||21 Mar 2003 07:55
|Oil up and dollar steady as tanks roll into
By Bill Tarrant
SINGAPORE (Reuters) - Oil prices have bounced off
three-month lows, while the dollar and Asian stocks are steady as
U.S. tanks roll into southern Iraq and news of the first U.S. and
British casualties emerges.
Financial markets were in a holding pattern. Investors
were torn between expectations the war could end swiftly and worries
about possible torching of oil wells, terror attacks, chemical
warfare or a worsening of the North Korean crisis.
"We're really hostage to the headlines," said Andrew
Baker, senior Nasdaq trader at regional investment bank Wedbush
Morgan in Los Angeles. "It's a headline, emotion-driven market right
now, and no one wants to get on the wrong side of a headline."
News on Friday that 16 U.S. and British soldiers were
killed in a helicopter crash in Kuwait was the first report of
casualties on the U.S.-led side since the war started.
Crude, which had shed a quarter of its value in the last
week, rose slightly on talk that Iraq may have set fire to three or
four oil wells. Baghdad denied the report and the market later
The relatively muted start to the war, in contrast to the
massive air campaign expected, and cautious words from Bush, took
some steam out of this week's dollar rally, dealers said.
"The market had been pricing in the 'shock and awe'
campaign touted by the White House," said Marc Chandler, chief
currency strategist at HSBC in New York. "That's not happening."
Asian stock markets opened mostly higher after overnight
gains on Wall Street. Safe-haven gold and U.S. Treasuries edged up
in Asia, in a bout of renewed anxiety about the progress of the war
and its aftermath.
"Things are going very well," Defense Secretary Donald
Rumsfeld told reporters after the United States and Britain blasted
targets across Iraq and sent in ground forces in the first full day
of a campaign aimed at ridding Iraq of weapons of mass destruction
and toppling Saddam Hussein.
The price of crude oil for May delivery OILOIL
rose 33 cents to $28.45 a barrel by 0245 GMT after falling another
four percent in New York to fresh three-month lows on Thursday.
Brent crude oil rose 50 cents to $26 per barrel in
after-hours electronic trading on Friday, after touching a
three-month low of $25.30 in London.
With Tokyo markets closed for the first day of spring and
investors glued to news and television screens for clues on how the
war is going, trading in Asia was muted on Friday.
The dollar rose, recovering from early losses, and has
risen three percent against the yen in the last 10 days as traders
bet the war would be quick and cause little damage to the U.S.
economy, the world's largest.
At around 120.35 yen JPY=
at 0300 GMT, the dollar was up from its late New York level of
120.25. The euro EUR=
eased to $1.0609 from its late U.S. Thursday level of $1.0621.
Stocks in Asia were mostly higher in early trade. South
Korean shares .KS11
rose 0.76 percent, Singapore .STI
edged 0.18 percent higher, while Australia .AXJO
was flat and Taiwan .TWII
Airline and auto stocks led the gainers with Qantas QAN.AX
up 2.38 percent and Hyundai Motor rising 4.47 percent in Seoul.
U.S. Treasuries rose slightly on Friday, extending small
gains overnight in light trade.
Treasury prices, which soared in the first 10 weeks of
this year as the U.S. economy cooled, have slumped over the last 10
days as investors shifted money out of safe-haven bonds into riskier
assets like stocks, wagering the Iraq war will be short.
"We've had the big unwind of the pre-war situation and
we're now going to have a very volatile market for some weeks...
depending on the news of the progress of the war," said Tony
Pearson, head of market economics at National Australia Bank.
The benchmark 10-year note US10YT=RR
yielded 3.95 percent, down from Thursday's 4.04 percent high, but
well above last week's four-decade low of 3.55 percent.
Spot gold XAU=
rose to $333.35 in Asia on Friday from $332.50 in New York on
pent-up demand and some expectations the war could produce a weaker
U.S. dollar and economy.