1:00PM NY, 5:00 PM Frankfurt European markets closed sharply down, pressured by banks and auto stocks.

European stock markets closed steeply in the negative territory, pressured by weakness in the banking and automotive sectors. Merrill Lynch European said that they remain negative on financial services, travel and automotive firms in Europe. Across the region, France and Germany tumbled 2.1%, followed by the U.K. which dropped 1.7%.

In Frankfurt Deutsche Bank declined 2.1% after Lehman cut its earnings expectations for investment banks and downgraded the firm to underweight from overweight

In Paris Societe Generale also declined on negative broker comment. The stock dropped 2.9% after Lehman Bros downgraded it to underweight from equal weight, saying that growth won''t be supported by recent acquisitions. Among auto makers, Peugeot slid 3.9% on poorly received strategy presentation. In the energy sector, shares of Total slipped 1.2% after the oil producer said that it expects production growth of 4% a year on average.

In London shares of Northern Rock posted considerable weakness after Lehman Brothers lowered its rating on the U.K. mortgage lender. The stock dropped 5.3%. On the positive side, shares of mining group Vedanta Resources gained 3.1% after Merrill Lynch added the copper extractor to its Europe 1 focus list.


11:30AM Market averages extended losses on weak home sales data.

U.S. stock averages moved further to the downside after economic data showed existing home sales hit a record low of 12% and a separate gauge of employment prompted downward revisions of nonfarm payrolls report for August. On the one hand, the report was in favor of an interest rate cut, on the other, it intensified worries about economic growth.

The Dow dropped 165 points, or 1.2%. Housing stocks turned in some of the worst performances on the day, amid the realtors report.Financials were notable losers, with American Express (AX: chart) falling 2.3% and J.P. Morgan Chase (JPM: chart) losing 1.9%. Other sectors posting weakness were real estate, steel, telecommunications, and transportation stocks.

Retail stocks also moved steeply lower. Finisar (FNSR: chart) fell 18% after the fiber-optic firm reported slower-than-forecast quarterly revenue and warned Q2 revenue will miss expectations. The world''s biggest toy maker Mattel (MAT: chart) fell 2.6% after it announced a third major recall of Chinese-made toys because of excessive amounts of lead paint. Warehouse retailer Costco Wholesale (COST: chart) dropped 5.1% after reporting weaker-than-expected same-store sales in August, largely due to strong international sales. Guess (GES: chart) slid 7% on weaker profit outlook.

In midday trading, the Dow fell 156.97, or 1.17%, to 13,291.89. The Standard & Poor''s 500 index fell 16.94, or 1.14%, to 1,472.48, and the Nasdaq composite index fell 18.05, or 0.69%, to 2,612.19. The yield on the 10-year Treasury note, which moves inversely to its price, fell to 4.48% from 4.55% late Tuesday.


10:00AM New York – 7:30PM Mumbai – Sensex edged lower as trading volume recovers.

Sensex in Mumbai trading declined 0.12% or 19.25 to close at 15,535.35. CNX Nifty declined 3.40 or 0.08% to 4,475.85.

Of the stocks traded on the Bombay Stocks Exchange 1,403 closed higher, 1,331 declined and 65 were unchanged. Daily turnover on BSE increased to 5,167 crore rupee from 4,207 crore rupees. Daily trading volume on NSE increased to 1,900 crore rupees from 10,566 crore rupees a day ago. Of the 30 stocks on the index, 18 declined and 12 gained.

Ambuja Cement August sales jumped 3% to 1.15 million tons from a year ago lifting the stock 2% higher to 139 rupees.

NTPC, the largest power generator, rose 1.7% to 184 rupees after the reports that the company is looking to purchase Tungabhadra Steel, the maker of hydraulic gates for power plants.

Maruti Udyog lost nearly 3% to 869 rupees after the company guided that it will offer discount for its products to bolster sales during the holiday period. Managing Director, Jagdish Khattar, hinted that higher interest rates are restricting sales growth and the company may have to offer bigger discounts to attract new buyers.

Larsen Toubro fell 1.8% to 2,575 rupees after the news that its division in partnership with Italian company has won bidding for Bhusan Steel project for 1,200 crore rupees. ECC, the division, is likely to perform 64% of the value of the order.

Akruti Nirman jumped 4.3% to 568 rupees after the report that it plans to partner with Dubai World to bid for the redevelopment of Dharavi slums in Mumbai. In other news the company is reported to have purchased 8 acre land for 350 crore rupees from Hindoostan Spinning & Weaving Mills.