London (AFP) - Global stock markets rebounded Wednesday and oil prices surged following Omicron-driven losses on the eve of a key output meeting of OPEC and its allies.

European equities surged, with Frankfurt and Paris rising more than two percent, mirroring the rebound in most Asian bourses, as dealers temporarily set aside news of record-high eurozone inflation.

Wall Street was also higher in late morning trading, with the Dow climbing 1.3 percent.

Oil jumped more than three percent, while the dollar was mixed following earlier gains it made against major rivals as the Federal Reserve signalled it may remove its vast financial support measures at a quicker pace than first flagged.

- Rollercoaster ride -

Investors were facing a rollercoaster week as they track the mutant Omicron strain, whose emergence last Friday darkened the economic outlook, sparked fresh Covid restrictions and ravaged most markets.

Traders remain uncertain over its impact on the world economy and the likelihood of fresh lockdowns, as scientists rush to investigate the variant and urge speedy vaccination drives.

“An ugly combination of a Covid-related knock to growth, reduction in central bank support and sustained inflation is not a recipe for strong stock markets,” said AJ Bell investment director Russ Mould.

“However, some traders appear to have decided the weakness has gone far enough for now as they emerged to bid up stocks and oil.”

Patrick O’Hare at Briefing.com said that “a stock market that has been blessed with low interest rates got a little rattled yesterday by the thought that the Fed may start putting one or two less spoonfuls of sugar in the punch.”

He added that the rebound is a sign that investors have realised that nonetheless “the policy rate is still expected to be extraordinarily low”.

Meanwhile, OPEC and the oil cartel’s allies hold a key output meeting on Thursday, having resisted US-led pressure to step up production to bring down surging energy prices, while emergence of the new variant has complicated the equation.

The rebound in oil prices is likely a sign many traders believe OPEC+ will delay a planned increase in output of 400,000 barrels.

- ‘Economy threat’ -

The OECD grouping of major industrialised nations on Wednesday warned that Omicron threatens the global economic recovery, as it lowered the 2021 growth outlook and called for a swifter vaccines rollout.

The global economy is now expected to expand by 5.6 percent this year, down from a previous forecast of 5.7 percent, the OECD said in its latest outlook.

Top drug makers have offered differing opinions on their vaccines’ efficacy against Omicron.

Markets took a tumble on Tuesday after Moderna head Stephane Bancel told the Financial Times that existing vaccines might not be as effective against the new strain.

However, other drugmakers later said it was far too early to make a judgement.

The boss of BioNTech, which made a Covid shot with Pfizer, said it was likely people would be protected against severe symptoms.

“If by this time next week the medical gurus have concluded that existing vaccines are sufficient and/or the Omicron virulence is milder than the current Delta variant, the market should bounce strongly,” said strategist Louis Navellier.

“Conclusions the other way could weigh heavily on the current bullish outlook for 2022,” he added.

- Key figures around 1630 GMT -

New York - Dow: UP 1.3 percent at 34,939.73 points

EURO STOXX 50: UP 2.9 percent at 4,182.46

London - FTSE 100: UP 1.6 percent at 7,168.68 (close)

Frankfurt - DAX: UP 2.5 percent at 15,472.67 (close)

Paris - CAC 40: UP 2.4 percent at 6,881.87 (close)

West Texas Intermediate: UP 3.2 percent to $68.31

Brent North Sea crude: UP 3.3 percent at $71.50

Tokyo - Nikkei 225: UP 0.4 percent at 27,935.62 (close)

Hong Kong - Hang Seng Index: UP 0.8 percent at 23,658.92 (close)

Shanghai - Composite: UP 0.4 percent at 3,576.89 (close)

Euro/dollar: DOWN at $1.1326 from $1.1338 at 2200 GMT on Tuesday

Dollar/yen: DOWN at 112.99 yen from 113.17 yen

Pound/dollar: UP at $1.3319 from $1.3299

Euro/pound: DOWN at 85.05 pence from 85.25 pence

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