Dollar and U.S. stocks rise

By Herbert Lash

NEW YORK (Reuters) - The U.S. dollar and global stocks moved higher on Thursday, spurred by a rebound in financial shares after a sharp two-day sell-off and optimism that declining commodity prices will ease inflation pressures.

Oil fell to $115 a barrel as economic weakness in Europe underscored the threat to global demand for crude, and on hopes a shaky cease-fire between Russia and Georgia would hold.

Rising oil prices earlier in the day helped energy and mining shares in Europe. But sliding oil prices later gave Wall Street optimism that the recent drop in the price of key commodities will ease inflation strains in the long run.

"Crude oil's pulling back has taken the pressure out of the inflation picture. This translates to a natural rebound in equities," said Craig Peckham, equity trading strategist at Jefferies & Co in New York.

Financial shares jumped after an 8 percent slide the past two sessions in the U.S. sector, partially on the view that the latest U.S. government data showed inflation pressures may have peaked so the Federal Reserve will keep interest rates steady.

U.S. and European data suggested policy-makers have more scope to leave respective benchmark interest rates unchanged or even lower them. That would help banks reverse some of their recent losses.

In Europe, UBS (UBSN.VX) rose 3.6 percent, Standard Chartered (STAN.L) gained 3.7 percent and BNP Paribas (BNPP.PA) gained 1.2 percent.

In the United States, shares of Bank of America (BAC.N) were the top boost to the S&P 500, with a gain of 4.57 percent. Wells Fargo (WFC.N) and JPMorgan Chase <JPM.N also drove the index higher, rising 3 percent and 2.44 percent, respectively.