The S&P 500 Financial Index slipped to its worst levels in two and a half years as the European sovereign concerns continued to apply selling pressure to the sector. The S&P Index dipped to 148 in early trade but is showing signs of holding 150. It is difficult to judge if this actual buying or if it is merely short covering on the heels of commentary from Fed Chairman Ben Bernanke and ECB President Jean Claude Trichet which were supportive of markets. Regardless, the persecuted sector was long overdue for a bounce as we head toward earnings season. Mixed commentary from UBS (better than expected) and DB (lowered expectations) will keep investors guessing until Q3 numbers begin to hit wires with JPM (10/13) kicking us off.

News of Note:

1) UBS AG at Bank of America Banking and Insurance CEO conference: Management made the following points at the conference: Co expects to report a modest profit attributable to shareholders for the quarter. Co's results will include a number of notable items, including the $2.3 bln loss related to the unauthorized trading incident in the Investment Bank; Co says the losses have been limited to $2.3 billion. Co has reduced its funded balance sheet by more than half since 2007. Owned credit gains, in the region of CHF1.5 bln due to a substantial widening of its credit spread, will have a positive impact on co's results. Co's exposure to the sovereign debt of European countries rated AA and below is limited. Its largest growth exposure to Italy is well-hedged and commensurate with the size of Italy's economy. The aggregate net exposure to all these countries is relatively small and not a cause for concern. Co announces net profit attributable to shareholders for the Q3 includes a $2.3 bln loss resulting from the unauthorized trading incident reported in September 2011. Positive net new money in wealth management businesses expected to be broadly similar to the second quarter of 2011. BIS tier 1 capital base expected to remain broadly in line with the prior quarter end. Co had previously indicated that the unauthorized trade could lead to a Q3 loss.

2) Deutsche Bank (DB) sees Q3 results for CB&S business to come in significantly lower than expected; sees EUR900 mln of exposure to Greek debt; to make EUR250 mln impairment to Greek debt in Q3.

3) BNP Paribas (BNPQY) at BofA/Merrill Banking & Insurance Conference: Have not completely decided a program for next year; the EUR 3 bln issuance a month has been in advance of next year's program; says the EUR 3 bln a month issuance is likely to continue in 2012... says it does not need to sell assets; starting to see market interest in some portfolios; can accomplish sales with a limited discount to the portfolios... Opinion on France- says it is a AAA rating; notes this was reiterated over the summer; convinced the French authorities 'are committed to taking the right measures to make the French sovereign debt solid and sustainable'; notes Belgium seeing good growth; Italy- says has taken significant fiscal measures to get into balance by 2013... the scenario of a default or selective default for European countries is not plausible; believes those who bet against it will be proven wrong by developments in the next few weeks/months... high probability that Mutual Funds will continue to invest in BNP given it's rating; says the bank is prepared for the worst (no return of money funds); says funding needs short term are satisfied even without the money market funds... says the present environment (especially with higher level of capital needed depending on your size) that it does not see a major consolidation and mega banks; also some liquidity constraints... says sovereigns need to instill more confidence in its handling of debt; important that central banks be ready to provide liquidity buffers... says banks that have insufficient capital.

4) IntercontinentalExchange (ICE) reported activity for September and the third quarter of 2011. ICE's futures average daily volume increased 23% in the third quarter of 2011 over the prior year, and grew 17% for the month of September 2011 compared to September 2010. ICE's OTC energy average daily commissions (ADC) were $1.54 million for the third quarter of 2011, up 13% from the prior third quarter.

5) NYSE Euronext (NYX): CNBC, quoting Reuters, reports that the EU to formally object to the NYSE Deutsche Boerse (DBOEY) deal.

6) Morgan Stanley: Ratings agency Egan Jones lowered MS to A from A+, puts on negative outlook; concern on exposure to French banks.

7) CME Group (CME) announced September volume averaged 14.0 million contracts per day, up 16 percent from September 2010. Total volume for September was 294 million contracts, of which 85 percent was traded electronically.