Global stocks off on 'fiscal cliff,' oil up on Mideast

NEW YORK Fri Nov 16, 2012 10:29pm IST

Traders work on the floor of the New York Stock Exchange, November 16, 2012. REUTERS/Brendan McDermid

Traders work on the floor of the New York Stock Exchange, November 16, 2012.

Credit: Reuters/Brendan McDermid

Related Topics



NEW YORK (Reuters) - World shares headed toward a second consecutive weekly loss on Friday as U.S. government fiscal problems and weak global economic growth weighed on sentiment, while violence in the Middle East pushed up oil prices despite ample stockpiles and a weak outlook for demand.

U.S. stocks briefly rebounded after the open on a report that White House officials were in advanced talks to replace sweeping spending cuts with targeted cuts and tax increases in a move to avoid the so-called "fiscal cliff" in early 2013.

"This is the first time we've had one iota of anything constructive being done," said Todd Schoenberger, managing principal at the BlackBay Group in New York.

"That's very positive, but you can be flexible and still have us go over the cliff. Wall Street traders remain very nervous and need something concrete to get done," he said.

President Barack Obama met with top U.S. lawmakers on Friday, but the hour-long session was not expected to yield much in the way of tangible results, although it could create a template for the coming weeks of negotiations.

Investors have been concerned that if no deal were reached to modify automatic spending cuts and tax hikes, the U.S. economy could slip into recession. The S&P 500 has dropped 4.3 percent over the past two weeks, in part due to these worries.

The drop on Wall Street followed falling equity markets in Europe, where persistent worries about the euro zone's ability to deal with its debt problems are depressing investors.

The Dow Jones industrial average was down 6.92 points, or 0.06 percent, at 12,535.46. The Standard & Poor's 500 Index was down 2.09 points, or 0.15 percent, at 1,351.24. The Nasdaq Composite Index was down 9.46 points, or 0.33 percent, at 2,827.48.

The MSCI world equity index was down 0.4 percent at 316.39, and has lost almost 2 percent this week.

FTSEurofirst 300 index of top companies shed 1.0 percent to 1,068.34, on course for its worst week since late September.

The Japanese yen steadied a bit after a two-day pummeling against the U.S. dollar but remained on track for its worst weekly loss since late June on expectations of aggressive monetary easing from the Bank of Japan.

"The basic driver is still the interest rate differential between the dollar and yen, which is very narrow, and we have to wait for what happens after the (Japanese) elections," said Marcus Hettinger, global FX strategist at Credit Suisse in Zurich.

The U.S. dollar was up 0.22 percent at 81.32 yen. The euro was down 0.58 percent against the dollar at $1.2704.

Benchmark Brent crude oil prices rose toward $109 a barrel as a showdown between Israel and the Palestinians in Gaza stoked worries about supply. Investors were concerned that Arab producers may be drawn into any potential conflict, which could impact supply lines.

Brent crude rose 33 cents to $108.34 a barrel. U.S. oil gained $1.20 to $86.65.

U.S. Treasury debt prices rose slightly, with yields near two-month lows, on investor skepticism that budget talks aimed at preventing an automatic fiscal tightening will be immediately successful.

The benchmark 10-year U.S. Treasury note was up 7/32 in price to yield 1.5707 percent.

(Additional reporting by Richard Hubbard in London; Reporting by Herbert Lash; Editing by Dan Grebler)

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

Market Eye


Bullish on Equities

Bullish on Equities

Bullish on Indian equities, but gains seen 'less sharp'- Goldman Sachs  Full Article 

Streamlining Operations

Jet Streamlines

Jet Airways chairman says looking to restructure debts, talking to bankers  Full Article 

Political Economy

Political Economy

Analysis - Watch what markets don't do as world politics turns nasty   Full Article 


Honda's India Thrust

Honda's India unit to account for 25 pct of Asia Pacific sales by March 2017 - exec   Full Article 

Short of Expectations

Short of Expectations

Apple revenue lags Street's view despite strong China growth  Full Article 

Mircosoft Results

Microsoft Results

Microsoft revenue rises, profit falls as Nokia absorbed  Full Article 

Relief For Sahara

Relief For Sahara

Supreme Court could allow Sahara boss to conduct asset sale talks, company says.  Full Article 


Food Scandal

Five held in China food scandal probe, including head of Shanghai Husi Food   Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage