Oil continues rising, stock market outlook mixed as Shanghai falls hard

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(The Canadian Press)

By The Canadian Press

TORONTO - Oil prices continued rising overnight to above US$106 a barrel after surging more than $4 on Wednesday, as supply anxiety rose.

American stock index futures indicated a shaky open, with the greatest weakness on the technology-heavy Nasdaq market after a disappointing quarterly report from Oracle Corp.

Overseas equity indexes were mixed, with heavy losses of more than five per cent in mainland China and a 0.8 per cent decline in Tokyo, but solid gains on European bourses.

The Canadian dollar was off 0.06 cent to 98.09 cents US.

Canadian investors were awaiting a decision after the close of financial markets by the Canadian Radio-television and Telecommunications Commission on whether to approve the takeover of BCE Inc. (TSX: BCE.TO) by a group led by the Ontario Teachers' Pension Plan.

Regulatory concerns aside, market unease has been rising - and BCE's share price has been declining - on doubts over whether the deal can be completed in the current constrained credit environment.

In the U.S., Clear Channel Communications Inc. and the private equity group seeking to buy the radio-station company for $19.5 billion are suing the banks which are backing away from financing the deal.

Shares in Oracle tumbled in after-hours activity after the database software giant's quarterly profit jumped 30 per cent but sales fell short of Wall Street expectations with a mere 21 per cent increase to $5.35 billion. Traders were also unnerved by management's outlook.

The rise in oil prices followed Wednesday's data showing lower than expected American fuel inventories.

Crude was up 93 cents to US$106.83 a barrel early Thursday, while gold edged up 60 cents to US$954.80 an ounce.

Market players were awaiting a final reading on fourth-quarter gross domestic product and weekly numbers on unemployment claims.

In overseas activity, China's benchmark stock index tumbled 5.4 per cent to its lowest close in almost a year, pulled down by PetroChina and other large stocks.

The Shanghai composite fell 195.36 points to 3,411.49. as PetroChina, representing one-fifth of the index, dropped 8.3 per cent. Stock in China's biggest oil producer is down 22 per cent on the past week and 65 per cent from its peak.

"With PetroChina dragging down the index and with bearishness spreading, there's no bottom in sight," said Zhou Lin, an analyst with Huatai Securities.

Tokyo's Nikkei average was down 102.05 points to 12,604.58, while the Hang Seng in Hong Kong edged up 0.2 per cent.

The FTSE 100 index was up 0.8 per cent near midday in London, while the German DAX gained 1.1 per cent and the Paris CAC 40 grew 0.5 per cent.