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Oil drops sharply on concerns

05 February 2010 08:20 (UTC +04:00)

Baku â€“ APA-Economics. Concerns about the US economy and the potential spread of debt problems in Europe led to large stock market falls, BBC reported.
On Wall Street, shares suffered their worst losses in nine months. Key European markets lost more than 2% Spain and Portugal fell about 5%.
In the US, worse-than-expected levels of unemployment benefit claims added to worries about the pace of recovery.
Analysts said the negative sentiment was largely behind the price of US crude oil falling sharply.
Brent crude fell by $3.83 to $73.14 a barrel in New York having gone as low as $71.47. In London, Brent crude slipped by $3.79 to $72.13 a barrel.
The discouraging jobs news had dampened hopes of a near-term economic recovery, said Fadel Gheit, an oil analyst at Oppenheimer & Co.
"When people say there’s a light at the end of the tunnel, it’s getting to be a very dim light and a very long tunnel," he said.
Psychological barrier
European markets suffered as a lack of demand for government bonds in Portugal re-ignited concerns that countries such as Portugal and Greece would not be able to fund their national deficits without a bail-out.
Investors moving out of the euro saw it slide to its lowest level against the dollar in more than eight months.
However Jean-Claude Juncker, head of the eurogroup of finance ministers, said on Thursday that neither Spain nor Portugal posed risks to eurozone stability.
In the US, where claims for unemployment benefits rose by 8,000 to 480,000 last week according to Labor Department figures, markets reacted badly. It was the fourth increase in the past five weeks and the number of lost jobs was the highest in two months.
The Dow Jones index fell by 268.4 points, 2.6%, to close at 10,002.2 points having briefly dipped below the psychological 10,000 points barrier in late trading for the first time since November last year.
Meanwhile the Nasdaq index slid 3% to 2,125.43.
Investors had been "spoiled" by almost non-stop gains since March last year said Bob Doll, global chief investment officer for equities at BlackRock.
"The consolidation or corrective phase is probably not over," he added.
In London, the FTSE 100 index closed at its lowest level in three months, shedding 2.2%, 113.8 points to 5,139.31.
Meanwhile France’s Cac-40 index slipped 2.8% and Germany’s Dax-30 lost 2.5%.
The falls in European and US markets were similar to those experienced in mid-January, when China’s attempts to curb its growth brought concerns that other world economies would feel the impact.