European stocks fall, airlines dive on tension over Syria [Times of Oman]
(Times of Oman Via Acquire Media NewsEdge) European stock markets dropped further on Wednesday, with shares in airlines diving as rising tension over Syria pushed up the price of jet fuel. Prices of oil and gold rose.
Shares in energy groups rallied as concern about potential disruption to Middle East oil supplies amid Syrian tensions boosted demand for crude, analysts said.
London's FTSE 100 index slid 0.60 percent to stand at 6.402.39 points approaching midday in the British capital.
Frankfurt's DAX 30 gave up 1.05 percent to 8,155.71 points and the CAC 40 in Paris dropped 0.36 percent to 3,954.39 compared with Tuesday's closing values.
"The escalation of tensions with regard to Syria and the prospect of near-term military intervention by the US and its allies is having a punishing effect on equity markets, especially emerging markets, where portfolio outflows have damaged both equity markets and currencies," noted Neil MacKinnon, analyst at VTB Capital Research.
"As far as Syria is concerned, the best-case scenario from a market perspective is for military action to be short-lived and for tensions to be defused," he added.
The surge in oil prices benefited energy groups, with the share price of Total jumping 2.36 percent to 42.72 euros, RWE winning 2.10 percent to 21.18 euros and Shell gaining 2.18 percent to 2,224 pence in Wednesday deals.
But airlines dropped heavily with IAG, parent group of BA and Iberia, down 6.0 percent to 282.3 pence and Easyjet shedding 4.29 percent to 1,181 pence as jet fuel prices rallied in line with crude, traders said.
Jet fuel, or kerosene, is refined from crude oil.
The European single currency dropped to $1.3363 from $1.3391 late in New York on Tuesday.
The dollar rose to 97.46 yen from 97.01 yen Tuesday.
Sterling fell against the euro, to 86.24 pence to the euro, and against the dollar to $1.5495.
The Turkish lira fell further to 2.06 to the dollar, then rallied slightly to 2.0527, from 2.0382 at Tuesday's close.
In emerging market India, the rupee slumped almost four percent to 68.74 against the dollar -- another record low -- as fears over Syria compounded domestic economic woes and expectations the US will wind down its stimulus programme.Tensions push up oil, gold
The price of gold rose further to $1,426.04 an ounce from $1,419.25 the previous session, when the precious metal had rallied thanks to its status as a safe investment in times of political and economic unrest.
New York crude oil prices meanwhile jumped on Wednesday to the highest level for more than two years, as Western powers prepared for possible military action against Syria over the regime's alleged use of chemical weapons.
New York's main contract, West Texas Intermediate for delivery October, soared to $112.24, reaching a level last seen in early May 2011. It was later up 96 cents at $109.97 a barrel in Wednesday trade.
Brent North Sea crude oil jumped to $117.34 -- the highest point since late February. Brent went on to trade at $115.31 a barrel, up 95 cents compared with Tuesday's close.
"Commodity prices have come into sharp focus this week as the likelihood of a Western intervention in Syria increases," said Matt Basi, head of UK sales trading at CMC Markets
"As oil rockets higher on the prospect of further instability in the region, so too does gold as investors abandon equity markets and flock to the perceived safe haven of the yellow metal."
In the airlines sector, a British watchdog ruled that Irish no-frills carrier Ryanair must slash its almost 30-percent stake in rival Aer Lingus on grounds of unfair competition.
In Paris, the price of shares in construction, television and telecoms group Bouygues jumped by slightly more than 6.0 percent to 24.41 euros on reporting a big fall in first-half profits which were better than expected, however.
Shares in global hotel group Accor fell 3.25 percent to 27.86 euros on a cautious outlook and despite a switch back into profit in the first half.
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