Stocks are largely unchanged from earlier levels as the S&P 500 is down 1.4%. Financials (-3.6%) are off their lows, but continue to weigh on the broader market.
Every industry group comprising the financial sector is trading with a loss. The thrifts and mortgage group (-12.2%) is faring the worst. Losses are least intense among insurance brokers (-0.3%).
The financial sector is the worst performing economic sector year-to-date, down nearly 34%.

Steep slide in US stocks affecting the dollar and euro has lifted to fresh highs for the US session near $1.5700, earlier noted supply at $1.5670/80 overcome with relative ease. Further offers eyed at $1.5750.

The stock market continues to trade in negative ground. The S&P 500 has fallen to a 20% drop from its high, which was reached last October.
The session's tone has completely reversed. The Dow Jones Industrial Average was up more than 100 points in the early going. Now, the Dow is down more than 100 points, resulting in a swing of more than 200 points.
All ten of the major economic sectors are now in negative ground.

The dollar rose to the highest level against the euro in more than a week as leaders of the Group of Eight nations convened in Japan and a report showed German industrial production unexpectedly fell in May.
President George W. Bush, in Japan for the G-8 summit, reiterated support yesterday for a ``strong'' U.S. currency.
``With the G-8 meeting in the background, the near-term sentiment of the dollar is improving,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``They prefer a strong dollar.''
The dollar strengthened versus the euro on speculation U.S. officials will try to stem gains in oil prices as the G-8 summit gets under way in Japan.
Bush said yesterday on the first day of his five-day trip to Japan that the U.S. will continue to pursue a strong dollar.
``The U.S. believes in a strong-dollar policy,'' he said at a news conference with Japanese Prime Minister Yasuo Fukuda in Tokyo. The U.S. economy remains fundamentally strong even as growth has slowed, Bush said.
The U.S. currency also appreciated as crude oil fell after Iran's Foreign Minister Manouchehr Mottaki expressed confidence in talks with Western governments on the country's nuclear program. Organization of Petroleum Exporting Countries President Chakib Khelil said yesterday record oil prices are more related to the dollar exchange rate than supply.
Federal Reserve Bank of San Francisco President Janet Yellen said today in San Diego that the central bank ``will not allow a wage-price spiral to develop'' and that U.S. economic growth will ``pick up'' next year.
The euro dropped against the dollar as German industrial production unexpectedly dropped 2.4 percent in May, its third straight decline, prompting traders to pare bets the European Central Bank will raise the main refinancing rate for a second time this year.
``We do see the euro weaker,'' said Stuart Bennett, a senior European strategist at Calyon, the investment-banking unit of Credit Agricole SA, France's second-biggest lender. ``We are not relaxed about the growth outlook, and it's weaker than the ECB is accepting. Even though we suspect inflation means that they might have to hike again, the growth dynamics for Europe are pointing toward a weaker euro.''
The euro will fall to a range of $1.43 to $1.45 by the end of the year, Bennett predicted.
The yen weakened against the euro and the dollar as global stocks advanced on retreating oil prices, reviving demand for higher-yielding assets.

Without the help of a strong leader, the stock market has taken a dive into negative ground. The broad-based decline has taken all economic sectors lower, many to their worst levels of the session.
Financials are underperforming yet again; the sector is now down 3.1%. The sector's subpar performance has weighed on sentiment during recent sessions, pushing buyers to the sidelines.
The dropoff in equities has spurred buying among Treasuries. The 10-year note has gone from a modest downturn to gaining 23 ticks.

Oil trades currently at $139.65, down $5.67.

Stocks rose early Monday, with the Dow exiting bear territory, as investors welcomed lower oil prices and a stronger dollar.
The Dow Jones industrial average (INDU) and the broader Standard & Poor's 500 (SPX) index both added about 0.6% after the opening bell. The tech-heavy Nasdaq composite (COMP) gained nearly 1% in the early going.
Stocks ended mixed on Thursday with blue-chips edging higher despite a weak jobs report and an interest rate hike in Europe.
Oil prices retreated from their all-time high as the dollar strengthened. Crude for August delivery fell nearly $5 a barrel in early trade on the New York Mercantile Exchange.
The oil market is responding to reports out over the weekend that Iranian officials have agreed to renew talks with the EU over the country's nuclear program and the enrichment of uranium.
Company news: Automaker General Motors is set to cut thousands of more jobs and sell more of its brands amid a deepening slump in auto sales, The Wall Street Journal reported. Shares rose more than 5% in early trading.
NBC Universal and two private equity firms said Sunday they have reached a deal to buy The Weather Channel from Landmark Communications Inc. Shares of General Electric, the parent company of NBC Universal, rose 1.5%.
Shares of Yahoo led the Nasdaq higher on reports that a much ballyhooed deal with software maker Microsoft may still be in store.
Earnings: Investors are gearing up for earnings season, which unofficially gets underway Tuesday when Dow stock Alcoa reports second-quarter results.
General Electric, another Dow component, will report earnings later this week.
The benchmark 10-year note lost 1/32 to 99 3/32, lowering its yield to 3.98%. The note yielded 3.97% on Thursday.
Gold prices fell $14 to $919.60 an ounce.

