16/08/07   FTSE 100 6109.3, -34.2 Dow 12861.5, -167.4 FTSE 250 10889.4, -109.2 Nasdaq 2458.83, -40.29 FTSE All Share 3159.24, -19.93 S&P 500 1406.7, -19.85 Nikkei 16148.5, -327.1 Hang Seng 20615.1, -763.6 Oil (Brent) $71.08 Gold $679.70 Base Rate 5.75% 10 Yr Gilt 5.089% £/$ 1.983 Euro/Gbp 0.6775 Market report  US markets tumbled again yesterday with the S&P 500 wiping out all gains made this year and the Dow Jones falling to a four month low. The mood started positively after economic data was released that suggested the overall economy was not being damaged by the troublesome credit market. But doom and gloom soon set in again after rumours circled that the US's largest mortgage lender was having trouble raising money. The Dow Jones dropped 167.4 points to end at 12,861.5, the S&P 500 fell 19.85 points to finish at 1,406.7. The Nasdaq lost 40.29 points to close at 2,458.83. Countrywide Financial suffered its biggest drop since the 1987 stock market crash, falling 13% to $21.29. Early in the session Merrill Lynch downgraded the stock to "sell" from "buy" on worries about the mortgage market, sending shares in a negative direction. But the fall accelerated as rumours in the market suggested that the company is having difficulty raising money in the commercial paper market. Financial stocks suffered again, Lehman Brothers declined 3.9% to close at $51.57, while Merrill Lynch slid 3.4% to $68.94. But losses were broad based as 29 of the 30 Dow components fell including Caterpillar down 2.4% to $74.95, Honeywell off 2.9% at $54.72 and Intel slipping 2.4% to $23.22. Elsewhere, Applied Materials fell 4.1% to $20.36 after saying late Tuesday that current quarter orders and revenue will be lower than last quarter. New orders for the third quarter decreased 14%, overshadowing the company's otherwise upbeat quarterly sales and earnings report. US light crude oil for September delivery gained $0.95 to settle at $73.33 a barrel following a weaker than expected oil inventories report. COMEX gold for December ended flat at $679.70 an ounce. Treasury prices moved slightly higher lowering the yield on the 10 year note to 4.71%. The Nikkei tumbled 327.1 points to close at 16,148.5 this morning. The index reached its lowest level since November with Honda Motor Co leading declines among exporters after the Yen strengthened to the highest since March against the Dollar. Banks rallied in the afternoon, helping to recoup half the losses by the benchmark, on the view that declines have made their shares attractive and they may have limited fallout from the current credit squeeze. The Hang Seng is currently down 763.6 points at 20,615.1 this morning. China Mobile leads the drop as investors moved away from equities. Hong Kong Exchanges & Clearing Ltd sank the most in five months after Citigroup cut its rating on the stock to "sell" from "buy". The London market experienced more turbulence yesterday as the FTSE 100 Index dived more than 100 points into the red. However, a positive opening on Wall Street rescued the Footsie, which eventually closed down 34.2 points at 6109.3 after earlier coming within 41 points of the 6,000 barrier. The late session improvement came after tame inflation data in the United States, coupled with the lack of any immediate bad news in relation to the credit squeeze, caused stocks on Wall Street to turn positive. House builders lent their support to the Footsie, buoyed by the prospect that the Bank of England may hold off from raising interest rates after better-than-expected inflation figures yesterday. Persimmon topped the risers' board with a 4% improvement, or 45p to 1256p, while Barratt Developments gained 25.5p to 945.5p. In the second tier, Berkeley Group led the risers with a 72p lift to 1614p, Bovis Homes cheered 31.5p to 805p and Taylor Wimpey advanced 5.5p to 342.5p. Back in the top flight, Scottish & Newcastle benefited from a second day of speculation about a potential tie-up with Carlsberg. The company, regularly linked with bid rumours, gained more than 2% in a weak market, ahead 13p at 593p. Broadcaster ITV cheered 2%, or 2.1p to 106.2p, after it reported a sharp improvement adult viewing figures at its flagship ITV1 channel following a 23% increase in July. Unilever was also higher, up 26p at 1511p, after sentiment in the consumer products sector was boosted by positive half-year results from Nestle. Tropical storm forecasts lifted oil prices, meaning Royal Dutch Shell rose 12p to 1847p and BP edged ahead 2p to 542p. The US sub-prime hangover weighed on financial stocks, as mortgage lender Northern Rock led the retreat with a fall of more than 5%, or 38.5p to 687.5p. The group has been particularly hard hit as it is heavily reliant on wholesale credit markets to fund its mortgage lending business. Royal Bank of Scotland was off 12.5p at 561p, while Asian-facing bank Standard Chartered slipped 36p to 1562p. Fund managers also suffered due to their exposure to the US mortgage market, with Schroders off 46p at 1175p and Man Group down 7.25p at 487.25p. Other fallers included drugs manufacturer GlaxoSmithKline, down 13p at 1249p after US regulators decided the firm's Avandia diabetes treatment would bear more prominent health warnings about its possible side-effects. On a quiet day for corporate news, construction group Balfour Beatty saw its shares close unchanged at 430p despite unveiling forecast-beating profits and a record order book worth more than £10bn. Economic report  UK Retail Sales (Jul) 0930 BST The poor weather in July makes this number particularly uncertain. The picture from the retail surveys is mixed, the BoE agents survey remains relatively upbeat, but sales for the time of year, according to the CBI survey, fell very sharply. Analysts look for retail spending to be flat on the month, bringing the annual growth rate down to 3.3%. US Initial Jobless Claims (week 11 Aug) 1330 BST/0830 EDT Initial claims have risen for the past two weeks, with the last week's reading climbing to 316,000 from 309,000. Analysts look for an increase to 320,000 this week. US Housing Starts (Jul) 1330 BST/0830 EDT Analysts expect housing construction to slow further. Last month's new cycle low of 1413k for building permits suggests that housing will continue to drop. Analysts look for starts to fall to 1400k, from 1467k in June. Analysts also expect permits to edge lower, as homebuilder sentiment has continued to weaken. 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