US stocks started Tuesday trading with a sharp drop after unexpected move by Chinese authorities to tighten lending rules and news of surprise Greece elections. Markets rebounded by the end of trading session, with S&P 500 finishing practically unchanged and the Dow Jones Industrial Average closing 0.3% lower. The global equity sell-off began after economic data released in China showed producer-price index dropped 2.7 percent in November from a year earlier, a record 33rd-straight decline and the biggest fall since mid last year. Consumer prices rose 1.4 percent, against the 1.6 percent increase in October, indicating that China’s economy has entered a disinflation stage, and faces the risk of deflation. Following a surprise move by regulators that banned investors from using low-grade corporate debt as collateral to borrow cash, The Shanghai Composite Index plunged 5.4% Tuesday. The Nikkei Average dropped 1.5% on Wednesday morning as global equity sell-off and flight to safety drove the yen higher and took a toll on exporters. The yen advanced versus the dollar to ¥119.50, compared with ¥119.60 in New York Tuesday afternoon.

European stocks fell on investor concerns over the uncertainty of the results of Greece’s presidential election in which the Syriza party, opposing the austerity measures of proposed IMF/EU bailout , is well placed to do well. Greek stocks sank 12.8 percent, to post their biggest single-session fall since November 1987. The Stoxx Europe 600 index fell more than 2%, hit by weak German trade data and energy-stock losses. The euro traded at $1.2371 Tuesday against $1.23 Monday afternoon. Elsewhere. The report of UK Office for National Statistics Tuesday morning indicated industrial activity declined unexpectedly in October. The news didn’t bring down the British pound which actually traded higher against the dollar for a second-consecutive session as investors booked profits by selling dollars. The pound traded at $1.5663 Tuesday, compared to $1.56 Monday afternoon.

Brent for January settlement slid as much as 1.6 percent in London as an official at Iran’s oil ministry predicted a further slump in prices if solidarity among OPEC members falters. Iran, suffering from economic sanctions over its nuclear program, wants to raise production to 4.8 million barrels a day once the curbs are removed, he said at a conference in Dubai yesterday. In the US, the Energy Information Administration reduced its price forecasts for next year. According to its report WTI will average $62.75 a barrel, compared with a November projection of $77.75. Brent may trade at $68.08, down from an earlier estimate of $83.42. While the price drop will start to slow production next year, output is still forecast at the highest level since 1972, driven by increase in shale oil production. Output advanced to 9.08 million barrels a day through November 28, the fastest weekly rate since January 1983.

Gold rallied above the $1,200 level, extending its Monday gains. Gold rebounded on Monday as slower export data from China and the contraction of Japan’s economy for a second straight quarter revived safe-haven demand for the precious metal.

Copper dropped as much as 0.7 percent after closing yesterday at highest in more than a week as lower PPI and CPI data from China indicated slowdown in the economy of the world’s largest metals user. On the London Metals Exchange, lead fell while aluminum, zinc and nickel were little changed.

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