Global shares, euro, oil fall as caution returns
By Richard Hubbard
London (Reuters) - World equity markets and commodities fell on Monday after last week's strong gains, with a rise in political uncertainty in southern Europe worrying some investors and sending the euro lower.
U.S. shares were poised to join the slide when Wall Street reopens as the market retreats from the five-year highs hit on Friday. .N
The global economic outlook brightened substantially last week when data showed U.S. factory activity quickened in January and hiring increased, while a euro zone business activity survey suggested the worst of the region's downturn may be over.
On Sunday, China added to the optimism by reporting that its services sector had grown for a fourth straight month in January, although the slim gain also signaled that the global recovery underway is a modest one.
In Europe, political developments in Spain and Italy reminded investors that there were still many risks ahead, dampening the positive mood and encouraging some sellers.
Over the weekend Spain's opposition Socialist Party called on Prime Minister Mariano Rajoy to resign over a corruption scandal, as an opinion poll showed the lowest support on record for his centre-right People's Party (PP).
"If Rajoy were really forced to resign, if we were to have new elections in Spain, that would not help the improvement we've seen in financial markets," Tobias Blattner, European economist at Daiwa Capital Markets, said.
In Italy, former prime minister Silvio Berlusconi, one of the top candidates in this month's general election, is seeing a resurgence in popularity which threatens the reforms implemented by the outgoing technocrat government. Continued...