* Dollar slides on track to biggest plunge in 23 years
* Oil surges nearly 9 percent on weak dollar, fuel data
* U.S. stocks rally sputters at end after Fed rate cut
* Commodity prices surge in record surge as dollar falls
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Oct 29 (Reuters) - Crude oil surged nearly 9
percent and other commodities notched record percentage gains
on Wednesday as the dollar posted its biggest one-day drop
since 1985 after U.S. interest rates were cut.
U.S. stocks fell in a steep sell-off in the last minutes of
trade, sapping a rally that had driven up the Dow and S&P by
more than 2 percent after the Federal Reserve slashed two key
interest rates.
The tech-laced Nasdaq rose slightly.
Wall Street sold off after the chief executive of economic
bellwether General Electric was reported as saying he aimed for
flat profit next year, even if revenues fall by 10 to 15
percent.
Spurred by a tumbling dollar, the Reuters-Jefferies CRB
commodities index <.CRB> surged 5.91 percent in its biggest
daily percentage gain since it was created five decades ago.
The dollar extended losses after the Fed's half percentage
point rate cut, sliding more than 2 percent against a basket of
major trading-partner currencies as the U.S. Dollar Index
<.DXY> fell in its largest single-day fall in 23 years.
Stock markets around the world rallied after Wall Street
posted its second-best point gain ever on Tuesday and on
expectations of a Federal Reserve rate cut, helping to ease
risk aversion and lead investors to pare their dollar
holdings.
Leading European stock indexes closed up about 7 percent as
bank and commodity stocks surged, and following a 7.7 percent
gain in Japanese stocks.
The risk-adverse yen rallied, retracing steep losses a day
earlier, as global recession fears persisted despite firmer
sentiment in equity markets around the world.
Oil surged to almost $69 a barrel as the weak dollar and
data from the U.S. government showed crude stocks rose less
than expected last week and gasoline supplies fell
unexpectedly.
Commodity prices soared across the board, with everything
from grains to metals and sugar rising on the weaker dollar.
Copper surged nearly 8 percent at one point, lifting other
industrial metals, while gold futures rose nearly 4 percent in
a rally that also boosted silver by almost 10 percent.
Comments by Jeffrey Immelt, the chief executive of General
Electric <GE.N>, helped spark the late-day sell-off on Wall
Street. Immelt disappointed investors when he told Dow Jones
Newswires that the big industrial conglomerate aims to keep
earnings in 2009 the same as this year's.
"People are blaming Immelt for this last minute drop," said
Eric Kuby, chief investment officer, North Star Investment
Management Corp. "But it's also what we've been seeing for the
past few weeks -- the end of day hedge and mutual fund
liquidations."
The Dow plunged more than 300 points in the last 12
minutes, dashing prospects for the first back-to-back gains in
a month.
The Dow Jones industrial average <> closed down 74.16
points, or 0.82 percent, at 8,990.96. The Standard & Poor's 500
Index <.SPX> sled 10.42 points, or 1.11 percent, at 930.09. The
Nasdaq Composite Index <> rose 7.74 points, or 0.47
percent, at 1,657.21.
General Electric shares fell 4 percent in the last minutes
of trading, to end down 1.5 percent at $19.20.
GE said after the market close that Immelt's earnings
comment was not new, CNBC television reported.
There were some brightspots. The costs for banks to borrow
dollars from each other over three months fell for a 14th
straight day, suggesting that confidence was returning in the
credit markets.
GM shares rose 8.2 percent to $6.76 after sources familiar
with the matter told Reuters that General Motors <GM.N> and
private equity firm Cerberus Capital Management have resolved
"major issues" in a proposed GM-Chrysler merger.
In Europe, stocks rallies, led by basic resources,
insurance and banking shares. The pan-European FTSEurofirst 300
<> jumped 7.51 percent to 897.06 points, and Britain's
FTSE 100 <> rose 8.1 percent to 4,242.54.
Basic resource providers were strong gainers as the sector
added 12.3 percent the pan-European index, with Anglo American
<AAL.L> climbing 20.9 percent, while Arcelormittal <MTP.PA> and
Salzgitter <SZGG.DE> both added about 12 percent.
Insurers were also in demand, led by Allianz SE <ALVG.DE>,
which added 26 percent, and Old Mutual <OML.L>, which raced
ahead 30 percent to top the sector.
In addition to Wednesday's rate cuts by the Fed, China and
Norway, traders and analysts anticipate the European Central
Bank and the Bank of Japan will trim rates to combat the crisis
in financial markets and a faltering global economy.
U.S. Treasury debt prices were break-even or lower.
The benchmark 10-year U.S. Treasury note <US10YT=RR> slid
47/32 in price to yield 3.86 percent, while the 2-year U.S.
Treasury note <US2YT=RR> fell 3/32 in price to yield 1.58
percent.
The dollar <JPY=> gained 5.29 percent against the yen at
97.70, while the euro <EUR=> surged 2.05 percent at $1.2722
against the dollar.
The dollar also fell against a basket of major currencies,
with the U.S. Dollar Index <.DXY> off 1.05 percent at 86.279.
U.S. crude <CLc1> rose $5.18 to settle at $65.47 a barrel
after hitting a session high of $68.91.
London Brent crude <LCOc1> settled up $6.71 a barrel to
$67.00, an 11 percent jump.
December gold futures <GCZ8> settled up $13.50, or 1.8
percent, at $754.00 an ounce in New York.
Japan's Nikkei stock index <> ended up 7.7 percent
after plumbing its lowest level since 1982 on Tuesday. The
Nikkei has fallen as much as 40 percent in the past month.
Asia-Pacific stocks outside Japan climbed 2.3 percent after
touching a 4-year low on Tuesday, according to an MSCI index
<.MIAPJ0000PUS>.
(Reporting by Ellis Mnyandu, Gertrude Chavez-Dreyfuss, John
Parry and Robert Gibbons in New York, Jan Harvey in London and
Tyler Sitte in Frankfurt; Writing by Herbert Lash; Editing by
Leslie Adler)
