Japan Stocks Retreat on Slowing Retail Sales, U.S., Europe Jobs

By Masaki Kondo

July 3 (Bloomberg) -- Japanese stocks dropped on retailers’ slowing sales and after worsening U.S. and European job data fueled concern the global economic slump will be prolonged.

Seven & I Holdings Co., the nation’s largest retailer, plunged 5 percent after reporting a record quarterly slump in profit. Mitsui O.S.K. Lines Ltd. dropped 3 percent after commodity cargo fees fell to the lowest level in three weeks. Orix Corp., Japan’s largest non-bank financial company, surged 7.1 percent even after saying it will sell new shares, which will dilute shareholder value by as much as a fifth.

“Household spending won’t recover anytime soon,” said Hiroshi Morikawa, a senior strategist at Tokyo-based MU Investments Co., which manages about $13 billion. “Consumers are flocking to discounted products and that may damage the economy through deflation.”

The Nikkei 225 Stock Average slid 60.08, or 0.6 percent, to close at 9,816.07 in Tokyo. The broader Topix index lost 3.40, or 0.4 percent, to 920.62. The volume of shares traded in Tokyo declined to a level not seen since March 10.

For the week, the Nikkei lost 0.6 percent and the Topix decreased 0.7 percent.

The Nikkei soared 22.8 percent in the three months to June 30, the second-biggest gain on record, on optimism the global economy was stabilizing. Companies on the gauge are expected to pay dividends equivalent to 1.7 percent of their share prices, lower than U.S. and European counterparts.

Save Money

Seven & I dropped 5 percent to 2,190 yen, making it the biggest drag on the Topix. Net income tumbled 28 percent in the three months ended May 31, the steepest slide in quarterly net income since the company was formed in 2005. Worsening household income and job markets prompted consumers to save money, the company said in a filing with the Tokyo Stock Exchange.

Fast Retailing Co., the nation’s largest clothing retailer, dived 2.9 percent. The company said yesterday its average June customer spending fell the most this year. Isetan Mitsukoshi Holdings Ltd., a department store operator, sank 4.9 percent.

In New York, the Standard & Poor’s 500 Index slumped 2.9 percent after a government report showed employers cut more jobs than economists had estimated in June. Europe’s unemployment rate jumped in May to the highest level since 1999.

“It took years for us to get into this mess, and it’s going to take us more than a few months to turn it around,” U.S. President Barack Obama said.

Shipping Fees

Mitsui O.S.K. dived 3 percent to 593 yen. Iino Kaiun Kaisha Ltd., which operates oil, chemical and gas tankers, sank 3.3 percent. The Baltic Dry Index, a measure of shipping costs for commodities, fell 1.9 percent yesterday to the lowest level since June 12.

“The worsening of U.S. job figures is causing concerns the recession may be drawn out,” said Satoshi Yuzaki, a section manager at Takagi Securities Co. “That’s hurting shipping shares.”

Bridgestone Corp., the world’s largest tiremaker, jumped 1.8 percent, while Sumitomo Rubber Industries Inc. climbed 2 percent. Daiwa Securities Group Inc. lifted its ratings on the two companies to “outperform,” from “neutral.”

Orix leapt 7.1 percent, making it the second-biggest winner on the MSCI World Index. The company will raise as much as 100 billion yen ($1.04 billion) through share sales for loan repayments and investment, the company said yesterday.

“Orix’s financial position is very healthy,” said Shiro Yoshioka, an analyst at Japaninvest KK in Tokyo. “Orix is probably preparing to expand its business, which could boost profit.”

Nikkei futures expiring in September fell 0.5 percent to 9,840 in Osaka and slipped 0.8 percent to 9,820 in Singapore.

To contact the reporters for this story: Masaki Kondo in Tokyo at mkondo3@bloomberg.net.

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Asian Stocks Fall on U.S., Europe Jobs Data, Seven & I Results

By Patrick Rial

July 3 (Bloomberg) -- Asian stocks fell for a third day as a drop in profit at Seven & I Holdings Co., Japan’s largest retailer, and worsening job markets in the U.S. and Europe fanned doubts the global economy will recover soon.

Seven & I tumbled 5 percent after saying profit dropped 28 percent last quarter. Mitsui O.S.K. Lines Ltd., Japan’s No. 2 bulk shipper, lost 3 percent amid speculation global trade will suffer after unemployment reached 9.5 percent in both the U.S. and Europe. BHP Billiton Ltd., the world’s biggest mining company, declined 2.5 percent as oil and metals dropped.

The MSCI Asia Pacific Index lost 0.4 percent to 102.61 as of 3:28 p.m. in Tokyo. The gauge, which has leapt 45 percent from a more than five-year low in March, lost 1 percent in the past five days, the second weekly decline in three.

“We are running out of data points that can boost sentiment, so there’s not much hope for further gains,” said Tomomi Yamashita, a fund manager at Shinkin Asset Management Co. in Tokyo, which oversees about $5.5 billion. “Stocks are not at reasonable levels when you consider the facts.”

Japan’s Nikkei 225 Stock Average fell 0.4 percent to 9,746.06. Most markets in the region declined. China’s Shanghai Composite index led advancing markets, adding 0.7 percent as signs power demand is recovering drove gains in power companies.

The MSCI Asia soared a record 28 percent in the three months ended June 30 on optimism the global economy is stabilizing. The surge has driven the price of stocks on the measure to 23.4 times estimated earnings, compared with 15 times at the market trough in March and 15.2 for the U.S.’s Standard & Poor’s 500 Index.

Job Cuts

Sundance Resources Ltd. plunged in Sydney after the ore- exploration company said its chairman was stepping down. Orix Corp., Japan’s largest non-bank lender, surged 7.1 percent even after saying it would sell 100 billion yen ($1 billion) in new shares.

In New York, the S&P 500 slumped 2.9 percent after the Labor Department said U.S. employers cut 467,000 jobs in June, over 100,000 more than economists had forecast. That pushed the nation’s unemployment rate to 9.5 percent, a level not seen since August 1983. Futures on the S&P 500 rose 0.4 percent today.

“The U.S. unemployment data confirms that the economy remains very fragile at the moment,” said Jason Teh, who helps manage more than $2.5 billion at Investors Mutual Ltd. in Sydney. “The sustainability of the share market recovery has to be confirmed by further improving economic fundamentals.”

Europe’s unemployment rate also increased to 9.5 percent in May, the highest level since 1999. Jean-Claude Trichet, the European Central Bank governor, said the bank will maintain interest rates at 1 percent.

