World stocks rally, oil down on Libya hopes
NEW YORK, Aug 22 — Oil prices slipped and world stocks rose today above recent 11-month lows on hopes the conflict in Libya could be ending as energy shares went higher after the sell-off in the equity market last week.
US stocks jumped at the open, led by Exxon Mobil Corp, which rose 2 per cent. Investors, however, offset buys of risky assets by continuing to buy gold. Persistent worries that the sovereign debt crisis in euro zone peripheral countries may spread to bigger economies in the region encouraged flows into gold, pushing it to another record high.
The cost for euro zone banks to borrow money from one another rose again today, heading back towards their highest levels since late 2008, as US banks remained wary of lending to their European counterparts in the face of the intractable debt crisis.
Brent crude oil fell 1.6 per cent. The potential for a resumption of Libyan oil flows into the market if the Gaddafi regime collapses weighed on the benchmark oil price. If Libyan production comes back, it would ease petrol prices, a potential boost to economies worldwide.
Libyan government tanks and snipers put up scattered resistance in Tripoli after rebels swept into the heart of the capital, cheered on by crowds hailing the end of Muammar Gaddafi’s 42 years in power.
The Dow Jones industrial average was up 171.80 points, or 1.59 per cent, at 10,989.45. The Standard & Poor’s 500 Index rose 19.24 points, or 1.71 per cent, at 1,142.77. The Nasdaq Composite Index gained 53.62 points, or 2.29 per cent, at 2,395.46. European stocks rose 1.8 per cent.
The benchmark MSCI world equity index gained 1 per cent today but has fallen for five weeks in a row, and looks to be heading for its worst monthly performance since October 2008, when markets were reeling after the collapse of Lehman Brothers.
Gold hit a third consecutive all-time high near US$1,900 (RM5,656) an ounce after staging its biggest weekly gain in 21/2 years last week.
The euro rose 0.3 per cent. The dollar held above a record low around ¥75.94 hit on Friday, owing to concerns about intervention by Japanese authorities. It was at ¥76.74.
The US dollar fell 0.2 per cent against a basket of major currencies.
Investors are waiting to see whether the Federal Reserve flags further stimulus when bankers gather in Jackson Hole, Wyoming, later this week, a year after chairman Ben Bernanke launched a second round of quantitative easing to revive the economy.
Additional bond purchases by the Fed could help reflate asset prices, but many view the chances of a third round of quantitative easing as limited, and expect the Fed to take gradual measures to boost the economy. – Reuters