GLOBAL MARKETS-Crude gains on output forecast; U.S. stocks fall

* Dollar eases on diminishing U.S (Other OTC: UBGXF - news) . rate hike expectations

* Treasury debt prices rise on expected delayed Fed rate

hike

* European stocks rise on Fed outlook, U.S. down on biotechs

* Brent oil rises above $50 a barrel on U.S. crude forecast

(Adds close of U.S. markets)

By Herbert Lash

NEW YORK, Oct (HKSE: 3366-OL.HK - news) 6 (Reuters) - Crude oil surged 5 percent on

Tuesday after the United States cut output forecasts, while

global equity markets mostly rose on expectations the Fed will

not raise interest rates this year, though Wall Street fell on

slumping biotech stocks.

News (Other OTC: NWSAL - news) that non-OPEC producer Russia and key OPEC member Saudi

Arabia discussed the oil market last week helped boost oil

prices. The countries plan to continue exchanging views on

demand, production and shale oil, Russian Energy Minister

Alexander Novak told reporters.

A weakening dollar also added support for oil, while the

U.S. Energy Information Administration projected in a monthly

forecast that the country's crude output will fall through

mid-2016.

"Steeper U.S. production declines over the near term have

created a bid for oil prices," said Chris Jarvis, analyst at

Caprock Risk Management in Frederick, Maryland.

Brent, the global benchmark for crude, rose $2.67 to

settle at $51.92 a barrel. West Texas Intermediate, the

U.S. crude benchmark, settled $2.27 higher at $48.53.

European shares rallied, extending strong gains from the

previous session on expectations the U.S. and European central

banks will maintain equity-friendly monetary policy in the

coming months.

Large volume in the U.S. stock market's rally on Monday

suggests that at least the downside momentum is now broken, said

Bruce Bittles, chief investment strategist at Robert W. Baird &

Co in Sarasota, Florida.

"The markets are playing off the fact that there's a strong

likelihood the market has now made a bottom, and we at some

point will begin a year-end rally," Bittles said.

The pan-European FTSEurofirst 300 closed up 0.65

percent, while MSCI (NYSE: MSCI - news) 's all-country world stock index

rose 0.28 percent, aided by a 1 percent gain

earlier in Tokyo.

A 7.7 percent gain in shares of DuPont after CEO

Ellen Kullman said she would step down helped the Dow advance.

But continued deterioration in biotechs kept a damper on U.S.

stocks, said Ryan Larson, head of U.S. equity trading at RBC

Global Asset Management in Chicago.

The Nasdaq Biotech index fell 3.8 percent, with 126

of its 142 constituents trading lower.

"It (Other OTC: ITGL - news) 's really hurting the growth trade, the momentum trade

today, and that's apparent in the smaller Russell indices,"

Larson said.

The Russell 2000 index was off 0.70 percent, while

the Dow Jones industrial average closed up 13.76 points,

or 0.08 percent, to 16,790.19. The S&P 500 fell 7.13

points, or 0.36 percent, to 1,979.92 and the Nasdaq Composite

lost 32.90 points, or 0.69 percent, to 4,748.36.

The U.S. dollar slipped 0.69 percent against major

currencies on continued expectations the Fed will not this year

hike rates for the first time in almost a decade.

Commerce Department data showing the largest expansion in

the U.S. trade deficit in five months in August reinforced

expectations the Fed would delay hiking rates until next year. A

weak U.S. jobs report on Friday has also driven such

expectations.

"People are still very skeptical about the Fed raising rates

this year," said Thierry Albert Wizman, interest rates and

currency strategist at Macquarie Ltd in New York.

The dollar was last down 0.2 percent against the yen at

120.21 yen. The euro was last up 0.8 percent against the

dollar at $1.1274.

U.S. Treasuries prices also gained on the increase in the

U.S. trade deficit, which reinforced the view of slowing global

demand.

Benchmark 10-year Treasuries notes were up 6/32

in price to yield 2.0350 percent.

Yields on 10-year German Bunds, the benchmark

for euro zone borrowing costs, rose 2 basis points to 0.59

percent.

(Additional reporting by Barani Krishnan in New York; Reporting

by Herbert Lash; Editing by Nick Zieminski and James Dalgleish)