* Oil falls on OPEC production talk
* Equities rise
* Euro zone peripheral bonds in focus
* Wall Street set to open higher
By Jeremy Gaunt, European Investment Correspondent
LONDON, March 8 (Reuters) - Oil fell from recent highs on
Tuesday on reports that OPEC may boost production, prompting
some recovery on equity markets.
Wall Street looked set to open slightly higher after heavy
losses on Monday.
Emerging market stocks <.MSCIEF> were up 0.3 percent and
Japan's Nikkei <> closed up 0.2 percent. Europe's
FTSEurofirst 300 <> put in gains of around 0.5 percent
before slipping back to trade flat by 1210 GMT.
Kuwait's oil minister said OPEC was in talks to boost
production for the first time in more than two years.
Such a move would mean the producer group's was effectively
putting a cap on prices to help keep the global economic
recovery on track. []
Brent oil <LCOc1> was down around 50 cents at a little more
than $114 a barrel, after earlier dropping more than $2.
Revolts in Tunisia and Egypt, fighting in Libya, and
protests from Morocco to Oman had driven Brent to almost $120 a
barrel.
This in turn has rattled global investors who fear a burst
of inflation, along with potential interest rate hikes, could
deal a blow to global economic recovery.
"If oil stays in a $100-$120 per barrel range for around half
a year the global economy could see a severe slowdown, pushing
investors away from stocks, so everything depends on the Middle
East now", said Koichi Ogawa, chief portfolio manager at Daiwa
SB Investments.
Despite the concerns, however, equities have remained
resilient during the period.
MSCI's all-country world stock index <.MIWD00000PUS> is
still up 3.6 percent for the year to date and within reasonable
range of new 30-month highs.
EURO PAUSES
The euro slipped against the dollar, pausing from a rally
prompted by expectations that euro zone interest rates will be
raised as early as next month. []
The Swiss franc, which has strengthened as a safe haven
recently, slid after the statement from Kuwait's oil minister.
The dollar was up 0.3 percent against a basket of major
currencies, including the euro and Swiss franc. <.DXY>
Some analysts say that with an ECB rate rise in April
largely priced in and indications that currency speculators have
ramped up their long euro positions, the euro is ripe for a
short-term correction.
Yields rose on debt issued by the euro zone's lower-rated
sovereigns on Tuesday as the launch of a new Spanish bond by
syndication added to supply pressure in peripheral markets ahead
of a Portuguese bond auction keenly watched on Wednesday.
"The periphery had a good wobble yesterday so we may see
more of the same ... Portugal can't be far off asking for help,"
a trader said.
(Additional reporting by Naomi Tajitsu, Caroline Copley and
William James; Editing by Ron Askew)
