NEW YORK: Oil surged to almost $120 a barrel and the safe-haven Swiss franc hit a record high on Thursday on fears turmoil in Libya could spread, but gold eased on talk Saudi Arabia could boost its crude output.
US equity markets also hovered near break-even after this week's sharp slide. Analysts said it was too soon to say a long-expected sell-off on Wall Street was over with unrest in North Africa and the Middle East still alive.
The escalating violence in Libya, home to Africa's largest proven oil reserves, lifted benchmark Brent crude oil to its highest level since August 2008 and kindled concerns of an inflationary spike that might stall global recovery.
This week's relentless surge in oil prices stung the US dollar against major currencies. The Swiss franc benefited from the turmoil in North Africa while the euro extended gains against the dollar on expectations interest rates in the euro zone will rise earlier than those in the United States.
The dollar fell to a record low of 0.9240 of a Swiss franc on electronic trading platform EBS.
"The problem with civil unrest is that we don't really know when it's going to end. It might get worse and the supply of oil might come down even more, and that's a big concern for the market," said Sebastian Lynar, sales trader at IG Index.
Copper, considered a harbinger of economic sentiment, firmed after better than expected US jobless data, but it remained under pressure on concerns that higher oil prices driven by violence in Libya could slow economic growth.
Brent crude futures for April delivery spiked to $119.79 a barrel before easing to $114.55, up $3.30 on the day.
US light sweet crude oil also rose but remained under the $100 mark it touched on Wednesday for the first time since October 2008.
Spot gold prices rose slightly to $1,412.00 an ounce, up just $2.05.
The Financial Times quoted an unnamed official as saying Saudi Arabia was in active talks with European refiners who may be hit by a disruption in Libyan exports.
"You can't see a quick resolution to what's going on, but I see the market's fall as an over-reaction," said Caroline Vincent, fund manager at Cavendish Asset Management. "There are worries about oil prices and inflation, but Saudi Arabia has said it will meet the oil shortfall."
Forces loyal to Muammar Gaddafi launched a counter-attack but rebels threatened the Libyan leader's grip on power by seizing important towns close to the capital and bringing the tide of rebellion ever closer to his power base.
Disruption to Libya's output has cut at least 400,000 of the country's 1.6 million barrels per day production, Reuters calculations show.
Italian oil company ENI said the decline was greater, estimating 1.2 million barrels of oil had been removed from the market.
The Nasdaq and benchmark S&P 500 pared earlier slight gains to trade a little bit lower.
The Dow Jones industrial average was down 67.51 points, or 0.56 percent, at 12,038.27. The Standard & Poor's 500 Index was down 5.00 points, or 0.38 percent, at 1,302.40. The Nasdaq Composite Index was down 2.14 points, or 0.08 percent, at 2,720.85
European shares closed lower and were headed for their biggest weekly fall in nearly eight months,
The FTSEurofirst 300 index of top shares fell 0.5 percent to a provisional close of 1,145.81 points.
US Treasury debt prices rose on continued support from safe-haven buying as some analysts forecast yields would fall even lower in the near term. The benchmark 10-year US Treasury note was up 17/32 in price to yield 3.42 percent.
The euro was up 0.29 percent at $1.3786. Against the yen, the dollar was down 1.01 percent at 81.66.
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