While you were sleeping: BusinessWire New Year wrap

Monday 5th January 2009

Stocks rallied in the U.S., Europe and Asia on Friday, picking up after the worst year for equities since the 1930s, as oil rose and the U.S. dollar gained.

The Dow Jones Industrial Average rose 2.9% to 9034.69 and the Standard & Poor's 500 Index gained 3.2% to 931.8. The Nasdaq Composite advanced 3.5% to 1632.21. General Motors led the Dow higher, gaining 14% to US$3.65 after gaining the first of its government bailout funds. Exxon Mobil rose 2.3% to US$81.64 and Chevron gained 3.5% to US$76.52 as oil advanced.

Crude oil rose US$1.41 to US$46.04 in New York on Friday having sunk more than 50% last year. The price of oil rose as tensions escalated between Israel and Palestine over Gaza and Russia threatened to cut gas supplies flowing into Ukraine.

Israeli troops entered the Gaza Strip in a wider offensive against the Hamas group in response to rocket and mortar attacks into Israeli territory.

OAO Gazprom, Russia's state-owned natural gas company, has been using alternative routes to send gas to Europe after cutting supplies to Ukraine over a price dispute.

Russia supplies a quarter of Europe's gas and send about 80% via neighbouring Ukraine, according to Bloomberg.

Stocks in Europe gained amid optimism global efforts by governments to revive economic growth will start to bear fruit.
The Dow Jones Stoxx 600 Index climbed 3.8% to 204.46, with Rio Tinto surging 14% and BHP Billiton gaining 8.6%. Xstrata jumped about 17% and Vedanta Resource climbed 13%.

Germany's DAX 30 rose 3.4% to 4973.07, led by a 6.8% gain for Deutsche Borse. France's CAC 40 rose 4.1% to 3349.69 as Dexia SA climbed 11% and ArcelorMittal rose 9.9%.

In London, the FTSE 100 gained 3.9% to 4561.79, led by resources companies. In Japan on Friday, the Nikkei 225 Index rose 1.3% to 8859.56.

The U.S. dollar gained against the euro after a survey of manufacturing activity in Europe fell to a record low in December. The Markit Eurozone Purchasing Managers Index for the manufacturing sector fell to a lower-than-expected 33.9 last month.

Global economic growth may not revive until 2010, European Central Bank Vice President Lucas Papademos in an interview in Germany's WirtschaftsWoche magazine.

Trading in currency markets was light in the New Year's holiday period. The euro fell 0.7% to $1.3882. The dollar strengthened 0.5% to 91.20 yen.

The dollar index, which measures the greenback against six major currencies, rose 0.7%% to 81.69.

Gold fell as the dollar's gain reduced demand for the precious metal as an alternative investment. Gold futures for February delivery fell 0.5% to US$879.50 an ounce on the New York Mercantile Exchange.

Copper fell on Friday, extending 2008's 54% slump as global stockpiles climbed. Copper fell as much as 1.5% to US$3,025 a metric ton.

U.S. manufacturing declined last month on dwindling demand for large ticket items such as cars and home appliances. The Institute for Supply Management's factory index fell to a lower-than-expected 32.4, the lowest since 1980, from 36.2. A reading below 50 signals a contraction.

Manufacturing in China shrank for a third month. The Purchasing Managers' Index rose to 41.2 last month, seasonally adjusted, from 38.8 in November, according to the China Federation of Logistics and Purchasing.

In the U.K., mortgage approvals and house prices fell. Some 27,000 home loans were approved in November, down from 31,000 in the previous month. U.K. house prices fell by an annual 19% last month, according to HBOS Plc, Britain's biggest mortgage lender.

U.S. Treasury bonds maturing in at least 10 years fell as stocks gained and the U.S. dollar rebounded. Bond also declined before another round of new bond sales this week.

The yield on 10-year Treasury notes rose 21 basis points to 2.34%.

The U.S. economy is at "serious risk" of an extended period of stagnation, according to Federal Reserve Bank of San Francisco President Janet Yellen. "If ever, in my professional career, there was a time for active, discretionary fiscal stimulus, it is now," she said in a speech.

By Jonathan Underhill

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