US Markets - Wall Street ended the week higher on Friday after relative calm returned to the markets following weeks of volatility prompted by fears of a credit crunch.

While concerns over the extent of the fall-out from the subprime mortgage crisis continued to weigh on investor sentiment, lower trading volumes and a wait-and-see stance on the Federal Reserve’s interest rate policy resulted in a more typical August week of a directionless, drifting stock market.

Probably in mid-September or October we’ll get a sense of who’s taken big hits on credit exposures.

The S&P 500 finished 1.2% higher for the day and 2.3% up on the week at 1,479.37, while the Nasdaq Composite was up 1.4% for the day and 2.8% higher over the week at 2,576.69.

The Dow Jones Industrial Average rose 1.1% on Friday and was up 2.3% for the week at 13,378.87, and the Russell 2000 index of smaller companies gained 1.4% for the day and was 1.6% higher for the week at 798.93.

Investors were also awaiting the next meeting of the Federal Reserve’s policymaking Open Market Committee on September 18, when most analysts expect an interest rate cut to bring relief to financial markets.

A string of job-cut announcements underlined the persistence of difficult conditions in the mortgage sector. Accredited Home Lenders said it had stopped taking US mortgage applications and would eliminate 1,600 jobs, Lehman Brothers announced it would close down BNC Mortgage, its subprime unit, losing 1,200 employees, and HSBC said it was shedding 600 positions from its US mortgage arm.

Since the start of the year, more than 40,000 workers have lost their jobs at mortgage- lending institutions, according to Challenger, Gray & Christmas.

Construction companies have announced nearly 20,000 job cuts this year while the National Association of Realtors expects membership rolls to decline this year for the first time in a decade.

Shares in Accredited were down 10.5% over the week at $6.04 while Lehman Brothers was up 3.9% at $60.37.

Investors also continued to be bearish about Countrywide Financial, the US’s biggest mortgage lender, in spite of an announcement by Bank of America that it had ploughed $2bn of new capital into the beleaguered company. Angelo Mozilo, Countrywide Financial’s chief executive, did little to reassure traders when he said on Thursday that the US housing market was “certainly not getting better” and could push the economy into a recession. Shares were down 2% for the week at $21.

Shares in Toll Brothers rose 2% for the week to $23.09 in spite of the homebuilder posting sharply lower earnings in its fiscal third quarter and projecting more trouble ahead.

Home Depot was in the spotlight after the Financial Times reported that the retailer’s plans to sell its wholesale supply division to a group of private equity buyers could be in doubt because of the reluctance of three investment banks to fund the deal.

Reports emerged that the company was prepared to accept $1.2bn less for the business. However, its stock price rose 1.9% for the day after S&P reiterated its strong buy recommendation and finished the week 4.1% higher at $34.68.

Several takeover moves suggested there was still some life in the world of mergers and acquisitions, in spite of ongoing credit concerns.

MGM Mirage shares rose 19.1% for the week to $83.48 after Dubai World, the investment holding arm of the Dubai government, said it would pay more than $5bn for a 9.5% stake and 50% of the casino operator’s CityCenter development project in Las Vegas.

TD Ameritrade and?ETrade were reportedly discussing a merger to create a dominant force in the online brokerage sector. ETrade shares closed 5.1% higher for the week at $15.24 while TD Ameritraderose 7.9% to $17.70.

Shares in Lowe’srose 12.4% for the week to $30.20 after the retailer reported better earnings than expected.

European Markets - The FTSE Eurofirst 300 rose 2.8% on the week to 1,514.43. Germany’s Xetra Dax added 1.8% to 7,507.27 while in Paris, the CAC 40 gained 3.8% to 5,569.38.

Let's buck the trend this week and start our European review in Sweden where Stockholm shares closed slightly higher, off earlier lows after stronger-than-expected US economic data eased concerns about the US economy, with construction firm NCC leading the market higher on bullish broker comments.

The OMX Stockholm index closed up 1.03% at 391.51, while the OMX Stockholm 30 index ended 1.00% higher at 1,209.81. Turnover amounted to 20.6  billion SKr.

The main sector movers were materials, which closed up 2.45%; industrials, up 1.96%; and retailing, 1.84% higher.

The major movers within these sectors included SSAB A, up 4.91% at 224 SKr; Volvo B, up 3.36% at 123; and Hennes & Mauritz B, up 1.98% at 385.

NCC B closed up 6.53% at 179, after Carnegie hiked its recommendation on the construction company to 'Outperform' after yesterday's strong first half results, and set a target price of 215 SKr.

Skanska B closed up 2.76% at 139.50.

Ericsson B was up 0.32% at 25.14.

Among the telecom operators, TeliaSonera was up 1.48% at 51.50, and Tele2 B flat at 116.25.

H&M B was down 1.16% at 382, after ABG Sundal Collier cut its rating on the share to 'Hold' from 'Buy', citing concerns about the impact of raw material prices.

Nordea was up 0.85% at 107.10, as Goldman Sachs upgraded the share to 'Neutral' from 'Sell' and set a share price target of 115.19 SKr.

Among other heavily traded shares, Volvo B was up 1.05% at 120, SEB A was up 1.16% at 217.50, and NCC B was up 2.15% at 166, ahead if its results due out later.

Across in Denmark , Share prices closed slightly higher, lifted by FLSmidth and NKT Holding on positive broker comments, and by Lundbeck after its board chairman stepped down.

The OMXC20 index closed 0.23 points higher at 491.30 and the OMXCB Benchmark index rose 1.12 points to 471.42.

The OMXC All Share index closed 0.68 points higher at 481.27 on turnover of 4.26  billion DKr.

All told though, the Danish bourse was unusually quiet.

In Finland , Shares reversed early losses to close higher and extend a winning streak to six sessions on the back of some upbeat economic data in the US.

The OMX Helsinki 25 index finished up 61 points or 0.56% at 3,115.56, and the OMX Helsinki 0.57% higher at 11,223.77. Turnover was a below-average 891  million Eur.

Nokia was among the major gainers on a mixed leaderboard, closing 0.99% higher at 22.50 Eur.

Nokia said that Matsushita will shoulder the direct cost of replacing potentially faulty batteries used in its handsets. The Japanese company is estimating the cost of the voluntary recall that covers up to 46  million batteries it made at between 10-20  billion Yen, or some 64-127  million Eur.

Other major movers were Stora Enso, up 2.34% at 13.10 Eur, UPM-Kymmene, up 1.52% at 16.71 Eur, and Nokian Tyres, 1.98% firmer at 25.27 Eur.

Nokian Tyres yesterday afternoon confirmed it is in talks about setting up a new production plant in Kazakhstan, but that no agreement has yet been made.

In engineering, Wartsila rose 2.87% to 44.47 Eur, Konecranes rose 1.01% to 28.88 Eur, and Outotec added 3.87% to 41.88 Eur.

Wartsila said mutual pension insurance company Varma has increased its voting stake in the company to 11.91%. Varma holds 4.94% of the company's share capital.

Among the fallers were Neste Oil, down 1.24% at 24.65 Eur, TietoEnator, down 0.59% at 16.98 Eur, and Amer Sports, off 0.36% at 16.84 Eur.

Amer Sports said Finnish investment group Ajanta Oy will hold a 5.57% stake in the sporting goods manufacturer after forward market transactions concerning just over 4  million shares mature on Dec 21.

Elsewhere, Fortum dipped 0.17% to 23.31 Eur and Elisa fell 0.76% to 19.50 Eur.

