By Nick Macfie
SINGAPORE, Feb 22 (Reuters) - Oil prices rose and Asia stock
prices fell on Tuesday as markets anxiously watched the
unfolding crisis in Libya, with investors turning to safe haven
gold which in turn pushed up silver to its highest level in 31
years.
Brent crude oil futures rose by more than $2 to as high
as $108.18 per barrel, before giving up some of the gain, on
continued fears that violence in Libya could lead to wider
supply disruptions from the OPEC country.
Japan's Nikkei 225 index was down 1.96 percent
and the MSCI's index of Asia Pacific shares outside Japan
was off about 1.8 percent.
Moody's Investors Service changed the outlook on
Japan's Aa2 sovereign rating to negative from stable, warning
that government policies may not be enough to rein in public
debt.
"The market is not reacting much to the decision," said
Takeshi Shibasaki, chief financial analyst at Mizuho
Securities. "Standard and Poor's has already cut Japan's rating,
and separately there already were expectations among
participants that Moody's would do something."
European stocks lost more than 1 percent on Monday on a
combination of fears over Libya, where Muammar Gaddafi faced a
mounting revolt against his 41-year rule, signs of imminent
interest rate rises and more evidence of a poor earnings season.
U.S. markets were closed Monday for a holiday.
The U.S. dollar edged up against a basket of major
currencies, although the Australian dollar eased and could
suffer further declines as mounting tension in the Middle East
drives investors to cut risk.
Dealers said thin trading due to the U.S. holiday kept
markets subdued overnight, although this was punctured in early
Asian trade by a flurry of activity as the dollar surged some 30
pips against the yen to 83.50 , followed by a hasty
retreat back to 83.16.
Traders said there was some confusion about what triggered
the move, with some saying it was a miscommunication on the
execution of the trade and others saying it was an attempt to
break the 114.00 barrier for euro/yen .
The euro traded at $1.3676 , continuing to struggle
after failing to hold above $1.3700. The single currency also
lacked the vigour to break above key resistance after Germany's
main ruling party suffered a crushing defeat at a regional
election in the city-state of Hamburg on Sunday.
Brent crude for April delivery stood at $106.86
per barrel. On Monday, it had hit a two-and-a-half year high for
any nearby month of $108.70. The unrest in Libya shut down 6
percent of oil output in Africa's No.3 producer and prompted a
number of energy firms to pull out international staff, sending
Brent oil prices above $105 a barrel.
Libyan forces loyal to Gaddafi, the world's
second-longest-serving ruler after the Sultan of Brunei, have
fought an increasingly bloody battle to keep him in power with
residents reporting gunfire in parts of the capital Tripoli and
one political activist saying warplanes had bombed the city.
Security forces had killed dozens of protesters across
the country, human rights groups and witnesses said, prompting
widespread condemnation from world leaders.
Gold, a traditional refuge in times of tumult,
extended gains and rose to its highest in seven weeks, lifting
silver to its strongest level since 1980.
Spot gold rose $3.75 to $1,409.70 an ounce, its
highest in seven weeks, but soon drifted back into negative
territory. Silver jumped above $34 an ounce, its highest
since 1980.
New Zealand's quake-ravaged Christchurch city was struck by
a second major tremor in five months on Tuesday, causing
"multiple fatalities", police said.
News of the quake helped send the New Zealand dollar to
as low as $0.7541 , down about 1.2 percent from late
U.S. levels on fears the damage could dent confidence in the
already fragile economy. New Zealand's benchmark NZX 50 index
was down 0.9 percent.
(Additional reporting by Lewa Pardomuan in Singapore, Osamu
Tsukimori in Tokyo, Ian Chua in Sydney and John Gurr in
Wellington; Editing by Richard Borsuk)
