2:00PM European markets closed lower on economic worries.
European markets closed lower led by a sharp decline in Germany, France and the U.K. French index CAC-40 lost 0.89% to close at 5,082.7, German DAX Xetra Index lost 42.87 points to close at 5,775.64 and UK FTSE Index lost 0.72% or 42.60 points to close at 5,860.00. The crude oil prices dropped sharply in New York trading after weekly petroleum report. The surprise rise in gasoline inventory led a fall in oil price of $1.44 to $71.85 per barrel.

In Swiss trading Nestle SA rose to an all time high to SFr 419.50 on earnings report. The company reported 11% rise in sales to 47.14 swiss francs and earnings rose 11% to 4.15 swiss francs for the first half of the fiscal year. The organic revenue grwoth overcame the rise in raw materials cost. The compay still express confidence that the full year earnings will reach upper end of the forecast earnings range. The company sales growth in the U.S. and emerging markets was stronger than the sluggish sales in Europe. The company also mentioned in the conference call that it will take a while for sales to rebound in china. Company was forced to recall baby milk due to higher than permitted iodine level by Chinese authority.

Tech stocks came under pressure on the news of earnings and sales warning from National Semiconductor in the U.S. STMicroelectronics dropped 1.5% to 12.44 euro, ASM Litho dropped 1.1% to 16.41 euro and Infineon lost 1.1% to 8.66 euro.

In the telecom sector Deutsche Telekom dropped 0.6% to 11.50 on the target price revision from HSBC to 10.20 euro, France Telecom fell 1% to 16.42 euro but Telekon Austria gained 2.5% to 18.97 euro on earnings news. The company earnings rose 20% in the second quarter compared to a year ago.

TNT, the Dutch mail service group, fell 2.5% to 28.45 euro after the news that it had sold its U.S. logistics business to a private equity group for 1.48 billion euros. The stock had run in aticipation of higher bid.

The stocks in the UK fell after the housing report in the U.S. showed a weakening market. The FTSE index dropped 42 points with number of mining stocks led the decliners list. BHP Billiton reported 58% rise in profit but said that in the longer terms the earnings growth will slow down. The company also said that it plans to buyback shares worth as much as $3 billion in the coming months. BHP dropped 4% to close above 10 GBP. Other minig stocks fell in sympathy.

However, Anglo Austalian pallet company rose 4.7% on the full year results. Nikanor, the copper miner in Congo Republic, jumped 3.6% on the outperfom rating from a local broker Caznove. Italian restaurant chain, Prezzo, surged 6.5% on takeover rumors and Café Nero ganied 0.6% on the speculation that hedge fund may bid for the company.


12:15PM IBM to buy Internet Security Systems for $1.3 billion.
Market averages traded lower after existing home report. Dow at mid-day is trading down 44.01 points, Nasdaq down 14.02 points and S&P 500 dropped 5.3 points. Home builders stocks declined between 1% and 3%. Toll Bros (TOL: chart) lost 74 cents to $24.47, D.R. Horton (DHI: chart) declined 46 cents to $21.05 and Bezer Homes (BZH: chart) lost $1.07 to $39.47.

IBM (IBM: chart) said that it plans to spend $1.3 billion in cash to purchase Internet Security Systems (ISSX: chart). The network monitoring and analysis company is known for network management and security seystems services for large companies. The Company stock closed at $26 in yesterday’s closing. IBM is offering only 8% proemium to acquire the company.

IBM has been actively purchasing companies in the Internet services and online document management area. ISS has app. 1,300 employees and 17,000 customers.

10:30AM The Sensex falls for a second day in a row in a volatile trading.
The Sensex on BSE lost 95.97 points, or 0.83%, to end on 11,406.65. The turnover on BSE was Rs 2,982 crore, down from Tuesday’s Rs 3,079 crore. The index traded in the range of 205 points. The market-breadth was weak, as only 887 shares advanced on BSE compared to 1,610 that declined while 64 shares were unchanged. Of the 30-member Sensex stocks, 21 declined while only 9 advanced.

HDFC led the decliners, plunging 3.15% to Rs 1,276.10 followed by Bajaj Auto losing 2.16% to Rs 2691.40 and Cipla shedding 2% to Rs 246.40. Satyam Computers led the advancers, adding 1.24% to Rs 804.

Metal shares were the worst hit. Tata Steel plunged 1.80% to Rs 506.10, SAIL was down 2.32% to Rs 75.70, Uttam Galva lost 1.55% to Rs 32, Kalyani Steel sank 4.53% to Rs 277 and Jindal Saw moved back 4.66% to Rs 291.50. Auto stocks were also hit. Maruti Udyog shed 1.46% to Rs 826, LML was off 4.42% to Rs 18.40, Hindustan Motors declined 4.53% to Rs 36.85, Ashok Leyland dipped 2% to Rs 38.85 and Mahindra & Mahindra moved down 3.70% to Rs 635.

Consumer stocks also declined, pressed down by selling pressure. Nestle India lost 0.82% to Rs 1,011, Dabur India declined 1.66% to Rs 136.25, ITC shed 2% to Rs 178.10, Colgate-Palmolive slipped 2.30% to Rs 357 and Hindustan Lever edged down 1% to Rs 230.

Index large-cap Reliance Industries slid 0.06% to Rs 1,064.25. It traded between Rs 1,073.85 and Rs 1,056.05 for the day. Shares of SBI were unstable throughout. It traded between Rs 1,053.45 and Rs 859.50. The stock closed at 1.91% lower, at Rs 861.10 on a volume of 7.15 lakh shares. The most active stock on BSE was Educomp Solutions with a turnover of Rs 154.14 crore. Educomp closed 6.90% lower, at Rs 532.20 on a high volume of 27.63 lakh shares.

Other companies that declined were Bombay Dyeing plunging 10.90% to Rs 635 on high volumes of 19.41 lakh shares, Mahindra Gesco Developers'' falling 10% to Rs 756.50 on 16.08 lakh shares.

Apart from Satyam Computers, other stocks that advanced were Sundram Fasteners soaring 6.91%, to Rs 128.50 following the company surprising statement of declaring a liberal 1:1 bonus issue. Suzlon Energy gained 1.15%, to Rs 1,209, Gayatri Sugar advanced 1% to Rs 12.40 and R Systems International rose 1.80%, to Rs 165.50.

10:10AM Existing home sales declined 4.1% in July.
Total existing home sales including single-family, townhomes, condominiums and co-ops – dropped 4.1 percent to a seasonally adjusted annual rate1 of 6.33 million units in July from a downwardly revised pace of 6.60 million June, and were 11.2 percent below the 7.13 million-unit level in July 2005. The national median existing-home prices for all housing types was $230,000 in July, up 0.9 percent from July 2005 when the median was $228,000.

9:45AM Market show steady rise from the opening.
Market averages opened on a weak note only to rise steadily in the first fifteen minutes of trading. Traders are waiting for a reprot on existing home sales and weekly petroleum invenotory report. Industrial stocks are taking the leads in the early opening. Caterpillar is up 40 cents, Deere & Co is 30 cents and Ingersoll Rand is 5 cents at the opening. BHP Billiton is down 25 cents on earnings.