NEW YORK: U.S. stocks fell Thursday after a pair of reports showed that the economy nearly stalled in late 2007 and that unemployment claims rose last week.

Investors were disappointed to see the Commerce Department report saying fourth-quarter gross domestic product rose by a smaller-than-expected annual rate of 0.6 percent. And separately, the Labor Department reported that first-time unemployment claims rose last week by 19,000 to 373,000, the highest level since late January.

The data bolstered investors concern that the economy is weakening sharply - and those worries escalated further Thursday when the dollar dipped to a new low against the euro.

Meanwhile, corporate news was similarly downbeat. Sprint Nextel posted a $29.5 billion loss in the fourth quarter after writing down the remaining value of its Nextel Communications buy and losing customers. It also slashed its dividend, and shares tumbled 70 cents, or 7.8 percent, to $8.25.

The Dow Jones industrial average dropped 94.51, or 0.74 percent, to 12,599.77.

Broader stock indicators also lost ground. The Standard Poors 500 index declined 8.59, or 0.62 percent, to 1,371.43, and the Nasdaq composite index lost 11.75, or 0.50 percent, to 2,342.03.

Government bonds rose as stocks fell. The yield on the benchmark 10-year Treasury note, which moves opposite its price, sank to 3.75 percent from 3.85 percent late Wednesday.

The stock market this week has been hit by a series of complex developments, including regulatory changes that should enable mortgage companies Fannie Mae and Freddie Mac to put badly needed liquidity into the housing sector. There have also been indications that funding may be found for ailing bond insurers.

Fannie Mae rose $1.37, or 5 percent, to $28.64, and Freddie Mac rose $1.44, or 5.7 percent, to $26.53.

The Bond insurer MBIA fell 65 cents, or 4.4 percent, to $14.20, while another large bond insurer, Ambac Financial, fell 22 cents to $11.85.

Housing market news was dim. Thornburg Mortgage plunged after the mortgage lender said it has received margin calls - calls for immediate repayment of debt - on a portfolio of securities backed by alt-A mortgages. Alt-A mortgages are those given to customers with little credit history or minor credit problems.

Thornburg fell $2.29, or 20 percent, to $9.25.

Crude oil jumped $1.25 to $100.89 a barrel on the New York Mercantile Exchange. Gold prices also advanced.

WASHINGTON: The economy skidded to a near halt in the final quarter of last year, clobbered by dual slumps in housing and credit that caused people and businesses to spend and invest more sparingly.

The Commerce Department reported Thursday that the gross domestic product increased at a scant 0.6 percent pace in the October-to-December quarter. The reading Д unchanged from an initial estimate a month ago Д underscored just how much momentum the economy has lost. In the prior quarter, the economy clocked in at a brisk 4.9 percent pace.

Gross domestic product measures the value of all goods and services produced in the United States and is the best barometer of the countrys economic health.

“The economy just kept its head above water,” said Nigel Gault, economist at Global Insight.

Economists had thought the newly released fourth-quarter GDP would have been bumped up to a 0.8 percent growth rate.

The housing picture looked even more bleak in the new report.

Builders slashed spending on housing projects by a whopping 25.2 percent on an annualized basis in the fourth quarter, the biggest cut in 26 years.

And, even though economic growth slowed, inflation picked up Д an ominous mix that could spell further trouble for the economy.

As if the newly confirmed fourth-quarter GDP figure of 0.6 percent wasnt chilling enough, the Labor Department reported Thursday that new applications for unemployment insurance benefits rose by 19,000 to 373,000 last week, more evidence that the general economic sluggishness is spilling over into the job market.

On Wall Street, the latest batch of economic news rattled investors. The Dow Jones industrials were down in morning trading.

Fears have grown that the country is heading for a recession or is already in one.

The National Association for Business Economics expects economic growth in the current January-to-March quarter to slow to a meager 0.4 percent pace. Some analysts believe the economys performance could be even worse and actually shrink during this period. Under one rough rule, the economy would have to contract for six months in a row for the country to be viewed as in a recession.

