Oil prices fell over 2 percent toward $50 a barrel on Monday, paring some of the previous session's near 4 percent gain, on fears of a global flu pandemic after an outbreak of swine flu in Mexico.

The impending release of U.S. bank stress test results, a Federal Reserve meeting and a flood of earnings due later this week also heightened investor caution.

U.S. crude oil futures for June delivery fell $1.08 to $50.47 a barrel by 0033 GMT, erasing some of Friday's gains of $1.93 that brought the contract to settle at $51.55.

London Brent crude fell 77 cents to $50.90.

The swine flu in Mexico is also causing some risk aversion in the markets and is already weighing on the Dow, said Ben Wesmore, a commodities analyst at the National Australia Bank.

Investors are taking caution ahead of a flood of corporate earnings and economic data this week.

Worries of a global swine flu, which first emerged in Mexico, grew over the weekend with new infections in the United States and Canada discovered on Sunday, and as millions of Mexico hid indoors to avoid a virus that has already killed up to 81 people.

Reminiscent of the Asian bird flu earlier in the decade, a swine flu outbreak could become a major setback to the already fragile state of the world economy, research firm Informa Global Markets said in a report.

The U.S. dollar fell to its lowest in a month against the yen as worries about the spread of the flu from Mexico sent investors into perceived safe-haven currencies such as the yen and the Swiss franc.

World finance leaders on Saturday agreed there was a break in the clouds of the economic storm but said more measures were needed to ensure an end to the global recession, while a top U.S. official said the sense of unremitting freefall in the U.S. economy has ended.

Oil prices, which have largely stagnated around $50 a barrel for most of this month, have been tracking equities closely in recent weeks as investors looked to stocks for signs of an economic recovery that could revive demand for fuel.

Gulf oil producers said on Sunday they can tolerate moderate crude prices for longer to help revive global growth, but shared a concern with consumer nations that a prolonged period of low prices could sow the seeds of a future fuel price spike.

OPEC Secretary General Abdullah al-Badri separately told Reuters that world oil prices could recover to $60 per barrel by the end of the year if the global economy picks up, and it was too soon to judge if fresh output cuts would be needed when the cartel next meets on May 28.

Crude oil speculators on the New York Mercantile Exchange shifted to a net short position in the week to April 21, according to data from the U.S. Commodity Futures Trading Commission released on Friday.

(Editing by Ben Tan)