European stocks slip on rising Syrian crisis

Agence France-Presse

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The plunge happened amid rising concerns over the possibility of a US military attack on Syria

The European Union flag at the European Parliament in Strasbourg, France, 21 May 2013. Photo by EPA/Patrick Seeger

LONDON, United Kingdom – European equities fell Tuesday, August 27, mirroring losses in Asia and overnight on Wall Street, as investors eyed possible US military intervention in Syria and sent the price of safe-haven gold soaring.

Around midday in London, the FTSE 100 index of leading shares dropped 0.64% to stand at 6,450.56 points, as dealers in returned to their desks after a 3-day holiday weekend for Britain.

The CAC 40 index in Paris shed 1.40% to 4,010.28 points, and Frankfurt’s DAX 30 sank 1.49% to 8,309.10 as Syria concerns overshadowed news of buoyant German business confidence.

The European single currency eased to $1.3342, from $1.3369 late in New York on Monday.

Sterling fell against the euro to 85.97 pence for one euro and against the dollar to $1.5519.

Global oil prices advanced over concerns about renewed instability in the crude-rich Middle East region, with Brent oil hitting a near 6-month high close to $112 a barrel.

And gold prices rallied to $1,411 an ounce, up from $1,377.50 the previous session, as many investors parked their cash in the commodity seen as a safe bet in times of unrest.

Wall Street stocks had fallen on Monday after US Secretary of State John Kerry warned that the United States would demand “accountability” after an “obscene” chemical weapons attack on Syrian civilians.

The sell-off came immediately after Kerry said the US was still examining evidence of the use of chemical weapons in Syria but left no doubt that Bashar al-Assad’s regime would be blamed.

“Markets are tanking in Europe today, as Syria related risk-aversion prevails,” said trader Anita Paluch at Gekko Markets.

“The outlook of a military action in relation to the use of chemical weapons is clearly dampening risk appetite.”

New York’s Dow Jones Industrial Average shed 0.43% to finish at 14,946.46 points.

Sentiment was undermined also by official US data which showed that new orders for durable manufactured goods plunged 7.3% in July. That was much worse than market expectations for a 5% drop.

Dealers meanwhile set aside news that German business confidence rose for a fourth month in a row in August.

The Ifo economic institute’s closely watched business climate index rose to 107.5 points this month from 106.2 in July.

“The increasing likelihood of US intervention in Syria is weighing heavily on stocks markets and is likely to continue over the coming days unless Kerry’s comments are played down,” said analyst Craig Erlam at traders Alpari.

“I still think we are not close to any intervention, regardless of how clear cut the evidence appears, given the objections within the UN, particularly from Russia. As such, the weakness in the markets to the comments are only likely to be temporary.”

He added: “Unsurprisingly, the concerns over Syria have completely overshadowed the positive data out of the eurozone.”

In Asia on Tuesday, Hong Kong equities slid 0.59% and Tokyo shed 0.69%, but Sydney eked out a slender gain of 0.11%.

Emerging markets also remained under the spotlight due to lingering concern that tighter US monetary policy could spark massive outflows of foreign cash back to the West.

The Turkish lira fell to a record low level early on Tuesday, plunged to 2.033 in mid-morning.

Turkey is caught up in a currency turmoil that is also spreading across emerging economies in Asia, Latin America, Russia and South Africa as investors pull out some funds because of the imminent change in the US monetary climate as well as in global interest rates. –

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