Oil prices held near record highs on Tuesday after storming past $120 a barrel on Monday, pushing up gold prices and stalling a recovery in Asian stocks.

The US dollar was broadly weaker as doubts resurfaced on about the health of the US economy, while high oil prices boosted currencies of commodity exporters such as the Australian and Canadian dollars.

The relentless surge in commodities from oil to rice is a key concern for central banks, although some investors have started to price in the view that the worst of the credit crisis and the US economic slowdown could be over.

By 10:30 pm EDT, MSCI's measure of Asian stocks outside Japan was 0.1 percent weaker, backing off a four-month high hit on Monday.

The benchmark has risen 2 percent in the last two sessions but is down 6 percent so far this year.

US light crude for June delivery CLc1, a global benchmark, rose 22 cents to $120.19 a barrel. It jumped more than $4 on Monday to a record high of $120.36.

"A lot of this is supply-driven, with the market very vulnerable to any disruption in supplies," said Mark Pervan, a senior commodities analyst at Australian & New Zealand Bank.

"We're seeing large oil-producing countries coming up as a question mark," he said.

The rise in oil to a fresh record high raised market concerns about the outlook for US consumer spending.

Prices of oil and other dollar-denominated commodities usually rise to adjust for inflation when the US currency falls.

Stock markets in Australia , Taiwan and Singapore fell between 0.2 percent and 0.5 percent.

Hong Kong .HSI eased while South Korea was flat as trading resumed after a holiday. Japanese markets remain closed for a national holiday.

US stocks declined on Monday on worries that Bank of America Corp might walk away from buying troubled lender Countrywide Financial Corp, talk which Bank of America denied. Record oil prices also hit stocks.

Gold extended gains, adding to a rise of nearly 2 percent in New York, helped by bargain hunting and higher oil prices, which enhanced the metal's appeal as a hedge against inflation.

Gold was changing hands around $873.70/874.70 an ounce, up from $871.15/872.55 in late New York trading on Monday. It hit a four-month low of $845 on Friday. - Reuters