Lehman's earnings drop!

Lehman Brothers Holdings Inc., the largest U.S. underwriter of mortgage-backed bonds, reported a smaller profit decline than analysts estimated after limiting losses from the collapse of the subprime market. Lehman's so-called Level 3 assets, which are harder to value because market prices have become scarce, jumped 57 percent to $34.7 billion in the third quarter. The increase wasn't due to CDOs or other structured products the company said.

Interest rates on loans in euros stayed at a seven-year high, a day after global central banks teamed up in an attempt to thaw a freeze in money markets. The three-month borrowing cost was at 4.95 percent, its highest level since December 2000 and up from 4.18 percent at the start of July.

The three-month dollar London Interbank Offered Rate, a benchmark for borrowing, climbed as high as 5.15 percent last week from 4.87 percent a month before. The rate dropped to 4.99 percent today.

The Swiss Natiaonal Bank left interest rates unchanged for the first time in two years. The SNb expects Swiss GDP growth to be around 2% in 2008 showing little affects of the current turmoil in the international finacial markets.

An investors' group trying to restructure C$34 billion ($33.6 billion) in Canadian asset- backed commercial paper will probably meet its deadline tomorrow, though note holders may have to wait several weeks for all the details, a banker involved in the talks said.

The risk of European companies defaulting on their debt rose on concern the Federal Reserve's coordinated response to the global credit crisis won't be enough to prevent an economic slowdown damaging profits.

Federal Reserve Bank of New York President Timothy Geithner said central bankers are looking at "additional instruments'' to provide funds to banks in times of stress.

Brazil's central bank said that a recent rise in consumer prices increases the odds that inflation may accelerate into next year, fueling speculation policy makers may keep interest rates unchanged longer than analysts expected.

Goldman Sachs Group Inc., TCW Group Inc. and New York Life Capital Partners are raising more than $30 billion to increase their investments in leveraged buyouts. At least 32 firms are starting mezzanine debt funds as investors shun bonds and loans used to finance LBOs.

Landesbank Baden-Wuerttemberg, Germany's biggest state-owned bank, and smaller rival Landesbank Sachsen Girozentrale reached an agreement on covering risks from U.S. subprime investments, paving the way for a takeover.

HBOS Plc, the U.K.'s biggest mortgage lender, said writedowns and higher funding costs will hurt earnings this year, while an investment gain of about 1 billion pounds ($2 billion) probably won't recur in 2008.

Munich Re, the world's second-biggest reinsurer, is proving slow and steady wins the race after faster- growing Swiss Reinsurance Co. ran into a subprime trap.

Red Kite Metals, the hedge fund that almost tripled investors' money last year, lost about 22 percent last month as copper prices fell, according to two investors in the fund.

U.K. real-estate agents and surveyors became the most pessimistic about house prices since at least 1998 last month as a property-market decline spread to London, the Royal Institution of Chartered Surveyors said. An index of expected house prices fell to minus 47 in November, from minus 35.3 the previous month, London-based RICS said today, citing a survey.

European Union leaders signed a new governing treaty, with most countries planning parliamentary ratification to escape the popular votes that doomed the EU constitution.

Countrywide Financial said on Thursday that mortgage loan funding tumbled 40 percent to $23 billion in November, sending its shares down nearly 4 percent before the market opened.

Top U.S. tax preparer H&R Block said on Thursday the borrowing capacity under its committed lines of credit might not be sufficient to meet its financing needs and it might need to issue added debt or equity securities to meet future requirements.

Bill Gross, manager of the world's biggest bond fund, said a plan by the Federal Reserve and European central banks to alleviate a global credit crunch will help break the reluctance among banks to lend.

Japan's Nikkei 225 Stock Average lost 2.5 percent to close at 15,536.52, the biggest decline since Aug. 17. The Hang Seng declined 776.61 points or 2.72% to close at 27,744.45. The Shanghai Composite also declined 137.50 points or 2.70% to close at 4,958.043.
The DAX declined 67.89, or 0.8 percent, to 8,008.23 in morning trading, its biggest one-day loss in three weeks. DAX futures expiring in December sank 71, or 0.9 percent, to 8,017. The CAC 40 Index dropped 129.08, or 2.3 percent, to 5,614.24. The benchmark FTSE 100 Index sank 144, or 2.2 percent, to 6,415.8.