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

Thu Dec 13, 2012 4:51pm 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.
    Investor skittishness led the S&P 500 to end a six-day
winning streak, European shares to slip from 18-month highs and
MSCI's all-country world index to cap seven straight days of
gains. 
    "There is no conviction here and Boehner's comments - as
harsh as they were - were realistic," said Jason Weisberg,
managing director at Seaport Securities Corp. in New York.
    "The 'fiscal cliff' is already built in. That being said,
people don't like to be told the apocalypse is coming over and
over and over again. The real players in this market have
already closed their books," Weisberg 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 closed down 74.73
points, or 0.56 percent, at 13,170.72. The Standard & Poor's 500
Index fell 9.03 points, or 0.63 percent, at 1,419.45. The
Nasdaq Composite Index slid 21.65 points, or 0.72
percent, at 2,992.16. 
    MSCI's world equity index fell 0.29 percent
to 336.82.
    European shares slipped, 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 stocks 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 1.3076, while the
U.S. dollar index rose 0.13 percent at 79.919. 
    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 7/32 in price to yield 1.7265 percent.
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