WASHINGTON (Reuters) - U.S. producer prices and industrial output both tumbled last month, data showed on Tuesday, signaling slower growth that is likely to cause the Federal Reserve to keep interest rates on hold well into 2007.


U.S. Treasury bond prices rallied while stock prices and the dollar went into retreat in part on news U.S. industrial output fell 0.6 percent in September, compared with forecasts for no change, while industries used less of their capacity.

"Combined with the PPI (producer prices), we have additional evidence that the economy is slowing down," said Gregory Miller, chief economist at Suntrust Banks Inc. in Atlanta, Georgia.

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