US stock prices rose yesterday, hovering near record highs, while crude fell below $80 a barrel for the first time in four years on further signs of a slowdown in China’s economy.
Brent crude has fallen more than 30 per cent since June, and the Organisation of the Petroleum Exporting Countries (Opec) said demand for its members' oil could drop by about a million barrels per day in 2015 due to the US shale boom.
Data from Beijing showed below-forecast factory output and investment growth hitting a near 13-year low, reinforcing signs that the world's second-biggest economy would see its weakest growth for almost 24 years this year.
Falling energy costs, while apositive for consumers, have raised concerns about profits of major oil companies and their capital spending, analysts said.
“$80 is the pain threshold,” said Alexandre Baradez, chief market analyst at IG France.
Brent crude was last down $1.43 or 1.78 per cent at $78.95 a barrel, while US oil futures fell $1.46 to $75.72.
Top European shares fell 0.2 per cent to 1,346.39, erasing an earlier gain as an index on regional oil and gas shares shed 1.8 per cent.
Encouraging sales results from Wal-Mart, the world's largest retailer, offset weakness in the energy sector on Wall Street. In early trading, the Dow Jones industrial average rose 56.13 points, or 0.32 per cent, to 17,668.33, the S&P 500 was up 5.47 points, or 0.27 per cent, to 2,043.72 and the Nasdaq Composite added 26.10 points, or 0.56 per cent, to 4,701.23.
Earlier, Tokyo's Nikkei index raced to fresh seven-year highs after Jiji news agency reported Prime Minister Shinzo Abe appears to have decided to call an early election amid mounting expectations he would postpone a planned sales tax hike.
Worries about weak price growth in the eurozone were evident in a European Central Bank survey of forecasters released yesterday which intensified speculation the ECB would embark on more action to avert deflation.
The yield on 10-year German Bunds slipped over one basis point to 0.796 per cent.
Speculation about a snap election in Japan pulled the yen toward a recent seven-year low against the dollar before the greenback retreated on a bigger-than-expected rise in weekly domestic jobless claims. The dollar was last down 0.04 per cent at 115.43 yen.
The dollar was mixed against other major currencies. The euro gained 0.2 per cent at $1.2463, while sterling hit a 14-month low at $1.5733.
Safe-haven gold rose 0.2 per cent to $1,162.23 an ounce, holding above last Friday’s four-and-a-half-year low of $1,131.85.