* Brent hovers near 32-month high on supply concerns
* Euro slips, hurt by Moody's downgrade on Portugal
* World stocks end five-day winning streak
By Dominic Lau
LONDON, April 5 (Reuters) - Brent crude prices hovered close
to 32-month highs on Tuesday as markets focused on fears that
unrest in producer states in Africa and the Middle East could
disrupt supply, while stocks snapped a five-day winning streak.
The euro pulled back from a five-month high against the
dollar, hurt by a one-notch downgrade of Portugal's credit
rating by Moody's Investors Service, which said the country's
incoming government would need to seek financial aid.
Portuguese government bond yields traded around euro
lifetime highs.
Investors' assessment whether the single currency can make
fresh gains given that market players have already positioned
themselves for interest rate rises in the euro zone during 2011
also put pressure on the euro, which has risen 6.1 percent
against the dollar and 10.2 percent versus the yen this year.
"There is a lot of good news priced into the euro already
and (ECB President Jean-Claude) Trichet will have to support the
rate view to keep the positive momentum," said Niels
Christensen, currency strategist at Nordea in Copenhagen.
The European Central Bank is widely expected on Thursday to
raise rates by 25 basis points from a record low of 1 percent to
tame inflationary pressures <ECBWATCH>.
The euro was down 0.2 percent at $1.4194 <EUR=>, off a
five-month high of $1.4268 hit on Monday, while the dollar was
up 0.1 percent against a basket of major currencies <.DXY>.
OIL IMPACT
Federal Reserve Chairman Ben Bernanke said late on Monday
that the recent spike in inflation was unlikely to persist.
But a sustained higher oil price could pose a serious threat
to the global economic recovery and dampen risk appetite, and
commodity price pressures saw silver <XAG=> rise to a 31-year
high.
"It's interesting that the recent rally in oil has had
virtually no impact on equities. It was just over a month ago
where equities markets were nervous about the impact of oil
prices on the economy," Deutsche Bank strategist Jim Reid said
in a note.
"The difference this time is that the rise has likely been
due to decent growth rather than immediate geopolitical
concerns. Nevertheless one would expect the creeping price of
oil to start to get more attention given the recent rally."
World stocks measured by MSCI All-Country World Index
<.MIWD00000PUS> slipped 0.2 percent after hitting six-week highs
in the previous session, while emerging market shares <.MSCIEF>
were flat.
In Asia, Japan's Nikkei average <> lost 1.1 percent
with investors still wary about the long-term impact of last
month's massive earthquake and tsunami and a resulting nuclear
accident that workers are still struggling to contain.
Brent <LCOc1> stayed above $120 per barrel, easing 0.2
percent after hitting a 32-month high of $121.29 on Monday as
Nigerian election delays and a short-lived strike in Gabon added
to supply jitters for a market already on edge over fighting in
Libya and unrest in Yemen, which borders top producer Saudi
Arabia.
Silver <XAG=> rose to $38.77 an ounce, its highest since
early 1980, while gold <XAU=> was steady at $1,437.77 an ounce.
Copper <CMCU3> ended a two-day losing run, up 0.7 percent.
Yields on Portugal's 10-year government bonds <PT10YT=TWEB>
steadied at 8.867 percent, while Portuguese stocks <> fell
0.1 percent, slightly underperforming the broader FTSEurofirst
300 index <>, which was up 0.1 percent.
(Additional reporting by Jessica Mortimer and Emelia Sithole
in London, and Alex Richardson in Singapore; Editing by John
Stonestreet)
