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Higher oil prices fail to lift stock markets
February 04, 2016
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LONDON: A rise in oil prices on Wednesday failed to lift European stocks, which instead sagged on weak earnings, prompting investors to seek safety in the Japanese yen, gold and low-risk government debt.

US crude moved back above $30 a barrel and global benchmark Brent rose 52 cents to $33.24 after Russia reiterated its openness to talking with Opec about output cuts - but only after a third consecutive day of oil price losses in Asia had weighed on regional stock markets.

Wall Street, however, looked set to open about 0.2 per cent higher, according to index futures.

Oil prices, down 70 per cent in the last 18 months as investors have fretted about global growth and an economic slowdown in China, have been a major factor behind a torrid start to the year for stocks.

The pan-European FTSEurofirst 300 index is down nearly 10 per cent this year while the US S&P 500 has lost 6.9 per cent.

Market turmoil has in turn boosted expectations of further central bank stimulus measures.

The Bank of Japan (BOJ) last week became the latest major central bank to introduce negative interest rates.

Many in markets expect the European Central Bank (ECB) will ease policy further next month.

“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,” BNP Paribas European rate strategist, Patrick Jacq said.

The FTSEurofirst 300 stocks index fell 0.3 per cent on Wednesday, hit by weak earnings reports, although Swiss seeds and pesticides group Syngenta rose 6 per cent after ChemChina agreed to buy the company for $43 billion.


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