- European Stocks Sink Following Asian & North American Meltdown: After a gruesome open, European equity markets are licking their wounds, recuperating some of the days losses in what promises to be an epic end to a very difficult week. The German DAX and UK FTSE 100 both opened down over 10%, but managed to rebound to 8.24% and 5.47% declines respectively. "Trading volumes have been reasonably high so it's not just total paralysis," said equities analyst Peter Cartwright at Evolution Securities in London. "Confidence is shot to ribbons, and no one knows where bottom is." Cartwright went on to explain that many financial institutions are facing redemptions, so they have to cash out, and ahead of the cash out of Lehman's credit default swaps later on Friday there is fear on who will have to pay out for Lehman's demise.

-Nikkei Ends Week Down 24%, ASX Down 16%: In epic finishes for the week, the Asia-Pacific stock indexes broke record lows with the Nikkei posting the largest weekly loss on record, and the Australian equity measures having one of the worst single-day declines since the 1987 stock market crash. Overall, the Nikkei lost 24% on the week, and just 11% on the last trading day of the week while the ASX 200 fell 8.3% on the day and 16% on the week. The news comes on the heels of deteriorating conditions in the global economy with an unprecedented credit crunch hitting the global economy and co-ordinated rate cuts from the world's largest central banks this week.

- General Electric Results in Line in Q3: Shareholders heaved a sigh of relief on Friday's earnings release from General Electric, which posted $0.45 cent per share earnings, in line with estimates. The firm says it remains on track to meet its revised goals for 2009 and maintained its $124 dividend.

-Fed's Rosengren Says New Approach Needed to Deal With U.S. Crisis: The United States is suffering from a "liquidity lock" as risk aversion reigns the markets, said Boston Federal Reserve President Eric Rosengren. He partially blamed the recent bankruptcy of Lehman Brothers for money market losses. Speaking to an audience at the University of Wisconsin Thursday night, Rosengren said economic growth in the U.S. for the second quarter was below its potential and that consumer spending will possibly decline. He said that as long as the U.S. housing market suffers, so will real estate securities.

- Canadian Economy Adds 106,900 Jobs In September: The Canadian economy shrugged off rumours of a global recession and roared into September, creating 106,900 new jobs including 19,700 in the manufacturing sector, Statistics Canada reported. The jump in jobs was more than 10 times the consensus estimate of analysts, who had projected an increase of 10,000 after August's jump of 15,200 and the biggest monthly net job gain in 30 years.

-Swiss Seasonally Adjusted Unemployment Rate Rises to 2.6%: According to the State Secretariat for Economic Affairs, the number of unemployed persons in Switzerland rose to a seasonally adjusted level of 100,758 in September compared to 99,612 in August, translating into a 2.6% unemployment rate, just higher than the previous month's 2.5% level. Economists had been expecting no change to August's level.

-French Industrial Production Declines in August: Industrial production took a dive in August according to the French Statistics Office (INSEE), which reported a 0.4% month-over-month contraction in industrial production compared to a revised 1.4% increase the month prior. Economists had been expecting a steeper fall by 0.8% compared to July's unrevised 1.2% gain. Meanwhile, annual industrial production declined 2.6%, in line with expectations and July's 2.0% fall was revised up to a 1.8% decrease.

-French Manufacturing Production Contracts: According to the French Statistics Office, manufacturing production posted a 0.5% month-over-month contraction, but not as much as the expected 0.9% decline. July's 1.5% increase was revised marginally higher to a 1.6% gain. Meanwhile, annual manufacturing production contracted 2.9% compared to an expected 3.1% fall and the precious month's 2.3% decline.

- Irish Retail Sales Contract in August: The volume of retail trade in Ireland reversed in August, according to the Irish Statistics authority, which reported a 2.7% month-over-month decline, and downward revisions to July's 2.3% gain to a 1.7% rate of expansion. Meanwhile, annual retail sales contracted 6.0% compared to the previous month's downwardly revised 4.1% fall. Prior to revisions, July retail sales were seen falling 3.5%.

-Finnish Trade Surplus Moves Higher in August: A preliminary look at the Finnish trade balance revealed a surplus of €195 million euros in August compared to the previous month's €65 million in July, the National Board of customs reported. Economists had been expecting a €450 million level.

