June 16, 2014 / 3:35 PM / in 3 years

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

3 Min Read

* Global equity markets slip on Iraqi worries
    * Crude near 9-month highs on fears of Iraq impact
    * Bond prices rise on Iraq safety buying

 (Adds opening of U.S. markets, changes dateline; previous
    By Herbert Lash
    NEW YORK, June 16 (Reuters) - Oil prices rose on Monday
after advances by Sunni insurgents in Iraq raised concerns over
potential disruption to crude supplies, while the Iraqi violence
and renewed tensions in Ukraine drove a shift into safe-haven
currencies and bonds.
    Fighting in Iraq and Ukraine damped global equity markets,
even though merger activity offset some declines on Wall Street.
    Investor unease hit the Nikkei early in the day when
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 reduced
supplies to Ukraine on Monday after Kiev failed to meet a
deadline to pay off 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 0.14 percent. The FTSEurofirst 300 index of top
European shares pared some losses but was still down 0.35
    The Dow Jones industrial average fell 40.52 points,
or 0.24 percent, at 16,735.22. The Standard & Poor's 500 Index
 was down 3.29 points, or 0.17 percent, at 1,932.87. The
Nasdaq Composite Index was down 9.91 points, or 0.23
percent, at 4,300.74. 
    Brent crude for August delivery was up 54 cents at
$113.00 a barrel. U.S. oil was up 7 cents at $106.98 a
    The yen and the Swiss franc rose, with the Japanese currency
hitting a four-month high against the euro as investors sought
safety from Iraq and a gas dispute between Russia and Ukraine.
    The dollar slipped as traders await for clues from the U.S.
Federal Reserve on the timing of an interest rate increase amid
doubts about the economic recovery.
    The dollar fell 0.16 percent to 101.89 yen, while the
euro fell to a four-month low against the yen before paring much
of its decline, last at 138.17 yen in U.S. trading.
    The dollar and euro were also weaker against the Swiss
franc, another safe-haven currency, trading at 0.8977 francs
 and 1.2176 francs respectively.
    U.S. Treasuries prices rose as Iraq and Ukraine increased
demand for safe-haven bonds, though solid U.S. economic data
limited gains.
    Benchmark 10-year notes were last up 3/32 in
price to yield 2.5934 percent.

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

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