Iraq civil war fears send oil and gold prices up
Oil rose and gold climbed to near a three-week high as the escalation of violence in Iraq stoked concern that crude supplies will be disrupted and boosted the appeal of haven assets.
Oil rose and gold climbed to near a three-week high as the escalation of violence in Iraq stoked concern that crude supplies will be disrupted and boosted the appeal of haven assets. European and American stock futures dropped, while the British pound reached the strongest in almost five years.
Brent oil rose while gold advanced 0.4 per cent and silver touched the highest level since May 14. China's stocks rose to a two-month high after the central bank expanded the number of lenders eligible for cuts to their reserve requirement ratios.
"Markets have reacted with movements in crude and in precious metals prices, some selling out of equities into bonds," said Toby Lawson, the Sydney-based head of futures, options and cash equities trading for the Asia-Pacific region at Newedge Group.
"That's pretty normal when you see some escalation of geopolitical shocks to markets. Impacts on oil supply are going to be minimal at this point in time but that's not saying that the crisis couldn't escalate."
Iraq's army killed more than 279 rebels as the prospect of civil war in the second-largest producer in Opec, the oil-producers' cartel, intensifies with Sunni Muslim insurgents controlling territory north of Baghdad.
In Ukraine, tensions escalated at the weekend with 49 servicemen killed when pro-Russia fighters shot down a plane.
Iraq's government is seeking to reassert control over territory taken by the breakaway al-Qaeda group, whose advance puts in doubt the long-term unification of the Persian Gulf country. Sectarian strife is pushing Iraq closer to civil war, three years after the United States withdrew its military forces.
Russia may shut off gas supplies to Ukraine today amid escalating tensions over separatist movements in the former Soviet republic's east. Both nations have been trading accusations over Saturday's attack on the military plane and an assault on Russia's embassy in Kiev. Russia is also the world's biggest energy exporter.
Stocks in the Middle East slumped yesterday, with Dubai's DFM General Index sinking 4.7 per cent to the lowest close since April 6. The Kuwait Stock Exchange Index lost 1.4 per cent, the biggest drop in a week, while the Abu Dhabi Securities Market General Index sank 2 per cent. Qatar's benchmark gauge fell 1.6 per cent.
