The stock market has retreated into negative territory, trading just below the unchanged mark.
Much of the session's story remains the same as financials (+0.7%) continue to guide trading. The sector has dipped further from its session high, inducing the broader market's decline.

Suspects there is passthru from energy into core inflation.

The stock market is trading with a slight gain of 0.1% after retreating from its session high when it was up 0.6%.
The financial sector (+1.4%) is outperforming the broader market. The hard-hit regional banks group is outperforming with a gain of 4.5%. The thrifts & mortgages group (+3.3%) is modestly rebounding from its steep 12% drop yesterday.
The computer storage & peripherals group (-6.6%) is posting the largest loss. EMC (EMC 13.59, -1.55) is the main laggard after EMC's majority holding VMWare (VMW 39.07 -14.12) said its revenue growth will fall short of previous expectations.

High print was Y107.55. Stops were tripped over Y107.50 but no excitement from those. Offers remain layered from Y107.75 to Y108.00.

The dollar rose against the euro for the first time in three days as Federal Reserve Chairman Ben S. Bernanke said the bank may extend securities dealers' access to direct loans into 2009.
The U.S. currency erased losses that came yesterday on concern Fannie Mae and Freddie Mac, the two largest U.S. providers of home financing, may need to raise additional capital. China's yuan remained higher against the dollar after the Group of Eight nations signaled they're seeking gains in currencies of countries with trade surpluses.
``Bernanke's comments contributed to the turnaround to the dollar,'' said Stephen Malyon, a currency strategist at Scotia Capital Inc. in Toronto. ``It helped alleviate some of the concern about credit markets.''
The U.S. currency increased against the euro today as Bernanke said in a speech in Arlington, Virginia, that the Fed is committed to financial stability and is ``considering several options, including extending the duration of our facilities for primary dealers'' beyond year-end.
``It makes it clear that the markets are going through another bout of turbulence and they're willing to act to counter those forces,'' said Samarjit Shankar, director of global strategy for the foreign-exchange group in Boston at Bank of New York Mellon, the world's largest custodial bank, with about $23 trillion in assets under administration. ``That's where the support for the dollar is coming from.''
Bernanke said on June 3 that he's ``attentive'' to the effect of the dollar's decline on inflation. He and U.S. Treasury Secretary Henry Paulson are scheduled to testify before Congress on July 10.
Pending home resales in the U.S. fell 4.7 percent in May after a revised 7.1 percent increase in the prior month, the National Association of Realtors reported today in Washington. The median forecast of 38 economists surveyed by Bloomberg News was for a decrease of 3 percent.

The major indices climb to session highs, with the Nasdaq outpeforming thanks to strength in large-cap names such as Qualcomm (QCOM 46.34, +0.98) and eBay (EBAY 28.25, +1.33).
Wal-Mart (WMT 58.15, +1.24) is posting a solid gain of 2.2%. According to reports, Merrill Lynch added Wal-Mart to a list of recommended stocks.

"WTI prices, which averaged $72 per barrel in 2007, are projected to average $127 per barrel in 2008 and $133 per barrel in 2009."

Economist Brian Wesbury says recent data suggest "home building will continue to fall throughout most, if not all, of 2008. In addition, home prices probably will not bottom until mid-2009."

The S&P 500 recovers to the unchanged mark following a wave of broad-based buying interest that sends eight of the ten economic sectors in positive territory.
Of note, the financial sector is trading at session highs with a gain of 0.9% thanks to strength in insurance brokers (+2.1%) and life and health insurers (+2.0%). Specialized finance is under pressure as exchanges CME Group (CME 320.66, -13.63) and NYSE Euronext (NYX 44.67, -1.57) slip.
The energy sector pares its loss to -2.6% after being down as much as 3.8%. The modest recovery comes even as crude tradesear its worst level, with a loss of 4.1% to $135.67 per barrel.

Aug contract is now down $5.57 at $135.80 on session, after G8 call for diversifying energy sources, Iran's Ahmadinejad dismissed possibility of a war, easing concerns over an Atlantic hurricane and Boone Pickens energy plan.

