While you were sleeping: BusinessWire overnight wrap

Friday 5th December 2008

Crude oil fell below US$44 a barrel as the prospects of a prolonged slump in the world's biggest economies, curbing demand for fuel.

The price of oil may slide below US$25 a barrel in 2009 should the global downturn drive China's economy into recession, according to a Merrill Lynch report. Crude oil for January delivery fell 6.2% to US$43.89 a barrel on the New York Mercantile Exchange and has shed two thirds of its value since reaching a record US$147.27 in July.

Copper prices also fell on speculation a slowing global economy will have less need for the metal. Copper futures for March delivery dropped 2% to US$1.5235 a pound in New York.

The number of Americans on unemployment benefits rose to a 26-year high as companies shed jobs to cut costs. The number of people on jobless benefit rolls rose to 4.1 million in the week ended Nov. 22, the most since 1982, according to Labor Department figures. The department may release figures tomorrow showing the unemployment rate rose to 6.8% last month, a 15-year high.

US factory orders had the biggest decline in eight years in October. Orders fell a greater-than-expected 5.1%, the largest drop since 2000, according to the Commerce Department.

The US dollar fell versus the euro before the jobless figures. The dollar declined to $1.2779 per euro from $1.2717. It fell to 92.32 yen from 93.30. The euro traded at 117.96 yen from 118.64.

Federal Reserve Chairman Ben Bernanke called on the federal government to allow more funds to be directed at stemming foreclosures on mortgages. Options could include buying bad home loans. Bernanke said in a speech in Washington that central bank rate cuts and other measures aren't enough to kick-start the economy.

"Policy initiatives to reduce the number of preventable foreclosures should be high on the agenda," Bernanke said.

Stocks on Wall Street fell, snapping a two-day gain, as concerns General Motors may file for bankruptcy sent the automaker's stock down 9.2% to US$4.46. Exxon Mobil and Chevron fell more than 2% as the price of oil declined. Tech companies Intel, Microsoft and IBM all fell.

The Dow Jones Industrial Average declined 2.2% to 8401.81 and the Standard & Poor's 500 Index dropped 2.5% to 848.77. The Nasdaq Composite fell 2.8% to 1450.91, paced by technology stocks.

Stocks in Europe fell after European Central Bank President Jean-Claude Trichet said the region's economy will contract by about 0.5% in 2009. The ECB earlier cut its benchmark rate by 75 basis points to 2.5%.

Trichet said he is concerned not to cut interest rates too low, leaving fewer monetary policy tools available to respond should the recession worsen.

The ECB led central banks in the region cutting rates in the past 24 hours. The Bank of England lowered its benchmark rate to 2%, the lowest since 1951, and Sweden and Denmark cut their rates.

The Dow Jones Stoxx 600 Index fell 0.5% to 197.40. Royal Philips Electronics fell 2.1% after saying it would miss a target of doubling earnings by 2010.

Germany's DAX 30 fell 0.1% to 4564.23, with Hypo real Estate declining 7.1% and Deutsche Post dropping 3.8%. In France, the CAC 40 fell 0.2% to 3161.16.

The FTSE 100 Index fell 0.2% to 4163.61. Xstrata dropped 8.8% and 3i Group declined 8.9%.

Gold prices advanced as the weakening US dollar spurred demand for the precious metal as an alternative investment. Gold futures for February delivery rose 1.3% to US$780.75 an ounce in New York.

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