Stocks continue to pare losses, though their recent ascent has stalled. Strong leadership is coming from the financial sector.
Financials were down as much as 3.2% early on. The sector was recently up 0.5%, which was more than any other sector, but is now trading 0.2% higher. Particular strength is coming from diversified financial service companies (+3.2%). The large market cap of JPMorgan Chase (JPM 45.97, +2.51) and Bank of America (BAC 35.97, +1.60) have made their gains all the more influential.
Regional banks (-0.8%) were weighing on the sector earlier in the session as National City (NCC 3.66, -1.33) saw its market cap slashed. Investors sent the stock sharply lower, growing fearful the bank would suffer the same fate as Washington Mutual (WM 0.16, -1.53).

Citi economist Bob DiClemente says financial conditions "are extremely hostile to economic growth" and govt policy needs to focus on improving financial conditions to help the economy. "Policy actions will need to help boost aggregate capital in the financial system, either by restoring the attractiveness of private investment or through direct injections."

Stocks are making an upswing after trending lower. The ascent has taken the major indices to their best levels since this morning. Each, however, remains in the red.
The upturn has enabled the health care sector (+0.3%) to join consumer staples (+0.5%) in positive ground. The two defensive-oriented sectors are the only to sport a gain amid market uncertainty.

Though trading in choppy fashion, stocks are trending lower. At current levels, the Dow is facing a 4.0% week-to-date decline, the Nasdaq is off 5.5% for the week, and the S&P 500 is down 5.1% this week.The Nasdaq is also lagging its counterparts this session. Its dismal performance can traced back to Research In Motion (RIMM 71.96, -25.57). The company failed to meet analysts' steep growth expectations when it announced its latest quarterly results. Research In Motion has shed more than one quarter of its market cap this session. Such a sever loss is easily distinguishable in the Nasdaq 100 (-2.3%), which is predominantly weighted with large-cap tech stocks.

The yen rose against the dollar and headed for its biggest weekly gain since May as U.S. lawmakers disagreed over a financial rescue and Washington Mutual Inc. became the nation's biggest bank to collapse.
Japan's currency also strengthened against the euro after a group of Republicans opposed to the Treasury's $700 billion asset-purchase plan submitted an alternative proposal, prompting investors to reduce holdings of higher-yielding assets funded in Japan.
``The risk-aversion trade is back on, but it's not huge,'' said Alan Ruskin, head of international currency strategy in North America at RBS Greenwich Capital Markets Inc. in Greenwich, Connecticut. ``You never know what the next headline will be. The talk is that they will eventually pass the package in some shape or form.''
The yen rose 0.5 percent to 106.20 per dollar from 106.56 yesterday, extending this week's gain to 1.3 percent. The yen increased 0.6 percent to 154.78 per euro, from 155.68, and was up 0.4 percent for the week. The dollar traded at $1.4597 per euro, compared with $1.4609, having depreciated 0.9 percent this week.

President George W. Bush said in a statement today that Congress will overcome any disagreements and approve a financial rescue, while Alabama Senator Richard Shelby, the top Republican on the Banking Committee, said he's willing to let U.S. stock markets open Monday without an agreement in place.

``It's a nightmare,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. ``Safe-haven trades are back on. There's an enormous amount of uncertainty. No one is committed to big positions.''

The three-month London interbank offered rate, or Libor, that banks charge each other for dollar loans, was little changed today at 3.76 percent, near the highest level since January, on concern Treasury Secretary Henry Paulson's bailout plan will be diluted, encouraging banks to hoard cash. The Standard & Poor's 500 Index sank 1.4 percent.
U.S. government regulators seized Seattle-based WaMu, which faced $19 billion of mortgage-related losses, after customers withdrew $16.7 billion since Sept. 15. JPMorgan Chase & Co. agreed to acquire WaMu's deposits and branches for $1.9 billion.
After reaching a one-year low of $1.3882 on Sept. 11, the euro has traded in a range of $1.4437 to $1.4866 this week.
Currency traders are reluctant to put on big bets because it's unclear when Congress will pass the bailout
Futures contracts on the Chicago Board of Trade showed traders were certain the Fed would reduce the 2 percent target rate for overnight lending between banks by Oct. 29. There's a 70 percent chance policy makers will cut by a quarter-percentage point and 30 percent odds of a half-point decrease. Traders priced in a 68 percent likelihood of no change a week ago.
The U.S. economy expanded at an annual rate of 2.8 percent in the second quarter, slower than the previous estimate, the Commerce Department said today. Reports showed yesterday that sales of new homes fell in August to a 17-year low and orders for durable goods dropped more than forecast.
``The economy is slowing, and an interest-rate reduction will take its toll on the dollar, said RBS's Ruskin. ``We are in an early stage of a downturn, which will last for many, many months.''

