Crude prices briefly pared losses on news that US consumer sentiment improved in early June to its strongest level in nearly 2-1/2 years.

At 12:30 p.m. EDT (1630 GMT), US crude for July was down $2.11, or 2.8 percent, at $73.37 a barrel, trading in a range from $73.30 to $75.64. A lower finish would snap a string of three higher closes.

ICE Brent was trading down $1.63 at $73.66.

On Thursday, a report of a 48.5 percent surge in Chinese exports in May helped oil prices surge 2 percent.

The International Energy Agency also revised its 2010 oil demand growth forecast slightly higher in a report on Thursday, adding to the bullish sentiment in the market after a government oil inventory report showed lower crude stockpiles.

Meanwhile, world stocks and the dollar rose on Friday.

European shares also rose after supportive comments from UK officials helped BP rebound, and risk-sensitive banks gained as investors took heart from the US consumer sentiment data.

Deutsche Bank, HSBC and BNP Paribas all gained.

US stocks were largely lower, with the Dow industrials and the broad S&P 500 down slightly as the 1.2 percent drop in May retail sales reported by the Commerce Department raised questions about the strength of the US economic recovery.

MSCI's all-country world equity index was up 0.5 percent, helped by the rally in European markets. The pan-European FTSEurofirst closed up 0.5 percent to 1,018.87 points, driving a 2 percent gain for the week.

At 12:30 p.m., the Dow Jones Industrial Average was down 33.41 points, or 0.33 percent, at 10,139.12. The Standard & Poor's 500 Index was down 3.92 points, or 0.36 percent, at 1,082.92. The Nasdaq Composite Index was up 3.48 points, or 0.16 percent, at 2,222.19.

The dollar rose against the yen and euro on the U.S. consumer sentiment report. Lingering worries about euro zone debt and technical barriers contributed to the euro's decline, ending a three-day winning streak that took it as high as $1.2150.

The euro was down 0.35 percent at $1.2066, while the dollar rose against a basket of major currencies. The US Dollar Index was up 0.43 percent at 87.545.

Earlier in Asia, the MSCI index of Asia Pacific ex-Japan stocks rose nearly 1.7 percent. Japan's Nikkei average climbed 1.7 percent, helped by a halt in the yen's advance against the euro.