* Oil jumps on Saudi-Russia comment on output
* Aussie, Canadian dollars hit two-week highs
* Worries over cyber attack relegated to background
* European stock markets mixed after strong start, Wall St
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, May 15 Oil's strongest run of gains
since December cushioned the hit to stock markets on Monday from
a successful missile test by North Korea and a cyber attack that
locked 200,000 computers in more than 150 countries.
Asian shares hit a two-year high overnight
and Wall Street was set to open higher, while Europe's
major markets were mixed after hitting long-term highs in early
In Europe, another victory for Angela Merkel's conservatives
in a regional election in Germany pushed Frankfurt's DAX to a
record high in early trade.
But nerves about the pace of Chinese and U.S. growth, and
odd trends generated by record low volatility globally were
lingering in the background and the DAX was down 0.1 percent on
the day by 1200 GMT.
"The main story of the day is the commodity market as the
oil price rises, dragging up other commodity prices," said
Kathleen Brooks, research director at City Index in London.
"This is also having a knock-on affect on the commodity
currencies, with the CAD, AUD, NZD and NOK, the top performers
in the FX space this morning."
Saudi Arabia and Russia, the world's two top oil producers,
said on Monday an output cut needed to be extended for a further
nine months until March 2018 to rein in a global crude glut,
driving oil prices almost 3 percent higher.
That made the past seven days the strongest for the crude
market since December and spurred gains for copper and
iron ore as well as in commodity-linked currencies
including the Australian and Canadian dollars and Russia's
Oil traders were surprised by the strong wording of the
announcement, although it remained to be seen whether all
countries participating in the deal would agree with the
"Extending the cuts until March 2018 would take account of
the fact that demand in the first quarter of a year is lowest
for seasonal reasons," said Carsten Fritsch, analyst at
"That said, we are sceptical about Russia's willingness to
actively participate in any extended cuts."
At a time when central bank policymakers are wondering if
they have successfully got consumer prices moving upward again,
two weeks of fuel price rises also hint at another boost to
headline rates of inflation in the months ahead.
That in the past has been a mixed blessing for markets and
the global economic outlook, and gains for European stocks were
neither large nor across the board, with Paris shares drifting
The past fortnight has seen the emergence of some broad
concerns over the pace of economic growth in the United States
and China, and U.S. data on Friday was read as weak.
Gains in U.S. Treasury yields from the oil bounce were less
than those for their German equivalents and the euro was a third
of a cent stronger against the dollar.
"The shadow of Friday's softer U.S. CPI and retail sales
data hangs over markets this morning," Societe Generale analyst
Kit Juckes said in a note to clients.
"The inability of the dollar to gain more ... reflects the
changing global landscape as recovery elsewhere drives rates and
yields a bit higher. With a thin U.S. data calendar, there's not
much to propel yields or the dollar back up."
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Jamie McGeever, Dhara Ranasinghe,
Danilo Masoni, Helen Reid and Alex Lawler; Editing by Andrew