* U.S., world stocks inch lower
* Brent oil above $114 on supply concerns
* Dollar index pares earlier losses
(Updates prices, adds details)
By Caroline Valetkevitch
NEW YORK, March 1 (Reuters) - U.S. stocks dipped on Tuesday
as oil prices regained ground on worries about supply
disruptions, fanning concerns about the effect on economic
growth.
Gold hit three-month highs as escalating violence in Libya
and unrest spreading across the Middle East boosted the metal's
appeal as a safe haven from risk.
The retreat from risk drove down the price of copper, often
viewed as a bellwether of economic health due to its expansive
industrial usages, from two-week highs.
World equities, measured by the MSCI All-Country World
Index <.MIWD00000PUS>, fell 0.1 percent. The index gained 2.8
percent in February.
The U.S. dollar was down slightly against major currencies,
while the 10-year U.S. Treasury note also was lower.
U.S. stocks, which are up about 26 percent since the start
of September, declined despite data showing the U.S.
manufacturing sector grew in February at its fastest rate since
May 2004.
Federal Reserve Chairman Ben Bernanke, in testimony to the
U.S. Senate Banking Committee, said higher oil prices were
unlikely to have a big impact on the U.S. economy, but could
lead to weaker growth if sustained. []
The Dow Jones industrial average <> was down 14.91
points, or 0.12 percent, at 12,211.43. The Standard & Poor's
500 Index <.SPX> was down 3.20 points, or 0.24 percent, at
1,324.02. The Nasdaq Composite Index <> was down 7.02
points, or 0.25 percent, at 2,775.25.
"If gas prices go higher that will put a damper on
things," said Douglas Lane, president of the New York-based
Douglas C. Lane & Associates, which has about $2.2 billion in
assets under management.
"The market has been on a big upswing and there will be a
correction at some point. Maybe the oil crisis will be a reason
for that."
U.S. crude for delivery in April <CLc1> rose $1.21 to
$98.18 a barrel, while Brent crude <LCOc1> was up $1.74 at
$113.54 on continued concerns about supply disruptions amid
unrest in Libya. For details, see []
Oil, however, remained off its highs of last week, when
Brent crude traded close to $120 per barrel, its highest in
more than two years, due to concerns that political upheaval in
Libya would spread across oil-producing nations in the Middle
East. Saudi Arabia has calmed the market with extra supply.
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Graphic showing oil price shocks: http://r.reuters.com/qes28r
Calculator: Oil price impact on GDP
http://r.reuters.com/jux28r
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Spot gold rose to a session peak at $1,423.65 an ounce --
its highest since Dec. 7 when it hit a record high of
$1,430.95. The metal was up 0.8 percent at $1,421.95 an ounce
by 1533 GMT from $1,410.85 late in New York on Monday.
"What we're seeing in Libya, the region as a whole, makes
people want to hold gold," said Robin Bhar, an analyst at
Credit Agricole, adding the metal could hit a new peak "as soon
as this week."
Gold in February staged its largest monthly rise since last
August, as the turmoil in the Middle East fed demand for
perceived safe-haven assets.
Copper <CMCU3> traded at $9,815.50 a tonne at 1603 GMT,
down from a close of $9,885 on Monday. The metal used in power
and construction earlier reached a two-week high at $9,942 a
tonne, nearing record peaks of $10,190 a tonne from Feb. 15.
U.S. Treasury prices on Tuesday slipped as profit-taking
unwound some of the market's recent safe-haven rally.
Benchmark 10-year notes <US10YT=RR> were down 8/32, their
yields at 3.46 percent from 3.43 percent late on Monday.
The dollar index <.DXY>, which tracks the greenback's
performance against a basket of major currencies, was down 0.08
percent after earlier hitting a 3-1/2-month low.
The euro gave up gains against the dollar after Bernanke
noted in his remarks that downside risks to growth have
declined and the risk of deflation was negligible. <EUR=>
Helping to support the view that China's monetary
tightening was beginning to register, data out of that country
showed manufacturing growth slowed in February while costs
jumped. Analysts said more tightening would probably be needed
to cool inflation due largely to rising oil and food prices.
[]
In Europe, the FTSEurofirst 300 <> index of leading
European shares was down 0.6 percent at 1,162.08.
(Additional reporting by Ryan Vlastelica, Ellen Freilich, and
Wanfeng Zhou in New York; Emelia Sithole-Matarise and
Harpreet Bhal in London; Editing by Leslie Adler)
