* OPEC mulls boosting production after Libya unrest
* Euro slips for 2nd day on euro zone debt concerns
* Greek 10-year yields hit euro-era high
* Global stocks rise on oil price relief
(Updates with U.S. markets close; adds Nikkei futures)
By Walter Brandimarte
NEW YORK, March 8 (Reuters) - Oil prices fell on Tuesday as
OPEC responded to the decline in Libya's crude output by
considering a hike in production for the first time in more
than two years, while the euro slipped for a second day on
renewed euro zone debt worries.
U.S. stocks rallied as crude prices retreated after hitting
a 2-1/2-year high on Monday, easing worries the economic
recovery could be choked off. An upbeat profit forecast from
Bank of America also lifted sentiment. []
Asian stocks looked set to open higher, with Nikkei futures
traded in Chicago <NKH1> rising 1.15 percent to 10,570.00
points. Further unrest in Libya and the Middle East, however,
could still drive oil prices up and weigh on global equity
markets.
An official output increase by the Organization of the
Petroleum Exporting Countries would signal the group's
determination to cap prices, but many oil-exporting countries
were not convinced such a move was necessary. []
Brent crude <LCOc1> prices closed down 1.72 percent, at
$113.06 per barrel, while U.S. light crude futures <CLc1> ended
0.4 percent lower at $105.02.
Financials led U.S. stocks higher after Bank of America's
profit forecast. The rise lifted Wall Street out of the
technical danger zone, with the S&P 500 jumping back above a
six-month trend line. Holding this level is a sign of
strength.
The market "is still trying to deal with the turmoil in the
Mideast," said Bruce Zaro, chief technical strategist at Delta
Global Asset Management in Boston, noting that with "any kind
of pullback in oil prices, we've seen the effect where the
market has jumped rather significantly,.
The Dow Jones industrial average <> rose 124.35 points,
or 1.03 percent, to 12,214.38, and the Standard & Poor's 500
Index <.SPX> gained 11.69 points, or 0.89 percent, to 1,321.82.
The Nasdaq Composite Index <> closed up 20.14 points, or
0.73 percent, at 2,765.77.
Bank of America <BAC.N> shares shot up 4.7 percent to
$14.69. The S&P financial index <,GSPF> climbed 2.2 percent.
In Europe, the FTSEurofirst 300 <> index of top
shares ended up 0.31 percent at 1,147.43 points, after
seesawing between positive and negative.
Greek shares <> fell 3.8 percent, while the banking
index <.FTATBNK> dropped 6.3 percent, a day after Moody's cut
Greece's credit rating by three notches, raising the specter of
a debt restructuring. Shares of Greece's two top lenders
slumped, with National Bank <NBGr.AT> down 6.8 percent and EFG
Eurobank <EFGr.AT> down 6.1 percent.
MSCI's All-Country World Index of global stocks
<.MIWD00000PUS> edged higher 0.2 percent while its emerging
market benchmark <.MSCIEF> climbed 0.39 percent.
GREEK YIELDS AT RECORD HIGH
The euro fell against the dollar as concerns about the debt
situation of peripheral euro zone countries increased with
expectations of an interest rate hike by the European Central
Bank next month.
A rise in interest rates would push up borrowing costs
across the 17-country euro zone, increasing the cost of funding
for highly indebted countries.
Concerns about Europe's debt problems have been on the rise
since Moody's cut Greece's credit ratings on Monday.
Greece's borrowing costs spiked on Tuesday, with yields
paid by 10-year government bonds <GR10YT=TWEB> climbing to
12.946 percent, their highest since the launch of the euro
currency.
The euro <EUR=> fell 0.5 percent to $1.3902. It had climbed
to a four-month high above $1.40 on Monday after ECB president
Jean-Claude Trichet said last week that euro-zone interest
rates could rise as early as next month, initially boosting the
appeal of the European single currency.
"The problem with the interest rate-driven trade and
Trichet's hawkish comments is that you have to see the other
issues behind it," said John McCarthy, director of foreign
exchange at ING Capital Markets in New York. "Higher rates will
be devastating for the peripheral countries."
Gold eased below $1,430 an ounce, falling further from
Monday's record high after the drop in oil prices eased some
concerns about inflation. Spot gold <XAU=> was last at
$1,428.46.
The price of oil, however, was still considered a wild card
in financial markets as the fighting in Libya continued.
Expectations that the disruption to Libya's oil supply will
be prolonged drove more analysts to revise their oil price
forecasts higher on Tuesday. Goldman Sachs increased its
second-quarter 2011 Brent forecast by $4.50 a barrel to $105.
Bank of America-Merrill Lynch raised its outlook to an average
price of $122 in the second quarter, up from $86.
[]
The U.S. government's energy forecaster boosted its
full-year price forecast by $9 to $102 a barrel this year --
above the average $99.75 in 2008, when oil hit a record.
Prices of U.S. government debt fell as investors felt
comfortable buying stocks. Some were also seeking price
concessions in this week's U.S. Treasury auctions of $66
billion in debt.
Prices of 10-year Treasury bonds <US10YT=RR> fell 8/32,
while their yield rose to 3.544 percent. Despite the fall in
prices, the government found strong demand during Tuesday's
sale of three-year notes.
(Additional reporting by Wanfeng Zhou, Chuck Mikolajczak, Nick
Olivari, Brenda Goh and William James; Editing by Leslie
Adler)
