25/10/07

Stocks fell at the start of the session after Merrill Lynch reported a quarterly loss of $2.3bn and said it was taking a larger than projected write down of $7.9bn because of losses from bad subprime mortgage bets. Merrill shares finished nearly 6 percent lower on NYSE. The selloff gained pace after the National Association of Realtors said existing home sales sank more than expected last month, to its lowest pace on record. The industry group also revealed that the median home price fell 4.2 percent from a year ago in September.

Amazon.com saw its sales and earnings surge in the most recent quarter, the company reported late Tuesday. But the results were not as robust as some investors had hoped, sending its shares tumbling nearly 12 percent on the Nasdaq.

Boeing surprised investors by delivering a 61 percent jump in quarterly results that topped forecasts, while the company also raised both its earnings and revenue guidance for 2007.

Corning slipped 6 percent in morning trade after the company said it expects its fourth quarter earnings to fall short of analysts estimates, even after it reported better than expected earnings.

Broadcom Corp stock tumbled 17 percent after the company reported late Tuesday that net income fell in the most recent quarter from a year ago.

After the closing bell, Microsoft announced it would take a $240m stake in Facebook beating out Google in a battle for a piece of the social networking company.

Treasurys staged a modest rally, lowering the yield on the 10 year note to 4.33 percent, down 4.4 percent late Tuesday.

On NYMEX, light sweet crude for December gained $1.83 to settle at $87.10 a barrel, after US oil inventories took a surprise dip in the latest week.

COMEX gold for December gained $2.50 to $765.60 an ounce.

The Nikkei average closed 74.2 points lower at 16284.2 today as a strong yen nailed exporters such as Canon Inc, while bank stocks weakened after massive Merrill Lynch losses further stoked credit fears.

The FTSE100 snapped a three day losing streak to end 54.7 points higher at 6514.0, lifted by rebounding banks and miners. The index ended well of its day high of 6562.7 as the DJIA and S&P500 turned flat. Banks contributed nearly 10 points to the index's rise, partly boosted by Bradford and Bingley's comments to investors late Monday that it remained confident with funding and liquidity levels. The comments lifted fellow mortgage lenders Northern Rock and Alliance and Leicester. Barclays added 1.5 percent and RBS climbed 1.8 percent.

Miners recovered from sharp losses in the previous session lifted by firmer metal prices and after BHP Billiton said its fiscal first quarter iron ore production was at a record and production of copper swelled 23 percent on a year ago. BHP gained 2.3 percent, while Rio Tinto, Anglo American, Xstrata, Vedanta Resources, Kazakhmys, Lonmin and Antofagasta also rose. Cairn Energy added 7.5 percent on talk of bid interest from BP at £28 per share. BP declined to comment and no one at Cairn was immediately available for comment.

Smith and Nephew closed up 2.6 percent after traders cited market talk of a takeover bid for the medical device equipment maker. The company declined to comment.

GlaxoSmithkline added 1.7 percent. Generic drugmaker Mylan Laboratories said it had settled patent litigation with GlaxoSmithKline over Glaxo's Paxil CR anti-depressant Astra Zeneca gained 0.9 percent.

Persimmon rose 4.2 percent after the housebuilder said it had decided to implement a share buyback programme and purchased £2.38m worth of shares on Monday.

Last weeks initial claims rose by 28,000, up to 337,700. The 4 week average increased to 316,500. The estimate for this week is 330,000.

US Durable goods orders (Sept) 13.30 bst

A 1.7 percent rise for September durable goods is expected. Boeing reported aircraft orders rose to 132 from 75 during the month. This should boost overall transportation orders, which are expected to rise by 4 percent. For ex-transport orders, a rise of 0.7 percent is expected, a partial recovery after the 1.8 percent in August.

US New home sales (Sept) 15.00 bst

New home sales are seen continuing to slow over the medium term. The 8.3 percent decline in August was driven by big declines in the South (-15 percent) and West (-21 percent), so these are they key regions to watch this month. September sales are expected to fall to 780,000.

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