The Telegraph
Since 1st March, 1999
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Oil flares up, gold soars

London, March 17 (Reuters): Investors fled stocks and embraced the relative safety of long-term bonds and gold on Monday as the world prepared for a US-led war against Iraq.

Oil prices jumped, boosting worries about the effect of war on the world economy, and the dollar tumbled from recent highs against major currencies.

US stock markets also looked headed for losses when they open later in the session.

“The market appears to be in the final stages of digesting the inevitability of war,” said Nigel Richardson, senior strategist at AXA Investment Managers.

European stocks tumbled at the open, with major indices falling more than 3 per cent before recovering slightly.

The FTSE Eurotop 300 index was down 1.76 percent, while the narrower DJ Euro Stoxx 50 index shed 2.14 per cent.

Both indices soared in the latter part of last week, driven by US stocks gains and a feeling that the long, market-troubling crisis over disarming Iraq was drawing to a close.

But earlier on Monday, Asian shares had set a new downward tone. Japan's Nikkei lost 1.64 per cent to finish slightly above a 20-year low. Seoul stocks plunged 4.17 per cent and all other Asian markets were lower as well.

Monday’s war drums and the losses on stock markets drove investors towards traditional safe havens.

Gold, traditionally seen as an insurance policy by investors in times of trouble and dubbed by some a ‘war commodity’, briefly jumped.

Gold was quoted at $ 341.50/342.25 an ounce, up sharply from New York’s last quoted $ 336.10/336.90 and last week’s three-month traded low of $ 331.30.

Dollar plunges

The dollar fell across the board, eroding last week's gains when it launched a broad-based recovery from four-year lows on the euro and Swiss franc.

It was off session lows but was still half a per cent down against the euro and the Swiss franc at $ 1.0808 per euro and 1.3576 francs.

Oil prices surged as much as $ 1 higher before settling back. US light crude was up 57 cents at $ 35.95 a barrel and London's Brent crude was up 44 cents at $ 30.57 a barrel.

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