* Euro slips as Portugal vote looms
* Sterling falls on UK growth projections
* U.S. stocks weighed by housing data, miners shine
* Gold, silver up on safety bid; base metals rally
(Recasts; updates prices, adds second euro quote)
By Rodrigo Campos
NEW YORK, March 23 (Reuters) - Worries that a political
crisis in Portugal could topple the government and force the
country to seek a bailout sent the euro lower on Wednesday and
drove gold within a whisker of its all-time high on safe-haven
demand.
Continued unrest in the Middle East and North Africa drove
up the price of oil, while Wall Street stocks rallied as mining
stocks rose with higher metals prices.
Silver hit its highest price since 1980 as the ongoing
Western air strikes on Libya and the worries about Portugal
revived worries about the European debt crisis.
Portugal's parliament started a plenary session to debate
the government's austerity measures, setting the stage for the
likely collapse of the minority Socialist administration. Prime
Minister Jose Socrates has threatened to resign if the package
is rejected in a vote expected later on Wednesday.
A statement from Socrates was expected at 2000 GMT.
The cost of insuring Portugal's five-year debt against
default hit two-month highs, reflecting the growing belief that
Lisbon will follow Greece and Ireland in seeking emergency
funding if parliament rejects the austerity measures.
The yield on two-year Irish bonds rose to a euro-era high
of 10.715 percent, 55 basis points above the 10-year yield,
resulting in an Irish yield curve at its most inverted levels
since the launch of the euro zone.
"There's currently a lot of concern on the Portuguese
budget vote and the potential political implication for it. The
fear is that if Portugal failed to agree on austerity measures,
we can potentially see the country forced into the EFSF" rescue
fund, said Mary Nicola, currency strategist at BNP Paribas in
New York.
Hopes that this week's European summit would yield a
decision on how to increase the effective capacity of the euro
zone bailout fund were dashed after the release of a draft
document prepared for the meeting. The decision will likely
come in June. For details, see []
Portugal's political crisis has knocked the euro from its
recent 4-1/2-month highs against the U.S. dollar, although the
slide is expected to be temporary, given the expectation for
the European Central Bank to raise interest rates next month.
"Expectations of the ECB raising rates favors the euro over
the U.S. dollar," said Thanos Papasavvas, head of currency
management at Investec Asset Management, which manages over $10
billion in currency funds.
The euro <EUR=EBS> was last down 0.5 percent at $1.4122,
having hit a low for the session of $1.4105, according to
trading platform EBS.
U.S. STOCKS RISE
On Wall Street, the Dow rose moderately while the benchmark
S&P 500 and Nasdaq gained slightly. The S&P index of materials
stocks <.GSPM> was up 1.1 percent, the top-performing sector on
the S&P 500, as metals prices rose, including a more than 2
percent gain in copper. Freeport-McMoRan Copper & Gold <FCX.N>
shares jumped 4.4 percent at $54.59.
Coal mining shares, which have risen recently amid
uncertainty over the future of nuclear power after the crisis
in Japan, also climbed. Consol Energy <CNX.N> gained 2.49
percent, Peabody Energy <BTU.N> was up 1.9 percent and Massey
Energy <MEE.N> was up 2.3 percent.
The Dow Jones industrial average <> gained 45.33
points, or 0.38 percent, to 12,063.96. The Standard & Poor's
500 Index <.SPX> edged up 0.53 points, or 0.04 percent, to
1,294.30. The Nasdaq Composite Index <> added 3.71 points,
or 0.14 percent, to 2,687.58.
A plunge in sales of new U.S. single-family homes in
February to the lowest level since 1963 tempered gains. The
data from the U.S. Commerce Department suggested the housing
market slide was deepening. []
An objection by the Federal Reserve to Bank of America's
<BAC.N> plans to boost its dividend weighed on bank stocks.
Bank of America shares fell 2.5 percent.
The FTSEurofirst 300 <> closed up nearly 0.5 percent
as a rise in mining shares more than offset weaker bank stocks.
The MSCI All-Country World index <.MIWD00000PUS> ticked up less
than 0.1 percent to its fifth straight positive session.
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U.S. trading volume slowdown http://r.reuters.com/gyp68r
Japan earthquake in graphics http://r.reuters.com/fyh58r
U.S. crude futures chart: http://link.reuters.com/maq68r
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Sterling fell 0.8 percent to $1.6239 <GBP=D4> after UK
Chancellor George Osborne released a lower growth projection
for the coming year and increased borrowing targets from
2011/12 to 2014/15. See []
U.S. Treasuries pared early gains to trade near break even
in price in the wake of the Federal Reserve's purchase of $7.56
billion of Treasuries. Benchmark 10-year Treasury notes
<US10YT=RR> were trading 3/32 lower to yield 3.34 percent, up
from 3.33 percent late Tuesday.
The Bund future <FGBLc1> was 31 ticks higher at 122.33.
Germany sold 3.4 billion euros of 10-year bonds, attracting
greater demand than at a previous sale thanks to the
risk-averse mood in markets. []
U.S. oil prices <CLc1> rose 0.9 percent to $$105.90 a
barrel, while Brent <LCOc1> traded flat.
"Yemen is a very hot topic now. It is not that important to
the oil market but unrest in the region gives enough
psychological support to prices," Andy Sommer, energy market
analyst with EGL, said.
Spot gold <XAU=> was up 0.6 percent at $1,438.05 an ounce
after hitting a session high of 1,440.90, near its recent
record of $1,444.40.
Silver <XAG=> was up 2.3 percent at $37.18 an ounce at 1740
GMT, just below the session high of $37.29 an ounce, from
$36.34 late in New York on Tuesday.
Copper <CMCU3> rose over 2 percent on expectations of a
supply deficit this year, while aluminum <CMAL3> rallied to its
highest since September 2008.
Egyptian stocks <.EGX100> closed 9 percent lower in the
first day of trading on the Cairo exchange since Jan. 27, after
closing due to the political turmoil that ousted Hosni Mubarak
last month.
(Additional reporting by Ryan Vlastelica, Wanfeng Zhou,
Richard Leong and Ikuko Kurahone; Editing by Leslie Adler)
