* Asian monetary policy not excessively loose - IHS
* Saudi Arabia markets tumble on geopolitical concerns
* Precious metals, bonds gain on safe-haven demand
By Saikat Chatterjee
HONG KONG, March 2 (Reuters) - Oil vaulted over $116 per
barrel on Wednesday on concerns that escalating tensions in
Libya would spread in the Middle East and disrupt fuel supplies.
Brent crude's dizzying 15 percent jump in less than
two weeks has fanned worries about a stifling impact on the
economic recovery, sending investors out of stocks into
relatively safe assets such as gold and government bonds.
Though Asian stocks have reacted to swings in oil, markets
have been largely resilient compared with January's selloff when
investors dumped shares due to inflationary concerns.
While oil's jump has put monetary policy behind the curve in
some countries, many central banks in Asia have already
tightened considerably since the recovery began, so policy is
not excessively loose in the region, IHS Global Insight said.
Shares in Tokyo and Hong Kong tumbled more
than 1 percent following Wall Street's slide overnight and as
the CBOE Volatility Index VIX , Wall Street's so-called
fear gauge, jumped sharply.
Yahoo Japan was the notable outperformer with
shares surging by 4.3 percent to 32,500 yen after sources said
Yahoo Inc is in advanced talks to wind down its joint
venture in Japan with Softbank Corp .
"The market is volatile as oil's persisting gains and civil
unrest in the Middle East is negatively affecting investor
sentiment," said Lee Sun-yeb, a market analyst at Shinhan
Investment Corp.
"But as long as we do not see the turmoil spreading to other
countries within the region, current volatility will be
contained and will eventually recover," Lee added.
The broader MSCI index of Asia ex-Japan stocks
was down more than 1 percent, after a 2 percent
fall in February.
Markets will keenly watch developments in the Middle East,
especially Saudi Arabia, where stock markets tanked by nearly 7
percent on Tuesday and CDS spreads jumped. .
GOLD, BONDS GAIN
U.S. Treasuries, a safe-haven asset, paused after recent
hefty gains with ten-year yields stabilising at 3.40
percent, well below a peak of 3.74 percent hit last month.
Japanese government bonds rose, with futures snapping a
three-day losing streak. .
Gold held just below a record high of $1,434 an ounce
while spot silver hit a 31-year high. .
In the currency markets, the euro dipped slightly
after failing to break through a key resistance level, though
further declines for the common currency may be limited a day
before a European Central Bank meeting.
Given euro zone inflation holding well above the ECB's
target, markets expect the central bank to ramp up its
anti-inflation talk with Bernanke's comments reinforcing market
speculation that the ECB would raise rates before the Fed.
In Asian FX, the won was among the biggest
underperformers with the stock market working through a major
support level.
The New Zealand dollar fell sharply after Prime
Minister John Key said he expects the Reserve Bank of New
Zealand (RBNZ) will cut interest rates next week after the
devastating earthquake in Christchurch.
The Aussie/kiwi was last at NZ$1.3594, after
hitting a high of NZ$1.3667 , levels not seen since
August 1992.
(Additional reporting by Jungyoun Park in Seoul, Mantik
Kusjanto in Wellington and Krishna Kumar in Sydney; Editing by
Daniel Magnowski)
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