Nomura says ISM data "adds to the evidence that the pace of decline in the overall economy is slowing."

Losses have mounted so that all three of the major indices are now at their worst levels of the session.
The drop in equity prices has helped fuel interest in Treasuries. That has the 10-year Note up 19 ticks, and reduced its yield to 3.54%.
The U.S. dollar is also garnering support. The dollar index is currently up 1.3%, which marks its best single-session advance by percent since a 1.8% surge in January.

"Manufacturing inventories also slipped 1.0%, which was enough to lower the sectors inventory-to-sales (I/S) ratio to 1.45 from 1.46. The I/S ratio remains at a very high level, however, suggesting further inventory drawdowns in the months ahead."

Participants have been pushing stocks lower for the entire session. The decision to sell follows four consecutive sessions of gains, which lifted the S&P 500 roughly 6%.
Materials stocks (-4.3%) and energy stocks (-4.1%) are seeing the most selling. The drop in materials stocks comes as commodity prices grapple with a rebounding U.S. dollar, which is currently up nearly 1.4% in the dollar index's best percentage move in months.
Combining the dollar's rebound with an unexpected increase in weekly oil inventories has made for weaker oil prices, which are down 4.4% to $65.55 per barrel. The sharp drop in oil prices has made integrated energy giant Exxon Mobil (XOM 71.86, -1.06) a primary laggard in the broader market. However, Valero Energy (VLO 18.29, -4.09) is seeing some of the worst losses after issuing downside guidance.
Managed care provider Aetna (AET 25.77, -1.50) also issued downside guidance when it trimmed its 2009 earnings outlook. That has weighed on managed care providers (-2.8%), but biotech stocks (+2.9%) are helping to limit losses in the broader health care sector (-0.6%).

The dollar rose against the euro for the first time in five days on speculation an economic recovery will be too weak to sustain gains in higher-yielding assets such as stocks, encouraging demand for safety.
The greenback climbed against almost all of the most-traded currencies and the euro weakened as the contraction in the 16- nation economy deepened in the first quarter. The pound dropped the most against the dollar in almost two weeks on bets a three- month rally in European stocks outpaced expectations for earnings and economic growth.

WTI Nymex crude falls around 80 cents following the worse than expected EIA inventory data, which showed a 2.9m/bls build in crude stocks, compared to market expectations of a 2.0m/bls decline. The front contract is currently off $1.54 at $67.01.

Financial stocks had been holding up relatively well against this session's selling effort in the early going, but the sector is now down 1.1%, which is essentially in-line with the broader market.
Regional bank stocks are down just 0.4%, though they had been trading with a gain of more than 1% in the first few minutes of the session. However, Huntington Bancshares (HBAN 4.31, +0.16) is making a solid gain after announcing a $300 million common equity offering. That has participants looking past the decision by analysts at Oppenheimer to lower their estimates for HBAN shares.

- Investors Gaining Confidence In Banking System
- US Can't Borrow Indefinitely To Meet Spending Needs
- Tsy Yields Up On Deficits Worries, Better Econ
- Contraction Slowing, Econ To Pick Up Later '09
- Spending, Housing, Inventories Key To Recovery
- Expects 'Sizable' Job Losses In Next Few Months
- Inflation Likely To Fall Over Next Year
- Financial Conditions Better, But Still Under Stress

Stocks are paring their losses, but weakness remains widespread as declining issues outnumber advancers by roughly 9-to-1 in the S&P 500.
Energy stocks (-2.8%) remain a primary source of weakness for the S&P 500. Shares of integrated energy players Exxon Mobil and Chevron are leading losses in the S&P 500. Oilfield services outfit Schlumberger is also creating a considerable drag on the broader market this session; however, its share price is still up nearly 40% year-to-date.

- US ISM May Non-Manufacturing PMI Expected 45.0
- US ISM May Non-Mfg Business Index 42.4 Vs Apr 45.2
- US ISM May Non-Mfg Employment Index 39.0 Vs Apr 37.0
- US ISM May Non-Mfg Prices Index 46.9 Vs Apr 40.0
- US ISM May Non-Mfg New Orders Index 44.4 Vs Apr 47.0

U.S. stocks were poised to fall Wednesday, as investors showed little reaction to the latest on job cuts and awaited comments from Federal Reserve chairman Ben Bernanke.
Futures measure current index values against perceived future performance and offer an indication of how markets may open when trading begins in New York.

