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While you were sleeping: BusinessWire overnight wrap

Wednesday 19th November 2008

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The US median house price declined 9% in the third quarter with sales of properties with defaulting mortgages making up at least a third of sales.

Prices fell in 120 of the 152 US metropolitan areas, according to the National Association of Realtors. A separate survey showed confidence among US homebuilders fell to a record low this month. The National Association of Home Builders/Wells Fargo index of builder confidence sank to nine from 14 on a scale where anything below 50 means confidence is poor.

Amid further evidence of the enduring slump in housing, Treasury Secretary Henry Paulson clashed with lawmakers in the House, rejecting suggestions the second half of the US$700 billion rescue package should be used to aid home owners.

The Troubled Asset Relief Program, or TARP, "is not a panacea for all our economic difficulties," Paulson told the House Financial Services Committee. Paulson was interrupted during his testimony by lawmakers including Barney Frank, who heads the House panel and said the bill "couldn't have been clearer" in its intention of also reducing home foreclosures. Labour Department figures showed prices paid to US producers had a record slump in October as weakening world economic growth sapped demand for raw materials.

Shares on Wall Street fell after the housing reports, with the Standard & Poor's 500 Index sliding 2.4% to 830.13. The Dow Jones Industrial Average dropped 1.5% to 8146.86 and the Nasdaq Composite fell 3.2% to 1434.26.

General Motors tumbled 13% to US$2.77 as automakers await progress on some US$25 billion of federal aid that may be proffered to the ailing industry. Citigroup dropped about 10% to US$8.02 after analysts at Deutsche Bank forecast a loss for 2009. Boeing declined 5.8% to US$38.82.

Hewlett-Packard led gaining stocks, jumping 12% to US$32.88 after the world's biggest personal-computer maker posted a better-than-expected fourth-quarter profit. Shares of Yahoo! rose as much as 17% to US$11.86 after co-founder and chief executive Jerry Yang agreed to step down, reviving the prospects of a renewed offer for the No. 2 US search engine from Microsoft.

US Treasury bonds advanced as stocks fell and after the reports on housing and producer prices. The yield on two-year notes fell 5 basis points to 1.14%.

As Treasuries rallied it helped lift the US dollar versus the euro. The dollar rose to $1.2584 per euro from $1.2650. The yen was at 96.62 per dollar, from 96.43.

In commodity markets, crude oil fell to the lowest level in almost two years amid speculation US supplies are rising at a time when a global economic slump is crimping demand.

US stockpiles rose one million barrels last week, according to a Bloomberg survey. The Energy Department releases the figures on November 19 in the US Crude oil for December delivery fell 1.1% to US$54.33 a barrel on the New York Mercantile Exchange.

The outlook for a deepening global economic slump also drove down the price of gold. Gold futures for December delivery declined 1.3% to US$732.70 an ounce in New York.

Stocks in Europe gained as oil rose in European trading on concern about a hijacked Saudi Arabian carrier off the coast of Somalia. Total SA and BP Plc both advanced more than 4%. The Dow Jones Stoxx 600 Index climbed 0.8% to 201.91.

Alcatel-Lucent rose 4.8% after Dassault Aviation offered 1.56 billion euros for its stake in Thales SA. Germany's DAX 30 Index rose 0.5% to 4579.470, led by a 4% gain in Volkswagen shares. France's CAC 40 rose 1.1% to 3217.40 and the FTSE 100 Index rose 1.9% to 4208.55.

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