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NEW YORK (Reuters) - Crude oil prices rose on Thursday to their highest in three weeks on hopes for a pact among oil producers to cut output, while the dollar slipped on bets that interest rate hikes by the Federal Reserve would be more gradual than it has suggested.
The rebound in the oil market lifted share prices on Wall Street and other stock markets in another rollercoaster session. European stocks fell on disappointing earnings reports.
The persistent volatility in U.S. and European equity markets underpinned demand for U.S. and German government bonds.
However, gold, normally considered a safer asset in times of turbulence, retreated from 12-week highs.
"Once the oil market establishes stability, it would be good for the global economy," said Ron D'Vari, chief executive at NewOak Capital LLC in New York.
Russian energy minister Alexander Novak and a senior Gulf OPEC delegate suggested that major oil producers may pare production in an effort to ease a global supply glut that has hammered oil prices over the past year and a half.
It remained unclear whether a deal to cut production by up to 5 percent would be struck anytime soon.
Benchmark Brent futures LCOc1 jumped as much as 8 percent to nearly $36 a barrel before ending up 79 cents or 2.39 percent at $33.89 a barrel. U.S. crude CLc1 rose 92 cents, or 2.85 percent, at $33.22 per barrel.
Tumbling energy prices, stemming from worries about weakening demand from world No. 2 economy China, have roiled financial markets. This was a concern the Fed cited as a factor for keeping its key policy rate at 0.25-0.50 percent on Wednesday.
The Fed's worry over global and financial developments spurred selling in the dollar against most major currencies as traders reckoned U.S. policymakers would ease back on plans for four possible quarter-point rate hikes for 2016 that they had signaled at their December policy meeting.
The dollar index .DXY, which gauges the greenback against the euro, yen and four other currencies, was last down 0.3 percent at 98.576.
The possibility of a slower path for U.S. rate hikes was seen as less welcome by stock market participants. Some had hoped the Fed might put the brakes on raising rates altogether.
Wall Street swung wildly Thursday before settling in positive territory, helped by blockbuster quarterly results from Facebook (FB.O).
The Dow Jones industrial average .DJI rose 125.18 points, or 0.79 percent, to 16,069.64, the S&P 500 .SPX gained 10.41 points, or 0.55 percent, to 1,893.36 and the Nasdaq Composite .IXIC added 38.51 points, or 0.86 percent, to 4,506.68. [.N]
Europe's FTSEurofirst 300 .FTEU3 index of top shares fell 1.68 percent, to 1,319.229 due to disappointing results from Roche ROG.VX and Novartis NOVN.VX and worries about bad bank loans.
The MSCI world equity index .MIWD00000PUS, which tracks shares in 45 nations, gained 0.2 percent.
In the bond market, the yield on benchmark 10-year Treasury notes US10YT=RR edged down 1 basis point to 1.992 percent, while 10-year German Bunds DE10YT=RR were yielding 0.408 percent, down 4 basis points.
Spot gold prices XAU= fell $9.38 or 0.83 percent, to $1,115.81 an ounce.
Additional reporting by Danilo Masoni in Milan; Sudip Kar-Gupta, Patrick Graham in London and Meeyoung Cho in Seoul; Editing by Bernadette Baum and Nick Zieminski