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Global stocks rise as China fears ease; oil rebounds

Traders work on the floor of the New York Stock Exchange in New York, September 2, 2015. REUTERS/Brendan McDermid

By Caroline Valetkevitch

NEW YORK (Reuters) - Global stock indexes rose on Wednesday, helped by reports of brokerage measures in China to invigorate the country's battered markets, while oil bounced from earlier losses to end nearly 2 percent higher.

The S&P 500 jumped 1.8 percent, rebounding from Tuesday's steep losses. An upward revision in U.S. productivity data and a Federal Reserve report saying U.S. labor markets were tight enough to fuel small wage gains in some professions in recent weeks boosted sentiment.

Rallying equities pulled crude oil up from lows in another volatile session for the energy market.

Overseas, nine Chinese brokerages pledged to buy more than 30 billion yuan of shares, according to the China Securities Journal. That eased investor fears that Beijing may be intensifying a trading crackdown.

The news steadied global markets that have been rattled in recent weeks by concerns about slowing growth in China, the world's second biggest economy.

"What we're seeing today is not a recovery. It's market volatility, it's nervousness, it's an inability to call the direction of the market," said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.

"Through now and October we're going to see a lot more of this, a lot of volatility."

The CBOE Volatility index, Wall Street's "fear gauge," dipped 11 percent but stayed in territory not seen since 2011 after Standard & Poor's cut its credit rating on the United States for the first time.

The Dow Jones industrial average (.DJI) rose 293.03 points, or 1.82 percent, to 16,351.38, the S&P 500 (.SPX) gained 35.01 points, or 1.83 percent, to 1,948.86 and the Nasdaq Composite (.IXIC) added 113.87 points, or 2.46 percent, to 4,749.98.

The S&P 500 posted its worst monthly drop in three years in August and is down 8.5 percent from its all-time high in May.

European equities (.FTEU3) ended 0.2 percent higher, while MSCI's all-country stock index rose 0.8 percent.

Brent October crude rose 1.9 percent to settle at $50.50 a barrel, having recovered from a $47.74 low. U.S. October crude (CLc1) rose 1.9 percent to settle at $46.25, after falling as low as $43.21 in the session.

On Tuesday, oil slid 8 percent, ending a 25 percent three-session surge of frenzied short-covering.

The dollar rose as global stock markets steadied, and as U.S. hiring data encouraged speculation that the Fed will raise interest rates at its policy-setting meeting later this month.

The dollar index (.DXY), a measure of six major currencies' value against the greenback, was last up 0.40 percent and had added to gains when ADP reported that U.S. private payrolls increased 190,000 last month.

The government's more comprehensive non-farm payrolls report is due on Friday, the last monthly report before the Fed meets on Sept. 16-17.

In another report on Wednesday, U.S. data showed nonfarm productivity increased at its strongest pace in 1-1/2 years in the second quarter, keeping wage inflation subdued for now.

The combination of more demand for workers and worries about Chinese economic growth underscores the challenge faced by the Fed at its upcoming meeting, when it may decide to raise interest rates for the first time since 2006.

Prices of safe-haven U.S. Treasuries slipped on the greater risk appetite, with long-dated prices falling the most on continued speculation of foreign central bank selling.

Benchmark 10-year Treasuries were last down 5/32 in price to yield 2.19 percent from 2.17 percent late Tuesday. U.S. 30-year Treasuries were last off 18/32 to yield 2.96 percent from 2.93 percent late Tuesday.

In the precious metals market, gold eased as the rebound in stocks and the dollar arrested a four-day rise. Spot gold (XAU=) was down 0.5 percent at $1,134 an ounce.

(Additional reporting by Noel Randewich in San Francisco and Robert Gibbons in New York; Editing by Meredith Mazzilli and Leslie Adler)