Syria doubts drive up oil, yen; stocks slip

Dealers said the moves, spurred by reports from Washington that a strike may be imminent, were not massive as investors are waiting to see how the situation unfolds."Certainly there hasn't been any panic but with the headlines out there, there has been some risk-off trading," said Greg Matwejev, director of FX Hedge Fund Sales and Trading at Newedge.U.S. Secretary of State John Kerry, in the most forceful reaction yet to the August 21 gas attack outside Damascus, set the stage for possible action when he said President Barack Obama "believes there must be accountability for those who would use the world's most heinous weapons against the world's most vulnerable people."

Kerry said Obama was consulting with allies before he decides on how to respond and those comments saw U.S. stocks .SPX end 0.4 percent lower in light volumes on Monday.The share selloff started the move into safer assets with the yen rising broadly to leave the greenback down 0.4 percent at 98.07 yen and the Australian dollar down 0.8 percent to 88.25 yen.The euro had fallen 0.3 percent against the Japanese unit though it was steady against the dollar at $1.3372.Brent crude oil for October was around $111 a barrel, just under Monday's high of $111.68, which was its highest price since April 2.European shares were down 0.6 pct in early trading following a drop of 1.2 percent across Asian markets outside Japan .MIAPJ0000PUS. Tokyo's Nikkei .N225 ended 0.7 percent lower, while the safe-haven yen rose broadly.

Traders in Europe were expecting some good news on the economic front which could ease the nervousness in the market.While Italy's main share index was in positive territory, rising 0.4 percent after falling about 0.8 percent on Monday on concern over the stability of the ruling coalition, with Silvio Berlusconi's centre-right party threatening to bring down the government.Emerging markets were still being hit hard by doubts over the Syrian situation, which added to market pressures on near neighbor Turkey and sent the lira slumping to a record low around two to the dollar.The lira was already under pressure with investors pulling out of emerging markets as investor position for a post-stimulus world with many betting the U.S. Federal Reserve will start reducing its bond-buying program next month.

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