Oil prices hit a record high on Monday and Asian stocks retreated as a U.S. security alert deepened investor fears about the resilience of a U.S. recovery and the risk to the global economy from terror attacks. The dollar eased after Washington warned al Qaeda may attack financial institutions such as the New York Stock Exchange, World Bank and Citigroup , rattling investors already worried about weaker-than-expected U.S. economic growth figures. Oil , which has risen more than 37 percent this year, climbed 12 cents to hit a record high of $43.92 a barrel on concerns over supply disruptions and the latest security alert. The dollar's fall pushed gold higher. Most Asian share markets fell, with Japan's Nikkei stock average <.N225> down 0.7 percent by midday to 11,243.40.
"There are some buyers who are looking to buy stocks on dips, but the overall market is surrounded by much bigger clouds -- security fears, higher oil prices and currency market moves," said Teruhisa Ishikawa of Mizuho Investors Securities' investment information department. "Investors are thinking that it's wiser to stay still for a while than chasing (stocks), even undervalued ones." MSCI's broadest index of Asia-Pacific shares outside Japan <.MSCIAPJ> had dropped 0.1 percent by 0220. Its tech component slid 1.6 percent to stand just off one-year lows hit last week. Shares fell 1.4 percent in South Korea <.KS11>, 0.5 percent in Hong Kong <.HSI>, and 1 percent in Taiwan. Australia <.AXJO> bucked the trend, rising 0.3 percent.
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The dollar was trading near 111.11 yen , compared with about 111.35 in late U.S. trade on Friday and around 2 percent below a two-month high near 112.50 yen struck last Thursday. The U.S. currency was at $1.2060 per euro , compared with around 1.2019 late on Friday. The key focus this week will be U.S. payrolls data for July, due on Friday, which investors will look at for clues for interest rate rises in the world's largest economy. Economists polled by are expecting the report to show the economy created about 228,000 jobs last month, following a gain of about 112,000 in June. The unemployment rate is expected to remain steady at 5.6 percent. Exporter and airline shares suffered especially from the high oil prices, fears over the U.S. economic outlook and the security warning. Japan Airlines Corp. <9205.T>, Asia's biggest airline, fell 1.2 percent, while Singapore Airlines Ltd. , the world's second-most valuable airline, dropped 1.8 percent. Electronincs giant Sony Corp. <6758.T> slid 0.8 percent, while Toyota Motor Co. <7203.T>, Japan's biggest auto maker, declined 0.2. Taiwan Semiconductor Manufacturing Co. <2330.TW>, the world's largest contract microchip maker, fell 1.2 percent after jumping 4.6 percent on Friday following record quarterly profits and a surprisingly strong forecast. The drop helped pull Taiwan's electronics subindex <.TELI> down 1.5 percent. In U.S. equities on Friday the Dow Jones industrial average <.DJI> ended up 0.1 percent and the tech-heavy Nasdaq Composite Index <.IXIC> closed up 0.3 percent. Japanese government bond prices fell as traders cautiously awaited an auction of 10-year bonds on Tuesday. The yield on the benchmark 261st 10-year cash bond <0#JPTSY=JBTC> was up 1 basis point at 1.860 percent. Spot gold was at $393.00 an ounce against $391.00 last quoted in New York on Friday. ///