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GLOBAL MARKETS-Oil nose-dive takes shine off stocks

Published 20/06/2017, 10:55 pm
© Reuters.  GLOBAL MARKETS-Oil nose-dive takes shine off stocks
USD/JPY
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(Adds Wall Street futures, oil slide)

* Oil dives almost 3 percent to 7-month low

* Wall St set to open almost flat

* Sterling hit by BoE chief Carney's comments on interest rates

* Tech rebound cools concerns over sector of last fortnight

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Patrick Graham

LONDON, June 20 (Reuters) - A 2.5 percent drop in oil prices to their lowest in seven months dragged stock markets off all-time highs on Tuesday, cooling a recovery in hi-tech shares as central bankers sent cautious signals on the outlook for growth and interest rates.

Japan's Nikkei .N225 had jumped to a near two-year high in Asian trading and European shares built on their biggest one-day gain in two months after a bounce in tech stocks drove Wall Street to record highs on Monday.

But the dive in crude O/R helped take the shine off those moves and left the main U.S. markets set to open roughly flat. 1YMc1 ESc1

Japan's yen, a refuge for investors whenever appetite for risk cools, recovered all of the day's losses to trade higher against the dollar and euro in response. JPY=

Russia's rouble sank 1.5 percent. RUB=

"The oil thing is big and it is feeding a little bit into the yen and is certainly being felt in the Russian rouble," said head of Saxo Bank FX strategy John Hardy.

"I think we are just waking up to risk appetite (being very elevated) at these levels."

After jitters on hi-tech stocks this month, investors are fairly confident that major central banks will not be tightening the flow of cash that has kept markets rising for eight years, at a time when growth globally looks solid.

Bank of England Governor Mark Carney, days after a meeting at which three colleagues on the bank's policy committee voted for higher rates, knocked half a percent off Britain's pound by saying now was "not the time" to hike borrowing costs. GBP=D3

Similarly, in a speech late on Monday, Chicago Federal Reserve President Charles Evans said it may be worthwhile for the U.S. central bank to wait until year-end to decide whether to raise rates again.

That helped the Nikkei .N225 rack up gains of almost 1 percent and drove minimal gains for continental Europe's main indices. .GDAXI .FCHI .

"Companies are in aggregate in robust health, and with all the cash from quantitative easing still washing around the system, there is a lack of alternatives for investors to put their money in," said Andy Sullivan, portfolio manager with GL Asset Management UK in London.

Monday's rebound also cooled nerves over the technology sector after a second week of falls last week .SPLRCT .

"Hi-tech shares just went through a correction," said Mutsumi Kagawa, chief global strategist at Rakuten Securities.

"Valuation is not that expensive, standing far below their levels at the peak of the dot-com bubble ... Given that their profits are expected to see exponential growth in coming years, it is premature to say the rally in hi-tech shares is over."

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets

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