Wall Street slides on recession fears

Ben Bernanke has told a joint economic committee of Congress that the American economy will not grow much, if at all, over the first half of 2008 and could even contract slightly.

And he followed up with the comment, "A recession is possible."

However, the Fed chairman expects the stimulus of recent interest rate cuts and government spending measures to have an impact in the second half.

General Electric and computer giant IBM have been among the leading stocks suffering declines.

But a sharp recovery in crude oil prices has pushed producers like Exxon Mobil higher.

On the New York Stock Exchange, the Dow Jones industrial average has closed down 45 points at 12,609.

That compares to its surge yesterday of 391 points on optimism that the worst of the credit crisis was over.

The high-tech Nasdaq composite index is one point lower at 2,361.

In Europe, investors have shrugged off the recession warning from Ben Bernanke and pushed stock prices about 1 per cent higher in Germany, France and Britain.

London's FT-100 index has gained another 63 points to 5,916.

Local markets

Yesterday in Australia there was a burst of enthusiasm from investors after the earlier surge on Wall Street.

The All Ordinaries index jumped 130 points to close at 5,545, a gain of 2.4 per cent.

The banking sector led the way.

National Australia Bank shares climbed $1.37 to $30.50.

The gold sector was weaker after a drop in bullion prices, but other resource stocks fared a little better.

BHP Billiton was up 10 cents to $36.75.

Overnight on the Sydney Futures Exchange, the Share Price Index 200 contract closed up 21 points at 5,584.

The 10-year bond contract is down half a point at 93.81, with the implied yield rising to 6.19 per cent.

On foreign exchange markets, the Australian dollar jumped ahead overnight.

About 6:45am AEDT it was was being quoted at 91.48 US cents, up 0.75 of a cent on yesterday's local close.

On the cross-rates, it was at 0.5833 euros, 93.64 Japanese yen, 46.02 pence Sterling and against the New Zealand dollar it was at 1.157.

The gold price recovered overnight to be quoted at $US899 an ounce.

The spot price of West Texas crude oil had jumped $3.91 to $US104.83 a barrel.

Source: By Australian Broadcasting Corporation