The major indices slip to session lows in mostly broad-based weakness and then recover a bit. Crude oil prices are trading near session lows, with a loss of 3.7% to $136.12 per barrel.
The dollar is seeing some buying interest, rising 0.4% against a basket of world currencies. Meanwhile, gold is down 0.7% to $922.00 per ounce.

Ian Shepherdson, Chief U.S. Economist at HFE: «May pending home sales at -4.7% "suggests that a good part of the April gain was the result of Easter-related seasonal adjustment problems, but the overall picture of the index over the past few months is one of broad stability. It is still some 13% lower than a year ago but this is better than the peak 24% rate of decline at the turn of the year. Still it is too soon to call a turn in housing».

Just hitting the wires, May pending home sales fell 4.7%, compared to the expected decline of 3%. Separately, wholesale inventories rose 0.8%, which is slightly more than the consensus estimate that called for growth of 0.6%.
The S&P falls into negative territory following the economic reports, although the market's loss is slight. Six of the ten economic sectors are in the red, led by weakness in energy (-2.6%) and materials (-2.5%) as commodity prices slip 1%.
VMware (-13.12) plunged 24% to its lowest level since its August 2007 IPO after announcing the departure of its president and CEO. The tech-company also said it expects fiscal year 2008 revenue growth to be mostly below prior guidance that called for more than 50% growth.

EUR/USD: $1.5500
USD/JPY: Y107.50, Y106.50, Y106.00, Y105.50
EUR/JPY: Y165.00, Y164.00

Futures continue to suggest a negative start to the trading day as they trade modestly below session highs (S&P futures -4.3, Nasdaq futures -6.2). Conversely, crude oil is trading near its session lows, down 1.8% to $138.80.
Fed Chairman Bernanke said the Fed may extend its lending to Wall Street firms through 2009. Merrill Lynch (MER) had its second quarter earnings estimates cut at Wachovia, noting Merrill's CDO and bond insurer exposure.
In corporate news, yesterday after the close IndyMac (IMB) announced that it has been unable to raise additional capital and was informed by regulators that it is no longer well capitalized.

European equity bourses are paring back losses, as crude oil prices correct lower. FTSE-100 is down 44pts (-0.81%), CAC-40 is down 58pts (-1.48%) Xetra-DAX is down 82pts (-1.28%).

The yen rose against the dollar and euro on speculation widening mortgage-industry losses will prompt investors to pare holdings of higher-yielding assets funded with the Japanese currency.
``Falling stock markets, which are a sign of rising risk aversion, are supporting low-yielding currencies like the yen,'' said Marcus Hettinger, a currency strategist in Zurich at Credit Suisse Group, Switzerland's second-biggest bank. There's ``concern over more writedowns following the news about Fannie Mae and Freddie Mac.''
The dollar was little changed against the euro before speeches by Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson.
Bernanke speaks on financial regulation and stability at a forum in Arlington, Virginia today. He said on June 3 that he's ``attentive'' to the effect of the dollar's decline on inflation. Paulson and Bernanke are scheduled to testify before Congress on July 10.
``U.S. officials' comments may accelerate gains in the dollar,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``We can't rule out the possibility that Bernanke will be hawkish on inflation and Paulson will be supportive of the dollar.''
Gains in the U.S. currency may be limited before a National Association of Realtors housing report, due at 10 a.m. in Washington. Pending home resales probably fell 3 percent in May, the biggest decline since November.

EUR/USD Traded within $1.5740- $1.5675 range. Bids $1.5670/50. Offers $1.5740, $1.5750/60, $1.5780.

GBP/USD traded within $1.9790- $1.9710 range.

USD/JPY posted session low at Y106.20, then recovered to Y107.00. Bids Y106.20, Y106.00/5.90. Offers Y106.70/80, Y107.00

US data starts at 1255:GMT with Redbook. US May Pending Home Sales and Wholesale inventories are due at 14:00GMT. Also today ABC/Washington Post Consumer Confidence will be published at 21: 00 GMT.

WTI crude oil fell to $138.70 -- lowest level since June 27 following comments from US investor T Boone Pickens who reportedly said that he aims to cut US dependence on foreign oil and will offer solution on oil crisis. Crude oil has since bounced to $139.29, down $2.08.

