American Home may liquidate assets, shares plunge

(Reuters) - The development was the latest sign the U.S. housing slump is broadening, as worries about credit quality and defaults spread beyond subprime lenders, which lend to people with weaker credit, to lenders that make higher-quality loans.




American Home, a large mortgage provider, said its lenders cut off access to credit, leaving it unable on Monday to fund $300 million of loans it agreed to make. It expected to be unable to fund $450 million to $500 million of loans on Tuesday.


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UPDATE 2-American Home can't fund loans, may liquidate assets

(Reuters) - NEW YORK, July 31 - American Home Mortgage Investment Corp , a struggling mortgage lender, said on Tuesday it can no longer provide funding for home loans and has hired advisers to explore options, including a possible "orderly liquidation of its assets."



The Melville, New York-based real estate investment trust is one of the largest U.S. lenders to struggle with a U.S. housing slump that has caused home prices to stall, borrowing costs to rise and defaults to soar.


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Asian Stocks Rebound From 1-Month Low; JFE, Nippon Steel Rise, Canon Falls

(Bloomberg) -- Asian stocks rebounded from a one-
month low after higher profits at JFE Holdings Inc. and Nippon
Steel Corp. offset concerns of a drop in U.S. housing investment.

Canon Inc., the world's largest digital-camera maker, and
Macquarie Bank Ltd., Australia's biggest investment bank, led
declines on speculation the housing slump will slow U.S. consumer
spending and end a global boom in takeovers.


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CORRECTED: Things go from bad to worse for U.S. home builders

(Reuters) - NEW YORK - The slaughterhouse that has been the U.S. housing market for the past few months got bloodier on Thursday as several industry leaders reported worse results, June home sales fell more than expected and stocks throughout the sector hit multiyear lows.




The grim tidings about the industry dragged down both the housing and construction sectors, as well as the broader stock market.


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Stocks rally, dollar near lows vs. euro

(Reuters) - In the session's final half hour of trading, the Dow flirted with levels above the 14,000 mark. On Tuesday, it crossed the 14,000 milestone for the first time and set a new lifetime high at 14,021.95.




The dollar traded near record lows against the euro on concerns about the health of the U.S. housing market, with investors pondering the Federal Reserve's next interest-rate move.


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U.S. Housing Slowdown Will Lead Fed to Cut Rates, Pimco's McCulley Says

(Bloomberg) -- A slowdown in the U.S. housing market
and losses in mortgage-linked bonds will lead the Federal Reserve
to cut interest rates, said Paul McCulley, a bond fund manager at
Pacific Investment Management Co.

``The recession we have in the housing market is going to be
a very long, protracted affair,'' McCulley said in an interview
from Pimco's office in Newport Beach, California. ``That's going
to lead the average consumer to recognize that he needs to save
more out of current income, which is going to weaken consumption
in the economy.''


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Dollar May Drop Versus Yen Before Report Forecast to Show Cooler Inflation

(Bloomberg) -- The dollar may drop against the yen
before U.S. government reports forecast to signal cooling
inflation and waning foreign demand for U.S. securities.

The U.S. currency dropped to a 26-year low against the
pound and the weakest since 1985 against the New Zealand dollar
yesterday on concern that weakness in U.S. housing will curb
economic growth and push the Federal Reserve to cut interest
rates. Investors bought yen yesterday in part on speculation
investors will exit risky trades because of mounting losses in
U.S. securities backed by subprime mortgage loans.


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Government Bonds Rise Worldwide After Moody's Cut Ratings on Subprime Debt

(Bloomberg) -- Government bonds rose around the
world after Moody's Investors Service cut the ratings on $5.2
billion of bonds backed by subprime mortgages, spurring demand
for the safest assets.

Benchmark 10-year Treasuries and German bunds gained for a
third day and Japanese government bonds had their biggest rally
in more than 10 months on speculation a deepening U.S. housing
slump will slow the world's biggest economy.


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Pound Rises Versus Dollar to 26-Year High on Rates View, Subprime Concern

(Bloomberg) -- The pound traded at its highest in 26
years against the dollar on speculation the Bank of England will
raise interest rates further this year while a slowdown in the
U.S. housing market keeps the Federal Reserve on hold.

The currency yesterday gained by the most in three months
after Standard & Poor's said it may cut ratings on $12 billion of
bonds backed by U.S. subprime mortgages. The pound has gained 3.5
percent against the dollar this year as investors bought the U.K.
currency to take advantage of the highest rates among the Group
of Seven industrialized nations.


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U.S. 10-Year Yield Is Near One-Week Low as Moody's Lower Subprime Ratings

(Bloomberg) -- U.S. 10-year Treasury yields held
near a one-week low after Moody's Investors Service cut the debt
ratings on $5.2 billion of bonds backed by subprime mortgages.

