** MORNING WRAP **

** US MARKETS **
Dow 0,01%; Nasdaq -0,66%; S&P -0,37%; Soxx -0,89%; Russel2k -1,14%; DJAIG
0,69%; 10yr Bond -0,18%; 10yr Yield 5,13%; Crude future 69,97; Gold 581,15

| Telecom 0,38%| ConsStaples 0,08%| Utilities -0,04%| Industrials -0,19%|
Healthcare -0,29%| ConsDisc -0,37%| Technology -0,43%| Energy -0,6%| Materials
-0,64%| Financials -0,69%

** US HEADLINES **
– Dollar May Fall on Concern Fed Interest Rate Increases Will Slow Growth
- Treasury Investors, Certain of June Rate Increase, Prepare for August Rise
- U.S. Stocks Drop for Second Straight Week on Concern Rates Will Increase
- Delphi, SecondBiggest Union Reach Accord With GM on Retirements, Buyouts
- Goldman, Citi, UBS, Merrill Fees in Asia Squeezed by Competition, Tumult
- Ford Expects as Many as 11,000 Workers to Retire, Take Buyouts This Year
- Poole Says U.S. Inflation Is Above His `Comfort Zone’; Fed May Need to Act
- Ford Plans to Invest in Three Mexican Factories as It Trims U.S. Workforce
- Worldwide Spare Oil Output Capacity May Double by 2010, BP Analyst Says
- Goldman Sachs Names Cohn, Winkelried as Co-Presidents, Operating Chiefs
- KKR Pays Brambles $1.3 Billion for Cleanaway and Industrial Services Units
- ConocoPhillips May Spend as Much as $10 Billion to Expand Australian Plant

** US: IN PLAY TODAY **
– The NAHB Housing Market Index is reported at 19:00 CET.
- Circuit City (CC) reports Q1 earning before the openening bell.

** ASIAN MARKETS **
Nikkei 0,13%; Kospi -1,14%; HSI -0,51%; Taiwan 0,11%; China 0,65%; India
-0,29%; Thailand -1,12%; Australia -1,07%

** ASIAN HEADLINES **
- KKR Pays Brambles $1.3 Billion for Cleanaway and Industrial Services Units
- Asian Stocks Drop for First Day in Four on Rate Concern; Sony Leads Slide
- CAMC Engineering Shares More Than Double After China’s First IPO in a Year
- South Korean Won Drops on Speculation North Korea Is Ready to Test Missile
- Moody’s May Raise Japan’s Rating in 1218 Months as Deflation Diminishes
- Malaysia Is Confident of Achieving 6 Percent Growth This Year, Najib Says
- Bharti Airtel `Ready’ to Expand Overseas, Make Acquisitions, Chairman Says
- Bangkok’s `Ghost Buildings,’ Idle Since ‘98 Crisis, Become Hotels, Offices

** EUROPEAN MARKETS **
S&P future 0,01%; Bund future -0,17%; Crude future 69,53; €/$ 1,25955; Gold
569,85

** EUROPE: IN PLAY TODAY **

EADS’ Co-CEO said there were “no disagreements” between the company’s French
and German shareholders regarding the “crisis” that followed last week’s
announcement on delays to the A380 superjumbo planes (La Tribune). The same
Co-CEO denied any wrongdoing when selling company stock back in March (Le
Parisien).

- Arcelor may be active after the Figaro reported that the group might postpone
a June 21 extraordinary meeting for a vote on a buyback plan. The stock reached
a new 3-month relative high against the Cac 40 on Friday.

- Axa is expected to cut 300 jobs at its newly acquired Winterthur unit
(Tages-Anzeiger).

- Veolia Environnement could be active after abandoning plans of a friendly
merger with Vinci. The stock reached a new 3-month relative low against the Cac
40 on Friday.

- Suez may be active after announcing it would seek alternatives to its merger
with GDF should a government bill needed to permit the accord to proceed be
delayed. It also could be active after reports indicated that Enel was still
interested in the group and still had the “financial means” to do so (Le Monde).

- Nokia and Siemens agreed to combine their telecommunications network equipment
units in a transaction worth about E25bln with Nokia the “stronger” partner in a
new company based in Finland. The deal may be announced today (WSJ).

- Allianz could cut “thousands” of jobs and close as many as 6 regional
headquarters as part of a restructuring program to improve its German business
(Frankfurter Allgemeine SonntagsZeitung).

- Deutsche Boerse plans to write directly to Euronext’s shareholders with
details of its takeover offer, in an effort to beat out NYSE Group (Die Welt).

- DaimlerChrysler set to offer more small-engine versions of its cars and trucks
as its sales decline amid rising fuel prices, according to its CEO.

- Altana is considering investment companies in its search for a partner for its
pharmaceuticals unit after it was turned down by strategic investors (FTD).

- Volkswagen’s head of personnel labelled the situation at the carmaker as
“serious” but denied reports of an additional 10,000 job cuts. In other news,
the group will cut the price of its next Polo model by E2,000 to boost revenue
(Automobilwoche).

- Associated British Ports could receive a bid by Macquarie Bank worth £2.7bln
or 865p per share, higher than the 840p per share offer it received last week by
a Goldman Sachs-led consortium (Sunday Times).

- NYSE Group would consider opening a stock exchange in London to compete with
London Stock Exchange if its plan to merge with EuroNext doesn’t deliver enough
share listings (FT).

- ISoft may get bids from private equity firms including Permira, Carlyle Group
and Blackstone Group (Observer).

- BT Group may be fined “millions of pounds” by UK authorities by the end of the
month for alleged anticompetitive behaviour over pricing high speed Internet
access (Times).

- Banco Santander Central Hispano targets a 13% rise in FY06 net income to a
record E7bln after cost cuts in the UK and higher sales in Latin America.

- A US federal judge approved the $1.1bln settlement of a class action lawsuit
brought by Royal Ahold NV shareholders over an accounting scandal, the most
money ever paid by a European company to settle US fraud charges.

- Telecom Italia’s CEO declared the group was considering buying Time Warner’s
AOL Internet units in Germany and France.

- Nestle acquired weight-loss companyt Jenny Craig for $600m, the acquisition
will not dilute its earnings.

- Swiss Re hired Roger Ferguson, the former vice chairman of the US Federal
Reserve, to head its American operations starting in July.

** EUROPE: UPS & DOWNS **
+ INTEL RAISED TO `BUY’ FROM `NEUTRAL’ AT UBS
+ Q-CELLS RAISED TO `OUTPERFORM’ VS `NEUTRAL’ AT CREDIT SUISSE
+ W.H. SMITH RAISED TO `BUY’ FROM `NEUTRAL’ AT MERRILL LYNCH
- CARDINAL HEALTH CUT FROM JPMORGAN `FOCUS LIST’
- WOOLWORTHS LOWERED TO `UNDERPERFORM’ AT CREDIT SUISSE
- WOLTERS KLUWER PRICE EST. CUT TO EU20.3 VS EU21.5 AT DEUTSCHE
- REUTERS PRICE ESTIMATE CUT TO 500P FROM 530P AT DEUTSCHE