DJ EUROPEAN MORNING BRIEFING: Stocks Rebound Short-Lived

US SUMMARY: Shares Fall As Interest Rates Weigh

DJIA 11019.11 loss 60.35 dn 0.5%
NASDAQ 2122.98 loss 18.22 dn 0.9%
S&P 500 1245.60 loss 6.60 dn 0.5%
Dow Future 11093.00 loss 8.00 dn 0.1%
NASDAQ Future 1572.00 loss 1.50 dn 0.1%
S&P Future 1254.25 loss 1.75 dn 0.1%
Euro-USD 1.2570 loss 0.0008 dn 0.07%
10-Yr US Treasury: 5.21% up 0.06
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Wall Street posted a moderate decline Thursday, giving back most of the prior session's gains. Investors once again fretted about interest rates and whether the U.S. economy is slowing down enough to persuade the Fed to stop tightening before recession kicks in. Oil and the dollar gained, while Treasurys fell.

STOCKS: A slight rise in weekly unemployment claims met expectations of a weakening job market, but a greater-than-forecast drop in the Conference Board's index of leading indicators stoked concerns about a drop-off in economic growth.

"The base-building process is going to take a couple months to complete," said Steven Goldman, chief market strategist for Weeden & Co. "We're going to see pockets of strength, pullbacks, rallies. We're hopefully looking for a bottom from which to build a rally later this year."

FOREX: The dollar opens fairly steady after it advanced across the board Thursday, thanks largely to weakness in the greenback's major counterparts, especially the yen. After breaking through the Y116 mark, the dollar rallied to a two-month high at Y116.29 while the euro fell as low as $1.2551. Although the dollar subsequently retreated from its best levels for the day, it exited the North American session above Y116. Traders suggested the market reacted to vague pronouncements about when the Bank of Japan will raise interest rates.

OIL: Futures gained after the government reported only a small increase in gasoline stocks as the peak summer driving season gets under way. A barrel of light crude added 51 cents to settle at $70.84 on the New York Mercantile Exchange.

BONDS: Treasury prices fell again Thursday and the yield on the 10-year note lifted to a joint four-year high as investors sold U.S. government bonds in anticipation of further Federal Reserve rate hikes to curb economic growth.

Scott Gewirtz, head of Treasurys trading at Lehman Brothers in New York, said Thursday's selling came as investors unwound bets that Treasury prices would bounce back on weaker U.S. data. "There are a lot of people who are long the market waiting for any evidence that a slowdown is coming and it really hasn't come yet," he said.

Thursday's data, which showed weekly jobless claims remained around the 300,000 mark in the week ended June 17, were the latest sign that the economy was hardly about to weaken dramatically going forward, Gewirtz said.

Michael Cheah, portfolio manager at AIG SunAmerica in Jersey City, N.J., said that "in the face of the new supply" coming on tap, Treasurys could face more pressure in the days ahead.

He warned, however, that with the markets already pricing in significant further Fed tightening, "we have already gotten to very bearish levels."

And Cheah said he personally doubts the Fed will be able to raise rates much beyond their current levels.

Fed funds are "already at this level where the housing sector is suffering and we're at 5% ... I am hard pressed to see how the economy can stand a 5.5% fed funds, never mind a 6% rate."

ASIAN SUMMARY: Stocks Follow US Lower

USD-Yen 116.04 loss 0.08 dn 0.07%
AUD-USD 0.7342 0.0000 0.0%
Nikkei 225 14928.34 loss 207.30 dn 1.4%
Hang Seng 15737.39 loss 89.31 dn 0.6%
S&P/ASX 200 4925.70 loss 42.40 dn 0.9
Taiwan Index 6416.14 loss 69.01 dn 1.1%
S.Korea Kospi 1216.00 loss 22.83 dn 1.8%
JGB Yield 1.8700% up 0.0150
(All values as of 0450 GMT)
STOCKS: Markets in Asia continued to follow Wall Street lower, as U.S. data showing the economy may be slowing sent Japanese stocks down. Automakers Nissan and Honda and technology exporters including Fujitsu and Hitachi led the fallers.

FOREX: The dollar is holding above Y116.00, after a surprising rally overnight.

"There was a feeling that there would be more resistance at Y116," Grant Wilson, senior foreign exchange trader at Mellon Bank. "A little bit of price action has left people scratching their heads."

According to Wilson, once the Y116 barrier was taken out, traders began trying to push the dollar up to the next key technical level at Y116.55.

Without specific timing for a Bank of Japan rate hike, the yen will remain under pressure, dealers say.

BONDS: Prices of Japanese government bonds fell in line with Treasurys, as concern about global interest rate policies caused JGBs to decouple from stocks, at least for now.

METALS: Gold was slightly higher at $583.65 an ounce from late New York levels of $582.60, but base metals, including copper, were under pressure and likely to remain so through Friday amid a mixture of influences.

OIL: Futures edged up 5 cents to $70.89, anchored by strong fuel demand, refinery glitches and jitters about the unresolved tension between the U.S. and Iran. But Tetsu Emori, chief commodities strategist for Mitsui Bussan Futures, said Friday's slight rise is largely technical, based on the market's support for prices within the $68-72 range.

EUROPEAN OUTLOOK: Stocks Set For Weaker Start

Euro-USD 1.2570 loss 0.0008 dn 0.07%
Stlg-USD 1.8285 gain 0.0002 up 0.01%
USD-Franc 1.2434 gain 0.0008 up 0.06%
(All values as of 0450 GMT)
European shares and government debt prices are likely to open lower, with the euro gaining on the dollar stall.

