* Brent crude prices climb back above $40
* U.S. stocks end higher, following oil
* Focus shifting to Thursday's ECB meeting
(Updates with U.S. markets' closing levels)
By Caroline Valetkevitch
NEW YORK, March 9 (Reuters) - Oil prices resumed a more than
month-long rally on Wednesday, helping to lift world stock
markets, while the euro held steady ahead of this week's
European Central Bank meeting.
Brent moved back above $40 a barrel on speculation the
world's largest exporters would agree this month to freeze
production and help reduce the largest global build in crude oil
in years.
Brent LCOc1 rose $1.42 to settle at $41.07 a barrel, up
more than 40 percent from its January lows, while U.S. crude
CLc1 increased $1.79 to settle at $38.29.
Wall Street stocks built on recent gains on Wednesday as the
strong recovery in oil prices sent energy shares sharply higher.
The S&P energy index .SPNY rose 1.5 percent.
"Stability in that asset class (oil) for a period of time
will allow for the correlation to break down," said Art Hogan,
chief market strategist at Wunderlich Securities in New York.
The Dow Jones industrial average .DJI ended up 36.26
points, or 0.21 percent, to 17,000.36, the S&P 500 .SPX gained
10 points, or 0.51 percent, to 1,989.26 and the Nasdaq Composite
.IXIC added 25.55 points, or 0.55 percent, to 4,674.38.
MSCI's all-country world stock index .MIWD00000PUS gained
0.3 percent, while in Europe, the pan-regional FTSEurofirst 300
index .FTEU3 closed 0.45 percent higher.
The biggest weekly draw in U.S. gasoline in almost two years
persuaded traders that energy demand was improving despite crude
stockpiles at record highs.
"Gasoline is the star of the show today," said Matt Smith,
director of commodity research at New York-based energy data
provider ClipperData. "Ongoing strength in demand has yielded a
large draw to gasoline inventories despite a rebound in refinery
runs."
Traders expect the ECB on Thursday to cut its deposit rate
by at least 10 basis points and expand its asset-buying program.
More ECB stimulus would put downward pressure on the euro but
analysts have said ECB policymakers may not deliver the levels
of easing traders expect.
The single currency was little changed at $1.1008, erasing
an earlier 0.6 percent fall against the dollar EUR= . The
dollar index .DXY , which measures the greenback against the
euro, yen and four other currencies, dipped 0.1 percent.
In the bond market, yields of U.S. safe-haven government
bonds rose as some investors bet the recent decline in yields
due to global growth concerns was overdone.
Yields extended their climb as weak demand for $20 billion
worth of 10-year government debt stoked a wave of selling.
The benchmark 10-year note US10YT=RR was last down 17/32
in price to yield 1.891 percent, up from 1.834 percent late on
Tuesday.
Copper, zinc and other base metals rose as speculators piled
back into the market on hopes more production cuts would lead to
shortages. Three-month copper in London CMCU3 closed up 1.4
percent at $4,935 a tonne.