US & World Daily Markets Financial Briefing 01-10-2008

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all St. falls on credit woes, recession worry

U.S. stocks fell on Wednesday as signs of continued strains in the credit markets and labor market weakness kept investors on edge before a Senate vote on a revamped rescue plan for the financial sector.

A day after Wall Street notched its best day in six years, investors worried how effectively the $700 billion bank rescue will avert recession for the economy and repair weak corporate profits.

Economic reports on Wednesday painted a bleak picture of U.S. employment and manufacturing. In addition, the interbank cost of borrowing dollars over three months again rose on Wednesday.

General Electric, down more than 8 percent, was among the top decliners after Deutsche Bank cut its price target and outlook on the diversified manufacturer and Dow component.

Shares of heavy-equipment manufacturer Caterpillar Inc, another economic bellwether, slid more than 6 percent. Shares of energy companies, including Chevron, fell along with crude oil prices, making the energy sector a top drag on the broader market.

The Dow Jones industrial average fell 174.51 points, or 1.61 percent, to 10,676.15. The Standard & Poor's 500 Index declined 20.21 points, or 1.73 percent, to 1,146.15. The Nasdaq Composite Index shed 30.42 points, or 1.45 percent, to 2,061.46.

In the job market, ADP Employer Services said U.S. private employers cut 8,000 jobs in September, which was fewer than expected but was accompanied by a downward revision in August's job figures.

The Senate's modified rescue legislation, scheduled for a vote later on Wednesday, will include a sharp increase in the amount of bank deposits insured by the Federal Deposit Insurance Corp and tax breaks the House of Representatives rejected.

The rescue plan, which would allow the Treasury Department to buy bad mortgage-related assets from banks, is the centerpiece of the government's bid to unlock credit markets and head off a deeper economic downturn in the United States and abroad. Republican House members voted against the rescue package on Monday by about 2-to-1. A majority of Democrats voted in favor.

GE shares fell to $23.51 on the New York Stock Exchange, while Caterpillar shares declined to $5.82. Chevron shares fell to $79.91 as U.S. front-month crude declined $3.29 to $97.35 a barrel. On Nasdaq, technology bellwether Apple Inc was the top drag, falling 3.5 percent to $109.63.

Bucking the downward flow, bank shares headed higher on hopes of the bailout passage, with Bank of America up 3.2 percent at $36.12.

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FOREX-Dollar falls to session low vs yen after ISM

NEW YORK, Oct 1 (Reuters) - The dollar fell to a session low against the yen on Wednesday after a survey showed U.S. manufacturing was weaker in September than market expectations.

Against the yen, the dollar fell to 105.45 yen from 105.85 before the release of the report.

The euro was last at $1.4006, down from the $1.4025 it traded at just before the report. The euro had initially recovered against the dollar in the moments after the report.

"There was a brief sell-off in the dollar after the ISM and then it rose again," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.

"It is obvious that the credit market is affecting the real economy and this data confirms that. So markets are hopeful more than ever that the bailout package would pass and we see investors buying back the dollar."

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2008-10-01 15:20:26 - RESEARCH ALERT - Wedbush raises Children's Place to buy
Wedbush Morgan Securities raised its rating on Children's Place Retail Stores Inc to "buy" from "hold" on expectations ofimproved operating margin on better-than-expected earnings.

2008-10-01 14:20:40 - Italy mkt tensions "totally unjustified" -Treasury
Tensions in Italian financial markets are "totally unjustified" given the levels of liquidity in main Italian banks, the Treasury said in a statement on Wednesday.

2008-10-01 14:11:33 - LONGBOW CUTS CLEVELAND - CLIFFS PRICE TARGET TO $90 FROM $155
LONGBOW CUTS CLEVELAND-CLIFFS PRICE TARGET TO $90 FROM $155

2008-10-01 13:50:53 - RBC CUTS RELIANT ENERGY PRICE TARGET TO $15 FROM $30; KEEPS OUTPERFORM RATING
RBC CUTS RELIANT ENERGY PRICE TARGET TO $15 FROM $30; KEEPS OUTPERFORM RATING

2008-10-01 13:49:01 - Auto stocks sink as credit crunch hits car buyers
Shares in European automakers fell sharply on Wednesday as signs consumers are struggling to raise loans to buy cars fed into a market spooked by concerns about earnings targets at Daimler.

