* Oil retreats below $114 as OPEC discusses output increase
* Asian stocks up slightly, but remain under pressure
* Euro edges higher on rate hike expectation
* Gold remains firm as investors seek safe-haven assets
By Sugita Katyal
SINGAPORE, March 8 (Reuters) - Oil prices fell more than $1
a barrel on Tuesday, pulling away from two-and-a-half year
highs, but Asian stocks remained under pressure as investors
worried higher energy prices could stunt the global economic
recovery.
U.S. crude oil futures fell $1.30 to $104.14 and
Brent crude dropped to $113.60 after reports that Libyan
leader Muammar Gaddafi was looking for a way to step down and as
Kuwait's oil minister said OPEC was in talks to increase
production to ease worries about Middle East supply disruptions.
European shares were expected to edge up, rebounding from
losses the previous day, as crude prices retreated. U.S. stock
index futures rose 0.6 percent, pointing to a firmer
opening on Wall Street. .
"The market's fundamentals are recovering on corporate
earnings so sentiment for the longer term is good. But for the
short-term, the market may see some correction due to continuing
worries about developments in the Middle East," said Hajime
Nakajima, deputy general manager at Cosmo Securities.
Market players have been focused on the prospect of a
European Central Bank interest rate rise as early as next month,
but the euro zone debt crisis returned to the fore on Monday,
when Moody's slashed Greece's sovereign rating by three notches.
The euro edged higher on Tuesday but crowded bets on the
currency could cause a near-term decline before it is able to
take another shot at its November peak just above $1.4280.
.
Japan's Nikkei benchmark edged higher as investors covered
short positions after selling heavily on Monday, but analysts
said gains may be limited as concerns about turmoil in the
Middle East and high oil prices persist.
Japan's Nikkei closed up 0.19 percent while the
broader Topix shed 0.26 percent.
After an early fall, MSCI's index of Asia Pacific shares
outside Japan was up 0.5 percent helped by gains
in energy and industrial stocks.
Hong Kong's Hang Seng Index rose 1.3 percent, helped
by a broadly stronger energy sector and gains in Chinese large
caps.
Seoul shares were up 0.81 percent after sharp falls
in the previous session, lifted by shipbuilders and financials
but falls in technology plays dented upside momentum.
"It will be difficult for risk markets such as equities and
industrial commodities to push into higher ranges whilst the
threat to oil supplies remains elevated," said Ric Spooner,
chief market analyst at CMC Markets in Australia.
U.S. stocks fell on Monday, with the S&P 500 down 0.8
percent and the Nasdaq off 1.4 percent.
The prospects of further unrest in oil-rich Middle Eastern
countries has driven investors to seek safe-haven assets.
Spot gold was little changed at $1,430.55 an ounce by
0504 GMT, having rallied as high as $1,444.40 an ounce on
Monday, a record high, as violence flared in Libya and after the
downgrade of Greece's credit rating reignited worries about euro
zone sovereign debt.
(Additional writing by Alex Richardson; Editing by Nick Macfie
and Ramya Venugopal)
