World Markets: Shares dip on US fiscal cliff

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Asian shares were capped as investor sentiment was weighed down by concerns over US fiscal woes. (Reuters) Asian shares were capped as investor sentiment was weighed down by concerns over US fiscal woes. (Reuters)
SummaryWorld shares fell for fourth day as concerns about the fiscal crisis in the United States.

World shares fell for fourth day on Monday as concerns about the fiscal crisis in the United States and progress on a bailout plan for Greece dented optimism over global growth prospects.

Adding to the uncertainty, Japan reported that its economy shrank 0.9 percent in July-September from the previous quarter, pointing to a mild recession in the world's third- largest economy.

Investors remain consumed by U.S. fiscal cliff consequences, and this is capping market enthusiasm with such a significant obstacle remaining in the path of financial markets, said Tim Waterer, senior trader at CMC Markets.

Since the U.S. presidential election, investors have grown increasingly worried that the fiscal cliff facing the economy, which would see nearly $600 billion worth of spending cuts and tax increases begin in early 2013, may stall a modest recovery.

The MSCI world equity index, which was down 0.1 percent at 322.90 points on Monday, has lost about 2 percent since President Barack Obama's re-election.

The FTSEurofirst 300 index of top European shares opened down 0.2 percent at 1,095.42 points, having dropped 1.6 percent last week. London's FTSE 100, Paris's CAC-40 and Frankfurt's DAX opened unchanged to 0.6 percent lower.

The euro was virtually flat at $1.2710, not far from a two-month low of $1.2690 hit on Friday, with a euro zone finance ministers' meeting later not expected to make any decisions on a new tranche of loans to Greece.

The Greek government did win parliamentary approval for its 2013 budget on Sunday, seen as a key step in reviving its stalled international aid, but German Finance Minister Wolfgang Schaeuble said the troika of international lenders to Athens has not yet finished its report on the programme.

Worries about Greece still remain, but at least some uncertainties have been removed, so we are unlikely to see a big euro sell-off, said Masashi Murata, senior currency strategist at Brown Brothers Harriman in Tokyo.

German Bund futures held firm in early trade, supported by the concerns over Greece, with the main Bund futures contract last at 143.14, little changed from Friday's close.

Commodities were mixed, with Brent oil slipping below $109 per barrel and U.S. crude sliding under $86 a barrel, while gold edged up to $1,734 an ounce, near a three-week high of $1,738.

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