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US close: Financial woes hit confidence

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Date: Tuesday 26 Aug 2008

LONDON (ShareCast) - Wall Street fell Monday, as credit market woes returned to fore, oil prices experienced volatility and the dollar weakened.

The Dow Jones industrial average fell 241 points to 11,386, the broader Standard & Poor's 500 fell 25 points to 1,266 while the Nasdaq composite lost 49 points to 2,365.

Insurance giant American International Group fell sharply after Credit Suisse cut their third quarter profit forecast and lowered its 12-month price target on the stock. Lehman Brothers also fell as rumours that a Korea Development Bank is eyeing the firm eased.

Financial fell across the board with shares in JP Morgan Chase, Wells Fargo, Washington Mutual and Bank of America among the biggest losers. Shares in Fannie Mae and Freddie Mac however did manage to recover from last week’s slump, after traders cheered Freddie's strong debt offering.

Investors also digested a housing report, which showed existing home sales rose to a five-month high in July, beating forecasts, although home prices fell.

Traders will be looking ahead to Tuesday’s reports on July new home sales, August consumer confidence and the minutes from the last Federal Reserve policy meeting. Otherwise trading was thin on the ground Monday.

Oil prices experienced a volatile session with US light crude oil for October delivery settling up 52 cents at $115.11 per barrel on the New York Mercantile Exchange.

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