10:00AM New York, 2:00PM London – European markets traded lower on the fall out from the U.S. mortgage bonds losses and weakness in Asian trading.

European markets declined after the first four hours of trading in the region. Norway led the region with a loss of 1.9% followed by 0.7% decrease in France, a 0.45% decline in the Netherlands. Spain and Switzerland lost 0.2%. Germany and the U.K. bucked the regional loss with a gain 0.2%.

In London trading FTSE 100 increased 8 to 6,232.00. The index lost its earlier gain of nearly 20 points. Of the 102 stocks listed in the index 38 were trading higher, 61 were trading lower, and 3 were unchanged at mid-day trading.

Imperial Chemical gained 1.1% after the news that Akzo Nobel and Henkel KGaA have agreed to offer 8 billion pounds or 6.70 pounds per share. The consortium of Dutch and German companies revised bid is designed the break ICI into separate business groups. Electronic materials and adhesives groups will be purchased by Henkel for 2.7 billion pounds.

Standard Life rose 3% leading all members of the FTSE 100 index followed by 2.7% gain in International Power. The power generation company has acquired wind farms in Italy and Germany. GlaxoSmithKline, AstraZeneca, and British American Tobacco gained more than 1%. Punch Taverns and Man Group fell 4%, leading the decliners in the index. Miners including Lonmin, Kazakhmys, Rio Tinto, and BHP dropped more than 2% on the falling metals prices in European trading.

In Frankfurt trading DAX index gained 0.2% or 14.5 to 7,451 at mid-day trading. Of the 30 member stocks 11 declined and 19 gained.

Munich Re second quarter earnings increased to 1.14 billion euros from 1.12 billion euros a year ago and raised its earnings forecast for the year between 3.5 billion to 3.8 billion euros from 3.0 billion to 3.2 billion euros. Net premiums earned in the quarter rose 0.6% to 8.86 billion euros in the quarter.

Infineon Tech led the decliners with a loss of 2.5% followed by 2% decline in Thyssen Krupp and Daimler AG. Hypo Real Estate, Deutsche Post, and Deutsche Bank fell 1.5%. Merck KGaA and Volkwagen gained led the gainers on the index with a rise of 2.6%. Infineon said that chief finance officer of the company has been asked to leave. Siemens rallied nearly 1% on the news that it has won 350 million euro order from Kuwait Ministry of energy. Deutsche Wohnen and Leoni AG gained on broker upgrade and recommendations.


09:45AM Wall Street rallied at opening, but lost steam amid credit concerns.

Wall Street rallied at opening Monday but shortly afterwards erased gains amid growing concerns over credit markets and the impact of subprime mortgages on financial institutions. Credit worries were underlined by American Home Mortgage (AHM: chart) which dropped 36% after bankruptcy filing.

Bear Stearns (BSC: chart) fell 4% after defending its actions in the credit market and laying off a key executive. Merrill Lynch (MER: chart) traded near the flat line after UBS upgraded the stock to a buy rating. TD Ameritrade (AMTD: chart) was another stock that got an upgrade from UBS. Its shares edged down 0.2%.

In earnings-related news, UnitedHealth Group (UNH: chart), health insurer, rose 1.5% after raising its earnings forecast for 2007. Cooper Tire & Rubber Co. (CTB: chart) climbed 38% as it swung to a better-than-expected Q2 profit, driven by higher prices in North America and strong growth in Europe and Asia.

In the first hour of trading, the Dow Jones industrial average rose 40.32, or 0.31%, to 13,222.23. The Standard & Poor''s 500 index rose 2.09, or 0.15%, to 1,435.15, and the Nasdaq composite index fell 2.34, or 0.09%, to 2,508.91. The yield on the 10-year note rose to 4.69% from 4.68% late Friday. Bond prices move opposite their yields.


09:00AM U.S. stock futures pointed higher, helped by Merrill lynch upgrade.

U.S. stock futures advanced slightly on Monday, lifted by gains in the troubled financial services sector and speculations that the Fed Reserve will soothe economic fears and decide on interest-rate policy that will be favorable to the economy’s health. The Fed is expected to keep its benchmark target range unchanged at 5.25%.

The positive news for financial stocks was brought by Merrill Lynch (MER: chart) which gained 1.8% in pre-market trading after UBS raised its rating on the shares of the brokerage to a buy from neutral. TD Ameritrade (AMTD: chart) was also upgraded by UBS, pushing its shares up 3%.

However, investors remained somewhart cautious over the prospect of more worrying developments in housing. American Home Mortgage Investment (AHM: chart) dropped 35% after it filed for Chaper 11 bankruptcy protection on Monday. The co-president of Bear Stearns Cos. (BSC: chart) resigned shortly after a rating company warned mortgage credit problems could hurt the investment bank''''s profits.

On the earnings news front, Warren Buffett''''s Berkshire Hathaway (BRKA: chart) posted a 33% profit jump amid a strong performance from its insurance businesses. Other companies scheduled to release earnings include Conseco (CNO: chart) and EMC (EMC: chart). S&P 500 futures were up 4.6 points. Dow Jones industrial average futures rose 19 points, and Nasdaq 100 futures gained 6 points.