Off the lows near $1.5620 gains extend to $1.5670 area after the London fixing event but flows remain light. Offers reported here earlier, in the $1.5670/80 area. Demand interest remains intact at $1.5600/10 although stops are building below there.

The major indices have moved off their early morning highs. Gains remain largely broadbased, though the financial sector (-0.6%) has come under pressure. Financial stocks were trading more than 1.0% higher earlier, but those gains have been more than offset.
Authorities may require European financial firms Credit Suisse (CS42.12, -2.00) and UBS (UBS 19.44, -0.88) to raise additional capital, according to Reuters. The capital raise would help stem losses related to ongoing valuation adjustments and help the firms maintain their balance sheets.

- Inflation is a serious concern

The positive tone continues through early trading. All ten of the major economic sectors are in the green.
Technology (+2.0%) is boasting the largest advance. The sector's advance is due, in large part, to Yahoo! (+2.29). Shares of Yahoo! are trading higher after Microsoft (+0.32) stated it would enter discussions with Yahoo! after Yahoo! replaced its board of directors.

Traders say selling in crude oil on back of market talk that US will release oil from Special Petroleum Reserve (SPR). WTI Nymex crude oil is now at $141.20, down 2,8% on session.

EUR/USD: $1.5640, $1.5670,

USD/JPY: Y106.05, Y105.35/30

USD/CAD: C$1.0240

Stock futures have eased back a bit, but still indicate a slightly upward start to trading (S&P futures +1.4, Nasdaq futures +6.0). Dow Jones is reporting that Carl Icahn has been in talks with Microsoft regarding a transaction with Yahoo!.
General Electric's NBC Universal is joining Blackstone Group and Bain Capital to purchase The Weather Channel.
InBev is planning to replace the Anheuser-Busch board of directors, according to reports. The move by InBev comes as part of an effort to maintain its original bid for the St. Louis-based brewer.

The euro fell to the lowest level in more than a week against the dollar as a central bank report showed German industrial production unexpectedly declined in May for a third month.
``We do see the euro weaker,'' said Stuart Bennett, a senior European strategist at Calyon, the investment-banking unit of Credit Agricole SA, France's second-biggest lender. ``We are not relaxed about the growth outlook and it's weaker than the ECB is accepting. Even though we suspect inflation means that they might have to hike again, the growth dynamics for Europe are pointing towards a weaker euro.''
German industrial production fell 2.4 percent in May from April, the Bundesbank said today. Economists expected an increase of 0.3 percent.
The common currency also weakened as traders pared bets the European Central Bank will raise interest rates a second time this year and investors speculated the Group of Eight nations will signal they favor a stronger dollar.
``The sentiment on the euro is bad,'' said Kenichi Nishii, manager of the foreign-exchange trading department at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo, a unit of Japan's biggest publicly traded lender. ``Faced with a worsening economic outlook, the ECB won't be able to raise rates anytime soon. The markets are also wary of any comments on dollar weakness from the Group of Eight summit.''
The British pound weakened to a one-week low against the dollar after U.K. factory output fell 0.5 percent in May. The median forecast of analysts surveyed was for no change.
``The U.K. data has been pretty bad and more and more people are talking about a possible recession,'' said Martin McMahon, a currency strategist in Zurich at Credit Suisse Group, Switzerland's second-largest bank. ``There aren't many positives for the pound out there.''

EUR/USD: Recovery allows rate to probe above reported stops level at $1.5665, but if any stops triggered seen meeting profit take supply, one trader suggests. Further offers have been reported between $1.5670/80, a break above here to open a move on toward $1.5700, ahead of stronger area between $1.5710/20.
GBP/USD: Recovers back above $1.9700, following its data react sell off to $1.9684, with rate meeting resistance from reported offers placed on the approach to $1.9720. A break above here to open a move on toward $1.9750. Failure will turn attention back toward the downside and a retest of $1.9685/80, one trader suggests.
USD/JPY: firmed from Y106.85 to Y107.70. Bids Y107.20/00, Y106.85. Offers Y107.70/85, Y108.00/20.

