Losses remain widespread. Only the energy sector (+1.6%) is showing a gain. Every other sector is trading with losses ranging from 1.7% to 8.0%.
After slumping with oil prices in recent sessions, integrated oil and gas companies (+1.2%) and oil and gas exploration and production outfits (+1.7%) are leading the advance. Refiners (-1.0%), on the other hand, are moving lower.
Integrated businesses, along with exploration and production businesses, benefit from rising oil prices since they represent richer revenue streams. Refiners, however, are hurt by rising crude prices since it pressures their crack spreads.

The dollar declined against the yen as the Federal Reserve's $85 billion bailout of insurer American International Group Inc. failed to quell concern credit market losses will deepen.
The Fed will provide AIG with a two-year loan, take 79.9 percent of the New York-based company's stock and replace its management. The central bank kept its target rate for overnight lending between banks at 2 percent yesterday, rebuffing calls by some investors for an interest-rate cut.
``The Fed is monetizing debt on an unprecedented scale, and I can't see how that can be dollar-positive,'' said Michael Klawitter, a currency strategist at Dresdner Kleinwort in Frankfurt. ``Nothing is solved.'' ``It's hard to think a bottom is coming around this time,'' said Adam Fazio, a currency strategist at CIBC World Markets Inc. in New York.
The yen will rally in the next six months, a survey of Bloomberg users showed. Investors are the most bullish on the currency since March, according to 3,470 respondents from New York to Paris and Tokyo in the monthly Bloomberg Professional Global Confidence Index.
U.S. housing starts fell 6.2 percent in August to an annual rate of 895,000, the lowest since January 1991, the Commerce Department said in Washington. Building permits, a sign of future construction, dropped 8.9 percent to an 854,000 pace.
``We're in this battle between the return to macroeconomic- driven currency markets and the focus on risk reduction and position squaring,'' said Robert Sinche, head of global currency strategy at Bank of America Corp. in New York. ``There are hints that weaker economic news in the U.S. is starting to negatively impact the dollar. The capitulation selling of euros against the dollar and the yen may be over.''

The stock market stabilizes a bit and is now trading near recently reached session lows. The S&P 500 is now down 20.6% this year.
The financial sector is down 9.4% with all 86 of its components posting a loss. Goldman Sachs (GS 99.64, -33.51) plunges below the $100 mark for the first time in three years.

With global recession fears on the rise and risk aversion reaching new highs, global investors have retrenched sharply, according to Merrill Lynch's September fund manager survey, released Wednesday. When ask how likely it is that the global economy will experience recession (i.e. 2 quarters of negative real GDP growth), 22% of fund managers polled said a recession was likely, vs 3% in August who said a recession was unlikely and 15% in July who said a recession was unlikely. At the same time however, when asked about how the global real economy will develope over the next 12 months, 37% said the economy will get weaker, vs 52% who had this view in August and 65% who had this view in July. Merrill Lynch's poll was taken Sept 5 - 11, "after the U.S. Federal Reserve's takeover of Fannie Mae and Freddie Mac, but before the failure of Lehman Brothers.

Traders adding some more color to earlier chatter, noting that Japanese bids in the Y104.50/40 area arrested a slide begun by a UK clearer sales in good size. Presence of Japanese names at the low led to intervention speculation, accounting for the bounce to Y104.90, traders explain. Dollar now at Y104.70.

The Treasury is setting up a temporary financing program at the Fed's request. The program will auction Treasury bills to raise cash for the Fed's use. The initiative aims to help the Fed manage its balance sheet following its efforts to enhance its liquidity facilities over the previous few quarters.
The news gives a boost to gold prices (+3.0%), as investors seek to preserve their assets in the perceived value of the precious metal.
The stock market falls to fresh session lows, with the S&P 500 down more than 2%.
Just reported by the Department of Energy, crude inventories for the week ended Sept. 12 fell by 6.3 million barrels, which is a larger drop than the expected decline of 3.5 million. Gasoline inventories fell by 3.3 million barrels. Oil prices were up 3.1% to $94.01 just prior to the release.
In corporate news outside the financial world, flash memory maker Sandisk (SNDK 21.95, +6.90) rejected a $26 per share offer from Korean conglomerate Samsung, despite the offer representing a 93% premium over SNDK's closing price on Sept. 4, the day before media reported the possible takeover. Sandisk, which traded at $55.98 in Oct. 2007, said the offer undervalues the firm.
Nortel (NT 3.39, -1.91) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel, which provides networking solutions, expects customers to cut back on spending.
oftware developer Adobe Systems (ADBE 33.39, +1.22) is trading higher after topping Wall Street's forecast, helped by sales of Adobe Acrobat.
General Mills (GIS 69.77, +1.22) easily beat estimates thanks to a strong 14% year-over-year increase in sales.

