Syria doubts drive up oil, yen; stocks fall
By Richard Hubbard
LONDON (Reuters) - Uncertainty about the possibility of military action against the Syrian government lifted oil towards a five-month high on Tuesday, undercut world share prices and drove demand for safe-haven assets like the yen.
Emerging markets were hit hard again as doubts over the Syrian situation added to pressure coming from investors' positioning for an end to the availability of cheap dollars which has helped support many developing nations.
Dealers said the move into safe-haven assets, spurred by reports from Washington that a strike may be imminent, were not on a huge scale as investors are waiting to see how the situation unfolds.
"Certainly there hasn't been any panic but with the headlines out there, there has been some risk-off trading," said Greg Matwejev, director of FX Hedge Fund Sales and Trading at Newedge.
U.S. Secretary of State John Kerry, in the most forceful reaction yet to the August 21 gas attack outside Damascus, set the stage for possible action when he said President Barack Obama "believes there must be accountability for those who would use the world's most heinous weapons against the world's most vulnerable people".
Kerry said Obama was consulting with allies before he decides on how to respond and those comments saw U.S. stocks .SPX end 0.4 percent lower in light volumes on Monday.
The Wall Street sell-off started the move into safer assets with the yen rising broadly to leave the greenback down 0.4 percent at 98.07 yen and the Australian dollar down 0.8 percent to 88.25 yen.
The euro had fallen 0.3 percent against the Japanese unit though it was steady against the dollar at $1.3372. Continued...