Abbott Laboratories (NYSE: ABT) is going to buy Facet Biotech Corp. (NASDAQ: FACT) for $450 million. Abbott’s bid bested a failed bid from Biogen Idec Inc. (NASDAQ: BIIB). The move would add immunology and oncology to Abbott’s repertoire. These deals signal more than just the health of aspects of the biotech sector; it’s a sign of renewed confidence in the economic recovery. It wouldn’t be surprising to see more deals in this and other sectors take place in the coming months. iShares Nasdaq Biotechnology (NASDAQ: IBB) is up about 1% this morning.

Wholesale inventories took a surprise 0.2% dip in January, despite the fact that retail sales rose for a 10th consecutive month. What does it mean? Likely that despite the increase in sales, businesses are still cautious about consumer spending. After all, although unemployment remains 9.7%, it’s still historically very high. SPDR S&P Retail (NYSEArca: XRT) is up about 0.8% this morning. [ETFs for the New Retail Climate.]

Confidence in the global economy has declined for the second time this month over lingering concerns about the still-unresolved situation in Greece. The Bloomberg survey of users on six continents found that while more people were optimistic than pessimistic, sentiment in Europe has declined. It’s understandable. Even if this crisis has a firm resolution in place soon, who will be monitoring Greece after that? And what of the other economies considered at risk, particularly Spain and Portugal? So far, there’s been little discussion of a bailout package for other stressed countries. SPDR SJ Euro Stoxx 50 (NYSEArca: FEZ) is up 1.2% this morning.  [More on the Situation in Europe.]

The Federal Reserve’s move yesterday is having ripple effects throughout Europe and Asia. At first, the markets got a case of the jitters before they took the move for what it was intended to be: a vote of confidence in the U.S. economy, say Jack Ewing and Sewell Chan for The New York Times. European stocks are gaining for the fifth consecutive day. [Italy Forecast for Growth, But Dangers Lurk.]

• BLDRS Asia 50 ADR Index (NASDAQ: ADRA) is down 1% so far today

• SPDR DJ Euro Stoxx 50 (NYSEArca: FEZ) is down 0.25% so far today

Oil prices have shot up 11% in the last two weeks, and they’re showing no signs of stopping today. A refinery strike in France and concerns about Iran’s nuclear program are threatening to make supplies tight in the future, reports Chris Kahn for the Associated Press. United States Oil (NYSEArca: USO) is up 6% in the last five trading days. [How to Harness Energy Using ETFs.]

Inflation seems to be in check, if today’s government report is any indication. Consumer prices rose a scant 0.2%; excluding food and energy, prices actually fell 0.1%. It’s the first decrease since 1982, says Javier C. Hernandez for The New York Times. Nevertheless, investors shook it off and the dollar continued to strengthen. PowerShares DB U.S. Dollar Bullish (NYSEArca: UUP) is up 0.3% so far. [What Fed Rate Hike Means.]

The 16 nations that make up the European Union are joining forces to help Greece stave off further economic blows. Marcin Grajewski and Julien Toyer for Reuters say that although the details are still up in the air, the bloc’s leaders suggested it could include some form of loans to Greece to help it service its debt and avoid a damaging default. Europe’s ETFs are negative today. The SPDR DJ Euro Stoxx 50 (NYSEArca: FEZ) is down 0.7% so far today.

Reuters reports that state applications for unemployment benefits has dropped off last week, indicating that positive job growth may be on the horizon. The White House predicts that 95,000 jobs will be created this year.

Overall foreclosure filings dropped off about 10% between December and January. Les Christie for CNN Money reports that this contrasts with the 15%  spike in filings from one year ago, as well as the number of people who had their homes repossessed, which jumped 31%. Most industry observers also expect home prices to decline further this year before they stabilize. That will push more homeowners underwater, meaning they’ll owe more on their homes than they are worth. [For more news about homebuilders, visit our homebuilders category.]

• SPDR S&P Homebuilders (NYSEArca: XHB)

The real estate market should at least get a lift from rates on 30-year mortgages, which remain at lows not seen in years. The rate on a 30-year fixed mortgage dropped below 5% this week, reports the Associated Press.

Huge budget deficits and banking woes of weaker economies in the eurozone have become a snag on the E.U. economy, reports Marcus Walker for The Wall Street Journal. The euro is now at three-month lows and the future doesn’t look bright. News of potential Austrian banking problems, with questionable investments in Eastern Europe, and a nationalization of another Austrian bank at the request of the European Central Bank have agitated markets.

