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Asia Today ISSN 1861-4604 Sunday, September 24, 2017

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Sterling falls 0.3 percent after London attacks as oil rises following significant split between powerful Gulf countries

U.S. oil also climbed 1 percent to $48.17

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DUBAI, U.A.E. - On Monday, as Saudi Arabia, Egypt, Bahrain and the United Arab Emirates cut diplomatic ties with Qatar, global benchmark Brent advanced 1.1 percent to $50.48 a barrel.
 
U.S. oil also climbed 1 percent to $48.17, while Dubai's stock index dropped 0.6 percent in early trade.
 
The move of severing ties with Qatar was sudden, but tensions have been building over recent years, and particularly in recent weeks.
 
The dispute over Qatar's support for the Muslim Brotherhood, the world's oldest Islamist movement was cited as the reason for severing of ties.
 
While Saudi Arabia is the world's biggest exporter of crude oil, Qatar is the biggest supplier of liquefied natural gas (LNG) and a major seller of condensate - which is a low-density liquid fuel and refining product derived from natural gas.
 
Meanwhile, the weekend London attacks, that killed at least seven people and wounded 48, just days before Britain's general national election, hurt the sterling.
 
Sterling fell as much as 0.3 percent before paring the losses to trade down 0.2 percent at $1.2868 on Monday. 
 
Experts noted that British stocks are unlikely to see much adverse impact from the third terrorist attack in the country in less than three months, with financial spreadbetter CMC Markets expecting the FTSE 100 to open slightly higher.
 
FTSE 100 touched a record high on Friday and Germany's DAX too touched an all-time high the same day.
 
Meanwhile, Prime Minister Theresa May has said that Thursday's election would go ahead as planned.
 
With campaigning expected to resume on Monday, polls have shown the election is much tighter than previously predicted. With a tight election on hand, Britain could be thrown into political deadlock just days before formal Brexit talks are due to begin on June 19.
 
Masashi Murata, currency strategist for Brown Brothers Harriman in Tokyo said, “Today and tomorrow, I am guessing that sterling will move in a range ahead of the U.K. election, as I think no one can accurately forecast the outcome. Brexit has taught us not to believe polls, and not to take aggressive positions ahead of U.K. events."
 
On Monday, France and Germany are closed for a holiday. 
 
MSCI's broadest index of Asia-Pacific shares outside Japan reversed earlier losses to climb 0.1 percent.
While Japan's Nikkei also added 0.1 percent as the yen surrendered some of its gains, Chinese shares fell 0.5 percent, with news of service-sector activity rising in May, which grew at the fastest pace in four months failing to lift sentiment.
 
Australian shares meanwhile slid 0.8 percent and South Korea's KOSPI was little changed.
 
Taiwan shares hit their highest level since 2000 for a second straight session, and last trading up 0.5 percent.
The dollar index, which tracks the greenback against a basket of six major peers, was up 0.1 percent at 96.82.
 
The rise came after the index dropped to its lowest level since the U.S. presidential election in November on Friday.
Indicating that the labor market was losing momentum despite the unemployment rate falling to a 16-year low of 4.3 percent, U.S. nonfarm payrolls increased 138,000 in May, undershooting the forecast of 185,000.
 
In March and April, the number of jobs created was also revised down.
 
The dollar gained 0.2 percent to 110.67 yen, after losing 0.8 percent on Friday.
The U.S. 10-year Treasury bond yield recovered to 2.1695 on Monday after plunging from Thursday's close of 2.217.
The euro fell 0.2 percent to $1.1264 on Monday.
 
Gold rose to a six-week high on Monday, driven by the weaker dollar and was last steady at $1,280.24 an ounce.

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