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Global markets off 6-week high; oil falls 2% to $80.2 a barrel

Global markets off 6-week high; oil falls 2% to $80.2 a barrel
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First Published: Tue, Mar 09 2010. 10 56 PM IST
Updated: Tue, Mar 09 2010. 10 56 PM IST
London: World stocks slipped on Tuesday from the previous day’s six-week high and oil fell nearly 2%, while the yen rose broadly as investors grew cautious after a recent rally in riskier assets.
Sterling hit a one-week low against the dollar, weighed by data showing a widening UK trade deficit and comments by Fitch Ratings that the UK sovereign credit profile has deteriorated.
US technology shares rallied on Monday after JPMorgan Chase recommended Cisco Systems Inc. to investors while an analyst’s upgrade sent Research in Motion Ltd higher.
But Asia and Europe failed to keep up the momentum and US stock futures pointed to a weaker open on Wall Street later.
Robust corporate performance and upbeat fourth-quarter corporate results have helped investors push the benchmark MSCI world stocks up to a break-even level for the year after an early pullback, giving investors incentives to pause.
“The market had a good recovery after correction lows and it would be tough in the near term, even though you are still in a cyclical bull market, to just race ahead. People are still cautious,” said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin.
The MSCI world equity index fell 0.4% while the FTSEurofirst 300 index lost 0.8%. US stock futures fell around 0.4%.
Emerging stocks were down 0.3%.
US crude oil was one of the biggest movers, falling 2% to $80.22 a barrel, after hitting an 8-week peak above $82 a day earlier. Forecasts for growing US crude inventories tempered recent bullish sentiment.
“Forecasts of yet another build in US crude stocks show the disconnect between the fundamentals of oil supply and demand, which are quite bearish, and hopes of economic recovery, which are bullish,” said Commerzbank analyst Carsten Fritsch.
“But the market doesn’t seem to want to hear negative news for long and tends to react more strongly on the upside. It is two steps upwards, one step down at the moment.”
The dollar was up 0.4% against a basket of major currencies. The yen rose 0.6% to 89.82 per dollar while the euro lost 0.6% to $1.3557.
Sterling fell as low as $1.4940. Fitch also said urgency for fiscal adjustment was greatest for the UK, Spain and France among the larger AAA sovereigns.
The premium Greek/German government bond yield spread widened 7 basis points to 295 bps, while Portuguese/German and Spain/German spreads also widened.
Atul Prakash contributed to this story.
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First Published: Tue, Mar 09 2010. 10 56 PM IST
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