1:00PM NY, 5:00 PM Frankfurt European markets ended lower, dragged down by rate worries and weak automotive stocks.

European stock markets ended in the red on Wednesday, reflecting interest rate worries worldwide and weakness in the automotive sector. Interest rates were in the spotlight today after the European Central Bank lifted its key interest rate by a quarter of a point to 4%. Steep declines on Wall Street, with Dow losing over 100 points, also weighed.

Automotive stocks stood out as the worst performers, with Volkswagen falling 2.5% and Renault losing 4%. Among other stocks in focus, GlaxoSmithKline fell 0.7% on further evidence of the overall cardiovascular safety profile of its diabetes drug Avandia. Again the pharmaceutical sector, Danish biotech Bavarian Nordic climbed 10% after it gained a contract from the U.S. Department of Health and Human Services to manufacture 20 million doses of its smallpox vaccine Imvamune.

The German DAX Xetra 30 tumbled 2.4% at 7,730.05, the U.K. FTSE 100 dropped 1.7% to 6,522.70 and the French CAC-40 declined 1.7% at 5,977.87.


11:30AM U.S. market averages steeply dropped, with the Dow losing over 100 points.

U. .S. market averages posted heavy losses in late morning trading, with the Dow Jones Industrial average losing over 100 points. The steep decline followed news that Q1 unit labor costs jumped higher than expected, sparking inflation and interest rate concerns. The Labor Department said that U.S. worker productivity grew at a slower-than-expected pace, driving up labor costs by 1.8%.

Rate-sensitive stocks, including utilities and banks, weighed on market sentiment after the European Central Bank lifted its key interest rate by 0.25% to 4%. Shares of utility Exelon Corp. (EXC: chart) fell 2%. FPL Group (FPL: chart) stock lost 2.5% despite a price target upgrade from Citigroup.

Investment bank Goldman Sachs (GS: chart) fell 1.4%, while rival JPMorgan Chase & Co. (JPM: chart) lost 1%. Considerable weakness also emerged among transportation stocks, with Overseas Shipholding (OSG: chart), falling 3% and Burlington Northern (BNI: chart), losing 2.7%. Pharmaceuticals, telecoms, internet, oil and gold stocks also moved sharply lower.

At the same time, some brokerage stocks posted strong gains. E*Trade (ETFC: chart) climbed 5.7% and TD Ameritrade (AMTD: chart) moved up 4% amid speculation about further consolidation among discount brokers. In the retail sector, Guess (GES: chart) rose 5% on strong Q1 earnings and improved full-year earnings outlook.

The blue-chip average was led down by DuPont (DD: chart) and IBM (IBM: chart), each falling 2.2%. Dow members United Technologies (UTX: chart) and Boeing (BA: chart) declined 1.5%. The Dow Jones industrial average was down 107.03 points, or 0.79%, at 13,488.43. The Standard & Poor''s 500 was down 12.36 points, or 0.81%, at 1,518.59. The Nasdaq Composite was down 23.75 points, or 0.91%, at 2,587.48.


9:45AM U.S. stocks opened in the negative on rate concerns.

Wall Street opened lower on Wednesday, reflecting inflation and interest rate concerns, sparked by increased European key interest rate and higher unit labor costs Q1. First-quarter productivity came in line with expectations, rising 1%, down from the previous estimate of 1.7%. However, unit labor costs rose a higher-than-expected 1.8%.

Among companies in focus, Guess (GES: chart) climbed 6.2% after the retailer lifted its full-year earnings outlook. TD Ameritrade (AMTD: chart) was another gainer in early trading. The stock rose 4% after two hedge funds with a stake in the brokerage suggested that it should consider a merging deal.

On the side of the losers, Panera Bread (PNRA: chart) tumbled 13% after the retailer cut its Q2 earnings and same-store sales guidance on lower same-store sales expectations and rising costs. Company''s stock was downgraded by Morgan Keegan. Whole Foods Market (WFMI: chart) declined 3.4% after the Federal Trade Commission filed a lawsuit to prevent it from merging with Wild Oats (OATS: chart). Following the news, Morgan Stanley cut Whole Foods rating to equal-weight from overweight.

The blue-chip average was led lower by Alcoa Inc. (AA: chart), Home Depot Inc. (HD: chart) and IBM (IBM: chart), each falling 1.2%. 3M Co (MMM: chart) was another decliner on the Dow, losing 0.7%. The Dow Jones industrial average fell 68.27, or 0.50%, to 13,527.19. The Standard & Poor''s 500 index fell 9.49, or 0.62%, to 1,521.46, and the Nasdaq composite index fell 21.48, or 0.82%, to 2,589.75.


9:30AM The FTSE 100 is lower in afternoon trade Wednesday on banks, retailers.

In late morning trade Wednesday, the FTSE 100 which plunged 67 points, or 1%, to 6,555.4.

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