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NEW YORK, Jan 2 (Reuters) - U.S. factory activity fell to a 28-year low in December as the deepening year-old recession hammered the sector and produced a bleak outlook at the start of 2009.
The Institute for Supply Management said its index of national factory activity fell to 32.4 -- the lowest since 1980 -- from 36.2 in November. The ISM's jobs gauge also hit the lowest since 1982 and prices were the weakest since 1949.
The report on U.S. manufacturing was similar to factory surveys around the globe and showed rough times ahead, with a gauge of new orders hitting its lowest ever.
"Overall this is a very weak report, suggesting no sign of stabilization yet," said Ian Lyngen, interest rate strategist at RBS Greenwich Capital in Greenwich, Connecticut.
Stocks briefly turned negative after the unexpectedly weak report but then reverted to gains.
U.S. government bonds, generally sought after by investors during troubled economic times such as these, briefly added to gains. The dollar pared its gains versus the yen
A reading below 50 in the ISM index indicates contraction in the sector.
Economists had expected a reading of 35.5, according to the median of their forecasts in a Reuters poll. Their 69 forecasts ranged from 32.0 to 40.0.
Earlier, a similar report showed manufacturing activity in the euro zone sank to a record low for the survey in December and the outlook remained grim as new orders also sank to new lows.
Factories in China and India also joined much of Europe in slashing output and jobs at a record pace in December. (Reporting by Burton Frierson; Editing by Dan Grebler)