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Markets: Oil rises, Qatar stocks hit hard; Pound shrugs off overnight dip

● Brent crude recovers $50 on Middle East tension
● London’s FTSE 100 in line for new record
● Sterling steady but traders seek election protection
● Euro eases ahead of ECB decision
● Gold at 5-week high of $1,280 an ounce

Energy prices are on the rise after Saudi Arabia, Egypt, the United Arab Emirates and Bahrain severed ties with Qatar, accusing their neighbour of financing terror and undermining security. Qatari stocks fell by over 6 per cent in response.

Concerns that political instability in the important oil producing region could affect supplies sees Brent crude, the international benchmark, climb 1.1 per cent to $50.52 a barrel. West Texas Intermediate, the main US contract, is up 0.9 per cent to $48.08.

Brent last week fell to a three-week low of $48.95 amid fears that increased output by US drillers is counteracting Opec and Russian production cut deal designed to support prices.

What to watch
A batch of US data — the ISM non-manufacturing survey, alongside factory and durable goods orders — are due for release at 15:00 BST.

Investors will be interested to see if they dovetail with a somewhat meek jobs report published on Friday.

If so, that may cause traders to bet on a reduced pace of Federal Reserve monetary tightening — though the market is still pricing in a 95 per cent chance of the central bank raising interest rates next week.

The dollar index, which tracks the buck against a basket of its peers, and which in the wake of the soft jobs data fell to a near seven-month trough of 96.65, is up 0.1 per cent on Monday to 96.79. The policy-sensitive US 2-year bond yield is up one basis point to 1.30 per cent.

Equities
US index futures suggest the S&P 500 will open later in New York at 2,436, easing just 3 points from its best ever close.

London’s FTSE 100 is up 0.1 per cent to 7,558, also in line for another record close, and helped by strength in energy shares as oil prices recover some ground.

German and Swiss stock markets are closed for the Whit Monday break, but the French and Italian bourses are on the front foot.

Forex
After a small, brief dip overnight, the pound is level with Friday’s closing levels at $1.2878 in the wake of terror attacks in London at the weekend that left seven dead and 48 injured.

However, traders are buying protection against a fall for sterling following Thursday’s general election. One-week options, which now capture the election date, are showing the most bearish sterling stance since the Brexit vote a year ago.

In other major currencies, the moves are muted, with the Japanese yen 0.1 per cent softer at ¥110.57 per dollar and the euro off 0.1 per cent to $1.1268 ahead of the European Central Bank’s monetary policy decision on Thursday.

Mexico’s peso is a notable mover. It dropped 0.8 per cent as investors awaited the outcome of a key gubernatorial election for the state of Mexico, but then reversed course to show a of rise 0.6 per cent to 18.5685 per dollar as officials projected a narrow win for the ruling Institutional Revolutionary Party.