[R]4:00PM Market averages settled near flat line after sharp gain a day ago.[/R]

-Dow closed 40.58 points down, Nasdaq down 2.29 and S&P500 down 2.66.
-Yield on 10-year bond closed at 5.16% and 30-year bond at 5.21%.
-Crude oil traded up 41 cents to close at $73.93 per barrel.
-Gold jumped $27.10 to close at $616 per ounce. For the year the metal is up 16%.

-Asian markets rose across the region gained more than 2%. India and Philippines rose close to 4.5%.
-European markets advanced above 1.7% led by 1.8% rise in Germany. Russia rose 3.2% and South Africa gained 2.3%.
-Latin American markets advanced with 1.3% rise in Mexico and Argentina. Brazil gained 0.4%.

Market averages settled in a quiet zone after trading sharply higher in Thursday’s trading. However, trading sentiment in the metals market was far more bullish. With the perceived hint of pause in interest rate in the Fed statement, metals traders believe that interest rates will no longer provide the critical support to the U.S. dollar. The dollar faced sell-off in the currency trading and metals climbed sharply higher.

Gold gained $29 at its peak but settled in the New York Mercantile Exchange trading at $616 per ounce. Silver crossed $11 per ounce in trading but closed at $10.80 up 50 cents. Copper reached a new high to trade at $3.58 but settled at $3.4625, up 3.95 cents. Platinum jumped to $1,250 but settled at $1,246, up $41 in trading. For the year gold has traded between $740 and $530. It reached $739.20 on May 12th and traded as low as $532.50 on January 1st of this year.

Commerce Department reported that May personal income rose 0.4% in May after rising a revised 0.7% in April. Fed’s preferred index of personal consumption expenditures, excluding food and energy, rose 0.2% for the second month in a row. The PCE index gained 2.1% in May from a year ago after rising for the same amount in April of this year. The Fed’s comfort level for the rise in index is between 1% and 2%. On other economic news consumer sentiment improved to 84.9 from 82.4 in early June according to the University of Michigan survey. Also, index of business activity in Chicago region fell according to a report from National Association of Purchasing Managers.

Apple Computer (AAPL: chart) dropped another 2.9% on the news that company may have back-dated options between 1997 and 2001. Separately, French lawmakers passed a law which may force Apple in France to share its iTunes music download format with other music player makers. It may take several weeks before the law becomes effective but Apple in France may face tough negotiations with music artists and record label companies. The law strengthens the copyright protection from anti-piracy and also requires companies such as Apple to share its music and video file format with Sony and other player makers. The watered-down version adopted by the parliament may face constitutional challenge in French courts.

Recently listed IPO of Mastercard Inc (MA: chart) dropped on the news that the European Commission charged the company for fixing the processing fees paid by retailers and alleged that the company restricts competition in the marketplace.

[R]12:30PM European markets surged after U.S. rates decision.[/R]
European markets closed steeply higher in the last session of the second quarter, boosted by speculations that the U.S. Fed Reserve may be close to the end of its rate-tightening cycle. Technology stocks were among the biggest advancers, following U.S. gains, with Ericsson up 3%. Automakers also stood out among gainers, with Renault up 1.6%. European movers included Germany's Siemens and Bayer after they struck a deal over Bayer's diagnostics division, according to which Bayer will sell its diagnostics unit for 4.2 billion euros to Siemens. Bayer rose 4.5%, while Siemens added 0.8%. The German DAX 30 climbed 1.8%, the French CAC 40 surged 1.9%, and London FTSE 100 rose 0.7%.

Oil prices further advanced ahead of the Independence Day holiday. Light crude July delivery gained 28 cents to $73.80 a barrel. Gasoline lost 2 cents to $2.2725 a gallon. London Brent rose 16 cents to $73.04. The dollar dropped versus major currencies. The euro traded at $1.2774, up from $1.2644. The dollar bought 114.28 yen, down from 115.26. The British pound stood at $1.8471, up from $1.8260. European gold prices moved sharply higher. In London the precious metal traded at $613.50, up from $589.05 per ounce. In Zurich gold traded at $615.25, up from $589.45. Silver closed at $11.04, up from $10.45.


