By Rodrigo Campos
NEW YORK (Reuters) - Brent crude oil prices hit a four-month high and energy equities rose on Tuesday after reports of an agreement between two major producers to freeze output, while the U.S. dollar had its strongest session in three weeks.
Crude prices are up more than 10 percent in the last three sessions, lifted on Tuesday after Russia's Interfax news agency quoted a diplomatic source in Doha, Qatar, saying Russia and Saudi Arabia reached consensus about an oil output freeze ahead of a producers' meeting there on April 17.
"The market appears to be taking a lot of support from positive statements. But, this isn't the first time the Russians have come out and made remarks related to a production freeze being imminent," said Gene McGillian, a senior analyst at Tradition Energy.
Brent crude was up 3.6 percent to $44.36 a barrel and U.S. crude rose 3.3 percent to $41.70.
On Wall Street, energy sector shares led the market, and the S&P 500 hit an intraday high shortly after the headlines on the output freeze.
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The Dow Jones industrial average rose 153.51 points, or 0.87 percent, to 17,709.92, the S&P 500 gained 16.65 points, or 0.82 percent, to 2,058.64 and the Nasdaq Composite added 28.44 points, or 0.59 percent, to 4,861.84.
The S&P 500 energy sector <.SPNY> gained 2.8 percent.
The FTSEurofirst index of 300 major European companies rose 0.6 percent, led by energy names. MSCI's gauge of stocks across the globe added 0.6 percent, its fourth gain in the past five sessions.
Earlier, Japanese shares <.N225> rose 1.1 percent after a rally in the yen against the dollar stalled, lifting shares of exporters.
The U.S. dollar also strengthened against the euro for only the third session in the last 12. The dollar index ticked up 0.2 percent, its strongest session in three weeks.
The dollar has been weak of late as investors have pulled back from riskier assets and closed out trades that involved borrowing in low-yielding yen to buy assets in the U.S. and other markets.
Currencies of commodity-based economies like Canada also rose. Against the greenback, the loonie hit its strongest level in nine months.
"Oil is now more than 50 percent stronger than it was at its low in February. That's boosting general sentiment overall and with that we're seeing a rally in commodity currencies such as the Canadian dollar," said John Doyle, director of markets at Tempus Consulting in Washington.
U.S. Treasury yields rose as higher oil and global stock market gains reduced the safe-haven appeal of U.S. government debt.
Benchmark 10-year Treasury notes fell 10/32 in price to yield 1.773 percent from 1.724 percent late on Monday.
(Reporting by Rodrigo Campos, additional repoting by Gertrude Chavez-Dreyfuss; Editing by Nick Zieminski and Dan Grebler)