Traders report technical buying of gold following break above the 200-day moving average at $894.98. Spot gold now trades at $904.13, up $26.22 on the session, having hit $910.92 high.

The major indices continue to chop along in negative ground. The Dow made its way to the unchanged mark earlier in the session, but encountered selling pressure upon reaching that mark.
Oil prices are down more than 2%. They had been down as much as 3.5% earlier. Oil's decline has helped make energy the worst performing sector, shedding 3.3%.
The slide in the price of oil prices has failed to motivate broad-based buying this session. Investors continue to await a clearer financial plan from congressional leaders.

Mizuho economist Stefven Ricchiuto says "Consumer sentiment surprisingly held up fairly well in September despite the turbulence in the domestic financial markets. Confidence did slip between the preliminary and the final report but still exceeded August's exceptionally depressed pace... Apparently surging crude oil prices were more important in August that the financial market slide was in September."

Stock improvement allows dollar-yen to recapture Y106.00 area for trade to Y106.15 area as offers and stops atop Y106.00 vie for the upper hand. Further offers eyed at Y106.20/30.

Though the Dow is trading in the red, its loss is just half that of the S&P 500.
Only seven of the Dow's components are trading with gains, but their influence is limiting losses. Making the largest gains, on a percentage basis, are financial heavyweights Bank of America (BAC 35.10, +0.73) and JPMorgan Chase (JPM 43.62, +0.16).
The duo are also lending strength to the overall financial sector. Though the sector is down 1.3%, its losses are less than energy (-2.4%) and materials (-2.8%). The latter two sectors have been challenged by perceptions that slower global growth will weaken demand for commodities.

Stocks were set to retreat Friday, as bailout talks unraveled and JPMorgan Chase snatched up Washington Mutual after it was seized by federal regulators in the biggest bank failure in history.
Stock futures were down sharply (S&P futures vs fair value: -23.30. Nasdaq futures vs fair value: -62.30). This follows a strong Thursday session, as investors showed their enthusiasm over reports that Congressional leaders had reached a deal on a proposed $700 billion cash injection to buy bad mortgage-related investments from the failing finance sector.
But late Thursday, opposition to the deal by some Republicans emerged, and negotiations broke down. House Republicans have created a competing plan that would ease tax laws and allow the injection of more private capital, rather than taxpayer money, to bail out the finance industry. Bailout talks were set to resume Friday.
Financial services power JPMorgan Chase said late Thursday it would buy the failed bank WaMu after it was seized by the Federal Deposit Insurance Corp. JPMorgan said it would acquire all of WaMu's banking operations, including $307 billion in assets and $188 billion in deposits. The buyer said it would pay $1.9 billion to the FDIC and raise another $8 billion through the sale of stock.
In other financial news, the Federal Reserve Bank announced a plan to stabilize global markets by boosting its currency swap agreements with the European Central Bank and the Swiss National Bank by $13 billion.
As yet another sign of a stuttering economy, oil prices dropped $2.21 a barrel to $105.81.

