World stocks end their ad­vance as oil rally fal­ters

The Pak Banker - - MARKETS/SPORTS -

A halt in this week's rally in oil prices held back Euro­pean stocks and pushed Ger­man Bund yields below 0.20 per­cent on Fri­day as wor­ries about the global eco­nomic out­look lin­gered on. The re­newed aver­sion to risky as­sets pushed the Ja­panese yen to 2 1/2year high against the euro. Ster­ling held steady as talks for a changes in Bri­tain's Euro­pean Union mem­ber­ship dragged on through the night.

Brent fu­tures (LCOc1) were lit­tle changed at $34.27 a bar­rel af­ter end­ing the pre­vi­ous day down 22 cents. A record buildup in U.S. crude stock­piles stoked con­cern about global over­sup­ply, out­weigh­ing moves by oil pro­duc­ers, in­clud­ing Saudi Rus­sia, to cap oil out­put.

The pan-Euro­pean FTSEurofirst 300 was down 0.38 per­cent at 1,289.03 points. In spite of the de­cline, the in­dex was on course for its best week since Jan­uary 2015. Bri­tain's FTSE 100 was down 0.1 per­cent.

The de­clines track losses in Asian shares, which slipped from near three-week highs. As­sets per­ceived as safe havens did well, with Ger­man 10-year Bund yields fall­ing 2 ba­sis points to 0.19 per­cent. Ten-year U.S. Tnote yields also fell 2 ba­sis points, to 1.74 per­cent.

"The re­cov­ery in risk mar­kets is still frag­ile," said BNP Paribas rate strate­gist Pa­trick Jacq. MSCI's broad­est in­dex of Asia-Pa­cific

Ara­bia

and shares out­side Ja­pan fell 0.5 per­cent and Ja­pan's Nikkei (.N225) dropped 1.4 per­cent. On the week, how­ever, they were up about 4 per­cent and 7 per­cent, re­spec­tively.

The weekly per­for­mance came af­ter gains by oil eased some of the de­fla­tion con­cern in the de­vel­oped world.

Oil prices rose more than 14 per­cent in the three days to Thurs­day af­ter Saudi Ara­bia and Rus­sia, sup­ported by other ex­porters, in­clud­ing Venezuela and Iraq, moved to freeze oil out­put at Jan­uary's lev­els. Iran en­dorsed the plan with­out com­mit­ment on Wed­nes­day.

If ap­proved, agree­ment in Or­ga­ni­za­tion of it would be the first such 15 years among the the Pe­tro­leum Ex­port­ing Coun­tries and non-OPEC mem­bers. Iraqi Oil Min­is­ter Adel Ab­dul Mahdi said on Thurs­day that talks would con­tinue be­tween OPEC and non-OPEC mem­bers to find ways to re­store "nor­mal" oil prices. But data show­ing U.S. crude in­ven­to­ries rose by 2.1 mil­lion bar­rels last week, to a peak of 504.1 mil­lion bar­rels, the third week of record highs in the past month, hold­ing prices down.

At the EU sum­mit, Bri­tish Prime Min­is­ter David Cameron urged EU lead­ers to agree a deal that would al­low him to cam­paign in a June ref­er­en­dum to stay in the EU. Fel­low lead­ers and di­plo­mats said an agree­ment seemed pos­si­ble by the end of a two­day sum­mit on Fri­day, but some said out­stand­ing is­sues were prov­ing tough to crack, hold­ing up the process.

Ster­ling was down 0.1 per­cent against the dol­lar (GBP=D4). "By the end of to­day, we should have a de­cent idea whether the UK is set to have a ref­er­en­dum on EU mem­ber­ship this year," said Si­mon Smith, chief econ­o­mist at FxPro. "This mat­ters for ster­ling, which has cer­tainly shown strong signs of con­cern so far this year." The yen reached its strong­est since June 2013 against the euro at 125.33. The dol­lar (.DXY) was down 0.15 per­cent against a bas­ket of ma­jor cur­ren­cies.

Spot gold eased 0.5 per­cent to $1,225.43 an ounce, af­ter gain­ing 2 per­cent on Thurs­day. For the week, it has lost 1 per­cent, as traders took prof­its af­ter the metal climbed to a one-year top last week.

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