Taylor Wimpey led decliners in the FTSE 100 stocks with a drop of 5.22% followed by losses in Anglo American Plc of 4.83%, in Shire Plc of 4.30%, in Wolseley Plc of 4.04%, and in Sage Group Plc of 3.82%.

Retailers also fell on speculation that consumer spending will decline. Kingfisher shed 3.03% and Sainsbury edged down 2.47%.

Merger News

The Sunday Times reported in yesterday’s edition that the Brazilian government might block the $80 billion planned merger between Xstrata and CVRD. CVRD is the largest iron ore mining company in Brazil and one of the three large mining companies in the world by market capitalization.

Furthermore the government, which controls majority stakes through state development bank BNDES and state run pension fund controlled by Banco de Brasil, is also opposed to the transfer of $30 billion stock to Glencore as part of the cash-and-shares deal.

Brazil press reports on last week said the company had secured $50 billion in financing from HSBC, Lehman Brothers, and BNP Paribas for the takeover bid of Xstrata. Xstrata closed up 0.34%.


1:30PM New York – Alliance Data plunged 35% after Blackstone Group cited regulatory hurdles.

Alliance Data (ADS: chart), the credit card payment processor, fell 35% after Blackstone Group said that its purchase of the company for $6.5 billion may not happen.

Alliance Data said in the press release that Blackstone does not anticipate the condition to closing the merger relating to obtaining approvals from the Office of the Comptroller of the Currency (OCC) will be satisfied. The notice was given pursuant to the terms of the May 17, 2007 merger agreement among Alliance Data Systems Corporation and various entities controlled by Blackstone Group.

Alliance Data added in the press release that conditions for merger imposed by the Office of Comptroller can be satisfied by Blackstone and it disagrees with the stated assertion by Blackstone.

Blackstone''s notice did not assert any breach of the merger agreement by Alliance Data or the occurrence or anticipated occurrence of any material adverse effect on the Company, and acknowledged that the Company had, to date, used its """"""""""""""""""""""""""""""""best efforts"""""""""""""""""""""""""""""""" to obtain OCC clearance.

Neither did the notice reference or take issue with the financial or operational performance or liquidity of Alliance Data or its banks, or the parties'' ability to obtain Federal Deposit Insurance Corporation approvals related to the Company''s industrial loan corporation.


12:00PM New York – Merger news dominated early trading in New York.

New Homes Decline in December

U.S. market average edged higher at mid-day. New home sales, weakness in European and Asian markets, and worries related to the weakness in financial sector dominated trading sentiment.

New home sales in December fell 4.7% from November to annualized rate of 604,000 and November home sales were revised lower to 13% from 9% to 634,000 annual rate.

New home sales declined 41% from a year ago in December, one of the worst declines in a decade. The median home price in December fell 10% to $219,200 from $244,700 in December 2006. For the year 2007, sales declined 26.4% to 774,000 units.

Sales of new homes declined 6.5% in the South, 6% in the West, and 1.2% in the Midwest. In the Northeast sales rose 6% in the month.