While you were sleeping: US jobless claims rise, oil jumps

Friday 20th February 2009

The number of Americans remaining on unemployment benefits for more than a week jumped by 170,000 to 4.98 million in the first week of February, the highest since at least 1967.

The number of continuing claims in the Labor Department report exceeded the 4.86 million forecast in a Reuters survey. Other figures showed wholesale costs rose 0.8% in January, or 0.4% excluding food and fuel. And a report from the Philadelphia Federal Reserve Bank showed manufacturing in its region had the biggest contraction in 19 years.

The Fed Bank's general economic index worsened to minus 41.3 this month, from minus 24.3 in January, the bank said today. The world's biggest economy will probably stay mired in recession until at least June, with a tepid revival beyond that, according to Federal Reserve Bank of Atlanta President Dennis Lockhart.

The US economy "is extremely weak" and faces obstacles that will probably "work against a strong rebound," he said in a speech in Birmingham, Alabama.

Christina Romer, chairwoman of the White House's Council of Economic Advisers, said the US economy may reach its low point in the second half of the year.

"Things will get worse before they get better," she said in a speech at George Washington University. "Positive growth" will return by the end of the year, she said.

California's state legislature voted for tax increases amounting ton US$13 billion and spending cuts to rein in a budget deficit has reached a record US$42 billion.

Tech stocks led a decline on Wall Street, with the Nasdaq Composite falling 1.5% to 1446.14. Hewlett-Packard fell 8% to US$31.35 after posting lower-than-expected first-quarter sales and trimming its earnings forecast on waning worldwide demand for personal computers. Intel Inc. fell 4% to US$12.80 and IBM declined 2.7% to US$89.13.

The Dow Jones Industrial Average fell 0.7% to 7506.73 and the Standard & Poor's 500 declined 0.4% to 785.15. The Nasdaq Composite fell 1.5% to 1446.14.

Citigroup fell 12% to US$2.57 and Bank of America declined 12% to US$4.01, leading the Dow lower.

Crude oil surged after a US Energy Department report showed stockpiles unexpectedly fell 138,000 barrels to 350.6 million barrels last week.

Crude oil for March delivery jumped 13% to US$39.15 a barrel on the New York Mercantile Exchange.

Copper gained, tracking a broader rise in commodity prices as the US dollar weakened. Copper futures for May delivery rose 3.4% to US$1.5035 a pound on the New York Mercantile Exchange.

Gold fell from an eight-month high, with futures for April delivery down 0.2% to US$976.50 an ounce in New York.

The euro rose against the US dollar as concerns abated about the impact of banking losses in eastern Europe. The regional currency rose to $1.2659 from $1.2513 yesterday. The euro gained to 119.49 yen from 117.50. The greenback strengthened to 94.35 yen from 93.79.

In Europe, the Dow Jones Stoxx 600 index rose 0.02% to 183.39, led by banks, as some investors took advantage of their rapid slump to buy financials at lower levels.

Royal Bank of Scotland soared 20% and Lloyds Banking Group climbed 12%. Nestle rose 5.2% after the world's biggest food company predicted better than expected sales.

The FTSE 100 Index rose 0.3% to 4018.37 and the DAX 30 gained 0.2% to 4215.210. The CAC 40 fell 0.1% to 2872.60.

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