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Oil hits $142, world stocks plunge

Latest update : 2008-06-27

European and Asian stocks mostly fell on Friday after oil prices hit 142 dollars a barrel Friday. While higher crude costs hurt most companies, they benefit oil companies as their profits jump.

“I predict prices will probably hit 150 to 170 dollars this summer”, OPEC President Chakib Khelil tells FRANCE 24.


European stocks mostly fell on Friday as oil prices shot to record levels, but losses were less than falls on other global markets hit by soaring crude costs and a weak US economy.
Concerns are growing among investors that rising energy costs will fuel inflation and lead to higher interest rates worldwide, putting the brakes on global economic growth.
"Inflation risk has rapidly replaced credit risk as the predominant issue facing global financial markets," said Barclays Capital analyst Larry Kantor.
"The effects of higher inflation are poised to work through the global economy in profound ways for the remainder of the year."
Oil prices rose to record high levels close to 142 dollars a barrel on Friday.
In European stock market trade, the Paris CAC 40 index was down by 0.84 percent at 4,389.10 points approaching the half-way mark.
Frankfurt's DAX 30 shed 0.75 percent to 6,410.97 points, but in London the FTSE 100 was up by 0.19 percent at 5,528.90 points.
Traders said the FTSE was in positive territory owing to large gains being won by heavyweight energy companies on the back of surging crude prices.
While higher crude costs hurt most companies, they benefit oil companies as their profits jump.
Earlier in Asian trading, Tokyo closed down by 2.0 percent, extending a losing streak to a seventh day, while Shanghai slumped 5.3 percent.
Seoul closed 1.9 percent lower, Hong Kong shed 1.84 percent and Sydney lost 1.4 percent.
"The fall in the US stock market (overnight) caused by surging crude oil prices and anxiety over outlook for the financial sector" sparked the selloff in Asia, said Tsuyoshi Segawa, equity strategist at Shinko Securities.
A weak dollar was also weighing on Japanese exporters, he said.
Asian investors took their cue from Wall Street where the Dow Jones dropped more than three percent on Thursday to its lowest finish since September 2006.
Oil prices had topped 140 dollars for the first time on Thursday after the president of the OPEC producer cartel, Algerian Energy Minister Chakib Khelil, forecast that prices could soon surge as high as 170 dollars a barrel.
"Market confidence has been hurt badly. So, further (stock market) weakness is possible over the next few trading sessions," said Mega Securities analyst Alex Huang.
Meanwhile in China, concerns over new share offers also weighed on shares there as investors worried that liquidity pressure would further impact the already weak stock market.
The securities regulator said late Thursday that it would assess an application for initial public offerings in Shanghai by Everbright Securities and China South Locomotive and Rolling Stock Corp on Monday.
The dollar fell against the euro on Friday, despite a downbeat survey on economic confidence in the eurozone, ahead of next week's expected interest rate rise from the European Central Bank.

Date created : 2008-06-27