The stock market continues to struggle in the red. Without the support of the heavily-weighted financial sector, the S&P 500 will have a difficult time making a recovery.
Within the financial sector, 96% of stocks are posting a loss. Bank of America (-1.09) is the main laggard after having its second quarter and fiscal year 2008 earnings estimates lowered at Oppenheimer.

Goldman Sachs upgraded the third-largest producer of aluminum Alcoa Inc to ``buy'' from ``neutral,'' citing growing aluminum consumption in China.

The maker of the iPod and Macintosh computers Apple Inc may have sold as many as 425,000 of its new iPhones in the first three days after the handset made its debut, in line with projections.

Anheuser-Busch Companies Inc, the maker of Budweiser agreed to a sweetened $52B takeover offer from Belgian brewer InBev. The deal will create the world's largest brewer.

Microsoft Corporation, the technology company announced late Friday plans to cut the price of its low-end XBox 360 and introduce a new mid-range model with a 60GB hard drive. It is rumored that Microsoft could announce a deal with Netflix at the E3 video game industry conference in Los Angeles that would allow movies and TV shows from Netflix to be played on the Xbox.

The stock market's recovery effort fades. Within the S&P 500, 35% of stocks are trading higher, led by strength in Schlumberger (+2.48) and Apple (+2.35). Bank of America (-1.18) and General Electric (-0.54) top the laggard list.
Oil prices down 0.3% to $144.68 per barrel.

The dollar rose against the euro for the first time in four days after Treasury Secretary Henry Paulson asked Congress for authority to buy stakes in Fannie Mae and Freddie Mac to restore confidence in financial markets.
The currency also climbed after the Federal Reserve separately authorized the companies, which buy or finance almost half the $12 trillion of U.S. mortgages, to borrow directly from the central bank. The dollar pared gains as concern losses at regional banks will deepen pushed most U.S. stocks down.
``The big picture is that there's still a lot of risk in the financial system, and I don't think things are going to turn around quickly,'' said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York. ``The market is concerned about the state of the balance sheet of the U.S. government and U.S. assets overall.''
The Dollar Index traded on ICE futures in New York, which tracks the greenback against the currencies of six U.S. trading partners, fell for a fourth day to 71.996. The gauge may decline to a record low of 70.70 should it close below support at 71.82, said Kevin Edgeley, a technical analyst at Goldman Sachs Group Inc., the world's biggest securities firm. Support is where buy orders are clustered.
Investors should buy the dollar against the euro as the European economy lags behind that of the U.S., making the European Central Bank less willing to raise interest rates, wrote Jim McCormick, the London-based global head of currency strategy at Lehman Brothers Holdings Inc., in a note to clients.
Confidence among investors in Germany, Europe's largest economy, probably fell to a 15-year low in July, according to the median forecast of economists. The ZEW Center for European Economic Research in Mannheim will release the data tomorrow.

The major indices are struggling, as financial stocks (-4.4%) -- the third largest sector -- weigh on the broader market. Outside of financials things are not so bad. Nine of the ten economic sectors are posting loss, although none are down more than 1%.
The Dow is outperforming on a relative basis, thank to strength in defensive names Coco-Cola (+0.64), Proctor & Gamble (+0.49) and McDonald's (+0.44). Overall, 19 of the 30 Dow components are trading lower, with weakness in financial names keeping the average in the red.
Treasuries are rallying, with the 10-year note up 24 ticks and the 30-year bond up 39 ticks.

Currently, the S&P 500 is down roughly 0.3%, a sharp decline from its opening gain of 1.1%. Financials (-3.0%) are largely to blame for the retreat, although all ten economic sectors have slipped. Only four sectors remain in positive territory, led by energy (+0.6%).

“Fed cannot tighten now: they risk a further deterioration in financial markets and a sharp rise in unemployment. Banks are seriously curtailing the growth of credit. Both recession and inflation will probably worsen later this year.”

