PARIS: World stocks dipped on Tuesday, with a key index hitting a one-month low on lingering doubts over the pace of the US economy and worries over Greece's debt, while oil lost ground as the dollar inched higher.
World stocks as measured by MSCI were down 0.2 percent at 0900 GMT, with the index hitting its lowest level since mid-April earlier, while the euro zone's blue chip Euro STOXX 50 index was down 0.1 percent, losing ground for the fourth consecutive session.
Euro zone finance ministers said on Monday they would consider asking Greece's private creditors to extend the maturities on their bonds to buy Athens more time to pay down its massive debt, eclipsing their green light for a bailout for Portugal.
‘Markets are currently pricing the worst case scenario: a default of Greece and likely default of Ireland and Portugal. As long as we don't have a definitive plan to tackle Greece's debt problems, the sword of Damocles will remain over our heads,’ said Jacques Henry, analyst at Louis Capital Markets, in Paris.
‘A restructuring of the country's debt would hurt banks across Europe, but more broadly it could stop the contagion and remove the uncertainty.’
Yields on short-dated bonds of the euro zone's more indebted issuers fell on Tuesday after the 78 billion euro ($110 billion) Portuguese bailout was finalised, but the relief was not expected to last and longer-dated peripheral bond yields rose.
The euro inched higher at $1.4175, rebounding from a seven-week low against the US dollar on Tuesday, but the shared currency remained vulnerable on the downside as investors took the opportunity to cut long positions during bounces.
Lingering worries over Greece were keeping the euro on edge, with some traders expecting it to trade in a $1.40-1.4250 range in the next few days.
‘The risk-off sentiment remains in place and until that is there it's tough for the euro to rise past $1.4250 -- the mid-March highs. I see strong support at $1.40,’ said Neil Mellor, currency strategist at Bank of New York Mellon.
Brent oil dipped below $111 a barrel while US crude was down 37 cents at $97 a barrel on investor caution ahead of weekly US data expected to show builds in US crude and gasoline stocks and as the dollar gained ground.
London copper fell on Tuesday, also dragged by a firmer dollar and worries over the euro zone debt crisis.
Earlier, Japan's benchmark Nikkei average inched higher, helped by a weaker yen, but the gains were limited by a slide in the utility sector, dragged down by Tokyo Electric Power Co.
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