3/03/08

The Dow Jones tumbled 315.8 points to close at 12,266.4, the S&P 500 slumped 37.05 points to finish at 1,330.65. The Nasdaq dropped 60.09 points to end the week at 2,271.48.

AIG Inc led the financial sector lower after reporting quarterly results late Thursday. The company made a $5.3 billion loss in the period and suffered an $11 billion write-down related to big losses in investments tied to bad mortgage bets. Shares of the Dow component lost 7% to close at $46.86.

UBS added to the woes in the sector after estimating that financial firms could end up losing $600 billion in losses as the credit crisis continues to unfold. The brokerage also cut its first quarter earnings estimates on a number of investment banks. Among other financials to go lower, JPMorgan Chase shares slid 4.2% to $40.65. The company said late in the session that first quarter home equity losses could total $450 million.

Ambac Financial was again in focus after CNBC reported that the proposed $2.5 billion bail out package has some significant snags. Shares fell 5.6% to $11.14, rival MBIA suffered as well ending 7.75% lower at $12.97. Bond insurer Assured Guaranty managed to rise following news that billionaire investor Wilbur Ross was injecting up to $1 billion into the company. Shares in the company surged 12.6% to $25.65 on the news, but this simply added to Ambac and MBIA's troubles.

Elsewhere, Dell Inc - the world's second largest computer maker - declined 4.7% to $19.90 after reporting lower than expected quarterly profit. The company also issued a cautious outlook, saying some large customers are holding back on purchases.

Treasury prices surged, lowering the yield on the 10 year note 3.51% from 3.66% late Thursday.

US light crude oil for April delivery slipped $0.75 to settle at $101.84 a barrel. COMEX gold for April delivery jumped $7.50 to close at $975 an ounce.

The Nikkei tumbled 610.8 points to close at 12,992.2 this morning. Stocks fell to the lowest in more than a month on concern fallout from the US mortgage market crisis is spreading to Japan's consumer lenders. Takefuji Corp, the third largest consumer credit company by market value, dropped the most in three weeks.

The Hang Seng is currently 668.7 points lower at 23,663. Financial stocks lead the drop, as investors reacted to the comments from UBS - Industrial and Commercial Bank for China Ltd is among the worst hit. Foxconn International Holdings Ltd, the world's biggest contract maker of mobile phones, had its steepest drop in almost a month after business activity data from the US added to expectations local exports would decline as the world's largest economy heads for recession.

The FTSE 100 lost further ground on Friday as gloom in the banking sector and more economic woes across the Atlantic shook investors. Record oil prices of more than $103 a barrel, plus early losses in New York equity trading, added to uncertainty in London, sending blue chips down over 1% - 81.4 points - to 5884.3 by the close.

The banking sector sentiment was hit by the fall-out from results from HBOS and Royal Bank of Scotland. HBOS continued to suffer - down by a further 31.5p to 603.5p - after figures on Wednesday missed expectations and it warned that a slowing UK economy and the impact of the credit crunch would hit lending activity. And fresh from unveiling £2.5bn losses from the credit crunch, RBS came under pressure after Credit Suisse cut its price target on the stock. Shares fell 17p to 385p. Barclays fell by 23.25p to 477.25p. Elsewhere in the financial sector, insurer Admiral slid 30p to 1015p and Royal & Sun Alliance fell 4p to 132p.

Retailers lost ground after a consumer confidence survey registered a 13-year low and highlighted the worst climate for big purchases since December 1990. Argos and Homebase owner Home Retail Group was the biggest casualty with a drop of 10.25p to 259p. Tesco also lost 0.5p to 400.5p.

Oil prices of more than $103 a barrel saw British Airways slip 8p to 257.5p, while transport giant FirstGroup eased 26.5p at 579p. US-facing building supplies firm Wolseley lost ground amid the jittery mood across the Atlantic. Its shares were 24p off at 621.5p.

Among the Footsie's leading gainers was pest control-to-hygiene company Rentokil Initial. The company slumped nearly 25% yesterday after warning of significantly lower profits this year, but talk about a potential break-up of the business meant shares clawed back 2.9p to 83.4p.

The CBI industrial trends survey suggested the level of manufacturing activity was stable in February. However, the pricing component of the survey, which neared record highs, had the greatest effect on markets. Analysts expect the same messages from this survey as cost pressures continue to intensify.

US ISM Manufacturing (Feb) 1500 GMT/1000 EST

Both Empire manufacturing (-11.7 from 9) and Philadelphia Fed (-24 from -20) were much weaker than expected in February. Both the headline readings and detail from these surveys suggest that ISM manufacturing will drop back below breakeven. Analysts a decline to 47 from 50.7.

US Construction Spending (Jan) 1500 GMT/1000 EST