U.S. Stocks in Focus
NEW YORK - U.S. stocks were lower early Tuesday, following news of a larger-than-expected decline in monthly existing home sales, as investors watched energy prices and the financial sector following more management turmoil at Citigroup.

The Dow Jones Industrial Average was down 30 points at 10,539, the S&P 500 down 2.56 points at 1,219, and the Nasdaq Composite down 2.21 points at 2,139.

Volume was slight with 183 million shares trading on the New York Stock Exchange and 246 million shares moving in the Nasdaq market.

Shares opened mixed, but all three major averages turned negative around the time the homes sales data was released.

The National Association of Realtors said sales of previously owned U.S. homes fell 2.6% in July to a seasonally adjusted annual rate of 7.16 million, the third highest level ever.

The result pointed toward a still booming housing sector, but was beneath the forecast of economists polled by MarketWatch for 7.29 million sales.

Strategists cautioned against reading too much into the morning's market action, given that volume is light and many market players are absent for late August vacations.

However, there are concerns that the market is range-bound and there are few catalysts on the horizon to send it higher, according to Barry Hyman, equity market strategist at Ehrenkrantz, King & Nussbaum.

Since April the S&P 500 has been trapped in a range of 1,219 to 1,250. On Tuesday it was near the bottom end of the range. The market remains trained on the question of whether recent record high energy prices have slowed consumer spending, Hyman said, noting that many recent attempts at rallies have been tabled by soaring crude oil prices.

The benchmark Treasury 10-year note last was up 4/32 at 100-14/32 with a yield of 4.196%, after the home sales data.

U.S. Stocks to follow

Shares of Dow component Citigroup fell 39 cents to $43.81 after news that Marge Magner, a protégé of Sandy Weill's who ran Citigroup's consistently profitable consumer division, will step down at the end of September.

Another Dow component, Intel rose 9 cents to $26.17 ahead of a speech by the company's chief executive, Paul Otellini. He will discuss strategic plans during the Intel Developer Forum, a semi-annual gathering of chip engineers and designers.

Wachovia Corp. is studying a bid for independent auto finance company WFS Financial Inc, the Wall Street Journal reported Tuesday, though the report also said another suitor for WFS may come along. WFS Financial rose 14%.

Lucent was up 11 cents at $2.98 after Prudential Equity Group upgraded telecommunications-equipment provider to overweight from neutral weight, saying continued wireless momentum should boost earnings in the fourth quarter of 2005 and the first quarter of 2006. The broker also told clients it feels the company could bring its headcount down by as much as 20%. The stock was up 11 cents at $2.98 before the opening.

Sears Holding Corp. was off 7 cents at $136.43 following news that federal securities regulators charged two former chief officers of Kmart with financial fraud Tuesday, claiming they misled investors about the company's financial condition in the months leading up to bankruptcy. Sears Holdings was formed when Kmart acquired Sears.

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Forex - Yen gives back some gains but favorable outlook intact.

CHICAGO - The U.S. dollar clawed back against the yen Tuesday but optimism for the Japanese currency tied to political and economic developments remained intact.

The greenback was little changed against its chief European counterparts following the release of closely tracked German economic figures and ahead of a U.S. report expected to show only slight moderation from record existing home sales.

The yen has gained strength against the dollar of late on expectations for financial system reforms led by Prime Minister Junichiro Koizumi ahead of the snap election he has called for Sept. 11, as well as on some reciprocity from China's revaluation of the yuan.

The yen returned some gains against the dollar on Tuesday as traders looked to book profits.

In morning U.S. trading, the dollar was up 0.4% from where it stood late Monday, at 110.08 yen. The dollar reached as high as 113.71 yen on July 20.

Deutsche Bank told clients in a note released Tuesday that the yen has benefited from gains for the benchmark Nikkei 225 stock index.

Foreign-exchange "traders continue to be in awe of the roaring Japanese stock market," the analysts said. "Combine this with a new poll showing a favorable approval rating among businesses for PM Koizumi and one can understand why short-term traders have plunged back into short-dollar positions."

The dollar had fallen earlier against the euro, but was trading unchanged, with the common currency changing hands at $1.2219, in recent trading.

A second reading of second-quarter German gross domestic product again showed flat quarterly growth. But a closely tracked sentiment index from Germany, the euro-zone's largest economy, proved more upbeat. The ZEW poll of investor expectations in August rose higher than forecasts, to a 17-month-high 50 from 37 a month ago.

