December 13, 2017
Friday, November 28, 2014

Tumbling energy shares halt European stocks, Wall Street ends mixed

A file picture taken in Doha shows a general view of an oil refinery in the Gulf emirate of Qatar.
A file picture taken in Doha shows a general view of an oil refinery in the Gulf emirate of Qatar.
A file picture taken in Doha shows a general view of an oil refinery in the Gulf emirate of Qatar.

Stocks on Wall Street ended mixed in a light trading holiday-shortened session. The Dow Jones industrial average ended up 0.49 point, or 0 percent, at 17,828.24. The S&P 500 fell 5.26 points, or 0.25 percent, to 2,067.57 and the Nasdaq Composite added 4.31 points, or 0.09 percent, to 4,791.63.

Across the Atlantic, european shares snapped a five-day winning streak weighed down by steep falls in energy shares as oil prices hit four-year lows on fears about oversupply.

Oil companies such as Statoil and Galp Energia and explorer Premier Oil fell by between 5.7 percent and 15 percent after Brent slipped below $72 following OPEC's decision on Thursday not to cut output, a move investors said would leave oil markets heavily oversupplied.

A number of oil services firms including Norway's Seadrill , down 5.7 percent today, have been forced to scrap their dividends as the sector struggles with the drop in crude prices, which is prompting oil majors to accelerate cost-cutting efforts.

The European oil and gas sector was down 3.5 percent. It has now lost $240 billion in market value since late June, more than the entire market value of Shell, Europe's biggest oil major, Thomson Reuters data shows.

Jet fuel, derived from crude, accounts for around a third of airlines' operating costs.

Shares in Air France surged 5.8 percent while Lufthansa rose 3.8 percent.

The pan-European FTSEurofirst 300 rose 0.02 percent to close at 1,392.70, while MSCI's all-country world equity index fell 0.4 percent to 425.54.

The benchmark index had risen nearly 15 percent from a low in mid-October, lifted by the prospect of further measures from the European Central Bank to ward off the risk of deflation.

The drop in energy prices has also contributed to a slowdown in euro zone inflation, which rose just 0.3 percent year-on-year in November according to data published on Friday, suggesting deflation remains a real threat to the currency bloc.

The ECB is due to publish its new inflation forecasts on Thursday and, even if the recent slump in oil prices will not have been factored in, many economists expect downgrades.

Meanwhile, Japanese stocks rose to a two-week high today as a weaker yen helped exporters, while falling oil prices benefited airline and railway stocks such as ANA Holdings Inc and East Japan Railway Co.

The Nikkei benchmark ended 1.2 percent higher to 17,459.85, the highest closing price since Nov. 14. The benchmark gained 0.6 percent for the week and jumped 6.4 percent for the month, the biggest monthly gain since last November.

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