World markets slide, oil soars on Libya unrest

By Agence France-Presse
Tuesday, February 22, 2011 9:03 EDT
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LONDON (AFP) – Global markets dived Tuesday and oil prices spiked above $108 per barrel, as sentiment was rocked by violent unrest in Libya, while the safe-haven US dollar gained ground.

“The revolutions in Tunisia and Egypt are continuing to spread across the region. It seems to be Libya’s turn now. These developments cause a high degree of uncertainty,” said Commerzbank analyst Ulrich Leuchtmann.

Financial markets were also rattled by news of a deadly earthquake in New Zealand and a ratings downgrade for Japan, dealers said.

Just after midday, London’s FTSE 100 index of top shares shed 0.95 percent to 5,958 points, while the Paris CAC 40 plunged 1.46 percent to 4,037.59 and Frankfurt’s DAX 30 retreated 0.31 percent to 7,299.74 points.

Oil prices surged past $108 as Libyan output was hit by violent protests and concerns grew over spreading unrest in the strategic crude-producing Middle East and North Africa area.

In early morning trade, Brent North Sea crude for delivery in April spiked to $108.57 per barrel, hitting the highest level since September 4, 2008.

And the European single currency sank as low as $1.3525, compared with $1.3678 late on Monday, when US financial markets were closed for the Presidents’ Day public holiday.

“A trio of events have battered risky assets during the European session,” said research director Kathleen Brooks at trading website Forex.com.

“Firstly, the ongoing people’s uprising in Libya and the escalation of violence and casualties is weighing on the oil price; secondly the New Zealand earthquake; and lastly news that Moody’s had revised lower its outlook on Japanese sovereign debt to negative from stable.”

Libya denounced charges it was massacring protesters as lies Tuesday as Moamer Kadhafi broke cover over the challenge to his four-decade rule after a raft of diplomatic and military defections.

With the Middle East turmoil pushing oil prices ever higher, rulers of the Gulf state of Bahrain were confronted by fresh mass protests and governments made plans to evacuate citizens from hotspots across the Arab world.

Both the UN Security Council and Arab League were to meet to discuss the bloody crackdown by Libyan authorities that prompted the UN’s rights chief to warn that crimes against humanity may have been committed.

“The ongoing tensions in the Middle East and North Africa region, in particular in Libya, are pushing the oil price higher and weighing on equity market sentiment,” said VTB Capital economist Neil MacKinnon.

Asian stocks also nosedived on Tuesday, with Tokyo down 1.78 percent and Hong Kong losing 2.11 percent, as the political crisis in Libya worsened, with reports of escalating violence against pro-democracy demonstrators.

Tokyo was also hit after ratings agency Moody’s said it had lowered its outlook on Japan’s sovereign debt to “negative” due to concerns the state would not be able to bring it under control.

The agency said the government’s policies may not be strong enough to contain the industrialised world’s biggest debt.

Moody’s previously held a “stable” outlook on the nation’s “Aa2″ rating, the third highest on a scale of 19, and analysts said the outlook change would likely lead to a downgrade.

It follows rival agency Standard & Poor’s decision to cut Japan’s rating for the first time since 2002.

Wellington’s stock market meanwhile suffered a sell-off, falling 0.69 percent after a powerful earthquake killed at least 65 people in New Zealand’s second city, Christchurch.

The 6.3-magnitude quake buckled roads and rained glass and rubble on streets packed with lunchtime shoppers.

Agence France-Presse
Agence France-Presse
AFP journalists cover wars, conflicts, politics, science, health, the environment, technology, fashion, entertainment, the offbeat, sports and a whole lot more in text, photographs, video, graphics and online.
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  • NadePaulKuciGravMcKi

    Gaddafi to release contents of State Secrets File

    federal reserve
    treasury dept
    wall street

  • Anonymous

    Says who?