* Brent rallies on fears of global supply disruption
* Stocks slip, safe-haven gold and Japanese yen rise
* Saudi bonds slip to multi-week lows, oil-related
currencies rise
* China industrial output growth weakens, hits risk appetite
* World FX rates in 2019: http://tmsnrt.rs/2egbfVh
(Adds details, updates prices)
By Danilo Masoni
MILAN, Sept 16 (Reuters) - Oil prices climbed to four-month
highs on Monday and world stocks slid after weekend attacks on
crude facilities in Saudi Arabia shut about 5% of the world's
supply and fuelled worries over the impact of an oil shock on
economic growth.
Brent crude futures LCOc1 rose nearly 20% at one point in
their biggest intra-day gain since the Gulf War in 1991, and
U.S. futures CLc1 jumped almost 16%, both hitting their
highest level since May. But prices came off their peaks after
U.S. President Donald Trump authorised the use of the country's
emergency stockpile to ensure stable supply. O/R
By 0823 GMT, Brent futures were up 8.75% at $65.49 per
barrel, while U.S. light crude was up 7.8% at $59.13.
The upheaval in the oil market and poor economic data from
China bolstered investors' demand for safe-haven assets, pushing
the Japanese yen and Swiss franc higher and sending core euro
zone bond yields lower.
World stocks .MIWO00000PUS halted a four day winning
streak and were down 0.16%. European shares .STOXX fell 0.55%
and Wall Street signalled a weak start, too, with E-Mini futures
for the S&P 500 ESc1 off 0.34%.
The surge in crude prices comes at a time when central banks
in the United States, Europe and Asia are easing monetary policy
to fight a slowdown in the global economy amid a drawn out trade
war between Washington and Beijing.
"Spikes in oil prices when the global economy is already
flirting with the idea of recession is not ideal and, if
repeated and sustained, could ultimately be what tips us over
the edge," said Craig Erlam, analyst at OANDA in London.
Data from China further underscored worries about the
slowdown in the world's No. 2 economy. Industrial production
grew at its weakest pace in 17-1/2 years amid rising U.S. trade
pressure and softening domestic demand. Trump also said the United States was "locked and loaded"
for a potential response to the strikes on the Saudi facilities,
after a senior official in his administration said Iran was to
blame.
That inflamed fears about Middle East tensions and worsening
relations between Iran and the United States, powering
safe-haven assets, with gold XAU= up 0.92% to $1,502.1 per
ounce. GOL/
"The bigger issue is what premium markets will build in to
reflect the risk of further attacks," said Kerry Craig, Global
Market Strategist, J.P. Morgan Asset Management.
"In the very near-term, we may also see a pick-up in
safe-havens," he added.
"Central banks are likely to look through the inflationary
impact of higher oil prices but the added geopolitical risk to
an already fragile backdrop will not go without notice."
The U.S. Federal Reserve is due to hold its policy meeting
on Wednesday, at which it is widely expected to ease interest
rates and signal its future policy path. FEDWATCH
SAUDI BONDS HIT
Dollar-denominated bonds issued by Saudi Arabia's government
and state-oil firm Saudi Aramco tumbled to multi-week following
the attacks.
Saudi Aramco's longer-dated bonds bore the brunt of the
falls with the 2049 issue XS1982116136=TE dropping nearly 3
cents in the dollar to touch their lowest since early August,
data from Tradeweb showed. "Markets had become too sanguine over the last few months
about the geopolitical risks facing countries allied with the US
against Iran, with Saudi Arabia particularly vulnerable," said
Patrick Wacker at UOB Asset Management.
"While Saudi Arabia's sovereign fundamentals are still firm,
bond prices will need to factor in higher geopolitical risk
going forward," he added.
In currency markets, the Saudi news pushed the yen JPY= up
0.2% to 107.88 per dollar, while boosting currencies of
oil-exporting countries.
The Norwegian crown NOK=D3 surged as much as 0.7%, then
settled at 8.9517 crowns against the dollar, up 0.37% on the
day, while the Canadian dollar CAD=D3 rose 0.23% to C$ 1.3253.
The Russian rouble RUB= was also higher. FRX/
The currencies of oil importers such as Turkey TRY= and
India INR= underperformed.
The U.S. dollar .DXY was little changed against a basket
of currencies.
Elsewhere in bond markets, core longer-dated euro zone bond
yields edged lower as the and the poor data from China bolstered
demand for safe-haven assets. Germany's 10-year benchmark DE10YT=RR was down 1 bp at
-0.46% DE10YT=RR . Bund futures FGBLC1 rose 0.12%, while
Futures for U.S. 10-year Treasury notes TYv1 rose 0.27%.
(Additional reporing by Swati Pandey in SYDNEY and Karin
Strohecker in LONDON; Editing by Toby Chopra)