Toyota Motor Corp’s quarterly profit plunged 28% from the previous year as slipping North American sales, a strong yen and rising material costs dented its earnings.

The nation's largest retailer Wal-Mart Stores, Inc said same-store sales rose 3% in July. That was slightly lower than the consensus analyst estimate of a rise of 3.4%.

The insurance giant American International Group Inc posted its third consecutive quarterly loss of more than $5B as it wrote down bad mortgage-related investments.

The discount retailer Costco Whsl Corp New reported a 10% jump in July sales, beating the 7.8% gain projected by analysts surveyed.

Michael Hume of Lehman says, "The growth scare is clearly seen as being sufficient for the time being to counter the inflation risks that have been building for some time. It seems reasonable to expect no change in rates over the next few months."

The recovery effort fades as continued weakness in financials (-3.2%), consumer staples (-1.3%) and telecom (-1.6%) offset advances made by utilities (+1.0%) and tech (+1.0%). The Treasury market is rallying, with the 10-year note up 30 ticks, sending its yield down to 3.94%. The buying interest is fueled by a well received Treasury auction.

The euro touched a seven-week low against the dollar after European Central Bank President Jean- Claude Trichet said economic growth will slow, reducing expectations policy makers will raise interest rates further.
The European single currency also declined against the yen and the Canadian dollar as the ECB kept its main rate at a seven-year high of 4.25 percent.
``The slowing in the euro zone is starting to register with policy makers,'' said Jonathan Gencher, vice president of foreign exchange sales at BMO Capital Markets in Toronto. ``Not long ago, everyone was looking to find a reason to sell the dollar. The market is going to start to focus on reasons to sell the euro.''
Traders pared bets the ECB will raise the main refinancing rate for a second time this year.
The Dollar Index on the ICE futures exchange, which tracks the dollar against the currencies of six U.S. trading partners, reached 74.477, the highest since Feb. 27.
More Americans unexpectedly signed contracts to purchase previously owned homes in June, a sign that lower prices are drawing some buyers back into the market. The index of pending home resales rose 5.3 percent after a revised 4.9 percent decline in May, the National Association of Realtors said today in Washington. The gain is the third this year. Economists predicted a 1 percent drop.

"Given a 4.9% drop in pending sales in May and the increase in June, we look for existing home sales to rise between 0.5% and 1% in July."

Insurer's big loss, along with a rise in oil prices, lackluster retail sales and spike in unemployment claims, weigh on markets.
Stocks fell Thursday morning as rising oil prices, lackluster retail sales and AIG's big quarterly loss exacerbated worries about the slowing economy.
However, declines were tempered by a better-than-expected housing market report released in the mid-morning.
The tech-heavy Nasdaq composite lost 0.2%, bucking bigger losses thanks to strength in big tech stocks such as Microsoft and Intel .
Stocks fell sharply in the first half hour of trading, but managed to recover some losses after the release of the June pending home sales index. Sales rose 5.3% in the month versus forecasts for a drop of 1%.
U.S. light crude oil for September delivery rose $2.02 to $120.60 a barrel on the New York Mercantile Exchange after ending the previous session at a three-month low.
The world's largest retailer Wal-Mart reported July sales at stores open a year or more rose 3%, within its forecasted range of growth of 2% to 4%, but short of analysts' expectation that sales would grow 3.4%. Wal-Mart shares fell nearly 4%.
Fellow discount retailer Costco reported sales rose 10%, topping forecasts, while Target said sales fell 1.2% -- a bigger-than-expected drop.
A variety of retailers reported lackluster sales, reflecting the end of the impact from the government stimulus checks mailed out earlier this summer.
Clothing retailers were hit particularly hard, with both Abercrombie & Fitch and Pacific Sunwear of America reporting steeper-than-expected declines. Abercrombie shares fell 9% and Pacific Sunwear fell 3%.
On Thursday, the government reported that the number of Americans filing new claims for unemployment last week rose by 7,000 to 455,000. That figure represents a more than 6-year high.
Late Wednesday, the insurer AIG posted a steeper-than-expected quarterly loss of $5.36 billion due to massive writedowns related to the credit collapse. The Dow component reported a profit a year earlier. On a per-share basis, the company lost 51 cents excluding one-time items, versus forecasts for a 63-cent gain. Shares of AIG fell nearly 18% Thursday.
In the bond market, Treasury prices rose, lowering the yield on the benchmark 10-year note to 3.99% from 4.05% late Wednesday.
COMEX gold for October delivery rose $6.70 to $885.50 an ounce.

