Financials, surging commodities lift Wall Street

By Ellis Mnyandu

NEW YORK (Reuters) - Stocks rose on Thursday as a brokerage's upbeat view on U.S. banks drove a run-up in financials, while soaring prices of oil and other commodities lifted natural resource companies on bets the economic slump is waning.

RBC Capital Markets upgraded the banking sector, saying it is poised for a multiyear bull market. The KBW bank index .BKX added 4.8 percent.

Crude oil prices surged and underpinned the broader market after Goldman Sachs raised its year-end oil price forecast to $85 a barrel, saying economic stabilization and tight supplies should bode well for prices.

U.S. crude settled up 4 percent at $68.81 a barrel on the New York Mercantile Exchange.

"The bigger gain in oil, not just today, is encouraging on the macro level. It's indicative of demand," said Cleveland Rueckert, market analyst at Birinyi Associates Inc, in Stamford, Connecticut.

Oil rose on Thursday as U.S. data showing a drop in jobless claims boosted expectations of an economic recovery that could revive energy demand. First-time jobless claims fell for a third straight week and the number of people remaining on the benefit rolls fell for the first time since the start of the year.

But Rueckert said he preferred for oil to hold around $60 barrel. "You don't want to have the same thing that happened last year when it ... becomes a burden to a lot of the consumers who are supposed to drive economic growth."

The Dow Jones industrial average .DJI gained 74.96 points, or 0.86 percent, to 8,750.24. The Standard & Poor's 500 Index .SPX climbed 10.70 points, or 1.15 percent, to 942.46. The Nasdaq Composite Index .IXIC rose 24.10 points, or 1.32 percent, to 1,850.02.