Stocks posted slim gains Monday morning as investors welcomed the government's plan to rescue Fannie Mae and Freddie Mac, but remained wary about the outlook for the economy amid the credit crisis.
The Dow Jones industrial average , the Standard & Poor's 500 index and the tech-heavy Nasdaq composite all gained modestly in the early going, after having spiked more at the open.
Stocks tumbled last week, but found a little traction late Friday on talk that the Federal Reserve would open up its discount window to Fannie Mae and Freddie Mac, staving off a potential failure of the two mortgage firms.
That talk came to fruition Sunday when the Treasury Department and the Fed announced a plan to support the two mortgage financing firms, which are responsible for about half the nation's home-loan debt. The plan would give the two companies, which hold or guarantee nearly $5 trillion worth of mortgages, a bigger line of credit with the Treasury - and allow Treasury to buy stock in the firms.
The companies can also access the Federal Reserve Bank of New York for funds if necessary, giving the firms the same access to funds that commercial banks and Wall Street firms.
The failure of the two companies would cause more malaise for an already battered financial system, causing more losses to companies that have large holdings of mortgage-backed securities.
Freddie and Fannie shares were both lower Monday, giving up bigger opening gains. Both lost nearly half their value last week.
The latest casualty of the credit crisis was mortgage lender IndyMac , which was shut down by banking regulators on Friday. U.S. light crude oil for August delivery rose 22 cents to $145.30 a barrel on the New York Mercantile Exchange.
Over the weekend, Anheuser-Busch agreed to InBev's improved $54 billion takeover offer. The combination of the maker of Bud beer and the Belgian beer company will create the world's largest brewer.
Also this weekend, Yahoo spurned an offer from MIcrosoft and investor Carl Icahn to buy the company's Internet search unit
In other Microsoft news, the company said late Friday that it was cutting the price of its Xbox 360 gaming console and introducing a new model with a bigger hard drive.
In the bond market, Treasury prices tiptoed higher, lowering the yield on the benchmark 10-year note to 3.94% from 3.95% late Friday. Bond prices and yields move in opposite directions.

The Dow and S&P 500 trade with modest gains, while the Nasdaq holds near the unchanged mark.
The Nasdaq may be underperforming, but that is not stopping Apple (+4.07) from sporting a solid 2.4% gain. The company announced that it sold one million 3G iPhones in the first weekend.
Yahoo! (-1.10) is one of the worst-performing Nasdaq names. Over the weekend, Yahoo rejected a joint proposal from Microsoft (+0.40) and Carl Icahn that called for a restructuring of Yahoo, which would include Microsoft taking over Yahoo's search business.

The S&P 500 and Nasdaq fall into negative territory. Five of the ten economic sectors are posting a gain, led by a 1.6% rise in energy stocks. Financials (-2.9%) are acting as the main drag.
Within financials, Fannie Mae (+0.34) and Freddie Mac (+0.19) gave up the majority of their advance after trading as high as 32% and 26%, respectively. The stocks came under selling pressure following less-than-stellar results of Freddie's $3 billion sale in short-terms. Meanwhile, Goldman Sachs said the two stocks may decline another 35% despite the government's plan.

EUR/GBP backs above stg0.7980, as cable gets pulled higher by euro-dollar. Euro-sterling offers noted toward stg0.8000, a break above to open a move on toward stg0.8010 ahead of stronger area between stg0.8025/35. Bids remain in place toward stg0.7970.

EUR/USD nudges higher to trade around $1.5870 area after a couple of attempts to push the euro below $1.5840 to flush stops. Demand interest reported down there ahead of the stop interest.

EUR/USD: $1.5900, $1.6000, $1.5735
USD/JPY: Y106.50, Y105.85, Y107.00, Y107.10, Y107.50
GBP/USD: $1.9900
NZD/USD $0.7630

GBP/USD testes $1.9900, but offers ahead of $1.9910 still intact. Stops reported to be placed above this mentioned level, a break to allow for a quick test on earlier Asian highs at $1.9915. Above here and rate can push on toward $1.9940/50.

