[R]3:00PM New York – Market averages are trading with losses of 1% with less than one of hour of trading.[/R]

Stocks in New York trading fell sharply on earnings miss from Google and Caterpillar and continued worries related to bank exposure to mortgage markets. Nasdaq, Dow, and S&P 500 fell at least 1% dragged by financials and tech stocks. Market recovered from its mid-day losses but still struggled on summer Friday. The relatively higher trading volume reflected options and derivatives expiration.

Google, Caterpillar, Citigroup earnings failed to impress the market. Indexes and stocks fell at the opening. Citigroup and Wachovia Bank reported higher earnings but left investors wondering how many bridge loans at these banks are likely to go sour.

Advanced Micro Devices (AMD: chart) fell 1% after reporting a loss of $1.09 per share or $600 million in the second quarter. Unit shipments of chips rose 38% on heavy discounting to win market share battle with industry leader Intel.

SanDisk (SNDK: chart) jumped 3.6% after reporting earnings of 12 cents per share lower than the expectations of 15 cents. The company guided higher gross margins and better pricing environment for the rest of the year. The revenue in the quarter jumped 15% but earnings declined to $28 million from $96 million a year ago.

Sherwin Williams (SHW: chart) dropped 1.7% after reporting second quarter earnings of $202 million of $1.52 per share compared to a year ago of $184.5 million or $1.33 per share. Net sales in the quarter gained 3.2%.

Wilmington Trust (WL: chart) reported second quarter earnings of $48.9 million or 70 cents per share, 4% and 5% increase respectively from a year ago. The stock, one the few that managed to rise, increased 2% in trading.


[R]2:00PM New York, 7:00PM London – European shares decline led by sell-off in Spain and Germany.[/R]

European Markets closed lower across the region led by 1.8% drop in Spain and France followed by 1.5% decline in Germany and Italy, near 1.0% fall in the Netherlands and Switzerland, and 0.8% decrease in the UK. Tech companies’ earnings, rising euro in international markets, and worries related mortgage bonds in the U.S. failed to overcome strength in mining sectors.

In Madrid trading Ibex 35 index fell 1.82% to 14,930.10 on steep fall in construction companies, telecom, and banks. ACS, homebuilder fell 2.4% after an insurance group sold part of its stake in the company and plans to sell the rest. The news dragged Fomento Construction by 1.8% and Sacyr Vallehermoso by 1.5%.

In Frankfurt trading Dax Index dropped 1.46% to 7,874.85 on fall in bank, DaimlerChrysler, and Siemens. Deutsche Bank declined 2.2% and Commerzbank lost 2.8% on worries in the financial sector related to exposure to the U.S. mortgage market. However, domestic market focused bank IKB increased 1.9% after reporting 15% rise in profit in the fiscal first quarter and guiding higher operating profit for the year to 280 million euros. DaimlerChrysler fell 2.5% ahead of talks with the union for its Chrysler division. Siemens lost 2.5% on worries that rising euro will curb earnings in the international markets. Update software jumped 6% on the earnings jump of 90% on sales rise of 8%.

In London trading FTSE 100 fell 0.83% to 6,585.20 on takeover news and fall in Cable & Wireless, but mining stocks advanced. Cable & Wireless fell 3.6% after Caribbean operator and Ireland based wireless telephone services Digicel. The company claims in the filing that C&W uses its market domination to limits its entry into several Caribbean nations. Friends Provident, increased 4.3% on rumors that Paris based AXA is likely to make bid for the money management arm of the insurance company. Kingfisher and BAE Systems jumped a fraction on broker recommendation. Debenhams lost 4% after the controlling shareholder in the House of Fraser declined interest in the company. Mining stocks gained on takeover speculation in the industry lifting Antofagasta by 1.1% and Kazakhmys by 1%.

Recently listed shares of MF Global (MF: chart), brokerage unit of Man Group continued to decline in New York on the second day. The stock dropped 5% at mid-day trading in New York on top of 10% plunge on its first day of trading. The company was priced at $30 after revising its offer price downwards from $36 to $38 per share.


[R]1:00PM New York – China raises interest rates for the third time this year, but may not manage to cool the fast rising economy.[/R]

The People’s Bank of China reported one year borrowing rate and deposit rates by 0.27% to 6.84% and 3.33% respectively. The central bank has targeted inflation rate at 3% but the rate in June jumped to 4.4% on higher food and energy prices. China is worried that fast rising food prices may prompt wage hikes yielding the temporary rise in food prices to a permanent inflation. Reflecting the recent rises in interest rates, the currency yuan has increased 1.6% in the second quarter in addition to 1% rise in the first quarter. The bank also lowered tax to 5% from 20% on interest earned from fixed deposit to make them more attractive to stocks. The net yield for the deposits, as of Aug 15, will rise to 3.16% from 2.66%.

With yields so low in the bank deposits, investors have pulled money from banks and invested in the stock market lifting the Shanghai CSI index more than 60% this year on top of 89% rise in the year 2006.

Retail sales in China are growing at 34% on rising wages and rising purchases of furniture, household goods, and automobiles.

[R]12:30PM New York, 11:00PM India – Sensex Closes higher on telecom stocks and earnings from Larsen & Toubro.[/R]