12/07/07 FTSE 100 6615.1, -15.8 Dow 13577.9, +76.2 FTSE 250 11666.8, -65.3 Nasdaq 2651.79, +12.63 FTSE All Share 3413.09, -9.83 S&P 500 1518.75, +8.65 Nikkei 17984.1, -65.4 Hang Seng 22906.7, +299.7 Oil (Brent) $75.65 Gold $663.75 Base Rate 5.75% 10 Yr Gilt 5.462% £/$ 2.032 Euro/Gbp 0.6773 Market report  Wall Street managed to cobble together a modest rally on Wednesday despite a lack of any substantial earnings or economic news, helped by some takeover activity. The DJIA closed 76.17 lower at 13577.87, the S&P500 added 8.64 points to close at 1518.76 and the Nasdaq added 12.63 points to close at 2651.79. US markets plunged Tuesday on rising oil prices, a handful of profit warnings and after credit agencies S&P and Moody's downgraded securities backed by subprime mortgages. The action taken by the ratings firms raised worries that problems in the subprime mortgage sector, which gives home loans to borrowers with poor credit, could further depress the housing sector and spillover to the broader economy. A number of companies reported earnings after the close on Wednesday including Genentech which reported a quarterly surge in earnings and revenues after the closing bell, beating Wall Street estimates. But shares of the company edged lower in after hours trading after finishing up 1.4 percent on the NYSE. Shares of fast food operator Yum Brands climbed over 2 percent after the company said its quarterly results topped expectations, while it raised its annual profit forecast. Motorola slipped in after hours trading after the mobile phone maker warned of a loss and lower revenue in the second quarter and that it did not expect its mobile device business to be profitable for 2007. Oil prices finished lower after a weekly report on US inventories showed a surprise decline in oil inventories. US light crude for August lost 25 cents to $72.56 a barrel. Treasury prices fell, lifting the yield on the 10 year benchmark note to 5.09 percent, up from 5.02 percent late Wednesday. The dollar fell to a record low against the euro for the second straight session amid continued subprime worries, while the dollar edged higher against the yen. COMEX gold for August fell $2.30 to $662.10 an ounce. In Tokyo the Nikkei lost 65.4 points to close at 17984.1 to log its lowest close in two weeks, weighed down by Tokyo Electron and similar stocks after the company reported weak chip orders data a day earlier. Shares of Nomura Holdings tumbled nearly 5 percent after Deutsche Securities lowered its target price on Japan's largest brokerage, citing concern that suprime loan losses could weigh on earnings. The market earlier shrugged off news that the BoJ left its key policy rate unchanged at 0.5 percent for a fifth month as expected. The decision by the banks board was by a vote of 8-1. and may set the scene for a possible rate hike next month. In London the FTSE100 fell on Wednesday as high oil prices and worries over US subprime mortgages dented sentiment but standout gainers including Whitbread and BSkyB helped arrest losses. The FTSE100 closed 15.8 points lower at 6615.1, but well off a day low of 6574.2. with part of the recovery due a rebound on Wall Street, where major indexes were all higher. Oils also weighed on the broader market as crude prices hovered above $76 a barrel but failed to support BP which lost 1.1 percent and Royal Dutch Shell which slipped 1.2 percent. Miners were strong as metal prices firmed. Rio Tinto rose 2.3 percent and Kazakymys gaining 2.2 percent. Newspapers said Alcan has begun negotiating a $34bn friendly offer from Rio Tinto to fend off a hostile $28.6bn bid from US rival Alcoa. Rio declined to comment, while Alcan confirmed it had signed confidentiality and standstill agreements with third parties as it sought alternatives to the Alcoa bid, but did not name them. Whitbread hit a record high, topping the FTSE gainers with a 7 percent rise, boosted by a bout of bid speculation in the hotel and leisure sector. Earlier Whitbread benefited from talk that US property investor Starwood Capital Group was about to launch an offer for the UK company, which runs Premier Travel Inn budget hotels Economic report    US Trade Balance (May) 1330 BST/0830 EDT Analysts expect the May trade deficit to widen to about -USD60bn. After a 1.9% decline in April, analyst expect nominal imports to rise by 1.1%, or about USD2bn. This should largely reflect an increase in goods import prices (+0.9%) plus a small pickup in volumes. Meanwhile, exports could rise by USD500m. Goods export prices rose slightly (+0.1%), and we expect increases in autos and other capital goods exports. Food exports could drop back after rising 12.1% in April. US Initial Jobless Claims (week 7 Jul) 1330 BST/0830 EDT Analysts look for initial jobless claims of 315,000. US Monthly Budget Statement (Jun) 1900 BST/1400 EDT The federal budget deficit in the first eight months of FY2007 was about -USD148bn . Analysts expect the June surplus to be USD28bn, as receipts are seasonally boosted by quarterly income tax payments and corporate estimated taxes. Last year, July 1 occurred on a weekend, shifting USD19bn in payments from July into June. The calendar returns to normal this year. The details published in this e-mail are intended for information only and should not be construed as advice under the Financial Services and Markets Act 2000. 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