Bank Of America Corporation
In a deal that could be worth more than $8.4B, the bank has agreed to settle claims brought by state attorneys general regarding certain risky loans originated by Countrywide Financial. The deal will cover nearly 400,000 borrowers.

Ebay Inc
The Internet auctioneer plans to cut its global workforce by 10%, affecting about 1,000 employees and several hundred temporary workers. The reduction is expected to result in pretax restructuring charges of approximately $70M to $80M.

General Electric Company
The share price of the industrial and commercial conglomerate, a bellwether of the U.S. economy, hit its lowest point in more than 11 years as a sell-off pulled down broader markets.

Wachovia Corp
Wells Fargo appears to have the upper hand in the Wachovia acquisition. The Wall Street Journal reported that a North Carolina court issued a temporary restraining order preventing Citi from enforcing a claimed exclusivity agreement.

The Dow and Nasdaq hit fresh session lows and are currently trading near those levels. Consumer staples is the best performing sector with a decline of 4.6%. Materials is the worst performing sector with a decline of 7.1%.
Airline stocks are down 14% as economic concerns outweigh the benefits of cheaper oil (-4.8% at $89.35). The Amex Airline Index is down 49% this year.

Stripping out misses and the chances of an intermeeting cut, futures prices suggest a 100% chance of a 50bps ease by the Oct 28 FOMC and a 50/50 chance for either 75bps or 100bps worth of easing by January.

Via JPM's Mike Krauss - "On the heels of Global Equity market collapses today, the S+P 500 Cash Index is accelerating below our last major support confluence of 1100-1060. A few closes below 1060 or two straight eekly closes below 1093 would suggest that the decline from Oct 2007 is not just cyclical, but more secular in nature. On thing is clear, the downside momentum in stocks is much stronger than we had thought. Being October, Equity crashes have tended to bottom in the Oct 10 to Oct 25 time frame.... so its still a bit early in the month." Next support is 1019/1015 with macro support at 954. After that it is the bear market lows of 789 in March'03 and 769 from Oct 2002.

The euro had its biggest one-day drop against the yen since its 1999 debut as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks while stopping short of coordinated action.
The 15-nation currency fell below $1.35 for the first time since August 2007 after European authorities avoided announcing any plan comparable to the $700 billion U.S. bailout. The yen rose the most against the dollar in a decade as a plunge in global stocks encouraged investors to sell higher-yielding assets and pay back low-cost loans in Japan.
``What's driving the market is concern the institutional framework in Europe is not conducive for policy makers to get ahead of the crisis,'' said Todd Elmer, currency strategist at Citigroup Global Markets Inc. in New York. ``The picture for Europe is pretty gloomy.''
The dollar rose against the euro today on a surge in demand for U.S. currency funding as banks remained reluctant to lend to each other. The greenback gained 5.8 percent last week in its biggest rally since the euro's inception.
``Much of the euro-dollar move has been about the huge demand for dollar liquidity,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``I won't be standing in front of a running train.''
`There's a capitulation of emerging-market currencies,'' said Citigroup's Elmer. ``There were massive flows to emerging markets over the past years. We're seeing a reversal of that, which is providing support to the dollar. There's certainly further room to run.''

Matt Van Dyckhoff of Brown Brothers Harriman says there has not been such a weekly decline in the euro, since the move higher in dollar-Deutsch market in 1992 (DM fell). He looks for the pair to test $1.3300 and sees scope for euro-yen to see "an extended move to sub Y130." On the day, the euro fallen from a high of $1.3675 to a low of $1.3471 - the pairs holds at $1.3525 currently.

As well as a change in BoE rate view, economists at Goldman Sachs have also alterered their Fed call. GS says that "with the boost from fiscal stimulus gone and the impact of tighter credit conditions working its way into the real economy, US economic activity has decelerated sharply in recent weeks....The recession that we have been forecasting now looks likely to be deeper and longer, taking the unemployment rate to 8% by late 2009 and pushing the Fed to cut interest rates to 1% or lower".

The major indices post steep declines, although they have recovered from session lows.
The Dow, Nasdaq and S&P 500 are down 3.9%, 4.7% and 4.3%, respectively, after being down as much as 5.7%, 7.0% and 6.6%, respectively.
The major European markets also recovered from session lows, although they are still down at least 6.0%.

