While you were sleeping: Stocks drop as oil surges, again

While you were sleeping: Stocks drop as oil surges, again

(BusinessDesk) March 10 - Stocks in Europe and on Wall Street fell amid a renewed surge in oil prices as battles in Libya intensified, keeping alive concern the increase in fuel prices would choke the economic recovery.

In midday trading, the Dow Jones Industrial Average slipped 0.05%, the Standard & Poor's 500 Index shed 0.30% and the Nasdaq Composite Index dropped 0.60%.

Oil jumped to more than US$116 a barrel as clashes in Libya escalated, and an OPEC delegate said the group saw no need to hold an emergency meeting to stem concerns about supply.

“You’d be crazy not to be concerned about geopolitical risks,” Philip Dow, director of equity strategy at Minneapolis-based RBC Wealth Management, told Bloomberg News.

“Oil touches everything. However, if you’ve paid attention to every near-term uncertainty of the last two years, you would have missed the big move in stocks. You can’t see the forest for the trees. There’s not enough evidence that this could derail the global recovery. This is an expansion,” Dow said.

The money managers who picked the global stock market bottom told Bloomberg now was no time to sell as the biggest equity rally since 1955 started its third year.

Laszlo Birinyi, who told clients to buy as the S&P 500 fell to a 12-year low of 676.53 on March 9, 2009, told Bloomberg that gains that added about US$28 trillion to global share values will outlast previous increases as investors who missed the first phase play catch-up.

Valuations are still below historical averages, Barton Biggs, the hedge-fund manager who purchased stocks before the S&P 500’s 95% advance through yesterday, told Bloomberg.

Among shares that appealed to investors were International Business Machines Corp, which climbed to a record as Deutsche Bank AG lifted its share-price estimate for the company.

In Europe, the Stoxx 600 Index shed 0.2%, dropping for the third session in four.

Miners were among the biggest decliners, with key base metals prices falling on concern about demand for raw materials. The STOXX Europe 600 Basic Materials index lost 1.1%.

"The underlying pace of growth is still strong, but the risk is that if oil prices keep on going up then obviously it will strangle economic growth," Luc Van Hecka, chief economist at KBC Securities, told Reuters.

"The highest probability is for oil prices to fall back once these tensions fade. Equities still look attractive compared to other asset classes and in terms of valuations."

Bucking the trend was Iberdrola Renovables, which soared nearly 11% on news that parent Iberdrola planned to buy out the minority shareholders of its renewables unit.

The euro was steady at US$1.3907 on electronic trading platform EBS.

Investors are eyeing a euro zone summit on Friday where 17 heads of state are expected to agree on the next steps to stem the region's debt crisis.

The U.S. currency was little changed against a basket of its major counterparts, slipping 0.02%.

Brent crude oil futures for April gained US$2.68 to US$115.74 a barrel at 1603 GMT after forces loyal to Muammar Gaddafi hit storage tanks in the oil terminal of Es Sider, rebel fighters said.

Brent had risen as high as US$116.18 a barrel earlier in the session. U.S. crude was up 45 cents at US$105.47.

Meanwhile, the 12-member Organization of the Petroleum Exporting Countries has been talking about whether it needs to meet due to rising prices and the loss of Libyan supplies. The group believes that supply is adequate, Reuters reported, citing a delegate who declined to be identified.

"There have been consultations and we don't see a need to meet at the moment," the delegate said.

(BusinessDesk)

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