GLOBAL MARKETS-Wall St drops with oil near 7-year low; Europe stocks up

(Updates prices to early afternoon)
* U.S. shares fall as oil majors slide
* Brent crude hits nearly 7-year low after OPEC meeting
* Dollar up for second day; weaker euro boosts Europe shares

By Sam Forgione
NEW YORK, Dec 7 (Reuters) - Oil prices skidded to their
lowest level in nearly seven years on Monday, hurting the shares
of major oil companies on Wall Street as a global glut showed no
signs of abating, while European stocks benefited from a weaker
euro.
Brent crude prices LCOc1 fell to $41.20, their lowest
since February 2009, after a meeting of members of the
Organization of the Petroleum Exporting Countries Friday ended
in disagreement over production cuts and without a reference to
its output ceiling.
Oil majors Exxon (N:XOM) XOM.N , down 3 percent, and Chevron (N:CVX)
CVX.N , which fell 2.9 percent, were the biggest drags on the
U.S. Dow and benchmark S&P 500 indexes. Increased strength in
the dollar for a second straight session made it more expensive
to hold crude positions.
Brent crude LCOc1 was last down $2.26, or 5.3 percent, at
$40.74 a barrel, while U.S. crude CLc1 was last down $2.12, or
4.9 percent, at $40.88 per barrel.
"As a result of the collapse in oil and gas prices today,
the market is worried that you're going to see less capital
spending, you're losing a lot of a good-wage jobs in the oil
patch, and people are worrying that we're going to see a
snowball of defaults among high-yield energy issuers," said
Scott Wren, senior global equity strategist at Wells Fargo (N:WFC)
Investment Institute in St. Louis.
A weaker euro helped boost European shares, which rose from
three-week lows hit last week when the European Central Bank
disappointed investors with its latest stimulus package. A
weaker euro helps stocks by making European exports cheaper
relative to competing imports.
An outlier among European stocks was Electrolux ELUXb.ST ,
which sank over 13 percent after its deal to buy General
Electric's GE.N appliance business fell through.
MSCI's all-country world equity index .MIWD00000PUS , which
tracks shares in 45 nations, was last down 0.7 percent.
The Dow Jones industrial average .DJI fell 0.83 percent at
17,698.75. The S&P 500 .SPX was down 0.89 percent, at
2,073.10. The Nasdaq Composite .IXIC was off 0.89 percent, at
5,096.62.
Europe's broad FTSEurofirst 300 index .FTEU3 added 0.45
percent, and was last at 1,464.4. The euro EUR= was last down
0.32 percent, at $1.0856.
The dollar rose on expectations the U.S. Federal Reserve is
on track to raise interest rates next week in the wake of a
solid November jobs report. The dollar index .DXY , which
tracks the greenback against a basket of six major currencies,
rose 0.28 percent, to 98.62.
"It's pretty much a done deal they will move," Charles
St-Arnaud, currency strategist at Nomura Securities
International in New York said of the Fed, which meets on
monetary policy on Dec. 15-16.
U.S. Treasury debt prices rallied as investors consolidated
positions in a week that is generally thin on economic data
after last Friday's stronger-than-expected U.S. November jobs
report.
Benchmark 10-year Treasury notes US10YT=RR were last up
14/32 in price to yield 2.21 percent, from a yield of 2.28
percent late Friday.
Spot gold prices XAU= fell from a three-week high and were
last down $7.40, or 0.7 percent, at $1,077.1 an ounce after the
gains in the dollar.