4:00PM In lackluster trading and drop in retail stocks dominated the news.

-Yield on 10-year bond closed at 4.8% and 30-year bond closed at 4.94%.
-Crude oil rose 60 cents to $72.36 per barrel.
-Gold futures for October delivery closed down $4.40 to $622.60

-Asian Markets declined across the region led by 1.7% decline in Australia and 1.2% fall in Hong Kong and 1.06% drop in Singapore. India gained 1.1% on stable fuel prices.

-European Markets gained led by 0.67% gain Germany, 0.59% rise in France, 0.36% advacne in Spain and 0.25% gain in Switzerland. Norway dropped 0.5%.

-Latin American Markets advanced by a small fraction. Brazil rose 0.49%, Argentina gained 0.27% and Mexico closed near unchanged.

In a choppy trading with light volume market averages for the most of the day spent near unchanged line. The averages failed to make a headway in any direction right until the close of the day. More than 3,300 stocks traded on NYSE was with 51% volume from declining stocks and 48% volume from rising stocks. The Nasdaq trading had 3,100 stocks with 62% volume from rising stocks and 36% from falling stocks.

There are three economic reports in the morning. New home sales declined in July 4.3% from sales in June month and fell 21% from a year ago. Durable goods orders fell 2.4% in July but excluding the transportation sector the orders rose 0.5%. Initial jobless claims fell by 1,000 to 313,000 at the end of the last week.

Earnings report dominated the most active list. Chico’s (CHS: chart), the third most active stock on NYSE, fell 25% or $6.12 to $17.96 on lower than expected rise in same-store sales at flagship stores. The company reported only 3% rise in same-store sales at Chico’s after reporting double digit gains for nine years in a row. The trading volume on the stock exceeded 26.2 million shares, more than ten times normal trading volume.

SanDisk (SNDK: chart), flash memory and MP3 player maker, gained 4% to $53.01 on no news. Apple Computer (AAPL: chart) rose 50 cents to close at $67.81. The company also announced the recall of laptop batteries totaling 1 million units in the U.S. and 0.7 million in the international markets. The batteries are made by the same unit of Sony, involved with the similar recall of Dell laptop batteris. The Consumer Product Safety Commission may broaden the battery recall with other laptop manufactures using the similar batter produced by the unit of Sony.

2:00PM European markets closed higher on Italian banking mergers talk and cement company earnings and report on German GDP.
Markets in the region managed to climb higher as Swiss cement company Holcim reported better than expected eaernings. German Xetra index gained 0.67%, CAC-40 index in Paris gained 0.59% and SMH index in Switzerland gained 0.25%.

Italian bank merger news talk dominated the trading news. Sanpaolo IMI and Banca intensa are in talks to explore possible ‘merger of equals’ for $83 billion. The merger will create the largest bank in Italy surpassing Unicredit. French bank Credit Agricole owns 18% of Banca Intensa and Spanish bank Santander owns 8.7% of Sanpaolo IMI. The merger of banks in Italy is expected to accelerate with arrival of new Governor of Banca d’Italia.

Banca Intensa gained 7.5% and Saopaolo advacned 6% at the close. Capitalia and Midobaca in Italy also gained 3% and 5% respectively.

Germay’s business owners and managers reported a decline in confidence in August as reported in a survey conducted by economic institute Ifo. The indicator for the outlook for the business climate fell to 105.0 in August from 105.6 in July. At the same time Germany reported that its economy expanded in the second quarter at 0.9%. The latest economic expansion was driven by 4.6% rise in investment in construction and 2.5% gain in machinery segment. The consumer spending fell 0.4%

Holcim, swiss cement maker, fell 1.1% to SFr 98.50 in Swiss trading after reporting better-than expected earnings. The stock had run up in anticipation of better earnings. The company reported 38% rise in sales and 30% gain in earnings in the first-half earnings on the back of acqusition and price hike. The company also decided to sell its 85% stake in South African cement company.

Ericsson (ERICY: chart) has agreed to extend its current contract with Bharti Airtel, largest mobile telecom operator in India with 20 million subscribers for three years. The contract to manage network is valued at $1 billion. Bharti also has similar arrangement with IBM to manage hardware related issues. The Indian cell phone subscriber base has been growing at 40% rate in the last three years and is now over 100 million strong.

1:15PM Retail stocks decline.
Retail stocks declined after economic reports and earnings revision from Chicos and coldwater creek. While Coldwater Creek (CWTR: chart) raied its earnings guidance Chico’s reported earnings growth but its forecast for the same store sales and lowered earnings for the full year 2006 and 2007 hurt the stocks.

Chico’s (CHS: chart) is trading down $5.95 or 25% to $18.16. The stock has declined from its peak of $49.40 in February of this year. The steady decline in stock is the result of slow down in same-store sales and earnings revision.

The company reported earings for the second quarter of 30 cents vs. 27 cents a year ago, including 2 cents of options expenses in the current quarter. The sales in the quarter rose 18% to $405 million and earnings rose to $54 from $49 million.

The company also said in the press release that after nine years of double digit same-store sales growth at the flagship Chico’s stores the store chain is facing a slow down and may have a negative comp sales. The company guided flat or a low single digit same-store sales growth in the third and fourth quarter of this year. For the full-year the operating margin company expects to decline from 17% and 19% to 14% and 15%.

The company has now a portfoli of chains including flagship Chico’s, sportwear casual chain Fitigue, intimate apparel chain of stores Soma and White House/Black Market selling casual black, white and gray apparel. The recently acquired Fitigue failed to deliver expected sales grwoth in the quarter, White House/Black Market sales rose 19% but flag ship chain Chico’s sales grew only at 3%, slowest in nine years.