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Jan 30, 2009

Job losses in US send markets tumbling

News of more job losses and further depressing US economic news combined to send stock markets tumbling on both side of the Atlantic yesterday.

Investors took fright, with the Dow Jones index tumbling 226 points – 2.7pc – to 8149.01 at close. In London, the FTSE100 closed down 105.09 points – 2.45pc – at 4190.11.

Photography group Eastman Kodak is to make up to 4,500 staff redundant, just a year after halving its workforce.

Car manufacturer Ford is also axing 1,200 workers in its credit division, as it reported its biggest-ever loss.

The redundancies bring the total number of jobs lost in the US in the last four days to over 100,000 and the total for January is now likely to be the biggest in this recession.

Employment data released yesterday showed that those claiming unemployment benefit for the first time rose to 588,000 in the week to January 24, up from 585,000 in the preceding week.

Those claiming benefits for more than a week rose 159,000 to 4.776m – the highest on record.

Ford is making its job cuts having just closed the books on its worst year – in financial terms – in its 105-year history.

The company reported a 2008 loss of $14.6bn (£10.22bn) – equivalent to a loss of $2,700 for every vehicle sold during the year.

Chief executive Alan Mulally again stressed that Ford will not need a bridging loan from the US government unless it is impacted by extraordinary circumstances, such as the collapse of a competitor.

Ford – which did not receive any state aid in December's $17.4bn bail-out of its two main rivals, General Motors and Chrysler – ended the year with $24bn in cash but $25.8bn of debt. The manufacturer said it intends to utilise some of $10.1bn of credit lines available to it as it continues to restructure its business.

Eastman Kodak's sales tumbled by 24pc in the fourth-quarter, leading to a net loss of $137m.

Chief executive Antonio Perez said the second-half was "one of the most challenging periods we have seen in decades".

Sales of traditional camera equipment fell by 27pc, and digital equipment by 23pc.

Source : Telegraph
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