Page last updated at 13:47 GMT, Thursday, 25 September 2008 14:47 UK

Tough markets prompt GE warning

General Electric
GE is often considered to be a barometer of the US economy

General Electric (GE) has cut its earnings forecasts blaming turmoil in the financial markets for the move.

Third-quarter profits are now expected to come in at 43-48 cents per share, down from a previous forecast of 50-54.

The US industrial conglomerate also cut its earnings forecast for the full-year to $19.5bn-$21bn against an earlier prediction of $22bn-$23bn.

GE added it would be taking a number of steps - including suspending its stock buyback - to boost its funds.

The group also said it planned to leave its dividend at $1.24 per share until the end of 2009 - the first time it has not raised the payout since the 1970s.

The company, widely seen as a bellwether of the US economy, issued a gloomy forecast for the future of the economy, predicting "that difficult conditions in the financial-services markets are not likely to improve in the near future".

The news prompted analysts to warn investors they should prepare for more bad news in coming weeks

"The economy is clearly slowing, so it's normal to see GE, heavily involved in the economy as a whole, warning on its outlook," said Fortis Bank senior equity strategist Philippe Gijsels.

"I fear that there will be more of the same in the industrial sector in a not too distant future," he added.

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