* Global equities rise alongside commodities
* Euro at 15-month peak on EU rate hike optimism
* Dollar pressured as U.S. government shutdown looms
* Oil above $126, gold notches another record high
(Updates prices, adds details, quote)
By Leah Schnurr
NEW YORK, April 8 (Reuters) - Oil rose to a 32-month high
on Friday above $126 a barrel on concerns of long-term supply
cuts as expectations of more interest rate hikes in the euro
zone drove the euro to a 15-month peak against the dollar.
Commodities, including metals, gained broadly on
expectations of stronger demand, the weak U.S. dollar and, in
some cases, the threat of supply shortages.
Global equities were boosted by optimism the worldwide
economic recovery will fuel demand for commodities, and shares
hit their highest level in almost three years. U.S. stocks
opened higher but were little changed by late morning.
Brent crude surged $3.51 to $126.18 per barrel, its highest
level since August 2008 as the war in Libya, unrest elsewhere
in the Arab world and postponed elections in Nigeria drove a
bullish attitude on oil. U.S. crude rose to a 30-month high, up
$2.10 at $112.40.
Boosted by Thursday's European Central Bank rate hike, the
euro rose to its highest since January 2010. The currency was
up 0.9 percent at $1.4432 <EUR=> with a session peak of
$1.4444.
The greenback was pressured by the prospect of a U.S.
government shutdown. Republicans and Democrats have been in
budget talks trying to reach an agreement that would avert a
government shutdown at midnight.
The ECB's move to raise its key interest rate to 1.25
percent has widened the euro zone's yield advantage over the
United States, Britain and Japan, where rates remain at record
lows. For details, see []
ECB President Jean-Claude Trichet said policymakers were
ready to tighten further if needed. But he stressed the ECB had
not decided that Thursday's move was the first in a series.
[]
"Trichet's press conference was neutral and suggests to us
that the bank is embarking on a gradual series of rate
increases of perhaps 25 basis points per quarter," said Jon
Wetreich, currency strategist at Brown Brothers Harriman.
Stronger-than-expected German trade data helped underscore
the health of the euro zone's largest economy, helping
investors sidestep resurgent doubts over the resilience of the
zone following Portugal's request this week for aid to cope
with its debt. []
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ECB in graphics: http://r.reuters.com/kah88r
BOJ versus Fed assets: http://link.reuters.com/saq88r
Select interest rates: http://link.reuters.com/vug88r
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PROTESTS ERUPT
Libyan rebels said they repulsed a government assault on
the besieged city of Misrata but prospects faded for a military
overthrow of Muammar Gaddafi. []
Protests erupted across much of the Arab world on Friday,
the Muslim day of prayer, with demonstrators dying in Syria and
Yemen. Egyptians staged one of the biggest rallies since
President Hosni Mubarak's fall. []
Spot gold <XAU=> hit a record high for the fourth day in a
row and silver <XAG=> climbed past the $40 an ounce level for
the first time since 1980.
Miners drove European stocks and the FTSEurofirst 300 index
<> closed up 0.4 percent at a five-week closing high.
"The next big thing is the U.S. earnings season," said Matt
Brown, trader at Catalyst Markets. "If we want the market to
have further momentum we need the upside surprises to continue,
otherwise investors may step away."
The MSCI main world equity index <.MIWD00000PUS> rose 0.6
percent to its highest since July 2008, on track for its third
consecutive weekly gain.
The Dow Jones industrial average <> slipped 21.42
points, or 0.17 percent, to 12,388.07. The Standard & Poor's
500 Index <.SPX> eased 2.24 points, or 0.17 percent, to
1,331.27. The Nasdaq Composite Index <> lost 6.13 points,
or 0.22 percent, to 2,790.01.
In Washington, the White House and Congress worked to break
a budget deadlock and avoid a federal government shutdown,
after President Barack Obama and congressional leaders failed
to reach a deal in late-night talks. []
Investment firm Goldman Sachs <GS.N> estimated a government
shutdown lasting more than a week could cost the economy $8
billion in missed federal spending, dragging down growth.
(Additional reporting by Nick Olivari in New York and Joanne
Frearson in London; Editing by Andrew Hay)