Economist Peter Kretzmer at BAS says housing collapse "has now reached levels comparable to U.S. housing collapses of past decades, suggesting that a bottom may be approaching."

Futures point to a sharply lower start for the stock market: S&P futures vs fair value: -21.00. Nasdaq futures vs fair value: -21.50.
The overnight dollar Libor rate -- the amount of interest banks charge other banks to lend dollars overnight -- improved to 5.03% from yesterday's level of 6.44% as the Fed and other central banks pumped liquidity in the system. Still, the level remains well above the 2.00% fed funds target rate -- the overnight Libor rate was 2.14% before the Lehman Brothers (LEH) bankruptcy. In news outside of the financial sector, General Mills (GIS) topped expectations on the both the top and bottom lines, as did software maker Adobe Systems (ADBE). Nortel (NT) gave a preliminary third quarter view of $2.3 billion in revenue, which falls short of the $2.7 billion consensus. Nortel expects customers to cut back on spending.

permits -8.9% to 854k (lowest since Feb 1991).

The dollar fell against the euro after the Federal Reserve lent as much as $85 billion to American International Group Inc., prompting investors to sell U.S. government debt.
The U.S. currency also dropped against the Swiss franc and Canadian dollar after the U.S. reversed its opposition to a bailout of AIG by taking a majority stake in the insurer, sending U.S. Treasuries lower for a second day. The pound fell versus the euro on concern British home-loan provider HBOS Plc may not have access to funding.
The pound weakened versus the euro as HBOS, Britain's biggest mortgage bank, fell as much as 52 percent in London trading. Lloyds TSB Group Plc, the U.K.'s biggest provider of checking accounts, is in talks to buy the lender, according to two people familiar with the situation.
The U.K. currency stayed lower after a government report showed jobless-benefit claims rose in August by the most since 1992 and minutes of the Bank of England's Sept. 4 meeting showed policy makers voted 8-1 to keep the nation's key lending rate at 5 percent. The pound was at 79.57 pence per euro, from 79.26.
The yen fell against the euro as the AIG rescue stoked so- called carry trades, in which traders buy higher-yielding assets funded with low-interest-rate loans in countries such as Japan.
The Bank of Japan today left its overnight rate unchanged for a 22nd straight policy meeting.
The dollar also fell before government reports today that are expected to show the U.S. housing market is deteriorating, adding to evidence of a slump in the world's biggest economy.
Housing starts fell 1.6 percent in August to an annual rate of 950,000, the lowest level since March 1991, according to the median forecast of economists. Building permits, a sign of future construction, probably dropped 1 percent to a 928,000 pace. The Commerce Department will release the two reports at 12:30 GMT in Washington.

EUR/USD later eased back towards $1.4200, where demand from an Asian account ultimately gave way as the rate slipped to $1.4180. Bids $1.4175, $1.4150/40, offers $1.4285, $1.4300, $1.4350.
GBP/USD Rate dropped back as HBOS shares came under renewed pressure, taking it to an eventual low of $1.7815. Talk of a Lloyds/HBOS merger helped recovery to $1.7880. Little reaction to BOE MPC 8-1 split/increase in UK unemployment. Disappointing CBI data added weight but remained buoyed above $1.7830.
USD/JPY settled around Y105.60/70 ahead of the US open, while the cross recovered from Y149.50 to end around Y150.25. Dlr-yen offers Y106.20/25, Y106.70/75. tech Y106.90, bids Y105.20.

Housing data will be the main focus in US today with building permits and housing starts both expected to drop further in Aug.

"If loan facility is drawn upon, it will have a reserve impact and as such will need to be sterilized by sales from the Fed's portfolio. Currently, the Fed has $479 billion of Treasuries in its portfolio, of which $200 billion is potentially dedicated to the TSLF, implying that if the line of credit is drawn down the Fed would have less than $200 billion of unencumbered Treasuries in its portfolio."

Analyst TJ Marta at RBC says "The FOMC statement erred on the hawkish side, as the balanced assessment of risks does not comport with the recent and ongoing deleveraging in the commodities markets along with the rising slack in employment and industrial capacity. However, they are keeping their rate cut "powder dry" should the downside risks to growth evelop."