2008-10-01 13:40:58 - COWEN RAISES CA INC TO OUTPERFORM RATING
COWEN RAISES CA INC TO OUTPERFORM RATING

2008-10-01 13:36:14 - WEDBUSH RAISES CHILDREN'S PLACE RETAIL STORES TO BUY FROM HOLD
WEDBUSH RAISES CHILDREN'S PLACE RETAIL STORES TO BUY FROM HOLD

2008-10-01 13:32:06 - WEDBUSH CUTS RC2 CORP TO HOLD FROM BUY
WEDBUSH CUTS RC2 CORP TO HOLD FROM BUY

2008-10-01 13:29:24 - NEEDHAM CUTS XYRATEX TO BUY FROM STRONG BUY
NEEDHAM CUTS XYRATEX TO BUY FROM STRONG BUY

2008-10-01 13:07:05 - STOCKS NEWS US-Futures drop before bailout vote, GE lower Stocks on the move Real-Time Equity news U.S. stock market report
U.S. stock index futures fell on Wednesday on signs of continued strains in the credit markets and nervousness before a Senate vote on a revamped rescue plan for the financial sector.

2008-10-01 13:05:08 - HEADLINE STOCKS-U.S. stocks to watch on Oct 1
U.S. stocks to watch on Wednesday: GENERAL ELECTRIC Deutsche Bank lowered its earnings outlook and price target on the industrial conglomerate, citing deterioration at the company's GE Capital Unit. Shares fell 2.1 percent to $24.97 before the bell on Wednesday,.

2008-10-01 12:44:25 - BEFORE THE BELL-GE shares fall after broker cuts outlook
General Electric shares fell 2.1 percent to $24.97 before the bell on Wednesday, after Deutsche Bank lowered its earnings outlook and price target on the industrial conglomerate, citing deterioration at the company's GE Capital Unit.

2008-10-01 12:33:26 - HBOS shares surge on confidence over Lloyds deal
LONDON, Oct 1 (Reuters) - Shares in HBOS jumped 27 percent on Wednesday on growing confidence that a deal for it to be taken over by Lloyds TSB would go through, traders said.

2008-10-01 12:26:19 - CREDIT SUISSE CUTS RELIANT ENERGY TO NEUTRAL FROM OUTPERFORM
CREDIT SUISSE CUTS RELIANT ENERGY TO NEUTRAL FROM OUTPERFORM - THEFLYONTHEWALL.COM

2008-10-01 12:07:02 - GOLDMAN SACHS CUTS FEDERAL SIGNAL TO SELL FROM NEUTRAL - THEFLYONTHEWALL.COM
GOLDMAN SACHS CUTS FEDERAL SIGNAL TO SELL FROM NEUTRAL - THEFLYONTHEWALL.COM

2008-10-01 11:58:06 - 1-RESEARCH ALERT-JP Morgan downgrades Heartland Payment
J.P. Morgan downgraded Heartland Payment Systems Inc to "underweight" from "neutral," saying the company's U.S. focus and merchant base pose greater earnings risk compared to its peers.

2008-10-01 11:57:23 - JEFFERIES CUTS FOREST OIL PRICE TARGET TO $90 FROM $93; KEEPS BUY RATING
JEFFERIES CUTS FOREST OIL PRICE TARGET TO $90 FROM $93; KEEPS BUY RATING

2008-10-01 11:40:22 - 1-Deutsche Bank cuts outlook, target on GE
Deutsche Bank lowered its earnings outlook and price target on General Electric Co, citing deterioration at the company's GE Capital unit, due to tighter credit markets, asset shrinkage and debt pay-down.

2008-10-01 11:38:27 - 1-Goldman removes ArcelorMittal from conviction buy list
Goldman Sachs removed the world's top steel company ArcelorMittal from its conviction buy list and cut its price target on the stock by 40 euros to 59 euros, to reflect a lower steel price forecast.

2008-10-01 11:31:53 - Auto stocks sink as credit crunch hits car buyers
Shares in European automakers fell sharply on Wednesday as signs that consumers are struggling to raise loans to buy cars fed into a market spooked by concerns about earnings targets at leading manufacturer Daimler .

2008-10-01 11:24:51 - STOCKS NEWS EUROPE-British housebuilders up on rate cut hopes
Shares in Britain's housebuilders soar, led by Barratt Developments Plc up 10.3 percent, on hopes of an interest rate cut next week and a rescued bailout of the U.S. economy.

2008-10-01 10:54:52 - Intesa SP, Fiat shares halted for losses
Trading in shares of Italian bank Intesa Sanpaolo SpA and in auto maker Fiat SpA was halted on Wednesday because of excessive losses, Reuters data showed.

