NEW YORK: Brent oil priced in euros hit a record high on Thursday on heightened tension between Iran and the West while US stocks struggled to extend gains as they approached levels not seen since before the 2008 collapse of Lehman Brothers.
The rise in Brent, the benchmark for European crude and most international oil trades, poses a new headache for cash-strapped Europe, still reeling from a two-year-old sovereign debt crisis.
German data helped the euro rise to its highest against the dollar in 10 weeks. In Germany, the Ifo think tank survey of business sentiment rose to its strongest in seven months.
But forecasts for the euro zone economy underscored the pressures facing the region. The European Commission's half-yearly forecast showed output in the 17 nations sharing the euro will contract by 0.3 percent and the broader EU bloc will stagnate.
Economists worry that rising oil prices will undermine efforts to put the region on a stronger footing as well as dampen the outlook for the global economy.
"This record high is having a psychological impact, we see this impacting demand in Europe, which could suffer as elasticity is not that high," said Standard Bank's James Zhang.
On a euro basis, Brent futures hit a record 93.60 euros per barrel earlier in the session, exceeding a previous record on July 3, 2008 of 93.46 euros and prompting concern prices would hit the struggling economic recovery and further dent demand.
On Wall Street, the Dow Jones Industrial Average was up 47.45 points, or 0.37 percent, at 12,986.12. The Standard & Poor's 500 Index was up 3.59 points, or 0.26 percent, at 1,361.25. The Nasdaq Composite Index was up 22.01 points, or 0.75 percent, at 2,955.18.
Underpinning US stocks, weekly US jobless claims data added to signs of progress in the US economy. Data showed US first-time claims for unemployment benefits held steady at a four-year low of 351,000 last week.
If the US benchmark S&P 500 manages to break above its May 2011 intraday high of 1,370 it would be at its highest level since before the Lehman Brothers collapse in 2008.
World stocks, as measured by the MSCI world equity index , were up 0.2 percent, while the FTSEurofirst 300 index of top European shares was down 0.2 percent, having cut earlier losses.
The euro was up 0.5 percent.
Brent crude for April delivery was last up 0.2 percent at $123.14 per barrel. Prices had risen to an intraday peak earlier in the session of $124.50, the highest since early May 2011, on worries that tensions between Iran and the West could escalate further.
They ended up for a third straight session on Wednesday.
In the US Treasury market, the benchmark 10-year note was down 5/32, with the yield at 2.03 percent.
Reproduced with permission from Arab News