Spot gold sets historic high above $1,000 mark

By Atul Prakash and Anna Ringstrom

LONDON (Reuters) - Gold raced to an historic peak above $1,000 on Friday as the dollar's plunge to record lows on weak data and deepening financial market troubles in the United States boosted bullion's safe-haven appeal.

Bear Stearns BSC.N shares tumbled as much as 50 percent on news liquidity problems prompted the investment bank to secure financing from JPMorgan Chase and the Federal Reserve Bank of New York.

"This whole fear of the credit crisis being far from over seems to escalate on a daily basis," Daniel Hynes, metals analyst at Merrill Lynch, said.

"That has been a key driver of gold over the last couple of months. So this announcement just adds fuel to that fire."

Spot gold surged as high as $1,007.10 an ounce; it was at $996.90/997.70 by New York's last quote at 2:15 p.m. EDT (1815 GMT), up from $991.00/991.80 late on Thursday.

Gold, seen as a safe haven asset, has gained more than 20 percent this year on top of a 32 percent gain in 2007.

U.S. gold futures set a record high of $1,009 an ounce. The most active contract for April delivery on the COMEX division of the New York Mercantile Exchange settled up $5.70 at $999.50 an ounce.

Gold rallied as the dollar tumbled to a record low against the euro after news of mounting problems at Bear Stearns, the No. 5 U.S. investment bank, stoked fears of a long recession.