The Canadian dollar closed higher Wednesday but well off early highs as the European debt crisis took a new turn, gold close d at a fresh record high and oil approached the $109 (U.S.) mark.

The loonie was up 0.37 of a cent at $1.0412 cents (U.S.) after earlier surging as high as $1.0450, its highest level since November, 2007, as the U.S. dollar weakened.

The European debt crisis was sharply in focus late in the afternoon after Portugal's Prime Minister said his country will ask for a bailout due to its high debts and difficulty raising money on international markets.

Portugal becomes the third financially troubled euro zone country after Greece and Ireland to request assistance from Europe's bailout fund and the International Monetary Fund.

Analysts expect Portugal will need up to €80-billion ($114.4-billion U.S.).

Investors looking for a safe haven sent the June gold bullion contract on the New York Mercantile Exchange up $6 to a record close of $1,459.10 an ounce.

The May crude contract on the Nymex gained 49 cents to a two-and-a-half-year high of $108.83 a barrel amid a report from the American Petroleum Institute showing that crude inventories fell a greater than expected 2.8 million barrels last week. Analysts had forecast an increase of 1.3 million barrels.

However, inventories of gasoline rose unexpectedly by 568,000 barrels and crude supplies at the key U.S. storage facility in Cushing, Okla., rose 120,000 barrels, the API said.

Crude prices are still up more than 27 per cent from mid-February because of fears that fighting in Libya could spread and interrupt supplies from the big producers in the Persian Gulf, such as Saudi Arabia. Higher demand resulting from an improving global economy has also pushed prices higher.

Copper prices also advanced with the May contract in New York ahead 10 cents at $4.37 a pound.

The U.S. dollar also weakened against the euro a day before the European Central Bank was expected to make its first rate hike in nearly three years to deal with inflation. A quarter percentage point increase in the main rate to 1.25 per cent is fully priced in by the markets, so investors will be more interested in what the central bank's president, Jean-Claude Trichet, says at his news conference.

Traders are also looking ahead to a solid Canadian employment report at the end of the week. Statistics Canada is expected to report Friday that the economy added about 30,000 jobs in March and that data could further strengthen the currency.

"The story for [the Canadian dollar]is quite supportive," said Mark Chandler, head of Canadian FIC Strategy at RBC Dominion Securities.

"The reason Canada does well in the risk appetite movement is it's a small open economy, very leveraged on trade. We've been having good news generally in growth."