‘State of Crisis’

Seven & I plunged 5 percent to 2,190 yen. The retailer said yesterday profit dropped 28 percent in the three months ended May 31. Worsening household income and job markets prompted consumers to save money, the company said.

Rival retailer Aeon Co. declined 4.4 percent to 895 yen. Isetan Mitsukoshi Holdings Ltd., Japan’s largest department- store operator, slumped 4.9 percent to 950 yen. The company said on July 1 sales fell 10.3 percent in June.

Yoshimasa Hayashi, who was appointed as Japan’s Economy and Fiscal Policy Minister on July 1, said yesterday the nation may slip back into deflation and that the economy is “in a state of crisis.”

Today marks the first three-day slump in MSCI’s Asian gauge since April 28, as economic reports this week pointed to a stalled recovery in the region. The Bank of Japan’s Tankan survey of manufacturer sentiment rebounded less than estimated, while government data showed Japan’s unemployment rate reached a five-year high in May. Australia’s exports dropped to a 14-month low, while building approvals declined by the most since 2002.

Oil, Metals, Shipping

The job reports raised concern demand for materials will wane. Crude oil tumbled 3.7 percent to $66.73 a barrel in New York, the lowest settlement since June 3, and extended its decline today. A gauge of six metals in London dropped 1.2 percent. The Baltic Dry Index, a measure of shipping costs for commodities, lost 1.8 percent to a three-week low.

Mitsui O.S.K. slumped 3 percent to 593 yen. BHP lost 2.5 percent to A$33.43. Fortescue Metals Group Ltd., Australia’s third-largest iron ore producer, dropped 4.1 percent to A$3.52.

Chinatrust Financial Holding Co., Taiwan’s biggest credit- card issuer, surged 4.6 percent to NT$21.60. The China Times reported China may open its credit card market to Taiwanese banks, citing Liu Mingkang, Chairman of the China Banking Regulatory Commission.

Electricity Output

Huaneng Power International Inc., the listed unit of China’s largest power group, rose 1.3 percent to 7.91 yuan. The nation’s electricity output gained 3.6 percent in June, the first monthly increase since October, the China Securities Journal reported today, citing China State Grid Corp.

Sundance Resources, which is seeking to build a $3.3 billion iron ore project in Camaroon, slumped 6.3 percent to 15 Australian cents. Chairman George Jones will retire on Aug. 31 and be replaced by non-executive director Geoff Wedlock, the company said.

Orix jumped 7.1 percent to 5,880 yen in Tokyo. The company will sell 18 million new shares in two sales, using the proceeds to repay debt and the rest for investment and loans, the company said yesterday.

“Orix’s financial position is very healthy,” said Shiro Yoshioka, an analyst at Japaninvest KK in Tokyo. “Orix is probably preparing to expand its business, which could boost profit.”

To contact the reporters for this story: Patrick Rial in Tokyo at prial@bloomberg.net.

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Fortis Recommends Emerging-Market Stocks Over European Equities

By Adam Haigh

July 3 (Bloomberg) -- Investors should buy emerging-market equities rather than European stocks to benefit from government stimulus measures in China and a rally in commodities, according to Fortis Investments.

Fortis strategist Joost van Leenders cut his recommendation on European stocks to “neutral” from “overweight” in favor of adding to an already “overweight” position in emerging markets, he wrote in a weekly report to clients dated yesterday.

The MSCI Emerging Markets Index of 22 developing economies has jumped 61 percent from this year’s low on March 2, as inflows from investors surged and stimulus plans from China to Brazil bolstered confidence. That compares with a 29 percent rally in Europe’s Dow Jones Stoxx 600 Index from a 12-year low reached on March 9.

“This is mostly related to the economic cycle as emerging markets are actually doing quite well and Europe is definitely lagging,” Amsterdam-based Leenders said in a phone interview yesterday. “We have been a bit disappointed with the European economy and leading indicators are the lowest among the major regions.”

The European Commission Economic Sentiment Indicator which Fortis says is “one of the best” leading indicators for the countries using the euro “continued its sluggish advance in June, though it still firmly points at a shrinking economy,” Leenders wrote in the report. That compares with the Purchasing Manager’s Index for Chinese manufacturing, which signals “the government spending and bank lending stimuli and having a positive impact on the economy,” he wrote.

Chinese Stimulus

China, the world’s second-largest exporter, is using a 4 trillion-yuan ($585 billion) stimulus plan to revive the economy. The European Central Bank will start buying 60 billion euros ($84 billion) of covered bonds on July 6 to free credit and encourage lending, though ECB President Jean-Claude Trichet said yesterday the bank will make sure that the measures don’t boost inflation.

Fortis, which manages about $240 billion, maintained its “underweight” stance on U.S. and Japanese equities and made no other changes to its asset allocation, Leenders said.

To contact the reporter on this story: Adam Haigh in London at ahaigh1@bloomberg.net

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Europe Stock Futures Are Little Changed; Asian Shares Decline

By Adria Cimino

July 3 (Bloomberg) -- European stock futures were little changed, with the Dow Jones Stoxx 600 Index heading for its third straight weekly decline, the longest losing streak since March. Shares in Asia retreated.

France Telecom SA, Europe’s third-largest phone company, may slip after UBS AG advised selling the shares. Lanxess AG may gain after Deutsche Bank AG recommended Germany’s largest publicly traded specialty chemical maker. BHP Billiton Ltd. led commodity producers lower in Asia as metals fell.

Futures on the Euro Stoxx 50, a benchmark for the euro region, added less than 0.1 percent to 2,371 at 7:42 a.m. in London. The U.K.’s FTSE 100 Index may rise 9, according to Cantor Index. The MSCI Asia Pacific Index slipped 0.3 percent.

The Stoxx 600 has lost 0.2 percent this week, while the Standard & Poor’s 500 Index in the U.S. tumbled 2.5 percent as a worse-than-projected decrease in American jobs added to concern that rising unemployment will prolong the first global recession since World War II. U.S. markets are closed today.

Europe’s Stoxx 600 has dropped 5 percent since June 11 on speculation share prices have outpaced the outlook for economic growth after a three-month rally pushed valuations to 25.4 times earnings, the highest level since 2004, according to data compiled by Bloomberg.

“Equities may manage a small bounce after yesterday’s big sell-off, but with little in the way of fundamentals due and volumes likely to be depressed given the holiday across the Atlantic, it could end up being a rather uninspiring session,” Matthew Buckland, a dealer at CMC Markets in London, wrote.

France Telecom

France Telecom was cut to “sell” from “neutral” at UBS. Lanxess was raised to “buy” from “hold” at Deutsche Bank, which said a “cost cutting program will support earnings.”

