GLOBAL MARKETS-Metals up on weak dollar; oil eases on Libya peace prospects

* Reuters-Jefferies CRB index at 2-1/2 year high

* Euro rises on rate hike expectations

* Foreign inflows drive China stocks to 2011 highs

* Profit taking hits shares but move to riskier assets

By Saikat Chatterjee

HONG KONG, April 11 (Reuters) – Commodities prices rose
across the board on Monday, pushing the Reuters-Jefferies CRB
index to a fresh 2-1/2 year high on a weaker dollar and
strong trade data from China, while expectations of a European
Central Bank rate hike in July propped up the euro.

Copper prices inched higher, tin hit a record for a second
straight session and lead scaled a three-year high on the London
Metal Exchange, while Brent crude prices fell as prospects of a
peace deal in Libya eased supply worries. See [ID:nL3E7FB06Q]

Shares of resources companies firmed along with metals,
thought profit taking left Asia’s major stock markets weaker.
European shares were also expected to open slightly lower, with
investors cautious ahead of the start of earnings eason.

Gold jumped to a life-time high for a fifth session, topping
$1,476 as prospects of more declines in the U.S. dollar drove
investors into the precious metal, with record exchange traded
fund holdings helping silver to its highest in more than three

“I think there is a good chance that gold could hit $1,500
an ounce within this quarter. And perhaps even higher if we see
the weakness in the dollar persist and the Federal Reserve
continues their relatively easy monetary policy,” said Ong Yi
Ling, investment analyst at Phillip Futures in Singapore.

“This week, perhaps, the focus could be on whether the
Federal Reserve actually indicates to the market whether they
will be exiting their loose monetary policy, and whether they
display any hawkish signals.”

Japanese stocks eased 0.5 percent after hitting a
one-month high on Friday and after Citigroup slashed ratings on
the country’s major automakers to “sell”, saying the impact of
last month’s massive earthquake had yet to be fully priced in.

Hong Kong fell 0.4 percent and South Korea
ended 0.3 percent lower. Australia was the lone big
bourse in the region to show gains, advancing 0.6 percent on
strengh in mining and oil shares.

During the first week of April, flows into Asia-ex Japan
equity funds hit a 20-week high as expectations grew that most
Asian economies were able to keep inflationary pressures in
check, data from fund-tracker EPFR Global showed.


Chinese shares traded at 2011 highs due to heavy
inflows from foreign investors.

After a patchy start to the year, emerging markets have
roared back in recent weeks as policy tightening in China showed
that authorities in the world’s biggest economies are getting
more sanguine about growth prospects.

Three central banks in Asia are set to review monetary
policy this week with Singapore likely to tighten policy further
by recentering its currency band higher, which investors said
would be another thumbs up for emerging market prospects.

“This means more capital inflows into emerging market assets
and likely continued gains in their currencies,” Credit Agricole
strategists said in a daily note.

Expectations of strong corporate earnings reports in coming
weeks may further boost gains.

HSBC strategists said the sharp rebound in China’s March
exports after February’s slump suggested global growth prospects
remained strong, despite the earthquake and tsunami in Japan.

LME copper gained 0.3 percent to $9,905 a tonne,
extending gains from last week, after data showed Chinese copper
imports rose 30 percent on the month. [ID:nL3E7FB09E]

In currency markets, the euro rose to 15-month highs around
$1.4488 , paving the way for a test of $1.4582, the Jan
2010 high, as expectations grew that the ECB would follow up
April’s quarter point rate increase with another one in July.

While the euro’s gains have gathered steam from the March
lows after ECB President Jean-Claude Trichet first hinted at an
April rate hike, the yen and the dollar have floundered as the
Federal Reserve and Bank of Japan are expected to keep interest
rates near zero for an extended period of time.

Brent crude futures (LCOc1: Quote, Profile, Research) fell 50 cents to near $126 a
barrel, while U.S. light crude futures were little changed at
$112.69 after briefly topping $113 in early trade.

Even if crude oil prices are levelling off for now, petrol
prices could continue to rise as earlier increases work their
way into the retail market, cutting into consumers’
discretionary spending.

U.S. Treasury yields rose slightly, extending a three-week
rising streak, as market players unwound safe-haven bids on the
Libya news. Ten-year yields settled just below a seven-week high
of 3.62 percent hit on Friday.

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(Additional reporting by Ian Chua in SYDNEY; Editing by Ramya

GLOBAL MARKETS-Metals up on weak dollar; oil eases on Libya peace prospects