Oil rose more than $3 per barrel to above $51 on Thursday as rising equities markets bolstered sentiment during a G20 summit which investors hoped would deliver measures to restore global growth.

European shares rose sharply on expectations the economic downturn was moderating, with investors training their sights on the G20 leaders' meeting in London.

Asian stocks earlier shot to a three-month high with Tokyo's Nikkei <.N225> closing up 4.4 percent.

U.S. light crude oil for May delivery rose to a high of $51.53 per barrel, up $3.14, before slipping back to trade around $51.30 by 1248 GMT (8:48 a.m. EDT). London Brent crude was up $3.30 at $51.74 a barrel.

It's managed to pop back above $50 which could be giving the market a bit of a boost from a technical perspective, said Tony Machacek, oil broker at Bache Commodities in London.

There seems to be a G20 factor -- the stock markets are strong and the dollar is weaker. That is also helping the market.

Oil has fallen nearly $100 from a record high above $147 in July 2008 as the economic downturn has dented global energy demand, particularly in the United States.

The number of U.S. workers filing new claims for jobless benefits unexpectedly rose to its highest level in over 26 years last week and so-called continued claims jumped to a record high in March, according to Labor Department data on Thursday.


Initial claims for state unemployment insurance benefits rose 12,000 to a seasonally adjusted 669,000 in the week ended March 28, the highest since the week ending October 2, 1982, from an upwardly revised 657,000 the week before.

The head of the International Energy Agency said on Thursday the agency was likely to cut its global oil demand forecasts significantly as more bleak economic data emerged.

The possibility for downward revision will be high, Nobuo Tanaka, the agency's executive director, told Reuters in an interview on the sidelines of an energy conference.

We now have data from not only the IMF but the OECD. They all look gloomy. Inevitably, the possible downward revision can be significant but I cannot say how big.

The euro jumped against the dollar on Thursday after the European Central Bank cut interest rates by a smaller-than-expected 25 basis points to 1.25 percent. Markets had expected a 50 basis point cut.

The latest draft of the G20 communique, obtained by Reuters, called for an increase of IMF resources by $500 billion, which would make available total funding of $750 billion, G20 sources said on Thursday.

The communique said leaders would submit large hedge funds to supervision for the first time and enhance regulation through a new agency and a beefed-up IMF.

Investors were looking ahead to U.S. non-farm payrolls data on Friday, which could put downward pressure on oil prices.

Forecasters polled by Reuters expect non-farm payrolls to show a fall of 650,000 for March, similar to the 651,000 shed in February.

(Additional reporting by Alex Lawler in London and Osamu Tsukimori in Tokyo; editing by James Jukwey)