World stocks and the US dollar fell on Friday as oil prices rose on escalating violence in Libya, overshadowing a US jobs report that showed the economic recovery shifting up a gear.
Gold advanced above USD 1,430 an ounce and US Treasury debt prices gained as the Libyan turmoil drove a flight to safety.
US crude oil prices jumped to their highest since September 2008, and Brent crude rose above USD 116 a barrel as Libyan security forces clashed with rebels near the major oil terminal of Ras Lanuf.
The MSCI all-country world stock index was down 0.1%. On Wall Street, stocks ended lower and erased most of their gains for the week.
"It's really all about oil, and I suspect that's going to be the pattern next week as well. Gold's uncertainty hedge and ultimate currency roles continue to be very much in place," said Bill O'Neill, partner of LOGIC Advisors.
The US unemployment rate unexpectedly fell and employers added 192,000 jobs. The data had a muted impact, in part, because the market had rallied on Thursday on expectations of solid hiring by private employers.
The Labor Department reported hiring by US employers in February hit the highest level since last May as unemployment dipped to 8.9%, an almost two-year low.
Fears that more geopolitical turmoil and higher oil prices could threaten to stifle rallies in coming weeks dampened sentiment on Wall Street. The CBOE Volatility Index VIX, Wall Street's fear gauge, rose 2.7% to 19.11.
Among stock sectors, bank shares fell after Bank of America Merrill Lynch said banks' first-quarter earnings could be hurt by rising oil prices as well as by reduced client activity.
Shares of Citigroup Inc,which the brokerage downgraded, fell 3% to USD 4.54.
On Friday, the Dow Jones industrial average tumbled 88.32 points, or 0.72%, to end at 12,169.88. The Standard & Poor's 500 index dropped 9.82 points, or 0.74%, to 1,321.15. The Nasdaq Composite Index declined 14.07 points, or 0.50%, to 2,784.67.
For the week, the Dow was up 0.3%, while the S&P and Nasdaq were up 0.1% each. The S&P 500 is up 26% since the start of September when the recent rally began.
The US employment data did little to alter expectations that the Federal Reserve would maintain its loose monetary policy, driving down the dollar down against major currencies.
The dollar index was down 0.1%.
"(Fed Chairman Ben) Bernanke may be relieved to see another month of improvement in the unemployment rate, but given the underlying weakness of the report, the central bank will still argue that unemployment remains extremely high and therefore continued stimulus could be warranted," said Kathy Lien, director of currency research at GFT in New York.
And analysts said the dollar is likely to fall in the week ahead as investors continue to bet that interest rates in the euro zone will rise ahead of US rates.
European Central Bank President Jean-Claude Trichet strongly hinted on Thursday at an interest rate rise in April.
For the week, the euro gained 1.7% against the dollar on electronic trading platform EBS, the third straight weekly gain. For the day, it was up at 1.3980 from its Thursday US close of 1.3963.
In the US government debt market, benchmark 10-year notes rose 20/32 in price to yield 3.49%, down from 3.56 percent on Thursday.
Brent crude for April delivery settled at USD 115.97 a barrel, gaining 1.03 percent after rising above USD 116. Brent oil has risen about 15% since the end of January.
US crude for April delivery rose USD 2.51 to settle at USD 104.42 a barrel, the highest close since September 2008.
"Tension in the Middle East is like a runaway train," said Michael Hewson, an analyst at CMC Markets. "Once it starts, it's very difficult to stop. And if there is a danger that it impacts the supply chain, people will understandably get nervous."
Three-month copper on the London Metal Exchange fell to USD 9,895 a tonne from USD 9,910 on Thursday.
In the European stock market, the FTSEurofirst 300 was down 0.6%.