LONDON (Thomson Financial) - US SUMMARY: Stocks fall as oil soars on Nigeria worries

Index Change Pct change

*DJIA 12919.40 -42.58 -0.33

*Nasdaq 2523.67 -2.72 -0.11

*S&P 500 1480.93 -3.42 -0.23

Dow Future 12974.00 -45.00 -0.35 (2014 GMT)

Nasdaq Future 1866.50 +3.50 +0.19 (0332 GMT)

S&P Future 1488.20 -0.10 -0.01 (0343 GMT)

eur-usd 1.3576 -0.0026

Brent crude

Nymex 65.89 usd +1.78 usd

10 yr US

treasury 4.65 pct

* yesterday’s close

STOCKS: Stocks retreated from historically lofty levels Monday as rising oil prices chilled investor enthusiasm for strong earnings reports and new takeover activity. The Dow Jones industrials came within 17 points of 13,000 before

pulling back.

The blue chip index hit a new trading high of 12,983.92 after British bank Barclays PLC said it will acquire Dutch bank ABN Amro NV for 91.16 bln usd, and British drugmaker AstraZeneca PLC said it will buy US drugmaker MedImmune

Inc for 15.6 bln usd. Though the US economy has been slowing and the dollar has been weakening, global takeover activity remains robust, giving investors reason to believe US companies will keep finding ways to pull in profits. But

the market was still vulnerable to a downturn. Corporate growth is slower than it has been in years, though, and investors grew cautious as they awaited more clues about the direction of the economy. And so Monday, a spike in crude

oil prices above 65 usd a barrel reignited inflation worries, and reminded Wall Street that other economic obstacles exist as well, such as a weak dollar and slow housing market.

Analysts said investors were trading deliberately — and avoided succumbing to pre-13,000 euphoria. Although the Dow passed 12,000 only last October, there appeared to be little of the kind of frenzy that drove the market’s major

indexes to record after record during the dot-com boom.

Corporate profits have been cooling after more than three years of double-digit growth, but nonetheless have been generally stronger than expected so far this earnings season.

After the closing bell, Texas Instruments Inc issued better-than-expected first-quarter results. Shares closed down 9 cents at 32.41 usd in the regular session, but surged 8.6 pct to 35.20 usd in after-hours trading.

Other earnings reports from companies including Hasbro Inc, Novartis SA and Kimberly-Clark Corp came in strong. Hasbro rose 2.33 usd, or 7.7 pct, to 32.54 usd, while US shares of Novartis fell 39 cents to 57.44 usd. Kimberly-Clark fell

84 cents to 71.10 usd.

Merger-and-acquisition activity continues to surge. Barclays’ buy of ABN Amro would be the world’s biggest bank deal, and will lead to ABN Amro selling its US unit, LaSalle Bank, to Bank of America Corp for 21 bln usd. Bank of

America fell 53 cents to 50.51 usd. MedImmune, AstraZeneca’s takeover target, rose 8.56 usd, or 17.8 pct, to 56.57 usd. AstraZeneca fell 3.13 usd, or 5.3 pct, to 55.91 usd.

Later this week, investors will see results from six more of the Dow component companies, as well as data on the housing market, durable goods, gross domestic product and consumer confidence.

FOREX: The dollar rose slightly against the euro and British pound on Monday, but is still trading at historically low levels versus those currencies.

The dollar’s recent drop is not necessarily bad for the US economy; it makes US goods comparatively cheaper and therefore more attractive to foreign importers. However, a weaker dollar reduces its allure as an investment currency,

especially as interest rates rise in other countries.

BONDS: US Treasury prices rose as stocks fell. The yield on the benchmark 10-year Treasury note fell to 4.65 pct from 4.67 pct late Friday.

OIL: Crude oil prices soared above 65 usd a barrel Monday on fears that escalating violence in Nigeria could result in supply disruptions, while gasoline prices climbed toward a seasonal peak.