- Bankers Seen Less Dependent On Fed's Term Loans
- Banking Community Has Been 'Somewhat' Repaired
- US Needs To Define New Banking Regulatory System
- GM Bankruptcy To Have Dampening Effect On Recovery
- Effect Of Energy Prices On Recovery Still Unclear

The oil markets' seven-day rally faltered on Wednesday ahead of weekly U.S. inventory data and as investors grew more cautious ahead of the $70 a barrel mark.
U.S. light, sweet crude was down 86 cents at $67.69 a barrel , off an earlier peak of $68.72. ICE Brent crude was down 70 cents at $67.47 a barrel.

Data:
07:55 Germany PMI services (May) seasonally adjusted 45.2
08:00 Е16 PMI services (May) 44.8
08:30 UK CIPS services index (May) 51.7
09:00 Е16 GDP (Q1) preliminary Y/Y -4.8%
09:00 Е16 GDP (Q1) preliminary -2.5%
09:00 Е16 PPI (April) Y/Y -4.6%
09:00 Е16 PPI (April) -1.0%

The dollar rose against the euro and the yen as investors sought refuge in the U.S. currency after stocks fell on concern a three-month rally has outpaced expectations for economic growth and earnings.
The dollar climbed from a five-month low against the euro as the Dow Jones Stoxx 600 Index of European shares fell 1 percent from near the highest level since November and U.S. stock-index futures declined. The euro weakened as a report showed European gross domestic product shrank 2.5 percent from the fourth quarter, the most since 1995.
European household consumption shrank 0.5 percent, while exports dropped 8.1 percent and imports declined 7.2 percent, the European Union’s statistics office in Luxembourg said today, all the most since the series started in 1995. Investment spending weakened 4.2 percent, after a 4.3 percent contraction in previous quarter.
The dollar also rose after Reuters said Asian central banks are likely to keep buying U.S. Treasuries to help maintain market stability, citing officials and other people with direct knowledge of policy making that it didn’t identify.

EUR/USD after was established high in the field $1,4340, the pair decreased and at present bargains in the field of $1,4200

EUR/USD $1.4300, $1.4275/80, $1.4070
USD/JPY Y96.00, Y95.95, Y96.20, Y96.85, Y96.95, Y97.00, Y95.50, Y97.75
USD/CHF Chf1.0600
EUR/SEK Sek10.75
USD/CAD C$1.0750

Economists at Mizuho Securities say "the tone of the statistics will do little to settle the ongoing debate between the growth bulls and the bears." They say data will be mixed - with key
employment statistics still disappointing.

The dollar rose against the euro and the yen as investors sought refuge in the U.S. currency after stocks fell on concern a three-month rally has outpaced expectations for economic growth and earnings.
The dollar climbed from a five-month low against the euro as the Dow Jones Stoxx 600 Index of European shares fell 1 percent from near the highest level since November and U.S. stock-index futures declined. The euro weakened as a report showed European gross domestic product shrank 2.5 percent from the fourth quarter, the most since 1995.
European household consumption shrank 0.5 percent, while exports dropped 8.1 percent and imports declined 7.2 percent, the European Union’s statistics office in Luxembourg said today, all the most since the series started in 1995. Investment spending weakened 4.2 percent, after a 4.3 percent contraction in previous quarter.
The dollar also rose after Reuters said Asian central banks are likely to keep buying U.S. Treasuries to help maintain market stability, citing officials and other people with direct knowledge of policy making that it didn’t identify.
“The recent reserve diversification fears are clearly exaggerated given the lack of any viable alternative to the dollar,” said Lee Hardman, a foreign-exchange strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd.

- Unemployment rate is rising, new jobs shrinking

Resistance 3:Y97.80
Resistance 2:Y96.80
Resistance 1:Y96.20
Current price: Y95.87
Support 1: Y95.30
Support 2: Y94.50
Support 3: Y93.80
COMMENTS: The rate tested 61.8% FIBO of Y97,20-Y94,40 falling on Y96.20 then rolled away. Above optimism on dollar will grow and can lead to testing Jun 1 high on Y96.80. Further growth is possible to Y97.80. Strong support is in the field of session low on Y95.30 (also 61.8% FIBO of Monday's growth). Below correction to go deep up to Y94.50 and Y93.80.

