[R]1:00PM NY, 5:00 PM Frankfurt European stocks declined, pressured by mining stocks.[/R]
European stock markets closed in the red Thursday, dragged down by weakness in the shares of miners Rio Tinto and BHP Billiton. Markets showed little reaction to the in-line-with-expectations interest-rate decisions from the Bank of England and the European Central Bank.
The resource sector came under pressure after mining giants Rio Tinto and BHP Billiton fell more than 3% a day after speculation that BHP had launched a bid for Rio.

However, real estate company Hammerson rose 6.5% on bid speculation. Friends Provident was another notable gainer, rising 8.4% amid talk that French insurer Axa may be interested in making a bid. Among earnings-related movers, Societe Generale lost 2.1% after its Q1 profit dropped 2% to 1.43 billion euros. The German DAX Xetra 30 slipped 0.8% at 7,415.33, the French CAC-40 dropped 0.6% at 6,012.76, and the U.K. FTSE 100 fell 0.4% at 6,524.10,


[R]11:30AM U.S. stock averages remained in the negative, pressured by economic data.[/R]
The three major market averages continued to trade in the negative territory, pressured by disappointing economic report which showed that the U.S. trade deficit widened much more than expected in March. Retailers weighed on market sentiment throughout most of the morning session with lower-than-expected April sales, due largely to higher gasoline prices. Among the numerous companies posting disappointing sales figures were Wal-Mart Stores (WMT: chart), J.C. Penney Co. (JCP: chart) and Federated Department Stores (FD: chart).

However, later in the session, retail and airline stocks posted gains, helping to limit the downside move. The downward move reflected significant weakness among housing, disk drive, and oil stocks. Gold, banks and biotechnology shares also declined. The housing sector was dragged down by Toll Brothers Inc. (TOL: chart) which dropped 2.4% a day after the biggest U.S. luxury homebuilder reported a steep decline in revenue and a shrinking backlog. The company reported Wednesday a 19% drop in revenue to $1.17 billion for its Q2. Toll Bros blamed the stricter lending requirements that have been tough on buyers who want to upgrade but are unable to sell their current residences.

In other corporate news, Rio Tinto (RTP: chart) fell 5.4% a day after the stock rallied amid speculations that BHP Billiton will approach it. In late morning trading, the Dow Jones industrial average fell 74.36, or 0.56%, to 13,288.51. The Standard & Poor''s 500 index lost 9.61, or 0.64%, to 1,502.97, and the Nasdaq composite index dipped 20.39, or 0.79%, to 2,555.95.

[R]Import and export prices rose in April.[/R]
The Department of Labor released its report on import and export prices in the month of April on Thursday, showing that import prices continued to rise sharply due in large part to a substantial increase in the prices of petroleum imports. The report showed that import prices rose 1.3 percent in April following a revised 1.5 percent increase in March. With the increase, the Labor Department''s index of import prices rose to its highest level since petroleum prices peaked in August of 2006. The increase in import prices was largely due to a 6.5 percent increase in prices of petroleum imports, which followed a revised 8.1 percent increase in the previous month. Excluding petroleum imports, import prices edged up only 0.2 percent.

The Labor Department said that the modest increase in non-petroleum import prices was led by a 0.9 percent increase in prices for non-petroleum industrial supplies and materials. Higher metals prices more than offset falling prices for natural gas and chemicals. The report also showed that export prices rose 0.3 percent in April after a revised 0.6 percent increase March. This marks the slowest pace of growth since export prices fell 0.3 percent in October of 2006. The modest increase in export prices came as prices for agricultural exports fell 1.3 percent in April after rising 2.0 percent increase in the previous month. Excluding agricultural exports, export prices rose 0.4 percent. Higher prices for non-agricultural industrial supplies and materials contributed to the increase in non-agricultural export prices, with prices for fuels, chemicals, and iron and steel products all rising compared to the previous month.


[R]9:45AM U.S. markets opened lower on weak retail sales. Whole foods dropped 12%.[/R]
Wall Street saw a weak opening Thursday, hurt by disappointing retail sales due to unfavorable weather conditions and an earlier Easter holiday. Adding to concerns about consumer spending, data showing that trade deficit widened sharply in March also generated negative sentiment. The Dow Jones was led lower by losses for Alcoa (AA: chart), DuPont (DD: chart), and JP Morgan (JPM: chart), each falling over 1%. Blue-chip retailer Wal-Mart (WMT: chart) traded flat after it posted 3.5% decline in April sales, vs. the expected 1.1% drop.

Weak earnings reports also contributed to the decline. Whole Foods (WFMI: chart) dropped 12% after the natural and organic foods grocery retailer missed Q1 profit expectations, posting a profit decline and slowing same-store sales growth. Urban Outfitters (URBN: chart) fell 5% after it posted in-line-with estimates Q1 net income rise of 17 cents a share, up from 12 cents a share, with sales rising 16%.

In the first hour of trading, the Dow Jones industrial average fell 48.03, or 0.36%, to 13,314.84. The Standard & Poor''''s 500 index was down 5.57, or 0.37%, to 1,507.01, and the Nasdaq composite index declined 10.22, or 0.40%, to 2,566.12. Bonds rose slightly after the weak economic data, with the yield on the benchmark 10-year Treasury note falling to 4.66% from 4.67% late Wednesday.

[R]Trade deficit widened 10.4% in March.[/R]
Thursday morning, the Department of Commerce released its report on U.S. international trade in goods and services in the month of March, showing that the trade deficit widened much more than economists had been expecting. The report showed that the trade deficit widened to $63.9 billion in March from a revised $57.9 billion in February. Economists had expected the deficit to widen to $60.0 billion from the $58.4 billion originally reported for the previous month. The wider trade deficit came as an increase in the value of imports far outpaced an increase in the value of exports. The report showed that the value of imports rose 4.5 percent to $190.1 billion, while the value of exports rose 1.8 percent to $126.2 billion.

A significant increase in imports of industrial supplies and materials contributed to the increase in the value of imports. Imports of automotive vehicles, parts, and engines also showed a notable increase compared to the previous month. The Commerce Department added that the goods deficit widened to $70.2 billion in March from $64.1 billion in February, while the services surplus was nearly unchanged at $6.3 billion. At the same time, the report also showed that the politically sensitive trade deficit with China narrowed to $17.2 billion in March from $18.4 billion in February.


[R]9:30AM FTSE almost unchanged despite Bank of England decision to hike rates.[/R]

The UK market was traidng virtually unchanged Thursday. The FTSE 100 was off 13.5 points at 6,536.9.

Economic and political news

Tony Blair on Thursday announced his decision to step aside as prime minister, after holding the post for a decade. Blair will officially step down on June 27, paving the way for a transfer of power to Gordon Brown, the chancellor of the exchequer.

The Bank of England raised interest rates to their highest level for six years. The decision to lift rates by a quarter point to 5.5% was widely anticipated.