The International Energy Agency (IEA), the energy adviser to 28 developed nations including Ireland, today cut its 2009 global oil demand forecast for a third month as world economic growth deteriorates.

The IEA lowered its 2009 estimate by 670,000 barrels a day, or 0.8%, to 86.5 million barrels a day - - see lower end of page.

On Wednesday, US Treasury Secretary Henry Paulson abandoned a plan to buy toxic assets from financial firms and announced a switch to supporting consumer credit markets that had ground to a halt  --  see link to story in box below.

The Dow Jones Industrial Average ended with a third straight day of losses, down 411.30 points, or 4.7%, at 8282.66. Industrial giant General Electric's shares fell 8.5% after it said the federal government will backstop up to $139 billion of debt issued by GE Capital. Citigroup dipped 10%, closing under $10 for the first time in more than 10 years.

Embattled General Motors, which on Tuesday fell to a 1943 low, rose  5%.

The Nasdaq Composite Index dipped 5.2% to a 5-year low and the S&P 500 also tumbled 5.2%.

Goldman Sachs' shares fell 10.6%.

Crude futures fell $3.17 to $56.16 a barrel in New York

Intel cut its financial forecast for the current quarter, the latest signal of a drop in computer sales.

The chip giant said a fourth-quarter revenue range that points to a sales drop of around 12% from the third quarter. In mid-October, Intel had projected sales would rise 3% over the same period.

Intel also said its gross profit margin would be considerably lower than its prior prediction.

Intel's shares dropped 7% in after-hours trading on the Nasdaq Stock Market.

In Asia, the MSCI Asia Pacific Index fell 4.7% on Thursday.

Japan’s Nikkei 225 Stock Average dropped 5.3% and China’s CSI 300 Index rose 4%.

Asia-Pacific - benchmarks

Willem Buiter, Professor of European Political Economy, London School of Economics comments on his FT blog today: "I’m afraid this post is going to be rather boring (the comment “What’s new?” is taken as made). I intend to take you on a trip through Barack Obama’s Transition Economic Advisory Board.

The mean age is 61.9 years and the median is 60. Old age is good. I plan to enjoy it extensively and expect to be listened to respectfully by young whippersnappers. But even so… The youngest member is 49 years old. Were there no persons in their early 40s, their 30s or their late 20s who could brighten up this sexagenarian coterie?"

European Central Bank President Jean-Pierre Fauque, comments in an article in the FT today:"Modern financial systems have favoured instruments and intermediaries that promise large returns in the short term. Institutions come under pressure to follow the strategies of those able to show high short-term profits. This process tends to lead to herding behaviour, in which risk controls easily become a secondary issue. We need to counter these mechanisms and establish the right incentives for achieving a balance between short-term and long-term investors and intermediaries. Incentives for market participants need to be strengthened in this respect, including through revised internal compensation schemes.

The second point concerns transparency. Despite all regulatory advances and progress in information technology, the financial system has been characterised by a lack of transparency about the ultimate allocation of risks. Two examples are the sheer complexity of structured financial products, which even sophisticated investors are not able to assess properly, and the lack of regulation for certain financial institutions. Regulators therefore need, in particular, to tighten up requirements for markets in which structured financial products are traded and strengthen reporting requirements for formerly unregulated institutions.

Finally, pro-cyclical behaviour is pronounced in financial systems. But in the present global financial system there are mechanisms that intensify fluctuations. The challenge is to preserve an efficient financial system as an engine for economic growth and at the same time ensure its stability. For example, capital regulations and provisioning rules as agreed by the Basel committee on banking supervision, and industry governance structures, especially in the area of risk management, need to restrain excessive risk-taking in upturns and discourage excessive conservatism when credit to companies and households is most needed."

In Europe, the Dow Jones 600 is down 0.73%.

The ISEQ Is up 1.65 in Dublin.

Bank of Ireland has risen almost 75 after publication of its half-year interims today - - see box above.

IL&P has fallen 7%.

