Oil jumped more than $1 to above $53 a barrel on Monday, supported by a rise in the stock market after strong housing data and on details of a U.S. plan to remove toxic assets from bank balance sheets.

The U.S. government fleshed out the plan on Monday which it hopes can purge banks of up to $1 trillion in toxic assets, a key element of its drive to pull the world's biggest economy out of a deep recession.

The U.S. stock market extended early gains, sending the benchmark S&P 500 up more than 4 percent, following a report that showed sales of existing homes rebounded in February.

"The rise in the stock market points to improved demand," said Christopher Bellew, oil broker at Bache Commodities in London, adding: "OPEC production cuts are biting. Also funds have been adding to their length."

U.S. crude rose $1.30 to $53.37 a barrel by 1500 GMT having earlier climbed to $53.85, its highest price since Dec. 1. London Brent crude rose $1.80 to $53.02.

President Barack Obama said on Sunday the U.S. dollar was still strong but warned that excessive borrowing and high deficits could weaken Treasury bill demand.

U.S. crude oil has climbed from below $33 last December, lifted also by Organization of the Petroleum Exporting Countries supply cuts. It remains down almost $100 from a record high near $150 reached last year as the global economic crash eroded consumption.

The global economy is set to shrink 1 to 2 percent this year, World Bank President Robert Zoellick said on Saturday. He said the depth of the slowdown was unprecedented since the 1930s Great Depression.

Signs of higher demand in China, the world's second-largest consumer, could lend support. China's implied oil demand climbed 0.5 percent in February after three months of declines, Reuters calculations from official data showed.

Oil workers at Brazilian energy firm Petrobas began a five-day strike on Sunday in a bid to cut crude output in protest over job cuts, pay and conditions, a union leader said.