The yen rose against the dollar and euro on speculation widening mortgage-industry losses will prompt investors to pare holdings of higher-yielding assets funded with the Japanese currency.
``Falling stock markets, which are a sign of rising risk aversion, are supporting low-yielding currencies like the yen,'' said Marcus Hettinger, a currency strategist in Zurich at Credit Suisse Group, Switzerland's second-biggest bank. There's ``concern over more writedowns following the news about Fannie Mae and Freddie Mac.''
The dollar was little changed against the euro before speeches by Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson.
Bernanke speaks on financial regulation and stability at a forum in Arlington, Virginia today. He said on June 3 that he's ``attentive'' to the effect of the dollar's decline on inflation. Paulson and Bernanke are scheduled to testify before Congress on July 10.
``U.S. officials' comments may accelerate gains in the dollar,'' said Hiroshi Yoshida, foreign-exchange trader in Tokyo at Shinkin Central Bank, Japan's fifth-largest publicly traded lender by assets. ``We can't rule out the possibility that Bernanke will be hawkish on inflation and Paulson will be supportive of the dollar.''
Gains in the U.S. currency may be limited before a National Association of Realtors housing report, due at 10 a.m. in Washington. Pending home resales probably fell 3 percent in May, the biggest decline since November.

Extends recovery above Monday's highs of $1.9790, but reported offers placed to $1.9800 so far able to cap move at $1.9797. A break above $1.9800 to open a move on toward $1.9820/30 ahead of stronger offers placed between $1.9840/50. Bids now seen placed back at $1.9750.

Resistance 3: Y107.80
Resistance 2: Y107.30
Resistance 1: Y106.70
Current price: Y106.63
Support 1: Y106.20
Support 2: Y105.80
Support 3: Y105.00
Comments: Strong resistance is around Y106.70. Above there is a room for today's highs on Y107.30 and then – near Y107.80. Support is around on Y106.20, then – near Y105.80. Stronger level comes at Y105.00 (June 30 lows).

Resistance 3: Chf1.0400
Resistance 2: Chf1.0340
Resistance 1: Chf1.0280
Current price: Chf1.0253
Support 1: Chf1.0220
Support 2: Chf1.0160
Support 3: Chf1.0080
Comments: The nearest support on Chf1.0220. Then losses may widen to Chf1.0160. Stronger support comes at channel line from May 08 on Chf1.0080. Resistance is around today's high on Chf1.0280, then - yesterday’s high on Chf1.0340, then – on Chf1.0400.

Resistance 3: $2.0000
Resistance 2: $1.9940
Resistance 1: $1.9800
Current price: $1.9775
Support 1: $1.9700
Support 2: $1.9640
Support 3: $1.9580
Comments: Cable continues to retreat. Strong support is around $1.9700. Break under will accelerate the decline to $1.9640 (Monday’s low) and then – to June 23 low on $1.9580. Minor resistance is around at $1.9790/00 (yesterday’s high), 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: $1.5750
Current price: $1.5724
Support 1: $1.5670
Support 2: $1.5600
Support 3: $1.5530
Comments: Euro still under pressure, despite the tries of recovery yesterday. Support comes at today's low $1,5670. Strong support is around $1.5600 (50% of $1.5300 - $1.5905 rise). Below correction may extend to $1.5530. Minor resistance comes at Monday’s highs on $1.5750, above – on $1.5900/05 (03 July high). Set above will point to life-time high on $1.6020.

EUR/USD: $1.5500
USD/JPY: Y107.50, Y106.50, Y106.00, Y105.50
EUR/JPY: Y165.00, Y164.00

EUR
Bids: $1.5660, $1.5620/10
Offers: $1.5725/35, $1.5750/60

JPY
Bids: Y106.70, Y106.55/45
Offers: Y107.75, Y108.00

GBP
Bids: $1.9700, $1.9680
Offers: $1.9750/60, $1.9790/00

AUSSIE
Bids: $0.9490
Offers: $0.9550

European equity bourses are sharply lower Tuesday, with financials leading the charge lower amid jitters surrounding Fannie Mae and Freddie Mac. Oil stocks are also lower after sharp fall in crude oil prices yesterday on signs that Iran will be more cooperative with its nuclear program. CAC-40 is down 91pts (-2.0%), Xetra-DAX is down 126pts (-1.97%) and FTSE-100 is down 116pts (-2.1%).

