HONG KONG, Nov 7 (Reuters) - Oil soared above $98 a barrel for the first time on Wednesday and gold rose to a 28-year high as investors sought shelter from the falling dollar, which plumbed all-time lows.

Investors dumped the greenback following comments from a senior Chinese official about the need for China to balance its forex reserves to offset weakening currencies.

Asia share markets mostly rose, led by energy and mining firms, and stock markets in Europe looked set to open stronger, although a barrage of earnings from the likes of Total and Societe Generale will set the tone for the day.

U.S. crude raced to a life high of $98.03 as the dollar fell and investors worried about thinning oil inventories heading into the northern winter. Gold , prized an inflation hedge, touched a high of $836.75 an ounce, inching closer to a life high of $850 reached in January 1980 amid geopolitical tensions and soaring inflation linked to strong oil prices.

Investors are buying gold for wealth protection, said William Kwan, a dealer at Phillip Futures Pte Ltd in Singapore.

Financial institutions have the fear the dollar may go further down, so they are stepping up gold (purchases) to protect themselves, he said.

Tracking the rally in gold prices, platinum hit a new high of $1,481 an ounce and silver scaled a 27-year peak of $15.88 an ounce.

It's crazy. Everybody is coming to buy, said Ellison Chu, senior manager at Standard Bank London in Hong Kong.


Tokyo's Nikkei average reversed early gains to end 0.9 percent lower, but MSCI's measure of other Asia Pacific stocks put on 1.3 percent by 0622 GMT to take gains to about 45 percent this year.

Betting that the rally in oil and gold prices will boost profits for producers, investors snapped up oil and gas firms such as Woodside Petroleum and gold miners including Zijin Mining, driving both stocks up about 3 percent.

Metal stocks also firmed with mining giant BHP Billiton climbing 1.6 percent and both Sumitomo Metal Mining and Korea Zinc rising more than 2 percent.

But major exporters such as Canon Inc., chip-tester maker Advantest Corp and Hyundai Motor came under pressure as the dollar lost ground.

A weak dollar tends to hurt the value of dollar sales.


Investors sold the dollar after a senior Chinese official said China should balance the make-up of its $1.43 trillion stockpile of foreign exchange reserves so that strong currencies such as the euro offset weakening currencies like the dollar.

The comments gave the euro a push in the back, said Kimihiko Tomita, head of foreign exchange for State Street Global Markets in Tokyo.

Already weakened by persistent worries about the turmoil in credit markets that rocked major U.S. financial firms, the dollar dropped to an all-time low versus the euro and a basket of currencies.

The dollar index , which tracks the greenback's performance against a basket of six major currencies, plumbed 75.490, while the euro hit a record high just above $1.4660.

Against the Japanese currency, the dollar dipped below 114 yen to its lowest level in nearly two weeks.

Weakness in the dollar coupled with expectations of more interest rate hike by the Reserve Bank of Australia, which lifted rates on Wednesday as expected, helped drive the Aussie to a fresh 23-½ year peak near 94 U.S. cents .

Japanese government bonds perked up as the Nikkei reversed direction, causing bond yields to fall.

The benchmark 10-year yield eased 1 basis point to 1.56 percent.