NEW YORK Global equity markets bounced, paced by a jump in oil prices on Friday, but were still on track for a weekly decline while the dollar managed to stem its slide against the yen.
Stocks on Wall Street and in Europe were lifted by energy names, with Brent and U.S. crude oil jumping more than 6 percent as drawdowns in U.S. crude stockpiles fed hopes a punishing global glut that has persisted for nearly two years may be nearing tipping point.
Global benchmark Brent crude futures LCOc1 jumped 6.2 percent to $41.86 per barrel, and were on pace for their biggest weekly gain in five. U.S. crude CLc1 surged 6.2 percent to $39.55, for a 7.4 percent weekly gain.
The STOXX 600 Europe Oil and Gas .SXEP index was up more than 3 percent while the S&P energy index .SPNY climbed nearly 2 percent as the top performing sectors in each region, tracking the rise in crude prices.
The Dow Jones industrial average .DJI rose 45.85 points, or 0.26 percent, to 17,587.81, the S&P 500 .SPX gained 6.35 points, or 0.31 percent, to 2,048.26 and the Nasdaq Composite .IXIC dropped 2.87 points, or 0.06 percent, to 4,845.50.
"Crude oil continues to be one of the two principal drivers of equity market performance," said Peter Kenny, senior market strategist at Global Markets Advisory Group, in Berkeley Heights, New Jersey.
"The bottom line is between interest rates and crude, the markets are really moving based on those two factors."
Despite Friday's gains, the S&P 500 was on course for its biggest weekly decline in two months.
MSCI's index of world shares .MIWD00000PUS rose 0.69 percent but was down 0.55 percent for the week. The FTSEurofirst 300 closed up .FTEU3 1.2 percent, but still notched a fourth straight weekly decline, its longest losing streak since October 2014.
Much of the volatility this week has been fueled by the yen's surge against the dollar, which caught many market participants off-guard and increased speculation Tokyo could intervene in the currency market to halt the rally.
The dollar briefly traded above 109.00 yen JPY=, recovering from its first break below 108.00 since October 2014 the previous day. Japan's Finance Minister Taro Aso said the government would take steps to counter "one-sided" moves in the yen in either direction.
The dollar was last up 0.18 percent at 108.39 yen, with a weekly fall of 2.9 percent. On Thursday it fell as low as 107.67 yen.
Sharp appreciation of the safe-haven yen against the dollar is often a warning sign of broader financial market stress and investor risk aversion, which has been exacerbated this week by growing uncertainty surrounding the U.S. economic and policy outlook.
Federal Reserve Chair Janet Yellen, in a conversation with former Fed chairmen on Thursday, said the U.S. economy is on a solid course and still on track to warrant further interest rate hikes.
New York Fed President William Dudley on Friday said the central bank must approach further rate hikes cautiously and gradually because of lingering external risks to the U.S. economy, despite some strength at home and welcome hints of inflation.
The comments helped push benchmark 10-year Treasuries US10YT=RR down 8/32 in price to yield 1.715 percent after hitting a low six-week of 1.685 percent on Thursday.
(Additional reporting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Bernadette Baum)
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