BHP, the world’s biggest mining company, fell 2.7 percent in Australia. Copper slipped for a second day in London.

American depositary receipts of Total SA, Europe’s biggest oil refiner, retreated 0.6 percent from the close in France.

Crude oil was little changed, poised for a third week of declines, on speculation of reduced fuel demand with U.S. unemployment climbing to the highest in almost 26 years.

Logitech International SA, the world’s biggest maker of computer mice, was rated “overweight” in new coverage at Morgan Stanley, which said the current share price is “an attractive entry point.”

To contact the reporter on this story: Adria Cimino in Paris at acimino1@bloomberg.net.

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Marshals Arrive, Ruth Madoff Leaves as Manhattan Home Is Seized

By David Glovin, Erik Larson and David M. Levitt

July 3 (Bloomberg) -- U.S. marshals seized Bernard Madoff’s $7 million Manhattan penthouse apartment following a federal judge’s order that the Upper East Side residence be forfeited by the convicted con man.

Madoff’s wife, Ruth, moved out yesterday as they arrived, her lawyer said.

“Ruth moved out voluntarily pursuant to prior agreements we had reached with the government,” attorney Peter Chavkin said. He declined to say where she will live.

U.S. District Judge Denny Chin in Manhattan last week authorized the government to seize the aerie. The East 64th Street property will be sold to reimburse investors bilked by Madoff, who is serving a 150-year prison sentence. Irving Picard, the trustee unwinding his brokerage, is also liquidating assets to pay ex-clients. On July 1, another judge granted Picard’s request for the right to break Madoff’s lease on three floors at the “Lipstick” office building in midtown Manhattan.

A crowd of more than 50 reporters and onlookers formed in front of Madoff’s apartment building yesterday. Sheryl Rose, 35, a Manhattan resident who works in advertising sales, was on her way to get a tooth pulled across the street when she stopped to watch the scene.

‘Fend For Herself’

“She should absolutely leave,” Rose said of Madoff’s wife. “She should be left to fend for herself. She shouldn’t be living on East 64th street.”

Madoff, 71, was sentenced June 29 for masterminding the largest U.S. Ponzi scheme ever. Prosecutors said the money manager told clients they had as much as $65 billion invested with him. The government has so far documented losses of about $13 billion.

“We have taken possession of the Madoff apartment right now at twelve noon, and Mrs. Madoff is no longer in possession,” U.S. Marshal Joseph Guccione said in an interview. “We have possession of their furniture and everything in it.”

The residence is one of several Madoff owned with his wife before the scheme was exposed Dec. 11. Others are in Palm Beach, Florida; and Montauk, New York, on the eastern end of Long Island. Madoff has agreed to forfeit those as well.

Home Confinement

Bernard Madoff spent three months under home confinement in the apartment, between his arrest and his March 12 guilty plea. Since then, he’s been held at a federal lockup in lower Manhattan. His lawyers have requested that he serve his prison term at a federal correctional facility in Otisville, New York, 80 miles northwest of New York City.

About 10 blocks south of Madoff’s former Manhattan home, at the now-closed offices of Bernard L. Madoff Investment Securities LLC, the con man’s 1986 lease may now be broken, freeing up more funds to pay back fraud victims, a U.S. bankruptcy judge ruled.

The right to void the agreement for the elliptical building’s 17th through 19th floors was approved July 1 by U.S. Bankruptcy Judge Burton Lifland in New York. The order lets Picard stop paying rent before the contract’s January 2012 expiration.

The 17th and 18th floors are 19,000 square feet, and the 19th floor is 16,200 square feet, said Russell Freeman, asset manager for Metropolitan Real Estate Investors LLC, which owns the 587,000 square-foot tower. Madoff was one of the original tenants when it was completed in 1986, Freeman said.

Direct Lease

Madoff’s personal office on the 19th floor has been stripped of furnishings, leaving black low-rise formica cabinets, fitted for the room’s curved windows. The view to the southeast offers glimpses of the East River through the skyscrapers, including Donald Trump’s Trump World Tower. Mounted overhead is a Sony television with an insert for videocassettes.

The raised trading floor features no-frills black formica desks. An elliptical stairwell leads down to the 18th floor.

Madoff’s investment advisory business was run out of the 17th floor. His market-making and proprietary trading units were on the 19th floor and back office functions were on the 18th.

The 19th floor is being “actively” marketed through CB Richard Ellis Group Inc., the building’s leasing agent. Siebert Financial Corp., which had sublet part of a floor from Madoff’s firm, will remain under a direct lease, Freeman said.

Trading Positions

That floor has about 100 trading positions, making it good for “a plug and play trading operation,” Freeman said.

“We did everything we could with our brokers and attorneys to work with the trustee,” Freeman said. “In light of the horrible situation, they tried to do the right thing by everybody.”

The space may not be easy to rent given the rise in New York office vacancies, said Marisa Manley, president of Commercial Tenant Real Estate Representation Ltd., a Manhattan- based tenant brokerage. Midtown Manhattan’s office vacancy rate hit 15 percent in the second quarter, the highest in 15 years, Jones Lang LaSalle Inc. reported.

“There’s enough space in other good buildings, that even if the Lipstick Building has some cachet -- and it certainly does -- you know what? There’s a lot of good space out there,” Manley said.

The East Side tower, designed by architects Philip Johnson and John Burgee, is called the Lipstick building for its shape and reddish brown stone façade. The curved walls can create “inefficiencies,” Manley said. “If you have rectilinear furniture, you got to figure out what to do with those odd spaces. People got to figure out, where do I put my credenza?”

Potential Tenants

Freeman said “you do run into that” kind of thinking when potential tenants view the space.

“By the same note, you run into people who really do like the uniqueness of it,” he said.

Under Picard’s deal with the landlord, the trustee will continue to pay rent on the 17th floor until it’s vacated by the FBI, which plans to continue using the location for another year as part of its probe of Madoff’s firm.

Under the same deal, Picard will continue to pay rent for the 19th floor for six months while the landlord seeks to rent the space. Picard will have control of that floor for the next two months while he gathers records and disposes of assets, according to the filing.

“It would have been extremely difficult to locate a party willing to take on the 885 lease for a short period, especially at the above-market rates,” Picard said in the filing, referring to the building’s Third Avenue address.

Under his agreement with the landlord, the 18th floor will continue to be occupied by Surge Trading Inc., which outbid two other firms to buy Madoff’s market-making business. The lease rejection is effective June 30.

The bankruptcy case is In re Bernard L. Madoff, 09-11893, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net; Erik Larson in New York at elarson4@bloomberg.net; David M. Levitt in New York at dlevitt@bloomberg.net.

