GLOBAL MARKETS-Gold hits record, oil tops $122 a barrel

* Portugal bond yield at new high as bailout fears grow

* Wall Street ends flat as hits technical resistance

* Spot gold hits record high on safe-haven appeal

* Divisions at Fed highlighted by FOMC minutes
(Updates prices, adds quote)

By Leah Schnurr

NEW YORK, April 5 (Reuters) – Prices of spot gold notched a
record high on Tuesday as a downgrade of Portugal’s debt
stirred a bid for safety, while Brent crude ended above $122 a
barrel, at a 2-1/2 year high.

The rise in oil prices on unrest in oil-exporting countries
overshadowed another interest rate hike from China and fed
inflation fears, which supported gold prices. Spot gold (XAU=: Quote, Profile, Research)
rose to a record high above $1,450 an ounce.

“What it shows is that big money continues to believe gold
will go higher … because Bernanke wants to grow at any cost,”
said Axel Merk, portfolio manager of the $600 million Merk
Mutual Funds, referring to Federal Reserve Chairman Ben
Bernanke’s comments late on Monday suggesting he was committed
to completing a $600 billion stimulus program as scheduled in

“The other reason for gold to go up is that there was a
downgrade in Portugal, so people realize there are still some
issues,” Merk added.

Corn futures also hit a record high, extending their
biggest rally in six months as traders feared supplies could
run out unless ranchers or ethanol makers cut back on

Corn futures (Cc1: Quote, Profile, Research) on the Chicago Board of Trade set a new
high of $7.70-3/4 per bushel after matching 2008’s record high
on Monday. Corn has surged more than 15 percent in four days
since a U.S. government report showed unexpectedly low
inventories as of March 1. [ID:nLDE7300TD]

The euro rose to an 11-month high against the yen and
neared a recent five-month peak against the dollar on
expectations of rising euro zone interest rates. The European
Central Bank is widely expected to raise interest rates by a
quarter point when it meets on Thursday.

A large U.S. technology company merger helped keep a floor
under stocks, but indexes were dampened by profit-taking late
in the session.

Texas Instruments Inc (TXN.N: Quote, Profile, Research) said on Monday 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.

The deal offset the impact of an interest rate hike by
China, its fourth increase since October. China is viewed as a
main source of global growth. [ID:nL3E7F51LX]

Shares of Apple Inc (AAPL.O: Quote, Profile, Research) were down 0.7 percent at
$338.89 after the stock’s weighting was cut in a rebalancing of
the Nasdaq 100 index (.NDX: Quote, Profile, Research). The rebalancing, which takes
effect May 2, forced some to sell Apple’s stock.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) ended off 6.13
points, or 0.05 percent, at 12,393.90. The Standard & Poor’s
500 Index (.SPX: Quote, Profile, Research) eased 0.24 point, or 0.02 percent, to
1,332.63. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) added 2.00 points,
or 0.07 percent, to 2,791.19.

Global stocks were little changed, with the MSCI
All-Country World Index (.MIWD00000PUS: Quote, Profile, Research) breaking five straight
days of gains. The index was off 0.1 percent.


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
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.


Graphics on Thursday’s ECB meeting:

Graphic on euro zone credit ratings:

Graphic on China rate rise:


Against the yen, the euro was last up 0.9 percent at
120.67 yen (EURJPY=: Quote, Profile, Research), after having risen to 120.69 yen, an
11-month high, according to Reuters data. Against the dollar,
the euro was flat at $1.4221 (EUR=: Quote, Profile, Research), just below a session high
of $1.4245

Brent crude (LCOc1: Quote, Profile, Research) prices rose as worries about supply
from oil-producing countries in Africa and the Middle East
overshadowed China’s rate hike. Brent futures settled up $1.16
at $122.22 a barrel, while U.S. crude futures (CLc1: Quote, Profile, Research) were down
32 cents at $108.15.

Divisions at the U.S. Federal Reserve over how soon to
reverse course on monetary policy emerged more clearly last
month, although the central bank, in minutes of its latest
meeting released on Tuesday, appeared intent to complete its
bond-buying plan.

The split between policy hawks and doves reflects the
challenge the Fed faces in timing the withdrawal of its massive
support for the economy.
(Additional reporting by Wanfeng Zhou and Frank Tang in New
York, Carey Gillam in Kansas City, and Mark Felsenthal and
Glenn Somerville in Washington; Editing by Dan Grebler)

GLOBAL MARKETS-Gold hits record, oil tops $122 a barrel