U.S. markets rebounded late Wednesday, while Canadian markets maintained early momentum from a sharp jump in oil prices.

At the close, Toronto’s S&P/TSX composite index was up 59.67 points or 0.72% at 8354.04 on volume of 189 million shares. The TSX Venture Exchange gained 8.71 points or 0.59% at 1476.3.

In New York, a late-day surge pushed the Dow Jones industrial average into positive territory after being down as much as 90 points. The blue-chip index finished the day up 31.93 points or 0.32% at 10117.07. The broader Standard & Poor’s 500 Index was mostly unchanged, gaining 0.59 of a point at 1095.42. The technology-laced Nasdaq Composite Index fell 10.84 points or 0.58% at 1858.26.

The Canadian dollar gained 0.11 of a cent to US75.16¢.

The big news on the day was the spike in oil prices to record territory. Crude futures prices climbed as high as US$43.05 a barrel on the New York Mercantile Exchange before closing at US$42.90, up US$1.06 for the session. Prices have never been so high. One market-moving factor was a Russian government threat to halt production of Yukos Oil, which owes at least US$3.4 billion in back taxes for 2000.

In Toronto, the TSX’s energy sub-idex lead the market higher, gaining 1.56% on the day, with Suncor Energy (up 80¢ to $36.95), Talisman Energy (up 86¢ to $31.85) and Petro-Canada (up 63¢ to $61.73) among the big movers.

Elsewhere, gold shares gained 0.46% as a group, financials were up 0.46% and tech stocks increased 0.49% as investors pushed up the price of Nortel Networks shares by 9¢ to $4.64.

In the U.S., investors ignored some so-so economic news. The Federal Reserve reported Wednesday that the U.S. economy cooled off in June and July as consumer spending, especially on autos, slowed significantly after a big surge in early spring. The survey of business activity compiled from reports from the Fed’s 12 regional banks was the latest indication of what Federal Reserve chairman Alan Greenspan termed a “soft patch” developing in the economy in June.

The Fed’s report, known as the beige book for the colour of its cover, will be used when central bank policy-makers meet on Aug. 10 to decide whether to raise interest rates to make sure that inflation does not get out of hand.

In another sign of softness, the U.S. Commerce Department said that orders to U.S. factories for big-ticket durable goods eked out a small 0.7 per cent gain in June, reflecting a surge in demand for military aircraft, following back-to-back declines in orders in April and May.

Meanwhile, despite the jump in oil prices, some energy experts warned that the market could be in store for a reality check.

“At these lofty levels, crude is in danger of being way overbought,” one energy forecaster said. “It’s like a case of large traders “gone wild,” with the Yukos debt situation adding some level of new uncertainty and OPEC production tight, but “others can step up to fill the potential gap.”

Also, traders need to know that Yukos’ production of around 1.7 million barrels per day represents only 1,700 Nymex contracts at 1,000 barrels per contract. “On that basis I’d sell into this rally,” he said.