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While you were sleeping: Middle East concern lifts oil

27 Mar 15

Oil rose while stocks fluctuated after Saudi Arabia and its Arab Gulf allies began air strikes on Yemen, bolstering concern about disruption of supply.

Benchmark Brent climbed as much as 5.8 percent earlier, while West Texas Intermediate futures rallied as much as 6.6 percent.

"While thousands of barrels of oil from Yemen will not be noticed, millions from Saudi Arabia will matter," John Vautrain, who has more than 30 years of experience in the energy industry and is the head of Vautrain & Co, a consultant in Singapore, told Bloomberg. "Saudi Arabia has been concerned about unrest spreading from Yemen."

US equities pared earlier losses. In afternoon trading on Wall Street, the Standard & Poor's 500 Index was flat, while the Nasdaq Composite Index eked out a 0.03 percent gain. The Dow Jones Industrial Average was little changed.

Gains in Intel and those of Nike, last up 1.2 percent and 1.1 percent respectively, outweighed declines in shares of American Express and those of Cisco, down 2.1 percent and 1 percent respectively.

Meanwhile, the latest reports offered further signs of strength in the US jobs market. Jobless claims fell by 9,000 to a 282,000 in the seven days ended March 21, according to a Labor Department report. It was the lowest level in five weeks.

Separately, Markit said its preliminary purchasing managers index for the service sector climbed to 58.6 in March, the highest level since September, and up from 57.1 in February.

"The good news is that claims and the services sector data suggest the economy has gained some momentum heading into the second quarter," Ryan Sweet, a senior economist at Moody's Analytics in West Chester, Pennsylvania, told Reuters.

Indeed, St. Louis Federal Reserve Bank President James Bullard said US policy makers' removal of the reference to "patient" when it came to interest rates "should be interpreted as a sign of strength for the US economy."

"Now may be a good time to begin normalising US monetary policy so that it is set appropriately for an improving economy over the next two years," Bullard said in a speech in Frankfurt, Germany. "Even with some normalisation, policy will remain exceptionally accommodative."

In Europe, the Stoxx 600 Index finished the session with a 0.9 percent slide from the previous close. Germany's DAX dipped 0.2 percent, while France's CAC 40 Index gave up 0.3 percent, and the UK's FTSE 100 Index slid 1.4 percent.

UK stocks were hit by falling techs as well as London Stock Exchange group shed 5.9 percent after Borse Dubai sold its entire stake in the company.

Shares of SanDisk tumbled, last 18.3 percent weaker, after the company downgraded its estimates for first-quarter revenue.

"We are disappointed with our financial outlook," Chief Executive Officer Sanjay Mehrotra said in a statement. "We will work through these headwinds, leveraging our compelling product roadmap and broadening customer base."

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