World markets hit by Egypt unrest
Published 31/01/2011 | 10:59
The escalating political unrest in Egypt took its toll on global markets today as oil prices pushed higher and shares in the travel sector slumped.
As thousands of Egyptians defied a curfew last night and continued their protests, investors pulled cash out of riskier investments and turned to safer bets such as gold and the US dollar, Swiss franc and Japanese yen.
While Egypt's own stock market was shut amid the turmoil, London's FTSE 100 Index was down nearly 1pc, following declines on Asian and Middle Eastern markets.
The price of Brent crude in London was just below 100 US dollars a barrel, while the New York-listed price stood near 90 US dollars a barrel on fears that protests in the city of Suez - at the mouth of the strategic canal, a key route for tankers - could interrupt the flow of oil.
Tens of thousands of protesters have been demonstrating across Egypt for seven days in a row, calling for the resignation of President Hosni Mubarak, who has maintained a tight group on power for 30 years.
Michael Hewson, analyst at CMC markets, said, if tensions continued to escalate, gold, the US dollar and Swiss franc would be the most likely beneficiaries of flight away from riskier assets.
Mr Hewson said New York oil prices could soon push past the 100 US dollars-a-barrel mark.
He added: "With the US having to play a canny political game given Egypt's unique geopolitical location, the outcome of the events playing out over the next few days could well resonate for months to come."
In London, shares in Thomson Holidays owner TUI Travel and rival Thomas Cook were down more than 2pc and 4pc respectively as the tour operators started to cancel flights to the Egyptian city of Luxor.
British Airways parent International Consolidated Airlines was down more than 2%.
Escalating oil prices were not enough to overcome investors' concerns over supply disruptions - as the Suez Canal and Suez-Mediterranean pipeline are major conduits for Persian Gulf oil to reach Europe and North America.
Sentiment in the oil sector was weakened, with FTSE 100 firms such as BP, Tullow Oil and Cairn Energy all lower.