* Oil surges on news of Libyan air strike near oil terminal
* Gold climbs to record above $1,440 an ounce
* MSCI world equity index off 0.2 pct
* U.S. stocks up 0.1 pct to up 0.5 pct, bonds drop
(Updates with oil's jump on Libyan air strike, gold at record
and updates European stocks near close)
By Caroline Valetkevitch
NEW YORK, March 2 (Reuters) - Brent crude oil shot above
$117 a barrel on Wednesday on news of an airstrike in Libya
near an oil terminal, while gold hit a record high as investors
rushed into a safe-haven trade.
World stocks slipped, while on Wall Street, stocks pulled
back from session highs to trade modestly higher.
Oil prices shot up to approach 2-1/2-year highs on news
that airstrikes hit Brega about 1.2 miles (about 2 kilometers)
from a Libyan oil terminal, after Libyan leader Muammar GAddafi
launched land and air offensive to retake territory in Libya's
eastern region. For details, see [] and
[]
Gold <XAU=> climbed to an all-time record at $1,440.10 an
ounce, building on a 6 percent rise in February, its biggest
one-month climb since August.
The MSCI world equity index <.MIWD00000PUS> slipped 0.2
percent and was off about 2 percent from a 30-month peak set in
February. The index is still up about 3 percent since the start
of the year.
Investors were nervous that political instability could
spread to major oil producer Saudi Arabia, a central U.S. ally
in the region.
"If it continues to spread, Middle East tensions may reach
a point where a war could start and that could ignite an
incredible rally" in oil prices, said Ryoma Furumi, a
commodities sales manager at Newedge Japan.
As investors made their flight-to-safety bids, the dollar
fell to a record low against the Swiss franc. U.S. Treasury
debt prices declined, but trimmed some losses as demand rose
for safe-haven U.S. government debt.
U.S. stocks rose modestly, ranging from up 0.1 percent to
up 0.6 percent, with upbeat U.S. labor market data helping to
offset the spikes in oil prices. For details, see
[].
The FTSEurofirst 300 index <> of top European shares
slid 0.7 percent to 1,153.73 on fears that skyrocketing oil
prices could drastically curb or halt growth.
RISK PREMIUMS ESCALATE
Forces loyal to Muammar Gaddafi launched a major offensive
against rebels in eastern Libya, sparking a rebel warning that
foreign military help might be needed to "put the nail in his
coffin" and end Gaddafi's long rule. []
Saudi Arabia's stock markets declined for a 13th session
and hit a 22-month low, while Dubai equities fell to a
6-1/2-year low, reflecting investors' worries over planned
protests in Saudi Arabia.
"We are seeing a significant elevation in risk premiums,
with investors revising their expectations for the region,"
said Hashem Montasser, managing partner at Frontlane Capital, a
Dubai-based asset management firm.
"The earnings outlook is very unclear."
Saudi Arabia's benchmark stock index <.TASI> fell nearly 4
percent at one point to a fresh 22-month low.
Brent crude for April delivery <LCOc1> rose $2.10 to
$117.52 a barrel at midday on Wednesday. On Tuesday, Brent
April crude rose $3.62, or 3.24 percent, to settle at $115.42 a
barrel -- its highest close since August 2008.
U.S. crude for April delivery <CLc1> rose $2.40 to $102.03
at midday on Wednesday.
WARY MOOD ON WALL STREET
In the U.S. stock market, the Dow Jones industrial average
<> gained 13.05 points, or 0.11 percent, to 12,071.07, off
sharply from an intraday high at 12,115.12. The Standard &
Poor's 500 Index <.SPX> rose 3.09 points, or 0.24 percent, to
1,309.42. The Nasdaq Composite Index <> advanced 14.31
points, or 0.53 percent, to 2,751.73.
"We're taking a breather, waiting for the next foot to fall
in the oil markets," said Nicholas Colas, chief market
strategist at the ConvergEx Group in New York. "The market is
looking three to four months out, trying to figure out what
these higher oil prices will do to consumer spending."
"You're not going to see many hurried buyers as political
concerns persist," said Daron Anyangwe, sales trader at IG
Index.
The benchmark 10-year U.S. Treasury note <US10YT=RR> was
down 8/32, its yield at 3.43 percent, up from 3.40 percent on
Tuesday. The Swiss franc soared to a record high versus the
dollar <CHF=EBS>.
(Additional reporting by Edward Krudy, Ellen Freilich,
Wanfeng Zhou, Natsuko Waki, Harpreet Bhal and Carolyn Cohn;
Editing by Jan Paschal)
