New York - Oil prices rose on Thursday, building on a surge triggered by OPEC's output-cutting deal, while European stock markets retreated as attention switched to worries over Italy's weekend referendum.
Stocks were mixed in the US, with the Dow surging to a fresh record, and the Nasdaq falling sharply due to weakness in technology names.
Brent crude prices gained 4% on Thursday, after soaring almost 10% on Wednesday on news that OPEC had hammered out a deal to cut oil output for the first time in eight years.
"Oil adding to Wednesday's large gains tells you the market got what it wanted," CMC Markets analyst Jasper Lawler said.
But European investors were on edge ahead of an Italian constitutional referendum Sunday that is expected to go against the government of Prime Minister Matteo Renzi, who could resign with a defeat.
While the risk of a Eurosceptic party gaining power in Italy is "low," a change in government "could foster uncertainly and volatility in markets, regardless of how smooth the transition may be," the Eurasia Group said in a note.
"The banking system is likely to prove the weak link in the event of market turmoil as political uncertainty complicates ongoing plans by several banks to raise capital."
London's benchmark FTSE 100 index ended the day down 0.5%, while the DAX 30 in Frankfurt fell 1.0% and the CAC 40 in Paris shed 0.4%.
Nasdaq slumps
In the US, Dow jumped 0.4% to 19 191.93 almost 40 points above than the previous record set November 25.
But the Nasdaq dropped 1.4% as the technology sell-off accelerated, with Facebook slumping 2.8%, Intel 2.7% and Tesla Motors 4%.
Technology shares have been volatile since the US presidential election; with some analysts fearing protectionist measures by President-elect Donald Trump could harm the industry.
Analysts also consider low or no-dividend stocks to be more vulnerable than blue chip companies to higher interest rates, which can boost the value of bonds. Most technology stocks do not pay dividends.
The yield on the 10-year bond rose sharply on Thursday.
Focus now turns to the release Friday of key US jobs data for November. With dealers certain the Federal Reserve will hike interest rates this month; the figures could provide some insight into its plans for future increases over the next year.
Asian stock markets, playing catch up with Wednesday's reaction on European and US indices, closed higher on Thursday.
Adding to the buying sentiment was a better-than expected reading on Chinese factory output that provided fresh hope the world's number two economy was stabilising after years of slowing growth.'
In Tokyo, the Nikkei rose 1.1%, its best close this year, as energy companies soared. Japanese energy explorer Inpex jump 10% and Japan Petroleum rocketed 12.20%.
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