GLOBAL MARKETS-Oil gains on Iraqi violence; bonds rise on safety bid

Mon Jun 16, 2014 4:40pm EDT

* Global equity markets slip on Iraqi worries
    * Crude near 9-month highs on fears of Iraq impact
    * Yen, Swiss franc rise as investors seek safety

 (Adds close of U.S. markets)
    By Herbert Lash
    NEW YORK, June 16 (Reuters) - Oil prices rose on Monday
after the Sunni insurgency in Iraq raised concerns over
potential disruption to crude supplies, while that violence and
renewed tensions in Ukraine drove buying of safe-haven
currencies and U.S. Treasury bonds.
    While the fighting in Iraq damped global equity markets, 
merger activity and strong U.S. economic data offset downward
pressure on Wall Street, where stocks closed slightly higher.
    Investor unease hit the Nikkei early in the day as
Tokyo suffered its biggest fall in a month, while European
shares were in the red for the third time in four days.
    Russian natural gas exporter Gazprom cut supplies
to Ukraine after Kiev missed a deadline to pay its gas debts in
a dispute that could disrupt supplies to the rest of Europe.
 
    "There was a reasonable flight-to-quality bid overnight with
the developments in Iraq and Gazprom, so global equities were
under a fair amount of pressure and that gave a bid to
longer-dated Treasuries," said Ian Lyngen, senior government
bond trader at CRT Capital in Stamford, Connecticut.
    MSCI's all-country world equity index edged
down 0.04 percent. The FTSEurofirst 300 index of top
European shares closed down 0.42 percent at 1,383.95.
    The Dow Jones industrial average closed up 5.27
points, or 0.03 percent, at 16,781.01. The S&P 500 rose
1.62 points, or 0.08 percent, to 1,937.78 and the Nasdaq
Composite added 10.452 points, or 0.24 percent, to
4,321.105.
    Argentina's Merval index fell 8.4 percent after the
U.S. Supreme Court declined to hear the country's appeal over
its battle with hedge funds that refused to take part in its
debt restructurings. The move risks sending Argentina into a
fresh sovereign default. 
    Brent crude for August delivery rose 48 cents to
settle at $112.94 a barrel. U.S. oil fell 1 cent to
settle at $106.90 a barrel.
    The yen and the Swiss franc rose, with the Japanese currency
hitting a four-month high against the euro as investors sought
safety.
    The dollar slipped as traders await clues from the U.S.
Federal Reserve on the timing of an interest rate increase amid
doubts about the economic recovery.
    The dollar fell 0.22 percent to 101.83 yen, while the
euro fell to a four-month low against the yen before paring much
of its decline. It was last at 138.18 yen.
    U.S. Treasuries prices rose as Iraq and Ukraine increased
demand for safe-haven bonds. Investors paid Germany and the
Netherlands to keep their cash for up to half a year in 
government tenders as the escalating Iraqi violence fueled flows
into top-rated assets.
    Benchmark 10-year Treasury notes rose 2/32 in
price to yield 2.5970 percent.
    

 (Reporting by Herbert Lash; Additional reporting by Marc Jones
in London; Editing by Dan Grebler and Nick Zieminski)