GLOBAL MARKETS-Oil nose-dive takes shine off stocks


Reuters

(Adds Wall Street futures, oil slide)
    * Oil dives almost 3 percent to 7-month low
    * Wall St set to open almost flat
    * Sterling hit by BoE chief Carney's comments on interest
rates
    * Tech rebound cools concerns over sector of last fortnight
    * Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

    By Patrick GrahamLONDON, June 20 (Reuters) - A 2.5 percent drop in oil prices
to their lowest in seven months dragged stock markets off
all-time highs on Tuesday, cooling a recovery in hi-tech shares
as central bankers sent cautious signals on the outlook for
growth and interest rates.
    Japan's Nikkei <.N225> had jumped to a near two-year high in
Asian trading and European shares built on their biggest one-day
gain in two months after a bounce in tech stocks drove Wall
Street to record highs on Monday.
    But the dive in crude [O/R] helped take the shine off those
moves and left the main U.S. markets set to open roughly flat.
<1YMc1> <ESc1>
    Japan's yen, a refuge for investors whenever appetite for
risk cools, recovered all of the day's losses to trade higher
against the dollar and euro in response. <JPY=>
    Russia's rouble sank 1.5 percent. <RUB=>
    "The oil thing is big and it is feeding a little bit into
the yen and is certainly being felt in the Russian rouble," said
head of Saxo Bank FX strategy John Hardy.
    "I think we are just waking up to risk appetite (being very
elevated) at these levels."
    After jitters on hi-tech stocks this month, investors are
fairly confident that major central banks will not be tightening
the flow of cash that has kept markets rising for eight years,
at a time when growth globally looks solid.
    Bank of England Governor Mark Carney, days after a meeting
at which three colleagues on the bank's policy committee voted
for higher rates, knocked half a percent off Britain's pound by
saying now was "not the time" to hike borrowing costs. <GBP=D3>
    Similarly, in a speech late on Monday, Chicago Federal
Reserve President Charles Evans said it may be worthwhile for
the U.S. central bank to wait until year-end to decide whether
to raise rates again.
    That helped the Nikkei <.N225> rack up gains of almost 1
percent and drove minimal gains for continental Europe's main
indices. <.GDAXI> <.FCHI>.
    "Companies are in aggregate in robust health, and with all
the cash from quantitative easing still washing around the
system, there is a lack of alternatives for investors to put
their money in," said Andy Sullivan, portfolio manager with GL
Asset Management UK in London.
    Monday's rebound also cooled nerves over the technology
sector after a second week of falls last week <.SPLRCT>.
    "Hi-tech shares just went through a correction," said
Mutsumi Kagawa, chief global strategist at Rakuten Securities.
    "Valuation is not that expensive, standing far below their
levels at the peak of the dot-com bubble ... Given that their
profits are expected to see exponential growth in coming years,
it is premature to say the rally in hi-tech shares is over."

    For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

 (Additional reporting by Marc Jones, Helen Reid and Vikram
Subheder in LONDON and Hideyuki Sano in TOKYO; Editing by Jeremy
Gaunt and John Stonestreet)
 ((patrick.graham@thomsonreuters.com)(+44207 542
9429)(patrick.graham.thomsonreuters.com@reuters.net))

Keywords: GLOBAL MARKETS/ (WRAPUP 5, PIX)



This article appears in: Politics , World Markets , US Markets , Stocks


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