Trader's Highlight

DJI-NEW YORK, March 1 (Reuters) - Concerns that rising oil prices could hurt economic recovery prompted investors on Tuesday to sell stocks and hedge against further declines.

The CBOE Volatility Index VIX <.VIX>, Wall Street's so-called fear gauge, jumped 13.1 percent to 20.75 on growing uncertainty about oil. The index measures the cost of using options as insurance against a decline in the S&P 500 <.SPX> index.

The Dow Jones industrial average <.DJI> fell 169.38 points, or 1.39 percent, at 12,056.96. The Standard & Poor's 500 Index dropped 21.04 points, or 1.59 percent, to 1,306.18. The Nasdaq Composite Index <.IXIC> lost 44.86 points, or 1.61 percent, to 2,737.41.

NYMEX-NEW YORK, March 1 (Reuters) - U.S. crude oil futures settled at their highest level in 2-1/2 years on Tuesday, as Libya's popular revolt flared up, raising more concerns that similar upheavals may engulf other oil producers in the Middle East and North Africa.

The United States warned Libya could descend into civil war unless Muammar Gaddafi steps down intensifying its pressure against the intransigent leader.

On the New York Mercantile Exchange, crude for Aprildelivery settled at $99.63a barrel, gaining $2.66, or 2.74 percent, after trading from $96.37 to $99.72. It was the highest closing price since front-month NYMEX crude settled at $100.64 on Sept. 30, 2008.

CBOT-CHICAGO, March 1 (Reuters) - Chicago Board of Trade grain and soy complex close on Tuesday.

CBOT-SOYBEANS - May up 10-1/2 cents at $13.75-1/4.
New-crop November up 3-1/2 at $13.28-1/4. Late fund buying lifted soy to a higher close but the volume of buying was not huge, traders said. Gains in crude oil supportive.

CBOT-SOYOIL - May up 0.27 cent at 57.60 cents per lb. Gains in crude and palm oil supportive.

FCPO-KUALA LUMPUR, March 1 (Reuters) - Malaysian palm oil futures jumped as much as 2.6 percent on Tuesday as traders focused on buoyant crude markets setting the stage for growing biodiesel demand.

Although palm oil is less likely to be channelled into biofuels due to lack of government subsidies, aggressive mandates in Brazil and the United States may see more soyoil taken up, which leaves palm oil to dominate the food sector.

Palm oil has been volatile like most commodities as traders are trying to process whether rising crude oil, owing to the spreading Middle East unrest, will slow economic growth or fuel demand for feedstocks that can be converted into diesel.

The benchmark May crude palm oil contract on Bursa Malaysia Derivatives rose as much as 90 ringgit to 3,562 ringgit $1,167.677) before settling at 3,546 ringgit. Overall volumes shot up to 24,896 lots at 25 tonnes each from the usual 15,000 lots traded.

REGIONAL EQUITIES-BANGKOK, March 1 (Reuters) - Southeast Asian stock markets ended higher on Tuesday as investors bought commodity shares because of rising inflation expectations and banks gained due to the prospect of higher interest rates around the region.

Indonesia <.JKSE> rose 1.2 percent and Thailand <.SETI> gained 0.7 percent, led by banks, after both reported inflation data for February and economists forecast a rise in interest rates there.

Other markets in the region gained, led by Singapore's Straits Time Index <.FTSTI>, climbing almost 2 percent to around a one-week high of 3,067.60.

Singapore suffered a 5.3 percent loss in February, its worst monthly fall since May and the second worst in Southeast Asia after Vietnam's 9.6 percent.

Malaysia <.KLSE> and the Philippines <.PSI> each gained less than 1 percent on the day. Vietnam <.VNI> rose 1 percent after losing 10 percent in February after a dong devaluation.

Volume was relatively active across the region on Tuesday, with turnover in Singapore rising to 1.4 times its 30-day average, followed by Indonesia's 1.2 times. Turnover in Malaysia and Vietnam both fell short of their 30-day average.

The Singapore Exchange started all-day trading on Tuesday from 9 a.m. to 5 p.m. Malaysia suffered an outflow of $27 million on the day, after straight outflows over the past three weeks, the exchange said.

Shares in palm oil firms climbed across the region as Malaysian palm oil futures rose 1.3 percent. Singapore's Wilmar International , the world's largest palm oil plantation firm by market value, gained 1.4 percent and Malaysia's second-largest palm company, IOI Corp , added 0.7 percent.