HONG KON (Reuters) - Oil vaulted over $116 per barrel on Wednesday as concerns rose that escalating tensions in Libya would spread in the Middle East and disrupt fuel supplies.
Brent crude’s dizzying 15 percent jump in less than two weeks has fanned worries about a stifling impact on the economic recovery, pushing investors out of stocks and sending them to relatively safe assets like gold and government bonds.
Shares in Asian developed markets such as Tokyo and
Seoul tumbled more than 1 percent following Wall Street’s slide overnight. .
The MSCI index of Asia-ex Japan stocks slipped nearly half a percent in opening deals after falling by 2 percent in February.
Markets brushed aside reassuring comments from Federal
Reserve Chairman Ben Bernanke that oil’s recent surge is unlikely to derail the U.S. economy, although he offered no hint on whether the central bank is looking at rate rises.
“Volatility will rule until the situation in the Middle East shows signs of easing,” said Kim Young-june, a market analyst at SK Securities.
U.S. Treasuries, a safe-haven asset, paused after recent hefty gains with ten-year yields stabilising at 3.40 percent, well below a peak of 3.74 percent hit last month.
Gold was also one of the beneficiaries, hovering around a record high of $1,432 an ounce. Gold was up 6 percent in February.
In the currency markets, the euro dipped slightly
after failing to break through a key resistance level, though further declines for the common currency may be limited a day before a European Central Bank meeting.
Given euro zone inflation holding well above the ECB’s target, markets expect the central bank to ramp up its anti-inflation talk with Bernanke’s comments reinforcing market speculation that the ECB would raise rates before the Fed.