19/07/07 FTSE 100 6567.1, -92 Dow 13918.2, -53.3 FTSE 250 11726, -75 Nasdaq 2699.49, -12.8 FTSE All Share 3395.74, -42.45 S&P 500 1546.15, -3.2 Nikkei 18116.6, +101 Hang Seng 22886.5, +44.6 Oil (Brent) $76.73 Gold $672.6 Base Rate 5.75% 10 Yr Gilt 5.42% £/$ 2.0532 Euro/Gbp 0.6724 Market report  US markets retreated yesterday after hawkish comments from Federal Reserve chief Ben Bernanke, deepening concern over the subprime mortgage situation and disappointing corporate earnings. Addressing the Congressional Committee, Ben Bernanke said that he expects economic growth to pick up gradually this year, but noted that the central bank is still cautious about inflation. The Dow Jones fell by as much as 145 points, before finishing 53.3 points lower at 13,918.2, the S&P 500 slipped 3.2 points to finish at 1,546.15. The Nasdaq dropped 12.8 points to end at 2,699.49. After digesting some troubling corporate results, Wall Street received some positive news after Wednesday's closing from tech outfits IBM and eBay. IBM reported better than expected profits and sales when it reported quarterly earnings. eBay also reported earnings and revenue that beat analysts projections helped by strength in its auction business. Treasury prices climbed, lowering the yield on the benchmark 10 year note to 5.02 percent from 5.07 percent late Tuesday. US light crude for August delivery jumped $1.02 to $75.02 a barrel on NYMEX. The dollar fell against the euro and the yen. COMEX gold for August delivery gained $7.80 to $673.70. JP Morgan Chase reported a better than expected increase in quarterly results before the bell, driven by strong investment banking results. JP Morgan closed $1.18 lower at $48.74. Pfizer closed 83 cents lower at $25.13 after posting a decline in quarterly profit hurt by generic competition, sending its shares down over 3 percent. Altria posted lower profits that topped expectations, but cut its full year earnings forecasts, while fellow Dow component United Technologies booked higher profits. Macy's shares soared nearly 8 percent higher following a report by Women's Wear Daily that private equity firm KKR is reportedly mulling a $24bn bid for the retailer in conjunction with Goldman Sachs. On the economic front, investors got latest reading on prices paid by consumers. The Consumer Price Index rose slightly more than expected in June, but so called core CPI fell in line with Wall Street expectations. Housing starts climbed in June but applications for new projects fell more than expected. The Nikkei average rose 101 points to close at 18116.6 today as expectations of consolidation ramped up consumer finance stocks while earnings hopes lifted Chugai Pharmaceuticals Co and others. Shares of consumer finance companies surged in the last trading hour as a source close to the matter said Japanese consumer lenders Promise Co and Sanyo Shinpan are considering a merger that would create the industry's largest player. JFE Holdings hit a lifetime high for a third straight session on growing optimism that its first quarter earnings to be unveiled on July 30 will be solid. Nippon Steel Corp, the most actively traded issue, also jumped 4.7 percent to 919 yen. The FTSE100 fell 92 points to close at 6567.1 on Wednesday, as downbeat comments by Federal Reserve Chairman Ben Bernanke hit global equities already nervous about the US subprime market crisis. Bernanke said the US housing slump had yet to hit bottom and said the Fed had cut its forecasts for economic growth for this year and next year, in his semi annual testimony to the US Congress. Lonmin was among the biggest losers down 3.6 percent, having fallen for most of the week after the company cut its full year sales forecast on Monday. Anglo American fell 3.9 percent, Xstrata shed 1.6 percent and BHP Billiton also lost 2.8 percent. Rio Tinto also shed 1 percent. The miner reported record second quarter iron ore output, helping offset mixed coal and copper figures as it ramps up production to match further rises in industrial metal prices. Imperial Tobacco gained 1.5 percent after it agreed to buy Franco Spanish rival Altadis for E12.6bn in a deal that will propel it to second place from fourth in Europe's cigarette industry. Sainsbury gained 0.9 percent after Gulf Arab state Qatar made a bid approach for the company.   Economic report     UK Retail Sales (Jun) 0930 BST Analysts expect retail spending to rise 0.5% on the month taking the annual rate down to 3.7%. The retail surveys have moderated slightly but from very high levels. One uncertainty arises from the fact that June this year was the wettest since records began. But looking into the past pattern of spending - there is no clear link between extreme weather conditions and spending. UK Public Finances (Jun) 0930 BST Analysts expect borrowing of roughly £6bn in June, which if achieved would take borrowing so far this year to £15.5bn. The Chancellor estimates he will borrow $34bn this tax year. US Initial Jobless Claims (week 14 July) 1330 BST/0830 EDT Last week's initial claims rose 44% (+116k) on a non seasonally adjusted basis as auto factories moved fully into scheduled summer shutdowns. However, seasonal adjustment fully accounted for this spike, and adjusted claims fell to 308,000 from 320,000. Analysts look for 315,000 this week although there remains the possibility of seasonal distortions in the next few weeks as auto workers return to the job. US Philadelphia Fed (Jul) 1700 BST/1200 EDT Last month's Philly Fed rose 13.8pts to 18. The ISM-weighted average of the components improved to 6.5 from 5.6, as new orders improved but the shipments index fell to 5 from 9.3. Analysts expect the headline Philly Fed to fall to 10 this month. US FOMC Minutes (June 28 meeting) 1900 BST/1400 EDT The June 28 FOMC statement noted that core inflation readings have "improved modestly in recent months" but that a "sustained moderation in inflation pressures has yet to be convincingly demonstrated". In addition to discussion on the inflation outlook, the minutes could acknowledge some of the stronger growth data seen in May and June. However, continued downside risks from the housing and subprime mortgage markets may be highlighted. 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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