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By Anshuman Daga
SINGAPORE, May 6 (Reuters) - Oil prices held near record
highs on Tuesday after storming past $120 a barrel on Monday,
pushing up gold prices and stalling a recovery in Asian stocks.
The U.S. dollar was broadly weaker as doubts resurfaced on
about the health of the U.S. economy, while high oil prices
boosted currencies of commodity exporters such as the
Australian and Canadian dollars.
The relentless surge in commodities from oil to rice is a
key concern for central banks, although some investors have
started to price in the view that the worst of the credit
crisis and the U.S. economic slowdown could be over.
By 0230 GMT, MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> was 0.1 percent weaker, backing off a
four-month high hit on Monday.
The benchmark has risen 2 percent in the last two sessions
but is down 6 percent so far this year.
U.S. light crude for June delivery <CLc1>, a global
benchmark, rose 22 cents to $120.19 a barrel. It jumped more
than $4 on Monday to a record high of $120.36.
"A lot of this is supply-driven, with the market very
vulnerable to any disruption in supplies," said Mark Pervan, a
senior commodities analyst at Australian & New Zealand Bank.
"We're seeing large oil-producing countries coming up as a
question mark," he said.
The rise in oil to a fresh record high raised market
concerns about the outlook for U.S. consumer spending.
Prices of oil and other dollar-denominated commodities
usually rise to adjust for inflation when the U.S. currency
falls.
Stock markets in Australia <>, Taiwan <> and
Singapore fell between 0.2 percent and 0.5 percent.
Hong Kong <> eased while South Korea <> was flat
as trading resumed after a holiday. Japanese markets remain
closed for a national holiday.
U.S. stocks declined on Monday on worries that Bank of
America Corp <BAC.N> might walk away from buying troubled
lender Countrywide Financial Corp <CFC.N>, talk which Bank of
America denied. Record oil prices also hit stocks.
GOLD ADVANCES
Gold extended gains, adding to a rise of nearly 2 percent
in New York, helped by bargain hunting and higher oil prices,
which enhanced the metal's appeal as a hedge against inflation.
[]
Gold <XAU=> was changing hands around $873.70/874.70 an
ounce, up from $871.15/872.55 in late New York trading on
Monday. It hit a four-month low of $845 on Friday.
Against a basket of six major currencies, the dollar eased
to 73.015 <.DXY>, having backed off a 73.698 high on Friday.
The euro bought $1.5500 <EUR=>, although dealers said the
market did not appear to be in the mood to rest resistance
around $1.5570.
The dollar was trading around 104.90 yen <JPY=> after it
failed to sustain a high of 105.92 on Monday.
The rise in commodity prices comes at a time when Wall
Street does not expect the Federal Reserve to cut interest
rates at its next meeting in June. []
The Fed lowered its benchmark federal funds rate on April
30 by one-quarter point to 2 percent in what may be the last in
a series of cuts aimed at aiding an economy hit hard by a
housing slump and credit market turmoil.
The U.S. economy lost jobs for the fourth month in a row in
April but at a slower pace than earlier in the year, easing
fears the economy was slipping into a deep recession, although
the rise in oil prices has raised some fresh doubts.
[]
Europe will be a major focus of investors' attention this
week as the European Central Bank and Bank of England hold
policy reviews against a backdrop of weakening economic
strength. Both are expected to keep rates on hold.
(Additional reporting by Chua Baizhen; editing by Neil
Fullick)
