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Oil rebounded from weakness seen in the European morning when the US benchmark WTI contract hit a 14-month low on expectations that OPEC may not agree meaningful caps on oil production at a meeting next week.
There was much market talk about what exactly to read into a speech by Fed chairman Jerome Powell late on Wednesday, analysts said.
Many understood his remark that the Fed's rates were close to neutral to mean that there was now less need for rate hikes, a view that sparked a major rally in Wall Street indices on Wednesday after the European close.
As key European indices played catch-up, the Dow index was lower in New York late morning deals, but still held on to most of the previous day's strong gains.
"European markets are moving higher after US equities were sharply higher and Fed Chairman Jerome Powell gave somewhat dovish remarks in New York yesterday," said analysts at Charles Schwab.
While the US central bank is still widely expected to lift rates, Powell's comment was a far cry from his characterisation last month of them being "a long way from neutral".
Investors meanwhile remain wary ahead of the weekend's crunch trade talks between US President Donald Trump and China counterpart Xi Jinping at the G20 summit in Buenos Aires.
The pound fell versus the dollar and euro one day after the UK government and Bank of England painted a bleak picture of the country's economic future following Brexit.
New York's West Texas Intermediate crude, one of the world's major oil contracts, slumped in morning deals to strike a near 14-month low.
"The oil market is clearly not 100 per cent convinced that the OPEC+ will cut supplies next week, but the pressure is certainly building as prices continue to fall amid ongoing concerns over excessive supply and lower demand growth," Forex.com analyst Fawad Razaqzada told AFP.
"With WTI hovering around the US$50 mark, it has given up more than 50 per cent of its gains made since hitting a low in 2016.
"This represents a significant drop for a healthy market, which makes intervention from the OPEC+ group even more likely," Razaqzada added.
Dealers said a report saying that Russia had started talking with Saudi Arabia about cutting production helped trigger Thursday's rebound.
Key figures around 1640 GMT:
London - FTSE 100: UP 0.5 per cent at 7,038.95 points (close)
Frankfurt - DAX 30: FLAT at 11,298.23 (close)
Paris - CAC 40: UP 0.5 per cent at 5,006.25 (close)
EURO STOXX 50: UP 0.2 per cent at 3,174.16
New York - Dow Jones: DOWN 0.4 per cent at 25,25.01
Tokyo - Nikkei 225: UP 0.4 per cent at 22,262.60 (close)
Hong Kong - Hang Seng: DOWN 0.9 per cent at 26,451.03 (close)
Shanghai - Composite: DOWN 1.3 per cent at 2,567.44 (close)
Pound/dollar: DOWN at US$1.2789 from US$1.2825 at 2200 GMT
Euro/pound: UP at 89.00 pence from 88.63 pence
Euro/dollar: UP at US$1.1379 from US$1.1366
Dollar/yen: DOWN at 113.46 yen from 113.68
Oil - West Texas Intermediate: UP US$1.15 at US$51.44 per barrel
Oil - Brent Crude: UP 70 cents at US$59.79 per barrel