With risks lurking that the problems could intensify and further hurt the economy, Federal Reserve Chairman Ben Bernanke made clear he stands ready to lower a key interest rate again. The Fed, which started cutting interest rates to bolster the economy in September, has turned much more aggressively recently. In eight days in January, the Fed slashed rates by 1.25 percentage points Д the biggest one-month reduction in a quarter-century. Rates are expected to move lower at the Feds next meeting on March 18.

Bernanke, however, is hopeful that previous rate reductions and the $168 billion economic aid plan of tax rebates for people and tax breaks for business will energize the economy in the second half of 2008.

A gauge of inflation linked to the GDP report showed that “core” prices Д excluding food and energy Д grew at a rate of 2.7 percent in the fourth quarter. The inflation reading Д although unchanged from the governments initial estimate Д showed that inflation had picked up sharply from the third quarters 2 percent pace.

The inflation figure is above the Feds comfort zone Д the upper bound of which is a 2 percent inflation rate.

With inflation rising as the economy slows, fears are increasing that the country may be headed for a bout of stagflation. Thats a scenario the country hasnt experienced since the 1970s.

Even though Bernanke has made clear the Feds top priority Д for now Д is trying to get the economy back on track, he also says he remains mindful of inflation risks, especially from high energy prices.

Oil prices have reach new record highs, galloping past $100 a barrel in recent days. High energy prices can spread inflation by boosting the costs of a wide variety of other goods and services and can put a further damper on overall economic growth by crimping consumer spending.

Consumers boosted their spending at just a 1.9 percent pace in the fourth quarter. That was down slightly from the governments previous estimate and marked a pullback from the third quarters 2.8 percent growth rate. Consumer spending accounts for a big share of overall economic activity and thus is a major factor in how the economy fares.

Business spending on equipment and software grew at a 3.3 percent pace in the final quarter of last year. That was lower than the governments initial estimate and marked a deceleration from the third quarters 6.2 percent growth rate.

CHINA launched a nationwide safety campaign yesterday as its reputation was hit by fresh scares over lead and other poisons in consumer goods.

The latest problems are another blow to the “Made in China” brand, but experts said exports to the rest of the world were expected to continue rising, with the current furore likely to be little more than a blip in the country’s surging growth.

Already this month, Mattel has recalled millions of toys because their paint may have contained too much lead.

In the United States yesterday, the Consumer Product Safety Commission said an importer had recalled nearly 250,000 SpongeBob SquarePants address books and diaries made in China because the bindings might contain hazardous levels of lead paint. And in Saudi Arabia, the government said seven brands of Chinese toothpaste had been removed from shops after they were found to contain traces of a poisonous chemical, diethylene glycol, used in coolants and solvents.

A cabinet-level panel in China unveiled the safety drive, which will focus on food and drugs, as well as increased monitoring of exports, underscoring the government’s ongoing efforts to win back the confidence of consumers.

“There are still many problems in product quality and food safety in some places, industries and companies,” said the vice premier, Wu Yi, who is heading the panel.

The programme, which will run to the end of December, will ban false advertising, require all food producers to be certified and increase inspections for food, drugs and agricultural products.

She also said production areas for exported food would be examined and packaging would have inspection and quarantine symbols.

State media also reported that toy makers were to face tougher quality checks in Guangdong province, where many of the recalled Mattel toys were made.

China has promised to spend 500 million by 2010 to improve food and drug safety and to inspect farms, factories and ports.

Analysts said they did not believe China’s export boom would be irreparably damaged by the quality problems.

Professor Shujie Yao, the head of the School of Contemporary Chinese Studies at Nottingham University and a researcher for the China Policy Institute, said: “I think this is maybe just a hiccup. I wouldn’t think this was going to significantly damage the export performance of Chinese goods.

“If you look at the proportion of recalled products to total exports, it’s a tiny fraction - China exports probably close to one trillion US dollars’ worth of goods per year. I think politicians may want to exaggerate the impact of this issue because China is generating a large trade surplus with the US and the European Union.”

Higher safety standards forced on manufacturers by the latest scares may also strengthen Chinese exports in the long run - albeit making them more expensive and, therefore, slightly slowing the rate of export growth.