GLOBAL MARKETS-Stocks tumble, oil surges on Yemen air strikes
(Adds Wall Street drop, latest prices) * Stocks fall in America, Europe and Asia * Oil rises on fears of Middle East supply disruption * Dollar retreats versus yen, euro * Gold tops $1,200 an ounce By Michael Connor NEW YORK, March 26 (Reuters) - Stock markets around the world were knocked lower and oil prices jumped as much as 6 percent on Thursday after Saudi Arabia and its allies carried out air strikes in Yemen that also stung the dollar. Key indexes on Wall Street, which had already been declining this week on fears U.S. economic growth may be slowing, were down as much as 1 percent in early trading, while the Japanese yen and the Swiss franc rose against the dollar. The MSCI world equity index, which tracks shares in 45 countries, was last off 0.9 percent. "The air strikes in Yemen have really created a risk-off mood," said Rabobank strategist Philip Marey. Brent oil was last at $58 a barrel, up nearly 3 percent but off peaks hit of nearly $60. U.S. crude was up 1.6 percent at $50 a barrel after reaching $52.48. In the currency markets, the dollar fell against traditional safe havens the Swiss franc and the yen after warplanes from Saudi Arabia and other Arab countries struck Shi'ite Muslim rebels fighting to oust Yemen's president, and bombed the airport at the capital Sanaa in a move seen as a bid to check Iranian influence in the region. The dollar was also down against the euro but recovered in early New York trading on the view central bank policy was more favorable for the dollar. The euro was off 0.55 percent at $1.0911. Iran denounced the attacks as the Saudi military also targeted the Iran-backed Houthi rebels besieging the southern Yemen city of Aden. Arab producers ship oil via the narrow Gulf of Aden before heading to the Suez Canal and Europe. A vertiginous slide in oil prices, from more than $115 a barrel last June to a low of $45 in January, has been a major driver of financial markets in the past year and a key factor driving global interest rates down and stock markets up. U.S. and European shares followed Asian stocks lower. The pan-European FTSEurofirst 300 index was down 1.3 percent. In Germany, a major industrial economy heavily dependent on oil imports, the DAX index was down 1 percent. Wall Street's Dow Jones industrial average was last down 107.31 points, or 0.61 percent, to 17,611.23, the S&P 500 lost 11.86 points, or 0.58 percent, to 2,049.19 and the Nasdaq Composite dropped 38.27 points, or 0.78 percent. Gold rose, climbing roughly 1 percent to $1,206 an ounce , supported by the weak dollar and Middle East tensions. Yields on German government bonds, the benchmark for euro zone borrowing costs, nudged lower, though the prospect of more expensive oil sparking inflation limited falls. Ten-year Bunds yielded 0.222 percent, down fractionally on the day. Prices of U.S. Treasuries, which are often a safe haven for fretting investors, dipped on Thursday before a scheduled sale of $29 billion of Treasury notes. Demand was weak on Wednesday at an auction of five-year notes. (Additional reporting by Marc Jones and Nigel Stephenson in London,; Shinichi Saoshiro in Tokyo, Henning Gloystein in Singapore and Alistair Smout, John Geddie and Patrick Graham in London; Editing by John Stonestreet, Susan Fenton and James Dalgleish)
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