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Written by: Staff

LONDON, Feb 24 (Reuters) Oil prices shot up and shares eased on Friday after reports of an explosion at an oil refinery in Saudi Arabia and of shooting in the area.

U.S. Treasury yields eased on the reports, while the Swiss franc, a traditional refuge in times of geopolitical turmoil, edged up against the dollar and euro. Gold prices were up more than $3 at around $553 an ounce.

Al Arabiya television reported an explosion was heard at Saudi Arabia's Abqaiq oil facility and quoted witnesses as saying shooting was heard in the area in the kingdom's main eastern oil province.

Saudi security sources later said they had foiled suicide bomb attacks at the plant, which handles about two-thirds of the output of the world's largest oil exporter.

The news provoked a sharp rise in oil prices. Brent crude for April delivery was up $1.56 at $62.15 after briefly spiking even higher.

The FTSEurofirst 300 index gave up about half its earlier gains to stand 0.08 per cent higher on the day while futures markets, which had earlier indicated that Wall Street would open firmer, showed an initial modest dip was likely.

News that the volatile U.S. durable goods orders fell 10.2 per cent in January added to the gloom.

The yield on 2-year U.S. Treasuries fell two basis points to 4.708 per cent.

The news put in the shade earlier strong signals that Japan may soon abandon its super-stimulative monetary policy which pushed the yen to one-month highs.

Bank of Japan Governor Toshihiko Fukui said conditions for a shift in monetary policy in Japan, where interest rates have been effectively at zero for months, were falling into place.

Meanwhile the Yomiuri newspaper said the central bank was considering abandoning its policy of flooding the money market with excess funds at its March 8-9 meeting.

''Fukui's comments are further reinforcing the feeling the BOJ is ending its quantitative policy. It's the vote of confidence in the economy by the BOJ,'' said Adam Cole, senior currency strategist at Royal Bank of Canada Capital Markets.

The yen rose to a one-month high of 116.43 per dollar and 138.86 per euro, its highest level since mid-January before giving up some of its gains.

The euro was slightly lower at $1.1911.

Analysts said the prospect of further rate rises from the ECB, and from the U.S. Federal Reserve was not cowing equity investors.

''Fed and ECB rate hikes should not present a liquidity problem for equity markets,'' said ABN Amro analyst Lars Kreckel.

Japanese stock markets were similarly undeterred by the prospect of monetary tightening, with the Nikkei average ending up, but by less than one-tenth of a per cent.

However, overnight in New York, U.S. stocks fell as a disappointing Treasury note auction caused a spike in bond yields, hurting shares of banks and insurers.

The Dow Jones industrial average finished down 0.61 per cent.


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