Financial Watch

Oil prices dropped for the third straight day in New York on Thursday, amid continuing worries about the stability of the eurozone and a stunning sell-off in the US financial markets.

Crude futures had nudged higher earlier in the day but headed south as the euro dropped under 1.27 dollars, reaching the lowest level since March 2009.

New York’s main contract, light sweet crude for delivery in June, closed down 2.86 dollars to 77.11 dollars a barrel. Over the last three trading sessions, it has fallen 10.5 percent.

Emerging-market stocks headed for their worst week in 14 months and currencies slumped on concern Europe’s debt crisis will slow the global economic recovery and push up borrowing costs for governments worldwide.

The MSCI Emerging Markets Index dropped 1.8 percent to 935.17 by 10:40 a.m. in Hong Kong, extending this week’s retreat to 8.3 percent, the biggest decline since Feb. 20, 2009. The index has swung to a 6 percent loss for the year from a 5 percent gain over nine days. The Korean won declined 1.3 percent to 1,156.85 per dollar.

The U.S. Federal Reserve decided to leave interest rates unchanged, saying the current recovery will not result in rampant inflation, the board announced Wednesday.

The central bank kept the target range for its federal funds at between zero per cent and one-quarter of one percentage point, a record low level for the benchmark rate.

The Federal Open Market Committee (FOMC) — the group that meets concerning interest rates — said the U.S. recovery is still in an early enough stage that increased industrial production will not translate into higher prices any time soon.

Fewer US workers made first-time claims for jobless benefits last week, giving hope that accelerating economic growth would soon translate into job creation, official figures showed on Thursday.

Initial jobless claims fell by 11,000 to 448,000, according to the Department of Labor. Analysts were hoping for a bigger fall, but the decline brought claims to the lowest level in a month.

However, the less volatile four-week average of jobless claims remains elevated and rose last week by 1,500 to 462,500. Economists argue that claims need to fall to the low 400,000 level before US employers will begin adding consistently to payrolls.

Gold futures stayed lower early on Thursday after the government reported a drop in U.S. jobless claims in the latest week. Gold for June delivery was recently down $5.40, or 0.4%, to $1,166.40 an ounce.

The number of vacant housing units in the United States increased to a record 19 million in the first quarter of the year, up from 18.9 million in the fourth quarter, the Commerce Department reported Monday. About 14.5% of homes were vacant, with 4.4 million available to be rented and 2 million available to be sold.