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Oil and gold jump as European stocks drop

Oil and gold jump as European stocks drop
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The price of crude oil has surged and for the first time ever rose over 100 dollars a barrel in New York, with the price of Brent not far behind. Traders said that is partly because of the weaker dollar and also as renewed violence in Nigeria increased worries of tightening supplies.

At the same time, gold rose in London to its highest since 1980 at 855 dollars an ounce. Nervous investors are pushing up demand for the precious metal as a safe-haven in reaction to unrest in Pakistan and the falling value of the dollar.

On the first day of trading in the new year, European shares dropped sharply after new figures pointed to a further cooling of the US economy. The Institute for Supply Management’s manufacturing index for December declined to its lowest reading since April 2003. That sharp contraction in US factory activity pulled down most of the indexes more than 1%.

Banks fell, but British mortgage lender Alliance & Leicester was an exception. It closed up 16.4% on news that it had held tentative takeover talks with Spain’s Santander last month.