RPT-Wall St Week Ahead: Mortgage stress to spur more volatility

(Reuters) - NEW YORK, Aug 5 - More signs of weakness in the
mortgage market, another surge in oil prices and a Federal
Reserve rate decision could create more turbulence for Wall
Street this week.




Widening fallout from the U.S. housing slump has rattled
credit markets, putting investors on edge about the outlook
for corporate takeovers and share buybacks -- two catalysts of
the market's recent rally to record highs.


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Wells Fargo, other lenders curb mortgage loans

(Reuters) - Wells Fargo, the second-largest U.S. mortgage lender, said it is curtailing issuance of "Alt-A" home loans through brokers, while Wachovia has stopped entirely. Wachovia also said one lending unit has temporarily halted its Alt-A production.




Lenders are making fewer home loans once thought to be safe because investors now perceive those loans to be risky. The changes could worsen the U.S. housing slump by putting home ownership beyond the reach of a larger number of Americans.


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Global stocks steady after earnings soothe credit nerves

(Reuters) - Almost two weeks of a sell-off in equity and credit markets stemmed from concerns that a fallout in the U.S. housing sector will trigger a broad repricing of risks in a market which enjoyed cheap money and high appetite for high-yielding assets.




But a string of forecast-beating results from major companies, including Allianz , Royal Bank of Scotland and British Airways on Friday, has helped soothe such concerns. Investors are keen to see U.S. jobs data due later in the day for more clues on the strength of the economy.


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U.S. Treasuries Decline as Rebound in Global Stocks Dims Allure of Debt

(Bloomberg) -- U.S. 10-year Treasuries fell for the
first time in a week as a rebound in global stock markets reduced
the appeal of fixed-income securities.

Treasuries declined as Asian shares rebounded from a slump
after higher profits at Japanese companies helped ease concerns a
U.S. housing slowdown would crimp the economy. U.S. notes snapped
four days of gains that had been driven by investors seeking the
relative safety of government debt as equity markets dropped.


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Global financial markets stabilize after tremble

(Reuters) - Earlier, world stocks hit a 6-week low while credit spreads and emerging sovereign bond spreads burst wider as fears grew that a U.S. housing fallout might trigger a global credit crunch.




But European shares have since erased losses as auto shares rallied following strong Volkswagen results. U.S. stock futures pointed to a firmer open on Wall Street after it suffered the biggest fall since February.


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Metals steady as credit risks balance strike action

(Reuters) - Copper steadied on Friday as fears of credit risk in global markets were balanced by industrial action in the world's top copper producer.

Asian shares lost ground, tracking overnight losses in Wall Street as fears grew that a U.S. housing fallout might trigger a global credit crunch.


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European shares bounce back, carmakers rally

(Reuters) - European shares reversed early sharp losses on Friday to rise nearly 0.7 percent on the day as robust corporate results from car makers helped offset worries over the credit market and the health of the U.S. economy.

At 0901 GMT, the pan-European FTSEurofirst 300 index was up 0.58 percent, at 1,536.49 points, after falling more than 1 percent in early trade. It dropped 2.8 percent on Thursday on signs of deteriorating conditions for corporate buyouts and further weakness in the U.S. housing market.


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Japan Shares Drop on Concern U.S. Housing Slump Will Worsen; Canon Plunges

(Bloomberg) -- Japanese stocks tumbled by the most
in more than four months, on concern a worsening U.S. housing
slump will slow economic growth in the world's biggest economy
and prompt investors to shun equities.

Companies that rely on U.S. sales plunged. Canon Inc. slid
the most since October 2003 and Honda Motor Co. fell 2.5 percent.


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Platinum Futures Drop in Tokyo Trading as Stock Rout Cuts Risk Appetite

(Bloomberg) -- Platinum futures fell in Tokyo for a
fifth day as a rout in global equities and declines in prices for
other commodities dulled investors' demand for risk.

Asian stocks fell the most in four months on concern a
worsening U.S. housing recession would damp global growth. Copper
declined for a fourth session in New York, the longest slump in
more than a month, while crude oil had its biggest plunge in four
months yesterday.


Read more at Bloomberg Commodities News

Oil holds firm above $75, eyes tight global supply

(Reuters) - London Brent crude gained 41 cents to $75.59 a barrel by 0340 GMT, after ending $1.14 lower on Thursday. U.S. crude rose 43 cents to $75.38, after a loss of 93 cents the previous day, when it rallied more than $1 midsession to trade at a premium to Brent.




Traders saw an opportunity to buy after Thursday's dip, felt across commodity markets, which came as weak U.S. housing data revived worries about the economy of the world's biggest oil consumer and sparked a flight from risky assets.


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Treasuries Rise as Slide in Global Stocks Spurs Investors to Reduce Risk

(Bloomberg) -- U.S. Treasuries rose for a fourth
day as investors sold stocks and corporate bonds and sought the
relative safety of government debt.

Ten-year securities headed for a third weekly gain as Asian
stock markets slid the most in four months, extending a rout in
global equities. Japan's Nikkei 225 Stock Average slumped 2.3
percent on speculation a worsening U.S. housing slump will slow
growth in the world's biggest economy.


