* Crude oil rise on supply worries, Mideast protests
* World stocks down after softer U.S. retail sales
* Dollar climbs to 8-week high versus yen
(Recasts lead, updates prices, adds comment)
By Wanfeng Zhou
NEW YORK, Feb 15 (Reuters) - World stocks slipped on
Tuesday after weaker-than-expected U.S. retail sales tempered
some optimism about the American economy, while oil prices rose
as protests in Middle East countries raised concerns about
potential supply disruptions.
The MSCI world stocks index <.MIWD00000PUS> dropped 0.2
percent, though the index remained near last week's 30-month
highs. U.S. stocks <> <.SPX> fell after data showed sales
at U.S. retailers rose only 0.3 percent in January as extreme
weather in large parts of the country kept shoppers at home.
"I don't know if today's data was soft enough to take the
legs from underneath the market, but interestingly it's
indicative of some spending exhaustion occurring in the
consumer space," said Mark Luschini, chief investment
strategist at Janney Montgomery Scott in Philadelphia.
U.S. crude oil for March delivery <CLH1> staged a rally as
in early New York trading, climbing as high as $85.97,
rebounding from a 2-1/2-month low set in the previous session.
Last week's ousting of Egyptian President Hosni Mubarak and
the toppling of his Tunisian counterpart Zine al-Abidine Ben
Ali a month earlier have raised concern among investors that
the unrest spreading in the Middle East could disrupt oil
supplies.
"We are seeing contagion from Tunisia and Egypt to other
countries that are more important for the oil markets," said
Christophe Barret, oil analyst at Credit Agricole Corporate and
Investment Bank.
Stocks worldwide earlier Tuesday got a boost after Chinese
inflation data came in lower than expected at 4.9 percent in
the year to January, easing investor concerns that the world's
No. 2 economy will have to tighten monetary policy more
aggressively. []
"The data probably slightly eased expectations of immediate
tightening, although in the overall scheme of things, this
doesn't change the fact that China is still in a tightening
phase," said Etsuko Yamashita, chief economist at SMBC.
Inflation pressures, particularly in emerging markets, have
been part of the motivation this year for investors to move
into developed stock markets.
Japan's Nikkei <> stock index logged a 10-month
closing high and Europe's FTSEurofirst 300 <> was little
changed on the day.
DOLLAR AND YIELDS
The U.S. dollar climbed as high as 83.93 yen <JPY=EBS> on
trading platform EBS, the highest level since mid-December,
boosted by a rise in U.S. Treasury yields.
Two-year notes <US2YT=RR> yields earlier reached 0.89
percent, their highest level since May of last year.
But the dollar slipped versus the euro <EUR=EBS>, which was
boosted by demand from Middle East and Asian investors.
Analysts cautioned that euro sentiment remained fragile given
scepticism over whether euro zone leaders would come up with a
quick and effective solution to tackle its debt crisis.
Yield spreads of heavily indebted euro zone countries have
been widening in the past week on uncertainty over a rescue
package for the region, and there was some disappointment after
a meeting of European finance ministers on Monday.
"Initial optimism at the beginning of the year over a
comprehensive bailout package in the euro zone is now starting
to fade away," said Lee Hardman, currency strategist at BTM
UFJ.
Data showed that the euro zone ended last year with stable
economic growth, disappointing those hoping for a faster
recovery as expansion in the three largest nations fell short
of forecasts and Greece and Portugal contracted.
Countering this, German analyst and investor sentiment rose
slightly in February amid confidence in Germany's economic
recovery, a survey by the ZEW economic think tank showed.
(Additional reporting by Edward Krudy in New York and Jeremy
Gaunt and Claire Milhench in London)
