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* Global stocks, Brent buoyed by steps to safeguard banks
* U.S. private-sector jobs report adds to optimism
* Euro rebounds, cheered by Merkel comments on banking
* In bad sign, euro zone private-sector activity contracts (Adds fresh prices)
By Herbert Lash
NEW YORK, Oct 5 (Reuters) - Global stocks and oil prices surged on Wednesday on optimism European authorities are moving to prop up the region's banking sector and after U.S. data showed the economy is still growing, albeit slowly.
The euro also rebounded late in the session after Germany said it is ready to help its own banks and further opened the possibility of using a regional bailout fund to help strengthen the euro zone banking system. For details, see [ID:nB5E7KS06Z]
The euro
Risk aversion eased after data on the U.S. services sector and private-sector business activity reassured investors fearing recession. The reports helped offset concerns on data that suggested Europe is sliding into recession.
Wall Street rallied and European stocks jumped more than 3 percent, pushed higher by banking shares. Brent crude bounced more than 2 percent to over $102 a barrel and U.S. futures for West Texas Intermediate jumped 5 percent.
"The market is getting a little more confident that policy makers are more serious about tackling the problems," said Richard Batty, strategist at Standard Life Investments, which has $245 billion of assets under management.
The Dow Jones industrial average <.DJI> was up 66.08 points, or 0.61 percent, at 10,874.79. The Standard & Poor's 500 Index <.SPX> was up 12.01 points, or 1.07 percent, at 1,135.96. The Nasdaq Composite Index <.IXIC> was up 42.22 points, or 1.76 percent, at 2,447.04.
The benchmark S&P 500 index in the United States had fallen 10 percent over the past six sessions, but staged a sharp rebound late on Tuesday after earlier briefly dipping into bear territory. European shares had tumbled nearly 5 percent the previous three sessions.
In Europe, the FTSEurofirst 300 <.FTEU3> index of top European shares closed up 3.3 percent at 916.62 points. MSCI's all-country world index <.MIWD00000PU> rose 1.7 percent to 276.73.
Investor confidence improved after European finance ministers agreed to safeguard banks as concerns about a Greek default grew, while German Chancellor Angela Merkel said the German government was ready to capitalize its banks if needed. [ID:nL5E7L419D][ID:nB4E7KT004]
While it was "helpful to see a road map" that could give investors a better idea of what lies ahead in Europe, Batty said he was skeptical until he saw a "concrete plan in place."
Shares of Belgian-French financial group Dexia
Conflicting statements from the International Monetary Fund spurred volatility in currency trading. An IMF official said the global lender could buy Spanish or Italian bonds alongside a euro zone bailout fund, but later backed away from his suggestion. [ID:nN1E7940Z1].
Oil jumped, snapping a three-day losing streak, on government data showing big drops in U.S. inventories and news of efforts to bolster European banks. [ID:nL3E7L42VF]
Brent crude
Enthusiasm remained in check, however, as surveys showed private-sector business activity shrank in the euro zone for the first time in two years last month as new orders dried up.
Charles Lieberman, chief investment officer of Advisers Capital Management, LLC in Hasbrouck Heights, New Jersey, said valuations suggest U.S. stocks, which are trading at 10.4 times forward earnings, are cheap. But Europe was still a concern.
"There remain questions about how it will all be resolved, and it is by no means certain that the resolution will come in a responsible way that won't cause market turmoil," he said.
The Institute for Supply Management said its U.S. services index dipped to 53.0 last month from 53.3 in August but employment in the vast U.S. services sector fell in September to its lowest level since April 2010.
U.S. Treasury debt prices slid as investors pared safe-haven holdings as traders bet on more stimulus from the U.S. Federal Reserve. [ID:nN1E7940LC]
The benchmark 10-year U.S. Treasury note