[R]11:30AM Stocks reversed from earlier gains due to profit taking.[/R]
Profit taking helped stocks turn lower over the course of early trading on Friday, with the major averages pulling back well off their highs for the session and into negative territory. Computer hardware stocks posted significant weakness in morning trading, with Palm (PALM: chart) helping to lead the sector lower after the handheld computer maker reported strong Q4 profit growth but forecast Q1 earnings and revenue below analyst estimates. The weakness in the sector was also contributed by a notable loss by Apple (AAPL: chart) which fell down 3.7% after the company said it discovered some irregularities related to its issuance of stock option grants. Significant weakness was also visible in the semiconductor sector, dragged by KLA-Tencor (KLAC: chart), Advanced Micro Devices (AMD: chart), and Infineon (IFX: chart). Housing stocks also came under pressure, rebounding from yesterday’s gains on the heels of the Federal Reserve announcement. The Philadelphia Housing Sector Index fell 0.7%.

Meanwhile, gold stocks continued to benefit from a sharp rise by the price of gold. The biotechnology sector also showed strength, helped by gains for Cephalon (CEPH: chart) and Vertex (VRTX: chart). Some pharmaceutical stocks also moved to the upside, contributing to a 1.3% gain by the Amex Pharmaceutical Index. King Pharmaceuticals (KG: chart), AstraZeneca (AZN: chart) and GlaxoSmithKline (GSK: chart) helped to lead the sector higher. In morning trading, the Dow fell 3.68, or 0.03%. The Standard & Poor's 500 index fell 0.76, or 0.06%. The Nasdaq composite index fell 7.09, or 0.33%. Bonds rose, with the yield on the 10-year Treasury at 5.19%, down from 5.20% Thursday.

[R]10:30 AM The Sensex ends trading with a surge.[/R]
The Sensex in India closed with a surge of 447.09 points, or 4.40%, at 10,609.25. The benchmark experienced a highly volatile session. The turnover on BSE was $730 million or Rs 3,301 crore, higher than Thursday’s turnover of Rs 2,866 crore. The market-breadth was strong with 1,695 shares advancing, 680 declining and 81 shares were unchanged.

India reported that its external debt in foreign currency rose to $125.2 billion at the end of the March 2006 from $119.2 billion at the ned of last year 2005. Reserve Bank of India also reported that the company’s current account in the first quarter of 2006 swung to surplus of $1.82 billion from a revised deficit of $3.83 billion in the last quarter of 2005. However, current account deficit in the fiscal year 2006 ending in the month of March rose to $10.6 billion from $5.4 billion a year ago. The current account deficit is now at its peak since economic reforms were started in the year 1990.

Metals stocks gained 6%, Capital goods stocks rose 5% and banking stocks rose between 2% and 3%. UTI Bank is in the process of issuing convertible debntures to meet its capital requirements and fund international expansion. Metals stocks led the gainers with Jindal Steel up 12%, Hindustan Zinc up 9%, SAIL up 8% and Sterlite up 7%.

Reliance Communication Ventures led the gainers among most active stocks with a gain of 12% to Rs 250.55 on volume of 4.2 million. The company’s promoters have been raising their stake through gradual acquisition in the past few days. Also, there are reports that the finance minister has allowed the telecom company to increase its foreign direct investment (FDI) limits to 74%.

Hindustan Lever surged 8.7% to Rs 229.20 on a high volume of 6.6 million shares. Maruti Udyog soared 8.5%, to Rs 796 on 0.8 million shares. News reports indicated that the company will make more than 100,000 cars for Japanese auto-giant Nissan motors. Large-cap Reliance Industries climbed 4.71%, as well, to Rs 1,056.70 on 2 million shares and surged to an intra-day high of Rs 1,062.

Hindustan Construction climbed for the third day in a row soaring nearly 13%, to Rs 118.60 as 0.6 million shares. From Rs 97.65 on 27 June, the stock has advanced 21% in the past three trading sessions.

Among large-caps, Ranbaxy was the lone decliner, slipping 0.83% to Rs 356.90. Jet Airways also dipped, striking a new 52-week low of Rs 585, following the ongoing uncertainty between Jet and Air Sahara merger. It finished 2.82% lower at Rs 592 on 67,031 shares.