The dollar fell against the euro after the Federal Reserve lent as much as $85 billion to American International Group Inc., prompting investors to sell U.S. government debt.
The U.S. currency also dropped against the Swiss franc and Canadian dollar after the U.S. reversed its opposition to a bailout of AIG by taking a majority stake in the insurer, sending U.S. Treasuries lower for a second day. The pound fell versus the euro on concern British home-loan provider HBOS Plc may not have access to funding.
``The Fed is monetizing debt on an unprecedented scale and I can't see how that can be dollar positive,'' said Michael Klawitter, a currency strategist with Dresdner Kleinwort in Frankfurt. ``Nothing is solved. I can't see risk aversion taking a lasting dive.''
The yen jumped the most in a decade against the dollar on Sept. 15 as mounting credit-market losses forced Lehman Brothers Holdings Inc. to file the biggest bankruptcy in history, sparking a global stocks rout and a surge in bank loan costs.
The Fed yesterday injected $70 billion of temporary reserves into the banking system and $70 billion on Sept. 15, the most since the September 2001 terrorist attacks, to alleviate the seizure in credit markets. Central banks around the world pumped more than $210 billion into money markets.
The pound weakened versus the euro as HBOS, Britain's biggest mortgage bank, fell as much as 52 percent in London trading. Lloyds TSB Group Plc, the U.K.'s biggest provider of checking accounts, is in talks to buy the lender, according to two people familiar with the situation.
The U.K. currency stayed lower after a government report showed jobless-benefit claims rose in August by the most since 1992 and minutes of the Bank of England's Sept. 4 meeting showed policy makers voted 8-1 to keep the nation's key lending rate at 5 percent. The pound was at 79.57 pence per euro, from 79.26.
The yen fell against the euro as the AIG rescue stoked so- called carry trades, in which traders buy higher-yielding assets funded with low-interest-rate loans in countries such as Japan.
The Bank of Japan today left its overnight rate unchanged for a 22nd straight policy meeting.
``We regard any rebound of risk appetite at this stage as a temporary affair,'' BNP Paribas SA strategists led by Hans- Guenter Redeker, the London-based global head of currency strategy, wrote in a note today.

Resistance 3: Y109.00
Resistance 2: Y107.70
Resistance 1: Y106.70
Current price: Y105,67
Support 1: Y105.20
Support 2: Y104.70
Support 3: Y103.50
Comments: Support is around session low on Y105.20. Below losses may widen to Y104.70 (61.8% Fibo). Stronger level is around yesterday’s low on Y103.50. Resistance comes at session high on Y106.70, stronger – at Friday’s high on Y107.80/90.

Resistance 3: Chf1.1420
Resistance 2: Chf1.1300
Resistance 1: Chf1.1260
Current price: Chf1.1197
Support 1: Chf1.1190
Support 2: Chf1.1040
Support 3: Chf1.0940
Comments: In general, techs on USD/CHF hasn’t changed. Minor support is around session low on Chf1.1190, stronger – on Chf1.1040 (Tuesday’s low). Resistance comes at earlier broken channel support line from Jul 22 on Chf1.1260/70. A break above will target Chf1.1300.

Resistance 3: $1.8130
Resistance 2: $1.8020
Resistance 1: $1.7980
Current price: $1.7849
Support 1: $1.7730
Support 2: $1.7630
Support 3: $1.7450
Comments: Techs on GBP/USD hasn't changed. Support comes at $1.7730 (yesterday’s low), then - $1.7630. Stronger level comes near Sep 11 low on $1.7450. Resistance is near session highs on $1.7900 with a break above will target key channel resistance line from Aug 01 at $1.8020. Next band od resistance is around Sep 15 high on $1.8130.

Resistance 3:$1.4480
Resistance 2: $1.4380
Resistance 1: $1.4270
Current price: $1.4201
Support 1: $1.4080
Support 2: $1.3970
Support 3: $1.3880
Comments: Support comes at session lows on $1.4080, then – at $1.3960/70 and $1.3870/80 (Sep 11 low). Resistance is around session high on $1.4270 with a break above opens the way to channel resistance line from Jul 22 on $1.4380. Next band of resistance is at $1.4480 (15 Sep high).

