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Stocks firm, oil sags on doubts over supply deal

Stock prices around the world edged up yesterday following upbeat US growth data, while the oil market fell to its weakest level in over a week on doubts Opec could reach an accord to reduce output.

The dollar slipped against a basket of currencies on profit-taking. The dollar index had hit a near 14-year peak last week on expectations a Trump administration would result in tax cuts and a surge in federal spending to bolster the US economy.

“Optimism surrounding potential fiscal stimulus and some targeted deregulation next year have lifted US equity prices in recent weeks,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

“Couple that with an increasingly enthusiastic consumer supported by stronger wage gains and the economy appears well-positioned to remain on a growth path heading into 2017.”

Concerns about rising government borrowing to finance those fiscal stimuli, together with upbeat US economic data, renewed selling in US Treasuries and other core government bonds.

Gold prices fell on growing expectations on stronger global growth led by the US and the Federal Reserve raising interest rates in response.

The Dow Jones industrial average was up 15.62 points, or 0.08 per cent, to 19,113.52, the S&P 500 was 4.14 points, or 0.19 per cent, higher at 2,205.86 and the Nasdaq Composite was up 19.79 points, or 0.37 per cent, to 5,388.60.

The outlook for US stocks improved after data showed the US economy grew 3.2 per cent in the third quarter, faster than initially thought due to strong consumer spending and a surge in soybean exports.

European equities edged higher with Italian bank stocks gaining 3.7 per cent after Monte dei Paschi’s rescue plan got off to an encouraging start. Generali’s board approved a conversion of €400 million in Monte dei Paschi subordinated bonds into shares, according to Italian press reports.

Europe’s broad FTSEurofirst 300 index inched up 0.08 per cent, at 1,341.15. The MSCI world equity index, which tracks shares in 45 nations, fell 0.1 points or 0.02 per cent, to 413.54.

In addition to its bank sector, Italy was also in focus ahead of a constitutional referendum on Sunday.

Italian 10-year government yields fell below two per cent after Reuters reported that the European Central Bank is ready to buy more Italian bonds if there is turmoil after the constitutional referendum on Sunday. The political risk kept the euro restrained despite the pullback in the dollar. The single currency was last up 0.03 per cent, at $1.0616.

The dollar index slipped 0.1 per cent on profit-taking but remained 2.8 per cent higher for the month.

The greenback’s decline was mitigated by higher US yields stemming from jitters about higher domestic inflation if Trump and a Republican-controlled Congress enact tax cuts and federal spending in the coming months.

Benchmark 10-year Treasury yield was up two basis points to 2.34 per cent.

Meanwhile, oil prices fell more than 3.5 per cent as key Opec members seemed to struggle with arriving to an production cut agreement to address a global supply overhang.

Brent crude was last down $1.72, or down 3.57 per cent, at $46.52 a barrel. US crude was last down $1.74, or down 3.7 per cent, at $45.34 per barrel.

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