Early estimates for draws on the country’s crude oil and gasoline stocks pushed prices higher, analysts said.

Last week, US gasoline inventories stood at the lowest level since October 2005 and were about 3 pct below the level at this time last year, said Citigroup Global Markets energy analyst Tim Evans. The price of gasoline on the futures

market and at the pump historically peaks ahead of the summer driving season — when concerns about supplies reach a crescendo.

Light, sweet crude for June delivery climbed 1.78 usd to settle at 65.89 usd a barrel on the New York Mercantile Exchange. The contract rose just shy of 66 usd earlier in the session, trading as high as 65.96 usd. Crude last topped 66 usd

a barrel on March 29.

June gasoline futures gained about 5 cents to settle at 2.16 usd a gallon. Last year, gasoline futures peaked at 2.505 usd a gallon on May 11, according to Evans.

On Monday, following government elections over the weekend in Nigeria, gunmen battled security forces in Nigeria’s southern oil region, leaving at least seven people dead in the area’s main city, police said. Traders pushed oil prices

higher on fears that political unrest and violence in that country — a main oil supplier to the US — would lead to further supply disruptions. Nigerian officials said the governing party candidate won presidential elections, but a top

opposition politician rejected the vote, alleging fraud. Observers of the US-based International Republican Institute pointed out irregularities in the voting.

The week leading up to the elections in Nigeria was chaotic and bloody. At least 49 people have died in election-related violence since April 14. Rising violence since early 2006 in the unruly southern region where crude is pumped

has cut Nigeria’s daily production by about one quarter and sent global crude prices higher. More than 150 foreigners have been kidnapped over the past year.

Oil prices were also supported by strong demand from China, the world’s second-largest oil consumer, which reported Monday that March crude oil imports rose 8.8 pct year on year. Analysts expect demand to remain strong if Beijing is unable to cool off the country’s sizzling economy, which grew 11.1 pct in the first quarter. Meanwhile, in Belgium, workers at four refineries that push through 800,000 to 1 mln barrels of oil a day are threatening to strike as early

as May 9 after wage talks broke down last week.

METALS: Gold prices fell Monday as a recovery by the dollar lessened the precious metal’s appeal as an alternative investment.

Gold futures for June delivery fell 1.60 usd to 694.20 usd an ounce on the Comex division of the New York Mercantile Exchange.

EVENTS:

Forest Laboratories Q4 results. EPS forecast 71 cents vs 28 (before market opens)

Pepsi Bottling Group Q1 results. EPS forecast 10 cents vs 14 (before market opens)

AT&T Q1 results. EPS forecast 61 cents vs 52 (1600 GMT)

Du Pont EI De Nemours & Co Q1 results. EPS forecast 1.03 usd vs 93 cents (1600 GMT)

Sun Microsystems Inc Q3 results. EPS forecast 1 cent vs LPS 6 cents (1600 GMT)

Northrop Grumman Q1 results. EPS forecast 1.14 usd vs 1.02 (1600 GMT)

Advance GDP by industry, 2006 (1230 GMT)

April consumer confidence (1400 GMT)

March existing home sales (1400 GMT)

April Richmond Fed Survey (1400 GMT)

ASIA SUMMARY: Stocks edge lower on Wall Street slide; oil prices down

Index Change Pct change

Nikkei 225 17344.86 -110.51 -0.63 (0336 GMT)

S&P/ASX 200 6184.90 -24.30 -0.39 (0336 GMT)

Straits Times 3367.06 -21.42 -0.63 (0337 GMT)

Hang Seng 20503.89 -52.68 -0.26 (0337 GMT)

BSE Sensex 13916.83 -11.50 -0.08 (0430 GMT)

usd-yen 118.408 -0.16 -0.14 (Intra-day trade)

usd-sgd 1.5147 -0.0025 -0.16 (Intra-day trade)

usd-inr 41.6575 -0.005 -0.012 (Intra-day trade)