And rounding our the Nordic arena we go to Norway where Oslo Share prices closed higher, led by Aker Kvaerner on a deal with Statoil, while Aker Yards fell following disappointing second-quarter earnings and forecast cut, and Golar LNG, Awilco Offshore and Seadrill also fell on negative broker comments.

The OSEBX Benchmark index closed 1.14 points higher at 466.74 and the OSEAX All Share index finished 2.06 points higher at 539.89. Total turnover was 9.47  billion NKr.

Aker Kvaerner gained 2.75 NKr to 148.25 after the group and its US peer FMC Technologies were awarded subsea systems deals worth a combined 15-25  billion NKr by Statoil.

The companies will become preferred suppliers for the delivery of 'complete subsea solutions' to Statoil's new field developments, as well as additional equipment for new and existing fields.

Aker Yards fell 2.75 NKr to 64 after the Norwegian shipbuilder disappointed with its second-quarter results and reduced its 2007 guidance, but the one-off nature of the losses and a confident outlook meant falls were limited, according to dealers.

Aker Yards posted profits below expectations at both the pretax and operating levels, after booking a higher-than-expected 500  million NKr one-off loss, and downwardly revised its 2007 earnings guidance.

The Norwegian shipbuilder had already warned the market to expect weaker figures, causing its share price to slump almost 30%. Today the firm further revised its 2007 guidance downwards, saying it now expects the 2007 EBITDA result to be about 900  million NKr, down from the 1.0-1.1  billion figure given earlier this summer.

Net profit, meanwhile, is expected at about 700  million NKr, down from the 800-900  million NKr guidance given in July.

The profit warning stemmed from delayed ferry construction at three of the firm's Finnish yards, along with cost increases due to the booming market and growing pressure on sub-suppliers.

Golar LNG shed 4 NKr to 111.5 on market concerns that the stock has become overvalued.

Awilco Offshore fell 1.1 NKr to 60.2 on concerns about a softening market for jack-up rigs, dealers said.

According to SEB Enskilda, evidence is mounting that the jack-up rig market is softening.

Awilco reported second-quarter results earlier this week, and SEB said the key takeaways included weaker day-rate guidance, increased costs and a three-month delay to 'WilPioneer', the firm's first semi-submersible rig.

To reflect these concerns, the broker said it has taken a more cautious stance, cut its estimates and downgraded its price target by 20% to 70 NKr.

Seadrill shed 2.75 NKr to 109.75 on signs of rising costs and a weaker overall rig market, dealers said.

Analysts in Oslo said there is growing evidence that costs in the oil services industry are escalating faster than expected, and that they are also seeing a 'softening in the jack-up market and older rigs achieving lower utilisation than we expected'.

Norsk Hydro rose 0.75 NKr to 212.25 and Statoil added 2 NKr to 164.25, while Petroleum Geo-Services fell 0.5 NKr to 133 and Stolt-Nielsen shed 3 NKr to 177.

Norske Skog added 2.3 NKr to 71.5 after Capital Research and Management Company cut its stake in the Norwegian paper manufacturer to 4.8% from 5%.

Yara International fell 0.5 NKr to 157.5.

Schibsted rose 5 NKr to 263. Goldman Sachs upped its target on the stock to 291 NKr from 274, while repeating its 'neutral' stance.

Orkla was up 0.7 NKr at 93.6.

Heading in the opposite direction now in Europe, down to the Med' where Greek shares closed flat, in line with European bourses, as investors paused for breath ahead of the final round of first-half results to be released next week.

The ASE general index closed flat at 4,800.9 and blue chips slid just 0.1% to 2,554.2. Mid caps edged 0.1% higher to 6,230.2 and small caps jumped 1.4% to 1,098.8.

Advancers outnumbered decliners 142 to 104 while 82 were unchanged in average trade of roughly 386  million Eur.

Refiner Hellenic Petroleum jumped 0.9% to 10.7 Eur, recovering from earlier losses incurred after Marfin Analysis cut its target price to 12.1 Eur from 12.3 Eur.

EFG Eurobank grew 0.9% to 25.2 Eur and announced that the Hellenic Market Commission has approved its memorandum for a pre-emption rights offering.

Greek Postal Savings Bank fell 1.3% to 15 Eur as investors cashed in on recent gains following their better-than-expected first-half year results released yesterday.

National Bank of Greece lost 1.4% to 42.36 Eur, also on profit taking after yesterday's sharp gains.

Electricity utility Public Power Corp led blue chip decliners throughout the session and dropped 1.6% to 22.4 Eur after gaining yesterday.

Alpha Bank rose 1.3% to 23 Eur on the positive sentiment surrounding the bank after Turkish newspaper Hurriyet reported yesterday that the bank and Anadolu Group are in exclusive talks until September 30 in attempts to rescue its bid for Alternatif Bank.

Travel goods retailers Hellenic Duty Free Shops fell 1.3% to 12.42 Eur, unaffected by broker Deutsche Bank upgrading its shares to hold from sell.

Betting technology company Intralot jumped 1.7% to 25.44 Eur and is seen posting a 6% rise in first half net profit next Wednesday, according to an analysts consensus poll by Thomson Financial News.

Consumer and household goods retailer Sarantis slid 0.4% to 9.68 Eur. Its first half year net profits are seen rising 8% year-no-year to 12  million Eur when it announces result on Tuesday, Aug 28, according to an analysts consensus poll by Thomson Financial News.

Across in Italy Milan shares ended slightly higher encouraged by stronger-than-expected US housing and durable goods data, but dealers noted that trading volumes were lacklustre and there were few and uncertain fresh trading ideas.

The Mibtel index finished up 0.62% at 31,011 while the S&P/Mib ended up 0.62% at 39,954 on volumes worth some 4.153  billion Eur, the lowest they have been all month.

Eni accelerated gains finishing up 1.55% at 24.86 Eur after CEO Paolo Scaroni said he would go to Kazakhstan after Sep 4 to meet the new Kazakh government and try to solve the dispute over the Kashagan oil field, of which Eni is the operator.

Scaroni also said that on Monday a procedure would start with the Kazakh government to try to find an amicable settlement to the affair.

The Kazakh government recently threatened to halt the Kashagan project due to delays and violations of environmental regulations.

Other oil related stocks were also stronger with Saipem finishing up 4.30% at 26.44, Snam Rete Gas ending up 3.12% at 4.2825 and Tenaris adding 1.27% at 17.35.

Among utilities, Enel finished up 0.72% at 7.59 as Russia's antitrust authority allowed it to raise its stake in the OGK-5 utility to 100%.

Enel now has 29.9% of the utility and according to media reports will raise this stake to 70% by year end.

AEM finished up 1.25% at 2.60 while its merger partner ASM Brescia finished up 1.58% at 4.2175.

Among financial stocks, Generali finished up 0.89% at 29.17 after the insurer announced it had resumed the share buyback programme of up to 1.5  billion Eur that had been authorized by shareholders last March and announced at the beginning of the month while releasing its first half results.

Generali's life insurance unit Alleanza ended up 0.26% at 9.435, while Fondiaria finished up 0.64% at 34.48 and Unipol dipped 0.43% at 2.4325 after yesterday's strong rally.

In Spain Shares closed higher, recovering from earlier losses following positive US data, on light volume with BME leading on continued sector consolidation talk.

The IBEX-35 index ended up 41.90 points at 14,334.4 after trading in a range of 14,195-14,350.

The main gainer of the day was BME, up 0.76 Eur at 39.33, on continued M&A talk as hopes mount for a bidding war for Swedish peer OMX.Also strong was Inditex, 0.80 higher at 43.35, as the strong US data lifted hopes for the broader economy.

