Oil Prices Surge, Then Retreat After Attack Begins : Markets: Word of the apparent success of the U.S. strike against Iraq sent stock prices sharply higher in Japan and other Far East nations.

Stock prices rebounded sharply here and across Asia today as word spread of a crushing American strike against Iraqi forces.

“The market is congratulating (President Bush’s) great success,” said Kasuhiko Hama, general manager of Nomura Securities’ equity department. “Iraq can’t win now.”

The Nikkei stock index rocketed 877.98 points, or 3.9%, to 23,320.68 in midafternoon trading, after dropping to as low as 22,099 after initial reports of the war’s outbreak.

In the United States, analysts predicted a strong opening for American securities markets today because of the apparent disabling of the Iraqi air force in the late-night strike.

The New York Stock Exchange, American Stock Exchange and over-the-counter market all planned to open as usual at 9:30 a.m. EST, spokesmen said.

In Asia, the dollar fell back as traders no longer felt the need to be in a “safe haven” currency.

Analysts say optimism was fed by the absence of any reaction from Iraq. But they warned that the optimism could evaporate quickly if Iraq retaliates by attacking Saudi Arabia and Israel.

News of the air attack hit Tokyo at 8:40 a.m., 20 minutes before the stock market opened. That gave traders an opportunity to digest the news rather than reacting in panic, analysts said.

As the session opened inside the white granite walls of the Tokyo Stock Exchange, there was some tension as blue-suited clerks signaled a rush of sell orders from the floor with fingers gesticulating and arms outstretched. In the first 30 minutes of trading, the Nikkei lost 343 points to 22,099, extending Wednesday’s 770-point drop.

Within an hour, however, the mood had changed. As news trickled in of the American strike’s success, traders began to predict a short war and started selling their dollars. With the yen strengthening, investors poured back into the stock market and prices began their upward march. With increasing frequency, traders on the floor broke into bursts of applause. The morning session closed up a sharp 433 points.

A press conference by White House spokesman Marlin Fitzwater, announcing the American strike, came close to the end of the morning session and gave a big boost to the market, traders said. “Bush seemed very happy, he made a good impression,” Hama said.

The dollar dropped to 133.35 yen in afternoon trading in Asia, after soaring to as high as 138 at the start of trading. The dollar had closed in New York at 136.80 yen on Wednesday. The dollar also fell to 1.517 German marks in Asia, down from 1.545 in New York.

Other Far East stock markets followed Tokyo higher as the afternoon wore on and the American strike appeared to have been decisive. The Taiwan market jumped 6.7%; the Singapore market rose 4.3%.

“When we heard the news of the attack we were somewhat shocked, but it wasn’t unexpected,” said Yoshinobu Ishii, managing director of Nikko Securities.

Everybody was ready, Ishii said. “Institutional investors had already lowered their positions, the effects of the attack had largely been discounted the day before and the general feeling was that the early decline was a buying opportunity.”

Most analysts assume that the war will be relatively brief and contained. However, Ishii said, if Iraq attacks Israel or the war extends to Saudi Arabia, “we don’t know how the markets will react.”

Asian Markets React With U.S. and European markets closed for the day, exchanges in Asia and the Pacific were the first to react to the outbreak of hostilities

Thursday,midday Point Pct. Market/Index or afternoon change change Taipei 3,538.32 up +222.06 +6.7% Weighted Index Singapore 1,198.44 up +49.36 +4.3% Straits Times Tokyo 23,320.68 up +877.98 +3.9% Nikkei Hong Kong 3,067.34 up +83.30 +2.8% Hang Seng Sydney 1,224.70 up +20.20 +1.7% All Ordinaries

Dollar In Japanese yen, midafternoon 133.35, down 3.45 or 2.5% Gold In Hong Kong, $ per ounce, $391.50, down $11.70 or 2.9%