* World share up, but set for weekly drop
* Oil prices rally more than 3%
* German Q1 GDP falls 2.2% Q/Q
* Graphic: World FX rates in 2020 tmsnrt.rs/2egbfVh
By Dhara Ranasinghe
LONDON, May 15 (Reuters) - World stocks rose on Friday and oil prices jumped more than 3%, taking the sting out of a week that has seen sentiment hit as deteriorating U.S.-China relations added to worries over how fast economies could recover from the coronavirus shock.
Oil prices rose to their highest levels in more than a month on signs that demand from China is picking up.
European shares opened broadly higher, with stock markets in London, Paris and Frankfurt tracking overnight gains in U.S. and Asian markets .
U.S. stock market futures pointed to a positive open for Wall Street shares.
Data showing China's industrial output in April rose 3.9% from a year earlier, expanding for the first time this year, bought some comfort to markets.
Still, after a bruising week, a broad measure of European stocks was set to end the week 3% lower - the biggest weekly fall since the mid-March rout in global stocks.
MSCI's world stock index, a touch firmer on Friday, is down around 2.5% this week.
"After a brutal few days for stock markets, a late turnaround in banking and energy stocks saw U.S. markets recover from their lowest levels this month, to closer higher for the first time this week last night," said Michael Hewson, chief market analyst at CMC Markets.
"With Asia markets also having a positive session...markets here in Europe have opened higher as we come to the end of what is still likely to be the worst week for European stocks since early March."
Analysts said this week's drop, while a natural correction after a rally since mid-March, also reflected growing concerns about rising U.S.-China tensions.
U.S. President Donald Trump on Thursday signaled a further deterioration of his relationship with China over the novel coronavirus, saying he has no interest in speaking to President Xi Jinping right now and suggesting he could even cut ties with Beijing.
"There is no doubt that the optics around the trade/diplomacy backdrop have worsened in the last week and this has had a negative influence," said Chris Bailey, European strategist at Raymond James in London.
"There has also been a subtle change in the perceptions of market participants, for example the negative interest rate debate getting a very good airing in the United States."
U.S. Federal Reserve Chair Jerome Powell has brushed off the notion that the Fed could push rates below 0% after futures tied to Fed interest rate policy expectations recently began pricing a small chance of sub-zero U.S. rates within the next year.
Two year U.S. Treasury yields are trading at just 0.15% , while short-dated bond yields in Britain have dipped back below 0% this week.
Faced with an exceptional hit from the coronavirus crisis, central bankers are under intense pressure to do more to shore up battered economies.
The German economy contracted by 2.2% in the first quarter, its steepest three-month slump since the 2009 financial crisis as shops and factories were shut in March to contain the spread of the coronavirus, preliminary data showed on Friday.
Elsewhere, the dollar was a touch softer against major currencies. The euro was around 0.1% firmer at $1.0815 , while the dollar dipped 0.15% to 107.08 yen .
Britain's pound was about a fifth of a percent weaker against the euro and the dollar, with focus on talks between Britain and European Union leaders on their future relationship.
Reporting by Dhara Ranasinghe; Editing by Angus MacSwan