US May Factory orders are due at 14:00GMT
Canada May Building Permits are due at 12:30GMT and followed at at 14:00 GMT Bank of Canada Business Outlook Survey, then New Zealand Business Confidence are due at 14:00GMT.

Recovery allows rate to probe above reported stops level at $1.5665, but if any stops triggered seen meeting profit take supply, one trader suggests. Further offers have been reported between $1.5670/80, a break above here to open a move on toward $1.5700, ahead of stronger
area between $1.5710/20.

The euro fell to the lowest level in more than a week against the dollar before a central bank report that may show German industrial production slowed in May.
The common currency also weakened as traders pared bets the European Central Bank will raise interest rates a second time this year and investors speculated the Group of Eight nations will signal they favor a stronger dollar.
``The sentiment on the euro is bad,'' said Kenichi Nishii, manager of the foreign-exchange trading department at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo, a unit of Japan's biggest publicly traded lender. ``Faced with a worsening economic outlook, the ECB won't be able to raise rates anytime soon. The markets are also wary of any comments on dollar weakness from the Group of Eight summit.''
The British pound weakened to a one-week low against the dollar after U.K. factory output fell 0.5 percent in May. The median forecast of analysts surveyed was for no change.
``The U.K. data has been pretty bad and more and more people are talking about a possible recession,'' said Martin McMahon, a currency strategist in Zurich at Credit Suisse Group, Switzerland's second-largest bank. ``There aren't many positives for the pound out there.''

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.50
Current price: Y107.45
Support 1: Y106.50

Support 2: Y105.80
Support 3: Y105.00
Comments: Dollar rises above earlier broken channel support line from March 17 on Y107.20. Back above will make possible testing June 16 highs on Y108.60 and then - Y109.40. Support comes near at Y106.90, then Friday’s lows on Y106.50, then – at Y105.80.

Resistance 3: Chf1.0490
Resistance 2: Chf1.0350
Resistance 1: Chf1.0307
Current price: Chf1.0300
Support 1: Chf1.0230
Support 2: Chf1.0160
Support 3: Chf1.0080
Comments: The nearest resistance at today's highs Chf1.0340. Above the rise may extend to Chf1.0430. Stronger resistance is around Chf1.0490 (June 23 high). Support comes at Chf1.0230 (Friday’s low). Then losses may widen to Chf1.0160. Stronger support comes at channel line from May 08 on Chf1.0080.

Resistance 3: $2.0000

Resistance 2: $1.9940

Resistance 1: $1.9860
Current price: $1.9705
Support 1: $1.9680
Support 2: $1.9640

Support 3: $1.9580

Comments: The nearest support at today's low $1.9680. Break under will accelerate the decline to $1.9640 and then – to June 23 low on $1.9580. Minor resistance is around at $1.9860 (23.6%), then – around $1.9940. Stronger level is around physiological level on $2.0000, tested on July 01.

Resistance 3:$1.6020

Resistance 2: $1.5900
Resistance 1: $1.5730
Current price: $1.5650
Support 1: $1.5600
Support 2: $1.5530
Support 3: $1.5470
Comments: Euro still under pressure with strong support is around $1.5600 (50% of $1.5300 - $1.5905 rise). Below correction may extend to $1.5530 and then – to 23 June lows at $1.5470. Minor resistance comes at Friday’s highs on $1.5730, above – on $1.5900/05 (03 July high). Set above will point to life-time high on $1.6020.

EUR/USD: $1.5640, $1.5670,
USD/JPY: Y106.05, Y105.35/30
USD/CAD: C$1.0240

GBP/USD drops below reported support at $1.9700, triggering stops placed under the figure. Rate printed lows at $1.9684 before recovering to $1.9700. If rate can clear below $1.9680 now seen opening a deeper move toward $1.9660/50. Offers now seen placed to $1.9720, stronger at $1.9750.

EUR
Bids: $1.5620/10, $1.5580/70
Offers: $1.5645/50, $1.5680

JPY
Bids: Y106.85, Y106.55/45
Offers: Y107.45/65, Y107.75/85

GBP
Bids: $1.9750, $1.9700
Offers: $1.9790/00, $1.9830/35, $1.9850

New week will be full of economic data. Some interests will be on industrial production data from Germany and UK to be released in the European session Monday. Both industrial and manufacturing production in UK recovered modestly in April but are expected to give back some of the gains in May by falling -0.1% mom and -0.2% mom respectively. Moreover, both are expected to show first negative annualized growth of -0.8% and -0.1% yoy respectively. Though, reactions to the data could be mild as long as dollar's broad based recovery continues. Germany's industrial production is expected to recover mildly by showing 0.4% mom growth but with yoy rate slowed from 4.8% to 3.2%. The three days G8 meeting starts Monday in Japan and is expected to focus on energy and good inflations. it's to be seen whether currency rates will be a topic. Just released in European session, Swiss unemployment rated dropped from 2.4% to 2.3% in Jun as expected. Canadian building permits is expected to fall -5.8% in May. No US data will be scheduled Monday and focus will be on Fed Yellen's speech on US Economic Outlook.

