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Oil surges, stocks fall as Middle East erupts [Updated]

January 28, 2011 | 11:15 am

Financial markets worldwide on Friday finally began to pay attention to the uprisings in the Middle East. Stocks tumbled and some investors fled back to gold and other hard assets.

[Updated at 2:45 p.m.: All data below now reflect closing market figures.] 

The biggest reaction was in the oil market: U.S. crude futures, which on Thursday had sunk to a two-month low amid rising domestic inventories, jumped $3.70, or 4.3%, to $89.34 a barrel in New York.

Egypt The obvious fear is that the social unrest in Tunisia, Yemen and Egypt could spread to the region’s biggest oil exporters.

Gold, which has been hit by profit-taking all month since reaching a record high of $1,422.60 an ounce on Jan. 3, was up $22.30, or 1.7%, to $1,340.70 in a classic “flight to safety.”

Investors also ran back to U.S. Treasury securities, pushing the yield on the 10-year T-note down to 3.32% from 3.38% on Thursday.

On Wall Street, stocks were dragged lower by worries about the Middle East and by a string of disappointing fourth-quarter earnings reports, including those from Ford Motor Co., Microsoft Corp. and Amazon.com.

The Dow Jones industrial average lost 166.13 points, or 1.4%, to 11,823.70. Wall Street is putting the Dow-12,000 party hats back in the drawer.

It also didn’t help the market that the government’s first estimate of fourth-quarter U.S. economic growth came in at 3.2%, weaker than the 3.5% consensus estimate, despite a surge in consumer spending.

In Europe, most major stock markets lost between 1% and 1.5%. Many emerging markets were down more sharply, as usual in a broad sell-off. Turkey fell 2.8%, the Mexican market was off 1.6% and Brazil was down 2%.

-- Tom Petruno

Photo: Protests in Cairo on Friday. Credit: Mohamed Omar / European Pressphoto Agency

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