The aluminum maker Alcoa Inc kicked off earnings season by posting a nearly 24% decline in quarterly profit, citing rising costs for raw materials, but beat expectations.

Cisco Systems Inc the world's biggest maker of computer-networking equipment faces a slowdown in the U.S. and Europe and may say fourth-quarter revenue was ``flat to down'' from the third quarter, according to UBS.

Eli Lilly & Co., the world's biggest maker of psychiatric medicines, said it would buy the developer of experimental cancer treatments Sgx Pharmaceuticals Inc for $64M cash.

Chesapeake Energy Corporationthe oil and natural gas producer said it will issue 25M shares to raise money for debt payments.

The stock market is trading with a loss of about 0.6%, which is slightly above its recently reached session low. Buyers have not shown much interest following yesterday's late session rally.
Four sectors remain in positive territory, led by materials (+1.4%) and utilities (+1.1%). Tech (-1.5%), consumer discretionary (-1.1%) and financials (-1.3%) are the main laggards.

Northwest Airlines announced about 2500 white collar job cuts but said it would try to achieve the reduction with attrition and voluntary leavings.

The stock market has fallen deeper into negative territory to trade at a new session low. Financial stocks (-1.6%) were the primary perpetrator inducing the drop; the sector is at its lowest point since late morning.
Adding to pessimism, crude prices are up 0.8% to $137.10 per barrel. Still, the commodity is down markedly during the past week.
The dollar is down 0.5% at midday, as indicated by the dollar index. The greenback's decline makes dollar-denominated commodities, such as oil, pricier.

The dollar fell the most against the euro in a week on concern crude oil prices may prolong the slowdown of the U.S. economy.
European Central Bank President Jean-Claude Trichet said the level of inflation is ``worrying.''
``The resilience of oil prices makes an extended rally in the dollar unlikely,'' said Vassili Serebriakov, a currency strategist at Wells Fargo & Co. in New York.
Trichet told the European Parliament in Strasbourg, France, today that risks to price stability have ``intensified'' over recent months. He also said it's important for the U.S. to keep repeating support for a strong currency.
Oil prices are 88 percent higher from a year ago. Crude oil for August delivery increased as much as 1.7 percent to $138.28 a barrel after Iran said it carried out a test of a missile capable of hitting Israel. The exercise, reported on Iranian state television, raised concern that Israel will attack the Mideast's second-biggest oil producer.
The euro-dollar exchange rate and oil have moved in the same direction 90 percent of the time in the past year, according to calculations based on the correlation of their value.
``We've not broken the back of the current uptrend of oil prices so far,'' said Michael Woolfolk, senior currency strategist in New York at Bank of New York Mellon. ``That's not favorable for the dollar.'' The firm is the world's largest custodial bank, with more than $23 trillion in assets under administration.
Traders raised bets that the ECB will raise borrowing costs again to curtail 4 percent annual inflation, twice policy makers' 2 percent target. The implied rate on the December Euribor interest-rate futures contract rose 0.02 percentage point to 5.12 percent.
Trichet said last week that he has ``no bias'' for monetary policy after increasing the ECB's main refinancing rate a quarter-percentage point to 4.25 percent.
``The risk is that the ECB will raise interest rates again,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``That will keep the euro relatively supported.''

The stock market trades with a slight loss, as strength in materials (+2.0%) helps to offset weakness in tech (-1.2%).
According to reports, Boeing (+0.77) and Northrop Grumman (-0.08) are going to recompete over the disputed air refueling tanker contract. Northrop was originally awarded the $35 billion contract by the Air Force. Boeing argued it did not have a fair chance at the deal.

Pressing to fresh highs for the session atop $1.9800 area and leading a charge higher against the dollar. Offers at $1.9780/00 absorbed on the push but further supply seen at $1.9850.

