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CORRECTED-GLOBAL MARKETS-Oil surges, stock futures slip after attack on Saudi facility

Published 16/09/2019, 01:21 pm
© Reuters.  CORRECTED-GLOBAL MARKETS-Oil surges, stock futures slip after attack on Saudi facility
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(Correct milestone for oil prices in first paragraph from six-month to four-month)

* Oil prices surge on fears of global supply disruption

* Safe haven gold, Japanese yen rise, stock futures slip

* Japan markets closed for public holiday, liquidity seen thin

By Swati Pandey

SYDNEY, Sept 16 (Reuters) - Oil prices surged to four-month highs on Monday while Wall Street futures fell and safe-haven bets returned after weekend attacks on Saudi Arabia's crude facilities knocked out more than 5% of global oil supply.

U.S. crude futures CLc1 were last up 11% at $61.10 a barrel, coming off highs on expectations other global oil suppliers would step in to lift output. Brent crude LCOc1 soared 13% at $68.06 after earlier rising to $71.95.

Yemen's Iran-backed Houthi rebel group had claimed responsibility for the attack, which hit the world's biggest oil-processing facility but a senior U.S. official told reporters on Sunday that evidence indicated Tehran was behind it. attacks heightened investor worries about the geopolitical situation in the region and worsening relations between Iran and the United States.

Those fears powered safe-haven assets, with prices for gold XAU= climbing 1% in early Asian trade to $1,503.09.

Moves in Asian share markets were small, however, with Japan shut for a public holiday.

MSCI's broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS was a tick lower at 515.4. Australian shares were down 0.1% while South Korea's KOSPI .KS11 was a tad higher.

E-Minis for the S&P 500 ESc1 were off 0.4% while those for the Dow 1YMc1 eased 0.3%. risk appetite collapses due to fears of worsening middle east tensions in the wake of any retaliation to the drone attacks, some emerging markets could face a double whammy of pressures," said Mitul Kotecha, Singapore-based senior emerging markets strategist at TD Securities.

"In Asia, the most risk sensitive currencies are Indian rupee INR=D3 , Indonesian rupiah IDR=D3 and Philippine peso PHP=D3 ."

BONDS AND CURRENCIES

Among major currencies, the Saudi news pushed the yen JPY= up 0.4% to 107.64 per dollar while the Canadian dollar CAD=D3 rose 0.5% in anticipation of higher oil prices.

The euro EUR=D3 was little moved near a three-week top while the pound GBP=D3 hovered near Friday's two-month highs. That left the greenback down 0.15% at 98.105 against a basket of six major currencies .DXY .

The risk-sensitive Australian dollar was down 0.5% against the yen AUDJPY= , snapping nine straight days of gains. The kiwi dollar NZDJPY=R slipped to a one-week low on the yen.

"One immediate question this (attack) poses for bond markets is whether a further rise in the inflation expectations component of bond yields - which have proved historically sensitive to oil prices - will give this month's sharp bond market sell-off fresh impetus," said NAB analyst Ray Attrill.

"Or will safe haven considerations dominate to drive yields lower? Watch this space."

In early Asian trading, futures for U.S. 10-year Treasury notes TYv1 rose 0.3%, indicating yields may slip when cash trading begins. bonds were sold off last week, sending yields higher, led by a broader risk rally on hopes the United States and China would soon end their long trade war. Better-than-expected U.S. retail sales data also boosted sentiment.

Chinese data for industrial production, retail sales and fixed asset investment will be released later on Monday, which could help set the tone for this week.

Investors also await the outcome of the U.S. Federal Reserve's policy meeting on Wednesday at which it is widely expected to ease interest rates and signal its future policy path. FEDWATCH

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Editing by Sam Holmes)

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