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Ammon News - LONDON (AFP) - Most European equities fell sharply Tuesday as investors ignored solid data from Germany and eyed possible military intervention in Syria, sending the price of safe-haven gold soaring.

While London’s FTSE 100 index slid 0.79 percent to 6.440.97 points, other markets were down over two percent.

Frankfurt’s DAX 30 fell 2.28 percent to 8,242.56 points, the CAC 40 in Paris dropped 2.42 percent to 3,968 points.

Milan dropped 2.34 percent, Madrid fell 2.96 percent, Athens plunged 4.08 percent and Istanbul slumped 4.73 percent.

“Markets are tanking in Europe today, as Syria related risk-aversion prevails,” said trader Anita Paluch at Gekko Markets.

“The outlook of a military action in relation to the use of chemical weapons is clearly dampening risk appetite.”

In midday trading Wall Street was also down, with the Dow Jones Industrial Average off 0.55 percent to 14,864.91 points, the broader S&P 500 index down 0.86 percent to 1,642.51 points and the tech-rich Nasdaq composite slumping 1.04 percent to 3,619.57 points.

“The uncertainty being created by the potential for some form of military action in Syria, political uncertainty in Italy and the timing of a Fed tapering programme appears to have convinced a lot of people that the risks of getting involved in these markets somewhat outweighs any potential rewards, hence today’s sharp falls,” said CMC Markets UK analyst Michael Hewson.

On the foreign exchange markets, the European single currency rose to $1.3391, from $1.3369 late in New York on Monday.

Sterling fell to 1.16 euros and $1.5539.

Global oil prices surged over concerns about renewed instability in the Middle East, with Brent oil rising to a six month high of $114.17 a barrel during European trading. It later settled back to $113.98, up $3.25 compared with Monday’s close.

And gold prices rallied to $1,419.25 an ounce, up from $1,377.50 the previous session, as many investors parked their cash in the commodity seen as a safe bet in times of unrest.

Talk of war in the Middle East upstaged solid data out of Germany where the German business confidence rose for a fourth consecutive month in August, boosted by a stronger export outlook in Europe’s top economy.

The Ifo economic institute’s closely watched business climate index rose to 107.5 points this month from 106.2 in July.

“Unsurprisingly, the concerns over Syria have completely overshadowed the positive data out of the eurozone,” said analyst Craig Erlam at traders Alpari.

In Asia on Tuesday, Hong Kong equities slid 0.59 percent and Tokyo shed 0.69 percent, but Sydney eked out a slender gain of 0.11 percent.

Emerging markets also remained under the spotlight due to lingering concern that tighter US monetary policy could spark massive outflows of foreign cash back to the West.

The Turkish lira slumped to a new record low, closing at 2.0372 to the dollar, despite the central bank vowing a vigorous defence of the currency with its $40 billion in reserves.

Turkey is caught up in a currency turmoil that is also spreading across emerging economies in Asia, Latin America, Russia and South Africa as investors pull out some funds because of the imminent change in the US monetary climate as well as in global interest rates.

Hungary’s central bank (MNB) cut its main interest rate to a record low level of 3.8 percent from 4.0 percent after 12 monthly quarter-point cuts in a row.

In India, the rupee also plunged to a new low, posting one of its sharpest-ever single-day falls.

The rupee fell to a lifetime low of 66.30 rupees to the dollar, slipping past its previous low of 65.56 last Thursday.

Hewson noted that the risk aversion is also manifesting itself through “a move into safer haven US, UK and German government bonds.”

The increased buying pushed down the yield on 10-year German government bonds to 1.89 percent, to 2.60 percent on British 10-year bonds, while 10-year US Treasury bonds dipped to 2.75 percent.