RPT-GLOBAL MARKETS-Inflation fears dent stocks as oil tops $100

(Repeats to broader subscriber base)

By Lincoln Feast

SINGAPORE, Feb 20 (Reuters) - Record prices for commodities from oil and palladium to soybeans dented demand for shares on Wednesday amid fears that rising inflation will limit how far interest rates can be cut to prop a slowing global economy.

U.S. crude oil CLc1 jumped to an all-time high above $100 on Tuesday, fuelled by expectations that OPEC will not raise output next month, while supply constraints are also helping drive up costs of other raw materials.

The spike in prices is a problem for central banks, including the U.S. Federal Reserve, which are grappling with falling consumer sentiment and a crunch in credit availability.

"Increasing petrol prices are going to dampen confidence even further," said Tony Russell, senior equities adviser at ABN AMRO Morgans in Australia. "Inflation is a major concern for the various central banks around the world at the moment."

While markets still expect the Fed to lower interest rates next month, higher prices are threatening further rate cuts.

Lower interest rates generally make stocks more attractive compared to other assets and reduce companies' borrowing costs.

Japan's Nikkei average .N225 was down 0.8 percent by 0230 GMT, while MSCI's index of other Asian stocks .MIAPJ0000PUS shed 0.5 percent. The MSCI index is down almost 10 percent so far this year and 18 percent off its peak in early November.