* Oil hovers near two-and-a-half year highs
* Gold regains some lost ground, trend still bullish
* Food, energy prices seen as risk for Asia stocks
By Nick Macfie
SINGAPORE, Feb 23 (Reuters) - Asian stocks were flat to
slightly lower on Wednesday after Wall Street's worst showing
since August, and oil hovered near 2-1/2 year highs as the
revolt against Libya's Muammar Gaddafi reduced crude output in
Africa's third-largest producer.
Popular protests in Egypt and Tunisia have toppled
entrenched leaders, but a defiant Gaddafi, the world's
second-longest-serving leader after the Sultan of Brunei, said
he would not be forced out by the deadly unrest sweeping his
nation.
The turmoil in Libya, which pumps nearly 2 percent of world
oil output, sent London Brent crude prices above $108 a
barrel to a 2-1/2 year high but they settled below $106 on
Tuesday as the Organization of the Petroleum Exporting Countries
(OPEC) said it would act should there be a supply shortage.
On Wednesday, Brent was trading up around 70 cents at around
$106.47. NYMEX crude for April delivery was up 50 cents
at $95.92 a barrel. The contract earlier rose as high as $96.08,
the highest for any nearby month since October 2008.
Japan's Nikkei 225 index was down 0.2 percent and
the MSCI's index of Asia Pacific shares outside Japan
was off 0.3 percent.
Transporter companies, whose fuel bills are headed up,
extended sharp losses from Tuesday, with Korean Air Line
shedding 1.5 percent.
"The only observation an outsider sitting in Asia can make
about events in the Middle East and North Africa is that the
unpredictability of events and the difficulty in ascertaining
the 'end game' mean that equity markets settling back into
equilibrium is still some way off," said Nomura analyst Sean
Darby.
"The ongoing risk is if food prices were to continue to rise
due to unseasonal weather and indeed if fuel prices were to
climb further. Non-linear responses such as bans on exports of
food by producers or curtailment of shipments of fuel due to
non-payment would only exacerbate the situation on the ground
and make it more difficult to return to normalcy."
Gold , a traditional safe haven in times of trouble,
were little changed around $1,400 an ounce on Tuesday, after a
six-session rally, but the trend is still expected to be
upwards.
Currencies viewed as safe havens, such as the yen and Swiss
franc, have also been boosted by events in Libya.
The dollar traded around 0.9371 Swiss francs , not far
off a three-week low around 0.9362 plumbed overnight. The euro
fell to a 3-1/2 week low at 1.2782 francs and last
stood around 1.2834.
The euro was at $1.3697, after having briefly risen
as high as $1.3704 on EBS after European Central Bank officials
said they were ready to fight inflation. .
Wall Street stocks on Tuesday suffered their worst day since
August in what could be the start of a long-anticipated pullback
after gaining more than 20 percent in the past six months.
The Dow Jones industrial average closed down 1.44
percent. The Standard & Poor's 500 Index fell 2.05
percent. The Nasdaq Composite Index dropped 2.74
percent.
U.S. stock futures were slightly higher, suggesting
Wall Street will rise again when it reopens on Wednesday.
(Editing by Ramya Venugopal)
