US stocks plunge as IMF predicts more losses

July 29th, 2008 - 7:24 am ICT by IANS  

New York, July 29 (DPA) Major US stock indices have posted steep drops after the International Monetary Fund (IMF) predicted more losses for financial institutions and “no bottom” in sight to the US housing crisis. The IMF stood by its prediction of $1 trillion combined losses in the financial sector stemming from the one-year-old credit crisis in the US- more than double the writedowns reported to date by banks and mortgage lenders.

In an update of an April report on financial-market stability, the IMF Monday said banks had done well to raise extra capital in the current environment, but that bank balance sheets remained under stress.

Recent housing indicators provided few signs that the sharp drop in prices and record number of foreclosures would end anytime soon, the IMF said.

An index of financial stocks dropped 4.6 percent on the day.

The blue-chip Dow Jones Industrial Average plunged 239.61 points, or 2.11 percent, to 11,131.08. The broader Standard & Poor’s 500 Index tumbled 23.39 points, or 1.86 percent, to 1,234.37. The technology-heavy Nasdaq Composite Index dropped 46.31 points, or two percent, to 2,264.22.

The dollar fell to 63.52 euro cents from 63.68 euro cents Friday, and to 107.43 Japanese yen from 107.87 yen.

Gold edged up 90 cents to $937.80 per fine ounce.

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