LONDON, Jan 29: World stock markets and the dollar stumbled again on Wednesday, while oil and gold prices rose, after a belligerent speech by US President George Bush appeared to pave the way towards war, analysts said.

In New York, the Dow Jones Industrial Average tumbled 126.49 points (1.56 per cent) to 7,962.35, and the Nasdaq composite dropped 20.13 points (1.50 per cent) to 1,322.05 at 1600 GMT.

The Standard and Poor’s 500 slipped 10.19 points (1.19 per cent) to 848.35.

Analysts said Tuesday’s modest gains quickly evaporated, putting the market back on the downward trend it has been on for most of the past two weeks as the notion of war sinks in.

Brian Piskorowski, equity strategist at Prudential Securities in New York, said Bush’s “tough talk has only served to reignite selling” after “the short scramble to cover... on fears that Bush’s remarks might alleviate Iraqi concerns.”

In Europe, stocks suffered heavy falls as traders speculated that a conflict in Iraq may be only a matter of weeks away.

But some markets managed to recover in late deals to end the day in profit, pushing the DJ Euro Stoxx 50 index of leading euro-zone shares up 1.2 per cent to 2,185.8 points in late trading.

In Asia, stocks dived 2.3 per cent in Tokyo and shed 0.9 per cent in Hong Kong.

On the foreign exchange market, the dollar remained under pressure, allowing the euro to climb to 1.0859 dollars from 1.0835 late on Tuesday.

Gold prices, which have risen sharply in recent weeks as investors flee to safer havens, rose to $370.60 on the London Bullion Market from $368.40 late on Tuesday.

Oil prices, having slipped back in early trading as traders took Bush’s sabre-rattling in their stride, surged in late deals in response to figures showing a sharp fall in US stock levels of oil products.

Benchmark Brent North Sea crude oil for March delivery rallied 58 cents per barrel to $30.85 here in late deals.

Among European stock markets, the British FTSE 100 index closed down 0.2 per cent at 3,483.8 points, having plumbed a new seven-and-a-half-year low of 3,391.5 points earlier in the day.

But the German DAX 30 index gained 0.8 per cent to 2,693.7 points in late trading while the French CAC 40 index finished up 1.4 per cent at 2,840.1 points.

—AFP