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While you were sleeping: BusinessWire overnight wrap

Thursday 25th September 2008

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US Federal Reserve Chairman Ben Bernanke said the world's biggest economy has "decelerated broadly" and faces "grave threats" to its financial stability as he urged the Congress to approve a US$700 billion rescue package.

Stocks on Wall Street were little changed after two days of declines. The Standard & Poor's 500 Index fell 0.2% to 1185.87, the Dow Jones Industrial Average dropped 0.3% to 10825.17 and the NASDAQ Composite gained 0.1% to 2155.68.

Goldman Sachs rose 6.4% to US$133 after the investment bank raised US$5 billion in a public stock sale, twice as much as expected, and adding to a US$5 billion investment from Warren Buffet.

Washington Mutual declined 29% to US$2.26 and American International Group fell 34% to US$3.31 amid concern the Congress will water down the financial rescue proposal.

Prices of US existing homes had a record decline last month, according to the National Association of Realtors, showing the housing recession is showing no sign of abating. The median national home price dropped 9.5% to $203,100 and the pace of sales slowed.

In the fixed income market, interest rate swap spreads widened to a record and US Treasury bill rates fell as investors eschewed riskier assets in favour of cash and safe-haven investments.

The US two-year swap spread exceeded 163 basis points. One month T-bill rates sank below zero and three-month rates fell to 0.5%.

The US Treasury sold US$40 billion of seven-day cash management bills at 0.05%, underlining demand for relative safe assets. The Treasury has sold $124 billion of T-bills this week.

The yield on 10-year Treasury bonds fell one basis point to 3.79%.

Crude oil fell after a report showed US fuel demand declined 6.6% in the past four weeks from the same period a year earlier to an average 19.5 million barrels a day, the lowest since 2003.

Crude oil for November delivery fell 0.8% to US$105.73 a barrel on the New York Mercantile Exchange.

European stocks fell for a third day, paced by France's Renault SA and Germany's Daimler AG. Miner Anglo American fell after the price of copper declined. Financials gained, led by Royal Bank of Scotland.

The US dollar fell against the euro though advanced against the yen. The dollar traded at $1.4621 per euro, from $1.4648 yesterday. The yen weakened to 106.12 per dollar from 105.56.

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