Stocks hit two-year lows on commodity outlook; biotechs fall

By Chuck Mikolajczak

NEW YORK (Reuters) - Global equity markets reached a two-year low on Tuesday as the outlook for raw materials prices and emerging markets remained soft, while U.S. biotech shares remained under pressure.

Commodity prices edged up but held near multi-year lows on concern over an economic slowdown in major raw material consumer China. U.S. stocks closed slightly higher in a choppy session, and an early rally in biotechs faded to deal the sector its eighth straight drop.

The S&P 500 managed to barely snap a five-session losing streak, but remained close to August lows that analysts see as a key support level.

 

"I don't like the way this market looks at all right now. The S&P is getting ready to test the August low," said Randy Frederick, managing director of trading and derivatives for Charles Schwab in Austin.

"A retest is a good thing, but it needs to hold."

Since the Federal Reserve held U.S. interest rates in check on Sept. 17, markets have been kept off balance on the timing of a rate hike.

Fed officials gave mixed messages on Monday and investors were looking to a speech from Fed Chair Janet Yellen on Wednesday for more clarity, with a key U.S. payrolls report also due on Friday.

Mining and trading company Glencore , whose shares fell by almost a third on Monday on investor concern over its debt levels, bounced up 16.9 percent in London but only after its Hong Kong-listed shares <0805.HK> fell 29 percent.

Copper steadied after hitting a one-month low. It last traded at $4,970.15 a tonne, up 0.1 percent on the day but within reach of a 6-1/2-year low below $4,855.

Platinum > fell to a low of $894 an ounce, its lowest since December 2008, on fears that the emissions scandal surrounding German carmaker Volkswagen could hit demand from the auto sector. It last stood at $910.75, down 0.6 percent.

The pan-European FTSEurofirst 300 index <.FTEU3> closed down 0.6 percent, recovering from a steeper fall led by biotech shares <.SXDP>.

U.S. biotechs <.NBI> were volatile, rising as much as 3.9 percent before gains dissipated to send the sector down 0.6 percent. The Nasdaq Biotech Index is down 20 percent over its last eight sessions on concerns over government intervention in drug pricing.

MSCI's all-country share index <.MIWD00000PUS> was down 0.6 percent after touching a two-year low.

The flash reading of annual euro zone inflation is due on Wednesday. A fall into negative inflation would fuel speculation about further European Central Bank stimulus, six months after the euro zone's central bank launched a massive asset purchase program.

The U.S. 10-year Treasury note > rose 11/32 in price to yield 2.0561 percent.

The Dow Jones industrial average <.DJI> rose 47.24 points, or 0.3 percent, to 16,049.13, the S&P 500 <.SPX> gained 2.31 points, or 0.12 percent, to 1,884.08 and the Nasdaq Composite <.IXIC> dropped 26.65 points, or 0.59 percent, to 4,517.32. Brent crude oil , which lost 2.6 percent on Monday, rebounded to settle up 89 cents a barrel to $48.23 while U.S. crude gained 1.8 percent to settle at $45.23 on expectations U.S. crude inventories dropped in the latest week.

(Reporting by Chuck Mikolajczak; Editing by Meredith Mazzilli and Nick Zieminski)