Global shares retreat, oil falters on investor unease

Thu Oct 25, 2012 1:51pm EDT
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By Herbert Lash

NEW YORK (Reuters) - Global shares and oil prices faltered on Thursday, as encouraging data from Britain and China was overshadowed by uncertainty over the U.S. presidential election and economy.

U.S. business investment showed signs of stalling in September, an indication that a possible sharp tightening in the federal budget already is weighing on the economy.

A reading of new orders for capital goods outside of defense and excluding aircraft was unchanged last month, suggesting companies are holding back due to fears the U.S. Congress may fail to avert sharp tax hikes and spending cuts in 2013.

Wall Street pared earlier gains that had followed a rise in European equity markets, and the dollar edged higher against the euro. Crude oil prices also pared early gains. Both U.S. stocks and crude oil had turned lower during the session, but slightly rebounded after midday.

"There is an election coming up that is really very difficult to project right now. So when uncertainty becomes part of the mix, guys usually are more likely to lighten their risk profile a little bit," said Gordon Charlop, a managing director at Rosenblatt Securities in New York.

U.S. economic data, while initially viewed as supportive for risk assets, also pointed to headwinds in the economy, Charlop said.

"Between some of the numbers we saw that people were initially happy with but not overly impressed - they weren't able to reverse the sentiment, and that is the way it feels like it is trading today," he said.

The latest polls have shown President Barack Obama and Republican challenger Mitt Romney in a dead heat with less than two weeks until the November 6 election.   Continued...

A city trader monitors stock prices in London.