GLOBAL MARKETS - U.S. stocks little changed, oil at another record

By Herbert Lash

NEW YORK (Reuters) - U.S. stocks were little changed on Friday as oil prices streaking toward $128 a barrel lifted energy shares and offset investor worries about a slump in U.S. consumer confidence to a 28-year low.

Gold, a traditional hedge against inflation, broke above a key psychological level of $900 per ounce for the first time in three weeks as crude oil surged to a record $127.82.

U.S. government debt prices turned lower in afternoon trade as stocks erased a majority of their losses and Treasuries ran into technical "perceived" resistance at 3.78 percent on 10-year yields and 3.03 percent on five-year yields.

The dollar fell as a plunge in U.S. consumer confidence raised concerns about an economic contraction in second quarter and trimmed the chances the Federal Reserve will raise interest rates this year.

The Reuters/University of Michigan Surveys of Consumers said its preliminary index of confidence fell in May to 59.5, its lowest level since June 1980 -- the height of U.S. stagflation.

Oil shot to a fresh peak as a bullish call from investment bank Goldman Sachs, which said crude will average $141 a barrel in the second half of this year due to paper-thin inventories, drowned out an offer of more supply from OPEC kingpin Saudi Arabia.

Shares of Exxon Mobil Corp (XOM.N: Quote, Profile, Research) and Chevron (CVX.N: Quote, Profile, Research) rose more than 11.5 percent, supporting the Dow and the broad market Standard & Poor's 500 Index. The rise in oil prices also helped European stock markets close higher.

But even with the climb in oil shares, the blue chip Dow industrials and the Nasdaq fell.