[R]1:00PM NY, 5:00 PM Frankfurt European markets ended lower, dragged down by rate worries.[/R]

European stock markets finished in the negative territory on Thursday, reflecting continuous worries over global interest rates. Solid gains posted by Vodafone Group failed to lift market sentiment.

The mobile phone giant Vodafone Group rose 2.1% in London. Still in the telecom sector, France Telecom lost 1.2% after the company''s shares started to trade without rights to the company''s latest dividend payout. It also agreed late Wednesday to sell its Orange Netherlands unit to Germany''s Deutsche Telekom. Among other gainers, Dutch food retailer Ahold climbed 7.3% after it reported higher-than-expected net profit.

On the side of the losers, property group Land Securities dropped 3.6%, while Hypo Real Estate shares lost 2.2% in Germany. Shares in budget airline easyJet fell 2%, although passengers in May rose 13.8% and Goldman Sachs upgraded its stock. Air France-KLM fell 1.1% after it said passengers in May advanced 1% from a year ago.

The German DAX Xetra 30 slipped 1.4% at 7,618.61, the French CAC-40 dropped 1.5% at 5,890.49, while, the U.K. FTSE 100 fell 0.3% at 6,505.10.


[R]11:30AM U.S. market averages steeply dropped, with the Dow losing 80 points.[/R]

U.S. market averages moved steeply lower in late morning trading, pressured by mixed retail sales in May and interest rate concerns, sparked by the 10-year Treasury note which jumped over 5%. Economic data failed to lift market sentiment. The Commerce Department said inventories among U.S. wholesalers rose 0.03% in April to after increasing a revised 0.4% in March.

The Dow dropped 80 points, dragged by 3M Co .(MMM: chart) down 1.5%, Disney (DIS: chart), falling 1.9%, Home Depot (HD: chart), down 1.2% and Pfizer (PFE: chart), losing 1.1%. Among retailers, J.C. Penney (JCP: chart) fell 3.6% and Wal-Mart (WMT: chart) lost 1.5% on lower-than-expected same-store sales.

Rate-sensitive housing stocks stood out among losers, helping to lead the market lower. A notable increase by the price of oil also weighed, contributing to significant weakness in the oil-sensitive airline sector. Some utilities, gold, and biotechnology stocks also moved sharply lower. In the tech sector, Apple (APPL: chart) shares rose 2.2% to $127, helping to limit losses. The advance came after Piper Jaffray raised its price target on the stock to $160 a share from $140.

In late morning trading, the Dow Jones industrial average fell 62.25, or 0.46%, to 13,403.42. The Standard & Poor''s 500 index fell 10.74, or 0.71%, to 1,506.64, and the Nasdaq composite index fell 15.57, or 0.60%, to 2,571.61. Bonds fell sharply, with the yield on the benchmark 10-year Treasury note jumping to 5.08% from 4.97% late Wednesday.

[R]Wholesale trade rose 0.3% in April.[/R]
Thursday morning, the Department of Commerce released its report on wholesale trade in the month of April, showing that wholesale inventories rose in line with estimates while wholesale sales showed a more notable increase. The report showed that wholesale inventories rose 0.3 percent in April following an upwardly revised 0.4 percent increase in March. Economists had been expecting inventories to increase by 0.3 percent compared to the 0.3 percent increase originally reported for the previous month.

The modest increase in inventories came as a 0.5 percent decrease in wholesale inventories of durable goods partly offset a 1.6 percent increase in wholesale inventories of non-durable goods. The Commerce Department also said that wholesale sales rose 1.3 percent in April after rising 2.1 percent in the previous month. Wholesale sales of durable goods rose 0.8 percent, while wholesale sales of non-durable goods rose 1.8 percent. With wholesale sales growth outpacing wholesale inventories growth, the inventories/sales ratio edged down to 1.12 in April from 1.13 in March.


[R]9:45AM U.S. stocks opened in the negative on rate concerns.[/R]

U.S. stock market opened lower on Thursday, reflecting rising yields in the bond market and mixed retail sales reports. The 10-year Treasury note''s yield jumped over 5% in overnight trading, raising concerns that a rate cut later in the year is less probable. Mixed retail sales in May indicated that consumer spending was uncertain.

Retailers released reports on sale-store sales in May, showing a slight improvement compared to April’s generally weak sales. Wal-Mart (WMT: chart) lost 0.9% after it said its same-store sales came in slightly below estimates because of weakness in its apparel and home merchandise. J.C. Penney (JCP: chart) was a notable decliner, falling 4%, Macy''s (M: chart) slipped 2%, and Abercrombie & Fitch (ANF: chart) lost 0.6% after reporting sales below estimate.

Costco Wholesale (COST: chart), Limited Brands (LTD: chart), and Jos. A. Bank Clothiers (JOBS: chart) moved higher on better-than-expected same-store sales. However, Nordstrom (JWN: chart) dropped 1.7% despite robust results. Saks Inc. (SKS: chart) jumped 5.1% after the luxury retailer posted stronger-than-expected sales.

In deal news, a group of investors including Blackstone Group launched an improved offer for Biomet (BMET: chart), lifting it to $11.4 billion, or $46 a share. In morning trading, the Dow Jones industrial average fell 12.92, or 0.10%to 13,452.75 a day after falling nearly 130 points. The Standard & Poor''s 500 index fell 3.76, or 0.25%, to 1,513.62, and the Nasdaq composite index fell 4.51, or 0.17%, to 2,582.67.

Bonds fell sharply, with the yield on the benchmark 10-year Treasury note jumping to 5.04% from 4.97% late Wednesday.