War jitters keep markets on edge

LONDON Iraq war jitters continued to unnerve world financial markets yesterday, boosting government bonds and gold and pushing down shares.


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Published: Thu 20 Feb 2003, 3:28 AM

Last updated: Wed 1 Apr 2015, 8:24 PM

Oil prices slipped as traders awaited fresh news on whether and when the United States would launch an attack to disarm Iraq.

Futures trade indicated that Wall Street would give up some of the gains it made overnight when trading begins yesterday. Diplomats said the United States and Britain wanted to draft a new U.N. resolution on Iraq authorising military action in hopes for a vote at the end of the month.

Markets rallied earlier in the week on hopes that war would at least be delayed following an outpouring of public opposition and cautious comments from chief U.N. weapons inspector Hans Blix.

European government bond yields headed lower. Yields on the volatile two-year Schatz were two basis points lower at 2.431 per cent while benchmark 10-year yields were down 3.1 basis points at 3.965 per cent.

European blue chip stocks snapped three days of gains and traded mostly lower.

The FTSE Eurotop 300 index of pan-European blue chips was 0.77 per cent lower, while the narrower DJ Euro Stoxx 50 index lost 1.18 per cent.

"There's still a possibility of a U.S. and UK attack on Iraq without U.N. backing, which is the riskiest outcome," said Rupert Thompson, global strategist at E*Trade. Earlier, in Tokyo, the Nikkei average ended down 14.53 points or 0.17 per cent at 8,678.44. The broader TOPIX index slipped 0.36 per cent to 853.59.

This was despite an overnight rally in New York, where the blue-chip Dow Jones industrial average climbed 1.67 per cent. However, stock index futures in London pointed towards a slightly weaker Wall Street opening after a statement from President George W Bush on the Iraq crisis.

"Hopes for another day of gains from the US markets have evaporated as President Bush reiterated that the US did not need a further UN resolution to take action against Iraq," said Tim Hogman at Cantor Index in London.

Gold climbed and was trading around $347 an ounce, up from $343.45/344.45 at Tuesday's close in New York. Traders said they expected some "insurance buying" as the weekend neared. On the foreign exchange markets, the Japanese yen held near 2-1/2 week highs on the dollar at around 119 yen while the euro rallied a third of a per cent against dollar to above $1.07.

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