Crude oil prices jumped to a 30-month peak today as worries about supply disruption increased due to widening clashes in Libya, while world stocks fell on concern sustained high oil prices could hurt growth.
Unrest in the oil-rich Middle East stoked demand for precious metals, with gold - often sought in times of geopolitical tensions - rising close to a lifetime high at $1,434.82 an ounce, while silver surged to a 31-year peak.
The euro briefly reversed gains against the dollar and peripheral euro zone debt prices fell after Moody's cut its rating for Greece by three notches to B1 and kept it on review for further downgrades, although core German debt was little changed.
US crude oil futures jumped 1.6 per cent, topping $106, to their highest price in 30 months as a counter-offensive by Libya's Muammar Gadafy against rebels deepened fears that Africa's largest holder of oil reserves is headed for civil war.
US crude is up by more than a fifth in the last two weeks.
Investors are worried that a prolonged period of high oil prices could stifle economic growth and erode corporate profits, while adding to inflationary pressures.
The MSCI all-country world stock index was down 0.4 per cent, with European stocks weighing on the benchmark.
The FTSEurofirst 300 index of top European shares was 0.3 per cent lower, tracking falls in Asian equities overnight and after Wall Street ended lower on Friday, erasing last week's gains.
Japan's Nikkei average ended down more than 1 per cent while in Dublin, the Iseq index of leading shares was up 2.24 points to 2922.42 at 10am.
In currencies, the euro reversed early gains against the dollar after the Moody's action, but later rose to a four-month high of $1.4014 after breaking above resistance at $1.40 on Friday.
Some analysts said uncertainty about the euro zone's more indebted countries could hamper future gains by partially offsetting expectations of an interest rate hike from the European Central Bank.
US and German government bond prices were flat on the day, shrugging off Moody's rating decision on Greece.
Reuters
