(Adds dropped word in first paragraph)
* Brent oil tops $103, 28-mth high, on Egypt violence
* Nikkei eases after surge; Panasonic weighs
* Commodities rise, stoking inflation fears; sugar at record
* Greater China markets shut for Lunar New Year holidays
By Vikram S.Subhedar
HONG KONG, Feb 3 (Reuters) - Oil prices surged past $103 on
Thursday as pro-democracy protests in Egypt turned violent,
while commodities markets raced even higher, adding to worries
of mounting inflationary pressures that could threaten the
global economic recovery.
North Sea Brent crude futures rose nearly a dollar
to $103.27 per barrel, the highest in 28 months, after
supporters of Egyptian President Hosni Mubarak opened fire on
protesters, in what many saw as an official crackdown on
anti-government demonstrations.
Fears that unrest in Egypt and Tunisia will spread to other
countries in the Middle East and threaten the region's oil
exports overshadowed the bearish effect of soaring gasoline
inventories in the United States, prompting investors to move to
safer assets, or the sidelines.
In currency markets, the euro paused below a 12-week
peak, though tough talk on the inflation from the European
Central Bank after its monthly meeting later in the day could
give it fresh impetus to test resistance around $1.3950.
Higher energy prices along with copper, sugar and cocoa
prices at or near record highs have put a sharp dent in appetite
for riskier assets such as emerging market equities as investors
fear price pressures will get out of control.
In fast growing countries such as Brazil, India and China,
worries have grown that policymakers will need to tighten
monetary policy aggressively to tame rising consumer prices,
which could put a dampener on a key driver of the global
economy.
"The current strong pace of activity is clearly not
compatible with comfortable and stable levels of inflation,
underscoring the urgency of continued monetary policy
tightening," said Leif Eskesen, chief economist for India &
ASEAN at HSBC, in a report on India's services sector.
The report showed business activity in the country's
services sector grew at a faster pace in January than the month
before, but the input price index hit a 30-month high.
Higher prices for raw materials are already squeezing
corporate profit margins. While many firms appear able to pass
those costs on for now, sharp spikes will eventually force
consumers to cut back on spending.
U.S. candy maker Hershey Co reported overnight that
it was seeing "meaningfully higher" costs for ingredients such
as cocoa and sugar, while Australia's Qantas announced
a round of fuel surcharges on Thursday.
Japan's Nikkei fell 0.3 percent, easing slightly
after posting its biggest jump in two months the day, as
investors took a more cautious stance and awaited key earnings
results and Friday's U.S. payrolls data.
Shares of Panasonic Corp fell 3.2 percent after it
posted a worse-than-expected drop in quarterly profit as tough
price competition and a stronger yen offset help from Japan's
incentive scheme for eco-friendly appliances.
Overall, foreigners remained net buyers of Japanese stocks
for a 13th straight week on optimism that the U.S. and global
economies are gathering momentum.
Developed market shares are likely to outperform those in
emerging markets over the next six months, until it is clear
inflation is under control, said Shane Oliver, chief investment
strategist at AMP Capital Investors.
U.S. private employers added more jobs than expected in
January, the 12th consecutive month that companies took on
staff, adding to hopes that the American labour market is slowly
recovering and bolstering hopes for the more comprehensive U.S.
jobs report on Friday.
Elsewhere in Asia, Australia's main share benchmark
rose 0.5 percent as strong metals prices continued to support
shares of resources firms. Mining giants BHP and Rio
Tinto both rose more as copper prices stayed just shy
of $10,000 a tonne, with supplies tight against strong demand.
But regional trading was thin overall, with markets in
Greater China, South Korea and much of Southeast Asia closed for
Lunar New Year holidays.
(Additional reporting by Antoni Slodowski in TOKYO and Ruby
Cherian in BANGALORE)
(Editing by Kim Coghill)
* For Reuters Global Investing Blog, click on
http://blogs.reuters.com/globalinvesting
* For the MacroScope Blog, click on
http://blogs.reuters.com/macroscope
* For Hedge Fund Blog, click on
http://blogs.reuters.com/hedgehub
