Oil rises above $ 60 as Asian stocks rebound

SINGAPORE, Mar 6 (Reuters) Oil edged up above on Tuesday after sliding more than 2 percent a day ago as Asian equities and the dollar rose, spurring hopes for an end to the financial market slump dealers feared could hit energy demand.

U.S. crude gained 17 cents to .24 a barrel by 0715 GMT, having dropped .57 on Monday to touch a two-week low of .55. London Brent crude was up 20 cents to .74.

Asian shares rebounded, with Tokyo's Nikkei average snapping a five-day losing run to close 1.2 percent higher, and Hong Kong's Hang Seng index rose 2.1 percent, offering some hope that the worst of the declines may have run its course.

The dollar rebounded against the yen, up more than 1 yen from Monday's three-month low as the share price recovery helped limit a week-long sell-off in risky assets that has been worsened by the surge in the Japanese currency.

Oil markets initially proved immune to most of last week's stock market gyrations, rising every day but Friday, as a tightening U.S.

supply picture and the fear of disruption to Iran's exports countered the turmoil rocking other markets.

But they fell hard on Monday along with other riskier assets as the continued rise of the yen -- initially lifted by a flight from risk triggered by a fall in Chinese equities -- drove more speculators to unwind the carry trade that funded their bets.

In addition to the shift in money flows, some traders feared the extended decline in stocks coupled with lacklustre U.S. economic data and fears of defaults in the U.S. subprime mortgage market threatened to crimp oil demand in the top consumer.

''Oil prices... (are) reflecting the concerns over weaker equities markets and the implications for the economic outlook,'' Commonwealth Bank of Australia said in a daily report. ''A softening in international economic growth would also take a toll on oil demand.'' STOCKS IN FOCUS Oil traders are watching weekly oil data from the U.S. government due out on Wednesday as the expected a drop in gasoline stocks may provide support to the market.

Industry analysts polled by Reuters expect a 2.3 million-barrel draw in distillates stocks and a 1.7 million-barrel decline in gasoline inventories. Crude oil stockpiles were forecast to have risen by 2.1 million barrels Ministers of OPEC, which pumps about a third of global crude oil output, have said the group will not change its output levels after curbing exports by a total of 1.7 million barrels per day, if oil prices hold at current levels.

The group will meet on March 15.

Despite the recent retreat, oil prices remain near their highest in two months and well above their 20-month low in mid-January of under a barrel.

Traders are also keeping a wary eye on Iran. U.N. ambassadors from major powers began negotiations on Monday on a resolution that would intensify sanctions against Iran for its nuclear programme but agreement remained elusive.

REUTERS CS PM1505