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While you were sleeping: BusinessWire overnight wrap

Wednesday 3rd December 2008

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US stocks rose, with General Electric jumping almost 14% after announcing it will maintain its dividend payments and Citigroup rebounded on the Federal Reserve's decision to extend terms of emergency loans.

The Dow Jones Industrial Average rose 2.25% to 8332.76 and the Standard & Poor's 500 Index gained 2.8% to 839.21. The Nasdaq Composite rose 1.3% to 1416.2. General Electric rose to US$17.62, Citigroup advanced 12% to US$7.23 and Bank of America rose about 11% to US$14.31.

Stocks on Wall Street pared their gains after figures showed sales in the auto industry fell 30% in November, sending General Motors down 0.4% to US$4.75. Its sales tumbled more than 40% last month. Ford gained 5.1% to US$2.68 after the company asked Congress for as much as US$9 billion in credit, pledging to at least break even by 2011.

The Fed extended three emergency-loan programs to April 30 from the end of January, putting the maturity in sync with other support measures. The changes are to the Primary Dealer Credit Facility, Term Securities Lending Facility and the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility.

The Fed said extending the terms was a response to "continuing strains in financial markets," according to a statement. The loan facilities have about US$304 billion in loans outstanding.

Chairman Ben Bernanke this week said the central bank's efforts to date "have not yet returned private credit markets to normal functioning."

US Treasuries rose, sending yields on longer-dated bonds to record lows on speculation inflation won't accelerate in a slumping economy while the Fed may begin buying government debt as the recession worsens.

The yield on 10-year Treasuries fell 4 basis points to 2.68%, having reached a record 2.65% yesterday. The yield on the 30-year bond fell 3 basis points to 3.18%.

Stocks in Europe gained, boosting the Dow Jones Stoxx 600 Index by 1.7% on optimism central banks will continue their efforts to support financial markets and ease availability of credit.

Allianz gained almost 5% and Commerzbank jumped 7.9%, helping lift Germany's DAX 30 by 3.1% to 4531.79. Volkswagen gained 5.6%. in France, the CAC 40 gained 2.4% to 3152.9, led by automakers. Peugeot rose 9.6% and Renault rose 9.4% as Ford's proposal to the US Congress stoked optimism the industry will pull out of its slump.

The FTSE 100 Index rose 1.4% to 4122.86 after Tesco posted better than expected sales growth and British Airways jumped on the prospects of a merger with Qantas Airways of Australia.

Tesco jumped 13% and British Airways rose 12%. Royal Bank of Scotland soared 17%. Mining company Vedanta Resources rose 5% after announcing plans to buy back as much as 10% of its stock.

Europe's 10-year government bonds rose for a third day after a report showed producer prices had the biggest slide in 22 years, stoking expectations for further rate cuts in the region.

The yield on the German bund fell 6 basis points to 3.10%. The yield on two-year notes was little changed at 2.12%.

The euro advanced against the US dollar and the yen on optimism that central bank efforts to revive global economic growth will start to have an impact.

The dollar fell to $1.2691 per euro in New York from $1.2611. The yen weakened to 118.57 per euro from 117.52.

Crude oil fell on concern a weaker US economy will consume less fuel, while demand will wane in Europe and Japan.

Crude for January delivery fell 4.7% to US$46.96 a barrel on the New York Mercantile Exchange, the lowest since May 2005.

Copper futures fell after figures showed stockpiles have reached a four-year high, suggesting supply is outweighing demand. Inventories rose 0.6% to 293,025 metric tons, according to the London Metal Exchange.

Copper futures for March delivery fell 1.9% to US$1.6005 a pound in New York.

Gold futures for February delivery rose 0.8% to US$783.30 an ounce on the New York Mercantile Exchange.

By Jonathan Underhill

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