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Markets Watching Inflation Anxiously

Bob Pisani is off; this post was written by CNBC producer Robert Hum.

Inflation remains in focus. On a day when the rest of the Asian markets were up, South Korea’s Kospi index fell fractionally after the country’s central bank surprisingly raised interest rates by 25 basis points to help contain inflation.

Here in the U.S.,S&P Futures lost steam after a hotter-than-expected PPI number and higher-than-expected jobless claims. (Market Open Update: Stocks Slip After Economic News; Energy Falls)

In yet another sign of food and energy inflation news this week, December PPI rose 1.1 percent, higher than the 0.8 percent expected and its sharpest increase in almost a year. But stripping out food and energy, PPI was inline with estimates. Meanwhile, weekly jobless claims in the past week rose 35,000 to 445,000 — higher than the 415,000 level expected by economists.

European markets are mixed with just fractional moves, as traders continued to breathe with a sigh of relief after another round of debt auctions — this time in Spain and Italy — went well. The Euro continues to recover from its losses earlier this week, as it pushes back closer to $1.33.

Elsewhere:

1) Marathon jumps 12 percent after the oil company announced it will spin off its downstream (refining) business into a separate, independent company. That will allow the company to focus on its exploration and production business. The spin-off, which is set to happen on June 30, will create a new company called Marathon Petroleum, which will become the nation’s fifth largest refiner. Its stock will trade at the NYSE under ticker “MPC.”

2) Williams-Sonoma rises 1 percent after reporting a 5 percent increase in holiday season comps. With the stronger sales before Christmas and into January, the home furnishings retailer also boosted revenue and earnings guidance for the fourth quarter and year. Q4 earnings are now seen between $0.96-$0.98 (above $0.94 consensus) on sales of $1.17 billion-$1.19 billion (vs. $1.15 billion). Also helping: higher margins, solid cost controls, and continued growth of web sales.

3) Deere rises 2 percent after JPMorgan upgraded the agricultural equipment maker to “overweight.” The analyst believes that higher crop prices, tax incentives to buy equipment, and the likely greater production of agricultural commodities will further stimulate demand for the company’s farming equipment.

4) South Korean steelmaker POSCO saw Q4 earnings miss estimates. The 3rd largest steelmaker in the world cited sluggish demand and higher costs. Another problem: the company has been unable to raise prices, while its iron ore costs have been rising. As a result, it has been forced to focus more on cost-cutting efforts. Putting further pressure on its raw material prices recently are the major flooding in Australia and lower exports out of India.

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  • A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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