U.S. and European stocks rise

By Herbert Lash

NEW YORK (Reuters) - U.S. and European stocks rose on Wednesday on a resilient financial sector and robust U.S. durable goods data that eased some concerns about the sagging U.S. economy, although the dollar and bonds dipped.

Oil prices rose for a third day, boosted by concern that Tropical Storm Gustav will cut supply from U.S. oil and gas installations in the Gulf of Mexico. Data showing an unexpected fall in U.S. crude stocks also boosted oil demand.

The euro strengthened against the dollar and euro zone government bond prices fell after several European Central Bank officials played down the chance of an interest rate cut soon.

Investors bet the dollar's recent jump to 2008 highs against major trading currencies went too far, too fast given the hawkish rhetoric from ECB officials.

ECB Executive Board member Axel Weber said any talk about lower rates in the euro zone is premature, and ECB Vice President Lucas Papademos went as far as saying further rate hikes could be needed to curb stubbornly high inflation.

The U.S. durable goods report for July, which was mostly stronger-than-expected across the board, dealt U.S. government debt a blow but lifted European stocks out of negative territory and provided an early morning boost to U.S. stocks.

The government said orders for durables -- items meant to last three years or more -- jumped 1.3 percent after an upwardly revised 1.3 percent gain in June. Analysts were expecting orders to remain unchanged from the previous month.

Non-defence capital goods orders excluding aircraft, seen as a barometer of business spending, jumped 2.6 percent, the steepest gain since April. Analysts were expecting that category to decline by 0.1 percent.