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* 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 European outlook)
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 slammed by
slumping technology shares.
European share market futures <STXEc1> pointed to a lower
open, with special attention on the bank industry after
Commerzbank <CBKG.DE> agreed to buy Dresdner Bank from Allianz
<ALVG.DE> in a $14.5 billion deal. []
Hurricane 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, meanwhile, 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 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 99 cents to
$116.45 a barrel, though was only $5 from an August low. U.S.
markets are closed on Monday for a holiday.
A 4.1 percent drop on South Korea's benchmark KOSPI stock
index <> to the lowest since March 2007 led the region
lower. Shares of Samsung Electronics Co Ltd <005930.KS> and LG
Electronics <066570.KS> were the biggest drags on the index.
The Korean won lost about 2.5 percent to 1,116.00 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 sombre mood
given the unusually high amount of won-denominated bonds
maturing in September held by foreign investors. The fear is
that investors 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.
"The worst point will be over the next few weeks rather
than the next few months," he said.
FUND REDEMPTIONS
Japan's Nikkei stock index <> finished the day down
1.8 percent, with shares of electronics parts maker Kyocera
Corp <6971.T> the heaviest weight.
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> fell
almost 2.5 percent to their lowest level since March 2007.
The Shanghai composite index <> in China tumbled 3.2
percent on pessimism about the outlook for corporate earnings,
extending its year-to-date fall to just over 50 percent.
Investors last week pulled $7.6 billion out of 17 of the 24
equity, sector and fixed income groups watched by EPFR Global,
a Boston-based firm that tracks $10 trillion in assets.
Financial sector funds were one of the few that attracted new
money.
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 $1.4640 <EUR=>, on
its way to testing a six-month low around $1.4570 hit last
week.
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 Dhara
Ranasinghe)
