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While you were sleeping: Businesswire overnight wrap

Thursday 23rd October 2008

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Stocks tumbled on Wall Street and in Europe amid signs of a worsening economic downturn, sapping demand for raw materials and eroding corporate profits.

Bank of England Governor Mervyn King said the UK economy has probably entered a recession and minutes of the bank's Oct. 8 meeting, where it cut the benchmark rate by 50 basis points, show the decision was unanimous.

Crude oil fell more than US$5 a barrel, gold dropped to its lowest in a year and copper sunk to a three-year low. The Reuters/Jefferies CRB Index of 19 commodities tumbled 4.4% to 266.36.

Emerging market stocks and currencies fell with the slump in commodities. Argentina's bonds and stocks fell after the government seized pension funds, stoking concern the South American nation is heading for its second default in a decade.

The London interbank offered rate for three-month dollar loans fell to 3.54%.

The rout in stocks boosted US Treasury bonds as investors sought the haven of fixed payments offered on the safest debt. The yield on the two-year Treasury notes fell 7 basis points to 1.54% and the yield on the 10-year notes declined 11 basis points to 3.63%.

Wachovia Corp. posted a third-quarter loss of US$23.9 billion after writing down goodwill on a slump in asset prices, a record quarterly shortfall for a bank. The lender whose shares have dropped 85% this year, has agreed to be acquired by Wells Fargo.

The Dow Jones Industrial Average declined 6% to 8489.82 and the Standard & Poor's 500 Index fell 6.3%% to 894.48. The Nasdaq Composite declined 4.7% to 1618.32.

Alcoa fell 16% to US$10.28, Microsoft dropped 9.5% to US$21.10 and Hewlett-Packard fell 9.7% to US$34.41. Exxon Mobil declined 10% to US$64.10 as the price of oil slid. Boeing fell 7% to US$43.09.

Crude oil fell to a 16-month low on the prospects of waning demand as global growth slows. Crude for December delivery dropped 7.3% to US$66.90 a barrel on the New York Mercantile Exchange.

Copper dropped to almost a three-year low on expectations consumption of the metal, a barometer for economic activity, will decline. Copper futures for December delivery fell 7.1% to US$1.8655 a pound in New York. Gold futures for December delivery fell 4.3%, to US$735.20 an ounce.

Lenders and commodity companies led European stocks lower on increasing concern about a global slowdown. The Dow Jones Stoxx 600 Index fell 5.1% to 209.57. BHP Billiton declined 9% and Royal Bank of Scotland fell 14%.

Germany's DAX 30 fell 4.5% to 4571.07, paced by a 10% decline in Hypo Real Estate to 5.32 euros and a 7.8% slide in Daimler to 24.13 euros.

The UK's FTSE 100 Index fell 4.5%to 4040.89. Xstrata sank 14% to 975.77 pence, Vedanta Resource fell 13% to 650.49 pence and HBOS dropped 9.5% to 79.80 pence.

The euro fell below $1.28 for the first time in two years and was recently at $1.2826, down from $1.3063 on speculation central banks in Europe will extend their interest rate cuts to try to soften the economic slump.

The pound fell to a five-year low $1.6139 and was recently at $1.6227. UK central bank Governor King said a British recession is "likely". It may extend its contraction for 12 months, according to the National Institute of Economic and Social Research.

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