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European Central Bank cuts rates to 2 percent

European Central Bank cuts interest rates by half percentage point to 2 percent

FRANKFURT, Germany (AP) -- The European Central Bank cut its interest rates by a half percentage point to 2 percent on Thursday, moving to protect the continent's economy against a deep recession amid increasingly grim economic data.

The decision to cut the main refinancing rate from 2.5 percent was in line with market expectations and left the rate at its lowest level since December 2005. It followed a three-quarter point cut last month.

"Despite some apparent earlier reluctance to cut interest rates significantly in January after reducing them by 175 basis points over the previous three months, the ECB really had little option but to act again given the clear, widespread evidence that the euro zone recession is deepening," IHS Global Insight economist Howard Archer said after Thursday's decision.

With euro zone inflation heading lower, "the ECB had ample scope to cut interest rates further," he argued.

The ECB has now reduced interest rates on four occasions since October from a high of 4.25 percent, though it has stopped short of the more aggressive cuts enacted by the U.S. Federal Reserve and the Bank of England.

In an unprecedented move last month, the Fed ratcheted down its rate to hover between zero and 0.25 percent. The Bank of England cut its rate last week by half a percentage point to 1.5 percent.

New jobless claims increase more than expected

New claims for jobless benefits rise more than expected as workers file delayed requests

The Labor Department reported Thursday that first-time requests for unemployment insurance jumped to a seasonally adjusted 524,000 in the week ending Jan. 10, from an upwardly revised figure of 470,000 the previous week. Analysts had expected 500,000 new claims.

US foreclosure filings up 81 percent in 2008

Foreclosure filings soared 81 percent last year as mortgage crisis proves worse than expected

WASHINGTON (AP) -- More than 2.3 million American homeowners faced foreclosure proceedings last year, an 81 percent increase from 2007, with the worst yet to come as consumers grapple with layoffs, shrinking investment portfolios and falling home prices.

Nationwide, more than 860,000 properties were actually repossessed by lenders, more than double the 2007 level, according to RealtyTrac, a foreclosure listing firm based in Irvine, Calif., which compiled the figures.

Moody's Economy.com, a research firm, predicts the number of homes lost to foreclosure is likely to rise by another 18 percent this year before tapering off slightly through 2011.

Still, foreclosures -- which keep breaking records going back 30 years, according to the Mortgage Bankers Association -- are likely to remain well above normal levels for years to come, and that will continue to keep home prices from rebounding.

December wholesale prices fall 1.9 percent

Wholesale inflation drops for fifth month as gasoline prices fall by record amount

WASHINGTON (AP) -- Another huge plunge in energy costs sent wholesale inflation down for a fifth straight month in December, closing out a year in which prices dropped by the largest amount in seven years.

The Labor Department said Thursday that wholesale prices fell by 1.9 percent in December, close to the 2 percent decline that economists had expected.

For the year, the government says wholesale prices fell by 0.9 percent, the first annual decline since prices had fallen by 1.6 percent in 2001. That was also a year in which the country was in a recession

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