Global stocks retreat as oil gains dissipate
By Chuck Mikolajczak
NEW YORK (Reuters) - Global equity markets lost ground on Tuesday, slowing the recent recovery in riskier assets as oil prices reversed some of their recent bounce and benefited safe-haven assets like the Japanese yen and gold.
After gains of more than 5 percent on Monday, which helped push a gauge of world equities up more than 1 percent, both Brent LCOc1 and U.S. crude CLc1 were down more than 1 percent.
The decline in crude weighed on both the energy .SPNY and financial .SPSY sectors on Wall Street. Concerns about bank exposure to the energy sector were highlighted by JP Morgan's (JPM.N: Quote) announcement that it will put aside an additional $500 million to cover potentially bad loans to energy companies.
"It is looking for its direction from oil, there has to at some point be a disconnect between what oil does and what the broader market does," said Ken Polcari, Director of the NYSE floor division at O’Neil Securities in New York.
"But at the moment it is too connected right now."
U.S. crude futures were last down 3.4 percent at $32.26 a barrel and Brent LCOc1 lost 2.4 percent to $33.85 a barrel. The commodity had shown signs of stabilization above $30 a barrel on plans for a production freeze by major producers, but lost ground on Tuesday amid doubts about the impact a freeze could have on oversupply.
The Dow Jones industrial average .DJI fell 109.3 points, or 0.66 percent, to 16,511.36, the S&P 500 .SPX lost 14.64 points, or 0.75 percent, to 1,930.86 and the Nasdaq Composite .IXIC dropped 41.65 points, or 0.91 percent, to 4,528.96.
European shares also moved lower on the crude weakness, along with and disappointing updates from Standard Chartered (STAN.L: Quote), down 5.8 percent, and BHP Billiton (BLT.L: Quote), down 4.9 percent. A weak sentiment reading of German manufacturers also raised concerns about the health of the region's largest economy. Continued...