The yen rose, headed for a second weekly gain against the dollar, as U.S. lawmakers disagreed over a rescue plan for the financial industry and Washington Mutual Inc. became the nation's biggest bank to collapse.
The Japanese currency also strengthened against the euro and the Australian dollar after a group of Republicans opposed to the Treasury's $700 billion asset-purchase plan and submitted an alternative proposal, prompting investors to pare so-called carry trades. The dollar rose against the euro as investors rushed in the relative safety of U.S. Treasuries.
The new proposal to ease the credit crisis came after President George W. Bush met with Republican presidential candidate John McCain and Democratic rival Barack Obama to discuss the financial-markets rescue, according to Senate Banking Committee Chairman Christopher Dodd.
The U.S. government closed Seattle-based Washington Mutual, which faced $19 billion of mortgage-related losses, after customers withdrew $16.7 billion since Sept. 15, the Office of Thrift Supervision said in a statement. JPMorgan Chase & Co., the third-biggest U.S. bank by assets, agreed to acquire WaMu's deposits and branches for $1.9 billion.
The Fed, the European Central Bank and their counterparts in the U.K. and Switzerland said today they will provide dollars to money markets for the next week to ensure ample liquidity at the end of the quarter. The three-month London interbank offered rate, or Libor, that banks charge each other for dollar loans jumped yesterday by the most since 1999 amid concern that Paulson's bailout plan will be diluted as it makes its way through Congress, causing banks to hard cash.
The dollar rose against the euro as Treasury notes extended their longest winning streak since February. The yield on the two-year note fell 11 basis points to 2.06 percent, according to BGCantor Market Data. It dropped about 34 basis points in the past five weeks.

EUR/USD back on the defensive, slipping through the Asian base and back on to a $1.45 handle. Bids $1.4550, stops below, bids $1.4510/00, offers $1.4610/15.
GBP/USD dropped back to retest overnight lows around $1.8370, eventually breaking lower on euro-dollar slippage to $1.8337, but move cushioned as euro-sterling eased below stg0.7940. Cable lifted off lows, tracking euro-dollar recovery. Bids $1.8337, $1.8320-00. Offers $1.8400, $1.8440/50.
USD/JPY extending the lows as risk sentiment deteriorated. Dollar-yen took out good bids at Y105.60/50, slipping back to Y105.26 where strong demand was noted ahead of the week's lows. Bids Y105.20/15, stops below and under Y105.00, offers Y105.60.

The yen rose, headed for a second weekly gain against the dollar, as U.S. lawmakers disagreed over a rescue plan for the financial industry and Washington Mutual Inc. became the nation's biggest bank to collapse.
The Japanese currency also strengthened against the euro and the Australian dollar after a group of Republicans opposed to the Treasury's $700 billion asset-purchase plan and submitted an alternative proposal, prompting investors to pare so-called carry trades. The dollar rose against the euro as investors rushed in the relative safety of U.S. Treasuries.
The new proposal to ease the credit crisis came after President George W. Bush met with Republican presidential candidate John McCain and Democratic rival Barack Obama to discuss the financial-markets rescue, according to Senate Banking Committee Chairman Christopher Dodd.
``The delay of the package isn't doing the markets any favors,'' said David Powell, a currency strategist with Bank of America Corp. in London. ``But we still see the package being passed next week. Nobody wants to be seen as the person who caused the breakdown on these negotiations.''
The U.S. government closed Seattle-based Washington Mutual, which faced $19 billion of mortgage-related losses, after customers withdrew $16.7 billion since Sept. 15, the Office of Thrift Supervision said in a statement. JPMorgan Chase & Co., the third-biggest U.S. bank by assets, agreed to acquire WaMu's deposits and branches for $1.9 billion.
The Fed, the European Central Bank and their counterparts in the U.K. and Switzerland said today they will provide dollars to money markets for the next week to ensure ample liquidity at the end of the quarter. The three-month London interbank offered rate, or Libor, that banks charge each other for dollar loans jumped yesterday by the most since 1999 amid concern that Paulson's bailout plan will be diluted as it makes its way through Congress, causing banks to hard cash.
``This is a negative story for the dollar,'' said Motonari Ogawa, director of currency trading in Tokyo at Barclays Capital Inc., a unit of the U.K.'s third-biggest bank. ``News about Washington Mutual will make the market nervous and people will doubt whether a U.S. rescue plan will work.''
The dollar rose against the euro as Treasury notes extended their longest winning streak since February. The yield on the two-year note fell 11 basis points to 2.06 percent, according to BGCantor Market Data. It dropped about 34 basis points in the past five weeks.
``The U.S. needs to act quickly, because the financial system and the dollar are at risk,'' said Akio Shimizu, chief manager of currency trading in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan's largest publicly listed lender.

