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While you were sleeping: BusinessWire overnight wrap

Tuesday 30th September 2008

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Stocks on Wall Street tumbled, sending the Standard & Poor's 500 Index to its biggest decline since 1987 after the US House of Representatives rejected a US$700 billion financial sector bailout plan.

US lawmakers voted 228 to 205 against the bill, with many Republicans giving it the thumbs down to bestowing Treasury Secretary Henry Paulson with the power to buy toxic mortgage-related assets from financial institutions and restore some liquidity to credit markets.

The S&P 500 fell about 7% to 1128.81 and earlier was down almost 8%. The Dow Jones Industrial Average fell 5.3% to 10551.98. The NASDAQ Composite dropped 7.2% to 2026.19.

Financial shares paced the decline. Bank of America declined about 10% to US$33.02. Apple Inc. declined 15% to US$109.23 after analysts lowered their ratings for the stock. Google fell 9% to US$393.54. American Express dropped 13% to US$34.40 and General Motors fell 11% to US$8.70. Walt Disney fell 9.2% to US$29.75.

Investors were caught out by the House vote, as the rescue package had gained agreement from congressional leaders on both sides.

Paulson will use "all the tools at our disposal" to protect financial markets, according to a spokeswoman. Paulson will discuss the next steps with President George Bush, Federal Reserve Chairman Ben Bernanke and congressional leaders.

Meantime, the Federal Reserve is preparing to pump an additional $630 billion into the global financial system to try to alleviate the credit crisis, in a combined effort with the European Central Bank, the Bank of England and the Bank of Japan.

Crude oil had its biggest slide in seven years, pacing declines in commodities. Crude oil for November delivery fell 9.9%, to $96.26 a barrel on the New York Mercantile Exchange.

The dollar fell against the yen and the Swiss franc as investors eschewed higher-yielding assets funded with loans in Japan's currency. The dollar fell 1.8% to 104.12 yen at in New York. The US dollar bought $1.4441 per euro, from $1.4614.

Citigroup Inc. agreed to buy Wachovia Corp.'s banking operations, in a US$2.16 billion all-stock deal. Morgan Stanley agreed to sell a stake to Japan's Mitsubishi UFJ Financial Group for $9 billion.

In Europe, the Dow Jones Stoxx 600 Index fell to the lowest level in more than three years. Deutsche Postbank AG fell more than 20% after governments in Belgium, the Netherlands and Luxembourg rescued Fortis, the UK seized Bradford & Bingley Plc and the German government and a group of banks provided a 35 billion-euro guarantee for Hypo Real Estate Holding.

US bonds had the biggest rally in two weeks as investors sought the safest investments. The yield on two-year notes plunged 44 basis points to 1.66%. Ten-year yields fell 27 basis points to 3.58%.

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