Cintra added 0.08 to 11.43 as analysts weighed up a US Federal commission written reprimand to the Texas transportation unit for reassigning a highway contract originally designated to Cintra.

Main heavyweights were mixed, with BBVA off 0.04 Eur at 16.82, while Santander was up 0.01 at 13.29, and Telefonica up 0.09 higher at 17.75, both rescued from earlier selling by the US data announcement.

Iberia was flat at 3.30, giving up recent gains fuelled by hopes that the TPG and BA consortium will launch a formal bid for the flag carrier by mid-September as profit taking weighed.

Bankinter posted the sharpest loss, down 0.26 or 2.22% at 11.44, continuing to suffer from news Goldman Sachs has added the bank to its conviction sell list.

Now into mainstream Europe and starting in Germany where German stocks including Allianz SE, Europe's largest insurer, and Commerzbank AG declined. MAN AG, the region's third-largest truckmaker, paced rising shares.

Premiere AG tumbled after Germany's biggest television broadcaster said it plans to sell new shares.

The DAX Index lost 4.69, or 0.1%, to 7507.27. The measure has gained 1.8% this week. DAX futures expiring in September decreased 14, or 0.2%, to 7,536 at 6 p.m. in Frankfurt. The HDAX Index of the country's 110 biggest companies was little changed.

Indexes recovered earlier losses after a report showed US- made durable goods gained more than estimated in July and as new home sales in the world's largest economy unexpectedly rose.

Allianz slipped 1.46 Euros, or 0.9%, to 157.65. Commerzbank AG, Germany's second-largest lender, decreased 30 cents, or 1%, to 29.50 Euros. Banks and insurers were the worst performers in Europe, pacing declines in the Dow Jones Stoxx 600 Index.

MAN rallied 4.42 Euros, or 4.5%, to 103.57.

Premiere slumped 1.35 Euros, or 7.8%, to 16.06. The company plans to raise as much as 250 million Euros ($340.3 million) selling new shares within ``the next few weeks.''

The following stocks also rose or fell on the Frankfurt exchange:

Adidas AG, the world's second-largest sporting goods maker, lost 46 cents, or 1.1%, to 42.39 Euros. The country's national soccer federation and the professional clubs split over an arbitration decision regarding the company's sponsorship of the national team. The federation, known as the DFB, accepted the decision, while the organization representing clubs in the country's top two soccer division rejected it.

Adidas sought arbitration in March in an effort to maintain its five-decade status as uniform supplier to the German national soccer team.

P&I Personal & Informatik AG tumbled 1.35 Euros, or 5.9%, to 21.55. Berenberg Bank sold a 67% stake in the maker of human-resources software on behalf of The Carlyle Group's IPCar Beteiligungs GmbH, raising about 108 million Euros.

Petrotec AG declined 12 cents, or 2%, to 5.85 Euros. The producer of biodiesel posted a second-quarter loss as oversupply and subsidized fuel from overseas lowered biodiesel prices. Petrotec cut its full-year sales forecast to 68 million Euros from 70 million.

Q-Cells AG retreated 18 cents, or 0.3%, to 62.58 Euros after Lehman Brothers Holdings Inc. rated shares of the solar energy company ``equal-weight'' in new coverage and set its price estimate at 61 Euros, lower than the current share price.

Into France now where Paris shares closed higher as the US market gained on new economic data, spurring buying in Paris after the session had remained flat through much of the day.

The CAC-40 index finished up 46.05 points or 0.83% at 5,569.38. There were 33 gainers and six decliners, while one stock ended unchanged.

There was little French company news to spur trading, and the impending UK bank holiday Monday lent the market a quiet tone, but the upward impulse from the US left about half of the blue chips with gains of 1-2%.

ArcelorMittal strongly outperformed other CAC-40 stocks in late trading to close up 2.74 Eur or 6.25% at 46.60, buoyed by an upgrade to 'buy' from 'neutral' by Merrill Lynch, which said the stock is trading at a 25% discount to global peer multiples.

ArcelorMittal also benefited from a general rise in steel-related stocks in Europe, as did Vallourec, which outperformed with a rise of 3.05 Eur or 1.57% at 196.80.

Carrefour was the second largest gainer in the CAC-40, rising 1.07 Eur or 2.17% to 50.47, after a week in which it announced its withdrawal from the Swiss market as it focuses on those where it is already among the top retailers.

A leading Carrefour competitor, Auchan, today announced its withdrawal from the Moroccan market.

Property company Unibail-Rodamco gained 3.55 Eur or 1.93% to close at 187.49, but continuing concerns about credit stemming from the US subprime crisis kept a damper on most financial shares.

BNP Paribas closed down 0.69 Eur or 0.88% at 77.71, losing more than others, as the credit fears overshadowed its announcement that it will unfreeze three investment funds in which it blocked transactions earlier this month due to liquidity problems.

Societe Generale closed down 0.39 Eur or 0.33% at 119.24, Credit Agricole closed down 0.03 Eur or 0.11% at 27.49, and Axa closed unchanged at 29.71.

Outside the CAC-40, Plastic Omnium gained 1.40 Eur or 4.07% to 35.82. It has been in the process of refocusing on its core activities, partly through acquisitions.

Nuclear power plant maker Areva rose 19.55 Eur or 2.81% to 714.55, after denying a German newspaper report that it was interested in buying a stake in German wind turbine maker Nordex.

Among decliners, Clarins dropped 1.18 Eur or 2.08% to 55.46.

Neighbours The Netherlands saw shares in Amsterdam closed higher, closely tracking higher trade on Wall Street amid relatively low volumes, while Arcelor Mittal led gainers.

The AEX closed 3.35 points or 0.65% higher at 518.10, after trading in a range of 512.65-520.48.

The consortium seeking to buy Dutch bank ABN AMRO is concerned that Dutch regulators will impose onerous conditions on its proposed acquisition of ABN, making the proposed deal unattractive, a source close to the consortium said on Friday.

The Royal Bank of Scotland, together with Spain's Santander and Belgian-Dutch Fortis is attempting to buy ABN for 71 billion Euros ($96.33 billion), while Britain's Barclays Plc has offered 61 billion Euros to merge with the Netherlands' biggest bank.

Into Belgium now where shares in Brussels closed higher on busy trade after a flurry of company results this week, with Belgacom leading the blue-chip gainers.

At the close, the Bel 20 was up 40.84 points or 0.98% at 4,225.78.

National telecoms operator Belgacom led the blue-chips higher. The stock rose 1.09 Eur or 3.65% to 30.97, after it posted second-quarter results which beat analysts' forecasts, and raised its full-year guidance, underlining that it feels confident in an increasingly consolidated telecoms sector.

Net profit for the first half of 2007 rose 30% to 564.0  million Eur from 434.0  million a year earlier. Sales were up 0.2% at 3.04  billion Eur.

For the second quarter, the group posted net profit at 245  million Eur, compared to 219  million a year earlier and at the top end of analysts' expectations of 219-245  million Eur.

EBITDA amounted to 543  million Eur, down from 565  million but beating forecasts of 518-535  million Eur.

Second quarter sales totaled 1.53  billion, up from 1.52  billion and beating expectations of 1.48-1.51  billion.

Belgacom was upgraded to 'accumulate' from 'reduce' at KBC Securities following the group's revised outlook and Rabo Securities upgraded the stock to 'hold' from 'reduce', as the share price dropped below the brokerage's target price of 31 Eur.

