The Telegraph
Since 1st March, 1999
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Across-the-globe anxiety

London, Jan. 27 (Reuters): Stock markets across Asia, Europe and the US quivered as anxiety over the threat of a US-led war against Iraq swept the globe. The dollar also took a hit while oil prices held steady and safe-haven government bonds rose.

European shares tumbled to their lowest levels in almost six years as large investors dumped chunks of their equity holdings. The FTSE Eurotop 300 index was down 3.07 percent at 1320 GMT and the narrower DJ Euro STOXX 50 index was off 3.25 per cent, off the day’s lows.

“Relative valuations are irrelevant, no one wants to put money into equities until George W. Bush decides whether or not the US is going to war with Iraq,” said Stuart Fraser, a European fund manager at Standard Life Investment.

Stocks languished in negative ground on Wall Street with the blue-chip Dow losing 1 per cent at one point, as chief UN inspector Hans Blix said Iraq cooperated in providing inspectors with access but seems“not to have genuinely accepted disarmament demands.”

Blix, whose team spent two months hunting for evidence of banned weapons of mass destruction in Iraq, was in the midst of offering a highly anticipated briefing on Iraq to the Security Council. His report comes a day before President George W. Bush’s State of the Union speech, in which Bush will try to rebuild foreign support for a potential war on Iraq as well as answer growing doubts from the US public.

The blue-chip Dow Jones Industrial average fell 47 points, or 0.59 per cent, to 8,081, after losing more than 1 per cent minutes earlier. The broad Standard & Poor’s 500 index lost 4 points, or 0.52 per cent, at 856. The technology-loaded Nasdaq Composite Index eased 2 points, or 0.19 per cent, to 1,339.

“The markets are experiencing extreme volatility,” said John Person, head financial analyst at Infinity Brokerage Services.

Asian shares also fell on Monday. Tokyo’s Nikkei closed down 1.4 per cent and the broader TOPIX index ended down 1.32 per cent. The broad Morgan Stanley Asia Pacific Free Index closed down 1.18 per cent. The euro extended last week's gains to reach its highest against the dollar for more than three years. Sterling also hit a three-year high against the greenback, which fell to a new four-year low against the Swiss franc.

Oil was little changed Brent crude for March delivery was 13 cents lower at $30.36 a barrel and U.S. light crude was 24 cents down at $33.04 a barrel.

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