* Oil rebounds together with stocks, commodities
* Investors wary of possible Chinese rate rise, OPEC meeting
* Coming Up: U.S. Initial jobless claims; 1330 GMT
(Updates with new quotes, prices)
By Christopher Johnson and Una Galani
LONDON, Dec 9 (Reuters) - Oil prices climbed on Thursday
after two days of declines, up initially in tandem with equities
on renewed optimism about global economic growth, but later
paring gains as the dollar turned positive.
European shares hit a 26-month high on Thursday and Asian
markets closed higher, raised by expectations that economic
stimulus combined with U.S. tax cuts would boost consumption in
the United States, the world's biggest oil user. [] []
Benchmark U.S. light crude oil futures for January <CLc1>
traded 33 cents up at 88.61 at 1119 GMT after rising more than
$1 earlier on Thursday.
Oil thinned its gains as the dollar regained momentum and
recovered from an earlier weakness to be up around 0.3 percent
against a basket of currencies <.DXY>. A firmer dollar makes
assets more expensive for holders of other currencies.
Commerzbank's analyst Carsten Fritsch attributed the rise in
the oil price to a generally improving market sentiment which
was seeing a rise in stocks and other commodities with copper
hitting yet another all-time high.
"This short-term correction we saw yesterday was short-lived
too, back to bullish demand," he said.
U.S. crude prices touched a 26-month high of $90.76 earlier
this week but was pulled lower in the past two days partly
because of concerns that tax cuts could prompt the United
States to borrow more and boost its budget deficit.
ICE Brent crude <LCOc1> added 42 cents to $91.20.
The Standard & Poor's 500 Index on Wednesday closed at its
highest level since September 2008, while Japan's Nikkei average
on Thursday climbed to a fresh seven-month high. []
Traders and analysts said they were cautious ahead of a
possible Chinese interest rate rise and a meeting this weekend
of the Organisation of the Petroleum Exporting Countries, which
will look at its output targets.
OPEC appears unlikely to raise oil supply targets to cap an
oil price rally when it meets in the Ecuadorean capital Quito,
but could hint at the possibility of higher production later.
[]
"The question is if the oil prices rise well above $90 will
they (OPEC) say something about it. Saudi Arabia recently said
prices up to $90 are comfortable but not above $90," said
Fritsch.
CAUTION
China is widely expected to raise rates soon.
"We would be cautious going into next week, with the very
real possibility that the Chinese may move on the rate front,"
said Edward Meir, oil analyst at brokers MF Global.
"We do not think that this move is completely discounted
yet, and should it occur, it will likely cause further weakness
in Chinese equity markets, which is bound to spill over into
commodities."
A report that inflation in China in November was lower than
expectations of 4.7 percent in a Reuters poll also reassured
markets that an interest rate increase by the world's No.2 oil
consuming economy may not be in the offing. []
A bigger-than-expected 3.8-million-barrel drop in U.S. crude
stockpiles last week also contributed to the gain in prices.
[]
The oil market's attention was set to turn to U.S. initial
jobless claims later on Thursday, before Chinese trade data for
November comes out on Friday.
(Additional reporting by Alejandro Barbajosa in Singapore;
editing by Keiron Henderson)
