Oil bounced above $74 on Tuesday, nearly recouping earlier losses in line with equity markets ahead of a spate of U.S. economics data.

U.S. crude was 4 cents up at $74.41 a barrel by 1211 GMT (8:11 a.m. EDT), having fallen to as low as $73.41 earlier.

On Monday, it hit $74.81, the highest intraday prices since mid-October.

Brent crude was down 57 cents at $73.69, trimming its earlier loss by nearly $1.

The drop is probably due to the decline in equities markets today, said Tetsu Emori, a fund manager at Tokyo-based Astmax Co Ltd.

European shares turned flat after falling earlier in the day, with Wall Street set to open higher.

Commodities markets have closely tracked equities indexes in recent months. Dealers view stocks as an indicator of economic performance, which would boost or reduce energy and commodities demand.

Falls in Asian shares pressured oil prices earlier in the day.

The Shanghai stock index plunged more than 5 percent after Premier Wen Jiabao said Beijing would keep its monetary policy loose as the economy faces new difficulties, including trouble boosting domestic consumption.

On a brighter note, official data showed Germany, Europe's biggest economy, had exited recession in the second quarter, growing by 0.3 percent..

A Reuters survey of more than 30 analysts showed oil prices would average above $73 next year.

The analysts raised their consensus forecast for the fifth straight month, on expectations the strength of economic improvement and higher fuel demand would spur a sustained oil price rally.

Investors will watch for U.S. housing, consumer confidence and retail sales data due later on Tuesday for pointers on the health of the world's biggest economy.

The oil market's focus will also shift to weekly U.S. oil inventory data.

Analysts in a Reuters survey forecast a 900,000 barrel drop in U.S. crude inventories. Gasoline inventories were forecast to fall, while middle distillate stocks, including heating oil, were seen increasing.

Last week, U.S. crude stocks posted a big fall, as refiners boosted operations and imports dropped sharply to hit their lowest level in 11 months, U.S. Energy Information Administration data showed.

Data from the American Petroleum Institute will be released at 2030 GMT (4:30 p.m. EDT) on Tuesday, and the equivalent U.S. government data is due out on Wednesday.

(Additional reporting by Ramthan Hussain in Singapore; editing by Sue Thomas)