PARIS: European stocks fell on Monday, wiping out gains in early trade by a modest and short-lived rebound in oil value, as concerns over global crude demand widened.
Low oil prices and the impact of Western sanctions especially took a toll on Russia, which saw its ruble plummet by 9.5 per cent amid warnings of a steep economic contraction of 4.8 per cent next year if crude prices do not climb.
After slight increases earlier in the day, Brent North Sea crude for delivery in January was down US44c at $US61.41 in late London trading.US benchmark West Texas Intermediate (WTI) for January declined sharply, down $US1.15 to hit $US56.66 in midday trading in New York.
Both had hit their lowest levels since 2009 previously during Monday’s trading.
The oil market has now collapsed by 50 per cent in value since June, weighed down by plentiful supplies, the stronger dollar and weak demand arising from the struggling global economy.
Renewed worries over oil prices wiped out gains earlier in the day in European stocks, with London’s benchmark FTSE 100 index retreating 1.9 per cent to end the day at 6,182.72 points.
The Paris CAC 40 fell 2.5 per cent to 4,005.38 points, its lowest level since October 20 and its sixth-consecutive drop. In Frankfurt, the DAX 30 lost 2.7 per cent to 9,334.01 points.
European equities fell sharply last week as traders tracked the dizzying plunge in oil prices, which hurts the profits of energy companies.
“If ever a reminder was needed that oil is by some distance the most important commodity in the world the last few weeks have provided it,” said analyst David Hufton at energy brokerage PVM Oil Associates.
A potential new political crisis in Greece also spooked European markets last week, with concerns over the possibility of snap elections.
“The move in oil was shown to be a dead-cat bounce and prices rolled over and erased most stock market gains with them,” Jasper Lawler, an analyst at CMC Markets UK, said.
“After such a sharp drop last week, it’s not surprising there wasn’t much in the way of confidence to hold onto the morning’s share price gains going into the afternoon,” he added.
In a sign of the ambivalence, stock markets in most Gulf Arab states shed the majority of the gains they made at the start of trading on Monday to close lower or flat following days of heavy losses.
Asian markets fell on the back of the low oil price, while investors in Japan shrugged off Prime Minister Shinzo Abe’s decisive re-election and focused instead on the faltering economy.
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