GLOBAL MARKETS-Shares, oil fall on fears of US 'fiscal cliff'

Thu Dec 13, 2012 3:50pm EST

* World shares turn lower on news of impasse over budget
talks
    * Government debt falls on unemployment data
    * Dollar holds steady against euro currency
    * Oil falls on fears of rising inventories, fiscal cliff
talks


    By Herbert Lash
    NEW YORK, Dec 13 (Reuters) - A seven-day rally in world
shares came to a halt and commodity prices slipped on Thursday
after negotiations over the U.S. "fiscal cliff" hit a wall, with
both Republicans and the White House voicing frustration at the
lack of progress.
    Wall Street turned lower after U.S. House of Representatives
Speaker John Boehner, the top congressional Republican, refused
to give ground in negotiations with President Barack Obama on a
new fiscal plan. 
    Boehner voiced frustration about talks with the White House
to avert the steep tax hikes and spending cuts that will be
triggered at the end of the year unless Congress intervenes.
    "Today's there's a certain sense that both sides are still
apart," said Gordon Charlop, managing director at Rosenblatt
Securities in New York, describing trading as "tweaking" while
investors watch Washington's back-and-forth drama.
    "It's imperative they cooperate on some levels, and if they
do, I think we'll see a Santa Claus rally," Charlop said.
    Data showing U.S. retail sales rose in November and jobless
claims fell sharply last week were hopeful signs for an economy
that appears to have slowed sharply this quarter. But the news
failed to buoy investors consumed by the budget talks. 
     The Dow Jones industrial average was down 56.87
points, or 0.43 percent, at 13,188.58. The Standard & Poor's 500
Index was down 7.70 points, or 0.54 percent, at 1,420.78.
The Nasdaq Composite Index was down 20.31 points, or
0.67 percent, at 2,993.50. 
    MSCI's all-country world equity index, which
had chalked up seven straight days of gains, fell 0.29 percent
to 336.81.
    European shares slipped from 18-month highs, led by a fall
in heavyweight healthcare stocks, after uncertainty over the
U.S. budget talks prompted investors to cash in an eight-session
winning streak.
    The FTSEurofirst 300 index closed down 0.42 percent
at 1,134.86, ending a three-week rally that had pushed prices to
18-month highs. 
    Crude oil prices slipped under $109 a barrel due to rising
U.S. oil stockpiles and fears that the world's largest economy
might risk a recession if a resolution to the budget issue is
not reached.
    With the front-month January contract approaching expiration
on Friday, Brent crude's losses were deeper than for its U.S.
counterpart.
    Benchmark Brent crude settled down $1.59 to $107.91
a barrel. U.S. crude fell 88 cents to settle at $85.89.
    The Thomson Reuters-Jefferies CRB Index, which
tracks 19 commodity markets, was down 0.85 percent at 292.6968.
    The dollar held steady against the euro after falling for
three straight days as the looming fiscal crisis curbed weakness
in the currency after the Federal Reserve on Wednesday announced
further monetary stimulus.
    The Fed met market expectations by saying it would keep
buying $45 billion of government bonds each month after its
"Operation Twist" program expires. That is in addition to its
purchases of $40 billion a month in agency mortgage-backed
securities. 
    The euro was 0.03 percent higher at 1.3077, having
hit a session low of $1.3039 and a session high of $1.3100. 
    U.S. Treasury debt prices eased after data showed claims for
unemployment benefits were lower than expected in the latest
week, which undermined the safe-haven appeal of lower-risk U.S.
government debt.
    The benchmark 10-year U.S. Treasury note was
down 9/32 in price to yield 1.7317 percent.