Equities on Wall Street gave up some of their earlier gains, as the continued rise in oil prices had investors worried about the impact on consumer spending and corporate profits. Gold hit a record high.

In early afternoon trading, the Dow Jones Industrial Average gained 0.22 per cent, the Standard & Poor's 500 Index rose 0.29 per cent and the Nasdaq Composite Index advanced 0.56 per cent.

Oil rose yet again, edging closer to the highest level in 2 1/2 years after Libyan leader Muammar Gaddafi launched a land and air offensive to retake territory in Libya's east held by opposition forces.

"We're taking a breather, waiting for the next foot to fall in the oil markets," Nicholas Colas, chief market strategist at the ConvergEx Group in New York, told Reuters. "The market is looking 3-4 months out, trying to figure out what these higher oil prices will do to consumer spending."

Meanwhile, Federal Reserve Chairman Ben Bernanke didn't rule out increasing the central bank's asset purchases aimed at bolstering the US economy, saying he didn't want to see the economy relapse into recession.

In his testimony to Congress today and yesterday, Bernanke signalled that he planned to see through the Fed's US$600 billion of U.S.

Treasury purchases through June under the second round of quantitative easing.

Among the gainers was Texas Instruments Inc, rising 4 per cent after JPMorgan upgraded the semiconductor sector including the stock.

Across the Atlantic, the Stoxx Europe 600 Index declined 0.7 per cent in London.

Among those stocks weighing on the market was Swiss Life Holding, which dropped more than 3 per cent after Switzerland's biggest life insurer reported operating profit that fell short of analysts' estimates.

The euro strengthened to the highest level in almost four months against the greenback amid expectations interest rates in the euro zone would increase before those in the United States, ahead of the European Central Bank's policy meeting on Thursday.

The euro rose as high as US$1.3890 on trading platform EBS, its strongest level since November 9.

Oil's climb continued on Wednesday as escalating violence in Libya threatened the Opec nation's oil infrastructure and investors considered the potential of prolonged disruption.

"It looks like an attack fairly close to what is one of Libya's largest storage and export terminals," Andy Lebow, trader at MF Global in New York, told Reuters.

"It's hard to say if the Libyan government is trying to target oil infrastructure in the east or whether they're just targeting rebel held areas, but the market's reacting to this threat either way."

Brent crude was up US$1.89 to US$117.31 a barrel, while US crude futures rose US$2.21 to US$101.84 a barrel.

The head of Libya's oil company, Shokri Ghanem, told Reuters the country's problems could boost prices over US$130 a barrel if they persisted.

The turmoil further increased the appeal of gold, lifting it to a record. Spot gold was bid at US$1,435.65 an ounce at 1522 GMT, against US$1,433.70 late in New York on Tuesday.

Earlier in the session it hit a record US$1,437.97.

US gold futures for April delivery rose US$5.10 to USS$1,436.30, after touching a record US$1,439 earlier.

"[There's] a combination of reasons for [the rise in] gold, but primary at the moment are strong oil and weak equities - basically geopolitical," Simon Weeks, head of precious metals at the Bank of Nova Scotia, told Reuters.

"I think we see US$1,450, and that's probably enough," he said.

"Any good news from the Middle East will see a pullback to US$1,400."