* Oil retreats, lifts stocks and riskier assets
* But worries about growth linger, support safe-haven assets
* Dlr edges up, but still near record low on Swiss franc
By Anirban Nag
LONDON, Feb 25 (Reuters) - Oil fell from highs on Friday
after top exporter Saudi Arabia stepped up supplies, helping
push stocks up, although worries that dear oil may threaten
global growth kept those gains in check.
Saudi Arabia has quietly increased its production after
unrest in Libya saw a large chunk of the North African nation's
output being cut. ICE Brent crude futures <LCOc1> were up at
$111.63 a barrel, retreating from $113.91 earlier in the day
while U.S. crude futures <CLc1> rose to $97.75, but off highs.
European stocks extended gains, taking a breather after a
week-long retreat, but sentiment was fragile. The FTSEurofirst
300 <> index of top European shares was up 0.6 percent at
1,152.62 points, having lost over 3 percent over the past week.
"It's a relief rally as oil prices have come down, but
they're still high," said Richard Batty, investment director at
Standard Life Investments in Edinburgh.
"There remains a lot of uncertainty about developments in
the Middle East. You can't rule out the possibility of further
political change - and obviously that would have implications
for oil prices and financial markets. Higher oil prices would
check growth in Western economies."
U.S. stock index futures pointed to a higher open for Wall
Street on Friday, adding to a late rebound in the previous
session, with futures for the S&P 500 <SPc1> and the Dow Jones
industrial average <DJc1> up 0.6 percent.
World equities measured by the MSCI All-Country World Index
<.MIWD00000PUS> rose 0.36 percent, although it was off its
30-month high hit earlier this week.
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ For a take-a-look on the crisis: []
For graphics: http://r.reuters.com/nym77r
For a technical outlook on oil prices, see []
For a story on oil prices impact []
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Even if oil markets stabilise, broader sentiment could
remain cautious as high fuel prices would add to inflationary
pressures and crimp consumer demand. That could threaten growth
in Asian economies, the drivers of a global recovery since the
2008 financial crisis hit output worldwide.
Since the Libyan crisis erupted earlier this month, some of
the worst-performing markets within Asia are India, South Korea
and Taiwan due to their higher dependency on oil imports, Brown
Brothers Harriman said.
Analysts reckon the degree of vulnerability for G-10 oil
importers is far less than that found in emerging economies.
"Our own analysis indicates that net oil imports for many
emerging economies in Asia are close to or greater than 5
percent of GDP," said Andrew Cox, G-10 strategist at Citi.
OIL VOLATILE
Estimates varied on how much of Libya's production is down
with the International Energy Agency pegging the volume shut at
500,000 to 750,000 bpd. Italian oil company ENI <ENI.MI> said as
much as 1.2 million bpd may be down.
Key Libyan oil terminals are under rebel control while
Muammar Gaddafi's forces have fought back against the rebellion
[].
Although oil prices have come off 2-1/2 year highs, they are
still up 12 percent in the past three sessions alone, leading to
worries about stagflation and lending support to safe-haven
assets such as gold, U.S. Treasuries and the Swiss franc.
The dollar <.DXY> edged up as oil prices retreated from
their recent high, although expectations that the Federal
Reserve will lag behind the European Central Bank in raising
rates was unlikely to take it much higher.
The euro <EUR=> slipped to $1.3782, but was still eyeing
2011 highs against the dollar helped by more hawkish comments
from ECB officials. [].
"The contrasting policy outlooks for Europe and the U.S.
have helped the euro and weighed on the dollar, and it wouldn't
be surprising to see the euro test the early February highs,"
said Kit Juckes, currency strategist at Societe Generale.
Gold, <XAU=> another haven in times of global turmoil, held
near $1,400 an ounce and was headed for its fourth consecutive
week of gains.
(Additional reporting by Brian Gorman and Jessica Mortimer;
editing by Stephen Nisbet)
