Oil's relentless push to yet another record high pressured Asian shares across the board on Thursday, raising fears that inflation -- and central bank measures to cool it -- would hurt consumer spending and profits, Reuters reported. European markets were set to open lower, with financial bookmakers in London expecting Britain's FTSE 100, Germany's Dax, and France's CAC-40 to open between 0.4-0.7 percent lower. The euro tumbled to a two-month low against the dollar as weak euro zone retail sales figures on Wednesday sparked concern about the region's economy ahead of a European Central Bank meeting later on Thursday. Also weighing on the euro was a Financial Times article that said the United States and Europe now have a united desire to see the dollar strengthen against the European currency, some traders said. The rising dollar put pressure on gold and industrial metals as they became more expensive in other currencies. U.S. crude was steady at $123.48 in Asia by 0629 GMT, holding close to a record $123.93 hit earlier. Oil prices have doubled in a year and risen sixfold since 2002 on rising demand from China and other developing countries, adding pressure to economies already hit hard by a housing and credit crunch and rising food costs. Crude rose despite news of a large increase in U.S. crude inventories. The advance came a day after investment bank Goldman Sachs said oil prices could scale $200 a barrel in the next two years as part of a "super spike" in the market. Stocks in Asia took their cue from sky-high oil prices and Wall Street's tumble overnight, where a drop in shares in banks, home builders and companies dependent on consumer spending sent the Dow Jones industrial average down 1.6 percent. "The dilemma for global economies is potentially slowing growth and emerging inflation pressures," said Greg Goodsell, equity strategist at ABN AMRO in Australia. "It will be the task for central banks around the world to manage that process quite carefully because they tend to suggest opposite policy reaction in terms of interest rates." Tokyo's Nikkei average ended down 1.1 percent, with banks, such as Mitsubishi UFJ Financial Group, among the biggest fallers. Shares across the rest of Asia fell 1.2 percent. The benchmark is down around 7.7 percent so far this year. Stock indexes in Seoul, Singapore, and Taiwan fell between 0.3-2 percent. Shares in Hong Kong dipped 1.3 percent as oil producers, such as CITIC Resources benefited from sky-high crude oil prices, but airlines, including Air China slid as much as 5 percent. In contrast, shares in Sydney bucked the trend, helped by banks turning positive. The euro fell to $1.5285 on trading platform EBS, the lowest since early March. It later trimmed losses and was at $1.5317. The dollar traded at 104.48 yen The ECB is expected to keep interest rates steady at 4 percent later on Thursday because inflationary threats remain its main concern. But traders said recent weak data suggested the central bank may have to lower rates before the end of the year. Sterling hovered near an 11-week low of $1.9503 hit on Wednesday after weak consumer sentiment and jobs data. The Bank of England reviews policy later in the day and is also expected to leave its rates unchanged at 5 percent. The 10-year Japanese government bond yield hovered at a 7-month high at 1.660 percent. June 10-year JGB futures edged up 0.33 of a point to 135.80.
