GLOBAL MARKETS-U.S., Europe shares rise with oil prices; dollar gains

* S&P 500 gains after two days of losses

* European shares gain after four days of losses

* Oil prices rally 3 percent, boosting shares

* Strong European earnings reports boost region's shares

* Dollar gains ahead of Friday's U.S (Other OTC: UBGXF - news) . jobs data (Updates to open of U.S. markets; changes byline, dateline, pvs LONDON)

By Sam Forgione

NEW YORK, May 5 (Reuters) - U.S. and European stock markets recovered on Thursday after a rebound in oil prices boosted energy shares, with some strong European earnings reports also supporting stocks in the region, while the dollar rose ahead of Friday's U.S. employment data.

Oil prices jumped 2 percent as a huge wildfire near Canada's oil sands region and escalating tensions in Libya stoked concerns among investors of a near-term shortage in supply.

The rally in crude prices helped lift the S&P energy index 1.4 percent, making it the lead gainer among the 10 major S&P sectors. Investors awaited monthly jobs data on Friday, which is expected to show nonfarm payrolls likely rose by 202,000 in April and the unemployment rate held at 5 percent.

Firmer oil prices also lifted shares of major European oil producers, while encouraging European earnings updates from firms including telecoms group BT and oil company Repsol (Amsterdam: RP6.AS - news) helped prop up the stock market.

Thursday's gains in the S&P 500 stock index came after two straight days of losses, while the gains in European shares came after four days of losses.

"What we're seeing is a bit of a relief rally from oversold levels," said Adam Sarhan, chief executive of Sarhan Capital in New York.

MSCI (NYSE: MSCI - news) 's all-country world equity index was last down 0.24 points, or 0.06 percent, at 395.99.

The Dow Jones industrial average was last up 49.38 points, or 0.28 percent, at 17,700.64. The S&P 500 was last up 4.74 points, or 0.23 percent, at 2,055.86. The Nasdaq Composite was last up 8.53 points, or 0.18 percent, at 4,734.17.

Europe's broad FTSEurofirst 300 index was last up 0.31 percent at 1,306.8.

Brent crude was last up 89 cents, or 1.99 percent, at $45.51 a barrel. U.S. crude was last up $1.05, or 2.4 percent, at $44.83 per barrel.

The U.S. dollar rose against a basket of currencies for a third day as traders closed out profitable bets against the greenback before Friday's U.S. jobs report.

The dollar index, which measures the greenback's value versus six currencies, rose to its highest level in a week of 93.862 after falling to its lowest in over 15 months on Tuesday of 91.919.

The dollar also rose against the yen to a six-day high of 107.49 yen after hitting an 18-month low on Tuesday of 105.52 yen.

"We are seeing some short covering lifting the dollar against most major currencies," said Ron Simpson, director of currency research at Action Economics in Tampa, Florida. "You can largely attribute it to tomorrow's nonfarm payrolls report."

U.S. Treasury yields were little changed as the number of Americans filing for unemployment benefits rose unexpectedly but remained within the range of a strong labor market, leaving investors with no clear signals ahead of the U.S. jobs report.

Benchmark 10-year U.S. Treasury yields were last at 1.78 percent.

Spot gold prices fell $2.51 or 0.20 percent, to $1,276.60 an ounce. (Additional reporting by Tanya Agrawal in Bengaluru and Dion Rabouin and Richard Leong in New York; Editing by Nick Zieminski)