DJ EUROPEAN MORNING BRIEFING:Stocks Fall As Metals Hammered

US SUMMARY: Equities Fall; Markets Dwell On Inflation

DJIA 10706.14 loss 86.44 dn 0.8%
NASDAQ 2072.47 loss 18.85 dn 0.9%
S&P 500 1223.69 loss 12.71 dn 1.0%
Dow Future 10730.00 gain 34.00 up 0.3%
NASDAQ Future 1522.75 gain 7.50 up 0.5%
S&P Future 1226.25 gain 4.25 up 0.4%
Euro-USD 1.2562 gain 0.00030 up 0.2%
10-Yr US Treasury: 4.97% down 0.02
(Futures values, Treasury, EUR/USD Data as of 0450 GMT)
Wall Street resumed its retreat with another session of steep losses Tuesday as declines in oil and gold prices did little to calm anxiety over inflation. The selloff erased the Dow Jones industrial average's gains so far in 2006, although futures overnight point to a modest recovery Wednesday. Prices of Treasurys and the dollar rose. Tuesday.

STOCKS: Investors struggled to make sense of the Labor Department's May producer price index, which showed a mild uptick in wholesale prices but a stronger-than-forecast rise in inflation without food or energy costs. The data suggested that energy costs grew less than expected, but the higher core prices nonetheless kept the market on edge.

While a downturn in commodities fed some hopes about easing inflation, persistent uncertainty about whether the Federal Reserve will continue boosting interest rates left investors unwilling to buy stocks amid fears of an economic crash.

"(The PPI data) was not conclusive enough to drive the market," said Rick Pendergraft, an equity trader for Schaeffer's Investment Research. If Wednesday's consumer price data comes in below or meets expectations, that might spark a rally following stocks' hefty slide over the past

Crude futures plunged as Tropical Storm Alberto posed less of a threat to U.S. refineries in the Gulf of Mexico. A barrel of light crude dropped $1.80 to $68.56 on the New York Mercantile Exchange.

In earnings news, Goldman Sachs Group Inc. posted sharply better-than-forecast results for the second quarter but warned that continued market weakness could hurt its results. Major retailer Best Buy Co. said its profit swelled 38 percent to beat estimates as customers bought more big-ticket items and cost-cutting measures boosted its margins.

FOREX: The dollar is slightly lower in Europe after rising Tuesday, having benefitted largely from investors' continued flight to higher quality assets and a broadly weaker yen.

Dealers look for the dollar to climb later as fears of higher global interest rates cause investors to buy dollars in exchange for riskier assets, analysts said, should CPI show a big rise.

BONDS: Equity market woes imparted a modest amount of luster to U.S. government bonds Tuesday, and drove up prices in a relatively calm session.

Chairman Ben Bernanke spoke Tuesday, but he didn't address monetary policy issues. But the consumer price index will prove definitive in answering what sort of rate action the Fed will take when it meets at the end of June. Most see a rate hike then, but some think the Fed could well stand steady at a 5% fed funds rate.

"The market is waiting for the important data...which is the CPI," said Alex Li, strategist with Credit Suisse First Boston. "That will set the tone," he said.

Economists surveyed by Dow Jones Newswires expect the overall consumer price index will have risen by 0.4% last month, while the core CPI likely gained a more modest 0.2%.

ASIAN SUMMARY: Shares Stabilize; Commodities Tumble

USD-Yen 115.19 loss 0.25 dn 0.2%
AUD-USD 0.7372 loss 0.0004 dn 0.03%
Nikkei 225 14435.31 gain 216.70 up 1.5%
Hang Seng 15396.50 gain 162.00 up 1.1%
S&P/ASX 200 4836.80 gain 29.60 up 0.6%
Taiwan Index 6475.88 gain 138.60 up 2.2%
S.Korea Kospi 1220.92 gain 17.06 up 1.4%
JGB Yield 1.7900% up 0.0150
(All values as of 0450 GMT)
STOCKS: Japanese technology and industrial shares lifted the Nikkei Average to a solid rebound Wednesday fronted by sharp gains in Softbank Corp. Australian shares were marginally higher on some short-covering before the release of consumer inflation data Wednesday in the U.S., as well as bargain-hunting from retail and institutional investors.

