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Analysts have said oil producing countries are likely to raise output after crude rallied more than 30 percent from a low in May because they fear prices could damage economic growth in fuel importing countries.

European benchmark ICE Brent crude for February closed at $93.46 on Friday after hitting $94.74 a barrel, its highest level since October 2008.

Arab oil exporters meeting in Cairo this weekend said they saw no need to supply more crude as stocks were high and prices had been inflated temporarily by cold weather in Europe.

Asked by Reuters if the world economy could stand a $100 oil price, Kuwaiti Oil Minister Sheikh Ahmad al-Abdullah al-Sabah said: "Yes it can."

Iraq's new oil minister and the head of Libya's National Oil Corporation both told Reuters that $100 was a fair price, while Qatar's Minister Abdullah al-Attiyah said he did not expect OPEC to increase production in 2011.

"I do not expect an OPEC meeting before June because oil prices are stable," he said.

Some delegates even called for exporters to comply better with agreed production limits. OPEC members' compliance with promised cutbacks reached 56 percent in November, according to Reuters estimates.

When asked if output could be raised, Kuwait's Sheikh Ahmad said: "No. More compliance, more compliance."

MARKET "WELL SUPPLIED"

The Cairo meeting of the Organization of Arab Exporting Countries (OAPEC) brought together Arab members of OPEC including top exporter Saudi Arabia, which has traditionally been viewed as a price moderate, as well as non-OPEC countries Tunisia, Egypt, Syria and Bahrain.

OPEC cut output drastically after the global financial crisis struck in 2008 to prop up collapsing oil prices.

As demand has risen steeply in 2010 and is expected to rise further in 2011, the market is watching closely whether OPEC can release at least some of its spare capacity to prevent prices from soaring to around $150 per barrel as they did before the crisis struck in summer 2008.

OPEC's most influential oil minister, Saudi Arabia's Ali al-Naimi, said on Friday he was still happy with an oil price of $70-80 a barrel and there was no need for an extra OPEC meeting before the next scheduled one in June.

Others in the group have been pressing for a higher price, arguing that quantitative easing and a weakened U.S. dollar that spurred gains across financial markets mean the oil price strength is partly nominal.

The People's Bank of China said it would increase the benchmark lending rate by 25 basis points to 5.81 percent and raise the benchmark deposit rate also by 25 basis points to 2.75 percent.

The central bank said in a statement on its website (www.pbc.gov.cn) that the latest rate rise would take effect on Sunday.

Annual Chinese consumer price inflation raced to a 28-month high of 5.1 percent in November, in part due to excess cash in the economy that is driving prices higher.

While almost all investors and analysts thought more tightening was coming, there was uncertainty about whether the central bank would raise rates before the end of the year.

The move came after Beijing said early in December it was switching to a "prudent" monetary policy, from its earlier "moderately loose" stance.

Analysts said the change of wording could pave the way for more interest rate increases and lending controls.

Chinese stock markets have shed nearly 10 percent since mid-November on concerns the government would ratchet up its monetary policy tightening in face of rising inflation.

To tame price pressures, China raised interest rates on Oct 19 for the first time in nearly three years. The consensus of analysts polled by Reuters this month was for three rate rises of 25 basis points each by the end of next year.

Along with playing a key role in the fight against inflation, policy tightening also signals the government's confidence that the world's second-largest economy is on solid ground, even as the U.S. and European recoveries remain fragile.

China has also officially increased banks' required reserve requirements six times this year and restricted lending by them.

In addition, Beijing has taken a slew of steps to cool the property sector, trying to ward off a potential asset bubble.

(Reporting by Ben Blanchard and Niu Shuping; Editing by Mike Nesbit)

Thursday's U.S. data showing demand for a range of long-lasting U.S. manufactured goods surged in November and consumer spending rose for a fifth straight month reinforced expectations for strong economic growth in the fourth quarter.

"We've had a good run, helped by quantitative easing and better economic data," said Bernard McAlinden, investment strategist at NCB Stockbrokers in Dublin. "We've broken out of ranges, and it can go higher in 2011." MSCI world equity index held steady just below Thursday's peak, which was its highest since September 2008, set just before the collapse of Lehman Brothers.

The index is up nearly 10 percent this year.

Fund tracker EPFR said investor focus has shifted from bonds to equities in the final weeks of 2010, with equity funds globally taking in a net $4.5 billion for the week ending December 22. Bond funds saw redemptions totaling $2.3 billion.

The Thomson Reuters global stock index was also steady.

The FTSEurofirst 300 index was down around 0.1 percent as concerns about the impact of the euro zone debt crisis weighed on the banking sector.

Ratings agency Fitch downgraded Portugal on Thursday, citing burgeoning debt levels and a tough financing environment, in a move which analysts said had been largely expected by markets.

The downgrade puts Fitch's rating for Portugal on a par with Moody's A1 rating, but still two notches above that of Standard and Poor's A-minus.

Trading was very light, with markets closed in Germany, Italy, Spain, Denmark, Finland, Norway, Sweden, Switzerland, Greece, Austria, Hungary, and Iceland. Wall Street is also closed.

The UK stock market will close at 7:30 a.m. EST while Euronext stock markets will close at 8 a.m. EST.

Emerging stocks were also unchanged on the day.

U.S. crude oil rose more than 1 percent to $91.41 a barrel as unusually cold weather fueled demand and depleted supplies.

Snow and more frigid temperatures were predicted in parts of Europe over the weekend, threatening to prolong chaos at airlines and rail networks and further boost fuel demand.

The bund future fell 32 ticks.

The dollar was down 0.1 percent against a basket of major currencies while the euro shrugged off the Portuguese rating downgrade to rise slightly to $1.3126.

(Editing by Toby Chopra)

European benchmark ICE Brent crude for February hit $94.74 a barrel, its highest level since October 2008, before easing to around $93.90 by 6:15 a.m. EST in thin trade.

Global benchmark U.S. crude futures, which hit a 26-month high of $91.63 on Thursday, did not trade on Friday with the NYMEX floor closed for the Christmas holiday.

Brent, trading at a premium to U.S. crude, has surged partly due to a severe cold snap in continental Europe and Britain.

Snow was forecast in parts of Europe over the weekend, threatening to prolong chaos at airlines and rail networks and further boost fuel demand.

Analysts said oil could continue its rally on strong global demand and falling inventories in 2011, which promises to be a strong year for risk assets as confidence about the global economic recovery picks up.

The 19-commodity Reuters-Jefferies CRB index closed on Thursday at its highest level since October 2008.

"With the continuous commodity Index posting new all time highs and the S&P rising on supportive breadth, it is difficult not to maintain our bullish commodity and equity outlook heading into the first quarter of 2011," Barclays Capital said in a note.

"The latest surge has brought $100 per barrel within range for Brent crude in particular."

INFLATIONARY WORRIES

Oil's more than 30 percent climb from this year's low in May has revived concerns that prices could once again impact economic growth for fuel importing countries.

South Korea's finance minister warned on Friday that the fifth-largest buyer of crude oil could face inflationary pressures next year.

In India, the government is expected to decide next week whether to increase state-set fuel prices to cushion domestic oil retailers

China, the world's second-biggest energy user, raised gasoline and diesel prices to record levels on Wednesday as it aimed to encourage refiners to boost supplies to meet demand.

The government said it would prohibit transport companies passing the rise on to the population. But higher commodity prices helped raise Chinese consumer inflation to a 28-month high in November.