LONDON, March 6: Currency and commodity markets saw a flurry of record-setting performances on Thursday, with the dollar tumbling to a new low against the euro as oil and gold leapt to unprecedented peaks.

The volatility was in part prompted by a small explosion at a military recruiting station in New York, reviving memories of the September 11 attacks, and by another signal from the European Central Bank it was not about to cut eurozone interest rates.

Rattled by news of the blast, oil traders drove the price of crude to a record high close to $106 a barrel, a spurt that also reflected a surprise fall in US crude stockpiles and a weak US currency.

New York’s main oil contract, light sweet crude for delivery in April hit $105.97 per barrel, surging above $105 after topping the previous record of $104.95 set on Wednesday.

Brent North Sea crude for April jumped to $102.95, beating its previous all-time peak of $102.29 set on Monday.

“The spike (in prices) may have been a bullish, knee-jerk reaction to that (news),” said Societe Generale analyst Mike Wittner.

The dollar had meanwhile been falling steadily ahead of an interest rate decision by the European Central Bank, with the euro rising to $1.5347 to beat the previous day’s record of $1.53.

The greenback later extended its losses against the euro, tumbling to yet another record low after the ECB left its rates unchanged and said fighting inflation was a priority.

In mid afternoon European trade, the euro jumped to $1.5373 before slipping back to $1.5367.

The ECB cut its forecasts for growth in the eurozone while increasing those for inflation. Bank president Jean-Claude Trichet made it clear that keeping prices in check in the medium term was the ECB’s “primary objective.”

“Mr Trichet does not sound like a Central Banker who may be about to cut interest rates,” said an analyst at CIBC bank, Audrey Childe-Freeman.

The Federal Reserve is expected to continue to lower its rates, which have fallen by 225 basis points since September. The trend will likely undermine the value of the dollar against the euro and other currencies with higher yields.

The greenback has been hit by a stream of weak economic data in the fallout from a crisis in the US housing market, prompting the Fed to make more money available in a bid to spur growth.

Elsewhere, the price of gold hit a new high on the London Bullion Market, coming within striking distance of the symbolic $1,000 an ounce level.

The precious metal rose $992.05 an ounce, as investors sought a safe-haven hedge against oil-induced inflation.

Gold trade was also driven by the weak dollar. Gold is denominated in the US currency, which makes it attractive to investors armed with the euro and other strong currencies.—AFP