Resistance 3: Y109.00
Resistance 2: Y108.00
Resistance 1: Y107.00
Current price: Y105.50
Support 1: Y105.10
Support 2: Y103.95
Support 3: Y103.50
Comments: Nearest support comes at the level of Monday’s low on Y105.10. Stronger support at Y103.95 (trend support line from Mar 17 and the level of Sep 18 low). Further support can be found at the level of Sep 16 low on Y103.50. Resistance is around yesterday’s high on Y107.00, next level comes through Friday’s high on Y108.00. Brake above may bring rate to resistance near Y109.00 (area of Aug 9 high).

Resistance 3: Chf1.1050
Resistance 2: Chf1.0980
Resistance 1: Chf1.0940
Current price: Chf1.0891
Support 1: Chf1.0800
Support 2: Chf1.0690
Support 3: Chf1.0610
Comments: Tech on USD/CHF hasn't changed. Support is around yesterday’s low on Chf1.0800, then – near Monday’s low on Chf1.0690. Break under will lead the dollar to the May's high on Chf1.0610. Resistance comes at yesterday’s high on Chf1.0940. Next band of resistance comes at 50% Fibo of the decline from Chf1.1280 to Chf1,0690 at the level Chf1.0980. Further resistance comes at the Sep 22 high on Chf1.1050.

Resistance 3: $1.8800
Resistance 2: $1.8640
Resistance 1: $1.8445
Current price: $1.8371
Support 1: $1.8310
Support 2: $1.8265
Support 3: $1.8130
Comments: Nearest resistance comes at the level of today's high on $1.8445, further – on Monday’s, Tuesday's and Thursday's highs area on $1.8640 and around Aug 21 high on $1.8800. Support comes near channel line from Sep 11 on $1.8310. Below losses may widen to $1.8265 (Sep 18 high and Sep 22 low). Next support is located at the level of Sep 15 high on $1.8130.

Resistance 3: $1.4865
Resistance 2: $1.4770
Resistance 1: $1.4680
Current price: $1.4578
Support 1: $1.4565
Support 2: $1.4500
Support 3: $1.4400

Comments: Nearest support comes at yesterday’s and today's lows on $1.4560 with a break under will open the way to key support on $1.4500/05 (Fibo line, 50% of the $1.4150 - $1.4860 move). Next band of support is around channel line from Sep 11 on $1.4400. Resistance comes at today’s high on $1.4680, then - near $1.4770 (yesterday’s high). Above there is a chance to recover up to $1.4865 (Monday's high).

EUR/USD $1.4650, $1.4400, $1.4800, $1.4850
USD/JPY Y106.00, Y105.00, Y106.80, Y107.15
EUR/JPY Y157.10
GBP/USD $1.8300
USD/CAD C$1.0385

The yen rose, headed for a second weekly gain against the dollar, as U.S. lawmakers disagreed over a rescue plan for the financial industry and Washington Mutual Inc. became the nation's biggest bank to collapse.
The Japanese currency also strengthened against the euro and the Australian dollar after a group of Republicans opposed to the Treasury's $700 billion asset-purchase plan and submitted an alternative proposal, prompting investors to pare so-called carry trades. The dollar rose against the euro as investors rushed in the relative safety of U.S. Treasuries.
TThe new proposal to ease the credit crisis came after President George W. Bush met with Republican presidential candidate John McCain and Democratic rival Barack Obama to discuss the financial-markets rescue, according to Senate Banking Committee Chairman Christopher Dodd.
Dodd, Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben S. Bernanke favored a plan that would use taxpayer money to buy troubled assets from financial companies. The rival proposal calls for a mortgage-backed security insurance fund financed by premiums from the holders of those securities.
The dollar rose against the euro as Treasury notes extended their longest winning streak since February. The yield on the two-year note fell 11 basis points to 2.06 percent, according to BGCantor Market Data. It dropped about 34 basis points in the past five weeks.

