* 96 pct of U.S. Gulf of Mexico oil production closed
* Worries about slower global tech spending hurts stocks
* South Korea won plunges with market in panic
(Updates prices, adds Shanghai market action, quote on Korea)
By Kevin Plumberg
HONG KONG, Sept 1 (Reuters) - Oil rose above $116 a barrel
on Monday, as a quarter of U.S. crude production was shuttered
because of Hurricane Gustav, while Asian stocks were stung by
slumping technology shares.
Gustav was expected to strike land west of New Orleans, on
the Louisiana coast, only days after the sombre anniversary of
Hurricane Katrina's devastation in 2005, though the storm was
not expected to strengthen significantly once it made landfall.
[]
South Korea's won fell sharply against the U.S. dollar as
dealers panicked about the potential for foreign investors to
bail out of their domestic debt investments because of
deteriorating conditions in Asia's fourth-largest economy.
The dollar rose broadly, extending last month's biggest
rally in more than a decade, on the view the U.S. economy is
likely to recover more quickly than other major economies that
are probably still shrinking. The dollar's rally was striking
since it took place with oil prices also rising, which showed
the crude market's singular focus on Gustav.
"This is definitely a dangerous storm but I think most of
the market is in a wait-and-see mode," said Gerard Burg, a
commodities analyst at National Bank of Australia in Melbourne.
"Investors are a lot more cautious now given the general
bearish sentiments in the market."
The October U.S. light crude contract climbed 94 cents to
$116.38 a barrel, though was only $5 from an August low. U.S.
markets are closed on Monday for a holiday.
Japan's Nikkei stock index <> fell 1.7 percent,
weighed by shares of tech companies such as TDK Corp <6762.T>
and electronics parts maker Kyocera Corp <6971.T>.
Stark comments about slowing global demand for technology
from the world's second-largest computer maker Dell Inc
<DELL.O>, which knocked U.S. stocks lower on Friday, dealt a
blow to a sector whose valuations have been among the hardest
hit by the bear market.
Outside of Japan, Asia-Pacific stocks <.MIAPJ0000PUS> were
down 2.2 percent, eyeing August's lows.
The Shanghai composite index <> in China dropped 2.6
percent on pessimism about the outlook for corporate earnings,
extending its year-to-date fall to 53 percent.
South Korea's KOSPI <> fell 3.3 percent to the lowest
since March 2007, led by shares of Samsung Electronics Co Ltd
<005930.KS> and LG Corp <003550.KS>.
WON SUFFERS BIG LOSSES
The Korean won lost about 2 percent to 1,111.90 per dollar
<KRW=>, the weakest since November 2004, despite countless
times the Bank of Korea has defended its currency this year.
The country's markets entered September in a severe mood
given the unusually high amount of won-denominated bonds
maturing in September held by foreign investors. The fear is
that they may take their money and walk, rather than rolling
over the debt.
"This is more to do with the market panicking about what
may happen and also the market is increasingly convinced
intervention cannot be as aggressive as it was in previous
months.
There's a perception the Bank of Korea is running out of
ammunition," said David Mann, head of research, Korea and
foreign exchange strategist with Standard Chartered in Hong
Kong. "We're not expecting this to last for very long... The
worst point will be over the next few weeks rather than the
next few months."
Investors pulled money out of funds across the board last
week, though financial sector funds attracted new money,
according to EPFR Global, a Boston-based firm that tracks $10
trillion in assets.
Fund outflows from 17 of the 24 equity, sector and fixed
income groups watched by EPFR totaled $7.6 billion.
All emerging market fund groups recorded outflows last
week, with money leaving emerging market equity funds for the
11th time in the last 12 weeks.
"Appetite for exposure to emerging markets has been eroded
by a sharp correction in commodity prices during the third
quarter of 2008, a string of downward revisions to economic
growth forecasts and painfully high inflation rates in several
key markets including Russia, India, South Africa and
Argentina," the firm said in a research note released over the
weekend.
The dollar strengthened against both major and emerging
market currencies, ahead of a busy week of central bank
meetings, including the European Central Bank, the Bank of
England and the Reserve Bank of Australia.
The euro was down 0.4 percent at about $1.4637 <EUR=>, on
its way to testing a six-month low around $1.4570 hit last
week.
The dollar was largely unchanged against the yen, at 108.42
yen <JPY=>.
Sterling fell 0.5 percent to $1.8040 <GBP=> after Britain's
finance minister told a newspaper the country's economic
downturn might turn out to be the worst in 60 years.
[]
(Additional reporting by Fayen Wong in PERTH; Editing by Jean
Yoon)
