The escalating political unrest in Egypt has taken its toll on global markets with oil prices pushing higher and shares in the travel sector slumping.
After thousands of Egyptians defied a curfew on Sunday night and continued their protests, investors pulled cash out of riskier investments and turned to safer bets such as gold and the US dollar, Swiss franc and Japanese yen.
While Egypt’s own stock market was closed amid the turmoil, London’s FTSE 100 Index was down nearly 1% in early trading following declines on Asian and Middle Eastern markets.
The price of Brent crude in London was just below 100 US dollars a barrel, while the New York-listed price stood near 90 US dollars a barrel due to fears that protests in the city of Suez – at the mouth of the strategic canal, a key route for tankers – could interrupt the flow of oil.
Tens of thousands of protesters have demonstrated across Egypt for seven consecutive days, calling for the resignation of President Hosni Mubarak, who has maintained a tight grip on power for nearly 30 years.
Michael Hewson, analyst at CMC markets, said gold, the US dollar and Swiss franc would be the most likely beneficiaries of a flight away from riskier assets if tensions continued to escalate.
In London, shares in Thomson Holidays owner TUI Travel and rival Thomas Cook were down more than 2% and 4% respectively as the tour operators started to cancel flights to the Egyptian city of Luxor.
British Airways parent International Consolidated Airlines was down more than 2%.
Escalating oil prices were not enough to overcome investors’ concerns over supply disruptions – as the Suez Canal and Suez-Mediterranean pipeline are major conduits for Persian Gulf oil to reach Europe and North America.
Sentiment in the oil sector was weakened, with early falls for FTSE 100 firms such as BP, Tullow Oil and Cairn Energy.