-Dutch Industrial Production Surprises on Downside in August: Dutch industrial production surprised on the downside in August, posting a 1.3% month-over-month decline despite forecasts for a 0.5% rate of expansion and the previous month's 2.0% decline revised to a 1.8% loss. In annual terms industrial output declined 1.3% compared to a consensus for a flat reading, while July's 2.6% fall was revised to a 1.4% decline.

-Danish Inflation Moves Lower, But Not As Much As Thought: Consumer prices in Denmark were higher than expected in September, the Danish statistics authority reported, with headline inflation up 4.5% on the year compared to the consensus for a 4.0% level, and the previous month's 4.3% rate. On a month-over-month basis, CPI advanced 0.4% month-over-month compared to the consensus for a 0.3% increase and the previous month's 0.2% gain. Meanwhile, the Harmonized Index of Consumer Prices fell to 4.5% compared to speculation of a 4.3% level and the previous month's 4.8% rate. In month-over-month terms, HICP moved up 0.5% compared to the consensus for a 0.3% increase and the previous month's 0.2% gain.

-Norwegian CPI Moves Higher in September: Consumer prices in Norway rose faster than expected in September, the statistics authority reported, with headline inflation up 5.3% on the year compared to the consensus for a 4.6% level, and the previous month's 4.5% rate. On a month-over-month basis, CPI advanced 1.5% month-over-month compared to the consensus for a 0.8% increase and the previous month's 0.1% gain. Meanwhile, underlying inflation rose to 3.1% compared to speculation of no change to the previous month's 2.8% level. In month-over-month terms, underlying inflation moved up 1.0% compared to the consensus for a 0.8% increase and the previous month's 0.1% fall.

-Japan Stands Ready to Help IMF Aid Countries Hurt By Credit Crunch: Japanese Finance Minister Shoichi Nakagawa announced that government is prepared to help the International Monetary Fund come to the aid of countries crippled by the global credit crunch. "The impact of the credit crisis is spreading to the world," he said. "To minimize the chain-reaction Japan is ready to take leadership in contributing to support countries by providing funds. And I will call for other countries' co-operation at the G7 meeting tomorrow."

-BOJ's Shirakawa to Share Insight From Japan 1990s Bank Crisis With World Leaders: The Bank of Japan is moving as quickly as possible to help solve problems in money markets, said bank governor Maasaki Shirakawa, adding there is strong tension in financial markets and the world economy is slowing. Shirakawa spoke in Washington Thursday night ahead of the G7 meeting of finance ministers and central bank governors.

-Japan Money Stocks Fall Slightly Below Forecasts in September: Japanese M2 money supply increased by 2.2% in September year-over-year, according to the Bank of Japan. The figure is below the expected 2.4% forecast, and down from the 2.4% annual increase seen in August. M3 money supply grew 0.9% annually in September, below expectations for a 1.0% increase and below August's 1.0% increase.

-BOJ September Minutes Reveal Board's Concern over Global Financial Crisis: Back at its September meeting, Bank of Japan members foresaw the coming deterioration in global financial markets. Minutes from their Sept. 16-17 and Sept. 18 meetings were released Friday morning. One member of the bank said the current market turmoil could eventually affect Japanese banks, and all agreed attention must be paid to risk and the potential harm from market uncertainties.

-Japanese Bank Lending Falls in September: Bank lending including trusts increased by an annual 1.6% in September, below August's 1.8% rise. The Bank of Japan released its report on bank lending Friday. Excluding trusts, lending advanced 1.8% on the year, below the previous month's 2.0% gain, and the adjusted figure for bank lending rose 2.2%, below the previous month's 2.4% gain.

IN THE PRESS:

- Citi pulls out of battle for Wachovia: The Financial Times reports that Citigroup dropped out of the race for Wachovia on Thursday evening leaving Wells Fargo the winner in a battle which began last week. Wells Fargo will acquire Wachovia's banking operations for $11.7 billion, but Wells will have to raise $20 billion to do it.

- At Morgan Stanley, Outlook Darkens; Stock Tumbles 26%: The Wall Street Journal reports that shares of Morgan Stanley finished off the day 26% lower on Thursday as concerns over the banking sector batter the financial institution, which is seeking to bolster its position from a $9.0 billion deal with Japanese Mitsubishi UFJ Financial Group. Investors are concerned that MUFJ's purchase price is now roughly double the agreed to purchase price and feel the firm may walk away.

