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Markets settle as they await Syria developments

Pan Pylas, AP Business Writer

People walk by an electronic stock board of a securities firm in Tokyo as Japan's bench mark Nikkei 225 index shows 258.36 points gain to 14,119.17 Monday morning, Sept. 9, 2013. Asian stocks opened higher on Monday, lifted by Tokyo's Olympic bid victory, Chinese export growth and an Australian conservative coalition's election victory. (AP Photo/Koji Sasahara)

LONDON (AP) -- Financial markets settled Wednesday following the previous day's big moves when an easing of concerns over an imminent U.S.-led military strike on Syria sent stocks sharply higher and oil prices down.

Though President Barack Obama said in a televised address Tuesday that he has told the American military to stay prepared to attack Syria if needed, he voiced his backing for a Russian proposal for Syria to give up its chemical weapons to international control.

With Damascus indicating its support for the plan, investors have largely breathed a sigh of relief that a strike and all the possible regional repercussions may be averted — geopolitical worries, particularly when related to the oil-rich Middle East, are rarely conducive to risk-taking in the investing community.

"Investors are clearly relieved at the prospect of no U.S.-led military strike being carried out ....but as we see today, they're not getting too carried away with it," said Craig Erlam, market analyst at Alpari. "The reports are clearly being treated with a degree of skepticism, with people fully aware that things can escalate again rapidly."

In Europe, the FTSE 100 index of leading British shares was down 0.2 percent at 6,572 while Germany's DAX rose 0.3 percent to 8,478. The CAC-40 was 0.3 percent lower at 4,106.

In the U.S., the Dow Jones industrial average was up 0.2 percent at 15,223 while the broader S&P 500 index rose 0.3 percent to 1,679.

Syria remains the main driver in oil markets in particular. On Wednesday, the main New York crude benchmark edged up 37 cents to $107.76 a barrel but that follows the $2.13 slide the previous day to $107.39.

With little economic news scheduled later, the focus of attention in the markets will likely remain on developments regarding Syria.

"In the absence of any meaningful economic data out of the U.S. this week until Friday, stock markets continue to be driven by the easing of geopolitical concerns surrounding Syria," said Michael Hewson, senior market analyst at CMC Markets.

On Friday, investors will be closely monitoring U.S. retail sales data for August as they gear up for next week's policy meeting of the Federal Reserve.

Over recent weeks, the markets have priced in the likelihood that the Fed will start to reduce its monetary stimulus at the meeting. The main question for most traders is how much the current $85 billion of monthly asset purchases will be reduced.

The dollar's near-term fortunes likely rest on the Fed policy decision. Over recent days, the currency has traded within fairly narrow ranges against its main competitors and that trend continued Wednesday, with the euro up 0.2 percent at $1.3289 and the dollar 0.4 percent lower at 100 yen.

The steady tone in markets was evident earlier in Asia.

Tokyo's Nikkei 225 index, the regional heavyweight, shed early gains to flatten out at 14,425.07 points while China's benchmark Shanghai Composite Index gained 0.2 percent to 2,241.27. Hong Kong's Hang Seng fell 0.2 percent to 22,937.14 and South Korea's Kospi rose 0.5 percent to 2,003.85.