While you were sleeping: BusinessWire Overnight Wrap

Thursday 15th January 2009

Shares on Wall Street and in Europe tumbled after figures showed American retail sales slumped last month, Deutsche Bank posted a record fourth-quarter loss and the German economy shrank as much as 2%.

Copper plunged, the yen gained against the euro and the US dollar, Treasuries rallied and the price of oil fell.

The Dow Jones Industrial Average dropped 3.4% to 8164.22 and the Standard & Poor's 500 Index declined 3.7% to 839.82. The Nasdaq Composite fell 3.8% to 1487.66.

Citigroup slumped 22% to US$4.60, leading the Dow lower, as chief executive Vikram Pandit dismantles the group to try to ensure it has a future. The bank, which is forecast to post a US$2.6 billion fourth-quarter loss next week, has relinquished control of its Smith Barney brokerage in a US$2.7 billion deal with Morgan Stanley.

It may also sell its CitiFinancial consumer-lending unit, Bloomberg reported, citing people familiar with the plan.

Alcoa fell 4.6% to US$9.11, American Express dropped 5.8% to US$17.89 and General Electric declined 5.3% to US$14.15.

US retail sales fell twice as much as expected last month, marking the sixth consecutive decline with a 2.7% drop, according to Commerce Department figures. The data underlined the depth of the recession in the world's biggest economy, which shed 2.6 million jobs last year as corporate earnings, stocks and property values dropped and consumer credit shrank.

Some 69% of US consumers plan to hold off making discretionary purchases in the first quarter of this year, according to a survey by America's Research Group for Reuters. Many said they may be lured back to the shops once details of President-elect Barack Obama's economic stimulus package emerge.

Nortel Networks, the biggest maker of telephone equipment in North America, filed for bankruptcy protection as debt payments came due amid ongoing losses.

In Europe, the Dow Jones Stoxx 600 Index dropped 4.4% to 192.87. Anglo Irish Bank tumbled 30% and Royal Bank of Scotland fell 18% as Deutsche Bank reported its loss and amid concern banks will be forced to raise more capital.

HSBC Holdings, Europe's biggest bank, fell 8% after Morgan Stanley said it may have to raise more capital and reduce its dividends.

Deutsche Bank fell 9% after reporting a 4.8 billion euro loss as the value of stocks and bonds slumped. The DAX 30 Index slid 4.6% to 4422.35, led by a 17% slump in Postbank shares and a 12% decline for Siemens after it said orders have declined significantly. Commerzbank fell 11%.

France's CAC 40 fell 4.6% to 3052, led by an 11% drop in the shares of Societe Generale and AXA. In London, the FTSE 100 fell almost 5% as banks and mining companies tumbled. Xstrata declined 12% and Rio Tinto dropped 11%. Barclays declined 14% and Standard Chartered fell 11%.

Copper prices fell after the US retail sales slump stoked concern demand for the metals will recede as the American recession deepens. Copper futures for March delivery fell 4% to US$1.4845 a pound on the New York Mercantile Exchange's Comex division. Futures have tumbled 64% from the record US$4.2605 reached in May last year.

Crude oil dropped after figures showed US inventories climbed by 1.14 million barrels to 326.6 million barrels last week. The Energy Department figures showed stockpiles have reached the highest since 2007.

Crude oil for February delivery fell 1.1% to US$37.35 a barrel on the New York Mercantile Exchange having traded as low as US$35.52 a barrel.

US Treasuries rose after the retail sales figures, as further signs of a prolonged recession drove investors to the relative safety of fixed payments on government debt. The yield on 10-year Treasuries fell 9 basis points to 2.2% while the yield on 30-year bonds fell 10 basis points to 2.9%.

The yen strengthened to 89 per dollar from 89.38 and advanced to 119.92 per euro from 119.21. The US dollar strengthened to $1.3135 against the euro from $1.3182.

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