NEW YORK (Reuters) - Brent crude oil prices touched their weakest level in more than 11 years on Monday on concerns of global oversupply, while Wall Street ended higher as investors went shopping after two days of sharp declines.

A gas nozzle is used to pump petrol at a station in New York February 22, 2011. REUTERS/Shannon Stapleton

The dollar weakened against a basket of currencies in thin trading. The euro strengthened on apparent short covering following an inconclusive election result in Spain that may increase worries over the country’s financial stability.

Wall Street started the abbreviated Christmas holiday week on a positive note, and buying accelerated in the late afternoon following a down week for the three major U.S. indexes. [.N]

“You’re seeing some end-of-year bargain hunting here,” said Rick Meckler, president of LibertyView Capital Management in Jersey City, New Jersey, adding that financial stocks may seem cheap as banks stand to benefit from rising interest rates. The Federal Reserve last week announced its first rate hike in nearly a decade.

Investors may also feel better about the holiday shopping season after observing weekend shopping, Meckler said.

Even so, some investors were losing hope for the typical end-of year rally that turns stocks positive for December.

“Maybe some believe you’re going to see a Santa Clause rally but that window is closing awful fast,” said Robert Pavlik, chief market strategist at Boston Private Wealth in New York.

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The Dow Jones industrial average .DJI rose 123.07 points, or 0.72 percent, to 17,251.62, the S&P 500 .SPX gained 15.6 points, or 0.78 percent, to 2,021.15, and the Nasdaq Composite .IXIC added 45.84 points, or 0.93 percent, to 4,968.92.

The Dow and the S&P 500 ended last week with their biggest two-day percentage losses since Sept. 1.

Brent futures LCOc1 recovered some ground to settle down 1.4 percent at $36.35 a barrel after falling as low as $36.04 earlier, the lowest level since July 2, 2004. U.S. crude CLc1 settled up 1 cent at $34.74 after falling to $33.98, its lowest level since Feb. 13, 2009. [O/R]

“We’d like to see crude bottom and start to work higher to support economic growth and earnings growth, but we’re not there yet because we’ve got this supply-demand imbalance,” said Phil Orlando, chief equity market strategist, at Federated Investors, in New York.

SPAIN VOTE

The MSCI all-world stock index .MIWD00000PUS was up 0.3 percent. Europe's .FTEU3 index of major companies closed down 1.2 percent, weighed by Spain and the euro.

Spain's Ibex share index .IBEX fell 3.6 percent to its lowest level since Sept. 29 after the Popular Party won more seats than any other party but fell well short of a majority. Left-wing parties also failed to win a clear mandate to govern, and talks to form a coalition government could drag on for weeks.

The dollar fell 0.3 percent against a basket of major currencies .DXY, and the euro EUR= rose 0.5 percent against the dollar.

U.S. long-dated Treasury yields edged higher on Monday after U.S. crude oil prices stabilized somewhat, leading to a marginal rise in inflation expectations, while other Treasury yields were little changed on caution ahead of year-end.

Benchmark 10-year U.S. Treasury notes US10YT=RR were last up 2/32 in price to yield 2.190 percent, from a yield of 2.197 percent late on Friday. U.S. 30-year Treasury bonds US30YT=RR were last down 5/32 in price to yield 2.917 percent, from a yield of 2.908 percent late on Friday.

Gold rebounded after last week's slide following the Fed's rate hike rose 1 percent at $1,077.88 an ounce XAU=.