BBC News - Syria fears keep oil price high as markets slide

The possibility of military action against Syria has continued to shake up markets.

While the price of oil surged higher on Wednesday, share markets have fallen.

The price of gold has also climbed, as risk-averse investors look for safe-havens, while shares in airlines dropped on the looming threat of higher fuel costs.

Brent crude oil hit a six-month high above $117 a barrel, and has risen by 4% this week.

US crude oil touched its highest price since May 2011, rising to $110.17 a barrel.

International Airlines Group, the owner of British Airways, saw its share price fall around 5%, while Easyjet's share price also fell, by 4%.

European share markets all fell on Wednesday morning. The UK's FTSE 100 was down 0.4% while Germany's Dax dropped 1.0% and the Cac40 in Paris fell 0.2%.

Asian stock markets fell on Wednesday, with Japan's Nikkei 225 index, Hong Kong's Hang Seng and Australia's ASX 200 all seeing losses of more than 1%.

Syria itself is not a major oil producer, but analysts said that the prospect of further instability in the Middle East was worrying investors.

Nick McGregor, oil analyst at Redmayne Bentley Stockbrokers, said: "Until it is clear how the politics is going to play out, the markets won't have any certainty."

He added that fears about international military involvement in Syria sparking trouble in the Middle East would affect pricing across all oil markets.

"Every move closer to Western military action in the Middle East is going to have a big impact on the oil market's nerves, and if military action does happen there will be a significant risk premium built into the oil price."

Mr McGregor said that markets would remain shaky, and added, "we are in for a period of higher volatility certainly, and more likely than not higher prices".

Investors buying into gold, regarded as a haven investment in times of uncertainty, pushed the price of the precious metal to a three-month high.

Spot gold hit its highest price since May early on Wednesday, at $1,433.3 an ounce.

On the foreign exchange markets, currencies traditionally viewed as riskier continued to fall.

Ilya Spivak, currency strategist at DailyFX, said: "Turmoil in Syria continues to offer a worrisome backdrop to price action."

Turkey, Syria's neighbour, has also seen its currency, the lira, touch record lows against the dollar. Turkey's main stock index fell 1.5%, following Tuesday's 4.7% slide.

In a bond auction on Wednesday, Italy raised 8.5bn euros ($11.3bn; £7.3bn) but the interest rate it paid increased. It has been suggested that Italy has suffered from fears about Syria, with investors still cautious about risk.