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Tuesday, December 16, 2014

Russian rouble suffers steepest drop in 16 years, Wall Street falls 3rd session

Oil prices pared losses and global equity markets eased today in roller-coaster trading as investors snapped up beaten-down energy stocks and wagered the Federal Reserve will be cautious amid the turmoil sparked by crude's collapse.

Russia's huge emergency rate hike overnight failed to stabilize the ruble's decline, which jolted markets, and German Bund yields hit a new low as a collapse in Russian financial markets sent investors scurrying for top-rated assets.

Three retail trading platforms halted trading in rubles, citing growing signs of stress among the banks that underpin that trade, as speculation mounted that Moscow will impose capital controls within the next few days.

Russian stocks on the dollar-denominated RTS index slumped 12.4 percent and sovereign and corporate bonds also retreated. The dollar rose as much as 25 percent against the ruble in spot markets, before paring gains to trade almost 5 percent higher.

Brent crude trimmed losses to trade just below $60 a barrel after breaking through that level in a plunge of more than 4 percent to plumb a July 2009 low. US oil prices rallied abruptly to settle near break-even on what traders said was a mix of profit-taking and positioning ahead of options expiry.

Energy rose 0.7 percent, the only US equity sector to manage meaningful gains.

After being higher most of the day, the Dow Jones industrial average closed down 111.97 points, or 0.65 percent, at 17,068.87. The S&P 500 lost 16.89 points, or 0.85 percent, to 1,972.74 and the Nasdaq Composite fell 57.32 points, or 1.24 percent, to 4,547.83.

European shares staged a late rebound as the Russian rouble recovered a good chunk of the day's losses against the dollar and oil prices also gained ground.

Traders pointed to comments by US Secretary of State John Kerry, who said Russia had made constructive moves towards possibly reducing tensions in Ukraine.

The FTSEurofirst 300 index of pan-European shares closed 1.8 percent higher at 1,314.31 points after trading as low as 1,273.2 earlier in the day. It mirrored a bounce in oil prices and a recovery in the rouble against the dollar.

Trading volume on the FTSEurofirst 300 was nearly 80 percent higher than the index's average for the past three months.

Meanwhile, Japanese stocks slumped today to 6-1/2 week lows as free-falling oil prices boosted demand for the safe haven yen and fears of weak worldwide growth dampened risk appetite.

The Nikkei benchmark shed 2 percent to close at 16,755.32, its lowest closing level since the Bank of Japan shocked markets by unexpectedly easing policy further on October 31.

With global concerns pushing the safe haven yen to a four-week high, exporter stocks were pressured. Nikon Corp shed 2.9 percent, while Nissan Motor Co Ltd lost 2.6 percent.

The broader Topix lost 1.9 percent to 1,353.37, with all its 33 sub sectors closing in the red. The JPX-Nikkei Index 400 also lost 1.9 percent to close at 12,277.41.

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Tags:  Stocks  shares  FTSEurofirst  Nikkei  US  Dow Jones  





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