Oil opened weaker on US markets but prices turned higher after data was released showing US gasoline demand spiked during the past month, and inventories of motor fuel slipped from recent record highs.

The financial sector came under pressure as investors fretted over banks’ exposure to the decade-low oil prices.

JP Morgan raised its provisions for energy loan losses, while also flagging a decline in investment banking revenue.

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Meanwhile, Morgan Stanley said most of its energy loans were to non-investment grade firms.

Elsewhere, a survey by Markit Economics detailed the worst reading on activity in the US services sector since 2013.

Fall in sales of new homes

Separate data from the US Commerce Department revealed a slump in new home sales last month.

Single-family home sales tumbled by 9.2 per cent in January, almost unwinding the sharp increase during December.

But optimism reigned as the trading session progressed, sending the Dow Jones Industrial Average up 0.32 per cent to 16,484.99.

The S&P 500 rose 0.44 per cent to 1,929.65 and the Nasdaq gained 0.87 per cent to 4,542.6.

Stocks in Europe suffered some sharp falls, driven by heavy losses for banking shares.

In London, the FTSE 100 Index lost 1.6 per cent to close at 5,867.18.

Paris’s CAC 40 Index shed 1.96 per cent to 4,155.34 and Germany’s DAX slumped 2.64 per cent to 9,167.8.

Shares open lower on Australian market

Locally, shares declined 0.5 per cent despite the futures market pointing to a rise prior to the open.

At the same time, the Australian dollar was fairly flat at 72.02 US cents.

On the cross-rates it was buying 65.4 euro cents, 51.65 British pence, 80.71 Japanese yen and $NZ1.08.

West Texas Crude oil had closed at $US30.15 a barrel, the price of a barrel of Tapis was higher at $US34.19 and spot gold had edged up to $US1,229.19 an ounce.