10-year JGBs 1.665 pct -0.01 -0.89 (Intra-day trade)

Brent North Sea 67.93 usd -0.22 -0.32 (Intra-day trade)

crude for June

STOCKS: Asian shares edged lower today, following the overnight fall on Wall Street. Tokyo shares ended the morning session lower, mirroring Wall Street’s weakness. Many investors had stayed on the sidelines to wait for the announcement of the earnings of major companies. Yahoo Japan, Elpida Memory, KDDI and Nikko Cordial will report today their results for the fiscal year ended March 31, while Canon will release its results for the January-March quarter. Hong Kong shares were lower in morning trade, tracking Wall Street’s falls overnight as a spike in crude oil prices sparked fresh inflation worries. The sentiment was also hit by declines on the Japanese market. Manila shares slipped in early trading and showed its concern about the government’s higher-than-expected budget deficit in the first quarter. Indian shares opened slightly lower as the market awaits its central bank’s annual monetary and credit policy announcement today.

BONDS: Japanese government bond prices ended the morning session mostly higher, led by short-covering in the light of the softer performance of the equity market. Market expectations that today’s auction of 20-year government bonds would go smoothly had also lent support to the debt market. But, overall, trading was subdued, with investors waiting for new leads from economic data due to be released later in the week.

FOREX: The US dollar was trading mixed against major currencies in Sydney trade, keeping to a tight range ahead of key data releases this week which are expected to provide further insight on the state of the US economy. While the dollar remains out of favour as investors chase higher yielding currencies, it has been showing a slightly firmer trend helped by talk that the worst of the US housing downturn may be over. Tonight’s Conference Board report on April consumer confidence and the March existing home sales report will set the tone for a busy data week.

OIL: Prices edged lower in Asian trade on profit-taking in a market nervous over lost production in Nigeria, the world’s sixth biggest oil exporter. At 0249 GMT, New York’s main oil futures contract, light sweet crude for delivery in June, was 15 cents lower at 65.74 usd a barrel from 65.89 usd in late US trades overnight, when the contract jumped 1.78 usd. Ruling party candidate Umaru Yar’Adua won Nigeria’s presidential election on Monday but foreign observers questioned the credibility of the vote that, along with state polls the week before, claimed at least 200 lives. Opposition parties rejected the result, raising the political risk level in a major oil producer.

METALS: Gold continued lower yesterday, as the dollar clawed back ground lost against the major currencies last week. The metal remained near fresh 11-month highs hit earlier, however, and analysts remained upbeat its prospects. “In the precious sector we remain bullish on gold prices. Gold is biased to head towards the 700-715 usd an ounce level in the second and third quarters,” said JP Morgan analyst Michael Jansen. Separately, gold was underpinned by upbeat sentiment in the platinum and palladium market. Copper rose yesterday as robust Chinese imports fuelled supply fears in light of low global stocks. However, prices have not yet revisited seven-month highs hit last week as supply fears from Indonesia eased after a strike at Freeport McMoRan’s Grasberg mine in Indonesia was called off after workers were offered a pay rise. Nickel was sharply higher yesterday amid critically low stocks. Prices rose in spite of a small 18-tonne rise in stocks stored in LME

warehouses, as reported by the LME. Inventories are still so low that they would not satisfy a day’s worth of global consumption.

EVENTS:

Australia Q1 CPI

BHP Billiton Q3 production, development and exploration report

Australia’s AXA Asia Pacific Holdings Q1 business inflows report

Australia’s Santos Q1 production report

Caltex Australia AGM

Japan March corporate services price Index

Japan 20-year govt bond auction

Japan major automakers March global output

Japan’s KDDI FY results

Japan’s Elpida Memory FY results

Japan’s Canon Q1 results

Yahoo Japan FY results

Japan’s Fanuc FY results

Japan’s Nikko Cordial FY results

SKorea’s Samsung SDI Q1 results

Hong Kong-listed Lingbao Gold FY results

Hong Kong-listed Sinogas FY results

Hong Kong-listed SMIC FY results

Taiwan March export orders

Taiwan March industrial output

Taiwan’s AU Optronics Q1 results

Taiwan’s Taishin Financial Q1 results

Singapore’s Keppel T&T Q1 results

Singapore’s MobileOne Q1 results

Singapore Petroleum Q1 results

Singapore’s SMRT Corp FY results

Philippine 3-year Treasury bond auction

Indonesia’s Bank NISP EGM and AGM

Indonesia’s Berlian Laju Tanker AGM

Indonesia’s Lippo Bank AGM

India’s HDFC Bank FY results (0330 GMT)

India’s Maruti Udyog FY results (0430 GMT), press conference (0550 GMT)

Reserve Bank of India press conference on Monetary Policy (0800 GMT)

EUROPE SUMMARY: London shares close weaker but off lows; AstraZeneca down on bid talk

Index Change Pct change

*FTSE 6479.70 -7.10 -0.11

*DAX 7335.62 -6.92 -0.09

*CAC 5917.32 -21.58 -0.36

UK10-year

Bond 92.24 +0.1

UK 30-year

Bond 95.76 +0.06

stg-usd 2.0016 -0.0028

eur-usd 1.3578 -0.0022

sfr-usd 1.2084 +0.0004

Brent crude

ICE 68.15 usd +1.66 usd

* yesterday’s close

STOCKS: Leading shares closed weaker Monday, but off lows, with AstraZeneca falling back after the group’s acquisition plans of US MedImmune disappointed. Meanwhile Aviva PLC, the UK’s biggest insurer, is expected to report 11 pct growth in first quarter sales and profits today, buoyed by a first contribution from 2006 acquisition AmerUs. Plans for its 4 bln stg property portfolio and progress on the possible disposal of leisure arm David Lloyd are likely to overshadow group performance when Whitbread PLC announces its full-year results today. Steel group Outokumpu Oyj is expected to report a jump in first-quarter earnings, buoyed by high stainless steel prices, though investor interest in today’s report will be on the guidance for the rest of 2007, following the recent downturn in the sector. Banco Comercial Portugues first quarter to March results due today are expected to be boosted by flat costs, though a year-on-year comparison of the bottom line will reflect the lack of one-time gains, analysts said. Banco BPI is expected to report a solid set of first-quarter results today showing growth in net interest and trading revenues, while the star revenue performer is expected to be commissions, analysts said. Dutch chemicals and coatings group Akzo Nobel NV is expected today to report uninspiring first quarter results due to lower revenues at its Chemicals unit, but the focus will be on what Akzo plans to do with the 11 bln eur in cash from the sale of Organon BioSciences and restructuring at its Coatings unit. Austrian power utility Verbund AG is expected to report increased figures for the first quarter 2007 today thanks to improved water supply for electricity production. The Italian eyewear manufacturer Luxottica SpA is expected to release a weak set of first-quarter results following a decline in retail sales due to bad weather in the US and the dollar’s slide against the euro.

BONDS: European government bonds lost much of their early gains on Monday and settled into a range as investors took profits during a period of quiet newsflow and ahead of key US data today. Fears that the weakness of the US sub-prime mortgage market may have spread to the wider housing market will keep investors very sensitive to any downside surprises, analysts said. Another possible reason for the back-track in bond prices may be the improvement in equity prices on the US open. Meanwhile, in the UK, gilts also lost much of the ground gained in the morning, when high money supply growth data offset some mixed mortgage lending figures. M4 money lending rose 12.8 pct, above the 12.5 pct expected by the market, while mortgage lending eased somewhat from high levels. Today, eyes will be on a testimony by all the Bank of England rate-setters before the Treasury select committee. The market will be sensitive to views on how much further rates need to rise as well as the BoE’s outlook on inflation after a surprisingly high number was published last week.