The yen rose against the euro and the dollar as Asian stocks slumped, prompting speculation investors will pare holdings of higher-yielding assets funded with the Japanese currency.
The yen also advanced against the Australian dollar.
Asian stocks fell the most in three weeks after Lehman Brothers Holdings Inc. said yesterday Fannie Mae and Freddie Mac may have to raise $75 billion because of mortgage losses.
The dollar rose against the euro on speculation Federal Reserve Chairman Ben S. Bernanke and Treasury Secretary Henry Paulson will reiterate their support for a strong currency.

EUR/USD declined to $1.5670 before rebounded sharply to $1.5720.
GBP/USD also printed session lows on $1.9705 before rising to $1.9765.
USD/JPY fell from Y107.20 to Y106.50.

Gains in the U.S. currency may be limited before a National Association of Realtors housing report. Pending home resales probably fell 3% in May, the biggest decline since November, according to a survey of economists.

Japan's benchmark stock indices ended Tuesday's session lower, as the stronger yen, along with weaker financial stocks, again weighed on sentiment. The benchmark Nikkei 225 was down 326.94 points, or 2.45%, at 130033.1, with the broader-based TOPIX down 29.29 points at 1283.51. The Nikkei is now a the lowest level since March.

Stock market fixing:
Nikkei 225 +122.15 +0.90% 13,360.04
Topix +14.92 +1.20% 1,312.80
CAC +76.59 +1.80% 4,342.59
FTSE -63.80 -1.18% 5,512.70
DAX +123.54 +1.97% 6,395.75
Dow -56.58 -0.50% 11,231.96
NASDAQ -2.06 -0.09% 2,243.32
S&P -10.59 -0.84% 1,252.31
10yr Note -0.4300 -0.108% 3.930%
NYMEX Crude Oil -3.92 -2.70% 141.37
Gold -4.80 -0.51% 928.80

Japanese stocks rose, snapping the Nikkei 225 Stock Average's longest losing streak in 54 years, as investors bet shares had become cheap relative to earnings.
Mizuho Financial Group Inc., Japan's third-biggest bank by assets, rose the most in a month, while Tokyu Land Corp. paced a rally by developers. Orix Corp., the nation's largest non-bank financial company, jumped the most in eight weeks. Canon Inc. gained as the yen fell to the weakest against the dollar in almost two weeks.
Mizuho surged 6%, the sharpest gain since June 2. Smaller rival Sumitomo Mitsui Financial Group Inc. gained 3.6%, while Chuo Mitsui Trust Holdings Inc. climbed 4%.
Tokyu Land Corp. surged 7.5%, while Tokyo Tatemono Co. leapt 6.4%. Orix rose 6.3%. The stocks were the biggest winners on the MSCI World Index.
Canon rose 1.5%, the biggest advance since June 16, while Mazda Motor Corp. added 1.8%. Mitsubishi Motors Corp.leapt 6%, the sharpest jump since June 4.

European stocks advanced, sending the Dow Jones Stoxx 600 to its biggest gain in two months, after a rout left the index at the cheapest relative to earnings in at least six years and oil prices declined.
J Sainsbury Plc snapped a four-day drop as JPMorgan Chase & Co. upgraded the food retailer, saying the shares were cheap compared with profit. Continental AG led auto-related stocks higher as crude traded below $141 and the group rebounded from the lowest valuation in five years. Awilco Offshore ASA rallied 15% after China Oilfield Services Ltd. offered about $2.49 billion for the Norwegian oil-drilling contractor.
Sainsbury added 3%. JPMorgan raised its recommendation for the third-largest U.K. supermarket chain to ``overweight'' from ``neutral.''
Continental, Europe's biggest tiremaker, rallied 3.2%. Fiat SpA, Italy's largest carmaker, advanced 2%.
Air France-KLM Group climbed 4.6% as Europe's biggest carrier said passenger traffic rose 2.6% in June, led by the Middle East and Africa and the Americas.
EasyJet Plc increased 4%. Europe's second-largest discount airline said it carried 20% more passengers in June after adding planes and buying GB Airways Ltd.