2008-10-01 10:46:07 - GLANCE RESEARCH ALERT-Deutsche cuts UniCredit price target, keeps "buy"
Deutsche Bank cut its target price on Italian bank UniCredit SpA to 4.50 euros from 5.60 euros on Wednesday and kept its "buy" rating on the stock.

2008-10-01 10:26:06 - GLANCE RESEARCH ALERT-Oddo raises France Telecom to "buy"
French broker Oddo Securities raised its recommendation on France Telecom to "buy" and its share price target to 24 euros, saying the group did not plan any large acquisitions before the end of 2009.

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BEIJING - China has cut jet fuel prices for the fourth quarter by almost 7 pct to 7,750 yuan per ton, the official Xinhua news agency reported.

The news agency said the National Development and Reform Commission, the powerful state planning agency, has sent out a notice saying that the price of fuel will be reduced by 570 yuan per ton as of today.

It said the price was based on a "cost calculation formula" used for the nation's airlines. It did not give details of the formula.

The state planner said the price cut reflects the recent decline in crude oil prices.

The report said that so far there is no indication that domestic airlines plan to reduce their fuel surcharges on domestic routes.

TAIPEI - Share prices closed off their highs amid uncertainty surrounding a US financial sector rescue plan as lawmakers work out a revised package after voting down an original proposal.

Broader global concerns kept investors from pushing stocks higher even as Taiwan authorities took further measures to prop up the local bourse, including a temporary ban on all short-selling.

The weighted index closed up 44.73 points or 0.78 pct at 5,764.01, after moving in the range of 5,727.72 and 5,854.00.

Turnover was 62.86 bln twd.

The construction sector fell 1.31 pct and financial sector lost 0.94 pct as investors fear the two sectors could suffer the most from a slowing economy and global financial turmoil.

SEOUL - South Korean Finance Minister Kang Man-soo said on Wednesday Asia's fourth largest economy was seen growing slower than expected, hit by the global financial turmoil.

He also said foreign exchange authorities were taking necessary measures to prevent the won's sharp falls as they could have a major impact on the economy.

"It is difficult to predict how the economy would grow. Although we had earlier expected late-4 percent economic growth we expect growth at early-4 percent now as the U.S. financial crisis is more serious than expected," Kang said in a prepared statement for a local TV station.

The Finance Ministry previously forecast the economy would expand by 4.7 percent in 2008.

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U.S crude oil supplies rose more than expected last week as imports rebounded following hurricane-related disruptions, while gasoline stocks unexpectedly increased, according to government data issued on Wednesday.

The Energy Information Administration (EIA) said domestic commercial supplies of crude rose 4.3 million barrels to 294.5 million barrels in the week to Sept. 26, topping analysts' expectations that supplies would be up 2.4 million barrels.

U.S. petroleum imports rose 1.85 million barrels per day (bpd) last week to 8.99 million bpd.

Crude supplies rose even as domestic refinery utilization moved up 5.6 percentage points to 72.3 percent of capacity, rebounding after utilization rates sunk to record lows in the aftermath of recent hurricanes Gustav and Ike.

Fifteen refineries were shut ahead of Hurricane Ike which made landfall on the Gulf Coast's refinery row on Sept. 13.

Inventories of gasoline rose 900,000 barrels to 179.6 million barrels last week, according to the weekly report. Analysts were eyeing a 1.6-million-barrel decline.

Stockpiles of distillate fuels, which include heating oil and diesel, fell by 2.3 million barrels to 123.1 million, nearly double the decline analysts had anticipated.

India spot gold prices close lower on overseas leads

MUMBAI (Thomson Financial) - India spot gold prices declined Wednesday on weak overnight global leads, traders said.

In London, gold rose 1 percent in Europe as a slightly softer dollar encouraged bargain hunting after yesterday's more than $30 dip, with investors seeking safety in the metal from financial turmoil.

"There has been sporadic domestic buying across the country, except for Mumbai," said a treasury official at Union Bank Of India.

The festival of Navratri, considered an auspicious period for buying gold, is underway in India, the world's largest consumer of the yellow metal.

Gold prices may further decline to $820 levels in near-term, the official added.

In Mumbai, gold of 0.995 purity closed 210 rupees lower at 13,200 rupees per 10 grams and gold of 0.999 purity closed 195 rupees lower at 13,265 rupees per 10 grams.

Silver of 0.999 purity closed rupees 710 lower at 20,530 rupees per kg.

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