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Global Stock Declines Worsen; Commodities Weigh – Wall Street Journal

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  • Stocks under pressure
  • Crude extends losses
  • Bond yields drop

Stocks around the world extended losses Wednesday amid a deepening rout in commodity prices.

The Stoxx Europe 600 fell 0.5% in the early minutes of trading, led lower by oil-and-gas companies, miners and banks. Asian markets declined across the board after the S&P 500 and Dow Jones Industrial Average fell to their lowest close this month on Tuesday.

Energy and materials companies have led declines in recent sessions, pressured by a fall in oil and metals prices. Brent crude oil was last down 1% at $61.56 a barrel and off over 3% so far this week after the American Petroleum Institute’s reading of weekly U.S. inventories showed a surprising build in both crude oil and gasoline.

Shares of

Tullow Oil

fell 2.7% in early European trading Wednesday and were down over 10% from the start of the week.

Some investors also worried that lower oil prices could lessen investment plans from the energy sector into other parts of the economy. In the U.S. “essentially all investment we have seen recently appears to have been driven by the energy sector,” strategists at UBS wrote in a note last week.

Adding to the downbeat tone across risky assets, Chinese iron-ore and steel rebar prices fell sharply Wednesday after disappointing economic data from China at the start of the week and figures showing that despite output capacity cuts, steel production has remained relatively strong in October. That put pressure on mining companies Wednesday, with Europe’s basic resources sector down 1.4%.

Oil storage tanks  in Cushing, Okla., U.S., on Tuesday, March 24, 2015. Oil prices fell overnight.

Oil storage tanks in Cushing, Okla., U.S., on Tuesday, March 24, 2015. Oil prices fell overnight.


Photo:

Daniel Acker/Bloomberg News

Yields on 10-year Treasurys fell to 2.346% from 2.381% Tuesday, while German yields fell to 0.374% from 0.394%, signaling a rise in prices. Lower commodity prices tend to trim investors’ expectations for a rise in consumer prices, while declines in stock markets often boost haven demand. Data on U.S. inflation is due later Wednesday.

In Europe, the Stoxx Europe 600 index was on track for a seventh straight day of losses, also hit by a steady climb in the euro, with the common currency last trading up 0.3% against the dollar at $1.1827, reflecting a gain of 1.6% this week alone.

The WSJ Dollar Index, which tracks the dollar against a basket of 16 others, was down 0.2%.

Earlier, Asian stocks declined as recent global weakness and a fall in commodity prices reversed some of October’s big gains.

Japan’s Nikkei Stock Average fell 1.6%, logging a sixth-straight loss in its longest losing streak since May 2016. Oil and gas giants

Japan Petroleum Exploration

and Inpex were both down roughly 4%.

The yen also firmed against the dollar and was last up 0.4%, adding pressure to the index. Data showed Japan’s economy grew at an annualized pace of 1.4% in the July-September quarter, but the figures were in line with expectations causing little market impact. The country has now gone nearly two years without a contraction, the longest since 2001.

Chinese stocks were also down sharply Wednesday after Tuesday’s release of muted October economic data, especially in the country’s south as the Shenzhen Composite fell 1% and the largely small-cap ChiNext slid 1.5%.

Wednesday’s stock weakness also came amid fears of escalating financial regulations, which have already seen jitters in the bond market in recent days. The 10-year government-bond yield briefly topped 4% this week for the first time in three years. That could result in some funds chasing safer returns, said Shen Zhengyang, an analyst at Northeast Securities.

Hong Kong’s

Hang Seng

was off 0.9% while Australian shares fell 0.6%.

Yifan Xie

contributed to this article.

Write to Riva Gold at riva.gold@wsj.com and Kevin Kingsbury at kevin.kingsbury@wsj.com