1:00PM NY, 5:00 PM Frankfurt European markets finished about 3% lower, dragged by weak mining and financial stocks.

European stock markets plunged Thursday, making the biggest one-day dip since the Iraq war. Stocks were dragged down by growing credit-market woes along with a heavy sell off in the shares of metals producers and financial services firms. London led decliners, down 4.1%, falling below the 6,000 level. France tumbled 3.3%, while Germany declined 2.4%.

In Frankfurt Deutsche Boerse slipped 7.2%, due to the fact that many of its shares are held by funds which may have to sell them in order to raise cash to pay investors back. Hypo Real Estate fell 3.8% on fears it will not get investors'' approval for buying Depfa Bank Exporter issues posted a significant decline, with BMW falling 1.7% and Siemens losing 3.4%.

In Paris two of the country’s biggest banks paced losses, in accordance with financial weakness across Europe. BNP Paribas SA dropped 3.2% and Societe Generale SA lost 2.1%. Outside the sector, Saint-Gobain fell 2.4% after JPMorgan Chase & Co. downgraded the supplier of building materials.

In London, stocks were weighed down by declines in financial firms. Shares of asset manager Invesco dropped 6.5%, while Asian-focused bank Standard Chartered moved down 7.6%. Miners also posted heavy losses, contributing to the downward move. Rio Tinto tumbled 7%, Antofagasta dropped 11% and Xstrata slid 6.5%.


11:30AM Market averages extended losses. Fed Reserve injected $17 billion into the banking system.

U.S. stocks extended losses, reflecting weaker-than-expected housing data which is adding to recent concerns about the outlook for the housing market. Continuing subprime mortgage woes and tightening lending standards also weighed. Countrywide Financial (CFC: chart) fell 15% after it drew on an $11.5 billion line of credit to fund its operations. The Federal Reserve injected another $17 billion of liquidity into the banking system.

Technology stocks traded mostly lower, with computer makers all losing ground. Apple Inc. (AAPL: chart) dropped 5.65, Dell Inc. (DELL: chart) slipped 3.7%, and Hewlett-Packard Co. (HPQ: chart) fell 2.4% before posting quarterly earnings after the market close. Tech giant Intel (INTC: chart) rose 0.5% to stand out among the very few gainers. The chip maker gained after an upgrade by Credit Suisse from underperform to outperform.

In deal news, Fifth Third Bank (FITB: chart) agreed to buy First Charter (FCTR: chart) for $1.09 billion. Shares of Fifth Third dropped 3.8%, while First Charter rose 7%.

In late morning trading, the Dow tumbled 139.01, or 1.08%, to 12,722.46. The S&P shed 12.29, or 0.87%, at 1,394.41, and the Nasdaq composite index dropped 19.83, or 0.81%to 2,439.00. Bonds continued their rally as investors fled into safer securities. The yield on the benchmark 10-year Treasury note fell to 4.66% from 4.72% late Wednesday.


Initial jobless claims rose 6,000.

Thursday morning, the Department of Labor released its report on initial jobless claims in the week ended August 11th, showing that jobless claims unexpectedly increased compared to the previous week. The report showed that jobless claims rose to 322,000 from the previous week''s unrevised figure of 316,000. The increase came as a surprise to economists, who had expected jobless claims to edge down to about 315,000. The Labor Department also said that the less volatile four-week moving average rose to 312,500 from the previous week''s unrevised average of 307,750.

Additionally, the report showed that continuing claims in the week ended August 4 rose to 2.567 million from the preceding week''s revised level of 2.550 million. Recent employment data has painted a negative picture of the labor market, as last week''s jobless claims report showed that claims increased by more than economists had been expecting. Earlier this month, a report from the Labor Department showed that non-farm payroll employment increase by a smaller than expected 92,000 jobs in July. Economists had been expecting a more significant increase of about 135,000 jobs. The report also showed that the unemployment rate unexpectedly edged up to 4.6 percent in July from 4.5 percent in June. With the increase, the unemployment rate reached a six-month high, although it remains at relatively low levels.


Housing starts hit a 10-year low.

The Department of Commerce released its report on housing starts and building permits in the month of July on Thursday, showing that both housing starts and building permits fell much more than economists had been expecting. The report showed that housing starts fell 6.1 percent to an annual rate of 1.381 million units in July from the revised June estimate of 1.470 million units. With the decrease, housing starts are down 20.9 percent year-over-year. Economists had been expecting a somewhat more modest decrease to a 1.405 million unit rate compared to the 1.467 million unit rate originally reported for the previous month.

The bigger than expected drop in housing starts was partly due to a notable decline in start in the South, which fell 11.0 percent. Housing starts fell 3.7 percent in the West and 1.3 percent in the Northeast, while starts in the Midwest edged up 2.6 percent. The Commerce Department also said that building permits fell 2.8 percent to an annual rate of 1.373 million units in July from the revised June rate of 1.413 million units. The decrease contributed to a 22.6 percent drop compared to July of 2006. The drop in building permits exceeded the estimates of economists, who had expected building permits to fall to a 1.400 million unit rate compared to the 1.406 million originally reported for the previous week.
09:45AM Wall Street opened lower on weakness among home builders and Countrywide Financial.

Wall Street posted a notable decline at opening Thursday, pressured by data showing a deepening slump in the housing market and concerns about economic growth amid worsening credit markets conditions. News that the U.S. largest mortgage lender Countrywide Financial (CFC: chart) was drawing on an $11.5 billion line of credit to fund its operations sent its stock down 13%. At the same time, the Federal Reserve injected another $17 billion of liquidity into the banking system.