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GLOBAL MARKETS-German sentiment weighs on stocks, euro; oil tumbles
August 12, 2014 / 5:50 PM / 3 years ago

GLOBAL MARKETS-German sentiment weighs on stocks, euro; oil tumbles

* Brent crude hits 13-month low on ample supply

* German shares lag after sentiment data shows Ukraine fear

* U.S. stocks lower, energy sector weighs (Updates prices, changes comments)

By Rodrigo Campos

NEW YORK, Aug 12 (Reuters) - Brent crude oil hit a 13-month low on Tuesday as ample North American production outweighed concern over supply from the Middle East, while stocks and the euro were pressured by plunging investor morale in Germany, Europe’s largest economy.

German shares fell more than 1 percent and the euro weakened against the U.S. dollar after the ZEW gauge of economic sentiment fell to its lowest level since December 2012. Sanctions against Russia over its support of Ukrainian separatists raised fears about the impact on Germany’s economy.

Moscow said on Tuesday that a convoy of 280 trucks carrying humanitarian aid had set off for Ukraine, but Kiev said it would not allow the vehicles to cross into its territory. NATO has warned Russia not to use humanitarian aid as an excuse to invade.

“The recent string of disappointing economic indicators from (Germany), along with an escalation of sanctions towards Russia, has institutional investors and analysts nervous about future economic conditions,” said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.

The Dow Jones industrial average fell 5.52 points or 0.03 percent, to 16,564.46, the S&P 500 lost 2.6 points or 0.13 percent, to 1,934.32 and the Nasdaq Composite dropped 12.08 points or 0.27 percent, to 4,389.26.

An MSCI index of stocks in major developed and emerging economies dipped 0.1 percent and a pan-European benchmark fell 0.2 percent, while Frankfurt’s DAX index fell 1.2 percent, in its biggest decline since Aug. 1.

Brent prices were recently down 1.6 percent at $103.03 while U.S. crude fell 1 percent to $97.13.

The euro index, which measures the currency against five major peers, was on track for its worst daily performance in a week in the wake of the soft German data.

Against the U.S. dollar, the euro fell 0.2 percent, bringing the decline since the start of July to 2.5 percent.

In U.S. debt markets, the selling pressure from this week’s supply has been partly offset by a steady bid for safe-haven Treasuries on worries about conflicts in Iraq, eastern Ukraine and Gaza.

Following the auction of $27 billion in 3-year notes at the lowest yield since April, benchmark 10-year yields were at 2.4419 percent, not far from last week’s 14-month low of 2.349 percent.

Gold was little changed at $1,308 an ounce. Copper slipped 0.5 percent to $6,963 a tonne near a six week low.

Investors kept an eye on Iraq as the Prime Minister-designate Haider al-Abadi won endorsements from the United States and Iran as he called on political leaders to end feuds that have allowed jihadists to seize a third of the country.

Still, al-Abadi’s Shi‘ite party colleague Nuri al-Maliki has refused to step aside after eight years as premier that have alienated Iraq’s once dominant Sunni minority and irked Washington and Tehran. (Additional reporting by Richard Leong, Ryan Vlastelica and Gertrude Chavez-Dreyfuss in New York and Jason Neely in London; Editing by Leslie Adler and Nick Zieminski)

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