Tuesday, January 3, 2012

GLOBAL MARKETS-Euro makes shaky start, oil spikes on Iran tension

SINGAPORE (Jan 3): The euro languished near a decade low against the yen on Tuesday as the trading year began with no relief in sight for the European debt crisis, and U.S. crude jumped 1.5 percent to above $100 a barrel on escalating tensions between Iran and the West.

Asian shares rose, led by gains for the materials sector, with mining heavyweights BHP Billiton and Rio Tinto both up more than 1.5 percent.

MSCI's broadest index of Asia Pacific shares outside Japan rose 0.5 percent. Stock indexes in Australia and South Korea both rose more that 1 percent.

Japanese markets were closed for a holiday.

The euro bought around 99.50 yen, having fallen as low as 98.71 in the previous session, its lowest since late 2000.

Against the dollar, the euro was steady at $1.2935, but within striking distance of its 2011 trough of $1.2856 hit last week.

"(The euro) ended last year on a downtrend, breaking key levels. Through much of last year, people were surprised how well it held up," said Greg Gibbs, a strategist at RBS.

"Eventually it started to fall... and that will make the market more sceptical over it and hence it's probably going to look a bit soggy at the start of the year."

Oil rose after Iran said it had test-fired two long-range missiles, a display of military muscle flexing in the face of mounting Western pressure over its nuclear programme.

The move stoked fears of supply disruptions in the Strait of Hormuz, through which 40 percent of world oil is shipped, and pushed U.S. crude up 1.5 percent to around $100.35 a barrel. - Reuters

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