FOREX: The euro came off earlier lows against the dollar yesterday but remained weak on profit-taking after the currency hit two-year highs last week and after dovish comments from the Greek representative on the European Central Bank. The euro earlier fell to a low of 1.3539 against the dollar. Although it has recovered from those levels it remains below the 1.36 usd mark.

Elsewhere, the pound edged back up above 2 usd after earlier touching six-day lows against the dollar of 1.9971 usd. The pound closed at 2.0016 according to Thomson Markets. The currency came under pressure after a report by the Ernst & Young ITEM Club overnight, which said the UK is “skating on thin ice” with its exceptionally high debt levels. It also warned that individuals and businesses are “overly relaxed about risk”.

METALS: Copper rose as robust Chinese imports fuelled supply fears in light of low global stocks. At 2.06 pm copper for three-month delivery stood at 7,945 usd, against 7,955 usd at the close on Friday. Also underpinning prices, copper inventories stored in LME-certified warehouses across the globe fell 925 tonnes to 147,100 tonnes, said the LME in a daily report. Nickel was sharply higher amid critically low stocks. Prices rose in spite of a small 18-tonne rise in stocks stored in LME warehouses, as reported by the LME. Nickel was up at 49,230 usd from 48,800 usd. In other metals, zinc was up at 3,675.75 usd against 3,600 usd, lead was at 1,970 usd against 1,930 usd, aluminium was up slightly at 2,845 usd against 2,842 usd. Tin rose to 13,850 usd against 13,675 usd at Friday’s close. Gold continued lower as the dollar clawed back ground lost against the major currencies last week.

Brent crude for June delivery jumped 1.66 usd to settle at 68.15 usd a barrel on the ICE Futures exchange in London.

EVENTS:

UNITED KINGDOM

INTERIMS

Associated British Foods

Bionostics

BP (Q1)

Character Group

York Pharma

FINALS

Formjet

Ukrproduct Group

Whitbread - Analysts expect pretax profit in the range of 204-212 mln stg, up from 181.1 mln last year.

AGMs

Bradford & Bingley

Brit Insurance

Datamonitor

Schroders

Northern Rock

NEW BUSINESS FIGURES

Aviva (Q1) - Aviva will report new business sales for the three months to March 31 of 7.527 bln stg on a Present Value of New Business Premiums basis, up from 6.788 bln stg in the same period last year, according to a consensus of analyst forecasts supplied by the company.

PRODUCTION REPORTS

BHP Billiton (March)

TRADING STATEMENTS

Carphone Warehouse (Q4)

ECONOMICS

UK March PSNCR (0930 BST)

CBI quarterly industrial trends survey (1100 BST)

AUSTRIA

Verbund Q1 results - According to a consensus of analysts polled by Thomson Financial News, revenues are expected to come in at 798.8 mln eur in the first quarter 2007 after 783.5 mln eur adjusted by eco-electricity processing (876.3 mln eur unadjusted) in the same period in 2006.

BENELUX

Akzo Nobel Q1 results - Rabo Securities said in a note to clients it expects group sales - excluding Organon - to fall to 2.443 bln eur from 2.748 bln eur in the same period last year (excluding Organon’s 644 mln eur in sales).

ING AGM (0930 GMT)

Belgian April business confidence indicator (1300 GMT)

Hagemeyer AGM

Endemol Q1 trading update

InBev AGM (0900 GMT). Press conference (1030 GMT)

Agfa-Gevaert AGM

Bekaert annual report published

GBL shareholders meeting

Euronav AGM

EASTERN EUROPE

Elmu AGM

Emasz AGM

FRANCE

L’Oreal Q1 sales; AGM (0800 GMT)

Danone Q1 sales (0530 GMT). webcast conference (0800 GMT)

Casino Q1 sales

Michelin Q1 sales

STMicroelectronics Q1 results (after US close)

