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European stocks, euro retreat, oil prices slump

European stock markets slid yesterday and the euro fell against the dollar as traders expected US President Barack Obama’s re-election to be challenged quickly by a looming fiscal crisis, and the EU issued gloomy growth forecasts.

After rising in early exchanges as investors welcomed an end to the US political drama, equities and the European single currency headed south as attention switched to the challenging months ahead.

At the close of trading, London’s FTSE 100 index of top companies had lost 1.58 per cent to 5,791.63 points, Frankfurt’s DAX 30 retreated 1.96 per cent to 7,232.83 points and in Paris the CAC 40 shed 1.99 per cent to 3,409.59. Madrid’s IBEX index lost 2.26 per cent to 7,660.70 points as Spain’s growth prospects grew darker.

In New York, US stock markets tumbled on expectations that Obama’s re-election will set up a tough battle with Republicans over a feared “fiscal cliff”.

Oil prices plunged, mirroring global equities, as traders fretted in the US following President Barack Obama’s re-election and gloomy EU economic forecasts.

Sentiment was also dented by profit-taking, a stronger dollar and poor crude inventories data signalling weak demand in the world’s biggest oil consuming nation.

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