* World stocks firm, post best week so far in 2011
* Greenback up vs major currencies after U.S. GDP revised
* Portugal 10-year yield at new euro-era high
* Oil, gold steady, watching MidEast, Libya
(Updates after U.S. market open, euro decline, adds New York
to dateline)
By Rodrigo Campos and Mike Peacock
NEW YORK/LONDON, March 25 (Reuters) - The euro slipped
against the dollar on Friday on increasing concern about the
worsening debt crisis in Portugal after S&P downgraded the
country's rating, while world stocks eked out gains on signs of
a buoyant economy.
Portuguese debt yields hit new highs on Friday after
Standard & Poor's downgraded its ratings and warned it could
cut them again. But the pressure for now did not spread toward
other markets.
The downgrade prompted "one of the first major rejection of
Portuguese assets," said Kathy Lien, director of currency
research at GFT in New York. "For most of the week the market
has treated Portugal as an isolated problem that will not
spread to other parts of Europe but this sentiment is losing
popularity very quickly."
U.S. stocks rose in early trade after the government
reported the U.S. economy grew more quickly than previously
estimated in the last quarter of 2010 as businesses maintained
fairly solid spending and restocked shelves to meet rising
demand.
An optimistic outlook by software maker Oracle fueled hopes
that a global resurgence in technology spending remained
intact.
"When you get an upward revision (in GDP), along with some
very good earnings out of Oracle, that will give more
confidence that even with uncertainty in the rest of the world,
we're on a good footing here, and that will help stocks," said
Elizabeth Miller, president of Summit Place Financial Advisors
in Summit, New Jersey.
Equity volumes have dwindled in the U.S. and other markets
including Europe, as violence in the Middle East and northern
Africa coupled with Japan's natural disasters two weeks ago and
its ongoing nuclear crisis to cloud the outlook for the global
economic recovery.
The Dow Jones industrial average <> gained 22.78
points, or 0.19 percent, to 12,193.34. The Standard & Poor's
500 Index <.SPX> rose 0.95 points, or 0.07 percent, to
1,310.61. The Nasdaq Composite Index <> added 4.38 points,
or 0.16 percent, to 2,740.80.
The MSCI All-Country index <.MIW0000PUS> was up 0.1 percent
and was on track to post its best week in nearly four months.
European shares traded near break-even as bullish signs on
the economy and corporate results were tempered by the euro
zone debt problems and violence in Libya.
Portugal's president consulted political leaders on Friday
on whether to call a snap election after the Socialist prime
minister resigned after a reform was kicked down in parliament.
The crisis could force Lisbon to request a bailout from the
European Union and International Monetary Fund, becoming the
third euro zone country to seek aid, after Greece and Ireland.
For details see [].
The yield on 10-year Portuguese government bonds rose to a
new euro-era high above 8 percent, well above the level which
the government says is sustainable, and the premium to hold its
10-year debt rather than Germany's widened to 474 basis
points.
The euro <EUR=EBS> was last down 0.3 percent at $1.4128,
having earlier hit a session low of $1.41133 on trading
platform EBS. Traders reported option barriers around $1.4250
and said the level will be strongly defended. Technical
analysts said a weekly close above $1.4200 would leave it well
positioned for a further rise.
The yen traded near 81 per dollar <JPY=>, a level it has
clung tightly to all week since a rare coordinated intervention
by leading central banks last Friday to curb its appreciation.
Higher-yielding currencies gained as the global economic
outlook boosted risk appetite and on growing demand for
dollar-funded carry trades.
The higher-yielding Australian dollar hit a 2011 high of
$1.0255 <AUD=D4>, just shy of its 29-year peak of $1.0257.
Traders cited stops above $1.0260, with option expiries at
$1.0200. Traders said model funds were adding to long positions
in the currency as were real money accounts.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
FX COLUMN-Return of the yen carry trade []
Reuters polls on world stock markets: []
European sovereign debt crisis: http://r.reuters.com/hyb65p
Japan disaster in figures: http://r.reuters.com/ser58r
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
OIL, GOLD PREY TO MIDEAST
Oil ticked lower for the day but both U.S. crude <CLc1> and
Brent <LCOc1> were on track to post healthy weekly gains.
Investors were keeping a close eye on protests in Yemen,
Bahrain and on Syria.
"So long as ongoing problems in the Middle East continue to
elevate risks of a further supply disruption, there is a strong
likelihood of a price spike in the second quarter," said J.P.
Morgan analysts headed by Lawrence Eagles.
Spot gold held steady below the previous session's record
highs, as worries over euro zone's debt crisis and Middle East
turmoil supported sentiment. []
Japan's Nikkei index <> rose 1.1 percent to post its
best week since November as foreign investors scooped up
battered shares. In the previous two weeks, the Nikkei had lost
nearly 14 percent.
(Additional reporting by Angela Moon, Wanfeng Zhou, Axel Bugge
and Shrikesh Laxmidas; Editing by Leslie Adler)
