* Obama says Osama bin Laden killed in shootout
* Stocks rise, bonds fall, dollar off 3-year lows
* Percpetion bin Laden death reduced security risk
* News provides reason to reduce extended positions
* Trade choppy with many Asian centres shut for holidays
SYDNEY, May 2 The dollar rebounded from
three-year lows and U.S. crude slid more than 1 percent on
Monday after news al Qaeda leader Osama bin Laden was killed in
a firefight with U.S. forces reduced the perception of security
risks facing the United States.
The news appeared to have provided a reason for investors to
unwind extended positions in many assets, including very short
dollar positions in holiday-thinned Asian trade.
Earlier, investors had a taste of how vulnerable overbought
assets can be to a sudden sell-off when silver dropped 10
percent after hitting a record high last week and the Australian
dollar slumped nearly a full cent after reaching a post-float
peak of $1.1011 .
U.S. President Barack Obama said the Al Qaeda leader was
killed in a firefight with U.S. forces and his body was
U.S. stock index futures SPc1 added to gains, Japan's
Nikkei average rose 1.4 percent on the day, while U.S.
Treasury prices fell.
Many Asian markets including China, Hong Kong, Singapore and
Thailand were shut for public holidays, leaving MSCI's gauge of
Asian stocks excluding Japan up a mere 0.2
"By lowering national security risks overall, this is likely
to bolster equity markets and lower U.S. Treasury prices in a
reverse flight to quality movement," said Mohamed El-Erian,
Chief Executive Officer and Co-Chief Investment Officer at
PIMCO, which oversees $1.2 trillion in assets.
"Oil markets are likely to be the most volatile given their
higher sensitivity to the tug of war between lower risk overall
and the possibility of isolated disturbances in some parts of
the Middle East and central Asia," he said.
U.S. crude CLc1 fell more than 1 percent to a session low
of $112.21, retreating from a 31-month peak of $114.18 set on
The dollar index , which tracks its performance
against a basket of major currencies, jumped from a three-year
low of 72.813 to 73.227.
U.S. Treasury yields pushed higher across the curve with the
10-year rising to 3.308 percent from a six-week
trough of 3.273 percent.
Meanwhile, silver was nursing heavy losses after skidding
about 10 percent to a low of $42.58 . It last stood at
$44.64, off a record high of $49.51 set last week. Gold fell to
$1,548 from an all-time high of $1,575.79.
Still, once the dust settles, analysts expect the recent
trends including a weak U.S. dollar and higher commodity prices
to resume, especially given that the U.S. Federal Reserve in no
hurry to tighten its ultra-loose monetary policy.
"The economic data in the U.S. is still going to be on the
soft side and the market is going to keep a lid on yields and
that is going to help push down the dollar," said Joseph
Capurso, strategist at Commonwealth Bank.
Some were also sceptical of whether bin Laden death would
reduce the security risks facing the United States.
"It doesn't change much about the energy situation and
doesn't change much about the ongoing battle with radical
Islamists," said Chip Hanlon, president of Delta Global Advisors
"It's sort of like the news when we heard Saddam (Hussein)
was caught, in the end it didn't change much fundamentally and I
don't think this will either."
(Reporting by Ian Chua in Sydney and Jennifer Ablan in New
York; Editing by Neil Fullick)