In Paris BNP Paribas SA and Societe Generale SA led decliners, falling 1.5% and 2.3%, respectively. Insurer AXA was downgraded to neutral from outperform by Credit Suisse on concerns growth could be lower than expected. Company’s shares lost 1.2%.

In London miners posted heavy losses for a second straight session, with BHP Billiton falling down 1.7% and Anglo American losing 1.9%. Financials stood out among decliners again. Royal Bank of Scotland retreated 2.2%, Northern Rock slipped 5.3% on speculation it might miss profit estimates. Europe's biggest bank HSBC fell 2%. Elsewhere, sugar firm Tate & Lyle added 0.5%.


[R]11:30AM Market averages gained some ground on more cash support from the Fed.[/R]

U.S. stocks gained some ground in late morning trading on the back of a Fed Reserve's announcement related to the injection of more cash into the banking system. There were conflicting announcements concerning plans of repurchase agreement in which the Fed buys securities from dealers, who then deposit the money into commercial banks. Eventually, the Fed said it would buy $7 billion.

KKR Financial Holdings (KFN: chart) said it was selling $5.1 billion of residential mortgage loans, adding it will no longer invest in such assets. Company's shares plunged nearly 20% as it also got a downgrade from Lehman to equal-weight.

Countrywide Financial Corp. (CFC: chart), the biggest U.S. mortgage lender, fell 5.4% after Merrill Lynch downgraded the stock, with the warning that the company may have to file for bankruptcy. Again in the sector, Arbor Realty Trust (ABR: chart) slipped 3% after it was downgraded by Lehman Brothers due to its broad exposure to mortgage backed securities.

Among other stocks driven by analyst comments, Fossil (FOSL: chart) jumped 6.8% after the fashion accessory retailer was upgraded by Piper Jaffray from market perform to out perform on higher sales of its watches.

In late morning trading, the Dow Jones was up 15.61, or 0.12%, at 13,044.53, after briefly trading below 13,000 for the first time since April 25. The S&P's 500 index was up 5.10, or 0.36%, at 1,431.64, and the Nasdaq was up 6.77, or 0.27 %, at 2,505.89. Bonds were little changed, with the yield on the benchmark 10-year Treasury note at 4.73%, the same as late Tuesday.


[R]Consumer price index gained 0.1% in July.[/R]

Consumer prices saw modest growth in the month of July, according to a report released by the Department of Labor on Wednesday, with the small increase in prices coming in line with economist estimates. The Labor Department said its consumer price index edged up 0.1 percent in July following a 0.2 percent increase in June. The modest increase came in line with economist estimates of an increase of about 0.1 percent.

With the modest increase, the annual rate of consumer price growth slowed to 2.4 percent from 2.7 percent in the previous month. A notable decrease in energy prices helped to limit the upside for prices, with energy prices falling 1.0 percent in July after falling 0.5 percent in June. The decrease marked the biggest drop in energy prices since a 1.5 percent drop in January. The drop in energy prices helped to offset notable increases in apparel and medical care prices, which rose 0.4 percent and 0.6 percent, respectively.

Food prices rose 0.3 percent following a 0.5 percent increase in June. The report also showed that the core consumer price index, which excludes food and energy prices, rose 0.2 percent in July, matching the increase that was seen in the previous month and economist estimates. The year-over-year increase in core prices remained at 2.2 percent for the third straight month, lingering at the lowest level in over a year.


[R]09:45AM Wall Street opened steeply lower amid fears about global credit crunch.[/R]

Wall Street plunged at opening Wednesday, with continuous fears about a global credit crunch stifling positive sentiment, generated by data which showed the slowest consumer price inflation growth in eight months. An announcement from the Fed Reserve that it is ready to inject more cash to the banking system if needed, failed to bring relief. The Dow Jones fell below 13,000.

Shares of Countrywide Financial Corp. (CFC: chart), the biggest U.S. mortgage lender, fell 2% after Merrill Lynch downgraded the stock. Among other stocks driven by analyst comments, drinks and snacks giant PepsiCo (PEP: chart) was downgraded to neutral from buy at Goldman Sachs, with the broker citing valuation. The stock added 1%. At the same time, the broker upgraded Molson Coors Brewing (TAP: chart) to buy, sending its stock up 1.3%.

Agricultural equipment maker Deer & Co.'s (DE: chart) said its Q3 earnings rose 23% o $537.2 million, or $2.37 a share, compared with $436 million, or $1.85 a share a year earlier. H.J. Heinz Co. (HNZ: chart) projected Q1 sales growth of about 9% and earnings per share of 62 cents to 63 cents, above analyst expectations. The stock rose 3.5%.

In early trading, the Dow Jones industrial average fell 49.91, or 0.38%, to 12,979.01, trading below 13,000 for the first time since April 25. The Standard & Poor's 500 index was down 2.98, or 0.21%, at 1,423.56, and the Nasdaq composite index was down 4.43, or 0.18%, at 2,494.69. Bonds rose, with the yield on the benchmark 10-year Treasury note at 4.70% from 4.73% late Tuesday.