The Telegraph
Since 1st March, 1999
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Stocks rebound, wait for next move on Iraq

London, Jan. 28 (Reuters): Stocks rebounded, safe haven gold lost its lustre, oil prices rose while the dollar steadied on Tuesday as markets round the globe nervously looked to US President George W. Bush's State of the Union address for the next move in the Iraq crisis.

Risk-haven government bonds rose after earlier falls and gold, another safe haven in turbulent times, was down but off session lows ahead of the US market opening.

In Europe gold headed lower after hitting a six-year high of $ 372.60 an ounce on Monday. Spot gold was last at $ 366.75 an ounce, compared with Monday’s New York close at $ 369.20, as a firmer dollar and gains in stock markets prompted profit-taking.

The fear of war, which has overhung markets for months, weighed on Asian shares. In Tokyo, the Nikkei stocks index fell 0.98 per cent on Tuesday as electronics company Fujitsu Ltd reported a net loss.

However, US stocks rose on Tuesday after a better-than-expected read on consumer confidence and reassuring outlooks from heavyweights like Merck & Co. Inc. boosted investor enthusiasm ahead of a key speech from President George W. Bush.

The blue-chip Dow Jones Industrial average climbed 80 points, or 1.01 per cent, to 8,070. The broad Standard & Poor's 500 index gained 8 points, or 1.02 per cent, to 856. The tech-loaded Nasdaq Composite Index climbed 9 points, or 0.70 per cent, to 1,334. The dollar held nervously a cent above a three-year low against the euro. It was last at $ 1.0802 per euro after falling on Monday to lows beyond $ 1.09.

Oil prices rise

Oil prices rose after Iraq said it could retaliate against its crude-producing neighbour Kuwait if US troops attacked from there. Brent crude for March delivery was 33 cents higher at $ 30.19 a barrel and US light crude was up 39 cents at $ 32.68.

Sensex recovers

In Mumbai, the sensex recovered by 20.13 points to close at 3267.84 at the stock exchange today, rallying smartly from intraday lows of 3209.51 following fresh buying from foreign funds, leading to short-covering by operators, despite the continuing Iraqi standoff. Short-coverings by operators, two days ahead of the settlement of the derivative segment, contributed considerably to the rise in equity prices, truncating a string of three-session consecutive sharp losses.

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