STOCKS: European markets face a lackluster opening session, dragged lower on the back of continued weakness in New York. Energy and mining stocks are headed for a mixed start after directionless overnight movements in commodities.

U.K. spreadbettor IG Index forecasts a 10-point fall on the FTSE to 5674, with the DAX down 33 to 5510 and the CAC down 13 to 4790.

In corporate new overnight, Associated British Ports said it has agreed to a revised 910 pence per share bid from a consortium led by Goldman Sachs Group, valuing the U.K. company at GBP2.8 billion.

European stock markets advanced on Thursday although British Airways lost ground after the carrier was hit by a probe on pricing and fuel surcharges.

FOREX: The dollar opens very slightly lower against the euro, but overnight activity shed little light on its next move. U.S. durable goods orders later will likely define the euro's near-term direction. For now, the euro seems stalled.

BONDS: Prices of European government bonds are likely to open lower before the markets will be scrutinizing German inflation numbers.

German consumer prices are forecast to rise 0.2% in June, with the annual rate set to tick up to 2% from 1.9%, according to a Dow Jones poll of 19 economists.

Despite an expected easing of energy prices in June, the economists expect inflation to accelerate due to higher costs for hotel accommodation and restaurant bills during the World Cup soccer championships.

The states of Saxony and Brandenburg are expected to post data Friday, followed by Bavaria, Baden-Wuerttemberg, and Hesse Monday. North-Rhine Westphalia is slated for Friday or Monday and the preliminary pan-German CPI figure is likely to be released Monday.

European government bonds were lower Thursday due to softer Treasurys and slightly firmer equity markets, with gilts outperforming on improved U.K. interest-rate sentiment calling for no changes for the time being.

CALENDAR: Friday, June 23: US Durable Goods

GMT Expected Previous
0645 FRA 1Q Survey on Labor Activity and Employment
Status, revised figures
0800 ITA 1Q Construction Production Index
0830 UK May Motor Vehicle Production
1100 UK EU Trade Min Mandelson speaks
1230 US May Durable Goods -0.5% -4.4%

-By Dennis Baker; Dow Jones Newswires; [email protected]

(MORE TO FOLLOW) Dow Jones Newswires

June 23, 2006 01:45 ET (05:45 GMT)

23 Jun 2006 05:45 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events

SCHEDULED EVENTS:

Acambis (ACAM): AGM

Aviation Latecoere (3227.FR): AGM

Azkoyen (AZK.MC): AGM & EGM

Belvedere (6087.FR): AGM

Campofrio Alimentacion (CPF.MC): AGM

Compania Espanola de Petroleos (CEP.MC): AGM

Cofidur (5462.FR): AGM

Consorte Group (COGR.OS): EGM

Cyber Press Publishing (6592.FR): AGM & EGM

Cybit (CYH.LN): FY Earnings

Dyson Group (DYS.LN): FY Earnings

Espanola del Zinc (ZNC.MC): AGM

European Motor Holdings (EMH.LN): AGM

Exendis (44085.AE): AGM

Groupe Sodifrance (7256.FR): AGM

Hannover Rueckversicherungs (HNR1.XE): Investors' Day

Ioltech (6693.FR): 1Q Sales

IT Link (7259.FR): AGM

Lingotes Especiales (LGT.MC): AGM

MGI Coutier (5302.FR): AGM

NSC Groupe (6452.FR): AGM

Prim (PRIM.MC): AGM

SeaDrill (SDRL.OS): AGM

Singulus Technologies (SNG.XE): AGM

Systran (410919.FR): AGM

UK Balanced Property Trust (UBR.LN): FY Earnings

(MORE TO FOLLOW) Dow Jones Newswires

June 23, 2006 01:45 ET (05:45 GMT)

23 Jun 2006 05:45 GMT =DJ EUROPEAN MORNING BRIEFING: Div Payments & Ex Div Dates

Aberdeen New Thai (ANW.LN): FY 2005 Dividend Payment Date

De Vere Group (DVR.LN): 1H 2006 Dividend Payment Date

Deutsche Euroshop (DEQ.XE): FY 2005 Dividend Payment Date

Deutsche Euroshop (DEQ.XE): FY 2005 Ex-Dividend Date

Enodis (ENO.LN): 1H 2006 Dividend Payment Date

Etam Developement (3574.FR): FY 2005 Dividend Payment Date

Euromoney Institutional Investors (ERM.LN): 1H 2006 Dividend Payment Date

Faes Farma (FAE.MC): FY 2005 Ex-Dividend Date

Hunter Douglas (41861.AE): FY 2005 Ex-Dividend Date

Keystone Investment Trust (KIT.LN): 1H 2006 Dividend Payment Date

Koenig & Bauer (SKB.XE): FY 2005 Dividend Payment Date

Koenig & Bauer (SKB.XE): FY 2005 Ex-Dividend Date

Lowland Investment Co (LWI.LN): 1H 2006 Dividend Payment Date

Norvestor Equity: FY 2005 Ex-Dividend Date

Perpetual Income & Growth Investment Trust (PLI.LN): FY 2005 Dividend Payment
Date

Petit Forestier (7318.FR): FY 2005 Dividend Payment Date

Prosodie (415203.FR): FY 2005 Dividend Payment Date

Standard Life Equity Income Trust (SLET.LN): 1H 2006 Dividend Payment Date

Synergie (3265.FR): FY 2005 Dividend Payment Date

Unipapel (UPL.MC): FY 2005 Dividend Payment Date

(END) Dow Jones Newswires

June 23, 2006 01:45 ET (05:45 GMT)