus on expanding its business operations in China and the United Arab Emirates (UAE). ILB chief executive officer Tee Tuan Sem said it expects to operate two new warehouses in Henan province in China and in Dubai in the UAE by the first quarter of next year.

NESTLE SA, the world's biggest food company, will resume buying palm oil from PT Sinar Mas Agro Resources and Technology if the independent audits show Greenpeace's allegations of deforestation are baseless. In April, Sinar Mas announced appointment of two independent auditors, Control Union Certification and BSI Group, to address claims that its operations contribute to deforestation.
The audit is in process and Nestlé is part of the committee overseeing this audit.

The Sessions Court in Kuala Lumpur yesterday acquitted and discharged three former directors accused of four counts of making false statements in their company''s quarterly reports in 2007. Judge S.M Komathy Suppiah held that the prosecution had failed to make out a prima facies case against former managing director Datuk Jamaluddin Hassan, 50, and former members of the board of directors Hakim Sukirman, 51, and Gan Chin Sam, 52. She said the court did not believe the evidence of two prosecution witnesses, namely the executive director of finance and general manager of finance of the company, formerly known as Satang Jaya holdings Bhd, which deals with the maintenance of local aircraft and security equipment.

ASTRO All Asia Networks Plc (AAAN) enters the final leg of its privatisation exercise with most research houses having recommended minority shareholders accept the general offer made by Astro Holdings Sdn Bhd.
Only 9 per cent-stakeholder, the Employees Provident Fund (EPF) remain as owner of a significant block of shares. Analysts expect the pension fund to accept the offer. Most research houses recommended minority shareholders accept the offer, saying the RM4.30 cash a share offered by Astro Holdings is some way above their discounted cashflow valuation. Astro Holdings is a special-purpose vehicle whose main shareholders are Usaha Tegas Sdn Bhd and affiliates, Khazanah Nasional and several Bumiputera foundations. Collectively, they own 72.9 per cent of AAAN. Standard and Poor's in March said the offer price was 16.2 per cent above its 12-month target price of RM3.70.

AEON Co (M) Bhd is expected to cease managing the first phase of 1 Utama Shopping Complex in Bandar Utama, Petaling Jaya, when the contract comes to an end in August. Sources told Business Times that the owner, See Hoy Chan Holdings (SHC), and AEON have agreed that SHC would take over the mall's operation but AEON will also get a larger retail space compared to what it has now. AEON now operates the Jusco department store cum supermarket as well as the Jusco Home Centre in 1 Utama.

TDM Bhd, a plantation group controlled by the Terengganu state government, plans to boost fresh fruit bunch production by a fifth to 20.5 tonnes this year.TDM has planted 700 hectares of the Kalimantan land. Another 3,000 hectares will be planted with oil palm trees this year. However, TDM may not buy all of the 40,000 hectares due to problems regarding land usage.

Mobile phone services provider Maxis Bhd plans to invest more than RM100 million in Terengganu to expand its network coverage in the state. Although it is the leading mobile operator in Malaysia, it has yet to dominate the market in the East Coast states, particularly in Terengganu.

Olympia Industries Bhd's unit Lotteries Corp Sdn Bhd (LCSB) has signed an initial deal with Taiwan Lottery Co Ltd to cooperate on the sales of four-digits game in Taiwan. LCSB is the organiser and manager for the sales of numbers forecast pools and public lotteries including four-digits number games in Sabah. Under the memorandum of understanding, both parties will sign a deal within six months.

SUNWAY Holdings Bhd said its unit Sunway Geotechnics (M) Sdn Bhd has won a RM88 million deal from Sunway City Bhd to partly build an office tower in Bandar Sunway, Selangor. Sunway Geo will do the earthworks, piling and substructure works for a one- block 24-storey office tower that has a six-storey basement car park, Sunway said in a statement to Bursa Malaysia.

