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RPT-GLOBAL MARKETS-Euro, crude ease on Portugal debt worries

Published 03/24/2011, 02:50 AM
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* Portugal bailout appears likely after PM resigns

* Nikkei down 0.2 percent, MSCI Asia ex-Japan up 0.9 percent

* U.S. stocks rise modestly on back of base metals gains

* Euro falls below $1.41, yen sits around 81 per dollar

* Oil eases 0.2-0.3 percent, gold steady near record (Fixes format of bullet point)

By Alex Richardson

SINGAPORE, March 24 (Reuters) - The euro fell and oil eased on Thursday after Portugal's prime minister resigned following parliament's rejection of his minority government's austerity programme, renewing worries about the scale of the euro zone's sovereign debt crisis.

Asian stocks outside Japan rose as higher commodities prices lifted materials shares, but Tokyo shares weakened as concerns over radiation leaks from an earthquake-damaged nuclear power plant continued to sap investor confidence.

European shares were expected to open little changed as uncertainty over Portugal, Japan and the Middle East gave investors little incentive to stake out fresh positions, while U.S. S&P 500 futures barely budged, pointing to a cautious start on Wall Street as well.

The resignation of Prime Minister Jose Socrates was seen as increasing the likelihood that Portugal will join Greece and Ireland in requiring a bailout from the European Union.

An official euro zone source estimated in January that if Portugal asked for international aid, it might need between 60 billion to 80 billion euros (up to $113 billion).

"Whether there will be a bailout for Portugal or not has some consequences on how things will pan out in Europe. Risks in the euro-zone seem to be increasing," said Serene Lim, a Singapore-based oil analyst at ANZ Bank.

Tokyo's Nikkei fell 0.2 percent. It remains 8 percent below its close on March 11, when a 9.0 magnitude earthquake and tsunami hit northeastern Japan, leaving around 25,600 people dead or missing and cutting power to millions of homes as well as factories, many of which are still struggling to come back online.

The estimated $300 billion in damage makes it the costliest natural disaster in history, and Japan is still grappling with the worst nuclear crisis since Chernobyl after the quake and tsunami crippled a power plant 240 km (150 miles) north of Tokyo.

"We are unlikely to see further gains in the near future, unless there's an end to the nuclear crisis in sight," said Takashi Hiroki, chief strategist at Monex Securities.

Disruptions in the global supply chain after the Japan quake continue to be felt around the world, most notably for auto makers and electronics firms. Toyota Motor said overnight it will slow some North American production because of parts shortages.

MSCI's measure of Asia Pacific shares outside Japan rose 0.9 percent, with Australia's resources-heavy index gaining 1 percent after a rally in prices of base metals such as copper the previous day.

Gains for materials shares lifted Wall Street on Wednesday, with the Dow Jones industrial average rising 0.6 percent and the broader S&P 500 gaining 0.3 percent.

DEBT CRISIS

The political upheaval in Portugal, along with looming elections elsewhere, was expected to deter European leaders from taking tough decisions to address the region's sovereign debt crisis when they meet at a summit this week.

They are unlikely to come up with a plan to strengthen the euro zone's bailout fund until June, which may also undermine the single currency.

"If the EU leaders fail to come up with measures to enhance the safety net that markets have wanted in their summit meeting, the euro could face further pressure down the road," said Sumino Kamei, senior currency analyst at Bank of Tokyo-Mitsubishi UFJ.

The euro bought around $1.4085 , having dropped as far as $1.4075 on electronic trading platform EBS in late New York trade on Wednesday.

The yen sat near 81 per dollar, a level it has hugged tightly in recent days with markets still wary of further central bank intervention to curb the Japanese currency if it strengthens past 80.50.

Leading central banks launched the first coordinated market intervention in more than a decade last week to reverse a run that had seen the yen hit a record 76.25 on expectations Japan -- a net creditor to the rest of the world -- would see a wave of funds being repatriated to pay for earthquake reconstruction.

Japanese government bonds rose, with benchmark 10-year futures up 0.19 point, while the 10-year yield eased 1.5 basis points to 1.2 percent.

Oil eased as the euro zone concerns rekindled worries about economic growth -- and hence energy demand -- in the bloc, although traders said continued political unrest in parts of the Middle East would prevent it from falling far.

U.S. crude fell 0.3 percent to $105.48 a barrel and Brent crude was off 0.2 percent at $115.35.

Spot gold traded around $1,437.90 an ounce, in sight of its record $1,444.40 set earlier in the month. ($1 = 0.707 Euros) (Editing by Kim Coghill)

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