* Europe shares turn negative as energy weighs
* Oil hits 12-day high, then turns negative on output deal
* Wall St gains as financials, consumer discretionary lead (Adds open of U.S. markets, byline, dateline; previous LONDON)
By Chuck Mikolajczak
NEW YORK, Feb 16 (Reuters) - Global equity markets rose on Tuesday but eased from earlier highs, as oil prices relinquished gains and turned lower after an agreement among top producers to freeze output still faced obstacles and diminished hopes for a production cut.
Top oil exporters Russia and Saudi Arabia agreed on Tuesday to freeze output levels but said the deal was contingent on other producers joining in - a major sticking point with Iran absent from the talks and determined to raise production. crude LCOc1 was last down 3.5 percent at $32.18 after hitting a 12-day high of $35.55 a barrel. U.S. crude CLc1 was off 2.1 percent at $28.83 after touching a high of $31.53. production will likely continue to drop, though it could take until September to get the market back into balance," said Brian Jacobsen, chief portfolio strategist at Wells Fargo (N:WFC) Funds Management in Menomonee Falls, Wisconsin.
"In the meantime, I expect that we could see another downward move in oil prices if the production freeze agreement falls apart."
After an extended holiday weekend, Wall Street was led higher by gains in financial and consumer discretionary stocks, with the S&P financial index .SPSY up 1.2 percent after notching its best day in over 4 years on Friday.
The Dow Jones industrial average .DJI rose 62.25 points, or 0.39 percent, to 16,036.09, the S&P 500 .SPX gained 11.09 points, or 0.59 percent, to 1,875.87 and the Nasdaq Composite .IXIC added 45.44 points, or 1.05 percent, to 4,382.95.
The MSCI World equity index .MIWD00000PUS was up 0.32 percent.
Shares in Europe lost ground after a 6 percent rally in the prior two sessions as oil faded, with the pan-European FTSEurofirst 300 stocks index .FTEU3 last off 0.6 percent. The STOXX Europe 600 oil and gas index .SXPP was down 1.7 percent after rising as much as 3 percent in earlier trading. yen JPY= strengthened against the dollar in the wake of the oil announcement, which dented risk appetite. It remained well off a 15-month low of 111.99 yen hit last week, when investors piled into the yen as a safe haven and expectations faded that the Federal Reserve would raise interest rates this year.
The dollar .DXY rose 1 percent against a basket of major currencies while the euro EUR= edged lower at $1.1138, down from last week's four-month high of $1.1377. U.S. Treasury yields US10YT=RR lost 6/32 basis points to yield 1.7654 percent, lifting benchmark yields further from their near 3-1/2 years lows set last week. XAU= , which had its best week in four years last week, edged 0.4 percent higher at $1,214.66 after rising as high as $1,216.80 as gains in U.S. equities eased demand for the yellow metal. CMCU3 edged down 0.3 percent at $4,549.50 a tonne.