New York, March 2 (DPA) Wall Street stocks fell sharply Tuesday as the price of oil surged again in the face of ongoing unrest in Libya and more anti-government protests in other parts of the Middle East.

Crude oil in New York trading jumped 2.7 percent to $99.63 per barrel, a more than two-year high, as Libyan opposition forces clashed with government troops loyal to defiant leader Muammer Gaddafi.

Investors shrugged off comments from US Federal Reserve Chairman Ben Bernanke, who said he expected the temporary rise in oil prices would have little effect on the US economy and inflation. The central bank head did warn that "sustained rises" in oil "would represent a threat both to economic growth and to overall price stability".

Bernanke said in testimony before Congress that he saw "some grounds for optimism" in the sluggish US labour market and said the central bank's forecast for the world's largest economy had improved somewhat since November.

The blue-chip Dow Jones Industrial Average fell 168.32 points, or 1.38 percent, to 12,058.02. The broader Standard and Poor's 500 Index dropped 20.89 points, or 1.57 percent, to 1,306.33. The technology-heavy Nasdaq Composite Index lost 44.86 points, or 1.61 percent, to 2,737.41.

The US currency rose to 72.6 euro cents from 72.45 euro cents Monday. The dollar climbed against the Japanese currency to 81.92 yen from 81.79 yen.