* Portugal bond yield at new high as bailout fears grow
* Wall Street buoyed by Texas Instruments deal
* Spot gold hits record high on safe-haven appeal
* Euro reverses loss,; world stocks end winning streak
(Recasts, adds details, updates prices)
By Leah Schnurr
NEW YORK, April 5 (Reuters) - Spot gold notched a record
high on Tuesday as a downgrade of Portugal's debt stirred a bid
for safety, while on Wall Street a large U.S. technology
company merger helped drive small gains.
The euro reversed losses to turn positive against the
dollar after talk of a hawkish U.S. think-tank report on
European Central Bank policy. The ECB is widely expected to
raise interest rates by a quarter point when it meets on
Thursday.
A rise in crude oil prices to 2-1/2 highs on unrest in
oil-exporting countries fed inflation fears and supported the
price of gold. Spot gold <XAU=> rose to a record high above
$1,450 an ounce.
Wall Street shares crept higher after Texas Instruments
<TXN.N> said it would buy rival National Semiconductor Corp
<NSM.N> for $6.5 billion, driving National Semiconductor's
stock up more than 70 percent.
The deal offset the impact of an interest rate hike by
China, its fourth increase since October.[]
"These kinds of deals show that even with the rate hike and
the ISM number, prices are still extremely attractive," said
Tim Courtney, chief investment officer at Burns Advisory Group
in Oklahoma City. "That's why the market is holding steady
despite some bad news."
The Institute for Supply Management on Tuesday reported
that growth in the U.S. services sector slowed in March.
Rating agency Moody's cut Portugal's sovereign debt by one
notch, saying the incoming government would urgently need to
seek financial aid from the European Union. Portuguese bond
yields rose to euro lifetime highs. []
"Even though Moody's still rates the sovereign two notches
higher than Standard & Poor's, the downgrade is another blow to
sentiment," said Gavan Nolan, an analyst at data monitor
Markit.
Portugal's lending banks told the central bank on Monday
that the country urgently needs a bridge loan and banks have
virtually no more capacity to buy government debt, sources
said. []
Yields on Portugal's 10-year government bonds <PT10YT=TWEB>
rose as high as 9.033 percent, while Portuguese stocks <>
slumped 1 percent. The Portuguese market fared worse than the
broader FTSEurofirst 300 index <>, which provisionally
closed up 0.2 percent.
It was the highest close for European shares in almost four
weeks, with energy shares rising with oil prices.
Credit default swaps implied a 41 percent probability of a
Portuguese default within five years, compared with 33 percent
at the end of February, data provider CMA said.
[]
The euro <EUR=> fell against the dollar for the second day
but trimmed losses after the talk of a hawkish U.S. think-tank
report on European Central Bank monetary policy. The euro was
last trading at $1.4236 up 0.13 percent.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphics on Thursday's ECB meeting:
http://r.reuters.com/kah88r
Graphic on euro zone credit ratings:
http://r.reuters.com/pyh48r
Graphic on China rate rise: http://r.reuters.com/veh88r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
FOMC MINUTES ON TAP
Global stocks snapped a five-day winning streak with the
MSCI All-Country World Index <.MIWD00000PUS> trading flat after
hitting six-week highs in the previous session.
The Dow Jones industrial average <> added 13.55 points,
or 0.11 percent, to 12,413.58. The Standard & Poor's 500 Index
<.SPX> rose 2.37 points, or 0.18 percent, to 1,335.24. The
Nasdaq Composite Index <> gained 9.76 points, or 0.35
percent, to 2,798.95.
Brent crude <LCOc1> prices topped $122 a barrel, recouping
losses as worries about supply from oil-producing countries in
Africa and the Middle East overshadowed China's rate hike.
Brent futures were up $1.47 at $122.51 a barrel, while U.S.
crude futures <CLc1> were flat around $108.46.
Federal Reserve Chairman Ben Bernanke said late on Monday
that the recent spike in U.S. inflation was unlikely to
persist.
But sustained higher oil prices could pose a serious threat
to the global economic recovery and dampen risk appetite.
Investors were awaiting the release of minutes from the latest
rate-setting committee meeting of the Fed later in the
afternoon.
(Additional reporting by Nick Olivari and Rodrigo Campos;
Editing by Leslie Adler)
