Oil heads lower again; global stocks move higher

By Caroline Valetkevitch

NEW YORK (Reuters) - Oil prices resumed their decline on Tuesday after rallying the previous session, while world stock markets edged higher, with biotech shares gaining.

A bounce in oil prices on Monday from five-year lows had helped foster a broadly more positive tone in Asia, but both Brent and U.S. crude oil were down more than 1 percent in early U.S. trading on Tuesday. Brent crude oil has lost more than a third in price since June.

U.S. stocks were higher, with shares of Biogen Idec rising 6.8 percent and giving the S&P 500 its biggest boost after favorable data from the Phase III trial of its Alzheimer's drug. The NASDAQ biotech index was up 1.6 percent.

The S&P energy index was up 0.9 percent, though the index has fallen sharply with oil prices and is down 14 percent since June.

"The broader market should be able to weather this storm, but (the energy sector) will still take a hit," said James Liu, global market strategist for JPMorgan Funds in Chicago.

The Dow Jones industrial average was up 62.05 points, or 0.35 percent, at 17,838.85. The Standard & Poor's 500 Index was up 9.67 points, or 0.47 percent, at 2,063.11. The Nasdaq Composite Index was up 22.94 points, or 0.49 percent, at 4,750.29.

MSCI's global share index was up 0.2 percent. European shares were up 0.5 percent. Emerging market shares tracked by MSCI were down 0.03 percent.

In the energy market, Brent crude was last down 85 cents at $71.69 a barrel, while U.S. crude oil was down 90 cents at $68.10.

Behind the shock of the plunge in oil is a deeper debate about whether developed economies are slipping into a prolonged period of stagnation, or just coming out of the financial crises of the past five years more slowly than previously hoped.

IMF Managing Director Christine Lagarde said late on Monday that cheaper oil was a positive for the global economy. The drop has given a lift to travel companies and should have a positive impact on consumer spending.

DOLLAR GAINS

The dollar rose against a basket of currencies, helped by comments from two Federal Reserve officials who stressed the positive impact on the U.S. economy from a decline in oil prices.

Fed Vice Chairman Stanley Fischer and New York Fed President William Dudley said at separate events on Monday that soft oil prices would only temporarily dampen overall U.S. prices. The comments suggested the Fed was not letting energy markets distract it from lifting rates.

The dollar index was up 0.7 percent at 88.591.

U.S. Treasuries prices fell, pressured by institutional investors readying for a big corporate bond deal by leading retailer Amazon.

The 10-year Treasury note was last off 17/32 to yield 2.2782 percent.

(Additional reporting by Patrick Graham in London and Ryan Vlastelical in New York; Editing by Catherine Evans and Dan Grebler)