The energy sector bounces into positive territory in conjunction with a rise in crude prices (+1.8% at $120.68). At the same time, the broader market dips a bit, but is still trading well above session lows.Within the energy sector, 79% of stocks are trading higher.

Not a lot of volume as the pair orbits $1.5375 after finding a footing at $1.5355. Not ruling out the possibility of a test lower later. Trouble is, the trader says, dollar doesn't seem to want to push higher elsewhere either, leaving the chance of a nothing afternoon.

Lehman says despite uncertainty surrounding new programs, initial unemploy claims are "indicative of a weakening labor market and slowing economy." LEH prelim est is -70,000 NFP in August.

The decline is halted as selling pressure eases after a better-than-expected home sales report hits the wires, although the major indices still trade with substantial losses.
June pending home sales rose 5.3%, which is better than the expected decline of 1.0%.
All ten of the sectors are in negative territory, led by a 1.8% drop in financials as AIG (AIG 24.59, -4.50) plunges 16%. The energy (-0.1%) and tech (-0.1%) sectors are outperforming on a relative basis
The tech-heavy Nasdaq is outperforming, as it did yesterday, with a loss of 0.5% compared to the S&P 500's decline of 0.8%.

Futures continue to indicate a lower start (S&P futures vs fair value: -11.7. Nasdaq futures vs fair value: -15.0. ) as the latest jobless claims reading raises concerns about the labor market. The NY Post reports that Lehman Brothers (LEH) CEO Dick Fuld is in "scramble mode" to try and raise capital to ensure the company does not get split up. LEH is down 3% in premarket trading. Treasuries are seeing some buying interest, with the 10-year note up 19 ticks, sending its yield down to 3.99%.
Stocks rose Wednesday as oil prices slid to a fresh three-month low. Tech shares led the advance as investors cheered solid quarterly results from Cisco.
AIG: But after the market close Wednesday, AIG posted a more than $5 billion loss for the second quarter as the insurance giant was stung by the turmoil in the credit markets and downturn in the housing market.
Retail sales: Investors also digested a flurry of monthly sales reports from retailers. Overall, same-store sales are expected to rise 2.3% in July, compared to a 2.9% gain during the year-ago period, according to Thomson Reuters.
Oil: Oil prices rebounded after sliding for the past four weeks. U.S. crude for September delivery rose $2.06 to $120.64 a barrel in electronic trading.

Wouldn't say surprised by weakness of recent data
- All the GDP risks we had listed were on the downside

- no signs of significant contraints on bank loans
- Must avoid broad based second round effects
- Data confirm weakening of real GDP growth
- Strongly determined to firmly anchor inflation expectations
- Will monitor very closely all developments

The euro rose against the dollar for the first time in three days on speculation European policy makers will say today they remain concerned about inflation as a report showed German exports gained the most in almost two years. The ECB decided to keep rates at 4.25 percent today.
The currency rebounded from near an eight-week low before a European Central Bank meeting at which President Jean-Claude Trichet may focus on risks for consumer-price growth. Deutsche Lufthansa AG workers received a 5.1 percent pay increase from the German airline to stay ahead of the fastest inflation in more than 16 years.
Trichet said July 3 he had ``no bias'' or ``pre-commitment'' after policy makers increased the main refinancing rate a quarter- percentage point. Since then, government reports including retail sales and consumer confidence showed economic growth is flagging.
German sales abroad in June increased 4.2 percent from May, when they fell 3.4 percent, the country's Federal Statistics Office in Wiesbaden said. That's the biggest increase since September 2006. Economists expected a gain of 1.8 percent, the median of 12 forecasts in a Bloomberg News survey showed.
Separately, the Bank of England kept its key rate at 5 percent.

