A US government decision to take a bigger shareholding in Citigroup and data showing the economy shrank faster than expected in the December has taken Wall Street stocks to near 12-year lows. Citigroup plunged 39% after the Treasury agreed to convert as much as $US25 billion of preferred shares into common stock in a third rescue attempt. Citigroup sank 96USc to $US1.50, an 18-year low, as the government took its stake to 36% and cut shareholders’ stake by 74%. More than 1.8 billion of the bank’s shares changed hands, setting a record for trading volume for a US stock. The Dow Jones Industrial Average fell 119.15 points, or 1.7%, to 7062.93, leaving it 50% below its 2007 record and at its lowest level since May 1997. The weekly fall was 4.5% and the monthly drop 11.7%. The S&P 500 lost 2.4% to 735.09, its lowest close since December 1996, for a weekly fall of 4.5% and a monthly drop of 11%. Bank of America Corp. tumbled 26%, snapping a four-day rally in an S&P 500 group of banks. Bank of America dropped $US1.37 to $US3.95 while Wells Fargo, both also recipients of US funds, slumped 16% to $US12.10. Alcoa and Boeing fell more than 3.8% after the Commerce Department said gross domestic product contracted at a 6.2% annual pace in the fourth quarter. Canadian stocks fell for the first time in three days, led by financial companies, after economic weaker US demand and lower energy prices drove the account deficit to the widest in almost a decade. The Standard & Poor’s/TSX Composite Index fell 63.80 points, or 0.8%, to 8123.02, retreating from Thursday’s gain of 3.2%, the biggest rally this year. The benchmark index hit a five-year low on February 23 and has lost 10% this year. The index rose 2.2% this week to pare its February loss to 6.6%. European stocks fell, capping the Dow Jones Stoxx 600 Index’s sixth straight monthly drop. It sank 1.8% to 172.92, extending its weekly drop to 2.3%. UK stocks fell for the first time in three days, led by banks, commodity producers and insurers. Lloyds Banking Group tumbled 22% in London after saying it hadn’t reached agreement on a government asset insurance programme. Royal Bank of Scotland Group fell 20% after reporting the UK’s biggest corporate loss. The FTSE 100 Index dropped 85.55 points, or 2.2%, to 3830.09, a 1.5% fall over the week. Germany’s DAX Index retreated 2.5% to 3843.74, its lowest level since September 2004. The fall over February was 11%. France’s CAC 40 Index fell 42.36, or 1.5%, to 2702.48, taking the week’s drop to 1.8%. It declined 9.1% in February. Commodities: Oil, gold fall Crude oil fell for the first time in four days on concern energy demand will decline because the US economy is weaker than expected. Prices also retreated as the dollar strengthened, reducing the appeal of commodities as an alternative investment. Crude oil for April delivery fell 46USc, or 1%, to settle at $US44.76, up 7.4% this month and 0.4% so far this year. Gold fell, capping the first weekly loss in three, as the dollar strengthened to the highest level since April 2006. I Gold futures for April delivery fell 10USc to $US942.50 an ounce in New York, leaving it down 6% for the week, the first decline since February 6 and the biggest since December 5. Currencies: Dollar stronger, pound weakens The dollar rose to the highest in almost three years against a basket index comprising the euro, yen, pound, Swiss franc, Canadian dollar and Swedish krona. The pound touched a one-week low against the dollar as consumer confidence in the UK held near the weakest in 30 years. The dollar gained 0.6% to $US1.2663 per euro in New York and decreased 1% to ¥97.54. The euro dropped 1.6% to ¥123.52. The pound weakened to $US1.4240, leaving it 1.2% lower this week. It was also down 1.6% at ¥138.81 and 89.16p against the euro, a decline of 1.2% in the past four weeks.

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