08 July 2005 10:10 [Source: ICIS news]
LONDON (CNI)--The UK stock market recovered its poise but sterling remained under pressure on Friday as investors took stock of the previous day's bomb blasts in central London which killed at least 37 people and forced an unpreceedented closure of the entire subway network.
The bombings, the biggest-ever co-ordinated attacks in the capital, forced British Pirme Minister Tony Blair to break away from G8 meeting in Scotland to oversee operations in London. The leaders of the world's eight biggest economies vowed not to let the blasts scupper their meeting, a key item on the agenda was solving poverty in Africa.
Oil prices shot back up towards record levels as dealers fretted over security risks to key oil installations in the face of the attacks. Nymex light crude oil rose 55 cents to $61.28 a barrel, less than a dollar away from record levels.
Traders said the high oil prices were also supported by concerns over supply disruptions in the US Gulf of Mexico as the hurricane season gathers momentum with Hurricane Dennis now next in line to lash at oil fields and refineries in that area.
Soaring oil prices were starting to be felt in the petrochemical market. On Thursday, methyl tertiary butyl ether (MTBE) traded at $1,100 a tonne, up $110/tonne from the previous day.
The London bomb blasts and the prospect of an imminent rate cut in the UK weighed heavily on the sterling which hit a fresh 19-month low against the dollar. Sterling has fallen more than 5% in the past two weeks.
The stock market, however, recovered most of its previous day losses as a firmer close on Wall Street gave much needed support with the UK's FTSE 100 putting on gains of about 1% after ending down 1.8% on Thursday.
Londoners were back at work on Friday as they stoically struggled with a skeleton underground service as many lines remain closed due to the result of the bombings, three of which tore through the subway system.
"The mood is business as usual. Sod it, we're just going to get on with it," Les Ames, a trader at brokers WH Ireland told Reuters.
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