PARIS — Global stocks fell and oil rose above $100 a barrel on Wednesday, as concern about the political crises in Egypt and Portugal added to traders’ growing grab-bag of anxieties.
Egypt was at the center of geopolitical concern after President Mohamed Morsi on Tuesday night defied an army ultimatum that he resign, raising the risk that the country would descend into bloodshed and chaos.
“Egypt’s not a major oil producer compared with Libya next door,” said Damian Kennaby, director of research for oil market services at IHS Cambridge Energy Research Associates in London. “But there’s a whole lot of ‘what if’ going on right now, and that’s being built into the oil price.” Egypt produced 728,000 barrels of oil a day on average last year, while Libya produced about 1.5 million, according to figures from BP.
In afternoon trading, American crude oil for August delivery was trading at $100.93 a barrel in Europe, up 1.3 percent, its first time above $100 in nine months.
The Euro Stoxx 50 of euro zone blue chips was down 1.8 percent. In London, the FTSE 100 index fell 1.6 percent. On Wall Street, the Standard Poor’s 500-stock index was down 0.3 percent at the start of trading.
In a worrying reminder that the euro zone crisis is not over, Portuguese stocks slumped 5 percent, and the price of Portuguese 10-year government bonds also fell, pushing the yield past 8 percent, its first time at that level since last November, before easing.
In Lisbon, Prime Minister Passos Coelho was struggling to overcome the turmoil in his government that has led both his finance minister and foreign minister to resign within a matter of days amid opposition to crushing austerity policies.
Portugal’s tottering coalition government could collapse amid calls for new elections, potentially ushering in a long period of uncertainty about economic policy in a country that is still under the tutelage of the International Monetary Fund and European Union following its bailout in 2011.
“The situation in Portugal is worrying,” Reuters quoted Jeroen Dijsselbloem, the Dutch finance minister and leader of the Eurogroup of euro zone finance ministers, as saying Wednesday. “I assume the political situation in Portugal will stabilize and that Portugal will stay committed to the undertakings that are part of its program.”
European banking stocks fell after Standard Poor’s cut credit ratings on some of the biggest lenders in the sector. Barclays, which was cut to A from A+, fell 2.9 percent. Deutsche Bank, also cut to A from A+, fell 2.8 percent. Credit Suisse, cut to A- from A, fell 3.8 percent.
Market volatility has returned after a period of calm amid signs of slowing in the Chinese economy, an engine of global growth. A government survey of purchasing managers Wednesday showed activity in the services sector slipping to a 53.9 in June from 54.3 in May, the lowest in nine months. A separate report from Markit Economics and HSBC showed activity firming slightly in June at 51.3, up from 51.2 in May.
Indications from the Federal Reserve in Washington that it might soon begin tapering down its quantitative easing policy has also unsettled investors, setting off a rout in bonds that has erased tens of billions of dollars of value.
Earlier on Wednesday, Asian stock markets closed down moderately.
Stanley Reed contributed reporting from London.
Article source: http://www.nytimes.com/2013/07/04/business/global/daily-market-activity.html?partner=rss&emc=rss
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