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(11am update) A four-day rally on Wall Street ended as disappointing corporate results and depressing reports on durable goods, new homes and jobless fuelled fears the recession is deepening.
Allstate tumbled 19% after reporting its first unprofitable year as a public company, while Textron and Eastman Kodak slid more than 27% after posting losses.
Orders for goods designed to last several years fell in December for a fifth month, the longest slide since comparable data began in 1992. Sales of new homes fell to an annual pace of 331,000, a rate that would take more than a year to clear the glut of unsold properties. And the number of Americans collecting jobless benefits soared to a record 4.776 million in the week ended January 17.
The main Dow Jones index lost 226.44 points, or 2.7%, to 8200.62, erasing all of the previous day’s gains. The S&P 500 index retreated 3.3% to 845.14, extending the month's losses to 6.4%.
European stocks fell for the first time in four days. The Dow Jones Stoxx 600 index slipped 1.8% to 190.79, bringing this month’s decline to 3.8%.
National benchmark indexes decreased in all of the 18 western European markets except Luxembourg and Portugal.
BHP Billiton and Rio Tinto dropped at least 3% on lower metal prices. AstraZeneca sank 6.3% as the UK’s second-largest drugmaker predicted no sales growth this year. Watchmaker Swatch and Nobel Biocare Holding also slipped on lower sales.
The U.K.’s FTSE 100 retreated 105.09 points or 2.5% to 4190.11.
France’s CAC 40 declined for a second time this week, losing 66.26 points, or 2.2%, to 3009.75.
Germany’s DAX lost 2% to 4428.11 as unemployment rose almost twice as much as forecast in January.
Commodities: Oil down, gold up
Crude oil continued to fall after stockpiles increased more than forecast and reports said the recession would deepen. Prices for March delivery fell 72USc to $41.44 a barrel.
Gold rose after equity markets ended a four-day advance. Futures for April delivery rose $US16.50, or 1.9%, to $US906.50 an ounce in New York.
Currencies: Dollar and yen rise
The dollar advanced the most in almost a week against the euro and the yen strengthened.
The euro dropped below $US1.30 after an Austrian reported George Soros saying the euro may not “survive” unless the EU pushes for a global plan to deal with toxic debt.
The dollar gained as much as 1.8% to $US1.2933 per euro. The yen strengthened 2% to ¥116.51 per euro and 0.4% to ¥89.89 per dollar.
In other overnight developments:
• Ford Motor Co had its worst annual performance in its 105-year history. A final quarter loss of $US5.9 billion contributed to a full-year loss of $US14.6 billion, eclipsing 2006’s record of $US12.6 billion.
• Online retailer Amazon.com bucked trends with a 9% profit rise. Net sales jumped 18% to $US6.70 billion amid gains in both its US and overseas businesses. The shares rose in after-hours trading.