"Everyone sees this as a lift to the euro when in fact it could very well be the euro's descent and competitive benefits reaped [from a weaker euro] that have been at the root of the recent improvement in German sentiment," said Merrill Lynch economist David Rosenberg.

The euro had shed some 10% against the dollar this year but has stabilized over the past several weeks. "Economic optimism in Germany may have been fueled by the development of the world economy, which continued to be sound in spite of high oil prices, but also by first signals of a revival of domestic demand," the ZEW said.

Indeed, in the release of second-quarter GDP, domestic demand rose 0.3% from the first quarter, Germany's Federal Statistical Office said. However, a rise in imports outstripped export gains that had boosted the Germany economy in the first quarter.

The dollar was up 0.1% against the British pound; one pound was worth $1.7908 in morning U.S. trading.

"There's little on the economic calendar in the U.K. to provide direction for the pound, although in the absence of anything else, an optimistic outlook from U.K. housebuilder Persimmon may be lending some support as cable [pound-dollar] continues to trade close to the key $1.80 level," said Nas Nijjar, a senior foreign-exchange dealer in New York, for London-based CMC Group.

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Europe at a Glance
LONDON - Leading shares remained weak at midday with little in the way of positive news to spark interest in a typically uninspiring summer session, dealers said.

At 11.50 am, the FTSE 100 was down 17 points at 5,300.4, above this morning's session low of 5,295.

The broader indices were also lower with the exception of the FTSE 250 which was 8 points higher at 7,700.6.

Volume remained light, with 850.5 mln shares traded in 65,450 deals, with most City desks light staffed due to the summer holidays.

PARIS - Share prices were firmly lower midday in thin trade, in line other European bourses, as US futures pointed down, with heavyweight Total leading stocks down on profit-taking, dealers said.

At 12.13 pm the CAC-40 Index was down 37.89 or 0.84 pct at 4,448.05. Volume was 940 mln euro.

On the Matif, August CAC-40 futures were trading down 39 at 4,452.5.

FRANKFURT - Shares were lower in midday trade after an uninspiring performance in the US overnight, as oil prices rose in Asia this morning, and amid a dearth of local corporate news, though TecDAX-listed biotech companies Evotec and Medigene soared on takeover speculation, dealers said.

While the ZEW research institute's economic expectations index for August, which rose by 13.0 points to +50.0 in July compared to expectations of a rise to +38.0, pushed the DAX higher briefly, the index soon returned to its earlier levels.

At 11.55 am, the DAX 30 Index was 30.99 points or 0.63 pct lower at 4,910.70, having moved between 4,897.14-4,926.33 so far this session.

The MDAX was at 6,767.87, down 38.22 points or 0.56 pct, while the TecDAX was at 581.80, down 2.10 points or 0.36 pct.

The DAX futures were at 4,919.00, down 11.00 points or 0.22 pct, while the bund futures were at 122.98, down 0.27.

AMSTERDAM - Share prices traded slightly lower in early afternoon trade with oil stocks among the strongest decliners, ahead of an expected lower opening on Wall Street, dealers said.

At 12.56 pm, the AEX Index fell 2.34 points or 0.59 pct to 392.33, after opening at a high of 393.63 and reaching a low of 392.08.

Government bonds traded broadly lower, while the euro was virtually unchanged at 1.2234 usd from 1.2223 usd late yesterday.

Trading was subdued as investors remained sidelined amid a lack of direction from Wall Street overnight and in the absence of major corporate news, dealers said. They noted the index will likely stay in negative territory for the remainder of the session as US futures are pointing south.

STOCKHOLM - Share prices were slightly lower in midday trade on profit-taking, with Handelsbanken leading the market lower after its first half results, dealers said.

At 12.45 pm, the Stockholmsboersen All-Share Index was down 0.66 pct at 269.01, while the OMX index was down 0.74 pct at 860.51. Turnover was 6.40 bln skr.

MADRID - Share prices were lower in thin midday trade on weak US futures and oil price concerns with the broad market lower while Altadis outperformed, dealers said.

At 12.22 pm, the IBEX-35 Index was down 56.7 points at 10,118.1, after trading in a range of 10,107-10,160 on light turnover of 495 mln eur, with put-throughs accounting for about 8 pct.

