Oil climbed to a two-year high, government bonds gained, while stocks and U.S. index futures tumbled as violence escalated in Libya. Oil for March delivery rose as much as 9.6 percent, and traded 7.4 percent higher at 6:10 a.m. in New York. The 10-year Treasury yield slid seven basis points. The MSCI World Index fell 0.6 percent, and the Bloomberg GCC 200 Index of Persian Gulf shares sank to a five-month low. Standard & Poor’s 500 Index futures lost 1.5 percent. The Dollar Index advanced 0.6 percent, while the New Zealand currency weakened against all of its major peers. Protests in the Middle East are driving oil prices higher, stoking concern inflation will accelerate. At least 250 people died in the Libyan capital Tripoli overnight, al-Jazeera reported, as violence spread in a nation with Africa’s largest oil reserves. China told banks to recalculate capital levels to account for higher risk weightings on some loans, two people with knowledge of the matter said, as it seeks to curb lending. “The dominoes are falling in the Middle East, causing oil to spike and risky asset classes to stumble,” Fred Goodwin, a fixed-income strategist at Nomura International in London, wrote in a research note. “Higher oil is a very bad growth shock, as it smashes real incomes.” Oil gained as much as $8.29 to $94.49 a barrel, the highest since October 2008, and last traded at $93.11 on the Nymex. Brent for April settlement climbed as much as 2.7 percent to $108.57 on the ICE Futures Europe exchange. Copper for delivery in three months fell 1.5 percent on the London Metal Exchange, and aluminum nickel and lead retreated. Cotton for delivery in May declined 3.6 percent, extending its two-day drop to 6.9 percent. Gold for immediate delivery fell 0.6 percent to $1,398.13 an ounce in London. Bonds, Stocks The two-year Treasury note yielded 0.71 percent, down from 0.76 percent yesterday. The yield on the German 10-year bund declined four basis points to 3.15 percent. The yield on the equivalent-maturity Japanese note dropped five basis points to 1.27 percent. The Stoxx Europe 600 Index lost 1 percent for its biggest three-day retreat since November. More than 15 shares fell for every one that rose. Air France-KLM Group, the region’s largest airline, tumbled 2.8 percent. Deutsche Lufthansa AG, the second- largest carrier, lost 2.2 percent. Eni SpA, the largest foreign oil producer in Libya, sank 1.8 percent on the Chi-X platform after “technical issues” prevented Italy’s stock exchange from opening, Borsa Italiana SpA said. Home Values The decline in U.S. futures indicated the S&P 500 may drop from its highest level since June 2008 when trading resumes today after the Presidents’ Day holiday. The S&P/Case-Shiller index of home values in 20 cities fell 2.4 percent in December from the same month in 2009, the biggest 12-month decrease in a year, according to 19 economists surveyed by Bloomberg before the report due at 9 a.m. New York time. A report scheduled for release at 10 a.m. may show the Conference Board’s sentiment index decreased to 65 this month from a revised 65.6 in January that was the highest since March 2008. Qatar’s QE Index fell the most among 36 developing-nation benchmark gauges, tumbling 3.2 percent. The MSCI Emerging Markets Index lost 1.6 percent, its largest drop in two weeks. Benchmark indexes in Russia, Turkey, Taiwan and South Korea slid at least 1.4 percent. China’s Shanghai Composite Index declined 2.6 percent, the most in a month. The dollar strengthened against 14 of its 16 most actively traded peers, appreciating 0.3 percent versus the euro and 0.4 percent per pound. The Swiss franc rose 0.7 percent against the euro and 0.4 percent versus the dollar. The yen climbed for the fifth day versus the dollar, rising 0.2 percent, the longest run of increases this year against the U.S. currency. New Zealand Quake New Zealand’s currency tumbled 1.8 percent against the dollar and sank 2 percent versus the yen. The death toll from the magnitude 6.3 earthquake, the strongest since September when the city was shaken by a 7.0 magnitude temblor, is likely to rise, New Zealand police said in a statement. The quake sent office workers in the country’s second-largest city fleeing into streets covered in shattered glass, paper, bricks and broken concrete. To contact the reporter on this story: Stephen Kirkland in London at skirkland@bloomberg.net. To contact the editor responsible for this story: Paul Sillitoe at psillitoe@bloomberg.net.

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