Oil down, stocks mixed as Japan slips into recession

Mon Nov 17, 2014 4:23pm EST
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By Herbert Lash

NEW YORK (Reuters) - Oil prices fell and global equity markets were mixed on Monday after news that Japan unexpectedly slipped into recession in the third quarter renewed concerns about world growth.

But two blockbuster acquisitions and anticipation of more European stimulus capped declines and helped lift the S&P 500 to a record closing high on Wall Street.

The Japanese yen steadied against the U.S. dollar, pulling back from a fresh seven-year low, as the economic data set the stage for Prime Minister Shinzo Abe to delay an unpopular sales tax hike and call an election two years before he has to.

Japan's economy shrank an annualized 1.6 percent after a 7.3 percent slide in the second quarter, when a sales tax hike hit consumer spending. Analysts polled by Reuters had expected 2.1 percent growth in the third quarter, but consumption and exports remained weak, saddling companies with big inventories.

Tokyo's Nikkei index lost 3 percent, its biggest one-day drop since August, and Wall Street closed mixed after a choppy session. Brent oil initially fell more than $1 toward $78 a barrel as Japan is the world's No. 4 crude importer.

"Concern about deceleration of economic growth particularly in Asia" weighed on markets, said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

News that Allergan agreed to be bought by Actavis, while Halliburton said it would buy Baker Hughes, in deals worth $100 billion, helped offset declines. Allergan and Baker Hughes were two of the top three point gainers on the S&P 500, up 5.3 percent and 8.9 percent, respectfully.

Comments by European Central Bank President Mario Draghi that the bank is ready to do more if its stimulus is not enough to accelerate the euro zone recovery also offset declines.   Continued...

Passers-by are reflected on an electronic stock quotation board outside a brokerage in Tokyo, November 17, 2014. REUTERS/Issei Kato