GERMANY

Continental AG AGM

Volkswagen discussion on climate production, Volkswagen Automobil Forum, Berlin (0900 GMT)

SAP CEO Kagermann speaks at SAPPHIRE product press conference, Atlanta (1430 GMT)

GREECE

Mytilineos Holdings AGM

ITALY

Luxottica Q1 results. Conference call (1600 GMT) - Net profit forecast 120.3-125.9 mln

April consumer confidence (0730 GMT)

Unipol AGM (0830 GMT)

February retail trade (0900 GMT)

Lottomatica AGM (1st call)

Campari AGM (1st call)

Bulgari AGM (1st call)

PORTUGAL

BPI Q1 results (after market closes). News conference - Forecasts for net profit range from 82 mln eur at Banif to 82.3 mln eur at Lisbon Brokers and 84 mln eur at Caixa BI, up from 74.3 a year earlier.

BCP Q1 results (after market closes). News conference - Forecasts for net profit range from 184 mln eur at Lisbon Brokers to 186 at Caixa BI, down from 199 mln a year earlier. However, excluding 34 mln eur of one-time items a year earlier, proforma net profit will have risen by over 12 pct.

Novabase Q1 results (after market closes)

Galp board meets to decide on 2006 div proposal

SCANDINAVIA

Finnish March labour force survey (0600 GMT)

Fortum Q1 results (0600 GMT) - The company is to report first quarter pretax profit of 683 mln eur versus 492 mln eur last year

FOEX Pulp & Paper price statistics (0900 GMT)

Jyske Bank Q1 earnings (0800-0900 GMT)

Sydbank Q1 earnings (1000-1100 GMT)

UPM Kymmene Q1 results (1100 GMT)

Kone Q1 results

M-real Q1 results - The company’s quarterly pretax profit is seen growing to 76 mln eur, from 16 mln eur a year earlier, with expectations ranging from 48 mln eur to 94 mln eur, a Kauppalehti/SME poll of 16 analysts shows.

Outokumpu Q1 results (1000 GMT) - January-March pretax profit is seen coming in at 373 mln eur, up from 60 mln eur a year ago, according to analysts polled by Kauppalehti/SME.

Oriola-KD Q1 results

OMX Q1 results

MTG Q1 results

TeliaSonera Q1 results - TeliaSonera AB is expected today to report a first-quarter underlying EBITDA of 7.716 bln skr, little changed from the year-earlier 7.706 bln skr, on continued margin pressure but with cost cuts beginning to bite, analysts told Thomson Financial News.

SKF Q1 results - SKF AB is expected to report today a 6.3 pct rise in first-quarter pretax profits to 1.700 bln skr, on the back of continued strong demand for industrial products, with investor focus seen centring on the outlook, according to a survey of analysts by Thomson Financial News and SME Direkt.

Saab Q1 results

Subsea 7 Q1 results - Operating profit forecast 36 mln usd vs 45 mln; sales 430 mln vs 399 mln

Elisa Q1 results

SPAIN

Spain Gas Assn (Sedigas) conference on LNG (Barcelona 1st day)

CNMV chairman news conference for annual report (1530 GMT); CNMV chairman appears in Parliament

SWITZERLAND

Compagnie Financiere Richemont FY sales - Forecast 4.818-5.000 bln eur vs 4.308 bln

Micronas Semiconductor Q1 results

OC Oerlikon Q1 results

Bucher Industries AG Q1 sales

Swiss March watch exports

Swiss March trade surplus

UBS’ March Switzerland private consumption index

EUROPEAN UNION/EURO AREA

Euro zone Feb industrial orders (0900 GMT)

ECB main refi result (0915 GMT)

EU rules on inquiry into acquisition by General Electric Co of Abbott Laboratories’ diagnostics business

EU presents report on aid to the coal industry

EU court judgement on Netherlands’ breach of community law on ‘open skies’ agreement

TFN.newsdesk@thomson.com

ami/npr/jro

COPYRIGHT

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The copying, republication or redistribution of AFX News Content, including by framing or similar means, is expressly prohibited without the prior written consent of AFX News.

