U.S. stocks rise on oil price rise

By Herbert Lash

NEW YORK (Reuters) - U.S. and European stocks rose on Wednesday as a surprise rise in U.S. durable goods data eased concerns about the weak U.S. economy and helped lift the battered financial sector, but the dollar slipped.

Oil rose on forecasts that Tropical Storm Gustav will intensify into a hurricane and lead to a shutdown of U.S. oil and natural gas platforms as it churns toward the Gulf of Mexico.

Data showing an unexpected fall in U.S. crude stocks also boosted oil demand, which lifted energy shares and made them the biggest contributors to gains in U.S. and European stocks.

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.

Sterling slid to a new two-year low against the dollar in thin trading, pressured by concerns about a slowing British economy that could force the Bank of England to cut rates.

The U.S. durable goods report for July, which showed orders up in many sectors, dealt U.S. government debt a blow but lifted European stocks out of negative territory and provided an initial boost to U.S. stocks.

Orders for durable goods, items meant to last three years or more, were up 1.3 percent after an upwardly revised 1.3 percent gain in June, the Commerce Department said. Analysts were expecting durable goods orders to remain unchanged.