Ten-year notes yesterday advanced for a second day as
Moody's announcement fed demand for the relative safety of
government debt. Standard & Poor's said it may lower the rating
on $12 billion of securities, citing a deepening decline in the
U.S. housing market.


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UPDATE 1-U.S. construction spending up 0.9 percent in May

(Reuters) - Economists polled ahead of the report were expecting a much
weaker 0.1 percent rise in the overall construction spending
figure.




Spending on private homebuilding, however, fell 0.8 percent
to a seasonally adjusted $549 billion annual rate, the 15th
consecutive monthly decrease as U.S. housing market troubles
continue.


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FACTBOX - CDOs: ABS and other sundry collateral

(Reuters) - While there are many kinds of debt used as collateral, the
surge in subprime bonds as a percentage of total ABS has led to
their domination in many CDOs. Investors watching the prolonged
U.S. housing slump cause rising delinquencies and losses on the
ABS expect CDO values and ratings will soon be affected.




Losses at two Bear Stearns Cos. hedge funds after
bad bets on subprime came to a head in June as bank creditors
tried to extricate their investments in the fund. Most of the
funds' CDO assets put up for sale never found buyers at prices
acceptable to the banks, fueling speculation that ABS CDOs
would suffer widespread markdowns, sources said.


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Yen May Extend Gains Against Euro and the Dollar as Investors Reduce Risks

(Bloomberg) -- The yen may gain for a fourth day
against the euro and dollar on speculation investors will pare
riskier assets amid concern about a slumping U.S. housing market.

Investors this week have reduced the so-called carry trades,
in which they borrow yen to buy higher-yielding assets in stocks
and emerging-market debt, as the risk of defaults on U.S.
subprime mortgages increases. Data is forecast to show Japan's
industrial production gained in May, which may add to yen buying.


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Asian Stocks Fall for a Third Day on U.S. Spending Concern; Toyota Drops

(Bloomberg) -- Asian stocks fell for a third day on
concern a slump in U.S. housing will curb spending in the
region's biggest export market.

Toyota Motor Corp., which made almost two-thirds of its
sales outside Japan last year, and Hon Hai Precision Industry Co.,
whose customers include Apple Inc., led declines after sales of
previously owned homes fell to the lowest in almost four years.


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Mortgage Rate Increase Pushes U.S. Housing Market, Economy to 'Blood Bath'

(Bloomberg) -- The worst is yet to come for the
U.S. housing market.

The jump in 30-year mortgage rates by more than a half a
percentage point to 6.74 percent in the past five weeks is
putting a crimp on borrowers with the best credit just as a
crackdown in subprime lending standards limits the pool of
qualified buyers. The national median home price is poised for
its first annual decline since the Great Depression, and the
supply of unsold homes is at a record 4.2 million, according to
the National Association of Realtors.


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Gold, Silver Climb on Speculation U.S. Housing Slump to Pressure Dollar

(Bloomberg) -- Gold and silver in New York rose on
speculation a slump in the U.S. housing market will hurt growth,
weakening the dollar and boosting the appeal of precious metals
as alternative investments.

Gold generally moves in the opposite direction of the
dollar, which fell for the third session in a row against a
basket of six major currencies. A government report showed home
construction slowed in May, a signal the Federal Reserve may not
raise interest rates anytime soon. Gold has gained 4.2 percent
this year, while the dollar index fell 1.1 percent.


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UPDATE 1-Subprime mortgage bond index drops to record low

(Reuters) - Losses at a hedge fund run by top mortgage bond dealer Bear Stearns Cos. have captivated the industry as investors prepare for possible sales of low-rated assets from the fund. Bear Stearns last week sold about $4 billion of the fund's best bonds to cover losses, and today is meeting with creditors and private equity firm Blackstone Group to prevent its collapse, according to people familiar with the situation.




A government report on Tuesday showed U.S. housing starts set an annual pace of 1.474 million units in May, off from the 1.506 million rate in April. The National Association of Home Builders on Monday said its confidence index is at its lowest level in 16 years.


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Futures dip ahead of data, Yahoo up

(Reuters) - Shares of Internet media company Yahoo Inc. traded up more than 5 percent in Europe, however, so a bounce in technology could cushion the market.




Data on U.S. housing starts is due before the bell, a day after a survey showed sentiment among U.S. home builders fell in June to the lowest since February 1991.


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Dollar Set for Weekly Gain as Fed Interest-Rate Cut Expectations Diminish

(Bloomberg) -- The dollar headed for a fourth weekly
gain against the euro as signs of a recovery in the U.S. housing
market prompted traders to scale back expectations the Federal
Reserve will reduce interest rates.

The U.S. currency is poised for the longest stretch of weekly
gains in 15 months after a report showed new-home sales increased
the most in 14 years. Industry figures today will probably show
sales of previously owned homes held steady last month, after
slumping by the most in 18 years in April, according to a
Bloomberg survey of economists.


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