Brent below $100; gold, U.S. stocks bounce after rout

NEW YORK Tue Apr 16, 2013 4:27pm EDT

1 of 5. Traders work on the floor at the New York Stock Exchange, April 12, 2013.

Credit: Reuters/Brendan McDermid

NEW YORK (Reuters) - Brent crude fell below $100 a barrel on Tuesday for the first time in nine months as continued concern about the global economy weighed on the outlook for demand, while gold and U.S. stocks rebounded after a recent sell-off lured buyers back.

The broad rout in commodities and stocks seen in recent sessions was triggered by data from China and the United States that raised worries about the strength of the global recovery.

Those fears continued to weigh on oil on Tuesday, with Brent crude down 72 cents at $99.91 a barrel. U.S. crude recovered earlier losses to settle at $88.72, up 1 cent.

"We are still seeing some weakness in price, in contrast to a number of markets that are snapping back to the upside with more vigor. That's because we still have a lot of oil," said Tim Evans, an energy futures specialist at Citi Futures Perspectives in New York.

"I think what we're seeing is a shift in the oil markets' focus to its own fundamentals, rather than trying to pretend that the oil market is the equity market, or a currency market."

U.S. stocks gained more than 1 percent, supported by strong earnings from some of America's biggest companies and on expectations the Federal Reserve will continue to provide stimulus.

"It's a relief rally, and investors ... are looking, as they have after any pullback we've had in the past several months, to take advantage of it and buy," said Alan Lancz, president of Alan B. Lancz & Associates Inc in Toledo, Ohio.

Gold bounced after plunging more than 8 percent on Monday. Spot gold initially dropped further, to $1,321.35 an ounce, before reversing direction to gain 1.5 percent to $1,372.90.

Gold has fallen about 20 percent so far this year after an unbroken 12 years of gains and is down some 28 percent from the record high hit in September 2011 of $1,920.30 an ounce.

Analysts have cited various reasons for gold's latest slump, including funds switching out of bullion and the possibility that other central banks in Europe could use Cyprus's bailout plans to sell excess gold reserves as a reason to offload some of their own holdings.

Data showed U.S. consumer prices dropped last month, leaving room for the Federal Reserve to keep up its economic stimulus efforts. The Fed's ultra-loose monetary policy has been one of the drivers of the stock market rally this year.

"Dovish economic data is not good in the long run, but it is certainly supportive of more Fed action," said Art Hogan, managing director at Lazard Capital Markets in New York.

A batch of strong earnings reports also drove gains on Wall Street. Coca-Cola (KO.N) reported better-than-expected profit that sent its shares up more than 5 percent to their highest level since 1998.

Shares of Johnson & Johnson (JNJ.N) touched a record high of $83.50 after the healthcare company, a Dow component, reported strong quarterly earnings.

The Dow Jones industrial average .DJI gained 157.58 points, or 1.08 percent, to 14,756.78. The Standard & Poor's 500 Index .SPX rose 22.21 points, or 1.43 percent, to 1,574.57. The Nasdaq Composite Index .IXIC climbed 48.14 points, or 1.50 percent, to 3,264.63.

Separate data showed U.S. factory output declined in March, while permits for future housing construction tumbled. Data at the start of the year had been generally upbeat, pointing to an acceleration in economic growth in the first quarter, but recent reports have suggested the recovery hit a soft patch heading into the spring.

MSCI's global share index .MIWD00000PUS, which tracks around 9,000 stocks in 45 countries, was up 0.7 percent.

However, the FTSEurofirst 300 .FTEU3 closed 0.7 percent lower after disappointing ZEW German consumer confidence numbers and a lackluster update from luxury group LVMH (LVMH.PA).

Currency markets also unwound some of the previous day's action with the yen tumbling against the dollar and euro, reversing Monday's sharp gains.

"Yesterday there was a lot of fear in the market, especially as people were watching what's going on in gold," said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York. "There's a thought that maybe things were overdone in the yen cross."

The dollar rose to a session peak at 98.15 yen, according to Reuters data, and was recently up 0.8 percent at 97.54 yen. The euro rallied 2.2 percent to 128.53 yen, having hit a session peak of 128.99 yen.

(Additional reporting by Rodrigo Campos, Wanfeng Zhou, Caroline Valetkevtich and Anna Louie Sussman; Editing by James Dalgleish)

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Comments (7)
MaggieMP wrote:
This article is far too technical for me – I don’t mean that as criticism, but to open the way for long-held thoughts that seem to apply whenever concern for ‘growth wellness’ is measured in our “the market is everything” world.

Growth to where, and based on what? And why? Do we even know anymore?

When the observation is made that “the market is a god”, and that “we’re willing to throw almost anything into the throat of the volcano to appease that god”, it’s pretty difficult to find solid counter argument.

By other models, it shouldn’t matter if purchasing slows down. We could, for instance, place ‘dollar’ value on volunteer or unpaid work as contributing to larger wellness. We cold decide as a community (of even global size) to evaluate wellness by different measure. Ocean, soil, and fresh water quality, for instance. Opportunity to learn, explore, and create – even if grand careers don’t come of it, for instance. It seems our choice, but we seem ‘locked in’ to a market-must-grow, market-is-god, paradigm.

Apr 16, 2013 2:26am EDT  --  Report as abuse
RossKiwi wrote:
Maguire – LBMA Default Triggered Gold & Silver Takedown

Apr 16, 2013 3:02am EDT  --  Report as abuse
RossKiwi wrote:
to MaggieMP

“Only after the last tree has been cut down.

Only after the last fish has been caught.

Only after the last river has been poisoned.

Only then will you realize that money cannot be eaten.”

Cree Nation Tribal Prophecy

Apr 16, 2013 3:05am EDT  --  Report as abuse
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