[R]09:45AM Wall Street opened flat, reflecting credit markets concerns and strong earnings.[/R]

Wall Street opened flat, as investors weighed up a new hit to the credit markets and some strong earnings reports. On Tuesday worries about home loan defaults renewed when American Home Mortgage Investment (AHM: chart)reported troubles with its credit lines.

Bear Stearns (BSC: chart) built on these concerns Wednesday as it is likely to face losses in July in its Asset-Backed Securities Fund after closing other two hedge funds recently. The stock dropped 1.8%.

On the earnings news frint, Mastercard (MA: chart) slipped 11.5%, despite posting better-than-expected results. The world's No. 2 credit card franchise said it swung to a profit in Q2 from a loss last year, due to higher card usage and weaker dollar. Mastercard posted profit if $1.43 a share vs. a loss of $2.30 per share a year ago, exceeding expectations of $1.3. Kraft Foods (KFT: chart) lost 0.8% although its Q2 profit rose 4%.

In the first hour of trading, the Dow fell 31.95, or 0.24% to 13,180.04 after being up more than 50 points earlier. The Standard & Poor's 500 index fell 3.91, or 0.27%, to 1,451.36, and the Nasdaq composite index fell 13.29, or 0.52%, to 2,532.98.


[R]9:00AM U.S. stock futures pointed to a lower opening, hurt by credit markets and funds.[/R]

U.S. stock futures reversed from steeper lows early Wednesday but continued indicating weak opening. The troubled credit market was in the spotlight again, alongside with funds exposed to that market and lending banks. Worries about U.S. home loan defaults affected not only Wall Street, but spread throughout global markets too.

Australia''s Macquarie Bank said that one of its funds had a monthly loss of 25% and didn''t have direct exposure to the U.S. subprime market. Bear Stearns is expected to face losses in July in its Asset-Backed Securities Fund fund with about $900 million in mortgage investments. Recently, Bear Stearns shut two hedge funds.

Among companies posting earnings before the opening bell, Time Warner (TWX: chart) edged down after it reported a 5% profit rise, while Mastercard (MA: chart) gained 4% on better-than-expected results. Owens Corning (OC: chart), building products maker, reported 88% earnings jump in Q2, due to weak housing market. Kraft Foods (KFT: chart) said Q2 profit rose 4%.

Rupert Murdoch''s media conglomerate News Corp. (NWS: chart) and WSJ publisher Dow Jones (DJ: chart) attracted attention after signing a formal merger agreement of $5 billion, or $60 a share. In other corporate news Apple (AAPL: chart) added 1% in pre-open trading as Citigroup upgraded the stock to buy from hold. It kept its price target at $160.

S&P 500 futures fell 5.4 points at 1,456.50 and Nasdaq 100 futures declined 5.5 points at 1,940.25. Dow industrial futures fell 55 points.


[R]8:15AM News Corp. and Dow Jones agreed to merge for $5 billion.[/R]

Rupert Murdoch’s News Corp. (NWS: chart) and WSJ publisher Dow Jones & Co. (DJ: chart) announced early Wednesday they signed a definitive merger agreement. Murdoch added one of the great trophies of U.S. journalism to his global media empire in a deal valued at $5 billion. The Bancroft family, which have owned the newspaper for over a century, initially rejected Murdoch''s offer in early May, but then agreed to reconsider.

Bancroft family members and trustees, representing 37% of the company''''s shareholder vote, agreed to support the deal. Another 29% of the vote is held by public shareholders, who are very likely to support Murdoch. The combined percentage will be enough to guarantee passing of the deal.

The deal is expected to expand Murdoch''''s global media and entertainment empire News Corp., which owns the Fox broadcast network, Fox News Channel, the Twentieth Century Fox movie and TV studio, MySpace, newspapers in Australia and the U.K.


[R]8:00AM New York, 1:00PM London – European companies report higher earnings but credit worries in the U.S. affect the trading sentiment.[/R]

European markets fell sharply at the mi-day trading across the region. The high yield fund losses at a subsidiary controlled by Macquarie Bank in Australia and profit declines at banks in Japan contributed to worries in the region. Bear Stearns in the U.S. is limiting high yield funds withdrawal on losses. The indexes in the region traded lower at the opening and quickly fell after four hours of trading.