Crude oil powered to a 4-month high above $52 a barrel on Monday, capping gains in European shares, while government bond prices edged higher and a resurgent yen led a broad rally against the dollar.
U.S. crude climbed for a sixth straight day, adding 46 cents to $51.95 a barrel, after hitting a session high of $52.28, as forecasts of more U.S. cold weather signalled already low stocks of heating fuels could drop further.
Average prices so far this year are running $6 above 2004's $41.48.
"Market participants are having to get used to ever greater levels of volatility across all energy markets and there has never been a greater need for effective risk management by those with exposure to the energy sector," Barclays Capital analyst Kevin Norrish said in a note to clients.
The high oil prices, while once more invoking the twin worries of inflation and growth, however, helped to boost oil stocks as majors such as Royal Dutch/Shell (RD.AS: Quote, Profile, Research) and Total led the list of blue chip stock gainers.
By early afternoon the FTSEurofirst 300 index of leading European shares was up 0.1 percent at around 1,097 points while the FTSE 100 , Cac-40 , and DAX indexes were between down 0.1 and up 0.2 percent.
Mining stocks such as Anglo-American, BHP Billiton and Rio Tinto got a lift from copper prices hitting a new 16-year high.
But HSBC shares fell 2.6 percent on fears over the quality of its earnings after the banking giant reported that 2004 profits rose 37 percent, towards the low end of market expectations.
The Dow Jones industrial index hit new highs for 2005 on Friday and stock index futures point to a weaker opening later on Monday.