GLOBAL MARKETS-Gold hits record as Wall St lifted by M&A

* Portugal bond yield at new high as bailout fears grow

* Wall Street buoyed by Texas Instruments deal

* Spot gold hits record high on safe-haven appeal

* Some at Fed saw easy money need beyond 2011-minutes
(Adds details, FOMC minutes, updates prices)

By Leah Schnurr

NEW YORK, April 5 (Reuters) – Prices for spot gold notched
a record high on Tuesday as a downgrade of Portugal’s debt
stirred a bid for safety, while on Wall Street a large U.S.
technology company merger helped drive small gains.

The U.S. dollar hit a fresh 5-1/2 month high against the
yen and rose against the euro after minutes of the Federal
Reserve’s most recent meeting showed some officials last month
believed they would have to hold to an easy monetary policy
course beyond this year. A few Fed members said the central
bank should move to tighter conditions before year-end.

A rise in crude oil prices to 2-1/2 highs on unrest in
oil-exporting countries fed inflation fears and supported gold
prices. Spot gold (XAU=: Quote, Profile, Research) rose to a record high above $1,450 an
ounce.

Wall Street shares crept higher after Texas Instruments Inc
(TXN.N: Quote, Profile, Research) said it would buy rival National Semiconductor Corp
(NSM.N: Quote, Profile, Research) for $6.5 billion, driving National Semiconductor’s
stock up more than 70 percent. [ID:nN04281619]

The deal offset the impact of an interest rate hike by
China, its fourth increase since October.[ID:nL3E7F51LX]

“These kinds of deals show that even with the rate hike and
the ISM number, prices are still extremely attractive,” said
Tim Courtney, chief investment officer at Burns Advisory Group
in Oklahoma City. “That’s why the market is holding steady
despite some bad news.”

The Institute for Supply Management on Tuesday reported
that growth in the U.S. services sector slowed in March.

Shares of Apple Inc (AAPL.O: Quote, Profile, Research) were flat after the stock had
its weighting cut in a rebalancing of the Nasdaq 100 index
(.NDX: Quote, Profile, Research). The rebalancing, which takes effect May 2, forced some
to sell the iPhone maker’s stock.

Rating agency Moody’s cut Portugal’s sovereign debt by one
notch, saying the incoming government would urgently need to
seek financial aid from the European Union. Portuguese bond
yields rose to euro lifetime highs. [ID:nL3E7F50X6]

Portugal’s leading banks told the central bank on Monday
that the country urgently needs a bridge loan and banks have
virtually no more capacity to buy government debt, sources
said. [ID:nLDE7340WP]

Yields on Portugal’s 10-year government bonds (PT10YT=TWEB: Quote, Profile, Research)
rose as high as 9.033 percent, while Portuguese stocks (.PSI20: Quote, Profile, Research)
slumped 1 percent. The broader FTSEurofirst 300 index (.FTEU3: Quote, Profile, Research),
closed up 0.2 percent.

It was the highest close for European shares in almost four
weeks, with energy shares rising with oil prices.

Credit default swaps implied a 41 percent probability of a
Portuguese default within five years, compared with 33 percent
at the end of February, data provider CMA said.
[ID:nLDE7341H4]

<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

Graphics on Thursday’s ECB meeting:

http://r.reuters.com/kah88r

Graphic on euro zone credit ratings:

http://r.reuters.com/pyh48r

Graphic on China rate rise: http://r.reuters.com/veh88r

^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

INFLATION IN VIEW

Global stocks overcame early weakness to edge higher, with
the MSCI All-Country World Index (.MIWD00000PUS: Quote, Profile, Research) logging its
sixth day of gains. The index was up 0.01 percent.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) added 28.84 points,
or 0.23 percent, to 12,428.87. The Standard & Poor’s 500 Index
(.SPX: Quote, Profile, Research) rose 3.76 points, or 0.28 percent, to 1,336.63. The
Nasdaq Composite Index (.IXIC: Quote, Profile, Research) gained 13.66 points, or 0.49
percent, to 2,802.85.

Brent crude (LCOc1: Quote, Profile, Research) prices topped $122 a barrel, recouping
losses as worries about supply from oil-producing countries in
Africa and the Middle East overshadowed China’s rate hike.
Brent futures were up $1.02 at $122.08 a barrel, while U.S.
crude futures (CLc1: Quote, Profile, Research) were down 20 cents around $108.27.

Minutes of the Federal Reserve’s March 15 meeting showed
officials increasingly concerned about inflation and the
possibility an inflationary psychology might take root.

However, they concluded for the most part that higher
inflation from energy and commodity price spikes would be
temporary, although they vowed to keep a watchful eye on
whether consumers and businesses were beginning to expect
higher inflation in the future. [ID:nWAL5FE754]
(Additional reporting by Nick Olivari, Ryan Vlastelica, Mark
Felsenthal and Glenn Somerville; Editing by Padraic Cassidy)

GLOBAL MARKETS-Gold hits record as Wall St lifted by M&A