(Updates after U.S. data)
* Investors question speed of stock rally
* Oil prices extend gains to 2-1/2 month high
* Dollar trying to snap four-day losing streak
* Bond markets digest glut of supply
* U.S. jobless claims 2.4 million, in line with estimates
By Marc Jones
LONDON, May 21 (Reuters) - Equity markets slipped on Thursday on concerns about the long-term impact of the new coronavirus and simmering U.S.-China tensions, though those worries couldn't stop oil prices from marching to a 2-1/2 month high.
The London, Frankfurt and Paris bourses and Wall Street futures were 0.5%-1.3% lower ahead of U.S. trading, while the dollar seemed to be backsliding again having earlier appeared to have snapped a four-day losing run.
It was also a big day for data and central bankers. Purchasing manager index surveys (PMIs) from Europe had already confirmed that economic activity has begun to return, though they were far from stellar.
Euro zone-wide figures came in better-than-expected overall but Germany's improvement undershot forecasts, and it was the third month in a row that the surveys were plonked firmly in economic contraction territory.
"While we have seen resilience in European markets there is still caution, and we can't seem to get over the peaks (in equity markets) that we saw at the end of last month," said CMC Markets' senior analyst Michael Hewson.
"We have got PMIs improving but you would expect that because lockdowns are being eased. They are still rubbish, they are just less rubbish than they were in April."
For oil markets, there just seems to be relief that worst looks to be over.
Benchmark Brent saw another 2% jump to $36.5 a barrel, taking its rebounded over the last month to $20, or 120%. A number of key European holiday hotspots have signalled they will reopen next month, giving a much needed boost for fuel-guzzling airlines too.
The dip in Wall Street future came amid rising tensions between Washington and Beijing over the coronavirus.
On Wednesday, U.S. Secretary of State Mike Pompeo had called China's $2 billion pledge to fight the pandemic as "paltry" and there was also sparring over democracy erosion in Hong Kong and a sale of U.S. torpedoes to Taiwan .
"President Xi claimed this week that China is acting with openness, transparency responsibility. I wish it were so," Pompeo had told a State Department news conference.
In the bond markets, traders were still trying to digest the latest glut of debt to pay for governments' coronavirus support programme. The U.S. auctioned $20 billion of 20-year debt for the first time since 1986 on Wednesday.
Italy had sold roughly the same by lunchtime and Spain said it will need to raise almost 100 billion euros more than planned. That could make this week's proposed 500 billion euro ($550 billion) EU coronavirus recovery fund even more helpful.
The Franco-German driven plan would push the bloc in the direction of joint financing but has seen resistance from a number of other northern European countries who want the aid to be in the form of loans to be repaid rather than grants.
The 10-year BTP yield was up 1.1 basis points at 1.64% , not far from the 1.59% low it touched on Tuesday, while Spanish yields rose 2.4 bps at 0.73%
U.S. weekly jobless claims came in at a seasonally adjusted 2.4 million. It was line with a Reuters survey of economists ahead of the data and though high, well off the record 6.867 million seen at the end of March.
There will also be a raft of U.S. Federal Reserve speakers, including Fed chair Powell, and two big emerging market central banks – Turkey and South Africa - are expected to cut their interest rates again.
In Asia overnight, Japan's Nikkei stock index slid 0.2% after data there showed the country's exports collapsed 21.9% in April. Another dismal trade report came from Korea where 20-day exports declined by 20.3% year-on-year and imports fell by 16.9%, though Korean stocks still ended the day higher.
Shares in China ended down 0.2% with both the U.S. tensions a driver and Friday's annual National People's Congress (NPC) meeting, which has been delayed by 2-1/2 months due to COVID-19, also looming.
The first focus will be on Premier Li Keqiang's 2020 work report where he is expected to announce key economic targets and details on fiscal stimulus plans.
In the currency markets, the dollar climbed to $1.0956 per euro and rose to $1.2291 against the British pound before twitching back again. The greenback also gained against the Australian and New Zealand dollars , reflecting the cautious mood of the markets.
No such issues in the oil world though, where U.S. crude's rise meant both Brent and WTI are now at the highest since early March on hopes that demand for fuel will see a robust global pick up.
U.S. crude inventories fell by 5 million barrels last week, against expectations in a Reuters poll for a 1.2 million-barrel rise, Energy Information Administration (EIA) data had showed.
Reporting by Marc Jones; Editing by Hugh Lawson, Kirsten Donovan