FOREX: The dollar is lower as Japan stocks rise. However, traders looked for the dollar to resume its recovery later, especially on a high CPI number.

BONDS: Prices of Japanese government debt fell as it became clear that the Nikkei's recovery would sustained. The bank of Japan at its meeting this week is likely to keep its policy unchanged in light of this week's market plunge.

METALS: Spot gold is down $15.90 an ounce at $556.10. Gold's near-term picture is grim, but volatility traders will continue to like the action. Copper and other base metals also fell as fear of rising global interest rates swept the markets.

OIL: Prices fell for the third straight day Wednesday, following fears that rising inflation and interest rates could cause an economic slowdown and depress demand for crude. Light, sweet crude for July delivery fell 30 cents to $68.26 a barrel. But traders cautioned that the market could again turn on any bad news.

EUROPEAN OUTLOOK: Stocks To Suffer Further Losses

Euro-USD 1.2562 gain 0.0030 up 0.2%
Stlg-USD 1.8348 gain 0.0028 up 0.1%
USD-Franc 1.2393 loss 0.0007 dn 0.06%
(All values as of 0450 GMT)
European shares are set to continue falling at the open, while government debt and the euro start fairly firm.

STOCKS: European markets are unlikely to struggle free from spiraling losses as investors react to further declines on Wall Street and weaker commodities.

U.K. spreadbettor IG Index is calling the FTSE down 16 points at 5503, the DAX down 29 at 5263 and the CAC down 17 at 4600.

Concern over future demand for metals has been the primary cause of the decline but mining analysts note the still-tight supply picture should limit further falls and offer support to the major mining stocks.

"The miners have borne the brunt of the fallout in metal prices and, while there is confidence that a base can be found soon, investors are nervous at the moment and will continue to react with the herd," said one trader.

Analysts said investors were moving out of the gambling sector and into construction and utility stocks, which have higher earnings visibility and dividend yield.

The potential for further interest rate hikes, which some analysts said would further slice into commodity demand, was blamed for the continued slide across the European markets.

While over recent weeks this has been centered on potential US rate hikes there is now concern of U.K. rate hikes, said Jimmy Yates, a trader at CMC Markets.

"Traders remain in a reactive mood and any further suggestions as to where the Fed will take rates through the latter part of 2006 will undoubtedly influence sentiment in equity markets on both sides of the Atlantic," Yates said.

In corporate news, Credit Suisse Group Wednesday said it will sell Winterthur to French insurer AXA, after having decided to part with the business some two years ago.

The Zurich-based bank said AXA will acquire 100% of the insurer for a cash consideration of CHF12.3 billion.

European stocks ended sharply lower Tuesday in reaction to a further slide in commodity markets and concern over the prospect of interest-rate hikes.

FOREX: The euro opens slightly higher as anxiety continues. Investors are concerned that central banks are going to become more hawkish on inflation and tighten interest rates, causing a slowdown in global growth, said Daniel Katzive, currency strategist at UBS.

"It seems that markets are more worried about central banks reacting to inflation pressures," than the actual inflation readings themselves, he added.

Traders also priced a higher consumer price index reading, due out Wednesday, some analysts said, which was a driver behind a stronger dollar-euro pair.

"While consensus is for a 0.2% reading, the risks are clearly skewed to a higher number, say 0.3%," Jens Nystedt, director of global foreign exchange research at Deutsche Bank in New York said. "This may mean that to the market's concern regarding a U.S. growth slowdown we will soon add inflationary concerns."

Also, "we haven't seen the usual supporting bid for euros by central banks," Nysted said, "so once the market saw central banks weren't there they took the chance to push the euro even lower."

BONDS: European government debt is benefitting from worries about economic slowdown on the stock market, but both euro zone and gilt debt have to contend with the potential for rising interest rates.

