* Japan's Nikkei down 1.6 pct as equities sold broadly
* Commodity-related stocks outperform as oil prices squeezed
higher
* Brent oil is on the cusp of $100/barrel
* Egypt effect on commodities compounds fears of inflation
in emerging markets
(Updates prices)
By Kevin Plumberg
HONG KONG, Jan 31 (Reuters) - Brent crude futures climbed
near $100 a barrel on Monday and Asian stocks fell, hit by fears
of unrest throughout the Middle East sparked by deadly protests
in Egypt.
More than 100 people have been killed during six days of
protests in Egypt aimed at toppling President Hosni Mubarak.
A wider conflagration in the region could threaten the flow
of oil at a time when policymakers in emerging markets are
already bedeviled by high food and fuel prices and some
developed economies are gaining momentum.
"To the extent that the instability continues, investor
reaction will most likely push oil and Treasury bond prices
higher, and global equities lower." Mohamed El-Erian, co-chief
investment officer at bond giant PIMCO, told Reuters.
"The situation in Egypt is very fluid."
For now, investors watched closely for any sign of growing
instability in the Middle East. U.S. S&P 500 futures were up 0.2
percent after Wall Street closed down 1.8 percent on
Friday, while U.S. Treasury futures were flat on the day.
The U.S. dollar, yen and Swiss franc, which all gained on
Friday in reaction to the escalating Egyptian situation were
largely stable, with protesters in Cairo camped out and calling
for Mubarak to step down after 30 years of rule.
The prospect of more expensive energy bills in high growth
emerging markets added to unease about rising inflation among
investors, who had last week pulled money out of developing
equity markets for the first time in more than a month.
Emerging Asian currencies, down broadly on Monday, will be
tested this week ahead of Lunar New Year holidays, with focus on
inflation data from Indonesia, South Korea and Thailand due on
Tuesday.
Japan's Nikkei share average was down 1.2 percent,
at one point hitting its lowest since early December 2010.
Japan's biggest gas and oil developer Inpex Corp
gained 2.7 percent in heavy trade, becoming the second biggest
gainer on the Nikkei.
The MSCI Asia Pacific ex-Japan stock index
fell 1 percent, with selling scattered across the consumer
discretionary, industrial and materials sectors.
Stocks in Indonesia and the Philippines were the hardest
hit, with benchmark indexes falling 2.1 and 2.6 percent,
respectively. These markets were among last year's biggest
gainers in Asia and the latest bout of risk reduction has made
investors more willing to take profits.
Egyptian markets and bankers were shuttered on Monday.
OIL HEADS TO $100
U.S. crude for March delivery was trading at around
$90 a barrel after hitting a high of $90.87 a barrel early in
the session. Focus would likely be on Brent futures though,
where the lead month contract was trading just shy of $100 a
barrel .
"For the global economy, Egypt is less important, though it
does matter for access to the Suez Canal, a key oil distribution
route," ANZ Bank economist Sharon Zollner said in a note to
clients.
"The greater fear is that the turmoil could spread to other
Middle East countries, including even Saudi Arabia. If that
happens, then all bets on oil prices are off."
In the currency market, the euro was largely stable at
$1.3605. The euro has rallied for three weeks and risen to
two-month highs, though the Egyptian turmoil as well as risks
surrounding a European Central Bank meeting on Thursday may
press it against major support at $1.3535 this week.
Gold and other precious metals are traditionally seen as
safe havens at times of geopolitical uncertainty. Spot gold was
steady in early trade at $1,339 per ounce as more
investors saw it as relatively cheap after the metal touched a
near four-month low on Friday.
(Additional reporting by Jennifer Ablan in NEW YORK and Adrian
Bathgate in WELLINGTON; Editing by Alex Richardson)
