1 July crude fell $4.75 to $131.93 a barrel after China said it would boost state-set prices on gasoline, diesel and electricity by up to 18%, raising hopes of slower demand growth in that country. Iraq is nearing deals with Western oil giants to boost output. Those reports offset Nigerian supply disruptions.

Stocks Mixed On Crude, Techs

2 A sharp drop in oil prices sent the Nasdaq up 1.3%, the S&P 500 0.4% and the Dow 0.3%. The Philly chip index surged 2.5%. But the NYSE composite slipped 0.1% on weakness in energy and financials. Transportation and retail groups, sensitive to energy costs, led the market higher. Volume rose across the board. The 10-year Treasury yield rose 7 ticks to 4.22%.

Factory Index Weak, Prices Hot

3 The Philly Fed's mid-Atlantic manufacturing index fell 1.5 points in June to -17.1, the 7th straight negative reading and below views. The report's prices paid index shot up to a 28-year peak on soaring costs for oil and raw materials. Many factories are passing their expenses on to customers. Meanwhile, jobless claims dipped while leading indicators inched up.

Iraq Nears First Major Oil Deals

4 Iraq is close to its first big oil contracts since the '03 U.S.-led invasion to try to boost output, the country's oil ministry said. It would be a stop-gap move until Iraq OKs a nat'l oil law. Shell, BP, Exxon Mobil and Total were close to signing no-bid deals, the New York Times reported. They had deals with Iraq until nationalization in '72. Iraq's oil output recently hit a post-invasion high.

Citi Sees More Big Write-Downs

5 The No. 1 U.S. bank will take "substantial" Q2 write-downs on mortgage debt as well as more asset markdowns related to leveraged loans and bond insurers. Citi (NYSE:C - News) says Q2 CDO write-downs will be less than Q1's $3 bil. Citi wrote down total assets by $14 bil in Q1. Citi shares fell 5% early, ending down 1%. Other financials also rallied off daily lows.

Military Routs Afghan Militants

6 Afghan and NATO troops backed by warplanes ousted Taliban militants from villages near Kandahar, southern Afghanistan's main city, killing at least 56 fighters. NATO called the operation a swift success. The crisis erupted after 400 Taliban fighters escaped during a prison break. Local officials suspect most fighters fled before Afghan and NATO forces arrived.

Ex-Bear Execs Accused Of Fraud

7 Federal authorities indicted 2 of the investment bank's former managers for giving upbeat assessments on 2 hedge funds despite private misgivings. The funds, heavily invested in subprime mortgages, collapsed last year, costing investors $1.8 bil. Authorities have charged over 400 people since March, including dozens in the last 2 days, in their crackdown on mortgage fraud.

Larger Fed Role On Wall St. Eyed

8 Treasury Sec'y Henry Paulson said the Fed may need to offer emergency funding to a broader range of financial firms but it is vital to limit it. He said the Fed should have the right to demand quick info from Wall St. firms and other powers to protect fin'l market stability. Other fin'l regulators said they're stepping up supervision of brokerages and urged Congress for legal changes.

Obama Skips Public Funds, Limits

9 Abandoning his earlier pledge, Barack Obama won't take over $84 mil in federal campaign funding, thus letting him avoid spending caps they impose. Obama had said he would tap the funds if his GOP rival did, but Obama's camp claimed John McCain is already spending private funds. Obama has raised over $265 mil, double that of McCain.

Court: Worker Messages Private

10 A new ruling limits company monitoring of employee text and e-mail messages. A federal appeals court ruled Calif. police violated its officers' rights by getting a telecom to turn over text-messages sent on police devices. The ruling bars access to messages not on company databases, including 3rd-party-managed corporate e-mail accounts.