* Brent crude up 1.2 pct to trade at $113.56 a barrel
* World stocks up 0.1 pct, set for 3rd monthly rise
* Copper rises; U.S. Treasury yields dip below 3.40 pct
By Dominic Lau
LONDON, Feb 28 (Reuters) - Oil prices advanced on Monday as
protests in Oman raised concerns about supply from the Middle
East, though world stocks rose and were on track to post their
third straight month of gains on an improving growth outlook.
Copper prices extended the previous session's 3 percent
gains after an earthquake in top producer Chile, though
benchmark U.S. 10-year Treasuries were also in demand, sending
yields to below 3.40 percent -- their lowest in four weeks.
The dollar hovered near its three-week low against a basket
of major currencies.
Omani protesters demanding political reforms blocked roads
leading to a main export port and refinery on Monday as the
death toll from Sunday clashes with police in the Gulf Arab
sultanate rose to six. However, its oil flow has not been
affected. []
Revolt in Libya has cut as much as three quarters of the
OPEC member's output, prompting Saudi Arabia to step in and plug
the supply gap to Libya's oil buyers.
However, oil prices stayed firm, with Brent crude <LCOc1> up
1.2 percent to trade above $113.56 a barrel and U.S. crude
futures <CLc1> rising 1.2 percent to above $99 a barrel.
"There is the continued threat that conflicts will spread in
the region that produces a large amount of oil in the world,"
said Ben Westmore, a commodities economist at the National
Australia Bank.
"There's been a bit of a contagion already," he said.
The worst-case scenario for oil markets would be an
interruption to supply from Saudi Arabia. It holds most of the
world's spare crude output capacity, and without it there is no
producer that could fill supply disruption such as that stemming
from Libya.
Brent crude is up more than 12 percent this month, heading
towards its sixth straight month of rises.
The higher oil price could derail global growth, though
Monday's rise was not as dramatic as last week when Brent crude
neared $120 a barrel, a 29-month high.
World equities measured by MSCI All-Country World Index
<.MIWD00000PUS> added 0.1 percent after rising 1.1 percent on
Friday. The global index is up 2.1 percent this month, on track
for a third straight monthly rise.
Europe's FTSEurofirst 300 <> index fell 0.3 percent,
partly hurt by results from HSBC <HSBA.L>, while Ireland's
stocks <.ISEQ> dropped 0.3 percent.
Ireland's main opposition party said it would start urgent
talks on forming a new government in a bid to turn its landslide
election win into a mandate to renegotiate a bailout deal with
Europe.
In Asia, Japan's Nikkei average <> rose 0.9 percent,
helped by a weaker yen.
TREASURY YIELDS DOWN
A growing aversion to risky assets in the latest week
fuelled the biggest flows to global bond funds in more three
months, and turned more investors away from emerging market
stocks, according to fund tracker EPFR Global. []
Yields on benchmark 10-year U.S. Treasuries <US10YT=RR>
eased 2 basis points to 3.3941 percent.
The greenback also slipped, down 0.2 percent and hovering
near its three-week low against a basket of major currencies
<.DXY>.
"Rising oil prices help to widen the perceived policy
divergence between the Fed and other major central banks," said
Lee Hardman, currency analyst at BTM-UFJ.
"The ECB sees rising crude as an upside risk to inflation
rather than the Fed's view that it will be negative for growth.
This is increasing the risks of a near-term overshoot for the
euro."
Copper <CMCU3> rose for the third day, up 0.7 percent this
month and on track for its eighth month of gains.
(Additional reporting by Neal Armstrong in London, Florence Tan
in Singapore; Editing by Ruth Pitchford)
