GLOBAL MARKETS-U.S. stocks fall as oil hits record above $100
Earlier in Europe, shares closed slightly higher as results from British bank Barclays gave investors confidence that more losses were unlikely in the financial sector after a shock $2.85 billion write-down at Credit Suisse.
Euro-zone government debt rose on the new wave of bank write-downs in Europe, but safe-haven U.S. government bond prices fell sharply on profit-taking and inflation worries after U.S. crude oil futures surged more than 4 percent to top $100 a barrel.
“The big move in oil is having a definite psychological impact as it dispels the notion that there will be a major pullback in the price of oil,” said Chip Hanlon, president of Delta Global Advisors Inc. in Huntington Beach, California.
Oil extended four days of gains with U.S. crude futures on the New York Mercantile Exchange hitting a record high of $100.10 a barrel on concerns that OPEC will keep production flat or even cut output when it meets in March.
The market also is on edge over a quarrel between OPEC producer Venezuela and Exxon, the world’s largest non-government-controlled oil company by market value.
Crude oil for March delivery CLc1 settled up $4.51 at $100.01, while London Brent for April delivery LCOJ8 hit an intraday high of $98.70 per barrel, surging $3.79. That surpassed the previous record of $98.50 set on Jan. 3.
The Organization of Petroleum Exporting Countries is unlikely to cut output at its March 5 meeting due to rising prices and uncertainty about Venezuelan and Nigerian supply, OPEC delegate sources said Tuesday.
That was after OPEC President Chakib Khelil, Algeria’s oil minister, told Reuters “production is not going to increase. It will either decrease or be stable.”
U.S. stocks rose earlier in the day, as the higher oil prices initially lifted energy shares and a better-than-expected earnings report by Wal-Mart Stores Inc, the world’s biggest retailer, initially eased fears about consumer spending.
Shares of Exxon Mobil and Chevron Corp, whose stock debuted on Tuesday as a component of the Dow Jones industrial average, gained more than 2 percent before paring gains.
The Dow Jones industrial average .DJI was down 10.99 points, or 0.09 percent, at 12,337.22. The Standard & Poor’s 500 Index .SPX was down 1.21 points, or 0.09 percent, at 1,348.78. The Nasdaq Composite Index .IXIC was down 15.60 points, or 0.67 percent, at 2,306.20.
The late sell-off in the stock market curbed losses in U.S. government bonds, as traders scrambled for safe-haven Treasury holdings after unwinding them earlier in favor of stocks, investors said.
BARCLAYS RESULTS BODE WELL
In Europe, Barclays was the first major UK bank to report results after a turbulent year, and analysts said Tuesday’s numbers – including a modest $584 million increase in write-downs and a 10 percent dividend increase – bode well for the sector.
Analysts said other banks would unlikely report further losses from earlier disclosures, easing investor concerns.
“The fact that (Barclays) felt confident enough to declare an increase in the dividend really stabilized the situation,” said Edward Menashy, an economist at Charles Stanley.
Shares of other European banks also gained, with HSBC up 0.4 percent and Royal Bank of Scotland rising 1.6 percent.
In Japan, stocks climbed to a two-week high as Mitsubishi UFJ Financial Group and other banks gained, spurred by a report that Qatar has bought shares in Credit Suisse and plans to spend as much as $15 billion on European and U.S. bank stocks over the next year.
The benchmark Nikkei .N225 hit 13,853, its highest level since Feb. 5, before paring gains to close 0.9 percent higher at 13,757.91.
The high-yielding Australian and New Zealand dollars climbed as investors added to risky trades amid strong gains in commodity prices and expectations of further interest rate increases in Australia.
The Aussie rose to three-month highs versus the greenback after minutes from the Reserve Bank of Australia’s February policy meeting cemented expectations for more interest rate hikes, boosting the currency’s appeal to global investors.
The dollar was down against a basket of major trading-partner currencies, with the U.S. Dollar Index .DXY down 0.22 percent at 75.925 from a previous session close of 76.095.
In U.S. Treasuries, the benchmark 10-year note yield