World shares slip on oil price drop

Shares in Europe and the US slid along with oil - as well as other commodities - on mounting concern the European debt crisis would curb global economic growth.

Also weighing on the US equity market was a report that New York manufacturing slowed and that home improvement retailer Lowe's Cos was forecasting earnings would be lower than expected.

All but one of 39 companies in the Standard & Poor's 500 Index slumped as oil dipped below US$70 a barrel for the first time in three months, according to Bloomberg News data.

Among the most active were Lowe's, Alcoa, Caterpillar and JPMorgan Chase.

In late trading, the Dow Jones Industrial Average fell 0.62 per cent, the Standard & Poor's 500 Index declined 0.61 per cent and the Nasdaq Composite slid 0.45 per cent.

Manufacturing in the New York region expanded at a slower pace in May than forecast as sales cooled. The Federal Reserve Bank of New York's general economic index fell to 19.1 from 31.9 in April, which was the second-highest level in four years.

The Chicago Board Options Exchange Volatility Index, or VIX, which is known as Wall Street's 'fear gauge', rose 5.73 per cent to 33.03.

The Stoxx Europe 600 Index fell 0.2 per cent to 248.09.

The U.K.'s FTSE 100 slipped 0.01 per cent, and France's CAC 40 declined 0.47 per cent. In

Germany, the DAX rose 0.17 per cent.

Among the most actives were Rio Tinto Group, Hochtief and Man Group.

Rio Tinto, the world's largest mining company, dropped 3 per cent as copper prices plunged on mounting signs the global economic recovery was slowing. Xstrata, the world's fourth-largest copper producer, fell 2.1 per cent.

Another round of airport closures because of ash from an Icelandic volcano hurt shares of airlines. Ryanair Holdings fell 3.8 per cent while British Airways lost 1.2 per cent.

Airlines grounded 1,000 flights across Europe today as the return of the Icelandic ash cloud closed terminals from Northern Ireland to the Netherlands.

London Heathrow, the region's busiest airport, suffered more than 150 cancelations before reopening at 7am and Amsterdam Schiphol, the fifth-busiest, shut for seven hours until 1pm.

The Dollar Index, which measures the greenback against a basket of six major currencies, rose 0.24 per cent to 86.30.

The euro slid to a four-year low against the US dollar on persistent concerns that efforts to rein in spending in Europe would dampen global growth.

A 750-billion euro bail-out package announced earlier this month from the European Union and the International Monetary Fund has failed to improve the appeal of the euro.

"Raising more debt to pay old debt is not necessarily the way for Greece to accomplish what needs to be accomplished," John McCarthy, director of foreign exchange trading at ING Capital Markets in New York, told Reuters.

"It's a package that raises more questions than answers and wouldn't necessarily alleviate the euro zone debt crisis. We expect the euro to slip further."

In early afternoon New York trading, the euro fell 0.2 per cent against the US dollar to US$1.2340.

Earlier today the euro fell as low as US$1.2234, according to electronic trading platform EBS, the lowest in more than four years.

The euro has lost more than 7 per cent against the US dollar this month, and is almost 14 per cent lower for the year, making it the worst-performing major currency, according to Reuters data.

Against the yen, the euro fell 0.5 per cent to 113.82 yen. The US dollar fell 0.2 per cent to 92.23 yen.

Sterling fell 0.8 per cent to US$1.4433.

US 10-year note yields were near the lowest level in more than a week.

The yield on the US 10-year note was at 3.46 per cent at 2.19pm in New York, compared with 3.45 per cent on May 14, according to BGCantor Market Data. It earlier touched 3.38 per cent the lowest level since May 7.

The three-month London interbank offered rate in US dollars, or Libor, climbed to 0.46 per cent, the highest since August 7, from 0.445 per cent on May 14 and 0.252 at the end of February, according to the British Bankers' Association.

The Reuters/Jefferies CRB Index, which tracks 19 raw materials, dropped 2.12 per cent to 253.06.

Gold slipped from a record high.

Spot gold fell to US$1,226.05 at midday from US$1,230.05 late in New York on Friday. Earlier on Friday the metal hit a record high of US$1,248.95.

In the short term, the safe-haven investment may benefit from concerns about the euro-zone.

"We're seeing other markets suffering heavy losses and that could cap gold in the short term because there is a tendency to release profitable positions to pay for nonprofitable ones," Ole Hanson, analyst at Saxo Bank, told Reuters.

US June gold futures fell 50 cents to US$1,227.30 an ounce.

Gold priced in euros and sterling rose to a record overnight as did gold futures in Shanghai.

US oil prices fell to a five-month low on concerns about Europe's economy, the weak euro, swollen US oil inventories and that China's growth might slow.

Stockpiles of crude at Cushing, Oklahoma, the delivery hub for the US contract's West Texas Intermediate benchmark crude, have risen in the last eight weeks to a record high 37 million barrels, pushing front-month US crude down relative to later futures contracts and the other global crude benchmark, Brent.

US crude for June delivery dropped US$1.66, or 2.32 per cent, to US$69.95 at 1.09pm EDT, having traded as low as US$69.27, the weakest since December 14.

July Brent crude fell US$3.08 to US$74.85 a barrel.