Portugal Colonial - Wall Street slumps as oil drops, Europe gains

Europe shrugged off earlier losses in Asia after Moscow said it made headway Monday in peace talks with Kyiv ahead of the latest round of negotiations.

But Wall Street was generally gloomy, with indices starting positively before slumping by the end of trading. The Nasdaq lost two percent and the S&P 500 fell 0.7 percent.

Investors are jittery over looming Federal Reserve rate hikes, which are expected at the conclusion of the central bank's two-day policy meeting Wednesday, while the new pandemic shutdowns in China are also of concern because they could prolong the supply chain snarls that have pushed prices higher.

The US central bank is having to tread a fine line between reining in runaway inflation while also supporting the world's biggest economy in the face of the war in Ukraine, which many fear could lead to another recession.

Meanwhile the prospect of easing supply tensions and growing demand fears sent oil prices sliding, though sentiment was more positive in Europe.

"Moscow claims substantial progress in peace talks while escalating conflict... but that is enough for traders grabbing onto any good headline," said Markets.com analyst Neil Wilson.

Frankfurt shares ended the day 2.2 percent higher, and Paris added 1.8 percent while London gained 0.6 percent.

The latest talks come more than two weeks after Russia's President Vladimir Putin ordered his army to invade pro-Western Ukraine.

In Asia, investors worry that China's spreading coronavirus lockdowns could throttle the massive economy's demand for crude.

Stock prices in Hong Kong, in particular, took a pounding as an announced lockdown in Shenzhen fueled a tech-sector rout.

"The rapid spread of Covid across China is now unsettling investors, with expectations that mass lockdowns will once again blight the economy," said Hargreaves Lansdown analyst Susannah Streeter.

Oil demand was "expected to take a hit if Chinese economic output falls," she said.

Crude has continued to slide after rising to close to $140 per barrel last week, a near 14-year high.

However, the price of oil -- which keeps the wheels of the global economy turning -- remains elevated, at the same time feeding upward pressure on inflation.

- Key figures around 2015 GMT -

New York - Dow: FLAT at 32,945.24 (close)

New York - S&P 500: DOWN 0.7 percent at 4,173.11 (close)

New York - Nasdaq: DOWN 2.0 percent at 12,581.22 (close)

London - FTSE 100: UP 0.6 percent at 7,196.25 (close)

Frankfurt - DAX: UP 2.2 percent at 13,929.11 (close)

Paris - CAC 40: UP 1.8 percent at 6,369.24 (close)

EURO STOXX 50: UP 1.5 percent at 3,741.10 (close)

West Texas Intermediate: DOWN 6.7 percent at $101.97 per barrel

Brent North Sea crude: DOWN 5.8 percent at $106.11

Hong Kong - Hang Seng Index: DOWN 5.0 percent at 19,531.66 (close)

Shanghai - Composite: DOWN 2.6 percent at 3,223.53 (close)

Tokyo - Nikkei 225: UP 0.6 percent at 25,307.85 (close)

Euro/dollar: UP at $1.0949 from $1.0912 Friday

Pound/dollar: DOWN at $1.3003 from $1.3037

Euro/pound: UP at 84.18 pence from 83.70 pence

Dollar/yen: UP at 118.19 yen from 117.29 yen

burs-sea/spm/ach/cs/des

R.J.Fidalgo--PC