[R]12:00PM New York – U.S. stocks turned negative after opening higher.[/R]

Market averages opened higher in the face of weaker than expected earnings from Morgan Stanley and Palm. Stock market appears to welcome the decision by a sovereign fund controlled by China to invest $5 billion in Morgan Stanley.

Dow Jones Industrial Average lost 35.20 to 13,195.45, Nasdaq added 0.89 to 2,596.54, and S&P 500 decreased 2.68 to 1,452.30.

Morgan Stanley (MS: chart) reported fourth quarter loss of $5.8 billion compared to a gain of $2.65 billion. Diluted earnings per share swung to a loss of $3.61 billion from profit of $1.97 in the prior year.

For the year the brokerage firm reported revenue decline of 6% to $28.1 billion and earnings declined 62% to $3.44 billion. Diluted earnings per share fell 58% to $2.98.

The brokerage firm continued to reel from current malaise in the credit market. The additional $5.7 billion write-down of U.S. subprime, and other mortgage related exposures in November, and the $3.7 billion write-down as of October 31 (as announced on November 7), result in a total fourth quarter write-down of approximately $9.4 billion. In total, these write-downs reduced full year earnings per diluted share from continuing operations and the return on average common equity from continuing operations by approximately $5.80 and 19 percentage points, respectively.

China Investment Corporation also invested $5 billion in Morgan Stanley, however no details were available at what stock price the stake was sold to China.

Hovnanian Enterprises reported wider than expected loss as housing market continued to weaken. For the fourth quarter ending on October 31st the company reported a loss of $7.42 per share compared to a loss of $1.88 per share a year ago. Total loss in the quarter increased to $412 million from $115 million from a year ago. For the fiscal year 2007 the company reported a loss of $627 million compared to profit of $149 million or earnings per share swung to a loss of $10.11 from a profit of $2.14.

The Company delivered 13,564 homes with an aggregate sales value of $4.6 billion in fiscal 2007, down 24.4% from 17,940 home deliveries with an aggregate sales value of $5.9 billion in fiscal 2006. In the fourth quarter, the Company delivered 3,969 homes with an aggregate sales value of $1.3 billion in fiscal 2007, a decline of 22.0% in sales value from the fourth quarter in fiscal 2006.

The European Commission ruled that MasterCard Inc. cross border charges on cross border are incompatible with European Union rules and must drop these fees within the next six months. The Commission dictated the fine of 3.5% of daily global revenues if the fees are not removed in the required period.

MasterCard competitor Visa entered into an agreement with European Commission limiting the charges. EU is in the process of replacing country by country payment system with a Single Euro Payment System by the year 2008.


[R]6:00AM New York, 8:00PM Tokyo - Japan lowered economic growth to 1.3% from 2.1% for the current fiscal year.[/R]

Stocks in Japan snapped earlier gains after a government report slashed the economic growth forecast from 2.1% to 1.3% for the fiscal year ending March 2008.

In Tokyo trading Nikkei 225 declined 1.77% or 1,777.35 o 15,030.51 while the broader Topix Index declined 12.98 to 1,456.79.

In the first section of the Tokyo Stock Exchange 8 billion shares worth 977 billion yen were traded and 296 million shares valued at 7.3 billion yen changed hands in the second section.

Of the Nikkei 225 stocks 45 gained, 174 declined, and 6 were unchanged. Nippon Kayaku led decliners with a fall of 11.21% after the company cut its net income forecast by 30% to 6.7 billion yen for the year ending March 31.

Japan Cabinet Office lowered its annual economic growth for the current year to 1.3% from the earlier projection of 2.1%. The construction slow-down from the new Building Standards Law in June hurt the overall growth. Analysts forecast that the housing slowdown would erase 0.6% or 3 trillion yen from growth this year.

According to the report, housing investment would fall 12.7% in the year ending March 2008 but would rebound 9% next year as the industry catches up with the backlog in the activities.

In addition, private consumption growth is expected to remain unchanged at 1.3% in the fiscal 2008, while capital investment is expected to increase to 3.3% in the fiscal 2008 from 0.9% in the fiscal 2007.