Dexia downgraded the stock to 'neutral' from 'buy', saying that it had had 'high hopes' for an update on shareholder remuneration, expecting a 0.32 Eur interim dividend and 200  million Eur share buy-back.

Real estate company Cofinimmo followed closely behind, moving up 3.64 Eur or 3.00% to 124.99.

Brewer InBev was up 1.19 Eur or 2.17% to 56.15, while steel and wire cord manufacturer Bekaert was up 1.80 Eur or 1.89% to 97.00.

Utility Suez was 0.45 Eur or 1.18% higher at 38.51.

Among the heavyweight financials, KBC Group was up 0.90 Eur or 0.99% to 91.70, while Fortis rose 0.16 Eur or 0.59% to 27.25. Peer Dexia bucked the trend -- inching down 0.11 Eur or 0.55% to 19.86.

Outside the Bel 20, cinema group Kinepolis was 0.12 Eur or 0.27% higher at 44.75 after it posted a higher-than-forecast 9.0% rise in first-half net profit, boosted by favourable tax rates.

Net profit for the cinema group came to 8.2  million Eur from 7.5  million last year.

Sales dipped slightly to 100.1  million Eur from 102.2  million. Despite a 9.0% fall in ticket sales in the first half, Kinepolis said the sales decline remained 'limited' at 2.1% due to other operating activities in food and beverages, retail, business-to-business and real estate.

Operating profit fell to 11.5  million Eur from 13.6  million.

Elsewhere, Belgian technology group ThromboGenics was up 0.37 Eur or 3.74% at 10.25. The group posted a rise in sales and net loss for the period December 2006 to June 30 this year after the market close.

The group reported sales of 1.310  million Eur for the period ending June 30 this year compared to 691,000 Eur for June to November last year.

Net loss was 8.599  million Eur compared to 5.395  million.

Now into Swizterland where Zurich shares closed higher, with losses through the day trimmed after early gains on Wall Street were seen on stronger-than-expected new home sales.

The Swiss Market Index closed 37.40 points higher at 8,775.90, while the Swiss Performance Index closed 34.41 points higher at 7,146.9.

The Euro was up at 1.6387 SFr, and the Dollar was higher at 1.2015 SFr.

Financial stocks were down across the board, with UBS dropping 0.20 SFr to 63.15 and Credit Suisse shedding 0.45 SFr at 79.35.

Julius Baer lost 1.4%, or 1.00 SFr at 79.20, and insurers suffered similarly, as Swiss Life fell 1%, or 2.75 SFr at 275, and Swiss Re dropped 0.80 SFr to 100.30.

Zurich Financial slipped 1.00 SFr to 343.50 and Baloise retreated 1.2%, or 1.30 SFr at 109.10.

Pharmaceuticals fared little better as Roche yielded 0.90 SFr at 210.90, with investors shrugging off news that it has won EU approval for its cancer drug Avastin in the treatment of non-small cell lung cancer.

Novartis was 0.15 SFr lower at 63.45.

Among the market's few gainers was chemicals group Lonza, up 1.2%, or 1.30 SFr at 112.90, and agribusiness Syngenta, up 1.30 SFr at 222.50.

Swatch also rose, 0.45 SFr to 67.45. Earlier, Swiss magazine L'Hebdo said that Swatch will invest in the founding of a new company to develop a fuel-cell based engine for the automotive industry.

Nestle was 1.00 SFr higher at 501.50.

Outside the SMI, Valora plunged 13.8%, or 38.30 SFr to 239.90 after reporting a first half net proft of 12  million from 27  million a year earlier, impacted by lower sales of tobacco and print media in its Swiss kiosk division.

Kudelski was 1.5%, or 0.60 SFr lower at 38.10, under pressure on concern over its EBIT target and weak profits.

Earlier, the Swiss access systems maker reported a below-consensus first half net profit of 28.1  million SFr, down from 90.3  million a year earlier.

Sales growth continued unabated, however, with revenues for the first six months reaching 422.9  million SFr, up from 305.1  million, beating the average forecast of 405.5  million by a wide margin.

And finally bringing Europe to a close this week, we go to Austria where shares in Vienna closed higher, as a solid performance by Telekom Austria and modest gains by index heavyweights Raiffeisen International and Erste Bank helped Vienna's blue-chip index to close in positive territory for the third day in a row.

The ATX closed up 0.55% or 24.46 points at 4,508.72. The ATX Prime closed up 0.25% or 5.41 points at 2,211.26.

The ATX index was 5.13% higher than at its close last Friday, while the ATX Prime was 4.48% higher than a week earlier.

Telekom Austria shares posted the sharpest gains among ATX heavyweights today, climbing 2.49% to 18.55 Eur in trading that observers attributed to bargain hunting and renewed investor interest in the telecoms conglomerate on the back of Wednesday's consensus-beating half-year results.

More modest gains by fellow index heavyweights Raiffeisen International, up 0.84% to 106.85 Eur, and Erste Bank, 0.57% higher at 53.20 Eur, also helped to boost the ATX.

BWIN, the online gaming provider, led gainers on the ATX, rising 4.37% to 20.30 Eur as yesterday's half-year results continued to encourage widespread bargain hunting in the stock.

BWIN's closing price was 20% higher than a week earlier.

The improved market sentiment for the industrial sector helped a number of ATX shares, including Andritz, up 2.45% to 47.70 Eur, voestalpine, 2.13% higher at 58.42 Eur, and A-TEC Industries, which gained 1.12% at 135.00 Eur.

Shares in vaccines specialist Intercell rose 2.01% to 25.40 Eur, ending a week that saw the share gain nearly 13% over its closing price last Friday.

Better-than-expected news on the housing market in the US helped push Wienerberger shares up 1.13% to 50.18 Eur.

ATX heavyweight OMV led decliners on the index, closing down 2.34% to 43.75 Eur. Observers said they did not attribute all too much significance to the decline in light of the stock's very low trading volumes today.

Flughafen Wien shares shed 0.95% to 72.09 Eur, while those of Uniqa lost 0.70% to 21.35 Eur. The two stocks were also the only ATX components to end at levels lower than last Friday, but analysts noted that both had significantly outperformed the index during the downturn last week.

Real estate stocks led gainers on the ATX Prime, with CA Immo up 5.43% to 18.45 Eur, Conwert 4.66% higher at 12.35 Eur and ECO Business Immobilien gaining 4.37% to 9.79 Eur after the company announced that it hopes to pay out its first-ever dividend for the 2008 financial year.

Shares in fellow property developer Meinl European Land (MEL) bucked this upward trend, shedding 8.36% to 12.60 Eur as investor confidence in the stock continued to diminish as a result of the intransparency associated with the company's stock repurchases, dealers said.

Sal. Oppenheim cut MEL's rating to 'neutral' and slashed its target price to 16 Eur from 21 Eur, while merchant bank Kempen reiterated its 'reduce' rating and lowered its target price to 14.40 Eur from 19.20 Eur.

Palfinger closed down 2.22% at 35.25 Eur after Merrill Lynch cut its rating to 'neutral' on valuation grounds. The crane manufacturer's shares has gained some 55% since the start of the year.

UK Market - The London market extended its winning streak on Thursday to a fifth straight session but it was a close call.

Up 90 points in early trade, the FTSE 100 faded to end just 0.9 points higher at 6,196.9. The FTSE 250 improved 35 points, or 0.3%, to 10,945.7. Trading volumes remained weak, with just over 3bn shares changing hands.

With the FTSE 100 up 338 points, or 5.7%, from last Thursday’s 11-month low, traders said investors, who are still nervous, had been keen to take some “chips off the table”, particularly with a long holiday weekend looming.