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Buyout Firms Say FDIC’s Proposed Takeover Rules May Go Too Far

By Jason Kelly and Margaret Chadbourn

July 3 (Bloomberg) -- Private-equity firms said the Federal Deposit Insurance Corp. may be diminishing the appetite for future bank takeovers by demanding buyout groups put more capital at risk.

Under a proposal outlined by the FDIC yesterday, investor groups would act as a source of strength for “subsidiary depository institutions.” Buyout firms have expressed concern that expanding the so-called source of strength provision, which requires owners to support ailing banks, may impose obligations on minority investors.

“The FDIC’s proposed guidance would deter future private investments in banks that need fresh capital,” Douglas Lowenstein, president of the industry group the Private Equity Council, said in a statement yesterday.

The FDIC is courting private-equity companies that have about $400 billion to invest while trying to placate lawmakers such as U.S. Senator Jack Reed who have expressed fear that buyout firms may be lax stewards of the banking industry. Private-equity firms pumped more than $1 billion into U.S. banks, 52 of which have been closed by the FDIC this year.

The rules, subject to a 30-day public comment period, also require buyers to be well-capitalized for three years and to maintain a Tier 1 capital ratio of at least 15 percent. There’s also a provision requiring investors to own the bank for a minimum of three years.

‘Bad News’

“The dialogue has begun with respect to the rules and that’s a process that I think both sides would welcome,” said Thomas Vartanian, a partner at the law firm Fried Frank Harris Shriver and Jacobsen LLP in Washington. “The bad news is that the discussion has started in a way that suggests private equity investors should be treated differently.”

The plans would bar investment by so-called silo structures, in which a controlling investment would be isolated from a private-equity firm’s other holdings.

“The proposal may represent the starting point of an interesting compromise,” said Joseph Vitale, a partner at New York-based law firm Schulte Roth & Zabel LLP, who advises buyout firms on investments in financial institutions. “At first blush, the source of strength provision does not seem to be as problematic as it might have been.”

U.S. Comptroller of the Currency John Dugan and Office of Thrift Supervision acting director John Bowman, both members of the FDIC’s board, said the proposals may go too far.

‘Choke Off Capital’

The rule changes could “choke off capital,” Bowman said during the board meeting.

“We hope that the comment period yields changes that facilitate the flow of private capital into the banking system, consistent with the administration’s other efforts to address the financial crisis,” Lowenstein said in the statement.

The FDIC has worked on policy guidance for private-equity investors since January, after the sale of Pasadena, California- based IndyMac Bancorp to a group led by Steven Mnuchin, an ex- Goldman Sachs Group Inc. investment banker, and including buyout firm J.C. Flowers & Co.

The largest U.S. bank to collapse this year, Coral Gables, Florida-based BankUnited Financial Corp., was sold in May to firms including Blackstone Group LP and Carlyle Group LP, the world’s two largest private equity firms. Those buyers were told to hold the lender for at least 18 months.

The FDIC rules would require private-equity firms to disclose their ownership structure and provide details about their capital fund investments.

To contact the reporters on this story: Jason Kelly in New York at jkelly14@bloomberg.net; Margaret Chadbourn in Washington at mchadbourn@bloomberg.net

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Camulos May Give Mariner Role in Hedge-Fund Business Operations

By Saijel Kishan

July 3 (Bloomberg) -- Camulos Capital LP, a hedge-fund firm founded by former Soros Fund Management LLC trader Richard Brennan, is in talks to have Mariner Investment Group run its business operations.

Mariner, an $11 billion firm managed by Bill Michaelcheck, may handle compliance, accounting and administration for Stamford, Connecticut-based Camulos, according to a June 30 investor letter obtained by Bloomberg News.

“For many of our partners, the ‘800-pound Gorilla’ issue is the stability of the Camulos platform,” Brennan said in the letter. “We are well aware of the concern.”

Camulos, started in 2005 to specialize in credit investments, told clients last year it may make changes to its main fund amid investment losses. After limiting withdrawals, it returned half of the 15 percent in redemption requests at the end of May and expects to pay out the rest by the end of this month. Some funds capped withdrawals after record losses that averaged 19 percent in 2008, according to Hedge Fund Research Inc. in Chicago.

A deal would give Camulos access to Mariner’s investor base, which is “key” to retaining its investment team, Brennan said in the letter. He said some employees may join Mariner to help with the transition and management of certain business operations.

Brennan’s Background

Brace Young, chief executive officer for New York-based Mariner, confirmed in an e-mail the details of the potential agreement. He declined to comment further. Brennan and Richard Holahan, general counsel at Camulos, didn’t return e-mails and phone messages.

Brennan worked for three years at billionaire George Soros’s New York-based hedge fund, where he managed credit investments. Before that he was a managing director at Merrill Lynch & Co.

Mariner, started in 1992 by Michaelcheck, invests client money in its own hedge funds as well as those run by others.

Hedge funds are private, lightly regulated pools of capital whose managers can buy or sell any assets, bet on falling and rising asset prices and participate in profits.

To contact the reporter on this story: Saijel Kishan in New York at skishan@bloomberg.net;

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NYSE Traders Resort to Processing Orders by Hand After Glitch

By Edgar Ortega and Lydia Thew

July 3 (Bloomberg) -- The New York Stock Exchange, which last month finished replacing a 25-year-old system so that trades are processed in 5 milliseconds, was forced to close the world’s largest equity market by hand yesterday after a 15 minute delay.

The Big Board postponed the end of business until 4:15 p.m. in New York to ensure all orders were executed properly, Larry Leibowitz, head of U.S. markets for NYSE Euronext, said in an interview. The NYSE’s 1,200 floor traders completed the closing auction manually, instead of using automated systems.

“Having people around as the fail-safe really came through at this point because that allowed us to have a close, where otherwise it might have been very difficult,” Leibowitz told Bloomberg Television on the NYSE floor. “Things will always happen with computers, just like they happen with people, but we want to make sure that we can recover as quickly as possible.”

Trading on U.S. exchanges a day before the observance of Independence Day was the slowest since Jan. 2. While NYSE Euronext handled record volumes in March without trouble, the network malfunction comes as the New York-based company seeks to maintain its lead in equity trading amid competition from Nasdaq OMX Group Inc., Direct Edge Holdings LLC and Bats Exchange Inc.

The exchange will work over the holiday-lengthened weekend to fix the problem, Leibowitz said. NYSE reported intermittent technical problems throughout the day, starting at 9:25 a.m. with issues with floor brokers’ handheld computers, according to notices posted on the company’s Web site.

