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While you were sleeping: BusinessWire overnight wrap

Tuesday 8th July 2008

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US stocks fell, with the Standard & Poor’s 500 hovering near a level that would confirm a bear market, as speculation Fannie Mae and Freddie Mac will have to raise more capital sent financial firms lower.

Shares of Freddie Mac and Fannie Mae fell more than 18% on concern about larger than expected losses at the biggest US providers of home-loan financing. Debt obligations and mortgage-backed securities guaranteed by the lenders tumbled versus US government debt. Yahoo! Inc. rose after Microsoft Corp. said it may restart talks to acquire the owner of the most-popular US website.

The S&P 500 lost 0.8% to 1,252.31 at 4:14 p.m in New York. The Dow Jones Industrial Average fell 0.5% to 11,231.96. The Nasdaq Composite Index fell 0.1% to 2,243.32.

Commodities also dropped. Crude oil fell amid concern slowing economic growth in Europe will sap demand. Oil for August delivery fell almost 3% to $141.37 a barrel on the New York Mercantile Exchange, retreating from the record $145.85 it reached on July 3.

Gold and silver slid earlier as the US dollar advanced, eroding the allure of the precious metals as a haven. Gold futures for August delivery dropped 0.9% to $925.40 an ounce, while Silver fell 1.4% to $18.105 an ounce.

The Reuters Jefferies CRB Futures Price Index of 13 commodities declined 13.32 to 459.04.

The dollar reached a one-week high before easing against the euro as US stocks dropped and concerns rose about further credit losses.

The US currency fell to $1.5727 per euro in late New York trading, from $1.5706 on July 4. It earlier reached $1.5611, the highest in about a month. The yen dropped to 107.15 per dollar, from 106.80. Japan's currency declined to 168.53 against the euro, from 167.73.

‘Modest’ Growth

Federal Reserve Bank of San Francisco president Janet Yellen told a conference at the University of California-San Diego that the world’s biggest economy will “grow only modestly” though this year before reviving in 2009.

In Europe, finance ministers identified accelerating inflation as the biggest threat to their economic zone and endorsed the European Central Bank’s decision last week to raise its benchmark interest rate to a seven-year high 4.25%.

European stocks gained as the price of oil fell and some investors took advantage of the recent slide in the Dow Jones Stoxx 600 to buy shares at lower levels.

The Stoxx 600 rose 1.3% to 283.17. In the UK, the FTSE 100 increased 1.9%, to 5,512.7, the biggest gain in two months. Germany’s benchmark DAX Index rose 2% to 6,395.75.

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