[R]4:30PM New York, 10:30PM Frankfurt, 2:00 AM Mumbai[/R]

Market averages in New York fell sharply after earnings report from Wal-Mart and Home Depot. Sentinel hedge fund has asked government agency approval to halt withdrawal from its fund.[/R]

Dow Jones Industrial Average dropped 1.3% or 167.45 to 12,861.47, Nasdaq lost 1.6% or 40.29 to 2,458.83, and S & P 500 lost 1.4% or 19.84 to 1,406.70.

FTSE 100 Index in the U.K. closed down 34.20 or 0.56% to 6,109.30, in Tokyo Nikkei 225 closed at 16,475.61, down 2.19% or 369, and in Brazil, iBovespa Index near the market close traded down 3.19% to 49,285.30.

Yields edged lower on 10-year U.S. bonds and closed at 4.72% and 30-year bond rose to close at 5.02%.

Crude oil increased 95 cents to close at $73.33 per barrel, natural gas closed down 8 cents to $6.86 per mBtu, and gasoline futures increased 3.5 cents to close at 200.88 cents per gallon.

Gold was unchanged in New York trading at $679.70 per ounce, silver lost 19 cents to close at $12.55 per ounce, and copper futures increased $148.00 to close at $7,487.00 per metric ton.

In New York trading stocks fell at the opening and continued slide in the afternoon trading. The last hour saw a steep decline in market averages. Investors sold for the third day in a row stocks in banking, brokerage, home builders, mortgage lenders, and retail sectors. Several stocks in these sectors now trade 40% lower from their peaks in April of this year. Bear Stearns fell 2.5% to two-year low price of $103.15 and Lehman Brothers declined 4% to $51.57 to 21-month low. Countrywide Financial dropped 13% to $21.29 on downgrade to ‘sell’ from ‘buy’ by Merrill Lynch.

The Fed pumped $7 billion liquidity in the financial system through repo purchases. The added liquidity did lower the interest rate in the bond market but has not calmed the credit market jitters. The riskier end of the credit market in the mortgage bond market remains shut for the most borrowers. The added liquidity may just add more fuel to the inflation fires.

Weekly oil report showed that crude oil inventory fell 5.2 million at the end of last week and that of gasoline dropped 1.1 million but that of distillate inched higher by 0.2 million. The chained consumer price index for July decreased 0.1% and was up 0.1% on seasonally adjusted basis following 0.2% increase in June. The core rate, excluding energy and food, increased 0.2% in the month, same as in the month of June.

Home builders stocks fell for the fifth day in a row. Beazer Homes plunged 8% and has now declined 73% from its peak near $38 reached on May 24th, D R Horton fell 5%, Pulte Homes dropped 3% today after losing 15% in the last two trading days, Lennar declined 4% and is now trading at 4-year low, and Toll Brothers declined 4% to $21.78 to 3-year low. Countrywide Financial fell nearly 13% after Merrill Lynch downgraded the stock. The stock is now trading 50% lower from it peak at the end of January. Washington Mutual fell 4.5% after losing 10% in previous three sessions to $32.57. The stock is trading at 66-months low.

Of the 30 stocks in Dow Jones Industrial Average 29 closed lower and 1 advanced. General Motors fell 5.4% and led the decliners in the index followed by 3% or more losses in Alcoa, Honeywell, Caterpillar, and Intel. Johnson & Johnson edged a fraction higher.

Of the stocks in S&P 500, 424 stocks closed lower and 73 gained, 3 stock closed unchanged. Home builders, mortgage lenders, rail roads, banks, and retailers stocks dominated the losers list. Countrywide led the stocks in the index with a loss of 13% followed by 11% decline in Agilent Technology, and 7% decreases in Ambac, E*Trade, LSI Corp, Freeport McMoran, and CSX. Genworth Financial, H J Heinz, and TJX led the index stocks with a gain of more than 3%.

Asian markets fell precipitously as fears emanating from U.S. mortgage markets spread in the region. In the overnight trading broader averages fell nearly 2%, dragging the regional markets lower. Indonesia led the region with a loss of 6.44% after dropping 2% in the previous session, followed by losses of 4.1% in Philippines, 3.6% in Taiwan, and 3.3% in Australia. Hong Kong fell 2.8% and Japan dropped 2.2%.

In Latin Markets trading Argentina led the region with a sharp loss of 5.2% followed by Brazil with a loss of 3.2%, 2.6% decline in Mexico, and 2.4% decrease in Chile.


[R]1:00PM NY, 5:00 PM Frankfurt European markets closed lower amid weakness in the financial sector.[/R]

European stock markets finished in the negative Wednesday for a second day in a row, dragged down by continuing weakness in the financial sector. Banking firms Deutsche Bank and UBS were under pressure amid concerns about the impact of U.S. subprime mortgage market troubles. France fell 0.7%, followed by the U.K which declined 0.6% and Germany, losing 0.3%.

The defensive food and beverage sector was one of the very few gainers, boosted by a 9.5% rise in the shares of Swiss food group Nestle. Personal goods manufacturer Unilever was another food and beverage company on the rise, moving up 1.8%.

In Frankfurt Deutsche Bank was a notable decliner. The bank fell 1% after Merrill Lynch downgraded its stock to neutral from buy. On the positive side, Bayer jumped 5.1% amid speculation that Novartis may bid for the chemical and pharmaceutical manufacturer. E.On shares rose 1.2% after the water utility posted in-line-with expectations quarterly earnings and held onto its 2007 guidance.