Trader's Highlight

DJI-NEW YORK, Feb 22 (Reuters) - Wall Street suffered its worst day since August on Tuesday as investors dumped stocks on turmoil in oil exporter Libya, in what could be the start of a long-anticipated pullback after a lengthy rally.

Rising volatility and heavy volume added heft to the possibility of a larger pullback. With 9.76 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, it was the highest volume session for the month and the second-highest for the year.

The CBOE Volatility Index <.VIX>, Wall Street's so-called fear gauge, surged 26.6 percent to end at 20.80, its highest one-day jump since May 20, 2010.

The Dow Jones industrial average <.DJI> lost 178.46 points, or 1.44 percent, to end at 12,212.79. The Standard & Poor's 500 Index <.SPX> fell 27.57 points, or 2.05 percent, to 1,315.44. The Nasdaq Composite Index <.IXIC> dropped 77.53 points, or 2.74 percent, to 2,756.42.

NYMEX-NEW YORK, Feb 22 (Reuters) - U.S. crude oil futures jumped to their highest level in almost 2-1/2 years on Tuesday as the citizen revolt against long-time Libyan leader Muammar Gaddafi escalated.

Fighting in Libya, the latest flashpoint in the spreading turmoil in the Middle East and North Africa, added to investor worries that oil supplies from those regions may be disrupted.

Libya's oil terminals were blocked while Italy, heavily reliant on energy imports, said it was ready to tap emergency gas stocks if Libyan supplies are interrupted.

On the New York Mercantile Exchange, crude for March delivery was up $6.61, or 7.67 percent, at $92.81 a barrel, after surging to a session high of $94.49, the highest since prices hit $96.03 on Oct. 3, 2008. It posted its early low at $86.25.

CBOT-CHICAGO, Feb 22 (Reuters) - Chicago Board of Trade grain and soy complex closing trends on Tuesday.

CBOT-SOYBEANS - March down 70 cents at $12.98 per bushel.Investors liquidate amid political turmoil in Libya, with prices falling to lowest since Dec. 20, 2010. Expectations for big acreage forecasts also weigh.

CBOT-SOYOIL - March down 2.50 cents at 53.99 cents per lb.Pressure from falling soybeans overwhelms support from soaring crude oil.

FCPO-KUALA LUMPUR, Feb 22 (Reuters) - Malaysian palm oil rose 0.4 percent on Tuesday with traders taking positions on Libyan unrest that boosted most commodity markets, but the upside was capped by concerns of slower demand.

Palm oil futures treaded water after hitting a four-week low on Monday as traders looked for signs that the recent rally in prices may dampen demand.

But if unrest continues in Libya, which is a key oil producer, U.S. crude could rally further, pulling along prices of palm oil used as a feedstock in biofuels that competes with petroleum diesel.

The benchmark May 2011 palm oil futures on the Bursa Malaysia Derivatives Exchange rose 13 ringgit to 3,669 ringgit ($1,209) in choppy trade. Overall trade almost doubled to 29,573 lots at 25 tonnes each from the usual 15,000 lots.

REGIONAL EQUITIES-BANGKOK, Feb 22 (Reuters) - Southeast Asian stock markets tumbled on Tuesday as unrest in Libya stoked worries about rising global oil prices and the potential hit to sectors such as airlines.

U.S. crude futures surged to a 2-1/2-year high, hurting confidence among emerging market investors.

Singapore's Straits Times Index <.FTSTI> suffered its biggest loss in three months, falling 1.7 percent, while the Philippine index <.PSI> dropped 1.4 percent and Vietnam <.VNI> hit its lowest level in more than two months.

Singapore-based Najeeb Jarhom, head of research at AmFraser Securities, said the Straits Times Index could now test 2,900 after a fast drop towards the psychological level of 3,000. It closed at 3,019.12 on Tuesday. Malaysia, Thaland and Indonesia reported a drop in turnover to around 0.8 times the 30-day average.