NEW YORK: World stocks tumbled on Tuesday as revolt in Libya drove crude prices to 30-month highs and rekindled fears of slower global growth if the unrest spreads to other major oil suppliers in the region.
Crude prices surged in New York and London, where prices for North Sea Brent touched $108.57 a barrel before trimming gains after Saudi Arabian Oil Minister Ali al-Naimi said the Organization of the Petroleum Exporting Countries would meet any supply shortages. For details seen
Libya declared force majeure on all oil product exports as political violence shut more than 13 percent of the country's 1.6 million barrels per day of crude production.
The Swiss franc, traditionally sought in times of heightened geopolitical tension, firmly gained against the euro as concerns about oil supplies cooled risk appetites and sent investors into safe-haven assets such government debt.
Libya's leader Muammar Gaddafi vowed to die in Libya as a martyr and said he would crush a revolt which has seen eastern regions already break free from his rule.
Libya ranks third in Africa after Nigeria and Angola in oil production and investors are concerned that the spread of violence in North Africa and the Middle East might disrupt the supply of oil exports from the region.
US crude for March delivery, which expires at the end of the session, rose $7.13 to $93.34 a barrel. The more actively traded April contract gained $5.27 to trade at $94.98 a barrel.
"The major underlying fear in the market is that these protests spread in the region to even larger producers like Saudi Arabia," said Andy Lebow, a trader at MF Global in New York. "While that might not look likely right now, even a hint of real problems there could send prices vertical."
Global stocks, as measured by MSCI's all-country world index , fell 1.5 percent and much of Wall Street fell 2 percent before the benchmark S&P 500 pared some losses.
Higher oil prices hit certain stocks on concerns of higher fuel costs. The Arca airline index fell 5.1 percent.
Still, US consumer confidence rose to a three-year high in February, but a drop in home prices for the sixth month in a row in December suggested the economy still faces significant hurdles.
The Dow Jones industrial average was down 170.40 points, or 1.38 percent, at 12,220.85. The Standard & Poor's 500 Index was down 25.30 points, or 1.88 percent, at 1,317.71. The Nasdaq Composite Index was down 66.74 points, or 2.36 percent, at 2,767.21.
The price of the 30-year US Treasury bond rose more than a full point and the benchmark 10-year rose nearly a full point as the unrest in Libya prompted investors to swap riskier assets for safe-haven bonds.
The 10-year US Treasury note was up 29/32 in price to yield 3.47 percent, while the 30-year bond last traded 1-10/32 higher in price to yield 4.61 percent.
Gold fell back below $1,400 an ounce as bullion investors took profits from the previous session's safe-haven rally.
Spot gold prices fell $6.25 to $1,399.70 an ounce.
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