9:45AM Wall Street opened modestly higher, despite subprime lending concerns.

Wall Street posted modest gains at opening Wednesday, recovering from heavy losses the previous session. However, investors remained concerned about subprime lending, due to a number of new downgrades and downgrade threats in the securities sector.

Second-quarter earnings reports were also eagerly awaited, with biotechnology company Genentech (DNA) and fast-food chain operator Yum Brands (YUM) due to release results after market close. On the merger-and-acquisition news front, Alcan (AL) reportedly started merger talks with Rio Tinto in order to fend off a hostile bid from Alcoa. Alcan shares gained 1.3%.

In other corporate news, Liz Claiborne Inc. (LIZ) said it is selling 16 of its 36 apparel brands. It is also considering up to 800 job cuts. The stock added 0.9%. In the first minutes of trading, the Dow Jones industrial average rose 12.92, or 0.10%, to 13,514.62. The Standard & Poor's 500 index rose 0.94, or 0.06%, to 1,511.06, and the Nasdaq composite index gained 5.09, or 0.19%, to 2,644.25.


9:30AM London equities fall sharply with banks, properties and oil stocks leading the decline.

In London, concern about U.S. housing market and subprime mortgage rates hurt sentiment. Two of the biggest banks, HSBC, the biggest bank in terms of market capitalization and HBOS, the biggest lender in the U.K. fell sharply as investors fear that the slowing U.S. housing demand may erode economic growth. Oil companies Royal Dutch Shell and BP also dipped on downgrades by Goldman, Sachs & Co and on weaker oil prices.

Economic news

Prime Minister Gordon Brown announced today that the government is considering introducing covered bonds to boost mortgage lenders to offer more 25-year fixed-rate loans, which is part of the premier’s legislative program for the next year.

Advancers of the Day

BSkyB advanced 5.4% after the broadcaster announced it had added 90,000 net new customers in the three months to June 30, 17 per cent higher than the same period a year earlier.

UK leisure group Whitbread gained 5.5% on speculation that US property investor Starwood Capital Group is ready to launch an offer for the company.

AstraZeneca gained 2.5% as Morgan Stanley upped the company on Tuesday from equal-weight to overweight.

Decliners of the Day

HSBC, the largest bank by market value in Europe, dipped 1%, while HBOS, the biggest mortgage bank in the U.K., declined also 1%.

Oil stocks also declined after Goldman Sachs reduced its rating on several of the large-caps in the sector. Royal Dutch Shell shed 1.5% after a downgrade from neutral to sell while BP, which was cut from buy to neutral, lost 0.8%.

Property stocks were also hit as Hammerson lost 1.7% and Liberty International was lower by 1.5%. Land Securities Group declined 1.7%.


9:00AM U.S. stock futures pointed lower amid continued subprime worries.

U.S. stock futures were indicating a lower market opening Wednesday, hurt by continued subprime loans concerns. The economic jitters were sparked yesterday by a wave of profit warnings from Home Depot (HD) and Sears Holdings (SHLD) along with a threat from S&P that it could downgrade credit ratings on $12 billion worth of subprime securities.