Aug. 28 (Bloomberg) -- Oil reached a two-year high and energy shares led gains in U.S. stocks, while emerging-market currencies weakened, amid growing speculation there will be an American-led military strike against Syria. European shares declined while Treasuries snapped a four-day advance.
West Texas Intermediate oil climbed 1 percent to $110.11 a barrel as of 10:42 a.m. in New York after rising as much as 3 percent to $112.24. The Standard & Poor’s 500 Index 0.3 percent after the gauge sank 1.6 percent yesterday. The Turkish lira and Indian rupee slumped to records. The dollar strengthened against 11 of its 16 major peers while the pound rebounded from three- week low against the euro. The U.S. 10-year note yield increased six basis points to 2.77 percent.
The U.S. and its allies are moving closer to a military strike against Syria in response to an alleged chemical weapons attack near Damascus last week. President Barack Obama plans to release an intelligence assessment this week and U.K. Prime Minister David Cameron said Britain will put forward a draft resolution at the United Nations today authorizing action to protect civilians. Global funds have withdrawn about $44 billion from emerging-market stock and bond funds since the end of May through last week, according to EPFR Global, a Cambridge, Massachusetts-based data provider.
"Syria’s taking attention away from what’s been generally better news out of the U.S. in terms of stronger growth," Sean Fenton, a Sydney-based fund manager who helps oversee about $1 billion at Tribeca Investment Partners, said in a Bloomberg Television interview. "It’s probably even more concerning what’s happening within Asia in terms of capital flight."
Stocks declined and crude rallied yesterday amid speculation that any strike against Syria may spread to other parts of the Middle East and threaten exports from a region that produces 35 percent of the world’s oil. Saudi Arabia, the largest supplier in the Organization of Petroleum Exporting Countries, has backed rebels opposed to Syrian President Bashar al-Assad. Assad’s allies include Iran, the group’s sixth-biggest producer.
"The fear here is that a strike on Syria will lead to a broader regional conflict vis-à-vis al-Assad’s puppet-master," Stephen Schork, president of the Schork Group Inc., an energy advisory company in Villanova, Pennsylvania, said in a report today.
The S&P 500 dropped the most in two months yesterday, extending its two-day decline to 2 percent and closing at the lowest level since July 3. Among stocks moving today, energy shares led gains among the 10 main S&P 500 industry groups, with Exxon Mobil Corp. and Chevron Corp. increasing at least 1.8 percent. TiVo Inc. climbed 5 percent after the maker of digital- video recorders posted a profit. Joy Global Inc. lost 5.7 percent as the mining equipment maker said orders for new equipment are declining.