GLOBAL MARKETS-Bernanke and oil rise trip global equity rally

(Updates markets with Bernanke testimony)

By Richard Satran

NEW YORK, Feb 14 (Reuters)- A global equity rally turned into a downturn on Wall Street on Thursday after Federal Reserve Chairman Ben Bernanke failed to relieve gloomy sentiment on the U.S. economy with testimony before Congress.

Oil prices surged and bonds lost ground in Europe and the United States, with investors fearing central banks may be unable to lower interest rates much more given the threat of inflation despite sluggish economic growth.

The Dow Jones industrial average .DJI skidded 104.13 points, or 0.83 percent, at 12,448.11. The Standard & Poor's 500 Index .SPX was down 10.04 points, or 0.73 percent, at 1,357.17.

Bernanke repeated his earlier statements that the Fed will act as needed to help the struggling U.S. economy and that growth should pick up in the third quarter of the year. But he added that the Fed plans to lower its economic growth estimates "in about a week" in line with more sluggish private forecasts.

"It doesn't seem to be a very inspired commentary. He hasn't hinted anything about rate cuts and the fact he hadn't may be giving people pause," said Kevin Kruszenski, head of listed trading at KeyBanc Capital Markets in Cleveland.

Underscoring the inflation worries, U.S. crude oil futures rose more than $2 to above $95 a barrel on Thursday, supported by talk that OPEC has been shipping less recently.

"A number of supply-driven factors have reminded the market of how thin spare capacity of production really is -- Nigeria, North Sea glitches and geopolitical tension," said Harry Tchilinguirian of BNP Paribas.