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While you were sleeping: BusinessWire overnight wrap

Friday 3rd October 2008

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US stocks dropped, sending the Dow Jones Industrial Average down 3%, as reports showed the world's biggest economy is weakening and lending rates rose.

Wall Street slid even after the Senate approved a reworked version of the US$700 billion financial rescue package for the House to vote this week. Treasuries rallied as investors sought the safest securities.

The Dow fell to 10,508.34. The Standard & Poor's 500 Index declined 3.6% to 1,119.32 and the NASDAQ Composite Index dropped 4% to 1,984.40.

Manufacturers and industrials led the slide. General Electric dropped 10% to US$22.28 after selling US$12 billion of shares at a discount o bolster capital. Caterpillar Inc fell 7% to US$52.7.

The cost of borrowing in dollars rose, indicating banks are still reluctant to lend. The London interbank offered rate rose six basis points to a nine-month high of 4.21%.

US factory orders fell a larger-than-expected 4% in August while people applying for unemployment benefits for the first time in the US rose to a seven-year high, government reports showed.

US house prices fell in 24 of 25 US metropolitan areas in July, Bloomberg News reported, citing real estate data company Radar Logic Inc.

The International Monetary Fund said the US economy now risks falling into recession as the impact of the credit crisis widens.

Treasuries rose, pushing yields lower, on speculation central banks will keep lowering interest rates worldwide to prevent a global economic slump and as investors eschewed riskier investments.

The yield on two-year Treasury notes fell 19 basis points to 1.62%. The yield on the 10-year notes fell nine basis points to 3.64%.

European Central Bank President Jean-Claude Trichet yesterday said the bank discussed cutting interest rates, a statement that drove the euro down versus the US dollar.

The euro dropped as low as $1.3748, a 13-month low, from $1.4009 yesterday. The dollar fell to 105.22 yen from 105.71, with Japan's currency rallied against most of the majors, as investors avoided so-called carry trades into high-yielding assets.

European stocks fell, sending the Dow Jones Stoxx 600 Index down 1.4% to 254.24. Siemens AG fell 4.6% to 60.81 euros and BHP Billiton declined 7.3% to 1,121 British pence.

BHP led commodity producers lower as prices of crude oil and gold fell amid concern weakening world growth will sap demand.

Crude oil for November delivery fell 4.6% to $94 a barrel on the New York Mercantile Exchange. Gold for December delivery fell 5% to $843.20 an ounce.

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