The Dow drops below 10,000 for the first time since 2005. The S&P 500 is down more than 4% and the Nasdaq is down more than 5%. Treasuries, meanwhile, are rallying in a flight to safety bid. On a related note, gold is up 4.8% to $868.80 per ounce.
Although financials (-5.2%) are under pressure, multi-line insurer Hartford Financial Services (HIG 31.19, +3.79) is up 13.8% on news that it is getting $2.5 billion in capital from German insurer giant Allianz. Hartford, which has more than $300 billion in assets, said it will post a loss in the third quarter and cut its quarterly dividend by 40%. HIG tumbled 52% last week on concerns regarding its capital position.
World stock markets continue to tumble. The DJ World Average, Excluding U.S., is down 7.1%. Emerging markets are taking a pounding, with the MSCI Emerging Markets Index ETF (EEM) dropping 9.9%. Brazil's Bovespa has fallen 11.2% and Russia's RTS is down 19.1%.
The dollar is rallying against European currencies, with the euro down 1.9% to $1.35 and the pound down 2.0% to $1.74. The yen, however, is showing strength, with the dollar falling 5.4% against the Japanese currency.

Financials are leading the market lower, amid failure by finance ministers to reach an agreement at the Paris Summit and confusion over whether German government would guarantee all private German bank accounts. In FTSE-100: Financials -6.17%, oil & gas -5.93%, consumers -3.01%, telecommunications -1.9% , utilities -1.58% and industrials -3.61%. In CAC-30: Financials -5.99%, oil & gas -4.6%, consumers -3.96%, utilities -6.22%. In Xetra-DAX: Financials -7.65%, consumers -2.39%, industrials -8.55% and technology -5.14%. FTSE-100 is down 254pts (-5.13%), CAC-30 is down 214pts (-5.86%) and Xetra-DAX is down 287pts (-5.37%).

The major indices start the week sharply lower as overseas markets tumble on financial market and global slowdown concerns.
European markets are seeing notable weakness in banks on worries that more bailouts of European financial institutions are needed. London's FTSE is down 4.9%, Germany's DAX is down 5.1%, and France's CAC is down 5.5%. Brazil's Bovespa stock index was halted after tumbling 10.1%. Asian markets also faced selling pressure -- Hong Kong's Hang Seng fell 5.0% and Japan's Nikkei fell 4.3%.
Overseas weakness is prompting some buying in the dollar, which is up 1.3% against leading world currencies.
Commodities fall 2.0%, with oil down 2.6% to $91.48 per barrel, on global slowdown concerns. Gold, however, is managing to rally 3.8% to $860.00 in a safe have bid.

-- Need improved conditions EU inter-bank market.

S&P futures vs fair value: -22.40. Nasdaq futures vs fair value: -37.50.
The Fed continues to address liquidity issues, planning to eventually bring the outstanding Term Auction Facilities (TAF) balances to $900 billion from $450 billion. The TAF aims to improve liquidity by allowing depository institutions to borrow from the Fed using the same collateral that is accepted at the discount window. The Fed will also start paying interest on depositary institutions' required and excess reserve balances. Dollar Libor -- the rate banks charge each other for short-term loans -- remain at highly elevated states, but did decline slightly for all terms except the overnight lending rate. Overnight Libor climbed 37 basis points to 2.37%.
Companies: Drug company Eli Lilly said it would buy ImClone (IMCL), the biotech that produces colon cancer treatment Erbitux, for $6 billion.
Online auctioneer eBay said it would cut one-tenth of its workforce, or 1,000 employees, to streamline its business.

"Global GDP growth is expected to hover around zero over the three quarters from 3Q08 to 1Q09, similar to the performance recorded in 2001." EM mkts are sharply eroding, they say.

The euro had its biggest one-day drop against the yen in seven years as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks while stopping short of coordinated action.
The 15-nation currency declined to a 14-month low against the dollar and the weakest in two years versus the yen after leaders meeting at the weekend avoided announcing any plan that would mirror the U.S.'s $700 billion bailout. Germany joined with banks and insurers to prevent the collapse of property lender Hypo Real Estate Holding AG and Belgium announced a revised deal to salvage Fortis. The yen jumped 5 percent versus the Australian dollar as investors cut holdings of higher- yielding assets funded in Japan, known as carry trades.
``It appears that European governments are failing to grasp the real problem and are taking reactive measures instead of dealing with the underlying situation,'' said Ian Stannard, a London-based currency strategist fro BNP Paribas SA. ``The market is disappointed with the results out of weekend meetings and that's going to put the euro under increasing pressure.
Technical analysis shows the euro may fall to $1.3380 this week, said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo.
The European currency is likely to extend last week's 5.8 percent loss as its daily moving average convergence/divergence chart is showing a sell signal, according to Suzuki. Support at $1.3380 is near the euro's 200-week moving average, he said. Support is a level where buy orders may be clustered.
``There's really not much to suggest the euro can stage a meaningful recovery right now,'' Suzuki said. ``It's been caught in a wave of panic selling and the charts show it can go lower still.''

