* World equity markets head for second weekly fall
* U.S. stocks slide as budget talks held at White House
* Brent crude above $108 a barrel on Middle East tension
* Dollar extends gains versus yen, hits session high
By Herbert Lash
NEW YORK, Nov 16 World shares headed toward a
second consecutive weekly loss on Friday as U.S. government
fiscal problems and weak global economic growth weighed on
sentiment, while violence in the Middle East pushed up oil
prices despite ample stockpiles and a weak outlook for demand.
U.S. stocks briefly rebounded after the open on a report
that White House officials were in advanced talks to replace
sweeping spending cuts with targeted cuts and tax increases in a
move to avoid the so-called "fiscal cliff" in early 2013.
"This is the first time we've had one iota of anything
constructive being done," said Todd Schoenberger, managing
principal at the BlackBay Group in New York.
"That's very positive, but you can be flexible and still
have us go over the cliff. Wall Street traders remain very
nervous and need something concrete to get done," he said.
President Barack Obama met with top U.S. lawmakers on
Friday, but the hour-long session was not expected to yield much
in the way of tangible results, although it could create a
template for the coming weeks of negotiations.
Investors have been concerned that if no deal were reached
to modify automatic spending cuts and tax hikes, the U.S.
economy could slip into recession. The S&P 500 has dropped 4.3
percent over the past two weeks, in part due to these worries.
The drop on Wall Street followed falling equity markets in
Europe, where persistent worries about the euro zone's ability
to deal with its debt problems are depressing investors.
The Dow Jones industrial average was down 6.92
points, or 0.06 percent, at 12,535.46. The Standard & Poor's 500
Index was down 2.09 points, or 0.15 percent, at 1,351.24.
The Nasdaq Composite Index was down 9.46 points, or 0.33
percent, at 2,827.48.
The MSCI world equity index was down 0.4
percent at 316.39, and has lost almost 2 percent this week.
FTSEurofirst 300 index of top companies shed 1.0
percent to 1,068.34, on course for its worst week since late
The Japanese yen steadied a bit after a two-day pummeling
against the U.S. dollar but remained on track for its worst
weekly loss since late June on expectations of aggressive
monetary easing from the Bank of Japan.
"The basic driver is still the interest rate differential
between the dollar and yen, which is very narrow, and we have to
wait for what happens after the (Japanese) elections," said
Marcus Hettinger, global FX strategist at Credit Suisse in
The U.S. dollar was up 0.22 percent at 81.32 yen. The
euro was down 0.58 percent against the dollar at $1.2704.
Benchmark Brent crude oil prices rose toward $109 a barrel
as a showdown between Israel and the Palestinians in Gaza stoked
worries about supply. Investors were concerned that Arab
producers may be drawn into any potential conflict, which could
impact supply lines.
Brent crude rose 33 cents to $108.34 a barrel. U.S.
oil gained $1.20 to $86.65.
U.S. Treasury debt prices rose slightly, with yields near
two-month lows, on investor skepticism that budget talks aimed
at preventing an automatic fiscal tightening will be immediately
The benchmark 10-year U.S. Treasury note was up
7/32 in price to yield 1.5707 percent.