* Euro slips as Portugal vote looms
* Sterling falls on UK growth projections
* Miners lift European, U.S. stocks
* Gold, silver up on safety bid; base metals rally
(Updates prices, adds IMF comment on Portugal)
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 U.S. oil, while Wall Street stocks gained as
mining stocks tracked metals prices higher.
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. Precious metals
are considered a good store of value in uncertain or volatile
times.
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.
An International Monetary Fund spokeswoman said Portugal
has not requested a loan program backed by the IMF, dismissing
speculation Lisbon was in talks with the fund.
"There's currently a lot of concern on the Portuguese
budget vote and the potential political implication for it,"
said Mary Nicola, currency strategist at BNP Paribas in New
York.
"The fear is that if Portugal failed to agree on austerity
measures, we can potentially see the country forced into the
EFSF" rescue fund, she said.
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 seen as 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.
"We hold an overweight position in the euro and will be
looking to buy on any dips," he added.
The euro <EUR=EBS> was last down 0.4 percent at $1.4135,
having hit a low for the session of $1.4105, according to
trading platform EBS.
U.S. STOCKS RISE
On Wall Street, U.S. stocks rose. The S&P materials stocks
sector <.GSPM> climbed 1.6 percent, the top-performing sector
on the S&P 500, as metals prices rose. Freeport-McMoRan Copper
& Gold <FCX.N> shares jumped 5.5 percent at $55.16.
Coal mining shares, which have risen recently amid
uncertainty over the future of nuclear power after the crisis
in Japan, also climbed.
The Dow Jones industrial average <> gained 86.92
points, or 0.72 percent, to 12,105.55. The Standard & Poor's
500 Index <.SPX> rose 5.79 points, or 0.45 percent, to
1,299.56. The Nasdaq Composite Index <> added 19.13
points, or 0.71 percent, to 2,703.
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. []
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> edged up 0.2
percent, its fifth straigh session of gains.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
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 $1.6246 <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 were little changed as the possibility that
Japan might sell Treasuries to pay for repairing catastrophic
events offset a safe-haven bid due to turmoil in the Middle
East and North Africa. Benchmark 10-year Treasury notes
<US10YT=RR> were trading 5/32 lower to yield 3.34 percent, up
from 3.33 percent late Tuesday.
U.S. oil prices <CLc1> rose 0.6 percent to $105.60 a
barrel, while Brent <LCOc1> edged down 0.1 percent.
"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 0.7 percent at $1,439.25 an ounce
after hitting a session high of 1,440.90, near its recent
record of $1,444.40.
Silver <XAG=> was up 2.7 percent at $37.31 an ounce at 1925
GMT, just below the session high of $37.34 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 Lesley Wroughton, Chris Reese,
Wanfeng Zhou and Robert Gibbons; Editing by Leslie Adler)
