(Adds close of U.S. markets)
* World stocks at four-month high, lifted by energy stocks
* Crude oil prices zig-zag, close above $127 a barrel
* Emerging market stocks at new high, wipe out 2008 losses
By Herbert Lash
NEW YORK, May 19 (Reuters) - Stocks rose to four-month
highs around the world on Monday as crude oil trading near
record highs boosted energy shares, but U.S. technology shares
turned negative after a chip maker said the record oil prices
are likely to hurt consumer spending.
Oil closed at a record above $127 a barrel after OPEC's
president insisted the producer group would not increase output
at its next meeting in September.
Crude's relentless rise bolstered energy-related stocks in
Asia, Europe and the United States. Exxon Mobil, the largest
publicly traded oil company, led a key U.S. stock index
higher.
Emerging market equities hit a high for the year, wiping
out their 2008 losses in a new bout of investor confidence.
An economic forecasting gauge that showed the U.S. economy,
while weak, has so far managed to avoid recession helped the
dollar rebound from a two-and-a-half-week low against the euro.
The Conference Board's Leading Economic Indicators index showed
a slight April gain of 0.1 percent.
"There's a realization that we haven't seen, at least to
date, a significant economic impact from the high oil prices
and there is a general comfort level with the economic data,"
said Michael James, senior trader at regional investment bank
Wedbush Morgan in Los Angeles.
The Dow Jones industrial average <> rose 41.36 points,
or 0.32 percent, at 13,028.16. The Standard & Poor's 500 Index
<.SPX> added 1.28 points, or 0.09 percent, at 1,426.63. The
Nasdaq Composite Index <> fell 12.76 points, or 0.50
percent, at 2,516.09.
With energy prices heading higher recently and the economy
still growing, investors looked for companies that can do well
in an inflationary environment.
Shares of big manufacturers, including Caterpillar Inc
<CAT.N>, also rose, and Exxon was the biggest contributor to
the Standard & Poor's 500 Index's upturn.
Technology shares, however, fell after the chief executive
of semiconductor maker SanDisk Corp. <SNDK.O> warned on
consumer spending levels. CEO Eli Harari told Reuters on the
sidelines of a conference in Boston that "with the oil prices
hitting $127 a barrel, discretionary spending is going to be
affected."
Shares of SanDisk slumped 7.5 percent, while top chip maker
Intel Corp <INTC.O> fell 0.5 percent, and No. 2 maker Advanced
Micro Devices <AMD.N> lost 2.2 percent.
In Europe energy stocks were among the top weighted
gainers. Total <TOTF.PA> rose 3.1 percent and Royal Dutch Shell
<RDSa.AS> added 3.2 percent. Among miners, Vedanta <VED.L>
added 8.5 percent and Anglo American <AAL.L> gained 4 percent.
The FTSEurofirst 300 <> index of top European shares
closed 0.96 percent higher at 1,378.29, its fourth positive day
in a row and highest close since Jan. 16. Gains in mining and
oil shares led the UK's FTSE 100 index <> up 1.2 percent.
Markus Steinbeis, head of European equities at Pioneer
Investments in Munich, said oil and mining stocks are "one way
of protecting your portfolio from a higher inflation."
Steinbeis added: "Many market participants are preparing
for rising inflation. They are looking for companies with
strong pricing power, which can easily pass on higher prices."
The equity markets were buoyed early by comments from
officials in the euro zone's two largest economies -- Germany
and France -- that were optimistic.
France is on track to meet a target of between 1.7 percent
and 2 percent economic expansion in 2008, said Economy Minister
Christine Lagarde. Germany surprised analysts and grew 1.5
percent from January to March, its strongest quarterly
expansion since 1996.
Crude oil in New York settled higher at a record close
above $127 a barrel in volatile trade before Tuesday's
expiration of futures contracts for June.
Near the close, prices fell more than a dollar and then
bounced nearly the same, buffeted by pre-expiry selling and a
rebounding dollar, as was the case for most of the session.
"Market is still in bull mode technically, leading to
additional upside follow-through," said Tom Bentz, an analyst
at BNP Paribas Commodity Futures Inc, commenting on the early
strength above $127.
Crude <CLM8> for June delivery settled up 76 cents at
$127.05 a barrel, after trading from $125.28 to $127.77, just
shy of Friday's record high of $127.82.
In London, July Brent crude <LCON8> ended up 7 cents at
$125.06 a barrel. Brent crude hit a record $126.34 on Friday.
U.S. Treasury debt prices pared losses and rose in thin
trade volume after SanDisk's warning about consumer spending
hurt technology shares and bond investors reacted
accordingly.
The benchmark 10-year U.S. Treasury note <US10YT=RR> rose
6/32 to yield 3.83 percent. The 2-year U.S. Treasury
note<US2YT=RR> rose 4/32 to yield 2.40 percent. The 30-year
U.S. Treasury bond <US30YT=RR> rose 6/32 to yield 4.57
percent.
The dollar rose against major currencies, with the U.S.
Dollar Index <.DXY> up 0.40 percent at 73.057.
The euro <EUR=> fell 0.44 percent at $1.5506, and against
the yen, the dollar <JPY=> rose 0.27 percent at 104.31.
U.S. gold ended higher above $900 an ounce after scaling a
near-four week peak on the back of inflation fears sparked by
record high crude prices.
The June gold contract <GCM8> in New York settled $5.90
higher at $905.80 an ounce, boosted by the metal's inflation
hedge appeal as oil settled at record over $127 a barrel.
Gold's close above $900 should lead futures to test the
next resistance area of around $925 an ounce, traders said.
MSCI's benchmark emerging market share index <.MSCIEF> rose
to a new 2008 high of 1250.99, wiping out all its losses this
year.
Asian shares hit a new four-month high as a relentless rise
in oil prices bolstered resource shares.
MSCI's measure of Asian stocks outside Japan
<.MIAPJ0000PUS> rose 0.4 percent, the sixth consecutive session
it has gained. The index earlier hit its highest level since
mid-January, but is still down about 5 percent for the year.
Tokyo's Nikkei average <> and shares in Taiwan <>
and Hong Kong <> gained less than 0.5 percent each.
(Reporting by Kristina Cooke, Ellen Freilich and Steven. C.
Johnson in New York and Lewa Pardomuan and Jane Merriman in
London; Editing by Leslie Adler)
