GLOBAL MARKETS-Oil hits 32-month peak, euro gains on rate hopes

* Global equities rise alongside commodities

* Euro at 15-month peak on EU rate hike optimism

* Dollar pressured as U.S. government shutdown looms

* Oil at 32-month high, gold notches another record high
(Recasts, updates prices, adds details)

By Leah Schnurr

NEW YORK, April 8 (Reuters) – Oil rose to a 32-month high
above $124 a barrel on Friday on concerns of long-term supply
cuts, while expectations of more interest rate hikes in the
euro zone drove the euro to a 15-month peak versus the dollar.

Commodities, including metals, gained broadly on
expectations of stronger demand and, in some cases, the threat
of supply shortages.

Global equities were boosted by optimism the worldwide
economic recovery will fuel demand for commodities, and shares
hit their highest level in almost three years. U.S. stocks
opened higher but were little changed by midmorning.

Boosted by Thursday’s European Central Bank rate hike, the
euro rose to its highest since January 2010. The currency was
last up 0.8 percent at $1.4413 (EUR=: Quote, Profile, Research).

The greenback was also pressured by the prospect of a U.S.
government shutdown, and U.S. 10-year Treasury yields rose near
six-week highs.

Republicans and Democrats have been in budget talks trying
to reach an agreement that would avert a government shutdown at
midnight. Senate Majority Leader Harry Reid said budget
negotiators had agreed to $38 billion in spending cuts.

The ECB’s move to raise its key interest rate to 1.25
percent has widened the euro zone’s yield advantage over the
United States, Britain and Japan, where rates remain at record
lows. For details, see [ID:nLOOKCBANK]

ECP President Jean-Claude Trichet said policymakers were
ready to tighten further if needed. But he stressed the ECB had
not decided that Thursday’s move was the first in a series.

“Trichet’s press conference was neutral and suggests to us
that the bank is embarking on a gradual series of rate
increases of perhaps 25 basis points per quarter,” said Jon
Wetreich, currency strategist at Brown Brothers Harriman.

Stronger-than-expected German trade data helped underscore
the health of the euro zone’s largest economy, helping
investors sidestep resurgent doubts over the resilience of the
zone following Portugal’s request this week for aid to cope
with its debt. [ID:nLDE73707D]


ECB in graphics:

BOJ versus Fed assets:

Select interest rates:


Brent crude (LCOc1: Quote, Profile, Research) rose past $124 per barrel to a
32-month high after attacks on Libyan oil fields.

Spot gold (XAU=: Quote, Profile, Research) hit another record high and silver (XAG=: Quote, Profile, Research)
climbed past the $40 an ounce level for the first time since

Mining shares led European stock gains and the FTSEurofirst
300 index (.FTEU3: Quote, Profile, Research) rose 0.3 percent. The MSCI main world equity
index (.MIWD00000PUS: Quote, Profile, Research) rose 0.6 percent to its highest since
July 2008, on track for its third consecutive weekly gain.

The Dow Jones industrial average (.DJI: Quote, Profile, Research) was down 13.13
points, or 0.11 percent, at 12,396.36. The Standard & Poor’s
500 Index (.SPX: Quote, Profile, Research) was up 0.10 point, or 0.01 percent, at
1,333.61. The Nasdaq Composite Index (.IXIC: Quote, Profile, Research) was down 1.97
points, or 0.07 percent, at 2,794.17.

In Washington, the White House and Congress worked
furiously to break a budget deadlock and avoid a federal
government shutdown, after President Barack Obama and
congressional leaders failed to reach a deal in late-night
talks. [ID:nN08144565]

“With all the focus recently on debt problems in the euro
zone periphery, what is going on in the U.S. highlights that
the U.S. has budget problems of its own, while the euro
continues to be driven by the prospect of more rate hikes,”
said Carl Hammer, currency strategist at SEB in Stockholm.
(Additional reporting by Nick Olivari in New York and
Sebastian Tong in London; Editing by Dan Grebler)

GLOBAL MARKETS-Oil hits 32-month peak, euro gains on rate hopes