* Wall Street gains as volatility eases
* European shares snap seven-day losing streak
* Oil hits one-month low after U.S. inventory data
* Dollar holds onto gains as Wall Street trades higher (Updates with U.S. market opening, changes byline and dateline, previous LONDON)
By Caroline Valetkevitch
NEW YORK, Feb 7 (Reuters) - The Dow and S&P 500 rose more than 1 percent on Wednesday, extending their rebound from the previous session, while oil prices fell sharply after U.S. data fanned fears of oversupply.
European shares also jumped and equities' trading was less choppy than in Tuesday's session.
The Cboe Volatility Index, known as the VIX, the most widely followed barometer of expected near-term volatility for the S&P 500 index, eased after rising sharply earlier in the week.
On Tuesday, U.S. equities had roared back from Monday's selloff, when the Dow and S&P 500 saw their biggest one-day declines in two years.
"Now that the volatility event is over, investors will focus on the economic data and the fundamentals," said Sameer Samana, global equity and technical strategist at Wells Fargo Investment Institute in St. Louis.
But he said equities could see more declines before investors' confidence is rebuilt.
The Dow Jones Industrial Average rose 378.68 points, or 1.52 percent, to 25,291.45, the S&P 500 gained 32.48 points, or 1.21 percent, to 2,727.62 and the Nasdaq Composite added 54.36 points, or 0.76 percent, to 7,170.24.
The pan-European FTSEurofirst 300 index rose 2.31 percent and MSCI's gauge of stocks across the globe gained 1.06 percent.
Emerging market stocks rose 0.18 percent. MSCI's broadest index of Asia-Pacific shares outside Japan closed 0.15 percent lower, while Japan's Nikkei rose 0.16 percent.
In the energy market, oil prices fell. U.S. crude fell 2.08 percent to $62.07 per barrel and Brent was last at $66.12, down 1.11 percent on the day. U.S. data showed an unexpected build in refined products, fanning fears of oversupply headed into the slow-demand season.
It was a steep spike in yields last Friday that sparked the initial Wall Street rout, forcing sales by a host of highly leveraged funds, which ramped up volatility and drove yet more selling.
Investors are also wary about U.S. lawmakers wrangling to extend the so-called debt ceiling - funding for the U.S. government runs out on Feb. 8 unless a stopgap bill manages to pass the Senate later on Wednesday.
Like many others, BlackRock analysts described the rout as a buying opportunity, seeing the leveraged products moves as essentially driven by jitters over recent equity gains on one hand, and the possibility of higher interest rates on the other.
Strategists also point out that the improving global economic outlook is a positive for stocks overall.
U.S. Treasury prices fell before the Treasury Department was due to auction new 10-year notes.
Benchmark 10-year notes last fell 9/32 in price to yield 2.7999 percent, from 2.766 percent late on Tuesday.
The U.S. dollar rose against most major currencies amid the gains on Wall Street.
The dollar index rose 0.61 percent, with the euro down 0.68 percent to $1.2292.
Additional reporting by Sinead Carew in New York; Sujata Rao in London; Editing by Matthew Mpoke Bigg and Nick Zieminski