* Global equities rise, Wall Street lower
* Euro at 15-month peak on EU rate hike optimism
* Dollar pressured as U.S. government shutdown looms
* Oil above $126, gold notches another record high
(Updates prices, adds details, quote)
By Leah Schnurr
NEW YORK, April 8 (Reuters) - Oil rose to a 32-month high
on Friday above $126 a barrel on concerns of long-term supply
cuts as expectations of more interest rate hikes in the euro
zone drove the euro to a 15-month peak against the dollar.
Commodities, including metals, gained broadly on
expectations of stronger demand, the weak U.S. dollar and, in
some cases, the threat of supply shortages.
Global equities were boosted by optimism the worldwide
economic recovery will fuel demand for commodities, and shares
earlier hit their highest level in almost three years. But
lofty oil prices became less appealing as the day wore on, and
Wall Street was lower by mid afternoon.
Brent crude <LCOc1> surged $3.74 to $126.41 per barrel, its
highest level since August 2008 as the war in Libya, unrest
elsewhere in the Arab world and postponed elections in Nigeria
drove a bullish attitude on oil. U.S. crude <CLc1> rose to a
30-month high, up $2.27 at $112.57.
"It's definitely momentum trading on all the troubles:
Libya, Nigeria, Yemen, Bahrain and also on the uncertainty
about a (U.S.) budget deal. No one is going to want to go home
too short this weekend," said Dan Flynn, analyst at PFGBest
Research in Chicago.
The greenback was pressured by the prospect of a U.S.
government shutdown. Republicans and Democrats have been in
budget talks trying to reach an agreement that would avert a
government shutdown at midnight.
A stopgap bill that Democrats hope to pass in the Senate on
Friday would fund the Pentagon through the rest of the fiscal
year and other arms of government for another week at current
levels, Senate Democratic Leader Harry Reid said.
Boosted by Thursday's European Central Bank rate hike, the
euro rose to its highest since January 2010. The currency was
up 0.9 percent at $1.4432 <EUR=> with a session peak of
$1.4444.
The ECB's move to raise its key interest rate to 1.25
percent has widened the euro zone's yield advantage over the
United States, Britain and Japan, where rates remain at record
lows. For details, see []
ECB President Jean-Claude Trichet said policymakers were
ready to tighten further if needed. But he stressed the ECB had
not decided that Thursday's move was the first in a series.
[]
Stronger-than-expected German trade data helped underscore
the health of the euro zone's largest economy, helping
investors sidestep resurgent doubts over the resilience of the
zone following Portugal's request this week for aid to cope
with its debt. []
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ECB in graphics: http://r.reuters.com/kah88r
BOJ versus Fed assets: http://link.reuters.com/saq88r
Select interest rates: http://link.reuters.com/vug88r
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PROTESTS ERUPT
Libyan rebels said they repulsed a government assault on
the besieged city of Misrata but prospects faded for a military
overthrow of Muammar Gaddafi. []
Protests erupted across much of the Arab world on Friday,
the Muslim day of prayer, with demonstrators dying in Syria and
Yemen. Egyptians staged one of the biggest rallies since
President Hosni Mubarak's fall. []
Spot gold <XAU=> hit a record high for the fourth day in a
row and silver <XAG=> climbed past the $40 an ounce level for
the first time since 1980.
Miners drove European stocks and the FTSEurofirst 300 index
<> closed up 0.4 percent at a five-week closing high.
"The next big thing is the U.S. earnings season," said Matt
Brown, trader at Catalyst Markets. "If we want the market to
have further momentum we need the upside surprises to continue,
otherwise investors may step away."
The MSCI main world equity index <.MIWD00000PUS> rose 0.4
percent, earlier rising to its highest since July 2008 and on
track for its third consecutive weekly gain.
The Dow Jones industrial average <> fell 67.47 points,
or 0.54 percent, to 12,342.02. The Standard & Poor's 500 Index
<.SPX> gave up 7.88 points, or 0.59 percent, to 1,325.63. The
Nasdaq Composite Index <> lost 20.10 points, or 0.72
percent, to 2,776.04.
In Washington, the White House and Congress worked to break
a budget deadlock and avoid a federal government shutdown,
after President Barack Obama and congressional leaders failed
to reach a deal in late-night talks. []
Investment firm Goldman Sachs <GS.N> estimated a government
shutdown lasting more than a week could cost the economy $8
billion in missed federal spending, dragging down growth.
(Additional reporting by Nick Olivari and Robert Gibbons in
New York and Joanne Frearson in London; Editing by Andrew Hay)