Resistance 3:Chf1.0960
Resistance 2:Chf1.0860
Resistance 1:Chf1.0740
Current price: Chf 1.0674
Support 1:Chf1.0580
Support 2:Chf1.0480
Support 3:Chf1.0370
СOMMENTS: Tech hasn't changed. Strong support comes near channel line from Apr 22, coming today at Chf1.0580. Below losses may widen to Chf1.0480 and Chf1.0370. Resistance is near yesterday’s highs on Chf1.0740, further – on Chf1.0860 (Friday’s high). Next band of resistance is around Chf1.0960 (May 28 high and May 13 and 20 lows).

Resistance 3:$1.6800
Resistance 2:$1.6720
Resistance 1:$1.6650
Current price: $1.6604
Support 1: $1.6500
Support 2: $1.6320
Support 3: $1.6160
COMMENTS: The sterling looks optimistic with resistance comes at $1.6650 (channel line from May 18) and then – on $1.6800 (50,0% Fibo of $2.0130-$1.3520 decline). The nearest support is the zone $1.6500 (June 1 high). Below loss can increase up to $1.6320 (yesterday's low), and then - to $1.6160 (low of current week).

Resistance 3: $1.4600
Resistance 2: $1.4480
Resistance 1: $1.4320
Current price: $1.4215
Support 1: $1.4200
Support 2: $1.4100
Support 3: $1.4050
COMMENTS: The euro was receded from channel resistance line from Apr 28 at $1.4320. Above the rise may extend to $1.4480 (Sep 15 high) and then – to $1.4600 (61,8% of $1,6030-$1,2330 decline). Support comes at session lows on $1.4200. Below decline may widen to $1.4100 and then – to $1.4050 (May 22 highs).

GDP (Q1) preliminary Y/Y -4.8%
GDP (Q1) preliminary -2.5%
PPI (April) Y/Y -4.6%
PPI (April) -1.0%

EUR/USD
Offers $1.4350, $1.4320, $1.4300/05, $1.4285
Bids $1.4250, $1.4210/00, $1.4190, $1.4175/70, $1.4150

EUR/JPY
Offers Y138.00, Y138.50/55
Bids Y137.10/00

EUR/USD
Bids $1.4250, $1.4210/00

USD/JPY
Offers Y97.20, Y97.00, Y96.90, Y96.50/60
Bids Y95.80, Y95.30/20

The euro rose to a seven-month high against the yen after a report showed Australia’s economy unexpectedly expanded last quarter, boosting demand for higher- yielding currencies.
Australia’s dollar strengthened as Asian stocks rose after the report added to evidence the worst of the global recession may be over. The Bureau of Statistics said the economy grew 0.4% in the three months ended March 31, following a revised 0.6% contraction in the previous three months.
The yen erased earlier gains after a Bank of Japan official signaled interest rates may stay low for some time. BOJ board member Hidetoshi Kamezaki said today it is too early for the central bank to end its policy of taking “extraordinary” steps to spur economic growth.

EUR/USD printed highs on $1.4330 before slid to $1.4250.

EUR/USD: $1.4300, $1.4275/80, $1.4070
USD/JPY: Y96.00, Y95.95, Y96.20, Y96.85, Y96.95, Y95.50, Y97.75

Majors close
Nikkei +26.56 +0.3% 9,704.31
Topix +1.04 +0.1% 913.56
FTSE -29.17 -0.65% 4,477.02
CAC -1.45 -0.04% 3,378.04
Dax +1.50 +0.03% 5,144.06
Dow +19.43 +0.22% 8,740.87
NASDAQ +8.12 +0.44% 1,836.80
S&P +1.87 +0.20% 944.74
10yr Note -0.7100 -0.191% 3.644%
NYMEX Crude Oil -0.03 -0.04% 68.55
Gold +4.40 +0.45% 984.40

