Stocks rattle, oil soars as tensions mount in the Middle East

NEW YORK: Global equity markets slid on Wednesday as U.S. President Donald Trump warned Russia that missiles "will be coming" in Syria after a suspected chemical attack, and oil hit its highest since 2014 after Saudi Arabia said it intercepted an air strike over Riyadh.

The fallout from new U.S. sanctions on Moscow have rattled investors and fears of military action were stoked after one of Russia's ambassadors reiterated it would shoot down any U.S. missiles fired at Syria.

Trump, who has criticized Russia for standing by Syrian President Bashar al-Assad, shot back in a message on Twitter on Wednesday.

"Russia vows to shoot down any and all missiles fired at Syria. Get ready Russia, because they will be coming, nice and new and 'smart!'," he wrote in the post. "You shouldn't be partners with a Gas Killing Animal who kills his people and enjoys it!"

In response, Russia's Foreign Ministry said in a Facebook post that "smart missiles should fly towards terrorists, not towards the lawful government".

The Dow Jones Industrial Average fell 129.86 points, or 0.53 percent, to 24,278.14, the S&P 500 lost 5.99 points, or 0.23 percent, to 2,650.88 and the Nasdaq Composite  added 8.66 points, or 0.12 percent, to 7,102.96.

Facebook and Netflix helped to pare losses in the S&P 500 and Nasdaq.

Facebook Inc shares were up 1.5 percent as Chief Executive Mark Zuckerberg gave a second day of testimony before the U.S. Congress. Netflix shares climbed more than 3 percent following a Goldman Sachs target price increase $60 above Wall Street's median price target of $300.

The pan-European FTSEurofirst 300 index lost 0.60 percent and MSCI's gauge of stocks across the globe  shed 0.16 percent.

Emerging market stocks rose 0.14 percent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.04 percent higher, while Japan's Nikkei lost 0.49 percent.

"It feels like there are expectations that the U.S. is going to take some action against Syria," said Phil Blancato, chief executive of Ladenburg Thalmann Asset Management in New York. "The market, I don't believe, has priced one yet."

Investors' nerves were rattled just a day after worries  eased on a more conciliatory tone on trade between Trump and Chinese President Xi Jinping.

Meanwhile, oil prices hit their highest in more than three years after Trump's latest comments despite bearish inventory numbers.

U.S. crude rose 2 percent to $66.82 per barrel and Brent was last at $72.07, up 1.45 percent on the day.

Oil prices began to climb on Trump's warning over Syria, then rallied further on a report that Saudi Arabia's air defense forces intercepted a missile over Riyadh, the capital.

The dollar fell against the yen, hitting a two-week low over lingering worries of a trade war with China and domestic scandals swirling around Trump.

The dollar index fell 0.08 percent, with the euro  up 0.12 percent to $1.2369.

The Japanese yen strengthened 0.33 percent versus the greenback at 106.85 per dollar, while Sterling was last trading at $1.4183, up 0.08 percent on the day.

The Russian ruble slumped as much as 2.5 percent against the dollar and even more versus the euro.

In metals, aluminum prices extended their rally to a sixth straight session, hitting an 11-week peak amid persistent worry about shortages after the United States imposed sanctions on Russia's Rusal.

Spot gold added 1.2 percent to $1,355.21 an ounce. U.S. gold futures gained 1.00 percent to $1,359.30 an ounce as safe-haven demand sharpened.

Palladium, which has also benefited from expectations that sanctions on Russia could hurt supply, rose further after climbing nearly 6 percent in the past two days.

Some metals entered the red. The London Metal Exchange and the CME Group said they were taking action to restrict aluminum brands of Rusal, one of the world's biggest producers, on their exchanges.

"There's a lot of panic and uncertainty. Buyers are scrambling to try to replace where they can, to plug the gap left by not having Russian-origin metal," said Robin Bhar, head of metals research at Societe Generale in London.

U.S. Treasury yields edged higher after slipping on U.S. consumer price data that reinforced expectations the Federal Reserve will raise interest rates at a gradual pace.

Benchmark 10-year notes last rose 2/32 in price to yield 2.7899 percent, from 2.797 percent late on Tuesday.