UPDATE 9-Oil rises second day as U.S. jobs, equities lift

* Wall Street gains on U.S. labor data, earnings

* U.S. jobless claims at 4-month low, offer hope

* French banking, euro zone worries persist

* Coming up: CFTC traders' data, 3:30 p.m. EDT Friday
(Update prices and market activity)

By Gene Ramos and Robert Gibbons

NEW YORK, Aug 11 (Reuters) - Oil prices rose for a second
straight day on Thursday, gaining as much as 3 percent as a
strong U.S. jobs report trumped early concerns about French
banks and fears that Europe's debt crisis will spread.

Oil gains tracked Wall Street, with the Dow Jones
industrial average .DJI, Standard & Poor's 500 Index .SPX
and the Nasdaq Composite Index .IXIC climbing more than 4
percent to recover from deep losses earlier in the week. [.N]

Equities surged on gains in energy and financial services
shares and on the jobless claims data that helped ease economic
worries after last week's downgrade of the U.S. credit rating.

U.S. jobless benefit claims fell to a four-month low last
week, offering hope for the economy after a historic credit
rating downgrade spurred a heavy sell-off on Wall Street and
world share markets earlier this week.

Economic worries festered, heightening concerns about oil
demand growth. Speculation was rife that France's credit rating
would be downgraded, although three major ratings agencies have
reaffirmed its AAA rating.

"Relative calm over the French bank situation is giving
equities and overall sentiment a lift, which has pushed (U.S.)
crude prices higher on lessened demand contraction fears," said
John Kilduff, partner at hedge fund Again Capital LLC in New
York.

In London, ICE Brent crude for September LCOc1 rose
$1.02, or 1 percent, to $107.70 a barrel by 2:35 p.m. EDT (1835
GMT), having swung between $104.43 and $108.08. The gain added
to a 4 percent leap on Wednesday.

U.S. September crude CLc1 settled up $2.83, or 3.41
percent, at $85.72 a barrel, bouncing from the day's low of
$81.03. Near the close, the contract rose further to hit a
session high of $85.90. On Wednesday, it rose 4.5 percent.

Brent's trading volume as of 2:40 p.m. EDT was about
588,000 contracts, more than 30 percent above the 30-day
average. U.S. crude's volume reached about 858,000 lots, up
31.5 percent from the 30-day average.

U.S. crude's Relative Strength Index (RSI) recovered some
more, to 36.48, above the 30 threshold that signifies oversold
conditions. The index ended at 30.86 on Wednesday as buyers
trooped in following a government report that crude inventories
unexpectedly fell 5.2 million barrels last week. The RSI fell
below 30 starting Aug. 4. [EIA/S]

Implied volatility for U.S. crude stood at 49.74 percent on
the Chicago Board Options Exchange's Oil Volatility Index
.OVX, down 9.71 percentage points from the settlement on
Wednesday, when it hit a two-year high of 70.37.

"It's risk premium coming out of the market. It was due for
a bounce. It is likely to do so heading into the weekend," said
Chris Jarvis, senior analyst at Caprock Risk Management in
Hampton Falls, New Hampshire.

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For a 24-hour technical outlook on Brent:

here

For a 24-hour technical outlook on U.S. oil:

here

For a graphic on asset returns in the last week:

link.reuters.com/xus92s

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JOBLESS CLAIMS CONTRAST WITH TRADE

The number of Americans filing jobless benefit claims fell
7,000 last week to a seasonally adjusted 395,000, below the
psychological 400,000 level, somewhat easing concerns the
economy may slide back into recession. [ID:nN1E77A099]

But another report showed the U.S. trade deficit jumped to
$53.1 billion in June, the largest since October 2008, from
$50.8 billion in May.

JPMorgan said it still expects Brent to average $110 a
barrel in the third quarter, before rising to $115 in the next
quarter. [ID:nL3E7JB3M4]
(Additional reporting by Eileen Moustakis in New York, Emma
Farge in London and Manash Goswami in Singapore; Editing by
David Gregorio and Dale Hudson)