NEW YORK Oil prices resumed a more than month-long rally on Wednesday, helping to lift world stock markets, while the euro held steady ahead of this week's European Central Bank meeting.
Brent moved back above $40 a barrel on speculation the world's largest exporters would agree this month to freeze production and help reduce the largest global build in crude oil in years.
Brent LCOc1 rose $1.42 to settle at $41.07 a barrel, up more than 40 percent from its January lows, while U.S. crude CLc1 increased $1.79 to settle at $38.29.
Wall Street stocks built on recent gains on Wednesday as the strong recovery in oil prices sent energy shares sharply higher. The S&P energy index .SPNY rose 1.5 percent.
"Stability in that asset class (oil) for a period of time will allow for the correlation to break down," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
The Dow Jones industrial average .DJI ended up 36.26 points, or 0.21 percent, to 17,000.36, the S&P 500 .SPX gained 10 points, or 0.51 percent, to 1,989.26 and the Nasdaq Composite .IXIC added 25.55 points, or 0.55 percent, to 4,674.38.
MSCI's all-country world stock index .MIWD00000PUS gained 0.3 percent, while in Europe, the pan-regional FTSEurofirst 300 index .FTEU3 closed 0.45 percent higher.
The biggest weekly draw in U.S. gasoline in almost two years persuaded traders that energy demand was improving despite crude stockpiles at record highs.
"Gasoline is the star of the show today," said Matt Smith, director of commodity research at New York-based energy data provider ClipperData. "Ongoing strength in demand has yielded a large draw to gasoline inventories despite a rebound in refinery runs."
Traders expect the ECB on Thursday to cut its deposit rate by at least 10 basis points and expand its asset-buying program. More ECB stimulus would put downward pressure on the euro but analysts have said ECB policymakers may not deliver the levels of easing traders expect.
The single currency was little changed at $1.1008, erasing an earlier 0.6 percent fall against the dollar EUR=. The dollar index .DXY, which measures the greenback against the euro, yen and four other currencies, dipped 0.1 percent.
In the bond market, yields of U.S. safe-haven government bonds rose as some investors bet the recent decline in yields due to global growth concerns was overdone.
Yields extended their climb as weak demand for $20 billion worth of 10-year government debt stoked a wave of selling.
The benchmark 10-year note US10YT=RR was last down 17/32 in price to yield 1.891 percent, up from 1.834 percent late on Tuesday.
Copper, zinc and other base metals rose as speculators piled back into the market on hopes more production cuts would lead to shortages. Three-month copper in London CMCU3 closed up 1.4 percent at $4,935 a tonne.
(Additional reporting by Tariro Mzezewa, Rodrigo Campos, Richard Leong and Barani Krishnan in New York; Editing by Nick Zieminski and Meredith Mazzilli)
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First Published On : Mar 10, 2016 04:15 IST