BINA Puri Holdings Bhd has won a RM306.9 million contract from Rekajaya Projek Sdn Bhd to build a campus building for Universiti Teknologi Mara (UiTM) Kampong Pinang in Samarahan, Sarawak. Work will take 30 months, it said in a statement to Bursa Malaysia. With the award, Bina Puri now has total orders worth RM1.916 billion.

COMPUGATES Holdings Bhd, a distributor of prepaid cards and other IT and office equipment, plans to plant gaharu trees on 54 acres (21.87ha) of land in Kuala Kangsar, Perak. It has hired JS Tractor & Engineering Works Sdn Bhd to clear the land for the planting, at a cost of RM197,600. Gaharu or agarwood, is used to make incense or perfume

SALCON Bhd said its unit Salcon Engineering Bhd has won an RM84.21 million contract from Pengurusan Aset Air Bhd to build a water treatment plant and carry out other works at Sungai Labu, Selangor. Work will take 30 months, it said in a statement to Bursa Malaysia.

HEITECH Padu Bhd has won a RM29.9 million government contract for works on the immigration system.
The contract is for one year, the company told Bursa Malaysia. However, it did not elaborate on what it will actually do.

Alliance Bank Malaysia Bhd has identified Singaporean Sng Seow Wah as its new group chief executive officer (CEO), sources said, adding that this could be a precursor to a move by Singapore's DBS Group Bhd to buy into the Malaysian bank However both Sng's appointment and DBS' potential entry have yet to receive the green light from Bank Negara. Sng is a seasoned banker with more than 24 years experience in corporate and commercial banking and is presently the head of human resources, special projects and corporate communications at Fullerton Financial Holdings.

The strengthening ringgit reflects Malaysia's fundamentals and is a natural consequence of a robust economic recovery, said Prime Minister Datuk Seri Najib Razak.

The Malaysian economy grew 10.1 per cent in the first three months of this year, better than the 6.2 per cent contraction in the same period last year.At 5pm yesterday, the local currency traded at around RM3.22 to the US dollar. In the first quarter, the ringgit rose 5 per cent against the US dollar
Bank Negara governor Tan Sri Dr Zeti Akhtar Aziz was asked for pointers for her counterparts in Europe now reeling from a sovereign debt crisis. She replied that Asia's resilience during the recent crisis was from a decade of reforms.

SALES of passenger cars and commercial vehicles in April increased 16.8 per cent year-on-year to 48,706 units from 41,686 units, says the Malaysian Automotive Association (MAA). It attributed the higher sales to the rush to take delivery of the vehicles before the hike in interest rate. However, sale of cars and commercial vehicles in April was 7,433 units, down 13.2 per cent compared with March as production could not meet the April delivery deadline. Sales of passenger cars in April rose to 43,661 units from 37,810 units in the corresponding month last year while that of commercial vehicles rose to 5,045 units from 3,876 units.Sales of passenger vehicles in the first four months of this year increased to 176,718 units from 147,111 units in the corresponding period last year.Sales of commercial vehicles in the same period shot up to 19,403 units from 14,964 units previously.For the January to April period, total industry volume was up to 196,121 units
from 162,075 units in the same period last year.

Results

Malaysia Airports Holdings Bhd (MAHB) (5014) registered 21 per cent lower net profit in the first quarter ended March 31 2010 compared with the same period last year as it recognised losses from associate Sabiha Gokcen International Airport Ltd. This was due mainly to the airport operator's adoption of Financial Reporting Standards 139 (FRS139), under which financial instruments are required to be stated at fair value.MAHB's first quarter net profit was RM72.5 million against RM92.1 million previously. It recognised some RM24 million losses from associates in the period reviewed, out of which about RM18 million was from its investment in Sabiha Gokcen The rest resulted from a drop in project and maintenance work and the discontinuation of its event management operations.MAHB owns a 20 per cent stake in Sabiha Gokcen, which holds concession rights worth e1.9 billion (RM7.5 billion).MAHB's first quarter revenue rose 11.9 per cent to RM436.4 million
on stronger contributions from its airport operations, driven by the recovery in air travel.

