Wall Street drops as oil prices rise

Stocks on Wall Street plummeted the most this year in their first reaction since last week to oil price rises from escalating tensions in the Middle East and North Africa.

Libyan leader Muammar Gaddafi is determined to cling to power even as much of the country and its oil production is under the control of anti-government forces.

US investors were also focused on retail stocks, with Wal-Mart sliding 3.1% after fourth-quarter profit rose 27% but fell short of analysts' expectations.

Bank of America fell 3.9% after saying its credit-card subsidiary was restating eight quarters of reports to regulators because it took a $US20.3 billion write-down due to deteriorating credit and new regulations over the past two years.

Energy components were among the few positive blue chip stocks as oil prices surged. Chevron gained 2.5% and Exxon Mobil rose 1.4%. At the close (10am NZ time), the Dow Jones Industrial Average was down 178.46 points, or 1.4%, to 12,212.79.

The Nasdaq Composite was down 2.7% to 2756.42 and the S&P 500 index dropped 2.1% to 1315.44, its biggest drop since August 11 last year.

Other markets: Europe, Asia down
All world sharemarkets ftook a beating as investors sold down stocks on worries about raging political tensions in the Middle East and North Africa.

The Stoxx Europe 600 index dropped 0.6% to 285.38. Airlines ranked among the hardest-hit stocks because of the spike in oil prices. Air France-KLM dropped 3% in Paris and easyJet fell 2.9% in London.

Italy’s FTSE MIB index fell 1.1% to 21,993.96, adding to Monday's 3.6% slump. Italian stocks are particularly sensitive because of close ties to Libya. Oil company Eni fell 0.9%.

London's FTSE 100 fell 0.3% to 5996.76, Frankfurt's DAX was marginally lower at 7318.35 and Paris's CAC 40 slumped 1.2% to 4050.27.

In Asia, Japanese stocks fell as selling pressure mounted after Moody's Investors Service lowered the nation's ratings outlook. The Nikkei Stock Average gave up 1.8% to 10,664.70.

China's Shanghai Composite sank 2.6% to 2855.52 and Hong Kong's Hang Seng index lost 2.1% to 22,990.81.

Australia's S&P/ASX 200 fell 0.9% to 4856.67, Korea's Kospi dropped 1.8% to 1969.92 and Taiwan's Taiex shed 1.9% to 8673.67. Singapore's Straits Times Index shed 1.7% to 3019.12 and India's Sensex lost 0.8% to 18,296.16.

Commodities: Oil, gold up
Oil prices rose to two-and-a-half-year highs as the unrest sweeping the Middle East showed no signs of easing. Political turmoil in Libya has caused about 50,000 barrels a day of oil output to be shut down.

The contract for light, sweet crude for March delivery expired $US7.37, or 8.6%, higher at $US93.57 a barrel from Friday's settlement in New York. The more heavily traded April contract settled $US5.71, or 6.4%, up at $US95.42 a barrel.

Brent crude on the ICE futures exchange, which was open on Monday, rose just 4USc to settle at $US105.78 a barrel, the highest since Sept 22, 2008.

Gold prices rallied back above $US1400 an ounce, while silver surged to fresh 31-year highs. The most actively traded contract, for April delivery, was up 1%, or $US13.70, at $US1402.30 an ounce in New York.

Silver for March delivery was up 2.9%, or 94.9USc, at $US33.245 an ounce.

Currencies: Swiss franc up, dollar down
The Swiss franc rose sharply against the US dollar and euro as traders sought safety amid turmoil in the Middle East.

The dollar hit a three-week low against the Swiss franc, while the euro fell to its lowest level against the currency since January 31.

The dollar was at 0.9402 Swiss francs in New York, from about 0.9471 late on Monday. The euro was at 1.2861 francs, from about 1.2950 francs.

The euro was at $US1.3677 from $US1.3675. The euro was at ¥113.71, from about ¥113.65.

The dollar traded in a tight range against the yen after Moody's Investors Service changed its outlook on Japan's credit rating to "negative" from "stable." The dollar was at ¥83.16, from about ¥83.11.