Japanese shares rose after U.S. manufacturing figures added to signs the global recession is abating. Stocks pared gains on media reports North Korea is preparing to launch a medium-range missile.
Sony Corp. climbed 4.3% . Honda Motor Corp. jumped 2.2% on optimism General Motors Corp.’s bankruptcy will allow Japanese carmakers to expand market share. Nippon Yusen KK lost 1.7% as investors speculated the shares have risen too fast.
Stocks lost momentum after Yonhap News said North Korea is preparing to test another missile following six launches last week and the nation’s second detonation of a nuclear device. Leader Kim Jong Il picked his third son to succeed him, the Dong-A Ilbo newspaper said.
Nippon Yusen lost 1.7%. Rival Mitsui O.S.K Lines Ltd. dropped 2.9%. Both companies broke a four-day winning streak and were cut to “underperform” from “neutral” by Merrill Lynch & Co., the brokerage bought last year by Bank of America Corp.
Nomura Real Estate Holdings Inc. sank 4.8% after the developer said it plans to raise as much as 64.1 billion yen ($665 million) from the sale of new shares. Sony Financial Holdings Inc. plummeted by a record 14% after the Sony Corp. subsidiary said the value of its life insurance business fell by more than half last fiscal year.

European stocks were little changed as concern a three-month rally has outpaced expectations for earnings and economic growth offset the biggest jump in pending U.S. home sales in seven years and a surge by automakers.
Barclays Plc sank 14% after the bank’s Abu Dhabi investors sold about 3.46 billion pounds ($5.71 billion) of shares in the U.K. lender. Swedbank AB, the biggest bank in the Baltic states, dropped 5.6 percent after an adviser to the Latvian government said the country will need to devalue its currency. Volkswagen AG led European carmakers higher after Porsche SE said its aim to integrate with the company is “the best industrial solution for all sides.”
Stocks pared declines after an industry report showed the number of Americans signing contracts to buy previously owned homes climbed 6.7% in April, the fourth increase in five months, as lower prices attracted buyers. Economists had forecast sales would increase 0.5% , according to a survey.
Europe’s jobless rate rose to the highest in almost 10 years in April, the European Union statistics office in Luxembourg said today. Unemployment in the 16-member euro region increased to 9.2% from 8.9% in March, the highest since September 1999.
Swedbank slid 5.6%. Bengt Dennis, the former Swedish central bank governor and an adviser to the Latvian government on how to cope with the economic crisis, said the Baltic country will need to devalue its currency. Swedbank said it has enough capital to cope with a devaluation of Lithuania’s litas, should it occur, Lietuvos Rytas reported.
Volkswagen surged 10%, leading a gauge of automakers on the Stoxx 600 3 percent higher.
Porsche, which holds a majority stake in Volkswagen, said it knows its obligations toward Europe’s largest carmaker and will fulfill them. Porsche said it has secured 10 billion euros of a 12.5 billion-euro credit line that it’s seeking from banks.
Porsche advanced 2.7%. UniCredit SpA upgraded the maker of the 911 sports car to “buy” from “hold,” saying “the stock has underperformed too much” following the company’s announcement to create an “integrated car manufacturing group” with Volkswagen.
Gamesa Corp. Tecnologica SA, Spain’s biggest maker of wind turbines, sank 8.2% after Iberdrola SA, its largest shareholder, sold a 10% stake.
WPP Plc, the world’s largest advertising company, decreased 5.4% after saying sales excluding acquisitions and currency swings declined 6.7% in the first four months from a year earlier.

Choppy, listless trading kept Wall Street's stocks restricted to a relatively narrow range for most of the session, but stocks were still able to close higher for the fourth consecutive session - a feat that hasn't been accomplished in nearly two months.

Japan's benchmark stock indices ended Wednesday's session higher across the board, closing at a fresh eight month high for the fourth straight session. The Nikkei 225 was higher by 37.36 points, or 0.38%, to stand at 9741.67. The broader-based TOPIX was 0.94 points higher at 914.50.

Data released
04:30 Australia RBA meeting announcement 3.00% 3.00% 3.00%
06:45 France PPI (April) -0.6% -0.2% -0.4%
06:45 France PPI (April)Y/Y -5.5% -6.4% -5.5%
08:30 UK M4 money supply (April) final 0.2% 0.1% 0.1%
08:30 UK M4 money supply (April) final Y/Y 17.4% 17.4% 17.4%
08:30 UK Consumer credit (April), bln 0.3 0.2 0.1
09:00 EU(16) Unemployment (April) 9.2% 9.1% 8.9%
12:55 USA Redbook (30.05)

The dollar dropped to its lowest level against the euro this year on speculation record U.S. borrowing will undermine the greenback, prompting nations to consider alternatives to the world’s main reserve currency.
The U.S. currency pared its decline versus the yen as the National Association of Realtors said pending sales of existing homes climbed 6.7% in April. The median forecast of economists was a 0.5% gain.
The euro’s rally against the dollar may be entering its “last stage,” and investors would likely benefit from selling the 16-nation currency against the greenback, UBS AG said.

