Stock markets and oil price fall on economic woes

World stocks were lower this afternoon as US unemployment claims rose to a 16-year high and concerns of the bank giant Citigroup…

World stocks were lower this afternoon as US unemployment claims rose to a 16-year high and concerns of the bank giant Citigroup and US car makers persisted.

Citigroup Inc shares tumbled to a 13-year low yesterday as investors questioned the survival prospects of the US banking giant. The stock opened down 9.5 per cent at $5.79.

Shares had risen in pre-market trading yesterday after Saudi Prince Alwaleed said he had boosted his stake in Citigroup back to 5 per cent from less than 4 per cent.

The Swiss National Bank cut rates by 100 basis points yesterday to a target range for 3-month Swiss franc Libor of 0.5 to 1.5 per cent, joining central banks elsewhere who have cut rates sharply to boost their economies.

"This move clearly signals that the SNB are concerned about deflationary risks. This joins them with the Fed and BoE who have also expressed similar concerns in recent weeks," said UBS analysts in a client note.

Oil plunged below $50 a barrel today, deepening losses over the previous four sessions as battered financial markets reflected ever lower confidence in the world economy and evidence mounted of falling fuel demand.

US crude fell $3.71, to $49.91 a barrel by 2.02pm, the weakest level since January 2007.

In Dublin the Iseq index was 3.4 per cent lower as Anglo Irish Bank and Bank of Ireland surrendered some early gains. At 2.45pm Anglo Irish Bank was over 7 per cent higher at 99 cents while Bank of Ireland was ahead 5.7 per cent at €1.11.

Irish Life and Permanent shares fell sharply today, dropping almost 20 per cent to €1.15.

In London the FTSE was off 2 per cent, Germany's DAX was 2.3 per cent lower at 2.45pm while the CAC40 in France was 3.2 per cent down. The Dow Jones index was behind 1.7 per cent with GM stock sliding over 10 per cent in early trade.

The MSCI world equity index fell to 197.72, its lowest since May 2003, and was trading at 198.52 at 12.50pm, down 2.04 per cent on the day.

US stock futures were down 0.79 per cent and the FTSEurofirst 300 index of leading European shares was down 2.5 per cent, after earlier hitting a 5-1/2 year low.

Federal Reserve officials slashed economic growth forecasts through 2009 yesterday, with the lower range of the Fed's central tendencies forecasting the US economy could shrink by 0.2 per cent.

Oil fell by more than $1.50 a barrel to 22-month lows at $51.95, as the slumping global economy hit demand.

Two-year US Treasury yields hit record lows at 1.06 per cent on expectations of a 50 basis point US rate cut to 0.50 per cent next month. Thirty-year yields hit their lowest since the early 1960s.

Euro zone government bond yields hit their lowest since July 2005 at 2.095 per cent. The dollar trimmed earlier losses but was down 0.27 per cent to 95.65 against the safe-haven yen, and edged lower against the euro to $1.2547.

Agencies