While you were sleeping: BusinessWire overnight wrap

Thursday 5th February 2009

US companies eliminated a less-than-expected 522,000 jobs last month, according to an estimate that comes two days before the non-farm payrolls data that may show the unemployment rate jumped to a 16-year high 7.5%.

The loss of jobs in the latest month follows a revised reduction of 659,000 in December, according to a gauge from ADP Employer Services gauge was less than economists forecast and followed a revised cut of 659,000 for the prior month. America shed some 2.6 million jobs in 2008.

US service industries improved last month while remaining in contraction with a reading of 42.9 on the Institute for Supply Management's non-manufacturing index. The gauge covers some 90% of the US economy.

The better-than-expected data may not allay concerns about the world's biggest economy, which is expected to continue to lose jobs for months to come.

Shares on Wall Street fell after Kraft Foods said earnings would miss its forecasts and Walt Disney Co. posted a slump in profit.

Kraft, the world's second-largest food manufacturer, tumbled 9.5% to US$26.03 after saying 2009 earnings will be US$1.88 a share, down from the company's estimate in October of US$2. The revision mainly reflected the US dollar's advance against the euro, which reduced the value of European earnings.

Walt Disney fell 8.4% to US$18.88 after posting a 32% drop in fourth-quarter profit after the No.2 US media company had a drop in advertising sales and consumers spent less.

Bank of America fell 9.3% to US$4.82, leading the Dow lower, after investors awaited details of the federal government's plans to help aid banks, which is due next week.

The Dow slipped 1.5% to 7960.24 and the Standard & Poor's 500 Index declined 0.6% to 833.28. The Nasdaq Composite rose 0.1% to 1517.75.

President Barack Obama said in Washington that his administration will tie aid to financial companies to a cap on compensation for executives of US$500,000 a year. Obama described payouts to executives made last year, as the banks were receiving government bailout funds, as "shameful."

"In order to restore our financial system, we've got to restore trust," Obama said. "We've got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street."

U.S. Treasury bonds fell after the government announced a record US$67 billion of debt sales next week.

The yield on 10-year Treasuries edged up two basis points to 2.91%. The yield on the five-year bonds rose two basis points to 1.91%.

Copper rose to a week-high on optimism demand for the metal in China, the biggest consumer, will hold up after a report showed a slight improvement in manufacturing.

The Purchasing Manager's Index rose to 45.3 in January from 41.2 in December. A reading below 50 on the Chinese manufacturing gauge indicates a contraction.

Copper futures for March delivery edged up 0.6% to US$1.531 a pound on the New York Mercantile Exchange.

Crude oil fell after a US Energy Department report showed inventories jumped a more-than-expected 7.2 million barrels to 346.1 million barrels last week, suggesting the shrinking US economy is sapping demand for fuel.

Crude oil for March delivery fell 0.7% to US$40.48 a barrel on the New York Mercantile Exchange. Gold futures for April delivery rose 1.1% to US$902.20 an ounce in New York.

The euro fell against the US dollar and the yen after Fitch cut Russia's credit rating one notch to BBB, following a downgrade by Standard & Poor's in December. Russia, whose currency the ruble is at more than a decade low, said it will cut state spending and step up efforts to support its banks.

In neighbouring Kazakhstan the currency known as the tenge was devalued by 18% stoking fears that the deteriorating outlook in Eastern Europe will extend to the west.

The euro fell to 115.12 yen from 116.63. It slipped to $1.2857 from $1.3040. The greenback was little changed at 89.50 yen from 89.44.

The Dow Jones Stoxx 600 Index gained 2.6% to 194.67, buoyed by better-than-expected US data. Xstrata jumped 15%, Rio Tinto gained 11% and BHP Billiton rose 9.4%.

The FTSE 100 Index gained 1.5% to 4228.6 and Germany's DAX 30 climbed 2.7% to 4492.79. France's CAC 40 rose 2.9% to 3068.99, led by a 10% gain for ArcelorMittal.

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