Market Morning: Sickly Europe

NEW YORK (TheStreet) -- Worries over sovereign-debt contagion have European investors sick early Friday.

Stocks in Europe were lower across the board, Asian stocks closed down -- Japan's Nikkei 225 fell 1.2% and Hong Kong's Hang Seng declined 1.7% -- and U.S. futures were suggesting a flat to slightly higher open.

France and Germany have differences of opinion over the role of the European Central Bank. France wants more action from the ECB, Germany doesn't.

ECB President Mario Draghi wants the bickering to stop and called Friday for the "the urgent implementation" of the firepower of Europe's rescue fund, The Associated Press reported.

European leaders last month agreed on a second bailout package for Greece and measures to increase the firepower of the €440 billion ($600 billion) European Financial Stability Facility.

Meanwhile, British Prime Minister David Cameron will travel to Berlin to meet with German Chancellor Angela Merkel. Merkel is seeking support for changes to European Union treaties that are meant to strengthen the eurozone. But she needs approval from all 27 members of the EU.

The U.K. is is a member of the European Union but doesn't use the euro.

The bond markets in Italy and France were calmer Friday. Italy's 10-year yield rose slightly to 6.72%; Spain's yield dipped to 6.35%.

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Gold prices were stabilizing Friday after a dramatic selloff, which dragged gold down 3% as well as stocks and other commodities.

Gold continues to be at risk of liquidation if investors need to raise cash fast. Gold prices were up a modest $9, but more than two-thirds of the rally was driven by a weaker U.S. dollar and only a small fraction driven by real investor demand, according to Kitco's gold index.

Gold is also still dealing with the after effects of MF Global's (MFGLQ.PK) bankruptcy, with traders unable to pony up more cash to trade their future positions at another firm possibly liquidating some positions. Margin requirements at the CME -- the amount it costs to trade a futures contract -- had been suspended for MF clients but were re-installed on Thursday further pressuring gold prices as traders needed cash.

Buying remains scarce Friday as traders also even out their positions into the weekend and a shortened holiday week not wanting to be caught betting heavily against or for gold.

-- Alix Steel

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Speaking of MF Global, The Wall Street Journal reported Friday that regulators discovered new details indicating MF Global Holdings Ltd. shifted hundreds of millions of dollars in customer funds to its own brokerage accounts in the days before it field for bankruptcy.

The Journal cited people familiar with the matter.

The moves by MF Global could violate regulations that stipulate commodities brokers can't mix customer funds with brokerage funds, the newspaper noted.

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Deutsche Boerse and NYSE Euronext (NYX) said Friday they would offer concessions on their derivatives businesses in an attempt to get approval of their $10 billion merger.

The European Union's competition watchdog is balking at approving the deal.

But the companies said they sent a proposal to the EU that aims at "eliminating the existing overlap in European single equity derivatives and ensures continued competition in European interest rate and equity index derivatives."

Deutsche Boerse announced in February it would buy NYSE Euronext, the owner of the New York Stock Exchange and other global exchanges.

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Heinz(HNZ), the ketchup maker, is expected by analysts to report on Friday second-quarter adjusted earnings of 80 cents a share on revenue of $2.92 billion.

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Amazon(AMZN) is poised to launch its own smartphone by holiday 2012, according to Citigroup analyst Mark Mahaney.

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Actors Ashton Kutcher and Demi Moore said Thursday they were getting a divorce after six years of marriage.

-- Written by Joseph Woelfel

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