By Dhara Ranasinghe and Pete Schroeder

LONDON/WASHINGTON (Reuters) -The final quarter of the year got a boost Monday as U.S. stocks surged in early trading, shaking off a gloomier start in global markets while oil prices jumped over 5%.

Oil prices rocketed upwards after the Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, said it would consider reducing output, while sterling rallied after the British government said it would reverse a controversial tax cut that had rocked UK markets.

In early trading, the Dow Jones Industrial Average rose 1.27%, the S&P 500 gained 1.14% and the Nasdaq Composite added 0.82%. The early jump came after U.S. stocks posted their worst September in roughly two decades, as sentiment remained frail given worries that aggressive interest rate hikes from the U.S. Federal Reserve and others raise global recession risks.

The MSCI world equity index, which tracks shares in 45 countries, was last up 0.76%.

European equity markets were a sea of red, with the STOXX 600 index down 0.4%, pulling back from earlier losses of 1.4%. Shares in beleaguered Swiss bank Credit Suisse fell around 10% in early trading, reflecting market concern about the group as it finalises a restructuring programme due to be announced on Oct. 27.

News of the British government’s tax U-turn didn’t appear to lift broader sentiment but probably helps to calm market worries about fiscal excess, said Kallum Pickering, senior economist at Berenberg Bank in London.

“Markets seem to have lowered their expectations for the BoE bank rate while gilt yields have fallen further from their recent highs. Less tight financial conditions may ease the near-term shock on economic performance,” said Pickering.

Oil prices rallied on reports what OPEC+ will this week consider cutting output by more than 1 million barrels a day, for its biggest reduction since the pandemic, in a bid to support the market. Brent crude rose more than 5% to almost $90 a barrel and U.S. West Texas Intermediate crude was up over 6%, at over $84 a barrel.

UK RESPITE

Britain’s battered pound was up around 0.4% at $1.12085 and its government bond yields fell, pushing their price up, following the UK policy reversal.

London’s FTSE-100 stock index was down 0.5%, falling in line with other markets.

Trade across Asia was generally subdued. South Korea had a national holiday and China entered its “Golden Week” break on Monday. Hong Kong is closed for a public holiday on Tuesday.

Gold was 0.6% firmer at $1,669.20 an ounce.

The U.S. dollar continued its run upwards. The dollar index, which tracks the greenback versus a basket of six currencies, rose 0.19%.

(Reporting by Dhara Ranasinghe, additional reporting by Sam Byford in Tokyo; Editing by Hugh Lawson, David Evans and Jonathan Oatis)