NEW YORK - US stocks fell sharply on Friday with the Dow closing below 12,000 for the first time since mid-March as rising oil prices and warnings of more mortgage-related write-downs at banks reignited investor fears of worse to come.
Adding to the pessimism, S&P said it may cut its ratings on Ford Motor Co, General Motors and Chrysler LLC, citing financial damage from high gasoline prices.
GM shares fell 6.8 per cent and Ford tumbled 8.1 per cent.
Oil prices shot up two per cent to $US134.70 a barrel on Middle East tensions and a weak dollar, compounding already elevated fears about inflation and consumer spending.
The Dow Jones industrial average closed down 220.40 points, or 1.83 per cent, at 11,842.69.
The Standard & Poor’s 500 Index ended 24.90 points, or 1.85 percent, lower at 1,317.93. The Nasdaq Composite Index finished down 55.97 points, or 2.27 percent, at 2,406.09.
For the week the Dow ended 3.8 per cent lower, the S&P fell 3.1 per cent and Nasdaq dropped two per cent.
The Dow closed at its second-lowest level this year and below 12,000 for the first time since March 17.
LONDON - Britain’s top share index closed 1.5 per cent lower on Friday as concerns over more losses and fundraising dragged down banks, while investors took profits from recent gains in oils and mining stocks.
The commodities-heavy FTSE 100 ended 87.6 points lower at 5,620.8 - its fifth successive weekly loss.
FRANKFURT - The DAX index shed 142.73 points to 6,578.44.
PARIS - The CAC-40 index reversed 82.12 points to 4,509.27.
TOKYO - Japan’s Nikkei average slipped 1.3 per cent on Friday, led down by Kyocera Corp and other blue-chip stocks as many investors come to view a recent rise in Japanese shares as over for now.
The benchmark Nikkei ended down 188.09 points at 13,942.08, extending losses after a 2.2 per cent decline on Thursday. It fell 0.2 per cent for the week.
HONG KONG - Hong Kong share prices closed lower on Friday, down 0.23 per cent, as investors remained cautious about the market’s volatility following energy price hikes in China, dealers said.
The Hang Seng Index closed down 52.01 points at 22,745.6. Turnover was 72.69 billion Hong Kong dollars.
WELLINGTON - The NZSX-50 index closed down 56.7 points, or 1.7 per cent, at a 30-month low of 3283.4. Turnover totalled $201.9 million.
SYDNEY - The Australian share market is expected to open lower following sharp falls on Wall St on concerns a higher oil price would curb consumer spending and warnings of more mortgage-related write-downs at banks.
At 0746 AEST on the Sydney Futures exchange, the September share price index was down 88 points to 5,221.
Today, the Australian Bureau of Statistics releases the latest new motor vehicle sales for May.
On the equities front, Lion Selection Ltd will hold a shareholder meeting to vote on sale of Indophil stake to Xstrata plc and BHP Billiton Ltd chief executive Marius Kloppers will address a Melbourne Mining Club Lunch in London.
The Australian share market closed firmly in the red on Friday, with losses across all sectors driven by lower crude oil prices and concerns about the state of credit markets.
The benchmark S&P/ASX200 index was down 78.3 points, or 1.46 per cent, at 5,288.3, while the broader All Ordinaries fell 72.5 points, or 1.32 per cent, to 5,411.8.
NYMEX
NEW YORK - US crude oil futures rebounded on Friday as Middle East tensions took centre stage and the dollar weakened on US banking jitters, traders said.
But gains were pared after Saudi Arabia Oil Minister Ali al-Naimi confirmed he had told United Nations Secretary General Ban Ki-Moon that Riyadh would lift output to 9.7 million barrels per day in July.
Earlier, market anxieties were fueled by a New York Times report that Israel had carried out a large military exercise this month that appeared, according to American officials the paper interviewed, to be a rehearsal for a potential bombing attack on Iran’s nuclear facilities.
Also supportive for prices, Royal Dutch Shell declared force majeure on oil exports for June and July from its Bonga offshore field in Nigeria on Friday following an attack by militants on Thursday.
On the New York Mercantile Exchange, July crude, which expired at the close, settled at $US134.62 a barrel, up $US2.69, or 2.04 percent, trading from $US131.19 to $US136.80.
It fell $US4.75, or 3.48 per cent, on Thursday. For the week, prices are down 24 cents, or 0.18 per cent, but from the start of the year, prices are up nearly $US39, or 40 per cent.
Prices hit an intraday record high $US139.89 on Monday.
In London, August Brent crude ended up $US2.86, or 3.17 per cent, at $US134.86 a barrel, trading from $US131.48 to $136.80.
A hard-line Iranian cleric responded that Israel and the United States will receive a “slap in the face” from Iran if they speak of using force against the Islamic republic.
Prices began recovering overnight after heavy losses on Thursday as China’s move to raise fuel prices by 18 per cent, beginning Friday, was thought to be a demand dampener.
But some analysts said that China’s truckers and newly rich middle class might even raise consumption because the action would do away with rationing or queues for motor fuel.
LONDON METALS EXCHANGE
Aluminium prices jumped to a three-month high on Friday as investors bought on news a US producer shut down about half its capacity, while copper hit a one-month high.
Benchmark aluminium on the London Metal Exchange hit $3,158 a tonne, its highest level since March 14.
