Monday 11th August 2008
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Commodities ranging from gold and silver, to wheat and orange juice fell as the dollar had its biggest advance against the euro in almost eight years. Lower prices for commodities boosted Wall Street, amid optimism companies' profit margins will widen as raw material costs fall.
The Standard & Poor's 500 Index rose 30.25 points 2.4% to 1,296.32. The Dow Jones Industrial Average climbed 2.7% to 11,734.32 and the Nasdaq gained 2.5% to 2,414.10.
McDonald's Corp. rose 6.2% at $65.67 after it posted sales that beat estimates on growth in the US. Home Depot rose 7.7% to $26.37, pacing gains in retail stocks. General Electric rose 3.8% to $29.64.
Fannie Mae fell after the largest US mortgage- finance company cut its dividend 86% after reporting a worse than expected second-quarter loss.
The euro fell to a six-month low against the US dollar on waning expectations the European Central Bank will raise interest rates. The European currency fell below US$1.50 after European Central Bank president Jean-Claude Trichet said the region's growth will be "particularly weak."
The euro fell about 2% to $1.50 at 5pm in New York and earlier touched $1.499, the lowest in almost six months.
Against the yen, the euro fell to 165.38 from 167.70.
Gold futures for December delivery fell 1.5% to $864.80 an ounce on the Comex division of the New York Mercantile Exchange. Silver futures for September delivery fell 5.7% to $15.33 an ounce. The Reuters Jefferies CRB Futures Price Index of 13 commodities fell 12.12 to 387.42
In other US news, billionaire Warren Buffett's Berkshire Hathaway Inc. posted an 8% decline in second-quarter profit, reflecting losses on derivatives and reduced insurance premiums. Profit fell to $2.88 billion from $3.12 billion a year earlier.
Swiss bank UBS AG agreed to buy back $19.4 billion of debt securities whose value plunged as a result of the global credit squeeze and pay $150 million to settle charges it misled investors. That follows a settlement of state and federal claims against Citigroup Inc., which last week agreed to buy $7.3 billion of the debt from individual investors and pay $100 million in fines, according to Bloomberg News.
The yield on two-year Treasury notes rose seven basis points, or 0.07 percentage point, to 2.5% in New York on Friday, according to BGCantor Market Data. The 10-year note rose 1 basis point to 3.93%.
European government bonds gained after Trichet's comments about weakening economic growth in the region.
The yield on the two-year note fell five basis points to 4.05% by 4:17pm in London. The yield on the 10-year bund was 4.25%.
The European Central Bank last week held its benchmark rate at 4.25%.
Europe's Dow Jones Stoxx 600 Index rose to a five-week high as the price of oil fell, paced by Ryanair Holdings Plc. The Stoxx 600 rose 0.8% to 289.28.
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