Oil prices slump on eurozone strains, Mideast truce hope

Oil prices slumped Tuesday on fresh economic strains caused by a downgrade to France's credit rating, and on easing Middle East supply concerns amid hopes of an Israel-Gaza truce, analysts said.

New York's main contract, light sweet crude for delivery in January, slid $2.61 to $96.67 a barrel.

Brent North Sea crude for January shed $2.30 to $109.40 a barrel in late London deals. Oil prices had struck one-month highs on Monday after gains of about two dollars a barrel on the Israel-Gaza violence.

"Today there's a bit more of a risk-off theme with the French downgrade and a bit of profit-taking on the back of yesterday's big (price) move," said IG analyst Jason Hughes.

France came under fresh economic pressure after ratings agency Moody's cut the French government bond rating by one notch from the highest level to "Aa1" and warned that an additional downgrade was possible.

Moody's action late on Monday brought to two the number of major ratings agencies to cut France's top rating, after Standard and Poor's did so in January. Fitch has maintained its assessment of French debt so far.

The downgrade put France behind eurozone partners such as Finland, Germany, Luxembourg and the Netherlands, which have retained top AAA ratings though they all have a negative outlook from at least one of the three agencies.

Oil prices were sliding one day after surging on fresh concern about supplies from the crude-rich Middle East.

"Reports of an Israel/Gaza ceasefire brokered by Egypt have settled the price of oil" on Tuesday, said Joshua Mahony, research analyst at Alpari trading group.

Gaza militants said a Cairo-brokered truce in their seven-day war with Israel would be announced on Tuesday, as Israeli Prime Minister Benjamin Netanyahu urged them to choose between "the sword" and peace.

Egypt, which has been leading efforts to secure a Gaza truce after nearly a week of cross-border violence, also said the Israeli "aggression" would end within hours, although the bloodshed showed no signs of abating.

At least 20 Palestinians were killed as Israeli air strikes rocked the Gaza Strip, medics in the Hamas-ruled territory said, and a rocket fired by Palestinian militants exploded near Jerusalem.

After the first night of the conflict without Palestinian deaths, the toll rose to more than 120 on Tuesday, medics said.

An Israeli soldier was also killed by rocket fire Tuesday, the army said, bringing to four the number of Israelis killed in the week-long spate of violence.

burs-bcp/jmm

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    USDSGD=X
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    EURSGD=X
    2.1135+0.0069+0.33%
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    6.1628-0.0128-0.21%
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    2.5983-0.0029-0.11%
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    SGDCNY=X
    1.1649-0.001-0.08%
    AUDSGD=X
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    GCM14.CMX
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    SIK14.CMX
    91.67-1.20-1.30%
    ^XAU
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    CLM14.NYM
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    545.SI
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