Stock futures climbed Monday morning, lifted by a government plan to bolster ailing mortgage giants Fannie Mae and Freddie Mac.
Stocks tumbled last week on fears U.S. government-sponsored mortgage firms Fannie Mae and Freddie Mac would collapse, but investors appeared soothed by a U.S. plan to shore up the firms.

Mortgage rescue plan On Sunday, Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke outlined a plan to prop up the two mortgage giants.
The plan would give Fannie and Freddie, which own or back about $5 trillion worth of home mortgages, a bigger line of credit with the Treasury Department. Shares of the two mortgage-lending giants each jumped about 31% in premarket trading Monday on news of the government's assistance.
Among other corporative news: Anheuser-Busch, maker of Budweiser, agreed to a sweetened $52 billion takeover offer from Belgian brewer InBev. The deal will create the world's largest brewer.
Industry General Electric Co. announced that it would develop a new line of fuel efficient jet engines to compete with United Technologies Corp.
Energy: Oil prices fell as the dollar strengthened on the U.S. mortgage rescue plan. Crude prices, which hit a trading record of $147.27 on Friday, fell $1.54 to $143.54 Monday.

GBP/USD breaks above reported resistance at $1.9880, currently holding near $1.9897. Offers now seen placed to $1.9905 (61.8% $1.9960/1.9816), with talk of stops placed on a break above $1.9910. Minor offers noted around the earlier Asian highs of $1.9915, with stronger interest at $1.9940/50 ahead of $1.9970/80.

“Bernanke will talk about inflation and the downside risk of the U.S. conomy,” said Etsuko Yamashita, chief economist at Sumitomo Mitsui Banking Corp. “This will lead to dollar-selling,” adds expert. The dollar may fall to $1.5990 a euro this week, she said.

EUR/USD backs below $1.5850 but so far holds off a retest of earlier pullback lows at $1.5842. Bids noted to $1.5840, a break below to open a deeper move toward $1.5825/20. Offers seen placed ahead of $1.5870.

The following data were issued
08:30UKPPI (Output) (June) unadjusted 0.9% 1.1% 1.6%
08:30UKPPI (Output) (June) unadjusted Y/Y 10.0% 9.8% 8.9%
08:30UKPPI Output ex FDT (June) adjusted 0.3% - 1.3%
08:30UKPPI Output ex FDT (June) unadjusted Y/Y 6.4% 6.4% 5.9%
08:30UKPPI (Input) (June) adjusted 2.1% 2.6% 3.8%
08:30UKPPI (Input) (June) unadjusted Y/Y 30.3% 28.9% 27.6%
09:00EU(15)Industrial production (May) -1.9% -2.3% 0.9%
09:00EU(15)Industrial production (May) Y/Y-0.6% 0.3% 3.9%

The dollar rose for the first time in four days against the euro after U.S. Treasury Secretary asked Congress for authority to buy stakes in Freddie Mac and Fannie Mae to restore confidence in financial markets.
The U.S. currency also climbed against the yen after the Federal Reserve separately authorized the firms, which buy or finance almost half the $12 trillion of U.S. mortgages, to borrow directly from the central bank. The South Korean won fell, following its biggest weekly gain in a decade.

EUR/USD opened in early Europe around $1.5885. Rate settled around $1.5960 as comments from US Treasury Secretary Paulson were broadcast outlining government plans to support Fannie Mae and Freddie Mac. Dollar boosted on the news, easing on to $1.5930 and then - below $1.5900 to the session lows on $1.5855/60. Offers $1.5890, $1.5900/10, bids $1.5840, $1.5825/20.
GBP/USD opened early Europe at $1.9842. Release of weaker than expected UK PPI data knocked sterling lower, cable dropping to $1.9816.
USD/JPY opened in early Europe around Y106.13 before slowly rose to Y106.75. Offers Y106.90/00, Y107.30, Y107.70/75, bids Y106.20, Y105.90.