It traded up at $3,150 in official rings from Thursday’s close at $3,070.
“Alcoa news and power supply problems in China are helping the price rally,” said analyst Dan Smith at Standard Chartered.
Aluminium producer Alcoa Inc said on Thursday it would temporarily idle half the production at its Rockdale, Texas, smelter because of local power supply problems.
London copper touched $8,456 a tonne, a high since May 19, and ended at $8,435 in official rings.
In New York, copper for July delivery settled up 5.25 cents, or 1.39 percent, at $3.8320 a lb on the the New York Mercantile Exchange’s COMEX division.
Zinc rose to $1,945 a tonne from $1,934, lead to $1,880 from $1,811, tin was at $22,700/22,800 from $22,400 and nickel was at $22,400 from $22,200.
COMEX
Gold ended slightly lower Friday on profit taking before the weekend, despite a recovery in crude oil prices and a lower dollar against the euro following tough anti-inflation comments from the European Central Bank.
Traders were also watching the crude market ahead of a weekend meeting of oil producers and consumers in Saudi Arabia, with any new strength in oil prices likely to push gold higher.
Spot gold was at $US901.35/902.75 by New York’s last quote at 2:30 p.m. EDT (1830 GMT), compared with $902.95/904.35 an ounce late in New York on Thursday when it jumped as high as $907.90 an ounce, its strongest level in more than a week.
The metal eased earlier on Friday after Thursday’s price rally failed to take gold through its previous high of $US908.70, hit on June 9.
The US August contract on COMEX division of New York Mercantile Exchange settled down 50 US cents at $US903.70 an ounce.
Among other precious metals, spot platinum was last at $2,050/2,060 an ounce from $2,036.50/2,056.50 on Thursday.
Palladium was at $470/475 an ounce from $469.00/477.00 and silver was at $17.37/17.43 an ounce from $17.39/17.44 late in New York on Thursday.
INTERNATIONAL NEWS
JEDDAH, Saudi Arabia - Saudi Oil Minister Ali al-Nuaimi said today the world has enough crude to last for “many decades” and that his country will invest massively to be able to produce 15 million barrels a day.
JEDDAH, Saudi Arabia - Saudi Arabia’s King Abdullah condemned oil “speculators” on Sunday at a summit on the spiralling price of crude which called for greater transparency in market dealings.
BAGHDAD - Iraq will award contracts to 41 foreign oil firms in a bid to boost production that could give multinationals a potentially lucrative foothold in huge but underdeveloped oil fields, an official said today.
LOCAL NEWS
CANBERRA - Australia’s energy minister, Martin Ferguson, did not repeat Prime Minister Kevin Rudd’s rhetoric about applying a “blowtorch” to OPEC when he fronted the Jeddah oil meeting overnight.
MELBOURNE - Six Qantas flights from Sydney and Melbourne have been cancelled today as engineers prepare to walk off the job in three states.
SYDNEY - Anglo-swiss miner Xstrata plc has quickly changed its mind and decided to match a $488 million takeover bid for Indophil Resources NL led by Hong Kong investment bank Crosby Capital.
SYDNEY - The Optus-led consortium that wants to team up with the federal government to build a national high speed broadband network said it was confident of securing funding for the debt component of its bid.
Stocks to watch on the Australian stock exchange today:
MGR - MIRVAC GROUP - up six cents to $3.24
Property firm Mirvac Group has downgraded its fiscal 2008 earnings guidance and cut the carrying value of its assets amid a slowing global economy, higher funding costs and stagnant housing markets.
FKP - FKP GROUP - up $1.20 to $5.00
LLC - LEND LEASE CORPORATION LTD - down 31 cents to $9.79
FKP Property Group has rejected a $5 cash per share, or $1.3 billion, takeover offer from Lend Lease Corporation Ltd, saying the bid substantially undervalued the owner and operator of retirement villages.
Lend Lease also announced that it was experiencing funding delays over plans to build the 2012 Olympic games Athlete’s village amid tough conditions in credit markets.
TCL - TRANSURBAN GROUP - down 79 cents to $4.62
Transurban Group successfully completed a $659 million placement of securities at $5.49 each after yesterday slashing its fiscal 2009 dividend guidance.
IRN - INDOPHIL RESOURCES NL - up 23 cents to $1.385
LST - LION SELECTION LTD - up 11 cents to $1.93
Indophil Resources NL chief executive Richard Laufmann has teamed up with a consortium to launch a $1.28 per share, $540 million, buyout of his company and trump a rival offer from Xstrata Plc.
BSL - BLUESCOPE STEEL LTD - up three cents to $12.06
BlueScope Steel Ltd has extended the terms of two tranches of a $1.192 billion three-tranche syndicated debt facility.
MAP - MACQUARIE AIRPORTS LTD - down 13 cents to $2.20
MQG - MACQUARIE GROUP LTD - down $2.15 to $46.60
Macquarie Airports Ltd said airline capacity reductions due to a higher oil price would have a limited impact on its business as traffic grew by seven per cent across its airports in May.
HER - HERALD RESOURCES LTD - up two cents to $2.95
Indonesian coal miner Bumi Resources says it is considering its position after its rival in the bidding war for Herald Resources Ltd, today declared its $553.56 million takeover offer unconditional.
