While you were sleeping: BusinessWire overnight wrap

Wednesday 7th January 2009

Crude oil climbed over US$50 a barrel as members of the OPEC cartel imposed reductions to shipments and Russian gas supplies to Europe fell amid that nation's dispute with Ukraine.

Oil for February delivery rose to as much as US$50.47 a barrel on the New York Mercantile Exchange and was recently at US$48.93. Kuwait plans to cut shipments to the U.S. and Europe by 10% as part of OPEC efforts to underpin the price of crude. Qatar also will reduce supplies.

Gazprom, the Russian state-owned gas export monopoly, said it shipped about 65 million cubic metres of gas to Europe via Ukraine yesterday, down from about 300 million on earlier days this year. The European Union, which gets 75% of its gas from Russia, has urged the two countries to begin negotiations.

Copper prices rose to the highest level in a month on optimism President-elect Barack Obama's plans to revive the world's biggest economy will stoke demand for the metal. Copper futures for March delivery rose to as high as US$1.585 a pound.

U.S. Treasuries fell on speculation sales of debt will surge as the U.S. federal government increases spending while trying to plug its budget deficits. The 30-year bond yield rose 1 basis point to 3.03%.

In Washington, Obama urged the Congress to approve a two-year, US$775 billion economic recovery and reinvestment package that will likely inflate the budget deficits for years to come. Obama is inaugurated on Jan. 20.

"Potentially we've got trillion-dollar deficits for years to come, even with the economic recovery we are working on," Obama told reporters in Washington. The budget deficit was US$455 billion in fiscal 2008.

U.S. stocks rose on optimism Obama's spending plans will help revive the world's biggest economy and after minutes of the Federal Reserve's December meeting showed the central bank plans to keep interest rates close to zero for an extended period.

General Motors gained 7.6% to US$3.99 and computer maker Hewlett-Packard rose 7.4% to US$39, leading a rally that sent the Dow Jones Industrial Average up 0.7% to 9014.7. Citigroup advanced 6.6% to US$7.54. Walt Disney climbed 3.5% to US$24.30.

The Standard & Poor's 500 Index rose 0.6% to 933.34 and the Nasdaq Composite advanced 1.4% to 1650.89.

Wall Street rebounded even after government figures showed U.S. factory orders dropped 4.6% in November, the fourth consecutive decline and twice as much as economists had expected.

Pending home sales fell 4% to 82.3, based on the National Association of Realtors' Pending Home Sales Index, the lowest since the body began tracking the figures in 2001 and four times worse than the consensus estimate in a Reuters survey. The Institute of Supply Management's non-manufacturing index climbed to 40.6 in December from a record-low 37.3 in the previous month. A reading below 50 represents a contraction.

Gold futures for February delivery rose 1% to US$866 an ounce in New York.

Europe's inflation rate fell to 1.6% last month, from 2.1% in November, as consumers reduced spending and the price of oil declined. That's the first time since August 2007 that inflation has eased below the European Central Bank's 2% upper limit.

The euro fell versus the U.S. dollar after the inflation report, which gives the ECB more room to cut interest rates further. The euro declined to $1.3503 in New York from $1.3635 and was at 126.66 yen from 127.31. The dollar advanced to 93.85 yen from 93.77.

In the U.K., consumer confidence fell, according to Nationwide Building Society, with its index falling 4 points to 47, the lowest since it began in 2004. House prices tumbled at an annual pace of 15.9% in December as mortgage funding dried up and demand for housing abated.

European shares rose after German officials said the nation's second fiscal stimulus package could reach 50 billion euros and amid investor speculation that Obama's spending plans in the U.S. will help stoke world growth.

The Dow Jones Stoxx 600 Index gained 2% to 212.87, led by a 21% surge in 3I Group and a 17% jump in Man Group Plc. ArcelorMittal rose 14% and Xstrata gained 13%. Rio Tinto climbed 11% after the price of copper rallied.

In London, the FTSE 100 Index rose 1.3% to 4638.92 and Germany's DAX 30 gained 0.9% to 5026.31. France's CAC 40 rose 1.1% to 3396.22.

German billionaire Adolf Merckle killed himself as his business empire sank under mounting debt. The businessman threw himself under a train and left a suicide note, according to police officials.

By Jonathan Underhill

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