European equities rose on Thursday as oil traded below record highs but investors were expected to avoid major moves ahead of keenly-awaited U.S. jobs data at the end of the week. Euro zone government bond yields -- which move in the opposite direction to bond prices -- crept higher ahead of an European Central Bank (ECB) interest rate decision on Thursday, while the dollar held steady. Crude oil rose after falling sharply off record highs on Wednesday. Prices had fallen on a surprise build-up of U.S. gasoline stocks and after the OPEC cartel of producer nations reassured the market on Wednesday it did have spare capacity to add to supplies if needed. Front-month September Brent crude was 49 cents higher at $40.19 per barrel, but down from Wednesday's intra-day peak of $40.99, the highest level since 1988 when the contract started. OPEC President Purnomo Yusgiantoro said the cartel held a spare output capacity of 1-1.5 million barrels per day. Data on U.S. gasoline and distillate stocks bucked expectations by showing rises of 2.4 million and 2.1 million barrels respectively.
Stock markets got an early boost from Wednesday's oil fall, since investors have been concerned about the potentially adverse impact of high crude prices on economic growth. European shares were also bolstered by above-forecast results from Europe's largest insurer, ING . The firm's shares jumped by over three percent after reporting second-quarter core earnings rose by 38 percent. Earlier, tech stocks led a rise in Asian share markets on the overnight drop in oil prices. Tokyo's Nikkei share average <.N225> close up 0.5 percent. The ECB is widely expected to announce at 1145 GMT that it is holding rates steady at 2.0 percent. In contrast, the Bank of England is tipped to raise its key rate by a quarter point to 4.75 percent at 1100 GMT. Investors are expected to focus on U.S. non-farm employment figures for July as they could give further clues about the likely path of future U.S. Federal Reserve interest rates.
STOCKS, BONDS, DOLLAR
The FTSE Eurotop 300 index <.FTEU3> of pan-European blue chips was 0.5 percent firmer while the narrower DJ Euro Stoxx 50 index <.STOXX50E> rose 0.6 percent. The Nikkei <.N225> ended up 50.87 points at 11,060.89, after it lost 315 points in the previous three days to hit a 10-week closing low on Wednesday. The broader Japanese TOPIX index <.TOPX> was up 0.19 percent at 1,116.85. The interest rate sensitive two-year Schatz yield was up 2.2 basis points (bps) at 2.58 percent, above Wednesday's two-month lows at 2.549 percent. The 10-year Bund yield rose 0.9 bps to 4.17 percent, off three-month troughs set on Wednesday at 4.163 percent. The dollar held steady against the euro at at $1.2060 and the Japanese yen at 110.97 .///