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GLOBAL MARKETS-Investors seek safety in bonds, yen after Turkey downs Russian jet

Published 24/11/2015, 11:40 pm
© Reuters.  GLOBAL MARKETS-Investors seek safety in bonds, yen after Turkey downs Russian jet
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* Low-risk bond yields fall after Turkey downs Russian jet

* Turkish, Russian assets fall

* U.S. travel warning hit European tourism-linked stocks

* Wall Street expected to open lower

By Nigel Stephenson

LONDON, Nov 24 (Reuters) - Investors sought safety in low-risk government debt on Tuesday after Turkish jets shot down a Russian warplane near the Syrian border, while European tourism-linked stocks fell after a U.S. travel warning due to "increased terrorist threats".

It was the first time a NATO member's armed forces had shot down a Russian or Soviet military aircraft since the 1950s. Russia said its plane had been downed over Syria. urn:newsml:reuters.com:*:nL8N13J14S

The dollar fell against the traditionally safe-haven Japanese yen and Swiss franc, helping push oil and metals prices higher.

Wall Street looked set to follow European shares lower ESc1 1YMc1 , according to index futures.

Yields on 10-year U.S. Treasuries US10YT=RR hit a three-week low at 2.21 percent and two-year German yields DE2YT=TWEB dipped below -0.4 percent for the first time.

Turkish shares .XU100 fell 1.4 percent and the lira TRYTOM=D3 lost 1 percent against the dollar. Russian stocks .MCX .IRTS and the rouble RUB= also fell.

The prospect of escalating tension between the former Cold War foes gave an additional push lower to German yields. Two-year debt last yielded -0.39 percent, having earlier hit a record low of -0.401 percent. Ten-year Bund yields DE10YT=TWEB fell 3.5 bps to 0.5 percent.

Brent crude LCOc1 rose 53 cents to $45.36 a barrel, also lifted by Saudi Arabia's pledge on Monday to work towards a stabilisation of oil prices.

The pan-European FTSEurofirst 300 index .FTEU3 fell 1.3 percent. The early damage was down by a 10 percent fall in Zodiac Aerospace ZODC.PA after the company reported a 44.6 percent fall in annual earnings.

Travel and leisure stocks .SXTP were under pressure after the U.S. State Department warned U.S. citizens of the risk of worldwide travel posed by what it called increased terrorist threats. ID:nL1N13I2IM

"Investors should stay cautious in the near-term as the threat of terror attacks are spreading to other parts of the world. The U.S. travel alert further highlights investors' caution. These concerns could have a further negative impact on fresh travel bookings," said Koen De Leus, senior economist at KBC, in Brussels.

Budget airline easyJet EZJ.L lost 2.9 percent, British Airways owner IAG ICAG.L fell 3.3 percent and tour operator TUI TUIT.L dropped 2.5 percent.

In Asia, MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS wavered in and out of positive territory, and was last down 0.1 percent.

Japan's Nikkei .N225 ended a choppy session with a 0.2 percent gain, after being closed on Monday for a holiday.

China's Shanghai Composite index .SSEC closed up 0.2 percent while the CSI300 .CSI300 ended almost flat.

The dollar .DXY dipped 0.2 percent against a basket of currencies, having hit an eight-month peak on Monday on expectations of an imminent rise in U.S. interest rates.

YEN, SWISS FRANC SOUGHT

The euro was up 0.1 percent at $1.0644, having fallen as low as $1.0592 on Monday, the yen was up 0.2 percent at 122.56 per dollar and the Swiss franc was up 0.1 percent at 1.018 per dollar.

"(An) intensification (of tension) could at least prompt some lightening up of long dollar bets and support traditional safe havens like yen," said Josh O'Byrne, strategist at Citi.

Gold XAU= rose 0.3 percent to $1,074.75 an ounce but near a 6 1/2-year low hit last week. Platinum XPT= hit its lowest since December 2008 at $831.80 and was last at $842 per ounce.

Copper CMCU3 rose 0.4 percent to $4,507 per tonne but, along with aluminium, lead and nickel, remained close to multi-year lows, weighed down by the prospect of higher U.S. interest rates and ebbing Chinese demand. ID:nL3N13J23O

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