* Oil climbs to around $99 a barrel after slide
* Europe rescues more banks; US, European shares rise
* Bush urges Congress to act on $700 billion bailout
(Recasts, updates prices, market activity, changes dateline,
previous LONDON)
NEW YORK, Sept 30 (Reuters) - Oil over $2 firmer on
Tuesday, trading at around $99 a barrel, after a fall of almost
10 percent in the previous session, as fears of a major
meltdown in financial markets eased.
U.S. crude <CLc1> was up $2.64 at $99.01 a barrel by 12:08
p.m. EDT (1608 GMT), after losing $10.52 on Monday to $96.37 --
the second biggest fall since April 23, 2003. London Brent
crude <LCOc1> rose $2.46 to $96.44.
U.S. shares <> rebounded after Wall Street's worst day
in 20 years, while European stocks <> set new highs for
the day.
The rebound suggested markets had fallen too far in
Monday's selloff after the U.S. Congress rejected a $700
billion financial sector rescue plan.
"We've been moving in tandem with how the equity markets
have performed," said Rob Laughlin of MF Global. "In terms of
the rally today, I think things were overdone last night across
many markets, including energy."
"I'm not suggesting the panic is over but I am suggesting
the scare tactics in some quarters have proven to be rather
overdone."
CRITICAL MOMENT
The U.S. House of Representatives on Monday voted 228 to
205 against a bailout plan that would have allowed the Treasury
to buy up toxic assets from banks. The unexpected rejection of
the plan sent stock markets sliding.
U.S. President George W. Bush said this was not the end of
the legislative process on the plan.
"We're at a critical moment for our economy and we need
legislation that addresses the troubled assets," he told
reporters at the White House. "Congress must act."
More evidence of distress in the financial sector emerged,
with Belgian-French financial services group Dexia <DEXI.BR>
getting a 6.4 billion euro ($9.18 billion) capital boost from
public shareholders.
Ireland offered to guarantee all bank deposits for two
years to improve banks' access to funds on international
markets, helping sentiment in the equity market.
Oil has fallen sharply from a record high of $147.27
reached in July on signs that high energy prices and the
financial crisis have cut into crude demand in the United
States and other industrialised nations.
In addition, oil has also been dragged down as investors,
who had rushed into commodities earlier this year as a hedge
against inflation and the weak dollar, sold crude for safer
havens.
Analysts said the spread of credit problems to Europe was
stoking fears the financial turmoil, which started with risky
lending to the U.S. property market, had gone global rapidly.
"Slower international economic growth is bound to dent oil
demand," said David Moore, a commodities analyst at the
Commonwealth Bank of Australia.
(Reporting by Rebekah Kebede in New York, Alex Lawler and Jane
Merrimanin Londen, additional reporting by Maryelle Demongeot
in Singapore and Fayen Wong in Perth; Editing by David
Gregorio)
