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Wall Street dives as Friday's surge proves short-lived

Weak economic data again trumped takeover activity and clawed back most of the gains on Wall Street last Friday.Today's fall of 140.92 points in blue chip stocks is just 25 points short of Friday's 165-point rebound.The Dow Jones Industrial Average closed

Nevil Gibson
Tue, 31 Aug 2010

Weak economic data again trumped takeover activity and clawed back most of the gains on Wall Street last Friday.

Today’s fall of 140.92 points in blue chip stocks is just 25 points short of Friday's 165-point rebound.

The Dow Jones Industrial Average closed 1.4% down at 10,009.73. With August nearly over, the measure is off 4.4% for the month.

In economic news, US consumer spending rose 0.4% last month, meeting economists' expectations, but incomes increased less than expected,

In the latest deal activity, Genzyme confirmed that its board had unanimously rejected a $US18.5 billion all-cash offer from Sanofi-Aventis, raising the prospect of a hostile takeover attempt from the French pharmaceutical company. Genzyme climbed 3.7%, while US shares of Sanofi slipped 0.3%.

3M agreed to acquire Cogent in a deal valued at $US943 million, though it will only pay $US430 million to account for the fingerprint-identification systems maker's large cash pile. Cogent surged 22% while 3M shed 1.4%, weighing on the Dow.

Intel dropped 1.9% as the chip giant agreed to buy the wireless unit of Germany's Infineon Technologies for $US1.4 billion.

Hewlett-Packard climbed 2.4%. The company, which remains in a battle with Dell for 3Par, authorised an additional $US10 billion to buy back its own stock and said it has been selected by the US Air Force for a five-year purchase contract that could be worth up to $800 million.

The Nasdaq Composite closed 1.6% down at 2119.97 and is off 6% for the month, while the S&P 500 index plunged 1.5% to 1048.92, putting its decline for August at nearly 5%.

Other markets: Europe steady, Asia up

In Europe, the Stoxx Europe 600 index ended virtually unchanged at 251.16.

In the euro area, there was evidence that the recovery remains on track. The economic sentiment indicator continued to improve in August, rising to 101.8, after a surge in July.

Germany's DAX 30 index shed 0.7% to 5912.41 and France's CAC-40 index fell 0.6% to 3487.01. The UK market was closed for a holiday.

Japanese stocks led Asian markets higher, though they ended well off the day's highs as traders were disappointed by the Bank of Japan's new easing measures aimed at addressing the country's anemic economic recovery and a strong yen.

The Nikkei Stock Average, which rose as much as 3.2% during the session, finished the day 1.8% higher at 9149.26.

Australia's S&P/ASX 200 rose 1.9% to 4452.71, Korea's Kospi added 1.8% to 1760.13, China's Shanghai Composite Index climbed 1.6% to 2652.66 and Hong Kong's Hang Seng Index snapped a six-day losing streak to finish 0.7% higher at 20737.22.

Commodities: Oil down, gold steady

Crude-oil futures fell slightly following a three-session rally as traders waited for more indications about the state of global demand.

Light, sweet crude for October delivery recently traded 60USc, or 0.8%, lower at $US74.57 a barrel in New York. Brent crude on the ICE futures exchange traded 28USc lower at $US76.37 a barrel.

Gold futures were steady as a holiday in the UK kept the market thin. The most actively traded gold contract, for December delivery, was down just 50USc at $US1237.40 an ounce in New York.

Currencies: Yen up, dollar down

The US dollar declined against the yen as measures from the Bank of Japan failed to halt the yen's advance.

The greenback also retreated against the Swiss franc but gained against other widely traded currencies as investors abandoned last week's move into riskier assets and shifted into traditional safe harbours.

The yen rallied, reversing the dollar's earlier gains, though thin market trading because of London’s closure kept the dollar's losses contained. It hit a daily low of ¥84.55 before rebounding.

The dollar was at ¥84.67 from ¥85.36 yen on Friday. The euro was at ¥107.42 from ¥108.69.

The euro was at $US1.2688 from $US1.2733. The UK pound was at $US1.5474 from $US1.5516. The US dollar was at 1.0245 Swiss francs from 1.0297 Swiss francs.

Nevil Gibson
Tue, 31 Aug 2010
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Wall Street dives as Friday's surge proves short-lived
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