The problem: Can I save enough to buy my first home?

Cathy Green, 26, faces a challenge familiar to many young professionals.

She wants to get on the property ladder in the next year but fears that rising interest rates and sky-high prices will pull the bottom rung out of reach.

“My parents have offered to help out with the deposit, and I have been told I can get an interest-only mortgage of 120,000 at a fixed rate for three or five years,” she says. “With this in mind, I’m looking at properties up to 170,000 in south-east London.”

Cathy earns around 25,000 a year as a trainee clinical psychologist, and is in the first year of a three-year course at King’s College London. For now, she is fortunate to be able to rent a room for 300 a month in a flat owned by her father in Chelsea.

However, she has debts to deal with. On top of 10,000 in student loans, she owes 4,000 on an MBNA credit card, paying interest at an annual percentage rate (APR) of 15.9 per cent.

“I am not actively using a credit card at the moment,” says Cathy. “I put 100 a month towards paying off this debt, although it’s a struggle.”

On the plus side, she has 5,000 in a Nationwide Building Society instant access cash individual savings account (ISA), earning 5.1 per cent.

Another 5,000 was invested on her behalf 10 years ago and is split between shares in Boots, ITV, the Bankers Investment Trust and the Merchant Trust. She has no idea what this investment is worth.

Cathy pays 6 per cent of her wages into the NHS final salary pension scheme.

The cure: Cut out luxuries and start putting cash aside

While Cathy is lucky to get parental help to buy her first home, our panel of independent financial advisers (IFAs) agree that she still needs to work out a budget - and stick to it - to save as much as possible towards the property purchase.

“With a monthly income after tax of around 1,500 and regular outgoings of about 600, she is spending about 900 on living costs - and can afford to save more,” says Keith Churchouse of IFA Churchouse Financial Planning.

Property

A 50,000 deposit should give Cathy access to some of the best mortgage deals, says Ben Yearsley of IFA Hargreaves Lansdown, and mean that she avoids the higher lending charge levied by some banks and building societies to protect themselves if borrowers have only a small amount of equity in a property.

As she’s on a tight budget, a fixed-rate mortgage, giving her set monthly repayments, is a good option. At the moment, a loan of 120,000 taken out over 25 years at 6 per cent would cost about 600 a month on an interest-only basis.

But Mr Yearsley warns that with this type of mortgage, she will not be paying off any of the capital, and urges her to switch to a repayment deal once she qualifies as a psychologist and her income has increased.

Sadly, she may find it tricky to find a one-bedroom flat in London for 170,000 unless she is prepared to be flexible about the location and the standard of property she is seeking.

Debt

If possible, Cathy should put more than 100 a month towards paying off her credit card debt, says Mr Yearsley, who also urges her to cut up her credit card.

Frances Goldspink of IFA Lucas Fettes suggests she transfer her balance on to a new card offering an interest-free deal. With Barclaycard, for example, she wouldn’t have to pay interest on debt transferred from another card until July 2008.

Since the interest rate on student loans is linked to inflation - and stands at only 2.4 per cent - Cathy should not worry about clearing this debt immediately, Mr Churchouse adds.

Savings/investments

Cathy already has the “bare bones of an investment portfolio” with her investment trusts and shares, Ms Goldspink notes. However, she may be better off selling her shares, using this money to pay off her credit card debt and then putting the remainder into an ISA.

“The only bright spark in the investments she holds are the Boots shares, which have performed well recently thanks to several takeover offers,” says Mr Yearsley.

“But if you are going to hold a portfolio of shares, you really need to have 15 to 20 different companies to get a reasonable spread.”

Retirement

Cathy is fortunate to have access to the NHS final salary pension plan.

