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Gold drops as war seen delayed
SINGAPORE (Reuters) -- Gold slumped to its lowest in almost seven weeks and Asian stocks rose on Monday after a weekend of global anti-war demonstrations and diplomatic bickering eased fears of imminent military action against Iraq. The Tokyo stock market hit a three-week high and Taiwan and South Korea's main benchmarks soared more than four percent. The dollar was slightly firmer in thin trading. "The case for war is getting weaker and weaker,'' said Teng Ngiek Lian, chief executive at Singapore's Target Asset Management, which manages $100 million in funds. Spot gold often used as a safe-haven investment, fell as low as $342 an ounce, its weakest since early January and down 2.4 percent from New York's close around $350.50 on Friday. "The gold market is saying that war is not a certainty,'' said Paul Lee, director of precious metals at Dresdner Kleinwort Wasserstein in Sydney. The low of the day was 12 percent below a $388.50 peak hit earlier in February, the highest in more than six years. At 0614 GMT, spot gold was quoted around $347.25. The dollar ran up to 120.78 yen from 120.29 late in New York, but pared its gains later on expectations Japanese exporters would sell the currency if it reached 121 yen. The euro which had gained on war fears as a safe-haven investment compared with the dollar, was at $1.0720, down from $1.0791. U.S. financial markets, including trade of crude and Treasuries in Asia, were closed to mark the U.S. Presidents' Day holiday. They will resume trading on Tuesday. MILLIONS MARCHMore than six million people worldwide marched over the weekend in the biggest anti-war demonstrations since the Vietnam war. Some of the largest crowds rallied in countries whose leaders have backed U.S. moves for military action in Iraq and to oust Saddam Hussein. NATO broke a one-month deadlock over measures to protect Turkey in the event of war with Iraq, but the long wrangle highlighted the diplomatic rift over how to disarm the Middle East oil producer. The United States and Britain were already on the defensive going into the weekend after reports from U.N. weapons inspectors on Friday were deemed as less critical of Baghdad's degree of compliance on disarmament than a previous interim report by the inspectors. Asian stock markets also took heart from a firm close on Wall Street on Friday, where the Dow Jones Industrial Average gained two percent to 7,908.80 and the technology benchmark Nasdaq pushed 2.56 percent higher to 1,310.17, partly thanks to a reassuring outlook from Dell Computer Corp Tokyo's Nikkei average closed up 0.8 percent at 8,771.89, its highest close since January 23. The index was bolstered by foreign buyers of blue-chip technology exporters. Toshiba Corp, Japan's biggest computer chipmaker, was up 4.58 percent at 388 yen, while Fujitsu Ltd, the country's biggest computer maker, ended 4.76 percent up at 352 yen. "Foreign investors are stepping up purchases of Japanese stocks and that is the main reason the market has held up so strongly in recent weeks,'' said Koichi Seki, equity manager of the sales department at Chuo Securities.
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