(Updates prices, adds Wall Street outlook)
By Jeremy Gaunt, European Investment Correspondent
LONDON, April 21 (Reuters) - Record high oil prices and
falling profits at Bank of America Corp. <BAC.N> dented
improving investor sentiment on Monday, extending losses on
European bourses and setting Wall Street up for a poor start.
The dollar also fell against major currencies, a reversal of
recent gains.
Crude oil <CLc1> hit a record $117.40 a barrel, building
inflation worries, while the No. 2 U.S. bank said first-quarter
profit fell, hurt by write-downs and rising credit losses.
Net income for the bank fell to $1.21 billion from $5.26
billion a year earlier, reminding investors of the toll from the
credit crisis.
Globally, equities were trading at their highest since
mid-January, boosted at the end of last week by U.S. earnings
resilience from internet leader Google <GOOG.O> and heavy
equipment maker Caterpillar <CAT.N> and fewer-than expected
writedowns from banking giant Citigroup <C.N>.
But the oil-Bank of America combo turned sentiment on the
day. The FTSEurofirst 300 <> index extended losses to
trade down 1.2 percent, taking back a good portion of Friday's
more than 2 percent rise.
Hopes that the worst of the credit crisis is behind has
boosted some investors sentiment, however.
World stocks as measured by MSCI <.MIWD00000PUS> were up 0.6
percent on the day at levels not seen since January 15. It has
risen more than 4 percent since its close last Monday.
Its emerging market stock counterpart <.MSCIEF> was up 0.9
percent.
Earlier, Japan's Nikkei 225 benchmark <.N224> rose 1.6
percent to a nearly two-month closing high of 13,696.55, a gain
of 220.10 points. The broader TOPIX <> closed up 2.1
percent at 1,331.51.
DOLLAR SLIPS
The dollar fell against a basket of major currencies with
nerves about inflation pressures from the high oil price
outweighing the positive spin of the previous week.
"Markets were hoping to come in today with a slightly more
optimistic outlook for credit and risk appetite, but there's
residual nervousness with oil prices continuing to squeeze up,"
Rabobank markets strategist Jeremy Stretch said.
The dollar was down 0.4 percent against a basket of six
major currencies <.DXY>. Against the yen it also fell 0.4
percent <JPY=> to 103.24 yen, having earlier closed in on 7-week
highs hit last week.
The euro gained 0.6 percent to 1.5903 <EUR=>, rising towards
last week's record high of $1.5983.
Euro zone government bond prices rose after a sharp decline
last week.
The two-year Schatz yield <EU2YT=RR> was down 2 basis points
at 3.787 percent while the 10-year Bund yield <EU10YT=RR>
slipped 4 basis points to 4.103 percent.
Improving sentiment for riskier assets is adding pressure to
the safe-haven government debt market.
(Editing by Stephen Nisbet)