Concerns about an acceleration in inflation and higher interest rates in the world's major economies have fueled bouts of heavy selling in stock, commodity and emerging markets from New York to Tokyo to London in recent weeks.

Faced with the bloodletting in equities, investors have tended to seek safety in the fixed-income market, even though many bond market participants expect the Fed to hike rates.

Recent inflation data and hawkish commentary from Fed officials has led the market to raise its calculation of the likelihood of another Fed rate hike to some 80% from about 50% at the start of last week.

"Overall the dominating topics are of course U.S. inflation fears, Fed talk and the weakness of equity markets," said Peter Fertig, an interest rate strategist at Dresdner Kleinwort Wasserstein in Frankfurt, Germany.

Looking ahead, analysts said bonds would be slave to the vagaries of global equity markets ahead of the release of the U.S. inflation data at 1230 GMT.

European government bond prices rose Tuesday, with bunds and gilts hitting multi-week highs after a fresh slump in equity markets prompted investors to seek relative safety in the fixed income market, analysts said.

(MORE TO FOLLOW) Dow Jones Newswires

June 14, 2006 01:45 ET (05:45 GMT)

14 Jun 2006 05:45 GMT =DJ EUROPEAN MORNING BRIEFING:Stocks Fall;Metals Hammered-2-

CALENDAR: Wednesday, June 17: ECB, FEd Speakers; US CPI

GMT Expected Previous
0645 FRA May CPI 0.2%MM 0.4%MM
1.9%YY 1.7%YY
0730 UK Average Earnings +4.5%3M +4.2%3M
0800 ITA May CPI 0.3%MM 0.3%MM
2.2%YY 2.2%YY
0830 UK May Claimant Count +7K +7.7K
0900 GER IfW's global, Euro-zone and German
economic prognoses
0930 GER Chancellor Merkel meets South Korea PM
Han
1100 US Jun 9 MBA Refinancing Index -3.8%
1230 US May CPI +0.4% +0.6%
1230 US May CPI, ex-food and energy +0.2% +0.3%
1430 US Jun 9 US Energy Dept Gasoline Stocks (in +700,000 +1M
barrels)
1430 US Jun 9 US Energy Dept Crude Oil Stocks (in unch +1.1M
barrels)
1430 US Jun 9 US Energy Dept Distillate Stocks (in +1.6M +1.8M
barrels)
1530 US Fed Gov Bies speaks on real estate at
the Mortgage Bankers Assn conference in
Half Moon Bay, Calif.
1700 US Dallas Fed Pres Fisher speaks on the
econ in Corpus Christi, Texas
1700 FRA Paris Club's 50th anniversary conference;
ECB Pres Trichet speaks
1800 US Fed's Beige Book
2300 US Boston Fed Pres Minehan gives welcoming
remarks at a Boston Fed conference in
Chatham, Mass.
2301 UK May UK Crude Steel Production
2330 UK May RICS Housing Survey +12 +15
2350 JPN Apr Tertiary Activity Index -0.6%MM
N/A JPN BOJ Policy Board meeting starts
N/A UK May Unemployment 3% 3%
N/A GER Chancellor Merkel meets Polish
Pres Kaczynski

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

(MORE TO FOLLOW) Dow Jones Newswires

June 14, 2006 01:45 ET (05:45 GMT)

14 Jun 2006 05:46 GMT =DJ EUROPEAN MORNING BRIEFING: Corporate Events

Inditex (ITX.MC): 1Q Earnings
Average Net Profit (DJ, 5 Analysts): EUR146M (EUR125M)
Average total sales: EUR1.70B (EUR1.41B)
Average EBITDA: EUR302M (EUR264M)
Note: The focus will be on margins and cost controls.

