By Christopher Whittall 

A rally in oil prices helped steady markets in Europe and Asia on Friday, even as Brexit loomed in the background.

Brent crude oil prices were up over 2% at $68.05 a barrel on Friday. That put the global benchmark on track for its third straight day of gains after steep falls earlier in the week sent it into bear market territory, commonly defined as a 20% fall from a recent peak.

U.S. futures pointed to an 0.5% decline for the S&P 500 after the index rose 1.1% on Thursday to snap a five-session losing streak thanks to a rally in technology shares.

Investors in Europe remained sharply focused on the latest U.K. political developments following several resignations from Prime Minister Theresa May's government on Thursday. That caused European stocks and the British pound to sink as concerns grew that the U.K.'s plan to leave the European Union was unraveling.

The Stoxx Europe 600 was up 0.2% on Friday, buoyed by gains in mining and energy shares. The British pound also stabilized after there were no fresh resignations from the U.K. government, rising 0.2% against the dollar after notching its largest daily decline in over two years on Thursday. But in one ominous sign, investors sold U.K. bank stocks again, with shares in Royal Bank of Scotland PLC down 2.9% after falling nearly 10% on Thursday.

Brexit "will remain very important for U.K. assets," said Salmam Ahmed, chief investment strategist at Lombard Odier Asset Management. Markets will likely "put pressure" on U.K. politicians as they seek to come to an agreement on leaving the EU, he added.

U.S. markets largely shrugged off Thursday's political headlines in Europe, with most analysts seeing it as posing little risk to the broader global economy.

But investors still appear skittish, as evidenced by large intraday price swings in U.S. stock indexes in recent sessions. That volatility has come amid dramatic swings in oil prices, a slowdown in global growth, investors re-evaluating the outlook for U.S. technology firms and concerns that U.S. company earnings may have peaked.

Despite these headwinds, Mr. Ahmed said he doesn't expect a sharp and prolonged downturn in stocks given his forecasts for above-trend growth in much of the world next year.

"It's only been in very rare instances where risky assets go into a proper bear market without a recession," said Mr. Ahmed.

"The underlying strong fundamentals mean that the probability of a global recession next year is almost zero," he added.

In Asia, China's Shanghai Composite Index closed 0.4% higher, while Korea's Kospi index advanced 0.2%. Japan's Nikkei Stock Average fell 0.6%.

Bond markets were quiet Friday, with the yield on the 10-year Treasury note little changed at 3.115%, according to Tradeweb. Ten-year U.K. bond yields rose slightly after plunging in the previous session as local investors sought havens.

In currencies, the WSJ Dollar Index, which measures the buck against a basket of 16 other currencies, was flat.

Write to Christopher Whittall at christopher.whittall@wsj.com

(END) Dow Jones Newswires

November 16, 2018 06:46 ET (11:46 GMT)