War fears power oil and gold

WORLD financial markets were gripped by mounting tension over war with Iraq today, driving the oil price back above $30 a barrel and gold to its highest in nearly six years.

Escalating fears of an American military strike came amid expectations that US Secretary of State Colin Powell would today announce that Iraq's weapons dossier contains omissions that amount to a violation of a United Nations disarmament resolution.

New York crude oil futures rose 38 cents to $30.82 a barrel in Asian markets after surging to $31.25 yesterday, a three-month high. North Sea Brent rose 56 cents to an 11-week high of $29.05.

The latest oil price rise cast a shadow over the global economic recovery. Economist Peter Hooper at Deutsche Bank said: 'We had thought that, after the first quarter, oil prices would come tumbling back down. But if prices go to the mid-$30s and stay there, it takes out a noticeable factor that we were assuming would bolster growth in 2003.'

Safe-haven gold leapt as high as $353.75 an ounce before faling back to close at $346.50 compared with $339.90 yesterday.