U.S. MARKET AVERAGES

The U.S. averages lost ground in early morning trading as crude-oil took the upward direction ahead of oil inventory report, expected to show huge declines in crude and gasoline supplies after Katrina.

The market was also driven by a number of M&A news, including News Corp.’s $650 million purchase of IGN Entertainment and the possible acquisition of Skype Technology by eBay. Investors ignored a surprising drop in first-time jobless claims, or 319,000 for the week ended on Sept 3, which is 1,000 less than the previous week.

The Housing sector has declined by 2.9% on disappointing news from Hovnanian Enterprise. The retaler sector dropped 1.3%. Insurance and Internet stocks also lost ground.

The gold sector is the leading gainer, jumping 2.2%, the highest level since mid-March.
Energy stocks made modest gains.

The 3 major U.S. equity indices are each showing losses of about 0.4%. Dow -37.10, Nasdaq -8.87, S&P 500 -4.97. NYSE Adv/Dec 769/1539, Nasdaq Adv/Dec 805/1547.

On the bond market, long-term Treasury prices rose, sending yields lower. The benchmark 10-year note, which is used to set mortgages, was up 5/32 at 101 1/32, with its yield at 4.12% vs. 4.14% on Wednesday.

MOVERS AND SHAKERS

Northwest Airlines Corp. (NWAC: chart) advanced 5.9% in pre-market dealings as a result of rising hopes that the company may solve the problems with its striking mechanics.

eBay Inc (EBAY: chart) was down 2.7% in pre-market trading because of the rumors that it intents to buy Internet phone service Skype Technologies SA.

News Corp. (NWS: chart) rose 0.64% after the company said it acquires IGN Entertainment Inc. for about $650 million.

Ford Motor Co. (F: chart) is expected to announce the sale of its Hertz Corp. unit to a group of corporate buyout firms. The company rose 1.4% in pre-market trading.

Sears Holdings (SHLD: chart) lost 3.6% as it announced a 4.4% decline in same-store sales for the second quarter.

Coca-Cola Enterprises Inc. (CCE: chart) was down 3.9% in pre-market dealings after it said third-quarter earnings won't reach analysts’ estimates of 51 cents per share.


ECONOMIC NEWS

On the data front, first-time claims for state unemployment benefits fell by 1,000 to 319,000 last week, the Labor Department estimated.The four-week average of new claims rose by 2,000 to 318,500, the highest in seven weeks. The figures include about 10,000 claims related to Hurricane Katrina, a Labor Department spokesman said, adding that upward revisions to last week's data are possible.

July wholesale trade data are due out at 10 a.m. ET and consumer credit numbers for July are slated for release at 3 p.m. ET.


INTERNATIONAL MARKET NEWS

Asian-Pacific benchmarks closed mixed on declining crude-oil prices to a three-week low. The Nikkei shed 0.56% as investors sold steel, bank and real estate issues, the central bank said that it would keep monetary policy and national elections approached. Across the region Hong Kong’s Hang Seng lost0.38%, while South Korea’s Kospi reached a record high, rising 0.2% on interest-rate hikes speculations. The dollar bought 110.40 yen.