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GLOBAL MARKETS-Oil surges 2.5 percent, soothes cyber nerves

Published 15/05/2017, 07:12 pm
© Reuters. GLOBAL MARKETS-Oil surges 2.5 percent, soothes cyber nerves
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* Oil jumps on Saudi-Russia comment on output

* Aussie, Canadian dollars hit two-week highs

* Worries over cyber attack relegated to background

* Gains for European stock markets limited

* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh

By Patrick Graham

LONDON, May 15 (Reuters) - A bounce in oil and other commodities prodded stock markets higher on Monday, cushioning the hit to sentiment from a successful missile test by North Korea and a cyber attack that locked 200,000 computers in more than 150 countries.

In Europe, another victory for Angela Merkel's conservatives in a regional election in Germany also helped share indices in London, Frankfurt and Madrid inch higher in early trade. .FTEU3

Saudi Arabia and Russia, the world's two top oil producers, said an output cut needed to be extended for a further nine months until March 2018 to rein in a global crude glut.

That drove a roughly 2.5 percent rise in oil prices LCOc1 CLc1 , and spurred gains for copper CMCU3 and iron ore and in commodity-linked currencies including the Australian and Canadian dollars and Russia's rouble.

At a time when central bank policymakers are wondering if they have successfully got consumer prices moving upward again, oil has been rising steadily for two weeks and may again start to boost headline rates of inflation in the months ahead.

"This recovery in the oil and gas sector could well continue this morning on reports that Saudi Arabia and Russia have agreed to do 'whatever it takes' to keep a floor under oil," said Michael Hewson, chief market analyst with CMC Markets in London.

"(That) has prompted oil prices to extend last week's gains."

The gains for European stocks were neither large nor across the board, however, with Paris shares drifting lower.

The past fortnight has seen the emergence of some broad concerns over the pace of economic growth in the United States and China, and U.S. data on Friday was read as weak.

As European bond markets got going on Monday, U.S. Treasury yields gained less from the oil bounce than their German equivalents.

"The shadow of Friday's softer U.S. CPI and retail sales data hangs over markets this morning," Societe Generale (PA:SOGN) analyst Kit Juckes said in a note to clients.

"The inability of the dollar to gain more ... reflects the changing global landscape as recovery elsewhere drives rates and yields a bit higher. With a thin U.S. data calendar, there's not much to propel yields or the dollar back up."

Earlier, Asian stock markets shrugged off worries over the 'ransomware' cyber attack to reach a two-year high. .MIAPJ0000PUS Hong Kong .HSI shares gained 0.9 percent and their mainland equivalents .CSI300 0.4 percent, after Beijing soothed market fears of tighter regulation saying bank risks were "completely controllable." nL4N1IH1BA

For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets (editing by John Stonestreet)

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