No euro zone releases are on the docket for release on Tuesday. However, the euro zone finance ministers will continue their meeting from the previous today.In terms of speakers, ECB Vice-President Lucas and European Commissioner for Economic and Financial Affairs Joaquin Almunia will speak in Brussels, Belgium. In addition, the UK's nationwide measure of consumer confidence for June is due out. A reading of 65 is expected, down from previously reached levels of 69.

German trade balance and current account data are the first releases scheduled for Wednesday. The trade balance surplus is expected to fall €700 million to €18.0 billion from April to May, while the current account surplus is forecast to dip €2.0 billion to €12.5 billion over the same period. The UK's trade balance is also out on Wednesday, and the total figure is forecasted to come in at a deficit of £4200M, slightly up from April's £4325M shortfall. Final euro zone GDP estimates will also be announced on Wednesday. No revisions to the preliminary estimates are expected, however.

Thursday the key event will be the Bank of England's interest rate announcement; the consensus forecast being that the Monetary Policy Committee will opt to hold at 5.00%. French industrial production data will be announced on Thursday. Expectations are for output to fall 0.6% month-over-month in May after rising 1.4% in April. In annualized terms, French industrial production growth will slow to 1.5%, down from April's 3.2% growth rate. Italian industrial production figures will also be released. The consensus is calling for a 0.6% decline in May month-over-month following April's 0.7% gain. Year-over-year, industrial production in Italy is expected to have slipped 1.3% in weighted daily average terms. April had seen a rise of 2.0%.

The only data release expected on Friday is the German wholesale price index. Economist are expecting wholesale price inflation to accelerate to 9.0% in June year-over-year, from the 8.1% rate seen in May. However, in monthly terms, the index growth rate is expected to slow to 1.0%, down from May's 1.4% growth rate.

The euro fell to the lowest in more than a week against the dollar before a central bank report today that economists forecast will show German industrial production growth slowed in May.
The dollar also rose versus the yen on speculation leaders from the Group of Eight nations will signal they favor a stronger U.S. currency. Cooling economic expansion may deter the European Central Bank from increasing borrowing costs, diminishing the allure of euro-denominated assets.
The British pound weakened to a one-week low against the dollar on speculation U.K. industrial production fell 0.1% in May, after a 0.2% increase in April, according to the median forecast of analysts.
JPMorgan, the third-largest U.S. bank, predicted the Bank of England will keep borrowing costs on hold ``for the time being''.

EUR/USD fell from $1.5700 to $1.5620 and continues to stay under pressure.
GBP/USD tested new session lows around $1.9731. Session highs were set near $1.9820.
USD/JPY rose from Y106.60 to Y107.50.

Gains in the dollar may be limited by speculation industry reports this week will show U.S. home sales declined and consumer confidence fell to a 28-year low.
The University of Michigan will say July 11 that its index of consumer sentiment fell to 55.5 this month, the lowest since May 1980, from 56.4 in June, according to a separate survey.

Japan's benchmark stock indices ended Monday's session sharply higher, although shy of best levels, snapping a 12-day losing streak - the longest since 1954. The Nikkei rose 122.15 points, or 0.92%, to stand at 13360.04. The broader-based TOPIX gained 14.92 points to stand at 1312.80.

Crude oil increased 3.3% last week to $144.18 a barrel on speculation tension in the Middle East may get worse. The rise in energy prices, however, masked losses in base metals and some agricultural commodities. The price increases were supported by a fall in US crude stocks and a bullish report by the International Energy Agency. An easing in the dispute between Iran and western countries about Tehran’s nuclear programme on Friday triggered profit-taking.

Iran said it gave a ``constructive'' response to incentives intended to persuade the country to stop uranium enrichment. A compromise may allay concern that Israel is ready to attack Iran's nuclear installations, starting a conflict likely to cut supply from OPEC's second-largest oil producer.

