UPDATE 1-U.S. SEC probing banks over possible mismanagement of ADRs - WSJ

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The U.S. Securities and Exchange Commission is investigating whether big banks have been mishandling securities in the American Depositary Receipt (ADR) market, the Wall Street Journal reported on Monday.

The SEC has sent subpoenas to four banks over the issue - Bank of New York Mellon Corp (BK.N), Citigroup Inc (C.N), Deutsche Bank AG (DBKGn.DE) (DB.N) and JPMorgan Chase & Co (JPM.N), the Journal reported, citing people close to the matter. (on.wsj.com/2eFTBJ4)

The probe, which is looking at whether the banks have broken controls designed to prevent market abuse and tax fraud, will not necessarily result in enforcement action, the report said.

A major focus of the SEC inquiry is the "pre-release" of ADRs, where banks issue depositary receipts to investors without first having the underlying shares in their custody, the Journal reported.

That means the shares could be sold short without actually having them - a practice known as "naked short selling", which is illegal.

ADRs represent shares of foreign companies that are held in custody by U.S. banks. Trading in ADRs rather than the underlying shares reduces administration and trading costs, both for companies and for investors.

Deutsche Bank and Citigroup declined to comment on the report, while the other two banks did not immediately respond to requests for comment. Thanks.

US STOCKS-S&P set to snap losing streak after strong jobs report

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Wall Street gained modestly on Friday after a strong U.S. employment report as investors sought bargains after a spate of selling sparked by uncertainty over the impending U.S. elections.

The S&P 500 was on track to snap a streak of eight straight days of declines, which had been the benchmark's longest run of down days since the 2008 financial crisis. The tech-heavy Nasdaq was also on pace to snap an eight-session losing streak.

Over its losing streak, the S&P 500 had fallen nearly 3 percent. Investors have been unnerved by signs of a tightening presidential race between Democrat Hillary Clinton and Republican Donald Trump, after Clinton had until recently been thought to have a clear lead.

"Investors are buying anything that looks like a dip and that is because the fundamentals continue to be pretty good even though I think there is a lot of anxiety about next week’s election," said Kate Warne, investment strategist with Edward Jones in St. Louis. "With the pullback, I think investors are seeing some bargains out there."

The Dow Jones industrial average .DJI rose 5.24 points, or 0.03 percent, to 17,935.91, the S&P 500 .SPX gained 3.78 points, or 0.18 percent, to 2,092.44 and the Nasdaq Composite .IXIC added 5.47 points, or 0.11 percent, to 5,063.88.

U.S. employers maintained a strong pace of hiring in October and boosted wages for workers, the Labor Department report on Friday showed. Nonfarm payrolls increased by 161,000 jobs last month amid gains in construction, healthcare and professional and business services.

While that was below economists' forecast for growth of 175,000 jobs, solid labor market fundamentals were underscored by revisions to August and September data, which showed 44,000 more jobs created than previously reported.

"The upward revisions over the last two months suggest that the overall picture is continued job growth," Warne said. "That means that consumers have more money and that should continue to support economic growth."

For the year, the S&P 500 is up 2.5 percent.

In an encouraging sign for stocks, S&P 500 companies are on pace to increase earnings by 3.9 percent in the third quarter, ending a four-quarter streak of profit declines, according to Thomson Reuters I/B/E/S.

Higher-than-expected quarterly profits from biotech company Regeneron (REGN.O) and health insurer Humana (HUM.N) lifted those companies' shares along with the S&P healthcare sector .SPXHC, which was the best performing group on Friday.

Advancing issues outnumbered declining ones on the NYSE by a 1.55-to-1 ratio; on Nasdaq, a 1.75-to-1 ratio favored advancers.

The S&P 500 posted 4 new 52-week highs and 13 new lows; the Nasdaq Composite recorded 28 new highs and 126 new lows. Thanks.

GLOBAL MARKETS-Stocks jittery after election-linked selling; oil prices weak

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NEW YORK Global equity markets were jittery on Friday, even as Wall Street clung to modest gains as investors looked past worries about the outcome of the U.S. presidential election to snap an eight-day losing streak.

Oil prices remained weak on skepticism about whether OPEC members will adhere to planned production limits, boosting concerns about low inflation and sending U.S. Treasury prices higher.

A dismal outing for Asian and European share indexes weighed on MSCI's 47-country "All World" index .MIWD00000PUS, which was down 0.31 percent, but the index was supported by Wall Street.

U.S. stocks found favor with investors after eight straight days of losses, the longest losing streak since 2008, which sent the S&P 500 index down 2.9 percent.

"Investors are buying anything that looks like a dip and that is because the fundamentals continue to be pretty good even though I think there is a lot of anxiety about next week’s election," said Kate Warne, investment strategist with Edward Jones in St. Louis.

"With the pullback, I think investors are seeing some bargains out there."

An upbeat jobs report helped soothe nerves. U.S. employers maintained a strong pace of hiring in October and boosted wages, which could effectively seal the case for a December interest rate increase from the U.S. Federal Reserve. [nLNN4MEC7Q]

"This was a very good report. With the hourly wage number beginning to accelerate, the Fed will have all the cover it needs to raise rates in December," said Joel Naroff, chief economist at Naroff Economic Advisors in Holland, Pennsylvania.

Economists also said the upbeat employment report could provide a boost to Democratic candidate Hillary Clinton against her Republican rival Donald Trump as the race to the White House tightens and becomes increasingly bitter and divisive.

Investors have been unnerved by signs the race is tightening; Clinton had until recently been thought to have a clear lead.

The Dow Jones industrial average .DJI fell 8.15 points, or 0.05 percent, to 17,922.52, the S&P 500 .SPX gained 1.76 points, or 0.08 percent, to 2,090.42 and the Nasdaq Composite .IXIC added 0.68 point, or 0.01 percent, to 5,059.09.

European shares slumped, weighed down by weaker drugmakers after two U.S. lawmakers called on federal antitrust regulators to open an investigation into possible price fixing.

Europe's broad FTSEurofirst 300 index .FTEU3 closed down 0.79 percent at 1,296.32.

Oil futures were on course for their biggest weekly percentage declines since January of just under 10 percent as signs of tensions resurfaced between Saudi Arabia and Iran that could scupper a key supply cut pact.

Riyadh told a meeting of OPEC experts last week that it could raise oil output steeply to bring prices down if Tehran refuses to limit its supply, OPEC sources say.

Brent crude LCOc1 settled down 77 cents, or 1.66 percent, at $45.58 a barrel, and U.S. crude CLc1 settled down 59 cents, or 1.32 percent, at $44.07.

The weakness in oil prices raised concerns about low inflation and boosted U.S. Treasury prices. Uncertainty about the election also enhanced the appeal of the lower-risk assets.

Benchmark 10-year notes US10YT=RR were up 8/32 in price to yield 1.78 percent, after rising as high as 1.83 percent on the employment data.

While the solid U.S. jobs report supported expectations for a December Federal Reserve interest rate hike, it failed to stem losses for the U.S. dollar.

Nervousness ahead of next week's election has hit the greenback in recent days and the dollar index .DXY, which measures the greenback against a basket of six major currencies, was down 0.1 pct, near a three-week low.

Gold steadied, heading for its biggest weekly rise since mid-September as jitters over the election offset the solid payrolls report.

Spot gold prices XAU= were little changed at $1,302.89 an ounce. Thanks.