* 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.
Brent 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.
"Global 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.
The 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.
Ten-year 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.
Copper CMCU3 edged down 0.3 percent at $4,549.50 a tonne.