“This is a great pension to have,” Mr Churchouse says. “She should review how much she contributes in the future when her financial situation is more settled - to ensure that she is making the most of it.”

If you would like a makeover, write to Sam Dunn at The Independent on Sunday, Independent House, 191 Marsh Wall, London E14 9RS, or email s.dunn@independent.co.uk

WASHINGTON - The heads of trade groups representing mortgage bankers and brokers traded barbs Tuesday over who’s to blame for the housing market’s woes.

The head of the mortgage banking industry’s trade group claimed brokers profited from a home loan boom but didn’t do enough to examine whether borrowers could repay.

Amid increasing evidence of financial distress for homeowners with weak, or subprime, credit histories, John Robbins, chairman of the Mortgage Bankers Association, says he is “mad as hell” at “a few unethical actors” that have sullied his profession’s reputation.

“Who made this mess?” Robbins asked. “The short-term folks. People who get a commission when the deal happens. For them, it’s the number of loans that counts. Good loan? Bad loan? Who cares? For them it’s all about their commission,” he added.

In reaction, the president of the National Association of Mortgage Brokers, e-mailed a statement that said: “It is truly unfortunate (Robbins) has attempted to shift blame away from Wall street, federally chartered banks, state-chartered lenders and underwriters for the subprime situation we find ourselves in today.”

Harry Dinham, president of the brokers’ group, added that congressional hearings have shown that “most residential mortgage loans are quickly sold into the secondary market in fact most lenders are really just brokering the transaction but afraid or ashamed to admit it,” he added.

In a lunchtime speech at the National Press Club, Robbins called for a national licensing system for mortgage brokers, which would help weed out “scam artists.”

The industry’s woes are confined to a small segment of the market, he said. About 5 percent of homeowners have subprime adjustable-rate loans that feature low “teaser” rates which can move sharply higher later. He estimates about half of those homeowners will be able to avoid default or foreclosure. If so, foreclosures among subprime borrowers will amount to 0.25 percent of U.S. homeowners, Robbins said.

“No seismic financial occurrence is about to overwhelm the U.S. economy,” he said.

Yet RealtyTrac Inc., an industry research firm, said last week that mortgage lenders foreclosed on 62 percent more U.S. homes in April than a year ago.

Home prices are falling too. The national median existing single-family home price in the first quarter was $212,300, down 1.8 percent from a year ago when the median price was $216,100, according to the National Association of Realtors. The median is a typical market price where half the homes sold for more and half the homes sold for less.

Earlier this month, Sen. Charles Schumer, D-N.Y. and two other senators introduced a bill that would mandate tougher federal standards for mortgage lenders. No hearing date has been set and the bill is under review by the Committee on Banking, Housing and Urban Affairs. House lawmakers are talking about introducing their own reform bill this summer.

Robbins warned against an overreaction by lawmakers that could cause the country to “revert to a time when without perfect credit you couldn’t buy a home.”

His speech comes a day after the Mortgage Bankers Association and four other industry trade groups banking industry trade groups endorsed mortgage reform principles.

Any legislation or new regulations should focus on lenders only being permitted to issue high-risk, home loans if they “reasonably believe” at the time the loan is made that borrowers have the ability to repay, the statement said. Mortgage terms should be “clearly disclosed” to consumers, and estimates of monthly payments that could quickly jump in later years should be made clearer, the groups said.

Banks say they are already stepping up efforts to assist borrowers who face default or foreclosure and tightening loan standards.

Federal Reserve Chairman Ben Bernanke last week said the central bank is considering tougher rules to reduce abusive home loan practices even though he believes the economy should escape without significant harm from the problems in the subprime mortgage market.

In March, the Fed and the other four federal agencies that regulate banks, thrifts and credit unions proposed guidelines that call for strict evaluations of a borrower’s ability to repay and caution when lenders make subprime mortgage loans.

The guidelines have not yet been made final. The Fed plans a mid-June hearing on ways to curb abusive lending practices. 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.