* S&P 500 gains over 1 pct after five straight days of losses
* Top European share index set for best day in three weeks
* U.S., European financial shares rally
* 10-yr Treasury yields rise from lowest since Aug. 2012
* Oil prices rally; U.S. crude off over 12-year lows (Updates to open of U.S. markets, changes byline, dateline; pvs LONDON)
By Sam Forgione
NEW YORK, Feb 12 (Reuters) - U.S. and European shares rebounded from recent weakness on Friday, with reassuring U.S. retail sales data boosting sentiment, while U.S. crude prices rallied from more than 12-year lows.
Banking shares in the United States and Europe spiked, with the S&P financial index last up 2.9 percent and the STOXX 600 Europe Banks index gaining 4.7 percent.
The benchmark U.S. S&P 500 gained over 1 percent after five days of losses that had dropped it to its lowest level in two years on Thursday. In Europe, gains of about 10 percent in shares of Deutsche Bank and its rival Commerzbank helped European stocks rebound.
The FTSEurofirst 300 index of top European shares was on track to notch its biggest daily gain in three weeks after hitting a two-and-a-half-year low on Thursday.
The S&P financial index has fallen 16 percent this year, and the European bank index over 25 percent, as worries over the impact of central banks' negative interest rate policies on banks' profitability intensified in recent days.
Commerce Department data showing U.S. retail sales excluding automobiles, gasoline, building materials and food services increased 0.6 percent in January also boosted optimism.
"The market has gone from very little chance of recession to pricing in an overwhelming chance of recession despite the data not supporting that," said Michael Jones, chief investment officer of RiverFront Investment Group in Richmond, Virginia.
"The more numbers you get like retail sales ... the more this market can whipsaw people by heading right back up."
Despite the rise in European stocks, an overnight drop in Asia shares limited gains in MSCI's all-country world equity index. The index rose 1.32 points, or 0.37 percent, to 354.67. On Thursday it had closed more than 20 percent below its all-time high, confirming a bear market in global equity prices.
The Dow Jones industrial average rose 246.95 points, or 1.58 percent, to 15,907.13, the S&P 500 gained 29.53 points, or 1.61 percent, to 1,858.61 and the Nasdaq Composite added 62.06 points, or 1.45 percent, to 4,328.89.
Europe's broad FTSEurofirst 300 index added 2.8 percent, at 1,229.55.
Gains of more than 2 percent in the S&P energy index were also a boost. Crude oil jumped on prospects for a coordinated production cut sparked by comments from the energy minister of OPEC member United Arab Emirates.
U.S. crude prices were last up $2.82 at $29.03 per barrel after hitting $26.05 a barrel on Thursday, lowest in more than 12 years. Brent crude was last up $2.27 at $32.33 a barrel.
Safe-haven 10-year U.S. Treasury notes were last down 22/32 in price to yield 1.72 percent after hitting 1.53 percent on Thursday, which marked their lowest yield since Aug. 2012.
The dollar rose against a basket of major currencies after the U.S. retail sales data. The dollar index, which measures the greenback against a basket of six rivals, was last up 0.53 percent.
Spot gold was last down $10.95 at $1,235.56 an ounce but was still set for its best week in four years.
Additional reporting by Dion Rabouin and Tariro Mzezewa in New York, Libby George in London and Aastha Agnihotri in Bengaluru; Editing by Nick Zieminski