By KAY JOHNSON, Associated Press
BANGKOK (AP) — Global stocks slumped Wednesday as Egypt's unfolding political crisis pushed the price of oil to its highest level in more than a year, adding to an uncertain global economic outlook.
Benchmark crude for August delivery rose to nearly $102 a barrel in electronic trading on the New York Mercantile Exchange, the highest since May last year.
Major European markets saw across-the-board drops in early trading, with London's FTSE 100 sliding by 1.5 percent to 6207.76 and the DAX in Germany falling 1.7 percent to 7774.43. The CAC-40 in Paris was down 1.6 percent to 3,683.70.
Futures augured losses for an abbreviated trading session on Wall Street. The Dow and S&P 500 futures contracts were both down 0.5 percent. U.S. stock markets will close at 1 p.m. on Wednesday ahead of the Independence Day holiday on Thursday. The market re-opens Friday.
Asian markets also closed lower on the energy pessimism. Japan's Nikkei 225 edged down 0.3 percent to 14,055.56 and Hong Kong's Hang Seng shed 2.5 percent to 20,147.31.
Seoul's Kospi was down 1.6 percent to 1824.66. In China, the Shanghai Composite lost 0.6 percent to 1,994.27. Australia's S&P/ASX 200 fell by 1.9 percent to 4,744.10.
The sell-off came as embattled Egyptian President Mohammed Morsi vowed not to resign despite the demands of millions of protesters and a threat by military to suspend the constitution, disband parliament and install a new leadership.
Egypt is not an oil producer but its control of the Suez canal — one of the world's busiest shipping lanes, which links the Mediterranean with the Red Sea — gives it a crucial role in maintaining global energy supplies.
"Crude oil prices rallied up, and now some airline shares are down quite significantly," said Dickie Wong, executive director of research at Kingston Securities Ltd. in Hong Kong.
In Asia, China Eastern Airlines was down 3.3 percent, Thai Airways dropped by 2.4 percent and Australia's Qantas Airways fell by 2.6 percent. Hong Kong carrier Cathay Pacific Airways Ltd was down 0.2 percent
Airlines are most immediately affected by changes in energy prices since fuel accounts for a large share of their expenses, but a sustained rise in oil prices could have a ripple effect on the global economy which is already beset by a recession in Europe and a shaky recovery in China.
"It definitely depends on the situation in Egypt now," Wong said.
The Egyptian crisis offset positive signs that the U.S. economy is slowly rebounding, causing American stocks to end slightly lower Tuesday after a morning rally.
The Standard & Poor's 500 closed down 0.88 point, or 0.1 percent, at 1,614.08 The Dow Jones industrial average fell 42.55 points, or 0.3 percent, to close at 14,932.41. The Nasdaq slipped 1.09 points, a fraction of a percentage point, to 3,433.40
In currencies, the euro fell to $1.2965 from $1.3020 late Tuesday in New York. The dollar slipped to 99.91 yen from 100.77 yen.
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