Wall Street failed to set in the positive territory Monday, with the Dow exiting bear territory, as investors welcomed lower oil prices and a stronger dollar.
Stocks ended mixed on Thursday with blue-chips edging higher despite a weak jobs report and an interest rate hike in Europe.
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 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.
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. 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% 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.
The yen weakened against the euro and the dollar as global stocks advanced on retreating oil prices, reviving demand for higher-yielding assets.

EUR/USD printed lows $1.5609 before rising to $1.5750, triggering somestops and offers. Later rate corrected to $1.5712.
GBP/USD tested $1.9650 before rising to $1.9790. Later rate back to $1.9750.
USD/JPY set highs on Y107.75 before falling to Y106.70. Later rate rebounded to Y107.30.

Today’s focus will be on US later data from housing sector – at 14:00 GMT Pending home sales report will be released.

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.80
Current price: Y106.77
Support 1: Y106.70
Support 2: Y105.80
Support 3: Y105.00
Comments: Dollar consolidates within the narrow range Tuesday. Strong resistance is around Y107.80. Above there is a room for testing June 16 highs on Y108.60 and then – near Y109.40. Support is around yesterday’s lows on Y106.70, then – near Y105.80. Stronger level comes at Y105.00 (June 30 lows).

Resistance 3: Chf1.0490
Resistance 2: Chf1.0400
Resistance 1: Chf1.0340
Current price: Chf1.0253
Support 1: Chf1.0220
Support 2: Chf1.0160
Support 3: Chf1.0080
Comments: Dollar tries to rebound after yesterday’s sell-off with support comes at Monday’s low on Chf1.0220. Then losses may widen to Chf1.0160. Stronger support comes at channel line from May 08 on Chf1.0080. Resistance is around yesterday’s high on Chf1.0340, then – on Chf1.0400. Stronger resistance is around Chf1.0490 (June 23 high).

Resistance 3: $2.0000
Resistance 2: $1.9940
Resistance 1: $1.9800
Current price: $1.9735
Support 1: $1.9700
Support 2: $1.9640
Support 3: $1.9580
Comments: Cable continues to retreat. Strong support is around $1.9700. Break under will accelerate the decline to $1.9640 (Monday’s low) and then – to June 23 low on $1.9580. Minor resistance is around at $1.9790/00 (yesterday’s high), 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: $1.5750
Current price: $1.5699
Support 1: $1.5600
Support 2: $1.5530
Support 3: $1.5470
Comments: Euro still under pressure, despite the tries of recovery yesterday. 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 Monday’s highs on $1.5750, above – on $1.5900/05 (03 July high). Set above will point to life-time high on $1.6020.

High Low Close
EUR/USD 1.5751 1.5609 1.5722
USD/JPY 107.75 106.64 107.12
GBP/USD 1.9826 1.9647 1.9756
USD/CHF 1.0342 1.0224 1.0263

EUR/JPY 168.60 167.11 168.44
EUR/GBP 0.7965 0.7900 0.7955
GBP/JPY 212.42 210.95 211.65
GBP/CHF 2.0388 2.0221 2.0277

Change % Change Last
Nikkei 225 +122.15 +0.90% 13,360.04
Topix +14.92 +1.20% 1,312.80
CAC +76.59 +1.80% 4,342.59
FTSE -63.80 -1.18% 5,512.70
DAX +123.54 +1.97% 6,395.75
Dow -56.58 -0.50% 11,231.96
NASDAQ -2.06 -0.09% 2,243.32
S&P -10.59 -0.84% 1,252.31
10yr Note -0.4300 -0.108% 3.930%
NYMEX Crude Oil -3.92 -2.70% 141.37
Gold -4.80 -0.51% 928.80

12:55 USA Redbook (05.07)
14:00 USA Wholesale inventories (May) 0.7% 1.3%
19:00 USA Consumer credit (May), bln +6.5 +8.9
G8 summit in Japan
23:50 Japan Machinery orders (May) adjusted - 5.5%
23:50 Japan Machinery orders (May) unadjusted Y/Y - 0.5%