Beach Visits Delayed

At about 3:30 p.m., when investors usually start submitting trades for the closing auctions, the exchange experienced a computer malfunction that interrupted the flow of orders.

Other exchanges, including the NYSE Arca all-electronic market, closed normally at 4 p.m. That allowed some traders to shrug off the Big Board delay as a minor inconvenience one day before the holiday.

“It’s going to affect people who want to go to the beach,” said Andy Brooks, the Baltimore-based head equity trader at T. Rowe Price, which oversees $268.8 billion.

In March, the Nasdaq Stock Market canceled the electronic auction that helps determine closing prices for stocks because of a technical issue. The NYSE extended floor trading on Sept. 30 to accommodate a late wave of sale orders; no exchange systems malfunctioned.

In June 2005, the NYSE halted trading for the day at 3:56 p.m. because of a communications problem. Since then, NYSE has overhauled its trading systems to cater to brokerages that rely on rapid-fire trading strategies, which account for more than half of trading volume in the U.S.

5-Millisecond Trading

Last month, the Big Board replaced SuperDOT, a trading system that debuted in 1984, with technology from NYSE Arca that processes trades faster and handles larger orders. Transactions are now executed in 5 milliseconds, down from 350 milliseconds in 2007.

NYSE floor brokers resorted to closing stocks the old- fashioned way yesterday, calling out bids and offers through so- called open outcry trading. About 216 million shares of NYSE- listed companies were traded between 4 p.m. and 4:15 p.m., or 5.5 percent of the total for the day, according to exchange data compiled by Bloomberg.

“We had to do everything by hand,” Alan Valdes of Hilliard Lyons Inc. said in an interview from the NYSE trading floor. “This was a small, minute thing. It didn’t affect our clients or prices.”

‘A Nonevent’

Outside the Big Board, traders including Bart Barnett at Morgan Keegan & Co. routed orders to so-called electronic communications networks.

“I’m trading everything through an ECN,” said Barnett, head of equity trading. “I don’t think it’s going to have a big effect on anything. It’s a nonevent.”

The NYSE glitch caused the calculation of the Standard & Poor’s 500 Index to be extended by at least 25 minutes beyond the usual 4 p.m. close. It fell 2.9 percent to 896.42 as of 4:29 p.m. in New York, almost a point lower than at 4 p.m.

“We are constantly going through a program of improving our systems, trying to make them more bulletproof,” Leibowitz said. “Things of the order of magnitude of today are very unusual.”

To contact the reporters on this story: Edgar Ortega in New York at ebarrales@bloomberg.net; Lydia Thew in New York at lthew@bloomberg.net

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Morning Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | Jul 03 09 07:20 GMT |

Previous session overview In the foreign exchanges, the weaker-than-expected payrolls data prompted a surge in risk aversion, with the U.S. dollar rising against the euro but falling against the Japanese yen. However, some of these moves have now been reversed in Asian and early European trading. The dollar rose back slightly against the yen in Asia Friday after tumbling yesterday on weak U.S. jobs data, boosted by demand from Japanese players investing in overseas assets. But some traders said the U.S. currency's recovery may be temporary, and if it begins falling again later in the session, a thin market due to a U.S. holiday could exaggerate its moves. The euro ended Thursday down against most of the majors, gaining only against the commodity dollars, after the European Central Bank left rates unchanged at 1.00 percent, as expected, for the second straight month. ECB President Jean-Claude Trichet said that 'current rates are appropriate' and that recovery is expected in mid-2010, but at the same time, he said later on in an interview that rates may not be at their 'lowest' level, suggesting that the ECB feels that they may have room to reduce rates further later in the year. The British pound was lower against the dollar after dovish comments from a Bank of England policymaker and continued concerns about the economy. BoE policymaker Tim Besley said it was too early to judge when the central bank will need to start withdrawing the massive stimulus it has delivered. Data showed that an index on purchasing managers' survey on UK construction activity fell to 44.5 in June. The Australian dollar was weaker late Friday, although above its lowest level, after weaker-than-expected U.S. jobs data eroded much of the positive sentiment that has supported the high-yielding currency. Market expectation European stocks are expected to open marginally higher Friday, as investors chase bargains after Thursday's hefty losses. However, the U.S. holiday is likely to limit activity. For EURGBP support noted at stg0.8525/20, though not disregarding the overnight low at stg0.8527, a break below stg0.8520 to open a deeper move toward stg0.8500. Resistance seen placed at stg0.8545/50 ahead of stg0.8565/70 and stg0.8580. Pound offers seen placed between USD1.6430/35 (USD1.6433 50% USD1.6545/1.6323), a break to open a move toward USD1.6460 (Europe high Thursday/61.8%) ahead of USD1.6490/00. Support remains toward USD1.6320, a break to open a deeper move toward USD1.6280, with stops noted through USD1.6275/70. EURUSD expected thin conditions, due to the US market holiday, and talk that a large Asian bid placed around the USD1.3990 level. Offers seen placed toward USD1.4030 USD1.4027 recovery high NY/USD1.4032 38.2% USD1.4202/1.3927) with stops above USD1.4035, which if triggered to open a move toward USD1.4080/85 ahead of USD1.4100. Support seen placed around USD1.3990, a break below to open a deeper move toward USD1.3960/50 ahead of USD1.3927 and stronger area between USD1.3920/00. If U.S. economic worries and higher risk aversion cause the dollar to reverse course against the yen later in the day, a key point to watch will be the JPY95.00 level, traders say: There are automated stop-loss selling orders placed there, and if a dollar fall triggers those, the currency could quickly hit JPY94.50 in a thin market, traders say. Despite the fall in the Australian dollar, analysts said they don't expect it to move outside of its recent range unless there is further weaker-than-expected data in the U.S. or locally. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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Daily Financial Market Outlook

