GLOBAL MARKETS-Euro falls, gold and silver up on safety bid

* Euro slips as Portugal vote looms

* Sterling falls on UK growth projections

* U.S. stocks weighed by housing data, miners shine

* Gold, silver up on safety bid; base metals rally (Recasts; updates prices, adds second euro quote)

By Rodrigo Campos

NEW YORK, March 23 (Reuters) - Worries that a political crisis in Portugal could topple the government and force the country to seek a bailout sent the euro lower on Wednesday and drove gold within a whisker of its all-time high on safe-haven demand.

Continued unrest in the Middle East and North Africa drove up the price of oil, while Wall Street stocks rallied as mining stocks rose with higher metals prices.

Silver hit its highest price since 1980 as the ongoing Western air strikes on Libya and the worries about Portugal revived worries about the European debt crisis.

Portugal's parliament started a plenary session to debate the government's austerity measures, setting the stage for the likely collapse of the minority Socialist administration. Prime Minister Jose Socrates has threatened to resign if the package is rejected in a vote expected later on Wednesday.

A statement from Socrates was expected at 2000 GMT.

The cost of insuring Portugal's five-year debt against default hit two-month highs, reflecting the growing belief that Lisbon will follow Greece and Ireland in seeking emergency funding if parliament rejects the austerity measures.

The yield on two-year Irish bonds rose to a euro-era high of 10.715 percent, 55 basis points above the 10-year yield, resulting in an Irish yield curve at its most inverted levels since the launch of the euro zone.

"There's currently a lot of concern on the Portuguese budget vote and the potential political implication for it. The fear is that if Portugal failed to agree on austerity measures, we can potentially see the country forced into the EFSF" rescue fund, said Mary Nicola, currency strategist at BNP Paribas in New York.

Hopes that this week's European summit would yield a decision on how to increase the effective capacity of the euro zone bailout fund were dashed after the release of a draft document prepared for the meeting. The decision will likely come in June. For details, see [ID:nBRU011391]

Portugal's political crisis has knocked the euro from its recent 4-1/2-month highs against the U.S. dollar, although the slide is expected to be temporary, given the expectation for the European Central Bank to raise interest rates next month.

"Expectations of the ECB raising rates favors the euro over the U.S. dollar," said Thanos Papasavvas, head of currency management at Investec Asset Management, which manages over $10 billion in currency funds.

The euro was last down 0.5 percent at $1.4122, having hit a low for the session of $1.4105, according to trading platform EBS.

U.S. STOCKS RISE

On Wall Street, the Dow rose moderately while the benchmark S&P 500 and Nasdaq gained slightly. The S&P index of materials stocks <.GSPM> was up 1.1 percent, the top-performing sector on the S&P 500, as metals prices rose, including a more than 2 percent gain in copper. Freeport-McMoRan Copper & Gold shares jumped 4.4 percent at $54.59.

Coal mining shares, which have risen recently amid uncertainty over the future of nuclear power after the crisis in Japan, also climbed. Consol Energy gained 2.49 percent, Peabody Energy was up 1.9 percent and Massey Energy was up 2.3 percent.

The Dow Jones industrial average <.DJI> gained 45.33 points, or 0.38 percent, to 12,063.96. The Standard & Poor's 500 Index <.SPX> edged up 0.53 points, or 0.04 percent, to 1,294.30. The Nasdaq Composite Index <.IXIC> added 3.71 points, or 0.14 percent, to 2,687.58.

A plunge in sales of new U.S. single-family homes in February to the lowest level since 1963 tempered gains. The data from the U.S. Commerce Department suggested the housing market slide was deepening. [ID:nCAT005396]

An objection by the Federal Reserve to Bank of America's plans to boost its dividend weighed on bank stocks. Bank of America shares fell 2.5 percent.

The FTSEurofirst 300 <.FTEU3> closed up nearly 0.5 percent as a rise in mining shares more than offset weaker bank stocks. The MSCI All-Country World index <.MIWD00000PUS> ticked up less than 0.1 percent to its fifth straight positive session.
U.S. trading volume slowdown U.S. crude futures chart:

Sterling fell 0.8 percent to $1.6239 after UK Chancellor George Osborne released a lower growth projection for the coming year and increased borrowing targets from 2011/12 to 2014/15. See [ID:nWLA6167]

U.S. Treasuries pared early gains to trade near break even in price in the wake of the Federal Reserve's purchase of $7.56 billion of Treasuries. Benchmark 10-year Treasury notes were trading 3/32 lower to yield 3.34 percent, up from 3.33 percent late Tuesday.

The Bund future was 31 ticks higher at 122.33. Germany sold 3.4 billion euros of 10-year bonds, attracting greater demand than at a previous sale thanks to the risk-averse mood in markets. [ID:nLDE72M11L]

U.S. oil prices rose 0.9 percent to $$105.90 a barrel, while Brent traded flat.

"Yemen is a very hot topic now. It is not that important to the oil market but unrest in the region gives enough psychological support to prices," Andy Sommer, energy market analyst with EGL, said.

Spot gold was up 0.6 percent at $1,438.05 an ounce after hitting a session high of 1,440.90, near its recent record of $1,444.40.

Silver was up 2.3 percent at $37.18 an ounce at 1740 GMT, just below the session high of $37.29 an ounce, from $36.34 late in New York on Tuesday.

Copper rose over 2 percent on expectations of a supply deficit this year, while aluminum rallied to its highest since September 2008.

Egyptian stocks <.EGX100> closed 9 percent lower in the first day of trading on the Cairo exchange since Jan. 27, after closing due to the political turmoil that ousted Hosni Mubarak last month. (Additional reporting by Ryan Vlastelica, Wanfeng Zhou, Richard Leong and Ikuko Kurahone; Editing by Leslie Adler)