Nuclear fallout stymies US shares

Japan's nuclear crisis continued to cast a pall over most non-Asian sharemarkets, with stocks on Wall Street down for a third day this week.

Major stock indexes dropped sharply after Günther Oettinger, the European Union's commissioner for energy, told a European Parliament committee that the stricken Fukushima nuclear power plant is "effectively out of control."

Economic news added to concerns with US housing starts showing the steepest monthly drop in nearly 27 years to record low, an indication that the battered sector continues to be a source of weakness for the economy.

At the close (9am NZ time), the Dow Jones Industrial Average had tumbled 242.12 points, or 2.0%, to 11,613.30, with all components but Caterpillar in the red.

The Nasdaq Composite dropped 1.9% to 2616.82, sinking into negative territory for the year. The S&P 500 index also fell 1.9% to 1256.88, with every sector losing ground.

Other markets: Europe down, Asia up
European stock markets dropped sharply in late trading Wednesday after the EU energy commissioner’s comments on Japan.

The Stoxx Europe 600 index dropped 1.4% after earlier having moved higher at the start of the day on the heels of a 5.7% rebound for Tokyo’s Nikkei Stock Average as it partially recovered from a loss of nearly 11% on Tuesday.

The comments came on top of a decision by Moody’s Investors Service to downgrade Portuguese government debt and continuing turmoil in the Middle East.

At the close, the Stoxx was down 1.5% to 262.18. London's FTSE 100 index was down 1.7% at 5598.23, Frankfurt's DAX was down 2.0% at 6513.84 and Paris' CAC-40 was 2.2% lower at 3696.56.

Japanese shares rebounded to lead Asian markets higher as buyers were tempted by the hefty selloff on Monday and Tuesday.

The Nikkei Stock Average, whose 11% drop on Tuesday was its biggest in one day since October 2008, recouped some of those losses in finishing 5.7% higher.

The lift belied events at the Fukushima plant, where efforts to extinguish smoldering spent fuel were thwarted by high radiation levels and forced the cancellation of a plan to dump water from a helicopter.

Australia's S&P/ASX 200 rose 0.7% to 4558.22, Korea's Kospi advanced 1.8% 1957.97, Hong Kong's Hang Seng index gained 0.1% 22,700.88, China's Shanghai Composite was 1.2% higher at 2930.80 and India's Sensex rose 1.1% to 18,358.69.

Commodities: Oil, gold up
Crude futures advanced after falling 4% on Tuesday as traders reassessed Japan’s fuel needs. It was estimated oil consumption there could rise from a shortage of nuclear-generated power.

Light, sweet crude for April delivery climbed $1, or 1%, to $98.18 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures Exchange added $2.75, or 2.5%, to $111.27 a barrel.

Comex gold futures recaptured the $US1400 level as investors returned to the broader markets and reassessed Japan's nuclear crisis with a calmer eye.

The most actively traded contract, for April delivery, was up 0.5%, or $US6.20, at $US1399 an ounce. The price hit a high of $US1405.40 as floor trading opened in New York.

Currencies: Safe-haven flows continue
Safe-haven currencies soared as investors spurned equities. The euro dropped to $US1.3923 from $1.3996 late on Tuesday. The dollar was at ¥80.20 from ¥80.81, while the euro was at ¥111.66 from ¥114.22.

The UK pound was down at $US1.6027 from $US1.6080, while the dollar traded at 0.9091 Swiss francs from 0.9166 francs.