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LONDON: Stock markets tumbled on Tuesday as traders tracked a strengthening dollar, high oil prices, political impasse in Germany and US debt concerns.

Brent crude oil jumped above $80 per barrel for the first time in almost three years on expectations for surging demand and concerns about tight supplies as the world slowly emerges from the pandemic crisis.

Wall Street opened lower, with tech shares hit hard as Treasury Secretary Janet Yellen urged Congress to quickly raise the debt ceiling to keep the US government operating.

Analysts attributed the disproportionate declines in tech names to rising treasury yields. Higher interest rates generally hit tech companies more than some other businesses because of their greater reliance on debt to fund growth.

“Technology stocks came under heavy selling pressure early Tuesday as investors looked at a combination of uncertainty on Capitol Hill coupled with all but certainty that borrowing costs will increase,” said JJ Kinahan, chief market strategist at TD Ameritrade.

Republicans have blocked a Democrat move to raise the US borrowing limit, meaning the government will likely run out of cash at the end of the week.

The country could default on its debt obligations next month, which most observers say would spark a massive financial crisis, with Republicans saying they will refuse to pay for Democrats’ spending plans.

The brewing crisis comes as Democrats fight to pass President Joe Biden’s multitrillion-dollar infrastructure and social spending bills, with party infighting fuelling concerns that the president’s agenda could end up dead in the water.

Bond yields were also up in Europe, with stock markets in London, Frankfurt and Paris all down in afternoon trading.

Germany, Europe’s biggest economy, was in focus as it headed for weeks, if not months, of protracted coalition haggling following weekend elections.

Chancellor Angela Merkel’s conservatives have insisted on trying to form a government even after losing to the Social Democrats in a tight race.

In Britain, army tanker drivers were put on standby to deliver petrol as the country battles a fuel crisis.

The British pound dipped more than one percent against the dollar to to $1.3531, the lowest level since January.

Bank of England governor Andrew Bailey hinted Monday that the central bank would refrain from aggressive monetary policy tightening despite elevated inflation.

“The pound took a pounding after governor Bailey implied that the BoE will not aggressively tighten its belt, as the UK is facing stagflation risks,” ThinkMarkets analyst Fawad Razaqzada told AFP.

China was also facing an energy crunch, with Goldman Sachs lowering its annual growth forecast for the world’s second biggest economy.

“While each country appears to be struggling with their own mix of issues, the ongoing squeeze on energy supply has helped drive fuels sharply higher across the board,” said Joshua Mahony, senior market analyst at IG trading group.

China has also been in the spotlight over concerns about the possible collapse of troubled Chinese developer Evergrande.

Key figures around 1400 GMT

Dow: DOWN 0.5 percent

FTSE 100: DOWN 0.3 percent

Frankfurt - DAX: DOWN 1.1 percent

Paris - CAC 40: DOWN 1.6 percent

EURO STOXX 50: DOWN 1.5 percent

Tokyo - Nikkei 225: DOWN 0.2 percent

Hong Kong: UP 1.2 percent

Shanghai: UP 0.5 percent

Euro/dollar: DOWN at $1.1675

Pound/dollar: DOWN at $1.3543

Euro/pound: UP at 86.32 pence

Dollar/yen: UP at 111.47 yen

Brent North Sea crude: UP 0.9 percent

West Texas Intermediate: UP 1.0 percent.

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