EUR/USD $1.4220, $1.4135, $1.3970
USD/JPY Y106.50, Y107.25
GBP/USD $1.7790
AUD/USD $0.8080
NZD/USD $0.6580
USD/CAD C$1.0650, C$1.0600

Yen crosses rebounds strongly following the news of AIG's bailout. Fed will take a 79.9% stake and will lend up to $85billion to AIG. Fed said in the statement that a "disorderly failure" of AIG could magnify the strains on financial markets, lead to higher borrowing costs and reduce household wealth. The loan is expected to be repaid with the proceeds from the sale of AIG's assets. Indeed, stock markets were unaffected by the disappointment that Fed held rates unchanged at 2.00% on anticipation of the bailout of AIG and ended up higher overnight. Yen's selling started with stocks rebound after FOMC decision.
BoJ left rates unchanged at 0.5% as widely expected. In the accompanying statement, BoJ noted that energy prices and weak experts is keeping the economy sluggish but growth will return to a moderate path once commodity price stabilize and global economies improve. Inflation will remain high for months before moderating.
The yen jumped the most in a decade against the dollar on Sept. 15 as mounting credit-market losses forced Lehman Brothers Holdings Inc. to file the biggest bankruptcy in history, sparking a global stocks rout.
The U.S. currency also dropped against the Swiss franc after the U.S. reversed its opposition to a bailout of AIG by taking a majority stake in the insurer, sending U.S. Treasuries lower for a second day. Norway's krone gained as oil, the country's biggest export, rebounded from a two-day decline.

EUR/USD: Eases back to $1.4220, getting further reports that a major Asian account sits at $1.4210.
GBP/USD: Dipped from around $1.7838 to $1.7825.
USD/JPY: Extending the pullback into European dealing as bids in the Y105.70 area give way and carry trades in general come under renewed pressure.

Housing data (12:30 GMT) will be the main focus in US today with building permits and housing starts both expected to drop further in Aug.

8 BOE MPC Voted To Keep Rates Unch Sep;
BOE MPC's Blanchflower Voted For 50BP Rate Cut
While the MPC agreed that a case could be made for a rate cut, the minutes show that they were concerned that a surprise cut could suggest that the committee was "slackening" in its resolve to tame inflation. The minutes also show that the committee was concerned over the recent fall in sterling.

Resistance 3:$1.4480
Resistance 2: $1.4380
Resistance 1: $1.4220
Current price: $1.4201
Support 1: $1.4080
Support 2: $1.3970
Support 3: $1.3880
Comments: Techs on EUR/USD:EUR/USD quite volatile Wednesday, a day after FOMC decided to keep key lending rate unchanged at current 2%. The dollar has gained about 12% since touching an all-time low of $1.6038 per euro on July 15, strengthening as reports showed the European economy shrank in the second quarter and crude oil dropped more than a third from its peak of $147.27 a barrel. Support comes at session lows on $1.4080, then – at $1.3960/70 and $1.3870/80 (Sep 11 low). Resistance is around session high on $1.4220 with a break above opens the way to channel resistance line from Jul 22 on $1.4380. Next band of resistance is at $1.4480 (15 Sep high).

High Low Close
EUR/USD 1.4280 1.4071 1.4095
USD/JPY 106.37 103.51 105.56
GBP/USD 1.8009 1.7733 1.7807
USD/CHF 1.1254 1.1045 1.1241

EUR/JPY 150.68 149.67 150.02
EUR/GBP 0.7979 0.7906 0.7913
GBP/JPY 190.02 184.07 187.99
GBP/CHF 2.0180 1.9936 2.0014

Change % Change Last
Nikkei 225 -605.04 -5.00% 11,609.72
Topix -59.63 -5.10% 1,117.57
FTSE -178.60 -3.43% 5,025.60
DAX -98.99 -1.63% 5,965.17
CAC -81.57 -1.96% 4,087.40
Dow +141.51 +1.30% 11,059.02
NASDAQ +27.99 +1.28% 2,207.90
S&P +20.90 +1.75% 1,213.60
10yr Note +0.0800 +0.023% 3.491%
NYMEX Crude Oil -4.56 -4.76% 91.15
Gold -6.50 -0.83% 780.50

03:30 Japan BoJ meeting announcement 0.50% 0.50% 0.50%
08:30 UK ILO Jobless rate (3 months to July) 5,4%
08:30 UK Average earnings (3 months to July) Y/Y 3,7%
08:30 UK Claimant count rate (August) 2,7%
08:30 UK Claimant count (August) +20,1К
08:30 UK BoE meeting minutes (03-04.09)
09:00 Е15 Trade balance (July) unadjusted, bln -0,1
10:00 UK CBI industrial order books balance (September) -13%
12:30 USA Current Account (2Q) -172,4В
12:30 USA Building permits (August), mln 0,937
12:30 USA Housing starts (August), mln 0,950 0,965
14:35 USA EIA Crude Oil Stocks change (Sep 13) -5,9М
23:50 Japan Tertiary activity index (July) -0,8%