Crude oil and gasoline rose to records on growing concern about violence in the Middle East and supply disruptions from Brazil to Nigeria. Oil jumped as high as $147.27 a barrel after the Jerusalem Post said Israeli war planes practiced over Iraq. Israeli government spokesman Mark Regev denied the report. A Brazilian oil workers union is planning a five-day strike. Prices have jumped more than $10 a barrel since July 9.

Israeli war planes are conducting maneuvers in Iraqi airspace and using U.S. airbases in the country, possibly preparing for a strike against Iran, the newspaper reported, citing comments by Iraqi officials in local media. Iran, the Organization of Petroleum Exporting Countries' second-biggest producer, this week tested missiles capable of reaching Israel. Iran has also said it may blockade the Strait of Hormuz, the shipping lane for a fifth of the world's crude, if its nuclear facilities are attacked.

About 4,500 employees of state-controlled Petroleo Brasileiro SA will take part in a protest on platforms in the offshore Campos Basin%. The basin is responsible for about 80% of the country's oil production. The Movement for the Emancipation of the Niger Delta said attacks will resume on oil facilities. The Nigerian militant group said it will call off its unilateral cease-fire beginning at midnight on July 12. MEND's attacks on pipelines and other installations have cut more than 20 percent of Nigeria's oil exports since 2006. MEND says it is fighting for a greater share of oil wealth for the impoverished inhabitants of the Niger Delta.

Oil also rose because of the weakening dollar, which bolstered the appeal of commodities as a hedge against the U.S. currency's drop. Crude oil for August delivery rose to $145.08 a barrel or 0.6%. Futures have doubled over the past year. Brent crude oil for August settlement rose 0.05% to $144.49 a barrel.

Gold rose to the highest since March as record energy costs and slumping equities spurred demand for the metal as a haven. Gold reached a record $1,033.90 an ounce on March 17. Gold futures for August delivery climbed to $960.60 an ounce. Gold gained 2.9% this week, the fourth consecutive advance. Gold peaked four months ago when the Federal Reserve cut the interest rate on direct loans to banks in an emergency meeting and stocks plunged worldwide after Bear Stearns agreed to be bought by JPMorgan Chase & Co. to avoid a collapse. Silver futures for September delivery jumped 2.4% last week, the fourth straight gain. Silver has gained 26% this year, while gold is up 15% .

Aluminium prices hit a record last week as China, the world’s biggest producer, ordered smelters to reduce production because of power shortages. China’s top 20 aluminium producers agreed to cut their output by as much as 10% with immediate effect. Aluminium rose 7.1% on the week to a record $3,380 a tonne. Lead surged from last week’s one-year low as falling stocks prompted traders to cover short positions. The metal gained 26% to $1,970 a tonne.

The S&P 500, down 1.9% over the week, posted its sixth straight weekly decline – the longest such run for four years. US stocks slumped as investors rushed to sell Fannie Mae and Freddie Mac on speculation that a government bail-out could wipe out shareholders while oil prices spiked above $147, pummelling consumer-facing stocks.

Fannie and Freddie have come under massive selling pressure lastweek on fears that they are not adequately capitalised to meet the demands of the current housing crisis. Analysts said falling share prices and widening credit spreads meant that raising the necessary funds would be extremely difficult. Freddie and Fannie shares plummeted as much as 50% before recovering to $7.75 and $10.25, respectively, down 3.1% and 22.4%.

JPMorgan slid 3.9% and Bank of America fell 3.1%. Lehman Brothers slumped 16.6% while the S&P 500 homebuilders index dropped 3.4% to its lowest level in seven years. The financials sector as a whole fell 2.6% and has now lost over half its value since the peak in February 2007.

In the background, oil prices surged, before easing back, putting immediate pressure on consumer-facing and energy-dependent stocks. Wal-Mart fell 1.6% while Dillard’s dropped 7.4%. The consumer discretionary and staples sectors slid 1.2% and 0.5%, respectively.

On Tuesday, results from Alcoa came in better than expected, helping it advance 5.7 per cent to $34.64 over the week. On Friday, industrial bellwether General Electric also posted decent second-quarter results. GE rose 2.8 per cent to $27.66 over the week.

The dollar dropped to within a cent of the all-time low against the euro on concern losses at Fannie Mae and Freddie Mac may deepen even after policy makers said the companies aren't facing a government takeover.
Treasury Secretary Henry Paulson said the government is supporting the two largest buyers of U.S. home loans in ``their current form.'' The euro touched a record versus the yen as stock markets pared losses.
``The concerns about Fannie and Freddie just highlight how bad things are and how vulnerable the financial system is,'' said Benedikt Germanier, a currency strategist at UBS AG in Stamford, Connecticut. ``It's not supportive for the dollar.''
The dollar fell 0.9 percent to $1.5933 per euro Friday, from $1.5788 Thursday. It touched $1.5947, the weakest since April 23. The dollar reached the all-time low of $1.6019 the previous day.
The euro increased 0.2 percent to 169.30 yen, from 169.05, after touching the all-time high of 169.63. The U.S. currency dropped 0.8 percent to 106.24 yen, from 107.07. The Australian dollar rose as much as 1 percent to 97.18 U.S. cents, the strongest level since 1983.
The U.S. currency posted a 1.5 percent weekly decline against the euro, the third drop in four weeks. The dollar decreased 0.8 percent versus the yen, which declined 0.9 percent against the euro.

The euro touched a record against the yen as stocks pared losses on a Reuters report that Federal Reserve Chairman Ben S. Bernanke told Freddie Chief Executive Officer Richard Syron yesterday that his company and Fannie can use the central bank's discount window.
Fed spokeswoman Michelle Smith said the central bank had no discussions with Fannie and Freddie about the use of the discount window.
The paring of stock losses encouraged some investors to buy higher-yielding assets funded by loans in Japan. In the carry trade, investors get funds in countries with low borrowing costs and invest where returns are higher. Japan's target lending rate of 0.05 percent compares with 4.25 percent in the countries that use the euro. The Standard & Poor's 500 Index dropped 1.1 percent after falling as much as 2.2 percent.
A government takeover of Fannie and Freddie is among options that may be weighed by the Bush administration, said Joshua Rosner, a New York-based analyst at Graham Fisher & Co., who met with officials in Washington yesterday.
Crude oil rose more than $5 to a record above $147 a barrel on the New York Mercantile Exchange on concern Israel may be preparing to attack Iran and supplies from Brazil and Nigeria may be disrupted.
A 10 percent increase in oil prices leads to a 1 percent appreciation of the euro against the dollar, according to a study by David Woo, London-based global head of currency strategy at Barclays Capital.
``The correlation reached the highest level this decade,'' he said in a Bloomberg Television interview. ``The balance of risk is still to the upside for the euro-dollar.'' The 15-nation euro will appreciate to a range of $1.62 to $1.63 in the next several months, Woo predicted.