Gains in the dollar may be limited by speculation Fed Chairman Ben S. Bernanke will highlight risks to the economy in his semi-annual testimony on monetary policy before the Senate Banking Committee tomorrow.
Losses in the euro may accelerate on speculation investor confidence in Germany, Europe's largest economy, fell to a 15- year low, weakening the case for higher interest rates. The ZEW Center for European Economic Research in Mannheim will say its index of investor and analyst expectations fell to minus 55 in July from minus 52.4 in the previous month, according to a survey

EUR/USD: $1.5900, $1.6000, $1.5735
USD/JPY: Y106.50, Y105.85, Y107.00, Y107.10, Y107.50
GBP/USD: $1.9900
NZD/USD $0.7630

- Oil price will have widespread effect across economy
- Economic problems due mainly to oil price rise

The dollar inched up from near a record low against the euro on Monday after the U.S. Treasury and Federal Reserve launched emergency measures to restore investor confidence in embattled U.S. mortgage lenders Fannie Mae and Freddie Mac. The Treasury boosted its direct credit lines to the companies that fund half of all U.S. mortgages and said it would buy their shares if necessary.

Analysts said the dollar's recovery would depend on whether the U.S. initiatives were enough to assuage investors' concerns about the financial health of Fannie and Freddie. Any improvement in the credit spreads and shares of Fannie and Freddie may help the dollar rebound further.

EUR/USD holds near $1.5860 with offers seen placed between $1.5885/90, a break above to open a move back toward earlier recovery highs/offers at $1.5910. Bids $1.5860, more between $1.5850/40.

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.80
Current price: Y106.72
Support 1: Y106.20
Support 2: Y105.50
Support 3: Y105.00
Comments: Dollar consolidates. Support is around at Y106.20 (Tuesday’s lows). Stronger level is around Y105.00 (June 30 high). Strong resistance is around Y107.80. Above there is a chance of testing June 16 highs on Y108.60 and then - Y109.40.

Resistance 3: Chf1.0450
Resistance 2: Chf1.0350
Resistance 1: Chf1.0250
Current price: Chf1.0236
Support 1: Chf1.0130
Support 2: Chf1.0020
Support 3: Chf0.9880
Comments: Dollar tries to rebound. Resistance comes at session highs on Chf1.0250 with stronger level comes on last Tuesday/Wednesday’s highs on Chf1.0350. Above there is a chance for rising to Chf1.0430/50. Support comes at Chf1.0130 (yesterday’s low and 50% of Chf1.0620-Chf0.9650). Further losses may bring the rate down to Chf1.0020.

Resistance 3: $2.0190
Resistance 2: $2.0020
Resistance 1: $1.9960
Current price: $1.9834
Support 1: $1.9710
Support 2: $1.9670
Support 3: $1.9580
Comments: Resistance comes at Friday's high on $1.9960. Stronger resistance is around psychological level on $2.0000/20, tested July 01. Support is near $1.9710. Break under will accelerate the decline to $1.9670 and then – to $1.9580.

Resistance 3:$1.6080
Resistance 2: $1.6020
Resistance 1: $1.5970
Current price: $1.5860
Support 1: $1.5760
Support 2: $1.5690
Support 3: $1.5600
Comments: Minor resistance comes at $1.5970, stronger one at life-time high on $1.6020 with a break above will target to $1.6080. Support is at $1.5760 and $1.5690. Stronger level is around $1.5600 (50% of $1.5300 - $1.5905 rise). Below correction may extend to $1.5530.

Industrial output fell back 1.9% m/m in May and 0.6% y/y, Eurostat said Monday. Although less than expected, the monthly downturn was the steepest decline ever recorded since the start of EMU and the lowest for eurozone countries since December 1992. Taking account of the upward revision for April, production for the past two months was 0.25% below the 1Q average, which rose 0.38% q/q after a 0.06% decline in 4Q.