Daily Forex Fundamentals | Written by Lloyds TSB | Jul 03 09 06:54 GMT |

Overview & economic commentary The UK services PMI survey is likely to garner the most attention today, with US markets are closed. The manufacturing survey, released on Wednesday, rose more than expected to 47.0 in June from 45.4, while yesterday's construction PMI fell slightly to 44.5 from 45.9 - both have improved significantly from lows seen earlier in the year, but remain below the 50 level that separates growth and contraction. For the services PMI survey, we expect the index to stay above 50, close to last month's surprisingly strong rise to 51.7. Taken together, the evidence from the surveys suggests that economic activity may have stopped declining towards the end of the quarter, though Q2 growth overall may still have been negative. The key unknown, however, is the strength and sustainability of any economic recovery, given prospects of rising unemployment and the need going forward for households and the government to reduce debt levels. Outside the UK, the final estimates of euro zone services PMI are also due which, unlike the UK survey, remain well below the 50 level. Nevertheless, the ECB yesterday left benchmark interest rates on hold at 1% and indicated that they were 'appropriate' at that level, in contrast to the surprise quarter-point reduction by the Riksbank to 0.25%, though the ECB did not rule out the possibility of a further reduction. Euro zone retail sales are also due and may show a small monthly fall, as unemployment rose to a 10-year high of 9.5% and despite some modest recovery in consumer confidence levels Currency commentary S&P futures are up a shade this morning recovering from yesterday's NFP inspired sell-off, causing market participants to trim their defensive positions on the final trading day of the week. US markets are closed today and this means that light trading volumes could squeeze some currency pairs. Volatility levels fell sharply again yesterday for some G7 crosses and unless familiar trading ranges are tested, one would expect short-dated vol to stay quite subdued. The UK services PMI at 9.30 could be a market mover for sterling and gilts. We look for a slight drop to 51.4 in June, ending a spell of successive increases since last November. Key resistance for £/$ runs along 1.6441, the 10-day moving average. €/£ is offered below 0.8550 but could resume this week's upward tendency if the PMI disappoints. A widening in the 2y gilt/bund spread to +8bp could temper €/£ gains. In EM, €/pln and €/huf have reversed some of yesterday's gains but appetite to push CE3 currencies higher may be curbed ahead of next week's start of the US Q2 earnings season. In Asia, the Shanghai comp index hit a new high of 3,084. Major data and events today UK Services PMI (09:30) May 51.7 Jun (f'cast) 51.4 Median 51.5 Range 49.0:53.0 French services PMI (08:50) (final) Jun (prel) 47.5 Jun (f'cast) 47.5 German services PMI (09:00) (final) Jun (prel) 44.3 Jun (f'cast) 44.3 Median 44.3 Range 44.3:44.5 EU-16 services PMI (09:00) (final) Jun (prel) 44.5 Jun (f'cast) 44.5 Median 44.5 Range 44.5:44.6 EU-16 retail sales (10:00) Apr +0.2% Y-O-Y -2.3% May (f'cast) -0.3% Y-O-Y -2.8% Median -0.1% Range -0.5%:+0.2% Chart: UK index of services (official measure of services GDP) is expected to recover in line with the recent recovery in the services PMI survey Lloyds TSB Bank http://www.lloydstsbfinancialmarkets.com Disclaimer: Any documentation, reports, correspondence or other material or information in whatever form be it electronic, textual or otherwise is based on sources believed to be reliable, however neither the Bank nor its directors, officers or employees warrant accuracy, completeness or otherwise, or accept responsibility for any error, omission or other inaccuracy, or for any consequences arising from any reliance upon such information. The facts and data contained are not, and should under no circumstances be treated as an offer or solicitation to offer, to buy or sell any product, nor are they intended to be a substitute for commercial judgement or professional or legal advice, and you should not act in reliance upon any of the facts and data contained, without first obtaining professional advice relevant to your circumstances. Expressions of opinion may be subject to change without notice. Although warrants and/or derivative instruments can be utilised for the management of investment risk, some of these products are unsuitable for many investors. The facts and data contained are therefore not intended for the use of private customers (as defined by the FSA Handbook) of Lloyds TSB Bank plc. Lloyds TSB Bank plc is authorised and regulated by the Financial Services Authority and is a signatory to the Banking Codes, and represents only the Scottish Widows and Lloyds TSB Marketing Group for life assurance, pension and investment business.

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Relatively Quiet Markets Expected

Daily Forex Fundamentals | Written by Saxo Bank | Jul 03 09 07:07 GMT |

The US markets are closed today and the only important economic data release is the E-Z Retail Sales so expect relatively quiet markets. Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment EC 08:00 PMI Services (JUN) 44.5 44.5 UK 08:30 Mortgage Equity Withdrawal (1Q) -£9.0B -£8.0B EC 09:00 Retail Sales MoM (MAY) -0.1% 0.2% What's going on? The market was taken by surprise at the release of worse than expected Nonfarm Payrolls (out at -467K vs. -365K expected). The Unemployment Rate was lower than expected at 9.5% and the 'broad' unemployment (including unwilling marginally attached and part-time workers) rose to 16.5%. Crude Oil is factoring in some weakness here and threatens to break the 66ish support level. Be ready for serious downside if that happens. S&P500 broke lower and closed at 896. The US market is closed today (due to 4th of July tomorrow) and with the lack of important data releases today, markets are likely to be relatively quiet. Only important release is the E-Z Retail Sales. FX FX Daily stance Comment EURUSD 0/- Look to sell rallies to 1.4015-25, stop above 1.4110 with 1.39 a preferred target. EURJPY 0/- Any rebound seen limited to 135.0. Sell there for 132.50, stop abv 136.0. USDJPY 0/- Sell rallies to 96.25 for a push down to 95.0. Stop abv 96.75. GBPUSD 0/- Look to sell rallies to 1.6425 max. Weakness could extend to 1.6230 level. AUDUSD 0 Test of 0.79 survived. Likely ranging 0.7925-0.8025 in a quiet session. Equities Equities Daily stance Comment DAX 0/+ Buy on dips towards 4670 and target 4730. Stop below 4645. FTSE 0/+ Buy on dips towards 4215 and target 4255. Stop below 4200. S&P500 Nasdaq100 Nikkei 0 Futures Commodities Daily Stance Comment Gold 0/+ Buy on dips towards 930 and target 945. Stop below 927. Silver 0/+ Buy at the break of 13.33 and target 13.70. Stop below 13.20. Oil 0/- Sell on rallies towards 68 and target 66.50. Stop above 69. FX Options FX-Options Comment EURUSD Vols was sold off very heavily during Thursday's trading especially after NFP, which did not bring the expect spot to enter range more and trend less. option market the expected volatility. With US holiday ahead and much lower implied vols we shall expect spot to enter range more and trend less. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Jul 03 09 06:37 GMT |

