Stocks dip as US pushes to avoid ‘fiscal cliff’

Elsewhere, expectations that Japan will inject new stimulus into its economy pushed the yen to a two-year low for a third day.

US President Barack Obama and Democratic and Republican lawmakers were scheduled to meet on Friday as the deadline looms for reaching a deal on the budget to avert massive tax increases and spending cuts which could drag the economy into recession — and others around the world along with it.

The MSCI all-world share index was down 0.2 percent, while US stocks opened lower.

The Dow Jones industrial average was down 71.88 points, or 0.55 per cent, at 13,024.43. The Standard & Poor’s 500 Index was down 8.24 points, or 0.58 per cent, at 1,409.86. The Nasdaq Composite Index was down 15.22 points, or 0.51 per cent, at 2,970.68.

The pan-European FTSEurofirst 300 was down 0.5 per cent and was on track for a small weekly loss.

Going over the fiscal cliff — allowing $600 billion of higher taxes and lower spending cuts to start coming into force in January — would prevent US debt spilling beyond a $16.4 trillion agreed limit.

However, analysts fear that such measures could wipe as much as 4 per cent off the country’s growth rate, if left unchecked.

An agreement on the US budget would be viewed as positive for riskier currencies such as the euro, while a deadlock in

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