MARKETS-FOREX (UPDATE 5)* Swiss franc rises to record high vs dlr at 0.9238
* Mid-East tension fuels safe haven demand, oil prices surge
* Euro rises versus dollar, ECB better placed for oil rise
(Adds quote, detail, updates prices)
LONDON, Feb 24 (Reuters) - The Swiss franc hit a record high against the dollar on Thursday as Middle East tensions stoked further appreciation in crude oil prices and demand for safe haven currencies at the broad expense of the greenback.
Brent crude oil jumped to its highest since August 2008 on concern unrest that has cut more than a quarter of OPEC-member Libya's output could spread to other producers including top exporter Saudi Arabia. [ID:nL3E7DO0SC]
Major banks warned on Thursday OPEC needs to act quickly to arrest the oil price rally, which could get out of control and derail economic recovery should unrest spread beyond Libya to other major oil nations. [ID:nLDE71N0VC]
Worries over Libya, following recent popular uprisings in Tunisia and Egypt, were helping the Swiss franc and to a lesser extent the yen, currencies that traders often buy at a time of uncertainty.
"There is a lot of safe haven demand for the Swiss and the yen but the dollar's downside against these currencies could be limited because for a lasting trend to arise you need U.S. Treasury yields to fall relative to Switzerland and Japan," said Manuel Oliveri, currency strategist at UBS in Zurich.
The two-year yield spread between U.S. and Switzerland was holding around 0.14 on Thursday, well within its recent range. US2YT=RR CH2YT=RR
Against the Swiss franc, the dollar fell to a record low of 0.9238 franc CHF=, its slide having intensified after triggering stop-loss selling below its previous record low of 0.9301 set at the end of last year.
One-month implied dollar/Swiss volatility continued to pick up, trading around 11.70 percent CHF1MO=, but this was still well below levels of around 15 percent seen around the start of the euro zone debt crisis in April 2010.
The euro was down 0.5 percent against the Swiss franc at 1.2762 EURCHF= after sliding to 1.2703, its lowest since Jan. 13. Against the low yielding yen, the single currency shed around 1 percent on the day to trade at 112.17 yen in early Europe before bouncing back to 112.80 in volatile trade.
The euro EUR= rose 0.3 p
ercent against the dollar, gaining support from recent hawkish comments on inflation by European Central Bank officials which raised expectations the ECB will hike interest rates before the U.S. Federal Reserve.Market players said rising oil prices were leading to increasing concerns over global growth prospects, but inflation was still a major focus which could weigh further on the dollar.
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