February 22, 2011 / 6:53 PM / 9 years ago

GLOBAL MARKETS-Oil surges, stocks fall as Libya spurs fears

* U.S. crude at 30-month highs on fear unrest may spread

* Global stocks fall as oil concerns prompt growth worries

* Euro gains against U.S. dollar on hawkish ECB talk

* Government debt prices gain on safe-haven buying (Adds fresh prices, latest Libyan developments)

By Herbert Lash

NEW YORK, Feb 22 (Reuters) - World stocks fell sharply on Tuesday as revolt in Libya lifted crude prices to 30-month highs and rekindled fears of slower global growth if the unrest were to spread to other major oil suppliers in the region.

Libya declared force majeure on all oil product exports as political violence shut more than 8 percent of the country’s 1.6 million barrels per day of crude production. For details see: [ID:nWLB4946] [ID:nLDE71L11T]

Crude prices surged in New York and London, where prices for North Sea Brent LCOc1 touched $108.57 a barrel before paring some gains. For details see: [ID:nLDE71L0ZE]

Gold prices steadied above $1,400 an ounce and base metals fell as concerns about oil supplies cooled the appetite for assets perceived as risky and drove investors into safe-haven assets such as bullion and government debt.

Muammar Gaddafi vowed to die in Libya as a martyr and said he would crush a revolt which has seen eastern regions already break free from his rule. [ID:nL3E7DM0K1]

Libya ranks third in Africa after Nigeria and Angola in oil production and investors are concerned that the spread of violence in North Africa and the Middle East might disrupt the supply of oil exports from the region.

U.S. light sweet crude oil CLc1 rose $5.62 to $91.82 a barrel, while Brent rose 48 cents to $106.20.

“If oil prices stay at these levels or even go higher then there would be a question mark about the current global growth forecasts,” said Jane Coffey, a fund manager at Royal London Asset Management.

Global stocks, as measured by MSCI’s all-country world index .MIWD00000PUS, fell 1.4 percent and Wall Street fell more than 1 percent, with the tech-heavy Nasdaq falling more than 2 percent.

Higher oil prices hit certain stocks on concerns of higher fuel costs. The Arca airline index .XAL fell 5.5 percent.

Still, U.S. consumer confidence rose to a three-year high in February, but a drop in home prices for the sixth month in a row in December suggested the economy still faces significant hurdles. [ID:nN22277393]

The Dow Jones industrial average .DJI was down 168.43 points, or 1.36 percent, at 12,222.82. The Standard & Poor's 500 Index .SPX was down 25.40 points, or 1.89 percent, at 1,317.61. The Nasdaq Composite Index .IXIC was down 68.54 points, or 2.42 percent, at 2,765.41,

The euro rose versus the dollar as hawkish comments from a European Central Bank official helped it pare earlier steep losses as escalating violence in Libya prompted investors to seek safer assets. [ID:nLDE71L1EX]

The euro EUR= was up 0.02 percent at $1.3678, and against the Japanese yen, the dollar JPY= was down 0.61 percent at 82.60.

The price of the 30-year U.S. Treasury bond US30YT=RR rose more than a full point and the benchmark 10-year rose nearly a full point as the unrest in Libya prompted investors to swap riskier assets for safe-haven bonds. [ID:nNYD003766]

The 10-year U.S. Treasury note US10YT=RR was up 31/32 in price to yield 3.47 percent, while The 30-year bond last traded 1-16/32 higher in price to yield 4.60 percent.

Gold prices slipped but remained above $1,400 an ounce as the dollar surrendered its earlier 1 percent gains versus the euro, with violence in Libya fueling interest in the metal as a haven from risk. [ID:nLDE71L0WD]

Spot gold prices XAU= fell $5.51 to $1,400.40 an ounce. (Additional reporting by Edward Krudy, Gertrude Chavez-Dreyfuss, Chris Reese and Julie Haviv in New York; Writing by Herbert Lash, Editing by Andrew Hay)

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