Global stocks drop on weak commodities, U.S. rate hike hint

Thu Nov 12, 2015 4:27pm EST
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By David Gaffen and Herbert Lash

NEW YORK (Reuters) - Global equity markets fell on Thursday, pulled lower by declining commodity prices that hurt energy shares, and comments by a Federal Reserve policymaker who hinted that a widely-anticipated interest rate hike next month is possible.

Gold fell to its lowest level since early 2010 on concerns about a rate hike by the U.S. central bank, and copper prices tumbled to their weakest in more than six years.

Weakness on Wall Street, a drop in commodity prices and poor earnings results dragged shares lower in Europe. The pan-European FTSEurofirst 300 index .FTEU3 closed down 1.6 percent at 1,470.05 points in its biggest daily decline since Sept. 28.

Stocks weakened after U.S. jobs data supported the view that the Fed will raise rates in December. Initial claims for state unemployment benefits were unchanged at a seasonally adjusted 276,000, close to levels last seen in the early 1970s.

The MSCI all-country world index .MIWD00000PUS lost 0.86 percent, while U.S. stock indexes posted their steepest fall since late September.

Following October's surge of about 8 percent, stock investors worried about China's economy and a U.S. rate hike are taking money off the table, said Michael Matousek, head trader at U.S. Global Investors Inc in San Antonio, which manages about $1.3 billion.

"That's why you have some of this selloff. We're down but it's not like the sky is falling," Matousek said.

The Dow Jones industrial average .DJI closed down 254.15 points, or 1.44 percent, to 17,448.07. The S&P 500 .SPX fell 29.03 points, or 1.4 percent, to 2,045.97 and the Nasdaq Composite .IXIC lost 61.94 points, or 1.22 percent, to 5,005.08. Crude prices hit 2-1/2 month lows after the U.S. government reported a stockpile build four times above market expectations and OPEC said its current output could result in a daily surplus of more than 500,000 barrels by next year.   Continued...

Traders work on the floor of the New York Stock Exchange November 4, 2015. REUTERS/Brendan McDermid  -