EUR/USD rebounded from $1.5400 and printed session low on $1.5480. Later rate traded within to $1.5440/80 range.

GBP/USD consolidated within the $1.9470/$1.9515 range before Bank of England decision pushed cable to $1.9520. Offers $1.9520/30, more toward $1.9550. Bids $1.9485/80, $1.9450.

USD/JPY was under pressure and before US session pressed the lower bound of the day's range Y109.20/70.

The euro rose against the dollar for the first time in three days on speculation European policy makers will say today they remain concerned about inflation as a report showed German exports gained the most in almost two years.
The currency rebounded from near an eight-week low before a European Central Bank meeting at which President Jean-Claude Trichet may focus on risks for consumer-price growth. Deutsche Lufthansa AG workers received a 5.1 percent pay increase from the German airline to stay ahead of the fastest inflation in more than 16 years. The ECB will keep rates at 4.25 percent today.
Trichet said July 3 he had ``no bias'' or ``pre-commitment'' after policy makers increased the main refinancing rate a quarter- percentage point. Since then, government reports including retail sales and consumer confidence showed economic growth is flagging.
``We think that the council is unlikely to sign up to a further policy rate increase given the sharp deterioration in the business climate,'' a team of Barclays Capital currency strategists, led by David Woo, wrote in an investor note today.
German sales abroad in June increased 4.2 percent from May, when they fell 3.4 percent, the country's Federal Statistics Office in Wiesbaden said. That's the biggest increase since September 2006. Economists expected a gain of 1.8 percent, the median of 12 forecasts in a Bloomberg News survey showed.
The Frankfurt-based ECB, which raised borrowing costs last month, publishes its decision at 11:45 GMT and Trichet holds a press conference 45 minutes later. Separately, the Bank of England kept its key rate at 5 percent.

Gains in European markets as the markets await the interest rate decisions from the Bank of England and ECB. FTSE 100 is trading higher by 0.8%, while the Dax gains 0.4% and the Cac in Paris trades up 1.15%

Resistance 3: Y111.50
Resistance 2: Y110.40
Resistance 1: Y109.80
Current price: Y109.42
Support 1: Y109.30

Support 2: Y108.40

Support 3: Y107.60

Comments: Dollar challenges session lows around Y109.30 with a break under correction may dip to Y108.40 (23.6% of the Y103.70 - Y109.80 rise), and then – to Aug 05 lows on Y107.60. Strong resistance is near yesterday’s highs on Y109.80 (Y109.90, 50% of Y124.15 - Y95.75 decline). Above the rise may extend to Y110.40. Key level is around resistance line from Mar 2008 on Y111.50.

Resistance 3: Chf1.0720

Resistance 2: Chf1.0670
Resistance 1: Chf1.0610
Current price: Chf1.0553
Support 1: Chf1.0470
Support 2: Chf1.0380
Support 3: Chf1.0300

Comments: Dollar retreats after yesterday’s rally. Strong support is around Chf1.0470 (23.6% of the rise from Chf1.0010 to Chf1.0610, also channel support line from Jul 16). Below losses may widen to Chf1.0380. Stronger level comes around 50% Фибо on Chf1.0300/10. Minor resistance comes at yesterday’s highs on Chf1.0610. Stronger level comes near Chf1.0670 (channel line). Above the rise may extend to Chf1.0720 (Feb lows).

Resistance 3: $1.9640

Resistance 2: $1.9580

Resistance 1: $1.9520
Current price: $1.9500
Support 1: $1.9460
Support 2: $1.9360

Support 3: $1.9280

Comments: Sterling strengthening with resistance is near session high on $1.9520. Above here the rate may rebound to recent highs on $1.9580 and $1.9640. Below $1.9460 and $1.9360 losses may widen to $1.9280. Key support is around $1.9100/30 (trend line from Jan 2002 and 50% Fibo of the $1.7091 - $2.1160 move).

