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WORLD> Global General
Dismal economy sinks oil below $37
(Agencies)
Updated: 2008-12-19 08:48

But on a more positive note, Citigroup Inc said it boosted its lending after receiving government money under the $700 billion Troubled Assets Relief Program.

The giant financial group has received $45 billion from TARP, a program that critics say banks have used for writedowns and loan losses rather than new loans to get the economy moving.

The latest batch of data on the sickly US labor market showed little sign of improvement last week, and continued weakness in the manufacturing sector held out no hope that unemployed workers would find a place in struggling factories.

In Germany, corporate sentiment deteriorated sharply in December, with manufacturers of export goods suffering acutely, the closely watched Ifo survey showed.

The Ifo research institute said it had to go back to 1982 to find such a weak index level.

"The German economy is in the middle of a severe recession but it is still unclear how large this recession will be," said ING Financial Markets' Carsten Brzeski.

British retail sales rose unexpectedly in November, but government borrowing hit a record monthly high, and mortgage lending plunged 51 percent year-on-year.

French Prime Minister Francois Fillon said no European country will avoid contraction in 2009.

The head of the International Monetary Fund predicted a US recovery by early 2010 but said his assessment was "plagued with uncertainty."

Near Zero Rates Loom

With the Bank of Japan expected to cut its interest rate closer to zero on Friday, Bank of England Deputy Governor Charles Bean told the Financial Times that zero rates were also a possibility in Britain.

The UK central bank has already slashed rates by three full points to 2.0 percent since October.

The BoJ is forecast to cut rates from an already minimal 0.3 percent after the dramatic Fed cut Tuesday, but to stop short -- for now -- of reviving a policy of flooding markets with cash.

Stocks settled on those expectations with Japan's Nikkei average closing 0.6 percent higher.

European stocks ended lower, and US stock market indexes fell on both oil and Standard & Poor's threat to strip General Electric of its 'AAA' credit rating.

The Dow Jones industrial average tumbled 219.35 points, or 2.49 percent, to 8,604.99 while the Standard & Poor's 500 Index dropped 2.12 percent to 885.28.

Investors, meanwhile, continued to flock to the safety of US Treasuries, sending the yield on the 30-year note to a record low below 2.53 percent.

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