EUR/USD having established a high on $1.4677, the pair could not will be fixed near this levels and has decreased in area $1,4600.
GBP/USD also showed growth at the Asian session up to $1.8445, but later the rate has receded from the reached levels.
USD/JPY the yen continues to strengthen the positions against dollar and at the moment is near to a week high on Y105,10.

Japan's benchmark stock indices ended the morning session modestly lower, unable to hold early gains as more unease spreads over the US TARP. The Nikkei 225 ended the morning ahead by 23.19 points, or 0.19%, at 11983.34. The broader-based TOPIX lost 0.96 points, or 0.08%,
to stand at 1152.99.

Japan shares fell as a drop in auto shipments dragged on export growth and Re-plus Inc.'s bankruptcy reignited credit concerns. Indexes pared losses after U.S. President George W. Bush urged lawmakers to pass a bailout package for the financial system.
Nissan Motor Co. slipped 5 percent, leading automakers lower, after data showed U.S.-bound car exports plunged as the financial crisis weighed on consumer spending. Re-plus, the latest Japanese property company to go bankrupt, was offered by its lower limit. Shinsei Bank Ltd. advanced 3 percent, helping lenders pare losses, following Bush's comments. Gauges also fell as most stocks traded without dividend rights from today.

European stocks advanced for the first time in four days, led by banks and insurers, as investors speculated takeovers may increase and the U.S. Congress will reach an agreement on a bailout plan soon.
UBS AG, the bank most hit by the subprime crisis in Europe, rallied 5.1 percent on speculation HSBC Holdings Plc may be interested in buying the company. RSA Insurance Group Plc, the U.K.'s second-largest non-life insurer, surged 11 percent. Swiss Reinsurance Co. climbed 4.8 percent after saying it has ``sufficient'' liquidity even when no external funding is available.
RSA soared 11 percent to 159.4 pence, extending gains this month amid speculation it may be bought by Germany's Allianz SE or Italy's Assicurazioni Generali SpA.
Repsol YPF SA rallied 4.9 percent to 21.42 euros after Expansion said Total SA and Royal Dutch Shell Plc are considering buying the Spanish oil company. Builder Sacyr Vallehermoso SA has said it may put its 20 percent stake in Repsol up for sale, which has spurred the interest of Total and Shell, the newspaper reported, citing unidentified people close to the conversations.

U.S. stocks advanced, led by banks, as Congress neared an agreement on a $700 billion bailout of financial institutions to help revive lending and credit markets.
Bank of America Corp., JPMorgan Chase & Co. and Citigroup Inc. added as much as 8.4 percent after Senate Banking Committee Chairman Christopher Dodd said Republicans and Democrats agreed on a ``set of principles'' for a financial-rescue package. Nike Inc. gained 9.8 percent as the world's largest athletic-shoe maker said earnings fell less than analysts estimated. Bed Bath & Beyond Inc. rose 3.7 percent after its forecast beat projections.
The Standard & Poor's 500 Index increased 22.22 points, or 1.9 percent, to 1,208.09 at 2:53 p.m. in New York. The Dow Jones Industrial Average added 195.78, or 1.8 percent, to 11,020.95. Five stocks rose for every two that fell on the New York Stock Exchange.
Nine of 10 industries in the S&P 500 advanced. The market extended its rally after Dodd, speaking to reporters on Capitol Hill, said the principles will allow Congress to ``act expeditiously'' and ``send a signal to markets.'' President George W. Bush said last night that a rescue plan for financial firms is needed to avert a ``long and painful'' recession.

Resistance 3: Y109.00
Resistance 2: Y108.00
Resistance 1: Y107.00
Current price: Y105.55
Support 1: Y105.50
Support 2: Y105.00
Support 3: Y103.50
Comments: The dollar fell, heading for a second weekly decline against the yen, as U.S. lawmakers held off approving a rescue of financial institutions and Washington Mutual Inc. became the nation's biggest bank to collapse. Support is around yesterday’s low on Y105.40/50 and then on Monday’s low on Y105.00/10. Stronger support at Y103.60 (trend line from Mar 17). Resistance is around yesterday’s high on Y107.00, then – at Friday’s high on Y108.00.