Stocks slipped near midday Wednesday as investors considered fluctuating oil prices, a weak dollar and Alcoa's better-than-expected quarterly profit, one day after a big rally.
Stocks surged Tuesday, as investors welcomed falling oil prices and talk that the Federal Reserve may give banks more time to access emergency funds. But investors struggled in the aftermath of that advance Wednesday, with oil prices seesawing on Mideast tension and the weekly supply reports.
Oil prices rose after after Iran test-fired ballistic missiles, reviving worries that unrest in the Middle East could disrupt oil supplies. But prices swayed after the government's weekly report showed crude stockpiles fell more than expected last week.
As is usually the case, Alcoa began the second-quarter results reporting period for Dow components late Tuesday.
The aluminum maker reported weaker earnings of 66 cents per share on lower sales of $7.6 billion reflecting the impact of higher costs. However, results topped analysts' expectations. Alcoa shares gained modestly Wednesday morning.
Arris Group slumped 20% after it said second-quarter sales won't meet estimates and earnings will come in at or near the low end of its previous forecast. The communications technology company cited weaker sales of voice-enabled cable modems.
Cisco Systems slipped 3% in active Nasdaq trade after an RBC Capital Markets analyst cut its price target to $27 from $29, saying the company sees a tech spending recovery happening later than initially thought.
In the bond market, Treasury prices fell, raising the yield on the benchmark 10-year note to 3.90% from 3.88% late Tuesday. Treasury prices and yields move in opposite directions.

The major indices are trading in mixed fashion, with the S&P 500 sporting a slight gain while the Dow and Nasdaq hold slight losses. Six of the ten economic sectors are posting a gain.
After some volatile action, crude prices (+0.1% at $136.11) fall from their 0.7% gain seen just prior to the inventory data release -- despite the data showing a larger-than-expected drop in stockpiles.

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».

The agency expects a 4th quarter consecutive loss for the 2Q of 08 on mortgage related writedowns.

--Eurozone finance ministers don't see hike as start of a cycle
--Eurozone no longer growing robustly, but still moderately;
--High level of agreement amoung EMU finance ministers on need to address inflation.

Stocks (S&P futures vs fair value: +2.7. Nasdaq futures vs fair value: -4.5. ) looked set for an upbeat start Wednesday as European markets rally but traders remain wary of high oil prices.
But crude prices rebounded Wednesday after Iran test-fired missiles. U.S. crude for August was up $1.74 at $137.78 a barrel in electronic trading.
Oil traders are also keeping an eye on a weekly report on fuel inventories from the U.S. Department of Energy. That report is due at 10:35 a.m. ET.
Analysts expect oil stockpiles fell last week by 1.9 million barrels, according to a survey by energy research firm Platts. Gasoline inventories are forecast to show a build of 500,000 barrels and distillate fuel is expected to have risen by 2.2 million barrels last week.
Alcoa unofficially kicked off the second-quarter earnings period. The aluminum giant posted a drop in quarterly profit, but the company's results topped the consensus estimate of Wall Street analysts.
The benchmark 10-year note gained 7/32 to 99 29/32, lowering its yield to 3.88% from 3.9% on Tuesday.
Gold fell $3.30 to $920 an ounce in premarket trading.

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

The euro traded near the lowest in more than a week against the dollar after European Central Bank President Jean-Claude Trichet said it's important for the U.S. to keep repeating support for a strong currency.
The euro fell versus the South African rand and Canadian dollar after Trichet said policy makers must ``look very carefully at adverse effects of excessive fluctuations.'' South Korea's won strengthened beyond 1,000 per dollar for the first time in two months on speculation the government intervened to boost the currency and curb inflation.
``Global central bankers are looking for a stronger dollar and even the ECB is now comfortable with a stronger dollar,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, the largest French bank. ``The euro is coming under some renewed pressure.''
The euro may fall to $1.5615 today or tomorrow, Stannard said.

EUR/USD printed lows around $1.5650 before rising to $1.5730. Later the rate traded within $1.5730-$1.5690 range. Bids $1.5660/50, $1.5635/30. Offers $1.5725/30, $1.5750.

GBP/USD Positive revision in previous month's data lifted rate briefly above $1.9700, only to sink back to $1.9680. Lateк the cable saw strong demand emerge from a US investment house and posted high of $1.9758 only to meet supply there and fell back to $1.9720. Offers placed at $1.9770/80, more toward $1.9800.

