* World stocks retreat on concern high oil could hurt growth
* Gold near record peak, silver at 31-year high
* Euro, bunds shrug off Greece ratings cut
By Emelia Sithole-Matarise
LONDON, March 7 (Reuters) - Crude oil prices jumped to a
2-1/2-year peak on Monday as worries about supply disruption
increased due to widening clashes in Libya, while world stocks
fell on concern sustained high oil prices could hurt growth.
Unrest in the oil-rich Middle East stoked demand for
precious metals, with gold -- often sought in times of
geopolitical tensions -- rising close to a lifetime high at
$1,434.82 an ounce, while silver surged to a 31-year peak.
The euro briefly reversed gains against the dollar and
peripheral euro zone debt prices fell after Moody's cut its
rating for Greece by three notches to B1 and kept it on review
for further downgrades, although core German debt was little
changed. []
U.S. crude oil futures <CLc1> jumped 1.6 percent, topping
$106, to their highest price in 30 months as a counter-offensive
by Libya's Muammar Gaddafi against rebels deepened fears that
Africa's largest holder of oil reserves is headed for civil war.
[]
U.S. crude is up by more than a fifth in the last two weeks.
Investors are worried that a prolonged period of high oil
prices could stifle economic growth and erode corporate profits,
while adding to inflationary pressures.
The MSCI all-country world stock index <.MIWD00000PUS> was
down 0.4 percent, with European stocks weighing on the
benchmark.
"Investors are still nervous. The one thing they hate is
uncertainty and the Middle East situation is providing plenty of
uncertainty," said Keith Bowman, analyst at Hargreaves Lansdown.
"A majority of countries have to import oil. It's a major
cost and a sustained period of elevated oil prices is seen as a
major drag on industries."
The FTSEurofirst 300 <> index of top European shares
was 0.3 percent lower, tracking falls in Asian equities
overnight and after Wall Street ended lower on Friday, erasing
last week's gains.
Japan's Nikkei average <> ended down more than 1
percent.
EURO SLIPS ON GREEK RATINGS CUT
In currencies, the euro <EUR=> reversed early gains against
the dollar after the Moody's action, but later rose to a
four-month high of $1.4014 after breaking above resistance at
$1.40 on Friday.
Some analysts said uncertainty about the euro zone's more
indebted countries could hamper future gains by partially
offsetting expectations of an interest rate hike from the
European Central Bank.
"People are a bit hesitant about taking euro/dollar above
$1.40 despite the factors playing in its favour -- interest rate
differentials and high oil prices," said Niels Christensen,
currency strategist at Nordea in Copenhagen.
"There's a bit of bad news with the Greece downgrade and
Ireland wanting to renogotiate the bailout, and there's some
focus on this, but it's too early for concerns about sovereign
debt to really come back and hurt the euro".
U.S. and German government bond prices were flat on the day,
shrugging off Moody's rating decision on Greece.
"This is not going to be the last downgrade for Greece. The
market has already discounted that Greece will need to
restructure its debt, so the rating agencies are just running
behind the market," said Christoph Weil, an economist at
Commerzbank.
(Additional reporting by Atul Prakash and Jessica Mortimer;
Editing by Catherine Evans)
