* European shares flat, Wall Street modestly higher
* Oil prices edge up
* Yield curve steepens slightly (Updates with U.S. market open, changes byline, dateline; previous LONDON)
By Chuck Mikolajczak
NEW YORK, June 22 (Reuters) - World stock markets edged higher on Thursday, buoyed by a slight rebound in oil prices after hitting seven-month lows, while the U.S. dollar weakened for a second consecutive session.
Oil edged up from November lows hit in the prior session, but prices remained under pressure from a supply glut that has persisted despite OPEC-led efforts to balance the market.
U.S. crude rose 1.62 percent to $43.22 per barrel and Brent was last at $45.71, up 1.99 percent on the day.
"It’s pretty low and you are looking for a bit of a breather but all the forces seem to be aligning against the price of oil, it is just a question of where does it settle out," said Thomas Martin, senior portfolio manager at Globalt Investments in Atlanta, Georgia.
"You go below $40 and you get a lot of people who are worried about things."
With the gains, the energy sector in Europe remained under pressure, down 0.4 percent, but well off earlier lows. The index is down about 2 percent on the week and is on track for its fifth straight weekly drop.
Those declines weighed on European shares but the picture was reversed on Wall Street, with energy up 0.5 percent, among the best performing sectors.
The Dow Jones Industrial Average rose 35.07 points, or 0.16 percent, to 21,445.1, the S&P 500 gained 3.46 points, or 0.14 percent, to 2,439.07 and the Nasdaq Composite added 4.15 points, or 0.07 percent, to 6,238.10.
Healthcare, up 1.5 percent was the best performing group on Wall Street as Senate Republicans unveiled a draft bill to replace the Affordable Care Act.
The pan-European FTSEurofirst 300 index lost 0.01 percent and MSCI's gauge of stocks across the globe gained 0.20 percent.
Since peaking in late February, crude has dropped around 20 percent, with only brief rallies, completely erasing gains at the end of the year after the initial OPEC-led production cut.
Oil's decline has hurt energy stocks and curbed investor expectations for higher inflation that would enable major central banks to pursue tighter monetary policies.
Subdued inflation and concerns about the outlook for world growth when the U.S. Federal Reserve is raising interest rates have led to a flattening in bond yield curves.
The gap between yields on U.S. five-year notes and 30-year bonds on Wednesday narrowed to 94.9 basis points, holding near its smallest since December 2007. The curve steepened slightly to 96.5 basis points on Thursday, suggesting the flattening of the yield curve this week was stalling.
A flattening yield curve is often viewed as a negative economic indicator. It shows concern about the future pace of growth and inflation, because buyers of long-dated debt would demand higher yields if they expected higher costs.
Benchmark 10-year notes last fell 3/32 in price to yield 2.1633 percent, from 2.155 percent late on Wednesday.
The dollar index fell 0.05 percent, with the euro down 0.07 percent to $1.1158.
Reporting by Chuck Mikolajczak; Editing by Bernadette Baum