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While you were sleeping: BusinessWire overnight wrap

Tuesday 4th November 2008

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US manufacturing had the biggest slump in 26 years last month on weakening world demand for exports and a squeeze on credit at home.

The Institute for Supply Management's index of national factory activity fell to 38.9 from 43.5 in September, well below the 50 level which separates a contraction from an expansion.

Crude oil fell more than US$3 a barrel the ISM report. Crude oil for December delivery fell 5.8% to US$63.91 a barrel on the New York Mercantile Exchange, amid concern demand will weaken as the world’s biggest economy slows. Crude is now down almost 60% from its record high US$147.27 reached in July.

Stocks on Wall Street swung between gains and losses, with the Dow Jones Industrial Average snapping two days of gains to fall 0.7% to 9266.55. Walt Disney dropped 5.7% to US$24.43 after Merrill Lynch said its earnings may be hurt by the slowing economy. Home Depot declined 4.8% to US$22.45. The Standard & Poor’s 500 Index fell 0.9% to 959.62 and the Nasdaq Composite fell 0.3% to 1715.43.

AT&T Inc. rose 4.7% to US$28.03 and Verizon Communications Inc. gained 3.2% to US$30.61 after Wachovia Corp. said they represented good value after recent declines.

Automakers reported US sales tumbled last month as consumers found it harder to get finance and a slowing economy sapped demand. General Motors said sales of cars and light trucks dropped 45% from a year earlier. Its shares fell 4.5% to US$5.52. Ford posted a 30% drop in sales, helping nudge its shares 1.4% lower to US$2.16.

Among Japanese automakers, Toyota Motor reported a 23% decline, Honda Motor’s sales slid 25% and Nissan Motor's tumbled 33%.

KKR & Co., the leveraged buy-out firm founded by Henry Kravis, delayed plans to go public for a second time amid losses in credit and stock markets. The transaction won’t be completed until some time next year, pushed back from the end of this year, the firm said in a statement.

In another sign of the ongoing impact of the financial crisis, Merrill Lynch analyst Guy Moszkowski predicted that Goldman Sachs would report a fourth-quarter loss because of slumping stock markets. That would mark the first quarterly loss at Merrill since it went public in 1999.

The yen fell against the dollar after a decline in interbank borrowing costs gave investors more comfort to buy higher-yielding assets funded with loans in Japan’s currency.

The yen fell to 99.05 per dollar in New York from 98.46 on Friday. The euro dropped to $1.2640 from $1.2726. The yen traded at 124.91 per euro from 125.30.

The London interbank offered rate, or Libor for three-month loans in US dollars fell 0.17 percentage points to 2.86%, the lowest since before the collapse of Lehman Brothers.

European finance ministers, meeting to agree further coordinated efforts to revive the region’s economy, said Europe faces a difficult year. The European Commission cut its forecast for growth in the region, predicted it would stall in 2009.

Stocks in Europe rose for a fifth straight day on optimism about falling money market rates. The Dow Jones Stoxx 600 Index gained 0.6% to 223.38. That was the longest winning streak in about a year.

ING Groep rose 5.2% and Swiss Reinsurance advanced 6.3%. HBOS rose 6.1% amid speculation it may receive a takeover offer rivaling one from Lloyds TSB Group.

Germany’s DAX 30 rose 0.8% to 5026.84, with Deutsche Post climbing 10% to 9.55 euros and Infineon fell about 10% to 2.7 euros. The UK’s FTSE 100 gained 1.5% to 4443.28 and France’s CAC 40 rose 1.2% to 3527.97.

Gold rose, snapping three days of declines, as its recent slide attracted buyers. Gold futures for December delivery rose 1.2% to US$726.80 an ounce in New York.

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