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.''


Read more at Bloomberg Bonds News

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.


Read more at Bloomberg Currencies News

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.


Read more at Bloomberg Bonds News

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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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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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.


Read more at Bloomberg Commodities News