GLOBAL MARKETS-Oil at new high, stocks slide on BofA results

(Recasts with U.S. markets, adds byline; changes dateline; previous LONDON)

By Herbert Lash

NEW YORK, April 21 (Reuters) - A record high in surging oil prices and Bank of America's dour outlook and poor earnings pummeled investor sentiment on Monday, sending stock markets in Europe and the United States lower.

The dollar fell broadly after weaker-than-expected profits at the largest U.S. retail bank curbed last week's upbeat optimism that a global credit crunch was close to an end.

Oil hit a fresh peak above $117 a barrel on worries about supply disruptions from major producers and comments by the Organization of Petroleum Exporting Countries reiterating that there was no need to raise output. Oil prices later eased.

U.S. and euro zone government debt prices fell amid fading hopes that the European Central Bank will cut interest rates or that the Federal Reserve would continue aggressively cutting rates.

Wall Street snapped a four-day winning streak and European shares fell sharply on renewed concerns that the banking sector could face a prolonged period of dreary earnings from tight credit markets sparked by the U.S. housing slump.

Analysts said banks may need to raise more capital, and Bank of America (BAC.N: Quote, Profile, Research) Chief Executive Kenneth Lewis said the effects of the battered housing market may take at least the rest of the year to work out.

"People think the profitability prospects for banks are significantly damaged," said Stephen Massocca, co-chief executive at San Francisco-based investment bank Pacific Growth Equities. "I don't see nor do I anticipate that the bank capital raises are over."