* U.S. stocks slide on worries about new Fed program
* Oil falls more than $3 as optimism dims over Fed plan
* Debt prices rise on gloomy U.S. GDP data, Fed program
(Recasts with U.S. markets, adds byline; dateline previously
LONDON)
By Herbert Lash
NEW YORK, Nov 25 (Reuters) - U.S. stocks fell and bonds
rallied on Tuesday on worries that a massive new program from
the Federal Reserve won't be enough to shore up the faltering
U.S. economy.
Oil fell more than 6 percent to $51 a barrel, unraveling a
near 10 percent rally the previous session, as optimism faded
over the government's bailout of Citigroup on Monday and the
Fed's latest move to ease seized-up credit markets.
The dollar fell for a third day against the euro after a
Commerce Department report showed the U.S. economy contracted
in the third quarter at its fastest pace in seven years as
consumer spending plunged to a 28-year low.
The report sent spending-dependent technology shares lower,
cementing expectations that the Fed would again cut its
benchmark overnight lending rate when policy-makers meet next
month.
The Federal Reserve on Tuesday announced two new programs
aimed at making it easier for consumers to obtain loans for
homes, cars and on credit cards. It will buy up to $100 billion
of debt issued by home funding companies Fannie Mae and Freddie
Mac and the Federal Home Loan Banks, as well as buying up to
$500 billion of mortgage securities backed by Fannie Mae,
Freddie Mac and Ginnie Mae. It also launched a $200 billion
facility to support consumer finance.
Economists and analysts applauded the government efforts to
boost consumer loans, but on reflection, after yet another
massive multi-billion-dollar program, investors wondered how
much more money is needed to stem the financial crisis.
"Longer term, I think it's a bit disconcerting that the Fed
continues to try to get ahead of this. Every time they stop one
leak, they have to move to the next one," said Tom Alexander,
head of Alexander Trading in Savannah, Georgia.
"That's the question in the minds of not only market
participants but the guy on the street: What is going to
happen?" Alexander said.
The tech-rich Nasdaq fell more than 2 percent as worries
about the deepening global slump drove a sell-off in big-cap
technology shares. BlackBerry-maker Research In Motion <RIMM.O>
fell 10.6 percent and Apple <AAPL.O> fell 4.1 percent.
In another disconcerting development on the tech front,
analysts at UBS said network equipment maker Cisco <CSCO.O> is
planning a four-day shutdown to cut costs as it faces "soft"
demand. Cisco slid 6.3 percent.
After 1 p.m., the Dow Jones industrial average <> was
down 85.55 points, or 1.01 percent, at 8,357.84. The Standard &
Poor's 500 Index <.SPX> shed 6.77 points, or 0.79 percent, at
845.04. The Nasdaq Composite Index <> fell 26.40 points,
or 1.79 percent, at 1,445.62.
European shares eked out a gain as rising bank and energy
stocks offset declines in autos and drugmakers and a slide in
miner Rio Tinto after BHP Billiton dumped its bid.
The FTSEurofirst 300 <> index of top European shares
ended up 0.6 percent at 833.36 points.
Darren Winder, head of macro and strategy research at
Cazenove, said global efforts at getting economies back on
their feet will slowly stabilize sentiment.
"Fundamentally markets are bumping along the bottom with
high levels of volatility, and that pattern will continue.
Falls in profit haven't fully taken their course," he said.
Banks and energy stocks added the most points to the index,
with HSBC <HSBA.L> gaining 6.1 percent and Credit Suisse
<CSGN.VX> jumping 11.4 percent. BP <BP.L> added 1.5 percent and
BG Group <BG.L> rose 4 percent.
Rio Tinto <RIO.L> plummeted 37 percent after BHP Billiton
<BLT.L>, which rose 7.2 percent, abandoned its bid for the
group.
Longer-dated euro zone government bond yields fell,
tracking a steep fall in their U.S. peers, after the report on
U.S. gross domestic product and a report showing single-family
U.S. home prices plunged a record 17.4 percent in September
from a year ago.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
60/32 in price to yield 3.12 percent. The 2-year U.S. Treasury
note <US2YT=RR> rose 5/32 in price to yield 1.18 percent.
The dollar fell against a basket of major currencies, with
the U.S. Dollar Index <.DXY> off 0.67 percent at 85.14. Against
the yen, the dollar <JPY=> fell 1.96 percent at 95.14.
U.S. light sweet crude oil <CLc1> fell $3.37 to $51.13 a
barrel, as the bleak U.S. economic data renewed worries about
the outlook for demand.
Spot gold prices <XAU=> fell $3.60 to $815.95 an ounce.
Before the Federal Reserve unveiled effort to support the
U.S. financial system, Asian shares rallied and bonds fell
overnight after the U.S. government rescued Citigroup.
Japan's Nikkei average <> jumped 5.2 percent, resuming
trade after a public holiday, and MSCI's index of Asia-Pacific
stocks excluding Japan <.MIAPJ0000PUS> rose 3.8 percent.
(Reporting by Leah Schnurr, John Parry, Vivianne Rodrigues in
New York and Ian Chua, Jane Merriman, Sitaraman Shankar and Jan
Harvey in London; writing by Herbert Lash; Editing by Leslie
Adler)