Nowhere was that trend more evident than in the mining sector, which charged higher at the opening only to run into concerted selling.

BHP Billiton closed 0.7% lower at £13.55, but is still up 10.7% this week, while Rio Tinto eased 0.6% to £32.62, but is still up 9.4% on the week.

Northern Rock was among the biggest blue-chip risers. The bank rose 4% to 757p as bid rumours continued to swirl. This time the name in the frame was ING, although the Dutch bank dismissed the rumours later in the day. Traders also pointed out that there was a huge short position in Northern Rock.

About 18% of the company’s issued share capital is thought to be on loan at the moment and dealers think the bid rumours have spooked some hedge funds into buying back their positions.

Tesco rose 2.7% to 416p. Traders said institutional investors were taking advantage of recent share price weakness to add to their holdings.

Tesco has underperformed the FTSE 100 by 2.8% over the past three months.

In the same sector, J Sainsbury firmed 0.5% to 533p after Numis Securities repeated its “buy” recommendation.

However, not everyone is taking that view. Yesterday, Lansdowne, a highly rated hedge fund, declared the sale of 12.45m shares. The fund’s holding now stands at just 1.4%, according to regulatory filings.

William Morrison added 1.7% to 275p on continued hopes that it might be close to selling a portfolio of shopping centres, a deal which could pave the way for a share buy-back programme.

On the downside, International Power drifted 1.6% to 403½p, tracking a decline in power prices in Australia, a key market for the company. Power prices in the State of Victoria fell 9% on Tuesday, brokers said.

More than 16% of IP’s generation capacity is in Australia, with the majority located in Victoria, according to Cazenove.

Housebuilding stocks came under pressure as investors moved to bank recent gains. The sector has outperformed the wider market since the end of July amid expectations that UK interest rates have peaked. Persimmon led the sector lower yesterday, falling 2.4% to £12.23, followed by Redrow, which eased 1.9% to 512p and Barratt Developments, which fell 1.3% to 938p.

Electra Private Equity was among the top performers in the FTSE 250, rising 7.2% to £16.51. The gain came as the company said it had managed to refinance one of its portfolio companies and this would lift net asset value by £40m.

Xchanging, the back office outsourcing company, celebrated a deal with German bank Allianz to run its retail investment account operations in Germany with a 9.2% gain to 273½p.

Bargain hunting saw Biffa, the waste disposal group, bounce 5.3% to 237¼p.

Since the company warned on commercial waste profits in April, its shares have fallen 32%. However, in the past 10 days a number of brokers have upgraded.

Last Friday, Cazenove upgraded to “outperform”, citing the growth prospects of the UK waste market. Other brokers believe Biffa could be a takeover target.

Takeover rumours continued to swirl around Abbot Group, the oilfield services company. Shares in Abbott gained 1.3% to 275½p with Nabors, the US drilling contractor, mentioned as a potential bidder.

Japan & Asia Pacific - Asian markets fell Friday, snapping a four-day winning streak in which they recovered the bulk of their prior week's losses. Concerns about the US credit markets eased following action last week by the Federal Reserve, but resurfaced Thursday after the head of Countrywide Financial, the biggest mortgage lender in the US, said the problems in the US housing market are far from over. Angelo Mozilo, chief executive of Countrywide, predicted that the troubles in the home loan sector will worsen and tip the US economy into recession. His comments came as Bank of America announced a two billion US Dollar investment in the mortgage lender, which has been hit hard by massive defaults on home loans.

Financial stocks were among those leading declines, with Bank of China dragged lower after it revealed higher-than-expected exposure to US subprime mortgage-backed bonds and collateralised debt obligations.

But Asia's stock markets were still on track for their biggest weekly gain in more than 19 years, following an improvement in the stability of credit markets compared with last week's massive spike in volatility.

MSCI's measure of Asia Pacific stocks excluding Japan, which suffered its biggest weekly drop in nearly a decade last week, was down 0.95% at 7:47 a.m. British time.

The index has rebounded almost 13% since hitting a five-month trough last Friday and is up 10.2% this week, it's biggest one-week gain on record, according to Reuters data going back to December 31, 1987.

But is still more than 10% below its July 24 record high. Year-to-date, the index has risen more than 14%.

The recent rebound in the Japan ese stock market petered out on Friday, as investors faced a combination of a mild strengthening in the Yen and anxiety about domestic politics.

The Nikkei 225 fell 0.4% to end the day at 16,248.97. The broader Topix declined 0.4% to 1,585.85.

As a result, by the end of the week’s trading the Nikkei had regained the majority, but not all, of last week’s loss. Last week the Nikkei dropped 9% – the fastest slide since the bursting of Japan’s stock market bubble in 1990.

Export shares put in a lacklustre performance against that background. Matsushita Electric Industrial, the world’s biggest consumer electronics maker under the Panasonic brand, declined 0.5% to Y2,015, though the electrical appliance sector inched up 0.1%. Electronics conglomerate Toshiba rose 1.4% to Y1,068.

Domestically focused sectors fell almost across the board as investors focused on Japan’s political troubles. Shinzo Abe, prime minister, will reshuffle his cabinet on Monday but few analysts expect it will do much to remedy his fall from public popularity.

Property shares, one of the purest domestic plays, declined. The Tokyo Stock Exchange’s real estate investment trust index lost 2.9% to 2,007.28.

South Korean share prices closed lower but well off their lows on Friday on solid retail investor support late in the session.

The KOSPI index closed down 8.39 points or 0.5% at 1,791.33, after losing more than one% in early trade. But even after today's retreat, the market has fared well this week, with the mainboard index rising 153 points, more than making up for the previous week's 190-point loss.

Trading was very light, with 369 million shares worth 4.8 trillion won exchanging hands, suggesting that many investors stayed on the sidelines.

Falls outpaced rises 433 to 342, with 68 shares unchanged.

Foreign investors continued to sell, dumping shares worth 217.2 billion won Friday. This month alone, foreign investors were net sellers of shares worth nearly 7 trillion won. Institutions and retail investors were net buyers of shares worth 25.9 billion won and 158 billion won, respectively.

Leasing and instalment-financing firm Hanmi Capital surged 700 won or 4.6% to 16,000 after Woori Financial confirmed it was in talks to take over the financial company. Woori was unchanged at 21,350 won.

Petrochemical stocks bucked the market downtrend, extending their rally on better profit margins. SK Energy jumped 4,000 won or 3.1% to 134,000, LG Chem rallied 2,500 won or 2.9% to 87,500, and Honam Petrochemical soared 5,000 won or 4.1% to 128,000. LG Petrochemical was also up 1,800 won or 4.6% at 40,700 .

Hanwha Securities has recommended an 'overweight' rating on the industry, saying most leading local petrochemical stocks have more than 30% upside potential. Samsung Corp jumped 2,100 won or 3.7% to 59,600, rising for a fifth straight day, still benefiting from news of a 190 million US Dollar power plant order from Singapore. IT stocks came under heavy pressure as foreign investors continued to sell down holdings. Samsung Electronics fell 13,000 won or 2.2% to 586,000 and Hynix slid 1,150 won or 3.1% to 35,550. LG Electronics also skid 2,800 won or 3.8% to 71,200.

Taiwan 's Directorate General of Budget, Accounting and Statistics announced yesterday that it was raising its 2007 GDP growth forecast to 4.58% from the previous estimate of 4.38%.

The move followed second-quarter growth of 5.07% year-on-year, much higher than the official forecast of 4.40%.

