* Oil up above $137 a barrel on supply worries
* Yen at 11-month low against euro, down on dollar
* Stocks flat
* Federal Reserve meeting in background
By Jeremy Gaunt, European Investment Correspondent
LONDON, June 24 (Reuters) - Oil jumped well above $137 a
barrel on Tuesday, but many financial markets moved into
cautious trading ranges before a U.S. Federal Reserve decision
on interest rates later in the week.
A weak Japanese yen lifted the euro to an 11-month high.
European shares were slightly up, lifted by mining stocks, while
Japanese equities closed flat.
Oil was driven higher by worries about tension between Iran
and Israel and by a strike in Nigeria. New York crude <CLc1> was
up 84 cents at $137.58 a barrel.
The yen was one of the most active movers of the day,
falling against both the dollar and euro on a combination of
increased risk appetite, weak Japanese corporate surveys and
interest rate differentials with the United States and Europe.
"Yen weakness seems to be driven by talk of strong retail
outflows from Japan into overseas assets," said Adam Cole,
global head of FX currency strategy at RBC Capital Markets.
The euro hit an 11-month high against the yen, rising as far
as 168.26 yen according to Reuters data, its strongest since
July 2007 <EURJPY=>. It was up around 0.4 percent.
The dollar <JPY=> also gained against the yen, up 0.1
percent to 108.02 yen, but was down on the euro. The euro <EUR=>
brought $1.5570.
The Fed's rate announcement on Wednesday was in the
background of much trading. The policymakers are expected to
keep rates unchanged at 2.0 percent, but their recent
hawkishness about inflation will be in focus.
Prospects of higher U.S. and European interest rates, for
example, were behind some of the yen weakness.
EUROPEAN STOCKS RISE
European shares got off to a higher start, lifted by gains
in miners but with one eye on the Fed, before easing back.
The FTSEurofirst 300 <> index of top European stocks
was up 0.1 percent. "Other than resources stocks and companies
up on merger talk, everything seems moribund," said David Buik
of Cantor Index.
Earlier, Japan's Nikkei stock average ended flat.
"Oil prices are stuck not far off their highs and U.S.
financial shares are stuck at lows. There's no financial
meltdown, that's over, but there's still a lot of worries," said
Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.
The benchmark Nikkei <> ended down 0.1 percent, or 7.91
points, at 13,849.56, the lowest close since May 28. The broader
Topix <> was up 0.1 percent at 1,349.19.
Euro zone government bonds were flat to lower following
stronger-than-expected French data and weaker Treasuries in New
York. The interest rate-sensitive two-year Schatz yield
<EU2YT=RR> was up 3 basis points at 4.600 percent. The 10-year
Bund yield <EU10YT=RR> was flat at 4.630 percent.
