4:00PM NY, 10:00 PM Frankfurt, 1:30AM Mumbai – Global Markets

Yields edged higher on 10-year U.S. bonds and closed at 5.15% and 30-year bond rose to close at 5.27%.

Crude oil gained 49 cent to close at $69.14 per barrel, natural gas down 22 cent to close at $7.13 per mBtu, and gasoline futures fell 3.99 cents to close at 228.66 cents per gallon.

Gold gained $2.80 to close at $657.00 per ounce, silver lost 7 cents to close at $13.02 per ounce, and copper futures lost $82 to close at $7,486 per metric ton.

In New York trading, three widely followed averages lost more than 1% lower on rising oil prices and bond yields. Oil price inched closer to $70 on expectations that world demand for oil will be higher than previously anticipated. U.S. bond yields rose as troubled mortgage markets showed no signs of stabilizing. Bear Stearns dropped 1.4%, Lehman Brothers lost 3%, and Merrill Lynch fell more than 2.9%. J.P. Morgan lost 1.5% and Goldman Sachs dropped 2%.

Largest private equity group Blackstone Group priced its IPO at $31 per share and raised $4.6 billion and saw its stock jump 14% at the end of first day of trading.

Delphi said that it is in agreement with the union and General Motors for a bankruptcy exit plan. Delphi in the past had sought hourly wage from union workers of $12.50 per hour from its current payment of at least $18.50. According to General Motors statement the accord, without revealing any detail, will cover 17,000 workers at Delphi. General Motors provides subsidy to the company as part of its spin-off plan.


Latin Markets fell across the region led by 1% loss in Brazil followed by 0.6% decline in Mexico, 0.3% decrease in Argentina and Chile edged 0.1% lower.

In Mexico City trading, IPC index fell after the Central Bank decided to leave the interest rates unchanged to 7.25%. The bank statement said that it is watching spread of inflation from food prices to wages and the risk remains high. The annual inflation at the end of last month fell to 3.95, above the target rate of 3%. American Movil, Cemex, and Homex fell in trading but Telmex and Coca Cola Femsa gained.

In Sao Paulo trading, Bovespa dropped 1% on worries that rising yields in the U.S. will hurt investment flows to the country. Petrobras, Tam Air, Bradesco and Itau fell in trading. Weak mining and metal stocks in European trading, dragged steel stocks lower in Brazil. CVRD, Gerdau, and Usinimas closed sharply lower.

European markets closed lower across the region on profit taking in mining and bank stocks. Lower than expected read on index of business confidence index in Germany did not help. With a loss of nearly 0.7%, Switzerland, Spain and Italy led the region in losses. Germany fell 0.2% and the U.K. declined 0.4%. There were no gainers in the European trading. For the week, most indexes in the region traded at record highs.

In Frankfurt trading, DAX Index fell 0.2% on the worries that interest rate hike may slow down the economic growth. Allianz (AZ: chart) largest insurance company, rose to a record level on the expectations that the banking unit, Dresdner Bank, may be sold. Analysts and investors are clamoring for the spin-off in the hope that the company will return to its insurance roots.

Dresdner Bank, though generating 15% return on equity, still lags 20% return in the banking industry. The bank stock is still trading 40% below its purchase price paid by Allianz in 2001. Infineon fell 2% on Merrill Lynch cutting its stock rating citing recent gains in valuation. But the broker raised its target for Allianz and said that sale of Dresdner is likely. Deutsche Bank and Deutsche Postbank lost 1%.

In London trading, FTSE index fell 0.4% as banks and brokerage stocks dropped. Royal Bank of Scotland lost 1% and the bank led consortium is to make its formal offer this weekend. Barclays fell 1.2% on the confirmation that the bank has ‘immaterial’ but some exposure to Bear Stearns troubled hedge funds. AstraZeneca lost 0.5% on the news that pharmaceutical company was ordered to pay for damages for overcharging U.S. Medicare drug plan and members of other plans. The company along with Schering-Plough and Bristol Meyers is found guilty of overcharging drug plan.

BP rose 0.7% and the company also handed over its stake in Siberian gas field to Russia controlled Gazprom. BP had invested nearly $600 million in the field and generated little production and distribution infrastructure. Pearson, the publisher of text books and newspaper Financial Times, gained 1.4% on the statement that the company has ended its talks to acquire Dow Jones & Company with General Electric unit NBC Universal. CNBC, Financial Television network and FT will explore ways to collaborate in the future.

National Grid fell 1.8% on ‘sell’ recommendation by Goldman Sachs on weak performance and lack of takeover offers.

In Paris trading Arcelor Mittal (MT: chart) fell 1.8% after the company said that steel demand in the third quarter is likely to decline but the company will not lower prices of flat steel.

Asian Markets fell after two weeks of rally lifting indexes in several countries near record levels. Today’s regional decline was led by 3.3% fall in Shanghai followed by 1.3% decline in South Korea, 0.9% in Pakistan and Sri Lanka, 0.6% in Singapore and Thailand. Japan, Philippines, India and Australia dropped a fraction. Hong Kong, the only market, in the region gained 0.2%. Banks and financial companies stocks declined across the region as worries of rising bond yields and interest rates resurfaced. D-RAM memory chip prices stabilized after rising 21% in previous two days of trading.

In Tokyo trading, property and insurance companies fell the most. Mitsubishi Estate dropped 4% followed by a 3.7% decline in Milea Holdings, and 3% loss in Mitsui Fudosan and Mizuho Bank. Automakers fell on the news that the U.S. government bill will require auto companies to sell cars and trucks that generate average 35 miles per gallon by the year 2010. Nissan dropped 0.8% and Toyota fell 0.3%. Broker downgrade led a 1.4% decline in Mitsubishi UFJ Financial. Advantest, semiconductor testing equipment makers, rose 3.5%.

In Shanghai trading, CSI Index fell 3.3% on the worries that government is likely to increase interest rates to cool rising markets. Shanghai with a total listing of 1,500 companies saw 15% of them close 10% lower, daily limit for stock price movement. China Vanke, largest real estate company, fell 3% and ICBC Bank dropped 2.1%.