GLOBAL MARKETS-Euro up as rate hike eyed; gold at new record

* Euro gains on expectations of rise in interest rates

* Global stocks buoyant, Wall Street little changed

* Brent gives up earlier gains; gold hits record high

* Portugal sells 1 bln euros in T-bills, yields spike

(Updates prices)

By Leah Schnurr

NEW YORK, April 6 (Reuters) – The euro rallied on Wednesday
ahead of an expected interest-rate hike in the euro zone, while
a weaker dollar and safe-haven appeal drove gold to another
record high.

The slumping greenback and geopolitical unrest earlier sent
Brent crude to a fresh 2-1/2 year high above $123 a barrel
before giving up gains as some said its recent run-up was
overdone.

The euro climbed against the dollar to its highest in more
than a year one day before the European Central Bank is widely
expected to raise its benchmark interest rate by 25 basis
points to curb inflation pressures.

The single currency held gains after Portugal’s caretaker
government said it needed financing from the European Union due
to rapidly deteriorating financial conditions. [ID:nLDE7350HL]

The ECB has held rates at a record low 1.0 percent since
July 2008. The Bank of Japan, on the other hand, is expected to
keep interest rates low at its policy meeting on Thursday
following last month’s massive earthquake and tsunami, and the
yen slid to an 11-month low against the euro and a six-month
low versus the dollar. (ECBWATCH: Quote, Profile, Research)

Among other commodities, silver rallied to a 31-year high
for a third consecutive day. Inflation fears have boosted
precious metals, as oil and corn prices reached new peaks in
recent days. A weaker greenback also makes dollar-priced assets
more affordable to holders of the euro and other currencies.

“It is unquestionable that the demand for precious metals
derives from the devaluation of the leading currencies — the
dollar, the pound and the euro,” said Angelos Damaskos, a fund
manager at Sector Investment Managers.

The euro rose as high as $1.4350 (EUR=: Quote, Profile, Research), according to
Reuters data, its highest since late January 2010. It last
traded up 0.9 percent at $1.4342. Against the yen (EURJPY=R: Quote, Profile, Research),
it was up 1.3 percent at 122.35 yen.

Spot gold (XAU=: Quote, Profile, Research) hit a record $1,461.91 an ounce and was
later up 0.3 percent at $1,455.34 an ounce. Silver (XAG=: Quote, Profile, Research) rose
as high as $39.75. Brent crude (LCOc1: Quote, Profile, Research) was unchanged at $121.22
a barrel after hitting its highest level since August 2008.
U.S. crude (CLc1: Quote, Profile, Research) gained 42 cents $108.76.

Corn futures (CK1: Quote, Profile, Research) fell 1 percent on profit-taking after
hitting a record high a day earlier on shrinking supplies in
the United States due to strong demand.

STOCK MARKET CONSOLIDATION

Global equities gained on a generally brighter economic
picture, though U.S. stocks were little changed in the
midafternoon before the start of earnings season next week.

Portugal added support after the battered euro zone
peripheral economy successfully sold six- and 12-month treasury
bills but had to pay a steep price in interest.
[ID:nLDE7350HL]

Emerging markets also rose, helped by renewed interest due
to higher expectations for interest rates in developed markets.
Shares of European banks rose after the successful Portuguese
debt auction. [ID:nLDE7301MN]

World stocks, measured by the MSCI (.MIWD00000OOPUS: Quote, Profile, Research),gained
0.4 percent. An emerging markets index (.MSCIEF: Quote, Profile, Research) rose 0.7
percent. Europe’s FTSEurofirst 300 (.FTEU3: Quote, Profile, Research) rose 0.3 percent.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) added 29.71 points,
or 0.24 percent, to 12,423.61. The Standard & Poor’s 500 Index
(.SPX: Quote, Profile, Research) edged up 2.28 points, or 0.17 percent, at 1,334.91. The
Nasdaq Composite Index (.IXIC: Quote, Profile, Research) rose 9.21 points, or 0.33
percent, to 2,800.40.

The market is “basically poised and waiting to see if these
(earnings) numbers will support the upside,” said Marc Pado,
U.S. market strategist at Cantor Fitzgerald & Co. in San
Francisco. “It’s a consolidation week.”

Pado said that earnings could push the S&P 500 to 1,385 by
early May.

Data showing that German industrial orders soared above
expectations in February brightened the outlook for Europe’s
top economy. Orders grew by 2.4 percent on the month, compared
to the Reuters forecast for an increase of 0.6 percent.
[ID:nLDE7350XH].

Portugal sold a total of 1.005 billion euros ($1.43
billion) in 12-month and six-month T-bills, but yields rose
sharply from last month’s auctions.

The 12-month T-bill yield rose to 5.902 percent from 4.331
percent in the auction three weeks ago, while the yield on the
shorter maturity rose to 5.117 percent from 2.984 percent in a
sale in early March.

Demand, however, outstripped supply by 2.6 times for the
12-month t-bills and by 2.3 times for the six-month T-bills.
(Additional reporting by Edward Krudy, Nick Olivari, Frank
Tang and David Sheppard)

GLOBAL MARKETS-Euro up as rate hike eyed; gold at new record