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GLOBAL MARKETS-Oil surges, bonds gain on Turkey-Russia tensions

Published 25/11/2015, 05:37 am
© Reuters.  GLOBAL MARKETS-Oil surges, bonds gain on Turkey-Russia tensions
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* Dow, S&P 500 trade higher with energy shares

* Oil prices jump

* Low-risk bond yields fall after Turkey downs Russian jet

* U.S. travel warning hits tourism-linked stocks (Updates prices, adds U.S. shares higher)

By Caroline Valetkevitch

NEW YORK, Nov 24 (Reuters) - Oil prices jumped and government debt prices also rose on Tuesday after Turkish jets shot down a Russian warplane near the Syrian border, adding to worries about tensions in the Middle East.

The S&P 500 erased early losses to trade higher by afternoon as energy shares rallied, while the dollar fell against the traditionally safe-haven Japanese yen, helping to push gold higher.

Travel and leisure stocks fell after the U.S. State Department late Monday warned U.S. citizens of the risk to worldwide travel posed by what it called increased terrorist threats. ID:nL1N13I2IM

Shares of United Continental UAL.N , American Airlines AAL.O and Delta Air Lines (N:DAL) DAL.N all were lower.

The warplane incident 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

"This has really gotten investors' attention," said Jack Ablin, chief investment officer at BMO Private Bank in Chicago. "Investors are worried that tensions could escalate."

Oil prices hit two-week highs, with Brent futures LCOc1 up more than 3 percent at $46.30 a barrel and U.S. crude CLc1 also up more than 3 percent at $43.05. urn:newsml:reuters.com:*:nL3N13J0V1

The Dow and S&P 500 were higher as energy shares jumped following oil's rally. The S&P energy index .SPNY was up 2.4 percent.

The Dow Jones industrial average .DJI rose 52.91 points, or 0.3 percent, to 17,845.59, the S&P 500 .SPX gained 4.63 points, or 0.22 percent, to 2,091.22 and the Nasdaq Composite .IXIC added 1.96 points, or 0.04 percent, to 5,104.44.

The MSCI index of global stock markets .MIWD00000PUS was flat, paring earlier losses, while a broad gauge of European stocks .FTEU3 ended down 1.3 percent. urn:newsml:reuters.com:*:nL8N13J4JU

Turkish shares .XU100 dropped as well, while the prospect of escalating tension between the former Cold War foes gave an additional push lower to German yields.

In U.S. Treasuries trading, the 30-year yield hovered near 3 percent, while benchmark 10-year Treasury notes US10YT=RR were up 5/32 in price to yield 2.232 percent. urn:newsml:reuters.com:*:nL1N13J18H

DOLLAR FALLS

The dollar index .DXY , which measures the dollar against six major world currencies, fell 0.2 percent. urn:newsml:reuters.com:*:nL1N13J1BK Against the Japanese yen JPY= , the currency fell to 122.44 yen, off 0.4 percent.

Gold rose, recovering from near six-year lows after news of the plane's downing. Spot gold XAU= peaked at $1,080.51 and was up 0.7 percent at $1,077.30 an ounce. urn:newsml:reuters.com:*:nL3N13J2NO

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