OTHER SCHEDULED EVENTS:

Aegis Group (AGS.LN): AGM

Accident Excahnge (ACE.LN): FY Earnings

Ales Groupe (5465.FR): AGM

Amper (AMP.MC): AGM

Amsterdam Commodities (31328.AE): AGM

Antofagasta (ANTO.LN): AGM

Audika (6375.FR): AGM & EGM

Cairo Communication (CAI.MI): 1H Earnings

Countrywide (CWD.LN): AGM

Dassault Systemes (DASTY): AGM

Deutsche Beteiligungs (DBA.XE): 2Q Earnings

Elekta (EKTA-B.SK): FY Earnings

Ensor Holdings (ESR.LN): FY Earnings

Flughafen Wien (VIEV.VI): May Passenger Data

Ginger (4502.FR): AGM

Groupe Steria (7291.FR): AGM

Hansa Trust (HAN.LN): FY Earnings

House of Fraser (HOF.LN): AGM

Ige + Xao (3082.FR): 3Q Sales

Inditex (ITX.MC): 1Q Earnings

Intek (ITK.LN): AGM

Kardan (11365.AE): AGM

Lenzing (LNZ.VI): AGM

London Asia Capital (LDC.LN): FY Earnings

Luxottica Group (LUX): AGM & EGM

Manutan International (3230.FR): 1H Earnings

NaturEx (5469.FR): AGM & EGM

Petroleum Geo-Services (PGS): AGM

PhotoCure (PHO.OS): Capital Markets Day

Prosodie (415203.FR): AGM

STADA Arzneimittel (SAZ.XE): AGM

Synergie (3265.FR): AGM

Team Partners Group (6490.FR): AGM & EGM

Tesco (TSCO.LN): Trading Update

TGS-Nopec Geophysical Co. (TGS.OS): AGM & Capital Markets Day

VolEx Group (VLX.LN): FY Earnings

Warner Estate Holdings (WNER.LN): FY Earnings

Woolworths Group (WLW.LN): AGM

(MORE TO FOLLOW) Dow Jones Newswires

June 14, 2006 01:46 ET (05:46 GMT)

14 Jun 2006 05:46 GMT =DJ EUROPEAN MORNING BRIEFING: Div Payments & Ex Div Dates

Cable & Wireless (CW.LN): FY 2005 Ex-Dividend Date

Dawson Holdings (DWN.LN): 1H 2006 Ex-Dividend Date

Diploma (DPLM.LN): 1H 2006 Dividend Payment Date

Domstein (DOM.OS): FY 2005 Dividend Payment Date

Edinburgh Investment Trust (EDIN.LN): FY 2005 Ex-Dividend Date

Future (FUTR.LN): 1H 2006 Ex-Dividend Date

Halfords Group (HFD.LN): FY 2005 Ex-Dividend Date

Havas (HAVS): FY 2005 Dividend Payment Date

INVESCO Income Growth Trust (IVI.LN): FY 2005 Ex-Dividend Date

Jungheinrich (JUN3.XE): FY 2005 Dividend Payment Date

Jungheinrich (JUN3.XE): FY 2005 Ex-Dividend Date

Liontrust Asset Management (LIO.LN): FY 2005 Ex-Dividend Date

Luxottica Group (LUX): FY 2005 Ex-Dividend Date

Matalan (MTN.LN): FY 2005 Ex-Dividend Date

Metraux Services (MSSN.EB): FY 2005 Dividend Payment Date

Metraux Services (MSSN.EB): FY 2005 Ex-Dividend Date

Mothercare (MTC.LN): FY 2005 Ex-Dividend Date

Northern Investors (NRI.LN): FY 2005 Ex-Dividend Date

RIT Capital Partners (RCP.LN): FY 2005 Ex-Dividend Date

Royal Dutch Shell 'A' (RDSA): 1Q 2006 Dividend Payment Date

Royal Dutch Shell 'B' (RDSB): 1Q 2006 Dividend Payment Date

United Internet (UTDI.XE): FY 2005 Dividend Payment Date

United Internet (UTDI.XE): FY 2005 Ex-Dividend Date

(END) Dow Jones Newswires

June 14, 2006 01:46 ET (05:46 GMT)