EUR/USD: after consolidation within $1.3600/50 posted session low at $1.3540, before gained back to $1.3620. Offers remain at $1.3620. more on approach to $1.3670/80 (day high and 61.8% of $1.3540-$1.3907 move). Bids spotted at $1.3535/30, stronger near $1.3500 option barrier.

Now the rate seen challenging short term tech resistance at $1.3605/10. Above here and rate can move back up to retest earlier recovery highs at $1.3618/offers to $1.3620. A break and clear above here to open technical potential toward the $1.3665/85 area.

``It's unwise to buy a currency which is both in recession and having a banking crisis,'' said Peter Pontikis, a treasury strategist at Suncorp-Metway Ltd. in Brisbane. The dollar will weaken to $1.45 per euro over the next month, he said.

-- Will take "appropriate" steps to stabalize prices.

Goldman Sachs Group Inc. said the U.S. economy will enter a recession ``significantly deeper'' than previously forecast, prompting the Federal Reserve to cut interest rates by at least 1 percentage point. Gross domestic product will decline in each of the next two quarters, with unemployment reaching 8 percent by the end of 2009, Goldman said in a research note.

The euro had its biggest one-day drop against the yen in seven years as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks while stopping short of coordinated action.
The 15-nation currency declined to a 14-month low against the dollar and the weakest in two years versus the yen after leaders meeting at the weekend avoided announcing any plan that would mirror the U.S.'s $700 billion bailout. Germany joined with banks and insurers to prevent the collapse of property lender Hypo Real Estate Holding AG and Belgium announced a revised deal to salvage Fortis. The yen jumped 5 percent versus the Australian dollar as investors cut holdings of higher- yielding assets funded in Japan, known as carry trades.
``It appears that European governments are failing to grasp the real problem and are taking reactive measures instead of dealing with the underlying situation,'' said Ian Stannard, a London-based currency strategist fro BNP Paribas SA. ``The market is disappointed with the results out of weekend meetings and that's going to put the euro under increasing pressure.
The German government and the country's banks and insurers agreed on a 50 billion-euro ($68 billion) rescue for Hypo Real Estate after an earlier bailout faltered. BNP Paribas SA, France's biggest bank, agreed to take over Fortis's units in Belgium after a government rescue failed.
``It could be difficult for the European Union to take coordinated relief actions,'' Toru Umemoto, chief currency analyst in Tokyo at Barclays Capital, Britain's third-biggest lender, said in a Bloomberg Television interview. ``This is a risk and the currency market is focusing on this risk.''
HSBC Holdings Plc cut its forecast for European growth next year to 0.4 percent from a previous prediction of a 0.9 percent, economists led by Janet Henry wrote in a note to clients dated Oct. 3. UBS AG cut its outlook for expansion in Asia excluding Japan next year to 6.1 percent from 6.9 percent.
``We are in a multi year trend reversal,'' said Paresh Upadhyaya, a senior vice president at Putnam Investment LLC in Boston, who helps manage $50 billion in currency assets. ``We are going to see a global central bank easing cycle. The yen is the place to be in this environment of economic slowdown and heightened volatility.''
Technical analysis shows the euro may fall to $1.3380 this week, said Kengo Suzuki, currency strategist at Shinko Securities Co. in Tokyo.
The European currency is likely to extend last week's 5.8 percent loss as its daily moving average convergence/divergence chart is showing a sell signal, according to Suzuki. Support at $1.3380 is near the euro's 200-week moving average, he said. Support is a level where buy orders may be clustered.
``There's really not much to suggest the euro can stage a meaningful recovery right now,'' Suzuki said. ``It's been caught in a wave of panic selling and the charts show it can go lower still.''

While governments, supervisors, central banks and commercial banks must work together to resolve the ongoing financial market crisis, they should not resort to "overhurried" measures, European Central Bank Executive Board member Gertrude Tumpel-Gugerell was quoted as saying over the weekend. In a comment piece in Austria's Oberoestereiche Nachrichten, Tumpel-Gugerell insisted that the financial markets would return to normal only when confidence has been restored and that efforts were underway to do just that.

Economists at Goldman Sachs now expect the Bank of England to cut rates by 25bp at Thursday's MPC meeting. However, "we still think no move is more likely than 50bps", adds GS. In addition, GS have also revised its total rate cuts by the BoE to 150bps by the end of 2009 from 50bps previously, "reflecting the deteriorating growth environment".

