* Escalating violence in Libya keeps oil prices bid
* Asian shares under pressure, Nikkei down 1 pct
* Portugal bailout fears rekindled
(Updates prices, changes headline, previous TOKYO)
By Ian Chua
SYDNEY, March 10 (Reuters) - Asian stock markets fell on
Thursday in the face of higher oil prices as fighting in Libya
intensified, fuelling worries that mounting inflationary
pressure could bite into global growth.
The euro zone's sovereign debt problem is also a risk to
global growth. Portugal on Wednesday saw its cost for issuing
two-year debt soar to its highest level since it joined the euro
in 1999, rekindling fears it will need a bailout.
That kept the euro from making much headway against the
dollar. The common currency last traded at $1.3913, still off
highs just above $1.40 set on Monday.
In an effort to keep a lid on prices, the Bank of Korea
raised interest rates for a fourth time in less than a year on
Thursday. New Zealand, on the other hand, cut rates in order to
bolster confidence after last month's devastating earthquake.
U.S. crude rose towards $105 a barrel, not far from a
peak near $107 hit earlier this week, after forces loyal to
Libyan leader Muammar Gaddafi bombed oil industry
infrastructure, inflicting what could be longer-term damage on
the country's exporting capacity.
Brent crude gained 0.5 percent to $116.50.
"Investors are still concerned about developments in the
Middle East, so oil prices during the day may decide the
market's direction," said Masumi Yamamoto, a market analyst at
Daiwa Securities Capital Markets.
That concern saw Japan's Nikkei average fall 1.1
percent, while stocks elsewhere in Asia shed 1.0
percent.
South Korea's KOSPI slid 1.1 percent, Hong Kong's
Hang Seng index fell 0.5 percent, while China's Shanghai
Composite Index lost 0.8 percent.
Technology stocks came under pressure after sector
heavyweight Texas Instruments issued a weak outlook.
Samsung Electronics fell 2.4 percent.
Revised data on Thursday showed Japan's economy, the world's
third largest, shrank at a slightly faster annualised pace in
the fourth quarter than initially reported.
But analyst expect improving exports to help the Japanese
economy return to growth this year, although they warned that
high oil prices threatened that outlook.
Traders said last week's hawkish comments by European
Central Bank President Jean-Claude Trichet about a possible rate
hike as early as next month were already discounted by markets.
"The market has already priced in a rise in euro zone rates
to near 2 percent by the end of the year. But there are worries
about whether the economy can cope with such high rates," said
Makoto Noji, a senior strategist at Nikko Cordial Securities.
"It's also hard to think investors will try to price in even
more aggressive rate hikes from now, which suggests the euro may
be capped in the near term," he said.
(Additional reporting by Gertrude Chavez-Dreyfuss, Ayai
Tomisawa and Hideyuki Sano in Tokyo; Editing by Nick Macfie)