EURUSD Comment: Messy and we remind that a weekly close above 1.4200 is the absolute minimum needed to confirm an important upside break. Until then we shall have to allow for yet more random consolidation within the recent range. Strategy: Attempt longs at 1.4000; stop below 1.3900. Short term target 1.4100, then 1.4200 Direction of Trade: → Chart Levels: Support Resistance 1.3988 " 1.4015 1.3927 1.41 1.3875 1.4178/1.4202* 1.3825 1.423 1.3800* 1.4269 GBPUSD Comment: Still stuck between a rock and a hard place, trying to break higher but getting zero help from other currencies. A weekly close clearly above 1.6500 should add to current strong bullish momentum. Strategy: Attempt small longs at 1.6415; stop below 1.6175. First target 1.6550/1.6600. Direction of Trade: → Chart Levels: Support Resistance 1.6323 " 1.65 1.6275 1.6605 1.6209 1.6664 1.6187* 1.6745* 1.6125 1.68 USDJPY Comment: Closing below the lower edge of the Ichimoku 'cloud' and the moving averages, adding a tiny amount of bearish pressure. Hopefully we will see a test of the increasingly important 94.00 area some time in the next two weeks. Strategy: Attempt small shorts at 96.00, adding to 97.00; stop above 97.25. First target 95.50 then 95.00. Direction of Trade: → Chart Levels: Support Resistance 95.70 " 96.2 95.5 96.55 95.3 96.89 95 97.00* 94.44 97.25 EURJPY Comment: Looking more top-heavy after yesterday's decent 'bearish engulfing' candle here and on a number of other Yen crosses. Obviously there is still the moving averages, trendline and 'cloud' to tackle, but a weekly close below 132.00 would add considerably to downside pressure, potentially setting off a very sharp move lower over the next two weeks. Strategy: Attempt shorts at 134.65, adding to 135.35; stop above 137.00. Short term target 133.00, then 132.00. Direction of Trade: → Chart Levels: Support Resistance 134.15 " 135 133.58 135.35 132.85 136 132.35 136.74/136.90* 131.41* 137.7 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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Technical Analysis for Crosses

Daily Forex Technicals | Jul 03 09 06:18 GMT |

GBP/JPY Influenced by the strong resistance areas of 61.8% Fibonacci, the pair declined aggressively, reaching our detected target -check it here-. Now, Sterling vs. Japanese yen has found a solid technical support of the golden Fibonacci expansion ratio as seen on the above four-hour chart, which helped it to form a bullish candlestick pattern that helps us to say an upside correctional movement is highly predicted on the intraday basis, particularly if it closed above 157.30 zones -38.2% Fibonacci retracement- as this expected closing will be able to activate the indicators to adjust upwards. Trading range for today is among key support at 153.20 and key resistance at 161.50. The general trend is to the downside as far as 167.45 remains intact with target at 116.00. Support: 156.90, 156.25, 155.55, 155.00, 154.70 Resistance: 157.75, 158.25, 159.00, 159.35, 160.00 Recommendation: According to our analysis, buy the pair at 157.30 with targets at 159.35 and stop loss at 155.60. EUR/JPY The pair declined sharply and consecutively yesterday, activating all negative signs appearing on the four-hour chart. Finally it found a solid support around 133.50 zones, which helped it to form a bullish candlestick structure connected with a closing above the cluster Fibonacci level around 134.15. Hence an upside movement is highly predicted on the intraday basis, supported by the positive sign appearing on the RSI 14 Trading range for today is among key support at 131.40 and key resistance now at 137.35. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support: 134.15, 133.60, 133.00, 132.50, 132.00 Resistance: 134.90, 135.55, 136.15, 136.65, 137.10 Recommendation: According to our analysis, buy the pair at 134.30 with targets at 136.20 and stop loss at 132.70. EUR/GBP Respecting our mid-day's analysis yesterday, the pair declined to correct the upside movements which was limited at 0.8630 zones. Now, the pivotal support zones at 0.8525 zones have helped the royal pair to form a bullish candlestick structure. Therefore we think that the short term bullishness is about to continue to activate the head and shoulders bottom pattern as seen on the above four-hour chart, supported by the bears power decreasing while the Dynamic Zones RSI indicator started to offer a positive sign. Trading range is among the key support at 0.8370 and key resistance now at 0.8700. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support: 0.8525, 0.8500, 0.8465, 0.8420, 0.8400 Resistance: 0.8560, 0.8605, 0.8630, 0.8665, 0.8700 Recommendation: According to our analysis, buy the pair at 0.8550 with targets at 0.8645 and stop loss at 0.8475. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by ecPulse.com | Jul 03 09 05:45 GMT |

EURO The Euro versus Dollar pair was able to reach the key support for the ascending channel at 1.3955 in an attempt to breach it yet failed to close below it keeping the uptrend within the channel valid targeting 1.4230. We expect the pair is to incline on the intraday basis to breach the 1.4000 level as far as 1.3900 remains intact. The trading range for today is among the key support at 1.3655 and the key resistance at 1.4400 The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120 Support: 1.3965, 1.3925, 1.3900, 1.3870, 1.3850 Resistance: 1.4000, 1.4030, 1.4095, 1.4155, 1.4220 Recommendation: According to our analysis, buy the pair above 1.4000 with targets at 1.4155 and stop loss with four hour closing below 1.3925 GBP The Cable continued to pressure the minor support at 1.6330 to the downside. We see a bullish technical pattern that may result in an incline on the intraday basis targeting 1.6600 after breaching the minor resistance at 1.6430 as far as 1.6270 remains intact. The trading range for today is among the key support at 1.5900 and the key resistance at 1.6815 The general trend is to the upside as far as 1.4840 remains intact with targets at 1.7100 Support: 1.6330, 1.6270, 1.6200, 1.6175, 1.6115 Resistance: 1.6430, 1.6490, 1.6570, 1.6600, 1.6685 Recommendation: According to our analysis, buy the pair above 1.6430 with targets at 1.6600 and stop loss with four hour closing below 1.6330 JPY After inclining yesterday, the USD/JPY pair reversed to the downside yet was limited at the 95.70 support level. Current trading levels remain within a minor ascending channel where we expect the pair is to breach the key support of the channel in an attempt to decline and target 94.85 and 94.40 before completing the short term targets at 93.00. This decline remains as far as 97.65 is intact. The trading range for today is among the key support at 93.00 and the key resistance at 98.85 The general trend is to the downside as far as 102.60 remains intact with targets at 84.95 and 82.60 Support: 95.70, 94.85, 94.40, 93.80, 93.40 Resistance: 96.40, 96.90, 97.50, 98.05, 98.55 Recommendation: According to our analysis, sell the pair below 95.70 with targets at 94.85 and 94.40 and stop loss with four hour closing above 96.04 CHF The Dollar versus Swiss pair was able to incline yesterday to reach the first resistance at 1.0900 before rebounding back to the downside in correctional movements. We expect the pair is to decline towards 1.0785 which will determine the intraday trend where a breach to the downside will open the way for further declines towards 1.0745 and 1.0570; yet a rebound to the upside will pressure the 1.0890 resistance level where a break of which will target 1.1000 – 1.1060. We wait for the pair to reach 1.0785 to determine the next intraday trend. The trading range for today is among the key support at 1.0570 and the key resistance at 1.1165 The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245 Support: 1.0785, 1.0745, 1.0685, 1.0650, 1.0600 Resistance: 1.0890, 1.0915, 1.0980, 1.1010, 1.1095 Recommendation: According to our analysis, sell the pair below 1.0830 with targets at 1.0745 and stop loss with four hour closing above 1.0890 CAD The Dollar versus Loonie pair inclined heavily yesterday to breach the correction levels where the incline was limited at a top where we expect may be the second top for a double top formation. The downside potential remains supported by the overbought signals on momentum indicators where the next target is the pivot support – possible neckline – at 1.1435. A breach of this level will take the pair to 1.1240 yet note that the pair will face a strong support first at 1.1335. The 1.1740 must remain intact for the pair to decline. The trading range for today is among the key support at 1.1280 and the key resistance at 1.1815 The general trend is to the downside as far as 1.1870 remains intact with targets at 1.0300 Support: 1.1555, 1.1485, 1.1440, 1.1360, 1.1335 Resistance: 1.1610, 1.1650, 1.1715, 1.1740, 1.1810 Recommendation: According to our analysis, sell the pair below 1.1555 with targets at 1.1440 and stop loss with four hour closing above 1.1650 Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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EURUSD, AUDUSD, EURCHF Daily Outlook

