* FTSEurofirst tracks Asian stocks lower
* Brent\WTI spread narrows; traders still eye $100/bbl
* Euro, short-dated German bonds get inflation boost
* Egypt protests continue, more than 100 dead
By Simon Jessop
LONDON, Jan 31 (Reuters) - Global shares continued to slide
on Monday, while Europe's benchmark Brent crude was just short
of $100 a barrel on fears political unrest in Egypt could spread
among regional oil-producing nations.
Protests to end the 30-year rule of President Hosni Mubarak
continued over the weekend, heightening risk aversion for
European investors already concerned by the effect their own
region's sovereign debt crisis and inflation could have on
growth.
"Whilst Egypt's importance to the global economy is limited,
its importance to the transportation of oil is huge," said
Jonathan Sudaria, night dealer at London Capital Group.
"Traders are concerned that with already rising inflation
and falling real incomes for consumers, a further rise in energy
prices could really dampen any consumer confidence and prospects
for growth."
Benchmark Brent crude <LCOc1> had come off slightly to trade
down 0.5 percent at $98.86 a barrel by 1143 GMT, after hitting a
28-month high on Friday, while benchmark U.S. crude <CLc1>
futures were flat.
OPEC Secretary General Abdullah al-Badri said on Monday the
group would boost supplies if needed, but he did not expect the
Egypt troubles to hit supplies via the country.
"Brent almost touched $100 and then kind of pulled back a
bit on profit taking but those are the fears that are keeping
prices well supported," said Amrita Sen, analyst at BarCap.
Egypt remained the "primary factor" in the oil markets,
added David Land, chief market analyst at CMC Markets,
particularly what it could mean "in terms of stability for such
a vital region for energy production", he added.
The Middle East and North African region produces more than
a third of the world's oil supply.
Protests in Egypt follow the Jan. 14 collapse of the
Tunisian government, and there are fears similar unrest could
topple other autocratic states, including in the oil- and
gas-rich Gulf.
Protest-contagion fears and risk aversion pushed European
shares <> down as much as 1 percent, with some traders
taking the opportunity to book profits, before losses were
pared. At 1200 GMT, the index was down 0.5 percent.
U.S. stock futures <DJc1><NDc1><SPc1> are flat to 0.2
percent higher after Friday's biggest one-day loss in six
months, but investors remain cautious about political risk.
Elsewhere, the MSCI world equity index <.MIWD00000PUS> and
Thomson Reuters global stock index <.TRXFLDGLPU> were both down
around 0.3 percent, while emerging stocks <MSCIEF> were down 0.9
percent.
Egypt's stock exchange was closed on Monday as a result of
the protests, while, adding to Cairo's financial woes, ratings
agency Moody's downgraded the country's debt rating on concern
the Mubarak regime may spend more to placate protesters.
Overnight in Asia, the Nikkei share average <> had
ended down 1.2 percent while the MSCI Asia Pacific ex-Japan
stock index fell 1.1 percent.
Among commodities, spot gold <XAU=> fell after posting its
largest daily gain in eight weeks on Friday, while copper <MCu3>
rose 1 percent and other base metals also gained on
short-covering ahead of a week-long Chinese holiday.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Egypt protest intensifies, Mubarak turns to army []
Brent closes in on $100 on Egypt unrest []
TAKE-A-LOOK-Egypt's unprecedented protests []
Reuters Insider link: Volatility Soars on Egypt
http://link.reuters.com/kyd77r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
BUNDS, EURO HIGHER
The euro and short-dated German bonds yields both got a
boost from news euro zone inflation had risen more than expected
in January, fuelling expectations for an interest rate rise.
Consumer price inflation in the 17-nation euro area rose 2.4
percent year-on-year in January, well above the European Central
Bank's target to keep it below, but close to 2 percent.
"(The inflation data) is arguably in the price but as it
edges further away from the ECB target it will keep the market
focused upon inflation concerns," said Richard McGuire, a rates
strategist at Rabobank.
Along the curve, the prospect of further turmoil in the
Middle East continued to underpin bond market sentiment.
Also supportive was a report the European Union may extend
Greek and Irish bailout loans to 30 years, in an attempt to end
the sovereign debt crisis. []
In currency markets, the euro <EUR=> rose 0.5 percent
against the dollar after the inflation data, helping counter
Friday's slide on the back of safe-haven flows to the greenback
and Swiss franc.
"(European Central Bank President Jean-Claude) Trichet has
warned of a hump in inflation, this data shows a rise in
inflation and the market has reacted to it," said Kit Juckes,
currency strategist at Societe Generale.
"Important though Egypt is, the troubles there were more a
catalyst for a correction in risk appetite rather than the onset
of risk aversion," he added.
Technical support for the euro is seen near $1.3570,
although spreading protests and a higher oil price would
"probably spark more short-term flows into the dollar", said
Karl Olsson, currency strategist at SEB in Stockholm.
The dollar was down 0.3 percent against a basket of major
currencies <.DXY> by 1214 GMT.
(Additional reporting by Joanne Frearson, Alejandro Barbajosa,
Emelia Sithole-Matarise and Jessica Mortimer, Jessica
Donati-Bourne; editing by Stephen Nisbet)
