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GLOBAL MARKETS-Euro up as rate hike eyed; oil at fresh peak

Published 04/06/2011, 10:55 AM
Updated 04/06/2011, 11:00 AM
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* Euro gains on expectations of rise in interest rates

* Stocks buoyant, Wall Street starts higher

* Commodities power higher; gold hits record high (Updates prices, rewrites)

By Leah Schnurr

NEW YORK, April 6 (Reuters) - The euro rallied on Wednesday ahead of an expected interest rate hike in the euro zone, while the weaker dollar and geopolitical unrest sent oil and gold prices to fresh peaks.

The euro surged more than 1 percent against the Japanese yen , hitting an 11-month high, one day before the European Central Bank is widely expected to raise its benchmark interest rate by 25 basis points to curb inflation pressures.

The ECB has held rates at a record low 1.0 percent since July 2008. The Bank of Japan, on the other hand, is expected to keep interest rates low at its policy meeting on Thursday following last month's massive earthquake and tsunami.

Among commodities, spot gold rose to a record high, silver touched a 31-year high, and Brent crude rose $1 to break through $123 a barrel, its highest level since August 2008. U.S. crude rose above $109 to its highest since September 2008.

A weaker greenback makes dollar-priced assets more affordable to holders of the euro and other currencies.

Global equities gained on a generally brighter economic picture with U.S. stocks up in midmorning as investors bet the upcoming earnings season and more merger activity will continue to lift the market. Mining shares rose with gold prices.

World stocks as measured by MSCI <.MIWD00000OOPUS> were up 0.5 percent percent, while the S&P 500 <.SPX> was up 0.3 percent. Emerging markets <.MSCIEF> rose 0.9 percent, helped by renewed interest due to higher expectations for interest rates in developed markets. For details, see [ID:nLDE7301MN]

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