Asia stocks sink on Syria concerns, oil surges

The growing likelihood of Western military action against Syria pummeled Asian stock markets Wednesday and sent the price of oil soaring.

Fears that the U.S., Britain and other countries are gearing up to confront Syria over its alleged use of chemical weapons against civilians rose after Defense Secretary Chuck Hagel said the U.S. military stands ready to strike against Syria if President Barack Obama gives the order.

“While we believe that the market tensions should not last for too long ... sentiment will continue to be under pressure until the situation shows signs of easing,” Anthony Lam of Credit Agricole CIB in Hong Kong said in a market commentary.

Japan's Nikkei 225 index sank 2.3 percent to 13,228.28. Hong Kong's Hang Seng dropped 1.4 percent to 21,574.15. South Korea's Kospi declined 0.5 percent to 1,876.95. Australia's S&P/ASX 200 tumbled 1.2 percent to 5,081.90. Benchmarks in the Philippines, Indonesia and mainland China also fell.

U.S. stocks were hit with a broad sell-off Tuesday. The Dow Jones industrial average lost 1.1 percent to close at 14,776.13. The Standard & Poor's 500 index declined 1.6 percent to close at 1,630.48. The Nasdaq composite was down 2.2 percent, to 3,578.52.

The tensions with Syria overshadowed two positive reports on the economy.  The Conference Board said its consumer confidence index rose to 81.5 in August, up from 80.3 the month before and beating expectations. A survey on home prices showed a strong rise from the year before.

Syria is not a major oil producer, but traders are worried that a showdown with the regime of President Bashar Assad could escalate into a regional conflict that might disrupt the flow of oil from the Middle East.  The conflict has the potential to draw in Iran, a key ally of Syria and a big oil producer. The Middle East nation also shares a border with Iraq, another larger oil producer in the region.

Benchmark oil for October delivery was up $2.16 to $111.16 a barrel in electronic trading on the New York Mercantile Exchange. The contract jumped $3.09 Tuesday to $109.01 a barrel on the Nymex. That's the highest closing price since February 2012, although oil remains far below its record close of $145.29 a barrel, reached on July 3, 2008.

In currencies, the euro was almost unchanged at $1.3387 from $1.3388 late Tuesday. The dollar rose slightly to 97.10 from 97.07. (AP)