* U.S. consumer spending up 0.4 pct in May
* Oil continues to rally; Chevron leads Dow
* Tesaro soars on success of cancer drug
* Indexes up: Dow 1.31 pct, S&P 1.48 pct, Nasdaq 1.72 pct (Updates to early afternoon)
By Yashaswini Swamynathan
June 29 (Reuters) - Wall Street was sharply higher on Wednesday, with the three major indexes recovering about half the losses suffered in the aftermath of Britain's shock vote to leave the European Union.
Investors looked for bargains among beaten-down stocks, pushing up markets for the second day after the "Brexit" verdict wiped out about $3 trillion globally in a two-day selloff.
Oil prices jumped after the U.S. government reported a larger-than-expected weekly drawdown in crude inventories.
Chevron's shares were up 2.8 percent, providing the biggest boost to the Dow. Exxon was up 1.8 percent.
All 10 major S&P indexes were in the black, led by a 2.13 percent jump in the energy index.
Adding to the upbeat sentiment, data showed U.S. consumer spending, which accounts for more than two-thirds of economic activity, increased 0.4 percent in May.
Investors are now hoping that central banks around the world will ease monetary policy to weather the storm as Britain and the EU chalk out the next steps for the country's exit from the trading bloc.
"There are very reasonable expectations from central banks globally, especially from the US Federal Reserve, the ECB and the BOE, to provide more liquidity, guidance and clarity to support markets," said Stephen Wood, chief market strategist for Russell Investments in New York.
The Brexit vote has the potential to create new headwinds for the U.S. economy, Fed governor Jerome Powell said on Tuesday, adding that the central bank was prepared to provide dollar liquidity to limit its implications.
Traders have priced in a mere 17 percent chance of a hike as late as December, according to CME Group's FedWatch tool.
At 12:37 a.m. ET (1637 GMT), the Dow Jones Industrial Average was up 228.22 points, or 1.31 percent, at 17,637.94, the S&P 500 was up 30.16 points, or 1.48 percent, at 2,066.25 and the Nasdaq Composite was up 80.66 points, or 1.72 percent, at 4,772.53.
Tesaro soared 114.4 percent to $79.71 after the company's ovarian cancer drug met its main goal. The stock was the top percentage gainer on the Nasdaq.
Diamond Resorts jumped 23.7 percent to $29.78 after receiving a $2.2 billion buyout offer from Apollo Global . Apollo's shares were flat.
Advancing issues outnumbered decliners on the NYSE by 2,674 to 348. On the Nasdaq, 2,194 issues rose and 573.
The S&P 500 index showed 44 new 52-week highs and no new lows, while the Nasdaq recorded 33 new highs and 26 new lows. (Reporting by Yashaswini Swamynathan in Bengaluru; Editing by Saumyadeb Chakrabarty)