Resistance 3:$1.5700

Resistance 2: $1.5540

Resistance 1: $1.5480
Current price: $1.5475
Support 1: $1.5400

Support 2: $1.5280
Support 3: $1.5140

Comments: Rate rises ahead of ECB rate decision that may be hold unchanged at current 4.25%. Resistance is around $1.5480 with a break above will tsrget $1.5540 (23.6% of $1.6030 - $1.5400 move). Further there is a risk for testing Jul 31 high on $1.5700. Minor support comes at Wednesday’s low on $1.5400 with stronger around $1.5280 (May-June lows). Below support is around Mar lows on $1.5140.

The front-month Nymex WTI Sept 08 was last $1.16 higher at $119.74.

EUR/USD: $1.5500, $1.5550, $1.5565, $1.5625
USD/JPY: Y109.30, Y109.00, Y108.70, Y108.50, Y107.75
AUS/USD: $0.8490, $0.9400
Kiwi: $0.7330
USD/CAD: C$1.0400

EUR
Bids: $1.5400, $1.5380/70
Offers: $1.5480/85, $1.5510/20, $1.5500

JPY
Bids: Y109.30/20
Offers: Y110.00

GBP
Bids: $1.9485/80, $1.9465/55
Offers: $1.9520/30, $1.9545/55, $1.9575/85

AUSSIE
Bids: $0.9060/50

Offers: $0.9130, $0.9170

The euro gained for the first time in three days against the dollar after a German government report showed exports rose at the fastest pace in almost two years.
“German exports gave a surprise to the markets,” said Masashi Kurabe at Bank of Tokyo-Mitsubishi UFJ Ltd. “This is supportive for the euro.”
Sales abroad of Europe's largest economy, adjusted for working days and seasonal changes, increased 4.2% from May, when they fell 3.4%. That's the biggest increase since September 2006. Economists expected a gain of 1.8%.
The single currency climbed from a seven-week low before a European Central Bank meeting at which President Jean-Claude Trichet may highlight inflation risks. The yen rebounded from a seven-month low versus the dollar before a

EUR/USD rebounded from $1.5400 and printed session low on $1.5480. Later rate retreated to $1.5460.

GBP/USD consolidated withinthe $1.9470/$1.9515 range.

USD/JPY held within the Y109.30/70.

Today’s focus is on rate decisions from BoE and ECB with banks are expected to leave rates unchanged at 5.00% and 4.25% respectively. But main attention will be on ECB’s head Trichet press-conference.
BoE rate decision is due to come at 11:00 GMT, while ECB’s decision is schedule to come at 11:45 GMT.
At 10:00 GMT Germany industrial production figures will be released.

Japan's benchmark stock indices ended the morning session lower. The Nikkei 225 was down 129.90 points, or 0.98%, at 13124.99. The TOPIX was down 18.46 points at 1258.81.

Stock market fixing:
Nikkei 225 +340.23 +2.60% 13,254.89
Topix +29.56 +2.40% 1,277.27
FTSE +31.60 +0.58% 5,486.10
DAX +42.69 +0.65% 6,561.39
CAC +61.98 +1.41% 4,448.33
Dow +40.30 +0.35% 11,656.07
NASDAQ +28.54 +1.21% 2,378.37
S&P +4.31 +0.34% 1,289.19
10yr Note +0.4100 +0.102% 4.048%
NYMEX Crude Oil -0.59 -0.50% 118.58
Gold -3.10 -0.35% 883.00

Japan's stocks rose the most in two weeks as falling oil prices lifted expectations production costs will ease and spending will rebound.
Mazda Motor Corp. led carmakers to their biggest jump in two weeks, while Bridgestone Corp., the world's biggest tiremaker, soared the most in four months after oil sank for a third day. Canon Inc., the world's biggest maker of digital cameras, jumped on speculation lower energy costs will boost consumer spending power.
Crude prices, which have risen 64% in the past 12 months and spurred the fastest inflation in a decade in Japan, lost 1.8% to $119.17 a barrel Tuesday, the lowest since May 5. Rising costs and weakening demand have dented corporate profits and caused production, household spending and exports to fall in June.

