Oil soars, Asia stocks tumble on Libya violence

HONG KONG – Oil surged to a more than two-year high and Asian stocks slumped on Tuesday as the political crisis in Libya worsened amid reports of escalating violence against pro-democracy demonstrators.

The Nikkei also took a beating after ratings agency Moody’s said it had lowered its outlook on Japan’s sovereign debt due to concerns the government would not be able to bring it under control.

And Wellington’s stock market also suffered a sell-off after New Zealand’s second city Christchurch was hit by a deadly earthquake that toppled buildings and ignited fires.

On oil markets Brent North Sea crude for delivery in April jumped $1.21 to $106.95 per barrel, its highest since 2008, while New York’s main contract, light sweet crude for March, surged $6.45 to $92.65.

Investors bought up the black gold amid growing concerns over supply from the oil-rich Middle East and North Africa region.

Gunfire rattled the Libyan capital Tripoli Monday as protesters attacked police stations as well as offices of the state broadcaster and set government buildings on fire.

The violence came amid reports that government gunmen were “firing indiscriminately” at the demonstrators in the capital’s Tajura district.

Human Rights Watch said at least 233 people had been killed since Thursday in the protests that have been inspired by uprisings in neighbouring Egypt and Tunisia.

Uprisings have taken place across the region, including Iran, Yemen and Morocco.

Demonstrators also overran several Libyan cities as leader Moamer Kadhafi denied Monday he had fled the country he has ruled for four decades.

And Bahrain said Monday it was no longer hosting the 2011 season-opening Formula 1 Grand Prix after mounting fatalities from pro-democracy protesters clashing with police.

“Rising violence in Libya and Bahrain are providing support to oil prices, with geopolitics a key focus of the market currently,” said Barclays Capital in a report.

Tokyo slumped 1.92 percent after Moody’s cut its outlook on Japan to “negative”, saying Tokyo’s policy may not be strong enough to contain the industrialised world’s biggest debt.

The agency previously held a “stable” outlook on the nation’s “Aa2” rating, the third highest on a scale of 19, and analysts said the outlook change would likely lead to a downgrade.

It follows rival agency Standard & Poor’s decision to cut Japan’s rating for the first time since 2002, accusing the government of lacking a “coherent” strategy to ease its mountainous debts.

Hong Kong tumbled 1.52 percent, Shanghai was 0.42 percent off, Sydney fell 0.64 percent and Seoul dived 2.22 percent.

“International turmoil in the Middle East and the Dow being closed for an extra day has seen European markets lead the way with falls (Monday) and that is affecting sentiment,” Craigs Investment Partners broker Bryon Burke told Dow Jones Newswires in New Zealand.

US markets were shut Monday for Presidents’ Day.

Wellington fell 0.92 percent after Christchurch was hit by a magnitude 6.3 quake, leading to reports of multiple deaths and buildings toppling over. The tremor, which comes after powerful quake in September, forced the evacuation of the city centre and the temporary closure of the main airport.

The single European currency slipped in morning Tokyo trade as investors grew more risk averse.

The euro fell to $1.3604, down from 1.3681 in late London trade while it tumbled to 112.98 yen from 113.75 yen. The dollar eased to 83.06 yen from 83.14 yen.

The Middle East troubles also led traders into the safe haven gold, which jumped to $1,409.00-$1,410.00 an ounce in Hong Kong, up from Friday’s close of $1,396.50-$1,397.50.