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While you were sleeping: BusinessWire overnight wrap

Friday 29th August 2008

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Stronger than expected growth in the US in the second quarter sparked a rally on Wall Street as industrials and financials surged ahead.

The Dow Jones industrial average ended up 212.67 points, or 1.85%, at 11,715.18. The Standard & Poor's 500 Index closed up 19.02 points, or 1.48%, at 1,300.68. The Nasdaq Composite Index ended up 29.18 points, or 1.22%, at 2,411.64.

A retreat in the price of US crude oil, which settled down US$2.56 at US$115.59 a barrel, eased fears about constraints on consumer and business spending.

American International Group, Caterpillar and AT&T rose more than 3% each and helped lead gains in nine of 10 industry groups in the S&P500 after the Commerce Department said gross domestic product grew at a 3.3% annual rate.

Tiffany & Co., the world's second-largest luxury jewelry retailer, jumped the most in three years on profit that topped analysts' estimates.

The brighter economic outlook coupled with a management shake-up at top US mortgage finance company Fannie Mae boosted financial shares, which led market gains.

Bank of America, the No. 2 US bank, was the top boost on the S&P, rising 6.0% to US$31.43.

Trading volume was light on the New York Stock Exchange, with about 910 million shares changing hands, well below last year's estimated daily average of roughly 1.90 billion. On Nasdaq, about 1.59 billion shares traded, also below last year's daily average of 2.17 billion.

Advancing stocks outnumbered declining ones by about 3.5 to one while on the Nasdaq, advancers beat decliners by about 2.6 to one.

The economic news was also a boost to the US dollar.
Against the euro, the dollar advanced 0.3% to US$1.4689 at 4:13 pm in New York, from US$1.4727 yesterday. It earlier touched US$1.4811, the weakest since August 22. The euro depreciated 0.1% to 161.05 yen, from 161.27. The dollar gained 0.1% to 109.64 yen, from 109.49.

The dollar has increased against all of the other major currencies in August on speculation the economies of countries outside the US are slowing. The greenback has risen 6.2% versus the euro, the biggest monthly gain since the European currency began trading in 1999.

Sterling declined 0.2% to 80.41 pence per euro after touching 80.61 pence, the weakest level since April 17. It reached a record low of 80.99 pence on April 16. The average value of a home in the UK fell 10.5% in August to 164,654 pounds, the biggest drop since the final quarter of 1990, Nationwide Building Society said today. The pound fell 0.4% to US$1.8284.

The Australian dollar and the South African rand were the best performers against the dollar today. The Aussie appreciated 0.3% to 86.15 US cents after the Bureau of Statistics said second-quarter capital spending increased 5.7%, almost three times the median forecast of 23 economists surveyed by Bloomberg News.

In late trading, 10-year Treasuries were down 6/32 in price for a yield of 3.78%, not much above the 3-1/2 month intra-day low of 3.847% set on Wednesday. Technical resistance is expected to a move much below 3.75%, with 3.89% a target to the upside.

Two-year notes were down 3/32 in price for a yield of 2.38%, up from 2.28%, with 30-year bonds unchanged at a yield of 4.38%. The two-year/10-year spread tightened by about 6 basis points to 141 basis points as the short end underperformed.

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