Oil gain boosts US shares; Fed stance hits other markets

[NEW YORK] US shares got a boost on Thursday from the surge in oil prices but markets elsewhere remained feeble on worries about weak global growth and a potential Federal Reserve rate hike.

Russian Energy Minister Alexander Novak's comments that Moscow could hold meetings with Opec over production cuts of up to five per cent gave a strong boost to crude prices, putting London benchmark Brent crude close to US$36 a barrel.

Analysts' doubts that the Russians and the cartel could reach such a deal pulled oil prices back down later, with Brent still registering a respectable 79-cent gain at US$33.89 a barrel.

The crude gain spilled over into equities, boosting the prices of large oil companies which have heavily suffered in the crude price collapse.

In New York trade Chevron gained 3.2 per cent and ExxonMobil 2.3 per cent, and the US-traded shares of BP and Shell surged 3.9 per cent and 3.7 per cent, respectively.

That, combined with strong advances by Caterpillar and Facebook on their more promising earnings reports and outlooks, sent the S&P 500 up for a 0.6 per cent gain, and the Dow blue chips added 0.8 per cent.

Providing a floor for Friday's trade, too, after the US close both Microsoft and Amazon reported solid quarterly earnings.

But more broadly there remained undercurrents of worry in the markets, after the US Federal Reserve left the door open for a new interest rate increase in March in its policy statement on Wednesday.

"Even though the (US) indices are up, there's still a negative overhang from the Fed not taking a March rate hike off the table," said Michael James of Wedbush Securities.

The Fed statement, in acknowledging slower growth but not shifting policy, cast a cloud over markets elsewhere.

"With investor sentiment quite poor and fixated on the negatives, they'll likely latch onto the Fed's focus over global risks," Mitsushige Akino of Ichiyoshi Asset Management told Bloomberg News.

Shares in Tokyo, Paris, London and Frankfurt all finished lower.

Also weighing on market sentiment in Europe was Italy's banking sector whose shares dived again on Thursday amid concerns over consolidation and the latest proposal for dealing with bad loans.

"It's the Italian banking sector which is the cause of investors' jitters," said Frederic Rozier, management adviser at Meeschaert Gestion Privee in Paris.

In Asia, markets were hit in the fallout of Apple's announcement that it expected a decline in iPhone sales in the current quarter amid market saturation for smartphones.

Apple rival Samsung fell sharply, as did several makers of components for the phones.

AFP