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Egypt crisis sends oil higher, shares lower News

By Haris Afzal on Monday, January 31, 2011 with 1 comment

Egypt crisis sends oil higher, shares lower
HONG KONG: Oil prices closed in on the $100 a barrel mark on Monday as traders grew increasingly worried about unrest in Egypt, while stock markets in Asia mostly fell.

Share prices partly lost ground due to last week's sharp falls on Wall Street -- the result both of instability in Egypt and poor corporate results.

However, resource stocks gained on higher prices for oil and gold.

Tokyo's Nikkei index was down 1.22 percent in morning trade, Sydney's S&P/ASX 200 index fell 0.87 percent and Hong Kong's Hang Seng lost 1.25 percent.

But the Shanghai Composite Index was up 0.36 percent, with notable gains among oil companies and gold miners.

World oil prices rose, with the most obvious threat from Egypt's political turmoil the risk that supplies through the vital Suez Canal could be disrupted.

New York's main contract, light sweet crude for March delivery, was up 37 cents at $89.71 per barrel in morning trade. Brent North Sea crude for March rose 18 cents to $99.60.

The Brent price was likely to fuel expectations that oil could top $100 a barrel, posing a worrying risk to global economic recovery.

Tokyo saw heavy losses among companies with direct exposure to Egypt, where President Hosni Mubarak is under intense pressure from continued mass unrest, amid calls by Western governments for a peaceful political transition.

Among Japanese stocks losing ground were Nissan Motor, which operates an assembly plant in Egypt, and Toshiba, which is preparing to build a television factory there, Dow Jones Newswires reported.

Asian markets were not helped by Wall Street's poor performance -- the blue-chip Dow Jones Industrial Average lost 0.41 percent over last week after eight straight weeks of gains.

Adding to pressure were disappointing corporate earnings reports, including from tech bellwethers Amazon and Microsoft, and industrial heavyweight Ford Motor Co.

However some analysts were more sanguine about any knock-on from the situation in Egypt.

In Hong Kong, Ben Kwong, chief operating officer at KGI Asia, said he was not too worried either about Egypt or the likelihood that China will soon take further measures to cool its economy.

"The risk of further tightening in China is more or less priced in by now... (and) the geopolitical risk tends to be short-lived," Kwong told Dow Jones Newswires.

"I'm not that pessimistic. If the (Hang Seng) market falls further to below 23,000, I would be looking for bargain-hunting opportunities."

With mainland Chinese markets bucking the downward trend, there were notable gains for energy firm PetroChina, oil trader SINOPEC Shandong Taishan Petroleum and gold producers Shandong Gold-Mining and Zijin Mining.

The euro fell to $1.3585 in Tokyo morning trade from 1.3609 in New York late Friday as traders moved into the safehaven greenback. The single European currency dropped to 111.60 yen from 111.72 yen.

The dollar fetched 82.08 yen, flat from 82.09 yen in New York Friday.

Gold opened at $1,342.00-$1,343.00 an ounce in Hong Kong, well up from Friday's close of $1,314.50-$1,315.50, amid a general rise in commodity prices on the back of the Egyptian unrest.

Category: World News



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