World Summary: MARKETS SLUMP ON DEAL UNCERTAINTY

Sydney, May 06, 2008 (RWE via COMTEX) -- CFC | news | PowerRating | PR Charts -- (RWE Aust Business News) Stockmarkets went into reverse overnight as Microsoft pulled out of its bid for Yahoo and doubts were raised about Bank of America's takeover of Countrywide Financial.

Record oil prices also depressed consumer stocks with the overnight high reaching more than $120 a barrel.

The Dow Jones fell 89 points, the S&P 500 fell 6points and the Nasdaq Composite fell 13 points.

Microsoft shares rose on the news of the withdrawal of its bid for Yahoo but later slipped to close 0.5pc lower.

Microsoft withdrew after both sides failed to agree on a price.

Yahoo shares fell 15pc.

Other technology stocks were relatively unaffected by the development with Yahoo rival Google shares rising 2.3pc.

Another major takeover deal which is running into the headwind is Bank of America's plan to buy the largest U.S. mortgage lender, Countrywide Financial Corp.

Friedman Billings Ramsey analyst Paul Miller has suggested in a report that Bank of America would likely try to renegotiate the transaction.

S&P analysts also believe this will happen.

Bank of America shares fell 2.1pc while Countrywide slid 10.4pc.

In US economic data, the service sector grew in April for the first time in four months.

The Institute for Supply Management said its non-manufacturing index was 52.0 in April versus 49.6 in March.

The job gauge for the sector posted its biggest improvement in seven months but inflation pressures were at their highest in five months.

A reading above 50 in the ISM index indicates growth in the service sector.

There were surges in both oil and precious metals overnight.

Record oil prices were depressing consumer stocks with the overnight high reaching over $120 a barrel.

Oil production from several regions is being affected by strife and political turmoil.

Rebels have attacked Nigerian oil facilities and Turkey recently conducted fresh strikes in northern Iraq against the Kurds.

General Electric shares fell 3.62pc and Home Depot 2.5pc.

European markets fell back slightly overnight with tech stocks feeling the pressure most.

Microsoft's withdrawal from its bid to aquire Yahoo saw Yahoo shares plummet nearly 20pc in Frankfurt.

Alcatel-Lucent fell 2pc while Ericsson lost 2.1pc.

Other tech losses included chip maker ASML down 2.3 percent and Nokia around 1.5pc.

Deutsche Telekom fell 1.7pc following reports that the group is considering a bid to acquire U.S.-based Sprint Nextel.

Accor rose 2.1pc after Colony Capital and Eurazeo announced their intention to raise their shares of the French catering firm.

Deutsche Post rose 2.5pc after reporting on track earnings for the first quarter.

EADS fell 3.9pc after reports of more possibe delays in delivery of the Airbus A380.

German media reported that Airbus could run into problems selling some of its factory sites.

EADS is rumoured to be having a board meeting on Tuesday to decide whether to proceed with the sale of factory sites.

European Central Bank President Jean-Claude Trichet, chairing a meeting of the Bank of International Settlements, said all countries, without exception, were affected by significant inflation risks stemming from rises in food, energy and other commodity prices.

Another issue discussed was the money market crisis, but they noted there were improvements recently in equity prices and an easing of perceived credit risk.

WALL STREET... The Dow Jones Industrial Average fell 88.66 to 12969.54, S&P 500 index dipped 6.41 to 1407.49, the Nasdaq Composite index fell 12.87 to 2464.12 and the Nasdaq 100 index dipped 6.05 to 1975.82. In Treasuries the 10-year note gained 1/32 to 97 4/32,leaving the yield unchanged at 3.86pc. The 30-year bond yield gained 1 point to 4.59pc while the 2-year note yield lost 3 points to 2.42pc.

US DOLLAR... is changing hands at 104.94 yen, compared with 105.20 previously. The euro is at 1.5496 from 1.5434 previously while sterling is at 1.9729 from 1.9730. On the Swiss franc, the US dollar is 1.0535 from 1.0559.

AUSTRALIAN DOLLAR... is changing hands at US94.64c compared with US94.08c on the local close. Offshore the Aussie posted a high of US94.68c and low of US93.43c. The Aussie crosses are 99.32 yen (pre 98.51), 0.6106 euros (pre 0.6065) and 47.96 pence on sterling (pre 47.47).

AUSTRALIAN MARKET... should weaken with the June futures contract losing 3 points to 5730. Yesterday the ASX 200 index closed 29.9 points ahead at 5730.3 while the All Ordinaries index improved 37.3 points to 5797.7. The Reserve Bank board meets today and economic data includes the March trade balance. St George Bank will release its interim report. AGMs will be held for APN News & media, CITIC Australia, MedAire and Reef Casino. Shares trading ex dividend are Trust Company and Envestra, CBH Resources is trading ex bonus issue.

EUROPEAN MARKETS...London was closed for May Day holiday, previous close was 6,215.50, the Paris CAC-40 eased 6.35 to 5,063.36, Frankfurt's DAX edged up 8.85 to 7,052.08 and Zurich eased 7.54 to 7,658.26. Regional markets were mixed. Madrid edged up 1.19 to 1,512.07, Milan fell 32 to 34495, Amsterdam edged up 0.17 to 481.38, Brussels eased 2.6 to 3,943.74 and Oslo lost 1.

METALS... COMEX gold (Jun) rose $16.10 to $874.10 oz. The August contract gained $16.30 to $878.40 oz. May silver 36.5c to $16.746 oz. July platinum advanced $21.80 to $1927.40 oz, while May copper jumped 12.05c to 397.85c lb in New York.

The London Metal Exchange was closed for holiday previous closes were: copper fell $296 to $8390 tonne, Tin fell $250 to $22,840, lead fell $120.50 to $2530, Zinc dipped $45.50 to $2146, aluminium fell $34 to $2816, while nickel sold $855 lower at $27,600 tonne. The 3-month ask prices were: copper $8405 (pre $8405), tin $23,200 (pre $23,200), lead $2590 (pre $2590), zinc $2210 (pre $2210), aluminium $2920 (pre $2920) and nickel $28,500 (pre $28,500). OIL... June crude jumped $3.65 to $119.97 barrel with a high of $120.36 and low of $116.05 barrel. The July contract gained $3.67 to $119.47 barrel with a high of $119.81 and low of $115.00. Brent ICE for June climbed $3.43 to $117.99 with a high of $118.58 and low $114.21 barrel. Reuters CRB index jumped 5.73 points to 413.86.

rweabn.com.au

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