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He also said a rapid appreciation of the yuan is not necessarily the right move — as Washington and increasingly Europe are requesting — though Cheng insisted the country wasn’t actively seeking a major trade surplus.

The reports sent the beleaguered dollar to new lows against the euro, with the shared currency surging as high as $1.4703 from $1.4559 late Tuesday.

The Japanese yen also rallied, with the dollar falling to 113.52 yen from 114.71 yen. The British pound surged to $2.1025 — the first time sterling has broken $2.10 since May 1981 — from $2.0866.

Gold futures, which traditionally move in the opposite direction to the dollar because of their role as an inflation hedge, jumped $23.40 to $846.80 an ounce, and rose as high as $848 an ounce during the European morning. Oil futures rose above $98 a barrel in electronic trading.

The loss reported Wednesday was one of the biggest quarterly corporate deficits ever and it sent GM’s shares down more than 8 percent in premarket trading.

The loss was attributed to a $38.6 billion noncash charge largely related to establishing a valuation allowance against accumulated deferred tax credits in the U.S., Canada and Germany, as well as mortgage losses at GM’s former financial arm, GMAC Financial Services.

November soybeans settled 23 3/4 cents higher at $10.29 1/2 and January soybeans ended 23 1/2 cents higher at $10.44 1/2. December soymeal settled $7.70 higher at $284.60 per short ton. December soyoil finished 106 points higher at 43.62 per pound.

A dearth of fresh fundamental news kept traders focused on outside influences, with soaring metal futures, record high crude oil prices and weakness in the U.S. dollar promoting broad-based commodity wide buying, said Vic Lespinasse, an analyst with Illinois Grain.

BP Plc and ConocoPhillips evacuated oilrig workers, adding to concern that supplies may be insufficient. The U.S. Energy Department is set to report today that inventories fell for a third week, according to a survey of analysts.

“The weakness in the dollar is giving investors the chance to buy oil at a cheaper price,” said Tetsu Emori, a fund manager at Astmax Futures Ltd. in Tokyo. “Any further declines will only push oil higher.”

Crude oil for December delivery gained as much as $1.33, or 1.4 percent, to $98.03 a barrel in after-hours electronic trading on the New York Mercantile Exchange. That’s the highest since trading began in 1983. It traded at $97.91 at 11:32 a.m. in Singapore. Futures have gained 66 percent in the past year.

Yesterday, oil rose $2.72, or 2.9 percent, to settle at $96.70 a barrel, a record close.

The dollar’s decline increased the attractiveness of commodities as alternative investments. A weaker dollar reduced the costs for buyers paying in other currencies.

The dollar slumped to a record low against the euro on speculation interest rate cuts by the U.S. Federal Reserve will prompt investors to buy higher-yielding currencies.

Despite gold reaching new record 28 year highs above $800 the sentiment towards gold remains lukewarm at best. Most of the UK, Irish and international financial press and media barely covered or ignored this significant development at the weekend. This, and the fact that the investment public remain unaware of the gold price and the merits of investing in gold are classic contrarian indicators which show that gold remains in the early stages of its bull market. When gold is covered as headline news in newspapers on a daily basis and articles appear regularly about the merits of investing in gold and how to invest in gold, then it will be the later stages of the bull market and an indicator that it may be time to sell. When stockbrokers start telling their clients and the wider investment public to buy the gold ETFs, it will be time to sell. When there are gold and commodities supplements alongside property supplements in major newspapers it will be the time to sell. When the topic du jour on the dinner party circuit is “how great my gold investments are performing,” it will definitely be time to sell.

Bull markets end in mass participation and mania and we are a long way from there yet. Besides this obvious lack of animal spirits and wholesale bullishness towards gold, it is also important to remember that gold remains undervalued. Gold will have to at least reach its inflation adjusted high of $2,200 per ounce (as oil and many other commodities have already done) before it could be considered fair valued or over valued.

Boris Sobolev of the Resource Stock Guide wrote perceptively: “What if, however, we are wrong and gold is now, in fact, making a final spike to its all time high of $850 or higher. The aftermath, as after the top in 1980, could be severe and it would be time to sell? Is this a real possibility?”

No, the situation today is completely different:

• In August 1979, Paul Volcker became the chair of the Federal Reserve and started to fight inflation by radically raising interest rates. Today, Chairman B. Bernanke, in an effort alleviate the pain in the ailing banking system, is aggressively lowering interest rates. • 28 years ago, the United States was the biggest creditor nation in the world. Now, the opposite is the case – U.S. is the largest debtor. This, along with the Fed policy, is causing the dollar to fall to historic lows.

This could destabilise the US housing market and may also lead to further turmoil in financial institutions, who collectively own $1 trillion (£480.6bn) worth of sub-prime debt.

Cleveland, Ohio, is an industrial city on the banks of Lake Erie in the US “rust belt”.

It is the sub-prime capital of the United States. One in ten homes in the city is now vacant, and whole neighbourhoods have been blighted by foreclosed, vandalized and boarded-up homes.

Many of these homes are now owned by the banks and investment pools owning the mortgages, and the company making the most foreclosures in Cleveland is Deutsche Bank Trust, which acts on behalf of such investment pools.

The U.S. currency declined versus all 16 of the most- actively traded currencies except the yen after Fed Governor Randall Kroszner said conditions for subprime-mortgage borrowers may worsen. It dropped the most against the South African rand, falling 1.2 percent.

“The dollar will continue to weaken because the rate differentials move against the dollar,” said Marcus Hettinger, a currency strategist at Credit Suisse Group in Zurich. “The subprime issue is negative because it increases the probability that the Fed will ease again.”

The U.S. currency dropped to an all-time low of $1.4556 per euro before trading at $1.4547 as of 7:03 a.m. in New York, from $1.4469 late yesterday. The dollar may fall to $1.46 in the coming days, Hettinger said.

Against Australia’s currency, the dollar declined to as low as 92.66 U.S. cents, compared with 92.07 late yesterday in New York. The U.S. currency fell to 92.59 cents against its Canadian counterpart, from 93.33 cents yesterday, and to 6.5013 rand, from 6.5900. It was at $2.0878 against the pound, near a 26-year low of $2.0897. The dollar traded at 114.72 yen, from 114.55 yen.

Dollar Assets

“Conditions for subprime borrowers have the potential to get worse before they get better,” Kroszner, the Fed’s chief liason officer with the banking industry, said in remarks delivered to conferences in Arlington, Virginia and Washington yesterday. Bank of England Governor Mervyn King said today in a BBC Radio 4 interview it may take months before commercial banks publish their full losses from the U.S. subprime-mortgage slump.

The FTSE 100 fell 69.2 to 6,461.4, with Alliance & Leicester (down 4 per cent) and Barclays (off 3 per cent, to a two-year low) singled out for punishment. In New York, Citigroup, down |4.9 per cent to multi-year lows, weighed on the Dow Jones index, which fell 51.7, or 0.4 per cent, to 13,543.4. Merrill Lynch, Goldman Sachs and Lehman Brothers also dropped on speculation they face more writedowns on top of the $40bn (£19bn) announced in the past four months.

Bill Gross, the chief investment officer of Pacific Investment Management, said US mortgage delinquencies and defaults would rise in 2008. “There are $1 trillion worth of sub-primes, Alt-As [self-certified] and basically garbage loans,” he said, adding that he expects some $250bn in defaults. “We’ve only begun to see the pain from rising mortgage payments,” he added. Brian Gendreau, an investment strategist at ING, commented: “Financials are 20 per cent of the S&P 500 and if that sector doesn’t do well all bets are off. People just don’t know what’s on the balance sheets.”