While you were sleeping: BusinessWire overnight wrap

Thursday 4th December 2008

US service industries had their biggest contract in 11 years last month, providing more evidence of the slump in the world's biggest economy.

The Institute for Supply Management's index of non- manufacturing businesses fell to 37.3 in November, the lowest level since the institute began tracking the index in 1997. Separate figures showed US companies shed 250,000 jobs last month, the most in seven years, according to ADP Employer Services.

The US economy has broadly weakened since mid-October, according to the Federal Reserve regional survey, known as the Beige Book. Manufacturing fell, retail sales weakened and housing and commercial property markets waned. The Fed begins a two-day meeting on monetary policy on Dec. 15 amid predictions the US economy may shrink as much as 5% this quarter.

The yen strengthened against the euro and the US dollar after the US reports, which spurred some investors to exit higher-yielding assets funded with loans in Japan's currency. It also fell against the euro amid expectations the European Central Bank will cut its refinancing rate by 50 basis points this week.

The yen rose to 118 versus the euro from 118.44. It strengthened to 93.14 per dollar from 93.18.

Stocks on Wall Street staged a late rally, helped by gained in Citigroup. American Express and Bank of America. The Dow Jones Industrial Average rose 0.9% to 8496.7 and the Standard & Poor's 500 Index gained 0.9% to 856.6. The Nasdaq Composite rose 1.2% to 1470.02.

Helping US stocks to rise were figures showing a jump in online spending and a surge in mortgage applications, suggesting there's still demand in the US economy. ComScore Inc. said online purchases at US stores rose 15% on Dec. 1. Amazon.com climbed as much as 10%

European stocks rose for a second day on optimism central banks will gain traction in their concerted efforts to underpin economic growth.

The Dow Jones Stoxx 600 Index climbed 0.6% to 198.29. Royal Philips Electronics and Ericsson AB rose more than 6% on speculation central banks in Europe and the UK will cut interest rates again this week.

Germany's DAX 30 rose 0.8% to 4567.24 and France's CAC 4o rose 0.4% to 3166.65. In London, the FTSE 100 was 1.1% higher at 4169.96.

Crude oil fell after figures showed US refineries operated at less of their capacity last week. The Energy Department report showed refineries ran at 84.3% of capacity, down 1.8 percentage points from the previous week.

Crude for January delivery fell 0.3% to US$46.84 a barrel on the New York Mercantile Exchange. Copper prices fell to a three-year low on concern the global economic slump will saop demand for the metal. Freeport-McMoRan Copper & Gold Inc. will reduce output in the next two years as demand wanes.

Copper futures for March delivery fell 2.4% to US$1.562 a pound in New York.

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