US stocks fall after service industries shrink

Exxon Mobil Corp., General Electric Co. and AT&T Inc. led declines in New York trading.

By NEWS AGENCIES
February 6, 2008 11:29
4 minute read.

 
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SHARES TEL AVIV The Tel Aviv-25 Index fell for a second day, retreating 12.13, or 1.1 percent, to 1,068.51 at the close in Tel Aviv as 20 members fell, four gained and one was unchanged. Investors traded about NIS 1.82 billion in shares and convertible securities. Bank Leumi dropped for a second day, losing NIS 0.44, or 2.5%, to NIS 17.10. Israel's largest bank by assets may be sold to a foreign buyer without a tender process, Globes reported. Supervisor of Banks Rony Hizkiyahu has received a legal opinion allowing him to make such a sale, provided the foreign bank meets criteria set by the Bank of Israel, the financial daily said. Makhteshim Agan Industries fell NIS 0.74, or 2.5%, to NIS 28.95, its steepest decline in a week. The world's biggest maker of generic agrochemicals said employees at its Beersheba plant had declared a work dispute, a precursor to a strike. Perrigo Co. jumped NIS 6.10, or 5.5%, to NIS 117.60. The biggest US maker of non-prescription, store-branded drugs reported second-quarter earnings that beat analyst estimates and raised its full-year profit forecast. Teva Pharmaceutical Industries climbed NIS 2.90, or 1.8%, to NIS 166.50, its biggest gain since January 9. WALL STREET US stocks tumbled the most in three weeks after service industries fell to the lowest levels since 2001, reinforcing speculation the economy has tipped into a recession. Exxon Mobil Corp., General Electric Co. and AT&T Inc. led declines in New York trading, and all 10 industry groups in the Standard & Poor's 500 Index retreated, after the Institute for Supply Management's index unexpectedly contracted in January. The S&P 500 lost 28.31, or 2.1%, to 1,352.51 at 12:48 p.m. in New York. The Dow Jones Industrial Average decreased 248.66, or 2%, to 12,386.66. The Nasdaq Composite Index slipped 42.07, or 1.8%, to 2,340.78. About five stocks fell for every one that rose on the New York Stock Exchange after the ISM's non-manufacturing index, which reflects almost 90% of the economy, slumped to 41.9 from 54.4 the prior month. A reading of 50 is the dividing line between growth and contraction. EUROPE European stocks ended lower Tuesday, after the US non-manufacturing ISM index surprised on the downside, giving a further indication that the US is slipping toward recession. Auto manufacturers Renault and Daimler and German print machine manufacturer Heidelberger Druck fell on fears that the US consumer's wallet is shrinking. The Dow Jones Stoxx 600 Index fell 3.2%, or 10.4 points, to 318.74. The UK's FTSE 100 Index slid 2.6% to 5,868.00, while France's CAC-40 Index tumbled 4% to 4,776.86. Germany's DAX Index slumped 3.4% to 6,765.25. ASIA The recent rally in Asian markets petered out Tuesday as investors sold shares after Wall Street's overnight decline amid lingering fears about a US recession. Japanese stocks sank as several companies, including camera maker Olympus, posted poor earnings forecasts for the financial year. Tokyo's benchmark Nikkei 225 stock index shed 114.20 points, or 0.82%, to 13,745.50 points after jumping 2.7% Monday. "The sharp rebound we've seen in the past two weeks is running out of momentum, and as the main catalyst for this - US rate cuts - is now factored into the market, there aren't many reasons to push this market higher," said Yoji Takeda, head of Asian equity management at RBC Investment Management in Tokyo. Among the session's biggest losers were companies in the textiles and electronics sectors that downgraded earnings forecasts and reported poor figures for the most recent quarter. In Hong Kong, the blue chip Hang Seng Index fell 223.38 points, or 0.89%, to close at 24,808.70. On the Chinese mainland, stocks dropped following an 8% gain in the benchmark index the day before. The benchmark Shanghai Composite Index fell 1.6%, or 72.5 points, to 4,599.7. CURRENCIES The shekel slipped for a second day, trading at 3.6108 per dollar from 3.5810 Monday. It rose to 3.5575 on February 2, the highest level since January 1998. It has been the best performer among 11 emerging-market currencies in Europe, the Middle East and Africa over the past month. The euro declined the most against the dollar in almost two months after Europe's service industries weakened and raised concern that European reluctance to cut interest rates will hamper growth. The euro fell 1.2% to $1.4655 at 2:27 p.m. in New York, from $1.4830 Monday. It was the biggest loss since December 14. The currency dropped 1% to 156.73 yen, from 158.26. The dollar rose to 106.92 yen, from 106.71. COMMODITIES Oil futures fell below $89 Tuesday after financial markets were surprised by data that indicated the traditionally strong service sector shrank dramatically last month, raising the prospect that demand for energy will weaken along with the US economy. Expectations that crude stocks are climbing also took prices lower. Light, sweet crude for March delivery fell $1.46 to $88.56 a barrel on the New York Mercantile Exchange. Oil prices are off more than $10 from last month's record of $100.09 a barrel, largely due to growing concerns about the economy. Gold for April delivery lost $10.70 to fetch $898.70 an ounce on the New York Mercantile Exchange. Gold earlier fell as low as $888.40 an ounce, it's lowest level since January 23. Platinum for April delivery surged to $1,815 an ounce - its highest ever - before falling back sharply to $1,783 an ounce, down $14.60.

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