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Oil at 3-month lows, global stocks edge up before US rate decision

Reuters/New York 14 Mar 17 | 02:28 AM

Oil prices hovered near three-month lows while a key gauge of world stocks advanced on Monday as investors braced for a busy week for global markets, including a potential US interest rate hike by the Federal Reserve.

The dollar steadied against a basket of currencies after touching a two-week low.

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Friday's strong US employment report solidified a view among Wall Street's top banks that the Federal Reserve will boost interest rates when its policy makers meet this week.

With a rate hike widely expected, market watchers will be looking for signals about the pace of future increases.

"I think all eyes will be on what the Fed does and, more importantly, what they say in their comments," said Brant Houston, managing director at CIBC Atlantic Trust Private Wealth Management.

MSCI's all-country world stock index rose 0.3 per cent.

US stocks were little changed ahead of the expected Fed rate hike later this week.

The Dow Jones Industrial Average fell 39.96 points, or 0.19 per cent, to 20,863.02, the S&P 500 lost 2.55 points, or 0.11 per cent, to 2,370.05 and the Nasdaq Composite added 6.50 points, or 0.11 per cent, to 5,868.23.

Corporate deal-making continued as chips giant Intel said it would acquire driverless technology firm Mobileye for $15.3 billion. Mobileye shares jumped 29 per cent.

In Europe, Amec Foster Wheeler rallied 11.6 per cent after oil services company Wood Group agreed to buy the company for $2.7 billion.

The pan-European STOXX 600 index gained 0.4 per cent, helped by increases in mining shares.

Aside from the Fed meeting, which starts on Tuesday, the world's most powerful finance ministers and central bankers convene in the German town of Baden Baden starting on Friday, their first meeting since Donald Trump won the US election.

Oil hovered around three-month lows as rising inventories and drilling activity in the United States offset optimism over Opec's efforts to restrict crude output and reduce a global glut.

US crude fell 0.3 per cent to $48.34 a barrel, and touched its lowest point since November 30. Brent crude slipped 0.1 per cent to $51.33 a barrel.

The dollar edged up 0.05 per cent against a basket of key world currencies, recovering after Friday's bout of profit-taking following the robust US jobs report.

"We remain bullish on the dollar, but as Friday's events suggested, a lot of good news is already priced into the dollar at current levels," said Shaun Osborne, chief FX strategist, at Scotiabank in Toronto.

Sterling, which has been one of the worst performers against the dollar over the last two weeks, rose 0.5 per cent after the devolved Scottish government demanded the right to hold a new referendum on independence.

US Treasury yields edged higher in anticipation of Fed rate hike on Wednesday, nervousness that the central bank could indicate a more aggressive pace of future rate hikes, and new corporate bond supply.

Prices for benchmark 10-year Treasuries slipped 7/32 to yield 2.606 per cent, from a yield of 2.582 per cent late on Friday.

Spot gold fell 0.1 per cent as the prospect of imminent interest rate rises kept them near five-week lows touched last week.

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Company Price Gain (%)
ICICI Bank292.503.61
Tata Motors308.751.83
Dr Reddy's Labs2,380.251.24
Bajaj Auto2,901.900.98
Maruti Suzuki8,993.400.46


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