[R]1:00PM NY, 5:00 PM Frankfurt European markets closed down, dragged by rate worries. Banks and miners led decliners.[/R]

European stock markets finished in the negative territory on Wednesday, pressured by weakness among banks and miners amid much weaker-than-expected U.S. durable goods data.

Rate-sensitive mining and financial-services stocks led decliners, with shares of miner BHP Billiton down 2.8% and insurer AXA falling 0.9%. Interest rates also dragged British mortgage lender Northern Rock. Shares of the lender dropped 12% after it said it expects growth of about 15% in underlying attributable profit for 2007, lower than the 17% growth rate expected by analysts. Rivals Bradford & Bingley and Alliance & Leicester also posted losses, falling more than 2.6% in London.

In merger-and-acquisition news, ProSiebenSat.1 Media climbed 4.1% after the German broadcaster agreed to buy SBS Broadcasting Group from private-equity groups and the Dutch government for 3.3 billion euros. Among other stocks posting gains, shares of utilities Gaz de France and Suez rose 3.7% and 1%, respectively, after the French government said all options remain open for reviewing the merger talks between the two companies. The U.K.'s FTSE 100 closed down 0.5% at 6,527.60, the German DAX lost 0.8% at 7,801.23 and the French CAC-40 slipped 0.2% at 5,941.76.


[R]11:30AM Market averages turned mixed on rate worries. The Nasdaq advanced, helped by Oracle, AMD.[/R]

U.S. market averages traded in a lackluster fashion, reflecting strength in the tech sector, weak economic data, as well as continuous worries about the subprime mortgage market and hedge fund woes. Investors were also unwilling to make big moves ahead of the Fed Reserve’s decision on interest rates.

The Nasdaq moved notably higher, as Oracle (ORCL: chart) gave tech shares a boost with 2% gain on better-than-expected earnings. The tech-heavy average was also supported by strength in the semiconductor sector. Advanced Micro Devices (AMD: chart) rose 2.5%, standing out as one of the sector's best performances. At the same time, Dow components Caterpillar (CAT: chart), down 2.2%, Boeing (BA: chart), down 0.6%, and Alcoa (AA: chart), down 0.7% dragged the blue-chip average.

Banking, oil and hardware stocks moved to the downside, while semiconductors and utilities gained. The weakness in the oil sector continued despite rallying crude oil futures after weekly data showed a drop in gasoline inventories. In merger-and-acquisition news, Guitar Center (GTRC: chart) soared 19% after it agreed to be bought by affiliates of Bain Capital Partners LLC, a private investment company, in a deal worth approximately $2.1 billion.

The Dow Jones industrial average fell 5.61, or 0.04%, to 13,332.05, after dropping about 80 points in earlier trading. The Standard & Poor's 500 index gained 0.41, or 0.03%, to 1,493.30, and the Nasdaq composite index advanced 6.55, or 0.25%, to 2,580.71. Treasury bonds rose following the weak durable goods. The 10-year Treasury note's yield fell to 5.06% from 5.09% late Tuesday.


[R]Durable goods orders dropped 2.8% in May.[/R]

Wednesday morning, the Department of Commerce released its report on durable goods orders in the month of May, showing that orders for manufactured goods meant to last at least three years fell much more than economists had been expecting. The report showed that durable goods orders fell 2.8 percent in May following an upwardly revised 1.1 percent increase in April. Economists had been expecting orders to fall by 1.0 percent compared to the 0.8 percent increase originally reported for the previous month. The bigger than expected drop in durable goods orders was largely due to a steep drop in orders for transportation equipment, which fell 6.8 percent in May after falling 1.8 percent in April. A 22.7 percent drop in orders for commercial aircraft and parts contributed to the decline.

The Commerce Department said that excluding orders for transportation equipment, durable goods orders fell by a more modest 1.0 percent in May compared to a 2.5 percent increase in the previous month. Notable decreases in orders for primary metals, heavy machinery, and electrical equipment, appliances, and components also contributed to the bigger than expected drop in durable goods orders. At the same time, the report showed a notable increase in orders for defense capital goods, which rose 6.7 percent in May after coming in unchanged in April. Excluding orders for defense, durable goods orders showed a 3.2 percent drop. The report also showed that shipments of durable goods rose 0.4 percent in May following a 2.0 percent increase in April, while inventories or durable goods edged up 0.2 percent after a 0.4 percent increase in the previous month.


[R]9:45AM Wall Street opened lower on weak durable goods orders and nervousness ahead of Fed’s decision on rates.[/R]

Wall Street opened in the negative, pressured by much weaker-than-expected durable goods orders and cautiousness ahead of the Fed Reserve's two-day meeting on interest rates. The Commerce Department reported that durable goods orders in May dropped by 2.8%, a steeper drop than the decline of 1.7%, anticipated by investors. The weak data sparked concerns that the U.S. economy will not recover from its recent slowdown.

The downward trend was bucked by positive earnings releases, indicating stronger corporate profit growth in Q2. Conagra (CAG: chart) added 1.7% after reporting a Q4 profit of $192 million, or 39 cents per share, vs. a profit of $59.2 million, or 11 cents, a year ago. Quarterly results beat estimates of earnings of 31 cents per share on revenue of $2.83 billion.

Among other earnings-related movers, Nike Inc. (NKE: chart) posted 325 profit increase in the most recent quarter compared to the year-ago period. Nike rose 4%. Among tech stocks, Oracle Corp. (ORCL: chart) reported 23% profit rise and said that said sales in the current quarter may rise more than expected. Shares gained 2%.

The Dow Jones industrial average fell 56.99, or 0.43%, to 13,280.67. The Standard & Poor's 500 index fell 7.77, or 0.52%, to 1,485.12, and the Nasdaq composite index fell 5.19, or 0.20%, to 2,568.97. Treasury bonds rose after the weak durable goods data drove investors to the safe-haven assets. The 10-year Treasury note's yield fell to 5.04% from 5.09% late Tuesday.