• iShares MSCI Austria Index (NYSEArca: EWO): up 60.5% year-to-date

Portugal, Ireland, Italy, Greece and Spain, also known as “PIIGS” to some, have incurred large budget deficits, and now, the countries have low growth prospects, which translates to a possible rapid rise in future debt. These countries’ wages and costs have been rising, but they are unable to devalue their currency. Diego Iscaro, economist at IHS Global Insight in London, observes that “Europe has a lot of treaties but no clear mechanism for how to deal with such cases.”

• New Ireland Fund (NYSE: IRL): up 55.3% year-to-date
• iShares MSCI Italy Index (NYSEArca: EWI): up 21.8% year-to-date
• iShares MSCI Spain Index (NYSEArca: EWP): up 34.6% year-to-date

Greek Finance Minister George Papaconstantinou expects to have to borrow $73.22 billion from bond markets next year, and anticipates the possibility of having to go to E.U. members or the International Monetary Fund for more loans.

Simon Tilford, chief economist at the Center for European Reform, says that “it’s hard to see how Italy, Spain and Portugal are going to generate enough growth” to reduce debt. Ireland has a younger population to fall back on, but the economy is suffering from a drop in exports to the United Kingdom.

For more information on Europe, visit our Europe category.

• CurrencyShares Euro Trust (NYSEArca: FXE): up 4.1% year-to-date

• iShares MSCI EMU Index (NYSEArca:EZU): up 27.4% year-to-date

• SPDR Dow Jones Euro STOXX 50 (NYSEArca:FEZ): up 26.4% year-to-date

• iShares S&P/Citigroup International Treasury Bond Fund (NASDAQ: IGOV): down 1.6% in the last month; holds debt from Italy, Spain and Greece

Read the disclaimer, Tom Lydon is a board member of Rydex Funds.

Max Chen contributed to this article.

After feeling the effects of the financial crisis, the European economy is out of a negative growth pattern, boasting 0.4% growth in the third quarter. Matthew Saltmarsh for The New York Times reports that other factors that signal a turnaround include a stronger currency and growth in countries such as Germany and France. (Why it takes more than a stronger currency for growth to resume).

Recovery in the region as a whole is mixed, though. Unemployment remains startlingly high in some areas, wages have stagnated and lending still needs a push to operate at full strength, Terence Roth and Christopher Emsden for The Wall Street Journal report. Greece, Finland and Spain are still contracting.

Although these economies continue to struggle along, industrial countries centered in the region’s economic core are setting the pace for an overall recovery. (Sweden has been a recovery leader). To play the recovery with ETFs, look for those areas that are sitting above their long-term trend lines (the 200-day moving average). Europe can be accessed via either broad, regional ETFs or some strong single-country funds.

For more stories about Europe, visit our Europe category.

• iShares MSCI Germany Index (NYSEArca:EWG): up 19.2% year-to-date

• iShares MSCI EMU Index (NYSEArca:EZU): up 28% year-to-date

• SPDR Dow Jones Euro STOXX 50 (NYSEArca:FEZ): up 25.8% year-to-date

• iShares MSCI Sweden Index (NYSEArca:EWD): up 62.3% year-to-date, one of the best

• iShares MSCI Austria Index (NYSEArca: EWO): up 67.9% year-to-date

Analysts are out making the case for Europe to be the next comeback story. Why?

• Some investors believe Europe is best positioned to benefit from a recovery in share prices over the next year or two, as European economies benefit from favorable monetary policy and companies projecting higher earnings, reports Dave Kansas for The Wall Street Journal.

• Valuations in European stocks have not been stretched too far. The average P/E ratio in Europe is around 16. The price-to-book ratio shows that stocks are trading about 15% under long-term averages. Additionally, historic trends shows the attractiveness of dividend yields as compared to government bond yields.

• Major European markets have jumped from their March lows. Investors are putting more money into European stocks, with inflows exceeding outflows by $2.1 billion.

• U.S. investors are also capitalizing on the weaker dollar by investing in foreign markets. The falling dollar as a result of monetary and fiscal policies will make gains in overseas markets more attractive when investors repatriate the investments, providing a “dollar kicker.”

Still, potential investors should note that Europe’s banking system remains fragile, economic activity is highly uneven and several countries are still grappling with difficult fiscal situations. The main concern in Europe is its financial system. Those outside of Europe feel that European banks are undercapitalized and banking is a large characteristic of Europe’s economy. Chief economist Carl Weignberg at High Frequency Economics also warns of possible deflationary risks.

• iShares MSCI EMU Index (NYSEArca: EZU): up 33.8% year-to-date

• SPDR DJ Euro STOXX 50 (NYSEArca: FEZ): up 30.6% year-to-date

• PowerShares FTSE RAFI Europe (NYSEArca: PEF): up 56.9% year-to-date

For more information on Europe, visit our Europe category.

Max Chen contributed to this article.

