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US markets enter bear territory 

By James Quinn, Wall Street Correspondent

Last Updated: 1:09am BST 03/07/2008



Leading US indices closed in firm bear market territory for the first time in the current downturn as oil prices soared above $144 and General Motors faced further questions over its liquidity.

The benchmark Dow Jones Industrial Average closed down 166.75 points at 11,215.51, some 20pc below its October 2007 high – the classic definition of a bear market being a 20pc fall from its peak.

Likewise, the technology-focused Nasdaq index fell 53.31 points to 2,251.46 to enter its own bear market.

Traders moved to sell equities as oil soared to break a series of records, hitting a new intra-day high of $143.91, closing at a record settlement price of $143.57, only to go on to touch a new all-time high of $144.32 in after-hours trading.

The markets were also weighed down by GM, one of the Dow’s 30 constituents, whose shares dipped below the $10-mark for the first time since 1954, down 15.1pc at the close at $9.98.

The slump was caused by Merrill Lynch analyst John Murphy who said GM needed to raise up to $15bn (£7.56bn) to get through this year and next. GM insisted it has enough cash to get through 2008, and can sell assets and make other moves in 2009.

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