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(Adds European outlook, updates prices)
By Anshuman Daga
SINGAPORE, May 6 (Reuters) - Oil prices held near record
highs on Tuesday after storming past $120 a barrel, pushing up
gold prices and stalling a recovery in Asian stocks.
European equities <FDXc1> <FCEc1> were set to open flat to
lower amid a flurry of results led by Swiss bank UBS <UBSN.VX>,
which unveiled 5,500 job cuts and said financial market
conditions remained tough. UK stocks were expected to dip as
trading resumes after a holiday.
The U.S. dollar was broadly weaker as doubts resurfaced on
about the health of the U.S. economy, while record oil prices
lifted currencies of major commodity exporters.
The relentless surge in prices of commodities from oil to
rice is a key concern for central banks, although some
investors have started to price in the view that the worst of
the credit crisis and the U.S. economic slowdown could be over.
By 0600 GMT, MSCI's measure of Asian stocks outside Japan
<.MSCIAPJ> was down 0.2 percent at 498.2, slipping from a
four-month high hit on Monday.
The MSCI benchmark has risen 2 percent in the last two
sessions but is down 6 percent so far this year. Japan remained
closed for national holidays for the second day in a row.
U.S. light crude for June delivery <CLc1>, a global
benchmark, edged up one cent to $119.98 a barrel. It jumped
more than $4 on Monday to a record high of $120.36 on supply
concerns in Iran and Nigeria.
"A lot of this is supply-driven, with the market very
vulnerable to any disruption in supplies," said Mark Pervan, a
senior commodities analyst at Australian & New Zealand Bank.
"We're seeing large oil-producing countries coming up as a
question mark," he said.
The rise in oil to a fresh record high raised market
concerns about the outlook for U.S. consumer spending.
Prices of oil and other dollar-denominated commodities
usually rise to adjust for inflation when the U.S. currency
falls.
Stock markets in Hong Kong <>, China <> and
Singapore <.FTSTI> were little changed. The main index in
Australia <>, where the central bank kept interest rates
steady at a 12-year high and pointed to a slowdown in demand,
retreated 0.5 percent.
U.S. stocks declined on Monday on worries that Bank of
America Corp <BAC.N> might walk away from buying troubled
lender Countrywide Financial Corp <CFC.N>, talk which Bank of
America denied. Record oil prices also hit stocks.
GOLD ADVANCES
Gold extended gains, adding to a rise of nearly 2 percent
in New York, helped by bargain hunting and higher oil prices,
which enhanced the metal's appeal as a hedge against inflation.
[]
Gold <XAU=> rose to $873.70/874.10 an ounce, up from
$871.15/872.55 in late New York trade on Monday. It hit a
four-month low of $845 on Friday.
Against a basket of six major currencies, the dollar eased
to 73.085 <.DXY>, having backed off a 73.698 high on Friday.
The euro bought $1.5520 <EUR=>, having recouped all the
losses suffered after Friday's U.S. payrolls report was not as
weak as expected.
The dollar traded around 104.76 yen <JPY=> after it failed
to sustain a high of 105.92 on Monday.
The rise in commodity prices comes at a time when Wall
Street does not expect the Federal Reserve to cut interest
rates at its next meeting in June. []
The Fed lowered its benchmark federal funds rate on April
30 by one-quarter point to 2 percent in what may be the last in
a series of cuts aimed at aiding an economy hit hard by a
housing slump and credit market turmoil.
The U.S. economy lost jobs for the fourth month in a row in
April but at a slower pace than earlier in the year, easing
fears the economy was slipping into a deep recession, although
the rise in oil prices has raised some fresh doubts.
[]
Europe will be a major focus of investors' attention this
week as the European Central Bank and Bank of England hold
policy reviews against a backdrop of weakening economic
strength. Both are expected to keep rates on hold.
(Additional reporting by Chua Baizhen; editing by Kim
Coghill)
