* Dollar index <.DXY> hits 3-year low
* EU inflation data signals more tightening
* Libya war spills into Tunisia, Syrian unrest escalates
By Dmitry Zhdannikov
LONDON, April 29 (Reuters) - Oil prices hovered near
31-month highs as a weak dollar and violence in North Africa and
the Middle East outweighed concerns about slowing growth in top
consumer the United States.
On its last trading day of April, U.S. crude was heading for
an eighth consecutive month of gains, the longest run of monthly
increases since 1983, Reuters data showed.
U.S. crude <CLc1> was up 41 cents at 1217 GMT at $113.27 a
barrel, the highest since the close on Sept. 22, 2008. Brent
futures were also rose 44 cents to $125.46, less than $2 short
of its 2011 high of $127.02, reached on April 11.
Both U.S and Brent crude recouped losses posted earlier on
Friday after euro zone data showed the inflation rate rose
further above the European Central Bank's target in April.
The data increased the chances of another interest rate rise
in the euro zone in June [] and helped push the
dollar index against a basket of major currencies <.DXY> to a
fresh three-year low.
"European markets are becalmed by three consecutive short
trading weeks, and market activity has been fairly limited
during this time. Geopolitical concerns in North Africa and the
Middle East remain, with the conflict in Libya at an impasse and
Syrian unrest increasing," said Lawrence Eagles from JP Morgan.
Libya's conflict spilled beyond its borders on Friday as
forces loyal to leader Muammar Gaddafi ttacked the Tunisian town
of Dehiba, near the Libyan border. [].
Morocco, which borders major oil and gas producer Algeria,
said a bomb that killed at least 14 people on Thursday in its
busiest tourist destination was a terrorist act. []
And in Syria, tensions escalated with security forces firing
tear gas to disperse protesters in Damascus while tens of
thousands of Syrians rallied across the country demanding
political freedoms. []
SEEN SIDEWAYS
The weak dollar also helped push gold to a new record as
investors sought alternative assets. []
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For a 24-hour technical outlook on Brent:
http://graphics.thomsonreuters.com/WT1/20112904083345.jpg
For a wrap on U.S. growth, inflation: []
For stories on Libya & Middle East crisis: []
For a TAKE-A-LOOK on Middle East, N Africa:[]
For top stories on the global economy: []
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Oil hovered near multi-month peaks despite weak U.S. data,
which showed on Thursday that economic growth had braked sharply
in the first quarter as higher food and gasoline prices dampened
consumer spending and sent inflation rising at its fastest pace
in 2-1/2 years.
"At current price levels the main downside risk comes from
demand destruction," said Olivier Jakob from Petromatrix
consultancy.
Growth in the U.S. gross domestic product slowed to an
annual rate of 1.8 percent from a fourth-quarter pace of 3.1
percent, the Commerce Department said. Economists had expected a
2 percent pace. []
Victor Shum, an analyst at Purvin & Gertz, said oil prices
would continue to trade sideways in the next few days.
"Any aggressive exit by is unlikely, because what are the
alternatives for investors?" Shum said. "If the global economy
tanks, stocks will go down. Oil will stay supported because of
geopolitical risks."
"With renewed buying being seen from Asian customers, we
continue to see upside price risks in the environment, unless
more concrete action from OPEC members is forthcoming," said JP
Morgan's Eagles.
(Writing by Dmitry Zhdannikov, editing by William Hardy)