European stocks rose for a second day after BNP Paribas SA's earnings beat analysts' estimates, Xstrata Plc made a hostile bid for Lonmin Plc and the Federal Reserve indicated interest rates are on hold.
BNP jumped the most in two weeks after pretax profit at its investment bank eased concern France's biggest bank will have to raise capital. Lonmin surged 48 percent as Xstrata offered $9.8 billion for the platinum producer. Daimler AG and Air France-KLM Group gained as oil fell to a three-month low.
Stocks pared gains after Freddie Mac, the second-largest U.S. mortgage-finance company, posted its fourth straight quarterly loss and said it will cut the common-stock dividend.

Stocks on Wall Street jumped Wednesday, ending a choppy session in positive territory, as investors welcomed falling oil prices, Cisco Systems' improved earnings and talk of a big share buyback plan at Microsoft.

Oil prices: U.S. light crude oil for September delivery settled 59 cents lower at $118.58 a barrel, a three-month low. Prices had been even lower after the weekly oil inventories report showed gas supplies fell more than expected and crude supplies unexpectedly grew.
Freddie Mac disappoints again: Dragging on stocks in the morning was a weaker-than-expected second-quarter report from the troubled mortgage financer. Freddie also slashed its dividend and said it doubled its reserves for bad loans from the previous quarter. Freddie and its sister company, Fannie Mae, which together back or hold nearly half of all U.S. mortgage debt, have lost billions of dollars over the last year due to bad loans. Both companies' stocks have been pummeled. On Wednesday, Freddie lost over 19% and Fannie - which reports Friday - fell almost 15%.
Cisco and other results: Giving the tech sector some support was Cisco, which reported better-than-expected quarterly sales and earnings late Tuesday, but also lowered its fiscal first-quarter growth forecast.
AIG slipped ahead of its quarterly earnings report, due out after the close. The insurer and Dow component is expected to have earned 63 cents per share versus a profit of $1.77 per share.
In other news, Microsoft could buy back up to $20 billion of its stock as a means of boosting its lagging share price, according to reports that cited a top software analyst at brokerage UBS. Shares of the Dow component gained 3%.

The yen fell to the lowest since January against the dollar after Japan's government said the economy is ``deteriorating,'' acknowledging for the first time that the country's longest postwar expansion has probably ended.
Euro was under pressure as investors speculate ECB will keep its key interest rate at a seven-year high of 4.25% today, according to the forecasts of economists. ECB President Jean- Claude Trichet will hold a press conference after the rate decision.
Factory orders in Germany, adjusted for seasonal swings and inflation, declined 2.9% from May, the Economy Ministry said Wednesday. That's the biggest drop since July 2007.

EUR/USD printed session highs around $1.5515, but weak German economic data dragged the rate down below $1.5400, triggering stops and bids.
GBP/USD tested 6-dais channel resistance line on $1.9590 and retreated to $1.9455.
USD/JPY rose to 5-months high on Y109.70, triggering offers around Y108.80/90 and stops on Y109.05/10.

Today’s focus is on rate decisions from BoE and ECB with banks are expected to leave rates unchanged at 5.00% and 4.25% respectively. But main attention will be on ECB’s head Trichet press-conference.

BoE rate decision is due to come at 11:00 GMT, while ECB’s decision is schedule to come at 11:45 GMT. At 10:00 GMT Germany industrial production figures will be released.

Resistance 3: Y111.50
Resistance 2: Y110.40
Resistance 1: Y109.80
Current price: Y109.42
Support 1: Y109.30
Support 2: Y108.40
Support 3: Y107.60
Comments: Dollar challenges session lows around Y109.30 with a break under correction may dip to Y108.40 (23.6% of the Y103.70 - Y109.80 rise), and then – to Aug 05 lows on Y107.60. Strong resistance is near yesterday’s highs on Y109.80 (Y109.90, 50% of Y124.15 - Y95.75 decline). Above the rise may extend to Y110.40. Key level is around resistance line from Mar 2008 on Y111.50.