EUR/USD tested lows on $1.4100 before rose up to $1.4330.

Resistance 3:Y97.80
Resistance 2:Y96.80
Resistance 1:Y96.20
Current price: Y96.18
Support 1: Y95.30
Support 2: Y94.50
Support 3: Y93.80
COMMENTS: Rate continues to challenge 236% Fibo of Monday’s rise at Y96.20. Above the bullish momentum will strengthen up to Jun 01 high at Y96.80. Further rise may extend to Y97.80. Strong support is around session lows on Y95.30 (also 61.8% Fibo). Below correction may widen to Y94.50 and Y93.80.

Resistance 3:Chf1.0960
Resistance 2:Chf1.0860
Resistance 1:Chf1.0740
Current price: Chf 1.0612
Support 1:Chf1.0580
Support 2:Chf1.0480
Support 3:Chf1.0370
СOMMENTS: Dollar holds a bit above lows with strong support comes near channel line from Apr 22, coming today at Chf1.0580. Below losses may widen to Chf1.0480 and Chf1.0370. Resistance is near yesterday’s highs on Chf1.0740, further – on Chf1.0860 (Friday’s high). Next band of resistance is around Chf1.0960 (May 28 high and May 13 and 20 lows).

Resistance 3:$1.6800
Resistance 2:$1.6720
Resistance 1:$1.6650
Current price: $1.6604
Support 1: $1.6160
Support 2: $1.5850
Support 3: $1.5600
COMMENTS: The sterling looks optimistic with resistance comes at $1.6650 (channel line from May 18) and then – on $1.6800 (50,0% Fibo of $2.0130-$1.3520 decline). Support is near session lows on $1.6160. Below losses may widen to $1.5850 (yesterday’s low), then – to $1.5600.

Resistance 3: $1.4600
Resistance 2: $1.4480
Resistance 1: $1.4320
Current price: $1.4285
Support 1: $1.4270
Support 2: $1.4100
Support 3: $1.4050
COMMENTS: Euro was close to channel resistance line from Apr 28 at $1.4320. Above the rise may extend to $1.4480 (Sep 15 high) and then – to $1.4600 (61,8% of $1,6030-$1,2330 decline). Support comes at session lows on $1.4270. Below decline may widen to $1.4100 and then – to $1.4050 (May 22 highs).

High Low Close
EUR/USD 1.4328 1.4100 1.4304
GBP/USD 1.6591 1.6324 1.6575
USD/JPY 96.64 95.33 95.75
USD/CHF 1.0741 1.0590 1.0614

EUR/JPY 137.42 135.75 136.96
EUR/GBP 0.8673 0.8605 0.8626
GBP/JPY 159.17 156.86 158.73
GBP/CHF 1.7605 1.7437 1.7598

Change % Change Last
Nikkei +26.56 +0.3% 9,704.31
Topix +1.04 +0.1% 913.56
FTSE -29.17 -0.65% 4,477.02
CAC -1.45 -0.04% 3,378.04
Dax +1.50 +0.03% 5,144.06
Dow +19.43 +0.22% 8,740.87
NASDAQ +8.12 +0.44% 1,836.80
S&P +1.87 +0.20% 944.74
10yr Note -0.7100 -0.191% 3.644%
NYMEX Crude Oil -0.03 -0.04% 68.55
Gold +4.40 +0.45% 984.40

07:45 Italy PMI services (May) - 42.0
07:50 France PMI services (May) 47.6 46.5
07:55 Germany PMI services (May) seasonally adjusted 46.0 43.8
08:00 EU(16) PMI services (May) 44.7 43.8
08:30 UK CIPS services index (May) 49.5 48.7
09:00 EU(16) PPI (April) -0.8% -0.7%
09:00 EU(16) PPI (April) Y/Y -4.5% -3.1%
09:00 EU(16) GDP (Q1) preliminary -2.5% -1.6%
09:00 EU(16) GDP (Q1) preliminary Y/Y -4.6% -1.4%
12:15 USA ADP employment (May) -541K -491K
14:00 USA ISM Non-mfg composite index (May) 44.9 43.7
14:00 USA ISM Non-mfg business index (May) - 45.2
14:00 USA Factory orders (April) 0.4% -0.9%