The weighted index closed down 42.75 points or 0.49% at 8,690.09, off a low of 8,668.05 and a high of 8,741.64, on turnover of 131.70  billion twd.

For the week, the index was up 599.80 points, or 7.41%.

Philippine shares closed lower Friday as Wall Street's weakness prompted investors to lock in recent gains ahead of a three-day weekend.

Philippine financial markets will be closed on Monday for a public holiday.

Manila's composite index lost 22.21 points or 0.7% at 3,206.94, off the day's low of 3,199.78. The 30-company index rose 11.1% from the previous week, after posting its biggest single-day point gain in seven years on Tuesday, rebounding after huge losses last week.

The broader all-share index fell 12.08 points or 0.6% to 2,052.44.

Out of 161 stocks traded, 81 declined, 34 advanced, while 46 stocks ended flat.

A total of 1.7 billion shares worth 3.5 billion pesos changed hands.

In Hong Kong Share prices closed weaker, but well off the session's lows, as investors exercised caution ahead of the weekend.

Profit-taking pressure also arose following first-half results announcements from several blue chips, but the market still managed to end the week with a solid gain of 12.43% after hefty gains in the last four days following China's decision to allow mainland individuals to invest directly in Hong Kong-listed securities under a trial program.

Dealers noted that the index came off the day's lows as some investors stepped into the market in late trade after the mainland bourses closed at a fresh record high.

China insurers posted strong gains due to the yuan's strength.

The Hang Seng Index closed down 45.08 points or 0.20% at 22,921.89, off a low of 22,629.49 and high of 22,933.80. For the week, the index is up 2,534 points or 12.43%.

Turnover was 83.29  billion hkd.

Bank of China was down 0.22 hkd or 5.38% at 3.87, BOC Hong Kong was down 0.80 hkd or 4.09% at 18.76 and Bank of Communications fell 0.01 hkd or 0.12% to 8.54.

China A-shares closed at a record for the fifth straight day led by banks, as newly-established mutual funds continued to accumulate blue chips amid optimism over corporate earnings.

China's two largest banks, ICBC and Bank of China, closed higher after posting robust first-half earnings results but they underperformed their peers as investors were worried over their exposure to US subprime mortgage securities.

The benchmark Shanghai Composite Index closed up 75.17 points or 1.49% at a record 5,107.67. It gained 9.69% for the week.

The index also hit an all-time intraday high at 5,125.36, surpassing the previous record of 5,050.38 set yesterday. Turnover rose to 165.33  billion yuan from 153.37  billion yuan in the previous session.

Since the beginning of July, China's regulators have approved 11 new stock funds, which have raised more than 100  billion yuan from subscriptions as investors sought returns above the inflation rate, which hit a 10-year-high at 5.6% in July.

Analysts said money inflows from funds are likely to continue propping up large-cap stocks.

As of Aug 23, 999 listed companies in Shanghai or Shenzhen have posted a combined net profit of 138.11  billion yuan for this year, up 72.5% year-on-year, the official China Securities Journal said.

Among those, net profit in the financial and property sector doubled in the first six months from a year earlier.

Investors also seemed to ignore liquidity pressure from upcoming large bank IPOs.

Hong Kong-listed China Construction Bank Corp (HK 0939) said its shareholders have approved a plan to issue up to 9  billion A-shares for a listing on the Shanghai stock exchange.

Industrial Bank Co Ltd surged 5.24 yuan or the 10% daily trading limit to 57.67, while Huaxia Bank Co Ltd gained 1.33 yuan to 20.42.

Industrial and Commercial Bank of China added 0.04 yuan to 6.99 after its net profit rose 61.4% year-on-year in the six months to June to 41  billion yuan.

Bank of China rose 0.06 yuan to 6.16 after it said its first-half net profit rose 51.7% to 29.54  billion yuan.

Indonesian shares in Jakarta finished a volatile session sharply higher Friday as late-session gains by Telkom and banks drove the main index to close at its high for the day.

Bank Negara Indonesia (BNI) rose after reporting a 21.5% rise in first-half earnings. The bank said net profit rose to 1.02 trillion rupiah on a sharp rise in fee-based income.

The composite index closed up 25.45 points, or 1.2%, at 2,143.11, off a low of 9,092,97. Volume totaled 4.68 billion shares, valued at 3.3 trillion Rupiah.

For the week, the main index gained 234.47 points, or 12.3%.

The LQ-45 index closed up 3.79 points at 446.00 Gainers led decliners 127 to 71, with 45 stocks unchanged.

Malaysian shares closed Friday mixed as softer US markets overnight prompted investors to take profits ahead of the weekend after the two-day rally.

Trading volume remained low, reflecting investors' reluctance to hold on to positions for extended periods especially since the credit crisis is unresolved.

The Kuala Lumpur Composite Index (KLCI) was down 10.10 points or 0.8% at 1,273.52.

For the week, the KLCI gained 81.97 points or 6.9%.

The FTSE Bursa Malaysia 30-large cap index lost 107.90 points or 1.3% to 8,060.17 and the second board index gained 1.06 point or one% to 105.3.

Gainers led losers 481 to 363, with 258 stocks unchanged and 236 counters untraded.

Singapore shares closed Friday flat as the market recovered from early losses on late bargain-hunting in property stocks.

The Straits Times Index closed down 1.46 points or 0.04% at 3,369.45, off a low of 3,318.06. For the week, the index was up 7.6%, wiping off last week's losses.

Losers led gainers 476 to 303, with 909 stocks unchanged.

Volume traded reached 1.6 billion shares valued at 1.68 billion Singapore Dollars.

Real estate investment trusts were weaker on concern that funding costs for property acquisitions will rise as a result of risk aversion in global credit markets.

Ascendas REIT was down eight cents at 2.39 Dollars and CapitaMall was 14 cents lower at 3.36 Dollars.

Banks were mixed, with DBS Group Holdings down 30 cents at 20.30 Dollars, United Overseas Bank off 10 cents at 20.60 Dollars and Oversea-Chinese Banking Corp up five cents at 8.65 Dollars.

Newly-listed Parkway Life Real Estate Investment Trust extended losses, dipping one cent to 1.18 Dollars.

Retailer FJ Benjamin rose 1.5 cents to 80 cents after the company proposed a payout of 15 cents a share comprising 13 cents capital distribution and two cents in special and ordinary final dividend.

COSCO Corp (Singapore) added six cents to 5 Dollars after winning shipbuilding contracts worth 708.1 million US Dollars.

Thai shares closed marginally lower Friday as other regional stocks consolidated following overnight weakness on Wall Street amid lingering fears over a US credit squeeze.

Investors also took a wait-and-see stance ahead of next week's expected announcement of a date for general elections in Thailand as well as a rate-setting meeting at the central bank.

The Stock Exchange of Thailand (SET) composite index shed 0.78 points, or 0.10 percent, to 790.92 and the bluechip SET 50 index slipped 0.49 points to 565.06.

Losers led gainers 173 to 156, with 132 stocks unchanged, on volume of 1.9 billion shares worth 9.9 billion Baht.

Thailand's top energy firm PTT gained 2.00 baht to 290.00, and its unit PTT Exploration and Production added 1.00 to 113.00.

Top lender Bangkok Bank also lost 1.00 baht to 116.00.

Thai Airways International was unchanged at 41.75. The kingdom's largest mobile phone operator Advanced Info Service dropped 3.00 baht to 91.50.

Indian shares rose, bucking the weak trend on other Asian exchanges, as the political uncertainty surrounding a controversial nuclear deal with the US became more subdued.

