* MSCI Asia ex-Japan down 0.72%, Nikkei -1.57%
* Iran launches missile attacks on Iraqi bases housing U.S.
forces
* U.S. President Trump to make statement Wednesday
* Crude futures, gold up amid fears of further escalation
* Asian stock markets: https://tmsnrt.rs/2zpUAr4
(Updates prices, adds chart, new quote)
By Sujata Rao
LONDON, Jan 8 (Reuters) - Global equities fell on Wednesday
and Wall Street was set for a weaker open after Iran's attack on
U.S.-led forces in Iraq, but earlier sharp market moves faded as
fears abated that the raid would lead to an immediate military
escalation.
Investors are waiting now for a statement from U.S.
President Donald Trump but his earlier tweet - "All is well!"
and "So far, so good!" - has led to hopes that the United States
will stop short of strong retaliation. Iran's Foreign Minister Mohammad Javad Zarif also tweeted
that the Iranians "do not seek escalation or war". Oil had surged above $70 a barrel, while gold held at new
seven-year highs after the missile attack on the Ain Al-Asad air
base and another in Erbil in Iraq, hours after the funeral of an
Iranian commander who was killed by a U.S. drone strike last
week. But with no signs of any human casualties from the attack,
the dash for safe-haven assets petered out, allowing S&P500
futures, down almost 2% at one point, to trade around flat by
The Japanese yen, which surged almost 1% to three-month
highs after the attacks, also eased back to trade flat on the
day at 108.450 JPY=D3 . Brent crude futures slipped off highs
to below $69 a barrel. LCoc1
"The live situation was optically quite dramatic but the
important thing to focus on is the no-human-casualty dimension,
which gives ample space to de-escalate the situation," said
Salman Ahmed, chief investment strategist at Lombard Odier
Investment Managers.
"The Trump factor is the random factor but what's visible is
that no one wants war and that's what markets are focusing on."
A pan-European equity index slipped 0.2% but after opening
0.5% lower .STOXX . MSCI's index of global equities pulled back
0.2% .MIWD00000PUS but remained less than 1% off recent record
highs.
Earlier, Chinese shares closed more than 1% lower, Japan's
Nikkei lost 1.6% and an MSCI ex-Japan Asian benchmark fell 0.6%.
WAITING FOR TRUMP
Some reckon it will take a hawkish statement from Trump or
more attacks by Iran to drive the next phase of the risk
selloff.
"We are looking out for whether the U.S. is going to
retaliate, so it's going to be a big wait-and-see mode until we
hear from Trump," Ashley Glover at CMC Markets in Sydney.
"We are seeing that 'buy the dip' mentality creeping in as
big long-term investors like to buy into these weaknesses."
Bond-buying also faded, with yields on benchmark 10-year
U.S. Treasury notes US10YT=RR at 1.81%, down one basis point
on the day but well off session lows around 1.705%. The 10-year
German government bond yield was unchanged on the day at -0.284%
after earlier falling to -0.299% DE10YT=RR .
U.S. 10-year Treasury futures TYc1 had earlier peaked at
their highest level since November, and were last up 0.18%.
On currency markets, the attacks had sent the yen spiralling
to three-month highs beyond 107.7 per dollar but gave up all
those gains to trade flat at 108.4 JPY= . Another safe-haven
currency, the Swiss franc, also gave up knee-jerk gains
CHF=EBS .
"If the market was really worried that the end of the world
was nigh, dollar/yen would have collapsed, and that's clearly
not been the case," said Stuart Oakley, global head of flow FX
at Nomura in Singapore.
The euro EUR= was 0.2 weaker, buying $1.1129 and the
dollar index .DXY was up 0.1% at 97.10.
The buying of gold and oil also eased as the trading session
wore on - Brent crude futures LCOc1 which had shot to $70 per
dollar, were last up 0.5% at $68.1 per barrel.
Gold, which earlier brushed through $1,600 an ounce, eased
to $1,582. GOL/
Lombard Odier's Ahmed said he had not reduced equity
holdings overall but had increased exposure to energy stocks.
"We adopted a long oil hedge to portfolio and we are
maintaining that... Oil may be one market that's not reflecting
geopolitical risks."
Tensions in the Middle East https://www.reuters.com/live-events/tensions-in-the-middle-east-id2917592
Iran missile strikes jolt gold https://tmsnrt.rs/2sNtCJB
Iran strikes sends FX markets into a spin https://tmsnrt.rs/35EEV4c
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