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From DealingFloor:

** ASIAN MARKETS **

Nikkei -1,68%; Kospi -0,57%; HSI -0,91%; Taiwan 0,22%; China -0,06%; India -2,51%; Thailand -1,45%; Australia -1,34%

** ASIAN HEADLINES **

- Asian Stocks Fall on Bernanke Comments; BHP Billiton, Honda Motor Decline
- China’s Central Bank Has No `Immediate’ Plan to Raise Rates, Governor Says
- Malaysia’s 2006 GDP Growth to Meet Forecast, Central Bank Governor Says
- IBM Plans to Triple Its Investment in India to $6 Billion in Three Years
- Indonesian Central Bank Keeps Benchmark Rate Unchanged to Curb Inflation
- Citigroup Says It Aims to Boost China Property Investments to $800 Million
- Copper Futures in Shanghai Decline on Indications Demand May Be Weakening
- Gold Falls in Asia on Speculation That Fed May Increase U.S. Rates Further

** EUROPEAN MARKETS **

S&P future 0,07%; Bund future -0,21%; Crude future 72,2; €/$ 1,2894; Gold 635,6

** EUROPE: IN PLAY TODAY **

- BAE Systems Plc: Europe’s biggest weapons maker said it received a $180 million foreign military sales contract to manufacture 378 Iraqi Light Armored Vehicles from the U.S. Army Tank-automotive and Armaments Command.

- Eni SpA: Paolo Scaroni, chief executive officer of Europe’s fourth-largest oil company, said oil producers and refiners may struggle to meet demand during the next several years until new refineries come into operation and boost fuel inventories.

- Linde AG: The European Commission’s competition authorities will rule on the acquisition of BOC Group Plc by the German industrial-gas maker for 8 billion pounds ($15 billion).

- Roche Holding AG: A combination of Genentech Inc.’s Avastin and Tarceva cancer drugs appears to work better than chemotherapy in stalling the growth of lung tumors, new research showed. The study compared the Avastin-Tarceva combination to chemotherapy either with or without Avastin, said Genentech, which is majority-owned by Roche.

- Ryanair Holdings Plc, Europe’s biggest low-cost airline, said 2006 profit gained 9.5 percent as passenger numbers increased. Net income rose to 306.7 million euros ($395.4 million) for the 12 months through March from 280 million euros a year earlier, said Dublin-based Ryanair in an e-mailed statement today. Revenue gained 28 percent to 1.69 billion euros.

- ThyssenKrupp AG: Germany’s largest steelmaker sold its aluminum castings business in the U.S. to investment company Speyside Equity LLC for an undisclosed amount as it overhauls its automotive unit in North America.

- BAA Plc, the world’s largest airport owner, has accepted a 950 pence-a-share ($17.77) takeover offer from Spain’s Grupo Ferrovial SA, the British Broadcasting Corp. reported, without saying where it got the information. BAA agreed to the deal following an auction involving Ferrovial and a team led by Goldman Sachs Group Inc., the BBC said.

- SAP AG plans to remain independent and doesn’t expect any U.S. industry players to aim to buy the world’s largest business-management software maker, Financial Times said, citing Chief Executive Officer Henning Kagermann. Kagermann believes the main consolidation push in the information technology industry is over and forecast only smaller acquisitions by SAP, the newspaper said, citing Kagermann.

** EUROPE: UPS & DOWNS ***

+ JOHNSON MATTHEY PRICE EST RAISED 4% TO 1,375P AT CREDIT SUISSE

+ INTERNATIONAL PAPER RAISED FROM `UNDERWEIGHT’ AT PRUDENTIAL

+ ANGLOGOLD ASHANTI RAISED TO `BUY’ FROM `HOLD’ AT CITIGROUP

+ UNICREDITO PRICE ESTIMATE RAISED TO EU7.2 AT MORGAN STANLEY

- DAIMLERCHRYSLER PRICE EST. CUT 4% TO EU44 AT CREDIT SUISSE

- DANONE REMOVED FROM JPMORGAN’S `ANALYST FOCUS LIST’

- ELECTROLUX PRICE ESTIMATE LOWERED TO SK210 VS SK230 AT LEHMAN

** US MARKETS MONDAY **

Dow -1,77%; Nasdaq -2,24%; S&P -1,78%; Soxx -3%; Russel2k -3,19%; DJAIG -0,46%; 10yr Bond 0%; 10yr Yield 5,02%; Crude future 72,2; Gold 635,6

¦ Utilities -0,93%¦ Telecom -0,97%¦ ConsStaples -1,4%¦ Healthcare -1,47%¦ ConsDisc -1,55%¦ Financials -1,61%¦ Technology -1,84%¦ Industrials -2%¦ Materials -2,92%¦ Energy -2,96%

** US HEADLINES **

- Bernanke’s Tough Talk on Inflation May Bury Notion of Interest-Rate Pause
- U.S. Notes May Drop as Traders Raise Bets on June Interest Rate Increase
- Buy U.S. Treasuries, Dollar After Plunge Last Month in Stocks, Faber Says
- Euro May Strengthen on Expectation of ECB Interest-Rate Increase This Week
- Crude Oil Falls From Three-Week High as EU to Present Incentives to Iran
- Gold May Challenge Record as Inflation Concerns Increase, Citigroup Says

** BERNANKE COMMENT **

The Fed Chairman acknowledged that the “anticipated moderation of economic growth seems now to be under way,” which plays into our Neutral market view. Adding insult to injury, though, Bernanke said consumer spending has “decelerated noticeably” in recent months and he also delivered some sobering comments on inflation trends that swayed the market to believe that a tightening at the June 28-29 FOMC meeting is likely. Due to such “unwelcome developments,” Bernanke continued by saying, “the Committee will be vigilant to ensure that the recent pattern of elevated monthly core inflation readings is not sustained.” Prior to Bernanke’s remarks hitting the wires, the market was pricing in roughly a 50% probability of another rate hike in June. After Bernanke’s comments, the probability increased to as high as 76%.

Source: Tuesday Pre-Market: Asia Continues To Fall