* Dollar rises on Fed official's QE2 comments,
* World stocks up slightly, Wall Street gains; oil also up
* Yen at lows since March 18 intervention by BOJ, cenbanks
* Euro/yen hits 10-month high, euro-dollar up too
* S&P downgrades Portugal and Greece (Recasts, updates with rebound in oil, low in yen)
By Barani Krishnan
NEW YORK, March 29 (Reuters) - The U.S. dollar rose on Tuesday on speculation the Federal Reserve might curtail a program aimed at keeping interest rates low, pulling U.S. stocks higher, while oil and other key commodities prices also rose.
The yen fell the most against the dollar since intervention by the Bank of Japan and other major central banks to stop runaway gains in the Japanese currency.
U.S. Treasuries widened losses after the sale of $35 billion in five-year notes. It was the second of the Treasury's three auctions of coupons this week, totaling $99 billion.
The dollar rose against the euro after the president of the St. Louis Federal Reserve Bank, James Bullard, told an audience in Prague the U.S. economy was strong enough for the Fed to curtail its $600 billion asset purchase program by about $100 billion. For details, see [ID:nLDE72S0RJ].
The euro hit a session low of $1.4060 versus the dollar on
the EBS trading platform after falling through reported bids at
$1.4080. It last traded at $1.4088
U.S. crude oil
Copper tracked gains in equities, while a rebound in agricultural markets boosted other commodities ahead of the first-quarter close. [MET/L] [GRA/] <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ (Graphic: http://r.reuters.com/tep68r) ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
GLOBAL, US STOCKS UP
World stocks as measured by MSCI <.MIWD00000PUS> were up 0.2 percent after slipping about 0.3 percent earlier on weakness in European shares, particularly banks.
Global stocks rebounded on the strength in U.S. shares, which were powered by a rise in large-cap technology firms. Just a day ago, Wall Street registered the lowest volume for 2011.
"The quarter is ending with a lot of uncertainties out there," said Michael Shaoul, chairman of the New York-based Marketfield Asset Management, which oversees $973 million.
"There's nothing obvious about what investors need to do in this environment, and that's why you're seeing such low volume," he said. "No one has any reason to recommit capital."
Wall Street remained cautious on Tuesday over the crises in Japan and the Middle East and north Africa. Stocks were higher, though volume was still far below average.
The Dow Jones industrial average <.DJI> was up 85.37 points, or 0.70 percent, at 12,283.25. The Standard & Poor's 500 Index <.SPX> was up 8.24 points, or 0.63 percent, at 1,318.43. The Nasdaq Composite Index <.IXIC> was up 22.56 points, or 0.83 percent, at 2,753.24. [.N]
But Amazon.com Inc
Cisco Systems
European banking shares closed up after falling earlier on
a surprise capital increase by Italian bank UBI Banca
YEN, BOND YIELDS
The dollar and euro both reached their highest levels against the yen since March 18, when the Bank of Japan and others intervened to stop yen gains.
The dollar rose to 82.42 yen
"While there are no obvious catalysts for the yen's moves, we suspect that the combination of recent equity market resilience and higher U.S. Treasury yields is weighing on the Japanese currency," said Vassili Serebriakov, currency strategist at Wells Fargo Bank in New York.
U.S. 30-year Treasury bonds briefly fell a point in price after a tepid five-year note auction, rising stocks and hawkish Federal Reserve statements hurt yields across the Treasury curve.
Treasury long bonds
Portugal's 10- and 2-year yields jumped to euro lifetime highs and Greece's 2-year yields rose 10 basis points to 15.46 percent after a downgrade by Standard & Poors.
The S&P downgrades left Portugal one notch above junk and Greece's credit-worthiness below that of Egypt, deepening the debt woes of two of the weakest countries in the euro zone. [ID:nLDE72S1LY] (Additional reporting by Atul Prakash, Jessica Mortimer and Richard Leong; Editing by Dan Grebler)