* Some profit taking to blame, with equities near recent
highs
* Commodity-related stocks outperform as oil prices squeeze
higher
* Brent oil is on the cusp of $100/barrel
* Egypt effect on commodities compounds fears of inflation
in emerging markets
(Adds quote, updates prices)
By Kevin Plumberg
HONG KONG, Jan 31 (Reuters) - Brent oil futures climbed near
$100 a barrel and Asian stocks fell on Monday, hurt by fears
that deadly protests in Egypt may foment unrest throughout the
Middle East and choke oil supplies, accelerating a move out of
riskier assets.
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 bedevilled by high food and fuel prices and some
developed economies have been gaining momentum.
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, suggesting that investors
would take a wait-and-watch approach to the Middle East.
"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."
The U.S. dollar, yen and Swiss franc, which all strengthened
against the euro 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, fund
tracker EPFR Global said in a note.
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 finished 1.2 percent
lower, and at one point hit its lowest since early December.
The MSCI Asia Pacific ex-Japan stock index
fell 1.1 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 banks were closed 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."
Egypt controls the Suez Canal and the Suez-Mediterranean
(SUMED) Pipeline, which between them moved more than 2 million
barrels per day (bpd) of crude and oil products in 2009.
Some analysts believe the selling of risky assets in
emerging Asia will subside rather quickly because of the
region's relatively superior fundamentals, particularly when it
comes to credit markets.
"Asia will begin to decouple very quickly and even in the
Middle East will start distinguishing between names. People will
start looking to go long the risk and some of these trades will
begin unwinding soon," said Vijay Chander, credit strategist
with Standard Chartered Bank.
In the currency market, the euro was largely stable at
$1.3610. 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 later this week.
Gold and other precious metals are traditionally seen as
safe havens at times of geopolitical uncertainty. Spot gold has
been under pressure though because growing optimism about the
U.S. recovery reduced the need for havens.
Gold was at $1,335 per ounce , just above a four-month
low of $1,308 on Friday.
(Additional reporting by Jennifer Ablan in NEW YORK, Adrian
Bathgate in WELLINGTON and Umesh Desai in HONG KONG; Editing by
Alex Richardson)