USD/JPY fell to Y107.00, bit sharply rebounded to Y107.65 before stabilized within Y107.55/25.

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."

Stretches on to $1.9757, after earlier reported US investment house buys, pushing above reported offers at $1.9750, but eases back around $1.9740 on talk of Korean supply which has 'topped out cable and euro-dollar'. Offers now seen placed between $1.9770/80, more toward $1.9800.

August contract earlier today hit high at $138.28 on reports that Iran has tested a long-range missile.

The euro traded near the lowest in more than a week against the dollar after European Central Bank President Jean-Claude Trichet said it's important for the U.S. to keep repeating support for a strong currency.
The euro fell versus the South African rand and Canadian dollar after Trichet said policy makers must ``look very carefully at adverse effects of excessive fluctuations.'' South Korea's won strengthened beyond 1,000 per dollar for the first time in two months on speculation the government intervened to boost the currency and curb inflation.
``Global central bankers are looking for a stronger dollar and even the ECB is now comfortable with a stronger dollar,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, the largest French bank. ``The euro is coming under some renewed pressure.''
The euro may fall to $1.5615 today or tomorrow, Stannard said.

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.80
Current price: Y107.32
Support 1: Y106.70

Support 2: Y106.20
Support 3: Y105.00

Comments: Dollar tries to recover with 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 Y106.70, then – near Y106.20 with stronger level comes at Y105.00 (June 30 lows).

Resistance 3: Chf1.0490
Resistance 2: Chf1.0400
Resistance 1: Chf1.0350
Current price: Chf1.0308
Support 1: Chf1.0280
Support 2: Chf1.0220
Support 3: Chf1.0160

Comments: Dollar looks optimistic after yesterday’s rally. Strong resistance zone is near Tuesday’s highs on Chf1.0350. Above the rise may extend to Chf1.0400. Strong resistance is around Chf1.0490 (June 23). Support comes at Chf1.0280 (50% Fibo of yesterday’s rise). Further losses may bring the rate down to Chf1.0220 (yesterday’s low).

Resistance 3: $2.0000

Resistance 2: $1.9940

Resistance 1: $1.9800
Current price: $1.9720
Support 1: $1.9670
Support 2: $1.9580

Support 3: $1.9520

Comments: Cable rebounds from lows. Minor resistance is around at $1.9790/00 (Monday’s high), then – around $1.9940. Stronger level is around physiological level on $2.0000, tested on July 01. Support is around yesterday’s low on $1.9700. Break under will accelerate the decline to $1.9580 and then – to trend support line from Apr 2006 at $1.9520.

Resistance 3:$1.6020
Resistance 2: $1.5900
Resistance 1: $1.5750
Current price: $1.5698
Support 1: $1.5600
Support 2: $1.5530
Support 3: $1.5470

Comments: Techs on euro hasn’t changed. 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.

1.On eve of hike, Infl risks/expectations had risen

2.ECB hiked due to higher inflation risks/expectations

3.Inflation alarm signals are rising worldwide

4.Oil price impact on consumer economies relatively minor

5.But oil prices still a threat to world growth.

EUR/USD: $1.5680, $1.5795
USD/JPY: Y106.65, Y105.00
EUR/JPY: Y168.10, Y166.30/25
GBP/USD: $1.9675, $1.9695, $1.9730

GBP/USD gets a slight lift, moves back above $1.9700. But as data released are as expected, rate resumed to drag lower, currently holding near $1.9682. Bids to $1.9670, stronger on approach to $1.9650.

EUR
Bids: $1.5650
Offers: $1.5730, $1.5740/50

JPY
Bids: Y107.00/6.90, Y106.65/45
Offers: Y107.55/Y107.75, Y108.00, Y108.20

GBP
Bids: $1.9705/95, $1.9665/50
Offers: $1.9750, $1.9800

The dollar traded near a two-week high against the euro as crude oil prices fell and the Federal Reserve pledged to support credit markets, improving the outlook for the world's biggest economy.
The currency traded near a two-week high versus the yen after Fed Chairman Ben S. Bernanke said he may extend an emergency-loan program for securities firms into next year.
The British pound may decline as an industry report showed U.K. consumer confidence slid to the lowest level since at least 2004 in June. A Nationwide Building Society index of consumer confidence declined 6 points to 63, the lowest since the survey began in May 2004.

