adminBrent crude oil steadied above $109 a barrel after climbing more than a dollar in the previous session. Prices have surged over five percent since 16 December.
European shares dropped 0.4 percent .FTEU3 and Asian stocks also slipped, pushing the MSCI world equity index .MIWD00000PUS down 0.25 percent on the day.
“The only way Iran would actually close Hormuz is when it is attacked and war breaks, but such a possibility appears low as no country would want to take the risk when growth worldwide was likely to slow down,” said
Naohiro Niimura, a partner at research and consulting firm Market Risk Advisory Co.
But he added the tensions would be a major source of volatility in 2012 along with the eurozone debt crisis. He expected Brent to trade between $105-$110 in 2012.
MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.9 percent, keeping it on course for a 2011 loss of 18 percent, underperforming a 12 percent decline in European shares .FTEU3 and a 9 percent drop in world stocks.
Japan’s Nikkei stock average .N225 ended down 0.2 percent, on track for a 17.6 percent drop this year.
The euro held above an 11-month low against the dollar, with thin year-end trade set to keep the common currency subdued ahead of Italian debt sales.
Rome will sell up to 9 billion euros of six-month treasury bills and 2.5 billion euros of two-year zero coupon bonds later. Demand from domestic banks was expected to ensure a smooth auction, albeit at a high cost.
It faces the more difficult task of selling long-term debt today when there will be a greater reliance on international investors to buy 8.5 billion euros of paper with maturities of up to 10 years.
The euro stood at $1.3063, holding above its 11-month trough of $1.2945 hit earlier this month. Safe-haven German Bund futures were barely changed.
The eurozone must clear several hurdles including a wall of debt auctions, pressing on with tighter common fiscal standards and building a meaningful firewall around its bond market before it can hope to regain market confidence about its ability to contain the debt crisis.
Italy faces around 150 billion euros of debt refinancing in February-April alone. Latest figures showed banks deposited a record 452 billion euros ($538 billion) at the European Central Bank, showing no sign that interbank lending is reviving.
In the United States, fresh data suggested the economy was on track for moderate recovery, with improving labour market conditions lifting US consumer confidence to an eight-month high in December although US single-family home prices fell more than expected in October. — Reuters.
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