Total passenger volume increased 21 per cent to 13.45 million, resulting in revenue from airport operations, including aeronautical and non-aeronautical revenue, improving 12 per cent to RM408.6 million.MAHB's own retail business, part of its non-aeronautical revenue, was up 24.7 per cent to RM100.2 million due to the higher passenger volume.Its non-airport operations, including hotel and agriculture business, recorded 9.8 per cent higher revenue at RM27.8 million.

TDM Bhd posted an almost fivefold jump in net profit to RM19.46 million in the first quarter ended March 31, 2010 (1QFY10) from RM4.11 million a year earlier on the back of higher crude palm oil (CPO) and palm kernel production and prices. Revenue rose 32.8% to RM89.92 million from RM67.72 million a year earlier, while earnings per share were 8.89 sen. No dividend was declared for the period under review. However, TDM's net profit declined 9% against the RM21.38 million posted in the previous quarter due to lower production and sales of CPO and palm kernel in 1QFY10. CPO and palm kernel production rose by 16% and 12%, respectively while prices of CPO and palm kernel increased by 25% and 24%, respectively. It said its healthcare division also saw strong performance, with revenue and pre-tax profit up by 23% and 91% to RM19 million and RM2.68 million respectively as patient numbers from the community hospital segment grew 18% from the previouss
corresponding period. However, its food division recorded a loss of RM652,000 because of lower average prices on the back of weaker demand for processed birds.

Utusan Melayu(M) Bhd suffered a net loss of RM6.05 million on the back of RM74.83 million in revenue for its first quarter ended March 31, 2010 (1QFY09). This compares with a net loss of RM7.47 million on RM79.52 million revenue a year ago. Loss per share narrowed to 5.46 sen from 6.74 sen a year ago.Utusan attributed the lower revenue to a decline in advertising revenue. According to its income statement, the cost of raw materials and consumables in 1Q declined by RM7.2 million to RM23.76 million from RM30.96 million, although this was partially offset by higher staff costs, which had increased by RM4.28 million from a year ago.

Sino Hua-an International Bhd posted a smaller net loss of RM2.48 million for the first quarter ended March 31, 2010 (1Q10) compared with a net loss of RM23.63 million a year earlier because of the rising prices of its products. Its revenue was 20.1% higher at RM373.59 million from RM310.95 million a year earlier while loss per share was 0.22 sen. The company is involved in the production and sale of metallurgical coke and its by-products. The average prices of metallurgical coke, ammonium sulphate, crude benzene, tar oil, coal slime and middlings during the current quarter under review have increased by approximately 23%, 4%, 157%, 80%, 57% and 13% respectively compared with the preceding year's corresponding quarter," it said in a statement to Bursa Malaysia Securities on Monday, May 17, adding the price of coal gas has remained consistent. It also attributed the 13% rise in the cost of sales to RM367.9 million to the 29% increase in average price of
raw materials, namely coking coal. However, it said the gradual recovering trend in the coking steel industry helped the company to record a gross profit of RM5.7 million in 1Q10 from a gross loss of RM1.35 million previously.

SK Property Holdings Bhd saw its net profit decline 29.3% to RM1.88 million for the first quarter ended March 31, 2010 (1Q10) from RM2.66 million previously due in part to higher selling and marketing expenses incurred in the period, it said. Selling and marketing expenses had more than doubled to RM1.65 million in 1Q10 from RM772,000 previously. Revenue was 34.6% higher at RM31.42 million from RM23.34 million, which it said was due to higher sales registered for its Sutera Damansara and Bangi Lakehill Villas projects as certain phases achieved advanced stages of completion.