Resistance 3: Chf1.0720
Resistance 2: Chf1.0670
Resistance 1: Chf1.0610
Current price: Chf1.0551
Support 1: Chf1.0470
Support 2: Chf1.0380
Support 3: Chf1.0300
Comments: Dollar retreats after yesterday’s rally. Strong support is around Chf1.0470 (23.6% of the rise from Chf1.0010 to Chf1.0610, also channel support line from Jul 16). Below losses may widen to Chf1.0380. Stronger level comes around 50% Фибо on Chf1.0300/10. Minor resistance comes at yesterday’s highs on Chf1.0610. Stronger level comes near Chf1.0670 (channel line). Above the rise may extend to Chf1.0720 (Feb lows).

Resistance 3: $1.9640
Resistance 2: $1.9580
Resistance 1: $1.9520
Current price: $1.9500
Support 1: $1.9360
Support 2: $1.9280
Support 3: $1.9100
Comments: Sterling strengthening with resistance is near session high on $1.9520. Above here the rate may rebound to recent highs on $1.9580 and $1.9640. Below $1.9360 losses may widen to $1.9280. Key support is around $1.9100/30 (trend line from Jan 2002 and 50% Fibo of the $1.7091 - $2.1160 move).

Resistance 3:$1.5700
Resistance 2: $1.5540
Resistance 1: $1.5480
Current price: $1.5425
Support 1: $1.5400
Support 2: $1.5280
Support 3: $1.5140
Comments: Rate rises ahead of ECB rate decision that may be hold unchanged at current 4.25%. Resistance is around $1.5480 with a break above will tsrget $1.5540 (23.6% of $1.6030 - $1.5400 move). Further there is a risk for testing Jul 31 high on $1.5700. Minor support comes at Wednesday’s low on $1.5400 with stronger around $1.5280 (May-June lows). Below support is around Mar lows on $1.5140.

High Low Close
EUR/USD 1.5515 1.5395 1.5412
USD/JPY 109.87 108.19 109.59
GBP/USD 1.9595 1.9464 1.9470
USD/CHF 1.0612 1.0500 1.0591

EUR/JPY 169.31 167.24 168.92
EUR/GBP 0.7926 0.7897 0.7914
GBP/JPY 213.92 211.36 213.37
GBP/CHF 2.0665 2.0538 2.0623

Change % Change Last
Nikkei 225 +340.23 +2.60% 13,254.89
Topix +29.56 +2.40% 1,277.27
FTSE +31.60 +0.58% 5,486.10
DAX +42.69 +0.65% 6,561.39
CAC +61.98 +1.41% 4,448.33
Dow +40.30 +0.35% 11,656.07
NASDAQ +28.54 +1.21% 2,378.37
S&P +4.31 +0.34% 1,289.19
10yr Note +0.4100 +0.102% 4.048%
NYMEX Crude Oil -0.59 -0.50% 118.58
Gold -3.10 -0.35% 883.00

06:00 Germany Trade balance (June) unadjusted, bln, 15.5 14.4
06:00 Germany Current account (June) unadjusted, bln, - 7.5
08:00 Italy Industrial production (June) adjusted, - -1.4%
08:00 Italy Industrial production (June) Y/Y adjusted, - 4.1%
10:00 Germany Industrial production (June) adjusted, 1.2% -2.4%
10:00 Germany Industrial production (June) adjusted Y/Y, 1.9% 0.8%
10:00 Germany Industrial production (June) unadjusted Y/Y, - -1.5%
11:00 UK BoE meeting announcement 5.00% 5.00%
11:45 EU(15) ECB meeting announcement 4.25% 4.25%
12:30 EU(15) ECB press conference
12:30 USA Jobless claims (week to 02.08) 420K 448K
20:30 USA M2 money supply (28.07), bln,- +48.7
23:50 Japan (M2+CDs) money supply (July) Y/Y, - 2.3%