India's Congress-led coalition government and their communist allies have been bickering over the nuclear treaty, aimed at resolving the country's energy crisis. The Left parties have even issued an 'ultimatum' to the government to abandon the deal, or face 'dire consequences'.

The Bombay Stock Exchange's benchmark Sensex rose 1.84%, or 260.89 points, at 14,424.87, while the National Stock Exchange's S&P CNX Nifty was up 1.70%, at 4,184.80.

Among the BSE 30, 28 shares advanced, and 2 retreated. In the broader market, 1,555 shares advanced, 1,071 declined and 48 were unchanged. Banking shares sustained their early gains after the weekly inflation reading showed that the central bank may have to prolong a pause on rate hikes. State Bank of India rose 3.62% to close at 1,466.25 rupees, ICICI Bank gained 1.02% to 834.25 rupees, while HDFC Bank added 0.11% to close at 1,101 rupees.

Softening crude prices and views that a hike in fuel prices will take a backseat on the government's agenda against the backdrop of the strained relations with the Left, buoyed sentiment in auto shares. Fuel prices in India are not determined by the market, but are set at subsidised rates by the government.

Maruti Udyog Ltd rose 1.69% to 790.20 rupees, Mahindra & Mahindra Ltd gained 2.47% to 639.95 rupees, and Tata Motors Ltd rose 5.71% to close at 657.65 rupees. Ambuja Cements Ltd rose 2% to 135.40 rupees. Swiss cement giant Holcim yesterday launched an open offer to buy an additional 20% stake in the company at 154 rupees a share.

Australian shares closed lower Friday as investors locked in profits after a four-day rally.

The S&P/ASX 200 closed down 71.2 points or 1.2% at 6,088.5 after trading between 6,079.4 and 6,143.7. Over the week, the benchmark index gained 417.5 points or 7.4%.

The All Ordinaries index fell 62.5 points or 1.0% to settle at 6,087.5. Over the week, the broader market index rose 417.2 points or 7.4%, its biggest gain since a 12.3% weekly rise in June 1975.

Losers beat gainers 649 to 559, with 341 stocks unchanged.

Volume was 1.83 billion shares worth 5.89 billion Australian Dollars.

The S&P/ASX200 September futures contract was down 101.0 points at 6,084.0.

The yield on the 10-year bond fell 0.015%age point to 5.925%, while the yield on 90-day bills dropped 0.055%age point to 6.788%.

IAG disappointed with a 27% slump in year to June net profit to 552 million Dollars due to losses related to storms in Australia and the UK and lower investment returns. Analysts were expecting profit of 623 million Dollars on average.

IAG ended down 42 cents or 7.3% at 5.30 Dollars. Other insurers incurred more modest losses with AMP down nine cents or 0.9% at 9.96 Dollars after reporting on Thursday a 27% surge in first-half underlying net profit. QBE fell 18 cents to 32.70 Dollars.

Australia's only listed oil refiner, Caltex Australia, rose 79 cents or 3.4% to 23.76 Dollars after beating market expectations with its first-half earnings which were boosted by robust refining margins.

Surf and ski wear company Billabong International fell 88 cents or 5.4% to 15.44 Dollars after its full-year net profit fell short of market expectations even though earnings rose 14.6% with another double-digit growth forecast for the current fiscal year.

Index leader BHP Billiton fell 1.10 Dollars or 2.9% to 36.60 Dollars after gaining 6.5% on Thursday after the mining group presented a bullish business outlook. BHP reported a record profit of 13.4 billion US Dollars for the past year to June.

Rio Tinto dropped 1.88 Australian Dollars or 2.1% to 89.12 Dollars.

Financial stocks also retreated with investment bank Macquarie Bank giving back some of its gains over the week. Macquarie declined 2.60 Dollars or 3.4% to 74.60 Dollars while fellow deal-maker Babcock & Brown fell 1.09 Dollars or 4.5% to 23.41 Dollars.

Major banks were mixed with National Australia Bank falling six cents to 29.45 Dollars and Commonwealth Bank off 20 cents at 54.81 Dollar. ANZ gained six cents to 29.45 Dollars and Westpac added one cent to 26.78 Dollars.

New Zealand share prices closed lower Friday as investors also chose to cash in recent gains.

The benchmark NZSX-50 index fell 36.67 points, or 0.9%, to 4,052.45 on turnover worth 103.5 million New Zealand Dollars.  Decliners beat gainers 55 to 45.

News that Christchurch-based Property Finance Group, with loans of more than 630 million Dollars, requested the suspension of its shares, also weighed on sentiment. The news came just days after Nathans Finance was put into receivership.

Tower fell a cent to 2.30 Dollars. But Dorchester Pacific was up three cents at 1.15 Dollars following an upbeat annual meeting on Thursday.

Market leader Telecom was down five cents at 4.28 Dollars, Fletcher

Building fell 30 cents to 11.45 and Contact Energy dropped 15 cents to 9.30.

Fisher & Paykel Appliances was five cents lower at 3.60 Dollars and Fisher & Paykel Healthcare fell two cents to 3.37.

Commodities - Most commodities prices ended the week on firm footing, with a strong recovery among base metals, as traders bet that the impact of the credit turmoil on the global economy would be limited.

Agricultural prices surged as weather damage to wheat crops in Australia, Europe and Canada prompted panic buying. Crude oil prices, however, ended the week with a small decline in spite of a recovery to the $70-a-barrel level.

Wheat prices surged on Thursday to a record high of $7.54 a bushel after Canada said its wheat crop might be almost 20% smaller than last year’s.

Chicago Board of Trade December wheat, the most active contract, ended the week 7.1% higher at $7.37 a bushel. The less representative September front-month contract ended the week at $7.12½ per bushel.

The wheat price surge pushed up other agricultural commodities. CBOT December corn rose 4.4% on the week to $3.59¼ a bushel while CBOT December soyabean moved 1.8% higher on the week to $8.42¾ a bushel.

Crude oil prices declined on the week as Hurricane Dean missed the US oil and natural gas production areas as well as the refineries in the Gulf of Mexico and inflicted little damage to Mexican oil fields.

By late London afternoon trading, Nymex October West Texas Intermediate had fallen 1.8% on the week. On Friday, it moved 77 cents higher on the day to $70.60 a barrel.

ICE October Brent lost 0.3% on the week, in spite of rising 38 cents Friday to $70.24 a barrel.

Crude oil’s gains on Friday came after reports of problems at several refineries, which led to concerns over gasoline and heating oil supplies.

The base metal market was buoyed by positive comments on global commodities demand from miners BHP Billiton and Xstrata.

London Metal Exchange copper prices ended the week with an increase of 5.7% to $7,365 a tonne, while aluminium rose 2.9% to $2,569 a tonne. Zinc moved 2.4% higher to $3,160 a tonne.

Lead rose 13% on the week to $3,255 a tonne, adding to a dramatic price rise of 95.5% since January on strong Chinese demand for batteries. Lead is a key component in manufacturing batteries.

Nickel moved 5.7% higher on the week to $26,250 a tonne while tin rose 8.9% to $13,360 a tonne.

Gold gained 1.7% on the week to close at $668.2 a troy ounce. Silver was up 1.5% to $11.90.

Currencies - Currency markets this week appeared to return to the trading patterns seen before the violent turbulence of the previous two weeks.

Carry trades were re-established as volatility eased and yield-hungry investors emerged after a fortnight of extreme caution.

Last week, Japan’s low-yielding Yen hit a high against the Dollar not seen for more than a year after several sessions of turbulence. Investors had abandoned carry trades – a risky strategy of trading interest rate differentials, where gains can be wiped out suddenly by volatile price moves.

