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International markets roundup

Switzer Daily
4 February 2016

NEW YORK - The Dow and S&P 500 turned higher late Wednesday afternoon, with the Dow rallying 1 per cent as energy shares jumped with oil prices and financial shares cut losses to trade flat.

The Nasdaq stayed weaker but was well off the day's lows.

The S&P financial index was down 0.01 per cent, while the energy index rose 3 per cent, sharply extending gains after US crude oil ended up 8 per cent on the day.

"The thing that's surprising me the most today is the sudden turnaround or push back up in oil. Of course it's bringing a lot of the energy stocks that are pretty beaten down with it," said Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia.

Oil rose after investors took advantage of earlier weakness in prices and a drop in the US dollar.

The S&P materials was up 2.8 per cent.

Earlier in the day, stocks fell after US data showed the economy's service sector expanded at a slower-than-expected rate, raising concerns that weakness in manufacturing was spreading to other areas of the economy.

At 1508 ET, the Dow Jones industrial average was up 180.76 points, or 1.12 per cent, at 16,334.3, the S&P 500 had gained 9.49 points, or 0.5 per cent, at 1,912.52 and the Nasdaq Composite index had dropped 8.70

points, or 0.19 per cent, to 4,508.25.

LONDON - UK shares have fallen, pulled lower by financial stocks, with banks hitting their lowest levels in over four years and Hargreaves Lansdown among top fallers following a mixed earnings update.

Britain's blue-chip FTSE 100 index closed down 1.4 per cent at 5,837.14 points on Wednesday, with banks among the top fallers.

The FTSE 350 Banking index fell 3.6 per cent, and is down around 19 per cent this year. The index hit its lowest level since November 2011.

Traders said that evaporating expectations that the US Federal Reserve might hike rates in March was hurting the sector, which sees interest margins squeezed and struggles to make money if rates are too low for too long.

"We've seen quite a big revision of expectations where central bank policy is concerned, not just in Europe, but in the US as well, I think that's really hurting the sector," Chris Beauchamp, analyst at IG, said.

He added that Britain postponing a sale of shares in Lloyds Banking Group and a further deterioration in the global economic outlook were also weighing on the sector.

In positive territory, however, were British mining stocks, as the price of copper advanced on improving China data showing that its services sector expanded at its fastest pace in six months in January.

Shares in Anglo American, Rio Tinto and Glencore climbed between 3.4 per cent to 8.5 per cent.

HONG KONG - A third consecutive day of oil price losses in Asia had weighed on regional stock markets.

"There is still a lot of vulnerability in stock markets and the euro remains quite strong, which is adding pressure on the ECB to take action," said BNP Paribas European rate strategist Patrick Jacq.

MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.7 per cent.

Japan's Nikkei closed down 3.2 per cent, hit by weak oil and a strong yen, wiping out almost all the gains it made after the BOJ became the latest major central bank to introduce negative interest rates.

Chinese shares dipped 0.4 per cent.

Stock market weakness has driven investors into the shelter of low-risk government debt. Two-year yields on bonds from euro zone benchmark issuer Germany and Japanese five- and 10-year yields hit record lows on Wednesday, while yields on 10-year US Treasury bonds hit 10-month lows on Tuesday.

The Japanese yen, which tends to be bought by investors in times of risk aversion, was 0.2 per cent stronger on the day at 119.71 per dollar. It hit a six-week low of 121.70 per dollar after the BOJ's policy meeting on Friday.

"Risk sentiment is pretty fragile, so we are seeing yen being supported," ING currency strategist, Petr Krpata, said.

WELLINGTON - The S&P/NZX 50 Index dropped 46.7 points, or 0.8 per cent, to 6133.38.

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