Malaysia Airlines Bhd (MAS) posted a net profit of RM310.05 million for the first quarter ended March 31, 2010 from a net loss of RM698.55 million a year earlier. Revenue was higher at RM3.30 billion from RM2.72 billion previously while earnings per share was 10.64 sen from loss per share of 34.02 sen. Its operating profit was RM289.5 million, a contrast from an operating loss of RM141.1 million a year ago, due to an increase in other operating income as a result of A380 compensation as well as improvement in passenger and cargo traffic demand. It saw derivative gain from fuel hedging contracts rise to RM56.7 million from a derivative loss of RM557 million a year ago.

ASIA

The euro plunged to a four-year low in volatile trade here yesterday as fears about eurozone debt continued to hammer the single currency and regional stock markets. Sentiment remained fragile despite an EU-IMF rescue package worth almost a trillion dollars designed to prevent the Greek crisis from spreading, as fears grew that the single currency is at risk of collapse. The euro fell to as low as US$1.2243 in trade here - its lowest since April 2006 - from 1.2358 in New York Friday. It later recovered slightly to 1.2277 in afternoon trade.

Tokyo shares dived 2.17 per cent, or 226.75 points, to close at 10,235.76, while Shanghai closed down 5.07 per cent, or 136.70 points, at 2,559.93 and Sydney plunged 3.12 per cent, or 143.9 points, to 4,467.2.

"Investors are questioning if tightening fiscal spending really is the right thing to do because it would have a negative impact on the economy," said Hideaki Inoue, chief forex manager at Mitsubishi UFJ Trust and Banking Corp. "The entire economic outlook is becoming increasingly grim."

Australia accused Japan Airlines and Air New Zealand of price-fixing on air cargo yesterday , bringing to 15 the number of carriers being pursued by the nation's corporate watchdog on the issue. The Australian Competition and Consumer Commission (ACCC) said it had begun legal proceedings against the firms for allegedly colluding with other airlines to fix the level of certain surcharges between 2002 and 2006.

Regional markets followed European and Wall Street stocks lower. On Friday the Dow dropped 1.51 per cent on escalating fears for the health of the eurozone.

Stocks in Japanese exporters extended losses, with their overseas profits threatened by the euro's weakness.

"The market has no confidence in the euro," Mizuho Corporate Bank market economist Daisuke Karakama said, noting the single currency was lower even though there was no fresh news to drive it down.

Shares in Bangkok were 2.5 per cent lower as political violence continued to paralyse the capital with almost 30 people killed as authorities clashed with "Red Shirt" protesters.

In other markets:
Singapore: The Straits Times Index fell 0.75 per cent, or 21.52 points, to 2,833.69, a one-week low.

Banking group DBS rose 2 cents to S$14.38, Singapore Telecom shed 5 cents to S$2.91 and Singapore Airlines dropped 24 cents to S$14.56.

Hong Kong: Shares tumbled yesterday as fears about the eurozone debt crisis weighed on sentiment.

The Hang Seng Index gave up 2.14 per cent, or 430.23 points, to close at 19,715.20, its lowest since February 8.

Analysts expect Europe's woes and possible mainland tightening measures to weigh further on shares this week
* Seoul closed 2.60 per cent, or 44.12 points, lower at 1,651.51.

* Taipei ended 2.23 per cent, or 173.41 points, lower at 7,598.72.

* Manila closed 1.23 per cent, or 41.11 points lower, at 3,289.31.

* Mumbai fell 0.94 per cent, or 159.04 points, to 16,835.56.

Officials at Indonesia's new commodity exchange said yesterday that they expect the launch this week of a palm oil futures contract will attract traders, despite a lack of supply-demand data.

The Indonesia Commodity & Derivative Exchange (ICDX) is due to launch the crude palm oil futures contract on May 21, marking the second shot at creating an Indonesian benchmark price to better reflect local supply and demand while eliminating currency risk.

EUROPE

European shares ended lower yesterday, with miners weak as metal prices fell on a strengthening dollar, while gains in defensive food producers and drugmakers limited wider losses.

The pan-European FTSEurofirst 300 index of top shares closed 0.1 per cent lower at 1,013.06 points, after climbing to a high of 1,025.78 earlier in the session.

