Global stocks weighed down by another oil price dive

Global shares stumbled Wednesday after another steep drop in the price of oil reinforced worries about the potential impact on the world economy of job cuts and reduced investment in the energy industry.

France's CAC 40 inched down 0.79 per cent to 4,250.23 and Germany's DAX was down 1.17 per cent at 9,466.79 in early trading. Britain's FTSE 100 slipped 0.91 per cent to 5,868.25.

U.S. shares were set to continue the previous day's losses. Dow futures were down 0.12 per cent at 16,072. S&P 500 futures fell 0.05 per cent to 1,896.50.

Investors are worried about spillover effects from the slump in oil prices as major energy companies cut jobs and investment. Falling oil prices are also an added challenge for economies that are battling deflation at a time when both China and the U.S. are showing signs of faltering growth momentum.

However, some analysts think there will be eventually be an economic boost from lower energy costs as the disposable income of consumers could be increased by several trillion dollars.

"Falling oil prices have been one of the key drivers of negative sentiment in stocks. Two days of sharply weaker oil prices have refocused share markets on the potential problems flowing from the bear market in oil," said Ric Spooner, chief analyst at CMC Markets in Sydney.

"Significant cuts in capital expenditure in the energy market are taking their toll on economies," he said in a commentary. "Markets are also concerned about the potential impact on credit markets that might flow from bankruptcies in the oil sector if oil prices keep falling."

Japan's benchmark Nikkei 225 lost 3.2 per cent to finish at 17,191.25. South Korea's Kospi slipped 0.8 per cent to 1,890.67. Hong Kong's Hang Seng was down 2.3 per cent at 18,991.59 and China's Shanghai Composite fell 0.4 per cent to 2,739.25.

Benchmark U.S. oil was up 46 cents at $30.34 US a barrel in electronic trading on the New York Mercantile Exchange after being lower during much of the Asian trading day. The futures contract slid $1.74, or 5.5 per cent, to close at $29.88 a barrel in New York on Tuesday; it fell nearly 6 per cent the day before.

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