Stocks dip on growth concerns, but oil rallies

By Chuck Mikolajczak

NEW YORK (Reuters) - Global equity markets outside the U.S fell on Thursday as concerns about the economies of China and Japan cast a cloud over the world growth picture, though Wall Street rose, due in part to a rebound in oil prices.

The FTSEurofirst 300 index of top European shares snapped a three-day rally to close down 1.4 percent, following a disappointing session in Asia.

Wall Street went against the grain with an advance as Apple shares rebounded and the rise in oil prices boosted the energy sector.

The dollar was was down 0.53 percent at 95.50 against a basket of major currencies as investors mulled whether recent volatility, amid a slowdown in China and other world markets, would prevent the U.S. Federal Reserve from raising U.S. interest rates next week.

"The two questions are Chinese weakness and the Fed rate hike, obviously next week, we will know about the Fed," said Stephen Freedman, senior investment strategist at UBS Wealth Management America in New York.

"China is going to take some time for people to distinguish between an extended soft patch or somewhat more of a hard landing."

The Dow Jones industrial average rose 144.41 points, or 0.89 percent, to 16,397.98, the S&P 500 gained 18.17 points, or 0.94 percent, to 1,960.21 and the Nasdaq Composite added 56.32 points, or 1.18 percent, to 4,812.85.

The latest policy responses to signs of stuttering global growth came as the Reserve Bank of New Zealand cut its benchmark rate by 25 basis points and signaled more would follow if China's economy slows further. The Kiwi dollar was down 1.27 percent to $0.6305.

Risks concerning Chinese growth had already been highlighted as producer prices in China fell for a 42nd straight month and car sales dropped, highlighting the strains on the world's No. 2 economy.

MSCI's all-country world stock index advanced 0.19 percent.

Japan's main gauge of capital spending also unexpectedly fell for a second straight month, data from July showed, highlighting its economic struggles.

Tokyo's Nikkei fell 2.5 percent. Chinese stocks ended down also, falling more than 1 percent each. Hong Kong and Australian stocks both lost more than 2 percent.

The emerging market woes were not confined to Asia.

Standard & Poor's stripped Brazil of its investment-grade credit rating on Wednesday, further hampering President Dilma Rousseff's efforts to regain market trust and pull Latin America's largest economy from recession.

Financial markets are betting that Russia, South Africa, Turkey and Colombia could all be next in line for "junk" debt status. The Brazilian real tumbled to the lowest since 2002 and was last at 3.8441 per dollar.

MSCI's all-country gauge of Asia Pacific shares outside of Japan lost 1.3 percent while its emerging markets index lost 0.2 percent.

Brent crude oil, which has halved in price in little over a year, climbed 2.3 percent to $48.67 per barrel and WTI U.S. crude jumped 3.4 percent at $45.65 a barrel as strong U.S. demand for gasoline overshadowed increased crude inventories.

(Editing by Bernadette Baum)