EUR/USD printed lows around $1.5650 before rising to $1.5730. Later rate rose back to the figure.
GBP/USD held within the $1.9670/00 before rising up to $1.9740. Later rate was back to $1.9711.
USD/JPY fell to Y107.00, bit sharply rebounded to Y107.40.

Any gains in the euro may be limited by speculation European Central Bank President Jean-Claude Trichet will reiterate that he has no plans to raise rates further after increasing borrowing costs a quarter percentage point to 4.25% percent on July 3.

Japan's benchmark stock indices ended Wednesday's session modestly higher. The benchmark Nikkei 225 ended the day higher by 19.03 points, or 0.15%, at 13052.13, having been as high as 13284 earlier. The broader-based TOPIX was last 2.02 points higher at 1285.53

Stock market fixing:
Nikkei 225 -326.94 -2.50% 13,033.10
Topix -29.29 -2.20% 1,283.51
FTSE -72.20 -1.31% 5,440.50
DAX -91.34 -1.43% 6,304.41
CAC -66.98 -1.54% 4,275.61
Dow +152.25 +1.36% 11,384.21
NASDAQ +51.10 +2.28% 2,294.42
S&P +21.39 +1.71% 1,273.70
10yr Note -0.5000 -0.127% 3.880%
NYMEX Crude Oil -5.33 -3.77% 136.04
Gold -5.50 -0.59% 923.30

Japan's stocks fell to the lowest in almost three months on concern asset writedowns will cause credit markets to tighten and as a drop in oil prices dimmed earnings prospects for commodities-related companies.
Mizuho Financial Group Inc. fell the most in seven weeks after analysts said the two largest U.S. mortgage lenders will need to raise capital and Merrill Lynch & Co. may report a loss. Nomura Holdings Inc. dropped to the lowest in three months. Inpex Holdings Inc. plunged to a one- month low after crude prices sank the most in almost three weeks.
Freddie Mac and Fannie Mae fell to the lowest in 13 years in New York after Lehman Brothers Holdings Inc. analysts said yesterday the mortgage lenders may need to raise a combined $75 billion to overcome further writedowns. Merrill Lynch may report a second-quarter loss after $6 billion of writedowns, Citigroup Inc. analysts said the same day.
Mizuho, the Japanese bank most heavily hit by the collapse in the U.S. mortgage market, dropped 3.7% and was the most actively traded stock by value on the Topix. Orix Corp., Japan's largest non-bank financial company, tumbled 6.3%. Nomura fell 4.6%, the lowest since April 14.

European stocks fell, sending the Dow Jones Stoxx 600 Index to the lowest in three years, as concern deepened financial firms will need more capital and slumping commodity prices weighed on energy and basic-resource shares.
Credit Suisse Group AG and Deutsche Bank AG retreated as analysts said the two largest U.S. mortgage finance companies may have to raise a combined $75 billion. Bank of Ireland Plc tumbled after the lender said slowing economic growth is ``adversely impacting'' earnings. Royal Dutch Shell Plc and Anglo American Plc followed crude oil and metals lower.
Stocks extended declines as a report showed U.S. home sales slumped more than forecast. Contracts to buy previously owned U.S. homes slipped 4.7% in May, the National Association of Realtors said.
Credit Suisse, Switzerland's second-largest bank, fell 3.2%. Deutsche Bank, Germany's largest bank, slipped 2.6%.
Shell, Europe's largest oil producer, declined 2.3%, while Total SA, the region's third biggest, lost 2%.

Wall Street closed higher, despite the report showed 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%.
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.

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 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% increase in the prior month, the National Association of Realtors reported today in Washington. The median forecast of 38 economists for a decrease of 3%.

