Syria fears keep markets jittery as oil price steadies

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

The price of oil, which has soared this week, steadied throughout Wednesday afternoon.

Europe's share markets have fallen, yet US markets opened flat, with the dollar gaining alongside other haven currencies.

The price of gold also climbed, as risk-averse investors looked for traditionally safe investments.

Shares in airlines dropped on the looming threat of higher fuel costs. Earlier on Wednesday Brent crude oil had hit a six-month high above $117 a barrel, although the price then fell back.

US crude oil touched its highest price since May 2011, rising to $110.17 a barrel, before also coming off its peak.

International Airlines Group, the owner of British Airways, saw its share price fall 4.49%, while Easyjet's share price dropped by more than 1.78%.

'Higher prices'

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.

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".

European share markets were all lower. The UK's FTSE 100 was down 0.17%, Germany's Dax index dropped 1.03% and the Cac 40 in Paris fell 0.21%.

However, in the US the Dow Jones rose 60 points to 14835.69.

On the foreign exchange markets, currencies traditionally viewed as riskier continued to fall, while the dollar saw some gains. The US dollar, along with the Japanese yen and the Swiss franc are considered to be more attractive for investors during uncertain times.

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

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.