PARIS, March 13: The dollar sank to a record low against the euro, gold surged beyond the $1,000 level and oil pushed further into uncharted territory on another traumatic day for global markets on Thursday.

Stock markets too were rattled, with sharp declines in Asia, Europe and the United States after a bond fund backed by private equity powerhouse Carlyle Group said it had failed to reach a deal with creditors and had defaulted on debt of nearly $17 billion.

The day’s events revealed deep-seated fragility in the global financial system, still reeling from a crisis in the US housing sector.

Thursday’s volatility came despite an announcement earlier in the week that the US Federal Reserve would carry out a massive $200 billion injection of liquidity into the money markets in a bid to get bank credit flowing again.

The beleaguered US currency, rocked by mounting US recession fears, plunged to an all-time low against the euro, which struck a record high $1.5625.

The euro was later trading at $1.5598 against $1.5540 late Wednesday.

The dollar at one point fell below 100 yen for the first time in 12 years, touching 99.78. It later went to 100.59 yen against 101.79 on Wednesday.

“For the dollar, investors are becoming increasingly alert to the unfavourable mix of negative data, rising inflation expectations and the possibility of a deeper and longer lasting US recession,” said Commerzbank analyst Gavin Friend.

Many analysts now expect the Fed to cut its key lending rate by as much as three-quarters of a point next week. Investors generally prefer the currencies of countries that have higher interest rates as they can reap better yields.

The sliding dollar and bouyant euro have caused consternation in European political and business circles, where there are growing fears that a steadily appreciating currency will cut into eurozone export growth and dampen growth.

US exports, by contrast, are rendered cheaper and more competitive on overseas markets by a weaker currency, suggesting that a strong dollar may not in fact be what the US government seeks.

The dollar dip on Thursday helped take the price of gold and oil in the other direction, with the former breaking through the symbolic $1,000 threshold to $1000.45 an ounce and the latter rising to an unprecedented $111 a barrel.

Anxious investors are funnelling cash into commodities as they seek refuge from volatile stock markets, the collapsing dollar and a US economy that is either in, or headed for recession.

The weak US currency supports dollar-priced commodities such as gold and crude oil because it makes them cheaper for buyers using stronger units and therefore spurs demand.

“Ongoing inflationary pressure from rising oil prices and continued concerns about the US economy and credit liquidity have led sentiment to turn more positive (on gold),” said James Moore, analyst at TheBullionDesk.com.

Demand for the precious metal, which is used in jewellery, dentistry and electronics, is also spearheaded by Asian economic giants China and India.

“The gold-favourable environment continues to evolve positively for the metal, with expectations of further Fed rate cuts and inflationary concerns boosting safe-haven buying,” said analysts at Barclays Capital.

Gold has risen about 17 per cent so far this year, underscored also by supply problems in South Africa -- the world’s largest producer.

The price of gold at the fixing was $995 an ounce, up from $975.50 on Wednesday.—AFP