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Oil falls, Asia stocks up but investors still jittery

Oil falls, Asia stocks up but investors still jittery
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First Published: Wed, Mar 09 2011. 11 13 AM IST
Updated: Wed, Mar 09 2011. 11 13 AM IST
Singapore: Oil prices fell for a second day on Wednesday as Opec considered raising production, pushing up Asian stocks although investors remained on edge because of the turmoil in the Middle East.
The euro nursed heavy losses early in Asia as worries about European sovereign debt problems intensified following Moody’s credit rating downgrade for Greece on Monday.
US crude for April dipped to $104.63 a barrel, easing further from a 2-1/2 year high hit on Monday, after Kuwait’s oil minister said the Organization of the Petroleum Exporting Countries (Opec) was considering boosting supply to offset disruptions in Libya, where government forces are trying to quash a popular uprising.
North Sea Brent crude fell nearly 50 cents to $112.60.
An official oil output increase by Opec would signal the group’s determination to cap prices, but unrest in the region has fuelled concerns about more supplies being cut off.
“Oil has stopped rising for now, but it hasn’t really retreated to levels that allows aggressive buying in risky assets, so investors will still be jittery,” said Hiroichi Nishi, general manager at Nikko Cordial Securities.
Japan’s Nikkei benchmark extended gains for a second day after the pullback in oil prices lifted Wall Street but investors remained worried that high fuel prices could stunt global economic growth and erode corporate earnings.
By midmorning, the benchmark Nikkei was up 1.3%, or 133.52 points, to 10,659.55. The broader Topix index gained 1.3% to 951.07. It broke above its 25-day moving average, key technical level closely watched by Japanese traders, now at 10,630.45.
MSCI’s index of Asia Pacific shares outside Japan edged up 0.01%, led by gains in consumer durables and financials.
The Korea Composite Stock Price Index (KOSPI) was up 0.20% at 2,000.28 points as of 0205 GMT after crude oil prices dippped, with banks surging ahead of the central bank’s interest rate meeting on Thursday.
The Bank of Korea is expected to raise rates to curb price pressures after surprising markets by leaving rates unchanged in February.
The euro fell for a third straight session against the dollar, with further pressure likely as investors remained unconvinced that a European Union summit on Friday to overhaul the euro zone economies will yield any results.
Concerns about Europe’s debt problems have been on the rise since Moody’s cut Greece’s credit ratings by three notches on Monday, signaling more downgrades are on the way and adding to fears that Athens will have to restructure its debt.
Failure to break through resistance above $1.40 prompted investors to trim long euro/dollar positions, sending the common currency to a low around $1.3860 overnight. It last traded at $1.3881.
With the euro on the back foot, the dollar rose against a basket of major currencies. The dollar index inched up to 76.776, pulling away from a four-month low of 76.124 set on Monday.
US stocks rallied as crude prices retreated. The Dow Jones industrial average rose 1.03%, while the Standard & Poor’s 500 Index gained 0.89%.
Gold steadied on Wednesday after rising to record highs as the prospects of further unrest in oil-rich Middle Eastern countries has driven investors to seek safe-haven assets.
Gold eased below $1,430 an ounce, falling further from Monday’s record high after the drop in oil prices eased some concerns about inflation. Spot gold was at $1,426.80 an ounce.
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First Published: Wed, Mar 09 2011. 11 13 AM IST
More Topics: Markets | Oil | Crude | Commodity | Brent |