Stocks steady as investors eye oil price

By Pan Pylas

Associated Press

Published: Wednesday, March 9 2011 4:40 a.m. MST

In this Feb. 1, 2011 photo, traders gather at a post on the floor of the New York Stock Exchange.

Richard Drew, Associated Press

Enlarge photo»

LONDON — World stocks mostly rose Wednesday following Wall Street's advance overnight and as oil prices stabilized on expectations OPEC countries will pump up production to offset any output lost in Libya.

Oil prices, which have been the major driver of stock markets over the past few weeks, eased in recent days after OPEC members said they were in informal talks over raising output to compensate for lost production in Libya. Under normal circumstances, Libya delivers almost 2 percent of the world's daily needs.

By late morning London time, the benchmark oil contract on the New York Mercantile Exchange was flat at $105 a barrel, while Brent crude in London rose 68 cents to $113.74. Both rates are noticeably lower than the start of the week.

Shifts in oil prices have been having a direct impact on stocks as high energy costs hurt industry and consumer spending.

In Europe, the FTSE 100 index of leading British shares was down 0.3 percent at 5,959 while Germany's DAX rose 0.5 percent to 7,197. The CAC-40 in Paris was 0.1 percent higher at 4,018.

Wall Street was poised for a modest advance at the open following a perky performance on Tuesday — Dow futures were up 22 points at 12,221 while the broader Standard & Poor's 500 futures rose around 2 points to 1,322.

Analysts say developments in North Africa and the Middle East will continue to be the main point of interest in the markets this week, especially considering a relative lack of important scheduled economic indicators.

Investors worry that the violent rebellion against Libyan leader Moammar Gadhafi may spread to other crude producers in the region, especially oil powerhouse Saudi Arabia.

"With no end to the Libyan unrest in sight and violence having escalated in recent days, it is no surprise that global investors have little appetite to increase their risk exposure for the time being," said Yusuf Heusen, senior sales trader at IG Index.

Earlier in Asia, Japan's Nikkei 225 stock average gained 0.6 percent to close at 10,589.50, with sentiment lifted after the government announced that machinery orders rose 4.2 percent in January from the previous month.

South Korea's Kospi rose 0.3 percent to 2,001.47 and Hong Kong's Hang Seng added 0.4 percent to 23,810.11.

Mainland Chinese shares edged higher in thin trading, as investors awaited the release of February inflation data on Friday. The Shanghai Composite Index was virtually unchanged, adding just 2.21 points to 3,002.15, while the Shenzhen Composite Index of China's smaller, second exchange gained 0.3 percent to 1,311.34.

In the currency markets, the euro was under pressure for the third day running amid fears that Europe's government debt crisis is flaring up again in the run-up to crucial meetings of EU leaders.

Despite leaping above $1.40 on Monday after last week's hint from the European Central Bank that eurozone borrowing costs are likely to rise next month, the euro's rally has hit a snag. Tensions over whether Portugal can meet its financial obligations grew after it had to pay a high rate on a bond auction.

"The news emerging from the eurozone, with the exception of the ECB, is not really positive," said Ashley Davies, an analyst at Commerzbank.

By mid morning London time, the euro was trading a further 0.2 percent lower on the day at $1.3870.

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Pamela Sampson in Bangkok contributed to this report.

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