Equities pulled lower by oil, China concerns

NEW YORK - Global equities were lower on Monday, pressured by another downdraft in oil prices and worries over growth in China's economy, while the holiday season kept trading volumes muted.

Prices of both Brent and U.S. crude dropped more than 3 percent , reversing a brief rebound and dragging U.S. energy shares down 1.8 percent as the worst performing of the major S&P sectors.

Crude again moved within sight of an 11-year low. Brent settled at $36.62 and U.S. crude settled at $36.81 as last week's short-covering dried up and players worried that prices had more room to swoon.

"You have energy and tax-loss harvesting moving markets back and forth in these last few weeks," said Tim Courtney, Chief Investment Officer at Exencial Wealth Advisors, which oversees $1.4 billion in assets.

In contrast to oil, U.S. natural gas prices settled up 10 percent at $2.228 per million British thermal units as forecasts for colder temperatures led to bets that long-delayed winter weather was finally arriving.

The Dow Jones industrial average fell 23.9 points, or 0.14 percent, to 17,528.27, the S&P 500 lost 4.45 points, or 0.22 percent, to 2,056.54 and the Nasdaq Composite dropped 7.51 points, or 0.15 percent, to 5,040.99.

A weak batch of industrial profits raised concerns about China's economy and sent Chinese stocks lower by almost 3 percent, their biggest drop in a month.

Profits at Chinese industrial companies in November fell 1.4 percent from a year earlier, the sixth consecutive month of decline and another sign that the world's chief engine of growth for the past decade is sputtering.

MSCI's broadest index of Asia-Pacific shares outside Japan gave up early modest gains to fall 0.53, putting it on track for a 12-percent loss this year.

With trading light in the United States and Europe between Christmas and the upcoming New Year's holidays, as well as a holiday on Monday in the United Kingdom, markets could see exaggerated moves this week.

MSCI's all-country world index lost 0.22 percent, while the pan-European FTSEurofirst 300 index closed down 0.54 percent.

In Europe, the drop in oil prices put pressure on energy stocks such as Repsol and Total.

Yields on benchmark 10-year Treasury notes inched down to 2.2322 percent, up 3/32 in price.

The dollar edged lower against a basket of major currencies, off 0.03 percent at 97.951 as bullish bets on the currency this year on a U.S. Federal Reserve rate hike met year-end profit-taking.

But the drop in oil prices hurt currencies linked to the commodity, such as the Australian and Canadian dollars.

The Australian dollar fell 0.1 percent to $0.7248 while its Canadian counterpart fell 0.6 percent to $1.3902, heading back towards this month's 11-year lows.

Spot gold was down 0.7 percent at $1,068.19 an ounce and was on track for its sixth straight quarterly decline, its longest run of quarterly losses since the mid-1970s. —Reuters

Asian shares resume slide on fears over Chinese economy

TOKYO - Asian stocks looked vulnerable to another sell-off on Tuesday, with investors gripped by fears of a hard landing for the Chinese economy, the world's most important growth engine.

Japan's Nikkei index fell 3.8 percent to six-month lows while the MSCI's broadest index of Asia-Pacific shares outside Japan hit fresh three-year lows.

Underlining concerns about China, Japanese Finance Minister Taro Aso said on Tuesday he hoped China would take action to stabilize its economy and that Tokyo had no plan for now to unveil its own new economic stimulus package.

MSCI's all country world index fell 3.8 percent on Monday to a 10 1/2-month low, its biggest fall in almost four years. It has lost 9.2 percent over five days.

Leading the losses were Chinese shares, which plunged more than 8 percent to post their biggest losses since 2007 on heightened worries that the Chinese economy was growing at a much slower pace than Beijing's 7 percent target for 2015.

Investors are also unnerved by uncertainty over US monetary policy. The Federal Reserve has said it plans to raise interest rates this year for the first time in almost a decade.

The heavy fall in share prices worldwide over the past week has sharply reduced expectations of a US rate hike in September, but the outlook is far from clear.

"There seems to be no consensus with the Fed on whether they are worried about acting too prematurely or too late," Toru Yamamoto, chief bond strategist at Daiwa Securities, said in report.

The S&P 500 Index fell 3.9 percent to a 10-month low on Monday. The CBOE volatility index, a key measure of US equity volatility, shot up to more than 50 percent at one point for the first time since the 2008 global financial crisis.

Because some investors often fund their investment in risk assets by borrowing low-yielding euro and yen, the sell-off in shares helped send both currencies to seven-month highs.

The euro rose as high as $1.1715 and last stood at $1.1571 while the yen strengthened to 116.15 to the dollar before stepping back to 118.80.

The dollar was not helped by falls in US bond yields either, which diminishes the currency's yield attraction.

The 10-year US Treasuries yield fell to a four-month low of 1.905 percent in choppy trade on Monday and last stood at 2.012 percent.

Oil prices plunged more than 6 percent on Monday to 6 1/2-year lows after the dive in Chinese equities market.

US crude futures traded at $38.38 per barrel, near Monday's low of $37.75.

Brent crude futures fell to $42.23 on Monday and last stood at $42.69.

Brent stood not far from $36.20, its low hit in the aftermath of the global financial crisis, having fallen more than 66 percent from last year's peak.

Copper, a good indicator of global economic activity because of its wide use, declined to a six-year low of $4,855 a tonne, falling more than 52 percent from its 2011.

The fall in commodity prices have hurt many commodity exporting countries' currencies.

The Australian dollar traded at $0.7177, having fallen to a 6-1/2-year low of $0.7044 on Monday. —Reuters