Japanese stocks ended sharply lower, although off the session's worst levels. The benchmark Nikkei 225 was down 465.05 points, or 4.25%, at 10473.09. The broader-based TOPIX was down 48.92 points at 999.05.

Resistance 3: Y104.50
Resistance 2: Y104.10
Resistance 1: Y103.60
Current price: Y103.12
Support 1: Y102.60
Support 2: Y101.50
Support 3: Y100.00
Comments: The dollar fell for a fourth day against the yen on speculation reports will show a deepening slump in the U.S. economy. Pending home sales fell 1.1 percent in August after a 3.2 percent decline in the previous month, according to economist. The National Association of Realtors will release the data on Oct. The nearest support is presented by area of May's lows on Y102,60. Below there is a chance of falling to Y101,50 and further to Y100,00 (April 10 low). Resistance is presented by levels FIBO from falling Y106,15-Y102,80: Y103,60 (23,6 %, and also level Y103,40 is area of low Sep 30, 16 and July 16), Y104,10 (38,2 %), Y104,50 (50,5 %, also area of Friday's low).

Resistance 3: Chf1.1600
Resistance 2: Chf1.1500
Resistance 1: Chf1.1420
Current price: Chf1.1375
Support 1: Chf1.1275
Support 2: Chf1.1220
Support 3: Chf1.1140
Comments: The German government and the country's banks and insurers agreed on a 50 billion euro ($68 billion) rescue for Hypo Real Estate after an earlier bailout faltered. As the nearest support acts Chf1,1275 (session low). Below loss of a rate can will increase up to Chf1,1220 (Friday's low) and further to Chf1,1140 (Oct 1 low). Resistance is Sep 11 and Oct 2 highs on Chf1,1420. Above is possible growth to Chf1,1500 and further to Chf1,1600.

Resistance 3: $1.7980
Resistance 2: $1.7820
Resistance 1: $1.7700
Current price: $1.7588
Support 1: $1.7550
Support 2: $1.7440
Support 3: $1.7300
Comments: The U.S. Congress approved a financial-market bailout on Oct. 3, authorizing the government to spend as much as $700 billion buying troubled assets from financial institutions reeling from record home foreclosures. The dollar supported by the given fact has continued to become stronger against pound. Support is located on area of Oct 2-3 low on $1,7550/60, stronger level is the area of Sep 11low on $1,7440. Below possible falling to $1,7300. Resistance is noted on $1,7700 (session high), further is located stronger level $1,7820 (23.6 % Fibo of falling $1,8670-$ 1,7550). Above the purpose of growth can become $1,7980 (38,2 %).

Resistance 3:$1.4080
Resistance 2: $1.3900
Resistance 1: $1.3680
Current price: $1.3600
Support 1: $1.3550
Support 2: $1.3360
Support 3: $1.3260
Comments: The euro fell to a 13-month low against the dollar as the deepening credit crisis prompted European governments to pledge bailouts for troubled banks. As the nearest support acts the area of Sep 2007 low on $1,3550, further is possible falling to $1,3360 (Aug 2007 low) and $1,3260 (June 2007 low). In case of restoration by the nearest resistance there will be an area of session high/Friday's low on $1,3680/00. Further follows Fibo on $1,3900 (23.6 % of decrease $1,4870-$ 1,3600, and also area of Friday's high) and $1,4080 (38,2 %).

High Low Close
EUR/USD 1.3907 1.3699 1.3804
USD/JPY 106.15 104.48 105.12
GBP/USD 1.7840 1.7557 1.7746
USD/CHF 1.1402 1.1218 1.1271

EUR/JPY 146.82 143.98 145.09
EUR/GBP 0.7846 0.7749 0.7774
GBP/JPY 188.47 184.68 186.58
GBP/CHF 2.0175 1.9929 2.0002

Change % Change Last
Nikkei -216.62 -1.9% 10 938.14
Topix -29 -2.7% 1 047.97
FTSE +109.91 +2.26% 4,980.25
DAX +136.40 +2.41% 5,797.03
CAC +117.47 +2.96% 4,080.75
Dow -157.47 -1.50% 10,325.38
NASDAQ -29.33 -1.48% 1,947.39
S&P -15.05 -1.35% 1,099.23
10yr Note -0.0200 -0.005% 3.644%
NYMEX Crude Oil -0.09 -0.10% 93.88
Gold -11.10 -1.33% 833.20

08:30 Е15 Sentix Investor Confidence (Oct) -20,2
12:30 Canada Ivey Purchasing Managers Index (Sep) 51.5
12:30 Canada Building Permits (MoM) (Aug) 1.8%
23:01 UK NIESR GDP Estimate (Sep) -0.2%