By Riva Gold 
   -- Crude oil rises as OPEC meets 
 
   -- Dow rises after eight straight losses 
 
   -- Biggest weekly outflows from EM equities since 2016 

A jump in oil prices helped boost stock markets Friday, but major indexes remained on track for weekly losses as escalating trade friction led investors to reassess the outlook for growth.

The Dow Jones Industrial Average jumped 145 points, or 0.6%, to 24606, rebounding after falling for an eighth-straight session Thursday, its longest streak of declines in more than a year. The S&P 500 added 0.3% and the Nasdaq Composite rose 0.3%.

U.S. crude oil jumped 3.3% to $67.73 a barrel after OPEC members tentatively agreed to a deal to join other big producers in adding around 600,000 barrels a day of oil to global markets. Ministers went into the Friday meeting with an official target of boosting production by one million barrels a day.

While higher oil prices can hurt consumers as they pay more at the pump, they also tend to support shares of energy producers and equipment providers and can drive business investment, analysts said.

Shares of Chevron and Exxon Mobil led gains in the Dow, rising 1.9% and 1.6%, respectively.

Despite the day's gains, most stock markets remained on track for sharp weekly losses. The Stoxx Europe 600 rose 0.8% Friday but was poised to end the week 1.3% lower, while the Dow was poised to lose 2.5% and the Shanghai Composite Index dropped 4.4%, its worst week since February.

The possibility that trade tensions could damage growth and hurt stocks has become more real to investors in recent sessions after President Donald Trump called for a fresh round of tariffs on $200 billion of Chinese goods.

German auto maker Daimler meanwhile issued an unexpected profit warning late Wednesday saying Chinese retaliatory import duties on vehicles built in the U.S. would hurt sales and earnings.

"We're starting to see some corporate impact to some of the rhetoric coming out of Washington," said Barbara Reinhard, head of asset allocation at Voya Investment Management. "Potentially targeting the auto sector has a far greater economic impact than anything that has been done so far."

As investors broadly shed risk, investors withdrew the biggest weekly amount from emerging-market equities, financials and investment-grade bond funds since 2016, according to Bank of America Merrill Lynch.

Japan's Nikkei Stock Average fell 0.8% Friday and 1.5% for the week, while Hong Kong's Hang Seng Index fell 3.2% for the week.

When it comes to trade risks, "I'm more worried about financial conditions tightening than the direct impact," said Thomas Costerg, economist at Pictet Wealth Management, referring to risks that the uncertainty causes stocks to fall, credit spreads to widen and business confidence to weaken.

"There is a risk that markets think things get out of control and China imposes non-tariff barriers [...] but I think we'll end up at a negotiated solution and the direct impact is limited, a bit like a tax on the U.S. consumer," he added.

On Friday, U.S. bank stocks rose after the Federal Reserve said Thursday that the largest U.S. banks were healthy enough to withstand a severe economic downturn.

Banks were also supported by higher government bond yields, which tend to boost lending income. Yields on 10-year Treasurys rose to 2.922% from 2.899% Thursday afternoon. Yields rise as prices fall.

Meanwhile, the dollar came under pressure as European currencies strengthened.

The euro was up 0.4% against the dollar after data showed business activity in the eurozone picked up for the first month in five.

"Politically, Europe is in a trickier spot than it has been for a while, but flash estimates tell us the first-quarter slowdown was probably somewhat of a temporary blip," said Tim Graf, head of macro strategy for EMEA at State Street Global Markets.

The British pound was up 0.2% against the dollar, adding to Thursday's gain after the Bank of England's chief economist Andy Haldane joined dissenters voting for a rate increase, pushing up expectations for a possible rate rise this summer.

Write to Riva Gold at riva.gold@wsj.com

 

(END) Dow Jones Newswires

June 22, 2018 09:58 ET (13:58 GMT)

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