* U.S., Europe stocks dip; Wall Street volume low
* Euro retreats versus dollar; DXY near 15-month low
* Nikkei futures dip after three days of gains
* U.S. crude up as unrest escalates in Yemen
(Updates prices, adds gold, quote)
By Rodrigo Campos
NEW YORK, March 22 (Reuters) - U.S. crude prices jumped on
Tuesday as unrest in Yemen raised concerns about a further
threat to supply and as the dollar traded near 15-month lows
against major currencies.
Expectations that interest rates will rise in Europe before
they do so in the United States weighed on the dollar. Although
the euro eased back after hitting a 4-1/2-month high against
the dollar, expectations of a euro zone rate hike next month
could limit any downside for the single currency.
And UK inflation data on Tuesday fueled expectations of a
British rate hike in coming months, driving sterling to a
14-month high against the greenback.
Stocks in the United States and Europe fell slightly, with
the recent rally keeping in check the worries over the crises
in Japan and Libya.
"The combination of Japan getting better and some progress
in Libya has been enough to get people interested again," said
Perry Piazza, director of investment strategy at Contango
Capital Advisors in San Francisco. "That said, there's still a
lot of uncertainty and high commodity prices that are starting
to dent confidence."
With crude oil flows from Libya already crippled by a
standoff between rebels and the government, worries over
further supply disruptions rose as thousands of Yemeni
protesters took to the streets clamoring for President Ali
Abdullah Saleh to step down.
"The situation in the Middle East is still very bullish for
oil," said Phil Flynn, analyst at PFGBEST Research in Chicago.
"The unrest spreading on top of the conflict in Libya is still
the market focus."
The Dow Jones industrial average <> dipped 9.62 points,
or 0.08 percent, to 12,026.91. The Standard & Poor's 500 Index
<.SPX> slipped 3.75 points, or 0.29 percent, to 1,294.63. The
Nasdaq Composite Index <> fell 7.13 points, or 0.26
percent, to 2,684.96.
Trading volumes remained subdued on Wall Street.
The MSCI global stocks index <.MIWD00000PUS> was up 0.4
percent, buoyed by an overnight rise in Japanese stocks.
Europe's main equity benchmark <> closed 0.06 percent
lower after hitting a one-week high on Monday.
Tokyo's Nikkei average <> added 4.4 percent as traders
returned from a national holiday, but U.S. dollar-denominated
Nikkei futures <NKc1> were trading lower after three days of
hefty gains.
"There's a relative calmness in markets as investors plot
their next moves, even though we're flying through fog with all
the issues that remain uncertain," said Jeffrey Davis, chief
investment officer at Lee Munder Capital Group in Boston.
The CBOE volatility index <.VIX> edged 2.4 percent lower to
20.12 after a near 16 percent drop on Monday.
"Most investors are pretty safe now, and I suspect the VIX
should continue to settle back down gradually," Davis said.
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EURO RETREATS, CRUDE REVERSES LOSSES
In currency markets the euro <EUR=> dipped after hitting
$1.4249 versus the U.S. dollar, its highest level since
November, as it ran into what traders said were options-related
barriers.
Still, expectations that the European Central Bank will
hike interest rates next month could limit any downside for the
common currency.
"This, to me, is just a technical pullback," said Joseph
Trevisani, chief market analyst at FX Solutions in Saddle
River, New Jersey.
The dollar also had hit a a 15-month low against other
major currencies <.DXY> but the index was trading near break
even.
Gold was little changed as interest-rate hike expectations
kept the market calm, but air strikes on Libya and escalating
political unrest in the Middle East underpinned safe-haven
demand.
U.S. oil prices <CLc1> rose 1.6 percent to $104.53 per
barrel while Brent <LCOc1> added 0.8 percent at $115.91.
Copper rose as worries about Japan's nuclear crisis eased
and boosted risk appetite, and supported by the weaker dollar,
but poor Chinese import data weighed on demand prospects.
Chinese data released on Monday showed lower-than-expected
commodities imports for February.
China's rare earth metal export prices in February,
however, were up almost ninefold from a year before, according
to Reuters calculations based on Chinese data [].
Shares in U.S. miner Molycorp <MCP.N>, one of the few
companies outside China that is well-placed to capitalize on
the constriction in supply, jumped more than 14 percent.
U.S. Treasuries were little changed in low volume as
investors looked for further progress in Japan and the Middle
East. Benchmark 10-year notes <US10YT=RR> were last unchanged
in price, yielding 3.33 percent.
(Additional reporting by Ryan Vlastelica, Karen Brettell,
Wanfeng Zhou, Joshua Schneyer and Tom Miles; Editing by Leslie
Adler)
