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U.S. stock market report 0844 ET 28Jan2009-Govs must remove bad bank assets: Obama advisor ------------------------------------------------------------------------------

Laura Tyson, an economic advisor to the Obama administration, on Wednesday said that in order to repair the financial markets, governments would need to remove bad assets from banks and recapitalize them.

"The natural next step, which is real simple, you take the bad assets out, the balance sheets are hit really hard, you recapitalize banks with different rules, and they go out again and lend," Tyson said in a panel discussion at the World Economic Forum.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0837 ET 28Jan2009-Bernstein bullish on Chinese Internet companies ------------------------------------------------------------------------------

Bernstein Research on Wednesday started coverage on the Chinese Internet sector with an outperform rating, saying that "even with slower economic growth, there is more than enough domestic growth to fuel both players for at least the next 5 years."

The firm rated both Baidu Inc and Sohu.com Inc outperform, giving them price targets of $170 and $80, respectively.

"We think concerns about the Chinese economy and spate of controversies affecting the Internet in China, including a recent crackdown on pornography, have rattled investor confidence in both stocks. These fears, in our view, are unwarranted," Bernstein wrote to clients.

Shares of Baidu rose 4.5 percent to $120.48 in premarket while Sohu shares gained 5.1 percent to $39.99.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0824 ET 28Jan2009-Bove slashes targets on U.S. Bancorp ------------------------------------------------------------------------------

Ladenburg Thalmann analyst Dick Bove on Wednesday slashed his price target on U.S. Bancorp to $17 from $32, saying the company may want to cut its dividend and raise more capital in the future.

He also slashed his 2009 earnings outlook on the company to $1.31 a share from $2 a share, and his 2010 view to $1.79 a share from $2.27 a share.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0817 ET 28Jan2009-Oil flat ahead of EIA report ------------------------------------------------------------------------------

March crude futures traded slightly lower on Wednesday, ahead of the release of the Energy Information Administration report on crude stocks. Investors are looking for an increase in the stockpile, another sign that the recession is weighing on demand in the United States.

The contract slid 0.2 percent to $41.48 a barrel.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net 0809 ET 28Jan2009-Wal-Mart may want stake in Arcandor AG ------------------------------------------------------------------------------

Shares of Arcandor AG rose on Wednesday as traders cited market talk that Wal-Mart Stores was interested in buying a stake in the German retailer.

Neither company was available for comment. It wasn't clear how big of a stake Wal-Mart, the world's largest retailer, was looking to buy in Arcandor.

Shares of Wal-Mart, a Dow component, rose 0.5 percent to $49.05 in premarket trade on Wednesday.

Reuters Messaging: ryan.vlastelica.reuters.com@reuters.net Keywords: MARKETS STOCKSNEWS

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