Daily Forex Technicals | Written by E-Forex | Jul 03 09 06:14 GMT |

EURUSD Intra-day support on the 1.4100 failed to hold on yesterday and the pullback extended in the overnight trading to 1.2930, before recovering to 1.4000 at the time of this writing. Minor resistance is formed by the 1.4 handle and a breach above would open the more notable barrier at 1.4050/65 - formed by the weekly market open price. A close above the said level would keep both short and medium term studies bullish. However, the euro is facing difficulties on its attempts to establish higher support and aim towards recent top side at 1.4340. Range-bound trading is likely to continue, below 1.4180-1.4200 and above 1.3750. Current quote is 1.3997 @06:00 GMT Support levels: 1.3930, 1.3900/10, 1.3830 and 1.3750 Resistance levels: 1.4000, 1.4050/65, 1.4100, 1.4180/00 Market sentiment: long-term : bearish, mid-term : bullish, short-term : slightly bullish AUDUSD The Aussie dollar tries to rebound and now trades above earlier broken support at .7950. Upside barriers are emerging at .8000, .8030 and .8100. Intra-day sentiment is currently positive but .8030/50 may limit the upside on potential rallies. On the downside, a resume of yesterday's decline may extend to .7800 where important support is formed. Current quote is .7970 @06:00 GMT Support levels: .8000, .7930 and .7840/50 Resistance levels: .8100, .8155/85, .8235 and .8260 Market sentiment: long-term : bearish, mid-term : bullish, short-term : slightly bullish EURCHF The euro continues to push on the downside against the swiss franc, currently trading by ~20 points below 1.5200 which is the first intra-day resistance. Intra-day momentum is bearish and important support is formed by 1.5145/50. Downside is slightly favored for now but extended pullbacks towards 1.5100 or below could trigger another SNB intervention against the franc. Current quote is 1.5178 @06:00 GMT Support levels: 1.5140/50 and 1.5100 Resistance levels: 1.5230/35, 1.5285, 1.5325 and 1.5380/00 Market sentiment: long-term : bearish, mid-term : bearish, short-term : bullish E-Forex Legal disclaimer and risk disclosure Past performance does not guarantee similar performance in the future. Our forecasts do not constitute an offer to buy or sell, or the solicitation of an offer to buy or sell any foreign exchange transaction. E-Forex.ro accepts no responsibility or liability whatsoever for any expense. We do not warrant or guarantee the accuracy, timelines or completeness to the service or informations you find here.

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Lagarde Says Europe Needs Derivatives Clearinghouse, Lags U.S.

By Mark Deen

July 2 (Bloomberg) -- French Finance Minister Christine Lagarde pressed Europe Union partners to speed up efforts to contain counterparty risk in derivatives trades, saying the region is falling behind the U.S. in the area.

France wants countries using the euro to have local derivatives clearinghouses that can access liquidity at the European Central Bank, and is seeking the creation of a data base of derivatives trades.

“Europe is falling behind in this area,” Lagarde said today in a speech to executives gathered at the Europlace conference in Paris. “I’m asking the European Commission to propose directives to harmonize the rules on clearinghouses to guarantee their solidity and reliability across Europe.”

The proposals, already under consideration by the EU, are an attempt to cut risk in the $592 trillion over-the-counter derivatives market after the collapse of banks such as Lehman Brothers Holdings Inc. The plan is similar to one released by U.S. President Barack Obama last month that would require standardized over-the-counter derivatives to be guaranteed by clearinghouses.

Banks holding derivatives on their balance sheets should also get an incentive to register them with clearinghouses in the form of lower capital requirements, the French finance ministry said.

Reducing Risk

Some clearinghouses operate as central counterparties for every buy and sell order executed on an exchange, reducing the risk that a trader defaults on his obligation in a deal. Capitalized by its members, a clearinghouse allows regulators to assess market positions and prices. Customers pay fees for clearing, or post-trade processing services, which include verifying that a buyer has the funds to execute a trade.

U.S. Treasury Secretary Timothy Geithner sent proposals last month to congressional leaders laying out his plan to police over-the-counter derivatives trading, the unregulated market where swaps based on interest rates, currencies, commodities and a company’s ability to pay back debt are exchanged.

Lagarde, who meets with her counterparts from the other 26 EU nations next week, also said today she wants them to toughen regulatory proposals by barring hedge funds registered in non- cooperative offshore financial centers from receiving an EU seal of approval.

On accounting standards, she said that rules on marking to market need to be overhauled as soon as possible to prevent them from amplifying economic booms and busts, and that central banks and governments should be part of the bodies that set such rules because they concern financial stability.

Cross-Boarder Risk

The EU also needs to standardize legal protection for savers so that investors from one country aren’t at risk of buying financial products in a neighboring state with looser oversight, she said.

“I asked for these initiatives to be taken quickly,” Lagarde said, speaking to the conference in a prerecorded video speech because she is part of a delegation of French officials who traveled to Iraq today.

Lagarde also reiterated the French government’s forecast for a return to growth in its economy next year with an expansion of 0.5 percent.

“It will be growth well below potential but a return to growth all the same,” she said, according to a text of the speech released by her office.

To contact the reporters on this story: Mark Deen in Paris at markdeen@bloomberg.net



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