* New Zealand dollar jumps the most in four months after
* Brent, U.S. crude hit highest since September
* Treasury yields fall after auction, extend slide on Iraq
* U.S. shares fall, but energy stocks up
(Updates to U.S. market close)
By Rodrigo Campos
NEW YORK, June 12 Crude oil prices hit a
nine-month high on Thursday on supply concerns and equities sold
off as violence threatened stability in Iraq.
Crude jumped after Iraqi Kurdish forces took control of the
northern oil hub of Kirkuk, in the face of a triumphant Sunni
Islamist rebel march towards Baghdad that threatens Iraq's
future as a unified state. President Barack Obama did not rule
out U.S. action against the militants.
Brent crude futures rose 3 percent to $113.27 a
barrel while U.S. crude added 2.2 percent to $106.71, the
highest reading for both since September. The Thomson
Reuters/Jefferies CRB index rose 1.1 percent, the most
in two months.
"If this conflict knocked out Iraq as an exporter, that
would have significant impact on prices," said Christopher
Bellew, a trader at Jefferies Bache. Iraq is the second-largest
On Wall Street, stocks fell on caution over Iraq after
drifting lower on weaker-than-forecast retail sales and an
increase in first-time applications for unemployment benefits.
Energy shares, however, were higher on the heels of the jump
in oil prices.
"It's a bit of a crisis mode here," said Timothy Ghriskey,
chief investment officer at Solaris Asset Management LLC in New
York. "Geopolitical concerns have definitely taken over. It's a
very fluid situation and things are happening very fast, it
The Dow Jones industrial average fell 109.69 points
or 0.65 percent, to 16,734.19, the S&P 500 lost 13.78
points or 0.71 percent, to 1,930.11 and the Nasdaq Composite
dropped 34.30 points or 0.79 percent, to 4,297.63.
The FTSEurofirst 300 index of top European shares
closed flat, just off the 6-1/2 year high of 1,398.65 hit
earlier this week. A global stocks index from MSCI
fell 0.3 percent.
The New Zealand dollar jumped the most in four months to hit
its highest since mid-May after the central bank raised interest
rates and kept a hawkish bias. The kiwi
surged 1.65 percent to $0.8691.
The soft U.S. data, alongside growing geopolitical risk,
dampened speculation of a more hawkish stance from the Federal
Reserve, scheduled to meet next week. Fed Chair Janet Yellen was
expected to be pressured on the timeline for rate hikes in a
press conference on Wednesday.
The euro is, however, set to post its fifth week of losses
versus the dollar in the last six.
The shared currency was recently up 0.2 percent at $1.3561.
It earlier hit a low of $1.3510, near the low of $1.3503
hit last Thursday after the European Central Bank cut rates.
In fixed income, the violence in Iraq drove investors into
U.S. Treasuries that had inched up in price after the soft data.
A robust auction of 30-year bonds also helped push prices
higher as it eased concerns about fading demand for long-term
U.S. government paper.
U.S. 10-year notes were up 15/32 in price to
yield 2.5861 percent, from 2.641 percent late on Wednesday. The
30-year bond rose 1-4/32 to yield 3.4084 percent.
(Reporting by Rodrigo Campos, additional reporting by Angela
Moon, Gertrude Chavez-Dreyfuss and Lorenzo Ligato; Editing by
Nick Zieminski, Meredith Mazzilli and Chizu Nomiyama)