The index, which rose nearly 26 per cent in 2009, has struggled to gain ground this year and is down more than 3 per cent since the start of 2010 on sovereign debt worries in the eurozone peripheral economies.

In London, the benchmark FTSE 100 index of leading shares dipped 0.31 per cent to 5,262.53 points.

In Paris, the CAC 40 fell 0.47 per cent to 3,543.55 points and in Frankfurt the DAX closed marginally higher, up 0.17 per cent to 6,066.92 points.

British insurance giant Prudential said yesterday it will raise STG14.5 billion (STG1 = RM4.63) from the sale of new shares to help fund a record takeover of Asian insurer AIA.The British group had delayed by almost two weeks details of the record rights issue needed to fund the insurance sector's biggest ever takeover as regulators voiced concerns about the enlarged company's capital strength. Prudential announced in March that it had agreed to buy AIA - the Asian arm of troubled US insurer AIG - for US$35.5 billion (US$1 = RM3.24)
It expects to complete the takeover in the third quarter of 2010 while reports suggest Prudential may have to sell its British operations to fund the rest of the deal.

American Express Co has teamed up with UK private equity firm Permira to bid for Royal Bank of Scotland's US$4 billion payment processing arm, people familiar with the matter said yesterday. French software firm Atos Origin has also joined the private equity consortium of CVC Capital Partners and Welsh Carson Anderson & Stowe to bid for RBS's Global Merchant Services (GMS) unit, a person familiar with the matter said.

US

U.S. stocks erased losses and finished higher Monday after the euro rebounded from a four-year low and gained ground against the dollar, despite lingering worries about Europe's financial crisis.

The Dow Jones industrial average erased its 184-point loss and added 6 points, or 0.1%. The S&P 500 rose 1 point, or 0.1%, and the Nasdaq composite gained 7 points, or 0.3%.

Before posting gains, all three indexes were more than 1% lower but began to trim losses with an hour left in the session.

Economy: A report from the Federal Reserve Bank of New York showed that manufacturing growth slowed in the region in May. The Empire State Manufacturing Survey's index fell to 19.1 from 31.9 in April. Economists surveyed by Briefing.com expected the index to slip modestly to 30.

The Treasury said China boosted its holdings of U.S. debt in March for the first time in six months, increasing them by 2% to $895.2 billion. With mounting concerns over European debt and a strengthening U.S. economy, overall foreign holdings of Treasury securities rose by 3.5% to $3.88 trillion.

Companies: General Motors posted its first quarterly profit in nearly three years, earning $865 million on revenue of $31.5 billion. After emerging from bankruptcy last July, the company has trimmed costs and increased sales thanks to an improving economy and recall troubles at rival Toyota.

Hope improvement retailer Lowe's posted a profit that rose 2.7% from a year earlier and topped expectations as demand for big-ticket items improved. But the company's forecast for the second quarter came in lower than expectations, and shares of the retailer finished 3% lower.

World markets: European stocks finished mixed, with France's CAC 40 down 0.5%, Germany's DAX 0.2% higher and Britain's FTSE 100 lower less than 0.1%.

Asian markets finished the session lower. The decline was led by China, where the Shanghai Composite sank 5.1%. Japan's Nikkei ended 2.2% lower and the Hang Seng in Hong Kong fell 2.1%.

Dollar and commodities: : After holding firm against the euro most of the day, the dollar fell 0.3% late in the afternoon. But the greenback was 0.3% higher against the the British pound and rose 0.1% versus the Japanese yen.

U.S. light crude oil for June delivery slid $1.53, or 2.1% to settle at $70.08 a barrel -- a five-month high.

Gold prices continued to rise, gaining 70 cents, or 0.1%, to settle at $1,228.50 per ounce. Bonds: Treasury prices gave up gains Monday afternoon. The price of benchmark 10-year note edged lower, and its yield edged up to 3.49%.