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GLOBAL MARKETS-Stocks slump as oil price retreats again

Published 2016-02-19, 11:47 a/m
© Reuters.  GLOBAL MARKETS-Stocks slump as oil price retreats again
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* Mood turns as oil prices fail to extend gains
* Yen strengthens on safe haven appeal
* CPI data raises possibility of rate hike this year

(Adds open of U.S. markets, byline, dateline; previous LONDON)
By Chuck Mikolajczak
NEW YORK, Feb 19 (Reuters) - Global equity markets stumbled
on Friday as oil prices retreated from strong gains earlier in
the week, while U.S. bond prices rose as economic data raised
the possibility of an interest rate hike by the Federal Reserve
this year.
Brent futures LCOc1 slumped 3.7 percent to $33.03 a barrel
while U.S. crude CLc1 was down 4.7 percent at $29.32. Advances
earlier in the week sparked by moves by oil producers, including
Saudi Arabia and Russia, to cap output were erased after a
record buildup in U.S. crude stockpiles kindled worries over
persisting global oversupply.
Brent is now down 1.3 percent for the week, while WTI crude
is off 0.5 percent.
"There is still a perception there is a supply issue, there
is still a perception there is a demand issue," said Brian Nick,
head of tactical asset allocation for UBS Wealth Management
Americas in New York.
"Until you start to see less skittishness about the global
economy, oil is going to get hit from both sides of the
equation."
The weakness in oil prices bled over into U.S. stocks, with
the S&P energy index .SPNY shedding more than 2 percent as the
worst performer of the 10 major S&P indexes.
The Dow Jones industrial average .DJI fell 90.88 points,
or 0.55 percent, to 16,322.55, the S&P 500 .SPX lost 9.02
points, or 0.47 percent, to 1,908.81 and the Nasdaq Composite
.IXIC dropped 3.16 points, or 0.07 percent, to 4,484.38.
The S&P 500 has gained 2.8 percent for the week, putting it
on pace for its best weekly performance of the year.
The pan-European FTSEurofirst 300 .FTEU3 index of leading
shares was down 1.4 percent on the day, weighed by weakness in
oil, bank and auto shares, but was still up nearly 4 percent for
the week.
U.S. Labor Department data showed the consumer price index,
excluding the volatile food and energy components, increased 0.3
percent last month, in a sign of a pick-up in price pressures
that could allow the Federal Reserve to gradually raise interest
rates this year.
Assets perceived as safe havens did well, as benchmark
10-year Treasuries US10YT=RR were up 7/32 in price to yield
1.738 percent while yields on shorter-dated U.S. Treasury debt
rose after the CPI data, with two-year Treasury notes down 2/32
in price to yield 0.7378 percent.
The yen rose JPY= 0.49 percent against the dollar to
$112.68, and the greenback .DXY dipped 0.17 percent against a
basket of major currencies.
MSCI's index of world shares .MIWD00000PUS was 0.68
percent lower, but was up 3.3 percent for the week, putting it
on pace for its best week since October.
The weekly jump came after gains in oil eased some of the
deflation concerns in the developed world earlier in the week.
The global oil market is oversupplied by around 1.8 million
barrels per day (bpd), but that glut could be halved if a deal
to freeze oil production at last month's levels takes effect, a
top Russian energy official said on Friday.
Spot gold XAU= was down 0.6 percent at $1,229.93 an ounce
as expectations that rock-bottom interest rates will persist
served to keep prices above $1,225 an ounce. by Bernadette Baum)

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