By Saikat Chatterjee
HONG KONG, Feb 25 (Reuters) - Oil stabilised on Friday after
a sharp reversal from a 2-1/2 year peak overnight, calming
concerns that a surge in prices would hurt economic recovery.
Brent oil prices vaulted more than 7 percent to
almost $120 before pulling back on rumours that Libyan leader
Muammar Gaddafi had been shot and on Saudi Arabia's reassurances
that it could counter Libyan supply disruption. .
The pullback in oil, underpinned late gains in U.S. stocks
and caused shares in Asia's key markets to find their feet after
a steady decline earlier this week.
Japan's Nikkei average rose for the first time in
four days while Seoul shuffled up, drawing support from
Wall Street's overnight bounce.
"The Nikkei may bounce back today after oil stopped its
advance, but the dollar/yen rate will hold the key to gains,"
said Kazuhiro Takahashi, general manager at Daiwa Securities
Capital Markets.
"But with many economic indicators out next week from the
U.S. and ahead of the weekend, which will probably bring more
clues about the Libyan situation, investors won't take too many
risks," Takahashi said.
The S&P 500 recovered from early lows following the
retreat in oil but was down 2.7 percent for the week after sharp
gains in crude prices this week cast doubt on the strength of
the U.S. economic recovery.
The broader Asia-ex Japan stocks stabilised
near 1-1/2 month lows.
In the currency markets, the dollar stayed above a record
low against the Swiss franc after suffering heavy losses
overnight as investors sought safety in other currencies,
fearing the unrest in Libya could spread to other oil producers.
It has fallen nearly 4.8 percent against the franc in the
last two weeks, its worst showing since June.
Meanwhile, the euro held near three-week highs, helped by
more hawkish comments from European Central Bank officials with
ECB policymaker Axel Weber saying the only direction for
interest rates to go is up. .
Other ECB officials recently talked tough about fighting
inflation, reinforcing market view that the ECB will raise
interest rates before the U.S. Federal Reserve.
Gold, another safe-haven, consolidated around $1,400 an
ounce as safe-haven buying dried up after the rally in oil
fizzled.
U.S Treasuries consolidated overnight gains in Asian time,
with ten-year yields falling to 3.45 percent.
(Additional reporting by Antoni Slodkowski in TOKYO and Ian
Chua in SYDNEY; Editing by Tomasz Janowski)
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