The dollar rose for the first time in four days against the euro after U.S. Treasury Secretary Henry Paulson announced funding plans for Freddie Mac and Fannie Mae to restore confidence in financial markets.
The currency climbed against the yen after Paulson asked Congress for the authority to buy unlimited stakes in the two largest U.S. mortgage finance companies and the Federal Reserve offered them loans through its discount window.
``Speculators who sold the dollar are now sure to buy it back,'' said Koji Fukaya, senior currency strategist at the Tokyo unit of Deutsche Bank AG, the world's largest currency trader. ``Paulson is basically saying he won't let Freddie Mac and Fannie Mae fail as they play an important role in the U.S. financial system.''
The dollar may rise to $1.58 per euro and 107 yen this week, Fukaya forecast.

EUR/USD fell from $1.5965 to $1.5840.

GBP/USD slide from $1.9900 to trade within $1.9810/80.

USD/JPY rose from Y106.10 to Y106.80.

CAC-40 is up 43pts, FTSE-100 up 61pts and Xetra-DAX up 56pts.

EUR/USD: $1.5900, $1.6000, $1.5735
USD/JPY: Y106.50, Y105.85, Y107.00, Y107.10, Y107.50
GBP/USD: $1.9900
NZD/USD $0.7630

Resistance 3: Y109.40
Resistance 2: Y108.60
Resistance 1: Y107.80
Current price: Y106.60
Support 1: Y106.20

Support 2: Y105.50
Support 3: Y105.00

Comments: Dollar consolidates. Support is around at Y106.20 (Tuesday’s lows). Stronger level is around Y105.00 (June 30 high). Strong resistance is around Y107.80. Above there is a chance of testing June 16 highs on Y108.60 and then - Y109.40.

Resistance 3: Chf1.0490
Resistance 2: Chf1.0400
Resistance 1: Chf1.0350
Current price: Chf1.0213
Support 1: Chf1.0130
Support 2: Chf1.0020
Support 3: Chf0.9880

Comments: Dollar tries to rebound. 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 Chf1.0130 ( yesterday’s low and 50% of Chf1.0620-Chf0.9650). Further losses may bring the rate down to Chf1.0020.

Resistance 3: $2.0190

Resistance 2: $2.0020

Resistance 1: $1.9960
Current price: $1.9850
Support 1: $1.9710
Support 2: $1.9670

Support 3: $1.9580

Comments: Resistance comes at Friday's high on $1.9960. Stronger resistance is around psychological level on $2.0000/20, tested July 01. Support is near $1.9710. Break under will accelerate the decline to $1.9670 and then – to $1.9580.

Globex traded US index futures are trading sharply higher Monday morning, as US officials attempt to shore up brewing market troubles for theGSE's Fannie Mae and Freddie Mac. The S&P Sep contract was last 9.10 points higher at 1248.90, with the Nasdaq Sep contract up 13.00 points at 1833.50.

Resistance 3:$1.6080
Resistance 2: $1.6020
Resistance 1: $1.5970
Current price: $1.5897
Support 1: $1.5760
Support 2: $1.5690
Support 3: $1.5600

Comments: Minor resistance comes at $1.5970, stronger one at life-time high on $1.6020. Closest supports at $1.5760 and $1.5690. Stronger level 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.

The lead indices were higher in the morning, boosted by U.S. government support for beleaguered Freddie Mac and Fannie Mae. The Nikkei was down 29.53 points, or 0.23%, at 13010.16. The broader-based TOPIX was down 5.19 points at 1280.72.

Major Chinese indices ended the day modestly higher, helped by book-squaring ahead of economic data due later in the week. The benchmark Shanghai Comp ended the morning up 9.83 points or 0.34 pct at 2,866.46, off a low of 2,828.24 and a high of 2,895.30. The Shanghai A rose 10.37 points or 0.35 pct to 3,006.65, while the Shenzhen A was up 6.61 points or 0.73 pct at 908.54. The FTSE/Xinhua China A 50 Index rose 38.12 points or 0.36 pct to 10,624.90.

09:00 EU(15) Industrial production (May) -2.3% 0.9%
09:00 EU(15) Industrial production (May) Y/Y 0.3% 3.9%