* Oil rises, but off peaks earlier in week on Libya fears
* Swiss franc heads for best two-week rally since June
* U.S. bonds, gold rise as safe-haven buying lingers
(Adds close of U.S. markets)
By Herbert Lash
NEW YORK, Feb 25 (Reuters) - Global stocks rallied on
Friday after a week-long sell-off but oil prices edged higher
even after Saudi Arabia boosted oil output to calm fears of
supply disruptions sparked by the uprising in Libya.
The Swiss franc headed for its biggest two-week advance
against the dollar in eight months and looked set to extend
gains as lingering fears of contagion from unrest in Libya
continued to drive investors to safe-haven assets. For details,
see []
"The situation remains fluid. Everything still is up in the
air," said Mary Nicola, currency strategist at BNP Paribas in
New York. "As long as it persists, the Swiss franc should
benefit."
The dollar fell 4.6 percent against the Swiss franc over
the past two weeks after touching a record low of 0.9229
<CHF=EBS> on trading platform EBS before paring some losses.
Gold and bond prices also gained, reflecting concerns that
violence could spill over to other oil-producing countries in
the Middle East and stall the global economic recovery.
Oil came off Thursday's peak of almost $120 a barrel for
Brent futures, a level last seen in 2008, but a late bout of
buying to cover short positions lifted prices for the day.
"I don't think many traders are comfortable being short
over the weekend," said Tom Bentz, a broker at Paribas
Commodity Futures in New York.
Brent crude futures <LCOc1> settled up 78 cents at $112.14,
while U.S. light sweet crude settled up 60 cents at $97.88.
Saudi Arabia raised production about 8 percent to above 9
million barrels per day to make up for a near halt in Libyan
exports, an industry source said, helping prices fall from
peaks earlier in the week. []
The Saudi move bolstered optimism over data showing U.S.
consumer sentiment rose to its highest level in three years in
February. The news offset a report that showed the U.S. economy
grew slower than initially estimated in the fourth quarter.
[] []
The U.S. dollar rebounded against the euro but gold prices
rose toward $1,410 an ounce, posting a fourth straight week of
gains, as soaring oil prices stoked inflation worries.
[]
The euro <EUR=> was down 0.37 percent at $1.3752, while
spot gold prices <XAU=> rose $7.79 to $1,407.50 an ounce.
U.S. gold futures for April delivery <GCJ1> settled down
$6.50 an ounce at $1,409.30.
Consumer sentiment rose to 77.5, up from 74.2 in January,
and the highest since January 2008, according to the Thomson
Reuters/University of Michigan survey.
Gross domestic product was revised lower to an annualized
rate of 2.8 percent from an initial 3.2 percent estimate.
The potential spillover of unrest to other oil-producing
counties remained a concern, with trading in oil futures
volatile, considering outages in Libya have risen as high as
three-quarters of its 1.6 million barrels per day output.
Muammar Gaddafi vowed to "crush any enemy" on Friday,
addressing a crowd of supporters in Tripoli as Libya's popular
uprising closed in around him. A string of other towns were
reported to have fallen to the opposition. []
Still, investors took comfort in Saudi efforts to cover any
supply gaps.
"Fears that the unrest in Libya could turn into a civil war
and wipe out its oil production have been offset by assurances
from Saudi Arabia that it is raising output," said Gene
McGillian, analyst at Tradition Energy in Stamford,
Connecticut.
Major stock markets around the world rallied after sharp
sell-off earlier in the week that still left the benchmark S&P
500 index off 1.7 percent by week's end.
Analysts have been calling for a correction in stocks
following a six-month rally. Much weaker-than-average volume on
Friday cast doubt on the ability for stocks to move higher.
The Dow Jones industrial average <> closed up 61.95
points, or 0.51 percent, at 12,130.45. The Standard & Poor's
500 Index <.SPX> gained 13.78 points, or 1.06 percent, at
1,319.88. The Nasdaq Composite Index <> rose 43.15 points,
or 1.58 percent, at 2,781.05.
World equities as measured by MSCI's all-country world
index <.MIWD00000PUS> gained 1.1 percent.
U.S. Treasury debt prices rose as turmoil in North Africa
and worries over the economic impact of higher oil prices kept
a safe-haven bid for government debt alive. []
The benchmark 10-year U.S. Treasury note <US10YT=RR> was up
8/32 in price to yield 3.42 percent.
(To read Reuters Global Investing Blog click on
http://blogs.reuters.com/globalinvesting; for the MacroScope
Blog click on http://blogs.reuters.com/macroscope; for Hedge
Fund Blog click on http://blogs.reuters.com/hedgehub)
(Reporting by Caroline Valetkevitch, Gene Ramos, Wanfeng Zhou,
Karen Brettell and Frank Tang in New York; Writing by Herbert
Lash; Editing by Andrew Hay)
