Crude oil prices surged again on Monday, heightening fears for global growth as traders fretted about escalating clashes in Libya between forces loyal to leader Moamer Qadhafi and rebels seeking to end his four-decade rule. New York's main contract, light sweet crude for delivery in April, settled at $105.44 a barrel, a gain of $1.02 since Friday. The benchmark WTI futures contract had already gained more than 20 percent in the past two weeks. Earlier on Monday, it reached an intraday peak of $106.95, the highest mark since September 26, 2008. The higher oil prices battered global stock markets on Monday. But the Tokyo market stabilised on Tuesday, with the benchmark Nikkei stock average staging a modest rebound. The euro has been underpinned by rate hike expectations, dealers said.
"Investors are pricing in a potential rate hike in April though they can't buy the pair (the euro versus the dollar) aggressively because of the Middle East risk," Osao Iizuka, a senior dealer at Sumitomo Trust & Banking, told Dow Jones Newswires.
"Given bond yield differentials, however, I think they will continue to buy on dips," Iizuka said. The dollar sank to a four-month low against the euro on Friday as traders bet on the European Central Bank to raise interest rates next month.