Hopes for robust corporate earnings and fresh merger and acquisition activity kept US and European equities on an even keel as optimism over global growth continued to outweigh inflation concerns.

Those worries intensified as oil prices touched their strongest levels since August 2008 and corn held near a record peak, helping drive gold to a second successive all-time high and pushing core government bond prices lower.

 aside an increasingly precarious fiscal outlook for Portugal as the euro reached a 14-month high against the dollar ahead of Thursday’s European Central Bank policy meeting.

The single currency spent much of the day above $1.43 amid growing speculation that the ECB will follow up a widely-expected interest rate rise with a hawkish press conference.

But David Woo at Bank of America-Merrill Lynch said higher ECB rates and higher oil prices would inevitably raise the funding costs for peripheral European countries.

Near-unanimous expectations that the European Central Bank would raise interest rates on Thursday drove the euro above $1.43 to its highest level against the dollar for 14 months

“The five-year yield for Spain being stable provides some comfort despite the rapid rise of the same yield for Portugal to above 10 per cent. Still, the cost will factor into the ECB’s decision in terms of how much and how fast it will raise interest rates.”

Indeed, analysts have suggested that the euro’s resilience to the eurozone’s fiscal crisis has largely been due to Spain’s ability to distance itself from what is happening in more fiscally challenged eurozone nations.

And there was some relief that Portugal managed to raise €1bn through the sale of six- and 12-month T-bills on Wednesday, although the yields on both maturities increased sharply from the previous auctions.

But analysts said the successful auction was no panacea to Portugal’s problems.

“While the mid-April obligation to pay back some €4.3bn of government bonds maturing appears already funded, the repayment of the mid-June’s €4.9bn maturing bond is probably not,” said Paolo Pizzoli at ING.

Chiara Cremonesi, fixed-income strategist at UniCredit, said: “The bottom line is that Portugal can still attract good demand, but at a sky-high cost. Moreover, if Portugal does not manage to calm down markets, the cost-of-funding dynamic might become even more unfavourable for the country.

“With five T-bill auctions still scheduled for the second quarter, and pressure mounting both internally and externally to ask for a bail-out, the task looks anything but easy for Portugal.”

Gold hit a nominal record high for a second successive session as inflation concerns were stoked by oil prices climbing to fresh 2 1/2-year highs

Meanwhile, US government bonds continued to suffer from uncertainty about the outlook for US monetary policy and mounting inflation concerns.

The yield on the 10-year Treasury was up 7 basis points at 3.55 per cent.

“The Federal Reserve’s policy of pump-priming the economy is working well enough to cause concern among its members that perhaps they should take their feet off the pedal if the finish line is now in sight,” said Andrew Wilkinson, senior market analyst at Interactive Brokers.

“Lining the streets, however, are rising signs of inflation that are prompting bets that an end to the stimulus will come sooner rather than later.”

The bulk of the inflation concerns have come from persistent strength in commodity prices. Brent oil briefly pushed above $123 a barrel before retreating slightly, while corn futures edged back from Tuesday’s record high. Gold hit a record peak of $1,462.30, although it too eased back.

Equity markets investors, however, remained fairly sanguine about the inflation backdrop. By the close in New York, the S&P 500 was up 0.2 per cent, off an earlier high, while the FTSE Eurofirst 300 rose 0.3 per cent. The Nikkei 225 Average in Tokyo fell 0.3 per cent.