* Euro rises as far as $1.44, above 122 yen
* U.S. crude above $111 a barrel, Brent crude tops $123
* Nikkei up 1.9 percent, MSCI Asia ex-Japan gains 0.6
percent
* Gold near record above $1,466 an ounce
By Alex Richardson
SINGAPORE, April 8 (Reuters) - The euro rose to a near
15-month high against the dollar on Friday on the single
currency's widening yield advantage, while oil surged to a
two-and-a-half year high on worries that war in Libya and unrest
in the Middle East will disrupt supplies.
Higher oil prices also encouraged money to flow out of the
dollar into the euro and stoked concerns about commodity-fuelled
inflation, helping propel gold to another record.
"So far this year commodities are relatively unshaken by bad
news on the macro front," said Yingxi Yu, an analyst at Barclays
Capital. "The market is comfortable with the expectations of a
recovering global economy with an emphasis on the developed
world rather than the developing world."
Asian shares rose as it appeared a strong aftershock that
struck Japan's earthquake-ravaged northeast late on Thursday had
not done major damage.
European and U.S. markets, which had dipped on news of the
aftershock, were expected to open higher, with financial
bookmakers calling Europe's main indexes up 0.5-0.7 percent,
while S&P 500 index futures <SPc1> pointed to Wall Street gains.
U.S. Treasury prices fell as the risk of a government
shutdown and resulting disruption to the government debt
programme loomed.
U.S. President Barack Obama and congressional leaders failed
to reach a deal on Thursday in a budget row that could see the
federal government closed down at midnight on Friday,
potentially crimping the economic recovery. []
The euro rose as high as $1.44 , its highest since
mid-January 2010, bringing its gains for the year to 7 percent.
The European Central Bank raised its key interest rate to
1.25 percent on Thursday, as had been widely expected, widening
the euro zone's yield advantage over the United States, Britain
and Japan, where policy rates remain at record lows.
ECB chief Jean-Claude Trichet signalled the bank was ready
to tighten further if needed to curb inflationary pressures, but
added it had not decided if the move was the first of a series.
"They were not as hawkish as they were after the last
meeting, but there was enough of a message that the ECB will
hike further this year," said Mitul Kotecha, head of global FX
strategy at Credit Agricole in Hong Kong.
The euro slid around 20 percent against the dollar between
November 2009 and the middle of last year, but has been on a
broadly appreciating trend since then.
The single currency bought around 122.55 yen ,
near an 11-month high. The dollar was around 85.15 yen ,
down from a six-month high around 85.54 yen set on Thursday.
"It looks like the yen will weaken across the board," said
Satoshi Okagawa, head of FX and money trading group for Sumitomo
Mitsui Banking Corporation in Singapore.
"It is impossible to imagine at this point just how much
Japan's production and exports may fall, but the image is that
this is not the type of market condition that calls for buying
the yen."
EMERGING MARKETS ROAR
U.S. And European stocks fell around 0.2 percent after a 7.4
magnitude earthquake shook the northeast of Japan's main island,
which was devastated by a massive 9.0 magnitude quake and
tsunami four weeks ago.
Tokyo's Nikkei share average opened lower, but
rebounded strongly to close up 1.9 percent as it seemed the
latest quake had not caused major damage.
The Nikkei has regained more than two-thirds of the losses
sustained in the immediate aftermath of the March 11 quake, but
investors remain concerned about the impact on corporate profits
after it knocked out production and crippled a nuclear plant.
"People are buying shares for now, but it's not going to
last long," said Mitsushige Akino, chief fund manager at
Ichiyoshi Investment Management.
"Fundamentals remain unclear and extreme uncertainty
surrounding earnings, with many firms set not to provide annual
forecasts will keep a lid on the market's gains."
MSCI's index of Asia Pacific shares outside Japan
rose 0.6 percent, recording the latest in a
series of near three-year highs it has struck over the past
week.
After a patchy start to the year -- in part due to concerns
about policy tightening in response to energy and food-led
inflation -- emerging markets have roared back in recent weeks.
Data from Lipper on Thursday showed a net inflow of $2.7
billion into emerging market equities in the week to April 6,
the fourth-highest weekly total since the fund tracker began
compiling the data in 1992. []
U.S. crude <CLc1> rose more than $1 to hit $111.28 a barrel
and Brent crude <LCOc1> went as far as $123.65, both the highest
since August 2008.
"Oil prices are at a point where we could begin to see
demand destruction," said Mike Wittner, head of commodities
research at Societe Generale.
"It already looks like the United States may just be showing
some signs of demand destruction. The United States is always
the country where you see the impact the most because there are
no subsidies and hardly any tax burden."
Unrest in the Arab world has added a $20-25 premium to oil
prices since the toppling of regimes in Tunisia and Egypt in the
last few months, Wittner said.
Gold rose to $1,466.40 an ounce, the latest in a
series of records. Gold is popular with investors both as a
hedge against inflation and a falling dollar and a safe haven at
a time of geopolitical uncertainty.
Japanese government bonds edged lower, with benchmark
10-year futures <2JGBv1> down 0.10 point and the 10-year yield
up 1 basis point at 1.315 percent.
(Additional reporting by Rujun Shen, Randy Fabi and Masayuki
Kitano in Singapore and Chikafumi Hodo, Antoni Slodkowski and
Natsuko Waki in Tokyo; Editing by Kim Coghill)
