GLOBAL MARKETS-Oil, gold soar to records on Libya concerns

* US crude at 2-1/2-year high on supply disruption fears

* Gold hits record peak, silver at 31-year high on Libya

* US, European stocks rise as acquisitions lift sentiment

* Euro shrugs off Greece downgrade, supported by rate view (Updates with U.S. markets open, changes byline, dateline, previous LONDON)

By Walter Brandimarte and Emelia Sithole-Matarise

NEW YORK/LONDON, March 7 (Reuters) - Crude oil prices jumped to a 2-1/2-year peak while gold hit an all-time high on Monday as investors worried that widening unrest in Libya could spread to other oil producing nations in the Middle East.

Risk premium on Greek, Portuguese and Spanish debt rose after Moody's cut Greece's credit rating by three notches. The euro, however, shrugged off the move and hit a four-month high against the dollar on expectations the European Central Bank may raise interest rates next month. [ID:nLDE7260D6]

Stocks traded higher in the United States and Europe, despite worries about escalating oil prices, as a batch of proposed mergers and acquisitions lifted sentiment.

U.S. crude oil futures jumped 2 percent to as high as $106.95 as Libyan leader Muammar Gaddafi's counter-offensive against rebels deepened concerns that Africa's largest holder of oil reserves is headed for civil war. [ID:nL3E7E700D]

Gold spot prices hit a record high of $1,441.50 an ounce as investors rushed to safe-haven assets. Silver rose as high as as $36.38 an ounce, a 31-year peak.

"If we do see tension escalating further, then we could witness a new high in gold. Besides Libya, I think investors will also be looking at other countries within the Middle East. The example will be Saudi Arabia," said Ong Yi Ling, investment analyst at Phillip Futures in Singapore.

U.S. and European stocks posted gains, however, as investors hunted for bargains, also inspired by news of several mergers and acquisitions.

The Dow Jones industrial average <.DJI> rose 61.91 points, or 0.51 percent, to 12,231.79, while the Standard & Poor's 500 Index <.SPX> gained 5.69 points, or 0.43 percent, to 1,326.84. The Nasdaq Composite Index <.IXIC> was up 4.18 points, or 0.15 percent, at 2,788.85.

In Europe, the FTSEurofirst 300 index <.FTEU3> of top shares climbed 0.55 percent.

Gains were limited, however, as investors fret that a prolonged period of high oil prices could stifle economic growth and erode corporate profits, while adding to inflationary pressures.

"There was a pretty aggressive sell-off towards the last couple of hours of trading on Friday and we have seen investors come in and buy from the lows (but) as long as you have crude prices as high as they are that's going to limit further gains for equities," said Joshua Raymond, market strategist at City Index.

MOODY'S DOWNGRADES GREECE

Risk premium paid by peripheral euro-zone countries were on the rise after Moody's slashed the rating of Greece by three notches, signaling more downgrades in the near future. [ID:nLDE7260EL]

Greek bonds underperformed German benchmark debt, increasing the 10-year yield spread by 7 basis points to 912 bps, although Bunds failed to gain much traction as investors watched widening clashes in Libya.

The euro strengthened to a four-month high of $1.4037 as investors left debt concerns on the back burner to focus on expectations that the ECB will tighten monetary policy before the Federal Reserve. The European single currency was trading 0.19 percent higher later in the morning, at $1.4008.

"Sentiment is bullish at the moment and we could see a test of the 1.4080/00 area," said Richard Wiltshire, chief foreign exchange dealer at ETX Capital.

"The euro will stay bid on any dips ahead of April's rate announcement. I would assume they can't change their rhetoric, and we have seen a growing number of ECB officials talking about rate hikes sooner rather than later." (Additional reporting by Rodrigo Campos, Jan Harvey, Harpreet Bhal and Jessica Mortimer, Editing by Chizu Nomiyama)