Oil reversed early losses, rising more than $1 from Tuesday's trough, as the dollar tumbled and Asian stock markets rebounded amid easing concern about the slowdown in the global economic recovery.

US crude for August delivery climbed 44 cents to $72.58 a barrel by 0731 GMT, after earlier falling as much as $1.05 to $71.09 a barrel, its lowest since June 8 and down 1.5 per cent from Friday's settlement.

The price moves are part of an extended session combining the trades of Monday and Tuesday on the New York Mercantile Exchange (Nymex) because of the US Independence Day holiday.

A single settlement price will be issued for July 6. ICE Brent crude for August gained 64 cents to $72.11 a barrel, posting a bigger increase than US crude after prices fell on Monday.

'There is no need to be so bearish. The economy is not so bad,' said Keichi Sano, general manager of research at SCM Securities in Tokyo.

The dollar weakened more than 0.4 percent against a basket of currencies after rising earlier on Tuesday, while Asian stocks reversed course and rose, taking heart from gains in the Chinese market led by property and bank stocks.

The Australian dollar dribbled higher after the central bank sounded cautiously optimistic on the economic outlook.

Oil prices had earlier dropped on on the back of Monday reports showing global services growth slowed in June and after weak manufacturing data for major economies published last week.-Reuters