While you were sleeping: BusinessWire overnight wrap

Thursday 18th December 2008

The US dollar fell as much as 3% against the euro, the biggest drop since the euro-zone introduced the currency in 1999, and weakened against the yen, extending its slide since the Federal Reserve cut rates to a record.

The dollar fell to as little as $1.4437 per euro from $1.4002 and was recently $1.4328. The greenback slipped to 87.77 yen from 89.05 and earlier touched 87.14.

US Treasuries maturing in at least 10 years rallied as the Fed's decision to cut its target to as low as zero spurred investors to seek bonds' fixed payments. The yield on 10-year Treasuries fell 1 basis point to 2.15% while the 30-year bond yield sank 6 basis points to 2.65%. The 2-year yield fell 5 basis points to 0.7%.

Bernard Madoff, the Wall Street investment veteran accused in a US$50 billion investment fraud probe, is under house arrest, subject to electronic monitoring and a curfew on his movements.

Confidence in the world economy weakened this month as the seeds of recession spread to more countries, according to a global survey of Bloomberg customers. The Bloomberg Professional Global Confidence Index fell to 6.1 from 6.6 in November on a scale where a reading below 50 means there are more pessimists than optimists.

In the UK, the jobless rate had the biggest jump in 17 years in the face of a deepening recession. The number of people on unemployment benefits jumped by 75,700 to 1.07 million, according to the Office for National Statistics. The pound sank to a record low against the euro.

Inflation in Europe fell by the most in almost 20 years, helped by the slide in the price of crude oil, raising the prospect of further rate cuts by the European Central Bank. The inflation rate in the euro-zone fell to 2.1% last month from 3.2% the previous month.

Oil fell below $40 a barrel on speculation production cuts by the OPEC cartel won't be enough to prop up prices in a weaker world economy. OPEC has agreed to cut output by 9% percent, its biggest decrease ever. Meantime, US inventories of crude grew by 525,000 barrels to 321.3 million barrels last week, according to the Energy Department.

Crude oil for January delivery fell 7.9% to US$40.15 a barrel on the New York Mercantile Exchange as futures sank to as low as US$39.88.

Copper fell to a four-year low on the prospects of a prolonged global recession, bringing its decline this year to about 55%. Copper futures for March delivery fell 0.4% to $1.3725 a pound on the New York Mercantile Exchange. It sank as low as $1.3285.

The price of gold advanced to a nine-week high as the tumbling US dollar stoked demand for the precious metal as an alternative investment.

Gold futures for February delivery rose 3.1% to US$868.50 an ounce in New York.

Stocks on Wall Street edged lower, with all three main benchmark indexes slipping amid concern the Fed is running out of options to kick the world's biggest economy back into life. The Dow Jones Industrial Average fell 0.2% to 8908.93 and the Standard & Poor's 500 Index, which has swung between gains and losses, declined 0.1% to 912.52. The Nasdaq Composite fell 0.1% to 1589.73.

Citigroup was among the biggest decliners on the Dow, falling 4.3% to US$7.87. General Electric dropped 3.3% to US$17.33. Exxon Mobil fell 1.4% to US$81.97 as the price of oil declined.

Macy's Inc. helped spur a rally by retailers after gaining better term on a $2 billion credit line. It rose as much as 22% to US$10.37. Home Depot gained 2.6% to US$24.93 and Wal-Mart Stores advanced 0.3% to US$55.40.

Stocks fell in Europe on concern earnings at banks are set to decline. The Dow Jones Stoxx 600 Index fell 0.8% to 197.51. BNP Paribas led France's CAC 40 lower, falling 17% after saying investment banking losses dented profit. In Germany, Deutsche Bank fell 8.8% after deciding not to redeem some of its debt. The DAX 30 fell 0.5% to 4708.38.

In London, the FTSE 100 gained 0.4% to 4324.19, led by Fresnillo and Lonmin.

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