Stocks stable, oil rises as wary investors eye Middle East hostilities

By Sinéad Carew, Lawrence White

NEW YORK/ LONDON (Reuters) -MSCI’s global equities index was up very slightly on Wednesday while the dollar rose and oil prices pared earlier gains, as investors anxiously watched to see how Israel would respond to Iran’s missile attack the previous day.

Oil prices were slightly higher after climbing more than 3% earlier on Wednesday as Israel and the United States vowed retribution over Iran’s biggest ever direct attack on its regional adversary, firing more than 180 ballistic missiles.

Iran had said early on Wednesday its missile attack on Israel was finished barring further provocation.

The dollar hit a three-week high against the euro on Wednesday after the ADP national employment report showed U.S. private payrolls increased more than expected in September, ahead of Friday’s highly anticipated jobs data.

Longer-dated U.S. Treasury yields were higher as the data pointed to a stable labor market while Middle East tensions were also on investors minds.

Sentiment is dominated by the risk of escalating conflict in the Middle East and there is a lack of information on how strong the Israeli response is going to be. That’s why the market is sort of not doing a lot,” said Jay Hatfield, portfolio manager at InfraCap.

In energy markets, U.S. crude rose 0.43% to $70.13 a barrel and Brent rose to $73.82 per barrel, up 0.34% on the day.

The latest stocks report showed the benchmark S&P 500 and the Nasdaq had traded near two-week lows as investors monitored the Middle East and reacted to the private employment report. Also on their radar was a U.S. dock strike, that started Tuesday and affected half of U.S. ocean shipping.

At 12:16 p.m. Eastern time the Dow Jones Industrial Average rose 30.30 points, or 0.07%, to 42,187.27, the S&P 500 rose 7.35 points, or 0.13%, to 5,716.10 and the Nasdaq Composite rose 61.46 points, or 0.34%, to 17,971.72.

MSCI’s gauge of stocks across the globe rose 0.50 points, or 0.06%, to 846.37. The STOXX Europe 600 index last traded at up 0.05% at 521.14.

In Treasuries, the yield on benchmark U.S. 10-year notes rose 4.4 basis points to 3.787% from 3.743% late on Tuesday, while the 30-year bond yield rose 5.5 basis points to 4.1362%.

The 2-year note yield, which typically moves in step with interest rate expectations, rose 1.2 basis points to 3.6332%, from 3.621% late on Tuesday.

A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at a positive 15.2 basis points.

In currencies, the dollar index, which measures the greenback against a basket of currencies including the yen and the euro, rose 0.29% to 101.55.

The euro was down 0.14% at $1.1051 while against the Japanese yen, the dollar strengthened 1.76% to 146.09.

In precious metals, spot gold fell 0.47% to $2,650.22 an ounce. U.S. gold futures fell 1.02% to $2,640.00 an ounce.

(Reporting by Sinéad Carew in New York, Johann M Cherian in Bengaluru, Lawrence White in London and Kevin Buckland in Tokyo; Editing by Jane Merriman, Angus MacSwan and Chris Reese)