Global economies are already hinting at signs of recovery, and this will ultimately translate into better company profits and better share prices, comments Bruce Cameron for Personal Finance.

Cameron suggests looking to investments abroad because the potentially higher inflation rates in the United States as compared to other countries will cause the dollar to further depreciate. Thus, overseas investments would further benefit from the strength of foreign currencies.

Through the use of ETFs, investors are able to track indexes composed of various securities or commodities. ETFs are seen as a low-cost means of investing in foreign markets that would otherwise be inaccessible to the average investor. It is also prudent to diversify foreign holdings to reduce risk in one’s portfolio.

When it comes to gaining exposure in overseas markets, there are ETFs that range from very broad (Vanguard FTSE All-World ex-US (NYSEArca: VEU) to more specific (iShares MSCI Italy (NYSEArca: EWI).

Potential overseas investors should note that emerging markets are considered riskier than those of developed countries. Follow the trend lines, and you would not be amiss to have an exit strategy in place. For more information on trends, visit our trend following category.

• iShares MSCI Emerging Markets (NYSEArca: EEM): up 60.8% year-to-date

• SPDR DJ Euro STOXX 50 (NYSEArca: FEZ): up 25.6% year-to-date

Max Chen contributed to this article.

The 16-nation eurozone’s private sector posted a record move today, and purchasing managers say that the economy stabilized this month. William L. Watts for MarketWatch reports that the preliminary Markit composite purchasing managers’ index for the eurozone rose to a 15-month high of 50 in August, from 47 in July. The record monthly jump exceeded economists’ expectations for a rise to 48.3.

August officially ended the 14-month drag of readings under 50, signaling a beginning to a new pattern. Reuters reports that the end to the contraction is indicative of improving economic conditions.

There are numerous ways to play the eurozone. Several single-country ETFs exist for investors who want to bet on certain specific markets, such as France or Germany. For broader exposure that allows investors to access the growth of the region as a whole, there are a few European  ETFs on the market, as well.

Be sure to look at the underlying holdings to be sure you’re getting the country exposure you want:

• iShares MSCI EMU Index (EZU): up 13% year-to-date

• SPDR DJ Euro STOXX 50 (FEZ): up 12.3% year-to-date

For more stories about Europe, visit our Europe category.

Stocks are modestly higher as investors try to turn Wall Street’s best performance this year into a two-day advance, says Sars Lepro for the Associated Press. Although the financial stocks that led the rally are keeping their gains, analysts caution that the market is still under water. Investors bought stocks furiously Tuesday on news that Citigroup Inc. was operating at a profit for the first two months of 2009.

World markets are also enjoying the news regarding Citigroup (C) as Asian markets rallied along with European markets taking modest gains. Jeremiah Marquez for Associated Press reports that the relief was likely to be temporary as the economic slump continued to ravage Asia’s export-driven nations. The fact that Citigroup turned a profit does not help the fact that many large economies are still suffering a slowdown.

• SPDR Dow Jones EURO STOXX 50 (FEZ): down 30% year-to-date; up 3.6% for one week

UBS AG, Switzerland’s biggest bank, posted a loss of $18 billion for 2008, with more losses anticipated in the coming year. Elena Logutenkova for Bloomberg reports that costs to settle a U.S. tax investigation and additional writedowns on securities enlarged the full years’ loss.

UBS agreed on Feb. 18 to pay $780 million and disclose the names of about 300 secret account holders to avoid U.S. criminal prosecution on a charge that it helped wealthy Americans evade taxes.

• iShares MSCI Switzerland (EWL): down 25.7% year-to-date; up 4.2% for one week; UBS is 5.1%

Ford Motor Company (F) and the United Automobile Workers union are trying to save $500 million a year and bring its labor costs in line with what foreign competitors pay their workers in the United States. The deal, which UAWmembers ratified this week, immediately reduces its all-in hourly rate, including benefits, to $55, reports Nick Bunkly for The New York Times.

Currently, Ford’s labor costs amount to a little more than $60 an hour, including health care for retirees. The figure would continue to shrink as more workers take buyouts and when the new-vehicle market recovers, allowing increased production.

Phillip Waller for The International Herald Tribune reports that the British arm of Toyota (TM) is to cut UK staff pay and working hours by 10% to save money in the face of a sharp downturn in global demand. The “work share” agreement will take place at the two plants in Derby and Deeside and would begin on April 1, and continue throughout next year. Toyota is aiming at keeping employment sufficient throughout this hard period of time.

The Associated Press reports that President Barack Obama said he will accept a $410 billion spending package today, but insisted it must signal an “end to the old way of doing business.” The Federal funding earmarks were called “pork” by some, however, the president insists they are legitimate when done right. Plus, he said he’ll “work with Congress” to eliminate any earmarks the administration objects to.