(adds quotes, updates prices)
By Veronica Brown
LONDON, March 4 (Reuters) - World stocks turned lower again
on Tuesday on renewed concerns about banking stress and volatile
trading conditions for hedge funds as commodity and currency
markets gyrated following months of credit market turmoil.
U.S. stocks were pointing to a lower opening on Wall Street,
with investors on the alert for more signs of trouble for the
economy and banking system.
The potent rally in commodities, meanwhile, showed no sign
of slowing with resources from platinum to rice at or near
record highs, propping up mining shares but unable to halt
broader European stock losses.
An ailing dollar won brief respite from successive falls to
record lows versus the euro and a basket of major rival
currencies, as euro zone officials expressed concerns about the
single currency's sharp rise.
The FTSEurofirst 300 index <> of top European shares
was down 1.25 percent at 1,281.30 points, helping safe-haven
European government bonds to rise.
HSBC <HSBA.L> was among the largest weighted drags on the
broader European market, falling 2.41 percent, while Commerzbank
<CBKG.DE> lost 2.9 percent and UBS <UBSN.VX> fell 2.9 percent.
"Fears that there are further write-downs in the financial
sector, even after the Q4 earnings, are still a factor...
you see that the spill-over effect towards more cyclical sectors
is also something that will be here with us for sometime," said
Gerhard Schwarz, head of global equity strategy at UniCredit.
The dollar had plumbed record lows versus the euro and a
basket of currencies for five straight sessions as worries about
the U.S. economy sapped sentiment, but euro zone officials broke
the malaise with concerns about the single currency's climb.
The euro's surge beyond $1.50 prompted verbal intervention
by euro zone finance ministers as well as European Central Bank
President Jean-Claude Trichet.
The euro stood at $1.5216, flat on the day, but still fairly
close to the $1.5275 high set the previous session according to
Reuters data <EUR=>.
The dollar's trade-weighted index against six major
currencies was at 73.561 <.DXY>, slightly above the 73.354 it
hit on Monday, its lowest level since it was created in 1973.
SOARING COMMODS
The greenback's recent woes have added fresh fuel to
fired-up commodity markets, raising the allure of
dollar-denominated resources including gold, platinum, food
commodities and crude oil.
Spot platinum, elevated by solid fundamentals as well as
investment interest due to a power crisis in top producer South
Africa, hit a record $2,275 per ounce <XPT=>. While oil <CLc1>
held above $102 a barrel, off a record near $104 posted in the
previous session.
The Baltic Exchange's chief sea freight index <.BADI>, which
gauges the strength of major trade routes for bulk commodities,
has powered up by an eye-watering 40 percent in the last six
weeks.
Analysts said current lofty levels were not a deterrent to
further gains, with global economic uncertainty hastening the
need for portfolio diversification.
"I think we can drop the word 'alternative' from commodities
now," said Ross Norman, managing director of TheBullionDesk.com.
"This year is psyching itself up to be the year that
inflation re-emerges as a major topic. In that scenario people
are looking to invest in hard assets that hold their value
better than some other financial products," he said.
The broad commodity rally, including grains, even fanned out
to rice futures, which hit record highs for the third day in a
row on Monday <RRH8>.
Although gold hit a record above $980 per ounce <XAU=> on
Monday and is on track to reach $1,000, the metal is still some
way off the inflation-adjusted high of $2,187 per ounce, which
expresses the 1980 peak of $850 in today's money.
(Additional reporting by Ana Nicolaci da Costa and Toni
Vorobyova in London; editing by David Christian-Edwards)
