Stock markets retreat as oil slides

 Global stock markets dropped on Wednesday as sliding oil prices and US tax doubts prodded investors to lower their risk exposure, traders said.

London's benchmark FTSE 100 index closed the day down 0.6 percent, dragged down by falls in heavyweight oil and mining share prices.

Frankfurt's DAX 30 index shed 0.4 percent and the Paris CAC 40 lost 0.3 percent compared with the closing levels on Tuesday.

"European stock markets are lower again as the world-wide decline in equities rumbles on," said market analyst David Madden at CMC Markets UK.

"The single currency has had a good run in the past two days on account of the solid growth numbers from Germany yesterday, and the firmer inflation report from France today," he added.

The euro built on gains won Tuesday in response to the better-than-expected German growth figures -- breaking above $1.18 to hit a near one-month high.

The pound steadied in the wake of better-than-expected UK wages growth, traders said, but remains weak on uncertainty about the political future of Britain's Prime Minister Theresa May as her government struggles on with Brexit talks.

Meanwhile, oil extended its decline after falling heavily Tuesday on warnings of slowing demand and rising stockpiles.

Other commodity prices, including those of metals, followed suit.

"Mining stocks like Rio Tinto, Glencore, Vedanta, and BHP Billiton are in the red as metals like zinc, steel and nickel are weaker as fears that China is slowing down is weighing on investor sentiment," said Madden.

"The latest, industrial production, fixed asset investment, retail sales and housing sales out of China point to an economy that is cooling."

Both Glencore and BHP Billiton ended the day down around 1.4 percent, with shares in Rio Tinto shedding around 0.9 percent.

Meanwhile Wall Street pushed further lower after having succumbed to profit-taking on Tuesday, with the Dow down 0.3 percent nearing midday.

"US stocks are noticeably lower in early action, with weakness in Asia and Europe remaining, as a flare-up in global de-risking appears to be continuing," said analysts at Charles Schwab brokerage.

"US tax reform uncertainty is persisting and pressure on commodity issues continues as Chinese economic data has disappointed and crude oil prices continue to fall," they added.

Investors are concerned about US President Donald Trump's planned tax cuts as Republican lawmakers struggle to agree a deal.

 - Oil sell-off -

Both main oil contracts were down around half a percent on Wednesday, a day after the International Energy Agency cut its forecast for world crude consumption, saying recovering prices and a mild early northern hemisphere winter weighed on purchases.

The news comes after recent gains in crude fuelled by a production cut by the OPEC cartel and a brewing crisis in the Middle East between Saudi Arabia and Iran.

"The long-awaited short-term correction in oil prices finally occurred overnight," said Oanda market analyst Jeffrey Halley.

The latest losses in oil prices followed a drop of 1.9 percent in the value of the main US contract and 1.5-percent decline for Brent North Sea crude on Tuesday.

The oil sell-off filtered through to stocks in general, while indices have been on a broad decline since hitting multi-year highs last week.

- Key figures around 1630 GMT -

New York - DOW: DOWN 0.3 percent at 23,331.11

London - FTSE 100: DOWN 0.6 percent at 7,372.61 points (close)

Frankfurt - DAX 30: DOWN 0.4 percent at 12,963.09 (close)

Paris - CAC 40: DOWN 0.3 percent at 5,301.25 (close)

EURO STOXX 50: DOWN 0.2 percent at 3,549.55

Tokyo - Nikkei 225: DOWN 1.6 percent at 22,028.32 (close)

Hong Kong - Hang Seng: DOWN 1.0 percent at 28,851.69 (close)

Shanghai - Composite: DOWN 0.8 percent at 3,402.52 (close)

Euro/dollar: UP at $1.1795 from $1.1792 at 2145 GMT

Dollar/yen: DOWN at 113.13 yen from 113.43 yen

Pound/dollar: DOWN at $1.3363 from $1.3166

Oil - Brent North Sea: DOWN 26 cents at $61.95 per barrel

Oil - West Texas Intermediate: DOWN 40 cents at $55.30

Source: AFP