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International markets roundup

Switzer Daily
3 February 2016

NEW YORK - US stocks have extended their selloff in early afternoon trading as falling oil prices heightens concerns regarding the health of the global economy and investors sought safer investments.

Brent oil fell nearly six per cent, while US (WTI) crude briefly slid below $US30 per barrel, as hopes for a deal between OPEC and Russia on output cuts faded.

Shares of Exxon fell 2.4 per cent after the oil major reported its smallest quarterly profit in more than a decade.

Chevron also fell 3.3 per cent. The stocks weighed the most on the S&P energy index.

"We still haven't broken the correlation between oil and equities and we are yet to find a bottom in oil prices," said Jeff Carbone, co-founder of Cornerstone Financial Partners in Charlotte, North Carolina.

Carbone said consumer savings from cheap gasoline have failed to translate into higher spending as US consumers opt to pay down debt rather than buy big-ticket items.

Investors have been concerned about a China-led global economic slowdown, tepid US economic data and the pace of rate hikes by the Federal Reserve.

"Investors have been looking at the data and while the data has been good, it hasn't been great and investors remain concentrated on the negative news."

The focus now shifts to the January employment numbers due this week.

At 12:46 a.m. ET (1746 GMT) the Dow Jones industrial average was down 245.93 points, or 1.5 percent, at 16,203.25, the S&P 500 was down 28.24 points, or 1.46 percent, at 1,911.14 and the Nasdaq Composite index was down 66.32 points, or 1.44 percent, at 4,554.05.

LONDON - Britain's top share index has fallen sharply, knocked down by a drop in BP after the oil major reported its biggest ever annual loss.

The blue-chip FTSE 100 index closed 2.3 per cent lower at 5,922.01 points, with the FTSE down five per cent since the start of 2016.

BP shares slumped 8.7 per cent.

The company's results were worse even than when it counted the costs of the deadly Gulf of Mexico oil spill in 2010, raising questions over the sustainability of its dividend and some concerns over its debt position.

The worries about China and persistent concerns about an oversupply in the market have hit oil prices, which lost ground again on Tuesday.

HONG KONG - Concern over oil continue to dominate while pressure remains after weak economic data from China, Europe and the United States, a US forecast for mild weather and doubts that big oil-producing countries will agree to cut the global supply glut.

"(Prices) have just come back to reality a bit, although they are holding water above $US30 a barrel," said Ben Le Brun, market analyst at Sydney's OptionsXpress, pointing to concern over rising oil supplies and weaker economic data.

MSCI's broadest index of Asia-Pacific shares outside Japan lost 1.2 per cent. Falls almost everywhere except China, which saw a two per cent bounce, drove the index lower.

Japan's Nikkei ended down 0.6 per cent, as investors locked in profits after two straight days of big gains following the Bank of Japan's decision to introduce negative interest rates late last week.

"In a bear market, investors would use any rebound to cut equity holdings, and that has been the trading pattern recently," said Zeng Yan, an analyst at Zhongtai Securities, referring mainly to Chinese markets.

"There are no changes in fundamentals: yuan depreciation concerns are still there, the economy remains in bad shape, and market liquidity tends to be tight."

As expected, the Reserve Bank of Australia held interest rates steady at a record low of 2.0 per cent. Although the bank was hopeful on growth prospects, it reiterated that there is scope for a further cut if needed.

WELLINGTON - The S&P/NZX 50 Index rose 5.6 points, or 0.1 per cent, to 6180.09.

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