But calmer conditions prevailed this week as carefully timed comments and actions from central banks helped ease nerves. The catalyst for the Yen’s move lower was returning stability in the equity markets. Further ammunition for the carry trade was provided by the Bank of Japan’s decision to leave interest rates at 0.5% – the lowest in the industrial world.

The Dollar rose 1.6% over the week to Y116.09, while the Euro gained 2.7% to Y158.33.

Against the highest yielding currencies, the moves were even sharper. The New Zealand Dollar rose 4.5% to Y83.06, the Australian Dollar climbed 4.6% to Y95.47 and Sterling added 2.9% to Y233.32.

The Dollar, which had found unexpected support as a haven during recent credit market and subprime-related turmoil, resumed its fall after last Friday’s move by the Federal Reserve to cut the discount rate at which its regional banks lend to clients from 6.25% to 5.75%.

This prompted heightened expectations that the US central bank may cut its benchmark Fed funds rate, which stands at 5.25%.

Christopher Dodd, chairman of the Senate Banking Committee, emerged from a meeting with Ben Bernanke, Fed chairman, and Hank Paulson, Treasury secretary, on Tuesday and said Mr Bernanke had agreed to use “all the tools” at his disposal to restore stability to markets.

Although new house sales data and durable goods orders were better than expected Friday, analysts pointed to the fact that these were July numbers from before the credit and subprime crises, and they did little to damp expectations of a cut in the Fed funds rate in coming weeks.

The problems in the subprime sector have spilled over into the rest of the mortgage market and housing will remain a drag on economic growth for much longer.

The Euro climbed 1.2% over the week to $1.3637, while Sterling gained 1.4% to $2.0099.

Sterling’s support this week came from expectations that the Bank of England would maintain its policy position regardless of recent market turmoil.

Data on Friday suggested that the UK central bank may have more work to do to stem inflation after strong gross domestic product growth in the second quarter. The GDP deflator, an element of the data that measures inflation, rose from 3.2% to 3.8%, its highest reading since 1996.

The South African Rand gained a little traction in late afternoon trade as emerging market sentiment improved after US home sales data came in better than expected.

By 16:08 the Rand was bid at 7.2045 per Dollar from its overnight close of 7.2328. It was bid at 9.8305 to the Euro from a previous 9.8082 and at 14.4900 against Sterling from 14.5030 before.

And bringing currencies to a close this week, we go to the RMB here in China.  The RMB finished at 7.5666 to the Dollar on the over-the-counter (OTC) market, up from 7.5870 Thursday.

China - For the fourth time this year, the People's Bank of China, the central bank, raised interests rates on Wednesday.

The interest rate on bank deposits was raised by 27 basis points, and the lending rate by 18 basis points. After the hikes, the benchmark one-year deposit rate is now 3.6% while one-year lending rate is 7.02%.

The central bank said it raised the interest rate to "control money supply and credit, and stabilize inflation expectation".

Judging from the series of moves by the monetary authorities, it is not hard to detect the new preference of the decision-makers in choosing policy tools. The frequent adjustments of the interest rate this year indicate that the authorities are attaching more importance to it.

It is encouraging the central bank has resorted to the strongest tool in the market to improve the efficiency of the country's monetary policy.

After the central bank raised the interest rates earlier this year, there had been doubts on whether it would have any effect on the economy.

Some people said stock market indexes climbed after the interest rate hike instead of slumping on the news. Property prices had the same response. So these people concluded that interest rate hikes do not work in Chinese financial market.

Such an opinion does not hold water. The previous rounds of interest hikes did not have remarkable effects in cooling the economy because the interest rate of China is too low considering its economic growth.

Interest rates decide where the financial resources are allocated. It would only lose its effect when the rate does not reflect the real demand and supply of the resources. When the interest rate is lower than reasonable, it cannot function normally to guide the flow of financial resources.

The repeated interest hikes are actually correcting the situation, propelling the interest rate closer toward the reasonable level. Without these rises, the interest rate would not become an effective policy tool for controlling the economy, nor will the Chinese financial market get mature.

After the National Bureau of Statistics released the latest indicators of economic operation on August 13, the market had been expecting another interest hike. After all, the annul growth in the consumer price index (CPI) of 5.6% in July is a record high in a decade.

The Shanghai Composite Index climbed 0.5% to 4,980.07 on Wednesday, the first day of the interest hike. The readiness of the market for the hike has proven that the central bank's monetary policy has become predictable for the market. The market and the monetary authorities are building up some kind of interaction.

This understanding between the policy-makers and the market is precious, for it marks a start of transparent, scientific and modern policy making here.

The central bank raised the interest rate on deposits by 27 basis points while the bank loan interests were lifted by 18 basis points. Thus, the current difference between the interest rates of deposits and loans is narrowed. In other words, the banks' profit margin has been reduced.

The central bank has obviously done so in the hope that the commercial banks could make money from sharpening their competitive edge rather than relying on the official interest difference.

According to the central bank stipulation, the commercial banks could float their bank loan rates within a set limit above or below the official rates. But the difference between the deposit and the loan rates has been about 3.5%age points for years. Hence, the commercial banks were blessed with a profit margin which has incurred a lot of public criticism.

The central bank has responded by narrowing the differences and encouraging the commercial banks to improve themselves.

Among all the policy tools, an interest hike is the most effective one to ensure the economy is cooled down gently and safely. The stock market and the estate market have both be troubled with huge bubbles. The price bubbles in the two markets are actually a result of the lower-than-reasonable interest rate.

The bubbles are quite dangerous to the economy, but the means to break them should be selected with prudence. Administrative intervention might have an instant effect, but it would also make the economy suffer from drastic fluctuations

The interest rate hikes can change the market expectations of businesses and individuals, influence their decision-making, and prick the price bubbles one by one. Hence the economy is diverted away from overheating and retains its normal pace.

When interest rates are raised by small%ages it does have a dramatic influence on the market, but its long-term weight cannot be neglected.

Currently, the interest rate hike is the best way to achieve a soft-landing and the central bank is obviously making good use of it.

After this round of interest hikes, the actual interest rate for one-year deposit will be 1.82% under zero if the CPI growth in August remains the same as in July. The central bank may have to consider more raises when the time is proper to lift the actual interest rate above zero.

With the monetary policy being more market-orientated, the central bank has become more efficient in achieving its policy goals. It could have an even better performance if its independence was better guaranteed.

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ICBC and Bank of China released their interim results Thursday and reported exposure to sub-prime mortgage securities.

Bank of China's foreign currency denominated investment portfolio includes asset-backed securities (ABS) and collateralized debt obligations (CDOs) supported by US subprime mortgages. As of 30 June 2007, the bank has US$8.965 billion worth of exposure to subprime ABS, which represents 3.51% of the Group's total securities investment. Some comfort can be taken that 75.38% and 21.7% of these were rated AAA and AA respectively. At the same time, the Group's exposure to subprime CDOs was US$ 682 million, around 0.27% of the total securities investment. Again, 81.8% and 18.2% were rated AAA and AA respectively.

ICBC also reported exposure of around US$ 1.23 billion worth of subprime mortgage-back securities. These are at the top layer with credit ratings of AA and above.

No default has occurred for both banks but Bank of China has made impairment charges of RMB 388 million and RMB 758 million against specific subprime ABS and subprime CDOs respectively. ICBC, however, carried out strict impairment test and found no objective evidence that future cash flows will be reduced as a result of these exposures and thus did not make any material impairment charges.