LONDON: Global stock markets rebounded Wednesday and oil prices surged following Omicron-driven losses and on the eve of a key output meeting of OPEC and its allies.
European equities advanced, mirroring most rebounding Asian bourses, as dealers temporarily set aside news of record-high eurozone inflation.
Oil surged about five percent, while the dollar extended gains against major rivals as the Federal Reserve is seen removing its vast financial support measures at a quicker pace than first flagged.
Investors were facing a rollercoaster week as they track the mutant Omicron strain, whose emergence last Friday darkened the economic outlook, sparked fresh Covid restrictions and ravaged most markets.
Traders remain uncertain over its impact on the world economy and the likelihood of fresh lockdowns, as scientists rush to investigate the variant and urge speedy vaccination drives.
"An ugly combination of a Covid-related knock to growth, reduction in central bank support and sustained inflation is not a recipe for strong stock markets," said AJ Bell investment director Russ Mould.
"However, some traders appear to have decided the weakness has gone far enough for now as they emerged to bid up stocks and oil."
OPEC and the oil cartel's allies hold a key output meeting on Thursday, having resisted US-led pressure to step up production to bring down surging energy prices, while emergence of the new variant has complicated the equation.
The OECD grouping of major industrialised nations on Wednesday warned that Omicron threatens the global economic recovery, as it lowered the 2021 growth outlook and called for a swifter vaccines rollout.
The global economy is now expected to expand by 5.6 percent this year, down from a forecast of 5.7 percent, the OECD said in its latest outlook.
Top drug makers have offered differing opinions on their vaccines' efficacy against Omicron.
European stocks resume falls on Omicron warning
Markets took a tumble on Tuesday after Moderna head Stephane Bancel told the Financial Times that existing vaccines might not be as effective against the new strain.
However, other drugmakers later said it was far too early to make a judgement.
The boss of BioNTech, which made a shot with Pfizer, said it was likely people would be protected against severe symptoms.
"If by this time next week the medical gurus have concluded that existing vaccines are sufficient and/or the Omicron virulence is milder than the current Delta variant, the market should bounce strongly," said strategist Louis Navellier.
"Conclusions the other way could weigh heavily on the current bullish outlook for 2022," he added.
Key figures around 1200 GMT
London - FTSE 100: UP 1.3 percent at 7,150.17 points
Frankfurt - DAX: UP 1.4 percent at 15,312.74
Paris - CAC 40: UP 1.3 percent at 6,809.66
EURO STOXX 50: UP 1.6 percent at 4,129.82
West Texas Intermediate: UP 4.9 percent to $69.41
Brent North Sea crude: UP 5.2 percent at $72.82
Tokyo - Nikkei 225: UP 0.4 percent at 27,935.62 (close)
Hong Kong - Hang Seng Index: UP 0.8 percent at 23,658.92 (close)
Shanghai - Composite: UP 0.4 percent at 3,576.89 (close)
New York - Dow: DOWN 1.9 percent at 34,483.72 (close)
Euro/dollar: DOWN at $1.1331 from $1.1338 at 2200 GMT on Tuesday
Dollar/yen: UP at 113.39 yen from 113.17 yen
Pound/dollar: UP at $1.3321 from $1.3299
Euro/pound: DOWN at 85.05 pence from 85.25 pence