* Stocks hit as Middle East unrest feared
* Oil gets boost, Treasuries and gold too
(Adds U.S. midday trading)
By Al Yoon
NEW YORK, Jan 28 (Reuters) - Crude oil prices surged,
stocks fell around the world and the dollar gained on Friday as
images of street battles in Egypt riveted investors and raised
concerns the protests will intensify and spread across the
Middle East.
President Hosni Mubarak imposed curfews across Egypt as
media coverage of growing unrest further unsettled global
financial markets where investors had been accelerating moves
into riskier assets. Stock selling snowballed as video footage
of street battles with Egyptian police and security forces
blanketed television and the web.
"The crisis in Egypt as well as the significance of a
government shutting down the Internet for the entire country is
causing major nervousness in market participants that have been
long equities in front of the weekend," said Linda Raschke, a
partner with Chicago based brokerage firm FuturePath Trading.
"There is a flight to dollars as well as a flight out of
equities. The major benefiting market to the upside is crude
oil, capitalizing on the implications for regional
instability," she added.
U.S. crude oil prices surged more than 4 percent.
Traditional safe-haven investments U.S. Treasury debt, gold
and Swiss francs benefited from the sudden shift in market
sentiment. Gold prices jumped 2.5 percent.
"Gold is benefiting more than bonds at this particular
point," said Frank McGhee, head precious metals trader of
Integrated Brokerage Services in Chicago. "People are looking
at gold as a safe haven in times like this, and it's certainly
showing it."
On Wall Street, shares fell from 29-month highs and the
CBOE Volatility Index, or VIX <.VIX>, a broad measure of market
anxiety, soared more than 22 percent.
Disappointing results by high-profile companies including
Amazon.com and Ford Motor Co added to the negative sentiment
from the turmoil in Egypt.
Energy stocks declined despite the surge in oil prices as
uncertainty over the weekend developments in Egypt and anemic
growth in Chevron's <CVX.N> oil reserves kept investors
jittery.
The Dow Jones industrial average <> dropped 141.45
points, or 1.18 percent, to 11,848.38. The Standard & Poor's
500 Index <.SPX> slid 18.39 points, or 1.42 percent, to
1,281.15 and the Nasdaq Composite Index <> declined 65.57
points, or 2.38 percent, to 2,689.71.
"The market response to earnings in Microsoft, Amazon and
Ford is disappointing," said Peter Boockvar, equity strategist
at Miller Tabak & Co in New York. "Then you throw in Egyptian
riots possibly spreading... we're going into a weekend where
anything is possible in Egypt," he said.
In commodities, U.S. light sweet crude oil <CLc1> rose
$3.64, or 4.25 percent, to $89.28 per barrel, and spot gold
prices <XAU=> rose $29.64, or 2.26 percent, to $1,340.70.
Benchmark 10-year Treasury note yields dropped 0.05
percentage point to 3.34 percent.
The political unrest overshadowed economic data in the U.S.
that showed the nation's recovery was on track.
Though growth fell short of expectation, U.S. gross
domestic product data for the final quarter of 2010 showed the
biggest gain in consumer spending in more than four years with
strong exports offering the clearest signals yet that a
sustainable recovery is under way.
The market was buffeted as Ford <F.N> tumbled after
reporting a steep drop in its quarterly profit after a charge
for debt payments. Ford shares fell more than 12 percent and
rival automaker General Motors Co <GM.N> lost 5.4 percent.
"Ford results were pretty ugly," said James Dailey,
portfolio manager of TEAM Asset Strategy Fund in Harrisburg,
Pennsylvania. Ford shares had risen almost 12 percent from the
start of January to the Thursday close.
Amazon.com Inc's <AMZN.O> revenues missed expectations late
Thursday. Shares of the online retailer fell 8.6 percent.
In Europe, the FTSEurofirst 300 index <> of leading
European shares fell 0.95 percent, falling into the close of
trading as unrest in Egypt boosted worry about the Suez Canal,
crucial to Europe's imports of oil and Asian goods.
Asia's Japan's Nikkei average <> ended down 1.1
percent -- still weighed by a sovereign debt rating downgrade
-- while the MSCI world equity index <.MIWD00000PUS> dropped
1.3 percent.
Emerging market stocks <.MSCIEF> fared worse, falling 1.5
percent.
Israeli ADR's tumbled, as the country is the most liquid
market within the Middle East and potentially faces the biggest
security threat from Middle East instability. The BNY Mellon
index of leading Israeli ADRs <.BKIL> slid 2.3 percent.
In currencies, the dollar was up against a basket of major
trading-partner currencies, with the U.S. Dollar Index <.DXY>
up 0.55 percent at 78.157. The euro <EUR=> was down 0.87
percent at $1.3607.
"If the Mubarak government falls, the next few days could
see some heavy U.S. dollar and Swiss Franc safe-haven buying,"
said Joseph Trevisani, chief market analyst at FX Solutions in
Saddle River, New Jersey.
Against the Japanese yen, the dollar <JPY=> declined 0.93
percent at 82.09 yen.
(Additional reporting by Ellen Freilich, Rodrigo Campos and
Chuck Mikolajczak in New York, and Doris Frankel in Chicago;
Editing by Leslie Adler)
