* Oil above $126, gold notches another record high
* Euro rises to 15-month peak on EU rate hike optimism
* Global equities rise, but Wall Street slips
* US dollar pressured as U.S. government shutdown looms
(Updates prices, adds details, quote)
(Adds close of U.S. markets, byline)
By Leah Schnurr and Herbert Lash
NEW YORK, April 8 (Reuters) - Oil surged to a 32-month high
on Friday above $126 a barrel on concerns about long-term
supply cuts, while expectations of more interest rate hikes in
Europe drove the euro to a 15-month peak against the U.S.
dollar.
Gold rose to a record high for a fourth straight day as
commodities gained broadly on expectations of stronger demand
from the worldwide economic recovery and a weaker dollar.
European shares saw a five-week closing high, lifted by
rising commodity stocks such as miners, and on optimism over
the start of the first-quarter U.S. corporate earnings season
next week. But Wall Street stocks ended lower on concerns about
the impact of higher energy costs on the economy.
The MSCI main world equity index <.MIWD00000PUS> rose 0.5
percent to its highest since July 2008, and on track for its
third consecutive weekly gain.
Interest rate hikes by China and the European Central Bank
this week failed to contain the bullish outlook as investors
eyeing heightened inflationary threats flocked to hard assets
such as oil, gold and other precious metals as hedges.
"It's an across-the-board surge in all the commodities.
Gold, oil ... they're all up. People are dumping the dollar and
buying commodities," said MF Global senior commodity analyst
Edward Meir.
Brent crude <LCOc1> surged $3.98 to settle at $126.65 a
barrel, its highest level since August 2008, as the war in
Libya, unrest elsewhere in the Arab world and postponed
elections in Nigeria drove bullish sentiment on oil.
U.S. crude <CLc1> settled up $2.49 to a 30-month high of
$112.79.
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Graphic of dollar during 1995-1996 government shutdown:
http://link.reuters.com/gav88r
Graphic of S&P 500 during 1995-1996 government shutdown:
http://r.reuters.com/guw88r
Graphic of bonds during 1995-1996 government shutdown:
http://r.reuters.com/huw88r
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The greenback was pressured by the prospect of a U.S.
government shutdown as the White House and Congress struggled
to break a budget impasse that threatens to shut down the U.S.
government and idle hundreds of thousands of federal workers.
[]
Boosted by Thursday's European Central Bank rate hike, the
euro rose to its highest since January 2010. The currency was
up more than 1 percent on the day at $1.4475 <EUR=>.
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. []
"The market is ignoring all of Europe's fiscal and banking
troubles and trading off a single indicator -- interest
differentials," said Avery Shenfeld, chief economist at CIBC
World Markets in Toronto.
Stronger-than-expected German trade data helped underscore
the health of Europe's largest economy, helping investors side
step resurgent doubts over the resilience of the zone following
Portugal's request this week for aid. []
U.S. stocks fell late in the session. The prospect of a
government shutdown motivated investors to buy protection ahead
of the uncertain outcome of weekend budget talks. Many traders
were buying short-term put options on the SPDR S&P 500 Trust
<SPY.P>.
The Dow Jones industrial average <> was down 29.59
points, or 0.24 percent, at 12,379.90. The Standard & Poor's
500 Index <.SPX> was down 5.36 points, or 0.40 percent, at
1,328.15. The Nasdaq Composite Index <> was down 15.73
points, or 0.56 percent, at 2,780.41.
In Europe, debt problems persisted. Portuguese two- to
five-year bond yields rose near euro-era highs and are expected
to keep surging on investor jitters that Portugal's opposition
may balk at potentially tough bailout terms. []
U.S. Treasuries prices fell, leaving bonds with a third
straight week of losses, the legacy of investors' willingness
to acquire riskier assets for a greater rate of return.
[]
(Additional reporting by Angela Moon, Frank Tang, Nick Olivari
and Robert Gibbons in New York; Joanne Frearson in London;
Writing by Herbert Lash)