Resistance 3: Chf1.1050
Resistance 2: Chf1.0980
Resistance 1: Chf1.0940
Current price: Chf1.0867
Support 1: Chf1.0800
Support 2: Chf1.0680
Support 3: Chf1.0610
Comments: USD/CHF weakened ahead of the release of economic reports, including final figure of Core PCE price index and final Michigan sentiment index for September. Analysts predict index rose 73.3 this month after preliminary reading of 73.1. Support is around yesterday’s low on Chf1.0800, then – near Monday’s low on Chf1.0680. Break under will lead the dollar to May highs on Chf1.0600/10. Resistance comes at yesterday’s high on Chf1.0940. Next band of resistance comes at 50% Fibo of the decline from Friday’s high on Chf1.1280 - on Chf1.0980.

Resistance 3: $1.8800
Resistance 2: $1.8640
Resistance 1: $1.8460
Current price: $1.8385
Support 1: $1.8300
Support 2: $1.8190
Support 3: $1.8120
Comments: GBP/USD tries to rebound after yesterday’s sell-off with resistance comes at $1.8460, further – on Monday’s high on $1.8640 and around Aug 21 high on $1.8800. Break above will open the way to 15-days channel resistance line between $1.8830/40. Support comes near channel line on $1.8300. Below losses may widen to $1.8190/00.

Resistance 3:$1.4950
Resistance 2: $1.4840
Resistance 1: $1.4770
Current price: $1.4627
Support 1: $1.4560
Support 2: $1.4500
Support 3: $1.4460
Comments: The greenback was on course for a weekly loss against the euro after a group of Republicans opposed to the Treasury's $700 billion asset-purchase plan entered negotiations with an alternative proposal. Currently, futures contracts on the Chicago Board of Trade showed an 86% chance that the Fed will cut the 2% target rate for overnight lending between banks by a quarter-percentage point on Oct. 29, compared with zero chance a month ago. Minor support comes at yesterday’s low on $1.4560 with a break under will open the way to key support on $1.4500/05 (50% of the $1.4150 - $1.4860 move). Next band of support is around 2 weeks channel line on $1.4460. Resistance comes at yesterday’s high on $1.4770, then - between $1.4840/60 (Monday’s high). Above there is a chance to recover up to $1.4950 (50% of the $1.6030 - $1.3870 decline).

High Low Close
EUR/USD 1.4767 1.4557 1.4616
USD/JPY 107.01 105.44 106.46
GBP/USD 1.8667 1.8305 1.8380
USD/CHF 1.0940 1.0800 1.0894

EUR/JPY 156.30 155.11 155.60
EUR/GBP 0.7972 0.7897 0.7947
GBP/JPY 197.15 195.24 195.73
GBP/CHF 2.0185 1.9996 2.0030

Change % Change Last
Nikkei 225 -108.50 -0.90% 12,006.53
Topix -14.02, 1.2% 1,153.95
FTSE +101.45 +1.99% 5,197.02
DAX +120.16 +1.99% 6,173.03
CAC +111.94 +2.72% 4226.48
Dow +196.89 +1.82% 11,022.06
NASDAQ +30.89 +1.43% 2,186.57
S&P +23.31 +1.97% 1,209.18
10yr Note +0.9100 +0.241% 3.862%
NYMEX Crude Oil +2.29 +2.17% 108.02
Gold -13.00 -1.45% 882.00

06:10 Germany Import prices excluding oil (August) Y/Y 3,5%
06:10 Germany Import prices (August) Y/Y 9,3%
06:10 Germany Import prices (August) -0.9% 0.6%
12:30 USA PCE price index ex food, energy (Q2) final 2.1%
12:30 USA PCE price index (Q2) final 4.2%
12:30 USA GDP (Q2) final Y/Y 3.4% 3.3%
13:55 USA Michigan sentiment index (September) final 73,3 73,1
14:20 Germany HICP (September) preliminary Y/Y 3,3%
14:20 Germany CPI (September) preliminary Y/Y 3,1%
14:20 Germany CPI (September) preliminary -0.3%