- AIG Increases Borrowings While Racing to Sell Assets: The Wall Street Journal writes that American International Group drew on another $9 billion in borrowing from the government bringing its total liabilities to the taxpayer to $122.8 billion.

- We Have the Tools to Manage the Crisis: In the Wall Street Journal, Ex-Fed Chairman Paul Volcker argued that policy-makers have the tools to fight the financial market crisis, but without a strong display of leadership, fear might threaten an orderly recovery. Volcker goes to give his approval of government legislation but warns that the time to use the Treasury Department's new powers is now.

- Yamato Becomes 1st Subprime Victim in Japan Financial Sector: Nikkei news reports that Yamato Life Insurance is the first Japanese victim of the financial crisis, filing for bankruptcy on Friday. The firm is unlisted on the Nikkei stock exchange. EFK

IN THE MARKETS:

At 7:13 a.m. EDT:

The euro was down 0.44 cents to 1.3561 USD.

The U.S. dollar was up 0.97 cents to 1.1597 Canadian Dollars.

The U.S. dollar was down 83.00 cents to 98.98 Yen.

The pound sterling was down 1.23 cents to 1.6974 USD.

The Australian dollar was down 2.49 cents to 0.6593 USD.

The U.S. dollar index was up 43.60 points to 81.60.

The U.S. ten-year note was up 6.3 ticks to 113.47 with yields up 4.7 bps to 3.83%.

The German ten-year bund was down 75.0 ticks to 115.36 with yields up 8.2 bps to 3.96%.

The British ten-year gilt was down 85.0 ticks to 111.89 with yields up 9.5 bps to 4.46%.

The Australian ten-year bond was down 2.5 ticks to 94.83 with yields up 5.0 bps to 5.14%.

The Japanese ten-year government bond was up 3.0 ticks to 137.38 with yields up 6.4 bps to 1.53%.

The Eurostoxx was trading down 193.77 points to 2098.00.

The FTSE 100 was trading down 317.73 points to 3996.07.

The Dax was trading down 383.00 points to 4504.00.

The Nikkei closed down 881.06 points to 8276.43.

The Australian ASX closed down 360.20 points to 3960.70.

The Hang Seng closed down 1146.37 points to 14796.87.

The Shanghai Composite closed down 74.01 points to 2000.57.

Dow Jones Futures were down 194.00 points to 8404.00.

S&P 500 Futures were down 21.75 points to 890.75.

WTI Crude oil is down $ 3.96 to $ 82.63 per barrel.

ECONOMIC DATA:

JP Japan Money Stock M2 (Y/Y) September +2.2% vs. Exp: +2.4% Prior: +2.4%

JP Bank Lending Banks Adjust (Y/Y) September +2.2% vs. Prior: +2.4%

JP Bank Lending including Trusts(Y/Y) September +1.6% vs. Prior: +1.8%

JP Bank Lending Banks ex-Trust (Y/Y) September +1.8% vs. Prior: +2.0%

FR Industrial Production (M/M) August -0.4% vs. Exp: -0.8% Revised: +1.4% Prior: +1.2%

FR Industrial Production (Y/Y) August -2.6% vs. Exp: -2.6% Revised: -1.8% vs. Prior: -2.0%

FR Manufacturing Production (M/M) August -0.5% vs. Exp: -0.9% Revised: +1.6% vs. Prior: +1.5%

FR Manufacturing Production (Y/Y) August -2.9% vs. Exp: -3.1% Prior: -2.3%

IT Industrial Production (M/M) (SA) August +1.4% vs. Exp: +0.6% Revised: -0.5% Prior: -1.1%

IT Industrial Production (Y/Y) (WDA) August -5.3% vs. Exp: -4.0% Revised: -2.7% Prior: -3.2%

IT Industrial Production (Y/Y) (NSA) August -14.3% vs. Exp: -6.2% Revised: -0.1% Prior: -0.6%

By Erik Kevin Franco, This email address is being protected from spam bots, you need Javascript enabled to view it and Megan Ainscow, This email address is being protected from spam bots, you need Javascript enabled to view it with contributions from Geoff Matthews, This email address is being protected from spam bots, you need Javascript enabled to view it , edited by Stephen Huebl, This email address is being protected from spam bots, you need Javascript enabled to view it

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