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Global Stocks Drop as Oil Extends Declines

Global stocks fell Friday as crude prices continued to lose ground a day after the U.S. oil benchmark entered a bear market and the Federal Reserve Bank signaled a rate increase was likely at its next meeting.

The Stoxx Europe 600 dropped 0.6% in midmorning trade, with the oil-and-gas sector down 1.5% and the auto sector down 2.3%. All European indexes were trading lower, with Italy’s FTSE MIB losing the most, by 1.3%

Brent crude, the global benchmark, fell 1.9% to $69.32 a barrel, inching closer to a bear market. In the U.S., West Texas Intermediate crude dropped 1.1% to $59.73.

In the U.S., futures pointed to an opening decline in the S&P 500 of 0.5% and of 0.4% in the Dow Jones Industrial Average. Shares in Walt Disney traded 2.5% higher in premarket trading after the company posted a record profit Thursday.

Asian indexes also fell amid worries about China’s slowdown in economic growth. Hong Kong’s Hang Seng closed down 2.4%, the Shenzhen A Share index fell 0.4% and Japan’s Nikkei dropped 1.1%.

Auto sales in China dropped 12% in October from a year ago. Markets were also growing tense over Chinese policy makers’ attempts to set tougher targets on bank lending.

In Europe, U.K. figures showed the country’s economy expanded in the third quarter at its fastest pace in almost two years, bucking the trend on the continent. The British pound traded 0.2% higher against the euro and 0.4% higher against the greenback.

Markets had been watching to see whether October’s selloff or the recent softness in the housing market gained attention from the Fed’s board, said Mohammed Kazmi, portfolio manager at Geneva’s Union Bancaire Privée.

However, the central bank signaled comfort with its hiking cycle, and expressed confidence that U.S. growth remained strong, Mr. Kazmi said, noting that the market has already priced in increases in December and next year.

The dollar gained after the Fed meeting and held steady on Friday. The WSJ Dollar Index, which measures the currency against a basket of 16 of its peers, was up 0.2% at 90.54.

Yields on U.S. 10-year Treasurys edged down to 3.206% from a previous settle of 3.238%. Yields move inversely to prices.

In commodities, gold was down 0.4% at $1,219.90 an ounce.
Source: Dow Jones

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