* Oil dips on historic Iran nuclear deal
* World shares gain, Wall St poised to set fresh records
* Yen drops to six-month low vs dollar as Nikkei surges
* Disinflation pressures lift German bond yields
By Richard Hubbard
LONDON, Nov 25 The historic deal to curb Iran's
nuclear program prompted a dip in oil prices on Monday and
buoyed world shares as investors priced in an easing in
political tensions and the lift it may give to global economic
Negotiated by six world powers and Iran over the weekend,
the deal halts Iran's most sensitive nuclear activities and
gives it some relief from crippling sanctions, but does not
allow the OPEC member to increase oil sales for six
Despite tough work ahead to transform the agreement into a
permanent solution, it was enough to ease oil supply fears and
send Brent crude down $2.15 at $108.90 in European trade
after it had earlier slid $3 to hit a low of $108.05.
"What prices are mostly reflecting is a lack of geopolitical
risk premium," said Barclays oil analyst Miswin Mahesh.
"We would have expected a $3 to $4 a barrel move. We did not
get that because... you're not seeing additional barrels coming
into the market," he said.
The easing of Middle East tensions after the agreement did
look set to lift Wall St shares when trading opens, where the
S&P 500 and Dow indexes are sitting at record highs
after posting a seventh straight week of gains on Friday.
"It's positive news, its clearly boosting equity markets
today and in a broader sense its reflationary for the global
economy," said Mike Ingram, market commentator at BGC Partners.
European shares rose by 0.5 percent in the wake of
the agreement, extending last week's solid gains and edging
closer to their five-year high highs. Germany's DAX
rose 0.9 percent to a record high.
However, uncertainty over the region's economic outlook was
keeping liquidity levels low, with volumes likely to suffer
further this week due to the U.S. Thanksgiving holiday on
Thursday and as the end of the month approaches.
MSCI's world equity index, tracking shares
in 45 countries, gained 0.2 percent reflecting the firmer tone
in Europe and earlier gains across Asian share markets
after the Iran deal emerged.
In emerging markets, the deal gave a big boost to Turkish
stocks, which jumped 1.6 percent, though political tensions
weighed on Thai and Ukrainian assets, and the dip in oil prices
pushed the Russian rouble lower.
In Japan, a major oil importer, shares got an extra boost
from a weaker yen to surge by 1.5 percent and have now gained
almost 11 percent in little more than two weeks.
The Japanese currency, which typically falls when share
prices rise, had touched a sixth-month low of 101.895 yen to the
dollar on Monday as investors sold the currency to buy
higher-yielding assets elsewhere.
The fall in oil prices weighed on most commodity-linked
currencies, with the Canadian dollar dropping to a 4
1/2-month low of C$1.0584. Against an index of six major
currencies, the dollar was 0.2 percent higher.
In fixed income markets Iran's deal was fueling concerns
about disinflationary pressures which have been building in the
euro zone and earlier this month led to a surprise rate cut by
the European Central Bank.
ECB Governing Council member Ardo Hansson stirred the talk
further on Monday when he was quoted saying the options on rate
cuts were "still not fully exhausted" and the bank could move by
less than the usual 25 basis points.
His French colleague Christian Noyer said earlier that
interest rates have to remain low for an extended period and
might go even lower if needed as officials try to ensure the
euro zone does not fall into deflation.
The comments sent German 10-year Bund yields
down 0.2 basis points to 1.73 percent, even as equity prices
gained and markets prepared for a sale of up to 4 billion euros
of 10-year German debt on Wednesday.
In the commodity markets, prices moved lower to reflect the
greater attraction of equities and the dollar's strength. Gold
slid by around 1 percent to be near $1,231 an ounce and
close to its lowest level since early July.
Bullion was also being weighed down by fears of an early end
to the U.S. Federal Reserve's stimulus measures, and as holdings
in the biggest gold-backed exchange-traded fund suffered their
biggest drop in three weeks.
Copper had slipped 0.2 percent to $7,084 a tonne
though this followed a rise of 1.2 percent last week, its
biggest weekly gain in two months.