The IBEX-NM lost 1.2 points to 2,649.0.

COPENHAGEN - Share prices were lower in midmorning trade, led down by falls in AP Moeller-Maersk and Novo Nordisk, while Topdanmark was higher ahead of its interim earnings report, brokers said.

At 11.15 am, the KFX Index was 1.75 points lower at 372.33 and the KAX All Share Index was 1.15 points lower at 343.86.

ZURICH - Shares were down heavily midmorning, tracking other European markets after oil hit 66 usd per barrel, led by tech stock Kudelski ahead of results tomorrow and market heavyweight Nestle, dealers said.

At 11.08 am, the SMI was down 45.92 points at 6,577.37 and the SPI was off 32.86 at 5,019.02.

The euro was higher against the franc, last at 1.5538 sfr, as was the dollar, at 1.2706 sfr.

MILAN - Share prices were lower in thin midday trade, led by losses among oil sector stocks; while Fiat reached its new yearly highs ahead of crucial events in September, dealers said.

At 12.23 pm, the Mibtel Index fell 0.49 pct to 25,698 points, the S&P/Mib was down 0.60 pct at 33,530, and the Mib30 down 0.58 pct at 33,511.

Volumes stood at 992 mln eur.

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Asia at a Glance
BEIJING - A summary of Asian economic and corporate news at 1000 GMT:

JAPAN:

• Global chip production capacity in Q2 up 2.1 pct over Q1 - SICAS Japan
• Mizuho to repay 693 bln yen-worth of public debt
• Toshiba, Sony to go ahead with rival next-gen DVD formats after talks fail
• Asahi Glass H1 to June net profit 44.92 bln yen vs 59.46 bln yen
• Asahi Glass H1 net drops 24 pct on lower prices, lack of special gains
• Hikari Tsushin Q1 to June net profit 4.17 bln yen vs 4.33 bln
• Sumitomo Corp's debt rating upgraded to 'A-' from 'BBB+' - Fitch
• Marubeni to be delisted from two stock exchanges

HONG KONG:

• July composite CPI up 1.3 pct on yr vs 1.2 pct rise in June
• CLP Holdings H1 net profit 4.58 bln hkd vs 4.14 bln
• ZTE Corp H1 net profit 660 mln yuan vs 724 mln
• China Mengniu Dairy H1 net profit 246.53 mln yuan vs 184.08
• SIM Technology H1 net profit 109.53 mln hkd vs 48.62 mln
• China Everbright auditors quit over audit fee disagreement
• Bank of Communications appoints HSBC's Peter Wong as director
• Dragonair July passenger traffic up 10.3 pct yr-on-yr

SINGAPORE:

• July CPI up 0.1 pct yr-on-yr; up 1.1 pct vs June
• Global airport capacity shortage seen by 2020 - ACI
• Singapore Airlines says fuel surcharge increase 'under review'
• Singapore Airlines signs 10-yr service agreement with GE
• Singapore Exchange, CBOT may launch commodities derivatives exchange
• Jaya seeks another site for Chinese shipyard because of delays
• MAS orders DC William to halt insurance broking activities
• Asia Enterprises launches IPO of 68 mln shares at 0.27 sgd each
• Malaysia's AA Group launches Singapore IPO of 15.4 mln shares at 0.21 sgd each
• Labroy unit secures 41 mln sgd shipbuilding contract

INDONESIA:

• Rupiah extends fall, breaches 10,100/usd despite central bank support
• Govt may consider second global bond issue this year - Anwar
• Indonesia president says little progress yet made in fighting govt corruption
• Indonesian president calls on country to back Aceh peace pact
• Indonesia poses global polio threat if vaccinations not widespread - UN Agency
• Indonesian navy storms Croatian ship; Croatian envoy claims action 'illegal'
• Bank Negara Indonesia cuts 2005 net profit target to 3.0 trln rupiah from 3.3
• Indofood may appeal UK court ruling disallowing bond buyback
• Medco sells Asahan stake to Serica Energy
• Antam appoints HSBC as financial advisor for Freeport stake buy

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Crude Prices
Crude futures last were up 25 cents at $65.90 a barrel. Earlier in the month the market was rattled when crude futures hit an historic record of $67 a barrel.

Precious Metals Summary

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