GLOBAL MARKETS-Crude surges on output forecast; U.S. stocks fall
* Dollar eases on diminishing U.S (Other OTC: UBGXF - news) . rate hike expectations
* Treasury debt prices rise on expected delayed Fed rate
hike
* European stocks rise on Fed outlook, U.S. down on biotechs
* Brent oil rises above $50 a barrel on U.S. crude forecast
(Adds oil settlement prices)
By Herbert Lash
NEW YORK, Oct (HKSE: 3366-OL.HK - news) 6 (Reuters) - Crude oil jumped about 5 percent
on Tuesday after the United States cut output forecasts, while
global equity markets mostly rose on expectations the Fed will
not raise interest rates this year, although Wall Street fell on
slumping biotech stocks.
Helping crude was news that non-OPEC producer Russia and key
OPEC member Saudi Arabia discussed the oil market last week and
plan to continue exchanging views on demand, production and
shale oil, Russian Energy Minister Alexander Novak told
reporters.
A weakening dollar added support for oil, while the U.S.
Energy Information Administration projected in a monthly
forecast that the country's crude output will fall through
mid-2016.
"Steeper U.S. production declines over the near term have
created a bid for oil prices," said Chris Jarvis, analyst at
Caprock Risk Management in Frederick, Maryland.
Brent, the global benchmark for crude, rose $2.67 to
settle at $51.92 a barrel. West Texas Intermediate, the
U.S. crude benchmark, settled $2.27 higher at $48.53.
European shares rallied, extending strong gains from the
previous session on expectations the U.S. and European central
banks will maintain equity-friendly monetary policy in the
coming months.
Large volume in the U.S. stock market's rally on Monday
suggests that at least the downside momentum is now broken, said
Bruce Bittles, chief investment strategist at Robert W. Baird &
Co in Sarasota, Florida.
"The markets are playing off the fact that there's a strong
likelihood the market has now made a bottom, and we at some
point will begin a year-end rally," Bittles said.
The pan-European FTSEurofirst 300 closed up 0.65
percent, while MSCI (NYSE: MSCI - news) 's all-country world stock index
rose 0.34 percent, aided by a 1 percent gain
earlier in Tokyo.
An 8.1 percent surge in shares of DuPont after CEO
Ellen Kullman said she would step down helped the Dow advance.
But continued deterioration in biotechs kept a damper on U.S.
stocks, said Ryan Larson, head of U.S. equity trading at RBC
Global Asset Management in Chicago.
The Nasdaq Biotech index was down 3.6 percent, with
128 of its 142 constituents trading lower.
"It (Other OTC: ITGL - news) 's really hurting the growth trade, the momentum trade
today, and that's apparent in the smaller Russell indices,"
Larson said.
The Russell 2000 index was off 0.71 percent, while
the Dow Jones industrial average rose 13.39 points, or
0.08 percent, to 16,789.82. The S&P 500 fell 8.67 points,
or 0.44 percent, to 1,978.38 and the Nasdaq Composite
lost 41.68 points, or 0.87 percent, to 4,739.59.
The U.S. dollar slipped 0.6 percent against major
currencies on continued expectations the Fed will not this year
hike rates for the first time in almost a decade.
Commerce Department data showing the largest expansion in
the U.S. trade deficit in five months in August reinforced
expectations the Fed would delay hiking rates until next year. A
weak U.S. jobs report on Friday has also driven such
expectations.
"People are still very skeptical about the Fed raising rates
this year," said Thierry Albert Wizman, interest rates and
currency strategist at Macquarie Ltd in New York.
The dollar was last down 0.16 percent against the yen at
120.26 yen. The euro was last up 0.71 percent against the
dollar at $1.1264.
U.S. Treasuries prices also gained on the increase in the
U.S. trade deficit, which reinforced the view of slowing global
demand.
Benchmark 10-year Treasuries notes were up 4/32
in price to yield 2.0403 percent.
Yields on 10-year German Bunds, the benchmark
for euro zone borrowing costs, rose 2 basis points to 0.59
percent.
(Additional reporting by Barani Krishnan in New York; Reporting
by Herbert Lash; Editing by Nick Zieminski and James Dalgleish)