World stocks dip as risk-off mood persists, oil below $124

Global stocks and the oil price dipped on Thursday as disappointing U.S. data continued to temper risk appetite and analysts said the effect of a potential accord to release oil reserves would take time to filter through to the broader economy.

In Europe, shares fell to a three-week low and peripheral euro zone bond yields rose as investors unloaded Italian debt after an auction and braced for a tough budget from Spain on Friday that could make it harder for the country to return to growth.

Wall Street was seen stabilising after falling on Wednesday.

Brent crude slipped below $124 a barrel after falling more than 1 per cent on Wednesday on a surge in U.S. crude inventories and on talks between Western nations on releasing strategic oil reserves.

A more than 15 per cent rise in Brent this quarter risks choking economic growth and a French news report said there could be a reserve release within weeks. But Sarah Hewin, senior economist at Standard Chartered Bank in London, cautioned that it would take time for the extra supply to affect the global economy.

"It would offer some relief, and a pullback in oil prices, but like the European Central Bank's long-term financing operations, there will be some time lag before it affects the broader economy," said Hewin.

Reduced risk appetite supported the yen against the dollar although traders said the Japanese currency would soon come under renewed pressure as buying linked to the end of the Japanese financial year would peter out.

The euro slid 0.2 per cent versus the dollar to $1.32934 and was unnerved by the OECD which said euro zone economies were falling far behind the United States and Canada, advising central banks to keep easy money flowing to provide support.

MSCI's main global stock index, which hit an eight-month high earlier this week, was down 0.4 per cent.

Shares in Tokyo, which hit a one-year high on Tuesday, slipped 0.9 per cent, but still looked set for their best January-March quarter in 24 years.

Profit taking ahead of the end of the first quarter has added to the pullback in stocks in the past few days but analysts said that should be waning.

Mining shares rallied in Europe but energy stocks took a beating and Swedish retailer Hennes & Mauritz, the world's second-largest fashion retailer, skidded 4.9 per cent, on disappointing quarterly profits, pushing the European retail sector down 1.5 per cent.

French oil company Total 2 per cent in Paris, extending losses this week to more than 8 per cent in the wake of a gas leak in the North Sea.

CHINA WORRIES

Markets are likely to continue to suffer sharp swings in risk appetite on mixed economic data from the United States and China and continuing concerns about the euro zone's debt problems and its economic outlook.

Copyright @Thomson Reuters 2012