Asian stock markets stumbled amid Middle East tension

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Asian stocks retreated on Tuesday after Wall Street’s stumble overnight, while oil inched up from the previous day losses as lower Libyan oil production assuaged concerns that the severing of ties with Qatar by other Arab states could impede a deal to cut crude output.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.2 percent in early trade, pulling back from a two-year high hit on Monday.

Overnight, the major Wall Street indexes slipped between 0.1 percent and 0.2 percent, with Apple Inc. AAPL leading losses on the Dow Jones Industrial Average .

Saudi Arabia, the United Arab Emirates, Egypt and Bahrain closed transport links with Qatar on Monday, accusing it of supporting extremism and undermining regional stability. Although oil prices initially rose on fears about possible supply disruptions, they ended the day lower.

Saudi Arabia is the world’s biggest oil exporter, and Qatar is the top liquefied natural gas and condensate shipper.

“While we would not want to read too much into this in terms of looming trouble for OPEC, the fact that Qatar’s stance towards Iran is a key element in this issue does make for a potentially more complicated setup at future meetings should the issue not have been resolved in due time,” JBC Energy analysts said in a note.

 

Sterling, the euro and the dollar were all hugging tight ranges before the European Central Bank meeting and the UK’s national election on Thursday.

British Prime Minister Theresa May’s lead over the opposition Labour Party ahead of Thursday’s national election has narrowed to just 1 percentage point, according to a poll by Survation for ITV television on Monday, conducted before the attacks in London on Saturday.

Opinion polls by other leading polling firms have given wider leads for the Conservatives in recent days, ranging as high as 11 and 12 points.

But the expectations for a less dovish central bank could see the euro weaken further if the ECB doesn’t deliver.

The common currency EUR=EBS was slightly higher at $1.126 on Tuesday.

The dollar slid 0.1 percent to 110.36 yen JPY= on Tuesday. U.S. services sector activity slowed in May as new orders tumbled, but was offset by a jump in employment to a two-year high.

The dollar index .DXY, which tracks the greenback against a basket of trade-weighted peers, was flat at 96.787.

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