Oil rises towards $50 buoyed by equities

By Joe Brock

LONDON (Reuters) - Oil rose towards $50 a barrel on Friday, rebounding from a three and half year low and buoyed by rallies in Europe and Asian equities on talk that China may cut interest rates later in the day.

Oil has fallen by 11 percent this week taking it close to a $100 drop from its July record high and setting it on course for the steepest weekly decline since the week of October 6.

U.S. light crude for January delivery rose 35 cents to $49.77 a barrel at 9:20 a.m. British time, its first increase after five straight sessions of losses. Earlier it fell to $48.25, the lowest in three and a half years.

London Brent crude gained 58 cents to $48.66 a barrel.

Asian stock markets bounced from a five-year low touched earlier on Friday as a variety of talk such as China cutting interest rates later in the day prompted investors to cover short positions before the weekend.

The buying continued in Europe as mining stocks gained on higher precious metals prices and banks rallied after sharp fall in previous sessions.

"The move through $50 on January U.S. crude yesterday may have been the final push to the downside and if equities can improve a bit we could see that all the considerable amount of bearish news is finally priced in," said Christopher Bellew at Bache Commodities.

STORING OIL