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Dollar Falls to Record Low Versus Euro on Concern Subprime Losses to Mount

(Bloomberg) -- The dollar fell to a record low
versus the euro and headed for a sixth straight weekly drop as
concern increased that losses in subprime mortgages will worsen
a slowdown in U.S. housing and curb economic growth.

The currency also tumbled versus the yen as investors
exited riskier bets. Federal Reserve Chairman Ben S. Bernanke
said yesterday there will be ``significant financial losses'' on
mortgages given to people with poor credit histories.


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UPDATE 2-M&T Bank profit tops views,mortgage pressure eases

(Reuters) - Results marked a recovery from the prior quarter, when the U.S. housing slump forced the northeast regional bank to buy back troubled loans it had sold, and slash its profit forecast. M&T shares rose more than 3 percent in early trading.




Quarterly net income for M&T, whose largest shareholders include Warren Buffett's Berkshire Hathaway Inc. , rose 1 percent to $214.2 million, or $1.95 per share, from $212.6 million, or $1.87, a year earlier.


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M&T Bank profit tops views, mortgage pressure eases

(Reuters) - Results marked a recovery from the prior quarter, when the U.S. housing slump forced the northeast regional bank to buy back troubled loans it had sold, and slash its profit forecast. M&T shares rose more than 3 percent in early trading.




Quarterly net income for M&T, whose largest shareholders include Warren Buffett's Berkshire Hathaway Inc. , rose 1 percent to $214.2 million, or $1.95 per share, from $212.6 million, or $1.87, a year earlier.


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U.K. Pound May Advance Against Dollar on U.S. Subprime Concerns, Yield Gap

(Bloomberg) -- The pound may strengthen against the
dollar on speculation the Bank of England will raise interest
rates further this year while a slowdown in the U.S. housing
market keeps the Federal Reserve on hold.

The pound rose to a 26-year high versus the dollar
yesterday after Standard & Poor's said it may cut ratings on $12
billion of bonds backed by U.S. subprime mortgages. The pound
has gained 3.5 percent against the dollar this year as investors
bought the U.K. currency to take advantage of the highest rates
among the Group of Seven industrialized nations.


Read more at Bloomberg Currencies News

Home Depot sees deeper profit drop on housing woes

(Reuters) - ATLANTA, July 10 - Home Depot Inc. on Tuesday forecast a deeper profit drop for 2007, citing weakness in the U.S. housing market.



The home improvement industry leader said it expected per-share profit for the full year to fall 15 percent to 18 percent to a range of $2.30 to $2.36 per share. In May, Home Depot had said earnings per share would fall 9 percent this year.


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Asian Stocks Fall for First Time in Three Weeks on U.S. Housing Concerns

(Bloomberg) -- Asian stocks dropped for the first
time in three weeks on concern a U.S. housing slump will curb
growth in the region's biggest export market. Samsung Electronics
Co. and James Hardie Industries NV led the slide.

``Markets seem unable to push higher as we get more news
every day about the U.S. economy, particularly the housing
troubles there,'' said Hans Kunnen, who helps manage $107 billion
at Colonial First State Global Asset Management in Sydney.


Read more at Bloomberg Stocks News

Japanese Shares Rise as Yen Weakens; Honda Leads Gains, Bridgestone Jumps

(Bloomberg) -- Japanese stocks advanced, helping
the Nikkei 225 Stock Average rebound from a four-day slide,
after the yen reversed a strengthening trend and some U.S.
investment houses said they see few risks of widespread turmoil
in credit markets.

Honda Motor Co. jumped 2.3 percent, after sliding 1.6
percent during the past three sessions as the yen strengthened
and a weakening U.S. housing market increased concern consumer
demand would be curbed and that investors would favor bonds over
stocks. Toyota Motor Corp. rose after Goldman, Sachs & Co.
lifted its recommendation on the shares to ``buy.''


Read more at Bloomberg Stocks News

Corporate Bond Risk Jumps in Europe on Concern Over U.S. Housing Market

(Bloomberg) -- The risk of owning European company
bonds jumped to the highest in almost three months on concern a
slowing U.S. housing market will hit global corporate earnings
growth, according to traders of credit-default swaps.

Contracts based on 10 million euros ($13 million) of debt
included in the iTraxx Crossover Series 7 Index of 50 European
companies increased 7,500 euros to 222,000 euros, the highest
since April 5, according to JPMorgan Chase & Co. An increase in
the cost of the contracts, used to bet on a company's ability to
repay debt, shows a deteriorating outlook for credit quality.


Read more at Bloomberg Bonds News

No relief for yen as carry trades continue

(Reuters) - The comparatively high-yielding New Zealand dollar recovered all the losses it incurred on suspected central bank intervention late on Friday, striking a 22-year high against the dollar and climbing near to a 20-year peak against the yen.




Despite falls in equity markets fueled by rising global interest rates and renewed concern about the U.S. housing market, currency investors continued to put on carry trades, in which they borrowed in low-yielding currencies like the yen to fund purchases of higher-return units.


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