The euro fell against the dollar last week on bets a worsening economic outlook will deter the European Central Bank from increasing borrowing costs again. The 15-nation currency posted its first weekly decline since mid-June after ECB President Jean-Claude Trichet said he has ``no bias'' following the decision to raise the main refinancing rate by a quarter-percentage point to 4.25%. Speculation that he would signal more than one rate increase helped the euro trade as high as $1.5909 this week.

Trichet played down at a July 3 press conference the prospects of interest-rate increases, saying this week's quarter-point boost will help bring inflation back below the ECB's preferred limit of 2%. Trichet said he had ``no bias'' on further rate moves. European inflation accelerated to a 16-year high of 4% in May. Economic growth may weaken to 1.5% next year from 1.8% this year and 2.6% in 2007, according to ECB staff.

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.50
Current price: Y107.43
Support 1: Y106.50
Support 2: Y105.80
Support 3: Y105.00
Comments: Dollar rises above earlier broken channel support line from March 17 on Y107.20. Back above will make possible testing June 16 highs on Y108.60 and then - Y109.40. Support comes near Friday’s lows on Y106.50, then – at Y105.80. Stronger level comes at Y105.00 (June 30 lows).

Resistance 3: Chf1.0490
Resistance 2: Chf1.0350
Resistance 1: Chf1.0310
Current price: Chf1.0300
Support 1: Chf1.0230
Support 2: Chf1.0160
Support 3: Chf1.0080
Comments: Dollar looks optimistic, testing 50% Fibo on Chf1.0300/10 (Chf1.0490-Chf1.0110 move). Above the rise may extend to Chf1.0350. Stronger resistance is around Chf1.0490 (June 23 high). Support comes at Chf1.0230 (Friday’s low). Then losses may widen to Chf1.0160. Stronger support comes at channel line from May 08 on Chf1.0080.

Resistance 3: $2.0000
Resistance 2: $1.9940
Resistance 1: $1.9860
Current price: $1.9751
Support 1: $1.9710
Support 2: $1.9640
Support 3: $1.9580
Comments: Cable retreats with strong support is around 50% Fibo on $1.9710 ($1.9407-$2.0000 rise). Break under will accelerate the decline to $1.9640 and then – to June 23 low on $1.9580. Minor resistance is around at $1.9860 (23.6%), then – around $1.9940. Stronger level is around physiological level on $2.0000, tested on July 01.

Resistance 3:$1.6020
Resistance 2: $1.5900
Resistance 1: $1.5730
Current price: $1.5639
Support 1: $1.5600
Support 2: $1.5530
Support 3: $1.5470
Comments: Euro still under pressure with strong support is around $1.5600 (50% of $1.5300 - $1.5905 rise). Below correction may extend to $1.5530 and then – to 23 June lows at $1.5470. Minor resistance comes at Friday’s highs on $1.5730, above – on $1.5900/05 (03 July high). Set above will point to life-time high on $1.6020.

Merrill Lynch is in talks to sell its $6 billion stake in Bloomberg back to the financial data and news company in a cash-raising move designed to shore up the American bank's balance sheet, the Sunday Times reported. Merrill has held the 20% stake for about 20 years, the paper notes.

High Low Close
EUR/USD 1.5726 1.5651 1.5697
USD/JPY 106.86 106.55 106.75
GBP/USD 1.9847 1.9793 1.9822
USD/CHF 1.0277 1.0230 1.0252

EUR/JPY 168.03 167.08 157.58
EUR/GBP 0.7928 0.7901 0.7915
GBP/JPY 212.04 211.22 211.62
GBP/CHF 2.0364 2.0281 2.0321

Change % Change Last
Nikkei 225 -27.78 (-0.21%) 13229.46
DAX 30 -81.53 (-1.28%) 6272.21
САС 40 -77.99 (-1.80%) 4266.00
FTSE 100 -63.80 (-1.16%) 5412.80
Dow +73.03 (+0.65%) 11288.54
Nasdaq -6.08 (-0.27%) 2245.38
S&P +1.38 (+0.11%) 1262.90
10YR 96 0 3.98% 99 4/32
OIL NYMEX +1.72 (+1.20%) $145.29

08:30 UK Industrial production (May) - 0.2%
08:30 UK Industrial production (May) Y/Y - 0.2%
08:30 UK Manufacturing output (May) - 0.1%
08:30 UK Manufacturing output (May) Y/Y - 0.1%
10:00 Germany Industrial production (May) adjusted 0.4% -0.8%
10:00 Germany Industrial production (May) adjusted Y/Y - 4.8%
10:00 Germany Industrial production (May) unadjusted Y/Y - 15.5%
G8 summit in Japan
23:50 Japan (M2+CDs) money supply (June) Y/Y - 2.0%