By Dow Jones Business News,
June 20, 2014, 12:28:00 PM EDT
By Josie Cox
Escalating tensions in Iraq remained the key focus of European markets Friday, luring investors to assets perceived
to be safe--an urge that helped gold to its biggest daily gain in nine months in the previous session.
On Thursday, U.S. President Barack Obama ordered up to 300 members of U.S. special-operations forces to Iraq, while
ruling out immediate airstrikes against Sunni extremists and stepping up the pressure on Baghdad to form a government
that bridges the country's ethnic and religious divisions.
Gold rose 0.4% to hit $1,318.80 an ounce in late European trade, marking a price increase of almost 6% since the
start of June. Brent crude was little changed at $114.90 a barrel but is also up more than 5.5% over the same period.
"The stakes are high for the oil market," Barclays analysts wrote in a note. "Supply is currently constrained, with
Libyan production set to be offline for a while and Iran's sanctions-restricted barrels likely to be slow to return to
Citigroup strategists, meanwhile, said that the longer the Iraq insurgency lasts and the more divisive it becomes,
the more difficult it will be for Iraq to even approach its potential to sustain production at six million barrels a day
This, they said, would have "radical implications for oil markets at a time of growing lost production world-wide
due to intensifying disorder in more petroleum-producing countries."
If the rally continues, it could also start to have implications for currency markets, said Colin McLean, the chief
executive of Edinburgh-based investor SVM Asset Management. "Countries that are particularly dependent on energy imports
are particularly vulnerable," he said.
Meanwhile, Russia started massing troops near its border with Ukraine again, the North Atlantic Treaty Organization
Moves in equity markets were largely subdued Friday, with investors consolidating Thursday's gains following
reassurance from the U.S. Federal Reserve that it isn't about to raise interest rates.
Fed Chairwoman Janet Yellen reiterated Wednesday that interest rates would stay low for a relatively long time,
even though she also provided an upbeat assessment of the outlook for the world's largest economy.
The Stoxx Europe 600 ended the session flat, while the U.K.'sFTSE 100 added 0.3%. Germany's DAX closed 0.2% lower.
In the U.S., by contrast, the Dow Jones Industrial Average was on track for a sixth straight gain in late European
trade. The S&P 500 added 0.3%. Thursday marked the 44th straight day the S&P 500 closed up or down less than 1%, the
longest stretch since 1995.
Notable gainers in Europe included Shire, which rose more than 16% after the U.K. drug maker rebuffed an offer from
U.S. rival AbbVie Inc.AbbVie said Friday that Shire had rejected three cash and share proposals made to the board, with
the latest valued at GBP46.26($78.83) for each Shire share, for a total value of $46.35 billion.
Currency markets ended the week largely quiet too.
Having lost ground over the previous two sessions, the dollar was broadly flat against the euro Friday, at $1.3584.
On Thursday, the euro hit a 10-day high against the greenback.
Sterling remained a whisker above $1.70. It has held firm since Bank of England Governor Mark Carney last week said
that a rise in interest rates may come sooner than markets have been expecting. On Wednesday, minutes from the latest
policy-setting meeting showed that some members of the Monetary Policy Committee were "surprised" by the low probability
investors attached to a shift in interest rates this year.
Write to Josie Cox at firstname.lastname@example.org
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