Depressed stock prices not enough to change Dow

NEW YORK (Reuters) - Stock in General Electric, General Motors and three other bellwethers are trading below $10 a share -- which normally would get them booted out of the blue-chip Dow industrials.

But the struggling economy is giving them a reprieve and those companies -- along with Citigroup, Bank of America and aluminum producer Alcoa -- will remain components of the Dow Jones industrial average, John Prestbo, editor and executive director of the Dow Jones Indexes, told Reuters on Thursday.

Months of staggering losses have felled once-mighty members of the 30-stock Dow Jones industrial average. Despite a three-day surge in the market, both General Motors and Citigroup are at multi-year lows around or below $2 a share.

"I think if times were normal, that's exactly what we would do," Prestbo said, referring to the likelihood of those companies being removed.

"But times are far from normal," he said.

Critics contend these companies are no longer on top of their game and do not deserve a spot in what is arguably the most-watched metric of the U.S. stock market

In addition, many institutional investors are traditionally precluded from owning companies with shares under $10.

Prestbo countered: "Quite frankly, the ones that have bylaws prohibiting shares under that amount, those bylaws were created to reduce speculation and volatility. They weren't put in place with today's situation in mind.

"I would imagine that a lot of people are still holding those stocks," he said.

Outright nationalization or bankruptcy would result in an automatic expulsion from the Dow, but right now both Citigroup and GM exist in what Presto characterized as a "gray area."

He did not say what companies might be added to the index, but has said the Dow is underweight in financials. Critics have suggested replacing Citigroup and GM with companies like investment bank Goldman Sachs, credit card company Visa or Internet powerhouse Google.

The Dow was last altered in September when struggling insurer American International Group was replaced with food company Kraft Food Inc.

Dow Jones Indexes is a unit of Dow Jones & Co, which is a subsidiary of News Corp

(Reporting by Deepa Seetharaman; Editing by Jonathan Oatis)