EUR/USD tested $1.5670/80 zone of bids before rallying to $1.5740. Meanwhile later rate came under pressure again, backing off to $1.5630.
GBP/USD fell from $1.9790 amid position-adjustment after it failed to break above $1.9800. As a result pound slid to $1.9660.
USD/JPY printed lows at Y106.20 before rose to Y107.50.

There are no key economic news from US. In Europe the attention will be on UK trade balance at 08:30 GMT and EU Q1 GDP data revision at 09:00 GMT. As expected, economy growth was unchanged at +0.8% m/m and +2.2% y/y.

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.80
Current price: Y107.28
Support 1: Y106.70
Support 2: Y106.20
Support 3: Y105.00
Comments: Dollar tries to recover with 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 Y106.70, then – near Y106.20 with stronger level comes at Y105.00 (June 30 lows).

Resistance 3: Chf1.0490
Resistance 2: Chf1.0400
Resistance 1: Chf1.0350
Current price: Chf1.0275
Support 1: Chf1.0280
Support 2: Chf1.0220
Support 3: Chf1.0160
Comments: Dollar looks optimistic after yesterday’s rally. Strong resistance zone is near Tuesday’s highs on Chf1.0350. Above the rise may extend to Chf1.0400. Strong resistance is around Chf1.0490 (June 23). Support comes at Chf1.0280 (50% Fibo of yesterday’s rise). Further losses may bring the rate down to Chf1.0220 (yesterday’s low).

Resistance 3: $2.0000
Resistance 2: $1.9940
Resistance 1: $1.9800
Current price: $1.9728
Support 1: $1.9670
Support 2: $1.9580
Support 3: $1.9520
Comments: Cable rebounds from lows. Minor resistance is around at $1.9790/00 (Monday’s high), then – around $1.9940. Stronger level is around physiological level on $2.0000, tested on July 01. Support is around yesterday’s low on $1.9700. Break under will accelerate the decline to $1.9580 and then – to trend support line from Apr 2006 at $1.9520.

Resistance 3:$1.6020
Resistance 2: $1.5900
Resistance 1: $1.5750
Current price: $1.5715
Support 1: $1.5600
Support 2: $1.5530
Support 3: $1.5470
Comments: Techs on euro hasn’t changed. 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 1.5738 1.5633 1.5665
USD/JPY 107.53 106.22 107.40
GBP/USD 1.9795 1.9664 1.9690
USD/CHF 1.0347 1.0217 1.0333

EUR/JPY 168.48 167.17 168.29
EUR/GBP 0.7964 0.7937 0.7952
GBP/JPY 211.82 210.18 211.53
GBP/CHF 2.0376 2.0205 2.0350

Change % Change Last
Nikkei 225 -326.94 -2.50% 13,033.10
Topix -29.29 -2.20% 1,283.51
FTSE -72.20 -1.31% 5,440.50
DAX -91.34 -1.43% 6,304.41
CAC -66.98 -1.54% 4,275.61
Dow +152.25 +1.36% 11,384.21
NASDAQ +51.10 +2.28% 2,294.42
S&P +21.39 +1.71% 1,273.70
10yr Note -0.5000 -0.127% 3.880%
NYMEX Crude Oil -5.33 -3.77% 136.04
Gold -5.50 -0.59% 923.30

06:00 Germany Trade balance (May) unadjusted, bln 17.4 18.7
06:00 Germany Current account (May) unadjusted, bln 11.8 14.5
08:30 UK Trade in goods (May), bln -7.4 -7.6
08:30 UK Non-EU trade (May), bln -4.0 -4.2
09:00 EU(15) GDP (Q1) revised 0.8% 0.8%
09:00 EU(15) GDP (Q1) revised Y/Y 2.2% 2.2%
23:50 Japan Current account (May) unadjusted, trln - 1.380
23:50 Japan Trade balance (May) unadjusted, trln - 0.635
23:50 Japan Corporate goods price index (CGPI) (June) domestic - 1.1%
23:50 Japan Corporate goods price index (CGPI) (June) domestic Y/Y - 4.7%