By Herbert Lash
NEW YORK (Reuters) - Global equity markets rose on Wednesday, with European shares hitting eight-year highs on a $70 billion takeover bid by Royal Dutch Shell (L:RDSa), but shares pared gains after the largest U.S. crude inventory build since 2001 slammed oil prices.
Equity markets briefly sold off after U.S. Energy Information Administration data showed stockpiles of U.S. crude surged nearly 11 million barrels last week in their largest weekly build since March 2001.
Shell's bid for energy firm BG Group (L:BG), the first major merger in the energy industry in more than a decade, boosted European shares as energy stocks that had tumbled on the plunge in oil and gas prices since last summer rallied.
The STOXX energy sector index (SXEP) in Europe, which rose as much as 6.1 percent, closed up 2.45 percent, while the pan-European FTSEurofirst 300 index (FTEU3) of leading regional shares fell 0.04 percent to 1,611.68.
"The sector has been ripe for consolidation given the bearish outlook for oil prices," said Saxo Bank trader Andrea Tueni. "We could see other takeovers in the industry in the coming weeks and months."
Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey said Shell's bid is a big deal for a hard-hit sector that has been the weakest part of the equity market. But U.S. energy shares lagged, with oil super-majors Exxon Mobil (N:XOM) and Chevron (N:CVX) down 1.7 percent and 1.6 percent, respectively.
"What people are really waiting for are earnings, which either will give support for the next level or lead to a sell-off of sorts," Meckler said.
The blended estimate for U.S. first-quarter corporate earnings growth is a negative 2.8 percent, according to Thomson Reuters data, but excluding the energy sector, the earnings growth estimate is up 5.4 percent.
The Dow Jones industrial average (DJI) rose 22.96 points, or 0.13 percent, to 17,898.38. The S&P 500 (SPX) gained 4.1 points, or 0.2 percent, to 2,080.43 and the Nasdaq Composite (IXIC) added 33.16 points, or 0.68 percent, to 4,943.39
MSCI's all-country world index (MIWD00000PUS), which measures equity performance in 46 countries, rose 0.26 percent.
The dollar retreated after the Bank of Japan kept monetary policy unchanged, following the greenback's near three-week high against the yen on Tuesday.
The greenback initially fell ahead of the release of Federal Reserve minutes at 2 p.m. (1800 GMT) and the start of a U.S. earnings season that could show the negative impact of a strong currency and delay a long-expected rate hike by the Fed.
The dollar shed 0.27 percent to 119.94 yen
Oil prices fell below $58 a barrel as industry data showed a larger-than-expected weekly increase in U.S. stockpiles and as Saudi Arabia reported record output in March.
Brent May crude
Nervous investors drove safe-haven German Bund yields close to record lows on concerns over Greece's ability to resolve its debt crisis.
German 10-year yields
U.S. government bond prices fell, with the yield on the 10-year Treasury note (US10YT=RR) down 8/32 in price, pushing their yield up 1.9230 percent.