March 1, 2011 / 10:21 PM / 9 years ago

GLOBAL MARKETS-Gold hits record, oil jumps with Libya unrest

 * Gold hits record; investors turn to gold as safe haven
 * World stocks decline on worries about economic growth
 * Crude oil jumps on supply concerns
 (Updates with US closing prices)
 By Caroline Valetkevitch
 NEW YORK, March 1 (Reuters) - Gold rose to an all-time high
on Tuesday as investors fled risky assets amid escalating
violence in Libya, and oil prices jumped to their highest in 2
1/2 years.
 Oil's surge, which fanned worries about a dampening effect
on the economic recovery, pushed investors out of stocks. U.S.
Treasuries, also a safe-haven asset, rose.
 Major U.S. stock indexes dropped more than 1 percent, and
the CBOE Volatility Index VIX .VIX, Wall Street's fear gauge,
jumped 13.3 percent.
 "From the start of crude oil's ascent based on Libya, you
are seeing general risk issues become more of a front burner in
peoples' psyche," said James Dailey, portfolio manager of the
TEAM Asset Strategy Fund.
 Unrest in the Middle East and North Africa has driven gold
and oil prices up sharply in the past month. The turmoil has
unseated leaders in Tunisia and Egypt, and more recent chaos in
Libya has sparked concern the unrest will engulf other oil
producers in the region.
 Spot gold XAU= was last up 1.4 percent at $1,430.75 an
ounce, and earlier hit an all time-high at $1,432.10. Gold was
up 6 percent in February.
 In London, ICE Brent for April delivery LCOJ1 settled at
$115.42 a barrel, rising $3.62. It was the highest settlement
since Aug. 27, 2008, when front-month Brent crude oil futures
closed at $116.22.
 High oil prices are "essentially a huge tax on consumers,
who make up two-thirds of the (U.S.) economy. So there's no way
(gross domestic product) won't suffer on this," said Scott
Armiger, portfolio manager at Christiana Trust in Greenville,
Delaware, which has $6.8 billion in client assets.
 Graphic showing oil price shocks
 Calculator: Oil price impact on GDP
 In the U.S. stock market, the Dow Jones industrial average
.DJI fell 168.32 points, or 1.38 percent, to end at
12,058.02. The Standard & Poor's 500 Index .SPX was down
20.89 points, or 1.57 percent, at 1,306.33. The Nasdaq
Composite Index .IXIC was down 44.86 points, or 1.61 percent,
at 2,737.41.
 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. For details, see
 World equities, measured by the MSCI All-Country World
Index .MIWD00000PUS, fell 0.6 percent. The index had gained
2.8 percent in February.
 Benchmark 10-year U.S. Treasury notes US10YT=RR reversed
early losses to trade up 6/32, their yields at 3.39 percent
from 3.43 percent late on Monday.
 The retreat from risk drove down the price of copper, a
bellwether of economic health due to its extensive industrial
uses. London Metal Exchange copper for three-month delivery
closed ring trading down $25 at $9,860 a tonne, but prices
returned to positive territory in after-hours trade.
 Treasury Department data showed that China held $1.16
trillion in U.S. government debt in December, the most recent
month for which figures are available, up from prior estimates
of $892 billion.
 The data showed China may have more potential than ever to
influence U.S. debt prices, analysts said.
 Also rising later in the U.S. session was the dollar. It
recovered from a 3-1/2-month low against a basket of other
major currencies, with the euro again failing to breach
resistance at its 2011 high.
 The dollar index .DXY, which tracks the greenback's
performance against a basket of major currencies, fell to
76.735, its weakest level since early November, before
recovering to 77.053, up 0.2 percent from the prior close.
 In the European stock market, the FTSEurofirst 300 .FTEU3
index of leading European shares was down 0.6 percent at
 (Additional reporting by Karen Brettel, Frank Tang, Angela
Moon and Gene Ramos; Emelia Sithole-Matarise and Harpreet Bhal
in London; Editing by Kenneth Barry)

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