Wall Street stock futures fell sharply Friday after the U.S. Senate rejected a US$14 billion bailout for the auto industry and investors worried about the potential for massive job losses.

General Motors Corp. and Chrysler LLC have said they could run out of cash within weeks without government help.

If one of the automakers declared bankruptcy, some estimate as many as 3 million U.S. jobs could be lost next year.

An aid package for the Canadian auto industry was expected to be announced today, but that is now in doubt.

Meanwhile, sales of new motor vehicles were down 0.9% in October to 140,158 units, Statistics Canada reported Friday. The decline was due entirely to lower sales of passenger cars.

Separately, StatsCan said Canadian industries reduced their use of production capacity for a fifth straight quarter in the third quarter, with a majority of sectors, especially the automobile and construction sectors, contributing to the downturn.

The Canadian dollar opened at US80.32¢, down 0.74 cent after rising 1.67 cents yesterday.


In a speech Friday to the Saint John Board of Trade, Finance Minister Jim Flaherty said panicking in the face of the global economic crisis would be “devastating” for Canada.

Flaherty reiterated his position that Canada is better positioned to cope with the global economic crisis than other countries, including the United States.

South of the border, U.S. retail sales sank 1.8% in November. Excluding food and autos, sales were down 1.6%.

Meanwhile, U.S. wholesale prices sank 2.2% in November, the fourth straight monthly decline.

In financial industry news, Bernard Madoff, former Nasdaq Stock Market chairman and the founder of Bernard L. Madoff Investment Securities LLC, was arrested and charged with securities fraud in what federal prosecutors called a Ponzi scheme that could involve losses of more than US$50 billion.

Meanwhile, Bank of America Corp. said it expected to cut as many as 35,000 jobs over the next three years, including some from investment bank Merrill Lynch & Co., which it agreed to buy in September.

In commodities news, light, sweet crude fell $2.58 to $45.40 in electronic premarket trading on the New York Mercantile Exchange.

Overseas, markets suffered sharp losses in Europe and Asia.

Japan’s Nikkei stock average plunged 5.56%.

In afternoon trading, Britain’s FTSE 100 was down 3.92%, Germany’s DAX index was down 4.80%, and France’s CAC-40 was down 5.35%.

On Thursday, the S&P/TSX composite index fell 242.1 points, or 2.8%, to finish the day at 8,931.9.

Financial companies experienced the sharpest fall, down 3.4%.

The S&P/TSX Venture composite gained 7.9 points, or 1.1% to end at 713.44.

Markets south of the border tumbled after the U.S. Labour Department said initial jobless claims increased by a bigger-than-forecast 58,000 to 573,000 in the week ended Dec. 6, the highest level since November 1982.

The Dow Jones industrial average fell 196.33 points, or 2.24%, to close at 8,565.09.

The Nasdaq composite dipped 57.6 points, or 3.7%, to finish at 1,507.88 and the S&P 500 index dropped 25.65 points, or 2.9% to 873.59.

IE