Goodbody analyst Liam Igoe said today on Paddy Power's Interim Management Statement:"In its IMS this morning, Paddy Power has reaffirmed its guidance for the full-year and we are consequently retaining our forecasts for FY08. Its on-line operations continues to show strong resilience in the face of the economic downturn, though growth was down on the exceptional growth in H1 (+28% sportsbook and +46% gaming on a constant currency basis, or +17% and +30%, respectively, on a nominal basis. In the 19 week period to November 10th, online and telephone sportsbook grew by 13%, while online gaming gross win grew by 15%. However, the recessionary forces have been particularly felt in the retail side of the business. Here, like-for-like turnover fell 9% in October in Ireland and the UK. The only bright spot was in the UK machine category, where gross win increased by 22% (constant currency).

While the online performance is performing broadly as we anticipated, the retail side has weakened noticeably in recent months. In particular, our assumed 5% like-for-like retail turnover declines now look optimistic for FY09. We are, therefore, going to revise our assumptions to declines of circa 10% for the retail operations. This will reduce our forecast EPS for FY09 to circa 111c from 126c (or -12%). Despite this downgrade, the valuation metrics remain in-line with its main UK peers, with its traditional premium dissipated. Whilst it may be impossible to forecast precisely the actual severity of the economic downturn next year and its actual impact on companies, such as Paddy Power, its strong online business should give it the capability to weather the storm better than its main peers and, as such, its relative rating is undemanding."

Rossa White, an economist at Davy says rare good news due in Ireland today:"The only good news that Ireland has received this year is the habitual consequence of recession in the developed world. It is that inflation is falling fast. There are three effects for Ireland: interest rates are set to drop even further; commodity prices have collapsed; and service sector inflation will decline further, in line with an economy growing way below trend. CPI inflation may drop to 0% next year, meaning that each euro earned is worth a full euro in terms of spending power.

Today's inflation data (for October) will show a gradual slowdown in inflation but not a sudden stop. The big impact will be saved for the eight months from October to June, when we see the annual rate of inflation dropping from 4% to outright deflation, based on the Consumer Price Index. The European standardised measure for Ireland – the HICP – won't record deflation by mid-summer next year as it excludes mortgage interest. Nonetheless, inflation on that measure will dip below 1%.

For households, this is welcome respite. Note that the euro's strength against sterling has a bigger impact on lowering import prices than movements against the dollar. That may lower inflation even more rapidly. Despite the boost to real incomes, we still expect consumer spending to drop next year. But it would be a lot worse were it not for the fact that Ireland is such an open economy with a large reliance on imports."

Deirdre Ryan, Goodbody economist says MPC gives green light to further UK rate cuts:"It is agreed that base rates in the Eurozone and the UK have some way lower to go yet, given the differential that still exists with interest rates in the US. Yesterday’s Inflation report from the Bank of England clearly gives the green light to further easing in monetary policy and paints a pretty dismal assessment of the near term outlook for the UK economy. From a projection in August which incorporated a ‘quarter or two’ of negative growth, the central projection in yesterday’s report is for over a year of negative output, with annual growth forecast to slip to -2% by mid ‘09, after which a gradual recovery is forecast. Over this period, CPI inflation, currently at 5.2% is projected to fall back sharply, possibly into negative territory, and will likely lie ‘well below the 2% target’ at the end of the two year time horizon.

Both of these projections are based on implied market yields, although these were taken before last weeks rate cut. Market expectations for rates in Q309 were 2.8% according to the report, although these have fallen back somewhat since as the risks of deflation emerge further. The Governor yesterday was adamant in stating that the MPC “will do whatever is necessary to get CPI inflation back to target” in the medium term. The possibility of a fiscal package was also highlighted as a possible upside risk to output and is something which has not been incorporated into forecasts. Some forms of fiscal initiatives, including tax cuts or increased public spending, are expected to be announced as part of the Pre-Budget report due on the 24th of this month. Nevertheless, such measures are unlikely to prevent rates dropping below 2% by mid ’09 in our view. After finding themselves behind the curve for so long, the MPC is now struggling to get ahead."