Oil crumbles, bond prices up on economy fears

Tue Oct 14, 2014 4:42pm EDT
 
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By Rodrigo Campos

NEW YORK (Reuters) - Brent crude prices marked their biggest decline in more than three years on Tuesday and U.S. and German debt attracted buyers on lingering anxiety over world economic growth.

Wall Street struggled to maintain gains, after rising more than 1 percent earlier, as energy shares slid to enter a bear market.

Worries about a slowing global economy and fears of the spread of Ebola have made investors skittish of late. The CBOE Volatility Index, the equity market's preferred gauge of anxiety, edged lower but still closed at its second-highest level in more than two years.

An MSCI gauge of major stocks worldwide .MIWD00000PUS was down 0.15 percent after hitting an eight-month low earlier.

Investors have turned more defensive due to worries about the U.S. Federal Reserve ending its bond-buying stimulus later this month, mounting risks of recession in the euro zone, and a floundering Japanese economy.

The German Economy Ministry sharply cut its forecasts for growth for 2014 and 2015, and business sentiment also fell in Europe's largest economy.

Benchmark U.S. Treasuries yields US10YT=RR fell as low as 2.176 percent, the lowest level in 16 months, while yields on German 10-year debt DE10YT=TWEB touched a record low of 0.836 percent.

"You've seen global growth expectations come down a lot so yields in Europe are way down," said Court Hoover, director of research at JA Forlines Global Investment Management in Locust Valley, New York.   Continued...

 
Traders work on the floor after ringing the opening bell at the New York Stock Exchange, October 14, 2014. REUTERS/Eduardo Munoz