21 Mar 2003 | 11:48 GMT
SEARCH Symbol Company Keyword

21 Mar 2003 07:55 GMT Print this Article Email this Article
Oil up and dollar steady as tanks roll into Iraq

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 discounted it.

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 was down.

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.

 Back to Top
Oil price slumps as troops sweep into Iraq
Airlines brace for effects of war
Markets round-up: FTSE leaps on war progress
Holidaymakers stay home as Iraq war flares
U.S. to confiscate Iraq assets
Opposition to euro drops slightly
Risk of deflationary spiral very small indeed, says BoE
House of Fraser rebuffs approaches
Hewitt may rebuff call to ease pharmacy rules
BT outlines aggressive corporate outsourcing plans
Disclaimer | Copyright | Privacy | Contact Us | Corrections