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10/07 11:26P (RT) GLOBAL MARKETS-Asian shares fall hard, oil rises
after
strikes
Story 4727 (.HSI, .KLSE, .KS11, .PSI, .STI, I/ASIA, I/DBT,
I/EMRG...)
By Alan Wheatley, Asian Economics
Correspondent
SINGAPORE, Oct 8 (Reuters) - Asian shares fell hard
on
Monday while oil prices rose moderately as traders
and
investors priced in the risk that U.S.-led strikes
against
Afghanistan mark the beginning of a protracted
war.
The traditional safe havens of gold and the Swiss
franc
also rose slightly, as did short-dated bonds in some
markets,
but the absence of a lead from Wall Street made many
reluctant
to carve out big
positions.
"We don't know how long the strikes will take. The
market
is concerned about the possibility of retaliation from
the
terrorists, you don't know how they will retaliate," said
Allan
Araullo, vice president of Regina Capital Development Corp
in
Manila, where shares <.PSI> fell 3.84
percent.
"It's the same reaction all over the region," he
added.
With Tokyo closed for a national holiday, Hong Kong's
hang
Seng Index <.HSI> dropped 3.30 percent in early trading
to
9,938.63 and Singapore's Straits Tines Index <.STI> fell
3.29
percent to 1,339.83 at 0300
GMT.
The sell-off followed a wave of bombing and missile
strikes
by the United States and Britain to cripple the military
of
Afghanistan's ruling Taliban, which has been sheltering
Osama
bin Laden, accused of masterminding the deadly September
11
suicide plane attacks on New York and
Washington.
"It is not such a shockingly unexpected event that it
will
put markets into disarray, but how it unfolds over the next
few
days will be key," said Anthony Karydakis, senior
financial
economist at Banc One Capital Markets in
Chicago.
He expects major stock markets worldwide to weaken,
with
the Dow Jones industrials on Monday selling off by 200 or
300
points, or about three percent, at the
opening.
STORM
BREAKS
U.S. stock futures weakened in electronic trading
in
Chicago, with the lead month December Standard & Poor's
500
stock index <SPZ1> contract falling 6.80 from Friday's
1,071.80
settlement. The December Nasdaq 100 contract <NDZ1> fell
10.00
to
1,270.50.
Despite the initial sell-off, some brokers said the use
of
force against Afghanistan had at least ended the
markets'strikes
The dollar dipped below 120 yen to 119.90 <JPY=>,
about
2/3
of a yen below New York's close on Friday, although
dealers
said the move was largely a mark-down, driven by
anticipation
that risk-averse Japanese investors will repatriate
funds,
rather than a product of active
selling.
The Swiss franc firmed to 1.6110 per dollar <CHF=>
from
1.6162 late in New York on Friday, drawing strength from
its
traditional status as the safest of safe havens.
<FONT face=Quotrone
size=2>
OIL RISES
<FONT face=Quotrone
size=2>
Gains in gold, another safe haven, were equally
measured.
Bullion was quoted around $292.50/3.00 an ounce, up
around
$1.50 from late New York levels on
Friday.
Oil prices rose, though again only modestly, as
traders
fretted that the violence could spread to the Middle
East
region, where two-thirds of the world's petroleum reserves
lie.
"With these strikes in Afghanistan, we've now seen
one
layer of uncertainty peeled away. The strikes were
strongly
signalled, it was only the timing that was the issue,"
said
Simon Games-Thomas at NM Rothschild & Sons in
Sydney.
"What happens now (to oil) depends on the depth and
breadth
of the strikes and the response they engender," he
said.
The U.S. November crude futures contract jumped as much
as
46 cents in early NYMEX electronic trading on Monday
before
retreating to $22.71 cents a barrel at 0243 GMT, a gain of
35
cents from Friday's close in New
York.
When U.S. bond markets resume trading on Tuesday,
analysts
said demand for short-dated paper may push the yield on
the
two-year Treasury note down to as low as 2.5 percent from
2.7
percent at Friday's
close.
Treasuries have rallied through most of the year as
the
Federal Reserve has lowered interest rates nine times
since
January to try to prop up a rapidly weakening economy that
most
analysts assume has now tumbled into recession as a result
of
last month's
attacks.
A day before the the strikes on Afghanistan,
finance
ministers and central bank governors of the Group of
Seven
leading industrial nations acknowledged that the attacks
had
hurt the global economy and pledged to keep financial
marketsstable.
"We are strongly committed to bringing forward
needed
measures to increase economic growth and preserve the health
of
our financial markets," the United States, Britain,
Canada,
France, Germany, Italy and Japan said in a
statement.
In Asia, South Korea's central bank made a similar
pledge
on Monday, promising to provide ample liquidity in case
of
wayward moves in the financial
markets.
In the event, Seoul's benchmark Kospi <.KS11> stock
market
index fell just 0.69 percent to 498.45, while bond prices
moved
lower on fears of the inflationary impact on rising oil
prices
on Korea, which imports all its
oil.
"The assault came as no big surprise and investors
are
trying to gauge the impact," said Joh Jae-young, a
fixed-income
strategist at Kyobo Securities in
Seoul.
((--Asiadesk (65) 870 3814 fax: (65)
8703820))
REUTERS
Rtr 23:26
10-07-01
.....Duplicate
take.....
Story
4728
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