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While you were sleeping: BusinessWire overnight wrap

Friday 5th September 2008

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Renewed fears about the health of the US economy and slowing growth in Europe led Wall Street sharply lower on Thursday, one day ahead of the key monthly US jobs report.

The mood was set early in the session after weekly US government data showed an unexpected jump in the number of filings for jobless benefits, while a report by ADP Employer Services showed private employers cut 33,000 jobs in August.

The Dow Jones industrial average fell 344.65 points, or 2.99%, to 11,188.23, while the Standard & Poor's 500 Index dropped 38.15 points, or 2.99%, to 1,236.83. The Nasdaq Composite Index tumbled 74.69 points, or 3.20%, to 2,259.04.

It was the biggest one-day percentage drop for the three major indexes since June 26.

It was also the fourth day of losses for both the Nasdaq and the S&P 500, and the S&P 500's longest losing streak since January.

Construction and mining equipment maker Terex Corp compounded the gloom when it cut its 2008 sales and profit forecast. Economic bellwethers Caterpillar Inc and General Electric also dropped.

Energy and raw-material producers in the S&P 500 fell more than 2.1% as oil, gold and copper slumped. The decline drove the S&P 500 Materials Index to complete a 20% bear- market drop from its May 16 record.

Exxon Mobil dragged energy shares in the S&P 500 to the lowest level since February. Banks and brokerages fell 4.7% after bond investor Bill Gross warned of a "financial tsunami".

Gross, the manager of the world's biggest bond fund, Pimco, said the US government should give the Treasury the right to buy debt and other assets. Gross said he was staying on the sidelines of the markets.

Losses accelerated in the last hours of trading after the S&P 500 broke below the 1,260 level, a technical support level that had survived several tests in August.

Economists expect the government's labour report on Friday to show a decline of 75,000 jobs in August, which would be the eighth consecutive month of job losses in the United States.

Weakening euro

The euro fell to the lowest level against the dollar this year as European Central Bank president Jean-Claude Trichet said the countries that use the currency were in an "episode of weak activity".

The 15-nation euro dropped against the yen and the pound after Luxembourg Finance Minister Jean-Claude Juncker said the currency was "overvalued". The yen rose against the dollar, the Brazilian real and the Danish krone on speculation the global economic slowdown led investors to reduce holdings of higher-yielding assets and pay back loans made in Japan.

The euro dropped 1.3% to $1.4319 at 4:05pm in New York, from $1.4498 yesterday. The euro fell for the first time in eight days versus the pound, dropping 0.8% to 80.97 pence after touching a record high of 81.88. The euro slipped 2.3% to 153.36 yen, from 157.01, after touching 153.27, the lowest since March 24. The dollar fell 1.1% 107.09 yen, from 108.29.

South Korea's won advanced against all of the major currencies, rising 1.7% to 1,129.02 per dollar, after Finance Minister Kang Man Soo said yesterday on KBS-TV in Seoul that the country didn't face a crisis similar to the 1997 meltdown. Asia's worst performer against the dollar this year touched a four-year low of 1,159.05 yesterday.

Sterling fell 0.3% to $1.7711 as the Bank of England kept its target lending rate at 5% today. Policy makers judged the fastest inflation in more than a decade outweighed the risk that the British economy is sinking into a recession.

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